Document ID: EPA-HQ-OAR-2010-0162-3630
Agency: epa
Document Type: Supporting & Related Material
Title: 
Posted Date: 2011-08-29T04:00Z

EO12866_GHG+Fuel Eff Stds for Med-Heavy-Duty Engines+Vehicles 2060-AP61 FRM Preamble_20110531.docx
ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 85, 86, 1036, 1037, 1065, 1066, and 1068

DEPARTMENT OF TRANSPORTATIONNATIONAL HIGHWAY TRAFFIC SAFETY ADMINISTRATION 

49 CFR Parts 523, 534, and 535

[EPA - HQ - OAR - 2010 - 0162; NHTSA-2010-0079; FRL-xxxx-x]

RIN 2060-AP61; RIN 2127-AK74

Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles

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

ACTION:  Final Rules
__________________________________________________________________
SUMMARY:

EPA and NHTSA, on behalf of the Department of Transportation, are each finalizing rules to establish a comprehensive Heavy-Duty National Program that will reduce greenhouse gas emissions and increase fuel efficiency for on-road heavy-duty vehicles, responding to the President's directive on May 21, 2010, to take coordinated steps to produce a new generation of clean vehicles.  NHTSA's final fuel consumption standards and EPA's final carbon dioxide (CO2) emissions standards are tailored to each of three regulatory categories of heavy-duty vehicles:  (1) Combination Tractors; (2) Heavy-duty Pickup Trucks and Vans; and (3) Vocational Vehicles. The rules include separate standards for the engines that power combination tractors and vocational vehicles.  Certain rules are exclusive to the EPA program. These include EPA's final hydrofluorocarbon emissions standards to control leakage from air conditioning systems in combination tractors, and pickup trucks and vans. These also include EPA's final nitrous oxide (N2O) and methane (CH4) emissions standards that will apply to all heavy-duty engines, pickup trucks and vans.  

EPA's final greenhouse gas emission standards under the Clean Air Act will begin with model year 2014.  NHTSA's final fuel consumption standards under the Energy Independence and Security Act of 2007 will be voluntary in model years 2014 and 2015, becoming mandatory with model year 2016 for most regulatory categories.  Commercial trailers are not regulated in this phase of the Heavy-Duty National Program.

The agencies estimate that the combined standards will reduce CO2 emissions by approximately 280 million metric tons and save over 500 million barrels of oil over the life of vehicles sold during the 2014 through 2018 model years, providing over $7 billion in net societal benefits, and $49 billion in net societal benefits when private fuel savings are considered.

DATES:  These final rules are effective on [Insert date 60 days after publication in the Federal Register], sixty days after date of publication in the Federal Register. The incorporation by reference of certain publications listed in this regulation is approved by the Director of the Federal Register as of [Insert date 60 days after publication in the Federal Register].

ADDRESSES:  EPA and NHTSA have established dockets for this action under Docket ID No. EPA - HQ - OAR - 2010 - 0162 and NHTSA-2010-0079, respectively.  All documents in the docket are listed on the www.regulations.gov web site. Although listed in the index, some information is not publicly available, e.g., confidential business information or other information whose disclosure is restricted by statute.  Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form.  Publicly available docket materials are available either electronically through www.regulations.gov or in hard copy at the following locations:  EPA: EPA Docket Center, EPA/DC, EPA West Building, 1301 Constitution Ave., N.W., Room 3334, Washington DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566 - 1744, and the telephone number for the Air Docket is (202) 566-1742.  NHTSA:  Docket Management Facility, M-30, U.S. Department of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue, SE, Washington, DC 20590.  The 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:  NHTSA:  Rebecca Yoon, Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue, SE, Washington, DC 20590. Telephone: (202) 366-2992.  EPA:  Lauren Steele,  Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4788; fax number: (734) 214-4816; email address: steele.lauren@epa.gov, or Assessment and Standards Division Hotline; telephone number; (734) 214-4636; email asdinfo@epa.gov. 

SUPPLEMENTARY INFORMATION:  
Does this Action Apply to Me
This action affects companies that manufacture, sell, or import into the United States new heavy-duty engines and new Class 2b through 8 trucks, including combination tractors, school and transit buses, vocational vehicles such as utility service trucks, as well as (3/4)-ton and 1-ton pickup trucks and vans.  The heavy-duty category incorporates all motor vehicles with a gross vehicle weight rating of 8,500 pounds or greater, and the engines that power them, except for medium-duty passenger vehicles already covered by the greenhouse gas standards and corporate average fuel economy standards issued for light-duty model year 2012-2016 vehicles.  Regulated categories and entities include the following: 
Category
NAICS Code[a]
Examples of Potentially Affected Entities
Industry
336111
Motor Vehicle Manufacturers, Engine and Truck Manufacturers

336112

336120

Industry
541514
Commercial Importers of Vehicles and Vehicle Components

811112

811198

Industry
336111
Alternative Fuel Vehicle Converters

336112

422720

454312

541514

541690

811198

Note:
[a]  North American Industry Classification System (NAICS)

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities likely covered by these rules.  This table lists the types of entities that the agencies are aware may be regulated by this action.  Other types of entities not listed in the table could also be regulated.  To determine whether your activities are regulated by this action, you should carefully examine the applicability criteria in the referenced regulations.  You may direct questions regarding the applicability of this action to the persons listed in the preceding FOR FURTHER INFORMATION CONTACT section.

Table of Contents

I. Overview
A. Introduction
B. Building Blocks of the Heavy-duty National Program
C. Summary of the Final EPA and NHTSA HD National Program
D. Summary of Costs and Benefits of the HD National Program
E. Program Flexibilities
F. EPA and NHTSA Statutory Authorities
G. Future HD GHG and Fuel Consumption Rulemakings
II. Final GHG and Fuel Consumption Standards for Heavy-duty Engines and Vehicles
A. What Vehicles Would Be Affected?
B. Class 7 and 8 Combination Tractors
C. Heavy-Duty Pickup Trucks and Vans
D. Class 2b-8 Vocational Vehicles
E. Other Standards Provisions
III. Feasibility Assessments and Conclusions
A. Class 7-8 Combination Tractor
B. Heavy-Duty Pickup Trucks and Vans
C. Class 2b-8 Vocational Vehicles
IV. Final Regulatory Flexibility Provisions
A. Averaging, Banking, and Trading Program
B. Additional Flexibility Provisions
V. NHTSA and EPA Compliance, Certification, and Enforcement Provisions
A. Overview
B. Heavy-duty Pickup Trucks and Vans
C. Heavy-Duty Engines
D. Class 7 and 8 Combination Tractors
E. Class 2b-8 Vocational Vehicles
F. General Regulatory Provisions
G. Penalties
VI. How Will This Program Impact Fuel Consumption, GHG Emissions, and Climate Change?
A. What Methodologies Did the Agencies Use to Project GHG Emissions and Fuel Consumption Impacts?
B. MOVES Analysis
C. What Are the Projected Reductions in Fuel Consumption and GHG Emissions?
D. Overview of Climate Change Impacts from GHG Emissions
E. Changes in Atmospheric CO2 Concentrations, Global Mean Temperature, Sea Level Rise, and Ocean pH Associated with the Program's GHG Emissions Reductions
VII. How Will This Final Action Impact Non-GHG Emissions and Their Associated Effects?
A. Emissions Inventory Impacts
B. Health Effects of Non-GHG Pollutants
C. Environmental Effects of Non-GHG Pollutants
D. Air Quality Impacts of Non-GHG Pollutants
VIII. What are the Agencies' Estimated Cost, Economic, and Other Impacts of the Final Program?
A. Conceptual Framework for Evaluating Impacts
B. Costs Associated With the Final Program
C. Indirect Cost Multipliers
D. Cost per Ton of Emissions Reductions
E. Impacts of Reduction in Fuel Consumption
F. Class Shifting and Fleet Turnover Impacts
G. Benefits of Reducing CO2 Emissions
H. Non-GHG Health and Environmental Impacts
I. Energy Security Impacts
J. Other Impacts
K. The Effect of Safety Standards and Voluntary Safety Improvements on Vehicle Weight
L. Summary of Costs and Benefits from the Greenhouse Gas Emissions Perspective
M. Summary of Costs and Benefits from the Fuel Efficiency Perspective
N. Employment Impacts
IX. Analysis of the Alternatives
A. What Are the Alternatives that the Agencies Considered?
B. How Do These Alternatives Compare in Overall GHG Emissions Reductions and Fuel Efficiency and Cost?
C. What Is the Agencies' Decision Regarding Trailer Standards?
X. Public Participation
XI. Statutory and Executive Order Reviews
XII. Statutory Provisions and Legal Authority
A. EPA
B. NHTSA

I.  Overview
Introduction
EPA and NHTSA ("the agencies") are announcing a first-ever program to reduce greenhouse gas (GHG) emissions and improve fuel efficiency in the heavy-duty highway vehicle sector.  This broad sector  -  ranging from large pickups to sleeper-cab tractors  -  together represent the second largest contributor to oil consumption and GHG emissions from the mobile source sector, after light-duty passenger cars and trucks. These are the second joint rules issued by the agencies, following on the April 1, 2010 standards  to sharply reduce GHG emissions and fuel consumption from MY 20120-2016 passenger cars and light trucks (published at 75 FR 25324 (May 7, 2010)).  
In a May 21, 2010 memorandum to the Administrators of EPA and NHTSA (and the Secretaries of Transportation and Energy), the President stated that "America has the opportunity to lead the world in the development of a new generation of clean cars and trucks through innovative technologies and manufacturing that will spur economic growth and create high-quality domestic jobs, enhance our energy security, and improve our environment." ,  In the May 2010 memorandum, the President specifically requested the Administrators of EPA and NHTSA to "immediately begin work on a joint rulemaking under the Clean Air Act (CAA) and the Energy Independence and Security Act of 2007 (EISA) to establish fuel efficiency and greenhouse gas emissions standards for commercial medium- and heavy-duty vehicles beginning with the 2014 model year (MY)." In this final rulemaking each agency is addressing this Memorandum by adopting rules under its respective authority that together comprise a coordinated and comprehensive HD National Program designed to address the urgent and closely intertwined challenges of dependence on oil, achievement of energy security, and amelioration of  global climate change.  
At the same time, the final program will enhance American competitiveness and job creation, benefit consumers and businesses by reducing costs for transporting goods, and spur growth in the clean energy sector.  
The HD National Program the agencies are finalizing today reflects a collaborative effort between the agencies, a range of public interest nongovernmental organizations (NGOs), the state of California and the regulated industry.  At the time of the President's announcement, a number of major HD truck and engine manufacturers representing the vast majority of this industry, and the California Air Resources Board (California ARB), sent letters to EPA and NHTSA supporting the creation of a HD National Program based on a common set of principles.  In the letters, the stakeholders committed to working with the agencies and with other stakeholders toward a program consistent with common principles, including:
Increased use of existing technologies to achieve significant GHG emissions and fuel consumption reductions;
A program that starts in 2014 and is fully phased in by 2018;
A program that works towards harmonization of methods for determining a vehicle's GHG and fuel efficiency, recognizing the global nature of the issues and the industry;
Standards that recognize the commercial needs of the trucking industry; and
Incentives leading to the early introduction of advanced technologies.
The final rules adopted today reflect these principles.
The final HD National Program builds on many years of heavy-duty engine and vehicle technology development to achieve what the agencies believe is the greatest degree of GHG emission and fuel consumption reduction appropriate, technologically and economically feasible, and cost-effective for model years 2014-2018.  In addition to taking aggressive steps that are reasonably possible now, based on the technological opportunities and pathways that present themselves during these model years, the agencies and industry will also continue learning about emerging opportunities for this complex sector to further reduce GHG emissions and fuel consumption through future regulatory steps.  Similarly, the agencies will participate in efforts to improve our ability to accurately characterize the actual in-use fuel consumption and emissions of this complex sector.  As technologies progress in the coming years and as the agencies improve the regulatory tools to evaluate real world vehicle performance, we expect that we will develop a second phase of regulations to reinforce these developments and maximize the achieved reductions in GHG emissions and fuel consumption reduction for the mid- and longer-term time frame (beyond 2018).  The agencies are committed to working with all interested stakeholders in this effort and to the extent possible working towards alignment with similar programs being developed in Canada, Mexico, Europe, China, and Japan.  In doing so, we will continue to evaluate many of the structural and technical decisions we are making in today's final action in the context of new technologies and the new regulatory tools that we expect to realize in the future.
The regulatory program we are finalizing today is largely unchanged from the proposal the agencies made in October 2010.  The structure of the program and the stringency of the standards is essentially the same as proposed.  We have made a number of changes to the testing requirements and reporting requirements to better align the NHTSA and EPA portions of the program.  In response to comments, we have also made some changes to the averaging, banking and trading (ABT) provisions of the program that will make implementation of this final program more flexible for manufacturers.  We have added provisions to further encourage the development of advanced technologies and to provide a more straightforward mechanism to certify engines and vehicles using innovative technologies.  We have also made slight changes to the vocational vehicle standards to reflect new tire rolling resistance data, along with adjustments to the N2O and CH4 emissions caps reflecting additional data.  Finally in response to comments, we have made some technical changes to our emissions compliance model that results in different numeric standards for vehicles to more accurately characterize emissions while maintaining the same overall stringency and therefore expected costs and benefits of the program.
Heavy-duty vehicles move much of the nation's freight and carry out numerous other tasks, including utility work, concrete delivery, fire response, refuse collection, and many more.  Heavy-duty vehicles are primarily powered by diesel engines, although about 37 percent of these vehicles are powered by gasoline engines.  Heavy-duty trucks have always been an important part of the goods movement infrastructure in this country and have experienced significant growth over the last decade related to increased imports and exports of finished goods and increased shipping of finished goods to homes through internet purchases. 
The heavy-duty sector is extremely diverse in several respects, including types of manufacturing companies involved, the range of sizes of trucks and engines they produce, the types of work the trucks are designed to perform, and the regulatory history of different subcategories of vehicles and engines.  The current heavy-duty fleet encompasses vehicles from the "18-wheeler" combination tractors one sees on the highway to school and transit buses, to vocational vehicles such as utility service trucks, as well as the largest pickup trucks and vans.
For purposes of this preamble, the term "heavy-duty" or "HD" is used to apply to all highway vehicles and engines that are not within the range of light-duty vehicles, light-duty trucks, and medium-duty passenger vehicles (MDPV) covered by the GHG and Corporate Average Fuel Economy (CAFE) standards issued for MY 2012-2016.  It also does not include motorcycles.  Thus, in this rulemaking, unless specified otherwise, the heavy-duty category incorporates all vehicles with a gross vehicle weight rating above 8,500 pounds, and the engines that power them, except for MDPVs.  We note that the Energy Independence and Security Act of 2007 requires NHTSA to set standards for "commercial medium- and heavy-duty on-highway vehicles and work trucks."  
The NPRM proposed to include all segments of the heavy-duty category above, except NHTSA proposed not to include recreational vehicles (RVs), based on an interpretation of "commercial" vehicles.  NHTSA proposed that recreational vehicles were non-commercial, and therefore outside of the scope of its rule.  Oshkosh Corporation commented that this interpretation did not match the statutory definition in EISA, which defines "commercial medium- and heavy-duty on-highway vehicle" by weight only, and that therefore it should be explicitly broadened to include all vehicles that are not engaged in interstate commerce as defined by the Federal Motor Carrier Safety Administration in 49 CFR § 202.  Alternatively, Oshkosh suggested that if NHTSA stuck to the definition provided in EISA, there would be no logical reason to exclude RVs on that definition.  
NHTSA has reviewed the proposed interpretation and believes that, given the very wide variety of vehicles contained in the HD fleet, trying to exclude certain types of vehicles based on the proposed interpretation could create illogical results.  Therefore, NHTSA will adhere to the statutory definition contained in EISA for this rulemaking.  As RVs were not included by NHSTA for the proposed regulation in the NPRM, they are not within scope and are also excluded in NHTSA's portion of the final program.  NHTSA will revisit this issue in the next rulemaking and may include RVs at that time.  
Setting GHG emissions standards for the heavy-duty sector will help to ameliorate climate change.  The EPA Administrator found that human-induced climate change resulting from GHG emissions endangers the public health and welfare of current and future generations (74 FR 66496, December 15, 2009), based on the scientific assessment reports of the Intergovernmental Panel on Climate Change (IPCC), the U.S. Climate Change Science Program (CCSP), the U.S. Global Change Research Program (USGCRP), and the National Research Council (NRC).  As summarized in the Technical Support Document for EPA's Endangerment and Cause or Contribute Findings under Section 202(a) of the Clean Air Act, anthropogenic emissions of GHGs are very likely (a 90 to 99 percent probability) the cause of most of the observed global warming over the last 50 years.  Primary GHGs of concern are carbon dioxide (CO2), methane (CH4), nitrous oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs), and sulfur hexafluoride (SF6).  Mobile sources emitted 31 percent of all U.S. GHGs in 2007 (transportation sources, which do not include certain off-highway sources, account for 28 percent) and have been the fastest-growing source of U.S. GHGs since 1990.  Mobile sources addressed in EPA's endangerment and contribution findings under CAA section 202(a) -- light-duty vehicles, heavy-duty trucks, buses, and motorcycles -- accounted for 23 percent of all U.S. GHG emissions in 2007.  Heavy-duty vehicles emit CO2, CH4, N2O, and HFCs and are responsible for nearly 19 percent of all mobile source GHGs (nearly 6% of all U.S. GHGs) and about 25 percent of section 202(a) mobile source GHGs.  For heavy-duty vehicles in 2007, CO2 emissions represented more than 99 percent of all GHG emissions (including HFCs).
Setting fuel consumption standards for the heavy-duty sector, pursuant to NHTSA's EISA authority, will also improve our energy security by reducing our dependence on foreign oil, which has been a national objective since the first oil price shocks in the 1970s.  Net petroleum imports now account for approximately 60 percent of U.S. petroleum consumption.  World crude oil production is highly concentrated, exacerbating the risks of supply disruptions and price shocks as the recent unrest in North Africa and the Persian Gulf highlights.  Current oil prices are over $100 per barrel, with gasoline and diesel fuel prices in excess of $4 per gallon, causing financial hardship for many families and businesses.  The export of U.S. assets for oil imports continues to be an important component of the historically unprecedented U.S. trade deficits.  Transportation accounts for about 72 percent of U.S. petroleum consumption.  Heavy-duty vehicles account for about 17 percent of transportation oil use, which means that they alone account for about 12 percent of all U.S. oil consumption.
In developing this HD National program, the agencies have worked with a large and diverse group of stakeholders representing truck and engine manufacturers, trucking fleets, environmental organizations, and states including the State of California.  Further, it is our expectation based on our ongoing work with the State of California that the California ARB will be able to adopt regulations equivalent in practice to those of this HD National Program, just as it has done for past EPA regulation of heavy-duty trucks and engines.  NHTSA and EPA have been working with California ARB to enable that outcome.
In light of the industry's diversity, and consistent with the recommendations of the National Academy of Sciences (NAS) as discussed further below, the agencies are adopting a HD National Program that recognizes the different sizes and work requirements of this wide range of heavy-duty vehicles and their engines.  NHTSA's final fuel consumption standards and EPA's final GHG standards apply to manufacturers of the following types of heavy-duty vehicles and their engines; the final provisions for each of these are described in more detail below in this section:

   * Heavy-duty Pickup Trucks and Vans
   * Combination Tractors
   * Vocational Vehicles
As in the light-duty vehicle rule establishing CAFE  and GHG standards for MYs 2012-2016 light-duty vehicles, EPA's and NHTSA's final standards for the heavy-duty sector are largely harmonized with one another due to the close and direct relationship between improving the fuel efficiency of these vehicles and reducing their CO2 tailpipe emissions.  For all vehicles that consume carbon-based fuels, the amount of CO2 emissions is essentially constant per gallon for a given type of fuel that is consumed.  The more efficient a heavy-duty truck is in completing its work, the lower its environmental impact will be, because the less fuel consumed to move cargo a given distance, the less CO2 emitted into the air.  The technologies available for improving fuel efficiency, and therefore for reducing both CO2 emissions and fuel consumption, are one and the same.  Because of this close technical relationship, NHTSA and EPA have been able to rely on jointly-developed assumptions, analyses, and analytical conclusions to support the standards and other provisions that NHTSA and EPA are adopting under our separate legal authorities. 
The timelines for the implementation of the final NHTSA and EPA standards are also closely coordinated.  EPA's final GHG emission standards will begin in model year 2014.  In order to provide for the four full model years of regulatory lead time required by EISA, as discussed in Section I. B. (5)  below, NHTSA's final fuel consumption standards will be voluntary in model years 2014 and 2015, becoming mandatory in model year 2016, except for diesel engine standards which will be voluntary in model years 2014, 2015 and 2016, becoming mandatory in model year 2017.  Both agencies are also allowing for early compliance in model year 2013.  A detailed discussion of how the final standards are consistent with each agency's respective statutory requirements and authorities is found later in this preamble. 
NHTSA received several comments related to the timing of the fuel consumption standards.  The Engine Manufacturers Association (EMA), the National Automobile Dealers Association (NADA), The Volvo Group (Volvo), and Navistar argued that the timing of NHTSA's standards violated the lead time requirement of 49 U.S.C. 32902(k)(3)(A), which states that standards under the new medium- and heavy-duty program shall have "not less than 4 full model years of regulatory lead-time."  The commenters seemed to interpret the voluntary program as the imposition of regulation upon industry.  NADA described NHTSA's standards during the voluntary period as "mandates." 
NHTSA has reviewed this issue and believes that the regulatory schedule is consistent with the lead time requirement of 32902(k)(3).  To clarify, NHTSA will not be imposing a mandatory regulatory program until 2016, and none of the voluntary standards will be "mandates."  As described in later sections, the voluntary standards would only apply to a manufacturer if it makes the affirmative choice to opt-in to the program.  The voluntary period of 2014 and 2015 will provide manufacturers with the flexibility to prepare for the imposition of standards in 2016, in accordance with their varied business practices and timelines.  NHTSA believes the 2014 and 2015 voluntary period will enhance the usefulness of the four years of lead time until regulation by allowing manufacturers greater flexibility in the timeframes and speed in which they must meet the 2016 standards.  Mandatory NHTSA standards will first come into effect in 2016, giving industry four full years of lead time.  
NHTSA further believes that this is consistent with Executive Order 13563, which directs each agency to "seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation," as well as to "identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public."  
Allison Transmission stated that sufficient time must be taken before issuing the final rule in order to ensure that the standards are supportable.  NHTSA agrees with this comment, and, consistent with longstanding agency policy, is committed to ensuring that regulatory standards are only issued when and if they can be supported by sound, reliable data.  For those areas of potential regulation in this rule for which NHTSA has determined that insufficient time is available to analyze the requisite data, such as trailers, NHTSA is postponing regulation until sufficient support exists.
EMA, NADA, and Navistar also argued that the proposed standards would violate the stability requirement of 49 U.S.C. 32902(k)(3)(B), which states that they shall have "not less than 3 full model years of regulatory stability."  EMA stated that since there are HD emission standards taking effect in 2013, the 2014 implementation date for this rule would violate the stability requirements.  NADA argued that the MY 2014-2017/2018 phase-in period was inadequate to fulfill the stability requirement.
As described in the sections below, the fuel consumption standards are structured to phase in greater stringency over the years that the rule is in effect.  Consistent with NHTSA's statutory obligation to implement a program designed to achieve the maximum feasible fuel efficiency improvement, the standards increase based upon increasing fleet penetration rates for the available technologies.  NHTSA believes that the "regulatory stability" requirement exists to ensure that manufacturers will not be subject to new standards too rapidly, given that Congress did not include a minimum duration period for the MD/HD standards.  NHTSA believes that the underlying intent of this requirement is to ensure that standards which are set with increasing stringency, in order to be the maximum feasible during the regulatory period, will increase in a gradual and predictable manner.  Therefore, NHTSA interprets the phrase "regulatory stability" in § 32902(k)(3)(B) as requiring that the standards remain in effect for three years before they may be amended.  It does not prohibit standards which contain pre-determined stringency increases.  
NHTSA recognizes both the practical need and statutory requirement for regulatory stability and has structured the standards to ensure that they comply with § 32902(k)(3)(B).  Each standard, associated phase-in schedule, and alternative standard implemented by this final rule was noticed in the NPRM, and no standards that were not noticed at the time of this rulemaking will take effect before 2019.  This ensures that the standards in this rule will remain in effect for at least three years, providing the statutorily-mandated three full years of regulatory stability, and ensuring that manufacturers will not be subject to new or amended standards too rapidly.  Therefore, NHTSA believes the commenters' concern about regulatory stability is addressed in the structure of the rule.
Neither EPA nor NHTSA is adopting standards at this time for GHG emissions or fuel consumption, respectively, for heavy-duty commercial trailers or for vehicles or engines manufactured by small businesses.  The agencies recognize that aerodynamic and tire rolling resistance improvements to trailers represent a significant opportunity to reduce fuel consumption and GHGs as evidenced by the work of the EPA SmartWay program.  While we are deferring action today on setting trailer standards, the agencies are committed to moving forward in a timely manner to create a complementary regulatory program for trailers.  See Section IX for more details on the agencies' decisions regarding trailers, and Sections II and XI for more details on the agencies' decisions regarding small businesses. 
Building Blocks of the Heavy-duty National Program
The standards that are being adopted in this notice represent the first time that NHTSA and EPA are regulating the heavy-duty sector for fuel consumption and GHG emissions, respectively.  The HD National Program is rooted in EPA's prior regulatory history, the SmartWay Transport Partnership program, and extensive technical and engineering analyses done at the federal level.  This section summarizes some of the most important of these precursors and foundations for this HD National Program.  
EPA's Traditional Heavy-duty Regulatory Program
Since the 1980s, EPA has acted several times to address tailpipe emissions of criteria pollutants and air toxics from heavy-duty vehicles and engines.  During the last 18 years, these programs have primarily addressed emissions of particulate matter (PM) and the primary ozone precursors, hydrocarbons (HC) and oxides of nitrogen (NOX).  These programs have successfully achieved significant and cost-effective reductions in emissions and associated health and welfare benefits to the nation. They have been structured in ways that account for the varying circumstances of the engine and truck industries.  As required by the CAA, the emission standards implemented by these programs include standards that apply at the time that the vehicle or engine is sold as well as standards that apply in actual use.  As a result of these programs, new vehicles meeting current emission standards will emit 98% less NOX and 99% less PM than new trucks 20 years ago.  The resulting emission reductions provide significant public health and welfare benefits.  The most recent EPA regulations which were fully phased-in in 2010, the monetized health and welfare benefits alone are projected to be greater than $70 billion in 2030   -  benefits far exceeding compliance costs and not including the unmonetized benefits resulting from reductions in air toxics and ozone precursors (66 FR 5002, January 18, 2001). 
EPA's overall program goal has always been to achieve emissions reductions from the complete vehicles that operate on our roads. The agency has often accomplished this goal for many heavy-duty truck categories through the regulation of heavy-duty engine emissions.  A key part of this success has been the development over many years of a well-established, representative, and robust set of engine test procedures that industry and EPA now routinely use to measure emissions and determine compliance with emission standards.  These test procedures in turn serve the overall compliance program that EPA implements to help ensure that emissions reductions are being achieved.  By isolating the engine from the many variables involved when the engine is installed and operated in a HD vehicle, EPA has been able to accurately address the contribution of the engine alone to overall emissions.  The agencies discuss below how the final program incorporates the existing engine-based approach used for criteria pollutant regulations, as well as new vehicle-based approaches. 
NHTSA's Responsibilities to Regulate Heavy-Duty Fuel Efficiency under EISA
With the passage of the EISA in December 2007, Congress laid out a framework developing the first fuel efficiency regulations for HD vehicles.  As codified at 49 U.S.C. 32902(k), EISA requires NHTSA to develop a regulatory system for the fuel economy of commercial medium-duty and heavy-duty on-highway vehicles and work trucks in three steps:  a study by NAS, a study by NHTSA, and a rulemaking to develop the regulations themselves.
Specifically, section 102 of EISA, codified at 49 U.S.C. 32902(k)(2), states that not later than two years after completion of the NHTSA study, DOT (by delegation, NHTSA), in consultation with the Department of Energy (DOE) and EPA, shall develop a regulation to implement a "commercial medium-duty and heavy-duty on-highway vehicle and work truck fuel efficiency improvement program designed to achieve the maximum feasible improvement."  NHTSA interprets the timing requirements as permitting a regulation to be developed earlier, rather than as requiring the agency to wait a specified period of time.
Congress specified that as part of the "HD fuel efficiency improvement program designed to achieve the maximum feasible improvement," NHTSA must adopt and implement:
Appropriate test methods;
Measurement metrics;
Fuel economy standards; and
Compliance and enforcement protocols.
Congress emphasized that the test methods, measurement metrics, standards, and compliance and enforcement protocols must all be appropriate, cost-effective, and technologically feasible for commercial medium-duty and heavy-duty on-highway vehicles and work trucks.  NHTSA notes that these criteria are different from the "four factors" of 49 U.S.C. 32902(f) that have long governed NHTSA's setting of fuel economy standards for passenger cars and light trucks, although many of the same factors are considered under each of these provisions.
Congress also stated that NHTSA may set separate standards for different classes of HD vehicles, which the agency interprets broadly to allow regulation of HD engines in addition to HD vehicles, and provided requirements new to 49 U.S.C. 32902 in terms of timing of regulations, stating that the standards adopted as a result of the agency's rulemaking shall provide not less than four full model years of regulatory lead time, and three full model years of regulatory stability.
National Academy of Sciences Report on Heavy-Duty Technology 
In April 2010 as mandated by Congress in EISA, the National Research Council (NRC) under NAS issued a report to NHTSA and to Congress evaluating medium-duty and heavy-duty truck fuel efficiency improvement opportunities, titled "Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-duty Vehicles."   This study covers the same universe of heavy-duty vehicles that is the focus of this final rulemaking  -  all highway vehicles that are not light-duty, MDPVs, or motorcycles.  The agencies have carefully evaluated the research supporting this report and its recommendations and have incorporated them to the extent practicable in the development of this rulemaking.
The NAS report is far reaching in its review of the technologies that are available and which may become available in the future to reduce fuel consumption from medium and heavy-duty vehicles.  In presenting the full range of technical opportunities the report includes technologies which may not be available until 2020 or even further into the future.  As such, the report provides not only an invaluable list of off the shelf technologies the agencies could draw from in developing this near term 2014 program consistent with the set of principles set forth by the President, but the report also provides a road map the agencies can use as we look to developing future regulations for this sector.  A review of the technologies in the NAS report makes clear that there are not only many technologies readily available today to achieve important reductions in fuel consumption, like the ones we used in developing the 2014 program, but there are also great opportunities for even larger reductions in the future through the development of advanced hybrid drive systems and sophisticated engine technologies such as Rankine waste heat recovery.  The agencies will again make extensive use of this report when we move forward to develop the next phase of regulations for medium and heavy-duty vehicles.
The NHTSA and EPA Light-duty National GHG Program
On April 1, 2010, EPA and NHTSA finalized the first-ever National Program for light-duty cars and trucks, which set GHG emissions and fuel economy standards for model years 2012-2016.  The agencies have used the light-duty National Program as a model for this final HD National Program in many respects.  This is most apparent in the case of heavy-duty pickups and vans, which are very similar to the light-duty trucks addressed in the light-duty National Program both technologically as well as in terms of how they are manufactured (i.e., the same company often makes both the vehicle and the engine).  For these vehicles, there are close parallels to the light-duty program in how the agencies have developed our respective final standards and compliance structures, although, as discussed below, the technologies applied to light-duty trucks are not invariably applicable to heavy-duty pickups and vans at the same penetration rates in the lead time afforded in this heavy-duty action.  Another difference is that each agency adopts standards based on attributes other than vehicle footprint, as discussed below.
Due to the diversity of the remaining HD vehicles, there are fewer parallels with the structure of the light-duty program.  However, the agencies have maintained the same collaboration and coordination that characterized the development of the light-duty program.  Most notably, as with the light-duty program, manufacturers will be able to design and build vehicles to meet a closely coordinated, harmonized national program, and avoid unnecessarily duplicative testing and compliance burdens.  
EPA's SmartWay Program
EPA's voluntary SmartWay Transport Partnership program encourages shipping and trucking companies to take actions that reduce fuel consumption and CO2 by working with the shipping community and the freight sector to identify low carbon strategies and technologies, and by providing technical information, financial incentives, and partner recognition to accelerate the adoption of these strategies.  Through the SmartWay program, EPA has worked closely with truck manufacturers and truck fleets to develop test procedures to evaluate vehicle and component performance in reducing fuel consumption and has conducted testing and has established test programs to verify technologies that can achieve these reductions.  Over the last six years, EPA has developed hands-on experience testing the largest heavy-duty trucks and evaluating improvements in tire and vehicle aerodynamic performance.  In 2010, according to vehicle manufacturers, approximately five percent of new combination heavy-duty trucks will meet the SmartWay performance criteria demonstrating that they represent the pinnacle of current heavy-duty truck reductions in fuel consumption. 
In developing this HD National Program, the agencies have drawn from the SmartWay experience, as discussed in detail both in Sections II and III below (e.g., developing test procedures to evaluate trucks and truck components) but also in the RIA (estimating performance levels from the application of the best available technologies identified in the SmartWay program).  These technologies provide part of the basis for the GHG emission and fuel consumption standards  in this rulemaking for certain types of new heavy-duty Class 7 and 8 combination tractors. 
In addition to identifying technologies, the SmartWay program includes operational approaches that truck fleet owners as well as individual drivers and their freight customers can incorporate, that the NHTSA and EPA believe will complement the final standards.  These include such approaches as improved logistics and driver training, as discussed in the RIA.  This approach is consistent with the one of the three alternative approaches that the NAS recommended be considered.  The three approaches were raising fuel taxes, relaxing truck size and weight restrictions, and encouraging incentives to disseminate information to inform truck drivers about the relationship between driving behavior and fuel savings.  Taxes and truck size and weight limits are mandated by public law; as such, these options are outside EPA's and NHTSA's authority to implement.  However, complementary operational measures like driver training, which SmartWay does promote, can complement the final standards and also provide benefits for the existing truck fleet, furthering the public policy objectives of addressing energy security and climate change.
Environment Canada
Environment Canada)assisted EPA's development of this final rulemaking, by conducting emissions testing of heavy-duty engines and vehicles at Environment Canada test facilities.  As EPA does today for criteria pollutant emissions, we expect to continue our collaboration with Environment Canada on compliance issues going forward with this program.
Summary of the Final EPA and NHTSA HD National Program
When EPA first addressed emissions from heavy-duty trucks in the 1980s, it established standards for engines, based on the amount of work performed (grams of pollutant per unit of work, expressed as grams per brake horsepower-hour or g/bhp-hr).  This approach recognized the fact that engine characteristics are the dominant determinant of the types of emissions generated, and engine-based technologies (including exhaust aftertreatment systems) need to be the focus for addressing those emissions.  Vehicle-based technologies, in contrast, have less influence on overall truck emissions of the pollutants that EPA has regulated in the past.  The engine testing approach also recognized the relatively small number of distinct heavy-duty engine designs, as compared to the extremely wide range of truck designs.  EPA concluded at that time that any incremental gain in conventional emission control that could be achieved through regulation of the complete vehicle would be small in comparison to the cost of addressing the many variants of complete trucks that make up the heavy-duty sector  -  smaller and larger vocational vehicles for dozens of purposes, various designs of combination tractors, and many others.
Addressing GHG emissions and fuel consumption from heavy-duty trucks, however, requires a different approach.  Reducing GHG emissions and fuel consumption requires increasing the inherent efficiency of the engine as well as making changes to the vehicles to reduce the amount of work demanded from the engine in order to move the truck down the road.  A focus on the entire vehicle is thus required.  For example, in addition to the basic emissions and fuel consumption levels of the engine, the aerodynamics of the vehicle can have a major impact on the amount of work that must be performed to transport freight at common highway speeds.  For this first rulemaking, the agencies proposed a complimentary engine and vehicle approach in order to achieve the maximum feasible near-term reductions.
NHTSA received comments on the proposal to create complementary engine and vehicle standards.  Volvo and Daimler argued that EISA limited NHTSA's authority to the regulation of completed vehicles and did not give the agency authority to regulate engines.  49 U.S.C. 329002(k)(2) grants NHTSA broad authority to regulate this sector, stating simply that the Secretary "shall determine in a rulemaking proceeding how to implement a commercial medium- and heavy-duty on-highway vehicle and work truck fuel efficiency improvement program designed to achieve the maximum feasible improvement," considering appropriateness, cost-effectiveness, and technological feasibility.  NHTSA does not believe that this language precludes the regulation of engines, but rather explicitly leaves the regulatory approach to the agency's expertise and discretion.  Considering the factors described in the NPRM and in Sections III and IV below, NHTSA continues to believe that the separate regulation of engines and vehicles is consistent with the agency's statutory mandate to determine how to implement a regulatory program designed to achieve the maximum feasible improvement.
As described elsewhere in this preamble, the final standards that make up the HD National Program address the complete vehicle, to the extent practicable and appropriate under the agencies' respective statutory authorities, through complementary engine and vehicle standards.  The agencies continue to  believe that  this complementary engine and vehicle approach is the best way to achieve near term reductions from these vehicles.  However, we also recognize as did the NAS committee and a wide range of industry and environmental commenters, that in order to fully capture the multi-faceted synergistic aspects of engine and vehicle design a more comprehensive complete vehicle standard may be more appropriate in the future.  The agencies are committed to fully exploring such a possibility and to developing the testing and modeling tools necessary to enable such a regulatory approach.  We intend to work with all interested stakeholders as we move forward in the future. 
Brief Overview of the Heavy-duty Truck Industry
The heavy-duty truck sector spans a wide range of vehicles with often unique form and function.  A primary indicator of the extreme diversity among heavy-duty trucks is the range of load-carrying capability across the industry.  The heavy-duty truck sector is often subdivided by vehicle weight classifications, as defined by the vehicle's gross vehicle weight rating (GVWR), which is a measure of the combined curb (empty) weight and cargo carrying capacity of the truck.  Table I-1 below outlines the vehicle weight classifications commonly used for many years for a variety of purposes by businesses and by several federal agencies, including the Department of Transportation, the Environmental Protection Agency, the Department of Commerce, and the Internal Revenue Service.
Table I-1: Vehicle Weight Classification
Class
2b
3
4
5
6
7
8
GVWR (lb)
8,501 -10,000
10,001-14,000
14,001-16,000
16,001-19,500
19,501 -26,000
26,001-33,000
> 33,001
In the framework of these vehicle weight classifications, the heavy-duty truck sector refers to Class 2b through Class 8 vehicles and the engines that power those vehicles.  Unlike light-duty vehicles, which are primarily used for transporting passengers for personal travel, heavy-duty vehicles fill much more diverse operator needs.  Heavy-duty pickup trucks and vans (Classes 2b and 3) are used chiefly as work truck and vans, and as shuttle vans, as well as for personal transportation, with an average annual mileage in the range of 15,000 miles.  The rest of the heavy-duty sector is used for carrying cargo and/or performing specialized tasks.  "Vocational" vehicles, which may span Classes 2b through 8, vary widely in size, including smaller and larger van trucks, utility "bucket" trucks, tank trucks, refuse trucks, urban and over-the-road buses, fire trucks, flat-bed trucks, and dump trucks, among others.  The annual mileage of these trucks is as varied as their uses, but for the most part tends to fall in between heavy-duty pickups/vans and the large combination tractors, typically from 15,000 to 150,000 miles per year, although some travel more and some less.  Class 7 and 8 combination tractor-trailers  -  some equipped with sleeper cabs and some not -- are primarily used for freight transportation.  They are sold as tractors and sometimes run without a trailer in between loads, but most of the time they run with one or more trailers that can carry up to 50,000 pounds or more of payload, consuming significant quantities of fuel and producing significant amounts of GHG emissions.  The combination tractor-trailers used in combination applications can travel more than 150,000 miles per year.
EPA and NHTSA have designed our respective  standards in careful consideration of the diversity and complexity of the heavy-duty truck industry, as discussed next. 
Summary of Final EPA GHG Emission Standards and NHTSA Fuel Consumption Standards
As described above, NHTSA and EPA recognize the importance of addressing the entire vehicle in reducing fuel consumption and GHG emissions.  At the same time, the agencies understand that the complexity of the industry means that we will need to use different approaches to achieve this goal, depending on the characteristics of each general type of truck.  We are therefore dividing the industry into three discrete regulatory categories for purposes of setting our respective standards  -  combination tractors, heavy-duty pickups and vans, and vocational vehicles -- based on the relative degree of homogeneity among trucks within each category.  For each regulatory category, the agencies are adopting related but distinct program approaches reflecting the specific challenges that we see in these segments.  In the following paragraphs, we discuss EPA's final GHG emission standards and NHTSA's final fuel consumption standards for the three regulatory categories of heavy-duty vehicles and their engines. 
The agencies are adopting test metrics that express fuel consumption and GHG emissions relative to the most important measures of heavy-duty truck utility for each segment, consistent with the recommendation of the 2010 NAS Report that metrics should reflect and account for the work performed by various types of HD vehicles.  This approach differs from NHTSA's light-duty program that uses fuel economy as the basis.  The NAS committee discussed the difference between fuel economy (a measure of how far a vehicle will go on a gallon of fuel) and fuel consumption (the inverse measure, of how much fuel is consumed in driving a given distance) as potential metrics for MD/HD regulations.  The committee concluded that fuel economy would not be a good metric for judging the fuel efficiency of a heavy-duty vehicle, and stated that NHTSA should instead consider fuel consumption as the metric for its standards.  As a result, for heavy-duty pickup trucks and vans, EPA and NHTSA are finalizing standards on a per-mile basis (g/mile for the EPA standards, gallons/100 miles for the NHTSA standards), as explained in Section I. C. (2) (b) below.  For heavy-duty trucks, both combination and vocational, the agencies are adopting standards expressed in terms of the key measure of freight movement, tons of payload miles or, more simply, ton-miles.  Hence, for EPA the final standards are in the form of the mass of emissions from carrying a ton of cargo over a distance of one mile (g/ton-mi).  Similarly, the final NHTSA standards are in terms of gallons of fuel consumed over a set distance (one thousand miles), or gal/1,000 ton-mile.  Finally, for engines, EPA is adopting standards in the form of grams of emissions per unit of work (g/bhp-hr), the same metric used for the heavy-duty highway engine standards for criteria pollutants today.  Similarly, NHTSA is finalizing standards for heavy-duty engines in the form of gallons of fuel consumption per 100 units of work (gal/100 bhp-hr).
Section II below discusses the final EPA and NHTSA standards in greater detail.
Class 7 and 8 Combination Tractors
Class 7 and 8 combination tractors and their engines contribute the largest portion of the total GHG emissions and fuel consumption of the heavy-duty sector, approximately 65 percent, due to their large payloads, their high annual miles traveled, and their major role in national freight transport.   These vehicles consist of a cab and engine (tractor or combination tractor) and a detachable trailer.  In general, reducing GHG emissions and fuel consumption for these vehicles will involve improvements in aerodynamics and tires and reduction in idle operation, as well as engine-based efficiency improvements.
In general, the heavy-duty combination tractor industry consists of tractor manufacturers (which manufacture the tractor and purchase and install the engine) and trailer manufacturers.  These manufacturers are usually not the same entity.  We are not aware of any manufacturer that typically assembles both the finished truck and the trailer and introduces the combination into commerce for sale to a buyer.  The owners of trucks and trailers are often distinct as well.  A typical truck buyer will purchase only the tractor.  The trailers are usually purchased and owned by fleets and shippers.  This occurs in part because trucking fleets on average maintain 3 trailers per tractor and in some cases as many as 6 or more trailers per tractor.  There are also large differences in the kinds of manufacturers involved with producing tractors and trailers.  For HD highway tractors and their engines, a relatively limited number of manufacturers produce the vast majority of these products.  The trailer manufacturing industry is quite different, and includes a large number of companies, many of which are relatively small in size and production volume.  Setting standards for the products involved -- tractors and trailers -- requires recognition of the large differences between these manufacturing industries, which can then warrant consideration of different regulatory approaches.  
Based on these industry characteristics, EPA and NHTSA believe that the most straightforward regulatory approach for combination tractors and trailers is to establish standards for tractors separately from trailers.  As discussed below in Section IX, the agencies are adopting standards for the tractors and their engines in this rulemaking, but did not propose and are not adopting standards for trailers.  
As with the other regulatory categories of heavy-duty vehicles, EPA and NHTSA have concluded that achieving reductions in GHG emissions and fuel consumption from combination tractors requires addressing both the cab and the engine, and EPA and NHTSA each are adopting standards that reflect this conclusion.  The importance of the cab is that its design determines the amount of power that the engine must produce in moving the truck down the road.  As illustrated in 
Figure I-1, the loads that require additional power from the engine include air resistance (aerodynamics), tire rolling resistance, and parasitic losses (including accessory loads and friction in the drivetrain).  The importance of the engine design is that it determines the basic GHG emissions and fuel consumption performance of the engine for the variety of demands placed on the engine, regardless of the characteristics of the cab in which it is installed.  The agencies intend for the final standards to result in the application of improved technologies for lower GHG emissions and fuel consumption for both the cab and the engine.

Figure I-1: Combination Tractor and Trailer Loads
Accordingly, for Class 7 and 8 combination tractors, the agencies are each finalizing two sets of standards.  For vehicle-related emissions and fuel consumption, tractor manufacturers are required to meet vehicle-based standards.  Compliance with the vehicle standard will typically be determined based on a customized vehicle simulation model, called the Greenhouse gas Emissions Model (GEM), which is consistent with the NAS Report recommendations to require compliance testing for combination tractors using vehicle simulation rather than chassis dynamometer testing.  This compliance model was developed by EPA specifically for this final action.  It is an accurate and cost-effective alternative to measuring emissions and fuel consumption while operating the vehicle on a chassis dynamometer.  Instead of using a chassis dynamometer as an indirect way to evaluate real-world operation and performance, various characteristics of the vehicle are measured and these measurements are used as inputs to the model.  These characteristics relate to key technologies appropriate for this subcategory of truck  -  including aerodynamic features, weight reductions, tire rolling resistance, the presence of idle-reducing technology, and vehicle speed limiters.  The model also assumes the use of a representative typical engine, rather than a vehicle-specific engine, because engines are regulated separately. Using these inputs, the model will be used to quantify the overall performance of the vehicle in terms of CO2 emissions and fuel consumption.  The model's development and design, as well as the sources for inputs, are discussed in detail in Section II below and in Chapter 4 of the RIA.  
Final Standards for Class 7 and 8 Combination Tractors and Their Engines
The vehicle standards that EPA and NHTSA are adopting for Class 7 and 8 combination tractor manufacturers are based on several key attributes related to GHG emissions and fuel consumption that we believe reasonably represent the many differences in utility and performance among these vehicles.  The final standards differ depending on GVWR (i.e., whether the truck is Class 7 or Class 8), the height of the roof of the cab, and whether it is a "day cab" or a "sleeper cab."  These later two attributes are important because the height of the roof, designed to correspond to the height of the trailer, significantly affects air resistance, and a sleeper cab generally corresponds to the opportunity for extended duration idle emission and fuel consumption improvements.  We received a number of comments supporting this approach and no comments that provided a compelling reason to change our approach in this final action.
Thus, the agencies have created nine subcategories within the Class 7 and 8 combination tractor category based on the differences in expected emissions and fuel consumption associated with the key attributes of GVWR, cab type, and roof height.  The agencies are setting standards beginning in 2014 model year with more stringent standards following in 2017 model year.  Table I-2 presents the agencies' respective  standards for combination tractor manufacturers for the 2017 model year for illustration.  The standards represent an overall fuel consumption and CO2 emissions reduction up to 23 percent from the tractors and the engines installed in them when compared to a baseline 2010 model year tractor.  The standard values shown below differ somewhat from the proposal, reflecting refinements made to the GEM in response to comments.  These changes did not impact our estimates of the relative effectiveness of the various control technologies modeled in this final action nor the overall cost or benefits or cost effectiveness estimated for these final vehicle standards.  
Table I-2: Heavy-duty Combination Tractor EPA Emissions Standards (g CO2/ton-mile) and NHTSA Fuel Consumption Standards (gal/1,000 ton-mile)
2017 Model Year CO2 Grams per Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
104
79
66
Mid Roof
115
86
73
High Roof
118
88
71
2017 Model Year Gallons of Fuel per 1,000 Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
10.3
7.8
6.5
Mid Roof
11.3
8.4
7.2
High Roof
11.6
8.6
7.0
In addition, the agencies are finalizing separate performance standards for the engines manufactured for use in these trucks.  EPA's engine-based CO2 standards and NHTSA's  engine-based fuel consumption standards are based on EPA's existing test procedures and regulatory structure for criteria pollutant emissions from medium- and heavy-duty engines.  As at proposal, the final engine standards vary depending on engine size linked to intended vehicle service class.  Consistent with our proposal, the agencies are finalizing an interim alternative engine standard for model years 2014-2016.  This alternative standard is designed to provide a glide path for legacy engine products that may not be able to comply with the final engine standards for model years 2014-16 given the short (approximately 2 year) lead time of this program.  We believe this alternative standard is appropriate for a first-ever program when the overall baseline performance of the industry is quite varied and where the short lead time means that not every product can be brought into compliance by 2014.  The alternative standard only applies through model year 2016.
Separately, EPA is also finalizing engine-based N2O and CH4 standards for manufacturers of the engines used in these combination tractors.  EPA is finalizing separate engine-based standards for N2O and CH4 because the agency believes that emissions of these GHGs are technologically related solely to the engine, fuel, and emissions aftertreatment systems, and the agency is not aware of any influence of vehicle-based technologies on these emissions.  NHTSA is not incorporating standards for N2O and CH4 because these emissions do not impact fuel consumption in a significant way.  The standards that EPA is finalizing for N2O and CH4 are numerically higher than those we proposed, reflecting new data provided to the agencies in comments on the proposal showing that the current baseline level of N2O and CH4 emissions varies more than EPA had expected.  EPA expects that manufacturers of current engine technologies will be able to comply with the final N2O and CH4 "cap" standards with little or no technological improvements; the value of the standards will be to prevent significant increases in these emissions as alternative technologies are developed and introduced in the future.  Compliance with the final EPA engine-based CO2 standards and the final NHTSA fuel consumption standards, as well as the final EPA N2O and CH4 standards, will be determined using the appropriate EPA engine test procedure, as discussed in Section II below. 
As with the other categories of heavy-duty vehicles, EPA and NHTSA are finalizing respective standards that will apply to Class 7 and 8 trucks at the time of production (as in Table I-2, above).  In addition, EPA is finalizing separate standards that will apply for a specified period of time in use.  All of the standards for these trucks, as well as details about the  provisions for certification and implementation of these standards, are discussed in more detail in Sections II, III, IV, and V below and in the RIA.
EPA's Final Air Conditioning Leakage Standard for Class 7 and 8 Combination Tractors
In addition to the final EPA tractor- and engine-based standards for CO2 and engine-based standards for  N2O, and CH4 emissions, EPA is also finalizing a separate standard to reduce leakage of HFC refrigerant from cabin air conditioning (A/C) systems from combination tractors, to apply to the tractor manufacturer.  This standard is independent of the CO2 tractor standard, as discussed below.  Because the current refrigerant used widely in all these systems has a very high global warming potential, EPA is concerned about leakage of refrigerant.  There is an air conditioning component to the standards for pickup trucks and vans as well, however those standards are structured differently than the A/C standards for tractors, and are discussed separately in Section I.C(2)(b), and Section II.E, below.
Because the interior volume to be cooled for most of these truck cabins is similar to that of light-duty trucks, the size and design of current truck A/C systems is also very similar.  The  compliance approach for Class 7 and 8 tractors is therefore similar to that in the light-duty rule in that these  standards are design-based.  Manufacturers will choose technologies from a menu of leak-reducing technologies sufficient to comply with the standard, as opposed to using a test to measure performance.  
However, the final heavy-duty A/C provisions differ in two important ways from those established in the light-duty rule.  First, the light-duty provisions were established as voluntary ways to generate credits towards the CO2 g/mi standard, and EPA took into account the expected use of such credits in establishing the CO2 emissions standards.  In the HD National Program, EPA is requiring that manufacturers actually meet a standard  -  as opposed to having the opportunity to earn a credit -- for A/C refrigerant leakage.  Thus, refrigerant leakage control is not accounted for in the final heavy-duty CO2 standards.  We are taking this approach here recognizing that while the benefits of leakage control are almost identical between light-duty and heavy-duty vehicles on a per vehicle basis, these benefits on a per mile basis expressed as a percentage of overall GHG emissions are much smaller for heavy-duty vehicles due to their much higher CO2 emissions rates and higher annual mileage when compared to light-duty vehicles.  Hence a credit-based approach as done for light-duty vehicles would provide less motivation for manufacturers to install low leakage systems even though such systems represent a highly cost effective means to control GHG emissions.  The second difference relates to the expression of the leakage rate.  The light-duty A/C leakage standard is expressed in terms of grams per year.  For EPA's heavy-duty program, however, because of the wide variety of system designs and arrangements, a one-size-fits-all gram per year standard would  not be appropriate, so EPA  is adopting a standard in terms of percent of total refrigerant leakage per year.  This requires the total refrigerant capacity of the A/C system to be taken into account in determining compliance.  EPA believes that this  approach -- a standard instead of a credit, and basing the standard on percent leakage over time  -  is more appropriate for heavy-duty tractors than the light-duty vehicle approach and that it will achieve the desired reductions in refrigerant leakage.  Compliance with the standard will be determined through a showing by the tractor manufacturer that its A/C system incorporates a combination of low-leak technologies sufficient to meet the percent leakage of the standard.  The "menu" of technologies is very similar to that established in the light-duty 2012-2016 MY vehicle rule.  
Finally, EPA did not propose and is not adopting an A/C system efficiency standard in this heavy-duty rulemaking, although an efficiency credit was a part of the light-duty rule.  The much larger emissions of CO2 from a heavy-duty tractor as compared to those from a light-duty vehicle mean that the relative amount of CO2 that could be reduced through A/C efficiency improvements is very small.  
A more detailed discussion of A/C related issues is found in Section II of this preamble. 
Heavy-Duty Pickup Trucks and Vans (Class 2b and 3)
Heavy-duty vehicles with GVWR between 8,501 and 10,000 lb are classified in the industry as Class 2b motor vehicles per the Federal Motor Carrier Safety Administration definition.  As discussed above, Class 2b includes MDPVs that are regulated by the agencies under the light-duty vehicle program, and the agencies are not adopting additional requirements for MDPVs in this rulemaking.  Heavy-duty vehicles with GVWR between 10,001 and 14,000 lb are classified as Class 3 motor vehicles.  Class 2b and Class 3 heavy-duty vehicles (referred to in these rules as "HD pickups and vans") together emit about 20 percent of today's GHG emissions from the heavy-duty vehicle sector.
About 90 percent of HD pickups and vans are (3/4)-ton and 1-ton pick-up trucks, 12- and 15-passenger vans, and large work vans that are sold by vehicle manufacturers as complete vehicles, with no secondary manufacturer making substantial modifications prior to registration and use.  These vehicle manufacturers are companies with major light-duty markets in the United States, primarily Ford, General Motors, and Chrysler.  Furthermore, the technologies available to reduce fuel consumption and GHG emissions from this segment are similar to the technologies used on light-duty pickup trucks, including both engine efficiency improvements (for gasoline and diesel engines) and vehicle efficiency improvements.  
For these reasons, EPA believes it is appropriate to adopt GHG standards for HD pickups and vans based on the whole vehicle (including the engine), expressed as grams per mile, consistent with the way these vehicles are regulated by EPA today for criteria pollutants.  NHTSA believes it is appropriate to adopt corresponding gallons per 100 mile fuel consumption standards that are likewise based on the whole vehicle.  This complete vehicle approach being adopted by both agencies for HD pickups and vans is consistent with the recommendations of the NAS Committee in their 2010 Report.  EPA and NHTSA also believe that the structure and many of the detailed provisions of the recently finalized light-duty GHG and fuel economy program, which also involves vehicle-based standards, are appropriate for the HD pickup and van GHG and fuel consumption standards as well, and this is reflected in the standards each agency is finalizing, as detailed in Section II.C.  These  commonalities include a new vehicle fleet average standard for each manufacturer in each model year and the determination of these fleet average standards based on production volume-weighted targets for each model, with the targets varying based on a defined vehicle attribute.  Vehicle testing will be conducted on chassis dynamometers using the drive cycles from the EPA Federal Test Procedure (Light-duty FTP or "city" test) and Highway Fuel Economy Test (HFET or "highway" test).
For the light-duty GHG and fuel economy standards, the agencies factored in vehicle size by basing the emissions and fuel economy targets on vehicle footprint (the wheelbase times the average track width).  For those standards, passenger cars and light trucks with larger footprints are assigned higher GHG and lower fuel economy target levels in acknowledgement of their inherent tendency to consume more fuel and emit more GHGs per mile.  For HD pickups and vans, the agencies believe that setting standards based on vehicle attributes is appropriate, but feel that a weight-based metric provides a better attribute than the footprint attribute utilized in the light-duty vehicle rulemaking.  Weight-based measures such as payload and towing capability are key among the parameters that characterize differences in the design of these vehicles, as well as differences in how the vehicles will be utilized.  Buyers consider these utility-based attributes when purchasing a heavy-duty pick-up or van.  EPA and NHTSA are therefore finalizing standards for HD pickups and vans based on a "work factor" attribute that combines their payload and towing capabilities, with an added adjustment for 4-wheel drive vehicles.  The agencies received a number of comments supporting this approach arguing as the agencies had that this approach was an effective way to appropriately reflect the utility of work vehicles while setting a consistent metric measure vehicle performance and to drive technology development.
As we proposed, the agencies are adopting provisions such that each manufacturer's fleet average standard will be based on production volume-weighting of target standards for all vehicles that in turn are based on each vehicle's work factor.  These target standards are taken from a set of curves (mathematical functions), presented in Section II.C.  EPA is also phasing in the CO2 standards gradually starting in the 2014 model year, at 15-20-40-60-100 percent in model years 2014-2015-2016-2017-2018, respectively.  The phase-in takes the form of a set of target standard curves, with increasing stringency in each model year, as detailed in Section II.C.  The final EPA standards for 2018 (including a separate standard to control air conditioning system leakage) represent an average per-vehicle reduction in GHGs of 17 percent for diesel vehicles and 12 percent for gasoline vehicles, compared to a common baseline, as described in Sections II.C and III.B of this preamble.  Section II.C also discusses the rationale behind the  separate targets for diesel and gasoline vehicle standards.  EPA is also finalizing a compliance alternative whereby manufacturers can phase in different percentages: 15-20-67-67-67-100 percent in model years 2014-2015-2016-2017-2018-2019, respectively.  This compliance alternative parallels and is equivalent to NHTSA's first alternative described below.
NHTSA is  allowing manufacturers to select one of two fuel consumption standard alternatives for model years 2016 and later.  To meet the EISA statutory requirement for three year regulatory stability, the first alternative defines individual gasoline vehicle and diesel vehicle fuel consumption target curves that will not change for model years 2016-2018. The  target curves for this alternative are presented in Section II.C.  The second alternative uses target curves that are equivalent to the EPA program in each model year 2016 to 2018.  Stringency for the alternatives has been selected to allow a manufacturer, through the use of the credit and deficit carry-forward provisions that the agencies are also finalizing, to rely on the same product plans to satisfy either of these two alternatives, and also EPA requirements.  NHTSA is also allowing manufacturers to voluntarily opt into the NHTSA HD pickup and van program in model years 2014 or 2015.  For these model years, NHTSA's fuel consumption target curves are equivalent to EPA's target curves.
The agencies received a number of comments suggesting that the standards for heavy-duty pickups and vans should be made more stringent for gasoline vehicles and further that the phase-in timing of the standards should be accelerated to the 2016 model year (from 2018).  We also received comments arguing that the proposed standards were aggressive and could only be met given the phase-in schedules proposed by the agencies.  In response to these comments, we reviewed again the technology assessments from the 2010 NAS report, our own joint light-duty 2012-2016 rulemaking, and information provided by the commenters relevant to the stringency of these standards.  After reviewing all of the information, we continue to conclude that the proposed standards and associated phase-in schedules represent technically stringent but reasonable standards considering the available lead time and costs to bring the necessary technologies to market and our own assessments of the efficacy of the technologies when applied to heavy-duty pickup trucks and vans.
The form and stringency of the EPA and NHTSA standards curves are based on a set of vehicle, engine, and transmission technologies expected to be used to meet the recently established GHG emissions and fuel economy standards for model year 2012-2016 light-duty vehicles, with full consideration of how these technologies are likely to perform in heavy-duty vehicle testing and use.  All of these technologies are already in use or have been announced for upcoming model years in some light-duty vehicle models, and some are in use in a portion of HD pickups and vans as well.  The technologies include:
advanced 8-speed automatic transmissions
aerodynamic improvements
electro-hydraulic power steering
engine friction reductions
improved accessories
low friction lubricants in powertrain components
lower rolling resistance tires
lightweighting
gasoline direct injection
gasoline engine coupled cam phasing
diesel aftertreatment optimization
air conditioning system leakage reduction (for EPA program only)
See Section III.B for a detailed analysis of these and other potential technologies, including their feasibility, costs, and effectiveness when employed for reducing fuel consumption and CO2 emissions in HD pickups and vans. 
A relatively small number of HD pickups and vans are sold by vehicle manufacturers as incomplete vehicles, without the primary load-carrying device or container attached.  We are generally regulating these vehicles as Class 2b through 8 vocational vehicles, as described in Section I.C(2)(c), because, like other vocational vehicles, we have little information on baseline aerodynamic performance and expectations for improvement.  However, a sizeable subset of these incomplete vehicles, often called cab-chassis vehicles, are sold by the vehicle manufacturers in configurations with many of the components that affect GHG emissions and fuel consumption identical to those on complete pickup truck or van counterparts  --  including engines, cabs, frames, transmissions, axles, and wheels.  We are including provisions that will enable these vehicles to be covered in the chassis-based HD pickup and van program, rather than the vocational vehicle program.  These provisions are described in Section V.B.
In addition to the EPA CO2 emission standards and the NHTSA fuel consumption standards for HD pickups and vans, EPA is also finalizing standards for two additional GHGs, N2O and CH4, as well as standards for air conditioning-related HFC emissions.  These standards are discussed in more detail in Section II.E.  Finally, EPA is finalizing standards that will apply to HD pickups and vans in use.  All of the standards for these HD pickups and vans, as well as details about the provisions for certification and implementation of these standards, are discussed in Section II.C.
Class 2b-8 Vocational Vehicles
Class 2b-8 vocational vehicles consist of a wide variety of vehicle types.  Some of the primary applications for vehicles in this segment include delivery, refuse, utility, dump, and cement trucks; transit, shuttle, and school buses; emergency vehicles, motor homes, tow trucks, among others.   These vehicles and their engines contribute approximately 15 percent of today's heavy-duty truck sector GHG emissions. 
Manufacturing of vehicles in this segment of the industry is organized in a more complex way than that of the other heavy-duty categories.  Class 2b-8 vocational vehicles are often built as a chassis with an installed engine and an installed transmission.  Both the engine and transmissions are typically manufactured by other manufacturers and the chassis manufacturer purchases and installs them.  Many of the same companies that build Class 7 and 8 tractors are also in the Class 2b-8 chassis manufacturing market. The chassis is typically then sent to a body manufacturer, which completes the vehicle by installing the appropriate feature -- such as dump bed, delivery box, or utility bucket -- onto the chassis.  Vehicle body manufacturers tend to be small businesses that specialize in specific types of bodies or specialized features.  
EPA and NHTSA proposed that in this vocational vehicle category the proposed GHG and fuel consumption standards focus on chassis manufacturers.  Chassis manufacturers play a central role in the manufacturing process, and the product they produce  -  the chassis with engine and transmission  -  includes the primary technologies that affect GHG emissions and fuel consumption.  They also constitute a much more limited group of manufacturers for purposes of developing a regulatory program.  The agencies believe that a focus on the body manufacturers would be much less practical, since they represent a much more diverse set of manufacturers, many of whom are small businesses, and the part of the vehicle that they add has a limited impact on opportunities to reduce GHG emissions and fuel consumption (given the limited role that aerodynamics plays in many types of lower speed operation typically found with vocational vehicles.)  Therefore, the agencies proposed that the standards in this vocational vehicle category would apply to the chassis manufacturers of all heavy-duty vehicles not otherwise covered by the HD pickup and van standards or Class 7 and 8 combination tractor standards discussed above.  The agencies requested comment on the proposed focus on chassis manufacturers.
Volvo commented that the EISA does not speak to the regulation of subsystems, such as incomplete vehicles, and argued that on the other hand, Section 32902(k)(2) prescribes the regulation of vehicles.  Volvo further stated that precedent for the regulation of complete vehicles exists in the light-duty fuel economy rule.  As noted above, NHTSA does not believe that EISA mandates a particular regulatory approach, but rather explicitly leaves that determination to the agency.  NHTSA also notes that its heavy-duty rule creates a new fuel efficiency program for which the light-duty program does not necessarily serve as a useful precedent for considerations of its structure.  Unlike the light-duty fuel economy program, MD/HD vehicles are produced in widely diverse stages.  Further, given the MD/HD market structure, where the complete vehicle manufacturers are numerous, diverse, and often small businesses, the regulation of complete vehicles would create unique difficulties for the application of appropriate and feasible technologies.  NHTSA also notes that this rule does not represent the first time that the agency has regulated incomplete vehicles.  Rather, incomplete vehicles have a history of regulation under the Federal Motor Vehicle Safety Standards.  For this first phase of the HD National Program, NHTSA and EPA believe that given the complexity of the manufacturing process for vocational vehicles, and given the wide range of entities that participate in that process, vehicle fuel consumption standards would be most appropriately applied to chassis manufacturers and not to body builders.  
The agencies continue to believe that regulation of the chassis manufacturers for this vocational vehicle category will achieve the maximum feasible improvement in fuel efficiency and emissions reductions.  Therefore, consistent with our proposal the final standards in this vocational vehicle category apply to the chassis manufacturers of all heavy-duty vehicles not otherwise covered by the HD pickup and van standards or Class 7 and 8 combination tractor standards discussed above. As discussed above, EPA and NHTSA have concluded that reductions in GHG emissions and fuel consumption require addressing both the vehicle and the engine.  As discussed above for Class 7 and 8 combination tractors, the agencies are each finalizing two sets of standards for Class 2b-8 vocational vehicles.  For vehicle-related emissions and fuel consumption, the agencies are adopting standards for chassis manufacturers:  EPA CO2 (g/ton-mile) standards and NHTSA fuel consumption (gal/1,000 ton-mile) standards).  While the agencies believe that a freight metric is broadly appropriate for vocational vehicles because the vocational vehicle population is dominated by freight trucks and maintain that it is appropriate for the first phase of the program, we recognize that may be less appropriate for future phases of a HD program. , Manufacturers will use GEM, the same customized vehicle simulation model used for Class 7 and 8 tractors, to determine compliance with the vocational vehicle standards.  The primary manufacturer-generated input into the GEM for this category of trucks will be a measure of tire rolling resistance, as discussed further below, because tire improvements are the primary means of vehicle improvement available at this time for vocational vehicles.  The model also assumes the use of a typical representative engine in the simulation, resulting in an overall value for CO2 emissions and one for fuel consumption. This is done for the same reason as for combination tractors.  As is the case for combination tractors, the manufacturers of the engines intended for vocational vehicles will be subject to separate engine-based standards.
Final Standards for Class 2b-8 Vocational Vehicles and their Engines
Based on our analysis and research, the agencies believe that the primary opportunity for reductions in vocational vehicle GHG emissions and fuel consumption will be through improved engine technologies and improved tire rolling resistance.  For engines, as finalized for combination tractors, EPA and NHTSA are adopting separate standards for the manufacturers of engines used in Class 2b-8 vocational vehicles.  EPA's final engine-based CO2 standards and NHTSA's final engine-based fuel consumption standards vary based on the expected weight class and usage of the truck into which the engine will be installed.  Tire rolling resistance is closely related to the weight of the vehicle.  Therefore, we are adopting vehicle-based standards for these trucks which vary according to one key attribute, GVWR.  For this initial HD rulemaking, we are adopting standards based on the same groupings of truck weight classes used for the engine standards -- light heavy-duty, medium heavy-duty, and heavy heavy-duty.  These groupings are appropriate for the final vehicle-based standards because they parallel the general divisions among key engine characteristics, as discussed in Section II.
As for the engines used in Class 7 and 8 combination tractors, we are finalizing an interim alternative engine standard for model years 2014-2016.  The need for this provision and our considerations in adopting it are the same for the engines used in vocational vehicles as they are combination tractors.  As we proposed, these alternative standards will only be available through model year 2016.
The agencies received a significant number of comments arguing that our proposed standards for vocational vehicles did not reflect all of the technologies identified in the 2010 NAS report.  The commenters encouraged the agencies to expand the program to bring in additional reductions through the use of new transmission technologies, vehicle weight reductions and hybrid drivetrains.  In general, the agencies agree with the commenters central contention that there are additional technologies available to improve the fuel efficiency of vocational vehicles.  As discussed later, we are finalizing provisions to allow new technologies to be brought into the program through the innovative technology credit program.  However, we are not finalizing standards that are premised on the use of these additional technologies because we have not been able to develop the test procedures, regulatory mechanisms and baseline performance data necessary to finalize a more comprehensive approach to controlling fuel efficiency and GHG emissions from vocational vehicles.  In concept, the agencies would need to know the baseline weight, aerodynamic performance, and transmission configuration for the wide range of vocational vehicles produced today.  We do not have this information even for relatively small portions of this market such as concrete mixers nor are we well informed regarding the potential tradeoffs to changes to vehicle utility that might exist for changes to concrete mixer designs in response to a regulation.  Absent this information and the necessary regulatory tools, we believe the standards we are finalizing for vocational vehicles represent the most appropriate standards for this segment.  We intend to address fuel consumption and GHG emissions from these vehicles in a more comprehensive manner through future regulation and look forward to working with all stakeholders on this important segment in the future.  As discussed below, we are including provisions to account for and credit the use of hybrid technology as a technology that can reduce emissions and fuel consumption.  Hybrid technology can currently be a cost-effective technology in certain specific vocational applications, and the agencies want to recognize and promote the use of this technology.  We are finalizing a mechanism whereby credits can be generated by use of other technologies not included in the compliance model.  (See Sections I.E and IV below.) 
The agencies are setting standards beginning in 2014 model year and establishing more stringent standards in 2017 model year.  Table I-3 presents EPA's final CO2 standards and NHTSA's final fuel consumption standards for chassis manufacturers of Class 2b through Class 8 vocational vehicles for the 2017 model year.  The 2017 model year standards represent a 7 to 10 percent reduction in CO2 emissions and fuel consumption over a 2010 model year vehicle.
Table I-3: Final 2017 Class 2b-8 Vocational Vehicle EPA CO2 Standards and NHTSA Fuel Consumption Standards
EPA CO2 (gram/ton-mile) Standard Effective 2017 Model Year

Light Heavy-Duty 
Class 2b-5
Medium Heavy-Duty
Class 6-7
Heavy Heavy-Duty
Class 8
CO2 Emissions
373
225
222
NHTSA Fuel Consumption (gallon per 1,000 ton-mile) Standard Effective 2017 Model Year

Light Heavy-Duty 
Class 2b-5
Medium Heavy-Duty
Class 6-7
Heavy Heavy-Duty
Class 8
Fuel Consumption
36.6
22.1
21.8
  As mentioned above for Class 7 and 8 combination tractors, EPA believes that N2O and CH4 emissions are technologically related solely to the engine, fuel, and emissions aftertreatment systems, and the agency is not aware of any influence of vehicle-based technologies on these emissions.  Therefore, for Class 2b-8 vocational vehicles, EPA's final N2O and CH4 standards cover manufacturers of the engines to be used in vocational vehicles. EPA did not propose, nor are we adopting separate vehicle-based standards for these GHGs.  As for the engines used in Class 7 and 8 tractors, we are finalizing a somewhat higher N2O and CH4 emission standards reflecting new data share with the agencies as comments on our proposal. EPA expects that manufacturers of current engine technologies will be able to comply with the final "cap" standards with little or no technological improvements; the value of the standards is that they will prevent significant increases in these emissions as alternative technologies are developed and introduced in the future.  Compliance with the final EPA engine-based CO2 standards and the final NHTSA fuel consumption standards, as well as the final EPA N2O and CH4 standards, will be determined using the appropriate EPA engine test procedure, as discussed in Section II below. 
As with the other regulatory categories of heavy-duty vehicles, EPA and NHTSA are adopting standards that apply to Class 2b-8 vocational vehicles at the time of production, and EPA is adopting standards for a specified period of time in use.  All of the standards for these trucks, as well as details about the final provisions for certification and implementation of these standards, are discussed in more detail later in this notice and in the RIA.
EPA did not propose, nor is it adopting A/C refrigerant leakage standards for Class 2b-8 vocational vehicles, primarily because of the number of entities involved in their manufacture and thus the potential for different entities besides the chassis manufacturer to be involved in the A/C system production and installation.     
What Manufacturers Are Not Covered by the Final Standards?
The NPRM proposed to temporarily defer greenhouse gas emissions and fuel consumption standards for any manufacturers of heavy-duty engines, manufacturers of combination tractors, and chassis manufacturers for vocational vehicles that meet the "small business" size criteria set by the Small Business Administration (SBA).  13 CFR 121.201 defines a small business by the maximum number of employees; for example, this is currently 1,000 for heavy-duty vehicle manufacturing and 750 for engine manufacturing.  The agencies stated that they would instead consider appropriate GHG and fuel consumption standards for these entities as part of a future regulatory action. This includes both U.S.-based and foreign small-volume heavy-duty manufacturers.  To ensure that the agencies are aware of which companies would be exempt, the agencies proposed to require that such entities submit a declaration to EPA and NHTSA containing a detailed written description of how that manufacturer qualifies as a small entity under the provisions of 13 CFR 121.201.
EPA and NHTSA were not aware of any manufacturers of HD pickups and vans that meet these criteria.  For each of the other categories and for engines, the agencies identified a small number of manufacturers that would appear to qualify as small businesses under the SBA size criterion, which were estimated to comprise a negligible percentage of the U.S. market.  Therefore, the agencies believed that deferring the standards for these companies at this time would have a negligible impact on the GHG emission reductions and fuel consumption reductions that the program would otherwise achieve.  The agencies proposed to consider appropriate GHG emissions and fuel consumption standards for these entities as part of a future regulatory action. 
The Institute for Policy Integrity (IPI) commented that the small business exemption proposed in the NPRM was based on the improper framework of whether the exemption would have a negligible impact, and did not adequately explain why the regulation of small businesses would face special compliance and administrative burdens.  IPI argued that the only proper basis for this exemption would be if the agencies could explain how these burdens create costs that exceeded the benefits of regulation.  
NHTSA believes that developing standards that are "appropriate, cost-effective, and technologically feasible" includes the authority to exempt certain manufacturers if their inclusion would work against these statutory factors.  As noted above, small businesses make up a very small percentage of the market and are estimated to have a negligible impact on the emissions and fuel consumption goals of this program.  For this first rulemaking, the application of technologies is likely to be cost-prohibitive and infeasible for many small manufacturers.  The short lead time to develop this proposal, the extremely small fuel savings and emissions contribution of these entities, and the potential need to develop a program that would be structured differently for them (which would require more time), all led to the determination that the inclusion of small businesses would not be appropriate at this time.  While NHTSA disagrees that the only analysis should be of cost versus benefits, the agency believes that this exemption is cost-benefit justified due to these considerations.  
Volvo and EMA stated that by exempting small businesses based on the definition from SBA, the rules would create a competitive advantage for small businesses over larger entities.  EMA commented that the exemption should not apply to market segments where a small business has a significant share of a particular HD market.  Volvo argued that the exempted businesses could expand their product offerings or sell vehicles on behalf of larger entities, thereby inappropriately increasing the scope of the exemption.  The agencies continue to believe that the benefits of this exemption approach outweigh the risks of adverse consequences.  The agencies anticipate that the gain a manufacturer might achieve by restructuring its practices and products to circumvent the standards in the first few years of this program will be outweighed by the costs, particularly as small businesses anticipate their potential inclusion in the next rulemaking. 
Volvo also commented that the agencies should spell out the requirements for the exemption in greater detail.  The agencies agree that this may help to clarify the process.  As suggested by Volvo, the agencies will consider affiliations to other companies and evidence of spin-offs for the purpose of circumventing the standards in determining whether a business qualifies as a small entity for this exemption.  Each declaration must be submitted in writing to EPA as prescribed in Section V below, and a manufacturer would not be considered exempt until EPA and NHTSA have made a formal determination as to their status in writing.  As the agencies gain more experience with this exemption, these clarifications may be codified in the regulatory text of a future rulemaking.
Volvo further commented that the agencies were adopting a definition of "small business" in order to avoid doing a Small Business Regulatory Enforcement Fairness Act (SBREFA) and Regulatory Flexibility Act (RFA) analysis.  The agencies would like to reiterate that they have decided not to include small businesses at this time due to the factors described above.  The discussion on an RFA analysis is laid out in Section IX(4).  
The agencies continue to believe that deferring the standards for these companies at this time will have a negligible impact on the GHG emission reductions and fuel consumption reductions that the program would otherwise achieve.  Therefore, the final rules include the small business exemption as proposed.  The specific deferral provisions are discussed more detail in Section II.
The agencies will consider appropriate GHG emissions and fuel consumption standards for these entities as part of a future regulatory action. .
Light-duty Vehicle CH4 and N2O Standards Flexibility 
After finalizing the N2O and CH4 standards for light-duty vehicles as part of the MY 2012-2016 program, some manufacturers raised concerns that they may have difficulty meeting those standards across their light-duty vehicle fleets.  In response to these concerns, as part of the heavy-duty proposal, EPA requested comments on additional options for manufacturers to comply with light-duty vehicle N2O and CH4 standards to provide additional near-term flexibility.  Commenters providing comment on this issue supported additional flexibility for manufacturers.  EPA is finalizing provisions allowing manufacturers to use CO2 credits, on a CO2-equivalent basis, to meet the N2O and CH4 standards, which is consistent with many commenters' preferred approach.  Manufacturers will have the option of using CO2 credits to meet N2O and CH4 standards on a test group basis as needed for MYs 2012-2016.
Summary of Costs and Benefits of the HD National Program
This section summarizes the projected costs and benefits of the final NHTSA fuel consumption and EPA GHG emissions standards.  These projections helped to inform the agencies' choices among the alternatives considered and provide further confirmation that the final standards are an appropriate choice within the spectrum of choices allowable under the agencies' respective statutory criteria.  NHTSA and EPA have used common projected costs and benefits as the bases for our respective standards.
The agencies have analyzed in detail the projected costs and benefits of the final GHG and fuel consumption standards.  Table I-4 shows estimated lifetime discounted costs, benefits and net benefits for all heavy-duty vehicles projected to be sold in model years 2014-2018.  These figures depend on estimated values for the social cost of carbon (SCC), as described in Section VIII.G.  The costs and benefits summarized are slightly higher than at proposal, reflecting the use of 2009 (versus 2008) dollars, some minor changes to our cost estimates in response to comments, and a change to the 2011 Annual Energy Outlook (AEO) estimate of economic growth and future fuel prices.  In aggregate, these changes lead to an increased estimate of the net benefits of the final action compared to the proposal.
Table I-4: Estimated Lifetime Discounted Costs, Benefits, and Net Benefits for 2014-2018 Model Year HD Vehicles assuming the Model Average, 3% Discount Rate SCC Value[a,b] (2009 dollars)

$billions
3% Discount Rate
Program Costs
$8.9
Fuel Savings
$51
Benefits
$7.4
Net Benefits
$49
7% Discount Rate
Program Costs 
$8.9
Fuel Savings
$35
Benefits 
$6.7
Net Benefits 
$33
      Notes:
      [a] The agencies estimated the benefits associated with four different values of a one ton CO2 reduction (model average at 2.5% discount rate, 3%, and 5%; 95[th] percentile at 3%), which each increase over time.  For the purposes of this overview presentation of estimated costs and benefits, however, we are showing the benefits associated with the marginal value deemed to be central by the interagency working group on this topic:  the model average at 3% discount rate, in 2009 dollars.  Section VIII.F provides a complete list of values for the 4 estimates.
      [b] Note that net present value of reduced GHG emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to Section VIII.F for more detail.
Table I-5 shows the estimated lifetime reductions in CO2 emissions (in million metric tons (MMT)) and fuel consumption for all heavy-duty vehicles sold in the model years 2014-2018.  The values in Table I-5 are projected lifetime totals for each model year and are not discounted.  The two agencies' standards together comprise the HD National Program, and the agencies' respective GHG emissions and fuel consumption standards, jointly, are the source of the benefits and costs of the HD National Program. 
Table I-5:  Estimated Lifetime Reductions in Fuel Consumption and CO2 Emissions for 2014-2018 Model Year HD Vehicles
All Heavy-Duty  Vehicles
2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Total
Fuel (billion gallons)
4.1 
3.6 
3.6 
5.1 
5.9 
22.4
Fuel (billion barrels)
0.10
0.09
0.09
0.12
0.14
0.5
CO2  (MMT)[a]
50.8
45.4
44.7
63.6
72.5
277
Note:  [a] Includes upstream and downstream CO2 reductions.
Table I-6 shows the estimated lifetime discounted benefits for all heavy-duty vehicles sold in model years 2014-2018.  Although the agencies estimated the benefits associated with four different values of a one ton CO2 reduction ($5, $22, $36, $66), for the purposes of this overview presentation of estimated benefits the agencies are showing the benefits associated with one of these marginal values, $22 per ton of CO2, in 2009 dollars and 2010 emissions.  Table I-6 presents benefits based on the $22 value.  Section VIII.F presents the four marginal values used to estimate monetized benefits of CO2 reductions and Section VIII presents the program benefits using each of the four marginal values, which represent only a partial accounting of total benefits due to omitted climate change impacts and other factors that are not readily monetized.  The values in the table are discounted values for each model year of vehicles throughout their projected lifetimes.  The analysis includes other economic impacts such as fuel savings, energy security, and other externalities such as impacts on accidents, congestion and noise.  However, the model year lifetime analysis supporting the program omits other impacts such as benefits related to non-GHG emission reductions.  The lifetime discounted benefits are shown for one of four different SCC values considered by EPA and NHTSA.  The values in Table I-6 do not include costs associated with new technology required to meet the GHG and fuel consumption standards.
Table I-6: Estimated Lifetime Discounted Benefits for 2014-2018 Model Year HD Vehicles Assuming the Model Average, 3% Discount Rate SCC Valuea,b,c (billions of 2009 dollars)
Discount Rate
                                  Model Year

2014
2015
2016
2017
2018
Total
3%
$10.9
$9.6
$9.3
$13.3
$15.1
$58
7%
$8.2
$7.1
$6.7
$9.3
$10.2
$42
  Notes:
  [a] The analysis includes impacts such as the economic value of reduced fuel consumption and accompanying climate-related economic benefits from reducing emissions of CO2 (but not other GHGs), and reductions in energy security externalities caused by U.S. petroleum consumption and imports.  The analysis also includes economic impacts stemming from additional heavy-duty vehicle use, such as the economic damages caused by accidents, congestion and noise.
  [b] Note that net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to Section VIII.F for more detail, including a list of all four SCC values, which increase over time.
  [c] Benefits in this table include fuel savings. 
Table I-7 shows the agencies' estimated lifetime fuel savings, lifetime CO2 emission reductions, and the monetized net present values of those fuel savings and CO2 emission reductions.  The gallons of fuel and CO2 emission reductions are projected lifetime values for all vehicles sold in the model years 2014-2018.  The estimated fuel savings in billions of barrels and the GHG reductions in million metric tons of CO2 shown in Table I-7 are totals for the five model years throughout their projected lifetime and are not discounted.  The monetized values shown in Table I-7 are the summed values of the discounted monetized-fuel consumption and monetized-CO2 reductions for the five model years 2014-2018 throughout their lifetimes.  The monetized values in Table I-7 reflect both a 3 percent and a 7 percent discount rate as noted.
Table I-7: Estimated Lifetime Reductions and Associated Discounted Monetized Benefits for 2014-2018 Model Year HD Vehicles (monetized values in 2009 dollars)

Amount
$ value (billions)
Fuel Consumption Reductions
0.5 billion barrels 
$50.8, 3% discount rate $34.8, 7% discount rate
CO2 Emission Reductions[a] 
Valued assuming $22/ton CO2 in 2010
277 MMT CO2
$5.8[b]
 Notes:
 [a] Includes both upstream and downstream CO2 emission reductions.
 [b] Note that net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to Section VIII.F for more detail.  
Table I-8 shows the estimated incremental and total technology outlays for all heavy-duty vehicles for each of the model years 2014-2018.  The technology outlays shown in Table I-8 are for the industry as a whole and do not account for fuel savings associated with the program.
Table I-8: Estimated Incremental Technology Outlays for 2014-2018 Model Year HD Vehicles (billions of 2009 dollars)

2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Total
All Heavy-Duty Vehicles
$1.7
$1.5
$1.6
$1.8
$2.3
$8.9
Table I-9 shows EPA's estimated incremental cost increase of the average new heavy-duty vehicle for each model year 2014-2018.  The values shown are incremental to a baseline vehicle and are not cumulative.  
Table I-9: Estimated Incremental Increase in Average Cost for 2014-2018 Model Year HD Vehicles (2009 dollars per unit)

2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Combination Tractors 
$6,019
$5,871
$5,677
$6,413
$6,215
HD Pickups &Vans
$232
$302
$591
$885
$1,473
Vocational Vehicles
$414
$408
$457
$450
$419

Program Flexibilities
For each of the heavy-duty vehicle and heavy-duty engine categories for which we are adopting respective standards, EPA and NHTSA are also finalizing provisions designed to give manufacturers a degree of flexibility in complying with the standards.  These final provisions have enabled the agencies to consider overall standards that are more stringent and that will become effective sooner than we could consider with a more rigid program, one in which all of a manufacturer's similar vehicles or engines would be required to achieve the same emissions or fuel consumption levels, and at the same time.   We believe that incorporating carefully structured regulatory flexibility provisions into the overall program is an important way to achieve each agency's goals for the program.  
NHTSA's and EPA's  flexibility provisions are essentially identical to each other in structure and function.  For combination tractor and vocational vehicle categories and for heavy-duty engines, we are finalizing four primary types of flexibility: averaging, banking, and trading (ABT) provisions; early credits; advanced technology credits (including hybrid powertrains); and innovative technology credit provisions.  The final ABT provisions are patterned on existing EPA ABT programs and will allow a vehicle manufacturer to reduce CO2 emission and fuel consumption levels further than the level of the standard for one or more vehicles to generate ABT credits.  The manufacturer can use those credits to offset higher emission or fuel consumption levels in other similar vehicles, "bank" the credits for later use, or "trade" the credits to another manufacturer.  We are finalizing similar ABT provisions for manufacturers of heavy-duty engines.  For HD pickups and vans, we are finalizing a fleet averaging system very similar to the light-duty GHG and CAFE fleet averaging system.
At proposal, we restricted the use of the ABT provisions of the program to vehicles or engines within the same regulatory subcategory.  This meant that credit exchanges could only happen between similar vehicles meeting the very same standards.  We proposed this approach for two reasons.  First, we were concerned about a level playing field between different manufacturers who may not participate equally in the various truck and engine markets covered in the regulation.  Second, we were concerned about the uncertainties inherent in credit calculations that are based on projections of lifetime emissions for different vehicles in wholly different vehicle markets.  In response to comments, we have revised our ABT provisions to provide greater flexibility while continuing to provide assurance that the projected reductions in fuel consumption and GHG emissions will be achieved.  We are relaxing the restriction on averaging, banking, and trading of credits between the various regulatory subcategories, by defining three HD vehicle averaging sets:  Light Heavy-Duty (Classes 2b-5); Medium Heavy-Duty (Class 6-7); and Heavy Heavy-Duty (Class 8). This allows the use of credits between vehicles within the same weight class.  This means that a Class 8 day cab tractor can exchange credits with a Class 8 high roof sleeper tractor but not with a smaller Class 7 tractor.  Also, a Class 8 vocational vehicle can exchange credits with a Class 8 tractor.  We are adopting these revisions based on comments from the regulated industry that convinced us these changes would allow the broadest trading possible while maintaining a level playing field among the various market segments.  By restricting trading to within the same vehicle weight categories as EPA's existing criteria pollutant program, we are convinced that the lifetime vehicle performance between different vehicles within these defined categories will be similar enough for us to be confident the estimated credit calculations will fairly ensure the expected fuel consumption and GHG reductions.  
The engine ABT provisions are also changed from the proposal and now are the same as the existing criteria pollutant emission provisions.  The agencies have broadened the averaging sets to include both FTP-certified and SET-certified engines in the same averaging set.  For example, a SET-certified engine intended for a Class 8 tractor can exchange credits with a FTP-certified engine intended for a Class 8 vocational vehicle.  
As noted above, beyond ABT, the other primary flexibility provisions in this program involve opportunities to generate early credits, advanced technology credits (including hybrid powertrains), and innovative technology credits.  For the early credits and advanced technology credits, the agencies sought comment on the appropriateness of providing a 1.5x multiplier as an incentive for their use.  We received a number of comments supporting the idea of a credit multiplier, arguing it was an appropriate means to incentivize the early compliance and advanced technologies the agencies sought.  We received other comments suggesting a multiplier was unnecessary.  After considering the comments, the agencies have decided to finalize a 1.5x multiplier consistent with our request for comments.  We believe that given the very short lead time of the program and the nascent nature of the advanced technologies identified in the proposal, that a 1.5x multiplier is an effective means to bring technology forward sooner than would otherwise occur.    
For other technologies which can reduce CO2 and fuel consumption, but for which there do not yet exist established methods for quantifying reductions, the agencies still wish to encourage the development of such innovative technologies, and are therefore adopting special "innovative technology" credits.  These innovative technology credits will apply to technologies that are shown to produce emission and fuel consumption reductions that are not adequately recognized on the current test procedures and that are not yet in widespread use.  Manufacturers will need to quantify the reductions in fuel consumption and CO2 emissions that the technology is expected to achieve, above and beyond those achieved on the existing test procedures.  As with ABT, the use of innovative technology credits will only be allowed among vehicles and engines of the same defined averaging set, as described above. .  
A detailed discussion of each agency's ABT, early credit, advanced technology, and innovative technology provisions for each regulatory category of heavy-duty vehicles and engines is found in Section IV below.
EPA and NHTSA Statutory Authorities
EPA Authority
Title II of the CAA provides for comprehensive regulation of mobile sources, authorizing EPA to regulate emissions of air pollutants from all mobile source categories.  When acting under Title II of the CAA, EPA considers such issues as technology effectiveness, its cost (both per vehicle, per manufacturer, and per consumer), the lead time necessary to implement the technology, and based on this the feasibility and practicability of potential standards; the impacts of potential standards on emissions reductions of both GHGs and non-GHGs; the impacts of standards on oil conservation and energy security; the impacts of standards on fuel savings by customers; the impacts of standards on the truck industry; other energy impacts; as well as other relevant factors such as impacts on safety. 
This final action implements a specific provision from Title II, section 202(a).  Section 202(a)(1) of the CAA states that "the Administrator shall by regulation prescribe (and from time to time revise)...standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles ..., which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare."  With EPA's December 2009 final findings that certain greenhouse gases may reasonably be anticipated to endanger public health and welfare and that emissions of GHGs from section 202 (a) sources cause or contribute to that endangerment, section 202(a) requires EPA to issue standards applicable to emissions of those pollutants from new motor vehicles.
Any standards under CAA section 202(a)(1) "shall be applicable to such vehicles ... for their useful life."  Emission standards set by the EPA under CAA section 202(a)(1) are technology-based, as the levels chosen must be premised on a finding of technological feasibility.  Thus, standards promulgated under CAA section 202(a) are to take effect only "after providing such period as the Administrator finds necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period" (section 202(a)(2); see also NRDC v. EPA, 655 F. 2d 318, 322 (D.C. Cir. 1981)).  EPA is afforded considerable discretion under section 202(a) when assessing issues of technical feasibility and availability of lead time to implement new technology.  Such determinations are "subject to the restraints of reasonableness", which "does not open the door to `crystal ball' inquiry."  NRDC, 655 F. 2d at 328, quoting International Harvester Co. v. Ruckelshaus, 478 F. 2d 615, 629 (D.C. Cir. 1973).  However, "EPA is not obliged to provide detailed solutions to every engineering problem posed in the perfection of the trap-oxidizer.  In the absence of theoretical objections to the technology, the agency need only identify the major steps necessary for development of the device, and give plausible reasons for its belief that the industry will be able to solve those problems in the time remaining.  The EPA is not required to rebut all speculation that unspecified factors may hinder `real world' emission control."  NRDC, 655 F. 2d at 333-34.  In developing such technology-based standards, EPA has the discretion to consider different standards for appropriate groupings of vehicles ("class or classes of new motor 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 CAA).  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 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 (D.C. 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 (70 FR 69664 and 69676, November 17, 2005). 
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 the agencies 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).
EPA 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 Heavy-duty Federal Test Procedure (Heavy-duty FTP) and the Supplemental Engine Test (SET) 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)).  
EPA established the Light-duty FTP for emissions measurement in the early 1970s.  In 1976, in response to the Energy Policy and Conservation Act, EPA extended the use of the Light-duty FTP to fuel economy measurement (See 49 U.S.C. 32904(c)).  EPA can determine fuel efficiency of a vehicle by measuring the amount of CO2 and all other carbon compounds (e.g., total hydrocarbons and carbon monoxide (CO)), and then, by mass balance, calculating the amount of fuel consumed.
EPA Enforcement Authority
Section 207 of the CAA grants EPA broad authority to require manufacturers to remedy vehicles if EPA determines there are a substantial number of noncomplying vehicles.  In addition, section 205 of the CAA authorizes EPA to assess penalties of up to $37,500 per vehicle for violations of various prohibited acts specified in the CAA. In determining the appropriate penalty, EPA must consider a variety of factors such as the gravity of the violation, the economic impact of the violation, the violator's history of compliance, and "such other matters as justice may require."
NHTSA Authority
EISA authorizes NHTSA to create a fuel efficiency improvement program for "commercial medium- and heavy-duty on-highway vehicles and work trucks" by rulemaking, which is to include standards, test methods, measurement metrics, and enforcement protocols. See 49 U.S.C. 32902(k)(2).  Congress directed that the standards, test methods, measurement metrics, and compliance and enforcement protocols be "appropriate, cost-effective, and technologically feasible" for the vehicles to be regulated, while achieving the "maximum feasible improvement" in fuel efficiency.  
Since this is the first rulemaking that NHTSA has conducted under 49 U.S.C. 32902(k)(2), the agency interpreted these elements and factors in the context of setting standards, choosing metrics, and determining test methods and compliance/enforcement mechanisms.  Congress also gave NHTSA the authority to set separate standards for different classes of these vehicles, but required that all standards adopted provide not less than four full model years of regulatory lead-time and three full model years of regulatory stability.
In EISA, Congress required NHTSA to prescribe separate average fuel economy standards for passenger cars and light trucks in accordance with the provisions in 49 U.S.C. Section 32902(b), and to prescribe standards for work trucks and commercial medium- and heavy-duty vehicles in accordance with the provisions in 49 U.S.C. 32902(k).  See 49 U.S.C. Section 32902(b)(1).  Congress also added in EISA a requirement that NHTSA shall issue regulations prescribing fuel economy standards for at least 1, but not more than 5, model years.  See 49 U.S.C. Section 32902(b)(3)(B).  For purposes of the fuel efficiency standards that the agency is proposing for HD vehicles and engines, the NPRM proposed that interpretation of the statute that the 5-year maximum limit did not apply to standards promulgated in accordance with 49 U.S.C. Section 32902(k), given the language in Section 32902(b)(1).  Based on this interpretation, NHTSA proposed that the standards ultimately finalized for HD vehicles and engines would remain in effect indefinitely at their 2018 or 2019 model year levels until amended by a future rulemaking action.  In any future rulemaking action to amend the standards, NHTSA would ensure not less than four full model years of regulatory lead-time and three full model years of regulatory stability.  NHTSA sought comment on its interpretation of EISA.
Robert Bosch LLC (Bosch) commented that the absence of an expiration date for the standards proposed in the NPRM could violate 49 U.S.C. Section 32902, which it interpreted as requiring the MD/HD program to have standards that expire in five years. Section 32902(k)(3), which lays out the requirements for the MD/HD program, specifies the minimum regulatory lead and stability times, as described above, but does not specify a maximum duration period. In contrast, Section 32902(b)(3)(B) lays out the minimum and maximum durations of standards to be established in a rulemaking for the light-duty program, but prescribes no minimum lead or stability time.  Bosch argued that as 49 U.S.C. Section 32902(k)(3) does not require a maximum duration period, Congress intended that NHTSA take the maximum duration period specified for the light-duty program in Section 32902(b)(3)(B), five years, and apply it to Section 32902(k)(3).  Bosch also argued, however, that the minimum duration period should not be carried over from the light-duty to the heavy-duty section, as a minimum duration period for HD was specified in Section 32902(k)(3).
NHTSA has revisited this issue and continues to believe that it is reasonable to assume that if Congress intended for the HD/MD regulatory program to be limited by the timeline prescribed in Subsection (b)(3)(B), it would have either mentioned HD/MD vehicles in that subsection or included the same timeline in Subsection (k).  In addition, in order for Subsection (b)(3)(B) to be interpreted to apply to Subsection (k), the agency would need to give less than full weight to the earlier phrase in the statute directing the Secretary to prescribe standards for "work trucks and commercial medium-duty or heavy-duty on-highway vehicles in accordance with Subsection (k)."  49 U.S.C. 32902(b)(1)(C).  Instead, this direction would need to be read to mean "in accordance with Subsection (k) and the remainder of Subsection (b)." NHTSA believes this interpretation would be inappropriate.  Interpreting "in accordance with Subsection (k)" to mean something indistinct from "in accordance with this Subsection" goes against the canon that statutes should not be interpreted in a way that "render[s] language superfluous."  Dobrova v. Holder, 607 F.3d 297, 302 (2d Cir. 2010), quoting Mendez v. Holder, 566 F. 3d 316, 321-22 (2d Cir. 2009).  Based on this reasoning, NHTSA believes the more reasonable and appropriate approach is reflected in the proposal, and the final rules therefore follow this approach.  
Another commenter, CBD, expressed concern that lack of an expiration date meant that the standards would remain indefinitely, thus forgoing the possibility of increased stringency in the future.  CBD argued that this violated NHTSA's statutory duty to set maximum feasible standards.  NHTSA disagrees that the indefinite duration of the standards in this rule would prevent the agency from setting future standards at the maximum feasible level in future rulemakings.  The absence of an expiration date for these standards should not be interpreted to mean that there will be no future rulemakings to establish new MD/HD fuel efficiency standards for MYs 2019 and beyond  -  the agencies have already previewed the possibility of such a rulemaking in other parts of this final rule preamble.  Therefore, NHTSA believes this concern is unnecessary. 
NHTSA Testing Authority
49 U.S.C. Section 32902(k)(2) states that NHTSA must adopt and implement appropriate, cost-effective, and technologically feasible test methods and measurement metrics as part of the fuel efficiency improvement program.  
NHTSA Enforcement Authority
Overview
The NPRM proposed a compliance and enforcement program that included civil penalties for violations of the fuel efficiency standards.  49 U.S.C. 32902(k)(2) states that NHTSA must adopt and implement appropriate, cost-effective, and technologically feasible compliance and enforcement protocols for the fuel efficiency improvement program.  Congress did not speak directly to the compliance and enforcement protocols it envisioned.  Instead, it left the matter generally to the Secretary.  Congress' approach is unlike CAFE enforcement for passenger cars and light trucks, where Congress specified a program where a manufacturer either complies with standards or pays civil penalties.  But Congress did not specify in 49 U.S.C. 32902(k) what it precisely meant in directing NHTSA to develop "compliance and enforcement protocols."  
The statute is silent with respect to how "protocol" should be interpreted.  The term "protocol" is imprecise.  For example, in a case interpreting section 301(c)(2) of the Comprehensive Environmental Response, Compensation, and Liability Act (CERCLA), the D.C. Circuit noted that the word "protocols" has many definitions that are not much help.  Kennecott Utah Copper Corp., Inc. v. U.S. Dept. of Interior, 88 F.3d. 1191, 1216 (D.C. Cir. 1996).  Section 301(c)(2) of CERCLA prescribed the creation of two types of procedures for conducting natural resources damages assessments.  The regulations were to specify (a) "standard procedures for simplified assessments requiring minimal field observation" (the "Type A" rules), and (b) "alternative protocols for conducting assessments in individual cases" (the "Type B" rules).  The court upheld the challenged provisions, which were a part of a set of rules establishing a step-by-step procedure to evaluate options based on certain criteria, and to make a decision and document the results.
Taking the considerations above into account, including Congress' instructions to adopt and implement compliance and enforcement protocols, and the Secretary's authority to formulate policy and make rules to fill gaps left, implicitly or explicitly, by Congress, the agency interpreted "protocol" in the context of EISA as authorizing the agency to determine both whether manufacturers have complied with the standards, and to establish the enforcement mechanisms and decision criteria for non-compliance. Therefore, NHTSA interpreted its authority to develop an enforcement program to include the authority to determine and assess civil penalties for non-compliance.
Several commenters disagreed with this interpretation.  Volvo commented that the penalties proposed by NHTSA exceeded the authority granted to the agency by Congress, and that the fact that Congress did not adopt an entirely new statute for the HD program should be interpreted to mean that provisions adopted for the light-duty program should apply to the HD program as well.  Daimler argued that it was likely that EISA did not give NHTSA the authority to assess civil penalties, and Navistar argued that NHTSA could not have the authority as Congress did not expressly grant it.
NHTSA continues to believe that it is reasonable to interpret "compliance and enforcement protocols" to include civil penalties.  Where a statute does not specify an approach, the discretion to do so is left to the agency.  When Congress has "explicitly left a gap for an agency to fill, there is an express delegation of authority to the agency to elucidate a specific provision of the statute by regulation."  United States. v. Mead, 533 U.S. 218, 227 (2001), quoting Chevron v. NRDC, 467 U.S. 837, 843-44 (1984).  The delegation of authority may be implicit rather than express.  Id. at 229.  NHTSA believes it would be unreasonable to assume that Congress intended to create a hollow regulatory program without a mechanism for effective enforcement.  Further, interpreting "enforcement protocols" to mean not more than "compliance protocols" would go against the canon noted above that statutes should not be interpreted in a way that "render[s] language superfluous."  Dobrova v. Holder, 607 F.3d 297, 302 (2d Cir. 2010), quoting Mendez v. Holder 566 F. 3d 316, 321-22 (2d Cir. 2009).
Further, NHTSA believes that Congress would have anticipated that compliance and enforcement protocols would include civil penalties for the HD sector, given the long precedent of civil penalties for the light-duty sector.  The agency disagrees with the argument that the HD program would have appeared in a wholly separate statute if Congress had not intended the penalty program for light-duty to apply to it. The inclusion of the MD/HD program in Title 329 does not mean that Congress intended for the boundaries and differences between the separate sections to be ignored.  Rather, this argument leads to the opposite conclusion that the fact that Congress created a new section for the HD program, instead of simply amending the existing light-duty program to include "work trucks and other vehicles" in addition to automobiles, means the agency should assume that Congress acted intentionally when it created two wholly separate programs and respect their distinctions.
Therefore, consistent with the statutory interpretation proposed in the NPRM, the final rule includes penalties for non-compliance with the fuel efficiency standards.  
Penalty Levels
NHTSA proposed to adopt penalty levels equal to those in EPA's existing heavy-duty program, in order to provide adequate deterrence as well as consistency with the GHG regulation.  The proposed maximum penalty levels were $37,500.00 per vehicle or engine.  
Several manufacturers commented that the penalty levels should be limited to those mandated in the light-duty program. Volvo and Daimler argued that Congress intended lower penalties for the HD program than were proposed in the NPRM, because they believed that Congress had expressly or implicitly intended for the HD program to be included in the penalty calculation of Section 32912(b).  That section prescribes penalty levels for violators under Section 32902 of "$5 multiplied by each .1 of a mile a gallon by which the applicable average fuel economy standard under that section exceeds the average fuel economy," calculated and applied to automobiles. Volvo further argued that NHTSA was relying upon the CAA as the statutory basis for the penalty levels. 
NHTSA recognizes that Section 329 contains a detailed penalty scheme, for light-duty vehicle CAFE standards.  However, Section 32902(k)(2) explicitly directs NHTSA to "adopt and implement appropriate test methods, measurement metrics, fuel economy standards, and compliance and enforcement protocols," in the creation of the new HD program.  NHTSA continues to believe that this broad Congressional mandate should be interpreted based on a plain text reading, which includes the authority to determine compliance and enforcement protocols that will be effective and appropriate for this new sector of regulation.  NHTSA also believes that reading Section 32912 to apply to the new HD program would contradict Congress' broad mandate for the agency to establish new measurement metrics and a compliance and enforcement program.  Further, interpreting the requirement to create "enforcement protocols" for HD vehicles to mean that NHTSA should rely on the enforcement provisions for light-duty vehicles would go against the canon noted above that statutes should not be interpreted in a way that "render[s] language superfluous."  Dobrova v. Holder, 607 F.3d 297, 302 (2d Cir. 2010), quoting Mendez v. Holder 566 F. 3d 316, 321-22 (2d Cir. 2009).
NHTSA believes that Section 32912 does not apply to the new HD program for several other reasons.  First, this section uses a fuel economy metric, miles/gallon, while the HD program is built around a fuel consumption metric, per the requirement to develop a "fuel efficiency improvement program" and the agencies' conclusion, supported by NAS, that a fuel consumption metric is a much more reasonable choice than a fuel economy metric for HD vehicles given their usage as work vehicles.  Second, this section specifies a calculation for automobiles, a vehicle class which is confined to the light-duty rule.  In addition, the HD program prescribes fuel consumption standards, not average fuel economy standards.    
Finally, NHTSA believes that if Congress had intended for a pre-determined penalty scheme to apply to the new HD program, it would have been specific.  Instead, Congress explicitly directed the agency to develop a new measurement, compliance, and enforcement scheme.  Consistent with the statutory interpretation of the duration of the standards, NHTSA believes that if Congress intended for particular penalty levels to be used in 32902(k)(3), it would have either included a reference to those levels or included a reference in 32912 to the vehicles and metrics regulated by 32902(k)(3).  See U.S. v. United States, 464 U.S. 16, 23 (1983), quoting United States. v. Wong Kim Bo, 472 F.2d 720, 722 (5th Cir 1972) ("[W]here Congress includes particular language in one section of a statute but omits it in another section of the same Act, it is generally presumed that Congress acts intentionally and purposely in the disparate inclusion or exclusion.") 
Therefore, the final rule retains the maximum penalty level proposed in the NPRM.  
Future HD GHG and Fuel Consumption Rulemakings
This final action represents a first regulatory step by NHTSA and EPA to address the multi-faceted challenges of reducing fuel use and greenhouse gas emissions from these vehicles.  By focusing on existing technologies and well-developed regulatory tools, the agencies are able to adopt rules that we believe will produce real and important reductions in GHG emissions and fuel consumption within only a few years.  Within the context of this regulatory timeframe, our program is very aggressive - with limited lead time compared to historic heavy-duty regulations - but pragmatic in the context of technologies that are available. 
While we are now only finalizing this first step, it is worthwhile to consider how the next regulatory step may be designed.  Technologies such as hybrid drivetrains, advanced bottoming cycle engines, and full electric vehicles are promoted in this first step through incentive concepts as discussed in Section IV, but we believe that these advanced technologies will not be necessary to meet the final standards. Today's standards are premised on the use of existing technologies given the short lead time, as discussed in Section III, below.  When we begin work to develop a possible next set of regulatory standards, the agencies expect these advanced technologies to be an important part of the regulatory program and will consider them in setting the stringency of any standards beyond the 2018 model year.
We will not only consider the progress of technology in our future regulatory efforts, but the agencies are also committed to fully considering a range of regulatory approaches.  To more completely capture the complex interactions of the total vehicle and the potential to reduce fuel consumption and GHG emissions through the optimization of those interactions may require a more sophisticated approach to vehicle testing than we are adopting today for the largest heavy-duty vehicles.  In future regulations, the agencies expect to fully evaluate the potential to expand the use of vehicle compliance models to reflect engine and drivetrain performance.  Similarly, we intend to consider the potential for complete vehicle testing using a chassis dynamometer, not only as a means for compliance, but also as a complementary tool for the development of more complex vehicle modeling approaches.  In considering these more comprehensive regulatory approaches, the agencies will also reevaluate whether separate regulation of trucks and engines remains necessary.
In addition to technology and test procedures, vehicle and engine drive cycles are an important part of the overall approach to evaluating and improving vehicle performance.  EPA, working through the WP.29 Global Technical Regulation process, has actively participated in the development of a new World Harmonized Duty Cycle for heavy-duty engines.  EPA is committed to bringing forward these new procedures as part of our overall comprehensive approach for controlling criteria pollutant and GHG emissions.  However, we believe the important issues and technical work related to setting new criteria pollutant emissions standards appropriate for the World Harmonized Duty Cycle are significant and beyond the scope of this rulemaking.  Therefore, the agencies are not adopting these test procedures in this action, but we are ready to work with interested stakeholders to adopt these procedures in a future action.
As with this program, our future efforts will be based on collaborative outreach with the stakeholder community and will be focused on a program that delivers on our energy security and environmental goals without restricting the industry's ability to produce a very diverse range of vehicles serving a wide range of needs.

Final GHG and Fuel Consumption Standards for Heavy-duty Engines and Vehicles
This section describes the standards and implementation dates that the agencies are finalizing for the three categories of heavy-duty vehicles and engines.  The agencies have performed a technology analysis to determine the level of standards that we believe would be appropriate, cost-effective, and feasible in the lead time provided.  This analysis, described in Section III and in more detail in the RIA Chapter 2, considered for each of the regulatory categories:
the level of technology that is incorporated in current new engines and trucks, 
the available data on corresponding CO2 emissions and fuel consumption for these engines and vehicles, 
technologies that would reduce CO2 emissions and fuel consumption and that are judged to be feasible and appropriate for these vehicles and engines through the 2018 model year, 
the effectiveness and cost of these technologies, 
projections of future U.S. sales for trucks and engines, and 
forecasts of manufacturers' product redesign schedules.
 
What Vehicles Would Be Affected?
EPA and NHTSA are finalizing standards for heavy-duty engines and also for what we refer to generally as "heavy-duty vehicles."  As noted in Section I, for purposes of this preamble and rules,  the term "heavy-duty or "HD" applies to all highway vehicles and engines that are not regulated by the light-duty vehicle, light-duty truck and medium-duty passenger vehicle greenhouse gas and CAFE standards issued for MYs 2012-2016.  Thus, in this notice, unless specified otherwise, the heavy-duty category incorporates all vehicles rated with GVWR greater than 8,500 pounds, and the engines that power these vehicles, except for MDPVs.  The CAA defines heavy-duty vehicles as trucks, buses or other motor vehicles with GVWR exceeding 6,000 pounds.  See CAA section 202(b)(3).  In the context of the CAA, the term HD as used in these final rules thus refers to a subset of these vehicles and engines. EISA section 103(a)(3) defines a `commercial medium- and heavy-duty on-highway vehicle' as an on-highway vehicle with GVWR of 10,000 pounds or more.  EISA section 103(a)(6) defines a `work truck' as a vehicle that is rated at between 8,500 and 10,000 pounds gross vehicle weight and is not a medium-duty passenger vehicle.  Therefore, the term "heavy-duty vehicles" in this rulemaking refers to both work trucks and commercial medium- and heavy-duty on-highway vehicles as defined by EISA.  Heavy-duty engines affected by the  standards are those that are installed in commercial medium- and heavy-duty vehicles, except for the engines installed in vehicles certified to a complete vehicle emissions standard based on a chassis test, which would be addressed as a part of those complete vehicles, and except for engines used exclusively for stationary power when the vehicle is parked.  The agencies' scope is the same with the exception of recreational vehicles (or motor homes), as discussed above.  The standards that EPA is finalizing today cover recreational on-highway vehicles, while NHTSA is limiting their scope to not include these vehicles.
EPA and NHTSA are finalizing standards for each of the following categories, which together comprise all heavy-duty vehicles and all engines used in such vehicles. In order to most appropriately regulate the broad range of heavy-duty vehicles and engines, the agencies are setting separate engine and vehicle standards for the combination tractors , Class 2b through 8 vocational vehicles, and the engines installed in them.  The engine standards and test procedures for engines installed in the tractors and vocational vehicles are discussed within the applicable vehicle sections.  The agencies are establishing standards for heavy-duty pickups and vans whereby the entire vehicle is regulated  -  there are no separate engine standards.
As discussed in Section IX, the agencies are not adopting GHG emission and fuel consumption standards for trailers at this time.  In addition, the agencies are not adopting standards at this time for engine, chassis, and vehicle manufacturers which are small businesses (as defined by the Small Business Administration).  More detailed discussion of each regulatory category is included in the subsequent sections below.
Class 7 and 8 Combination Tractors
EPA is finalizing CO2 standards and NHTSA is finalizing fuel consumption standards for new Class 7 and 8 combination tractors.  The standards are for the tractor cab, with a separate standard for the engine that is installed in the tractor.  Together these standards would achieve reductions up to 23 percent from tractors.  As discussed below, EPA is finalizing its proposal to adopt the existing useful life definitions for Class 7 and 8 tractors and the heavy-duty engines installed in them.  NHTSA is finalizing revised fuel consumption standards for tractors, and finalizing as proposed engine standards for heavy-duty engines in Class 7 and 8 tractors.  The agencies' analyses, as discussed briefly below and in more detail later in this preamble and in the RIA Chapter 2, show that these standards are appropriate and feasible under each agency's respective statutory authorities.  
EPA is also finalizing standards to control N2O, CH4, and HFC emissions from Class 7 and 8 combination tractors.  The final heavy-duty engine standards for both N2O and CH4 and details of the standard are included in the discussion in Section II.E.1.b and II.E.2.b, respectively.  The final air conditioning leakage standards applying to tractor manufacturers to address HFC emissions are discussed in Section II.E.5. 
The agencies are finalizing CO2 emissions and fuel consumption standards for the combination tractors that reflect reductions that can be achieved through improvements in the tractor (such as aerodynamics), tires, and other vehicle systems.  The agencies are also finalizing heavy-duty engine standards for CO2 emissions and fuel consumption that reflect technological improvements in combustion and overall engine efficiency.  
The agencies have analyzed the feasibility of achieving the CO2 and fuel consumption standards, and have identified means of achieving the standards that are technically feasible in the lead time afforded, economically practicable and cost-effective.  EPA and NHTSA present the estimated costs and benefits of the standards in Section III.  In developing the final rules, the agencies have evaluated the kinds of technologies that could be utilized by engine and tractor manufacturers, as well as the associated costs for the industry and fuel savings for the consumer and the magnitude of the CO2 and fuel savings that may be achieved.
The agencies received comments from multiple stakeholders regarding the definition and classification of "combination tractors."  The commenters raised three key issues.  First, EMA/TMA, Navistar and DTNA requested that both agencies use the same definition for "tractor" or "truck tractor" in the final rules. EPA proposed a definition for "tractor" § 1037.801 as:
      Tractor means a vehicle capable of pulling trailers that is not intended to carry significant cargo other than cargo in the trailer, or any other vehicle intended for the primary purpose of pulling a trailer. For purposes of this definition, the term ``cargo'' includes permanently attached equipment such as fire-fighting equipment.  
(1) The following vehicles are tractors: 
            (i) Any vehicle sold to an ultimate purchaser with a fifth wheel coupling installed.
            (ii) Any vehicle sold to an ultimate purchaser with the rear portion of the frame exposed where the length of the exposed portion is 5.0 meters or less.  See § 1037.620 for special provisions related to vehicles sold to secondary vehicle manufacturers in this condition.
(2) The following vehicles are not tractors:
            (i) Any vehicle sold to an ultimate purchaser with an installed cargo carrying feature. For example, this would include dump trucks and cement trucks.
            (ii) Any vehicle lacking a fifth wheel coupling sold to an ultimate purchaser with the rear portion of the frame exposed where the length of the exposed portion is more than 5.0 meters.
NHTSA proposed a definition of "truck tractor" in 49 CFR 571.3 as:
      Truck tractor means a truck designed primarily for drawing other motor vehicles and not so constructed as to carry a load other than a part of the weight of the vehicle and the load so drawn.
Second, EMA/TMA, NTEA and Navistar expressed concerns over, and requested the removal of, the proposed language that all vehicles with sleeper cabs would be classified as tractors.  The commenters argued that because there are vocational vehicles manufactured with sleeper cabs that operate as vocational vehicles and not as tractors, those vehicles should be treated the same as all other vocational vehicles.  Third, eleven different commenters requested that the agencies subdivide tractors into line-haul tractors and vocational tractors and treat each based upon their operational characteristics: vocational tractors, which operate at lower speeds offroad or in stop-and-go city driving as vocational vehicles; and line-haul tractors, which operate at highway speeds on interstate roadways over long distances, as line-haul tractors.  
In response to the first comment, the agencies have decided to standardize the definition of tractor by using the long-standing NHTSA definition of "truck tractor" established in 49 CFR 571.3.  49 CFR 571.3(b) states that a "truck tractor means a truck designed primarily for drawing other motor vehicles and not so constructed as to carry a load other than a part of the weight of the vehicle and the load so drawn."  EPA's proposed definition for "tractor" in the NPRM was similar to the NHTSA definition, but included some additional language to require a fifth wheel coupling and an exposed frame in the rear of the vehicle where the length of the exposed portion is 5.0 meters or less.  EMA and Navistar argued that these two different definitions could to lead to confusion if the agencies applied their requirements for truck tractors differently from each other.  The commenters suggested that the EPA definition was more complicated than necessary, and that the simpler NHTSA definition should be used by both agencies as the base definition of truck tractor.
The agencies agree that the definitions should be standardized and that the NHTSA definition is sufficient and includes the essential requirement that a truck tractor is a truck designed "primarily for drawing other motor vehicles and not so constructed as to carry a load other than a part of the weight of the vehicle and the load so drawn."  EPA's proposed tractor definition was intended to be functionally equivalent to NHTSA's definition based on design, but to be more objective by including the criteria related to "fifth wheels" and exposed rear frame.  However, EPA no longer believes that such additional criteria are needed for implementation.  NHTSA established the definition for truck tractor in 49 CFR 571.3(b) years ago, and has not encountered any notable problems with its application.  Nevertheless, because the NHTSA definition relies more on design intent than EPA's proposed definition, we recognize that there may be some questions regarding how the agencies would apply the NHTSA definition being finalized to certain unique vehicles.  For example, many of the common automobile and boat transport trucks may look similar to tractors, but the agencies would not consider them to meet the definition, because they have the capability to carry one or several vehicles as cargo with or without a trailer attached, and therefore are not "constructed as to carry a load other than a part of the weight of the vehicle and the load so drawn."  Similarly, a "dromedary" style truck that has the capability to carry a large load of cargo with or without drawing a trailer would also not qualify as a tractor.  Even though these particular vehicles identified could potentially draw other motor vehicles like a trailer, they have also been designed to carry cargo with or without the trailer attached.  NHTSA has previously interpreted its definition for "truck tractor" as excluding these specific vehicles like the Dromedary and automobile/boat transport vehicles.  Tow trucks have also been excluded from the category of truck tractor.  On the other hand, it is worth clarifying that designs that allow cargo to be carried in the passenger compartment, the sleeper compartment, or external toolboxes would not exclude a vehicle from the tractor category.  The agencies plan to continue with this approach for the HD fuel efficiency and GHG standards, which means that these particular vehicles will be subject to the vocational vehicle standards and not the tractor standards, but vehicles that did meet the definition above for "tractor" will be subject to the combination tractor standards. 
In response to the second comment, the agencies have decided not to classify vocational vehicles with sleeper cabs as tractors.  In the NPRM, the agencies proposed that vocational vehicles with sleeper cabs be classified as tractors out of concern that a vehicle could initially be manufactured as a straight truck vocational vehicle with a sleeper cab and, soon after introduction into commerce, be converted to a combination tractor as a means to circumvent the Class 8 sleeper cab regulations.  Commenters who addressed this issue generally disagreed with the agencies' concern.  EMA/TMA, for example, argued that it is expensive and difficult for a manufacturer to change a vehicle from a straight truck to a tractor, because of modifications required to the vehicle, such as to the vehicle's air brake system, and also because of the manufacturers ultimate responsibility for recertification to NHTSA's safety standards.  EMA/TMA also argued that straight trucks are often built with sleeper cabs to perform the functions of a vocational type vehicle and not the functions of a line-haul tractor.  NTEA also provided an example of a straight truck (Expediter Cab) that can be built with a sleeper cab and a cargo-carrying body, which it argued should be classified as a vocational truck and not a tractor.  
Upon further consideration, the agencies agree that vocational vehicles with sleeper cabs would more appropriately be classified as vocational vehicles than as tractors.  The comments discussed above help to illustrate the reasons for building a vocational vehicle with a sleeper cab and the difficulties of converting a straight truck to a tractor.  Moreover, 49 U.S.C. Chapter 301 requires any service organization making such modifications to be responsible for recertification to all applicable Federal motor vehicle safety standards, which should act as a further deterrent to anyone contemplating making such a conversion.  Together these two items address the agencies' primary reason for proposing the requirement that all vehicles with sleeper cabs be treated as tractors  -  the concern of circumvention of the tractor standards.  However, the agencies will continue to monitor whether it appears that the definitions are creating unintended consequences, and may consider revising the definitions in a future rulemaking to address such issues.  NHTSA and EPA concluded that the engine and tire improvements required in the vocational category are appropriate for this set of vehicles based on the typical operation of these vehicles.  The agencies did not intend to include vocational vehicles with sleeper cabs, such as an Expediter vehicle, into the tractor category in either the NPRM or in this final action, therefore the agencies did not make any adjustments to the program costs and benefits due to this classification change.  
In response to the third comment, the agencies have decided to allow manufacturers to exclude certain vocational-type tractors from the combination tractor standards.  Such vocational tractors will now be subjected to the vocational vehicle standards and not the tractor standards.  
In today's market, as mentioned by Volvo and ATA, we understand that approximately 15 percent, or approximately 15,000 to 20,000, of the Class 7 and 8 tractors could be classified as vocational tractors based upon the work they perform.  The overall operation of these vocational-type tractors resembles other vocational vehicles with a lower average speed and more stop and go activity than line-haul tractors.  Due to their operation style, a FTP certified engine is a better match for these tractors than a SET certified engine, because the FTP cycle uses a lower average speed and more stop and go activity than the SET cycle.  In addition, the limited high speed operation leads to minimal opportunities for fuel consumption and CO2 emissions reductions due to aerodynamic improvements.  Conversely, the additional weight of the aerodynamic components could cause an unintended consequence of increasing gram per ton-mile emissions by reducing the amount of payload the vehicle can carry in those applications which are weight-limited.  Similarly, the vocational tractors typically do not hotel overnight and therefore will have little to no benefit through the installation of an idle reduction technology.  Multiple commenters (Allison Transmission, ATA, CALSTART, Eaton, EMA/TMA, National Solid Waste Management Association, MEMA, Navistar, NADA, RMA, and Volvo) argued that the proposed classification failed to recognize genuine differences between vocational tractors, which typically operate at lower speeds in stop-and-go city driving, and line-haul tractors, which typically operate at highway speeds on interstate roadways over long distances.  Commenters argued that the proposed tractor standards and associated tractor GEM test cycles were derived based primarily upon the operational characteristics of the line-haul tractors, and that technologies that apply to these line-haul tractors, such as improved aerodynamics, vehicle speed limiters and automatic engine shutdown, as well as engine performance for improving emissions and fuel consumption, do not have the same positive impact on fuel consumption when used on tractors operated as vocational vehicles given their significantly different typical driving cycles.
The agencies received several other comments that described criteria that could be used to distinguish between vocational and non-vocational tractors. Volvo suggested that a tractor could be a vocational tractor if it meets three of five specified features: 
      (1) a frame Resisting Bending Moment (RBM) greater than or equal to 2,000,000 in-lbs per rail, or rail and liner combination; 
      (2) an approach angle greater than or equal to 20 degrees nominal design specification, to exclude extended front rails/bumpers for additional equipment (e.g.  -  pumps, winch, front engine PTO); 
      (3) ground clearance greater than or equal to 14 inches as measured unladen from the lowest point of any frame rail or body mounted components, excluding axles and suspension (for HHD and MHD vehicles this is usually considered as the lowest point of the fuel tank/mounting or chassis aerodynamic devices); 
      (4) a total reduction in high gear greater than or equal to 3.00:1; and 
      (5) a total reduction in low gear greater than or equal to 57:1.  
The approach proposed by Volvo is somewhat similar to the approach NHTSA has for determining if a vehicle is a light truck under the light vehicle CAFE program, in which a vehicle must either have a GVWR greater than 6,000 pounds or have 4-wheel drive, and meet four of the five specified suspension characteristics (approach angle, break-over angle, axle clearance, etc.) to be classified as a light truck.  While we do not believe that the criteria suggested by Volvo are workable for all manufacturers and all applications, we agree that these criteria would reflect a reasonable basis for reclassifying vehicles as vocational tractors. 
Two other commenters, EMA/TMA and Navistar, suggested simply that the manufacturer should have the burden of establishing that a tractor is a vocational tractor to the agencies' reasonable satisfaction.  The commenter also suggested that factors that could be used to establish that a tractor is actually a "vocational tractor": 
      (1) a vehicle speed limiter set at 55 mph or less; 
      (2) power take-off (PTO) controls; 
      (3) extended front frame; 
      (4) ground clearance greater than 14 in.; 
      (5) an approach angle greater than 20 degrees; 
      (6) frame RBM greater than 2,000,000 in-lbs.; and 
      (7) a total gear reduction in low gear greater than 57 and a total gear reduction in top gear greater than 3.
The agencies believe that both suggested approaches have some merit.  A bright-line rule as suggested by Volvo could help to minimize the burden on both the manufacturers and the agencies, as manufacturer-written requests for approval and agency approvals of those requests would not be required for each vocational tractor determination whereas the EMA/TMA and Navistar approach requires the opposite namely that each manufacturer would have to justify the determination of each vocational tractor based upon its related design features in a separate petition to the agencies.  Neither of the two approaches, which are based on specific criteria, could be used to identify all the tractors that should be under considered as vocational tractors.  The urban beverage delivery tractor, for example, may not be designed with any of the features mentioned but is used in a vocational vehicle manner.  Also, the agencies were concerned  about the possibility of manufacturers circumventing the system by incorporating design changes to their line-haul tractors in order to classify them as vocational tractors required to meet less stringent emission and fuel consumption standards.  However, at this time the agencies do not believe that circumventing the system is likely, as most of these vocational tractors are built to order and will incorporate the design features required by the customer.  Manufacturer vehicle offerings are designed or tailored to suit the particular task of the consumer.  The vehicle transport mission including vehicle type, gross vehicle weight, gross combined weight, body style and load handling characteristics, must be considered in the design process.  Further, how the vehicle will be utilized, including operating cycles, operating environment and road conditions, is another important consideration in designing a vehicle to accomplish a particular task.  The agencies agree that these criteria could also be used as part of a basis for classification.  We also note that many of these vehicles have front axle weight ratings greater than 14,600 pounds.  The reader is referred to 40 CFR section 1037.630 of the EPA's regulations for additional detail about this allowance.  
While the agencies agree that these vocational tractors are operated differently than line-haul tractors and therefore fit more appropriately into the vocational vehicle category, we need to ensure that only tractors that are truly vocational tractors are classified as such. Upon further consideration of the comments received the agencies have decided to allow manufacturers to exclude certain vocational-type tractors from the combination tractor standards.  A vehicle determined to be a HHD vocational tractor would fall into the HHD vocational vehicle subcategory and be treated as a vocational vehicle.  Similarly, MHD vocational tractors will be treated as a MHD vocational vehicle.  Specifically, the provision being finalized is intended for three broad types of tractors:
      (1) Mixed service (onroad and offroad) vehicles often used in construction, logging, dump operation, and mining.
      (2) Heavy haul tractors (i.e., tractors with a GCWR over 120,000 pounds).
      (3) Urban delivery vehicles such as beverage trucks.  
 The provision being adopted in 40 CFR 1037.630 and 49 CFR Part 523.2 describes the three types of vehicles eligible for this reclassification and requires the manufacturers to describe in their applications their bases for believing that the vehicles qualify as vocational tractors.  EPA would deny an application for certification where we determine the manufacturer lacks an adequate basis.  The manufacturer would then have to resubmit its application to certify the vehicles in question to the tractor standards.  The agencies plan to monitor how manufacturers classify their tractor fleets and would reconsider the issue of vocational tractor classification in a future rulemaking if necessary.
Because the difference between some vocational tractors and line-haul tractors is potentially somewhat subjective, we are also including a default annual sales limit of 7,000 vocational tractors per manufacturer, based on a three year rolling average, that would apply in most circumstances.  However, in unusual circumstances, a manufacturer that was able to clearly demonstrate that it is producing enough truly vocational tractors to exceed this limit in any given model year could petition the agencies to allow it to exceed the limit for that year.  The manufacturer could ask for such relief at any point in the model year at which it becomes apparent that sales of truly vocational tractors will likely exceed the limit.  EPA if the agencies concur that the manufacturer has demonstrated that all of its vocational tractors meet the criteria.  We may also specify additional conditions such as additional reporting requirements.
Under the regulations being promulgated, manufacturers will be required to keep records of how they determined that such vehicles qualify as vocational tractors (whether or not they exceed the 7,000 vehicle limit).  Typically, this would be a combination of records of the design features and/or purchasers of the vehicles.  The agencies have analyzed the design features that reflect the special needs of these vocational tractors in three areas  -  mixed service, heavy haul, and urban delivery.  Mixed service applications, such as construction trucks, typically require higher ground clearance and approach angle to accommodate non-paved roads.  In addition, they often require frame rails with greater resisting bending moment (RBM) because of the terrain where they operate.  The mixed service applications also sometimes require higher front axle weight ratings to accommodate extra loads and/or power take off systems for additional capability.  Heavy haul tractors are typically designed with frame rails with extra strength (greater RBM) and higher front axle weight ratings to accommodate the heavy payloads.  Often the heavy haul tractors will also have higher ground clearance and greater approach angle for similar reasons as the mixed service applications.  Lastly, heavy haul vehicles require a total gear reduction of 57:1 or greater to provide the torque necessary to start the vehicle moving.  Urban delivery tractors, such as beverage haulers, have less defined design features that reflect their operational needs.  These vehicles offer options which include high RBM rails and front axle weight ratings, but not all beverage trucks are specified with these options.  The primary differentiation of these urban delivery tractors is their operation.
For this final rulemaking, the agencies projected the costs and benefits of the program considering this provision.  As detailed in RIA Section 5.3.2.2.1, the agencies assumed that approximately 20 percent of short-haul tractors sold in 2014 model year and beyond will be vocational tractors.  As such, these vehicles will experience benefits reflective of a FTP-certified engine and tire rolling resistance improvement at the technology costs projected in the rules for vocational vehicles.
  
What is the form of the Class 7 and 8 Tractor CO2 Emissions and Fuel Consumption Standards?
 As proposed, EPA and NHTSA are finalizing different standards for different subcategories of these tractors with the basis for subcategorization being particular tractor attributes. Attribute-based standards in general recognize the variety of functions performed by vehicles and engines, which in turn can affect the kind of technology that is available to control emissions and reduce fuel consumption, or its effectiveness.  Attributes that characterize differences in the design of vehicles, as well as differences in how the vehicles will be employed in-use, can be key factors in evaluating technological improvements for reducing CO2 emissions and fuel consumption.  Developing an appropriate attribute-based standard can also avoid interfering with the ability of the market to offer a variety of products to meet consumer demand.  There are several examples of where the agencies have utilized an attribute-based standard.  In addition to the example of the 2012-16 MY light-duty vehicle fuel economy and GHG rule, in which the standards are based on the attribute of vehicle "footprint," the existing heavy-duty highway engine criteria pollutant emission standards for many years have been based on a vehicle weight attribute (Light Heavy, Medium Heavy, Heavy Heavy) with different useful life periods, which is a similar approach finalized for the engine GHG and fuel consumption standards discussed below.  
Heavy-duty combination tractors are built to move freight.  The ability of a truck to meet a customer's freight transportation requirements depends on three major characteristics of the tractor:  the gross vehicle weight rating (which along with gross combined weight rating (GCWR) establishes the maximum carrying capacity of the tractor and trailer), cab type (sleeper cabs provide overnight accommodations for drivers), and the tractor roof height (to mate tractors to trailers for the most fuel-efficient configuration).  Each of these attributes impacts the baseline fuel consumption and GHG emissions, as well as the effectiveness of possible technologies, like aerodynamics, and is discussed in more detail below.  
The first tractor characteristic to consider is payload which is determined by a tractor's GVWR and GCWR relative to the weight of the tractor, trailer, fuel, driver, and equipment.  Class 7 trucks, which have a GVWR of 26,001-33,000 pounds and a typical GCWR of 65,000 pounds, have a lesser payload capacity than Class 8 trucks.  Class 8 trucks have a GVWR of greater than 33,000 pounds and a typical GCWR of greater than 80,000 pounds, the effective weight limit on the federal highway system except in states with preexisting higher weight limits.  Consistent with the recommendation in the National Academy of Sciences 2010 Report to NHTSA, the agencies are finalizing a load-specific fuel consumption metric (g/ton-mile and gal/1,000 ton-mile) where the "ton" represents the amount of payload.  Generally, higher payload capacity trucks have better specific fuel consumption and GHG emissions than lower payload capacity trucks.  Therefore, since the amount of payload that a Class 7 truck can carry is less than the Class 8 truck's payload capacity, the baseline fuel consumption and GHG emissions performance per ton-mile differs between the categories.  It is consequently reasonable to distinguish between these two vehicle categories, so that the agencies are finalizing separate standards for Class 7 and Class 8 tractors.  
The agencies are not finalizing a single standard for both Class 7 and 8 tractors based on the payload carrying capabilities and assumed typical payload levels of Class 8 tractors alone, as that would quite likely have the perverse impact of increasing fuel consumption and greenhouse gas emissions.  Such a single standard would penalize Class 7 vehicles in favor of Class 8 vehicles.  However, the greater capabilities of Class 8 tractors and their related greater efficiency when measured on a per ton-mile basis are only relevant in the context of operations where that greater capacity is needed.  For many applications such as regional distribution, the trailer payloads dictated by the goods being carried are lower than the average Class 8 tractor payload.  In those situations, Class 7 tractors are more efficient than Class 8 tractors when measured by ton-mile of actual freight carried.  This is because the extra capabilities of Class 8 tractors add additional weight to vehicle that is only beneficial in the context of its higher capabilities.  The existing market already selects for vehicle performance based on the projected payloads.  By setting separate standards the agencies do not advantage or disadvantage Class 7 or 8 tractors relative to one another and continue to allow trucking fleets to purchase the vehicle most appropriate to their business practices.
The second characteristic that affects fuel consumption and GHG emissions is the relationship between the tractor cab roof height and the type of trailer used to carry the freight.  The primary trailer types are box, flat bed, tanker, bulk carrier, chassis, and low boys.  Tractor manufacturers sell tractors in three roof heights  -  low, mid, and high.  The manufacturers do this to obtain the best aerodynamic performance of a tractor-trailer combination, resulting in reductions of GHG emissions and fuel consumption, because it allows the frontal area of the tractor to be similar in size to the frontal area of the trailer.  In other words, high roof tractors are designed to be paired with a (relatively tall) box trailer while a low roof tractor is designed to pull a (relatively low) flat bed trailer.  The baseline performance of a high roof, mid roof, and low roof tractor differs due to the variation in frontal area which determines the aerodynamic drag.  For example, the frontal area of a low roof tractor is approximately 6 square meters, while a high roof tractor has a frontal area of approximately 9.8 square meters.  Therefore, as explained below, the agencies are using the roof height of the tractor to determine the trailer type required to be used to demonstrate compliance of a truck with the fuel consumption and CO2 emissions standards.  As with vehicle weight classes, setting separate standards for each tractor roof height helps ensure that all tractors are regulated to achieve appropriate improvements, without inadvertently leading to increased emissions and fuel consumption by shifting the mix of vehicle roof heights offered in the market away from a level customarily tied to the actual trailers vehicles will haul in-use.
Tractor cabs typically can be divided into two configurations  -  day cabs and sleeper cabs.  Line haul operations typically require overnight accommodations due to Federal Motor Carrier Safety Administration hours of operation requirements.  Therefore, some truck buyers purchase tractor cabs with sleeping accommodations, also known as sleeper cabs, because they do not return to their home base nightly.  Sleeper cabs tend to have a greater empty curb weight than day cabs due to the larger cab volume and accommodations, which lead to a higher baseline fuel consumption for sleeper cabs when compared to day cabs.  In addition, there are specific technologies, such as extended idle reduction technologies, which are appropriate only for tractors which hotel -- such as sleeper cabs.  To respect these differences, the agencies are finalizing separate standards for sleeper cabs and day cabs.  
The agencies received comments from industry stakeholders (EMA, Allison Transmission, Bosch, and the Heavy-Duty Fuel Efficiency Leadership Group) and ICCT supporting the nine tractor regulatory subcategories proposed and did not receive any comments which supported an alternate classification.  Thus, to account for the relevant combinations of these attributes, the agencies are adopting the classification scheme proposed, segmenting combination tractors into the following nine regulatory subcategories:
Class 7 Day Cab with Low Roof
Class 7 Day Cab with Mid Roof
Class 7 Day Cab with High Roof
Class 8 Day Cab with Low Roof
Class 8 Day Cab with Mid Roof
Class 8 Day Cab with High Roof
Class 8 Sleeper Cab with Low Roof
Class 8 Sleeper Cab with Mid Roof
Class 8 Sleeper Cab with High Roof

Adjustable roof fairings are used today on what the agencies consider to be low roof tractors.  The adjustable fairings allow the operator to change the fairing height to better match the type of trailer that is being pulled which can reduce fuel consumption and GHG emissions during operation. As proposed, the agencies are treating tractors with adjustable roof fairings as low roof tractors and test with the fairing down.   
What are the Final Class 7 and 8 Tractor and Engine CO2 Emissions and Fuel Consumption Standards and Their Timing?
In developing the final standards for Class 7 and 8 tractors and for the engines used in these tractors, the agencies have evaluated the current levels of emissions and fuel consumption, the kinds of technologies that could be utilized by truck and engine manufacturers to reduce emissions and fuel consumption from tractors and associated engines, the necessary lead time, the associated costs for the industry, fuel savings for the consumer, and the magnitude of the CO2 and fuel savings that may be achieved.  The technologies that the agencies used to set the final tractor standards include improvements in aerodynamic design, lower rolling resistance tires, extended idle reduction technologies, and lightweighting of the tractor.  The technologies that the agencies used to set the engine standards include engine friction reduction, aftertreatment optimization, and turbocompounding, among others.  The agencies' evaluation indicates that these technologies are available today, but have very low application rates in the market.  EPA and NHTSA also present the estimated costs and benefits of the Class 7 and 8 combination tractor and engine standards in Section III and in RIA Chapter 2, explaining as well the basis for the agencies' conclusion not to adopt standards which are less stringent or more stringent.
Tractor Standards
The agencies are finalizing the following standards for Class 7 and 8 combination tractors in Table II-1, using the subcategorization approach that was proposed.  As explained below in Section III, EPA has determined that there is sufficient lead time to introduce various tractor and engine technologies into the fleet starting in the 2014 model year, and is finalizing standards starting for that model year predicated on performance of those technologies.  EPA is finalizing more stringent tractor standards for the 2017 model year which reflect the CO2 emissions reductions required for 2017 model year engines.  (As explained in Section II.B(3)(h)(v) below, engine performance is one of the inputs into the compliance model, and that input will change in 2017 to reflect the 2017 MY engine standards.)  The 2017 MY vehicle standards are not premised on tractor manufacturers installing additional vehicle technologies.  EPA's final standards apply throughout the useful life period as described in Section V.  As proposed, and as discussed further in Section IV below, manufacturers may generate and use credits from Class 7 and 8 combination tractors to show compliance with the standards.  
NHTSA is finalizing Class 7 and 8 tractor fuel consumption standards that are voluntary standards in the 2014 and 2015 model years and become mandatory beginning in the 2016 model year, as required by the lead time and stability requirement within EISA.  The 2014 and 2015 model year standards are voluntary in that manufacturers are not subject to them unless they opt-in to the standards.  However, once a manufacturer opts-in, the standards are mandatory for that manufacturer.  NHTSA is also adopting new tractor standards for the 2017 model year which reflect additional improvements in only the heavy-duty engines. As proposed, NHTSA is not implementing an in-use compliance program for fuel consumption because notable deterioration of fuel consumption over the useful life is not currently anticipated.  
As explained more fully in Section III and Chapter 2 of the RIA, EPA and NHTSA are not adopting more stringent tractor standards for 2014-2017 MY.  The final tractor standards are based on the maximum application rates of available technologies, and we explain in Section III and Chapter 2 of the RIA that use of additional technologies would be either infeasible in the lead time afforded, or uneconomical. 
  Table II-1: Heavy-duty Combination Tractor Emissions and Fuel Consumption Standards 
2014 Model Year CO2 Grams per Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
107
81
68
Mid Roof
119
88
75
High Roof
122
90
73
2014-2016 Model Year Gallons of Fuel per 1,000 Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
10.5
8.0
6.6
Mid Roof
11.6
8.7
7.4
High Roof
12.0
8.9
7.2
2017 Model Year CO2 Grams per Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
104
79
66
Mid Roof
115
86
73
High Roof
118
88
71
2017 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
10.3
7.8
6.5
Mid Roof
11.3
8.4
7.2
High Roof
11.6
8.6
7.0

The standard values shown above differ somewhat from the proposal, reflecting refinements made to the GEM in response to comments.  For example, the agencies received comments from stakeholders concerned that the 2017 MY tractor standards appeared to be backsliding because the reductions were not in line with the reductions expected from the 2017 MY engine standards.  The agencies reviewed the issue and found that the engine maps we created in GEM for the 2017 model year for the proposal did not appropriately reflect the engine improvements.  Therefore, the agencies developed new fuel maps for GEM v2.0 which fully reflect the engine improvements due to the 2017 MY standards.  These changes to GEM did not impact our estimates of the relative effectiveness of the various control technologies modeled in this final action nor the overall cost or benefits estimated for these final vehicle standards.  
Based on our analysis, the 2017 model year standards represent up to a 23 percent reduction in CO2 emissions and fuel consumption over a 2010 model year baseline, as detailed in Section III.A.2.
 
Standards for Engines Installed in Combination Tractors
EPA is adopting GHG standards and NHTSA is adopting fuel consumption standards for new heavy-duty engines.  This section discusses the standards for engines used in Class 7 and 8 combination tractors and also provides some overall background information.  We also note that the agencies are adopting standards for heavy-duty engines used in vocational vehicles.  However, as explained further below, compliance with the standards would be measured using different test procedures, corresponding with actual vehicle use, depending on whether the vehicle is a Class 7 and 8 combination tractor or a vocational vehicle.  The standards will vary depending on the type of vehicle in which they are used, as well as whether the engines are compression ignited or spark ignited.  EPA's existing criteria pollutant emissions regulations for heavy-duty highway engines establish four regulatory service classes that represent the engine's intended and primary truck application.  The Light Heavy-Duty (LHD) diesel engines are intended for application in Class 2b through Class 5 trucks (8,501 through 19,500 pounds GVWR).  The Medium Heavy-Duty (MHD) diesel engines are intended for Class 6 and Class 7 trucks (19,501 through 33,000 pounds GVWR).  The Heavy Heavy-Duty (HDD) diesel engines are primarily used in Class 8 trucks (33,001 pounds and greater GVWR).  Lastly, spark ignition engines (primarily gasoline-powered engines) installed in incomplete vehicles less than 14,000 pounds GVWR and spark ignition engines that are installed in all vehicles (complete or incomplete) greater than 14,000 pounds GVWR are grouped into a single engine service class.  The engines in these four regulatory service classes range in size between approximately five liters and sixteen liters.  
For the purposes of the GHG engine emissions and engine fuel consumption standards that EPA and NHTSA are adopting, the agencies are adopting these same four regulatory service classes as the engine subcategories.  This subcategory structure enables the agencies to set standards that appropriately reflect the technology available for engines for use in each type of vehicle, and that are therefore technologically feasible for these engines.  This is the same engine classification scheme the agencies proposed, and there were no adverse comments.
In the NPRM, the agencies proposed CO2 and fuel consumption standards for HD diesel engines to be installed in Class 7 and 8 combination tractors as shown in Table II-2.

Table II-2:  Heavy-duty Diesel Engine Standards for Engines Installed in Tractors
                                       
Effective 2014 Model Year
Effective 2017 Model Year

CO2 standard (g/bhp-hr)
Voluntary Fuel Consumption Standard (gal/100 bhp-hr)
CO2 standard (g/bhp-hr)
Fuel Consumption Standard (gal/100 bhp-hr)
MHD diesel engine
                                      502
                                     4.93
                                      487
                                     4.78
HHD diesel engine
                                      475
                                     4.67
                                      460
                                     4.52
The agencies proposed to require diesel engine manufacturers to achieve, on average, a three percent reduction in fuel consumption and CO2 emissions for the 2014 standards over the baseline MY 2010 performance for the engines.  The agencies' preliminary assessment of the findings of the 2010 NAS Report and other literature sources indicated that there are technologies available to reduce fuel consumption by this amount in the final timeframe.  These technologies include improved turbochargers, aftertreatment optimization, and low temperature exhaust gas recirculation.  
The agencies also proposed to require diesel engine manufacturers to achieve, on average, a six percent reduction in fuel consumption and CO2 emissions for the 2017 MY standards over the baseline MY 2010 performance for MHD and HHD diesel engines required to use the SET-based standard.  The agencies stated that additional reductions could likely be achieved through the increased refinement of the technologies projected to be implemented for 2014, plus the addition of turbocompounding, but the agencies' preliminary analysis indicated that this type of advanced engine technology would require a longer development time than MY 2014.  The agencies therefore proposed to provide additional lead time to allow for the introduction of this additional technology, and to wait until 2017 to increase stringency to levels reflecting application of this technology.
The agencies proposed that the HD diesel engine CO2 standards for Class 7 and 8 combination tractors would become effective in MY 2014 for EPA, with more stringent CO2 standards becoming effective in MY 2017, while NHTSA's fuel consumption standards would become effective in MY 2017, which would be both consistent with the EISA four-year minimum lead-time requirements and harmonized with EPA's timing.  The agencies explained that the three-year timing, besides being required by EISA, made sense because EPA's heavy-duty highway engine program for criteria pollutants had begun to provide new emissions standards for the industry in three year increments, which had caused the heavy-duty engine product plans to fall largely into three year cycles reflecting this regulatory environment.  To further harmonize with EPA, NHTSA proposed voluntary fuel consumption standards for HD diesel engines for MYs 2014-2016, allowing manufacturers to opt into the voluntary standards in any of those model years, with the caveat that opting in would cause the standards to become mandatory for the opt-in and subsequent model years.  NHTSA proposed that manufacturers could opt into the program by declaring their intent to opt in to the program at the same time they submit the Pre-Certification Compliance Report, and that a manufacturer opting into the program would begin tracking credits and debits beginning in the model year in which they opt into the program.  Both agencies proposed to allow manufacturers to generate and use credits to achieve compliance with the HD diesel engine standards, including averaging, banking, and trading (ABT) and deficit carry-forward.  The agencies sought comment on the proposed engine standards and timing.
The agencies received comments from EMA, Navistar, Cummins, ACEEE, Center for Biological Diversity, Detroit Diesel Corporation, American Lung Association, and the Union of Concerned Scientists.  Comments were divided with respect to the proposed levels of stringency.  While Cummins and DDC expressed support for the CO2 and fuel consumption standards for diesel engines, and EMA and Navistar stated the standards could be met if the flexibilities outlined in the NPRM are finalized as proposed, Navistar also stated that the model year 2017 standard may not be feasible since what the agencies characterized as existing technologies are not in production for all manufacturers  In contrast, environmental groups and NGOs stated that the standards did not reflect the potential reductions outlined in the 2010 NAS study and should be more stringent.  CBD argued that the standards were not set at the maximum feasible level, because the agencies had said that they were based on the use of existing technologies.  In addition, the Center for Neighborhood Technology encouraged the agencies to implement the rules as soon as possible, beginning in 2012 model year.  
In light of the above comments, the agencies re-evaluated the technical basis for the heavy-duty engine standards.  The baseline HHD diesel engine performance in 2010 model year on the SET is estimated at 490 g CO2/bhp-hr (4.81 gal/100 bhp-hr), based on our analysis of confidential data provided by manufacturers and data submitted for the non-GHG emissions certification process.  Similarly, the baseline MHD diesel engine performance on the SET cycle is estimated to be 518 g CO2/bhp-hr (5.09 gallon/100-bhp-hr) for the 2010 model year.  Further discussion of the derivation of the baseline can be found in Section III.  Based on the use of technologies that are available to manufacturers in the 2014 timeframe, but which do not require re-design, such as improved aftertreatment systems, friction reduction, improved auxiliaries, turbochargers, pistons, and other components, the agencies continue to believe that the standards in 2014 MY, which will require diesel engine manufacturers to achieve on average a three percent reduction in fuel consumption and CO2 emissions over the baseline 2010 model year performance,  are achievable.  
However, in recognition that manufacturers face a diverse set of conditions in meeting the standards, we are finalizing an additional flexibility mechanism  -  the optional alternate engine standard for 2014 model year, described in more detail below.  We believe that the concern expressed by Navistar regarding the 2014 MY standards will be addressed by this alternative.  The agencies also continue to believe the 2017 MY standards are achievable using the above approaches and, in the case of SET certified engines, turbocompounding.  While Navistar commented that the 2017 MY standard may be challenging because not all manufacturers are producing the technologies that may be required to meet the standards, the agencies believe that since manufacturers that may require turbocompounding to meet the standards will not have to do so until 2017 MY, there will be sufficient lead time for everyone to introduce this technology.  We note that we are finalizing these standards as proposed based on the assumption that most manufacturers will need to make improvements to existing engine systems in order to meet the standards.  EPA's HD diesel engine CO2 emission standards and NHTSA's HD diesel engine fuel consumption standards for engines installed in tractors are presented in Table II-2.  As explained above, the first set of standards take effect with MY 2014 (mandatory standards for EPA, voluntary standards for NHTSA), and the second set take effect with MY 2017 (mandatory for both agencies).  
Compliance with the CO2 emissions and fuel consumption standards will be evaluated based on the SET engine test cycle.  In the NPRM, the agencies proposed standards based on the SET cycle for engines used in tractors reflecting their primary use in steady state operating conditions (typified by highway cruising).  Tractors spend the majority of their operation at steady state conditions, and will obtain in-use benefit of technologies such as turbocompounding and other waste heat recovery technologies during this kind of typical engine operation.  Therefore, the engines installed in tractors will be required to meet the standard based on the SET, which is a steady state test cycle. 
The agencies place important weight on the fact that engine manufacturers are expected to redesign and upgrade their products during MYs 2014-2017 in making our decisions about the cost-effectiveness of the standards and the availability of lead time.  The final two-step CO2 emission and fuel consumption standards recognize the opportunity for technology improvements over the rulemaking timeframe, while reflecting the typical diesel truck manufacturers' product plan cycles.  Over these four model years there will be an opportunity for manufacturers to evaluate almost every one of their engine models and add technology in a cost-effective way, consistent with existing redesign schedules, to control GHG emissions and reduce fuel consumption.  The time-frame and levels for the standards, as well as the ability to average, bank and trade credits and carry a deficit forward for a limited time, are expected to provide manufacturers the time needed to incorporate technology that will achieve the final GHG and fuel consumption reductions, and to do this as part of the normal engine redesign process.  This is an important aspect of the final rules, as it will 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 will also provide manufacturers the opportunity to plan for compliance using a multi-year time frame, again in accord with their normal business practice.  Further details on lead time, redesigns and technical feasibility can be found in Section III.
The agencies continue to believe the standards for heavy-duty diesel engines in model years 2014 and 2017 are the most stringent technically feasible in the timeframe established in this regulation.  The standards will require a 3 percent reduction in engine fuel consumption and GHG emissions in 2014 MY based on improvements to engine components and aftertreatment systems.  The 2017 MY standards will require a 6 percent reduction in fuel consumption and GHG emissions and assumes the introduction, for some engines, of technologies such as turbocompounding which are still in development.  The standards will not, however, require the introduction of technologies that are still in development  -  such as rankine bottoming cycle - since these approaches cannot be introduced without further technical development or engine re-design.  Given this is the first ever program to regulate fuel efficiency for these engines we believe the standards are the most stringent feasible at this time. 
Additional discussion on technical feasibility is included in Section III below and in Chapter 2 of the RIA.
The agencies recognize, however, that the schedule of changes for the final standards may not be the most cost-effective one for all manufacturers.  The agencies also sought comment in the NPRM whether an alternate phase-in schedule for the HD diesel engine standards should be considered, based on comments received from manufacturers.  In developing the proposal, heavy-duty engine manufacturers stated that the phase-in of the GHG and fuel consumption standards should be aligned with the On Board Diagnostic (OBD) phase-in schedule, which includes new requirements for heavy-duty vehicles in 2013 and 2016 model years.  The agencies did not adopt this suggestion in the proposal, explaining that the credit averaging, banking and trading provisions would provide manufacturers with considerable flexibility to manage their GHG and fuel efficiency standard compliance plans  -  including the phase-in of the new heavy-duty OBD requirements  -  but requested comment on whether EPA and NHTSA should provide an alternate  phase-in schedules that would more explicitly accommodate this request in the event that manufacturers did not agree that the ABT provisions mitigated their concern about the GHG/fuel consumption standard phase-in. See 75 FR at 74178. 
In response to the request for comment in the NPRM on a possible alternate phase-in schedule, Cummins, Engine Manufacturers Association, and DTNA commented that their first choice was a delay in the OBD effective date for one year to the 2014 model year.  The industry's second choice was to provide manufacturers with an optional GHG and fuel consumption phase-in that aligns their product development plans for the engine GHG and fuel consumption standards with their current plans to meet the OBD regulations for EPA and California in 2013 and 2016 model years.  These commenters argued that meeting the OBD regulation in 2013 model year already poses a significant challenge, and that having to meet GHG and fuel consumption standards beginning in 2014 could require them to redesign and recertify their products just one year later.  They argued that bundling design changes where possible can reduce the burden on industry for complying with regulations, so aligning the introduction of the OBD, GHG, and fuel consumption standards could help reduce the resources devoted to validation of new product designs and certification.
In order to provide additional flexibility for manufacturers looking to align their technology changes with multiple regulatory requirements, the agencies are finalizing an alternate "OBD phase-in" option for meeting the HD diesel engine standards, which delivers equivalent CO2 emissions and fuel consumption reductions as the primary standards for the engines built in the 2013 through 2017 model years, as shown in Table II-3.  The optional OBD phase-in schedule requires that engines built in 2013 and 2016 model years to achieve greater reductions than the engines built in those model years under the primary program, but less reductions for the engines built in 2014 and 2015 model years.  
Table II-3: Comparison of CO2 reductions for the HHD and MHD Tractor Standards Under the Alternative OBD Phase-in and Primary Phase-In

                                HHD SET Engines
                                MHD SET Engines

                     Primary Phase-in Standard (g/bhp-hr)
                     Optional Phase-in Standard (g/bhp-hr)
               Difference in Lifetime CO2 Engine Emissions (MMT)
                     Primary Phase-in Standard (g/bhp-hr)
                     Optional Phase-in Standard (g/bhp-hr)
               Difference in Lifetime CO2 Engine Emissions (MMT)
Baseline
                                      490
                                      490
                                      --
                                      518
                                      518
                                      --
2013 MY Engine
                                      490
                                      485
                                      14
                                      518
                                      512
                                      17
2014 MY Engine
                                      475
                                      485
                                      -28
                                      502
                                      512
                                      -28
2015 MY Engine
                                      475
                                      485
                                      -28
                                      502
                                      512
                                      -28
2016 MY Engine
                                      475
                                      460
                                      42
                                      502
                                      487
                                      42
2017 MY Engine
                                      460
                                      460
                                       0
                                      487
                                      487
                                       0
Net Reductions (MMT)
                                       
                                       
                                       0
                                       
                                       
                                       3
The technologies for the 2013 model year optional standard include a subset of technologies that could be used to meet the primary 2014 model year standard.  The agencies believe this approach is appropriate because the shorter lead time provided for manufacturers selecting this option limits the technologies which can be applied.  However, in order to maintain equivalent CO2 emissions and fuel consumption reduction over the 2013 through 2017 model year period, it is necessary for the 2016 model year standard to be equal to the 2017 model year standard, using the same technology paths described for the primary engine program. If a manufacturer selects this optional phase-in, then the engines must be certified starting in the 2013 model year and continue using this phase-in through 2016 model year.  Manufacturers that opt in to the voluntary NHTSA program in 2014 and 2015 will be required to meet the primary phase-in schedule and may not adopt the OBD phase-in option.  Table II-4 below presents the final HD diesel engine CO2 emission standards under the "OBD phase-in" option.
Table II-4: Optional Heavy-Duty Engine Standard Phase-in Schedule for Tractor Engines
Effective 2013 Through 2015 Model Year

MHD Diesel Engine
HHD Diesel Engine
CO2 Standard (g/bhp-hr)
512
485
Voluntary Fuel Consumption Standard (gallon/100 bhp-hr)
5.03
4.76
Effective 2016 Model Year and Later

MHD Diesel Engine
HHD Diesel Engine
CO2 Standard (g/bhp-hr)
487
460
Fuel Consumption (gallon/100 bhp-hr)
4.78
4.52

While the agencies believe that the HD diesel engine standards are appropriate, cost-effective, and technologically feasible in the rulemaking timeframe, we also recognize that when regulating a category of engines for the first time, there will be individual products that may deviate significantly from the baseline level of performance, whether because of a specific approach to criteria pollution control, or due to engine calibration for specific applications or duty cycles.  In the current fleet of 2010 and 2011 model year engines, NHTSA and EPA understand that there is a relatively small group of engines that are up to approximately 25 percent worse than the average baseline for other engines.  For this group of engines, when compared to the typical performance levels of the majority of the engines in the fleet and the fuel consumption/GHG emissions reductions that the majority of engines would achieve through increased application of technology, the same reduction from the industry baseline may not be possible at reasonably comparable cost given the same amount of lead-time, because these products may require a total redesign in order to meet the standards.  Manufacturers of these engines with atypically high baseline CO2 and fuel consumption levels may also, in some instances, have a limited line of engines across which to average performance to meet the generally-applicable standards. 
To account for this possibility, the agencies requested comment in the NPRM on the establishment of an optional alternative engine standard which would be set at 3 percent below a manufacturer's 2011 engine baseline emissions and fuel consumption, or alternatively, at 2 percent below a manufacturer's 2011 baseline.  The agencies also requested comment on extending this optional standard one year (to 2017 MY) for a single engine family at a 6 percent level below the 2011 baseline.  This option would not be available unless and until a manufacturer had exhausted all available credits and credit opportunities, and engines under the optional standard could not generate credits.  
In comments to the NPRM, Navistar supported the alternative engine standard, but asked that it be set at 2 percent below the manufacturer's 2011 baseline.  They also supported  the extension to 2017 MY at 6 percent.  Navistar provided CBI in support of its comments.  Volvo, DTNA, environmental groups, NGOs, and the New York State Department of Environmental Conservation opposed the optional engine standard, arguing that existing flexibilities are sufficient to allow compliance with the standards and that all manufacturers should be held to the same standards.  
Based on the CBI submitted by Navistar, the agencies found that a large majority of the HD diesel engines used in Class 7 and 8 combination tractors were relatively close to the average baseline, with some above and some below, but also that some HD diesel engines were far enough away from the baseline that they could not meet the generally-applicable standards with any application of technology that would be reasonably cost-effective.  The agencies considered the arguments of all stakeholders prior to issuing this final action.  The agencies continue to believe that an interim alternative standard is needed for these products, and is the most effective way to set a standard that is technically feasible for all products while achieving worthwhile reductions in fuel consumption.  First, as explained at proposal, it is legally permissible to accommodate short term lead time constraints with alternative standards.  Second, commenters did not dispute that there are legacy engine families with significantly higher CO2 baselines, and that there are no feasible means of these engine families meeting the principal standards in the early model years of the program.  Although the agencies are of course sympathetic to the view that technological laggards should not be rewarded, the agencies do not believe that this is the case here.  The GHG standards and fuel consumption standards are first-time standards for these engines, so the possibility of significantly different baselines is not unexpected.  More important, the alternative standards require the engines to achieve the same emission reductions and fuel consumption improvements, predicated on use of the same technologies, as all other engines.  Thus, the agencies do not believe that the alternative standard affords a relative competitive advantage to the higher emitting legacy engines: the same level of improvement at the same cost will be required of those engines, and in addition, by 2017 MY, those engines will be required to make the additional improvements to meet the same standards as other engines (at higher cost, given the greater gap to make up).  Thus, the agencies are finalizing a regulatory alternative whereby a manufacturer, for an interim period from 2014-2016 model years, would have the option to comply with a unique standard based on a three percent reduction from an individual engine's own 2011 model year baseline level.  Our assessment is that this three percent reduction is appropriate given the potential for manufacturers to apply similar technology packages with similar cost to what we have estimated for the primary program.  This is similar to EPA's approach in the light-duty rule for handling a certain subset of vehicles that were deemed unable to meet the generally-applicable GHG standards during the 2012-2015 timeframe, and which needed alternate standards in those model years.  Our assessment is that this three percent reduction is appropriate given the potential for manufacturers to apply similar technology packages with similar cost to what we have estimated for the primary program.  
The agencies stress that this option is a temporary and limited option being implemented to address diverse manufacturer needs associated with complying with this first phase of the regulations.  As will be codified in 40 CFR 1036.620, this optional standard will be available only for the 2014 through 2016 model years, because we believe that manufacturers will have had ample opportunity to benchmark competitive products during redesign cycles and to make appropriate changes to bring their product performance into line with the rest of the industry after that time.  As proposed, the final rules require that manufacturers making use of these provisions for the optional standard would need to exhaust all credits within this averaging set prior to using this flexibility and would not be able to generate emissions credits from other engines in the same regulatory averaging set as the engines complying using this alternate approach.  
The agencies note that manufacturers choosing to utilize this option in MYs 2014-2016 will have to make a greater relative improvement in MY 2017 than the rest of the industry, since they will be starting from a worse level  -  for compliance purposes, emissions from engines certified and sold at the three percent level will be averaged with emissions from engines certified and sold at more stringent levels to arrive at a weighted average emissions for all engines in the class.  Since the NHTSA standards are optional in 2014, manufacturers may choose not to adopt either the alternative engine standard or the regular voluntary standard by not participating in the NHTSA program in 2014 and 2015. 
Some commenters argued that manufacturers could game the standard by establishing an artificially high 2011 baseline emission level. This could be done, for example, by certifying an engine with high fuel consumption and GHG emissions that is either: 1) not sold in significant quantities; or 2) later altered to emit fewer GHGs and consume less fuel through service changes.  In order to mitigate this possibility, the agencies are requiring either that the 2011 model year baseline must be developed by averaging emissions over all engines in an engine family certified and sold for that model year so as to prevent a manufacturer from developing a single high GHG output engine solely for the purpose of establishing a high baseline or meet additional criteria.  If a manufacturer does not certify all engine families in an averaging set to the alternate standards, then the tested configuration of the engine certified to the alternate standard must have the same engine displacement and its rated power within 5 percent of the highest rated power as the baseline engine.  In addition, the tested configurations must have a BSFC equivalent to or better than all other configurations within the engine family and represent a configuration that is sold to customers.

 
In-use Standards
Section 202(a)(1) of the CAA specifies that EPA is to adopt emissions standards that are applicable for the useful life of the vehicle.  The in-use standards that EPA is finalizing would apply to individual vehicles and engines.  NHTSA is adopting an approach which does not include in-use standards.  
EPA proposed that the in-use standards for heavy-duty engines installed in tractors be established by adding an adjustment factor to the full useful life emissions and fuel consumption results projected in the EPA certification process.  The agency proposed a two percent adjustment factor and requested comments and additional data during the proposal to assist in developing an appropriate factor level. The agency received additional data during the comment period which identified production variability which was not accounted for by the agencies at proposal.  Details on the development of the final adjustment factor are included in RIA Chapter 3.  Based on the data received, EPA determined that the adjustment factor in the final rules should be higher than the proposed level of two percent. EPA is finalizing a three percent adjustment factor for the in-use standard to provide a reasonable margin for production and test-to-test variability that could result in differences between the initial emission test results and emission results obtained during subsequent in-use testing.  
We are finalizing regulatory text (in §1036.150) to allow engine manufacturers to used assigned deterioration factors (DFs) without performing their own durability emission tests or engineering analysis.  However, the engines would be still be required to meet the standards in actual use without regard to whether the manufacturer used the assigned DFs.  This allowance is being adopted as an interim provision applicable only for this initial phase of standards.  

Manufacturers will be allowed to use an assigned additive DF of 0.0 g/bhp-hr for CO2 emissions from any conventional engine (i.e., an engine not including advance or innovative technologies).  Upon request, we could allow the assigned DF for CO2 emissions from engines including advance or innovative technologies, but only if we determine that it would be consistent with good engineering judgment.  We believe that we have enough information about in-use CO2 emissions from conventional engines to conclude that they will not increase as the engines age.  However, we lack such information about the more advanced technologies.  
EPA is also finalizing the proposed provisions requiring that the useful life for these engine and vehicles with respect to GHG emissions be set equal to the respective useful life periods for criteria pollutants.  EPA is adopting provisions where the existing engine useful life periods, as included in Table II-5:, be broadened to include CO2 emissions for both engines (see 40 CFR 1036.108(d)) and tractors (see 40 CFR 1037.105). 
Table II-5: Tractor and Engine Useful Life Periods
 
Years
Miles
Medium Heavy-Duty Diesel Engines
10
185,000
Heavy Heavy-Duty Diesel Engines
10
435,000
Class 7 Tractors
10
185,000
Class 8 Tractors
10
435,000

  Test Procedures and Related Issues
The agencies are finalizing a complete set of test procedures to evaluate fuel consumption and CO2 emissions from Class 7 and 8 tractors and the engines installed in them.  Consistent with proposal, the test procedures related to the tractors are all new, while the engine test procedures build substantially on EPA's current non-GHG emissions test procedures, except as noted.  This section discusses the final simulation model developed for demonstrating compliance with the tractor standard and the final engine test procedures.
Truck Simulation Model 
We are finalizing as proposed to set separate engine and vehicle-based emission standards to achieve the goal of reducing emissions and fuel consumption for both trucks and engines.  Engine manufacturers are subject to the engine standards while the Class 7 and 8 tractor manufacturers are required to install certified engines in their tractors.  The tractor manufacturer is also subject to a separate vehicle-based standard which utilizes a vehicle simulation model to evaluate the impact of the tractor cab design to determine compliance with the tractor standard. 
A simulation model, in general, uses various inputs to characterize a vehicle's properties (such as weight, aerodynamics, and rolling resistance) and predicts how the vehicle would behave on the road when it follows a driving cycle (vehicle speed versus time).  On a second-by-second basis, the model determines how much engine power needs to be generated for the vehicle to follow the driving cycle as closely as possible.  The engine power is then transmitted to the wheels through transmission, driveline, and axles to move the vehicle according to the driving cycle.  The second-by-second fuel consumption of the vehicle, which corresponds to the engine power demand to move the vehicle, is then calculated according to a fuel consumption map in the model.  Similar to a chassis dynamometer test, the second-by-second fuel consumption is aggregated over the complete drive cycle to determine the fuel consumption of the vehicle.
Consistent with proposal, NHTSA and EPA are finalizing a procedure to evaluate fuel consumption and CO2 emissions respectively through a simulation of whole-vehicle operation, consistent with the NAS recommendation to use a truck model to evaluate truck performance.  The agencies developed the Greenhouse gas Emissions Model (GEM) for the specific purpose of this proposal to evaluate truck performance.  The GEM is similar in concept to a number of vehicle simulation tools developed by commercial and government entities.  The model developed by the agencies and finalized here was designed for the express purpose of vehicle compliance demonstration and is therefore simpler and less configurable than similar commercial products.  This approach gives a compact and quicker tool for vehicle compliance without the overhead and costs of a more sophisticated model.  Details of the model are included in Chapter 4 of the RIA.  The agencies are aware of several other simulation tools developed by universities and private companies.  Tools such as Argonne National Laboratory's Autonomie, Gamma Technologies' GT-Drive, AVL's CRUISE, Ricardo's VSIM, Dassault's DYMOLA, and University of Michigan's HE-VESIM codes are publicly available.  In addition, manufacturers of engines, vehicles, and trucks often have their own in-house simulation tools.  The agencies sought comments regarding other software packages which would better serve the compliance purposes of the rules than GEM, but did not receive any recommendations.  
GEM is designed to focus on the inputs most closely associated with fuel consumption and CO2 emissions - i.e., on those which have the largest impacts such as aerodynamics, rolling resistance, weight, and others.  
EPA has validated GEM based on the chassis test results from a SmartWay certified tractor tested at Southwest Research Institute.  The validation work conducted on these this vehicle is representative of the other Class 7 and 8 tractors.  Many aspects of one tractor configuration (such as the engine, transmission, axle configuration, tire sizes, and control systems) are similar to those used on the manufacturer's sister models.  For example, the powertrain configuration of a sleeper cab with any roof height is similar to the one used on a day cab with any roof height.  Overall, the GEM predicted the fuel consumption and CO2 emissions within 2 percent of the chassis test procedure results for three test cycles  -  the California ARB Transient cycle, 65 mph cruise cycle, and 55 mph cruise cycle.  These cycles are the ones the agencies are utilizing in compliance testing.  Since the time of the proposal, the agencies also conducted a validation of GEM relative to a commonly used vehicle simulation software, GT-Power.  The results of this validation found that the two software programs predicted the fuel economy of each subcategory of tractor to be within 2 percent.  Test to test variation for heavy-duty vehicle chassis testing can be higher than 4 percent due to driver variation alone.  The final simulation model is described in greater detail in Chapter 4 of the RIA and is available for download by at (http://www.epa.gov/otaq/climate/regulations.htm).  
After proposal, the agencies conducted a peer review of GEM version 1.0 which was proposed.  In addition, we requested comment on all aspects of this approach to compliance determination in general and to the use of the GEM in particular.  The agencies received comments from stakeholders and made changes to GEM v2.0 to address concerns raised in comments, along with the comments received during the peer review process.  The most noticeable changes to GEM include improvements to the graphical user interface (GUI).  In response to comments, the agencies have reduced the amount of information required in the Identification section; linked the inputs to the selected subcategory while graying-out the items that are not applicable to the subcategory; and added batch modeling capability to reduce the compliance burden to manufacturers.  In addition, s ubstantial work went into model validations and benchmarking against vehicle test data and other commonly used vehicle simulation models.  The model also includes a new driver model, a simplified electric system model, and revised engine fuel maps to better reflect the 2017 model year engine standards.   Details of the changes are included in RIA Chapter 4.
To demonstrate compliance, a Class 7 and 8 tractor manufacturer will measure the performance of specified tractor systems (such as aerodynamics and tire rolling resistance), input the values into GEM, and compare the model's output to the standard.  The rules require that a tractor manufacturer provide the inputs for each of following factors for each of the tractors it wishes to certify under CO2 standards and for establishing fuel consumption values:  Coefficient of Drag, Tire Rolling Resistance Coefficient, Weight Reduction, Vehicle Speed Limiter, and Extended Idle Reduction Technology.  These are the technologies on which the agencies' own feasibility analysis for these vehicles is predicated.  An example of the GEM input screen is included in Figure II-1.
                                       
Figure II-1: GEM Input Screen

For the aerodynamic assessment, tire rolling resistance, and tractor weight reduction, the input values for the simulation model will be determined by the manufacturer through conducting tests using the test procedures finalized by the agencies in this action and described below.  The agencies are allowing several testing alternatives for aerodynamic assessment referenced back to a coastdown test procedure, a single procedure for tire rolling resistance coefficient determination, and a prescribed method to determine tractor weight reduction.  The agencies are finalizing defined model inputs for determining vehicle speed limiter and extended idle reduction technology benefits.  The other aspects of vehicle performance are fixed within the model as defined by the agencies and are not varied for the purpose of compliance.
Metric
Test metrics which are quantifiable and meaningful are critical for a regulatory program. The CO2 and fuel consumption metric should reflect what we wish to control (CO2 or fuel consumption) relative to the clearest value of its use: in this case, carrying freight.  It should encourage efficiency improvements that will lead to reductions in emissions and fuel consumption during real world operation.  The agencies are finalizing standards for Class 7 and 8 combination tractors that would be expressed in terms of moving a ton (2,000 pounds) of freight over one mile.  Thus, NHTSA's final fuel consumption standards for these trucks would be represented as gallons of fuel used to move one ton of freight 1,000 miles, or gal/1,000 ton-mile.  EPA's final CO2 vehicle standards would be represented as grams of CO2 per ton-mile.  The model converts CO2 emissions to fuel consumption using the CO2 grams per ton mile estimated by GEM and an assumed 10,180 grams of CO2 per gallon of diesel fuel.
This approach tracks the recommendations of the NAS report.  The NAS panel concluded, in their report, that a load-specific fuel consumption metric is appropriate for HD trucks.  The panel spent considerable time explaining the advantages of and recommending a load-specific fuel consumption approach to regulating the fuel efficiency of heavy-duty trucks.  See NAS Report pages 20 through 28.  The panel first points out that the nonlinear relationship between fuel economy and fuel consumption has led consumers of light-duty vehicles to have difficulty in judging the benefits of replacing the most inefficient vehicles.  The panel describes an example where a light-duty vehicle can save the same 107 gallons per year (assuming 12,000 miles travelled per year) by improving one vehicle's fuel efficiency from 14 to 16 mpg or improving another vehicle's fuel efficiency from 35 to 50.8 mpg.  The use of miles per gallon leads consumers to undervalue the importance of small mpg improvements in vehicles with lower fuel economy.  Therefore, the NAS panel recommends the use of a fuel consumption metric over a fuel economy metric.  The panel also describes the primary purpose of most heavy-duty vehicles as moving freight or passengers (the payload).  Therefore, they concluded that the most appropriate way to represent an attribute-based fuel consumption metric is to normalize the fuel consumption to the payload.
With the approach to compliance NHTSA and EPA are adopting, a default payload is specified for each of the tractor categories suggesting that a gram per mile metric with a specified payload and a gram per ton-mile metric would be effectively equivalent.  The primary difference between the metrics and approaches relates to our treatment of mass reductions as a means to reduce fuel consumption and greenhouse gas emissions.  In the case of a gram per mile metric, mass reductions are reflected only in the calculation of the work necessary to move the vehicle mass through the drive cycle.  As such it directly reduces the gram emissions in the numerator since a vehicle with less mass will require less energy to move through the drive cycle leading to lower CO2 emissions.  In the case of Class 7 and 8 tractors and our gram/ton-mile metric, reductions in mass are reflected both in less mass moved through the drive cycle (the numerator) and greater payload (the denominator).  We adjust the payload based on vehicle mass reductions because we estimate that approximately one third of the time the amount of freight loaded in a trailer is limited not by volume in the trailer but by the total gross vehicle weight rating of the tractor.  By reducing the mass of the tractor the mass of the freight loaded in the tractor can go up.  Based on this general approach, it can be estimated that for every 1,200 pounds in mass reduction total truck vehicle miles traveled, and therefore trucks on the road, could be reduced by one percent.  Without the use of a per ton-mile metric it would not be clear or straightforward for the agencies to reflect the benefits of mass reduction from large freight carrying vehicles that are often limited in the freight they carry by the gross vehicle weight rating of the truck.  There was strong consensus in the public comments for adopting the proposed metrics for tractors.
Truck Aerodynamic Assessment
The aerodynamic drag of a vehicle is determined by the vehicle's coefficient of drag (Cd), frontal area, air density and speed.  As noted in the NPRM, quantifying truck aerodynamics as an input to the GEM presents technical challenges because of the proliferation of truck configurations, the lack of a clearly preferable standardized test method, and subtle variations in measured aerodynamic values among various test procedures.  Class 7 and 8 tractor aerodynamics are currently developed by manufacturers using a range of techniques, including wind tunnel testing, computational fluid dynamics, and constant speed tests.  
Consistent with what was stated in the proposal, we believe a broad approach allowing manufacturers to use these multiple different test procedures to demonstrate aerodynamic performance of its tractor fleet is appropriate given that no single test procedure is superior in all aspects to other approaches.  Allowing manufacturers to use multiple test procedures and modeling coupled with good engineering judgment to determine aerodynamic performance is consistent with the current approach used in determining representative road load forces for light-duty vehicle testing (40 CFR 86.129-00(e)(1)). However, we also recognize the need for consistency and a level playing field in evaluating aerodynamic performance.  
To address the consistency and level playing field concerns, NHTSA and EPA proposed that manufacturers use a two-part screening approach for determining the aerodynamic inputs to the GEM.  The first part would have required the manufacturers to assign each vehicle aerodynamic configuration based on descriptions of vehicle characteristics to one of five aerodynamics bins created by EPA and NHTSA.  The proposed assignment by bin would have reflected the aerodynamic characteristics of the vehicle.  The agencies, while working with industry, concluded for the final rulemaking that an approach which identified a reference aerodynamic test method and a procedure to align results from other aerodynamic test procedures with the reference method is a simpler, more accurate approach than deciphering written descriptions of aerodynamic components.
Therefore, we are finalizing an approach, as described in Section V.B.3.d, which uses an enhanced coastdown procedure as a reference method and defines a process for manufacturers to align drag results from each of their own test methods to the reference method results.  Manufacturers will be able to use any aerodynamic evaluation method in demonstrating a vehicle's aerodynamic performance as long as the method is aligned to the reference method.  The results from the aerodynamic testing will be the single determining factor for aerodynamic bin assignments.    
EPA and NHTSA recognize that wind conditions, most notably wind direction, have a greater impact on real world CO2 emissions and fuel consumption of heavy-duty trucks than of light-duty vehicles.  As noted in the NAS report, the wind average drag coefficient is about 15 percent higher than the zero degree coefficient of drag.  In addition, the agencies received comments that supported the use of wind averaged drag results for the aerodynamic determination.  The agencies considered finalizing the use of a wind averaged drag coefficient in this regulatory program, but ultimately decided to  finalize drag values which represent zero yaw (i.e., representing wind from directly in front of the vehicle, not from the side) instead.  We are taking this approach recognizing that the reference method is coastdown testing and it is not capable of determining wind averaged yaw.  Wind tunnels are currently the only tool to accurately assess the influence of wind speed and direction on a truck's aerodynamic performance.  The agencies recognize, as NAS did, that the results of using the zero yaw approach may result in fuel consumption predictions that are offset slightly from real world performance levels, not unlike the offset we see today between fuel economy test results in the CAFE program and actual fuel economy performance observed in-use. We believe this approach will not impact overall technology effectiveness or change the kinds of technology decisions made by the tractor manufacturers in developing equipment to meet our final standards.  However, the agencies are defining an approach to allow manufacturers to gain credit for developing technologies which improve the aerodynamic performance in crosswind conditions, similar to those experienced by vehicles in use through innovative technologies, as described in Section IV.
The agencies are adopting an approach for this final action where the manufacturer would determine a truck's aerodynamic drag force through testing, determine the appropriate predefined aerodynamic bin, and then input the predefined Cd value into GEM.  Coefficient of drag and frontal area of the tractor-trailer combination go hand-in-hand to determine the force required to overcome aerodynamic drag.  The agencies proposed that the Cd value would be a GEM input derived by the manufacturer and that the agencies would specify the truck's frontal area for each regulatory subcategory. The agencies sought and received comment recommending an alternate approach where the aerodynamic input tables (as shown in Table II-6 and Table II-7) represent the drag force as defined as Cd multiplied by the frontal area. Because both approaches are essentially equivalent and the use of CdA more directly relates back to the aerodynamic testing, the agencies are finalizing the use of CdA as recommended by manufacturers.  
The agencies are finalizing aerodynamic technology bins which divide the wide spectrum of tractor aerodynamics into five bins (i.e., categories) for high roof tractors.  The first high roof category, Bin I, was designed to represent tractor bodies which prioritize appearance or special duty capabilities over aerodynamics.  These Bin I trucks incorporate few, if any, aerodynamic features and may have several features which detract from aerodynamics, such as bug deflectors, custom sunshades, B-pillar exhaust stacks, and others.  The second high roof aerodynamics category is Bin II which roughly represents the aerodynamic performance of the average new tractor sold today. The agencies developed this bin to incorporate conventional tractors which capitalize on a generally aerodynamic shape and avoid classic features which increase drag.  High roof tractors within Bin III build on the basic aerodynamics of Bin II tractors with added components to reduce drag in the most significant areas on the tractor, such as integral roof fairings, side extending gap reducers, fuel tank fairings, and streamlined grill/hood/mirrors/bumpers, similar to SmartWay trucks today.  The Bin IV aerodynamic category for high roof tractors builds upon the Bin III tractor body with additional aerodynamic treatments such as underbody airflow treatment, down exhaust, and lowered ride height, among other technologies.  And finally, Bin V tractors incorporate advanced technologies which are currently in the prototype stage of development, such as advanced gap reduction, rearview cameras to replace mirrors, wheel system streamlining, and advanced body designs.  
The agencies had proposed five aerodynamic bins for each tractor regulatory subcategory.  The agencies received comments from stakeholders indicating that this approach was not consistent with the aerodynamics of low and mid roof tractors.  High roof tractors are consistently paired with box trailer designs, and therefore manufacturers can design the tractor aerodynamics as a tractor-trailer unit and target specific areas like the gap between the tractor and trailer.  In addition, the high roof tractors tend to spend more time at high speed operation which increases the impact of aerodynamics on fuel consumption and GHG emissions.  On the other hand, low and mid roof tractors are designed to pull variable trailer loads and shapes.  They may pull trailers such as flat bed, low boy, tankers, or bulk carriers.  The loads on flat bed trailers can range from rectangular cartons with tarps, to a single roll of steel, to a front loader.  Due to these variables, manufacturers do not design unique low and mid roof tractor aerodynamics but instead use derivatives from their high roof tractor designs.  The aerodynamic improvements to the bumper, hood, windshield, mirrors, and doors are developed for the high roof tractor application and then carried over into the low and mid roof applications.  As mentioned above, the types of designs that would move high roof tractors from a Bin III to Bins IV and V include features such as gap reducers and integral roof fairings which would not be appropriate on low and mid roof tractors.  The agencies considered the comments provided by stakeholders and are finalizing only two aerodynamic bins for low and mid roof tractors.  The agencies are reducing the number of bins to reflect the actual range of aerodynamic technologies effective in low and mid roof tractor applications.  Thus, the agencies are differentiating the aerodynamic performance for low and mid roof applications into two bins  -  conventional and aerodynamic.
For compliance determination, a manufacturer would use the aerodynamic results determined through testing to establish the appropriate bin.  The manufacturer would then input into GEM the Cd value specified for each bin as defined in Table II-6 and Table II-7.  For example, if a manufacturer tests a Class 8 sleeper cab high roof tractor and the test produces a CdA value of 6.0, then the manufacturer would assign this tractor to the Class 8 Sleeper Cab High Roof Bin III.  The manufacturer would then use the Cd value of 0.58 as the input to GEM.
The Cd values in Table II-6 and Table II-6 differ from proposal based on a change in the reference method (enhanced coastdown procedure) and additional testing conducted by EPA.  Details of the test program and results are included in RIA Chapter 2.
Table II-6: Aerodynamic Input Definitions to GEM for High Roof Tractors

Class 7
Class 8

Day Cab
Day Cab
Sleeper Cab

High Roof
High Roof
High Roof
Aerodynamic Test Results (CdA in m[2])
Bin I
>= 7.9
>= 7.9
>= 7.5
Bin II
6.9-7.8
6.9-7.8
6.5-7.4
Bin III
5.9-6.8
5.9-6.8
5.5-6.4
Bin IV
5.4-5.8
5.4-5.8
5.0-5.4
Bin V
<= 5.3
<= 5.3
<= 4.9
Aerodynamic Input to GEM (Cd)
Bin I
0.78
0.78
0.74
Bin II
0.70
0.70
0.66
Bin III
0.62
0.62
0.58
Bin IV
0.54
0.54
0.50
Bin V
0.50
0.50
0.46

Table II-7: Aerodynamic Input Definitions to GEM for Low and Mid Roof Tractors

Class 7
Class 8

Day Cab
Day Cab
Sleeper Cab

Low Roof
Mid Roof
Low Roof
Mid Roof
Low Roof
Mid Roof

Aerodynamic Test Results (CdA in m[2])
Bin I
>= 5.1
>= 6.5
>= 5.1
>= 6.5
>= 5.1
>= 6.5
Bin II
<= 5.0
<= 6.4
<= 5.0
<= 6.4
<= 5.0
<= 6.4
Aerodynamic Input to GEM (Cd)
Bin I
0.77
0.87
0.77
0.87
0.77
0.87
Bin II
0.71
0.82
0.71
0.82
0.71
0.82
Tire Rolling Resistance Assessment
NHTSA and EPA are finalizing as proposed that the tractor's tire rolling resistance input to the GEM be determined by either the tire manufacturer or tractor manufacturer using the test method adopted by the International Organization for Standardization, ISO 28580:2009.  The agencies believe the ISO test procedure is appropriate to propose for this program because the procedure is the same one used by NHTSA in its fuel efficiency tire labeling program and is consistent with the direction being taken by the tire industry both in the United States and Europe.  The rolling resistance from this test would be used to specify the rolling resistance of each tire on the steer and drive axle of the vehicle.  The results would be expressed as a rolling resistance coefficient and measured as kilogram per metric ton (kg/metric ton).  The agencies are finalizing as proposed that three tire samples within each tire model be tested three times each to account for some of the production variability and the average of the nine tests would be the rolling resistance coefficient for the tire.  The GEM will use the steer and drive tire rolling resistance inputs and distribute 15 percent of the gross weight of the truck and trailer to the steer axle, 42.5 percent to the drive axles, and 42.5 percent to the trailer axles.  The trailer tires' rolling resistance is prescribed by the agencies as part of the standardized trailer used for demonstrating compliance at 6 kg/metric ton, which was the average trailer tire rolling resistance measured during the SmartWay tire testing.  

Weight Reduction Assessment
In the NPRM, the agencies proposed requiring a 400 pound weight reduction in Class 7 and 8 tractors through the substitution of single wide tires and light-weight wheels for dual tires and steel wheels.  This approach was taken since there is a large variation in the baseline weight among trucks that perform roughly similar functions with roughly similar configurations.  Because of this, the only effective way to quantify the exact CO2 and fuel consumption benefit of mass reduction using GEM is to estimate baseline weights for specific components that can be replaced with light weight components.  If the weight reduction is specified for light weight versions of specific components, then both the baseline and weight differentials for these are readily quantifiable and well-understood.  Light-weight wheels are commercially available as are single wide tires and thus data on the weight reductions attributable to these two approaches is readily available. As discussed below, a number of commenters suggested the technologies identified in the proposal would be inadequate to achieve the 400 pound reduction assumed in the standard. We believe with the additional technologies identified below it will be possible to achieve 400 pounds reduction consistent with our final standard.
The agencies received comments on this approach from Volvo, ATA, MEMA, Navistar, American Chemistry Council, the Auto Policy Center, Iron and Steel Institute, Arvin Meritor, Aluminum Association, and environmental groups and NGOs.  Volvo and ATA stated that not all fleets can use single wide tires and if this is the case the 400 pound weight reduction cannot be met.  A  number of additional commenters  -  including American Chemistry Council, The Auto Policy Center, Iron and Steel Institute, Aluminum Association, Arvin Meritor, MEMA, Navistar, Volvo, and environmental and nonprofit groups  -  stated that manufacturers should be allowed to use additional light weight components in order to meet the tractor fuel consumption and CO2 emissions standards.  These groups stated that weight reductions should not be limited to wheels and tires.  They asked that cab doors, cab sides and backs, cab underbodies, frame rails, cross members, clutch housings, transmission cases, axle differential carrier cases, brake drums, and other components be allowed to be replaced with light-weight versions.  Materials suggested for substitution included aluminum, light-weight aluminum, high strength steel, and plastic composites.  The American Iron and Steel Institute stated there are opportunities to reduce mass by replacing mild steel  -  which currently dominates the heavy-duty industry  -  with high strength steel.   
In addition, The American Auto Policy Center asked that manufacturers be allowed to use materials other than aluminum and high strength steel to comply with the regulations.  DTNA asked that weight reduction due to engine downsizing be allowed to receive credit.  Volvo requested that weight reductions due to changes in axle configuration be credited.  They used the example of a customer selecting a 4 X 2 over a 6 X 4 axle tractor.  In this case, they assert there would be a 1,000 pound weight savings from removing an axle.
As proposed, many of the material substitutions could have been considered as innovative technologies.  In response to the above summarized comments, the agencies evaluated whether additional materials and components could be used for compliance with the tractor weight reduction through the primary program.  The agencies reviewed comments and data received in response to the NPRM and additional studies cited by commenters.  A summary of this review is provided in the following paragraphs.
TIAX, in their report to the NAS, cited information from Alcoa identifying several mass reduction opportunities from material substitution in the tractor cab components which were similar to the ones identified by the Aluminum Association in their comments to this rulemaking.  TIAX included studies submitted by Alcoa showing the potential to reduce the weight of a tractor-trailer combination by 3,500 to 4,500 pounds.  In addition, The U.S. Department of Energy has several projects underway to improve the freight efficiency of Class 8 trucks which provide relevant data:  DOE reviewed prospective lightweighting alternative materials and found that aluminum has a potential to reduce mass by 40 to 60 percent, which is in line with the estimates of mass reductions of various components provided by Alcoa, and by the Aluminum Association in their comments and as cited in the TIAX report.  These combined studies, comments, and additional data provided information on specific components that could be replaced with aluminum components.
With regard to high strength steel, the Iron and Steel Institute found that the use of high strength steel can reduce the weight of light duty trucks by 25 percent.  Approximately 10 percent of this reduction results from material substitution and 15 percent from vehicle re-design.  While this study evaluated light-duty trucks, the agencies believe that a similar reduction could be achieved in heavy-duty trucks since the reductions from material substitution would likely be similar in heavy-trucks as in light-trucks.  U.S. DOE, in the report noted above, identified opportunities to reduce mass by 10 percent through high strength steel.  This study was also for light-duty vehicles.
The agencies considered other materials such as plastic composites and magnesium substitutes but were not able to obtain weights for specific components made from these materials.  We have therefore not included components made from these materials as possible substitutes in the primary program, but they may be considered through the innovative technology provisions.  We may consider including these materials in a subsequent regulation if data become available.  
Based on this analysis, the agencies developed an expanded list of weight reduction opportunities for the final rulemaking, as listed in Table II-8.  The list includes additional components, but not materials, from those proposed in the NPRM.  For high strength steel, the weight reduction value is equal to 10 percent of the presumed baseline component weight, as the agencies used a conservative value based on the DOE report.  We recognize that there may be additional potential for weight reduction in new high strength steel components which combine the reduction due to the material substitution along with improvements in redesign, as evidenced by the studies done for light duty vehicles.  In the development of the high strength steel component weights, we are only assuming a reduction from material substitution and no weight reduction from redesign, since we do not have any data specific to redesign of heavy-duty components nor do we have a regulatory mechanism to differentiate between material substation and improved design.  We are finalizing for wheels that both aluminum and light weight aluminum are eligible to be used as light-weight materials.  Only aluminum can be used as a light-weight material for other components.  The reason for this is data was available for light weight aluminum for wheels but was not available for other components.
The agencies received comments on the proposal from the American Chemistry Council highlighting the role of plastics and composites in heavy-duty vehicles.  As they stated, composites can be low density while having high strength and are currently used in applications such as oil pans and buses.  The DOE mass reduction program demonstrated for heavy vehicles proof of concept designs for hybrid composite doors with an overall mass savings of 40 percent; 30 percent mass reduction of a hood system with carbon fiber sheet molding compound; 50 percent mass reduction from composite tie rods, trailing arms, and axles; and superplastically formed aluminum body panels.  While the agencies recognize these opportunities, we do not believe the technologies have advanced far enough to quantify the benefits of these materials because they are very dependent on the actual composite material.  The agencies may consider such lightweighting opportunities in future actions, but are not including them as part of this primary program.  Manufacturers which opt to pursue composite and plastic material substitutions may pursue credits through the innovative technology provisions.
With regard to Volvo's request that manufacturers be allowed to receive credit for trucks with fewer axles, the agencies recognize that truck options exist today which have less mass than other options. However, we believe the decisions to add or subtract such components will be made based on the intended use of the vehicle and not based on a crediting for the mass difference in our compliance program.  It is not our intention to create a tradeoff between the right truck to serve a need (e.g. one with more or fewer axles) and compliance with our final standards.  Therefore, we are not including provisions to credit (or penalize) vehicle performance based on the subtraction (or addition) of specific vehicle components.  Table II-8 provides weight reduction values for different components and materials.
Table II-8: Weight Reduction Values
Weight Reduction Technology
                               Weight Reduction
                              (lb per tire/wheel)
Single Wide Drive Tire with ...
Steel Wheel
                                      84
                                       
Aluminum Wheel
                                      139
                                       
Light Weight Aluminum Wheel
                                      147
Steer Tire or Dual Wide Drive Tire with ...
High Strength Steel Wheel
                                       8
                                       
Aluminum Wheel
                                      21
                                       
Light Weight Aluminum Wheel
                                      30
Weight Reduction Technologies
                        Aluminum Weight Reduction (lb.)
                  High Strength Steel Weight Reduction (lb.)
Door
                                      20
                                       6
Roof
                                      60
                                      18
Cab rear wall
                                      49
                                      16
Cab floor
                                      56
                                      18
Hood Support Structure
                                      15
                                       3
Fairing Support Structure
                                      35
                                       6
Instrument Panel Support Structure
                                       5
                                       1
Brake Drums  -  Drive (4)
                                      140
                                      11
Brake Drums  -  Non Drive (2)
                                      60
                                       8
Frame Rails
                                      440
                                      87
Crossmember - Cab
                                      15
                                       5
Crossmember  -  Suspension
                                      25
                                       6
Crossmember  -  Non Suspension (3)
                                      15
                                       5
Fifth Wheel
                                      100
                                      25
Radiator Support
                                      20
                                       6
Fan Shroud
                                      10
                                       2
Fuel Tank Support Structure
                                      40
                                      12
Steps
                                      35
                                       6
Bumper
                                      33
                                      10
Shackles
                                      10
                                       3
Front Axle
                                      60
                                      15
Suspension Brackets, Hangers
                                      100
                                      30
Transmission Case
                                      50
                                      12
Clutch Housing
                                      40
                                      10
Drive Axle Hubs (8)
                                      160
                                       4
Non Drive Front Hubs (2)
                                      40
                                       5
Driveshaft
                                      20
                                       5
Transmission/Clutch Shift Levers
                                      20
                                       4

EPA and NHTSA are specifying the baseline vehicle weight for each regulatory vehicle subcategory (including the tires, wheels, frame, and cab components) in GEM in aggregate based on weight of vehicles used in EPA's aerodynamic test program, but allow manufacturers to specify the use of light-weight components.  GEM then quantifies the weight reductions based on the pre-determined weight of the baseline component minus the pre-determined weight of the component made from light-weight material.  Manufacturers cannot specify the weight of the light-weight component themselves, only the material used in the substitute component.  The agencies assume the baseline wheel and tire configuration contains dual tires with steel wheels, along with steel frame and cab components, because these represent the vast majority of new vehicle configurations today.  The weight reduction due to replacement of components with light weight versions will be reflected partially in the payload tons and partially in reducing the overall weight of the vehicle run in GEM.  The specified payload in GEM will be set to the prescribed payload plus one third of the weight reduction amount to recognize that approximately one third of the truck miles are travelled at maximum payload, as discussed below in the payload discussion.  The other two thirds of the weight reduction will be subtracted from the overall vehicle weight prescribed in GEM.
 In the context of this heavy-duty vehicle program with only changes to tires and wheels, the agencies do not foresee any related impact on safety.  
Extended Idle Reduction Technology Assessment
Extended idling from Class 8 heavy-duty long haul combination tractors contributes to significant CO2 emissions and fuel consumption in the United States.  The Federal Motor Carrier Safety Administration regulations require a certain amount of driver rest for a corresponding period of driving hours.  Extended idle occurs when Class 8 long haul drivers rest in the sleeper cab compartment during rest periods as drivers find it both convenient and less expensive to rest in the truck cab itself than to pull off the road and find accommodations. During this rest period a driver will idle the truck in order to provide heating or cooling, or to run on-board appliances.  In some cases the engine can idle in excess of 10 hours.  During this period, the truck will consume approximately 0.8 gallons of fuel and emit over 8,000 grams of CO2 per hour. An average truck can consume 8 gallons of fuel and emit over 80,000 grams of CO2 during overnight idling in such a case. 
Idling reduction technologies (IRT) are available to allow for driver comfort while reducing fuel consumptions and CO2 emissions. Auxiliary power units, fuel operated heaters, battery supplied air conditioning, and thermal storage systems are among the technologies available today.  The agencies are adopting a provision for use of extended idle reduction technology as an input to the GEM for Class 8 sleeper cabs.  As discussed further in Section III, if a manufacturer wishes to receive credit for using IRT to meet the standard, then an automatic main engine shutoff must be programmed and enabled, such that engine shutdown occurs after 5 minutes of idling, to help ensure the reductions are realized in-use.  A discussion of the provisions the agencies are adopting for allowing an override of this automatic shutdown can be found in RIA Chapter 2.  As with all of the technology inputs discussed in this section, the agencies are not mandating the use of idle reductions or idle shutdown, but rather allowing their use as one part of a suite of technologies feasible for reducing fuel consumption and meeting the final standards and using these technologies as the inputs to the GEM.  The default value (5 g CO2/ton-mile or 0.5 gal/1,000 ton-mile) for the use of automatic engine shutdown (AES) with idle reduction technologies was determined as the difference between a baseline main engine with idle fuel consumption of 0.8 gallons per hour that idles 1,800 hours and travels 125,000 miles per year, and a diesel auxiliary power unit operating in lieu of main engine during those same idling hours.  The agencies received comments regarding the assumptions used to derive the idle reduction value.  The agencies are finalizing the calculation as proposed.  Additional details regarding the comments and calculations are included in RIA Section 2.5.4.2.  
The agencies are adopting a provision to allow manufacturers to provide an AES system which is active for only a portion of a vehicle's life.  In this case, a discounted idle reduction value would be entered into GEM.  A discussion of the calculation of a discounted IRT credit can be found in Section III.  Additional details on the emission and fuel consumption reduction values are included in RIA Section 2.5.4.2.
Vehicle Speed Limiters
The NPRM proposed to allow combination tractors that use vehicle speed limiters (VSL) to include the maximum governed speed value as an input to the GEM model for purposes of determining compliance with the vehicle standards. See 75 FR at 74223. Governing the top speed of a vehicle can reduce fuel consumption and GHG emissions, because fuel consumption and CO2 emissions increase proportionally to the cube of vehicle speed.  Limiting the speed of a vehicle reduces the fuel consumed, which in turn reduces the amount of CO2 emitted.  The specific input to the GEM model would be the maximum governed speed limit of the VSL that is programmed into the powertrain control module (PCM).  The agencies stressed in the NPRM that in order to obtain a benefit in the GEM model, a manufacturer must preset the limiter in such a way that the setting will not be "capable of being easily overridden by the fleet or the owner."  If the top speed could be easily overridden, the fuel consumption/CO2 benefits of the VSL might not be realized, and the agencies did not want to allow the technology to be used for compliance if the technology could be disabled easily and the real world benefits not achieved. 
Many commenters (Cummins, Daimler, EMA/TMA, ATA, AAPC, NADA) supported the use of VSLs as an input to the GEM model, but requested clarification of what the specific requirements would be to ensure the VSL setting would not be capable of being easily overridden.  Cummins and Daimler requested that the final rules explicitly allow vehicle manufacturers to access and adjust the VSL control feature for setting the maximum governed speed, arguing that the diverse needs of the commercial vehicle industry warrant flexibility in electronic control features, and that otherwise supply chain issues may result from the use of VSLs.  NADA and EMA/TMA also requested that VSLs have override features and be adjustable, citing various needs for flexibility by the fleets.  EMA/TMA and ATA requested that VSLs be adjustable downward by fleets in order to obtain greater benefit in GEM, if company policies change or if a subsequent vehicle owner needs a different VSL setting.  EMA/TMA stated that the agencies should prohibit tampering with VSLs, and both EMA and TRALA requested more information on how the agencies intended to address tampering with VSLs.
In addition to features governing the maximum vehicle speed, commenters requested adding other programmable flexibilities to mitigate potential drawbacks to VSLs.  Cummins, DTNA, and EMA/TMA requested that a programmable "soft top" speed be added to PCMs which would allow a vehicle to exceed the speed limit setting governed by a VSL for a short period of time.  A "soft top" feature could be used for a limited duration in order to maneuver and pass other on-road vehicles at speeds greater than that governed by the VSL. The commenters argued this was important for vehicle passing and safety-related situations where, without a soft top feature, it could be possible for speed limited trucks to obstruct other vehicles on the road and cause severe road congestion.
ATA and EMA/TMA also requested that manufacturers be allowed to program a mileage based expiration into the VSL control feature, in order to preserve the value of vehicles for second owners who may require operation at higher speeds.  ATA further commented that manufacturers should be allowed to account for additional GEM input benefits if the speed governor is reprogrammed to a lower speed within the useful life of the vehicle.  
After carefully considering the comments, the agencies have decided, for these final rules, to retain most of the elements in the proposal.  Manufacturers will be allowed to implement a fixed maximum governed vehicle speed through a VSL feature and to use the maximum governed vehicle speed as an input to the GEM for certification.  
The agencies have decided to adopt commenters' suggestions to allow adjustable lower limits that can be set and governed by VSLs independent of the one governing the maximum certified speed limit to provide the desired flexibility requested by the trucking industry.  We believe that this flexibility would not decrease the anticipated fuel consumption/CO2 benefits of VSLs because the adjustable limits would be lower values.  Issues identified by the commenters including the ability to change delivery routes requiring lower governed speeds or when a fleet's business practices change resulting in a desire for greater fuel consumption savings are not in conflict with the purpose and benefit of VSLs.  As such, the agencies have decided to allow a manufacturer to install features for its fleet customers to set their own lower adjustable limits below the maximum VSL limit specified by the agencies.  However, the agencies have decided to not allow any additional benefit in GEM to a manufacturer for allowing a lower governed speed in-use than the certified maximum limit for this first phase of the HD National Program because we can only be certain that the VSL will be at the maximum setting.   
Both agencies also agree that manufacturers can provide a "soft top" and expiration features to be programmed into PCMs to provide additional flexibility for fleet owners and so that fleets who purchase used vehicles have the ability to have different VSL policies than the original owner of the vehicle.  Although the agencies considered limiting the soft top maximum level due to safety and fuel consumption/GHG benefit concerns, we have decided to allow the soft top maximum level to be set to any level higher than the maximum speed governed by the VSL.  This approach will provide drivers with the ability to better navigate through traffic.  However, the agencies are requiring that manufacturers providing a soft top feature must design the system so it cannot be modified by the fleets and will not decrement the vehicle speed limit causing the vehicle to decelerate while the driver is operating a vehicle above the normal governed vehicle speed limit.  For example, if a manufacturer designs a vehicle speed limiter that has a normal governed speed limiter setting of 62 mph, and a "soft top" speed limiter value of 65 mph, the algorithm shall not cause the vehicle speed to decrement causing the vehicle to decelerate while the driver is operating the vehicle at a speed greater that 62 mph (between 62 and 65 mph).  The agencies are concerned that a forced deceleration when a driver is attempting to pass or maneuver could have an adverse impact on safety.      
In using a soft top feature, a manufacturer will be required to provide to the agencies a functional description of the "soft top" control strategy including calibration values, the speed setting for both the hard limit and the soft top and the maximum time per day the control strategy could allow the vehicle to operate at the "soft top" speed limit at the time of certification.  This information will be used to derive a factor to discount the VSL input used in GEM modeling to determine the fuel consumption and GHG emissions performance of the vehicle.  We also agree with comments that VSLs should be adjustable so as not to potentially limit a vehicle's resale value.  However, manufacturers choosing the option to override the VSL after a specified number of miles would be required to discount the benefit of the VSL relative to the tractor's full lifetime miles.  The VSL discount benefits for using soft-top and expiration features must be calculated using Equation II-1.  Additional details regarding the derivation of the discounted equation are included in RIA Chapter 2.  The agencies are also requiring that any vehicle that has a "soft top" VSL to identify the use of the "soft top" VSL on the vehicle emissions label.
Equation II-1: Discounted Vehicle Speed Limiter Equation
VSL input for GEM = Expiration Factor * [Soft Top Factor* Soft Top VSL 
+ (1-Soft Top Factor) * VSL] + (1-Expiration Factor)*65 mph
 In response to the comments about how the agencies will evaluate tampering, NHTSA and EPA have added a number of requirements in these final rules relating to the VSL control feature.  VSL control features should be designed so they cannot be easily overridden.  Manufacturers must ensure that the governed speed limit programmed into the VSL must also be verifiable through on-board diagnostic scanning tools, and must provide a description of the coding to identify the governed maximum speed limit and the expiration mileage both at the time of the initial vehicle certification and in-use.  The agencies believe both manufacturers and fleets should work toward maintaining the integrity of VSLs, and the agencies may conduct new-vehicle and in-use random audits to verify that inputs into GEM are accurate.  
The agencies are aware that some fleets/owners make changes to vehicles, such as installing different diameter tires, changing the axle (final drive) ratio and transmission gearing, such that a vehicle could travel at speeds higher than the speed limited by its VSL.  Vehicles subject to FMCSA requirements must be in compliance with 49 CFR § 393.82.  The requirements apply to speedometers and states as follows:
      Each bus, truck, and truck-tractor must be equipped with a speedometer indicating vehicle speed 	in miles per hour and/or kilometers per hour. The speedometer must be accurate to within plus or minus 8 km/hr (5 mph) at a speed of 80 km/hr (50 mph).
To facilitate adjustments for component changes affecting vehicle speed, manufacturers should provide a fleet/owner with the means to do so unless the adjustments would affect the VSL setting or operation.  
 DTNA and ATA additionally requested that the agencies ensure that any VSL provisions adopted under the GHG emissions and fuel efficiency rules align with existing NHTSA standards.  The agencies agree and note that there are no existing standards for a VSL outside of this current rulemaking activity.  However, NHTSA has announced its intent to publish a proposal in 2012 for a VSL.  While both agencies have taken steps to avoid potential conflicts between the rulemaking being finalized today for fuel consumption and GHG emissions and the anticipated safety rulemaking, different conclusions may be reached in a safety-based rulemaking on VSLs, particularly in the approach to specifying soft top parameters and VSL expiration. 
Defined Vehicle Configurations in the GEM
As discussed above, the agencies are adopting methodologies that manufacturers will use to quantify the values input into the GEM for these factors affecting truck efficiency:  Coefficient of Drag, Tire Rolling Resistance Coefficient, Weight Reduction, Vehicle Speed Limiter, and Extended Idle Reduction Technology.  The other aspects of the vehicle configuration are fixed within the model and are not varied for the purpose of compliance.  The defined inputs include the tractor-trailer combination curb weight, payload, engine characteristics, and drivetrain for each vehicle type, and others.  
Vehicle Drive Cycles
The simulation model (GEM) uses various inputs to characterize a vehicle's configuration (such as weight, aerodynamics, and rolling resistance) and predicts how the vehicle would behave on the road when it follows a driving cycle (vehicle speed versus time).  As noted by the 2010 NAS Report, the choice of a drive cycle used in compliance testing has significant consequences on the technology that will be employed to achieve a standard as well as the ability of the technology to achieve real world reductions in emissions and improvements in fuel consumption.  Manufacturers naturally will design vehicles to ensure they satisfy regulatory standards.  An ill-suited drive cycle for a regulatory category could encourage GHG emissions and fuel consumption technologies which satisfy the test but do not achieve the same benefits in use.  For example, requiring all trucks to use a constant speed highway drive cycle will drive significant aerodynamic improvements.  However, in the real world a combination tractor used for local delivery may spend little time on the highway, reducing the benefits achieved by this technology.  In addition, the extra weight of the aerodynamic fairings will actually penalize the GHG and fuel consumption performance in urban driving and may reduce the freight carrying capability. The unique nature of the kinds of CO2 emissions control and fuel consumption technology means that the same technology can be of benefit during some operation but cause a reduced benefit under other operation.  To maximize the GHG emissions and fuel consumption benefits and avoid unintended reductions in benefits, the drive cycle should focus on promoting technology that produces benefits during the primary operation modes of the application.  Consequently, drive cycles used in GHG emissions and fuel consumption compliance testing should reasonably represent the primary actual use, notwithstanding that every truck has a different drive cycle in-use.   
The agencies proposed a modified version of the California ARB Heavy Heavy-duty Truck 5 Mode Cycle, using the basis of three of the cycles which best mirror Class 7 and 8 combination tractor driving patterns, based on information from EPA's MOVES model during the NPRM.  The key advantage of the California ARB 5 mode cycle is that it provides the flexibility to use several different modes and weight the modes to fit specific truck application usage patterns.  For proposal, EPA analyzed the five cycles and found that some modifications to the modes were to allow sufficient flexibility in weightings.  The agencies proposed the use of the Transient mode, as defined by California ARB, because it broadly covers urban driving.  The agencies also proposed altered versions of the High Speed Cruise and Low Speed Cruise modes which reflected only constant speed cycles at 65 mph and 55 mph respectively. The three cycles that were proposed were the ARB transient cycle, a 55 mph steady state cruise, and a 65 mph steady state cruise.  
The agencies received comment from NACAA recommending an increase in the high speed cruise cycle speed from the proposed value of 65 mph to 75 mph because trucks travel at higher speeds.  The agencies analyzed the urban and rural interstate truck speed limits in each state to determine the national average truck speed limit.  State interstate speed limits for trucks vary between 55 and 75 mph, depending on the state.  Based on this information, the national median truck speed limit is 65 mph.  The agencies also analyzed the national average truck speed limit weighted by VMT for each state based on VMT data by state from the Federal Highway Administration as described in RIA section 3.4.2.  Based on this information, the national average VMT-weighted truck speed limit is 63 mph.  The agencies continue to believe that the appropriate high speed cruise speed should be set at the national average truck speed limit to appropriately balance the evaluation of technologies such as aerodynamics, but not overstate the benefits of these technologies.  Therefore, the agencies are adopting as proposed a speed of 65 mph for the high speed cruise cycle.
The agencies also received comments from Allison which disagreed with proposed drive cycles for combination tractors because they did not account for external factors such as grades, wind, traffic condition, etc.  They also believe that the acceleration rates are too low.  The agencies recognize that the proposed drive cycles do not incorporate the external factors described by Allison.  Parallel to the approach used to evaluate light-duty vehicles, the drive cycles do not incorporate either grade or wind which can be difficult to simulate in chassis dynamometer cells.  In the final rules, the agencies are defining an approach that manufacturers may take to evaluate their aerodynamic packages in a wind-averaged condition and use a modified Cd value in GEM.  Similarly, the agencies are adopting provisions for the innovative technology demonstration that allows for the use of on-road testing which includes grades for technologies whose benefits are reflected with grade.  Lastly, the agencies' final drive cycles for highway operation contain a constant speed, as proposed.  The acceleration and deceleration rates are only used to bring the vehicle to the cruising speed and the CO2 emissions and fuel consumption from these portions of the drive cycle are not included in the composite emissions and fuel consumption results.  The agencies did not include the speed dithering, which is representative of actual driving and traffic conditions, in the proposed constant speed portion of the cycles because the dithering does not provide any additional distinction between technologies but only added complexity to the cycle.  The agencies believe this approach is still appropriate for the final action.
Allison referred the agencies to the Oak Ridge National Laboratory and SmartWay program to review the amount of time long-haul vehicles spend on the highway.  They believe the steady state highway speeds are overestimated.  Data provided by Allison indicates that day cabs spend only 14 percent of miles traveling at speeds greater than 60 mph.  NHTSA and EPA recognize that there is a variation in the amount of miles day cabs travel under different operations.  As described above, the agencies are adopting an approach where tractors which operate like vocational vehicles will be treated as such in the HD program.  Thus, these day cabs will have a drive cycle weighting representative of vocational vehicles with more weighting on the transient operation and less on the highway speed operation.
For proposal, EPA and NHTSA relied on the EPA MOVES analysis of Federal Highway Administration data to develop the mode weightings to characterize typical operations of heavy-duty trucks, per Table II-9 below.  A detailed discussion of drive cycles is included in RIA Chapter 3.  The agencies are adopting the proposed drive cycle weightings for combination tractors.
Table II-9: Drive Cycle Mode Weightings

Transient
55 mph Cruise
65 mph Cruise
Day Cabs
19%
17%
64%
Sleeper Cabs
5%
9%
86%

Empty Weight and Payload
The total weight of the tractor-trailer combination is the sum of the tractor curb weight, the trailer curb weight, and the payload.  The total weight of a truck is important because it in part determines the impact of technologies, such as rolling resistance, on GHG emissions and fuel consumption.  In this final action, the agencies are specifying each of these aspects of the vehicle, as proposed.  
In use, trucks operate at different weights at different times during their operations.  The greatest freight transport efficiency (the amount of fuel required to move a ton of payload) would be achieved by operating trucks at the maximum load for which they are designed all of the time.  However, logistics such as delivery demands which require that trucks travel without full loads, the density of payload, and the availability of full loads of freight limit the ability of trucks to operate at their highest efficiency all the time.  M.J. Bradley analyzed the Truck Inventory and Use Survey and found that approximately 9 percent of combination tractor miles travelled empty, 61 percent are "cubed-out" (the trailer is full before the weight limit is reached), and 30 percent are "weighed out" (operating weight equal 80,000 pounds which is the gross vehicle weight limit on the Federal Interstate Highway System or greater than 80,000 pounds for vehicles traveling on roads outside of the interstate system).  
As described above, the amount of payload that a tractor can carry depends on the category (or GVWR and GCWR) of the vehicle.  For example, a typical Class 7 tractor can carry less payload than a Class 8 tractor.  For proposal, the agencies used the Federal Highway Administration Truck Payload Equivalent Factors using Vehicle Inventory and Use Survey (VIUS) and Vehicle Travel Information System data to determine the proposed payloads.  FHWA's results found that the average payload of a Class 8 truck ranged from 36,247 to 40,089 pounds, depending on the average distance travelled per day.  The same results found that Class 7 trucks carried between 18,674 and 34,210 pounds of payload also depending on average distance travelled per day. Based on this data, the agencies are proposed to prescribe a fixed payload of 25,000 pounds for Class 7 tractors and 38,000 pounds for Class 8 tractors for their respective test procedures. The agencies proposed a common payload for Class 8 day cabs and sleeper cabs as predefined GEM input because the data available do not distinguish based on type of Class 8 tractor.  These payload values represent a heavily loaded trailer, but not maximum GVWR, since as described above the majority of tractors "cube-out" rather than "weigh-out."  
The agencies developed the proposed tractor curb weight inputs from actual tractor weights measured in two of EPA's test programs and based on information from the manufacturers.  The proposed trailer curb weight inputs were derived from actual trailer weight measurements conducted by EPA and weight data provided to ICF International by the trailer manufacturers.  Details of the individual weight inputs by regulatory category, as shown in Table II-9, are included in RIA Chapter 3.
Table II-10: Combination Tractor Weights
                                  MODEL TYPE
                                    CLASS 8
                                    CLASS 8
                                    CLASS 8
                                    CLASS 8
                                    CLASS 8
                                    CLASS 8
                                    CLASS 7
                                    CLASS 7
                                    CLASS 7
                            Regulatory Subcategory
                             Sleeper Cab High Roof
                             Sleeper Cab Mid Roof
                             Sleeper Cab Low Roof
                               Day Cab High Roof
                               Day Cab  Mid Roof
                               Day Cab  Low Roof
                               Day Cab High Roof
                               Day Cab  Mid Roof
                               Day Cab Low Roof
                           Tractor Tare Weight (lbs)
                                    19,000
                                    18,750
                                    18,500
                                    17,500
                                    17,100
                                    17,000
                                    11,500
                                    11,100
                                    11,000
                             Trailer Weight (lbs)
                                    13,500
                                    10,000
                                    10,500
                                    13,500
                                    10,000
                                    10,500
                                    13,500
                                    10,000
                                    10,500
                                 Payload (lbs)
                                    38,000
                                    38,000
                                    38,000
                                    38,000
                                    38,000
                                    38,000
                                    25,000
                                    25,000
                                    25,000
                              Total Weight (lbs)
                                    70,500
                                    66,750
                                    67,000
                                    69,000
                                    65,100
                                    65,500
                                    50,000
                                    46,100
                                    46,500

The agencies received comments from UMTRI and ATA regarding the values assumed for the combination tractor weights.  UMTRI recommended using 80,000 pounds for the total weight for tractor-trailer combinations.  ATA, based on their analysis of the Federal Highway Administration's Long Term Pavement Database, recommended 5,000 to 10,000 pound payload for Class 7 tractors and 25,000 to 30,000 pounds for Class 8 tractors.  ATA also determined from the same database that 20 percent of tractor miles are empty, 67 percent cube-out, and 13 percent weigh-out.  The agencies are adopting the proposed tractor-trailer weights because the changes suggested by the commenters will not change the evaluation of the technologies included in this phase of the HD program. NHTSA and EPA will evaluate additional sources of weight information in future phases of the program.
Standardized Trailers
As proposed, NHTSA and EPA are adopting provisions so that the tractor performance in the GEM will be judged by assuming it is pulling a standardized trailer.  The agencies believe that an assessment of the tractor aerodynamics should be conducted using a tractor-trailer combination where the likely tractor trailer combination is known.  We believe this approach best reflects the impact of aerodynamic technologies in actual use, where tractors are designed and used with a trailer.  Therefore, the aerodynamic test procedures and GEM model approach for high roof tractors that are typically used with box trailers is being finalized based on the use of a standardized box trailer.  In a change from our proposal we are finalizing provisions to allow for low and mid roof trailers to be tested without a defined trailer.  GEM will continue to use an predefined typical trailer in assessing overall performance.  We are finalizing this change in response to comments from truck manufacturers which have convinced us that the range of trailer designs and loads (e.g. flat trailers carrying sheets of steel versus flat trailers carrying industrial equipment) can vary to such a large degree that specifying one particular trailer for aerodynamic assessment would not be appropriate and could potentially lead to tractor designs that while beneficial when used with the specified test trailer were actually harmful in-use when used with the wide range of potential trailers and load configurations.  
In addition to assessing the tractor with a trailer, it is appropriate to adopt a standardized trailer used for testing, and to vary the standardized trailer by the regulatory category.  This is similar to the standardization of payload discussed above, as a way to reasonably reflect in-use operating conditions.  High roof tractors are optimally designed to pull box trailers.  The roof fairing on a tractor is the feature designed to minimize the height differential between the tractor and typical trailer to reduce the air flow disruption.  Low roof tractors are designed to carry flat bed or low-boy trailers.  Mid roof tractors are designed to carry tanker and bulk carrier trailers.  The agencies conducted a survey of tractor-trailer pairing in-use to evaluate the representativeness of this premise.  The survey of over 3,000 tractor-trailer combinations found that in 95 percent of the combination tractors the tractor's roof height was paired appropriately for the type of trailer that it was pulling.  The agencies also have evaluated the impact of pairing a low roof tractor with a box trailer in coastdown testing and found that the aerodynamic force increases by 20 percent over a high roof tractor pulling the same box trailer.  Therefore, drivers have a large incentive to use the appropriate matching to reduce their fuel costs.  However, the agencies recognize that in operation tractors sometimes pull trailers other than the type that it was designed to carry.  In this final action, the agencies are matching trailers to roof height for the GEM model assessment, as proposed.  As discussed above the aerodynamic test procedure for low and mid-roof tractors will be conducted without the use of a standardized trailer.  The other aspects of the test procedure such as empty trailer weight, location of payload, and tractor-trailer gap are being finalized for each regulatory subcategory to provide consistent test procedures. These provisions are identical to those proposed.  
Standardized Drivetrain
The agencies' assessment of the current vehicle configuration process at the truck dealer's level is that the truck companies provide tools to specify the proper drivetrain matched to the buyer's specific circumstances.  These dealer tools allow a significant amount of customization for drive cycle and payload to provide the best specification for each individual customer.  The agencies are not seeking to disrupt this process.  Optimal drivetrain selection is dependent on the engine, drive cycle (including vehicle speed and road grade), and payload.  Each combination of engine, drive cycle, and payload has a single optimal transmission and final drive ratio.  As proposed, the agencies are specifying the engine's fuel consumption map, drive cycle, and payload; therefore, it makes sense to also specify the drivetrain that matches.
Engine Input to GEM for Tractors
As proposed, the agencies are defining the engine characteristics used in GEM, including the fuel consumption map which provides the fuel consumption at hundreds of engine speed and torque points.  If the agencies did not standardize the fuel map, then a tractor that uses an engine with emissions and fuel consumption better than the standards would require fewer vehicle reductions than those technically feasible reductions reflected in the final standards.  The agencies are finalizing two distinct fuel consumption maps for use in GEM.  The first fuel consumption map would be used in GEM for the 2014 through 2016 model years and represents an average engine which meets EPA's final 2014 model year engine CO2 emissions standards.  The same fuel map would be used for NHTSA's voluntary standards in the 2014 and 2015 model years, as well as its mandatory program in the 2016 model year.  A second fuel consumption map will be used beginning in 2017 model year and represents an engine which meets the 2017 model year CO2 emissions and fuel consumption standards and accounts for the increased stringency in the final MY 2017 standard.  The agencies have modified the 2017 MY fuel map used in GEM for the final rulemaking to address comments received.  Details regarding this change can be found in RIA Chapter 4.4.4.  Effectively there is no change in stringency of the tractor vehicle (not including the engine) and there is stability in the tractor vehicle (not including engine) standards for the full rulemaking period.  These inputs are appropriate given the separate regulatory requirement that Class 7 and 8 combination tractor manufacturers use only certified engines.
Heavy-Duty Engine Test Procedure for Engines Installed in Combination Tractors
The HD engine test procedure consists of two primary aspects  -  a duty cycle and a metric to evaluate the emissions and fuel consumption.
EPA proposed that the GHG emission standards for heavy-duty engines under the CAA would be expressed as g/bhp-hr while NHTSA's proposed fuel consumption standards under EISA, in turn, be represented as gal/100 bhp-hr.  The NAS panel did not specifically discuss or recommend a metric to evaluate the fuel consumption of heavy-duty engines.  However, as noted above they did recommend the use of a load-specific fuel consumption metric for the evaluation of vehicles.  An analogous metric for engines is the amount of fuel consumed per unit of work.  The g/bhp-hr metric is also consistent with EPA's current standards for non-GHG emissions for these engines.  The agencies did not receive any adverse comments related to the metrics for HD engines; therefore, we are adopting the metrics as proposed.
EPA's criteria pollutant standards for engines currently require that manufacturers demonstrate compliance over the transient FTP cycle; over the steady-state SET procedure; and during not-to-exceed testing.  EPA created this multi-layered approach to criteria emissions control in response to engine designs that optimized operation for lowest fuel consumption at the expense of very high criteria emissions when operated off the regulatory cycle.  EPA's use of multiple test procedures for criteria pollutants helps to ensure that manufacturers calibrate engine systems for compliance under all operating conditions.  We are not concerned if off-cycle manufacturers further calibrate these designs to give better in-use fuel consumption while maintaining compliance with the criteria emissions standards as such calibration is entirely consistent with the goals of our joint program.  Further, we believe that setting standards based on both transient and steady-state operating conditions for all engines could lead to undesirable outcomes.  With regard to GHG and fuel consumption control, the agencies believe it is more appropriate to set standards based on a single test procedure, either the Heavy-duty FTP or SET, depending on the primary expected use of the engine.  
It is critical to set standards based on the most representative test cycles in order for performance in-use to obtain the intended (and feasible) air quality benefits.  Tractors spend the majority of their operation at steady state conditions, and will obtain in-use benefit of technologies such as turbocompounding and other waste heat recovery technologies during this kind of typical engine operation.  Turbocompounding is a very effective approach to lower fuel consumption under steady driving conditions typified by combination tractor trailer operation and is well reflected in testing over the SET test procedure.  However, when used in driving typified by transient operation as we expect for vocational vehicles and as is represented by the Heavy-duty FTP, turbocompounding shows very little benefit.  Setting an emission standard based on the Heavy-duty FTP for engines intended for use in combination tractor trailers could lead manufacturers to not apply turbocompounding even though it can be a highly cost effective means to reduce GHG emissions and lower fuel consumption.
The agencies proposed that engines installed in tractors demonstrate compliance with the CO2 emissions and fuel consumption standards over the SET cycle.  Commenters such as Cummins, Bosch, Daimler, and Honeywell supported the proposed approach.  ACEEE recommended adopting a new test cycle, such as the World Harmonized Duty Cycle which was developed using newer data, to evaluate HD engines.  Daimler also supported the WHDC for future phases of the program.  The agencies continue to believe the important issues and technical work related to setting new criteria pollutant emissions standards appropriate for the World Harmonized Duty Cycle are significant and beyond the scope of this rulemaking.  Therefore, the agencies are adopting the SET cycle to evaluate CO2 emissions and fuel consumption of HD engines installed in tractors, as proposed.
The current non-GHG emissions engine test procedures also require the development of regeneration emission rates and frequency factors to account for the emission changes during a regeneration event (40 CFR 86.004-28).  EPA and NHTSA proposed not to include these emissions from the calculation of the compliance levels over the defined test procedures.  Cummins and Daimler supported this approach and stated there already exist sufficient incentives for manufacturers to limit regeneration frequency.  Conversely, Volvo opposed the omission of IRAF requirements for CO2 emissions because emissions from regeneration can be a significant portion of the expected improvement and a significant variable between manufacturers.
For proposal, we considered including regeneration in the estimate of fuel consumption and GHG emissions and decided not to do so for two reasons.  First, EPA's existing criteria emission regulations already provide a strong motivation to engine manufacturers to reduce the frequency and duration of infrequent regeneration events.  The very stringent 2010 NOX emission standards cannot be met by engine designs that lead to frequent and extend regeneration events.  Hence, we believe engine manufacturers are already reducing regeneration emissions to the greatest degree possible.  In addition to believing that regenerations are already controlled to the extent technologically possible, we believe that attempting to include regeneration emissions in the standard setting could lead to an inadvertently lax emissions standard.  In order to include regeneration and set appropriate standards, EPA and NHTSA would have needed to project the regeneration frequency and duration of future engine designs in the timeframe of this program.  Such a projection would be inherently difficult to make and quite likely would underestimate the progress engine manufacturers will make in reducing infrequent regenerations.  If we underestimated that progress, we would effectively be setting a more lax set of standards than otherwise would be expected.  Hence in setting a standard including regeneration emissions we faced the real possibility that we would achieve less effective CO2 emissions control and fuel consumption reductions than we will achieve by not including regeneration emissions.  Therefore, the agencies are finalizing an approach as proposed which does not include the regenerative emissions.  
Chassis-based Test Procedure
In the proposal, the agencies considered proposing a chassis-based vehicle test to evaluate Class 7 and 8 tractors based on a laboratory test of the engine and vehicle together.  A "chassis dynamometer test" for heavy-duty vehicles would be similar to the Federal Test Procedure used today for light-duty vehicles.  
However, the agencies decided not to propose the use of a chassis test procedure to demonstrate compliance for tractor standards due to the significant technical hurdles to implementing such a program by the 2014 model year.  The agencies recognize that such testing requires expensive, specialized equipment that is not yet widespread within the industry.  The agencies have only identified approximately 11 heavy-duty chassis sites in the United States today and rapid installation of new facilities to comply with model year 2014 is not possible.  
In addition, and of equal if not greater importance, because of the enormous numbers of truck configurations that have an impact on fuel consumption, we do not believe that it would be reasonable to require testing of  many combinations of tractor model configurations on a chassis dynamometer.  The agencies evaluated the options available for one tractor model (provided as confidential business information from a truck manufacturer) and found that the company offered three cab configurations, six axle configurations, five front axles, 12 rear axles, 19 axle ratios, eight engines, 17 transmissions, and six tire sizes  -  where each of these options could impact the fuel consumption and CO2 emissions of the tractor.  Even using representative grouping of tractors for purposes of certification, this presents the potential for many different combinations that would need to be tested if a standard was adopted based on a chassis test procedure.
The agencies received comments from ACEEE and UCS supporting a full vehicle testing approach, but recognizing the difficulties in doing this in the first phase of the HD program. The agencies maintain that the full vehicle testing on chassis dynamometers is not feasible in this rulemaking, although we believe such an approach is likely to be appropriate in the future, if more testing facilities become available and if the agencies are able to address the complexity of tractor configurations issue described above.  
Summary of Flexibility and Credit Provisions for Tractors and Engine Used in These Tractors
EPA and NHTSA are finalizing four flexibility provisions specifically for heavy-duty tractor and engine manufacturers, as discussed in Section IV below.  These are an averaging, banking and trading program for emissions and fuel consumption credits, as well as provisions for early credits, advanced technology credits, and credits for innovative vehicle or engine technologies which are not included as inputs to the GEM or are not demonstrated on the engine SET test cycle.  With the exception of the advanced technology credits, credits generated under these provisions can only be used within the same averaging set which generated the credit (for example, credits generated by HD engines used in tractors can only be used by HD engines).  EPA is also adopting a N2O emission credit program, as described in Section IV below.
Deferral of Standards for Tractor and Engine Manufacturing Companies That Are Small Businesses
EPA and NHTSA are not adopting  greenhouse gas emissions and fuel consumption standards for small tractor or engine manufacturers meeting the Small Business Administration (SBA) size criteria of a small business as described in 13 CFR 121.201.  The agencies will instead consider appropriate GHG and fuel consumption standards for these entities as part of a future regulatory action. This includes both U.S.-based and foreign small volume heavy-duty tractor and engine manufacturers.
The agencies have identified two entities that fit the SBA size criterion of a small business. The agencies estimate that these small entities comprise less than 0.5 percent of the total heavy-duty combination tractors in the United States based on Polk Registration Data from 2003 through 2007, and therefore that the exemption will have a negligible impact on the GHG emissions and fuel consumption improvements from the final standards.  
To ensure that the agencies are aware of which companies would be exempt, we are requiring that such entities submit a declaration to EPA and NHTSA containing a detailed written description of how that manufacturer qualifies as a small entity under the provisions of 13 CFR 121.201. 
Heavy-Duty Pickup Trucks and Vans
The primary elements of the EPA and NHTSA programs for complete HD pickups and vans are presented in this section.  These provisions also cover incomplete HD pickups and vans that are sold by vehicle manufacturers as cab-chassis (chassis-cab, box-delete, bed-delete, cut-away van) vehicles, as discussed in detail in Section V.B(1)(e).  Section II.C(1) explains the form of the CO2 and fuel consumption standards, the  numerical levels for those standards, and the approach to phasing in the standards over time.  The  measurement procedure for determining compliance is discussed in Section II.C(2), and the EPA and NHTSA compliance programs are discussed in Section II.C(3).  Sections II.C(4) discusses implementation flexibility provisions.  Section II.E discusses additional standards and provisions for N2O and CH4 emissions, for impacts from vehicle air conditioning, and for ethanol-fueled and electric vehicles.
What Are the Levels and Timing of HD Pickup and Van Standards?
Vehicle-Based Standards
About 90 percent of Class 2b and 3 vehicles are pickup trucks, passenger vans, and work vans that are sold by the original equipment manufacturers as complete vehicles, ready for use on the road.  In addition, most of these complete HD pickups and vans are covered by CAA vehicle emissions standards for criteria pollutants today (i.e., they are chassis tested similar to light-duty), expressed in grams per mile.  This distinguishes this category from other, larger heavy-duty vehicles that typically have only the engines covered by CAA engine emission standards, expressed in grams per brake horsepower-hour.  As a result, Class 2b and 3 complete vehicles share much more in common with light-duty trucks than with other heavy-duty vehicles.
Three of these commonalities are especially significant: (1) over 95 percent of the HD pickups and vans sold in the United States are produced by Ford, General Motors, and Chrysler  -  three companies with large light-duty vehicle and light-duty truck sales in the United States,  (2) these companies typically base their HD pickup and van designs on higher sales volume light-duty truck platforms and technologies, often incorporating new light-duty truck design features into HD pickups and vans at their next design cycle, and (3) at this time most complete HD pickups and vans are certified to vehicle-based rather than engine-based EPA standards.  There is also the potential for substantial GHG and fuel consumption reductions from vehicle design improvements beyond engine changes (such as through optimizing aerodynamics, weight, tires, and accessories), and the manufacturer is generally responsible for both engine and vehicle design.  All of these factors together suggest that it is appropriate and reasonable to set standards for the vehicle as a whole, rather than to establish separate engine and vehicle GHG and fuel consumption standards, as is being done for the other heavy-duty categories.  This approach for complete vehicles is consistent with Recommendation 8-1 of the NAS Report, which encourages the regulation of "the final stage vehicle manufacturers since they have the greatest control over the design of the vehicle and its major subsystems that affect fuel consumption."  There was consensus in the public comments supporting this approach.
Weight-Based Attributes
In setting heavy-duty vehicle standards it is important to take into account the great diversity of vehicle sizes, applications, and features.  That diversity reflects the variety of functions performed by heavy-duty vehicles, and this in turn can affect the kind of technology that is available to control emissions and reduce fuel consumption, and its effectiveness.  EPA has dealt with this diversity  in the past by making weight-based distinctions where necessary, for example in setting HD vehicle standards that are different for vehicles above and below 10,000 lb GVWR, and in defining different standards and useful life requirements for light-, medium-, and heavy-heavy-duty engines.  Where appropriate, distinctions based on fuel type have also been made, though with an overall goal of remaining fuel-neutral. 
The joint EPA GHG and NHTSA fuel economy rules for light-duty vehicles accounted for vehicle diversity in that segment by basing standards on vehicle footprint (the wheelbase times the average track width).  Passenger cars and light trucks with larger footprints are assigned numerically higher target levels for GHGs and numerically lower target levels for fuel economy in acknowledgement of the differences in technology as footprint gets larger, such that vehicles with larger footprints have an inherent tendency to burn more fuel and emit more GHGs per mile of travel.  Using a footprint-based attribute to assign targets also avoids interfering with the ability of the market to offer a variety of products to maintain consumer choice.  
In developing this rulemaking, the agencies emphasized creating a program structure that would achieve reductions in fuel consumption and GHGs based on how vehicles are used and on the work they perform in the real world, consistent with the NAS report recommendations to be mindful of HD vehicles' unique purposes.  Despite the HD pickup and van similarities to light-duty vehicles, we believe that the past practice in EPA's heavy-duty program of using weight-based distinctions in dealing with the diversity of HD pickup and van products is more appropriate than using vehicle footprint.  Weight-based measures such as payload and towing capability are key among the things that characterize differences in the design of vehicles, as well as differences in how the vehicles will be used. Vehicles in this category have a wide range of payload and towing capacities.  These weight-based differences in design and in-use operation are the key factors in evaluating technological improvements for reducing CO2 emissions and fuel consumption.  Payload has a particularly important impact on the test results for HD pickup and van emissions and fuel consumption, because testing under existing EPA procedures for criteria pollutants is conducted with the vehicle loaded to half of its payload capacity (rather than to a flat 300 lb as in the light-duty program), and the correlation between test weight and fuel use is strong.   
Towing, on the other hand, does not directly factor into test weight as nothing is towed during the test.  Hence only the higher curb weight caused by heavier truck components would play a role in affecting measured test results.  However towing capacity can be a significant factor to consider because HD pickup truck towing capacities can be quite large, with a correspondingly large effect on design.
We note too that, from a purchaser perspective, payload and towing capability typically play a greater role than physical dimensions in influencing purchaser decisions on which heavy-duty vehicle to buy.  For passenger vans, seating capacity is of course a major consideration, but this correlates closely with payload weight.
Although heavy-duty vehicles are traditionally classified by their GVWR, we do not believe that GVWR is the best weight-based attribute on which to base GHG and fuel consumption standards for this group of vehicles.  GVWR is a function of not only payload capacity but of vehicle curb weight as well; in fact, it is the simple sum of the two.  Allowing more GHG emissions from vehicles with higher curb weight tends to penalize lightweighted vehicles with comparable payload capabilities by making them meet more stringent standards than they would have had to meet without the weight reduction.  The same would be true for another common weight-based measure, the gross vehicle combined weight, which adds the maximum combined towing and payload weight to the curb weight.   
Similar concerns about using weight-based attributes that include vehicle curb weight were raised in the EPA/NHTSA proposal for light-duty GHG and fuel economy standards: "footprint-based standards provide an incentive to use advanced lightweight materials and structures that would be discouraged by weight-based standards", and "there is less risk of `gaming' (artificial manipulation of the attribute(s) to achieve a more favorable target) by increasing footprint under footprint-based standards than by increasing vehicle mass under weight-based standards -- it is relatively easy for a manufacturer to add enough weight to a vehicle to decrease its applicable fuel economy target a significant amount, as compared to increasing vehicle footprint" (74 FR 49685, September 28, 2009).  The agencies believe that using payload and towing capacities as the weight-based attributes avoids the above-mentioned disincentive for the use of lightweighting technology by taking vehicle curb weight out of the standards determination.  
After taking these considerations into account, EPA and NHTSA proposed to set standards for HD pickups and vans based on the proposed "work factor" attribute that combines vehicle payload capacity and vehicle towing capacity, in pounds, with an additional fixed adjustment for four-wheel drive (4wd) vehicles.  This adjustment accounts for the fact that 4wd, critical to enabling the many off-road heavy-duty work applications, adds roughly 500 lb to the vehicle weight.  There was consensus in the public comments supporting this attribute, and the agencies are adopting it as proposed.  Target GHG and fuel consumption standards will be determined for each vehicle with a unique work factor (analogous to a target for each discrete vehicle footprint in the light duty vehicle rules).  These targets will then be production weighted and summed to derive a manufacturer's annual fleet average standard for its heavy duty pickups and vans.  Widespread support for the proposed work factor-based approach to standards and fleet average approach to compliance was expressed in the comments we received.
To ensure consistency and help preclude gaming, we are finalizing the proposed provision that payload capacity be defined as GVWR minus curb weight, and towing capacity as GCWR minus GVWR.  For purposes of determining the work factor, GCWR is defined according to SAE Recommended Practice J2807 APR2008, GVWR is defined consistent with EPA's criteria pollutants program, and curb weight is defined as in 40 CFR 86.1803-01.  Based on analysis of how CO2 emissions and fuel consumption correlate to work factor, we believe that a straight line correlation is appropriate across the spectrum of possible HD pickups and vans, and that vehicle distinctions such as Class 2b versus Class 3 need not be made in setting standards levels for these vehicles.  This approach was supported by commenters.
We note that payload/towing-dependent gram per mile and gallon per 100 mile standards for HD pickups and vans parallel the gram per ton-mile and gallon per 1,000 ton-mile standards being finalized for Class 7 and 8 combination tractors and for vocational vehicles.  Both approaches account for the fact that more work is done, more fuel is burned, and more CO2 is emitted in moving heavier loads than in moving lighter loads.  Both of these load-based approaches avoid penalizing truck designers wishing to reduce GHG emissions and fuel consumption by reducing the weight of their trucks.  However, the sizeable diversity in HD work truck and van applications, which go well beyond simply transporting freight, and the fact that the curb weights of these vehicles are on the order of their payload capacities, suggest that setting simple gram/ton-mile and gallon/ton-mile standards for them is not appropriate.  Even so, we believe that our setting of payload-based standards for HD pickups and vans is consistent with the NAS Report's recommendation in favor of load-specific fuel consumption standards.  Again, commenters agreed with this approach to setting HD pickup and van standards.
These attribute-based CO2 and fuel consumption standards are meant to be relatively consistent from a stringency perspective.  Vehicles across the entire range of the HD pickup and van segment have their respective target values for CO2 emissions and fuel consumption, and therefore all HD pickups and vans will be affected by the standard.  With this  attribute-based standards approach, EPA and NHTSA believe there should be no significant effect on the relative distribution of vehicles with differing capabilities in the fleet, which means that buyers should still be able to purchase the vehicle that meets their needs.
Standards 
The agencies are finalizing standards based on a technology analysis performed by EPA to determine the appropriate HD pickup and van standards.  This analysis, described in detail in RIA Chapter 2, considered:
the level of technology that is incorporated in current new HD pickups and vans, 
the available data on corresponding CO2 emissions and fuel consumption for these vehicles, 
technologies that would reduce CO2 emissions and fuel consumption and that are judged to be feasible and appropriate for these vehicles through the 2018 model year, 
the effectiveness and cost of these technologies for HD pickup and vans, 
projections of future U.S. sales for HD pickup and vans, and 
forecasts of manufacturers' product redesign schedules.
Based on this analysis, EPA is finalizing the proposed CO2 attribute-based target standards shown in Figure II-2 and II-3, and NHTSA is finalizing the equivalent attribute-based fuel consumption target standards, also shown in Figure II-2 and II-3, applicable in model year 2018.  These figures also shows phase-in standards for model years before 2018, and their derivation is explained below, along with alternative implementation schedules to ensure equivalency between the EPA and NHTSA programs while meeting statutory obligations.  Also, for reasons discussed below, separate targets were proposed and are being established for gasoline-fueled (and any other Otto-cycle) vehicles and diesel-fueled (and any other Diesel-cycle) vehicles.  The targets will be used to determine the production-weighted standards that apply to the combined diesel and gasoline fleet of HD pickups and vans produced by a manufacturer in each model year.
                                       
Figure II-2: EPA CO2 Target Standards and NHTSA Fuel Consumption Target Standards for Diesel HD Pickups and Vans 

Figure II-3: EPA CO2 Target Standards and NHTSA Fuel Consumption Target Standards for Gasoline HD Pickups and Vans
Described mathematically, EPA's and NHTSA's  target standards are defined by the following formulae:
EPA CO2 Target (g/mile) = [a x WF] + b
NHTSA Fuel Consumption Target (gallons/100 miles) =  [c x WF] + d
Where:
      WF =  Work Factor  =  [0.75 x  (Payload Capacity + xwd)] + [0.25 x Towing Capacity]
Payload Capacity = GVWR (lb)  -  Curb Weight (lb)
xwd  =  500 lb if the vehicle is equipped with 4wd, otherwise equals 0 lb
Towing Capacity =  GCWR (lb)  -   GVWR (lb)
Coefficients a, b, c, and d are taken from Table II-11 or Table II-12.
Table II-11: Coefficients for HD Pickup and Van Target Standards 
Diesel Vehicles
                                                                     Model Year
                                                                              a
                                                                              b
                                                                              c
                                                                              d
                                                                           2014
                                                                         0.0478
                                                                            368
                                                                       0.000470
                                                                           3.61
                                                                           2015
                                                                         0.0474
                                                                            366
                                                                       0.000466
                                                                           3.60
                                                                           2016
                                                                         0.0460
                                                                            354
                                                                       0.000452
                                                                           3.48
                                                                           2017
                                                                         0.0445
                                                                            343
                                                                       0.000437
                                                                           3.37
                                                                 2018 and later
                                                                         0.0416
                                                                            320
                                                                       0.000409
                                                                           3.14
Gasoline Vehicles
Model Year
                                                                              a
                                                                              b
                                                                              c
                                                                              d
                                                                           2014
                                                                         0.0482
                                                                            371
                                                                       0.000542
                                                                           4.17
                                                                           2015
                                                                         0.0479
                                                                            369
                                                                       0.000539
                                                                           4.15
                                                                           2016
                                                                         0.0469
                                                                            362
                                                                       0.000528
                                                                           4.07
                                                                           2017
                                                                         0.0460
                                                                            354
                                                                       0.000518
                                                                           3.98
                                                                 2018 and later
                                                                         0.0440
                                                                            339
                                                                       0.000495
                                                                           3.81

Table II-12: Coefficients for NHTSA's First Alternative and EPA's Alternative HD Pickup and Van Target Standards
Diesel Vehicles
                                                                     Model Year
                                                                              a
                                                                              b
                                                                              c
                                                                              d
                                                                        2014[a]
                                                                         0.0478
                                                                            368
                                                                       0.000470
                                                                           3.61
                                                                        2015[a]
                                                                         0.0474
                                                                            366
                                                                       0.000466
                                                                           3.60
                                                                      2016-2018
                                                                         0.0440
                                                                            339
                                                                       0.000432
                                                                           3.33
                                                                2019 and later 
                                                                         0.0416
                                                                            320
                                                                       0.000409
                                                                           3.14
Gasoline Vehicles
Model Year
                                                                              a
                                                                              b
                                                                              c
                                                                              d
                                                                        2014[a]
                                                                         0.0482
                                                                            371
                                                                       0.000542
                                                                           4.17
                                                                        2015[a]
                                                                         0.0479
                                                                            369
                                                                       0.000539
                                                                           4.15
                                                                      2016-2018
                                                                         0.0456
                                                                            352
                                                                       0.000513
                                                                           3.96
                                                                2019 and later 
                                                                         0.0440
                                                                            339
                                                                       0.000495
                                                                           3.81
      Notes:
      [a] NHTSA standards will be voluntary in 2014 and 2015

These targets are based on a set of vehicle, engine, and transmission technologies assessed by the agencies and determined to be feasible and appropriate for HD pickups and vans in the 2014-2018 timeframe.  See Section III.B for a detailed analysis of these vehicle, engine and transmission technologies, including their feasibility, costs, and effectiveness in HD pickups and vans.
To calculate a manufacturer's HD pickup and van fleet average standard, the agencies are requiring that separate target curves be used for gasoline and diesel vehicles. The agencies estimate that in 2018 the target curves will achieve 15 and 10 percent reductions in CO2 and fuel consumption for diesel and gasoline vehicles, respectively, relative to a common baseline for current (model year 2010) vehicles.  An additional two percent reduction in GHGs will be achieved by the EPA program from a direct air conditioning leakage standard.  These reductions are based on the agencies' assessment of the feasibility of incorporating technologies (which differ significantly for gasoline and diesel powertrains) in the 2014-2018 model years, and on the differences in relative efficiency in the current gasoline and diesel vehicles.  The resulting reductions represent roughly equivalent stringency levels for gasoline and diesel vehicles, which is important in ensuring our  program maintains product choices available to vehicle buyers.  
Cummins objected to setting separate diesel and gasoline vehicle standards, on the basis that it increases the burden for diesel engine manufacturers more than for gasoline engine manufacturers, and thereby could shift market share away from diesels.  EMA argued for fuel-neutrality based on historical precedent and the fact that GHGs emitted by one type of engine are no different than those emitted by another type of engine.  We believe that both engine types have roughly equivalent redesign burdens as evidenced by the feasibility and cost analysis in RIA Chapter 2.  Also, even though the emissions and fuel consumption reductions are expressed from a common diesel/gasoline baseline in these final rules, the actual starting base for diesels is at a lower level than for gasoline vehicles. Other industry commenters, including those with sizeable diesel sales, expressed general support for the standards.  
Environmental groups and others commented that the proposed standards were not stringent enough, citing the heavy-duty vehicle NAS study finding that technologies such as hybridization are feasible.  However, in the ambitious timeframe we are focusing on for these rules, targeting as it does technologies implementable in the HD pickup and van fleet starting in 2014 and phasing in with normal product redesign cycles through 2018, our assessment shows that the standards we are establishing are appropriate.  More advanced technologies considered in the NAS report would be appropriate for consideration in future rulemaking activity.  Additional conventional technologies identified by commenters as promising in light-duty applications and potentially useful for HD applications are discussed in RIA Chapter 2.
The NHTSA fuel consumption target curves and the EPA GHG target curves are equivalent.  The agencies established the target curves using the direct relationship between fuel consumption and CO2 using conversion factors of 8,887 g CO2/gallon for gasoline and 10,180 g CO2/gallon for diesel fuel.
It is expected that measured performance values for CO2 will generally be equivalent to fuel consumption.  However, as explained below in Section II. E. (3) , EPA is finalizing a provision for manufacturers to use CO2 credits to help demonstrate compliance with N2O and CH4 emissions standards, by expressing any N2O and CH4 undercompliance in terms of their CO2-equivalent and applying the needed CO2 credits.   For test families that do not use this compliance alternative, the measured performance values for CO2 and fuel consumption will be equivalent because the same test runs and measurement data will be used to determine both values, and calculated fuel consumption will be based on the same conversion factors that are used to establish the relationship between the CO2 and fuel consumption target curves (8,887 g CO2/gallon for gasoline and 10,180 g CO2/gallon for diesel fuel).  For manufacturers that choose to use the EPA provision for CO2 credit use in demonstrating N2O and CH4 compliance, compliance with the CO2 standard will not be directly equivalent to compliance with the NHTSA fuel consumption standard. 
 Implementation Plan
EPA Program Phase-in MY 2014-2018
EPA is finalizing the proposed provision that the GHG standards be phased in gradually over the 2014-2018 model years, with full implementation effective in the 2018 model year.  Therefore, 100 percent of a manufacturer's vehicle fleet will need to meet a fleet-average standard that will become increasingly more stringent each year of the phase-in period.  For both gasoline and diesel vehicles, this phase-in will be 15-20-40-60-100 percent in model years 2014-2015-2016-2017-2018, respectively.  These percentages reflect stringency increases from a baseline performance level for model year 2010, determined by the agencies based on EPA and manufacturer data.  Because these vehicles are not currently regulated for GHG emissions, this phase-in takes the form of target line functions for gasoline and diesel vehicles that become increasingly stringent over the phase-in model years.  These year-by-year functions have been derived in the same way as the 2018 function, by taking a percent reduction in CO2 from a common unregulated baseline.  For example, in 2014 the reduction for both diesel and gasoline vehicles will be 15% of the fully-phased-in reductions.  Figures II-2 and II-3, and Table II-11, reflect this phase-in approach.
EPA is also providing manufacturers with an optional alternative implementation schedule in model years 2016 through 2018, equivalent to NHTSA's  first alternative for standards that do not change over these model years, described below.  Under this option the phase-in will be 15-20-67-67-67-100 percent in model years 2014-2015-2016-2017-2018-2019, respectively.  Table II-12, above, provides the coefficients "a" and "b" for this manufacturer's alternative.  As explained below, this alternative will provide roughly equivalent overall CO2 reductions and fuel consumption improvements as the 15-20-40-60-100 percent phase-in.  In addition, as explained below, the stringency of this alternative was established by NHTSA such that a manufacturer with a stable production volume and mix over the model year 2016-2018 period could use Averaging, Banking and Trading to comply with either alternative and have a similar credit balance at the end of model year 2018.
Under the above-described alternatives, each manufacturer will need to demonstrate compliance with the applicable fleet average standard using that year's target function over all of its HD pickups and vans starting with its MY 2014 fleet of HD pickups and vans.  No comments were received in support of an alternative approach that EPA requested comment on, involving phasing in an annually increasing percentage of each manufacturer's sales volume.
 NHTSA Program Phase-in 2016 and Later
NHTSA is finalizing the proposed provision to allow manufacturers to select one of two fuel consumption standard alternatives for model years 2016 and later.  Manufacturers will select an alternative at the same time they submit the model year 2016 Pre-Certification Compliance Report; and, once selected, the alternative will apply for model years 2016 and later, and could not be reversed.  To meet the EISA statutory requirement for three years of regulatory stability, the first alternative will define a fuel consumption target line function for gasoline vehicles and a target line function for diesel vehicles that will not change for model years 2016 and later.  The  target line function coefficients are provided in Table II-12.  
The second alternative will be equivalent to the EPA target line functions in each model year starting in 2016 and continuing afterwards.  Stringency of fuel consumption standards will increase gradually for the 2016 and later model years.  Relative to a model year 2010 unregulated baseline, for both gasoline and diesel vehicles, stringency will be 40, 60, and 100 percent of the 2018 target line function in model years 2016, 2017, and 2018, respectively.  The stringency of the target line functions in the first alternative for model years 2016-2017-2018-2019 is 67-67-67-100 percent, respectively, of the 2018 stringency in the second alternative.  The stringency of the first alternative was established so that a manufacturer with a stable production volume and mix over the model year 2016-2018 period, could use Averaging, Banking and Trading to comply with either alternative and have a similar credit balance at the end of model year 2018 under the EPA and NHTSA programs.
NHTSA Voluntary Standards Period
NHTSA is finalizing the proposed provision that manufacturers may voluntarily opt into the NHTSA HD pickup and van program in model years 2014 or 2015.  If a manufacturer elects to opt into the program, the program would become mandatory and the manufacturer would not be allowed to reverse this decision.  To opt into the program, a manufacturer must declare its intent to opt in to the program at the same time it submits the Pre-Certification Compliance Report.  See regulatory text for 49 CFR 535.8 for information related to the Pre-Certification Compliance Report.  If a manufacturer elects to opt into the program in 2014, the program would be mandatory for 2014 and 2015.  A manufacturer would begin tracking credits and debits beginning in the model year in which they opt into the program.  The handling of credits and debits would be the same as for the mandatory program.
For manufacturers that opt into NHTSA's HD pickup and van fuel consumption program in 2014 or 2015, the stringency would increase gradually each model year.  Relative to a model year 2010 unregulated baseline, for both gasoline and diesel vehicles, stringency would be 15-20 percent of the model year 2018 target line function (under the NHTSA second alternative) in model years 2014-2015, respectively.  The corresponding absolute standards targets levels are provided in Figure II-2 and II-3, and the accompanying equations.  
What Are the HD Pickup and Van Test Cycles and Procedures?
EPA and NHTSA are finalizing the proposed provision that HD pickup and van testing be conducted using the same heavy-duty chassis test procedures currently used by EPA for measuring criteria pollutant emissions from these vehicles, but with the addition of the highway fuel economy test cycle (HFET) currently required only for light-duty vehicle GHG emissions and fuel economy testing.  Although the highway cycle driving pattern is identical to that of the light-duty test, other test parameters for running the HFET, such as test vehicle loaded weight, are identical to those used in running the current EPA Federal Test Procedure for complete heavy-duty vehicles.
The GHG and fuel consumption results from vehicle testing on the Light-duty FTP and the HFET will be weighted by 55 percent and 45 percent, respectively, and then averaged in calculating a combined cycle result.  This result corresponds with the data used to develop the  work factor-based CO2 and fuel consumption standards, since the data on the baseline and technology efficiency was also developed in the context of these test procedures.  The addition of the HFET and the 55/45 cycle weightings are the same as for the light-duty CO2 and CAFE programs, as we believe the real world driving patterns for HD pickups and vans are not too unlike those of light-duty trucks, and we are not aware of data specifically on these patterns that would lead to a different choice of cycles and weightings, nor did any commenters provide such data.  More importantly, we believe that the 55/45 weightings will provide for effective reductions of GHG emissions and fuel consumption from these vehicles, and that other weightings, even if they were to more precisely match real world patterns, are not likely to significantly improve the program results.
Another important parameter in ensuring a robust test program is vehicle test weight.  Current EPA testing for HD pickup and van criteria pollutants is conducted with the vehicle loaded to its Adjusted Loaded Vehicle Weight (ALVW), that is, its curb weight plus (1/2) of the payload capacity.  This is substantially more challenging than loading to the light-duty vehicle test condition of curb weight plus 300 pounds, but we believe that this loading for HD pickups and vans to (1/2) payload better fits their usage in the real world and will help ensure that technologies meeting the standards do in fact provide real world reductions.  The choice is likewise consistent with use of an attribute based in considerable part on payload for the standard.  We see no reason to set test load conditions differently for GHGs and fuel consumption than for criteria pollutants, and we are not aware of any new information (such as real world load patterns) since the ALVW was originally set this way that would support a change in test loading conditions, nor did any commenters provide such information.  We are therefore using ALVW for test vehicle loading in GHG and fuel consumption testing.
Additional provisions for our final testing and compliance program are provided in Section V.B.
How Are the HD Pickup and Van Standards Structured?
EPA and NHTSA are finalizing the proposed fleet average standards for new HD pickups and vans, based on a manufacturer's new vehicle fleet makeup.  In addition, EPA is finalizing proposed in-use standards that apply to the individual vehicles in this fleet over their useful lives.  The compliance provisions for these  fleet average and in-use standards for HD pickups and vans are largely based on the recently promulgated light-duty GHG and fuel economy program, as described in detail in the proposal.  
Fleet Average Standards
In the programs we are finalizing, each manufacturer will have a GHG standard and a fuel consumption standard unique to its new HD pickup and van fleet in each model year, depending on the load capacities of the vehicle models produced by that manufacturer, and on the U.S.-directed production volume of each of those models in that model year.  Vehicle models with larger payload/towing capacities have individual targets at numerically higher CO2 and fuel consumption levels than lower payload/towing vehicles, as discussed in Section II.C(1).  The fleet average standard for a manufacturer is a production-weighted average of the work factor-based targets assigned to unique vehicle configurations within each model type produced by the manufacturer in a model year.
The fleet average standard with which the manufacturer must comply is based on its final production figures for the model year, and thus a final assessment of compliance will occur after production for the model year ends.  Because compliance with the fleet average standards depends on actual test group production volumes, it is not possible to determine compliance at the time the manufacturer applies for and receives an EPA certificate of conformity for a test group. Instead, at certification the manufacturer will demonstrate a level of performance for vehicles in the test group, and make a good faith demonstration that its fleet, regrouped by unique vehicle configurations within each model type, is expected to comply with its fleet average standard when the model year is over.  EPA will issue a certificate for the vehicles covered by the test group based on this demonstration, and will include a condition in the certificate that if the manufacturer does not comply with the fleet average, then production vehicles from that test group will be treated as not covered by the certificate to the extent needed to bring the manufacturer's fleet average into compliance.  As in the light-duty program, additional "model type" testing will be conducted by the manufacturer over the course of the model year to supplement the initial test group data.  The emissions and fuel consumption levels of the test vehicles will be used to calculate the production-weighted fleet averages for the manufacturer, after application of the appropriate deterioration factor to each result to obtain a full useful life value.  See generally 75 FR 25470-25472.
EPA and NHTSA do not currently anticipate notable deterioration of CO2 emissions and fuel consumption performance, and are therefore requiring that an assigned deterioration factor be applied at the time of certification: an additive assigned deterioration factor of zero, or a multiplicative factor of one will be used.  EPA and NHTSA anticipate that the deterioration factor may be updated from time to time, as new data regarding emissions deterioration for CO2 are obtained and analyzed.  Additionally, EPA and NHTSA may consider technology-specific deterioration factors, should data indicate that certain control technologies deteriorate differently than others.  See also 75 FR 25474.
In-Use Standards
Section 202(a)(1) of the CAA specifies that EPA set emissions standards that are applicable for the useful life of the vehicle.  The in-use standards that EPA is finalizing apply to individual vehicles.  NHTSA is not adopting in-use standards because they are not required under EISA, and because it is not currently anticipated that there will be any notable deterioration of fuel consumption.  For the EPA program, compliance with the in-use standard for individual vehicles and vehicle models will not impact compliance with the fleet average standard, which will be based on the production-weighted average of the new vehicles (as explained below).
EPA is finalizing the proposed provision that the in-use standards for HD pickups and vans be established by adding an adjustment factor to the full useful life emissions and fuel consumption results used to calculate the fleet average.  EPA is also finalizing the proposed provision that the useful life for these vehicles with respect to GHG emissions be set equal to their useful life for criteria pollutants:  11 years or 120,000 miles, whichever occurs first (40 CFR 86.1805-04(a)).
As discussed above, we are finalizing the proposed provision that certification test results obtained before and during the model year be used directly to calculate the fleet average emissions for assessing compliance with the fleet average standard. Therefore, this assessment and the fleet average standard itself do not take into account test-to-test variability and production variability that can affect measured in-use levels.  For this reason, EPA is finalizing the proposed adjustment factor for the in-use standard to provide some margin for production and test-to-test variability that could result in differences between the initial emission test results used to calculate the fleet average and emission results obtained during subsequent in-use testing.  EPA is finalizing the proposed provision that each model's in-use CO2 standard be the model-specific level used in calculating the fleet average, plus 10 percent.  This is the same as the approach taken for light-duty vehicle GHG in-use standards (See 75 FR 25473-25474).  No adverse comments were received on this proposed provision.
As it does now for heavy-duty vehicle criteria pollutants, EPA will use a variety of mechanisms to conduct assessments of compliance with the  in-use standards, including pre-production certification and in-use monitoring once vehicles enter customer service.  The full useful life in-use standards apply to vehicles that have entered customer service.  The same standards apply to vehicles used in pre-production and production line testing, except that deterioration factors are not applied.
What HD Pickup and Van Flexibility Provisions Are Being Established?
This program contains substantial flexibility in how manufacturers can choose to implement the EPA and NHTSA standards while preserving their timely benefits for the environment and energy security.  Primary among these flexibilities are the gradual phase-in schedule, alternative compliance paths, and corporate fleet average approach described above.  Additional flexibility provisions are described briefly here and in more detail in Section IV.
As explained in Section II.C(3),  we are finalizing the proposed provision that, at the end of each model year, when production for the model year is complete, a manufacturer calculate its production-weighted fleet average CO2 and fuel consumption.  Under this  approach, a manufacturer's HD pickup and van fleet that achieves a fleet average CO2 or fuel consumption level better than its standard will be allowed to generate credits.  Conversely, if the fleet average CO2 or fuel consumption level does not meet its standard, the fleet would incur debits (also referred to as a shortfall).
A manufacturer whose fleet generates credits in a given model year will have several options for using those credits to offset emissions from other HD pickups and vans. These options include credit carry-back, credit carry-forward, and credit trading.  These provisions exist in the 2012-2016 MY light-duty vehicle National Program, 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.  The manufacturer will be able to carry back credits to offset a deficit that had accrued in a prior model year and was subsequently carried over to the current model year, with a limitation on the carry-back of credits to three years, consistent with the light-duty program.  We are finalizing the proposed provision that, after satisfying any need to offset pre-existing deficits, a manufacturer may bank remaining credits for use in future years.  We are also finalizing the proposed provision that manufacturers may certify their HD pickup and van fleet a year early, in MY 2013, to generate credits against the MY 2014 standards.  This averaging, banking, and trading program for HD pickups and vans is discussed in more detail in Section IV.A.  For reasons discussed in detail in that section, we are not finalizing any credit transferability to or from other credit programs or averaging sets.
Consistent with the President's May 21, 2010 directive to promote advanced technology vehicles and with the agencies' respective statutory authorities, we are adopting flexibility provisions that parallel similar provisions adopted in the light-duty program.  These include credits for advance technology vehicles such as electric vehicles, and credits for innovative technologies that are shown by the manufacturer to provide GHG and fuel consumption reductions in real world driving, but not on the test cycle.  See Section IV.B.We believe that it is also appropriate to take steps to recognize the benefits of flexible-fueled vehicles (FFVs) and dedicated alternative-fueled vehicles based on the approach taken by EPA in the light-duty vehicle rule for later models years (2016 and later).  However, unlike in that rule, we do not believe it is appropriate to create a provision for additional credits similar to the 2012-2015 light-duty program because the HD sector does not have the incentives mandated in EISA for light-duty FFVs, and so has not relied on the existence of such credits in devising compliance strategies for the early model years of this program.  See  74 FR at 49531.  In fact, manufacturers have not in the past produced FFV heavy-duty vehicles.  On the other hand, we did seek comment on how to properly recognize the impact of the use of alternative fuels, and E85 in particular, in HD pickups and vans, including the proper accounting for alternative fuel use in FFVs in the real world.  See 75 FR at 74198.   FFV performance will be determined in the same way as for light-duty vehicles, with a 50-50 weighting of alternative and conventional fuel test results through MY 2015, and a manufacturer-determined weighting based on demonstrated fuel use in the real world after MY 2015 (defaulting to an assumption of 100 percent conventional fuel use).  See 75 FR at 25434. For dedicated alternative fueled vehicles, NHTSA will require that vehicles be tested with the alternative fuel, and a petroleum equivalent fuel consumption level be calculated based on the Petroleum Equivalency Factor (PEF) that is determined by the Department of Energy.
Class 2b-8 Vocational Vehicles
Heavy-duty vehicles serve a vast range of functions including service for urban delivery, refuse hauling, utility service, dump, concrete mixing, transit service, shuttle service, school bus, emergency, motor homes, and tow trucks to name only a small subset of the full range of vehicles.  The vehicles designed to serve these functions are as unique as the jobs they do.  They are vastly different in size, shape and function.  The agencies were unable to develop a specific vehicle definition based on the characteristics of these vehicles.  Instead at proposal, we proposed to define that Class 2b-8 vocational vehicles as all heavy-duty vehicles which are not included in the Heavy-duty Pickup Truck and Van or the Class 7 and 8 Tractor categories.  In effect, we said everything that is not a combination tractor or a pickup truck or van is a vocational truck.  We are finalizing that definition as proposed reflecting the same challenges we faced at proposal regarding defining the full range of heavy-duty vehicles.  As at proposal, recreational vehicles are included under EPA's standards but are not included under NHTSA's final standards. The agencies note that we are adding vocational tractors to the vocational vehicle category in the final rulemaking, as described above in Section II.B. 
The agencies proposed that Class 4 pickup trucks although similar to Class 2b and 3 vehicles be included in the vocational vehicle category.  Comments from EMA, Cummins and Navistar supported the premise that Class 4 vehicles belong as part of the vocational vehicle program because they are specifically designed and engineered to meet vocational requirements.  They stated that components such as transmissions, axles, frames, and tires differ from the similar pickup truck and vans in the Class 2b and 3 market.  Given the consensus on this issue, the agencies are finalizing the proposed approach to classify Class 4 pickup trucks in the vocational vehicle category. 
As mentioned in Section I, vocational vehicles undergo a complex build process.  Often an incomplete chassis is built by a chassis manufacturer with an engine purchased from an engine manufacturer and a transmission purchased from another manufacturer.  A body manufacturer purchases an incomplete chassis which is then completed by attaching the appropriate features to the chassis.  
The diversity in the vocational vehicle segment can be primarily attributed to the variety of vehicle bodies rather than to the chassis.  For example, a body builder can build either a Class 6 bucket truck or a Class 6 delivery truck from the same Class 6 chassis.  The aerodynamic difference between these two vehicles due to their bodies will lead to different baseline fuel consumption and GHG emissions.  However, the baseline fuel consumption and emissions due to the components included in the common chassis (such as the engine, drivetrain, frame, and tires) will be the same between these two types of complete vehicles.  
The agencies face difficulties in establishing the baseline CO2 and fuel consumption performance for the wide variety of complete vocational vehicles because of the very large number of vehicle types and the need to conduct testing on each of the vehicle types to establish the baseline. To establish standards for a complete vocational vehicle, it would be necessary to assess the potential for fuel consumption and GHG emissions improvement for each of these vehicle types and to establish standards for each vehicle type.  Because of the size and complexity of this task, the agencies judged it was not practical to regulate complete vocational vehicles for this first fuel consumption and GHG emissions program. To overcome the lack of baseline information from the different vehicle types and to still achieve improvements fuel consumption and GHG emissions, the agencies proposed to set standards for the chassis manufacturers of vocational vehicles (instead of the body builders) and the engine manufacturers.  Chassis manufacturers represent a limited number of companies as compared to body manufacturers, which are made up of a diverse set of companies that are typically small businesses.  These companies would need to be regulated if whole vehicle standards were established. 
Similar to combination tractors, the agencies proposed to set separate vehicle and engine standards for vocational vehicles.  A number of comments were received on the proposal to regulate chassis and engine manufacturers.  The agencies received comments from DTNA supporting the proposal to regulate the chassis manufacturer.  While organizations like Cummins and ICCT expressed support for separate engine and vehicle standards; Navistar, Pew, and Volvo, in contrast, opposed separate engine and chassis standards, stating that separate engine standards disadvantages integrated truck/engine manufacturers and full vehicle standards should be required.  Volvo asked that the standards include an alternative integrated standard as well as complete vehicle modeling and testing beginning in 2017.  ACEEE and Sierra Club stated that the proposed standards and test procedures should move the agencies closer to full vehicle testing.    
While the agencies understand that full vehicle standards would allow integrated truck/engine manufacturers additional technologies to comply with the regulation which are not available under the current program design  -  such as electrified accessories and weight reduction --  the agencies are finalizing separate standards for vocational vehicles that apply to chassis manufacturers and engine standards that apply to engine manufacturers.  The agencies continue to believe that it is not practical to regulate complete vocational vehicles for this first fuel consumption and GHG emissions program because of the size and complexity of the task associated with assessing the potential for fuel consumption and GHG emissions improvement for each type of vocational vehicle. Thus, the agencies are finalizing a set standards for the chassis manufacturers of vocational vehicles (instead of the body builders) and for the engine manufacturers.    
In the NPRM, the agencies proposed vehicle standards based on the agencies' assessment of the availability of low rolling resistance tires that could be applied to vocational vehicles.  The agencies considered the possibility of including other technologies in determining the proposed stringency of the vocational vehicle standards, such as aerodynamic improvements, but as discussed in the NPRM, tentatively concluded that such improvements would not be appropriate for basing vehicle standard stringency in this phase of the rulemaking.  For example, the aerodynamics of a recovery vehicle are impacted significantly by the equipment such as the arm located on the exterior of the truck.  The agencies found little opportunity to improve the aerodynamics of the equipment on the truck.  The agencies also evaluated the aerodynamic opportunities discussed in the NAS report.  The panel found that there was minimal fuel consumption reduction opportunity through aerodynamic technologies for bucket trucks, transit buses, and refuse trucks primarily due to the low vehicle speed in normal operation.  The panel did report that there are opportunities to reduce the fuel consumption of straight trucks by approximately 1 percent for trucks which operate at the average speed typical of a pickup and delivery truck (30 mph), although the opportunity is greater for trucks which operate at higher speeds.  Thus, the proposed vocational vehicle standards for fuel consumption and GHG emissions were based solely on the use of low rolling resistance tires.
The agencies received comments from the Motor Equipment Manufacturers Association, Eaton, NRDC, NESCAUM, NACAA, ACEEE, ICCT, Navistar, Arvin Meritor, the Union of Concerned Scientists and others that technologies such as idle reduction, advanced transmissions, advanced drivetrains, weight reduction, hybrid powertrains, and improved auxiliaries provide opportunities to reduce fuel consumption from vocational vehicles.  Commenters asked that the agencies establish regulations that would require the incorporation of these technologies. 
The agencies assessed these technologies and have concluded that they may have the potential to reduce fuel consumption and GHG emissions, but the agencies have not been able to estimate baseline fuel consumption and GHG emissions levels for each type of vocational vehicle and for each type of technology, given the wide variety of models and uses of vocational vehicles.  For example, idle reduction technologies such as APUs and cabin heaters can reduce workday idling associated with vocational trucks.  However, characterizing idling activity for the vocational segment in order to quantify the benefits of idle reduction technology is complicated by the variety of duty cycles found in the sector.  Idling in school buses, fire trucks, pick-up trucks, delivery trucks, and other types of vocational vehicles varies significantly.  Given the great variety of duty cycles and operating conditions of vocational vehicles and the timing of these rules, it is not feasible at this time to establish an accurate baseline for the idle reduction technologies evaluated.  Similarly, for advanced drivetrains and advanced transmissions determining a baseline configuration, or a set of baseline configurations, is extremely difficult given the variety of trucks in this segment.  The agencies do not believe that we can legitimately base standard stringency on the use of technologies for which we cannot identify baseline configurations, because baseline emissions and fuel consumption are the benchmarks against which standards are developed.  For some technologies, such as weight reduction and improved auxiliaries  -  such as electrically driven power steering pumps and the vehicle's air conditioning system -- the need to limit technologies to those under the control of the chassis manufacturer restricted the agencies' options for incorporating the technologies into the final rules.  For example, lightweight components that are under the control of chassis manufacturers are limited to a very few components such as frame rails.  Considering the fuel efficiency and GHG emissions reduction benefits that will be achieved by finalizing these rules in the timeframe proposed, rather than delaying in order to gain enough information to include additional technologies, the agencies have decided to finalize standards that do not assume the use of these technologies and will consider incorporating them in a later action.
As the program progresses and the agencies gather more information, we expect to reconsider whether vocational vehicle standards for MYs 2019 and beyond should be based on the use of additional technologies besides low rolling resistance tires.
EPA is adopting CO2 standards and NHTSA is finalizing fuel consumption standards for manufacturers of chassis for new vocational vehicles and for manufacturers of heavy-duty engines installed in these vehicles.  The final heavy-duty engine standards for CO2 emissions and fuel consumption focus on potential technological improvements in fuel combustion and overall engine efficiency and those controls would achieve most of the emission reductions. Further reductions from the Class 2b-8 vocational vehicle itself are possible within the timeframe of these final regulations. Therefore, the agencies are also finalizing separate standards for vocational vehicles that will focus on additional reductions that can be achieved through improvements in vehicle tires.  The agencies' analyses, as discussed briefly below and in more detail later in this preamble and in the RIA Chapter 2, show that these final standards appear appropriate under each agency's respective statutory authorities. Together these standards are estimated to achieve reductions of up to 10 percent from most vocational vehicles.
EPA is also adopting standards to control N2O and CH4 emissions from Class 2b-8 vocational vehicles through controlling these GHG emissions from the HD engines.  The final heavy-duty engine standards for both N2O and CH4 and details of the standard are included in the discussion in Section II.E.1.b and II.E.2.b. EPA neither proposed nor is adopting air conditioning leakage standards applying to chassis manufacturers. 
As discussed further below, the agencies are setting CO2 and fuel consumption standards for these chassis based on tire rolling resistance improvements and for the engines based on engine technologies.  The fuel consumption and GHG emissions impact of tire rolling resistance is impacted by the mass of the vehicle.  However, the impact of mass on rolling resistance is relatively small so the agencies proposed to aggregate several vehicle weight categories under a single category for setting the standards.  The agencies proposed to divide the vocational vehicle segment into three broad regulatory subcategories - Light Heavy-Duty (Class 2b through 5), Medium Heavy-Duty (Class 6 and 7), and Heavy Heavy-Duty (Class 8) which is consistent with the nomenclature used in the diesel engine classification. The agencies received comments supporting the division of vocational vehicles into three regulatory categories from DTNA.  The agencies also received comments from Bosch, Clean Air Task Force, and National Solid Waste Management Association supporting a finer resolution of vocational vehicle subcategories.  Their concerns include that the agencies' truck configuration in GEM is not representative of a particular vocational application, such as refuse trucks.  Another recommendation was to divide the category by both GVWR and by operational characteristics.  Upon further consideration, the agencies are finalizing as proposed three vocational vehicle subcategories because we feel this adequately balances simplicity while still obtaining reductions in this diverse segment.  Finer distinctions in regulatory subcategories would not change the technologies or reductions expected from the vocational vehicle category.  As the agencies move towards future heavy-duty fuel consumption and GHG regulations for post-2017 model years, we intend to gather GHG and fuel consumption data for specific vocational applications which could be used to establish application-specific standards in the future.
EPA received comments supporting the exclusion of recreational vehicles, emergency vehicles, school buses from the rulemaking.  The commenters argued that these individual vehicle types were small contributors to overall GHG emissions and that tires meeting their particular performance needs might not be available by 2014.  The agencies considered these comments and EPA has decided to finalize standards for these individual vehicle categories as we proposed.  NHTSA will continue to exempt recreational vehicles.  We have taken this decision reflecting that any individual vocational truck segment is likely to be a small contributor to overall fuel consumption and GHG emissions on its own.  Absent regulations for the vast majority of vehicles in this segment, our program will fall short of its goals.  Further since the proposal, the agencies have met with a number of tire manufacturers to better understand their expectations for product availability for the 2014 model year.  Based on our review of the information shared, we are convinced that tires with rolling resistance consistent with our final vehicle standards and meeting the full range of other performance characteristics desired in the vehicle market will be broadly available by the 2014 model year.
What Are the Vocational Vehicle and Engine CO2 and Fuel Consumption Standards and Their Timing?
In developing the final standards, the agencies have evaluated the current levels of emissions and fuel consumption, the kinds of technologies that could be utilized by manufacturers to reduce emissions and fuel consumption and the associated lead time, the associated costs for the industry, fuel savings for the consumer, and the magnitude of the CO2 and fuel savings that may be achieved.  After examining the possibility of vehicle improvements based on use of the technologies underlying the standards for Class 7/8 tractors, including improved aerodynamics, vehicle speed limiters, idle reduction technologies, tire rolling resistance, and weight reduction, as well as use of hybrid technologies, the agencies ultimately determined to base the final vehicle standards on performance of tires with superior rolling resistance.  For standards for diesel engines installed in vocational vehicles, the agencies examined performance of engine friction reduction, aftertreatment optimization, air handling improvements, combustion optimization, turbocompounding, and waste heat recovery, ultimately determining to based the final standards on the performance of all of the technologies except turbocompounding and waste heat recovery systems.  The agencies' evaluation indicates that these technologies, as described in Section III.C, are available today in the heavy-duty tractor and light-duty vehicle markets, but have very low application rates in the vocational market.  The agencies have analyzed the technical feasibility of achieving the CO2 and fuel consumption standards, based on projections of what actions manufacturers would be expected to take to reduce emissions and fuel consumption to achieve the standards, and believe that the standards are cost-effective and technologically feasible and appropriate within the rulemaking time frame.  EPA and NHTSA also present the estimated costs and benefits of the vocational vehicle standards in Section III.  
Vocational Vehicle Chassis Standards
In the NPRM, the agencies defined tire rolling resistance as a frictional loss of energy, associated mainly with the energy dissipated in the deformation of tires under load that influences fuel efficiency and CO2 emissions.  Tires with higher rolling resistance lose more energy in response to this deformation, thus using more fuel and producing more CO2 emissions in operation, while tires with lower rolling resistance lose less energy, and save more fuel and CO2 emissions in operation.  Tire design characteristics (e.g., materials, construction, and tread design) influence durability, traction (both wet and dry grip), vehicle handling, ride comfort, and noise in addition to rolling resistance.  
The agencies explained that a typical Low Rolling Resistance (LRR) tire's attributes, compared to a non-LRR tire, would include increased tire inflation pressure; material changes; and tire construction with less hysteresis, geometry changes (e.g., reduced height to width aspect ratios), and reduction in sidewall and tread deflection.  When a manufacturer applies LRR tires to a vehicle, they generally also make changes to the vehicle's suspension tuning and/or suspension design in order to maintain vehicle handling and ride comfort.
The agencies also explained that while LRR tires can be applied to vehicles in all MD/HD classes, they may have special potential for improving fuel efficiency and reducing CO2 emissions for vocational vehicles.  According to an energy audit conducted by Argonne National Lab, tires are the second largest contributor to energy losses of vocational vehicles, after engines.  Given this finding, the agencies considered the availability of LRR tires for vocational applications by examining the population of tires available, and concluded that there appeared to be few LRR tires for vocational applications.  The agencies suggested in the NPRM that this low number of LRR tires for vocational vehicles could be due in part to the fact that the competitive pressure to improve rolling resistance of vocational vehicle tires has been less than in the line haul tire market, given that line haul vehicles generally drive significantly more miles and therefore have significantly higher operating costs for fuel than vocational vehicles, and much greater incentive to improve fuel consumption. The small number of LRR tires for vocational vehicles may perhaps also be due in part to the fact that vocational vehicles generally operate more frequently on secondary roads, gravel roads and roads that have less frequent winter maintenance, which leads vocational vehicle buyers to value tire traction and durability more heavily than rolling resistance.  The agencies recognized that this provided an opportunity to improve fuel consumption and GHG emissions by creating a regulatory program that encourages improvements in tire rolling resistance for both line haul and vocational vehicles. The agencies proposed to base standards for all segments of HD vehicles on the use of LRR tires.  The agencies estimated that a 10 percent reduction in average tire rolling resistance would be attainable between model years 2010 and 2014 based on the tire development achievements over the last several years in the line haul truck market. This reduction in tire rolling resistance would correlate to a 2 percent reduction in fuel consumption as modeled by the GEM.
Summary of Comments
The agencies received many comments on the subject of tire rolling resistance.  Comments included suggestions for alternative test procedures; whether LRR tires should be applied to certain types of vocational vehicles and whether certain vehicles should be exempted from the vocational vehicle standards if the standards are based on the ability to use LRR tires (these particular comments are discussed in Section II.D of the preamble); the appropriateness of the proposed standards; and compliance issues (discussed below in Section II.D.2.b.  
Regarding whether LRR tires should be applied to certain types of vocational vehicles, the agencies received many comments from stakeholders, such as Daimler Trucks North America, Fire Apparatus Manufacturers Association (FAMA), International Association of Fire Chiefs, National Ready Mix, National Solid Wastes Management Association (NSWMA), Spartan Motors, National Automobile Dealers Association, among others.  There were comments regarding applicability of low rolling resistance tires to vocational vehicles based on LRR tire availability, suitability of the tires for the applications, fuel consumption and GHG emissions benefits and the appropriateness of standards. Many of these commenters focused particularly on the whether LRR tires would compromise the capability of emergency vehicles.  Comments related to the capability of emergency vehicles are discussed and responded to in greater detail above in Section II.D.
Regarding whether LRR tires are available in the market for certain vocational vehicles and whether the vocational vehicle standards were therefore appropriate and feasible, both Ford and AAPC stated that the proposed model-based requirement for Class 2b-8 vocational chassis appeared to require tires with rolling resistance values of approximately 8.0-8.1 kg/metric ton or better, and that limited data available for smaller diameter tires, such as LT tires used on many light heavy duty trucks and vans, suggested that there exist few if any choices for tires that would comply.  Given this concern about the availability of compliant tires, particularly in the case of tires smaller than 22.5", during the proposed regulatory time frame, AAPC and Ford requested revisions to the requirement, or the modeling method, to establish different standards for vehicles that use different tire classes, with separate requirements for LT tires, 19.5" tires, and 22.5" tires.  AAPC argued that standards should be set based on data collected on high volume in-use tires, and that they should be set at a level that ensures the availability of multiple compliant tires.  Oshkosh went further and stated that the agencies did not even need to use GEM for determining compliance with the vocational standards, since all the variables other than tire RRC are predefined inputs, and therefore the agencies could simply set a standard for tires on vocational vehicles that required them to have rolling resistance values lower than 8.0 kg/metric ton.
Summary of Research Done Since the Notice of Proposed Rulemaking
Since the NPRM, the agencies have conducted substantial additional research on tire rolling resistance for medium- and heavy-duty applications. This research involved direct discussions with tire suppliers, assessment of the comments received, additional review of tire products available, and a more thorough review of tire use in the field.  In addition, EPA has conducted tire rolling resistance testing to help inform the final rulemaking. 
The agencies discussed many aspects of low rolling resistance tire technologies and their application to medium- and heavy-duty vehicles with tire suppliers since publication of the NPRM.  Several tire suppliers indicated to the agencies that low rolling resistance tires are currently available for vocational applications that would enable compliance with the proposed vocational vehicle standards, such as delivery vehicles, refuse vehicles, and other vocations.  However, the supplier conversations also made the agencies aware that availability of low rolling resistance tires varies by supplier. Some suppliers stated they focused their company resources on areas of the medium- and heavy-duty vehicle spectrum where fleet operators would see the most fuel efficiency benefits for the application of low rolling resistance technologies; specifically the long-haul, on-highway applications that drive many miles and use large amounts of fuel.  These suppliers stated that this choice was driven by the significant capital investment that would be needed to improve tire rolling resistance across the relatively large number of product offerings in the vocational vehicle segment, based on the wide range of tire sizes, load ratings, and speed ratings, compared to the much narrower range of offerings for long-haul applications.  Other suppliers stated that they have made conscious efforts to reduce the rolling resistance of all of their medium- and heavy-duty vehicle tire offerings, including vocational applications, in an effort to become leaders in this technology.
The agencies also discussed with tire suppliers the potential tire attribute tradeoffs that may be associated with incorporating designs that improve tire rolling resistance, given the driving patterns, environmental conditions, and on-road and off-road surface conditions that vocational vehicles are subjected to.  Some vehicle manufacturer commenters had suggested that changes in tire tread block design that improve rolling resistance may adversely affect tire performance characteristics such as traction, resistance to tearing, and resistance to wear and damage from scrubbing on curbs and frequent tight radius turns that are important to customers for vocational vehicle performance.  The suppliers agreed that providing tires unable to withstand these conditions or meet the vehicle application needs would adversely affect customer satisfaction and warranty expenses, and would have detrimental financial effects to their businesses. One supplier indicated that in some cases, tread-wear (tire life) could be compromised if suppliers choose to reduce the initial tire tread depth without any offsetting tire compound or design enhancements as the means to achieve rolling resistance reductions. That supplier argued that taking this approach could lead to more frequent tire replacements or re-treading of existing tire carcasses, and that the agencies should therefore take a total lifecycle view when evaluating the effects of driving rolling resistance reductions.  That supplier also indicated that a correlation of a 20 percent reduction in rolling resistance achieved through tread depth reduction could lead to a 30 percent decrease in tread-life and 15 percent reduction in wet traction.  The agencies note that when they inquired about potential `safety' related tradeoffs, such as traction (braking and handling) and tread wear when applying low rolling resistance technologies, tire suppliers consistently responded that they would not produce a tire that compromises safety when fitted in its proper application.
In addition to the supplier discussions and evaluation of comments to the Notice of Proposed Rulemaking, EPA conducted a series of tire rolling resistance tests on medium- and heavy-duty vocational vehicle tires.  The testing measured the RRC of tires representing 16 different vehicle applications in Classes 4 - 8.  The testing included approximately 5 samples each of both steer and drive tires for each application. The tests were conducted by two independent tire test labs, Standards Testing Lab (STL) and Smithers-Rapra (Smithers).   
Overall, a total of 156 medium- and heavy-duty tires were included in this testing, which was comprised of 88 tires covering various commercial vocational vehicle types, such as bucket trucks, school buses, city delivery vehicles, city transit buses and refuse haulers among others; 47 tires intended for application to tractors; and 21 tires classified as light-truck (LT) tires intended for Class 4 vocational vehicles such as delivery vans.  In addition, approximately 20 of the tires tested were exchanged between the labs to assess inter-laboratory variability.  While all of the tires were tested using the ISO 28580 method, approximately 20 tires were also tested using SAE J1269 to compare the two test methods. 
The test results for 88  commercial vocational vehicle tires (19.5" and 22.5" sizes)  showed a test average RRC of 7.4 kg/metric ton.  To comply with the proposed vocational vehicle fuel consumption and GHG emissions standards, a manufacturer would need to achieve an average tire RRC value of 8.1 kg/metric ton.  The measured average RRC of 7.4 kg/metric ton is better than the average value that would be needed to meet vocational vehicle standards.  Of those eighty-eight tires tested, twenty tires had RRC values worse than 8.1 kg/metric ton, two were at 8.1 kg/metric ton, and sixty-six tires were better than 8.1 kg/metric ton. Additional data analyses examining the tire data by tire size to determine the range and distribution of RRC values within each tire size showed each tire size generally had tires ranging from approximately 6.0 to 8.5 kg/metric ton, with a small number of tires in the 5.3  -  5.7 kg/metric ton range and a small number of tires in a range as high as 9.3  -  9.8 kg/ton. Review of the data showed that for each tire size and vehicle type, the majority of tires tested would enable compliance with vocational vehicle fuel consumption and GHG emission standards. 
The test results for the 47 tires intended for tractor application showed an overall average of 6.9 kg/ton, the lowest overall average rolling resistance of the different tire applications tested. This is consistent with what the agencies heard through comments and meetings with tire suppliers whose efforts have focused on tractor applications, particularly for long-haul applications, which yield the highest fuel efficiency benefits from LRR tire technology. 
Finally, the 21 LT tires intended for Class 4 vocational vehicles were comprised of two sizes; LT225/75R16 and LT245/75R16 with 11 and 10 samples tested, respectively. Some auto manufacturers have indicated that RRC values for tires fitted to these Class 4 vehicles typically have a higher RRC values than tires found on commercial vocational vehicles because of the smaller diameter wheel size and the ISO testing protocol. The test data showed the average RRC for LT225/75R16 tires was 9.1 kg/metric ton and the average for LT245/75R16 tires was 8.6 kg/metric ton. The range for the LT225/75R16 tires spanned 7.4 to 11.0 and the range for the LT245/75R16 tires ranged from 6.6 to 9.8 kg/metric ton. Overall, the average for the tested LT tires was 8.9 kg/metric ton.
Analysis of the EPA test data for all vocational vehicles, including LT tires, shows the test average RRC is 7.7 kg/metric ton and the standard deviation for is 1.2 kg/metric ton.  Review of the data shows that for each tire size and vehicle type, there are many tires available that would enable compliance with the proposed standards for vocational vehicles and tractors except for LT tires for Class 4 vocational vehicles where test results show the majority of these tires are worse than 8.1 kg/metric ton. 
The agencies also reviewed the RRC data from the tires that were tested at both the STL and Smithers laboratories to assess inter-laboratory and test machine variability.  The agencies conducted statistical analysis of the data to gain better understanding of lab-to-lab correlation and developed an adjustment factor for data measured at each of the test labs .  When applied, this correction factor showed that for 77 of the 80 tires tested, the difference between the original RRC and a value corrected RRC was 0.01 kg/metric ton. The values for the remaining three tires were 0.03 kg/metric ton, 0.05 kg/metric ton and 0.07 kg/metric ton. Based on these results, the agencies believe the lab-to-lab variation for the STL and Smithers laboratories would have very small effect on measured RRC values.  Further, in analyzing the data, the agencies considered both measurement variability and the value of the measurements relative to proposed standards.  The agencies concluded that although laboratory-to-laboratory and test machine-to-test machine measurement variability exists, the level observed is not excessive relative to the distribution of absolute measured RRC performance values and relative to the proposed standards.  Based on this, the agencies concluded that the test protocol and the proposed standards are reasonable for this program.
Summary of Final Rules
For vocational vehicles, the agencies intend to keep rolling resistance as an input to the GEM but with modifications to the proposed targets as a result of the testing completed by EPA since the NPRM and information from tire suppliers. 
For vocational vehicles, the rolling resistance of each tire will be measured using the ISO 28850 test method for drive tires and steer tires planned for fitment to the vehicle being certified. Once the test RRC values are obtained, a manufacturer will input the RRC values for the drive and steer tires separately into the GEM model where, for vocational vehicles, the vehicle load is distributed equally over the steer and drive tires. Once entered, the amount of GHG reduction attributed to tire rolling resistance will be incorporated into the overall vehicle compliance value. The following table provides the revised target RRC values for vocational vehicles for 2014 and 2017 model years.
Table II-13: Vocational Vehicle  -  Target RRC Values for GEM Input

2014 MY
2017 MY
Tire Rolling Resistance (kg/metric ton) 
7.7 kg/metric ton
7.7 kg/metric ton
These target standards are being revised based on the significant availability of tires for vocational vehicles applications which have performance better than the originally proposed 8.1 kg/metric ton target. As evidenced in the discussion of the EPA tire testing results, 63 of the 88 tires tested for vocational applications had RRC values better than the proposed target. The tires tested covered fitment to a wide range of vocational vehicle types and classes; thus agencies believe the original target value of 8.1 kg/metric ton was possibly too lenient after reviewing the testing data. Therefore, the agencies believe it is appropriate to reduce the proposed standard to an RRC value 7.7 kg/metric ton for non-LT tire type. As discussed previously, this value is the test average of all vocational tires tested (including LT) which takes a conservative approach over setting a target based on the average of only the non-LT Vocational tires tested. For LT tires, based on both the test data and in alignment with the comments from AAPC and Ford Motor Company, the agencies recognize the need to provide an alternative based on the test data and discussions with vehicles manufacturers. In lieu of having two sets of Light Heavy-Duty vocational vehicle standards, the agencies are finalizing an adjustment factor which applies to the RRC test results for LT tires. The agencies developed an adjustment factor dividing the overall vocational test average RRC of 7.7 by the LT Vocational Average of 8.9. This yields an adjustment factor of 0.87. For LT vocational vehicle tires, the measured RRC values will be multiplied by the 0.87 adjustment factor before entering the values in the GEM for compliance. 
Based on the tire rolling resistance inputs noted above EPA is finalizing the following CO2 standards for the 2014 model year for the Class 2b through Class 8 vocational vehicle chassis, as shown in Table II-14.  Similarly, NHTSA is finalizing the following fuel consumption standards for the 2016 model year, with voluntary standards beginning in the 2014 model year.  For the EPA GHG program, the  standard applies throughout the useful life of the vehicle.  
As with the 2017 MY standards for Class 7 and 8 tractors, EPA and NHTSA are adopting more stringent vocational vehicle standards for the 2017 model year which reflect the CO2 emissions reductions required through the 2017 model year engine standards.  See Section II.B.2.  As explained in Section II. D. (2) (c)(iv) below, engine performance is one of the inputs into the compliance model, and that input will change in 2017 MY to reflect the 2017 MY engine standards.  The 2017 MY vocational vehicle standards are not premised on manufacturers installing additional vehicle technologies. Thus, although chassis manufacturers will not be required to make further improvements in 2017 MY to meet the standards, the standards will be more stringent to reflect the engine improvements required in that year.  This is because in 2017 MY GEM vehicle modeling outputs (in grams per ton mile and gallons per 1,000 ton mile) will automatically decrease since engine efficiency will improve in that year.  The agencies chose to set the vocational vehicle standard in 2017 to reflect the 2017 engine improvements even though chassis manufacturers are not affected by the change in stringency.  
Table II-14: Final Class 2b-8 Vocational Vehicle CO2 and Fuel Consumption Standards 
EPA CO2 (gram/ton-mile) Standard Effective 2014 Model Year

Light Heavy-Duty
Class 2b-5
Medium Heavy-Duty  Class 6-7
Heavy Heavy-Duty Class 8
CO2 Emissions
387
234
226
NHTSA Fuel Consumption (gallon per 1,000 ton-mile) Standard Effective 2016 Model Year

Light Heavy-Duty
Class 2b-5
Medium Heavy-Duty  Class 6-7
Heavy Heavy-Duty    Class 8
Fuel Consumption
38.0
23.0
22.2
EPA CO2 (gram/ton-mile) Standard Effective 2017 Model Year

Light Heavy-Duty
Class 2b-5
Medium Heavy-Duty Class 6-7
Heavy Heavy-Duty   Class 8
CO2 Emissions
373
225
222
NHTSA Fuel Consumption (gallon per ton-mile) Standard Effective 2017 Model Year

Light Heavy-Duty
Class 2b-5
Medium Heavy-Duty Class 6-7
Heavy Heavy-Duty   Class 8
Fuel Consumption
36.6
22.1
21.8

  Off-Road and Low-Speed Vocational Vehicle Standards
There are several reasons that the agencies proposed to base the vocational vehicle standards on the use of low rolling resistance tires alone.  First, technologies that improve vehicle fuel efficiency and reduce CO2 emissions may not be equally effective on all vehicles depending on the kinds of work they do or if they travel at low speeds, as discussed above.  For example, some aerodynamic improvements could physically be applied to vocational vehicles, but because so many vocational vehicles rarely reach the sustained speeds that line-haul tractors do, applying aero features to vocational vehicles would result in very little benefit for those vehicles compared to the benefit expected for line-haul tractors.  The agencies believe it does not make sense to require technology without expected benefits, and commenters generally supported that approach in response to the NPRM.  Another important reason for basing the vocational vehicle standards on improvements to tires alone is the complexity associated with establishing a baseline emissions and fuel consumption rate for technology use in vocational vehicles, given the diversity of vehicles and duty cycles in this segment.  A baseline is needed since it is the benchmark against which standards are established.  Last and importantly, in order to be included in this regulation, technologies to reduce vocational vehicle emissions would need to be under the control of the chassis manufacturer.  The technologies available to chassis manufacturers are fairly limited.  
	 Some vocational vehicles, because of they are primarily designed for off-road use, may not be good candidates for low rolling resistance tires.  These vehicles may travel on-road for very limited periods of time, such as in traveling across an urban road, or if they are off-loaded from another vehicle onto a road and then driven off-road.  The infrequent and limited exposure to on-road environments makes these vehicles suitable candidates for providing an exemption from the CO2 emissions and fuel consumption standards.  The agencies are also targeting other vehicles that travel at low-speeds and meant to be used both on- and off-road, as the application of certain technologies to these vehicles not only may not provide the same level of benefits as it would for pure on-road vehicles, but it may also actually impair the vehicle's ability to do its off-road job.  In this case, the agencies want to ensure that vehicle functionality is maintained to the maximum extent possible, while avoiding the possibility that achievable benefits are not realized because of the structure of the regulations.  The sections below explain this issue in more detail as it applies to tractors and vocational vehicles.
The agencies explained in the NPRM that certain vocational vehicles have very limited on-road usage, and that although they would be defined as "motor vehicles" per 40 CFR 85.1703, the fact that they spend the most of their operations off-road might be reason for excluding them from the vocational vehicle standards.  Vocational vehicles, such as those used on oil fields and construction sites, experience very little benefit from LRR tires or from any other technologies to reduce GHG emissions and fuel consumption.  The agencies proposed to allow a narrow range of these de facto off-road trucks to be excluded from the proposed vocational vehicle standards if equipped with special off-road tires having lug type treads.  The agencies stated in the NPRM that on/off road traction is the only tire performance parameter which trades off with TRR are so significantly that tire manufacturers could be unable to develop tires meeting both a TRR standard while maintaining or improving the characteristic allowing them to perform off-road.  Therefore, these trucks were proposed to be exempted from vehicle standards but were still required to use certified engines, which would provide fuel consumption and CO2 emission reductions in all vocational applications.  To ensure that these trucks were in fact used chiefly off-road, the agencies proposed requirements that would allow exemption of a vehicle provided the vehicle and the tires were speed limited.  As mentioned, the agencies were aware that the majority off road trucks primarily used off-road tires and are low speed vehicles as well.  Based upon this understanding, the agencies specifically proposed that a truck must meet the following requirements to qualify for an exemption from vocational vehicle standards:
         * Tires which are lug tires or contain a speed rating of less than or equal to 60 mph; and
         * A vehicle speed limiter governed to 55 mph.
	In response to the NPRM, EMA/TMA, Navistar and Volvo agreed with excluding off-road vocational vehicles from the standards because these vehicles primarily operate off-road, but requested broadening the exclusion to cover other types of vocational vehicles.  Several manufacturers (IAFC, FAMA, NTEA, NSWMA, AAPC, RMA, Navistar and DTNA) requested the exemption of specific vehicle types, such as on/off-road emergency vehicles, refuse vehicles low speed transit buses or school buses, because their usage was viewed as being incompatible with LRRTs.  Navistar opposed the application of the proposed regulations to school buses, arguing that LRR tires may impact the ride quality for children in school buses.  However, Navistar also acknowledged that a significant portion of the national fleet of school buses already utilizes off-road tires designed with lug type tread patterns (e.g., Kentucky).  IAFC, FAMA and NTEA commented that fire trucks and ambulances should also be exempted due to their part-time off-road use such as in responding to a wildland fire or hazardous materials incidents which would require operations on dirt and gravel roads, fields or other off-road environments.  Commenters also contended that by requiring a 55-mph limitation, the proposed exemption would be impractical for emergency vehicles due to the need to responding quickly to life-threatening events.  The refuse truck manufacturers and trade associations, NSWMA and AAPC, commented that the solid waste industry operates a variety of vocational vehicles that perform solely off-road at landfills.  These comments also requested an exemption for certain refuse trucks (i.e., roll-off container trucks) that frequently go off-road at construction sites.  Other commenters (FAMA, IAFC and Oshkosh) opposed compliance with the LRR standard for vocational vehicles for on/off road mixed service tires with aggressive or lug treads, stating that up to this point the industry has had very little interest in improving the LRR aspects of these tires or even to conducting testing to determined CRR values.  
For the final rules, the agencies have considered the issues raised by commenters and have decided to adopt different criteria for exempting vocational vehicles and vocational tractors that primarily travel off-road than the agencies proposed in the NPRM.  The agencies believe that the intent underlying the exemption for vocational vehicles in the NPRM was correct but the proposals were either unsuitable for the industry or too restrictive to capture the all the vehicles intended for the exemption.  For example, the NPRM proposal, by using tire tread patterns and VSLs as the basis for qualifying vehicles for the exemption, was too restrictive because other non-lug type tread patterns exist in the market as well as other technologies which are equally capable of limiting the speed of the vehicle, as mentioned by Volvo.  Therefore, the exemption for off-road vocational vehicles will be replaced with new criteria based on the vehicle application, whether it operates at low speed and whether the vehicle has speed restricted tires.  The exemption is in part based on existing industry standards regulated by NHTSA.  These vocational vehicles will be exempted from complying with the vehicle standards of these rules but are still required to have certified engines.  As such, any vocational vehicle including vocational tractors primarily used off-road must meet the following criteria to be exempted from GHG and fuel consumption vehicle standards:   
         * Any vehicle primarily designed to perform work off-road such as in oil fields, forests, or construction sites and having permanently or temporarily affixed components designed to work in an off-road environment (i.e., hazardous material equipment or off-road drill equipment) or characteristics making them unsuitable for operation on roads; and meeting one or more of the following criteria:
               # Any vehicle equipped with an axle that has a gross axle weight rating (GAWR) of 29,000  pounds; or
               # Any truck or bus that has a speed attainable in 2 miles of not more than 33 mph; or
               # Any truck that has a speed attainable in 2 miles of not more than 45 mph, an unloaded vehicle weight that is not less than 95 percent of its gross vehicle weight rating (GVWR), and no capacity to carry occupants other than the driver and operating crew.
            
The agencies are also adopting in the final rules requirements to exempt any vocational vehicle that can operate in both on and off-road environments and having speed restricted tires rated at 55 mph or below.  The agencies' reasoning in adopting a speed restricted exemption for tires is that the majority of mixed service tires used for off-road use were identified as being restricted at 55 mph or less.  Also, as identified by FMVSS No. 119, speed restricted tires at a rating of 55 mph or less are incapable of meeting the same on-road performance standards as conventions tires.  Using a speed restriction as a criteria for exemption will also provide the possibility for certain low-speed vehicles to be inadvertently exempted as well (i.e., low speed city delivery tractors) but the risk of allowing the low volume of these vehicle to be exempted far outweighs the potential loss of creating a segment of vehicles that are precluded from performing their intended applications.  Therefore, the final rule includes an exemption for any mixed service off-road tire equipped on an applicable vocational vehicle that is speed restricted at 55 mph or less.  
Manufacturers choosing to exempt vehicles based on the above criteria should provide a description of how they meet the qualifications for each vehicle family group in their end-of-the year and final year reports (see Section V).  
Heavy-duty Engine Standards for Engines used in Vocational Vehicles 
EPA is finalizing GHG standards and NHTSA is finalizing fuel consumption standards for new heavy-duty engines installed in vocational vehicles.  The standards will vary depending on whether the engines are diesel or gasoline powered since emissions and fuel consumption profiles differ significantly depending on whether the engine is gasoline or diesel powered.  The agencies' analyses, as discussed briefly below and in more detail later in this preamble and in the RIA Chapter 2, show that these standards are appropriate and feasible under each agency's respective statutory authorities.  
The agencies have analyzed the feasibility of achieving the GHG and fuel consumption standards, based on projections of what actions manufacturers are expected to take to reduce emissions and fuel consumption.  EPA and NHTSA also present the estimated costs and benefits of the heavy-duty engine standards in Section III.  In developing the final rules, the agencies have evaluated the kinds of technologies that could be utilized by engine manufacturers compared to a baseline engine, as well as the associated costs for the industry and fuel savings for the consumer and the magnitude of the GHG and fuel consumption savings that may be achieved.
EPA's existing criteria pollutant emissions regulations for heavy-duty highway engines establish four service classes (three for compression-ignition or diesel engines and one for spark ignition or gasoline engines) that represent the engine's intended and primary truck application, as shown in Table II-15 (40 CFR 1036.140).  The agencies proposed to use the existing service classes to define the engine subcategories in this HD GHG emissions and fuel consumption program.  The agencies did not receive any adverse comments to using this approach.  Thus, the agencies are adopting the four engine subcategories for this final action.  All heavy-duty engines are covered either under the heavy-duty pickup truck and van category or under the heavy-duty engine standards.  
Table II-15: Engine Regulatory Subcategories
Engine Category
Intended Application
Light Heavy-duty (LHD) Diesel 
Class 2b through Class 5 trucks (8,501 through 19,500 pounds GVWR)
Medium Heavy-duty (MHD) Diesel 
Class 6 and Class 7 trucks (19,501 through 33,000 pounds GVWR)
Heavy Heavy-duty (HHD) Diesel 
Class 8 trucks (33,001 pounds and greater GVWR
Gasoline 
Incomplete vehicles less than 14,000 pounds GVWR and all vehicles (complete or incomplete) greater than 14,000 pounds GVWR

Diesel Engine Standards for Engines Installed in Vocational Vehicles
In the NPRM, the agencies proposed the following CO2 and fuel consumption standards for HD diesel engines to be installed in vocational vehicles, as shown in Table II-16.
Table II-16: Vocational Diesel Engine Standards over the Heavy-Duty FTP Cycle
Model Year
Standard
Light Heavy-Duty Diesel
Medium Heavy-Duty Diesel
Heavy Heavy-Duty Diesel
2014-2016
CO2 Standard (g/bhp-hr)
600
600
567

Voluntary Fuel Consumption Standard (gallon/100 bhp-hr)
5.89
5.89
5.57
2017 and Later
CO2 Standard (g/bhp-hr)
576
576
555

Fuel Consumption (gallon/100 bhp-hr)
5.66
5.66
5.45

The agencies explained in the NPRM that the standards were based on our assessment of the findings of the 2010 NAS report and other literature sources that there are technologies available to reduce fuel consumption in all these engines by this level in the final timeframe in a cost-effective manner.  These technologies include improved turbochargers, aftertreatment optimization, low temperature exhaust gas recirculation, and engine friction reductions.  
The agencies proposed that the HD diesel engine CO2 standards for vocational vehicles would become effective in MY 2014 for EPA, with more stringent CO2 standards becoming effective in MY 2017, while NHTSA's fuel consumption standards would become effective in MY 2017, which would be both consistent with the EISA four-year minimum lead-time requirements and harmonized with EPA's timing for stringency increases.  The agencies explained that the three-year timing, besides being required by EISA, made sense because EPA's heavy-duty highway engine program for criteria pollutants had begun to provide new emissions standards for the industry in three year increments, which had caused the heavy-duty engine and truck manufacturer product plans to fall largely into three year cycles reflecting this regulatory environment.  To further harmonize with EPA, NHTSA proposed voluntary fuel consumption standards for HD diesel engines for vocational vehicles in MYs 2014-2016, allowing manufacturers to opt into the voluntary standards in any of those model years, with the caveat that opting in would cause the standards to become mandatory for the opt-in and subsequent model years.  NHTSA proposed that manufacturers could opt into the program by declaring their intent to opt in at the same time they submit the Pre-Certification Compliance Report, and that a manufacturer opting into the program would begin tracking credits and debits beginning in the model year in which they opt in.  Both agencies proposed to allow manufacturers to generate and use credits to achieve compliance with the HD diesel engine standards for vocational vehicles, including averaging, banking, and trading (ABT), and deficit carry-forward.
The agencies proposed to require HD diesel engine manufacturers to achieve, on average, a three percent reduction in fuel consumption and CO2 emissions for the 2014 standards over the baseline MY 2010 performance for the HHD diesel engines, and a five percent reduction for the LHD and MHD diesel engines.  The standards for the LHD and MHD engine categories were proposed to be set at the same level because the agencies found that there is an overlap in the displacement of engines which are currently certified as LHDD or MHDD.  The agencies developed the baseline 2010 model year CO2 emissions from data provided to EPA by the manufacturers during the non-GHG certification process.  Analysis of CO2 emissions from 2010 model year LHD and MHDD diesel engines showed little difference between LHD and MHD diesel engine baseline CO2 performance in the 2010 model year, which overall averaged 630 g CO2/bhp-hr (6.19 gal/100 bhp-hr).  Furthermore, the technologies available to reduce fuel consumption and CO2 emissions from these two categories of engines are similar.  The agencies considered combining these engine categories into a single category, but decided to maintain these two separate engine categories with the same standard level to respect the different useful life periods associated with each category.  
For vocational engines certified on the FTP cycle, the agencies proposed to require a 5 percent reduction for HHD engines and 9 percent for LHD and MHD engines.  For LHD and MHD engines in 2017 MY, the 9 percent reduction is based on the assumption that valvetrain friction reduction can be achieved in MHD engines in addition to turbo efficiency and accessory (water, oil, and ful pump) improvements, improved EGR cooler, and other approaches being used for HHD engines.
For LHD and MHD diesel engine standards, the agencies maintained the same emissions and fuel consumption standards for the two categories since analysis of CO2 emissions from 2010 model year LHD and MHDD diesel engines showed little difference between LHD and MHD diesel engine baseline CO2 performance in the 2010 model year.  Furthermore, as noted above, the technologies available to reduce fuel consumption and CO2 emissions from these two categories of engines are similar.  
Commenters who discussed the HD diesel engine standards generally did not differentiate between the standards for engines used in combination tractors and the engines used in vocational vehicles.  As explained above in Section II.B.2.b, some commenters, such as EMA/TMA, Cummins, DTNA, and other manufacturers, supported the standards proposed in the NPRM, as long as the flexibilities proposed in the NPRM were finalized as proposed.  Volvo argued that the standards are being phased in too quickly.  Environmental groups and NGOs commented that the standards should be more stringent and reflect the potential for greater fuel consumption and CO2 emissions reductions through the use of additional technologies outlined in the 2010 NAS study.   
In response to those comments, the agencies refer back to our discussion in Section II.B.2.b.  The agencies believe that the additional reductions may be achieved through the increased development of the technologies evaluated for the 2014 model year standard, but the agencies' analysis indicates that this type of advanced engine development will require a longer development time than MY 2014.  The agencies are therefore providing additional lead time to allow for the introduction of this additional technology, and waiting until 2017 to increase stringency to levels reflecting application of this technology.  See Chapter 2 of the RIA for more details.  For MHD engines, the 9 percent reduction is based on the assumption that valvetrain friction reduction can be achieved in MHD engines in addition to turbo efficiency and accessory (water, oil, and fuel pump) improvements, improved EGR cooler, and other approaches being used for HHD engines.  
While it made sense to set standards at the same level for LHD and MHD diesel engines for vocational vehicles, the agencies found that it did not make sense to set HHD standards at the same level.  Based on manufacturer-submitted CO2 data for the non-GHG emissions certification process, the agencies found that the baseline for HHD diesel engines was much lower than for LHD/MHD diesel engines -- 584 g CO2/bhp-hr (5.74 gal/100 bhp-hr) on average for HHD, compared to 630 g CO2/bhp-hr (6.19 gal/100 bhp-hr) on average for LHD/MHD.  In addition to the differences in the baseline performance, the agencies believe that there may be some technologies available to reduce fuel consumption and CO2 emissions that may be appropriate for the LHD/MHD diesel engines but not for the HHD diesel engines, such as turbocompounding.  Therefore, the agencies are setting a different standard level for HHD diesel engines to be used in vocational vehicles.  Additional discussion on technical feasibility is included in Section III below and in Chapter 2 of the RIA.  
After consideration of the comments, EPA and NHTSA are adopting as proposed the HD diesel engine CO2 emission standards and fuel consumption standards for vocational vehicles are presented in Table II-16.  Consistent with proposal, the first set of standards take effect with MY 2014 (mandatory standards for EPA, voluntary standards for NHTSA), and the second set take effect with MY 2017 (mandatory for both agencies).
Compliance with all standards will be evaluated based on the composite HD FTP cycle.  In the NPRM, the agencies proposed standards based on the Heavy-duty FTP cycle for engines used in vocational vehicles reflecting their primary use in transient operating conditions (typified by both frequent accelerations and decelerations), as well as in some steady cruise conditions as represented on the Heavy-duty FTP.  The primary reason the agencies proposed two separate certification cycles for HD diesel engines  -  one for HD diesel engines used in tractors and the other for HD diesel engines used in vocational vehicles -- is to encourage engine manufacturers to install technologies appropriate to the intended use of the engine with the vehicle.  
DTNA, Cummins, EMA/TMA, and Honeywell commented that certain vocational vehicle applications would achieve greater fuel consumption and CO2 emissions reductions in-use by using an engine designed to meet the SET-based standard.  They stated that some vocational trucks operate at steady-state more frequently than in transient operation, such as motor coaches, and thus should be able to have an engine certified on a steady-state cycle to better reflect the vehicle's real use.
In response, while the agencies recognize the value to manufacturers of having additional flexibility that allows them to meet the standards in a way most consistent with how their vehicles and engines will ultimately be used, we remain concerned about increasing flexibility in ways that might impair fuel consumption and CO2 emissions reductions.  The agencies are therefore providing the option in these final rules for some vocational vehicles, but not others, to have SET certified engines.  Heavy heavy-duty vocational engines will be allowed to be SET certified for vocational trucks, since SET certified HHD engines must meet more stringent GHG and fuel consumption standards than FTP certified engines.  We believe this will provide manufacturers additional flexibility while still achieving the expected fuel consumption and CO2 emissions reductions.  However, medium heavy-duty vocational engines will not be allowed to be SET-certified, because medium heavy-duty engines certified on the FTP must meet a more stringent standard than engines certified on the SET, and the agencies are not confident that fuel consumption and CO2 emissions reduction levels would necessarily be maintained.  
As discussed above in Section II.B.2.b, the agencies place important weight on the fact that engine manufacturers are expected to redesign and upgrade their products during MYs 2014-2017 in making our decisions about the cost-effectiveness of the standards and the availability of lead time.  The final two-step CO2 emission and fuel consumption standards recognize the opportunity for technology improvements over the rulemaking timeframe, while reflecting the typical diesel truck manufacturers' product plan cycles.  Over these four model years there will be an opportunity for manufacturers to evaluate almost every one of their engine models and add technology in a cost-effective way, consistent with existing redesign schedules, to control GHG emissions and reduce fuel consumption.  The time-frame and levels for the standards, as well as the ability to average, bank and trade credits and carry a deficit forward for a limited time, are expected to provide manufacturers the time needed to incorporate technology that will achieve the final GHG and fuel consumption reductions, and to do this as part of the normal engine redesign process.  This is an important aspect of the final rules, as it will 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 will also provide manufacturers the opportunity to plan for compliance using a multi-year time frame, again in accord with their normal business practice.  Further details on lead time, redesigns and technical feasibility can be found in Section III.
The agencies recognize, however, that the schedule of changes for the final standards may not be the most cost-effective one for all manufacturers.  For HD diesel engines for use in tractors, the agencies discussed above in Section II.B.2.b our decision in this final program to allow an "OBD phase-in" option for meeting the standards, based on comments received from several industry organizations indicating that aligning technology changes for multiple regulatory requirements would provide them with greater flexibility.  In the context of HD diesel engines for use in vocational vehicles, Volvo specifically requested an "OBD phase-in" option in its comments to the NPRM.  They argued that bundling design changes where possible can reduce the burden on industry for complying with regulations, so aligning the introduction of the OBD, GHG, and fuel consumption standards could help reduce the resources devoted to validation of new product designs and certification.
The agencies have the same interest in providing this flexibility for manufacturers of HD diesel engines for use in vocational vehicles as in providing it for manufacturers of HD diesel engines for use in combination tractors, as long as equivalent emissions and fuel savings are maintained.  Thus, in order to provide additional flexibility for manufacturers looking to align their technology changes with multiple regulatory requirements, the agencies are finalizing an alternate "OBD phase-in" option for meeting the HD diesel engine standards which delivers equivalent CO2 emissions and fuel consumption reductions as the primary standards for the engines built in the 2013 through 2017 model years, as shown in Table II-17. 
Table II-17 Comparison of CO2 reductions for the Engine Standards under the Alternative OBD Phase-in and Primary Phase-In

                                    HHD FTP
                                  LHD/MHD FTP

                     Primary Phase-in Standard (g/bhp-hr)
                     Optional Phase-in Standard (g/bhp-hr)
               Difference in Lifetime CO2 Engine Emissions (MMT)
                     Primary Phase-in Standard (g/bhp-hr)
                     Optional Phase-in Standard (g/bhp-hr)
               Difference in Lifetime CO2 Engine Emissions (MMT)
Baseline
                                      584
                                      584
                                      --
                                      630
                                      630
                                      --
2013 MY Engine
                                      584
                                      577
                                      20
                                      630
                                      618
                                      14
2014 MY Engine
                                      567
                                      577
                                      -28
                                      600
                                      618
                                      -22
2015 MY Engine
                                      567
                                      577
                                      -28
                                      600
                                      618
                                      -22
2016 MY Engine
                                      567
                                      555
                                      34
                                      600
                                      576
                                      29
2017 MY Engine
                                      555
                                      555
                                       0
                                      576
                                      576
                                       0
Net Reductions (MMT)
                                       
                                       
                                      -3
                                       
                                       
                                       0
 Table II-18 presents the final HD diesel engine CO2 emission and fuel consumption standards under the optional "OBD phase-in" option.
Table II-18: Optional Heavy-Duty Engine Standard Phase-in
Model Year
Standard
Light Heavy-Duty Diesel
Medium Heavy-Duty Diesel
Heavy Heavy-Duty Diesel
2013
CO2 Standard (g/bhp-hr)
618
618
577

Voluntary Fuel Consumption Standard (gallon/100 bhp-hr)
6.07
6.07
5.67
2016 and Later
CO2 Standard (g/bhp-hr)
576
576
555

Fuel Consumption (gallon/100 bhp-hr)
5.66
5.66
5.45

In order to ensure equivalent CO2 and fuel consumption reductions and orderly compliance, and to avoid gaming, the agencies are requiring that if a manufacturer selects the  OBD phase-in option, it must certify its engines starting in the 2013 model year and continue using this phase-in through 2016 model year.  Manufacturers that opt in to the voluntary NHTSA program in 2014 and 2015 will be required to meet the primary phase-in schedule and may not adopt the OBD phase-in option.  
As discussed above in Section II.B.2.b, while the agencies believe that the HD diesel engine standards are appropriate, cost-effective, and technologically feasible in the rulemaking timeframe, we also recognize that when regulating a category of engines for the first time, there will be individual products that may deviate significantly from the baseline level of performance, whether because of a specific approach to criteria pollution control, or due to engine calibration for specific applications or duty cycles.  The discussion above described HD diesel engines for use in combination tractors, but the same supporting information is relevant to the agencies' consideration of an alternate standard for HD diesel engines for use in vocational vehicles.  In the NPRM, the agencies proposed an optional engine standard for vocational vehicles based on a five percent reduction from the products own 2011 model year baseline level, but requested comment on whether a two percent reduction would be more appropriate.  The comments received in response did not directly address engines for vocational vehicles, but the agencies believe that the information provided by Navistar and others is equally applicable to HD diesel engines for combination tractors and for vocational vehicles.  Our assessment for the final standards is that a 2.5 percent reduction is appropriate for LHD and MHD engines and 3 percent is appropriate for HHD engines given technologies available for application to legacy products by model year 2014.  Unlike the majority of engine products in this segment, engine manufacturers have devoted few resources to developing technologies for these legacy products reasoning the investment would have little value if the engines are to be substantially redesigned or replaced in the next five years.  Hence while the technologies we have identified to achieve the proposed five percent reduction would theoretically work for these legacy products, there is inadequate leadtime for manufacturers to complete the pre application development needed to add the technology to these engines by 2014.  We have concluded that if we limit the reductions to those improvements which reflect further enhancements of already installed systems rather than the addition or replacement of technologies with fully developed new on the shelf components, the potential improvement for the 2014 model year will be 2.5 percent for LHD and MHD engines and 3 percent HHD engines.  
As for HD diesel engines used in combination tractors, the agencies stress that this option for HD engines used in vocational vehicles is a temporary and limited option being implemented to address diverse manufacturer needs associated with complying with this first phase of the regulations.  As will be codified in 40 CFR 1036.620, this optional standard will be available only for the 2014 through 2016 model years, because we believe that manufacturers will have had ample opportunity to benchmark competitive products during redesign cycles and to make appropriate changes to bring their product performance into line with the rest of the industry after that time.  This optional standard will not be available unless and until a manufacturer has exhausted all available credits and credit opportunities, and engines under the alternative standard could not generate credits.  The final rules require that manufacturers making use of these provisions would need to exhaust all credits available to the averaging set prior to using this flexibility and would not be able to generate emissions credits from other engines in the same regulatory averaging set as the engines complying using this alternate approach.  
The agencies note that manufacturers choosing to utilize this option in MYs 2014-2016 will have to make a greater relative improvement in MY 2017 than the rest of the industry, since they will be starting from a worse level  -  for compliance purposes, emissions from engines certified and sold at the alternate level will be averaged with emissions from engines certified and sold at more stringent levels to arrive at a weighted average emissions for all engines in the class.  Since the NHTSA standards are optional in 2014, manufacturers may choose not to adopt either the alternative engine standard or the regular voluntary standard by not participating in the NHTSA program in 2014, 2015, and 2016. 
As discussed above in Section II.B.2.b, some commenters argued that manufacturers could game the standard by establishing an artificially high 2011 baseline emission level. This could be done, for example, by certifying an engine with high fuel consumption and GHG emissions that is either: 1) not sold in significant quantities; or 2) later altered to emit fewer GHGs and consume less fuel through service changes.  In order to mitigate this possibility, the agencies are requiring either that the 2011 model year baseline must be developed by averaging emissions over all engines in an engine averaging set certified and sold for that model year so as to prevent a manufacturer from developing a single high GHG output engine solely for the purpose of establishing a high baseline or meet additional criteria.  If a manufacturer does not certify all engine families in an averaging set to the alternate standards, then the tested configuration of the engine certified to the alternate standard must have the same engine displacement and its rated power within 5 percent of the highest rated power as the baseline engine.  In addition, the tested configurations must have a BSFC equivalent to or better than all other configurations within the engine family and represent a configuration that is sold to customers. 
Gasoline Engine Standard
Heavy-duty gasoline engines are also used in vocational vehicle applications.  The number of engines certified in the past for this segment of vehicles is very limited and has ranged between three and five engine models.  Unlike the purpose-built heavy-duty diesel engines typical of this segment, these gasoline engines are developed for heavy-duty pickup trucks and vans primarily, but are also sold as loose engines to vocational vehicle manufacturers, for use in vocational vehicles such as some delivery trucks.  Some fleets still prefer gasoline engines over diesel engines.  In the past, this was the case since gasoline stations were more prevalent than stations that sold diesel fuel.  Because they are developed for HD pickups and vans, the agencies evaluated these engines in parallel with the heavy-duty pickup truck and van standard development.  As in the pickup truck and van segment, the agencies anticipate that the manufacturers will have only one engine re-design within the 2014-18 model years under consideration within this proposal.  The agencies therefore proposed the following fuel consumption and CO2 emissions standards for gasoline engines for use in vocational vehicles, which represent a five percent reduction in CO2 in the 2016 model year over the 2010 MY baseline through use of technologies such as coupled cam phasing, engine friction reduction, and stoichiometric gasoline direct injection.  
  
In our meetings with all three of the major manufacturers in the HD pickup and van segment, confidential future product plans were shared with the agencies.  Reflecting those plans and our estimates for when engine changes will be made in alignment with those product plans, we had concluded for proposal that the 2016 model year reflects the most logical model year start date for the heavy-duty gasoline engine standards.  In order to meet the standards we are finalizing for heavy-duty pickups and vans, we project that all manufacturers will have redesigned their gasoline engine offerings by the start of the 2016 model year.  Given the small volume of loose gasoline engine sales relative to complete heavy-duty pickup sales, we think it is appropriate to set the timing for the heavy-duty gasoline engine standard in line with our projections for engine redesigns to meet the heavy-duty pickup truck standards.  Therefore, NHTSA's final fuel consumption standard and EPA's final CO2 standard for heavy-duty gasoline engines are first effective in the 2016 model year.  
The baseline 2010 model year CO2 performance of these heavy-duty gasoline engines over the Heavy-duty FTP cycle is 660 g CO2/bhp-hr (7.43 gal/100 bhp-hr) in 2010 based on non-GHG certification data provided to EPA by the manufacturers.  The agencies are finalizing 2016 model year standards that require manufacturers to achieve a five percent reduction in CO2 compared to the 2010 MY baseline through use of technologies such as coupled cam phasing, engine friction reduction, and stoichiometric gasoline direct injection.  Additional detail on technology feasibility is included in Section III and in the RIA Chapter 2.  NHTSA is finalizing as proposed a 7.06 gallon/100 bhp-hr standard for fuel consumption while EPA is adopting as proposed a 627 g CO2/bhp-hr standard tested over the Heavy-duty FTP, effective in the 2016 model year.  Similar to EPA's non-GHG standards approach, manufacturers may generate and use credits by the same engine subcategory to show compliance with both agencies' standards.

In-Use Standards
Section 202(a)(1) of the CAA specifies that emissions standards are to be applicable for the useful life of the vehicle.  The in-use standards that EPA is finalizing apply to individual vehicles and engines.  NHTSA is not finalizing in-use standards that would apply to the vehicles and engines in a similar fashion.  
EPA proposed that the in-use standards for heavy-duty engines installed in tractors be established by adding an adjustment factor to the full useful life emissions and fuel consumption results projected in the EPA certification process.  The agency proposed a two percent adjustment factor and requested comments and additional data during the proposal to assist in developing an appropriate factor level. The agency received additional data during the comment period which identified production variability which was not accounted for by the agencies at proposal.  Details on the development of the final adjustment factor are included in RIA Chapter 3.  Based on the data received, EPA determined that the adjustment factor in the final rules should be higher than the proposed level of two percent. EPA is finalizing a three percent adjustment factor for the in-use standard to provide a reasonable margin for production and test-to-test variability that could result in differences between the initial emission test results and emission results obtained during subsequent in-use testing.  
We are finalizing regulatory text (in §1036.150) to allow engine manufacturers to used assigned deterioration factors (DFs) without performing their own durability emission tests or engineering analysis.  However, the engines would be still be required to meet the standards in actual use without regard to whether the manufacturer used the assigned DFs.  This allowance is being adopted as an interim provision applicable only for this initial phase of standards.  

Manufacturers will be allowed to use an assigned additive DF of 0.0 g/bhp-hr for CO2 emissions from any conventional engine (i.e., an engine not including advance or innovative technologies).  Upon request, we could allow the assigned DF for CO2 emissions from engines including advance or innovative technologies, but only if we determine that it would be consistent with good engineering judgment.  We believe that we have enough information about in-use CO2 emissions from conventional engines to conclude that they will not increase as the engines age.  However, we lack such information about the more advanced technologies.  
EPA proposed that the useful life for these engines and vehicles with respect to GHG emissions be set equal to the respective useful life periods for criteria pollutants.  EPA proposed that the existing engine useful life periods, as included in Table II-19, be broadened to include CO2 emissions and fuel consumption for both engines and vocational vehicles. The agency did not receive any adverse comments with this approach and is finalizing the useful life periods as proposed  (see 40 CFR 1036.108(d) and 1037.105). While NHTSA will use useful life considerations for establishing fuel consumption performance for initial compliance and for ABT, NHTSA does not intend to implement an in-use compliance program for fuel consumption, because it is not required under EISA and because it is not currently anticipated there will be notable deterioration of fuel consumption over the engines' useful life.  
Table II-19:  Useful Life Periods
 
Years
Miles
Class 2b-5 Vocational Vehicles, Spark Ignited, and Light Heavy-Duty Diesel Engines
10
110,000
Class 6-7 Vocational Vehicles and Medium Heavy-Duty Diesel Engines
10
185,000
Class 8 Vocational Vehicles and Heavy Heavy-Duty Diesel Engines
10
435,000

Test Procedures and Related Issues
The agencies are finalizing test procedures to evaluate fuel consumption and CO2 emissions of vocational vehicles in a manner very similar to Class 7 and Class 8 combination tractors.  This section describes the simulation model for demonstrating compliance, engine test procedures, and a test procedure for evaluating hybrid powertrains (a potential means of generating credits, although not part of the technology package on which the final standard for vocational vehicles is premised).
Computer Simulation Model
As previously mentioned, to achieve the goal of reducing emissions and fuel consumption for both trucks and engines, we are finalizing separate engine and vehicle-based emission standards for vocational vehicles and engines used in those vehicles.  For the vocational vehicles, engine manufacturers are subject to the engine standards, and chassis manufacturers are required to install certified engines in their chassis.  The chassis manufacturer is subject to a separate vehicle-based standard that uses the final vehicle simulation model to evaluate the impact of the tire design to determine compliance with the vehicle standard. 
A simulation model, in general, uses various inputs to characterize a vehicle's properties (such as weight, aerodynamics, and rolling resistance) and predicts how the vehicle would behave on the road when it follows a driving cycle (vehicle speed versus time).  On a second-by-second basis, the model determines how much engine power needs to be generated for the vehicle to follow the driving cycle as closely as possible.  The engine power is then transmitted to the wheels through transmission, driveline, and axles to move the vehicle according to the driving cycle.  The second-by-second fuel consumption of the vehicle, which corresponds to the engine power demand to move the vehicle, is then calculated according to the fuel consumption map embedded in the compliance model.  Similar to a chassis dynamometer test, the second-by-second fuel consumption is aggregated over the complete drive cycle to determine the fuel consumption of the vehicle.
NHTSA and EPA are finalizing an approach consistent with proposal to evaluate fuel consumption and CO2 emissions respectively through a simulation of whole-vehicle operation, consistent with the NAS recommendation to use a truck model to evaluate truck performance.  The agencies developed the GEM for the specific purpose of this proposal to evaluate truck performance.  The GEM is similar in concept to a number of vehicle simulation tools developed by commercial and government entities.  The model developed by the agencies and finalized here was designed for the express purpose of vehicle compliance demonstration and is therefore simpler and less configurable than similar commercial products.  This approach gives a compact and quicker tool for evaluating vehicle compliance without the overhead and costs of a more complicated model.  Details of the model are included in Chapter 4 of the RIA.
EPA and NHTSA have validated GEM simulation of vocational vehicles against a commonly used simulation tool used in industry, GT-Drive, for each vocational vehicle subcategory.  Prior to using GT-Drive as a comparison tool, the agencies first benchmarked a GT-Drive simulation of the combination tractor tested at Southwest Research against the experimental test results from the chassis dynamometer in the same manner as done for GEM.  Then the agencies developed three vocational vehicle models (LHD, MHD, and HHD) and simulated them using both GEM and GT-Drive.  Overall, the GEM and GT-Drive predicted the fuel consumption and CO2 emissions for all three vocational vehicle subcategories with differences of less than 2 percent for the three test cycles  -  the California ARB Transient cycle, 55 mph cruise, and 65 mph cruise cycle.  The final simulation model is described in greater detail in RIA Chapter 4 and is available for download by interested parties at (http://www.epa.gov/otaq/).    
The agencies are finalizing that for demonstrating compliance, a chassis manufacturer would measure the performance of tires, input the values into GEM, and compare the model's output to the standard.  Tires are the only technology on which the agencies' own feasibility analysis for these vehicles is predicated.  An example of the GEM input screen is included in Figure II-4.  The input values for the simulation model would be derived by the manufacturer from tire test procedure finalized by the agencies in this action.  The agencies are adopting as proposed that the remaining model inputs would be fixed values that are pre-defined by the agencies and are detailed in the RIA Chapter 4, including the engine fuel consumption map to be used in the simulation.

Figure II-4: Example GEM Input Screen
Tire Rolling Resistance Assessment
In terms of how tire rolling resistance would be measured, the agencies proposed to require that the tire rolling resistance input to the GEM be determined using ISO 28580:2009(E), Passenger car, truck and bus tyres -- Methods of measuring rolling resistance -- Single point test and correlation of measurement results.  The agencies stated that they believed the ISO test method was the most appropriate for this program because the method is the same one used by the NHTSA tire fuel efficiency consumer information program, by European regulations, and by the EPA SmartWay program.  
The NPRM also discussed the potential for tire-to-tire variability to confound rolling resistance measurement results for LRR tires  -  that is, different tires of the same tire model could turn out to have different rolling resistance measurements when run on the same test.  NHTSA's research during the development of the light duty vehicle tire fuel efficiency consumer information program identified several sources of variability including test procedures, test equipment and the tires themselves, but found that all of the existing test methods had similar levels of and sources of variability.  The agencies proposed to address production tire-to-tire variability by specifying that three tire samples within each tire model be tested three times each, and that the average of the nine tests would be used as the Rolling Resistance Coefficient (RRC) for the tire, which would be the basis for the rolling resistance value for that tire that the manufacturer would enter into the GEM.  The agencies requested comment on this proposed method.
The agencies received many comments on the subject of tire rolling resistance, including suggestions for alternative test procedures and compliance issues.  Regarding whether the agencies should base tire RRC inputs for the GEM on the use of the ISO 28580 test procedure, the American Automotive Policy Council (AAPC) argued that the agencies should instead require the SAE J2452 Coastdown test method for calculating tire rolling resistance, which the commenter stated was preferred by OEMs because it simulates the use of tires on actual vehicles rather than the ISO procedure which tests the tire by itself.  The Rubber Manufacturers Association (RMA) argued, in contrast, that the agencies should use the SAE J1269 multi-point test, which is currently the basis for the EPA SmartWay[TM] RRC baseline values. RMA also argued that the SAE J1269 multi-point test can be used to accurately predict truck/bus tire RRC at various loads and inflations, including at the ISO 28580 load and inflation conditions, and that therefore the agencies should use the SAE test, or if the agencies want to use ISO, they should accept results from the SAE test and just correlate them.  Regarding compliance obligations, RMA further argued that it was not clear how or in what format testing information would need to be provided in order to be in compliance with the proposed requirement at §1037.125(i)
The agencies analyzed many comments on the subject of tire rolling resistance.  One of the primary concerns raised in comments was that the proposed test protocol and measurement methodology would not adequately address production tire variability and measurement variability.  Commenters stated that machine-to-machine differences are a significant source of variation, and this variation would make it difficult for manufacturers to be confident that the agency would assign the same RRC to a tire was tested for compliance purposes.  Commenters argued that the ISO 28580 test method is unique in that it specifies a procedure to correlate results between different test equipment (i.e., different rolling resistance test machines), but not all aspects of the ISO procedure have been completely defined.  Commenters stated that under ISO 28580, the lab alignment procedure depends on the specification of a reference test machine to which all other labs will align their measurement results.  RMA particularly emphasized the need for establishing a tire testing reference lab for use with ISO 28580, referencing the European Tyre and Rim Technical Organization (ETRTO) estimate that RRC values could vary as much as 20 percent absent an inter-laboratory alignment procedure.  RMA stated the agencies should specify a reference laboratory with the designation proposed in a supplemental notice that provides public comment.  In addition, RMA commented that the extra burden proposed by the agencies for testing three tires, three times each is nine times more burdensome than what is required through the ISO procedure.
Based on the additional tire rolling resistance research conducted by the agencies, we have decided to use the ISO 28580 test procedure, as proposed, to measure tire performance for these final rules.
The agencies believe this test procedure provides two advantages over other test methods. First, the ISO 28580 test method is unique in that it specifies a procedure to correlate results between different test equipment (i.e., different tire rolling resistance test machines). This is important because NHTSA's research conducted for the light duty tire fuel efficiency program indicated that machine-to-machine differences are a source of variation.  In addition, the ISO 28580 test procedure is either used, or proposed to be used, by several groups including the European Union through Regulation (EC) No 661/2009  and the California Air Resources Board (CARB) through a staff recommendation for a California regulation, and the EPA SmartWay program.  Using the ISO 28580 may help reduce burden on manufacturers by allowing a single test protocol to be used for multiple regulations and programs.
Because the ISO has not yet specified a reference lab and machine for the ISO 28580 test procedure, NHTSA announced in its March 2010 final rule concerning the light duty tire fuel efficiency consumer information program that NHTSA would specify this laboratory for the purposes of implementing that rule so that tire manufacturers would know the identity of the machine against which they may correlate their test results.  NHTSA has not yet announced the reference test machine(s) for the tire fuel efficiency consumer information program.  Therefore, for the light duty tire fuel efficiency rule, the agencies are postponing the specification of a procedure for machine-to-machine alignment until a tire reference lab is established. The agencies anticipate establishing this lab in the latter part of 2011 with intentions for the lab to accommodate the light-duty tire fuel efficiency program and, potentially, reference testing for medium and heavy duty tires.
Under the ISO 28580 lab alignment procedure, machine alignment is conducted using batches of alignment tires of two models with defined differences in rolling resistance that are certified on a reference test machine.  ISO 28580 specifies requirements for these alignment tires (``Lab Alignment Tires'' or LATs), but exact tire sizes or models of LATs are not specifically identified in ISO 28580.  Because the test procedure has not been finalized and heavy-duty LATs are not currently available, the agencies are postponing the use of these elements of ISO 28580 to a later date when they are available.
However, in the interim, the agencies note the lab-to-lab comparison results mentioned previously. This data showed there was very low variability between the two labs and the machines that were used for the tire testing. Based on the test data, the agencies judge the it is reasonable to implement the program with current levels of variability, and prior to finalizing a lab alignment procedure and before heavy-duty LATs are available.
For the final rules, the agencies are also including a warm up cycle as part of the procedure for bias ply tires to allow these tires to reach a steady temperature and volume state before ISO 28580 testing.  This procedure is similar to a procedure that was developed for the light duty tire fuel efficiency consumer information program, and was adopted from a procedure defined in Federal motor vehicle safety standard No. 109 (FMVSS No. 109).
Finally, the agencies intends to include testing and reporting for `single-wide' or `super-single' type tires. These tires replace the traditional `dual' wheel tire combination with a single wheel and tire that is nearly as wide as the dual combination with similar load capabilities.  These tire types were developed as a fuel saving technology, that provide lower rolling resistance along with a reduction in weight when compared to a typical set of dual wheel tire combinations; and are one of the technologies included in the EPA SmartWay[TM] program.  The agencies have learned that there is limited testing equipment available that is capable of testing single wide tires; single wide tires require a wider test machine drum than required for conventional tires.  Although the number of machines available is limited, the agencies believe the equipment is adequate for the testing and reporting of RRC for this program.
The agencies also continue to believe the ISO test method is the most appropriate for this program because the method is the same one used by the NHTSA tire fuel efficiency consumer information program, by European regulations, and by the EPA SmartWay program.  While we recognize that commenters recommended the use of other test procedures, like SAE J1269, the agencies have determined there is no established data conversion method from the SAE J1269 vehicle condition for vocational vehicle tires to the ISO 28580 single point condition at this time, and that given our explained preference for the ISO procedure, it would not be practical to attempt to include the use of the SAE J1269 procedure as an optional way of determining RRC values for GEM inputs.  
As discussed above, the agencies are taking the approach of using RRC for the HD fuel efficiency and greenhouse gas program to align with the measurement methodology already employed or proposed by the EPA SmartWay program, the European Union Regulation (EC) No 661/2009 and the California Air Resources Board (CARB) through a staff recommendation for a California regulation.  In the NPRM, the agencies proposed to use RRC, but for purposes of developing these final rules, the agencies also evaluated whether to use RRC or Rolling Resistance Force (RRF) as the measurement for tire rolling resistance for the GEM input.  The agencies considered RRF largely because in the NPRM for Passenger Car Tire Fuel Efficiency (TFE) program, NHTSA had proposed to use RRF.  A key distinction between these two programs, and their associated metrics, are the differences in how the measurement data are used and who uses the data.  In particular, the HD fuel efficiency and GHG emissions program is a compliance program using information developed by and for technical personnel at manufacturers and agencies to determine a vehicle's compliance with regulations. The TFE program, in contrast, is a consumer education program intended to inform consumers making purchase decisions regarding the fuel saving benefits of replacement passenger car tires.  The target audiences, and thus how the information will be used, are much different for the two programs. The agencies believe that RRF may be more intuitive for non-technical people because tires that are larger and/or that carry higher loads will generally have numerically higher RRF values than smaller tires and/or tires that carry lower loads.  RRC values generally follow an opposite trend, where tires that are larger and/or carry higher loads will generally have numerically lower RRC values than smaller tires and/or tires that carry lower loads.  The agencies believe this key distinction helps define the type of metrics to be used and communicated in accordance with their respective purposes.
Additionally, the RRC metric for use in the MD/HD program is not susceptible to the skew associated with tire diameter.  Medium- and heavy-duty truck tires are available in a small fraction of the tire sizes of the passenger market and, for the most part, are larger tires than those found on passenger cars.  When viewing RRC over a larger range of sizes, small diameter tires tend to appear as having a lower performance, which is not necessarily accurate, with the converse occurring as the diameter increases. 
Using the RRC value for determining the rolling resistance also takes into account the load carrying capability for the tire being tested, which, intuitively, can lead to some potentially confusing results.  Several vocational truck manufacturers argued in their comments that LRR tires were not available for, e.g., vehicles like refuse trucks, which tend to use large diameter tires to carry very heavy loads.  Based on the agencies' testing, in fact, the measured RRC (as opposed to the RRF) for refuse trucks were found to be among the best tested.  This finding can be explained by considering that RRC is calculated by dividing the measured rolling resistance force by the tire's load capacity rating.  Although the tire may have a relatively high rolling resistance force, the tire load capacity rating is also very high, resulting in an overall lower (better) RRC value than many other types of tires.  The amount of load tire can carry (test load) contributes to a very low reported RRC, thus confirming low rolling resistance tires below the proposed standards, as measured by RRC, are available to the industry regardless of segment or application. 
Based on these considerations, the agencies have decided to use the RRC metric for the HD fuel efficiency and GHG emissions program.  

Defined Vehicle Configurations in the GEM
As discussed above, the agencies are finalizing a methodology that chassis manufacturers would use to quantify the tire rolling resistance values to be input into the GEM.  Moreover, the agencies are  are defining the remaining GEM inputs (i.e., specifying them by rule), which differ by the regulatory subcategory (for reasons described in the RIA Chapter 4).  The defined inputs include the drive cycle, aerodynamics, truck curb weight, payload, engine characteristics, and drivetrain for each vehicle type, among others.
Metric
Based on NAS's recommendation and feedback from the heavy-duty truck industry, NHTSA and EPA proposed standards for vocational vehicles that would be expressed in terms of moving a ton of payload over one mile.  Thus, NHTSA's proposed fuel consumption standards for these trucks would be represented as gallons of fuel used to move one ton of payload one thousand miles, or gal/1,000 ton-mile.  EPA's proposed CO2 vehicle standards would be represented as grams of CO2 per ton-mile. The agencies received comments that a payload-based metric is not appropriate for all types of vocational vehicles, specifically buses.  The agencies recognize that a payload-based approach may not be the most representative of an individual vocational application; however, it best represents the broad vocational category.  The metric which we proposed treats all vocational applications equally and require the same technologies be applied to meet the standard.  Thus, the agencies are adopting the proposed metric, but will revisit the issue of metrics in any future action, if required, depending on the breadth of each standard.
Drive cycle
The drive cycles proposed for the vocational vehicles consist of the same three modes used for the Class 7 and8 combination tractors.  The proposed cycle included the Transient mode, as defined by California ARB in the HHDDT cycle, a constant speed cycle at 65 mph and a 55 mph constant speed mode.  The agencies proposed different weightings for each mode for vocational vehicles than  those proposed for Class 7 and 8 combination tractors, given the known difference in driving patterns between these two categories of vehicles. The same reasoning underlies the agencies' use of the Heavy-duty FTP cycle to evaluate compliance with the standards for diesel engines used in vocational vehicles.
The variety of vocational vehicle applications makes it challenging to establish a single cycle which is representative of all such trucks.  However, in aggregate, the vocational vehicles typically operate over shorter distances and spend less time cruising at highway speeds than combination tractors.  The agencies evaluated for proposal two sources for mode weightings, as detailed in RIA Chapter 3.  The agencies proposed the mode weightings based on the vehicle speed characteristics of single unit trucks used in EPA's MOVES model which were developed using Federal Highway Administration data to distribute vehicle miles traveled by road type.  The proposed weighted CO2 and fuel consumption value consisted of 37 percent of 65 mph Cruise, 21 percent of 55 mph Cruise, and 42 percent of Transient performance.
The agencies received comments stating that the proposed drive cycles and weightings are not representative of individual vocational applications, such as buses and refuse haulers.  A number of groups commented that the vocational vehicle cycle is not representative of real world driving and recommended changes to address that concern.  Several organizations proposed the addition of new drive cycles to make the test more representative.  
Bendix suggested using the CILCC as the general purpose mixed urban/freeway cycles and to use four representative cycles: mixed urban, freeway, city bus, refuse, and utility.  Bendix suggested using the Standardized On-Road Test (SORT) cycles for vocational vehicles operating in the urban environment in addition to SORT cycles for 3 different vocations  -  with separate weightings.  They stated that SORT with an average speed of 11.2 mph, lines up most closely with the average of transit bus duty cycles at 9.9 mph as well as the overall US National average of 12.6 mph.  As alternative approaches they suggested adopting the Orange County duty cycle for the urban transit bus vocation or creating an Urban Transit Bus cycle with several possible weighting factors  -  all with very high percentage transient (90% to 100%), very low 55 mph (0% to 7%), very low 65 mph (0% to 3%), and an average speed of 15 to 17 mph.  Bendix supported their assertions about urban bus vehicle speed with data from the 2010 American Public Transportation Association (APTA) 'Fact Book' and other sources.  In contrast, Bendix stated, the GEM cycle average speed is currently 32.6 mph.  Such high speeds at steady state will penalize technologies such as hybridization.
Clean Air Task Force said the agencies have not adequately addressed the diversity of the vocational truck fleet since they are not distinguished by different duty cycles.  They urged the agencies to sub-divide  vocational trucks by expected use, with separate test cycles for each sub-group in order to  capture the full potential benefits of hybridization and other advanced technologies in a meaningful and accurate way in future rulemakings for MY2019 and later trucks.     
Two groups cautioned that unintended consequences could result from the lack of diversity in duty cycles.  DTNA said that the single drive cycle proposed for all vehicles by the agencies would likely lead to unintended consequences - such as customers being driven for regulatory reasons to purchase a transmission that does not suit their actual operation.  Similarly, Volvo said medium- and heavy-duty vehicles are uniquely built for specific applications but it will not be feasible to develop regulatory protocols that can accurately predict efficiency in each application duty cycle. This trade-off could result in unintended or negative consequences in parts of the market. 
Several commenters suggested changing the weightings of the cycle to more accurately reflect real world driving.  Allison stated that the vocational vehicle cycle includes too much steady state driving time.  They suggested (with supporting data from the Oakridge National Laboratory analysis) reducing steady state driving at 60 mph to minimal or no time on the cycle to address this problem.  Allison commented that GEM contains lengthy accelerations to reach 55 and 65 miles per hour  -  much longer than is required in real world driving.  They supported this statement with data from a testing program conducted at Oakridge National Laboratory showing medium- and heavy-duty vehicles accelerate more rapidly than in the GEM drive cycle.  According to Allison, this long acceleration time in GEM, coupled with too much steady state operation with very little variation, is not representative of vocational vehicle operation.  In addition, Allison said that GEM does not adequately account for shift time, clutch profile, turbo lag, and other impacts on both steady state and transient operation.  The impact, they state, is that the cycle will hinder proper deployment of technologies to reduce fuel consumption and GHG emissions.
BAE focused their comments on urban transit bus operation.  They stated the weighting factors for steady state operation are inconsistent with urban transit bus cycles.
Other commenters suggested the agencies develop chassis dynamometer tests based on the engine (FTP) test.  Cummins said that chassis dynamometer testing should allow the use of average vehicle characteristics to determine road load and make use of the vehicle FTP and SET cycles.  Others commented that the correlation between the FTP and the UDDS is poor.
After careful consideration of the comments, the agencies are adopting the proposed drive cycles.  The final drive cycles and weightings represent the straight truck operations which dominate the vehicle miles travelled by vocational vehicles.  The agencies do not believe that application-specific drive cycles are required for this final action because the program is based on the generally-applicable use of low rolling resistance tires.  The drive cycles which we are adopting treats all vocational applications equally and require the same technologies be applied to meet the standard.  The agencies are also finalizing, as proposed, the mode weightings based on the vehicle speed characteristics of single unit trucks used in EPA's MOVES model which were developed using Federal Highway Administration data to distribute vehicle miles traveled by road type.  Similar to the issue of metrics discussed above, the agencies would revisit drive cycles and weightings in any future action which may develop standards which are specific to applications.
Empty Weight and Payload
The total weight of the vehicle is the sum of the tractor curb weight and the payload.  The agencies are proposed to specify each of these aspects of the vehicle.  The agencies developed the proposed truck curb weight inputs based on industry information developed by ICF.  The final curb weights are 10,300 pounds for the LH trucks, 13,950 pounds for the MH trucks, and 29,000 pounds for the HH trucks.    
NHTSA and EPA proposed payload requirements for each regulatory category developed from Federal Highway statistics based on averaging the payloads for the weight categories represented within each vehicle subcategory.  The proposed payloads were 5,700 pounds for the Light Heavy-Duty trucks, 11,200 pounds for Medium Heavy-Duty trucks, and 38,000 pounds for Heavy Heavy-Duty trucks.  
The agencies received comments from several stakeholders regarding the proposed curb weights and payloads for vocational vehicles.  BAE said a Class 8 transit bus has a typical curb weight of 27,000 pounds and maximum payload of 15,000 pounds.  Daimler commented that Class 8 buses have a GVWR of 42,000 pounds.  Autocar said that Class 8 refuse trucks typically have a curb weight of 31,000 to 33,000 pounds, typical average payload of 10,000 pounds, and typical maximum payload of 20,000 pounds.  UMTRI suggested using 80,000 pounds total weight for tractors.  ATA said that typical 3 axle trucks (Class 2-8) have a total weight of 11,000 pounds.  ATA based their recommendations on FHWA Long-Term Pavement Data Base on truck weights over the last several years. 
Upon further consideration, the agencies are reducing the weight of heavy heavy-duty vocational vehicle.  While we still believe the proposed values are appropriate for some vocational vehicles, we reduced the total weight to bring it closer to some of the lighter vocational vehicles.  The agencies are adopting final curb weights of 10,300 pounds for the LHD trucks, 13,950 pounds for the MHD trucks, and 27,000 pounds for the HHD trucks.  The agencies are also adopting payloads of 5,700 pounds for the Light Heavy-Duty trucks, 11,200 pounds for Medium Heavy-Duty trucks, and 15,000 pounds for Heavy Heavy-Duty trucks. Additional information is available in RIA Chapter 3.
Engine
As the agencies are finalizing separate engine and vehicle standards, the GEM will be used to assess the compliance of the chassis with the vehicle standard.  To maintain the separate assessments, the agencies are adopting the proposed approach of using fixed values that are predefined by the agencies for the engine characteristics used in GEM, including the fuel consumption map which provides the fuel consumption at hundreds of engine speed and torque points.  If the agencies did not standardize the fuel map, then a vehicle that uses an engine with emissions and fuel consumption better than the standards would require fewer vehicle reductions than those being finalized.  As proposed, the agencies are using diesel engine characteristics in GEM , as most representative of  the largest fraction of engines in this market.  The agencies did not receive any adverse comments to using this approach.  
The agencies are finalizing two distinct sets of fuel consumption maps for use in GEM.  The first fuel consumption map would be used in GEM for the 2014 through 2016 model years and represent a diesel engine which meets the 2014 model year engine CO2 emissions standards.  A second fuel consumption map would be used beginning in the 2017 model year and represents a diesel engine which meets the 2017 model year CO2 emissions and fuel consumption standards and accounts for the increased stringency in the final MY 2017 standard).  The agencies have modified the 2017 MY heavy heavy-duty diesel fuel map used in GEM for the final rulemaking to address comments received.  Details regarding this change can be found in RIA Chapter 4.4.4.  Effectively there is no change in stringency of the vocational vehicle standard (not including the engine) between 2014 MY and 2017 MY so that there is stability in the vocational vehicle (not including engine) standards for the full rulemaking period.  These inputs are reasonable (indeed, seemingly necessitated) given the separate final regulatory requirement that vocational vehicle chassis manufacturers use only certified engines. 
Drivetrain
The agencies' assessment of the current vehicle configuration process at the truck dealer's level is that the truck companies provide software tools to specify the proper drivetrain matched to the buyer's specific circumstances.  These dealer tools allow a significant amount of customization for drive cycle and payload to provide the best specification for the customer.  The agencies are not seeking to disrupt this process.  Optimal drivetrain selection is dependent on the engine, drive cycle (including vehicle speed and road grade), and payload.  Each combination of engine, drive cycle, and payload has a single optimal transmission and final drive ratio.  The agencies are specifying the engine's fuel consumption map, drive cycle, and payload; therefore, it makes sense to specify the drivetrain that matches.    
Engine Metrics and Test Procedures
EPA proposed that the GHG emission standards for heavy-duty engines under the CAA would be expressed as g/bhp-hr while NHTSA's proposed fuel consumption standards under EISA, in turn, be represented as gal/100 bhp-hr.  The NAS panel did not specifically discuss or recommend a metric to evaluate the fuel consumption of heavy-duty engines.  However, as noted above they did recommend the use of a load-specific fuel consumption metric for the evaluation of vehicles.  An analogous metric for engines is the amount of fuel consumed per unit of work.  The g/bhp-hr metric is also consistent with EPA's current standards for non-GHG emissions for these engines.  The agencies did not receive any adverse comments related to the metrics for HD engines; therefore, we are adopting the metrics as proposed.
  
EPA's criteria pollutant standards for engines currently require that manufacturers demonstrate compliance over the transient Heavy-duty FTP cycle; over the steady-state SET procedure; and during not-to-exceed testing.  EPA created this multi-layered approach to criteria emissions control in response to engine designs that optimized operation for lowest fuel consumption at the expense of very high criteria emissions when operated off the regulatory cycle.  EPA's use of multiple test procedures for criteria pollutants helps to ensure that manufacturers calibrate engine systems for compliance under all operating conditions.  We are not concerned if off-cycle manufacturers further calibrate these designs to give better in-use fuel consumption while maintaining compliance with the criteria emissions standards as such calibration is entirely consistent with the goals of our joint program.  Further, we believe that setting standards based on both transient and steady-state operating conditions for all engines could lead to undesirable outcomes.  With regard to GHG and fuel consumption control, the agencies believe it is more appropriate to set standards based on a single test procedure, either the Heavy-duty FTP or SET, depending on the primary expected use of the engine.  
It is critical to set standards based on the most representative test cycles in order for performance in-use to obtain the intended (and feasible) air quality benefits.  We are finalizing standards based on the composite Heavy-duty FTP cycle for engines used in vocational vehicles reflecting these vehicles' primary use in transient operating conditions typified by both frequent accelerations and decelerations as well as some steady cruise conditions as represented on the Heavy-duty FTP.  The primary reason the agencies are finalizing two separate diesel engine standards  -  one for diesel engines used in tractors and the other for diesel engines used in vocational vehicles -- is to encourage engine manufacturers to install technologies appropriate to the intended use of the engine with the vehicle. The current non-GHG emissions engine test procedures also require the development of regeneration emission rates and frequency factors to account for the emission changes during a regeneration event (40 CFR 86.004-28).  EPA and NHTSA proposed not to include these emissions from the calculation of the compliance levels over the defined test procedures.  Cummins and Daimler supported and stated there already exists sufficient incentives for manufacturers to limit regeneration frequency. Conversely, Volvo opposed the omission of IRAF requirements for CO2 emissions because emissions from regeneration can be a significant portion of the expected improvement and a significant variable between manufacturers
For proposal, we considered including regeneration in the estimate of fuel consumption and GHG emissions and decided not to do so for two reasons.  First, EPA's existing criteria emission regulations already provide a strong motivation to engine manufacturers to reduce the frequency and duration of infrequent regeneration events.  The very stringent 2010 NOX emission standards cannot be met by engine designs that lead to frequent and extend regeneration events.  Hence, we believe engine manufacturers are already reducing regeneration emissions to the greatest degree possible.  In addition to believing that regenerations are already controlled to the extent technologically possible, we believe that attempting to include regeneration emissions in the standard setting could lead to an inadvertently lax emissions standard.  In order to include regeneration and set appropriate standards, EPA and NHTSA would have needed to project the regeneration frequency and duration of future engine designs in the timeframe of this program.  Such a projection would be inherently difficult to make and quite likely would underestimate the progress engine manufacturers will make in reducing infrequent regenerations.  If we underestimated that progress, we would effectively be setting a more lax set of standards than otherwise would be expected.  Hence in setting a standard including regeneration emissions we faced the real possibility that we would achieve less effective CO2 emissions control and fuel consumption reductions than we will achieve by not including regeneration emissions.  Therefore, the agencies are finalizing an approach as proposed which does not include the regenerative emissions. 
Hybrid Powertrain Technology
Although the final vocational vehicle standards are not premised on use of hybrid powertrains, certain vocational vehicle applications may be suitable candidates for use of hybrids due to the greater frequency of stop-and-go urban operation and their use of power take-off (PTO) systems.  Examples are vocational vehicles used predominantly in stop-start urban driving (e.g., delivery trucks).  As an incentive, the agencies are finalizing to provide credits for the use of hybrid powertrain technology as described in Section IV.  Credits generated by use of hybrid powertrains could be used to meet any of the heavy-duty standards, and are not restricted to the averaging set generating the credit, unlike the other credit provisions in the final rules.  The agencies are finalizing that any credits generated using such technologies could be applied to any heavy-duty vehicle or engine, and not be limited to the vehicle category generating the credit.  Section IV below also details the final approach to account for the use of a hybrid powertrain when evaluating compliance with the truck standard.  In general, manufacturers can derive the fuel consumption and CO2 emissions reductions based on comparative test results using the final chassis testing procedures.  
Summary of Final Flexibility and Credit Provisions
EPA and NHTSA are finalizing four flexibility provisions specifically for heavy-duty tractor and engine manufacturers, as discussed in Section IV below.  These are an averaging, banking and trading program for emissions and fuel consumption credits, as well as provisions for early credits, advanced technology credits, and credits for innovative vehicle or engine technologies which are not included as inputs to the GEM or are not demonstrated on the engine FTP test cycle.  With the exception of the advanced technology credits, credits generated under these provisions can only be used within the same averaging set which generated the credit (for example, credits generated by HD vocational vehicles can only be used by HD vehicles).  EPA is also adopting a N2O emission credit program, as described in Section IV below.
Deferral of Standards for Small Chassis Manufacturing and Small Engine Companies
EPA and NHTSA are finalizing an approach to defer greenhouse gas emissions and fuel consumption standards from small vocational vehicle chassis manufacturers meeting the SBA size criteria of a small business as described in 13 CFR 121.201 (see 40 CFR 1036.150 and 1037.150).  The agencies will instead consider appropriate GHG and fuel consumption standards for these entities as part of a future regulatory action. This includes both U.S.-based and foreign small volume heavy-duty truck and engine manufacturers.
The agencies have identified ten chassis entities that appear to fit the SBA size criterion of a small business. The agencies estimate that these small entities comprise less than 0.5 percent of the total heavy-duty vocational vehicle market in the United States based on Polk Registration Data from 2003 through 2007, and therefore that the exemption will have a negligible impact on the GHG emissions and fuel consumption improvements from the final standards.  
EPA and NHTSA have also identified three engine manufacturing entities that appear to fit the SBA size criteria of a small business based on company information included in Hoover's.  Based on 2008 and 2009 model year engine certification data submitted to EPA for non-GHG emissions standards, the agencies estimate that these small entities comprise less than 0.1 percent of the total heavy-duty engine sales in the United States.  The final exemption from the standards established under this proposal would have a negligible impact on the GHG emissions and fuel consumption reductions otherwise due to the standards.  
To ensure that the agencies are aware of which companies would be exempt, we are finalizing as proposed to require that such entities submit a declaration to EPA and NHTSA containing a detailed written description of how that manufacturer qualifies as a small entity under the provisions of 13 CFR 121.201. 
Other Standards Provisions
In addition to finalizing CO2 emission standards for heavy-duty vehicles and engines, EPA is also finalizing separate standards for N2O and CH4 emissions.  NHTSA is not finalizing comparable separate standards for these GHGs because they are not directly related to fuel consumption in the same way that CO2 is, and NHTSA's authority under EISA exclusively relates to fuel efficiency.  N2O and CH4 are important GHGs that contribute to global warming, more so than CO2 for the same amount of emissions due to their high Global Warming Potential (GWP).  EPA is finalizing N2O and CH4 standards which apply to HD pickup trucks and vans as well as to all heavy-duty engines.  EPA is not finalizing N2O and CH4 standards for the Class 7 and 8 tractor or Class 2b-8 chassis manufacturers because these emissions would be controlled through the engine program.
EPA requested comment in Section II.E.4 below on possible alternative CO2 equivalent approaches to provide near-term flexibility for 2012-14 MY light-duty vehicles. As described below, EPA is finalizing provisions allowing manufacturers to use CO2 credits, on a CO2-equivalent basis, to meet the N2O and CH4 standards, which is consistent with many commenters' preferred approach.   
Almost universally across current engine designs, both gasoline- and diesel-fueled, N2O and CH4 emissions are relatively low today and EPA does not believe it would be appropriate or feasible to require reductions from the levels of current gasoline and diesel engines.  This is because for the most part, the same hardware and controls used by heavy-duty engines and vehicles that have been optimized for nonmethane hydrocarbon (NMHC) and NOX control indirectly result in highly effective control of N2O and CH4.  Additionally, unlike criteria pollutants, specific technologies beyond those presently implemented in heavy-duty vehicles to meet existing emission requirements have not surfaced that specifically target reductions in N2O or CH4.  Because of this, reductions in N2O or CH4 beyond current levels in most heavy-duty applications would occur through the same mechanisms that result in NMHC and NOX reductions and would likely result in an increase in the overall stringency of the criteria pollutant emission standards.  Nevertheless, it is important that future engine technologies or fuels not currently researched do not result in increases in these emissions, and this is the intent of the final "cap" standards. The final standards would primarily act to cap emissions at today's levels to ensure that manufacturers maintain effective N2O and CH4 emissions controls currently used should they choose a different technology path from what is currently used to control NMHC and NOX but also largely successful methods for controlling N2O and CH4.  As discussed below, some technologies that manufacturers may adopt for reasons other than reducing fuel consumption or GHG emissions could increase N2O and CH4 emissions if manufacturers do not address these emissions in their overall engine and aftertreatment design and development plans.  Manufacturers will be able to design and develop the engines and aftertreatment to avoid such emissions increases through appropriate emission control technology selections like those already used and available today.  Because EPA believes that these standards can be capped at the same level, regardless of type of HD engine involved, the following discussion relates to all types of HD engines regardless of the vehicles in which such engines are ultimately used.  In addition, since these standards are designed to cap current emissions, EPA is finalizing the same standards for all of the model years to which the rules apply.
EPA believes that the final N2O and CH4 cap standards will accomplish the primary goal of deterring increases in these emissions as engine and aftertreatment technologies evolve because manufacturers will continue to target current or lower N2O and CH4 levels in order to maintain typical compliance margins.  While the cap standards are set at levels that are higher than current average emission levels, the control technologies used today are highly effective and there is no reason to believe that emissions will slip to levels close to the cap, particularly considering compliance margin targets.  The caps will protect against significant increases in emissions due to new or poorly implemented technologies. However, we also believe that an alternative compliance approach that allows manufacturers to convert these emissions to CO2eq emission values and combine them with CO2 into a single compliance value would also be appropriate, so long as it did not undermine the stringency of the CO2 standard.  As described below, EPA is finalizing that such an alternative compliance approach be available to manufacturers to provide certain flexibilities for different technologies.
EPA requested comments in the NPRM on the approach to regulating N2O and CH4 emissions including the appropriateness of "cap" standards, the technical bases for the levels of the final N2O and CH4 standards, the final test procedures, and the final timing for the standards.  In addition, EPA requested any additional emissions data on N2O and CH4 from current technology engines.  We solicited additional data, and especially data for in-use vehicles and engines that would help to better characterize changes in emissions of these pollutants throughout their useful lives, for both gasoline and diesel applications. As is typical for EPA emissions standards, we are finalizing that manufacturers should establish deterioration factors to ensure compliance throughout the useful life.  We are not at this time aware of deterioration mechanisms for N2O and CH4 that would result in large deterioration factors, but neither do we believe enough is known about these mechanisms to justify finalizing assigned factors corresponding to no deterioration, as we are finalizing for CO2, or for that matter to any predetermined level.  In addition to N2O and CH4 standards, this section also discusses air conditioning- related provisions and EPA's proposal to extend certification requirements to all-electric HD vehicles and vehicles and engines designed to run on ethanol fuel.
What is EPA's  Approach to Controlling N2O?
N2O is a global warming gas with a GWP of 298.  It accounts for about 0.3% of the current greenhouse gas emissions from heavy-duty trucks.   
N2O is emitted from gasoline and diesel vehicles mainly during specific catalyst temperature conditions conducive to N2O formation.  Specifically, N2O can be generated during periods of emission hardware warm-up when rising catalyst temperatures pass through the temperature window when N2O formation potential is possible.  For current heavy-duty gasoline engines with conventional three-way catalyst technology, N2O is not generally produced in significant amounts because the time the catalyst spends at the critical temperatures during warm-up is short.  This is largely due to the need to quickly reach the higher temperatures necessary for high catalyst efficiency to achieve emission compliance of criteria pollutants.  N2O formation is generally only a concern with diesel and potentially with future gasoline lean-burn engines with compromised NOX emissions control systems.  If the risk for N2O formation is not factored into the design of the controls, these systems can but need not be designed in a way that emphasizes efficient NOX control while allowing the formation of significant quantities of N2O.  However, these future advanced gasoline and diesel technologies do not inherently require N2O formation to properly control NOX. Pathways exist today that meet criteria emission standards that would not compromise N2O emissions in future systems as observed in current production engine and vehicle testing which would also work for future diesel and gasoline technologies. Manufacturers would need to use appropriate technologies and temperature controls during future development programs with the objective to optimize for both NOX and N2O control.  Therefore, future designs and controls at reducing criteria emissions would need to take into account the balance of reducing these emissions with the different control approaches while also preventing inadvertent N2O formation, much like the path taken in current heavy-duty compliant engines and vehicles. Alternatively, manufacturers who find technologies that reduce criteria or CO2 emissions but see increases N2O emissions beyond the cap could choose to offset N2O emissions with reduction in CO2 as allowed in the  CO2eq option discussed in Section II.E.3.  
EPA is finalizing an N2O emission standard that we believe would be met by most current-technology gasoline and diesel vehicles at essentially no cost to the vehicle, though the agency is accounting for additional N2O equipment costs.  EPA believes that heavy-duty emission standards since 2008 model year, specifically the very stringent NOX standards for both engine and chassis certified engines, directly result in stringent N2O control. It is believed that the current emission control technologies used to meet the stringent NOX standards achieve the maximum feasible reductions and that no additional technologies are recognized that would result in additional N2O reductions. As noted, N2O formation in current catalyst systems occurs, but their emission levels are inherently low, because the time the catalyst spends at the critical temperatures during warm-up when N2O can form is short. At the same time, we believe that the  standard would ensure that the design of advanced NOX control systems for future diesel and lean-burn gasoline vehicles would control N2O emission levels.  While current NOX control approaches used on current heavy-duty diesel vehicles do not compromise N2O emissions and actually result in N2O control, we believe that the  standards would discourage any new emission control designs for diesels or lean-burn gasoline vehicles that achieve criteria emissions compliance at the cost of increased N2O emissions. Thus, the  standard would cap N2O emission levels, with the expectation that current gasoline and diesel vehicle control approaches that comply with heavy-duty vehicle emission standards for NOX would not increase their emission levels, and that the cap would ensure that future diesel and lean-burn gasoline vehicles with advanced NOX controls would appropriately control their emissions of N2O.  
Heavy-Duty Pickup Truck and Van N2O Exhaust Emission Standard
EPA is finalizing the proposed per-vehicle N2O emission standard of 0.05 g/mi, measured over the Light-duty FTP and HFET drive cycles.  Similar to the CO2 standard approach, the N2O emission level of a vehicle would be a composite of the Light-duty FTP and HFET cycles with the same 55 percent city weighting and 45 percent highway weighting. The standard would become effective in model year 2014 for all HD pickups and vans that are subject to the  CO2 emission requirements.  Averaging between vehicles would not be allowed. The standard is designed to prevent increases in N2O emissions from current levels, i.e., a no-backsliding standard. 
The  N2O standard level is approximately two times the average N2O level of current gasoline and diesel heavy-duty trucks that meet the NOX standards effective since 2008 model year. Manufacturers typically use design targets for NOX emission levels at approximately 50 percent of the standard, to account for in-use emissions deterioration and normal testing and production variability, and we expect manufacturers to utilize a similar approach for N2O emission compliance. We are not adopting a more stringent standard for current gasoline and diesel vehicles because the stringent heavy-duty NOX standards already result in significant N2O control, and we do not expect current N2O levels to rise for these vehicles particularly with expected manufacturer compliance margins.
Diesel heavy-duty pickup trucks and vans with advanced emission control technology are in the early stages of development and commercialization.  As this segment of the vehicle market develops, the final N2O standard would require manufacturers to incorporate control strategies that minimize N2O formation.  Available approaches include using electronic controls to limit catalyst conditions that might favor N2O formation and considering different catalyst formulations.  While some of these approaches may have associated costs, EPA believes that they will be small compared to the overall costs of the advanced NOX control technologies already required to meet heavy-duty standards.
The light-duty GHG rule requires that manufacturers begin testing for N2O by 2015 model year.  The manufacturers of complete pickup trucks and vans (Ford, General Motors, and Chrysler) are already impacted by the light-duty GHG rule and will therefore have this equipment and capability in place for the timing of this proposal. 
Overall, we believe that manufacturers of HD pickups and vans (both gasoline and diesel) would meet the  standard without implementing any significantly new technologies, only further refinement of their existing controls, and we do not expect there to be any significant costs associated with this standard. 
Heavy-duty Engine N2O Exhaust Emission Standard
EPA proposed a per engine N2O emissions standard of 0.05 g/bhp-hr for heavy-duty engines, but is finalizing a standard of 0.10 g/bhp-hr based on additional data submitted to the agency which better represents the full range of current diesel and gasoline engine performance.  The final N2O  standard becomes effective in 2014 model year for diesel engines, as proposed.  However, EPA is finalizing N2O standards for gasoline engines that become effective in 2016 model year to align with the first year of the CO2 gasoline engine standards.  Without this alignment, manufacturers would not have any flexibility, such as CO2eq credits, in meeting the N20 cap and therefore would not have any recourse to comply if an engine's N2O emissions were above the standard.  The standard remains the same over the useful life of the engine.  The N2O emissions would be measured over the composite Heavy-duty FTP cycle because it is believed that this cycle poses the highest risk for N2O formation versus the additional heavy-duty compliance cycles.  The agencies received comments from industry suggesting that the N2O and CH4 emissions be evaluated over the same test cycle required for CO2 emissions compliance.  In other words, the commenters wanted to have the N2O emissions measured over the SET for engines installed in tractors.  The agencies are not adopting this approach for the final action because we do not have sufficient data to set the appropriate N2O level using the SET.  The agencies are not requiring any additional burden by requiring the measurement to be conducted over the Heavy-Duty FTP cycle because it is already required for criteria emissions.  Averaging of N2O emissions between HD engines will not be allowed. The standard is designed to prevent increases in N2O emissions from current levels, i.e., a no-backsliding standard.
The proposed N2O level was twice the average N2O level of primarily pre-2010 model year diesel engines as demonstrated in the ACES Study and in EPA's testing of two additional engines with selective catalytic reduction aftertreatement systems. Manufacturers typically use design targets for NOX emission levels of about 50 percent of the standard, to account for in-use emissions deterioration and normal testing and production variability, and manufacturers are expected to utilize a similar approach for N2O emission compliance. 
EPA sought comment about deterioration factors for N2O emissions. See 75 FR 74208.  Industry stakeholders recommended that the agency define a DF of zero.  While we believe it is also possible that N2O emissions will not deteriorate in use, very little data for exists for aged engines and vehicles.  Therefore, the value we are assigning is conservative- specifically additive DF of 0.02 g/bhp-hr.  While the value is conservative, it is small enough to allow compliance for all engines except those very close to the standards.  For engines too close to the standard to use the assigned DFs, the manufacturers would need to demonstrate via engineering analysis that deterioration is less than assigned DF.
EPA sought additional data on the level of the proposed N2O level of 0.05 g/bhp-hr.  See 75 FR 74208.  The agency received additional data of 2010 model year engines from the Engine Manufacturers Association.  The agencies reanalyzed a new data set, as shown in Table II-20, to derive the final N2O standard of 0.10 g/bhp-hr with a defined deterioration factor of 0.02 g/bhp-hr.  
Table II-20: N2O Data Analysis
                                 Engine Family
                               Rated Power (HP)
                   Composite FTP Cycle N2O Result (g/bhp-hr)
                       EPA Data of 2007 Engine with SCR
                                       
                                     0.042
                   EPA Data of 2010 Production Intent Engine
                                       
                                     0.037
                                       A
                                      450
                                    0.0181
                                       A
                                      600
                                    0.0151
                                       B
                                      360
                                    0.0326
                                       C
                                      380
                                    0.0353
                                       D
                                      560
                                    0.0433
                                       D
                                      455
                                    0.0524
                                       E
                                      600
                                    0.0437
                                       F
                                      500
                                    0.0782
                                       G
                                      483
                                    0.1127
                                       H
                                      385
                                    0.0444
                                       H
                                      385
                                    0.0301
                                       H
                                      385
                                    0.0283
                                       J
                                      380
                                    0.0317
                                       
                                       
                                     Mean
                                     0.043
                                       
                                   2 * Mean
                                     0.09

 Engine emissions regulations do not currently require testing for N2O. The Mandatory GHG Reporting final rule requires reporting of N2O and requires that manufacturers either measure N2O or use a compliance statement based on good engineering judgment in lieu of direct N2O measurement (74 FR 56260, October 30, 2009).  The light-duty GHG final rule allows manufacturers to provide a compliance statement based on good engineering judgment through the 2014 model year, but requires measurement beginning in 2015 model year (75 FR 25324, May 7, 2010).  EPA is finalizing a consistent approach for heavy-duty engine manufacturers which allows them to delay direct measurement of N2O until the 2015 model year.  
Manufacturers without the capability to measure N2O by the 2015 model year would need to acquire and install appropriate measurement equipment in response to this final program.  EPA has established four separate N2O measurement methods, all of which are commercially available today.  EPA expects that most manufacturers would use either photo-acoustic measurement equipment for stand-alone, existing FTIR instrumentation at a cost of $50,000 per unit or upgrade existing emission measurement systems with NDIR analyzers for $25,000 per test cell.    
Overall, EPA believes that manufacturers of heavy-duty engines, both gasoline and diesel, would meet the final standard without implementing any new technologies, and beyond relatively small facilities costs for any company that still needs to acquire and install N2O measurement equipment, EPA does not project that manufacturers would incur significant costs associated with this final N2O standard.  
 EPA is not adopting any vehicle-level N2O standards for heavy-duty vocational vehicles and combination tractors.  The N2O emissions would be controlled through the heavy-duty engine portion of the program. The only requirement of those truck manufacturers to comply with the N2O requirements is to install a certified engine.
What is EPA's  approach to controlling CH4?
CH4 is greenhouse gas with a GWP of 25.  It accounts for about 0.03 percent of the greenhouse gases from heavy-duty trucks.
EPA is finalizing a standard that would cap CH4 emission levels, with the expectation that current heavy-duty vehicles and engines meeting the heavy-duty emission standards would not increase their levels as explained earlier due to robust current controls and manufacturer compliance margin targets.  It would ensure that emissions would be addressed if in the future there are increases in the use of natural gas or any other alternative fuel. EPA believes that current heavy-duty emission standards, specifically the NMHC standards for both engine and chassis certified engines directly result in stringent CH4 control. It is believed that the current emission control technologies used to meet the stringent NMHC standards achieve the maximum feasible reductions and that no additional technologies are recognized that would result in additional CH4 reductions. The level of the standard would generally be achievable through normal emission control methods already required to meet heavy-duty emission standards for hydrocarbons and EPA is therefore not attributing any cost to this part of the final action. Since CH4 is produced in gasoline and diesel engines similar to other hydrocarbon components, controls targeted at reducing overall NMHC levels generally also work at reducing CH4 emissions.  Therefore, for gasoline and diesel vehicles, the heavy-duty hydrocarbon standards will generally prevent increases in CH4 emissions levels.  CH4 from heavy-duty vehicles is relatively low compared to other GHGs largely due to the high effectiveness of the current heavy-duty standards in controlling overall HC emissions.  
EPA believes that this level for the standard would be met by current gasoline and diesel trucks and vans, and would prevent increases in future CH4 emissions in the event that alternative fueled vehicles with high methane emissions, like some past dedicated compressed natural gas vehicles, become a significant part of the vehicle fleet.   Currently EPA does not have separate CH4 standards because, unlike other hydrocarbons, CH4 does not contribute significantly to ozone formation.  However, CH4 emissions levels in the gasoline and diesel heavy-duty truck fleet have nevertheless generally been controlled by the heavy-duty HC emission standards.  Even so, without an emission standard for CH4, future emission levels of CH4 cannot be guaranteed to remain at current levels as vehicle technologies and fuels evolve.
In recent model years, a small number of heavy-duty trucks and engines were sold that were designed for dedicated use of natural gas.  While emission control designs on these recent dedicated natural gas-fueled vehicles demonstrate CH4 control can be as effective as gasoline or diesel equivalent vehicles, natural gas-fueled vehicles have historically produced significantly higher CH4 emissions than gasoline or diesel vehicles. This is because the fuel is predominantly methane, and most of the unburned fuel that escapes combustion without being oxidized by the catalyst is emitted as methane.  However, even if these vehicles meet the heavy-duty hydrocarbon standard and appear to have effective CH4 control by nature of the hydrocarbon controls, the heavy-duty standards do not require CH4 control and therefore some natural gas vehicle manufacturers have invested very little effort into methane control. While the final CH4 cap standard should not require any different emission control designs beyond what is already required to meet heavy-duty hydrocarbon standards on a dedicated natural gas vehicle (i.e., feedback controlled 3-way catalyst), the cap will ensure that systems provide robust control of methane much like a gasoline-fueled engine. We are not finalizing more stringent CH4 standards because we believe that the controls used to meet current heavy-duty hydrocarbon standards should result in effective CH4 control when properly implemented. Since CH4 is already measured under the current heavy-duty emissions regulations (so that it may be subtracted to calculate NMHC), the final standard would not result in additional testing costs.  
Heavy-duty Pickup Truck and Van CH4 Standard
EPA is finalizing the proposed CH4 emission standard of 0.05 g/mi as measured on the Light-duty FTP and HFET drive cycles, to apply beginning with model year 2014 for HD pickups and vans subject to the  CO2 standards.  Similar to the CO2 standard approach, the CH4 emission level of a vehicle will be a composite of the Light-duty FTP and HFET cycles, with the same 55% city weighting and 45% highway weighting. 
The level of the  standard is approximately two times the average heavy-duty gasoline and diesel truck and van levels.  As with N2O, this  standard level recognizes that manufacturers typically set emissions design targets with a compliance margin of approximately 50% of the standard.  Thus, we believe that the  standard should be met by current gasoline vehicles with no increase from today's CH4 levels.  Similarly, since current diesel vehicles generally have even lower CH4 emissions than gasoline vehicles, we believe that diesels will also meet the  standard with a larger compliance margin resulting in no change in today's CH4 levels.  
Heavy-duty Engine CH4 Exhaust Emission Standard
EPA is adopting a heavy-duty engine CH4 emission standard of 0.10 g/hp-hr with a defined deterioration factor of 0.02 g/bhp-hr as measured on the composite Heavy-duty FTP, to apply beginning in model year 2014 for diesel engines and in 2016 model year for gasoline engines.  EPA is adopting a different CH4 standard than proposed based on additional data submitted to the agency which better represents the full range of current diesel and gasoline engine performance.  EPA is adopting CH4 standards for gasoline engines that become effective in 2016 model year to align with the first year of the gasoline engine CO2 standards.  Without this alignment, manufacturers would not have any flexibility, such as CO2eq credits, in meeting the CH4 cap and therefore would not be able to sell any engine with a CH4 level above the standard.  The final standard would cap CH4 emissions at a level currently achieved by diesel and gasoline heavy-duty engines.  The level of the standard would generally be achievable through normal emission control methods already required to meet 2007 emission standards for NMHC and EPA is therefore not attributing any cost to this part of this program (see 40 CFR 86.007-11). 
The level of the final CH4 standard is twice the average CH4 emissions from gasoline engines from General Motors in addition to the four diesel engines in the ACES study.  As with N2O, this final level recognizes that manufacturers typically set emission design targets at about 50 percent of the standard.  Thus, EPA believes the final standard would be met by current diesel and gasoline engines with little if any technological improvements.  The agency believes a more stringent CH4 standard is not necessary due to effective CH4 controls in current heavy-duty technologies, since, as discussed above for N2O, EPA believes that the challenge of complying with the CO2 standards should be the primary focus of the manufacturers
CH4 is measured under the current 2007 regulations so that it may be subtracted to calculate NMHC.  Therefore EPA expects that the final standard would not result in additional testing costs.  
EPA is not adopting any vehicle-level CH4 standards for heavy-duty combination tractors or vocational vehicles in this final action.  The CH4 emissions will be controlled through the heavy-duty engine portion of the program. The only requirement of these truck manufacturers to comply with the CH4 requirements is to install a certified engine.
Use of CO2 Credits
As proposed, if a manufacturer is unable to meet the N2O or CH4 cap standards, the EPA program will allow the manufacturer to comply using CO2 credits.  In other words, a manufacturer could offset any N2O or CH4 emissions above the standard by taking steps to further reduce CO2.  A manufacturer choosing this option would convert its measured N2O and CH4 test results that are in excess of the applicable standards into CO2eq to determine the amount of CO2 credits required.  For example, a manufacturer would use 25 Mg of positive CO2 credits to offset 1 Mg of negative CH4 credits or use 298 Mg of positive CO2 credits to offset 1 Mg of negative N2O credits.  By using the Global Warming Potential of N2O and CH4, the  approach recognizes the inter-correlation of these compounds in impacting global warming and is environmentally neutral for demonstrating compliance with the  individual emissions caps.
The final NHTSA fuel consumption program will not use CO2eq, as suggested above.  Measured performance to the NHTSA fuel consumption standards will be based on the measurement of CO2 with no adjustment for N2O and/or CH4.  For manufacturers that use the EPA alternative CO2eq credit, compliance to the EPA CO2 standard will not be directly equivalent to compliance to the NHTSA fuel consumption standard.
Amendment to Light-duty Vehicle N2O and CH4 Standards
EPA also requested comment on revising a portion of the light duty vehicle standards for N2O and CH4.  75 FR at 74211.  Specifically, EPA requested comments on two additional options for manufacturers to comply with N2O and CH4 standards to provide additional near-term flexibility.  EPA is finalizing one of those options, as discussed below.  
For light-duty vehicles, as part of the MY 2012 - 2016 rulemaking, EPA finalized standards for N2O and CH4 which take effect with MY 2012.  75 FR at 25421 - 24.  Similar to the heavy-duty standards discussed in Section II.E above, the light-duty vehicle standards for N2O and CH4 were established to cap emissions and to prevent future emissions increases, and were generally not expected to result in the application of new technologies or significant costs for the manufacturers for current vehicle designs.  EPA also finalized an alternative CO2 equivalent standard option, which manufacturers may choose to use in lieu of complying with the N2O and CH4 cap standards.  The CO2-equivalent standard option allows manufacturers to fold all N2O and CH4 emissions, on a CO2-equivalent basis, along with CO2 into their otherwise applicable CO2 emissions standard level.  For flexible fueled vehicles, the N2O and CH4 standards must be met on both fuels (e.g., both gasoline and E - 85). 
After the light-duty standards were finalized, manufacturers raised concerns that they were having difficulty meeting the N2O and/or CH4 standards, especially in the early years of the program for a few of the vehicle models in their existing fleet.  This is problematic in the near-term because there is little lead time to implement unplanned redesigns of vehicles to meet the standards.  In such cases, manufacturers may need to either drop vehicle models from their fleet or to comply using the CO2 equivalent alternative.  On a CO2 equivalent basis, folding in all N2O and CH4 emissions would add 3 - 4 g/mile or more to a manufacturer's overall fleet-average CO2 emissions level because the alternative standard must be used for the entire fleet, not just for the problem vehicles. See 75 FR at 74211.  This could be especially challenging in the early years of the program for manufacturers with little compliance margin because there is very limited lead time to develop strategies to address these additional emissions. As stated at proposal, EPA believed this posed a legitimate issue of sufficiency of lead time in the short term, as well as an issue of cost, since EPA assumed that the N2O and CH4 standards would not result in significant costs for existing vehicles. Id.  However, EPA expected that manufacturers would be able to make technology changes (e.g., calibration or catalyst changes) to the few vehicle models not currently meeting the N2O and/or CH4 standards in the course of their planned vehicle redesign schedules in order to meet the standards.
Because EPA intended for these standards to be caps with little anticipated near-term impact on manufacturer's current product lines, EPA requested comment in the heavy-duty vehicle and engine proposal on two approaches to provide additional flexibilities in the light-duty vehicle program for meeting the N2O and CH4 standards. 75 FR at 74211.  EPA requested comments on the option of allowing manufacturers to use the CO2 equivalent approach for one pollutant but not the other for their fleet -- that is, allowing a manufacturer to fold in either CH4 or N2O as part of the CO2-equivalent standard.  For example, if a manufacturer is having trouble complying with the CH4 standard but not the N2O standard, the manufacturer could use the CO2 equivalent option including CH4, but choose to comply separately with the applicable N2O cap standard.  
EPA also requested comments on an alternative approach of allowing manufacturers to use CO2 credits, on a CO2 equivalent basis, to offset N2O and CH4 emissions above the applicable standard.  This is similar to the approach proposed and being finalized for heavy-duty vehicles as discussed above in Section II.E.   EPA requested comments on allowing the additional flexibility in the light-duty program for MYs 2012 - 2014 to help manufacturers address any near-term issues that they may have with the N2O and CH4 standards.
Commenters providing comment on this issue supported additional flexibility for manufacturers, and manufacturers specifically supported the heavy-duty vehicle approach of allowing CO2 credits on a CO2 equivalent basis to be used to meet the CH4 and N2O standards.  The Alliance of Automobile Manufacturers and the American Automotive Policy Council commented that the proposed heavy-duty approach represented a significant improvement over the approach adopted for light-duty vehicles.  Manufacturers support de-linking N2O and CH4, and commented that the formation of the pollutants do not necessarily trend together.  Manufacturers also commented that a deficit against the N2O or CH4 cap would be required to be covered with CO2 credits for that model, but the approach does not "punish" manufacturers for using a specific technology (which could provide CO2 benefits, e.g., diesel, CNG, etc.) by requiring manufacturers to use the CO2-equivalent approach for their entire fleet.  The Natural Gas Vehicle Interests also supported allowing the use of CO2 credits on a CO2-equivalent basis for compliance with CH4 standards and urged providing this type of flexibility on a permanent basis.  The Institute for Policy Integrity also submitted comments supportive of providing additional flexibility to manufacturers as long as it does not undermine standard stringency. This commenter was supportive of either approach discussed at proposal.
Manufacturers supported not only adopting the aspects of the heavy-duty approach noted above, but the entire heavy-duty vehicle approach, including two aspects of the program not contemplated in EPA's request for comments.  First, manufacturers commented that EPA incorrectly characterizes the light-duty vehicle issues with CH4 and N2O as short-term or early lead time issues.  For the reasons discussed above, manufacturers believe the changes should be made permanent, for the entire 2012-2016 light duty rulemaking period and, indeed, in any subsequent rules for the light duty vehicle sector.  Second, manufacturers commented that N2O and CH4 should be measured on the combined 55/45 weighting of the FTP and highway cycles, respectively, as these cycles are the yardstick for fuel economy and CO2 measurement.  Manufacturers commented that there should not be a disconnect between the light-duty and heavy-duty vehicle programs.
EPA continues to believe that it is appropriate to provide additional flexibility to manufacturers to meet the N2O and CH4 standards.  EPA is thus finalizing provisions allowing manufacturers to use CO2 credits, on a CO2-equivalent basis, to meet the N2O and CH4 standards, which is consistent with many commenters' preferred approach.  Manufacturers will have the option of using CO2 credits to meet N2O and CH4 standards on a test group basis as needed for MYs 2012-2016.  
In EPA's request for comments, EPA discussed the new flexibility as being needed to address lead time issues for MYs 2012-2014.  EPA understands that manufacturers are now making technology decisions for beyond MY 2014 and that some technologies such as FFVs may have difficulty meeting the CH4 and N2O standards, presenting manufacturers with difficult decisions of absorbing the 3-4 g/mile CO2-equivalent emissions fleet wide, making significant investments in existing vehicle technologies, or curtailing the use of certain technologies.  The CH4 standard, in particular, could prove challenging for FFVs because exhaust temperatures are lower on E-85 and CH4 is more difficult to convert over the catalyst.  EPA's initial estimate that these issues could be resolved without disrupting product plans by MY 2015 appears to be overly optimistic, and therefore EPA is extending the flexibility through model year 2016.  This change helps ensure that the CH4 and N2O standards will not be an obstacle for the use of FFVs or other technologies in this time frame, and at the same time, assure that overall fleet average GHG emissions will remain at the same level as under the main standards.
In response to comments from manufacturers and the Natural Gas Vehicle Interests that the changes to the program make sense and should be made on a permanent basis (i.e. for model years after 2016), EPA is extending this flexibility through MY 2016 as discussed above, but we believe it is premature to decide here whether or not these changes should be permanent.  EPA may consider this issue further in the context of new standards for MYs 2017-2025 in the planned future light-duty vehicle rulemaking.  With regard to comments on changing the test procedures over which N2O and CH4 emissions are measured to determine compliance with the standards, the level of the standards and the test procedures go hand-in-hand and must be considered together.  Weighting the highway test result with the city test result in the emissions measurement would in most cases reduce the overall emissions levels for determining compliance with the standards, and would thereby, in effect make the standards less stringent.  This appears to be inappropriate.  In addition, EPA did not request comments on changing the level of the N2O and CH4 standards or the test procedures and it is inappropriate to amend the standards for that reason as well.

EPA's Final Standards for Direct Emissions From Air Conditioning
Air conditioning systems contribute to GHG emissions in two ways  -  direct emissions through refrigerant leakage and indirect exhaust emissions due to the extra load on the vehicle's engine to provide power to the air conditioning system. HFC refrigerants, which are powerful GHG pollutants, can leak from the A/C system.  This includes the direct leakage of refrigerant as well as the subsequent leakage associate with maintenance and servicing, and with disposal at the end of the vehicle's life.  The most commonly used refrigerant in automotive applications  -  R134a, has a high GWP of 1430.  Due to the high GWP of R134a, a small leakage of the refrigerant has a much greater global warming impact than a similar amount of emissions of CO2 or other mobile source GHGs.     
Heavy-duty air conditioning systems today are similar to those used in light-duty applications.  However, differences may exist in terms of cooling capacity (such that sleeper cabs have larger cabin volumes than day cabs), system layout (such as the number of evaporators), and the durability requirements due to longer truck life.  However, the component technologies and costs to reduce direct HFC emissions are similar between the two types of vehicles.  
The quantity of GHG refrigerant emissions from heavy-duty trucks relative to the CO2 emissions from driving the vehicle and moving freight is very small.  Therefore, a credit approach is not appropriate for this segment of vehicles because the value of the credit is too small to provide sufficient incentive to utilize feasible and cost-effective air conditioning leakage improvements.  For the same reason, including air conditioning leakage improvements within the main standard would in many instances result in lost control opportunities.  Therefore, EPA is finalizing the proposed requirement that truck manufacturers  meet a low leakage requirement for all air conditioning systems installed in 2014 model year and later trucks, with one exception.  The agency is not finalizing leakage standards for Class 2b-8 Vocational Vehicles at this time due to the complexity in the build process and the potential for different entities besides the chassis manufacturer to be involved in the air conditioning system production and installation, with consequent difficulties in developing a regulatory system.  
EPA is finalizing a leakage standard which is a "percent refrigerant leakage per year" to assure that high-quality, low-leakage components are used in each air conditioning system design.  The agency believes that a single "gram of refrigerant leakage per year" would not fairly address the variety of air conditioning system designs and layouts found in the heavy-duty truck sector.  EPA is finalizing a standard of 1.50 percent leakage per year for heavy-duty pickup trucks and vans and Class 7 and 8 tractors.  The final standard was derived from the vehicles with the largest system refrigerant capacity based on the Minnesota GHG Reporting database.  The average percent leakage per year of the 2010 model year vehicles is 2.7 percent.  This final level of reduction is roughly comparable to that necessary to generate credits under the light-duty vehicle program.  See 75 FR 25426-25427.  Since refrigerant leakage past the compressor shaft seal is the dominant source of leakage in belt-driven air conditioning systems, the agency is seeking comment on whether the stringency of a single "percent refrigerant leakage per year" standard fairly addresses the range of system refrigerant capacities likely to be used in heavy-duty trucks.  Since systems with less refrigerant may have a larger percentage of their annual leakage from the compressor shaft seal than systems with more refrigerant capacity, their relative percent refrigerant leakage per year could be higher, and a more extensive application of leakage reducing technologies could be needed to meet the standard).  EPA welcomes comments relative to the stringency of the standard, and on whether manufacturers who adopt measures that improve the global warming impact of leakage emissions substantially beyond that achieved by the final standard should in some way be credited for this improvement.
Manufacturers can choose to reduce A/C leakage emissions in two ways.  First, they can utilize leak-tight components.  Second, manufacturers can largely eliminate the global warming impact of leakage emissions by adopting systems that use an alternative, low-GWP refrigerant.  One alternative refrigerant, HFO-1234yf, has been approved for use in light-duty passenger vehicles under EPA's Significant New Alternatives Program (SNAP).  While the scope of this SNAP approval does not include heavy-duty highway vehicles, we expect that those interested in using this refrigerant in other sectors will petition EPA for broader approval of its use in all mobile air conditioning systems.  In addition, the EPA is currently acting on a petition to de-list R-134a as an acceptable refrigerant for new, light-duty passenger vehicles. The timeframe and scale of R-134a de-listing is yet to be determined, but any phase-down of R-134a use will likely take place after this rulemaking is in effect.  Given that HFO-1234yf is yet to be approved for heavy-duty vehicles, and that the timeframe for the de-listing of R-134a is not known, EPA believes that a leakage standard for heavy-duty vehicles is still appropriate.  EPA believes that reducing A/C system leakage is both highly cost-effective and technologically feasible.  The availability of low leakage components is being driven by the air conditioning program in the light-duty GHG rule which apply to 2012 model year and later vehicles.  The cooperative industry and government Improved Mobile Air Conditioning program has demonstrated that new-vehicle leakage emissions can be reduced by 50 percent by reducing the number and improving the quality of the components, fittings, seals, and hoses of the A/C system.  All of these technologies are already in commercial use and exist on some of today's systems, and EPA does not anticipate any significant improvements in sealing technologies for model years beyond 2014. However, EPA does anticipate that updates to the SAE J2727 standard will be forthcoming (to address new materials and components which perform better than those originally used in the SAE analysis), and that it will be appropriate to include these updates in the regulations concerning refrigerant leakage.    
Consistent with the 2012-2016 light-duty GHG rule, we are estimating costs for leakage control at $18 (2008$) in direct manufacturing costs.  Including a low complexity indirect cost multiplier (ICM) of 1.14 results in costs of $21 in the 2014 model year.  Time based learning is considered appropriate for A/C leakage control, so costs in the 2017 model year would be $19.  These costs are applied to all heavy-duty pickups and vans, and to all combination tractors.  EPA views these costs as minimal and the reductions of potent GHGs to be easily feasible and reasonable in the lead times provided by the final rules.
EPA proposes that manufacturers demonstrate improvements in their A/C system designs and components through a design-based method.  The  method for calculating A/C leakage is based closely on an industry-consensus leakage scoring method, described below. This leakage scoring method is correlated to experimentally-measured leakage rates from a number of vehicles using the different available A/C components. Under the final approach, manufacturers would choose from a menu of A/C equipment and components used in their vehicles in order to establish leakage scores, which would characterize their A/C system leakage performance and calculate the percent leakage per year as this score divided by the system refrigerant capacity.  
Consistent with the light-duty GHG rule, EPA is finalizing a requirement that a manufacturer would compare the components of its A/C system with a set of leakage-reduction technologies and actions that is based closely on that being developed through the Improved Mobile Air Conditioning program and SAE International (as SAE Surface Vehicle Standard J2727, "HFC-134a, Mobile Air Conditioning System Refrigerant Emission Chart," August 2008 version).  See generally 75 FR 25426.  The SAE J2727 approach was developed from laboratory testing of a variety of A/C related components, and EPA believes that the J2727 leakage scoring system generally represents a reasonable correlation with average real-world leakage in new vehicles.  Like the cooperative industry-government program, our final approach would associate each component with a specific leakage rate in grams per year that is identical to the values in J2727 and then sum together the component leakage values to develop the total A/C system leakage.  However, in the heavy-duty truck program, the total A/C leakage score would then be divided by the value of the total refrigerant system capacity to develop a percent leakage per year.
EPA believes that the design-based approach would result in estimates of likely leakage emissions reductions that would be comparable to those that would eventually result from performance-based testing.  At the same time, comments are encouraged on all developments that may lead to a robust, practical, performance-based test for measuring A/C refrigerant leakage emissions.
CO2 emissions are also associated with air conditioner efficiency, since air conditioners create load on the engine.  See 74 FR 49529.  However, EPA is not  setting air conditioning efficiency standards for vocational vehicles and combination tractors.  The CO2 emissions due to air conditioning systems in these heavy-duty trucks are minimal compared to their overall emissions of CO2.  For example, EPA conducted modeling of a Class 8 sleeper cab using GEM to evaluate the impact of air conditioning and found that it leads to approximately 1 gram of CO2/ton- mile.  Therefore, a projected 24% improvement of the air conditioning system (the level projected in the light-duty GHG rulemaking), would only reduce CO2 emissions by less than 0.3 g CO2/ton-mile, or approximately 0.3 percent of the baseline Class 8 sleeper cab CO2 emissions.
EPA is not specifying a specific in-use standard for leakage, as neither test procedures nor facilities exist to measure refrigerant leakage from a vehicle's air conditioning system. However, consistent with the light-duty GHG rule, where we require that manufacturers attest to the durability of components and systems used to meet the CO2 standards (see 75 FR 25689), we will require that manufacturers of heavy-duty vehicles attest to the durability of these systems, and provide an engineering analysis which demonstrates component and system durability. 
Indirect Emissions From Air Conditioning
As just noted, in addition to direct emissions from refrigerant leakage, air conditioning systems also create indirect exhaust emissions due to the extra load on the vehicle's engine to provide power to the air conditioning system.  These indirect emissions are in the form of the additional CO2 emitted from the engine when A/C is being used due to the added loads.  Unlike direct emissions which tend to be a set annual leak rate not directly tied to usage, indirect emissions are fully a function of A/C usage.   
Ethanol-Fueled and Electric Vehicles
Current EPA emissions control regulations explicitly apply to heavy-duty engines and vehicles fueled by gasoline, methanol, natural gas and liquefied petroleum gas.  For multi-fueled vehicles they call for compliance with requirements established for each consumed fuel.  This contrasts with EPA's light-duty vehicle regulations that apply to all vehicles generally, regardless of fuel type.  As we proposed, we are revising the heavy-duty vehicle and engine regulations to make them consistent with the light-duty vehicle approach, applying standards for all regulated criteria pollutants and GHGs regardless of fuel type, including application to all-electric vehicles (EVs).  This provision will take effect in the 2014 model year, and be optional for manufacturers in earlier model years.  However, to satisfy the CAA section 202(a)(3) lead time constraints, the provision will remain optional for all criteria pollutants through the 2015 model year.  Commenters did not oppose this change in EPA regulations.
This change primarily affects manufacturers of ethanol-fueled vehicles (designed to operate on fuels containing at least 50 percent ethanol) and EVs.  Flex-fueled vehicles (FFVs) designed to run on both gasoline and fuel blends with high ethanol content will also be impacted, as they will need to comply with requirements for operation both on gasoline and ethanol.
The regulatory requirements we are finalizing today for certification on ethanol follow those already established for methanol, such as certification to NMHC equivalent standards and waiver of certain requirements.  We expect testing to be done using the same E85 test fuel as is used today for light-duty vehicle testing, an 85/15 blend of commercially-available ethanol and gasoline vehicle test fuel.  EV certification will also follow light-duty precedents, primarily calling on manufacturers to exercise good engineering judgment in applying the regulatory requirements, but will not be allowed to generate NOX or PM credits.
This provision is not expected to result in any significant added burden or cost.  It is already the practice of HD FFV manufacturers to voluntarily conduct emissions testing for these vehicles on E85 and submit the results as part of their certification application, along with gasoline test fuel results.  No changes in certification fees are being set in connection with this provision.  We expect that there will be strong incentives for any manufacturer seeking to market these vehicles to also want them to be certified:  (1) uncertified vehicles carry a disincentive to potential purchasers who typically have the benefit to the environment as one of their reasons for considering alternative fuels, (2) uncertified vehicles are not eligible for the substantial credits they could likely otherwise generate, (3) EVs have no tailpipe or evaporative emissions and thus need no added hardware to put them in a certifiable configuration, and (4) emissions controls for gasoline vehicles and FFVs are also effective on dedicated ethanol-fueled vehicles, and thus costly development programs and specialized components will not be needed; in fact the highly integrated nature of modern automotive products make the emission control systems essential to reliable vehicle performance.
Regarding technological feasibility, as mentioned above, HD FFV manufacturers already test on E85 and the resulting data shows that they can meet emissions standards on this fuel.  Furthermore, there is a substantial body of certification data on light-duty FFVs (for which testing on ethanol is already a requirement), showing existing emission control technology is capable of meeting even the more stringent Tier 2 standards in place for light-duty vehicles.
Feasibility Assessments and Conclusions
In this section, NHTSA and EPA discuss several aspects of our joint technical analyses.  These analyses are common to the development of each agency's final standards.  Specifically we discuss:  the development of the baseline used by each agency for assessing costs, benefits, and other impacts of the standards, the technologies the agencies evaluated and their costs and effectiveness, and the development of the final standards based on application of technology in light of the attribute based distinctions and related compliance measurement procedures.  We also discuss consideration of standards that are either more or less stringent than those adopted.      
This program is based on the need to obtain significant oil savings and GHG emissions reductions from the transportation sector, and the recognition that there are appropriate and cost-effective technologies to achieve such reductions feasibly.  The decision on what standard to set is guided by each agency's statutory requirements, and is largely based on the need for reductions, the effectiveness of the emissions control technology, the cost and other impacts of implementing the technology, and the lead time needed for manufacturers to employ the control technology.  The availability of technology to achieve reductions and the cost and other aspects of this technology are therefore a central focus of this final rulemaking.
The NPRM proposed Alternative 6, and incorporated a broad range of technologies, described further below, after analyzing the potential costs and benefits of each alternative and weighing the statutory factors prescribed by 49 U.S.C. 32902(k)(2).  This section directs NHTSA to "determine in a rulemaking proceeding how to implement a commercial medium- and heavy-duty on-highway vehicle and work truck fuel efficiency improvement program designed to achieve the maximum feasible improvement," and "adopt and implement appropriate test methods, measurement metrics, fuel economy standards, and compliance and enforcement protocols that are appropriate, cost-effective, and technologically feasible for commercial medium- and heavy-duty on-highway vehicles and work trucks."  The agency received comments on whether NHTSA had properly applied these statutory factors when determining the appropriate stringency level and technologies for the proposed standards.
CBD submitted several comments on whether NHTSA had met EISA's mandate to set standards "designed to achieve the maximum feasible improvement" and, to that end, appropriately considered feasible technologies in setting the stringency level.  CBD stated that the proposed rule had been limited to currently available technology, and that none of the alternatives contained all of the available technology, which it argued violated EISA.  CBD also stated that the phase-in schedule violated the technology-forcing intention of EISA, and that the agencies misperceived their statutory mandates, arguing that the agencies are required to force technological innovation through aggressive standards.  NHTSA recognizes that Congress intended EPCA (and by extension, EISA, which amended it) to be technology-forcing.  See Center for Auto Safety v. National Highway Traffic Safety Admin., 793 F.2d 1322, 1339 (D.C. Cir. 1986).  However, NHTSA believes it is important to distinguish between setting "maximum feasible" standards, as EPCA/EISA requires, and "maximum technologically feasible" standards, as CBD would have NHTSA do.  The agency must weigh all of the statutory factors in setting fuel efficiency standards, and therefore may not weigh one statutory factor in isolation of others.  
Neither EPCA nor EISA define "maximum feasible" in the context of setting CAFE standards. Instead, NHTSA is directed to consider three factors when determining what the maximum feasible standards are  -  "appropriateness, cost-effectiveness, and technological feasibility."  32902(k)(2).  These factors modify "feasible" in the context of the MD/HD rule beyond a plain meaning of "capable of being done."  See Center for Biological Diversity v. National Highway Traffic Safety Admin., 538 F.3d 1172, 1194 (9th Cir. 2008).  EPCA "gives NHTSA discretion to decide how to balance the statutory factors  -  as long as NHTSA's balancing does not undermine the fundamental purpose of EPCA: energy conservation."  Id. at 1195.  Where Congress has not directly spoken to a potential issue, NHTSA's interpretation must be a "reasonable accommodation of conflicting policies... committed to the agency's care by the statute."  Id. (discussing consideration of consumer demand) (internal citations omitted).  In the context of light-duty, it was determined that Congress delegated the process for setting the maximum feasible standard to NHTSA with broad guidelines concerning the factors that the agency must consider.  Id. (emphasis in original).  This interpretation is applicable to the heavy-duty process, which prescribes statutory factors commiserate to, and equally broad as, those prescribed for light-duty.  Thus, NHTSA believes that it is firmly within our discretion to weigh and balance the factors laid out in 32902(k) in a way that is technology-forcing, as evidenced by these standards promulgated in this final rule, but not in a way that requires the application of technology not even yet in existence, as CBD suggests.
As described in Section I. F. (2) above, the proposed fuel consumption would remain in effect indefinitely at their 2018 or 2019 levels, as Congress did not specify a maximum duration period.  CBD stated that this would be a per se violation of EISA, as, by definition, standards which are not updated continually and regularly cannot be considered maximum feasible.  NHTSA would like to clarify that the NPRM specified that the standards would remain indefinitely "until amended by a future rulemaking action."  NPRM at 74172.  Further, as noted above, NHTSA has broad discretion to determine the maximum feasible standards.  Unlike § 32902(b)(3)(B), which applies to automobiles regulated under light-duty CAFE, § 32902(k) does not specify a maximum number of years that fuel economy standards for heavy-duty vehicles will be in place.  Consistent with its broad authority to define maximum feasible standards, NHTSA interprets its authority as including the discretion to define expiration periods where Congress has not otherwise specified.  This is particularly appropriate for the heavy-duty sector, where fuel efficiency regulation is unprecedented.  NHTSA believes that it would be unwise to set an expiration period for this first rulemaking absent both Congressional direction and a known compelling reason for setting a specific date.  
Given the lead time mandated by EISA, NHTSA believes that the phase-in schedule provides an appropriate balance between the technology-forcing purpose of the statute and EISA-mandated considerations of economic practicability.  NHTSA is sensitive to the unique production practices of manufacturers of medium- and heavy-duty engines and vehicles, and believes that a phase-in schedule is necessary in order to provide manufacturers enough flexibility to incorporate the proposed technologies into their production schedules.  NHTSA recognizes, as noted in the case above, that balancing each statutory factor in order to set the maximum feasible standards means that the agency must engage in a "reasonable accommodation of conflicting policies."  See 538 F.3d at 1195, supra.  Here, the agency has determined that the phase-in schedule is one such reasonable accommodation.   
Allison Transmission commented that NHTSA had improperly relied on the NAS report and failed to do sufficient independent analysis, which Allison claimed did not meet the statutory obligation to provide an adequate basis for the rule.  Consistent with EISA's direction, NAS submitted a report evaluating MD/HD fuel economy standards to NHTSA in March of 2010.  NHTSA reviewed the findings and recommendations of the NAS report when developing the proposed rule, as was clearly intended by Congress, but also conducted an independent study, laid on in Section X of the NPRM.  In conducting its analysis of the NAS report, several key recommendations, such as the use of fuel efficiency metrics, were found to be the best approach to implementing the new program.   However, the results of its own study, along with EPA's, led NHTSA to develop several aspects of the rule that are inconsistent with the NAS report, such as the separate regulation of engines and vehicles and the regulation of large manufacturers.  NHTSA believes that in explicitly directing the NAS report in the development of the new MD/HD program, Congress intended for it to play an important role in the agencies' analysis.  The purpose of NHTSA's study, conducted in the time available, was to bring together the NAS recommendations and the agencies' independent analysis to explain further the basis for the proposed standards.
Navistar stated that the baseline engines proposed in the NPRM, MY 2010 selective catalytic reduction (SCR)-equipped, could not meet the agencies' statutory obligation to set feasible standards, and requested instead that MY 2010 engines currently in-use be used to meet the feasibility factor.  Navistar further commented that the proposed rule overall is not technologically feasible, stating that the proposed standards assume technologies which are not in production for all manufacturers.  NHTSA has previously interpreted "technological feasibility" to mean "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.'  74 FR 14196, 14216.  NHTSA has further clarified that the consideration of technological feasibility "does not mean that the technology must be available or in use when a standard is proposed or issued."  Center for Auto Safety v. National Highway Traffic Safety Admin., 793 F.2d 1322, 1325 n12 (D.C. Cir. 1986), quoting 42 Fed. Reg. 63, 184, 188 (1977).  
Consistent with these previous interpretations, NHTSA believes that a technology does not necessarily need to be currently available or in use for all regulated parties to be "technologically feasible" for this rule, as long as it is reasonable to expect, based on the evidence before the agency, that the technology will be available in the model year in which the relevant standard takes effect.  The agencies provide multiple technology pathways for compliance with a standard, allowing each manufacturer to develop technologies which fit their current production and research, and the standards are based on fleet penetration rates of those technologies.  As discussed below, it is reasonable to assume that all the technologies incorporated in this final rule, including SCR-equipped engines, will be available over the period the standards are in effect.
The Institute for Policy Integrity (IPI) commented that the agencies should increase the scope and stringency of the final rule to the point at which net benefits would be maximized, citing Executive Orders 12866 and 13563.  EOs 12866 and 13563 instruct agencies, to the extent permitted by law, to select, among other things, the regulatory approaches which maximize net benefits.  NHTSA agrees with IPI about the applicability of these EOs and has made every effort to incorporate their guidance in drafting this rule.  Specifically, IPI commented that the agencies should regulate trailers at least to some degree, arguing that the agencies' reasoning for not doing so was insufficient and requesting a plan and schedule in the final rule for the future regulation of trailers.  
The NPRM proposed to delay the regulation of trailers, as the inclusion would not be feasible at this time due to the diversity and complexity of the trailer industry, as well as a lack of critical information from the SmartWay program, industry and other key stakeholders.  Additionally, since a number of trailer manufacturing entities are small businesses, EPA and NHTSA need to allow sufficient time to convene a SBREFA panel to conduct the proper outreach to the potentially impacted stakeholders.  NHTSA agrees that the regulation of trailers, when appropriate, is likely to provide fuel efficiency benefits.  However, as discussed below, we continue to believe that both agencies must perform a more comprehensive assessment of the trailer industry, and therefore that their inclusion at this time is not feasible.
Though IPI agreed that the proposed rule was cost-benefit justified, IPI further stated that the agencies must implement an alternative that provides the maximum net benefits.  The agencies believe that standards that maximized net benefits would be beyond the point of technological feasibility for this first phase of the HD National Program.  The standards already require the maximum feasible fuel efficiency improvements for the HD fleet in the 2014-2018 timeframe.  Thus, even though, given the considerable cost-effectiveness of the technologies required by this rule, standards that maximized net benefits would likely be more stringent than those being promulgated in this final rule, NHTSA believes that standards that maximized net benefits would not be appropriate or technologically feasible in the rulemaking timeframe.  The Executive Orders cited by IPI do not require an agency to select a regulatory alternative that is inconsistent with its statutory obligations.  Thus, NHTSA has set fuel consumption standards for MYs 2016-2018 HD vehicles and engines at the maximum feasible level, but not at the level that maximizes net benefits.
Here, the focus of the standards is on applying fuel efficiency and emissions control technology to reduce fuel consumption, CO2 and other greenhouse gases.  Vehicles combust fuel to generate power that is used to perform two basic functions: 1) transport the truck and its payload, and 2) operate various accessories during the operation of the truck such as the PTO units.  Engine-based technology can reduce fuel consumption and CO2 emissions by improving engine efficiency, which increases the amount of power produced per unit of fuel consumed.  Vehicle-based technology can reduce fuel consumption and CO2 emissions by increasing the vehicle efficiency, which reduces the amount of power demanded from the engine to perform the truck's primary functions.
Our technical work has therefore focused on both engine efficiency improvements and vehicle efficiency improvements.  In addition to fuel delivery, combustion, and aftertreatment technology, any aspect of the truck that affects the need for the engine to produce power must also be considered.  For example, the drag due to aerodynamics and the resistance of the tires to rolling both have major impacts on the amount of power demanded of the engine while operating the vehicle.    
The large number of possible technologies to consider and the breadth of vehicle systems that are affected mean that consideration of the manufacturer's design and production process plays a major role in developing the final standards.  Engine and vehicle manufacturers typically develop many different models based on a limited number of platforms.  The platform typically consists of a common engine or truck model architecture. For example, a common engine platform may contain the same configuration (such as inline), number of cylinders, valvetrain architecture (such as overhead valve), cylinder head design, piston design, among other attributes.  An engine platform may have different calibrations, such as different power ratings, and different aftertreatment control strategies, such as exhaust gas recirculation (EGR) or selective catalytic reduction (SCR).  On the other hand, a common vehicle platform has different meanings depending on the market.  In the heavy-duty pickup truck market, each truck manufacturer usually has only a single pickup truck platform (for example the F series by Ford) with common chassis designs and shared body panels, but with variations on load capacity of the axles, the cab configuration, tire offerings, and powertrain options.  Lastly, the combination tractor market has several different platforms and the trucks within each platform (such as LoneStar by Navistar) have less commonality.  Tractor manufacturers will offer several different options for bumpers, mirrors, aerodynamic fairing, wheels, and tires, among others.  However, some areas such as the overall basic aerodynamic design (such as the grill, hood, windshield, and doors) of the tractor are tied to tractor platform.
The platform approach allows for efficient use of design and manufacturing resources.  Given the very large investment put into designing and producing each truck model, manufacturers of heavy-duty pickup trucks and vans typically plan on a major redesign for the models every 5 years or more.  Recently, EPA's non-GHG heavy-duty engine program provided new emissions standards every three model years.  Heavy-duty engine and truck manufacturer product plans typically have fallen into three year cycles to reflect this regime.  While the recent non-GHG emissions standards can be handled generally with redesigns of engines and trucks, a complete redesign of a new heavy-duty engine or truck typically occurs on a slower cycle and often does not align in time due to the fact that the manufacturer of engines differs from the truck manufacturer.  At the redesign stage, the manufacturer will upgrade or add all of the technology and make most other changes supporting the manufacturer's plans for the next several years, including plans related to emissions, fuel efficiency, and safety regulations.
A redesign of either engine or truck platforms often involves a package of changes designed to work together to meet the various requirements and plans for the model for several model years after the redesign.  This often involves significant engineering, development, manufacturing, and marketing resources to create a new product with multiple new features.  In order to leverage this significant upfront investment, manufacturers plan vehicle redesigns with several model years of production in mind. Vehicle models are not completely static between redesigns as limited changes are often incorporated for each model year.  This interim process is called a refresh of the vehicle and it generally does not allow for major technology changes although more minor ones can be done (e.g., small aerodynamic improvements, etc).  More major technology upgrades that affect multiple systems of the vehicle thus occur at the vehicle redesign stage and not in the time period between redesigns.
As discussed below, there are a wide variety of CO2 and fuel consumption reducing technologies involving several different systems in the engine and vehicle that are available for consideration.  Many can involve major changes to the engine or vehicle, such as changes to the engine block and cylinder heads or changes in vehicle shape to improve aerodynamic efficiency.  Incorporation of such technologies during the periodic engine, transmission or vehicle redesign process would allow manufacturers to develop appropriate packages of technology upgrades that combine technologies in ways that work together and fit with the overall goals of the redesign.  By synchronizing with their multi-year planning process, manufacturers can avoid the large increase in resources and costs that would occur if technology had to be added outside of the redesign process.  We considered redesign cycles both in our costing and in assessing the lead time required.
As described below, the vast majority of technology required by this program is commercially available and already being utilized to a limited extent across the fleet.  Therefore the majority of the emission and fuel consumption reductions which would result from these final rules would result from the increased use of these technologies.  EPA and NHTSA also believe that these final rules will encourage the development and limited use of more advanced technologies, such as advanced aerodynamics in tractors and hybrid powertrains in some vocational vehicle applications.  
In evaluating truck efficiency, NHTSA and EPA have excluded fundamental changes in the engine or truck's performance.  Put another way, none of the technology pathways underlying the final standards involve any alteration in vehicle utility.  For example, the agencies did not consider approaches that would necessitate reductions in engine power or otherwise limit truck performance.  The agencies have thus limited the assessment of technical feasibility and resultant vehicle cost to technologies which maintain freight utility.  Similarly, the agencies' choice of attributes on which to base the standards, and the metrics used to measure them, are consciously adopted to preserve the utility of heavy duty vehicles and engines. 
The agencies worked together to determine component costs for each of the technologies and build up the costs accordingly. For costs, the agencies considered 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 approach utilized by the agencies in the 2012-16 MY light-duty fuel economy and GHG final rule. 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 technology which reduces GHG emissions and fuel consumption. 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. In general, the direct costs of fuel consumption-improving technologies for heavy-duty pickups and vans are consistent with those used in the 2012-2016 MY light-duty GHG rule, except that the agencies have scaled up certain costs where appropriate to accommodate the larger size and/or loads placed on parts and systems in the heavy-duty classes relative to the light-duty classes.  For loose heavy-duty engines, the agencies have consulted various studies and have exercised engineering judgment when estimating direct costs.  For technologies expected to be added to vocational vehicles and combination tractors, the agencies have again consulted various studies and have used engineering judgment to arrive at direct cost estimates.  Once costs were determined, they were adjusted to ensure that they were all expressed in 2009 dollars using a ratio of gross domestic product deflators for the associated calendar years.  
Indirect costs were accounted for using the ICM approach explained in Chapter 2 of the RIA, rather than using the traditional Retail Price Equivalent (RPE) multiplier approach.  For the heavy-duty pickup truck and van cost projections in this final action, the agencies have used ICMs developed for light-duty vehicles (with the exception that here return on capital has been incorporated into the ICMs, where it had not been in the light-duty rule) primarily because the manufacturers involved in this segment of the heavy-duty market are the same manufacturers that build light-duty trucks.  For the Class 7 and 8 tractor, vocational vehicle, and heavy-duty engine cost projections in this final rulemaking, EPA contracted with RTI International to update EPA's methodology for accounting for indirect costs associated with changes in direct manufacturing costs for heavy-duty engine and truck manufacturers.  In addition to the indirect cost multipliers varying by complexity and time frame, there is no reason to expect that the multipliers would be the same for engine manufacturers as for truck manufacturers.  The report from RTI provides a description of the methodology, as well as calculations of new indirect cost multipliers.  The multipliers used here include a factor of 5 percent of direct costs representing the return on capital for heavy-duty engines and truck manufacturers.  These indirect cost multipliers are intended to be used, along with calculations of direct manufacturing costs, to provide improved estimates of the full additional costs associated with new technologies.  The agencies did not receive any adverse comments related to this methodology.
Details of the direct and indirect costs, and all applicable ICMs, are presented in Chapter 2 of the RIA.  In addition, for details on the ICMs, please refer to the RTI report (See Docket ID EPA-HQ-OAR-2010-0162-0283).  Importantly, the agencies have revised the ICM factors and the way that indirect costs are calculated using the ICMs.  As a result, the ICM factors are now higher, the indirect costs are higher and, therefore, technology costs are higher.  The changes made to the ICMs and the indirect cost calculations are discussed in Section VIII of this preamble and are detailed in Chapter 2 of the RIA.    
EPA and NHTSA believe that the emissions reductions called for by the final standards are technologically feasible at reasonable costs within the lead time provided by the final standards, reflecting our projections of widespread use of commercially available technology.  Manufacturers may also find additional means to reduce emissions and lower fuel consumption beyond the technical approaches we describe here.  We encourage such innovation through provisions in our flexibility program as discussed in Section IV.
The remainder of this section describes the technical feasibility and cost analysis in greater detail.  Further detail on all of these issues can be found in the joint RIA Chapter 2.
Class 7-8 Combination Tractor
Class 7 and 8 tractors are used in combination with trailers to transport freight. The variation in the design of these tractors and their typical uses drive different technology solutions for each regulatory subcategory.  The agencies are adopting provisions to treat vocational tractors as vocational vehicles instead of combination tractors, as noted in Section II.B.  The focus of this section is on the feasibility of the combination tractors, not the vocational tractors.
EPA and NHTSA collected information on the cost and effectiveness of fuel consumption and CO2 emission reducing technologies from several sources.  The primary sources of information were the 2010 National Academy of Sciences report of Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles, TIAX's assessment of technologies to support the NAS panel report, EPA's Heavy-duty Lumped Parameter Model, the analysis conducted by the Northeast States Center for a Clean Air Future, International Council on Clean Transportation, Southwest Research Institute and TIAX for reducing fuel consumption of heavy-duty long haul combination tractors (the NESCCAF/ICCT study), and the technology cost analysis conducted by ICF for EPA.  Following on the EISA of 2007, the National Research Council appointed a NAS committee to assess technologies for improving fuel efficiency of heavy-duty vehicles to support NHTSA's rulemaking.  The 2010 NAS report assessed current and future technologies for reducing fuel consumption, how the technologies could be implemented, and identified the potential cost of such technologies.  The NAS panel contracted with TIAX to perform an assessment of technologies which provide potential fuel consumption reductions in heavy-duty trucks and engines and the technologies' associated capital costs.  Similar to the Lumped Parameter model which EPA developed to assess the impact and interactions of GHG and fuel consumption reducing technologies for light-duty vehicles, EPA developed a new version of that model to specifically address the effectiveness and interactions of the final pickup truck and light heavy-duty engine technologies.  The NESCAFF/ICCT study assessed technologies available in 2012 through 2017 to reduce CO2 emissions and fuel consumption of line haul combination tractors and trailers.  Lastly, the ICF report focused on the capital, maintenance, and operating costs of technologies currently available to reduce CO2 emissions and fuel consumption in heavy-duty engines, combination tractors, and vocational vehicles.
What Technologies Did the Agencies Consider to Reduce the CO2 Emissions and Fuel Consumption of tractors?
Manufacturers can reduce CO2 emissions and fuel consumption of combination tractors through use of, among others, engine, aerodynamic, tire, extended idle, and weight reduction technologies.  The standards in the final rule are premised on use of these technologies.  The agencies note that SmartWay trucks are available today which incorporate the technologies on whose performance the final standards are based.  We will also discuss other technologies that could potentially be used, such as vehicle speed limiters, although we are not basing the final standards on their use for the model years covered by this rulemaking, for various reasons discussed below.   
In this section we discuss the baseline tractor and engine technologies for the 2010 model year, and then discuss the types of technologies that the agencies considered to improve performance relative to this baseline, while section III.A.2 discusses the technology packages the agencies used to determine the final standard levels. 
Baseline Tractor & Tractor Technologies
Baseline tractor:  The agencies developed the baseline tractor to represent the average 2010 model year tractor.  Today there is a large spread in aerodynamics in the new tractor fleet.  Trucks sold may reflect so-called classic styling (as described in Section II.B.3.c), or may be sold with aerodynamic packages.  Based on our review of current truck model configurations and Polk data provided through MJ Bradley, we believe the aerodynamic configuration of the baseline new truck fleet is approximately 25 percent Bin I, 70 percent Bin II, and 5 percent Bin III (as these bin configurations are explained above in Section II.B. (2)(c).  The baseline Class 7 and 8 day cab tractor consists of an aerodynamic package which closely resembles the Bin I package described in Section II.B. (2)(c), baseline tire rolling resistance of  7.8 kg/metric ton for the steer tire and 8.2 kg/ metric ton, dual tires with steel wheels on the drive axles, and no vehicle speed limiter.  The baseline tractor for the Class 8 sleeper cabs contains the same aerodynamic and tire rolling resistance technologies as the baseline day cab, does not include vehicle speed limiters, and does not include an idle reduction technology.  The agencies assume the baseline transmission is a 10 speed manual.  The agencies received a comment from the ICCT stating that the 0.69 Cd baseline for high roof sleepers published in the NPRM is higher than existing studies show. ICCT cited three studies including a Society of Automotive Engineering paper showing a lower Cd for tractor trailers.  The agencies based the average Cd for high roof sleepers on available in use fleet composition data, combined with an assessment of drag coefficient for different truck configurations.  The agencies are finalizing the 0.69 baseline Cd for high roof sleeper based on our assessment for the NPRM.  However, we will continue to gather information on the composition of the in-use fleet and may alter the baseline in a future action, should more data become available that demonstrates our estimate is incorrect.
Performance from this baseline can be improved by the use of the following technologies:
Aerodynamic technologies:  There are opportunities to reduce aerodynamic drag from the tractor, but it is difficult to assess the benefit of individual aerodynamic features.  Therefore, reducing aerodynamic drag requires optimizing of the entire system.  The potential areas to reduce drag include all sides of the truck  -  front, sides, top, rear and bottom.  The grill, bumper, and hood can be designed to minimize the pressure created by the front of the truck.  Technologies such as aerodynamic mirrors and fuel tank fairings can reduce the surface area perpendicular to the wind and provide a smooth surface to minimize disruptions of the air flow.  Roof fairings provide a transition to move the air smoothly over the tractor and trailer.  Side extenders can minimize the air entrapped in the gap between the tractor and trailer.  Lastly, underbelly treatments can manage the flow of air underneath the tractor.  As discussed in the TIAX report, the coefficient of drag (Cd) of a SmartWay sleeper cab high roof tractor is approximately 0.60, which is a significant improvement over a truck with no aerodynamic features which has a Cd value of approximately 0.80.  The GEM demonstrates that an aerodynamic improvement of a Class 8 high roof sleeper cab with a Cd value of 0.60 (which represents a Bin III tractor) provides a 5 percent reduction in fuel consumption and CO2 emissions over a truck with a Cd of 0.68.
Lower Rolling Resistance Tires:  A tire's rolling resistance results from the tread compound material, the architecture and materials of the casing, tread design, the tire manufacturing process, and its operating conditions (surface, inflation pressure, speed, temperature, etc.).  Differences in rolling resistance of up to 50 percent have been identified for tires designed to equip the same vehicle.  The baseline rolling resistance coefficient for today's fleet is 7.8 kg/metric ton for the steer tire and 8.2 kg/metric ton for the drive tire, based on sales weighting of the top three manufacturers based on market share.  Since 2007, SmartWay trucks have had steer tires with rolling resistance coefficients of less than 6.6 kg/metric ton for the steer tire and less than 7.0 kg/metric ton for the drive tire.  Low rolling resistance (LRR) drive tires are currently offered in both dual assembly and single wide-base configurations.  Single wide tires can offer  rolling resistance reduction along with improved aerodynamics and weight reduction. The GEM demonstrates that replacing baseline tractor tires with tires which meet the Bin I level provides approximately a 4 percent reduction in fuel consumption and CO2 emissions over the prescribed test cycle, as shown in RIA Chapter 2, Figure 2-2.
Weight Reduction:  Reductions in vehicle mass reduce fuel consumption and GHGs by reducing the overall vehicle mass to be accelerated and also through increased vehicle payloads which can allow additional tons to be carried by fewer trucks consuming less fuel and producing lower emissions on a ton-mile basis.  Initially for proposal, the agencies considered evaluating vehicle mass reductions on a total vehicle basis for tractors and vocational trucks.  The agencies considered defining a baseline vehicle curb weight and the GEM model would have used the vehicle's actual curb weight to calculate the increase or decrease in fuel consumption related to the overall vehicle mass relative to that baseline.  After considerable evaluation of this issue, including discussions with the industry, we decided it would not be possible to define a single vehicle baseline mass for the tractors and for vocational trucks that would be appropriate and representative.  Actual vehicle curb weights for these classes of vehicles vary by thousands of pounds dependent on customer features added to vehicles and critical to the function of the vehicle in the particular vocation in which it is used.  This is true of vehicles such as Class 8 tractors considered in this section that may appear to be relatively homogenous but which in fact are quite heterogeneous.
This reality led us to the solution we proposed.  In the proposal, we reflected mass reductions for specific technology substitutions (e.g., installing aluminum wheels instead of steel wheels) where we could with confidence verify the mass reduction information provided by the manufacturer even though we cannot estimate the actual curb weight of the vehicle.  In this way, we accounted for mass reductions where we can accurately account for its benefits.  
For the final action, based on analysis, the agencies developed an expanded list of weight reduction opportunities, as listed in Table II-5 in Section II.  The list includes additional components, but not materials, from those proposed in the NPRM.  For high strength steel, the weight reduction value is equal to 10 percent of the presumed baseline component weight, as the agencies used a conservative value based on the DOE report.  We recognize that there may be additional potential for weight reduction in new high strength steel components which combine the reduction due to the material substitution along with improvements in redesign, as evidenced by the studies done for light duty vehicles.  In the development of the high strength steel component weights, we are only assuming a reduction from material substitution and no weight reduction from redesign, since we do not have any data specific to redesign of heavy-duty components nor do we have a regulatory mechanism to differentiate between material substation and improved design.  We are finalizing for wheels that both aluminum and light weight aluminum are eligible to be used as light-weight materials.  Only aluminum can be used as a light-weight material for other components.  The reason for this is data was available for light weight aluminum for wheels but was not available for other components.
On average, these mass reduction technologies together can reduce weight by over 400 pounds. A weight reduction of this magnitude applied to a truck which travels at 70,000 pounds will have a minimal impact on fuel consumption.  However, for trucks which operate at the maximum GVWR which occurs approximately in one third of truck miles travelled, a reduced tare weight will allow for additional payload to be carried.  The GEM demonstrates that a weight reduction of 400 pounds applied to the payload tons for one third of the trips provides a 0.3 percent reduction in fuel consumption and CO2 emissions over the prescribed test cycle, as shown in Figure 2-3 of RIA Chapter 2.
Extended Idle Reduction:  Auxiliary power units (APU)s, fuel operated heaters, battery supplied air conditioning, and thermal storage systems are among the technologies available today to reduce main engine extended idling from sleeper cabs.  Each of these technologies reduces the baseline fuel consumption during idling from a truck without this equipment (the baseline) from approximately 0.8 gallons per hour (main engine idling fuel consumption rate) to approximately 0.2 gallons per hour for an APU.  EPA and NHTSA agree with the TIAX assessment of a 6 percent reduction in overall fuel consumption reduction.  
Vehicle Speed Limiters: Fuel consumption and GHG emissions increase proportional to the square of vehicle speed.  Therefore, lowering vehicle speeds can significantly reduce fuel consumption and GHG emissions.  A vehicle speed limiter (VSL), which limits the vehicle's maximum speed, is a simple technology that is utilized today by some fleets (though the typical maximum speed setting is often higher than 65 mph).  The GEM shows that using a vehicle speed limiter set at 62 mph on a sleeper cab tractor will provide a 4 percent reduction in fuel consumption and CO2 emissions over the prescribed test cycles over a baseline vehicle without a VSL or one set above 65 mph.
Transmission:  As discussed in the 2010 NAS report, automatic and automated manual transmissions may offer the ability to improve vehicle fuel consumption by optimizing gear selection compared to an average driver.  However, as also noted in the report and in the supporting TIAX report, the improvement is very dependent on the driver of the truck, such that reductions ranged from 0 to 8 percent.  Well-trained drivers would be expected to perform as well or even better than an automatic transmission since the driver can see the road ahead and anticipate a changing stoplight or other road condition that an automatic transmission can not anticipate.  However, poorly-trained drivers that shift too frequently or not frequently enough to maintain optimum engine operating conditions could be expected to realize improved in-use fuel consumption by switching from a manual transmission to an automatic or automated manual transmission.  Although we believe there may be real benefits in reduced fuel consumption and GHG emissions through the application of dual clutch, automatic or automated manual transmission technology, we are not reflecting this potential improvement in our standard setting or in our compliance model.  We have taken this approach because we cannot say with confidence what level of performance improvement to expect.  
Low Friction Transmission, Axle, and Wheel Bearing Lubricants:  The 2010 NAS report assessed low friction lubricants for the drivetrain as a 1 percent improvement in fuel consumption based on fleet testing.  The 2012-16 MY light-duty fuel economy and GHG final rule and the pickup truck portion of this program estimate that low friction lubricants can have an effectiveness value between 0 and 1 percent compared to traditional lubricants. However, it is not clear if in many heavy-duty applications these low friction lubricants could have competing requirements like component durability issues requiring specific lubricants with different properties than low friction.  
Hybrid:  Hybrid powertrain development in Class 7 and 8 tractors has been limited to a few manufacturer demonstration vehicles to date.  One of the key benefit opportunities for fuel consumption reduction with hybrids is less fuel consumption when a vehicle is idling, but the standard is already premised on use of extended idle reduction so use of hybrid technology would duplicate many of the same emission reductions attributable to extended idle reduction.  NAS estimated that hybrid systems would cost approximately $25,000 per truck in the 2015 through 2020 timeframe and provide a potential fuel consumption reduction of 10 percent, of which 6 percent is idle reduction which can be achieved through other idle reduction technologies.  The limited reduction potential outside of idle reduction for Class 8 sleeper cab tractors is due to the mostly highway operation and limited start-stop operation.  Due to the high cost and limited benefit during the model years at issue in this action, the agencies are not including hybrids in assessing standard stringency (or as an input to GEM).  However as discussed in Section IV, the agencies are providing incentives to encourage the introduction of advanced technologies including hybrid powertrains in appropriate applications.
Management:  The 2010 NAS report noted many operational opportunities to reduce fuel consumption, such as driver training and route optimization.  The agencies have included discussion of several of these strategies in RIA Chapter 2, but are not using these approaches or technologies in the standard setting process.  The agencies are looking to other resources, such as EPA's SmartWay Transport Partnership and regulations that could potentially be promulgated by the Federal Highway Administration and the Federal Motor Carrier Safety Administration, to continue to encourage the development and utilization of these approaches.  
Baseline Engine & Engine Technologies
The baseline engine for the Class 8 tractors is a Heavy Heavy-Duty Diesel engine with 15 liters of displacement which produces 455 horsepower.  The agencies are using a smaller baseline engine for the Class 7 tractors because of the lower combined weights of this class of vehicles require less power, thus the baseline is an 11L engine with 350 horsepower.  The agencies developed the baseline diesel engine as a 2010 model year engine with an aftertreatment system which meets EPA's 0.20 grams of NOX/bhp-hr standard with an SCR system along with EGR and meets the PM emissions standard with a diesel particulate filter with active regeneration.  The baseline engine is turbocharged with a variable geometry turbocharger.  The following discussion of technologies describes improvements over the 2010 model year baseline engine performance, unless otherwise noted.  Further discussion of the baseline engine and its performance can be found in Section III.A.2.6 below.  
With respect to stringency level, the agencies received comments from Cummins and Daimler stating that the proposed stringency levels were appropriate for the lead-times.  Navistar provided comments stating that the agencies used an artificially low baseline CO2 emissions level which was tilted toward the use of SCR aftertreatment system.  Conversely, the agencies received comments from several environmental groups (UCS, CATF, ACEEE) supporting a greater reduction in engine CO2 emissions and fuel consumption based on the NAS report. Navistar also stated that the agencies' baseline engine is inappropriate since there is not currently a 0.20 NOx compliant engine in production.  A discussion of how the baseline engine configuration can be found below in section (2)(b)(i).
Engine performance for CO2 emissions and fuel consumption can be improved by use of the following technologies:
Improved Combustion Process:  Fuel consumption reductions in the range of 1 to 3 percent over the baseline diesel engine are identified in the 2010 NAS report through improved combustion chamber design, higher fuel injection pressure, improved injection shaping and timing, and higher peak cylinder pressures.
Turbochargers:  Improved efficiency of a turbocharger compressor or turbine could reduce fuel consumption by approximately 1 to 2 percent over variable geometry turbochargers in the market today.  The 2010 NAS report identified technologies such as higher pressure ratio radial compressors, axial compressors, and dual stage turbochargers as design paths to improve turbocharger efficiency.
Higher efficiency air handling processes: To maximize the efficiency of such processes, induction systems may be improved by manufacturing more efficiently designed flow paths (including those associated with air cleaners, chambers, conduit, mass air flow sensors and intake manifolds) and by designing such systems for improved thermal control.  Improved turbocharging and air handling systems must include higher efficiency EGR systems and intercoolers that reduce frictional pressure loss while maximizing the ability to thermally control induction air and EGR.  The agencies received comments from Honeywell confirming that turbochargers provide a role in reducing the CO2 emissions from engines.  Other components that offer opportunities for improved flow efficiency include cylinder heads, ports and exhaust manifolds to further reduce pumping losses.  Variable air breathing systems such as variable valve actuation may provide additional gains at different loads and speeds.  The NESCCAF/ICCT study indicated up to 1.2% reduction could be achieved solely through improved EGR systems.
Low Temperature Exhaust Gas Recirculation: Most medium- and heavy-duty vehicle diesel engines sold in the U.S. market today use cooled EGR, in which part of the exhaust gas is routed through a cooler (rejecting energy to the engine coolant) before being returned to the engine intake manifold. EGR is a technology employed to reduce peak combustion temperatures and thus NOX. Low-temperature EGR uses a larger or secondary EGR cooler to achieve lower intake charge temperatures, which tend to further reduce NOX formation. If the NOX requirement is unchanged, low-temperature EGR can allow changes such as more advanced injection timing that will increase engine efficiency slightly more than 1 percent.  Because low-temperature EGR reduces the engine's exhaust temperature, it may not be compatible with exhaust energy recovery systems such as turbocompounding or a bottoming cycle.
Engine Friction Reduction:  Reduced friction in bearings, valve trains, and the piston-to-liner interface will improve efficiency. Any friction reduction must be carefully developed to avoid issues with durability or performance capability.  Estimates of fuel consumption improvements due to reduced friction range from 0 to 2 percent. 
Reduced Parasitic Loads:  Accessories that are traditionally gear or belt driven by a vehicle's engine can be optimized and/or converted to electric power. Examples include the engine water pump, oil pump, fuel injection pump, air compressor, power-steering pump, cooling fans, and the vehicle's air-conditioning system. Optimization and improved pressure regulation may significantly reduce the parasitic load of the water, air and fuel pumps.  Electrification may result in a reduction in power demand, because electrically powered accessories (such as the air compressor or power steering) operate only when needed if they are electrically powered, but they impose a parasitic demand all the time if they are engine driven. In other cases, such as cooling fans or an engine's water pump, electric power allows the accessory to run at speeds independent of engine speed, which can reduce power consumption. The TIAX study used 2 to 4 percent fuel consumption improvement for accessory electrification, with the understanding that electrification of accessories will have more effect in short-haul/urban applications and less benefit in line-haul applications. Bendix, in their comments to the agencies, confirmed that there are engine accessories available that can improve an engine's fuel efficiency.  
Selective catalytic reduction:  This technology is common on 2010 the medium- and heavy-duty diesel engines used in Class 7 and 8 tractors (and the agencies therefore are considering it as part of the baseline engine, as noted above).  Because SCR is a highly effective NOX aftertreatment approach, it enables engines to be optimized to maximize fuel efficiency, rather than minimize engine-out NOX.  2010 SCR systems are estimated to result in improved engine efficiency of approximately 3 to 5 percent compared to a 2007 in-cylinder EGR-based emissions system and by an even greater percentage compared to 2010 in-cylinder approaches.  As more effective low-temperature catalysts are developed, the NOX conversion efficiency of the SCR system will increase. Next-generation SCR systems could then enable additional efficiency improvements; alternatively, these advances could be used to maintain efficiency while down-sizing the aftertreatment. We estimate that continued optimization of the catalyst could offer 1 to 2 percent reduction in fuel use over 2010 model year systems in the 2014 model year.  The agencies estimate an additional 1 to 2 percent reduction may be feasible in the 2017 model year through additional refinement.

Mechanical Turbocompounding:  Mechanical turbocompounding adds a low pressure power turbine to the exhaust stream in order to extract additional energy, which is then delivered to the crankshaft.  Published information on the fuel consumption reduction from mechanical turbocompounding varies between 2.5 and 5 percent. Some of these differences may depend on the operating condition or duty cycle that was considered by the different researchers. The performance of a turbocompounding system tends to be highest at full load and much less or even zero at light load.  The agencies did not receive any comments regarding the efficacy of mechanical turbocompound systems.  
Electric Turbocompounding:  This approach is similar in concept to mechanical turbocompounding, except that the power turbine drives an electrical generator. The electricity produced can be used to power an electrical motor supplementing the engine output, to power electrified accessories, or to charge a hybrid system battery.  None of these systems have been demonstrated commercially, but modeled results by industry and DOE have shown improvements of 3 to 5 percent. The agencies did not receive any comments regarding the efficacy of electric turbocompound systems
Bottoming Cycle:  An engine with bottoming cycle uses exhaust or other heat energy from the engine to create power without the use of additional fuel.  The sources of energy include the exhaust, EGR, charge air, and coolant.  The estimates for fuel consumption reduction range up to 10 percent as documented in the 2010 NAS report.  However, none of the bottoming cycle or Rankine systems has been demonstrated commercially and are currently in only the research stage.  The agencies received comments from environmental stakeholders encouraging the agencies to include bottoming cycle technologies in setting the 2017 model year standards.   The agencies have evaluated the status of the development of bottoming cycle and continue to believe that its development is not yet at a stage to be included in 2017 model year technology package on which the standards are based.   
Projected Technology Package Effectiveness and Cost
Class 7 and 8 Combination Tractors 
EPA and NHTSA project that CO2 emissions and fuel consumption reductions can be feasibly and cost-effectively achieved in these rules' timeframes through the increased application of aerodynamic technologies, LRR tires, weight reduction, extended idle reduction technologies, vehicle speed limiters, and engine improvements.  As discussed above, the agencies believe that hybrid powertrains systems for tractors will not be sufficiently developed and the necessary manufacturing capacity put in place to base a standard on any significant volume of hybrid tractors.  As highlighted by the 2010 NAS report, the agencies do believe that hybrid powertrains have the potential in the longer term to provide significant improvements in fuel efficiency and to reduce greenhouse gas emissions.  The agencies also are not including drivetrain technologies in the standard setting process, as discussed in Section II.  
The agencies evaluated each technology and estimated the most appropriate application rate of technology into each tractor subcategory.  The next sections describe the effectiveness of the individual technologies, the costs of the technologies, the projected application rates of the technologies into the regulatory subcategories, and finally the derivation of the final standards.
Baseline Tractor Performance
The agencies developed the baseline tractor for each subcategory to represent an average 2010 model year tractor configured as noted earlier.  The approach taken by the agencies was to define the individual inputs to GEM, as shown in Table III-1.  For example, the agencies evaluated the industry's tractor offerings and concluded that the average tractor contains a generally aerodynamic shape (such as roof fairings) and avoids classic features such as exhaust stacks at the B-pillar, which increase drag.  As noted earlier, our assessment of the baseline new high roof tractor fleet aerodynamics consists of approximately 25 percent Bin I, 70 percent Bin II, and 5 percent Bin III tractors.  The baseline rolling resistance coefficient for today's fleet is 7.8 kg/metric ton for the steer tire and 8.2 kg/metric ton for the drive tire, based on sales weighting of the top three manufacturers based on market share.  The agencies assumed no application of vehicle speed limiters, weight reduction technologies, or idle reduction technologies in the baseline tractor.  The agencies use the inputs in GEM to derive the baseline CO2 emissions and fuel consumption of Class 7 and 8 tractors.  The results are included in Table III-1.

Table III-1: Baseline Tractor Definitions

                                    Class 7
                                    Class 8

                                    Day Cab
                                    Day Cab
                                  Sleeper Cab

                                 Low/Mid Roof
                                   High Roof
                                 Low/Mid Roof
                                   High Roof
                                   Low Roof
                                   Mid Roof
                                   High Roof
                               Aerodynamics (Cd)
Baseline
                                     0.77
                                     0.72
                                     0.77
                                     0.72
                                     0.77
                                     0.87
                                     0.68
                        Steer Tires (Crr kg/metric ton)
Baseline
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                        Drive Tires (Crr kg/metric ton)
Baseline
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                             Weight Reduction (lb)
Baseline
                                       0
                                       0
                                       0
                                       0
                                       0
                                       0
                                       0
             Extended Idle Reduction (gram CO2/ton-mile reduction)
Baseline
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                       0
                                       0
                                       0
                             Vehicle Speed Limiter
Baseline
                                      --
                                      --
                                      --
                                      --
                                      --
                                      --
                                      --
                                    Engine
Baseline
                              2010 MY 11 L Engine
                              2010 MY 11 L Engine
                              2010 MY 15 L Engine
                              2010 MY 15 L Engine
                              2010 MY 15 L Engine
                              2010 MY 15 L Engine
                              2010 MY 15 L Engine

Table III-2: Class 7 and 8 Tractor Baseline CO2 Emissions and Fuel Consumption

                                    Class 7
                                    Class 8

                                    Day Cab
                                    Day Cab
                                  Sleeper Cab

                                 Low/Mid Roof
                                   High Roof
                                 Low/Mid Roof
                                   High Roof
                                   Low Roof
                                   Mid Roof
                                   High Roof
CO2 (grams CO2/ton-mile)
                                      115
                                      135
                                      87
                                      101
                                      79
                                      87
                                      91
Fuel Consumption (gal/1,000 ton-mile)
                                     11.3
                                     13.3
                                      8.6
                                      9.9
                                      7.7
                                      8.6
                                      9.0
Tractor Technology Package Definitions
The agencies' assessment of the final technology effectiveness was developed through the use of the GEM in coordination with chassis testing of three SmartWay certified Class 8 sleeper cabs.  The agencies developed the standards through a three-step process.  First, the agencies developed technology performance characteristics for each technology, described below.  Each technology is associated with an input parameter which is in turn modeled in GEM.  Table III-3 describes the performance levels for the range of Class 7 and 8 tractor aerodynamic packages and vehicle technologies.  Second, the agencies combined the technology performance levels with a projected technology application rate to determine the GEM inputs used to set the stringency of the final standards.  Third, the agencies input the parameters into GEM and used the output to determine the final CO2 emissions and fuel consumption levels. 
Aerodynamics
The aerodynamic packages are categorized as Bin I, Bin II, Bin III, Bin IV, or Bin V based on the aerodynamic performance determined through testing conducted by the manufacturer.  A more complete description of these aerodynamic packages is included in Chapter 2 of the RIA.  In general, the CdA values for each package and tractor subcategory were developed through EPA's coastdown testing of tractor-trailer combinations, the 2010 NAS report, and SAE papers.  
Tire Rolling Resistance
The rolling resistance coefficient for the tires was developed from SmartWay's tire testing to develop the SmartWay certification, in addition to testing a small selection of tractor tires as part of this program.  The tire performance was evaluated in three levels - the baseline (average), 15 percent better than the average, and an additional 15 percent improvement.  The first 15 percent improvement represents the threshold used to develop SmartWay certified tires for long haul tractors.  The second 15 percent threshold represents an incremental step for improvements beyond today's SmartWay level and represents the best-in-class rolling resistance of the tires we tested.
Weight Reduction
The weight reductions were developed from tire manufacturer information, the Aluminum Association, the Department of Energy, and TIAX, as discussed above in Section II.B.3.e. 
Idle Reduction
The benefits for the extended idle reductions were developed from literature, SmartWay work, and the 2010 NAS report. The agencies received comments from multiple stakeholders regarding idle reduction technologies (IRT). Two commenters asked us to revise the default value associated with the IRT technology, and two commenters want to use IRT in GEM even without automatic engine shut down (AES).  The agencies proposed AES after 5 minutes with no exceptions to help ensure that the idle reductions are realized in-use.  Use of an AES ensures the main engine will be shut down, whereas idle reduction technologies alone do not provide that level of certainty. Without an automatic shutdown of the main engine, actual savings would depend on operator behavior and thus be essentially unverifiable. The agencies are finalizing the calculation as proposed, along with the automotive engine shutdown requirement.  Additional details regarding the comments and calculations are included in RIA Section 2.5.4.2.
Several commenters requested that the level of emissions reductions vary in GEM by different idle reduction technologies, and one commenter requested that the application of battery powered APUs be incentivized.  The agencies recognize that the level of emission reductions provided by different IRT varies, but are adopting a conservative level to recognize that some vehicles may be sold with only an AES but may then install an IRT in-use.  Or some vehicles may be sold with one IRT but then choose to install alternative ones in-use.  The agencies cannot verify the savings which depend on operator behavior.    
One commenter requested that we provide manufacturers with an option to allow the AES feature to be reprogammable after a specified number of miles or time in service.  The agencies recognize that AES may impact the resale value of tractors and, in response to comments, are adopting provisions for the optional expiration of an AES.  Thus, the initial buyer could select AES only for the number of miles based on the expected time before resale. Similar to vehicle speed limiters, we would discount the impact based on the full life of the truck (e.g. 1,258,788  miles). Additional detail can be found in RIA Section 2.5.4.2.
Vehicle Speed Limiter
The agencies are not including vehicle speed limiters in the technology package for Class 7 and 8 tractors.
Summary of Technology Performance
Table III-3 describes the performance levels for the range of Class 7 and 8 tractor aerodynamic packages and vehicle technologies.  
Table III-3: Class 7 and 8 Tractor Technology Values

                                    Class 7
                                    Class 8

                                    Day Cab
                                    Day Cab
                                  Sleeper Cab

                                 Low/Mid Roof
                                   High Roof
                                 Low/Mid Roof
                                   High Roof
                                   Low Roof
                                   Mid Roof
                                   High Roof
                               Aerodynamics (Cd)

                                       
                                       
                                       
                                       
                                       
                                       
                                       
Bin I
                                     0.77
                                     0.78
                                     0.77
                                     0.78
                                     0.77
                                     0.87
                                     0.74
Bin II
                                     0.71
                                     0.70
                                     0.71
                                     0.70
                                     0.71
                                     0.82
                                     0.66
Bin III
                                       
                                     0.62
                                       
                                     0.62
                                       
                                       
                                     0.58
Bin IV
                                       
                                     0.54
                                       
                                     0.54
                                       
                                       
                                     0.50
Bin V
                                       
                                     0.50
                                       
                                     0.50
                                       
                                       
                                     0.46
                        Steer Tires (Crr kg/metric ton)
Baseline
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                                      7.8
                                      7.8
Bin I
                                      6.6
                                      6.6
                                      6.6
                                      6.6
                                      6.6
                                      6.6
                                      6.6
Bin II
                                      5.7
                                      5.7
                                      5.7
                                      5.7
                                      5.7
                                      5.7
                                      5.7
                        Drive Tires (Crr kg/metric ton)
Baseline
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                                      8.2
                                      8.2
Bin I
                                      7.0
                                      7.0
                                      7.0
                                      7.0
                                      7.0
                                      7.0
                                      7.0
Bin II
                                      6.0
                                      6.0
                                      6.0
                                      6.0
                                      6.0
                                      6.0
                                      6.0
                             Weight Reduction (lb)
Control
                                      400
                                      400
                                      400
                                      400
                                      400
                                      400
                                      400
           Extended Idle Reduction (gram CO2/ton-mile reduction)[a]
Control
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                       5
                                       5
                                       5
                           Vehicle Speed Limiter[b]
Control
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                      N/A
Notes:
 [a] While the standards are set based on this value, users would enter another value if AES is not applied or applied for less than the full useful life of the engine.
[b] Vehicle speed limiters are an applicable technology for all Class 7 and 8 tractors, however the standards are not premised on the use of this technology.
Tractor Technology Application Rates
As explained above, vehicle manufacturers often introduce major product changes together, as a package.  In this manner the manufacturers can optimize their available resources, including engineering, development, manufacturing and marketing activities to create a product with multiple new features.  In addition, manufacturers recognize that a truck design will need to remain competitive over the intended life of the design and meet future regulatory requirements.  In some limited cases, manufacturers may implement an individual technology outside of a vehicle's redesign cycle.  
With respect to the levels of technology application used to develop the final standards, NHTSA and EPA established technology application constraints. The first type of constraint was established based on the application of fuel consumption and CO2 emission reduction technologies into the different types of tractors.  For example, idle reduction technologies are limited to Class 8 sleeper cabs using the assumption that day cabs are not used for overnight hoteling.  A second type of constraint was applied to most other technologies and limited their application based on factors reflecting the real world operating conditions that some combination tractors encounter.  This second type of constraint was applied to the aerodynamic, tire, and vehicle speed limiter technologies.  Table III-4 specifies the application rates that EPA and NHTSA used to develop the final standards.  The agencies received a significant number of comments related to this second basis.  In particular, commenters questioned the reasons for not requiring the maximum feasible reduction technology in every case.  The agencies have not done so because we have concluded that within each of these individual vehicle categories there are particular applications where the use of the identified technologies would be either ineffective or not technically feasible.  The addition of ineffective technologies provides no environmental benefit, increases costs and is not a basis upon which to set a maximum feasible improvement.  For example, the agencies have not required the use of full aerodynamic vehicle treatments on 100 percent of tractors because we know that in many applications (for example gravel truck engaged in local aggregate delivery) the added weight of the aerodynamic technologies will increase fuel consumption and hence CO2 emissions to a greater degree than the reduction that would be accomplished from the more aerodynamic nature of the truck.  To simply set the standard based on the largest reduction possible estimated narrowly over a single test procedure while ignoring the in-use effects of the technology would in this case result in a perverse outcome that is not in keeping with the agencies' goals nor the requirements of the CAA and EPCA.
Aerodynamics Application Rate
The impact of aerodynamics on a truck's efficiency increases with vehicle speed.  Therefore, the usage pattern of the truck will determine the benefit of various aerodynamic technologies.  Sleeper cabs are often used in line haul applications and drive the majority of their miles on the highway travelling at speeds greater than 55 mph.  The industry has focused aerodynamic technology development, including SmartWay tractors, on these types of trucks.  Therefore the agencies are adopting the most aggressive aerodynamic technology application to this regulatory subcategory.  All of the major manufacturers today offer at least one SmartWay truck model.  The 2010 NAS Report on heavy-duty trucks found that manufacturers indicated that aerodynamic improvements which yield 3 to 4 percent fuel consumption reduction or 6 to 8 percent reduction in Cd values, beyond technologies used in today's SmartWay trucks are achievable.  The aerodynamic application rate for Class 8 sleeper cab high roof cabs (i.e., the degree of technology application on which the stringency of the final standard is premised) consists of 20 percent of Bin IV, 70 percent Bin III, and 10 percent Bin II reflecting our assessment of the fraction of tractors in this segment that can successfully apply these aerodynamic packages.  
The 90 percent of tractors that we project can either be Bin II or Bin III equipped reflects the bulk of Class 8 high roof sleeper cab applications.  We are not projecting a higher fraction of Bin III aerodynamic systems because of the limited lead time for the program and the need for these more advanced technologies to be developed and demonstrated before being applied across a wider fraction of the fleet.  Our averaging, banking and trading provisions provide manufacturers with the flexibility to implement these technologies over time even though the standard changes in a single step.  
The final aerodynamic application for the other tractor regulatory categories is less aggressive than for the Class 8 sleeper cab high roof.  The agencies recognize that there are truck applications which require on/off-road capability and other truck functions which restrict the type of aerodynamic equipment applicable.  We also recognize that these types of trucks spend less time at highway speeds where aerodynamic technologies have the greatest benefit.  The 2002 VIUS data ranks trucks by major use.  The heavy trucks usage indicates that up to 35 percent of the trucks may be used in on/off-road applications or heavier applications.  The uses include construction (16 percent), agriculture (12 percent), waste management (5 percent), and mining (2 percent).  Therefore, the agencies analyzed the technologies to evaluate the potential restrictions that would prevent 100 percent application of SmartWay technologies for all of the tractor regulatory subcategories.
As discussed in Section II.B.2.c, in response to comments received from manufacturers, the agencies are finalizing only two aerodynamic bins for low and mid roof tractors.  The agencies are reducing the number of bins for these tractors to reflect the actual range of aerodynamic technologies effective in low and mid roof tractor applications.  The aerodynamic improvements to the bumper, hood, windshield, mirrors, and doors are developed for the high roof tractor application and then carried over into the low and mid roof applications.  As mentioned in Section II.B.2.c, the types of designs that would move high roof tractors from a Bin III to Bins IV and V include features such as gap reducers and integral roof fairings which would not be appropriate on low and mid roof tractors.  Thus, the agencies are differentiating the aerodynamic performance for low- and mid-roof tractors into two bins  -  Bin I and Bin II.  The application rates in the low and mid roof categories are the same as proposed, but aggregated into just two bins.  Bin I for these tractors corresponds to the proposed "Classic" and "Conventional" bins and Bin II corresponds to the proposed "SmartWay," "Advanced SmartWay," and "Advanced SmartWay II" bins.
Low Rolling Resistance Tire Application Rate

At least one LRR tire model is available today that meets the rolling resistance requirements of the Bin I and Bin II tire packages so the 2014 MY should afford manufacturers sufficient lead time to install these packages.  However, tire rolling resistance is only one of several performance criteria that affect tire selection.  The characteristics of a tire also influence durability, traction control, vehicle handling, comfort, and retreadability.  A single performance parameter can easily be enhanced, but an optimal balance of all the criteria will require improvements in materials and tread design at a higher cost, as estimated by the agencies.  Tire design requires balancing performance, since changes in design may change different performance characteristics in opposing directions.  Similar to the discussion regarding lesser aerodynamic technology application in tractor segments other than sleeper cab high roof, the agencies believe that the final standards should not be premised on 100 percent application of LRR tires in all tractor segments given the interference with vehicle utility that would result.  The agencies are basing their analyses on application rates that vary by subcategory  recognizing that some subcategories require a different balancing of performance versus rolling resistance.  
Weight Reduction Technology Application Rate
The agencies proposed setting the 2014 model year tractor standards using 100 percent application of a 400 pound weight reduction package.  Volvo and ATA stated in their comments that not all fleets can use single wide tires and if this is the case the 400 pound weight reduction cannot be met.  The agencies also received comments from MEMA, Navistar, American Chemistry Council, the Auto Policy Center, Iron and Steel Institute, Arvin Meritor, Aluminum Association, and environmental groups and NGOs identifying other potential weight reduction opportunities for tractors.  As described in Section II.B.3.e above, the agencies are adopting an expanded list of weight reduction options for the final rulemaking.  
The agencies, upon further analysis, continue to believe that a 400 pound weight reduction package is appropriate for tractors in the timeframe.  For tractors where single wide tires are not appropriate, the manufacturers have additional options to available achieve weight reduction, such as body panels and chassis components. Therefore, the agencies are adopting the proposed 100 percent application of a 400 pound weight reduction package to all tractors.     
Idle Reduction Technology Application Rate
Idle reduction technologies provide significant reductions in fuel consumption and CO2 emissions for Class 8 sleeper cabs and are available on the market today, and therefore will be available in the 2014 model year.  There are several different technologies available to reduce idling.  These include APUs, diesel fired heaters, and battery powered units.  Our discussions with manufacturers indicate that idle technologies are sometimes installed in the factory, but it is also a common practice to have the units installed after the sale of the truck.  We would like to continue to incentivize this practice and to do so in a manner that the emission reductions associated with idle reduction technology occur in use.  Therefore, as proposed, we are allowing only idle emission reduction technologies with include an automatic engine shutoff (AES).  We are also adopting some override provisions in response to comments we received (as explained below). As proposed, we adopting a 100 percent application rate for this technology for Class 8 sleeper cabs, even though the current fleet is estimated to have a 30 percent application rate.  The agencies are unaware of reasons why AES with extended idle reduction technologies could not be applied to all tractors with a sleeper cab in the available lead time.  
The agencies received comment that we should extend the idle reduction benefits beyond Class 8 sleepers, including Class 7 tractors and vocational vehicles. The agencies reviewed literature to quantify the amount of idling which is conducted outside of hoteling operations.  One study, conducted by Argonne National Laboratory, identified several different types of trucks which might idle for extended amounts of time during the work day.  Idling may occur during the delivery process, queuing at loading docks or border crossings, during power take off operations, or to provide comfort during the work day.  However, the study provided only "rough estimates" of the idle time and energy use for these vehicles.  The agencies are not able to appropriately develop a baseline of workday idling for the other types of vehicles and identify the percent of this idling which could be reduced through the use of AES.  
One commenter stated the application rate of AES should be less than 100 percent, but did not recommend an alternative application rate or provide justification for a change. The agencies re-evaluated the proposed 100 percent application rate and determined that a 100 percent application rate for this technology for Class 8 sleeper cabs remains appropriate. The agencies have also considered the many comments which raised concerns about the proposed mandatory 5 minute automatic engine shut down without override capability (in terms of safety, extreme temperatures and low battery conditions).  To avoid unintended adverse impacts, we are adopting limited override provisions. Three of the five exceptions are similar to those currently in effect under a California Air Resources Board (CARB) regulation. CARB provides AES exceptions (or overrides) within its existing heavy-duty vehicle anti-idling law, which were developed to address these same types of  concerns. The exceptions we are adopting include override capability during exhaust emissions control device regeneration, during engine servicing and maintenance, when battery state of charge is too low, in extreme ambient temperatures, when engine coolant temperature is too low, and during PTO operation.  The RIA provides more detail about these final override provisions in Section 2.5.4.3.
Vehicle Speed Limiter Application Rate
Vehicle speed limiters may be used as a technology to meet the standard, but in setting the standard we assumed a zero percent application rate of vehicle speed limiters.    Although we believe vehicle speed limiters are a simple, easy to implement, and inexpensive technology, we want to leave the use of vehicles speed limiters to the truck purchaser.  Since truck fleets purchase trucks today with owner set vehicle speed limiters, we considered not including VSLs in our compliance model. However, we have concluded that we should allow the use of VSLs that cannot be overridden by the operator as a means of compliance for vehicle manufacturers that wish to offer it and truck purchasers that wish to purchase the technology.  In doing so, we are providing another means of meeting that standard that can lower compliance cost and provide a more optimal vehicle solution for some truck fleets.  For example, a local beverage distributor may operate trucks in a distribution network of primarily local roads.  Under those conditions, aerodynamic fairings used to reduce aerodynamic drag provide little benefit due to the low vehicle speed while adding additional mass to the vehicle.  A vehicle manufacturer could choose to install a VSL set a 55 mph for this customer.  The resulting truck modeled in GEM could meet our final emission standard without the use of any specialized aerodynamic fairings.  The resulting truck would be optimized for its intended application and would be fully compliant with our program all at a lower cost to the ultimate truck purchaser.  .  
We have chosen not to base the standards on performance of VSLs because of concerns about how to set a realistic application rate that avoids unintended adverse impacts.  Although we expect there will be some use of VSL, currently it is used when the fleet involved decides it is feasible and practicable and increases the overall efficiency of the freight system for that fleet operator.  However, at this point the agencies are not in a position to determine in how many additional situations use of a VSL would result in similar benefits to overall efficiency.  Setting a mandatory expected use of such VSL carries the risk of requiring VSL in situations that are not appropriate from an efficiency perspective.  To avoid such possibility, the agencies are not premising the final standards on use of VSL, and instead will rely on the industry to select VSL when circumstances are appropriate for its use.  The agencies have not included either the cost or benefit due to VSLs in analysis of the program's costs and benefits.  Implementation of this program may provide greater information for using this technology in standard setting in the future.  Many stakeholders including the American Trucking Association have advocated for more widespread use of vehicle speed limits to address fuel efficiency and greenhouse gas emissions.  
Table III-4 provides the final application rates of each technology broken down by weight class, cab configuration, and roof height.
Table III-4:  Final Technology Application Rates for Class 7 and 8 Tractors

                                    Class 7
                                    Class 8

                                    Day Cab
                                    Day Cab
                                  Sleeper Cab

                                 Low/Mid Roof
                                   High Roof
                                 Low/Mid Roof
                                   High Roof
                                   Low Roof
                                   Mid Roof
                                   High Roof
                               Aerodynamics (Cd)
Bin I
                                      40%
                                      0%
                                      40%
                                      0%
                                      30%
                                      30%
                                      0%
Bin II
                                      60%
                                      30%
                                      60%
                                      30%
                                      70%
                                      70%
                                      10%
Bin III
                                       
                                      60%
                                       
                                      60%
                                       
                                       
                                      70%
Bin IV
                                       
                                      10%
                                       
                                      10%
                                       
                                       
                                      20%
Bin V
                                       
                                      0%
                                       
                                      0%
                                       
                                       
                                      0%
                        Steer Tires (Crr kg/metric ton)
Baseline
                                      40%
                                      30%
                                      40%
                                      30%
                                      30%
                                      30%
                                      10%
Bin I
                                      50%
                                      60%
                                      50%
                                      60%
                                      60%
                                      60%
                                      70%
Bin II
                                      10%
                                      10%
                                      10%
                                      10%
                                      10%
                                      10%
                                      20%
                        Drive Tires (Crr kg/metric ton)
Baseline
                                      40%
                                      30%
                                      40%
                                      30%
                                      30%
                                      30%
                                      10%
Bin I
                                      50%
                                      60%
                                      50%
                                      60%
                                      60%
                                      60%
                                      70%
Bin II
                                      10%
                                      10%
                                      10%
                                      10%
                                      10%
                                      10%
                                      20%
                             Weight Reduction (lb)
400 lb. Weight Reduction
                                     100%
                                     100%
                                     100%
                                     100%
                                     100%
                                     100%
                                     100%
             Extended Idle Reduction (gram CO2/ton-mile reduction)
AES
                                      N/A
                                      N/A
                                      N/A
                                      N/A
                                     100%
                                     100%
                                     100%
                             Vehicle Speed Limiter
VSL
                                      0%
                                      0%
                                      0%
                                      0%
                                      0%
                                      0%
                                      0%
 Derivation of the Final Tractor Standards
The agencies used the technology inputs and final technology application rates in GEM to develop the final fuel consumption and CO2 emissions standards for each subcategory of Class 7 and 8 combination tractors.  The agencies derived a scenario truck for each subcategory by weighting the individual GEM input parameters included in Table III-3 by the application rates in Table III-4.  For example, the Cd value for a Class 8 Sleeper Cab High Roof scenario case was derived as 10 percent times 0.68 plus 70 percent times 0.60 plus 20 percent times 0.55, which is equal to a Cd of 0.60.  Similar calculations were done for tire rolling resistance, weight reduction, idle reduction, and vehicle speed limiters.  To account for the two final engine standards, the agencies assumed a compliant engine in GEM.  In other words, EPA is finalizing the use of a 2014 model year fuel consumption map in GEM to derive the 2014 model year tractor standard and a 2017 model year fuel consumption map to derive the 2017 model year tractor standard.  The agencies then ran GEM with a single set of vehicle inputs, as shown in Table III-5, to derive the final standards for each subcategory.  Additional detail is provided in the RIA Chapter 2.  
Table III-5: GEM Inputs for the Class 7 and 8 Tractor Standard Setting

                                    Class 7
                                    Class 8

                                    Day Cab
                                    Day Cab
                                  Sleeper Cab

                                 Low/Mid Roof
                                   High Roof
                                 Low/Mid Roof
                                   High Roof
                                   Low Roof
                                   Mid Roof
                                   High Roof
Aerodynamics (Cd)
                                   0.73/0.84
                                     0.63
                                   0.73/0.84
                                     0.63
                                     0.73
                                     0.83
                                     0.57
Steer Tire CRR (kg/metric ton)
                                     6.99
                                     6.87
                                     6.99
                                     6.87
                                     6.87
                                     6.87
                                     6.54
Drive Tire CRR (kg/metric ton)
                                     7.38
                                     7.26
                                     7.38
                                     7.26
                                     7.26
                                     7.26
                                     6.92
Weight Reduction (lb)
                                      400
                                      400
                                      400
                                      400
                                      400
                                      400
                                      400
Extended Idle Reduction (g/ton-mile)
                                      --
                                      --
                                      --
                                      --
                                       5
                                       5
                                       5
Vehicle Speed Limiter
                                      --
                                      --
                                      --
                                      --
                                      --
                                      --
                                      --
                            2014 MY Final Standard
Engine
                                  2014 MY 11L
                                  2014 MY 11L
                                  2014 MY 15L
                                  2014 MY 15L
                                  2014 MY 15L
                                 2014 MY 15L 
                                 2014 MY 15L 
                            2017 MY Final Standard
Engine 
                                  2017 MY 11L
                                 2017 MY  11L
                                  2017 MY 15L
                                  2017 MY 15L
                                  2017 MY 15L
                                  2017 MY 15L
                                  2017 MY 15L
The level of the 2014 and 2017 model year final standards and percent reduction from the baseline for each subcategory are included in Table III-6.
Table III-6: Final 2014 and 2017 Model Year Tractor Reductions
2014 Model Year CO2 Grams per Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
107
81
68
Mid Roof
119
88
75
High Roof
122
90
73
2014-2016 Model Year Gallons of Fuel per 1,000 Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
10.5
8.0
6.6
Mid Roof
11.6
8.7
7.4
High Roof
12.0
8.9
7.2
2017 Model Year CO2 Grams per Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
104
79
66
Mid Roof
115
86
73
High Roof
118
88
71
2017 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile

Day Cab
Sleeper Cab

Class 7
Class 8
Class 8
Low Roof
10.3
7.8
6.5
Mid Roof
11.3
8.4
7.2
High Roof
11.6
8.6
7.0

A summary of the final technology package costs is included in Table III-7 with additional details available in the RIA Chapter 2.

Table III-7:  Class 7 and 8 Tractor Technology Costs inclusive of Indirect Cost Markups in the 2014 Model Year[a] (2009$)

Class 7
Class 8

Day Cab
Day Cab
Sleeper Cab

Low/Mid Roof
High Roof
Low/ Mid Roof
High Roof
Low Roof
Mid Roof
High Roof
Aerodynamics
$675
$924
$675
$924
$962
$983
$1,627

Steer Tires
$68
$68
$68
$68
$68
$68
$68

Drive Tires
$63
$63
$126
$126
$126
$126
$126

Weight Reduction
$1,536
$1,536
$1,980
$1,980
$3,275
$3,275
$1,980

Auxiliary Power Unit
--
--
--
--
$3,819
$3,819
$3,819

Air Conditioning
$22
$22
$22
$22
$22
$22
$22

Total
$2,364
$2,612
$2,871
$3,119
$8,271
$8,291
$7,641
Notes:
[a] Costs shown are for the 2014 model year so do not reflect learning impacts which would result in lower costs for later model years.  For a description of the learning impacts considered in this analysis and how it impacts technology costs for other years, refer to Chapter 2 of the RIA (see RIA 2.2.2).
[b] Note that values in this table include penetration rates.  Therefore, the technology costs shown reflect the average cost expected for each of the indicated classes.  To see the actual estimated technology costs exclusive of penetration rates, refer to Chapter 2 of the RIA (see RIA 2.9).
Reasonableness of the Final Standards
The final standards are based on aggressive application rates for control technologies which the agencies regard as the maximum feasible for purposes of EISA section 32902 (k) and appropriate under CAA section 202 (a) for the reasons given in Section (iii) above; see also RIA Chapter 2.5.8.2.  These technologies, at the estimated application rates, are available within the lead time provided, as discussed in RIA Chapter 2.5.  Use of these technologies would add only a small amount to the cost of the vehicle, and the associated reductions are highly cost effective, an estimated $20 per ton of CO2eq per vehicle in 2030 without consideration of the substantial fuel savings.  This is even more cost effective than the estimated cost effectiveness for CO2eq removal and fuel economy improvements under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Moreover, the cost of controls is rapidly recovered due to the associated fuel savings, as shown in the payback analysis included in Table VIII-8 located in Section VIII below. Thus, overall cost per ton of the rule, considering fuel savings, is negative  -  fuel savings associated with the rule more than offset projected costs by a wide margin.  See Table VIII-5 in Section VIII below.  Given that the standards are technically feasible within the lead time afforded by the 2014 model year, are inexpensive and highly cost effective even without accounting for the fuel savings, and have no apparent adverse potential impacts (e.g., there are no projected negative impacts on safety or vehicle utility), the final standards represent a reasonable choice under section 202(a) of the CAA and under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).  
Alternative Tractor Standards Considered
The agencies are not adopting tractor standards less stringent than the proposed standards because the agencies believe these standards are appropriate, highly cost effective, and technologically feasible within the rulemaking time frame.  
The agencies considered adopting tractor standards which are more stringent than those proposed reflecting increased application rates of the technologies discussed.  We also considered setting more stringent standards based on the inclusion of hybrid powertrains in tractors.  We stopped short of finalizing more stringent standards based on higher application rates of improved aerodynamic controls and tire rolling resistance because we concluded that the technologies would not be compatible with the use profile of a subset of tractors which operate in off-road conditions.  We have not adopted more stringent standards for tractors based on the use of hybrid vehicle technologies, believing that additional development and therefore lead-time is needed to develop hybrid systems and battery technology for tractors that operate primarily in highway cruise operations.  We know, for example, that hybrid systems are being researched to capture and return energy for tractors that operate in gently rolling hills.  However, it is not clear to us today that these systems will be generally applicable to tractors in the timeframe of this regulation.  In addition, even if hybrid technologies were generally available for these tractors during the MY 2014-2017 period, their costs would be extremely high and benefits would be limited given that idle reduction controls already capture many of the same emissions. 
Tractor Engines
Baseline Engine Performance
As noted above, EPA and NHTSA developed the baseline medium and heavy heavy-duty diesel engine to represent a 2010 model year engine compliant with the 0.20 g/bhp-hr NOX standard for on-highway heavy-duty engines.  
The agencies developed baseline SET values for medium and heavy heavy-duty diesel engines based on 2009 model year confidential manufacturer data and from testing conducted by EPA.  The agencies adjusted the pre-2010 data to represent 2010 model year engine maps by using predefined technologies including SCR and other systems that are being used in current 2010 model year production.  If an engine utilized did not meet the 0.20 g/bhp-hr NOX level, then the individual engine's CO2 result was adjusted to accommodate aftertreatment strategies that would result in a 0.20 g/bhp-hr NOX emission level as described in RIA Chapter 2.4.2.1.  The engine CO2 results were then sales weighted within each regulatory subcategory (i.e., medium heavy-duty diesel or heavy heavy-duty diesel) to develop an industry average 2010 model year reference engine.  Although, most of the engines fell within a few percent of this baseline at least one engine was more than six percent above this average baseline.
Table III-8: 2010 Model Year Baseline Diesel Engine Performance

CO2 Emissions (g/bhp-hr)
Fuel Consumption (gallon/100 bhp-hr)
Medium Heavy-Duty Diesel - SET
518
5.09
Heavy Heavy-Duty Diesel - SET
490
4.81
Engine Technology Package Effectiveness 
The MHD and HHD diesel engine technology package for the 2014 model year includes engine friction reduction, improved aftertreatment effectiveness, improved combustion processes, and low temperature EGR system optimization.  The agencies considered improvements in parasitic and friction losses through piston designs to reduce friction, improved lubrication, and improved water pump and oil pump designs to reduce parasitic losses.  The aftertreatment improvements are available through lower backpressure of the systems and optimization of the engine-out NOX levels.  Improvements to the EGR system and air flow through the intake and exhaust systems, along with turbochargers can also produce engine efficiency improvements. We note that individual technology improvements are not additive due to the interaction of technologies.  The agencies assessed the impact of each technology over each of the 13 SET modes to project an overall weighted SET cycle improvement in the 2014 model year of 3 percent, as detailed in RIA Chapter 2.4.2.9 through 2.4.2.14.  All of these technologies represent engine enhancements already developed beyond the research phase and are available as "off the shelf" technologies for manufacturers to add to their engines during the engine's next design cycle.  We have estimated that manufacturers will be able to implement these technologies on or before the 2014 engine model year. The agencies adopted a standard that therefore reflects a 100 percent application rate of this technology package.  The agencies gave consideration to finalizing a more stringent standard based on the application of turbocompounding, a mechanical means of waste heat recovery, but concluded that manufacturers would have insufficient lead-time to complete the necessary product development and validation work necessary to include this technology across the industry by model year 2014.   
As explained earlier, EPA's heavy-duty highway engine standards for criteria pollutants apply in three year increments.  The heavy-duty engine manufacturer product plans have fallen into three year cycles to reflect these requirements. The agencies are finalizing fuel consumption and CO2 emission standards recognizing the opportunity for technology improvements over this timeframe while reflecting the typical heavy-duty engine manufacturer product plan redesign and refresh cycles.  Thus, the agencies are finalizing to set a more stringent standard for heavy-duty engines beginning in the 2017 model year.
The MHDD and HHDD engine technology package for the 2017 model year includes the continued development of the 2014 model year technology package including refinement of the aftertreatment system plus turbocompounding.  The agencies calculated overall reductions in the same manner as for the 2014 model year package.  The weighted SET cycle improvements lead to a 6 percent reduction on the SET cycle, as detailed in RIA Chapter 2.4.2.12.  The agencies' final standards are premised on a 100 percent application rate of this technology package.  
We gave consideration to finalizing an even more stringent standard based on the use of waste heat recovery via a Rankine cycle (also called bottoming cycle) but concluded that there is insufficient lead-time between now and 2017 for this promising technology to be developed and applied generally to all heavy-duty engines.  TIAX noted in their report to the NAS committee that the engine improvements beyond 2015 model year included in their report are highly uncertain, though they include Rankine cycle type waste heat recovery as applicable sometime between 2016 and 2020.  The Department of Energy, along with industry are both working to develop waste heat recovery systems for heavy-duty engines.  At the Diesel Engine-Efficiency and Emissions Research (DEER) conference in 2010, Caterpillar presented details regarding their waste heat recovery systems development effort.  In their presentation, Caterpillar clearly noted that the work is a research project and therefore does not imply commercial viability.  At the same conference, Concepts NREC presented a status of exhaust energy recovery in heavy-duty engines.  The scope of Concepts NREC included the design and development of prototype parts.  Cummins, also in coordination with DOE, is also active in developing exhaust energy recovery systems.  Cummins made a presentation to the DEER conference in 2009 providing an update on their progress which highlighted opportunities to achieve a 10 percent engine efficiency improvement during their research, but indicated the need to focus their future development on areas with the highest recovery opportunities (such as EGR, exhaust, and charge air).  Cummins also indicated that future development would focus on reducing the high additional costs and system complexity.  Based upon the assessment of this information, the agencies did not include these technologies in determining the stringency of the final standards.  However, we do believe the bottoming cycle approach represents a significant opportunity to reduce fuel consumption and GHG emissions in the future.  EPA and NHTSA are therefore both finalizing provisions described in Section IV to create incentives for manufacturers to continue to invest to develop this technology.
Derivation of Engine Standards 
EPA developed the final 2014 model year CO2 emissions standards (based on the SET cycle) for diesel engines by applying the three percent reduction from the technology package (just explained above) to the 2010 model year baseline values determined using the SET cycle.  EPA developed the 2017 model year CO2 emissions standards for diesel engines while NHTSA similarly developed the 2017 model year diesel engine fuel consumption standards by applying the 6 percent reduction from the 2017 model year technology package (reflecting performance of turbocompounding plus the 2014 MY technology package) to the 2010 model year baseline values.  The final standards are included in Table III-9.
Table III-9: Final Diesel Engine Standards Over the SET Cycle
Model Year

MHD Diesel Engine  
HHD Diesel Engine
2014  -  2016
CO2 Standard (g/bhp-hr)
502
475

Voluntary Fuel Consumption Standard (gallon/100 bhp-hr)
4.93
4.67
2017 and later
CO2 Standard (g/bhp-hr)
487
460

Fuel Consumption (gallon/100 bhp-hr)
4.78
4.52

Engine Technology Package Costs
EPA has historically used two different approaches to estimate the indirect costs (sometimes called fixed costs) of regulations including costs for product development, machine tooling, new capital investments and other general forms of overhead that do not change with incremental changes in manufacturing volumes.  Where the Agency could reasonably make a specific estimate of individual components of these indirect costs, EPA has done so.  Where EPA could not readily make such an estimate, EPA has instead relied on the use of markup factors referred to as indirect cost multipliers (ICMs) to estimate these indirect costs as a ratio of direct manufacturing costs.  In general, EPA has used whichever approach it believed could provide the most accurate assessment of cost on a case by case basis.  The agencies' general approach used elsewhere in this action (for HD pickup trucks, gasoline engines, combination tractors, and vocational vehicles) estimates indirect costs based on the use of ICMs.  See also 75 FR 25376.  We have used this approach generally because these standards are based on installing new parts and systems purchased from a supplier.  In such a case, the supplier is conducting the bulk of the research and development on the new parts and systems and including those costs in the purchase price paid by the original equipment manufacturer.  In this situation, we believe that the ICM approach provides an accurate and clear estimate of the additional indirect costs borne by the manufacturer.  
For the heavy-duty diesel engine segment, however, the agencies do not consider this model to be the most appropriate because the primary cost is not expected to be the purchase of parts or systems from suppliers or even the production of the parts and systems, but rather the development of the new technology by the original equipment manufacturer itself.  Most of the technologies the agencies are projecting the heavy-duty engine manufacturers will use for compliance reflect modifications to existing engine systems rather than wholesale addition of technology (e.g., improved turbochargers rather than adding a turbocharger where it did not exist before as was done in our light-duty joint rulemaking in the case of turbo-downsizing).  When the bulk of the costs come from refining an existing technology rather than a wholesale addition of technology, a specific estimate of indirect costs may be more appropriate.  For example, combustion optimization may significantly reduce emissions and cost a manufacturer millions of dollars to develop but will lead to an engine that is no more expensive to produce.  Using a bill of materials approach would suggest that the cost of the emissions control was zero reflecting no new hardware and ignoring the millions of dollars spent to develop the improved combustion system.  Details of the cost analysis are included in the RIA Chapter 2.  The agencies did not receive any comments regarding the cost approach used in the proposal.  
The agencies developed the engineering costs for the research and development of diesel engines with lower fuel consumption and CO2 emissions.  The aggregate costs for engineering hours, technician support, dynamometer cell time, and fabrication of prototype parts are estimated at $6.8 million (2009 dollars) per manufacturer per year over the five years covering 2012 through 2016.  In aggregate, this averages out to $284 per engine during 2012 through 2016 using an annual sales value of 600,000 light-, medium- and heavy-HD engines.  The agencies received comments from Horriba regarding the assumption the agencies used in the proposal that said manufacturers would need to purchase new equipment for measuring N20 and the associated costs.  Horriba provided information regarding the cost of stand-alone FTIR instrumentation (estimated at $50,000 per unit) and cost of upgrading existing emission measurement systems with NDIR analyzers (estimated at $25,000 per unit).  The agencies further analyzed our assumptions along with Horriba's comments.  Thus, we have revised the equipment costs estimates and assumed that 75 percent of manufacturers would update existing equipment while the other 25 percent would require new equipment.  The agencies are estimating costs of $63,087 (2009 dollars) per engine manufacturer per engine subcategory (light-, medium- and heavy-HD) to cover the cost of purchasing photo-acoustic measurement equipment for two engine test cells. This would be a one-time cost incurred in the year prior to implementation of the standard (i.e., the cost would be incurred in 2013).  In aggregate, this averages out to less than $1 per engine in 2013 using an annual sales value of 600,000 light-, medium- and heavy-HD engines.
Where we projected that additional new hardware was needed to the meet the final standards, we developed the incremental costs for those technologies and marked them up using the ICM approach. Table III-10 below summarizes those estimates of cost on a per item basis.  All costs shown in Table III-18 include a low complexity ICM of 1.15 and flat-portion of the curve learning is considered applicable to each technology.
Table III-10: Heavy-duty Diesel Engine Component Costs for Combination Tractors (2009$)
                                  Technology
                                     2014
                                     2017
Cylinder Head
                                                                             $6
                                                                             $6
Turbo efficiency
                                                                            $18
                                                                            $17
EGR cooler
                                                                             $4
                                                                             $3
Water pump
                                                                            $91
                                                                            $84
Oil pump
                                                                             $5
                                                                             $4
Fuel pump
                                                                             $5
                                                                             $4
Fuel rail
                                                                            $10
                                                                             $9
Fuel injector
                                                                            $11
                                                                            $10
Piston
                                                                             $3
                                                                             $3
Engine Friction Reduction of Valvetrain
                                                                            $82
                                                                            $76
Turbo-compounding (engines placed in combination tractors only)
                                                                             $0
                                                                           $875
MHHD and HHDD Total (combination tractors)
                                                                           $234
                                                                         $1,091
     Note:
     [a] Costs for aftertreatment improvements for MH and HH diesel engines are covered via the engineering costs (see text).  For LH diesel engines, we have included the cost of aftertreatment improvements as a technology cost.
The overall diesel engine technology package cost for a engine being placed in a combination tractor is $234 in the 2014 model year and $1,091in the 2017 model year. 
Reasonableness of the Final Standards  
The final engine standards appear to be reasonable and consistent with the agencies' respective statutory authorities.  With respect to the 2014 and 2017 MY standards, all of the technologies on which the standards are predicated have already been demonstrated in some capacity and their effectiveness is well documented.  The final standards reflect a 100 percent application rate for these technologies.  The costs of adding these technologies remain modest across the various engine classes as shown in Table III-10.  Use of these technologies would add only a small amount to the cost of the vehicle, and the associated reductions are highly cost effective, an estimated $20 per ton of CO2eq per vehicle.  This is even more cost effective than the estimated cost effectiveness for CO2eq removal under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Even the more expensive 2017 MY final standard still represents only a small fraction of the vehicle's total cost and is even more cost effective than the light-duty vehicle rule.  Moreover, costs are more than offset by fuel savings.  Accordingly, EPA and NHTSA view these standards as reflecting an appropriate balance of the various statutory factors under section 202(a) of the CAA and under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
Temporary Alternative Standard for Certain Engine Families  
As discussed above in Section II.B (1)(b), notwithstanding the general reasonableness of the final standards, the agencies recognize that heavy-duty engines have never been subject to GHG or fuel consumption (or fuel economy) standards and that such control has not necessarily been an independent priority for manufacturers.  The result is that there are a group of legacy engines with emissions higher than the industry baseline for which compliance with the final 2014 MY standards may be more challenging and for which there may simply be inadequate lead time.  The issue is not whether these engines' GHG and fuel consumption performance cannot be improved by utilizing the technology packages on which the final standards are based.  Those technologies can be utilized by all engines and the same degree of reductions obtained.  Rather the underlying base engine components of these engines reflect designs that are decades old and therefore have base performance levels below what is typical for the industry as a whole today.  Manufacturers have been gradually replacing these legacy products with new engines.  Engine manufacturers have indicated to the agencies they will have to align their planned replacement of these products with our final standards and at the same time add additional technologies beyond those identified by the agencies as the basis for the final standard.  Because these changes will reflect a larger degree of overall engine redesign, manufacturers may not be able to complete this work for all of their legacy products prior to model year 2014.  To pull ahead these already planned engine replacements would be impossible as a practical matter given the engineering structure and lead-times inherent in the companies' existing product development processes.  We have also concluded that the use of fleet averaging would not address the issue of legacy engines because each manufacturer typically produces only a limited line of MHDD and HHDD engines.  (Because there are ample fleetwide averaging opportunities for heavy-duty pickups and vans, the agencies do not perceive similar difficulties for these vehicles.)  
Facing a similar issue in the light-duty vehicle rule, EPA adopted a Temporary Lead Time Allowance provision whereby a limited number of vehicles of a subset of manufacturers would meet an alternative standard in the early years of the program, affording them sufficient lead time to meet the more stringent standards applicable in later model years.  See 75 FR 25414-25418.  The agencies are finalizing a similar approach here.  As explained above in Section II B. (1) (b), the agencies are finalizing a regulatory alternative whereby a manufacturer, for a limited period, would have the option to comply with a unique standard requiring the same level of reduction of emissions (i.e., percent removal) and fuel consumption as otherwise required, but the reduction would be measured from its own 2011 model year baseline.  We are thus finalizing an optional standard whereby manufacturers would elect to have designated engine families meet a standard of 3 percent reduction from their 2011 baseline emission and fuel consumption levels for that engine family or engine subcategory.  Our assessment is that this three percent reduction is appropriate based on use of similar technology packages at similar cost as we have estimated for the primary program.  In the NPRM, we solicited comment on extending this alternative (See 75 FR at 74202).  As explained earlier, we are not finalizing that the option to select an alternative standard continues past the 2016 MY.  By this time, the engines should have gone through a redesign cycle which will allow manufacturers to replace those legacy engines which resulted in abnormally high baseline emission and fuel consumption levels and to achieve the MY 2017 standards which would be feasible using the technology package set out above (optimized NOX aftertreatment, improved EGR, reductions in parasitic losses, and turbocharging).  Manufacturers would, of course, be free to adopt other technology paths which meet the final MY 2017 standards.  
Since the alternative standard is premised on the need for additional lead time, manufacturers would first have to utilize all available flexibilities which could otherwise provide that lead time.  Thus, as proposed, the alternative would not be available unless and until a manufacturer had exhausted all available credits and credit opportunities, and engines under the alternative standard could not generate credits.  See 75 FR 25417-25419 (similar approach for vehicles which are part of Temporary Lead Time Allowance under the light-duty vehicle rule). We are finalizing that manufacturers can select engine families for this alternative standard without agency approval, but are finalizing to require that manufacturers notify the agency of their choice and to include in that notification a demonstration that it has exhausted all available credits and credit opportunities.  Manufacturers would also have to demonstrate their 2011 baseline calculations as part of the certification process for each engine family for which the manufacturer elects to use the alternative standard.  See Section V.C.1(b)(i) below.
Alternative Engine Standards Considered
The agencies are not finalizing engine standards less stringent than the final standards because the agencies believe these final standards are appropriate, highly cost effective, and technologically feasible, as just described.  
The agencies considered finalizing engine standards which are more stringent.  Since the final standards reflect 100 percent utilization of the various technology packages, some additional technology would have to be added.  The agencies are finalizing 2017 model year standards based on the use of turbocompounding.  As discussed above in Section III.A.2.b.iii, the agencies considered the inclusion of more advanced heat recovery systems, such as Rankine or bottoming cycles, which would provide further reductions.  However, the agencies are not finalizing this level of stringency because our assessment is that these technologies would not be available for production by the 2017 model year.  
Heavy-Duty Pickup Trucks and Vans
This section describes the process the agencies used to develop the standards the agencies are finalizing for HD pickups and vans.  We started by gathering available information about the fuel consumption and CO2 emissions from recent model year vehicles.  The core portion of this information comes primarily from EPA's certification databases, CFEIS and VERIFY, which contain the publicly available data regarding emission and fuel economy results.  This information is not extensive because manufacturers have not been required to chassis test HD diesel vehicles for EPA's criteria pollutant emissions standards, nor have they been required to conduct any testing of heavy-duty vehicles on the highway cycle.  Nevertheless, enough certification activity has occurred for diesels under EPA's optional chassis-based program, and, due to a California NOX requirement for the highway test cycle, enough test results have been voluntarily reported for both diesel and gasoline vehicles using the highway test cycle, to yield a reasonably robust data set.  To supplement this data set, for purposes of this rulemaking EPA initiated its own testing program using in-use vehicles.  This program and the results from it thus far are described in a memorandum to the docket for this rulemaking.
Heavy-duty pickup trucks and vans are sold in a variety of configurations to meet market demands.  Among the differences in these configurations that affect CO2 emissions and fuel consumption are curb weight, GVWR, axle ratio, and drive wheels (two-wheel drive or four-wheel drive).  Because the currently-available test data set does not capture all of these configurations, it is necessary to extend that data set across the product mix using adjustment factors.  In this way a test result from, say a truck with two-wheel drive, 3.73:1 axle ratio, and 8000 lb test weight, can be used to model emissions and fuel consumption from a truck of the same basic body design, but with four-wheel drive, a 4.10:1 axle ratio, and 8,500 lb test weight.  The adjustment factors are based on data from testing in which only the parameters of interest are varied.  These parameterized adjustments and their basis are also described in a memorandum to the docket for this rulemaking.
The agencies requested and received from each of the three major manufacturers confidential information for each model and configuration, indicating the values of each of these key parameters as well as the annual production (for the U.S. market).  Production figures are useful because, under our final standards for HD pickups and vans, compliance is judged on the basis of production-weighted (corporate average) emissions or fuel consumption level, not individual vehicle levels.  For consistency and to avoid confounding the analysis with data from unusual market conditions in 2009, the production and vehicle specification data is from the 2008 model year.  We made the simplifying assumption that these sales figures reasonably approximate future sales for purposes of this analysis.
One additional assessment was needed to make the data set useful as a baseline for the standards selection.  Because the appropriate standards are determined by applying efficiency-improving technologies to the baseline fleet, it is necessary to know the level of penetration of these technologies in the latest model year (2010).  This information was also provided confidentially by the manufacturers.  Generally, the agencies found that the HD pickup and van fleet was at a roughly consistent level of technology application, with (1) the transition from 4-speed to 5- or 6-speed automatic transmissions mostly accomplished, (2) coupled cam phasing to achieve variable valve control on gasoline engines likewise mostly in place, and (3) substantial remaining potential for optimizing catalytic diesel NOX aftertreatment to improve fuel economy (the new heavy-duty NOX standards having taken effect in the 2010 model year).
Taking this 2010 baseline fleet, and applying the technologies determined to be feasible and appropriate by the 2018 model year, along with their effectiveness levels, the agencies could then make a determination of appropriate final standards.  The assessment of feasibility, described immediately below, takes into account the projected costs of these technologies.  The derivation of these costs, largely based on analyses developed in the light-duty GHG and fuel economy rulemaking, are described in Section III.B(3).
Our assessment concluded that the technologies that the agencies considered feasible and appropriate for HD pickups and vans could be consistently applied to essentially all vehicles across this sector by the 2018 model year.  Therefore we did not apply varying penetration rates across vehicle types and models in developing and evaluating the final standards.  
Since the manufacturers of HD pickups and vans generally only have one basic pick-up truck and van with different versions ((i.e., different wheel bases, cab sizes, two-wheel drive, four-wheel drive, etc.) and do not have the flexibility of the light-duty fleet to coordinate model improvements over several years, changes to the HD pickups and vans to meet new standards must be carefully planned with the redesign cycle taken into account.  The opportunities for large-scale changes (e.g., new engines, transmission, vehicle body and mass) thus occur less frequently than in the light-duty fleet, typically at spans of 8 or more years.  However, opportunities for gradual improvements not necessarily linked to large scale changes can occur between the redesign cycles.  Examples of such improvements are upgrades to an existing vehicle model's engine, transmission and aftertreatment systems.  Given this long redesign cycle and our understanding with respect to where the different manufacturers are in that cycle, the agencies have initially determined that the full implementation of the final standards would be feasible and appropriate by the 2018 model year. 
 Although we did not determine that it was necessary for feasibility to apply varying technology penetration levels to different vehicles, we did decide that a phased implementation schedule would be appropriate to accommodate manufacturers' redesign workload and product schedules, especially in light of this sector's relatively low sales volumes and long product cycles.  We did not determine a specific cost of implementing the final standards immediately in 2014 without a phase-in, but we assessed it to be much higher than the cost of the phase-in we are finalizing, due to the workload and product cycle disruptions it would cause, and also due to manufacturers' resulting need to develop some of these technologies for heavy-duty applications sooner than or simultaneously with light-duty development efforts.  See generally 75 FR 25467-25468 explaining why attempting major changes outside the redesign cycle period raises very significant issues of both feasibility and cost.  On the other hand, waiting until 2018 before applying any new standards could miss the opportunity to achieve meaningful and cost-effective early reductions not requiring a major product redesign when the largest changes and reductions are expected to occur.
The final phase-in schedule, 15-20-40-60-100 percent in 2014-2015-2016-2017-2018, respectively, was chosen to strike a balance between meaningful reductions in the early years (reflecting the technologies' penetration rates of 15 and 20 percent) and providing manufacturers with needed lead time via a gradually accelerating ramp-up of technology penetration.   By expressing the final phase-in in terms of increasing fleetwide stringency for each manufacturer, while also providing for credit generation and use (including averaging, carry-forward, and carry-back), we believe our program affords manufacturers substantial flexibility to satisfy the phase-in through a variety of pathways:  the gradual application of technologies across the fleet (averaging a fifth of total production in each year), greater application levels on only a portion of the fleet, or a mix of the two.
We considered setting more stringent standards that would require the application of additional technologies by 2018.  We expect, in fact, that some of these technologies may well prove feasible and cost-effective in this timeframe, and may even become technologies of choice for individual manufacturers.  This dynamic has played out in EPA programs before and highlights the value of setting performance-based standards that leave engineers the freedom to find the most cost-effective solutions.  
However, the agencies do believe that at this stage there is not enough information to conclude that the additional technologies provide an appropriate basis for standard-setting.  For example, we believe that 42V stop-start systems can be applied to gasoline vehicles with significant GHG and fuel consumption benefits, but we recognize that there is uncertainty at this time over the cost-effectiveness of these systems in heavy-duty applications, and over customer acceptance of vehicles with high GCWR towing large loads that would routinely stop running at idle.  Hybrid electric technology likewise could be applied to heavy-duty vehicles, and in fact has already been so applied on a limited basis.  However, the development, design, and tooling effort needed to apply this technology to a vehicle model is quite large, and seems less likely to prove cost-effective in this timeframe, due to the small sales volumes relative to the light-duty sector.  Here again, potential customer acceptance would need to be better understood because the smaller engines that facilitate much of a hybrid's benefit are typically at odds with the importance pickup trucks buyers place on engine horsepower and torque, whatever the vehicle's real performance.
We also considered setting less stringent standards calling for a more limited set of applied technologies.  However, our assessment concluded with a high degree of confidence that the technologies on which the final standards are premised are clearly available at reasonable cost in the 2014-2018 timeframe, and that the phase-in and other flexibility provisions allow for their application in a very cost-effective manner, as discussed in this section below.
More difficult to characterize is the degree to which more or less stringent standards might be appropriate because of under- or over-estimating effectiveness of the technologies whose performance is the basis of the final standards.  Our basis for these estimates is described in Section III. B. (1) (1) .  Because for the most part these technologies have not yet been applied to HD pickups and vans, even on a limited basis, we are relying to some degree on engineering judgment in predicting their effectiveness.  Even so, we believe that we have applied this judgment using the best information available, primarily from our recent rulemaking on light-duty vehicle GHGs and fuel economy, and have generated a robust set of effectiveness values. 
What Technologies Did the Agencies Consider?
The agencies considered over 35 vehicle technologies that manufacturers could use to improve the fuel consumption and reduce CO2 emissions of their vehicles during MYs 2014-2018.  The majority of the technologies described in this section is readily available, well known, and could be incorporated into vehicles once production decisions are made.  Several of the technologies have already been introduced into the heavy duty pickup and van market (i.e., variable valve timing, improved accessories, etc.) in a limited number of applications. Other technologies considered may not currently be in production, but are beyond the research phase and under development, and are expected to be in production in highway vehicles over the next few years.  These are technologies 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 there is insufficient time for such technologies to move from research to production during the model years covered by this final action.

The agencies received comments regarding applicability of certain advanced technologies described in the TIAX 2009 report submitted to NAS.  Specifically mentioned where turbo-charging and downsizing of gasoline vehicles and hydraulic hybrid systems.  While turbo-charging and downsizing of gasoline vehicles was a principal technology in the light duty rule, the agencies determined that in the realm of heavy duty vehicles, this approach provides much less benefit to vehicles which are required to regularly operate at high and sustained loads.  In light duty applications, downsizing of a typically oversized engine largely results in benefits mainly under partial and light load conditions.  This approach is more applicable to light duty vehicles because they infrequently require high or full power.  Further, while turbo downsizing was already occurring in a portion of the light duty fleet, it has not been demonstrated in the heavy duty fleet likely due to concerns with durability of this technology. Similarly, other light duty technologies (i.e., cylinder deactivation, engine start stop) were also determined to not be compatible with the duty cycle of heavy duty vehicles for similar reasons. Due to the relatively aggressive implementation of this rule and the lack of commercialization in the heavy duty market, hydraulic hybrid systems were not considered a technology that could be implemented in the timeframe of this rule, particularly in the HD pickup and van sector. 
 
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.

In this class of trucks and vans, diesel engines are installed in about half of all vehicles.  The ratio between gasoline and diesel engine purchases by consumers has tended to track changes in the overall cost of oil and the relative cost of gasoline and diesel fuels.  When oil prices are higher, diesel sales tend to increase.  This trend has reversed when oil prices fall or when diesel fuel prices are significantly higher than gasoline.  In the context of our technology discussion for heavy-duty pickups and vans, we are treating gasoline and diesel engines separately so each has a set of baseline technologies.  We discuss performance improvements in terms of changes to those baseline engines.  Our cost and inventory estimates contained elsewhere reflect the current fleet baseline with an appropriate mix of gasoline and diesel engines.  Note that we are not basing the final standards on a targeted switch in the mix of diesel and gasoline vehicles.  We believe our final standards require similar levels of technology development and cost for both diesel and gasoline vehicles.  Hence the final program does not force, nor does it discourage, changes in a manufacturer's fleet mix between gasoline and diesel vehicles.  Although we considered setting a single standard based on the performance level possible for diesel vehicles, we are not finalizing such an approach because the potential disruption in the HD pickup and van market from a forced shift would not be justified.  Types of engine technologies that improve fuel efficiency 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 low-tension piston rings, roller cam followers, improved material coatings, more optimal thermal management, piston surface treatments, and other improvements in the design of engine components and subsystems that improve engine operation. 
       
   * 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.
       
   * Stoichiometric gasoline direct-injection 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.  
       
   * Diesel engine improvements and diesel aftertreatment improvements  -  improved EGR systems and advanced timing can provide more efficient combustion and, hence, lower fuel consumption.  Aftertreatment systems are a relatively new technology on diesel vehicles and, as such, improvements are expected in coming years that allow the effectiveness of these systems to improve while reducing the fuel and reductant demands of current systems. 
       
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 specific to the mating engine.  
       
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 efficiency and reducing CO2 emissions.
       
   * 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 higher-strength 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 program.  
       
Types of electrification/accessory and hybrid technologies considered include:

   * Electric power steering and Electro-Hydraulic power steering   -  are electrically-assisted steering systems that have advantages over traditional hydraulic power steering because it replaces a continuously operated hydraulic pump, thereby reducing parasitic losses from the accessory drive.
       
   * Improved accessories  -  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. 

How Did the Agencies Determine the Costs and Effectiveness of Each of These Technologies?
Building on the technical analysis underlying the 2012-2016 MY light-duty vehicle rule, the agencies took a fresh look at technology cost and effectiveness values for purposes of this final action.  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 and EPA in the light-duty rule. 

For two technologies, stoichiometric gasoline direct injection (SGDI) and turbocharging with engine downsizing, the agencies relied to the extent possible on the available tear-down data and scaling methodologies used in EPA's ongoing study with FEV, Incorporated.  This study consists of complete 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.  

For the other technologies, considering all sources of information and using the BOM approach, the agencies worked together intensively to determine component costs for each of the technologies and build up the costs 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 2009 dollars using a ratio of gross domestic product (GDP) values for the associated calendar years, and indirect costs were accounted for using the new approach developed by EPA and used in the 2012-2016 light-duty rule.  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.  

Regarding estimates for technology effectiveness, NHTSA and EPA used the estimates from the 2012-2016 light-duty rule as a baseline but adjusted them as appropriate, taking into account the unique requirement of the heavy-duty test cycles to test at curb weight plus half payload versus the light-duty requirement of curb plus 300 lb.  The adjustments were made on an individual technology basis by assessing the specific impact of the added load on each technology when compared to the use of the technology on a light-duty vehicle.  The agencies also considered other sources such as the 2010 NAS Report, recent CAFE compliance data, and confidential manufacturer estimates of technology effectiveness.  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, the agencies compared the multiple estimates and assessed their validity, taking care to ensure that common BOM definitions and other vehicle attributes such as performance and drivability were taken into account.  

The agencies note that the effectiveness values estimated for the technologies may represent average values applied to the baseline fleet described earlier, and do not reflect the potentially-limitless spectrum of possible values that could result from adding the technology to different vehicles.  For example, while the agencies have estimated an effectiveness of 0.5 percent for low friction lubricants, each vehicle could have a unique effectiveness estimate depending on the baseline vehicle's oil viscosity rating.  Similarly, the reduction in rolling resistance (and thus the improvement in fuel efficiency and the reduction in CO2 emissions) due to the application of LRR tires depends not only on the unique characteristics of the tires originally on the vehicle, but on the unique characteristics of the tires being applied, characteristics which must be balanced between fuel efficiency, safety, and performance.  Aerodynamic drag reduction is much the same -- it can improve fuel efficiency and reduce CO2 emissions, but it is also highly dependent on vehicle-specific functional objectives.  For purposes of this NPRM, NHTSA and EPA believe that employing average values for technology effectiveness estimates is an appropriate way of recognizing the potential variation in the specific benefits that individual manufacturers (and individual vehicles) might obtain from adding a fuel-saving technology.  

The following section contains a detailed description of our assessment of vehicle technology cost and effectiveness estimates.  The agencies note that the technology costs included in this NPRM take into account only those associated with the initial build of the vehicle.  

Engine Technologies
NHTSA and EPA have reviewed the engine technology estimates used in the 2012-2016 light-duty rule. In doing so NHTSA and EPA reconsidered all available sources and updated the estimates as appropriate.  The section below describes both diesel and gasoline engine technologies considered for this program.
Low Friction Lubricants
One of the most basic methods of reducing fuel consumption in both gasoline and diesel engines is the use of lower viscosity engine lubricants.  More advanced multi-viscosity engine oils are available today with improved performance in a wider temperature band and with better lubricating properties.  This can be accomplished by changes to the oil base stock (e.g., switching engine lubricants from a Group I base oils to lower-friction, lower viscosity Group III synthetic) and through changes to lubricant additive packages (e.g., friction modifiers and viscosity improvers).  The use of 5W-30 motor oil is now widespread and auto manufacturers are introducing the use of even lower viscosity oils, such as 5W-20 and 0W-20, to improve cold-flow properties and reduce cold start friction.  However, in some cases, changes to the crankshaft, rod and main bearings and changes to the mechanical tolerances of engine components may be required.  In all cases, durability testing would be required to ensure that durability is not compromised.  The shift to lower viscosity and lower friction lubricants will also improve the effectiveness of valvetrain technologies such as cylinder deactivation, which rely on a minimum oil temperature (viscosity) for operation.
Based on the 2012-2016 MY light-duty vehicle rule, and previously-received confidential manufacturer data, NHTSA and EPA estimated the effectiveness of low friction lubricants to be between 0 to 1 percent.  

In the light-duty rule, the agencies estimated the cost of moving to low friction lubricants at $3 per vehicle (2007$).  That estimate included a markup of 1.11 for a low complexity technology.  For HD pickups and vans, we are using the same base estimate but have marked it up to 2009 dollars using the GDP price deflator and have used a markup of 1.24 for a low complexity technology to arrive at a value of $4 per vehicle.  As in the light-duty rule, learning effects are not applied to costs for this technology and, as such, this estimate applies to all model years.[,]
Engine Friction Reduction)
In addition to low friction lubricants, manufacturers can also reduce friction and improve fuel consumption by improving the design of both diesel and gasoline engine components and subsystems.  Approximately 10 percent of the energy consumed by a vehicle is lost to friction, and just over half is due to frictional losses within the engine.  Examples include improvements in low-tension piston rings, piston skirt design, roller cam followers, improved crankshaft design and bearings, material coatings, material substitution, more optimal thermal management, and piston and cylinder surface treatments.  Additionally, as computer-aided modeling software continues to improve, more opportunities for evolutionary friction reductions may become available.
All reciprocating and rotating components in the engine are potential candidates for friction reduction, and minute improvements in several components can add up to a measurable fuel efficiency improvement.  The 2012-2016 light-duty final rule, the 2010 NAS Report, and NESCCAF and Energy and Environmental Analysis reports, as well as confidential manufacturer data, indicate a range of effectiveness for engine friction reduction to be between 1 to 3 percent.  NHTSA and EPA continue to believe that this range is accurate.
Consistent with the 2012-2016 MY light-duty vehicle rule, the agencies estimate the cost of this technology at $15 per cylinder compliance cost (2008$), including the low complexity ICM markup value of 1.24.  Learning impacts are not applied to the costs of this technology and, as such, this estimate applies to all model years. This cost is multiplied by the number of engine cylinders.
Coupled Cam Phasing
Valvetrains with coupled (or coordinated) cam phasing can modify the timing of both the inlet valves and the exhaust valves an equal amount by phasing the camshaft of an overhead valve engine.  For overhead valve engines, which have only one camshaft to actuate both inlet and exhaust valves, couple cam phasing is the only variable valve timing implementation option available and requires only one cam phaser.
Based on the 2012-2016 light-duty final rule, previously-received confidential manufacturer data, and the NESCCAF report, NHTSA and EPA estimated the effectiveness of couple cam phasing to be between 1 and 4 percent.  NHTSA and EPA reviewed this estimate for purposes of the NPRM, and continue to find it accurate.
The agencies received comments questioning the exclusion of cam phasing from the technology packages.  During the rulemaking process, manufacturers introduced many new or updated gasoline engines resulting in the majority of the 2010 gasoline heavy duty engines including cam phasing.  Because of this, the baseline analysis of technology for the 2010 heavy duty gasoline fleet already includes the benefits of cam phasing and therefore it is not appropriate for the agencies to include this as a technology that is available for most manufactures to add to their current gasoline engines.    
Cylinder Deactivation
In conventional spark-ignited engines throttling the airflow controls engine torque output.  At partial loads, efficiency can be improved by using cylinder deactivation instead of throttling.  Cylinder deactivation can improve engine efficiency by disabling or deactivating (usually) half of the cylinders when the load is less than half of the engine's total torque capability  -  the valves are kept closed, and no fuel is injected  -  as a result, the trapped air within the deactivated cylinders is simply compressed and expanded as an air spring, with reduced friction and heat losses.  The active cylinders combust at almost double the load required if all of the cylinders were operating.  Pumping losses are significantly reduced as long as the engine is operated in this "part-cylinder" mode.
 Cylinder deactivation control strategy relies on setting maximum manifold absolute pressures or predicted torque within a range in which it can deactivate the cylinders.  Noise and vibration issues reduce the operating range to which cylinder deactivation is allowed, although manufacturers are exploring vehicle changes that enable increasing the amount of time that cylinder deactivation might be suitable.  Some manufacturers may choose to adopt active engine mounts and/or active noise cancellations systems to address Noise Vibration and Harshness (NVH) concerns and to allow a greater operating range of activation.  Cylinder deactivation is a technology keyed to more lightly loaded operation, and so may be a less likely technology choice for manufacturers designing for effectiveness in the loaded condition required for testing, and in the real world that involves frequent operation with heavy loads. 
Cylinder deactivation has seen a recent resurgence thanks to better valvetrain designs and engine controls.  General Motors and Chrysler Group have incorporated cylinder deactivation across a substantial portion of their light duty V8-powered lineups.

Effectiveness improvements scale roughly with engine displacement-to-vehicle weight ratio: the higher displacement-to-weight vehicles, operating at lower relative loads for normal driving, have the potential to operate in part-cylinder mode more frequently.  For heavy duty vehicles tested and operated at loaded conditions, the power to weight ratio is considerably lower than the light duty case greatly reducing the opportunity for "part-cylinder" mode and therefore was not considered in this rulemaking as an effective technology for heavy duty applications.
Stoichiometric Gasoline Direct Injection
SGDI engines inject fuel at high pressure directly into the combustion chamber (rather than the intake port in port fuel injection).  SGDI requires changes to the injector design, an additional high pressure fuel pump, new fuel rails to handle the higher fuel pressures and changes to the cylinder head and piston crown design.  Direct injection of the fuel into the cylinder improves cooling of the air/fuel charge within the cylinder, which allows for higher compression ratios and increased thermodynamic efficiency without the onset of combustion knock.  Recent injector design advances, improved electronic engine management systems and the introduction of multiple injection events per cylinder firing cycle promote better mixing of the air and fuel, enhance combustion rates, increase residual exhaust gas tolerance and improve cold start emissions.  SGDI engines achieve higher power density and match well with other technologies, such as boosting and variable valvetrain designs.
Several manufacturers have recently introduced vehicles with SGDI engines, including GM and Ford and have announced their plans to increase dramatically the number of SGDI engines in their portfolios.  The 2012-2016 light-duty final rule estimated the range of 1 to 2 percent for SGDI. NHTSA and EPA reviewed this estimate for purposes of the NPRM, and continue to find it accurate. 
Consistent with the 2012-2016 light-duty final rule, NHTSA and EPA cost estimates for SGDI take into account the changes required to the engine hardware, engine electronic controls, ancillary and NVH mitigation systems.  Through contacts with industry NVH suppliers, and manufacturer press releases, the agencies believe that the NVH treatments will be limited to the mitigation of fuel system noise, specifically from the injectors and the fuel lines.  For this analysis, the agencies have estimated the costs at $481 (2009$) in the 2014 model year.  Flat-portion of the curve learning is applied to this technology.  This technology was considered for gasoline engines only, as diesel engines already employ direct injection.
Diesel Engine Technologies 
Diesel engines have several characteristics that give them superior fuel efficiency compared to conventional gasoline, spark-ignited engines.  Pumping losses are much lower due to lack of (or greatly reduced) throttling.  The diesel combustion cycle operates at a higher compression ratio, with a very lean air/fuel mixture, and turbocharged light-duty diesels typically achieve much higher torque levels at lower engine speeds than equivalent-displacement naturally-aspirated gasoline engines.  Additionally, diesel fuel has a higher energy content per gallon.  However, diesel fuel also has a higher carbon to hydrogen ratio, which increases the amount of CO2 emitted per gallon of fuel used by approximately 15 percent over a gallon of gasoline.
Based on confidential business information and the 2010 NAS Report, two major areas of diesel engine design will be improved during the 2014-2018 timeframe.  These areas include aftertreatment improvements and a broad range of engine improvements.
Aftertreatment Improvements
The HD diesel pickup and van segment has largely adopted the SCR type of aftertreatment system to comply with criteria pollutant emission standards.  As the experience base for SCR expands over the next few years, many improvements in this aftertreatment system such as construction of the catalyst, thermal management, and reductant optimization will result in a significant reduction in the amount of fuel used in the process.  This technology was not considered in the 2012-2016 light-duty final rule.  Based on confidential business information, EPA and NHTSA estimate the reduction in CO2 as a result of these improvements at 3 to 5 percent.
The agencies have estimated the cost of this technology at $25 for each percentage improvement in fuel consumption.  This estimate is based on the agencies' belief that this technology is, in fact, a very cost effective approach to improving fuel consumption.  As such, $25 per percent improvement is considered a reasonable cost.  This cost would cover the engineering and test cell related costs necessary to develop and implement the improved control strategies that would allow for the improvements in fuel consumption.  Importantly, the engineering work involved would be expected to result in cost savings to the aftertreatment and control hardware (lower platinum group metal loadings, lower reductant dosing rates, etc.).  Those savings are considered to be included in the $25 per percent estimate described here.  Given the 4 percent average expected improvement in fuel consumption results in an estimated cost of $119 (2009$) for a 2014 model year truck or van.  This estimate includes a low complexity ICM of 1.24 and flat-portion of the curve learning from 2012 forward.
Engine Improvements
Diesel engines in the HD pickup and van segment are expected to have several improvements in their base design in the 2014  -  2018 timeframe.  These improvements include items such as improved combustion management, optimal turbocharger design, and improved thermal management.  This technology was not considered in the 2012-2016 light-duty final rule. Based on confidential business information, EPA and NHTSA estimate the reduction in CO2 as a result of these improvements at 4 to 6 percent.
The cost for this technology includes costs associated with low temperature exhaust gas recirculation, improved turbochargers and improvements to other systems and components.  These costs are considered collectively in our costing analysis and termed "diesel engine improvements."  The agencies have estimated the cost of diesel engine improvements at $148 based on the cost estimates for several individual technologies.  Specifically, the direct manufacturing costs we have estimated are:  improved cylinder head, $9; turbo efficiency improvements, $16; EGR cooler improvements, $3; higher pressure fuel rail, $10; improved fuel injectors, $13; improved pistons, $2; and reduced valve train friction, $95.  All values are in 2009 dollars and are applicable in the 2014MY.  Applying a low complexity ICM of 1.24 results in a cost of $184 (2009$) applicable in the 2014MY.  We consider flat-portion of the curve learning to be appropriate for these technologies.
Transmission Technologies 
NHTSA and EPA have also reviewed the transmission technology estimates used in the 2012-2016 light-duty final rule.  In doing so, NHTSA and EPA considered or reconsidered all available sources and updated the estimates as appropriate.  The section below describes each of the transmission technologies considered for the final standards.
Improved Automatic Transmission Control (Aggressive Shift Logic and Early Torque Converter Lockup)
Calibrating the transmission shift schedule to upshift earlier and quicker, and to lock-up or partially lock-up the torque converter under a broader range of operating conditions can reduce fuel consumption and CO2 emissions.  However, this operation can result in a perceptible degradation in NVH.  The degree to which NVH can be degraded before it becomes noticeable to the driver is strongly influenced by characteristics of the vehicle, and although it is somewhat subjective, it always places a limit on how much fuel consumption can be improved by transmission control changes.  Given that the Aggressive Shift Logic and Early Torque Converter Lockup are best optimized simultaneously due to the fact that adding both of them primarily requires only minor modifications to the transmission or calibration software, these two technologies are combined in the modeling.  We consider these technologies to be present in the baseline, since 6-speed automatic transmissions are installed in the majority of Class 2b and 3 trucks in the 2010 model year timeframe.
Automatic 6- and 8-Speed Transmissions
Manufacturers can also choose to replace 4- 5- and 6-speed automatic transmissions with 8-speed automatic transmissions.  Additional ratios allow for further optimization of engine operation over a wider range of conditions, but this is subject to diminishing returns as the number of speeds increases.  As additional planetary gear sets are added (which may be necessary in some cases to achieve the higher number of ratios), additional weight and friction are introduced.  Also, the additional shifting of such a transmission can be perceived as bothersome or busy to some consumers, so manufacturers need to develop strategies for smooth shifts.  Some manufacturers are replacing 4- and 5-speed automatics with 6-speed automatics already, and 7- and 8-speed automatics have entered production in light-duty vehicles, albeit in lower-volume applications in luxury and performance oriented cars.
As discussed in the  light-duty final GHG rule, confidential manufacturer data projected that 6-speed transmissions could incrementally reduce fuel consumption by 0 to 5 percent from a 4-speed automatic transmission, while an 8-speed transmission could incrementally reduce fuel consumption by up to 6 percent from a 4-speed automatic transmission.  GM has publicly claimed a fuel economy improvement of up to 4 percent for its new 6-speed automatic transmissions.  

NHTSA and EPA reviewed and revised these effectiveness estimates based on actual usage statistics and testing methods for these vehicles along with confidential business information.  When combined with improved automatic transmission control, the agencies estimate the effectiveness for a conversion from a 4 to a 6-speed transmission to be 5.3% and a conversion from a 6 to 8-speed transmission to be 1.7%.  While 8-speed transmissions were not considered in the 2012-2016 light-duty final rule, they are considered as a technology of choice for this analysis in that manufacturers are expected to upgrade the 6-speed automatic transmissions being implemented today with 8-speed automatic transmissions in the 2014-2018 timeframe.  We are estimating the cost of an 8-speed automatic transmission at $281 (2009$) relative to a 6-speed automatic transmission in the 2014 model year.  This estimate is based from the 2010 NAS Report and we have applied a low complexity ICM of 1.24 and flat-portion of the curve learning.  This technology applies to both gasoline and diesel trucks and vans.
Electrification/Accessory Technologies
Electrical Power Steering or Electrohydraulic Power Steering
Electric power steering (EPS) or Electrohydraulic power steering (EHPS) provides a potential reduction in CO2 emissions and fuel consumption over hydraulic power steering because of reduced overall accessory loads.  This eliminates the parasitic losses associated with belt-driven power steering pumps which consistently draw load from the engine to pump hydraulic fluid through the steering actuation systems even when the wheels are not being turned.  EPS is an enabler for all vehicle hybridization technologies since it provides power steering when the engine is off.  EPS may be implemented on most vehicles with a standard 12V system.  Some heavier vehicles may require a higher voltage system which may add cost and complexity.
The 2012-2016 light-duty final rule estimated a 1 to 2 percent effectiveness based on the 2002 NAS report for light-duty vehicle technologies, a Sierra Research report, and confidential manufacturer data.  NHTSA and EPA reviewed these effectiveness estimates and found them to be accurate, thus they have been retained for purposes of this NPRM.
NHTSA and EPA adjusted the EPS cost for the current rulemaking based on a review of the specification of the system.  Adjustments were made to include potentially higher voltage or heavier duty system operation for HD pickups and vans.  Accordingly, higher costs were estimated for systems with higher capability.  After accounting for the differences in system capability and applying the ICM markup of low complexity technology of 1.24, the estimated costs are $115 for a MY 2014 truck or van (2009$).  As EPS systems are in widespread usage today, flat-portion of the curve learning is deemed applicable.  EHPS systems are considered to be of equal cost and both are considered applicable to gasoline and diesel engines.
Improved Accessories
The accessories on an engine, including the alternator, coolant and oil pumps are traditionally mechanically-driven.  A reduction in CO2 emissions and fuel consumption can be realized by driving the pumping accessories electrically, and only when needed ("on-demand").  Alternator improvements include internal changes resulting in lower mechanical and electrical losses combined with control logic that charges the battery at more efficient voltage levels and during conditions of available kinetic energy from the vehicle which would normally be wasted energy such as braking during vehicle decelerations.  
Electric water pumps and electric fans can provide better control of engine cooling.  For example, coolant flow from an electric water pump can be reduced and the radiator fan can be shut off during engine warm-up or cold ambient temperature conditions which will reduce warm-up time, reduce warm-up fuel enrichment, and reduce parasitic losses.
Indirect benefit may be obtained by reducing the flow from the water pump electrically during the engine warm-up period, allowing the engine to heat more rapidly and thereby reducing the fuel enrichment needed during cold starting of the engine.  Further benefit may be obtained when electrification is combined with an improved, higher efficiency engine alternator.  Intelligent cooling can more easily be applied to vehicles that do not typically carry heavy payloads, so larger vehicles with towing capacity present a challenge, as these vehicles have high cooling fan loads.

The agencies considered whether to include electric oil pump technology for the rulemaking.  Because it is necessary to operate the oil pump any time the engine is running, electric oil pump technology has insignificant effect on efficiency.  Therefore, the agencies decided to not include electric oil pump technology.
NHTSA and EPA jointly reviewed the estimates of 1 to 2 percent effectiveness estimates used in the 2012-2016 light-duty final rule and found them to be accurate for Improved Electrical Accessories.  Consistent with the 2012-2016 light-duty final rule, the agencies have estimated the cost of this technology at $93 (2009$) including a low complexity ICM of 1.24.  This cost is applicable in the 2014 model year.  Improved accessory systems are in production currently and thus flat-portion of the curve learning is applied.  This technology was considered for diesel trucks and vans only.
Vehicle Technologies
Mass Reduction
Reducing a vehicle's mass, or down-weighting the vehicle, decreases fuel consumption by reducing the energy demand needed to overcome forces resisting motion, and rolling resistance.  Manufacturers employ a systematic approach to mass reduction, where the net mass reduction is the addition of a direct component or system mass reduction plus the additional mass reduction taken from indirect ancillary systems and components, as a result of full vehicle optimization, effectively compounding or obtaining a secondary mass reduction from a primary mass reduction.  For example, use of a smaller, lighter engine with lower torque-output subsequently allows the use of a smaller, lighter-weight transmission and drive line components.  Likewise, the compounded weight reductions of the body, engine and drivetrain reduce stresses on the suspension components, steering components, wheels, tires and brakes, allowing further reductions in the mass of these subsystems.  The reductions in unsprung masses such as brakes, control arms, wheels and tires further reduce stresses in the suspension mounting points. This produces a compounding effect of mass reductions.
Estimates of the synergistic effects of mass reduction and the compounding effect that occurs along with it can vary significantly from one report to another.  For example, in discussing its estimate, an Auto-Steel Partnership report states that "These secondary mass changes can be considerable -- estimated at an additional 0.7 to 1.8 times the initial mass change." This means for each one pound reduction in a primary component, up to 1.8 pounds can be reduced from other structures in the vehicle (i.e., a 180 percent factor).  The report also discusses that a primary variable in the realized secondary weight reduction is whether or not the powertrain components can be included in the mass reduction effort, with the lower end estimates being applicable when powertrain elements are unavailable for mass reduction.  However, another report by the Aluminum Association, which primarily focuses on the use of aluminum as an alternative material for steel, estimated a factor of 64 percent for secondary mass reduction even though some powertrain elements were considered in the analysis.  That report also notes that typical values for this factor vary from 50 to 100 percent.  Although there is a wide variation in stated estimates, synergistic mass reductions do exist, and the effects result in tangible mass reductions.  Mass reductions in a single vehicle component, for example a door side impact/intrusion system, may actually result in a significantly higher weight savings in the total vehicle, depending on how well the manufacturer integrates the modification into the overall vehicle design.  Accordingly, care must be taken when reviewing reports on weight reduction methods and practices to ascertain if compounding effects have been considered or not.
     Mass reduction is broadly applicable across all vehicle subsystems including the engine, exhaust system, transmission, chassis, suspension, brakes, body, closure panels, glazing, seats and other interior components, engine cooling systems and HVAC systems.  It is estimated that up to 1.25 kilograms of secondary weight savings can be achieved for every kilogram of weight saved on a vehicle when all subsystems are redesigned to take into account the initial primary weight savings.[,]  
     Mass reduction can be accomplished by proven methods such as:
      *      Smart Design:  Computer aided engineering (CAE) tools can be used to better optimize load paths within structures by reducing stresses and bending moments applied to structures.  This allows better optimization of the sectional thicknesses of structural components to reduce mass while maintaining or improving the function of the component.  Smart designs also integrate separate parts in a manner that reduces mass by combining functions or the reduced use of separate fasteners. In addition, some "body on frame" vehicles are redesigned with a lighter "unibody" construction. 
      *      Material Substitution:  Substitution of lower density and/or higher strength materials into a design in a manner that preserves or improves the function of the component.  This includes substitution of high-strength steels, aluminum, magnesium or composite materials for components currently fabricated from mild steel.   
      *      Reduced Powertrain Requirements: Reducing vehicle weight sufficiently allows for the use of a smaller, lighter and more efficient engine while maintaining or increasing performance. Approximately half of the reduction is due to these reduced powertrain output requirements from reduced engine power output and/or displacement, changes to transmission and final drive gear ratios. The subsequent reduced rotating mass (e.g., transmission, driveshafts/halfshafts, wheels and tires) via weight and/or size reduction of components are made possible by reduced torque output requirements.
    * Automotive companies have largely used weight savings in some vehicle subsystems to offset or mitigate weight gains in other subsystems from increased feature content (sound insulation, entertainment systems, improved climate control, panoramic roof, etc.). 
    * Lightweight designs have also been used to improve vehicle performance parameters by increased acceleration performance or superior vehicle handling and braking.
Many manufacturers have already announced final future products plans reducing the weight of a vehicle body through the use of high strength steel body-in-white, composite body panels, magnesium alloy front and rear energy absorbing structures reducing vehicle weight sufficiently to allow a smaller, lighter and more efficient engine.   Nissan will be reducing average vehicle curb weight by 15% by 2015.  Ford has identified weight reductions of 250 to 750 lb per vehicle as part of its implementation of known technology within its sustainability strategy between 2011 and 2020. Mazda plans to reduce vehicle weight by 220 pounds per vehicle or more as models are redesigned.[,]  Ducker International estimates that the average curb weight of light-duty vehicle fleet will decrease approximately 2.8% from 2009 to 2015 and approximately 6.5% from 2009 to 2020 via changes in automotive materials and increased change-over from previously used body-on-frame automobile and light-truck designs to newer unibody designs.[230] While the opportunity for mass reductions available to the light-duty fleet may not in all cases be applied directly to the heavy-duty fleet due to the different designs for the expected duty cycles of a "work" vehicle, mass reductions are still available particularly to areas unrelated to the components necessary for the work vehicle aspects.     
Due to the payload and towing requirements of these heavy-duty vehicles, engine downsizing was not considered in the estimates for CO2 reduction in the area of mass reduction/material substitution.  NHTSA and EPA estimate that a 3 percent mass reduction with no engine downsizing results in a 1 percent reduction in fuel consumption.  In addition, a 5 and 10 percent mass reduction with no engine downsizing result in an estimated CO2 reduction of 1.6 and 3.2 percent respectively.  These effectiveness values are 50% of the 2012-2016 light-duty final rule values due to the elimination of engine downsizing for this class of vehicle.
Consistent with the 2012-2016 light-duty final rule, the agencies have estimated the cost of mass reduction at $1.32 per pound (2008$).  For this analysis, the agencies are estimating a 5% mass reduction or, given the baseline weight of current trucks and vans, are estimating costs of $497, $585, $552, and $620 for Class 2b gasoline, 2b diesel, 3 gasoline, 3 diesel trucks and vans, respectively.  All values are in 2009 dollars, are applicable in the 2014 model year and include a low complexity ICM of 1.24.  Flat-portion of the curve learning is considered applicable to mass reduction technologies.
The agencies have recently completed work on an Interim Joint Technical Assessment Report that considers light-duty GHG and fuel economy standards for the years 2017 through 2025.  In that report, the agencies used updated cost estimates for mass reduction which were not available in time for use in the proposal so they were not used.  Since publication of that report, much work has been conducted to update the cost estimates and that work is ongoing and expected to be part of the upcoming joint light-duty proposed rule for 2017 MY and later.  Since that work is ongoing, it is not considered ready for use in this analysis and, therefore, we have chosen to use the same cost estimates as used in the proposal for this action. 
Low Rolling Resistance Tires
Tire rolling resistance is the frictional loss associated mainly with the energy dissipated in the deformation of the tires under load and thus influences fuel efficiency and CO2 emissions.  Other tire design characteristics (e.g., materials, construction, and tread design) influence durability, traction (both wet and dry grip), vehicle handling, and ride comfort in addition to rolling resistance.  A typical LRR tire's attributes would include: increased tire inflation pressure, material changes, and tire construction with less hysteresis, geometry changes (e.g., reduced aspect ratios), and reduction in sidewall and tread deflection.  These changes would generally be accompanied with additional changes to suspension tuning and/or suspension design.

EPA and NHTSA estimated a 1 to 2 percent increase in effectiveness with a 10 percent reduction in rolling resistance, which was based on the 2010 NAS Report findings and consistent with the 2012-2016 light-duty final rule.  
Based on the 2012-2016 light-duty final rule and the 2010 NAS Report, the agencies have estimated the cost for LRR tires to be $7 per Class 2b truck or van, and $10 per Class 3 truck or van (both values in 2009$ and inclusive of a 1.24 low complexity markup).  The higher cost for the Class 3 trucks and vans is due to the predominant use of dual rear tires and, thus, 6 tires per truck.  Due to the commodity-based nature of this technology, cost reductions due to learning are not applied.  This technology is considered applicable to both gasoline and diesel.
Aerodynamic Drag Reduction
Many factors affect a vehicle's aerodynamic drag and the resulting power required to move it through the air.  While these factors change with air density and the square and cube of vehicle speed, respectively, the overall drag effect is determined by the product of its frontal area and drag coefficient, Cd.  Reductions in these quantities can therefore reduce fuel consumption and CO2 emissions.  Although frontal areas tend to be relatively similar within a vehicle class (mostly due to market-competitive size requirements), significant variations in drag coefficient can be observed.  Significant changes to a vehicle's aerodynamic performance may need to be implemented during a redesign (e.g., changes in vehicle shape).  However, shorter-term aerodynamic reductions, with a somewhat lower effectiveness, may be achieved through the use of revised exterior components (typically at a model refresh in mid-cycle) and add-on devices that currently being applied.  The latter list would include revised front and rear fascias, modified front air dams and rear valances, addition of rear deck lips and underbody panels, and lower aerodynamic drag exterior mirrors.
The 2012-2016 light-duty final rule estimated that a fleet average of 10 to 20 percent total aerodynamic drag reduction is attainable which equates to incremental reductions in fuel consumption and CO2 emissions of 2 to 3 percent for both cars and trucks.  These numbers are generally supported by confidential manufacturer data and public technical literature.  For the heavy-duty truck category, a 5 to 10 percent total aerodynamic drag reduction was considered due to the different structure and use of these vehicles equating to incremental reductions in fuel consumption and CO2 emissions of 1 to 2 percent.
Consistent with the 2012-2016 light-duty final rule, the agencies have estimated the cost for this technology at $58 (2009$) including a low complexity ICM of 1.24.  This cost is applicable in the 2014 model year to both gasoline and diesel trucks and vans.
What Are the Projected Technology Packages' Effectiveness and Cost?
The assessment of the final technology effectiveness was developed through the use of the EPA Lumped Parameter model developed for the light-duty rule.  Many of the technologies were common with the light-duty assessment but the effectiveness of individual technologies was appropriately adjusted to match the expected effectiveness when implemented in a heavy-duty application. The model then uses the individual technology effectiveness levels but then takes into account technology synergies. The model is also designed to prevent double counting from technologies that may directly or indirectly impact the same physical attribute (e.g., pumping loss reductions).
To achieve the levels of the final standards for gasoline and diesel powered heavy-duty vehicles, the technology packages were determined to generally require the technologies previously discussed respective to unique gasoline and  diesel technologies. Although some of the technologies may already be implemented in a portion of heavy-duty vehicles, none of the technologies discussed are considered ubiquitous in the heavy-duty fleet.  Also, as would be expected, the available test data shows that some vehicle models will not need the full complement of available technologies to achieve the final standards.  Furthermore, many technologies can be further improved (e.g., aerodynamic improvements) from today's best levels, and so allow for compliance without needing to apply a technology that a manufacturer might deem less desirable. 
Technology costs for HD pickup trucks and vans are shown in Table III-11.
Table III-11 Technology Costs for HD Pickup Trucks & Vans Inclusive of Indirect Cost Markups for the 2014MY (2009$)
Technology
Class 2b Gasoline
Class 2b Diesel
Class 3 Gasoline
Class 3 Diesel
Low friction lubes
$4
$4
$4
$4
Engine friction reduction
$116
N/A
$116
N/A
Stoichiometric gasoline direct injection
$481
N/A
$481
N/A
Engine improvements
N/A
$184
N/A
$184
8s automatic transmission (increment to 6s automatic transmission)
$281
$281
$281
$281
Improved accessories
N/A
$93
N/A
$93
Low rolling resistance tires
$7
$7
$10
$10
Aerodynamic improvements
$58
$58
$58
$58
Electric (or electro/hydraulic) power steering
$115
$115
$115
$115
Aftertreatment improvements
N/A
$119
N/A
$119
Mass reduction (5%)
$497
$585
$552
$620
Air conditioning
$21
$21
$21
$21
Total
$1,558
$1,446
$1,617
$1,484
At 15% phase-in in 2014
$234
$217
$234
$223

Reasonableness of the Final Standards
The final standards are based on the application of the control technologies described in this section.  These technologies are available within the lead time provided, as discussed in RIA Chapter 2.3.  These controls are estimated to add costs of approximately $$1,473 for MY 2018 heavy-duty pickups and vans.  Reductions associated with these costs and technologies are considerable, estimated at a 12 percent reduction of CO2eq emissions from the MY 2010 baseline for gasoline engine-equipped vehicles and 17 percent for diesel engine equipped vehicles, estimated  to result in reductions of  18 MMT of CO2eq emissions over the lifetimes of 2014 through 2018 MY vehicles.  The reductions are cost effective, estimated at $120 per ton of CO2eq removed in 2030.  This cost is consistent with the light-duty rule which was estimated at $100 per ton of CO2eq removed in 2020 excluding fuel savings.  Moreover, taking into account the fuel savings associated with the program, the cost becomes -$190 per ton of CO2eq in 2030.  The cost of controls is fully recovered due to the associated fuel savings, with a payback period within the fifth and sixth year of ownership, as shown in Table VIII-6 below.  Given the large, cost effective emission reductions based on use of feasible technologies which are available in the lead time provided, plus the lack of adverse impacts on vehicle safety or utility, EPA and NHTSA regard these final standards as appropriate and consistent with our respective statutory authorities under CAA section 202 (a) and NHTSA's EISA authority under 49 U.S.C. 32902(k)(2).   
Class 2b-8 Vocational Vehicles
Vocational vehicles cover a wide variety of applications which influence both the body style and usage patterns.  They also are built using a complex process, which includes additional parties such as body builders.  These factors create special sensitivity to concerns of needed lead time, as well as developing standards that do not interfere with vehicles' utility.  The agencies are adopting  a vehicle standard for vocational vehicles for the first phase of the program that relies on less extensive addition of technology than for the other regulatory categories as well as focusing on the chassis manufacturer as the manufacturer subject to the standard.  We believe that future rulemakings will consider increased stringency and possibly more application-specific standards. The agencies are also finalizing standards for the diesel and gasoline engines used in vocational vehicles, similar to those discussed above for Class 7 and 8 tractors.  
What Technologies Did the Agencies Consider to Reduce the CO2 Emissions and Fuel Consumption of Vocational Vehicles?
Similar to the approach taken with tractors, the agencies evaluated aerodynamic, tire, idle reduction, weight reduction, hybrid powertrain, and engine technologies and their impact on reducing fuel consumption and GHG emissions.  The engines used in vocational vehicles include both gasoline and diesel engines, thus, each type is discussed separately below.  As explained in Section II.D.1.b, the final regulatory structure for heavy-duty engines separates the compression ignition (or "diesel") engines into three regulatory subcategories -  light heavy, medium heavy, and heavy heavy diesel engines --  while spark ignition (or "gasoline") engines are a single regulatory subcategory (an approach for which there was consensus in the public comments).  Therefore, the subsequent discussion will assess each type of engine separately.
Vehicle Technologies
Vocational vehicles typically travel fewer miles than combination tractors.  They also tend to be used in more urban locations (with consequent stop and start drive cycles).  Therefore the average speed of vocational vehicles is significantly lower than tractors.    This has a significant effect on the types of technologies that are appropriate to consider for reducing CO2 emissions and fuel consumption.
The agencies considered the type of technologies for vocational vehicles based on the energy losses of a typical vocational vehicle.  The technologies are similar to the ones considered for tractors.  Argonne National Lab conducted an energy audit using simulation tools to evaluate the energy losses of vocational vehicles, such as a Class 6 pickup and delivery truck.  Argonne found that 74 percent of the energy losses are attributed to the engine, 13 percent to tires, 9 percent to aerodynamics, two percent to transmission losses, and the remaining four percent of losses to axles and accessories for a medium-duty truck traveling at 30 mph.  
Low Rolling Resistance Tires:  Tires are the second largest contributor to energy losses of vocational vehicles, as found in the energy audit conducted by Argonne National Lab (as just mentioned).  The range of rolling resistance of tires used on vocational vehicles today is large.  This is in part due to the fact that the competitive pressure to improve rolling resistance of vocational vehicle tires has been less than that found in the line haul tire market.  In addition, the drive cycles typical for these applications often lead truck buyers to value tire traction and durability more heavily than rolling resistance.  Therefore, the agencies concluded that a regulatory program that seeks to optimize tire rolling resistance in addition to traction and durability can bring about fuel consumption and CO2 emission reductions from this segment.  The 2010 NAS report states that rolling resistance impact on fuel consumption reduces with mass of the vehicle and with drive cycles with more frequent starts and stops.  The report found that the fuel consumption reduction opportunity for reduced rolling resistance ranged between one and three percent in the 2010 through 2020 timeframe.  The agencies estimate that average rolling resistance from tires in 2010 model year can be reduced by 10 percent by 2014 model year based on the tire development achievements over the last several years in the line haul truck market which would lead to a 2 percent reduction in fuel consumption based on GEM.
Aerodynamics:  The Argonne National lab work shows that aerodynamics have less of an impact on vocational vehicle energy losses than do engines or tires.  In addition, the aerodynamic performance of a complete vehicle is significantly influenced by the body of the truck.  The agencies are not finalizing to regulate body builders in this phase of regulations for the reasons discussed in Section II.  Therefore, we are not basing any of the final standards for vocational vehicles on aerodynamic improvements.  Nor would aerodynamic performance be input into GEM to demonstrate compliance.   
Weight Reduction:  NHTSA and EPA are also not basing any of the final standards on use of vehicle weight reduction.  Thus, vehicle mass reductions would not be input into GEM.  The vocational vehicle models are not designed to be application-specific.  Therefore weight reductions are difficult to quantify.  
Drivetrain:  Optimization of vehicle gearing to engine performance through selection of transmission gear ratios, final drive gear ratios and tire size can play a significant role in reducing fuel consumption and GHGs.  Optimization of gear selection versus vehicle and engine speed accomplished through driver training or automated transmission gear selection can provide additional reductions.  The 2010 NAS report found that the opportunities to reduce fuel consumption in heavy-duty vehicles due to transmission and driveline technologies in the 2015 timeframe ranged between 2 and 8 percent.  Initially, the agencies considered reflecting transmission choices and technology in our standard setting process for both tractors and vocational vehicles (see previous discussion above on automated manual and automatic transmissions for tractors).  We have however decided not to do so for the following reasons. 
The primary factors that determine optimum gear selection are vehicle weight, vehicle aerodynamics, vehicle speed, and engine performance typically considered on a two dimensional map of engine speed and torque.  For a given power demand (determined by speed, aerodynamics and vehicle mass) an optimum transmission and gearing setup will keep the engine power delivery operating at the best speed and torque points for highest engine efficiency.  Since power delivery from the engine is the product of speed and torque a wide range of torque and speed points can be found that deliver adequate power, but only a smaller subset will provide power with peak efficiency.  Said more generally, the design goal is for the transmission to deliver the needed power to the vehicle while maintaining engine operation within the engine's "sweet spot" for most efficient operation.  Absent information about vehicle mass and aerodynamics (which determines road load at highway speeds) it is not possible to optimize the selection of gear ratios for lowest fuel consumption.  Truck and chassis manufacturers today offer a wide range of tire sizes, final gear ratios and transmission choices so that final bodybuilders can select an optimal combination given the finished vehicle weight, general aerodynamic characteristics and expected average speed.  In order to set fuel efficiency and GHG standards that would reflect these optimizations, the agencies would need to regulate a wide range of small entities that are final bodybuilders, would need to set a large number of uniquely different standards to reflect the specific weight and aerodynamic differences and finally would need test procedures to evaluate these differences that would not themselves be excessively burdensome.  Finally, the agencies would need the underlying data regarding effectively all of the vocational trucks produced today in order to determine the appropriate standards.  Because the market is already motivated to reach these optimizations themselves today, because we have insufficient data to determine appropriate standards, and finally, because we believe the testing burden would be unjustifiably high, we are not finalizing to reflect transmission and gear ratio optimization in our GEM model or in our standard setting. 
Idle Reduction:  Episodic idling by vocational vehicles occurs during the workday, unlike the overnight idling of combination tractors (see discussion in Section III.A.2.a).  Vocational vehicle idling can be divided into two typical types.  The first type is idling while waiting  -  such as during a pickup or delivery.  This type of idling can be reduced through automatic engine shut-offs.  The second type of idling is to accomplish PTO operation, such as compacting garbage or operating a bucket.  The agencies have found only one study that quantifies the emissions due to idling conducted by Argonne National Lab based on 2002 VIUS data.  EPA conducted a work assignment to assist in characterizing PTO operations.  The study of a utility truck used in two different environments (rural and urban) and a refuse hauler found that the PTO operated on average 28 percent of time relative to the total time spent driving and idling.  The use of hybrid powertrains to reduce idling is discussed below.
Hybrid Powertrains:  Several types of vocational vehicles are well suited for hybrid powertrains.  Vehicles such as utility or bucket trucks, delivery vehicles, refuse haulers, and buses have operational usage patterns with either a significant amount of stop-and-go activity or spend a large portion of their operating hours idling the main engine to operate a PTO unit.  The industry is currently developing three types of hybrid powertrain systems  -  hydraulic, electric, and plug-in electric.  The hybrids developed to date have seen fuel consumption and CO2 emissions reductions between 20 and 50 percent in the field.  However, there are still some key issues that are restricting the penetration of hybrids, including overall system cost, battery technology, and lack of cost-effective electrified accessories.  We have not predicated the standards based on the use of hybrids reflecting the still nascent level of technology development and the very small fraction of vehicle sales they would be expected to account for in this timeframe -- on the order of only a percent or two.  Were we to overestimate the number of hybrids that could be produced, we would set a standard that is not feasible.  We believe that it is more appropriate given the status of technology development and our high hopes for future advancements in hybrid technologies to encourage their production through incentives.  However, to create an incentive for early introduction of hybrid powertrains into the vocational vehicle fleet, the agencies are adopting the proposed advanced technology credits if hybrid powertrains are used as a technology to meet the vocational vehicle standard, as described in Section IV. 
Gasoline Engine Technologies
The gasoline (or spark ignited) engines certified and sold as loose engines into the heavy-duty truck market are typically large V8 and V10 engines produced by General Motors and Ford.  The basic engine architecture of these engines is the same as the versions used in the heavy-duty pickup trucks and vans.  Therefore, the technologies analyzed by the agencies mirror the gasoline engine technologies used in the heavy-duty pickup truck analysis in Section III.B above.  
Building on the technical analysis underlying the 2012-2016 MY light-duty vehicle rule, the agencies took a fresh look at technology effectiveness values for purposes of this analysis using a starting point the estimates from that rule.  The agencies then considered the impact of test procedures (such as higher test weight of HD pickup trucks and vans) on the effectiveness estimates.  The agencies also considered other sources such as the 2010 NAS Report, recent CAFE compliance data, 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.  
The agencies note that the effectiveness values estimated for the technologies may represent average values, and do not reflect the potentially-limitless spectrum of possible values that could result from adding the technology to different vehicles.  For example, while the agencies have estimated an effectiveness of 0.5 percent for low friction lubricants, each vehicle could have a unique effectiveness estimate depending on the baseline vehicle's oil viscosity rating.  For purposes of this final rulemaking, NHTSA and EPA believe that employing average values for technology effectiveness estimates is an appropriate way of recognizing the potential variation in the specific benefits that individual manufacturers (and individual engines) might obtain from adding a fuel-saving technology.  

Baseline Engine:  Similar to the gasoline engine used as the baseline in the light-duty GHG rule, the agencies assumed the baseline engine in this segment to be a naturally aspirated, overhead valve V8 engine.  The agencies did not receive any comments regarding the baseline engine assumptions in the proposal.  The following discussion of effectiveness is generally in comparison to 2010 baseline engine performance.
For the final rulemaking, the agencies considered the same set of technologies for loose gasoline engines as the proposal.  The agencies did not receive any significant comments suggesting the consideration of other technologies to reduce the fuel consumption and CO2 emissions from heavy-duty gasoline engines.  The technologies the agencies considered include the following:
Engine Friction Reduction:  In addition to low friction lubricants, manufacturers can also reduce friction and improve fuel consumption by improving the design of engine components and subsystems. Examples include improvements in low-tension piston rings, piston skirt design, roller cam followers, improved crankshaft design and bearings, material coatings, material substitution, more optimal thermal management, and piston and cylinder surface treatments. The 2010 NAS, NESCCAF and EEA reports as well as confidential manufacturer data used in the light-duty vehicle rulemaking suggested a range of effectiveness for engine friction reduction to be between 1 to 3 percent.  NHTSA and EPA continue to believe that this range is accurate.
Coupled Cam Phasing:  Valvetrains with coupled (or coordinated) cam phasing can modify the timing of both the inlet valves and the exhaust valves an equal amount by phasing the camshaft of a single overhead cam engine or an overhead valve engine.  Based on the 2012-2016 MY light-duty vehicle rule, previously-received confidential manufacturer data, and the NESCCAF report, NHTSA and EPA estimated the effectiveness of couple cam phasing CCP to be between 1 and 4 percent.  NHTSA and EPA reviewed this estimate for purposes of the NPRM, and continue to find it accurate. 
Cylinder Deactivation:  In conventional spark-ignited engines throttling the airflow controls engine torque output. At partial loads, efficiency can be improved by using cylinder deactivation instead of throttling. Cylinder deactivation can improve engine efficiency by disabling or deactivating (usually) half of the cylinders when the load is less than half of the engine's total torque capability  -  the valves are kept closed, and no fuel is injected  -  as a result, the trapped air within the deactivated cylinders is simply compressed and expanded as an air spring, with reduced friction and heat losses. The active cylinders combust at almost double the load required if all of the cylinders were operating. Pumping losses are significantly reduced as long as the engine is operated in this "part cylinder" mode.  Effectiveness improvements scale roughly with engine displacement-to-vehicle weight ratio - the higher displacement-to-weight vehicles, operating at lower relative loads for normal driving, have the potential to operate in part-cylinder mode more frequently.  Therefore, the agencies reduced the effectiveness assumed from this technology for trucks because of the lower displacement-to-weight ratio relative to light-duty vehicles.  NHTSA and EPA adjusted the 2010 light-duty vehicle final rule estimates using updated power to weight ratings of heavy-duty trucks and confidential business information and confirmed a range of 3 to 4 percent for these vehicles.
Stoichiometric gasoline direct injection:  SGDI (also known as spark-ignition direct injection engines) inject fuel at high pressure directly into the combustion chamber (rather than the intake port in port fuel injection). Direct injection of the fuel into the cylinder improves cooling of the air/fuel charge within the cylinder, which allows for higher compression ratios and increased thermodynamic efficiency without the onset of combustion knock. Recent injector design advances, improved electronic engine management systems and the introduction of multiple injection events per cylinder firing cycle promote better mixing of the air and fuel, enhance combustion rates, increase residual exhaust gas tolerance and improve cold start emissions. SGDI engines achieve higher power density and match well with other technologies, such as boosting and variable valvetrain designs.  The 2012-2016 MY  light-duty vehicle final rule estimated the effectiveness of SGDI to be between 2 and 3 percent.  NHTSA and EPA revised these estimated accounting for the use and testing methods for these vehicles along with confidential business information estimates received from manufacturers while developing the program. Based on these revisions, NHTSA and EPA estimate the range of 1 to 2 percent for SGDI.  
Diesel Engine Technologies
Different types of diesel engines are used in vocational vehicles, depending on the application.  They fall into the categories of Light, Medium, and Heavy Heavy-duty Diesel engines.  The Light Heavy-duty Diesel engines typically range between 4.7 and 6.7 liters displacement.  The Medium Heavy-duty Diesel engines typically have some overlap in displacement with the Light Heavy-duty Diesel engines and range between 6.7 and 9.3 liters.  The Heavy Heavy-duty Diesel engines typically are represented by engines between 10.8 and 16 liters.  
Baseline Engine:  There are three baseline diesel engines, a Light, Medium, and a Heavy Heavy-duty Diesel engine.  The agencies developed the baseline diesel engine as a 2010 model year engine with an aftertreatment system which meets EPA's 0.2 grams of NOX/bhp-hr standard with an SCR system along with EGR and meets the PM emissions standard with a diesel particulate filter with active regeneration.  The engine is turbocharged with a variable geometry turbocharger.  The following discussion of technologies describes improvements over the 2010 model year baseline engine performance, unless otherwise noted.  Further discussion of the baseline engine and its performance can be found in Section III.C.2.(c)(i) below.  The following discussion of effectiveness is generally in comparison to 2010 baseline engine performance, and is in reference to performance in terms of the Heavy-duty FTP that would be used for compliance for these engine standards.  This is in comparison to the steady state SET procedure that would be used for compliance purposes for the engines used in Class 7 and 8 tractors.  See Section II.B.2.(i) above.
Turbochargers:  Improved efficiency of a turbocharger compressor or turbine could reduce fuel consumption by approximately 1 to 2 percent over today's variable geometry turbochargers in the market today.  The 2010 NAS report identified technologies such as higher pressure ratio radial compressors, axial compressors, and dual stage turbochargers as design paths to improve turbocharger efficiency.
Low Temperature Exhaust Gas Recirculation: Most LHDD, MHDD, and HHDD engines sold in the U.S. market today use cooled EGR, in which part of the exhaust gas is routed through a cooler (rejecting energy to the engine coolant) before being returned to the engine intake manifold. EGR is a technology employed to reduce peak combustion temperatures and thus NOX. Low-temperature EGR uses a larger or secondary EGR cooler to achieve lower intake charge temperatures, which tend to further reduce NOX formation. If the NOX requirement is unchanged, low-temperature EGR can allow changes such as more advanced injection timing that will increase engine efficiency slightly more than one percent.  Because low-temperature EGR reduces the engine's exhaust temperature, it may not be compatible with exhaust energy recovery systems such as turbocompound or a bottoming cycle.
Engine Friction Reduction:  Reduced friction in bearings, valve trains, and the piston-to-liner interface will improve efficiency. Any friction reduction must be carefully developed to avoid issues with durability or performance capability.  Estimates of fuel consumption improvements due to reduced friction range from 0.5 to 1.5 percent. 
Selective catalytic reduction:  This technology is common on 2010 heavy-duty diesel engines.  Because SCR is a highly effective NOX aftertreatment approach, it enables engines to be optimized to maximize fuel efficiency, rather than minimize engine-out NOX.  2010 SCR systems are estimated to result in improved engine efficiency of approximately 4 to 5 percent compared to a 2007 in-cylinder EGR-based emissions system and by an even greater percentage compared to 2010 in-cylinder approaches.  As more effective low-temperature catalysts are developed, the NOX conversion efficiency of the SCR system will increase. Next-generation SCR systems could then enable still further efficiency improvements; alternatively, these advances could be used to maintain efficiency while down-sizing the aftertreatment. We estimate that continued optimization of the catalyst could offer 1 to 2 percent reduction in fuel use over 2010 model year systems in the 2014 model year. The agencies also estimate that continued refinement and optimization of the SCR systems could provide an additional 2 percent reduction in the 2017 model year.
Improved Combustion Process:  Fuel consumption reductions in the range of 1 to 4 percent are identified in the 2010 NAS report through improved combustion chamber design, higher fuel injection pressure, improved injection shaping and timing, and higher peak cylinder pressures.
Reduced Parasitic Loads:  Accessories that are traditionally gear or belt driven by a vehicle's engine can be optimized and/or converted to electric power. Examples include the engine water pump, oil pump, fuel injection pump, air compressor, power-steering pump, cooling fans, and the vehicle's air-conditioning system. Optimization and improved pressure regulation may significantly reduce the parasitic load of the water, air and fuel pumps.  Electrification may result in a reduction in power demand, because electrically powered accessories (such as the air compressor or power steering) operate only when needed if they are electrically powered, but they impose a parasitic demand all the time if they are engine driven. In other cases, such as cooling fans or an engine's water pump, electric power allows the accessory to run at speeds independent of engine speed, which can reduce power consumption. The TIAX study used 2 to 4 percent fuel consumption improvement for accessory electrification, with the understanding that electrification of accessories will have more effect in short-haul/urban applications and less benefit in line-haul applications.
What Is the Projected Technology Package's Effectiveness and Cost?
Vocational Vehicles
Baseline Vocational Vehicle Performance
The baseline vocational vehicle model is defined in GEM, as described in RIA Chapter 4.4.6.  The agencies used a baseline rolling resistance coefficient for today's vocational vehicle fleet of 9 kg/metric ton.  Further vehicle technology is not included in this baseline, as discussed below in the discussion of the baseline vocational vehicle.  The baseline engine fuel consumption represents a 2010 model year diesel engine, as described in RIA Chapter 4.  Using these values, the baseline performance of these vehicles is included in Table III-12.
Table III-12: Baseline Vocational Vehicle Performance

                              Vocational Vehicle

                               Light Heavy-Duty
                               Medium Heavy-Duty
                               Heavy Heavy-Duty
Fuel Consumption Baseline (gallon/1,000 ton-mile)
                                     40.9
                                     24.9
                                     23.7
CO2 Baseline (grams CO2/ton-mile)
                                      417
                                      253
                                      241

Vocational Vehicle Technology Package
The final program for vocational vehicles for this phase of regulatory standards is based on the performance of tire and engine technologies.  Aerodynamics technology, weight reduction, drive train improvement, and hybrid power trains are not included for the reasons discussed above in Section III.C (1). 
The assessment of the final technology effectiveness was developed through the use of the GEM.  To account for the two final engine standards, EPA is finalizing the use of a 2014 model year fuel consumption map in GEM to derive the 2014 model year truck standard and a 2017 model year fuel consumption map to derive the 2017 model year truck standard.  (These fuel consumption maps reflect the main standards for HD diesel engines, not the alternative engine standards.)  EPA estimates that the rolling resistance of tires can be reduced by 10 percent in the 2014 model year.  The vocational vehicle standards for all three regulatory categories were determined using a tire rolling resistance coefficient of 7.7 kg/metric ton with a 100 percent application rate by the 2014 model year.  The set of input parameters which are modeled in GEM are shown in Table III-13.  
Table III-13: GEM Inputs for Final Vocational Vehicle Standards

                                    2014 MY
                                    2017 MY
Engine
                2014 MY 7L for LHD/MHD and 15L for HHD Trucks 
                 2017 MY 7L for LHD/MHD and 15L for HHD Trucks
Tire Rolling Resistance (kg/metric ton)
                                      7.7
                                      7.7
The agencies developed the final standards by using the engine and tire rolling resistance inputs in the GEM, as shown in Table III-13.  The percent reductions shown in Table III-14 reflect improvements over the 2010 model year baseline vehicle with a 2010 model year baseline engine.
Table III-14: Final Vocational Vehicle Standards and Percent Reductions

                              Vocational Vehicle

                               Light Heavy-Duty
                               Medium Heavy-Duty
                               Heavy Heavy-Duty
2016 MY Fuel Consumption Standard (gallon/1,000 ton-mile)
                                     38.0
                                     23.0
                                     22.2
2017 MY Fuel Consumption Standard (gallon/1,000 ton-mile)
                                     36.6
                                     22.1
                                     21.8
2014 MY CO2 Standard (grams CO2/ton-mile)
                                      387
                                      234
                                      226
2017 MY CO2 Standard (grams CO2/ton-mile)
                                      373
                                      225
                                      222
Percent Reduction from 2010 baseline in 2014 MY
                                      7%
                                      8%
                                      6%
Percent Reduction from 2010 baseline in 2017 MY
                                      11%
                                      11%
                                      8%

Technology Package Cost
The agencies did not receive any substantial comments on the engine costs proposed.  Thus the agencies are projecting the costs of these final standards based on the costs used in the proposal, but revised to reflect 2009$ and new ICMs.  EPA and NHTSA developed the costs of LRR tires based on the ICF report.  The estimated cost per truck is $162 (2009$) for LHD and MHD trucks and $194 (2009$) for HHD trucks.  These costs include a low complexity ICM of 1.18 and are applicable in the 2014 model year.  
Reasonableness of the Final Standards
The final standards would not only add only a small amount to the vehicle cost, but are highly cost effective, an estimated $20 ton of CO2eq per vehicle in 2030. This is even less than the estimated cost effectiveness for CO2eq removal under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Moreover, the modest cost of controls is recovered almost immediately due to the associated fuel savings, as shown in the payback analysis included in Table VIII-7.  Given that the standards are technically feasible within the lead time afforded by the 2014 model year, are inexpensive and highly cost effective, and do not have other adverse potential impacts (e.g., there are no projected negative impacts on safety or vehicle utility), the final standards represent a reasonable choice under section 202(a) of the CAA and NHTSA's EISA authority under 49 U.S.C. 32902(k)(2), and the agencies believe that the standards are consistent with their respective authorities. 
Alternative Vehicle Standards Considered
The agencies are not finalizing vehicle standards less stringent than the final standards because the agencies believe these standards are highly cost effective, as just explained.
The agencies considered finalizing truck standards which are more stringent reflecting the inclusion of hybrid powertrains in those vocational vehicles where use of hybrid powertrains is appropriate.  The agencies estimate that a 25 percent utilization rate of hybrid powertrains in MY 2017 vocational vehicles would add, on average, $30,000 to the cost of each vehicle and more than double the cost of the rule for this sector.  See the RIA at Chapter 6.1.8.  The emission reductions associated with these very high costs appear to be modest.  See the RIA Table 6-14.  In addition, the agencies are finalizing flexibilities in the form of generally applicable credit opportunities for advanced technologies, to encourage use of hybrid powertrains.  See Section IV.C. 2 below.  For these reasons, the agencies are not adopting more stringent standards for vocational vehicles. 
Gasoline Engines
Baseline Gasoline Engine Performance
EPA and NHTSA developed the reference heavy-duty gasoline engines to represent a 2010 model year engine compliant with the 0.20 g/bhp-hr NOX standard for on-highway heavy-duty engines.  
NHTSA and EPA developed the baseline fuel consumption and CO2 emissions for the gasoline engines from manufacturer reported CO2 values used in the certification of non-GHG pollutants.  The baseline engine for the analysis was developed to represent a 2011 model year engine, because this is the most current information available.  The average CO2 performance of the heavy-duty gasoline engines was 660 g/bhp-hour, which will be used as a baseline.  The baseline gasoline engines are all stoichiometric port fuel injected V-8 engines without cam phasers or other variable valve timing technologies.  While they may reflect some degree of static valve timing optimization for fuel efficiency they do not reflect the potential to adjust timing with engine speed.
Gasoline Engine Technology Package Effectiveness
The gasoline engine technology package includes engine friction reduction, coupled cam phasing, and SGDI to produce an overall five percent reduction from the reference engine based on the Heavy-duty Lumped Parameter model.  The agencies are projecting a 100 percent application rate of this technology package to the heavy-duty gasoline engines, which results in a CO2 standard of 627 g/bhp-hr and a fuel consumption standard of 7.05 gallon/100 bhp-hr.  As discussed in Section II.D.b.ii, the agencies are adopting gasoline engine standards that begin in the 2016 model year based on the agencies' projection of the engine redesign schedules of the small number of engines in this category.
Gasoline Engine Technology Package Cost
For the proposed costs, the agencies considered both the direct or "piece" costs and indirect costs of individual components of technologies.  For the direct costs, the agencies followed a BOM approach employed by NHTSA and EPA in the 2012-2016 LD rule. In the final rule, the agencies are using marked up gasoline engine technology costs developed for the HD Pickup Truck and Van segment because these engines are made by the same manufacturers (primarily by Ford and GM) and are simply, sold as loose engines rather than as complete vehicles.  Hence the engine cost estimates are fundamentally the same.  The agencies did not receive any comments recommending adjustments to the proposed gasoline engine technology costs.  The costs summarized in Table III-15 are consistent with the proposed values, but updated to reflect 2009$ and new ICMs.  The costs shown in Table III-15 include a low complexity ICM of 1.24 and are applicable in the 2016 model year.  No learning effects are applied to engine friction reduction costs, while flat-portion of the curve learning is considered applicable to both coupled cam phasing and SGDI.
Table III-15: Heavy-duty Gasoline Engine Technology Costs inclusive of Indirect Cost Markups (2009$)

                                    2016MY
Engine Friction Reduction
                                      $95
Coupled Cam Phasing
                                      $46
Stoichiometric Gas Direct Injection
                                     $452
Total
                                     $594

Reasonableness of the Final Standard
The final engine standards appear to be reasonable and consistent with the agencies' respective authorities.  With respect to the 2016 MY standard, all of the technologies on which the standards are predicated have been demonstrated and their effectiveness is well documented.  The final standards reflect a 100 percent application rate for these technologies.  The costs of adding these technologies remain modest across the various engine classes as shown in Table III-15.  Use of these technologies would add only a small amount to the cost of the vehicle, and the associated reductions are highly cost effective, an estimated $20 per ton of CO2eq per vehicle.  This is even more cost effective than the estimated cost effectiveness for CO2eq removal and fuel economy improvement under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Accordingly, EPA and NHTSA view these standards as reflecting an appropriate balance of the various statutory factors under section 202(a) of the CAA and under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
Alternative Gasoline Engine Standards Considered
The agencies are not finalizing gasoline standards less stringent than the final standards because the agencies believe these standards are feasible in the lead time provided, inexpensive, and highly cost effective.  
The final rule reflects 100 percent penetration of the technology package on whose performance the standard is based, so some additional technology would need to be added to obtain further improvements.  The agencies considered finalizing gasoline engine standards which are more stringent reflecting the inclusion of cylinder deactivation and other advanced technologies.  However, the agencies are not finalizing this level of stringency because our assessment is that these technologies would not be available for production by the 2017 model year.  
Diesel Engines
Baseline Diesel Engine Performance
EPA and NHTSA developed the baseline heavy-duty diesel engines to represent a 2010 model year engine compliant with the 0.20 g/bhp-hr NOX standard for on-highway heavy-duty engines.  
The agencies utilized 2007 through 2011 model year CO2 certification levels from the Heavy-duty FTP cycle as the basis for the baseline engine CO2 performance.  The pre-2010 data are subsequently adjusted to represent 2010 model year engine maps by using predefined technologies including SCR and other systems that are being used in current 2010 production.  The engine CO2 results were then sales weighted within each regulatory subcategory to develop an industry average 2010 model year reference engine, as shown in Table III-16.  The level of CO2 emissions and fuel consumption of these engines varies significantly, where the engine with the highest CO2 emissions is estimated to be 20 percent greater than the sales weighted average.  Details of this analysis are included in RIA Chapter 2.
Table III-16: 2010 Model Year Reference Diesel Engine Performance Over the Heavy-duty FTP Cycle

CO2 Emissions (g/bhp-hr)
Fuel Consumption (gallon/100 bhp-hr)
LHD Diesel
630
6.19
MHD Diesel
630
6.19
HHD Diesel
584
5.74
Diesel Engine Packages
The diesel engine technology packages for the 2014 model year include engine friction reduction, improved aftertreatment effectiveness, improved combustion processes, and low temperature EGR system optimization.  The improvements in parasitic and friction losses come through piston designs to reduce friction, improved lubrication, and improved water pump and oil pump designs to reduce parasitic losses.  The aftertreatment improvements are available through lower backpressure of the systems and optimization of the engine-out NOX levels.  Improvements to the EGR system and air flow through the intake and exhaust systems, along with turbochargers can also produce engine efficiency improvements. It should be pointed out that individual technology improvements are not additive to each other due to the interaction of technologies.  The agencies assessed the impact of each technology over the Heavy-duty FTP and project an overall cycle improvement in the 2014 model year of 3 percent for HHD diesel engines and 5 percent for LHD and MHD diesel engines, as detailed in RIA Chapter 2.4.2.9 and 2.4.2.10.  EPA used a 100 percent application rate of this technology package to determine the level of the final 2014 MY standards
Recently, EPA's heavy-duty highway engine program for criteria pollutants provided new emissions standards for the industry in three year increments.  The heavy-duty engine manufacturer product plans have fallen into three year cycles to reflect this environment.  EPA is finalizing set CO2 emission standards recognizing the opportunity for technology improvements over this timeframe while reflecting the typical heavy-duty engine manufacturer product plan cycles.  Thus, the agencies are finalizing to establish initial standards for the 2014 model year and a more stringent standard for heavy-duty engines beginning in the 2017 model year.
The 2017 model year technology package for LHD and MHD diesel engine includes continued development and refinement of the 2014 model year technology package, in particular the additional improvement to aftertreatment systems.  This package leads to a projected 9 percent reduction for LHD and MHD diesel engines in the 2017 model year.  The HHD diesel engine technology packages for the 2017 model year include the continued development of the 2014 model year technology package plus turbocompounding.  A similar approach to evaluating the impact of individual technologies as taken to develop the overall reduction of the 2014 model year package was taken with the 2017 model year package.  The Heavy-duty FTP cycle improvements lead to a 5 percent reduction on the cycle for HHDD, as detailed in RIA Chapter 2.4.2.13.  The agencies used a 100 percent application rate of the technology package to determine the final 2017 MY standards.  The agencies believe that bottom cycling technologies are still in the development phase and will not be ready for production by the 2017 model year.  Therefore, these technologies were not included in determining the stringency of the final standards.  However, we do believe the bottoming cycle approach represents a significant opportunity to reduce fuel consumption and GHG emissions in the future.  EPA and NHTSA are therefore both finalizing provisions described in Section IV to create incentives for manufacturers to continue to invest to develop this technology.
The overall projected improvements in CO2 emissions and fuel consumption over the baseline are included in Table III-17.
Table III-17: Percent Fuel Consumption and CO2 Emission Reductions Over the Heavy-duty FTP Cycle

2014
2017
LHD Diesel
5%
9%
MHD Diesel
5%
9%
HHD Diesel
3%
5%
Technology Package Costs
NHTSA and EPA jointly developed costs associated with the engine technologies to assess an overall package cost for each regulatory category.  Our engine cost estimates for diesel engines used in vocational vehicles include a separate analysis of the incremental part costs, research and development activities, and additional equipment, such as emissions equipment to measure N2O emissions.  Our general approach used elsewhere in this action (for HD pickup trucks, gasoline engines, Class 7 and 8 tractors, and Class 2b-8 vocational vehicles) estimates a direct manufacturing cost for a part and marks it up based on a factor to account for indirect costs.  See also 75 FR 25376.  We believe that approach is appropriate when compliance with final standards is achieved generally by installing new parts and systems purchased from a supplier.  In such a case, the supplier is conducting the bulk of the research and development on the new parts and systems and including those costs in the purchase price paid by the original equipment manufacturer.  The indirect costs incurred by the original equipment manufacturer need not include much cost to cover research and development since the bulk of that effort is already done.  For the MHD and HHD diesel engine segment, however, the agencies believe we can make a more accurate estimate of technology cost using this alternate approach because the primary cost is not expected to be the purchase of parts or systems from suppliers or even the production of the parts and systems, but rather the development of the new technology by the original equipment manufacturer itself.  Therefore, the agencies believe it more accurate to directly estimate the indirect costs.  EPA commonly uses this approach in cases where significant investments in research and development can lead to an emission control approach that requires no new hardware.  For example, combustion optimization may significantly reduce emissions and cost a manufacturer millions of dollars to develop but will lead to an engine that is no more expensive to produce.  Using a bill of materials approach would suggest that the cost of the emissions control was zero reflecting no new hardware and ignoring the millions of dollars spent to develop the improved combustion system.  Details of the cost analysis are included in the RIA Chapter 2.  To reiterate, we have used this different approach because the MHD and HHD diesel engines are expected to comply in large part via technology changes that are not reflected in new hardware but rather knowledge gained through laboratory and real world testing that allows for improvements in control system calibrations  -  changes that are more difficult to reflect through direct costs with indirect cost multipliers.
The agencies developed the engineering costs for the research and development of diesel engines with lower fuel consumption and CO2 emissions.  The aggregate costs for engineering hours, technician support, dynamometer cell time, and fabrication of prototype parts are estimated at $6.8 million (2009$) per manufacturer per year over the five years covering 2012 through 2016.  In aggregate, this averages out to $284 per engine during 2012 through 2016 using an annual sales value of 600,000 light-, medium- and heavy-HD engines.  The agencies received comments from Horriba regarding the assumption the agencies used in the proposal that said manufacturers would need to purchase new equipment for measuring N20 and the associated costs.  Horriba provided information regarding the cost of stand-alone FTIR instrumentation (estimated at $50,000 per unit) and cost of upgrading existing emission measurement systems with NDIR analyzers (estimated at $25,000 per unit).  The agencies further analyzed our assumptions along with Horriba's comments.  Thus, we have revised the equipment costs estimates and assumed that 75 percent of manufacturers would update existing equipment while the other 25 percent would require new equipment.  The agencies are estimating costs of $63,087 (2009$) per engine manufacturer per engine subcategory (light-, medium- and heavy-HD) to cover the cost of purchasing photo-acoustic measurement equipment for two engine test cells. This would be a one-time cost incurred in the year prior to implementation of the standard (i.e., the cost would be incurred in 2013).  In aggregate, this averages out to less than $1 per engine in 2013 using an annual sales value of 600,000 light-, medium- and heavy-HD engines.
EPA also developed the incremental piece cost for the components to meet each the 2014 and 2017 standards.  These costs shown in Table III-18 which include a low complexity ICM of 1.15; flat-portion of the curve learning is considered applicable to each technology.
Table III-18: Heavy-duty Diesel Engine Component Costs inclusive of Indirect Cost Markups (2009$)

2014 Model Year
2017 Model Year
Cylinder Head (flow optimized, increased firing pressure, improved thermal management)
$6 (MHD & HH)
$11 (LHD)
$6 (MHD & HHD)
$10 (LHD)
Exhaust Manifold (flow optimized, improved thermal management)
$0
$0
Turbocharger (improved efficiency)
$18
$17
EGR Cooler (improved efficiency)
$4
$3
Water Pump (optimized, variable vane, variable speed)
$91
$84
Oil Pump (optimized)
$5
$4
Fuel Pump (higher working pressure, increased efficiency, improved pressure regulation)
$5
$4
Fuel Rail (higher working pressure)
$10 (MHD & HHD)
$12 (LHD)
$9 (MHD & HHD)
$11 (LHD)
Fuel Injector (optimized, improved multiple event control, higher working pressure)
$11 (MHD & HHD)
$15 (LHD)
$10 (MHD & HHD)
$13 (LHD)
Piston (reduced friction skirt, ring and pin)
$3
$3
Aftertreatment system (improved effectiveness SCR, dosing, dpf)[a]
$0 (MHD & HHD)
$111 (LHD)
$0 (MHD & HHD)
$101 (LHD)
Valve Train (reduced friction, roller tappet)
$82 (MHD)
$109 (LHD)
$76 (MHD)
$101 (LHD)
    Note:
    [a] Note that costs for aftertreatment improvements for MHD and HHD diesel engines are covered via the engineering costs (see text).  For LH diesel engines, we have included the cost of aftertreatment improvements as a technology cost.
The overall costs for each diesel engine regulatory subcategory are included in Table III-19.
Table III-19: Diesel Engine Technology Costs per Engine (2009$)
                                       
                                     2014
                                     2017
LHD Diesel
                                     $388
                                     $358
MHD Diesel
                                     $234
                                     $216
HHD Diesel
                                     $234
                                     $216
Reasonableness of the Final Standards
The final engine standards appear to be reasonable and consistent with the agencies' respective authorities.  With respect to the 2014 and 2017 MY standards, all of the technologies on which the standards have already been demonstrated and their effectiveness is well documented.  The final standards reflect a 100 percent application rate for these technologies.  The costs of adding these technologies remain modest across the various engine classes as shown in Table III-19.  Use of these technologies would add only a small amount to the cost of the vehicle, and the associated reductions are highly cost effective, an estimated $20 per ton of CO2eq per vehicle.  This is even more cost effective than the estimated cost effectiveness for CO2eq removal and fuel economy improvement under the light-duty vehicle rule, already considered by the agencies to be a highly cost effective reduction.  Accordingly, EPA and NHTSA view these standards as reflecting an appropriate balance of the various statutory factors under section 202(a) of the CAA and under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
Alternative Diesel Engine Standards Considered
Other than the specific option related to legacy engine products, the agencies are not finalizing diesel engine standards less stringent than the final standards because the agencies believe these standards are highly cost effective.  
The agencies considered finalizing diesel engine standards which are more stringent reflecting the inclusion of other advanced technologies.  However, the agencies are not finalizing this level of stringency because our assessment is that these technologies would not be available for production by the 2017 model year.  
Final Regulatory Flexibility Provisions
This section describes flexibility provisions intended to achieve the goals of the overall program while providing alternate pathways to achieve those goals, consistent with Executive Order 13563.  The primary flexibility provisions for combination tractors and vocational vehicles are incorporated in a program of averaging, banking, and trading of credits that EPA and NHTSA developed in association with each agency's respective CO2 and fuel consumption standards (see Section II above).  For HD pickups and vans, the primary flexibility provision is the fleet averaging program patterned after the agencies' light-duty GHG and CAFE programs.  Furthermore, EPA is not finalizing an emission credit program associated with the final N2O, CH4, or HFC standards but will allow manufacturers to comply with these standards using CO2 credits.  This section also describes other finalized flexibility provisions that apply, including advanced technology credits, innovative technology credits and early compliance credits.
Averaging, Banking, and Trading Program
Averaging, Banking, and Trading (ABT) of emissions credits have been an important part of many EPA mobile source programs under CAA Title II, including engine and vehicle programs.  NHTSA has also long had an averaging and banking program for light-duty CAFE under EPCA, and recently gained authority to add a trading program for light-duty CAFE through EISA.  ABT programs are useful because they can help to address many issues of technological feasibility and lead-time, as well as considerations of cost.  They provide manufacturers flexibilities that assist the efficient development and implementation of new technologies and therefore enable new technologies to be implemented at a more progressive pace than without ABT. ABT programs may be more than just add-on provisions included to help reduce costs, and can be, as in EPA's Title II programs an integral part of the standard setting itself.  A well-designed ABT program can provide important environmental and energy security benefits by increasing the speed at which new technologies can be implemented (which means that more benefits accrue over time than with slower-starting standards) and at the same time increase flexibility for, and reduce costs to, the regulated industry.  American Council for an Energy-Efficient Economy (ACEEE) has commented that ABT and related flexibilities should not be offered for this rule because the agencies are not promoting the use of new technologies but rather the use of existing technologies.  However, without ABT provisions (and other related flexibilities), standards would typically have to be numerically less stringent since the numerical standard would have to be adjusted to accommodate issues of feasibility and available lead time.  See 75 FR at 25412-13.
Section II above describes EPA's GHG emission standards and NHTSA's fuel consumption standards.  For each of these respective sets of standards, the agencies also proposed ABT provisions, consistent with each agency's statutory authority.  The agencies worked closely together to design these provisions to be essentially identical to each other in form and function.  Because of this fundamental similarity, the remainder of this section refers to these provisions collectively as "the ABT program" except where agency-specific distinctions are required.
As explained at proposal, and discussed in detail below, the structure of the GHG and fuel consumption ABT program for HD engines was based closely on EPA's earlier ABT programs for HD engines; the proposed program for HD pickups and vans was built on the existing light-duty GHG program flexibility provisions; and the first-time ABT provisions for combination tractors and vocational vehicles were proposed to be as consistent as possible with EPA's other HD vehicle regulations.  The flexibility provisions associated with this new regulatory category were intended to build systematically upon the structure of the existing programs.   
As an overview, "averaging" means the exchange of emission or fuel consumption credits between engine families or truck families within a given manufacturer's regulatory subcategories and averaging sets. For example, specific "engine families," which manufacturers create by dividing their product lines into groups expected to have similar emission characteristics throughout their useful life, would be contained within an averaging set.  Averaging allows a manufacturer to certify one or more engine families (or vehicle families, as appropriate) within the same averaging set at levels above (i.e., that do not meet) the applicable emission or fuel consumption standard.  The increased emissions or fuel consumption over the standard would need to be offset by one or more engine (or vehicle) families within that manufacturer's averaging set that are certified below (i.e., that exceed) the same emission or fuel consumption standard, such that the average emissions or fuel consumption from all the manufacturer's engine families, weighted by engine power, regulatory useful life, and production volume, are at or below the level of the emission or fuel consumption standard  Total credits for each averaging set within each model year are determined by summing together the credits calculated for every engine family within that specific averaging set.   
"Banking" means the retention of emission credits by the manufacturer for use in future model year averaging or trading. "Trading" means the exchange of emission credits between manufacturers, which can then be used for averaging purposes, banked for future use, or traded to another manufacturer.  
In EPA's current HD program for criteria pollutants, manufacturers are restricted to averaging, banking and trading only credits generated by the engine families within a regulatory subcategory, and EPA and NHTSA proposed to continue this restriction in the GHG and fuel consumption program for engines and vehicles.  However, the agencies sought comment on potential alternative approaches in which fewer restrictions are placed on the use of credits for averaging, banking, and trading.  Particularly, the agencies requested comment on removing prohibitions on averaging and trading between some or all regulatory categories in the proposal, and on removing restrictions between some or all regulatory subcategories that are within the same regulatory category (e.g., allowing trading of credits between Class 7 day cabs and Class 8 sleeper cabs).  The agencies received many comments on the restrictions proposed for the ABT program, namely on the proposal that credits could only be averaged within the specified vehicle and engine subcategories and not averaged across subcategories or between vehicle and engine categories.  Many commenters, including Union of Concerned Scientist (UCS), NY Dept of Transportation, Natural Resources Defense Council,Oshkosh, Autocar, and Eaton, requested that the agencies maintain the restrictions as proposed in the NPRM.  UCS argued that allowing credits to be used across categories could undermine further technology advancements, and that manufacturers that have broad portfolios would have advantages over those manufacturers that do not.  The Center for Biological Diversity (CBD) argued that because of the various credit opportunities in the ABT program and the potential that manufacturers will pay penalties rather than comply with the standards, the program could actually cause an increase in emissions and a decrease in fuel efficiency.  On the other hand, several commenters, including EMA/TMA, Cummins, Volvo, and ATA, requested that the agencies maintain the proposed restrictions of averaging credits between the engine and vehicle categories, but reduce the restrictions on credit averaging across vehicle subcategories or engine subcategories or averaging sets within similar vehicle and engine weight classes (LHD, MHD and HHD).  Cummins requested that the agencies allow credit averaging between engine subcategories within the same weight classes (LHD, MHD and HHD).  Cummins explained that tractor and vocational engines in the corresponding weight classes not only share the same useful life but also use the same emission and fuel consumption technologies and therefore should be placed into the same engine averaging set. EMA/TMA argued that the NPRM restrictions would inhibit a manufacturer's ability to use credits to address market fluctuations, which would reduce the flexibility that the ABT program was intended to provide.  As an example, EMA/TMA stated that if the line-haul market were depressed for a period of time a manufacturer could make up any deficit selling more low-roof tractors with regional hauling operations. The same market shift could eliminate a manufacturer's ability to generate credits using its aerodynamic high-roof sleeper cab tractors and could create a credit deficit if there is a demand for more of the less aerodynamic low-roof tractors.  EMA/TMA argued that credit exchanges across vehicle categories within the same weight classes within the tractor subcategories and across vocational vehicle and tractor subcategories would allow a manufacturer more flexibility to deal with these types of market and customer demand situations.  Finally, several commenters, including Ford, DTNA NAD, NTEA and Navistar, requested that the agencies reduce the proposed restrictions even further by allowing credit averaging between vehicle categories and engine categories. Navistar argued that more flexibility was necessary for manufacturers like itself to increase innovation at a reasonable cost, stating that that more restrictions would increase costs within a shorter timeframe.
Based on comments received, the agencies continue to believe that the ABT program developed by the agencies increases and accelerates the technological feasibility of the GHG and fuel consumption standards by providing manufacturers flexibility in implementing new technologies in a way that may be more consistent with their business practices and cost considerations.  In response to the comments submitted by CBD, the agencies disagree with CBD's statements that the ABT program will adversely affect the fuel efficiency and GHG emission goals of this regulation.  This joint final rule requires vehicle and engine manufacturers to meet increasingly more stringent emission and fuel consumption standards which will result in emission reductions and fuel consumption savings.  Manufacturers will not have the option of not meeting the standards. The ABT program simply provides each manufacture the flexibility to meet these standards based upon their individual products and implementation plans.
CBD also argued that including any opportunities for manufacturers to earn credits in the final rule would violate NHTSA's statutory mandate to implement a program designed to achieve the maximum feasible improvement.  NHTSA strongly believes that creating credit flexibilities for manufacturers for this first phase of the HD National Program is fully consistent with the agency's obligation to develop a fuel efficiency improvement program designed to achieve the maximum feasible improvement.  EISA gives NHTSA broad authority to develop "compliance and enforcement protocols" that are "appropriate, cost-effective, and technologically feasible," and the agency believes that compliance flexibilities such as the opportunity to earn and use credits to meet the standards are a reasonable and appropriate interpretation of that authority, along with the other compliance and enforcement provisions developed for this final rule.  Unlike in NHTSA's light-duty program, where the agency is restricted from considering the availability of credits in determining the maximum feasible level of stringency for the fuel economy standards, in this HD National Program, NHTSA and EPA have based the levels of stringency in part on our assumptions of available flexibilities that have been built into the program to incentivize over-compliance in some respects, to balance out potential under-compliance in others.  By assuming the use of credits for compliance, the agencies were able to set the fuel consumption/GHG standards at more stringent levels than would otherwise have been feasible.  Greater improvements in fuel efficiency will occur under more stringent standards; manufacturers will simply have greater flexibility to determine where and how to make those improvements than they would have without credit options.  Further, this is consistent with the direction in EO 13563 to "seek to identify, as appropriate, means to achieve regulatory goals that are designed to promote innovation."After reviewing the other comments, the agencies have determined that some additional flexibilities will help to reduce manufacturing costs further and encourage technology implementation without creating an unfair advantage for manufactures with larger portfolios including engines and vehicles.  Therefore, the agencies have decided to allow credit averaging within and across vocational vehicle and tractor subcategories within the same weight class groups, as well as credit averaging across the same weight class vocational and tractor engine groups.  This added flexibility beyond what was proposed in the NPRM will not be extended to the HD pickup truck and van category because this group of vehicles is comprised of only one subcategory and is not broken down like the other categories and corresponding subcategories into different weight classes.  In essence, the HD pickup truck and van category is one large averaging set that will remain as proposed.  Vehicle manufacturers, large and small, will be able to average and trade credits generated within larger averaging sets across subcategories within similar vehicle weight classes. 
However, the agencies are maintaining the restrictions against averaging vehicle credits with engine credits or between vehicle weight classes or engine subcategories.  EPA and NHTSA believe that the use of credits beyond these designated averaging sets could create an advantage that currently does not exist in the market for large integrated manufacturers.  For example, a manufacturer that produces both engines and heavy-duty highway vehicles could mix credits across engine and vehicle categories to gain an advantage over competitors that are not integrated.  Limiting credit ABT to within each engine averaging set and not allowing it between engines and vehicles will help prevent a competitive advantage due solely to the regulatory structure.  Similarly, large volume manufacturers of engines could shift credits between heavy heavy-duty diesel engines and light heavy-duty diesel engines to gain an advantage in one subcategory over other manufacturers that may not have multiple engine offerings over several regulatory engine subcategories.  Finally, relating credits between averaging sets of engines would be problematic because of the differences in regulatory useful lives.  The agencies want to avoid having credits from longer useful life categories flood shorter useful life categories, adversely impacting compliance with the final CO2 and fuel consumption standards in the shorter useful life category.  The agencies believe this approach will ensure that CO2 emissions are reduced and fuel consumption is improved in each engine subcategory without interfering with the ability of manufacturers to engage in free trade and competition.  
Under previous ABT programs for other rulemakings, EPA and NHTSA have allowed manufacturers to carry forward credit deficits for a set period of time  -  if a manufacturer cannot meet an applicable standard in a given model year, it may make up its shortfall by overcomplying in a subsequent year.  In the NPRM the agencies proposed to allow manufacturers of engines, tractors, HD pickups and vans, and vocational vehicles to carry forward deficits for up to three years before reconciling the shortfall, but sought comments on alternative approaches for reconciling deficits.  DTNA, the only commenter who specifically commented on this in the proposal, supported the three year period and stated that it was sufficient for reconciling deficits.  The agencies have therefore included in the final rule the proposed 3 year reconciliation period.  However, the agencies' respective credit programs require manufacturers to use credits to offset a shortfall before credits may be banked or traded for additional model years.  This restriction reduces the chance of manufacturers passing forward deficits before reconciling shortfalls and exhausting those credits before reconciling past deficits.   
For the heavy-duty pickup and van category, the agencies proposed a 5-year credit life provision, as adopted in the light-duty vehicle program.  Navistar requested that the agencies drop the 5-year credit expiration date proposed for the heavy-duty pickup and van category and not specify an expiration date for earned credits.  Navistar stated that such credits are necessary to further improve the flexibilities of this program in order to meet the new stringent standards within the limited lead time provided.  The agencies disagree.  The 5-year credit life is substantial, and allows credits earned early in the phase-in to be held and used without discounting throughout the phase-in period.  We do not see how extending the life of credits can assist manufacturers in dealing with lead time issues.
For engines, vocational vehicles and tractors, EPA also proposed that CO2 credits generated during this first phase of the HD National Program could not be used for later phases of standards, but NHTSA did not expressly specify the potential expiration of fuel consumption credits.  DTNA and Cummins requested that the agencies' surplus credits not expire.  DTNA suggested that the agencies drop any reference to credit expiration until the next rulemaking, at which time the agencies would have a better understanding of actual credit balances and what kind of lifespan for credits might be necessary or appropriate.  DTNA argued that in some of EPA's past programs, EPA had delayed a final decision about credit expiration until development of the subsequent rule when, EPA had a better understanding of associated credit balances, along with the stringency of the standards being proposed for future model years.  EPA had proposed to limit the lifespan of credits earned to the first phase of standards in the interest of ensuring a level playing field before the next phase begins.  Upon further consideration, the agencies recognize that this is a new program and it is unknown whether any manufacturers will have credit surpluses by the end of the first phase of standards, much less whether some manufacturers will have significantly larger credit surpluses that might create an unlevel playing field going into the next phase.  The agencies are adopting a 5-year credit life provision, as adopted in the light-duty vehicle program and proposed and adopted for the HD pickup trucks and vans.  Consistent with past EPA practice, the agencies will address credit life in any follow-on rulemaking.  

The following sections provide further discussions of the flexibilities provided in this rule under the ABT program and the agencies' rationale for providing them.   
Heavy-duty Engines
For the heavy-duty engine ABT program, EPA and NHTSA proposed to use six averaging sets per 1036.740 for EPA and 49 CFR 535.7(d) for NHTSA, which aligned with the proposed regulatory engine subcategories.  As described above, the agencies agree with commenters that increasing the size of averaging sets from within subcategories to across subcategories within the same engine weight classe would provide important additional flexibilities for engine manufacturers without negatively impacting fuel savings or emissions reductions, and are therefore finalizing an approach which aggregates the six proposed engine averaging sets into four averaging sets.  The four engine averaging sets are light heavy-duty (LHD) diesel, medium heavy-duty (MHD) diesel, heavy heavy-duty (HHD) diesel, and gasoline or spark ignited engines. The final ABT program will allow for averaging, banking, and trading of credits between HHD diesel engines which are certified for use in vocational vehicles and HHD diesel engines which are certified for installation in tractors.  Similarly, the MHD diesel engines certified for use in either vocational vehicles or tractors will be treated as a single averaging set.  The agencies intend to monitor this program and may consider revisiting the ABT averaging sets if appropriate in a potential future rulemaking.
Credits generated by engine manufacturers under this ABT program are restricted for use only within their engine averaging set, based on performance against the standard as defined in Section II.B and II.D\\J2756DAAEC001.AA.AD.EPA.GOV\Share\Project\GHG Heavy Duty Truck Rule 2009\1NPRM\Preamble\Primary Working Documents\P02 Proposed Standards.doc.  Thus, LHD diesel engine manufacturers can only use their LHD diesel engine credits for averaging, banking and trading with LHD diesel engines, not with MHD diesel or HHD diesel engines.  This limitation is consistent with ABT provisions in EPA's existing criteria pollutant program for engines and will help avoid the credits earned from longer useful life subcategories from flooding shorter useful life subcategories, which would adversely impact fuel savings and emissions reductions that would otherwise be achieved through compliance with the emission and fuel consumption standards in the shorter useful life subcategories.    
The compliance program for the final rule adopts the proposed method for generating a manufacturer's CO2 emission and fuel consumption credit or deficit.  The manufacturer's certification test results would serve as the basis for the generation of the manufacturer's Family Certification Level (FCL).  The agencies did not receive comment on this proposal and continue to believe that it is the best approach.  The FCL is a new term we proposed for this program to differentiate the purpose of this credit generation technique from the Family Emission Limit (FEL) previously used in a similar context in other EPA rules.  A manufacturer may define its FCL at any level at or above the certification test results.  Credits for the ABT program are generated when the FCL is compared to its CO2 and fuel consumption standard, as discussed in Section II.  Credit calculation for the Engine ABT program, either positive or negative, is based on Equation IV-1 and Equation IV-2:
Equation IV-1: Final HD Engine CO2 credit (deficit)
HD Engine CO2 credit (deficit) (metric tons) = (Std-FCL) x (CF) x (Volume) x (UL) x (10[-6])
where
Std = the standard associated with the specific engine regulatory subcategory (g/bhp-hr)
FCL = Family Certification Level for the engine family
CF = a transient cycle conversion factor in bhp-hr/mile which is the integrated total cycle brake horsepower-hour divided by the equivalent mileage of the Heavy-duty FTP cycle.  For gasoline heavy-duty engines, the equivalent mileage is 6.3 miles.  For diesel heavy-duty engines, the equivalent mileage is 6.5 miles.  The CF determined by the Heavy-duty FTP cycle is used for engines certifying to the SET standard.
Volume = (projected or actual) production volume of the engine family
UL = useful life of the engine (miles)
10[-6] converts the grams of CO2 to metric tons
Equation IV-2: Final HD Engine Fuel Consumption credit (deficit) in gallons 
HD Engine Fuel Consumption credit (deficit) (gallons) = (Std  -  FCL) x (CF) x (Volume) x (UL) x 10[2]
where
Std = the standard associated with the specific engine regulatory subcategory (gallon/100 bhp-hr)
FCL = Family Certification Level for the engine family (gallon/100 bhp-hr)
CF = a transient cycle conversion factor in bhp-hr/mile which is the integrated total cycle brake horsepower-hour divided by the equivalent mileage of the Heavy-duty FTP cycle.  For gasoline heavy-duty engines, the equivalent mileage is 6.3 miles.  For diesel heavy-duty engines, the equivalent mileage is 6.5 miles.  The CF determined by the Heavy-duty FTP cycle is used for engines certifying to the SET standard.
Volume = (projected or actual) production volume of the engine family
UL = useful life of the engine (miles)
10[2] = conversion to gallons
To calculate credits or deficits, manufacturers will determine an FCL for each engine family they have designated for the ABT program.  The agencies have defined engine families in 40 CFR 1036.230 and 49 CFR 535.4 and manufacturers may designate how to group their engines for certification and compliance purposes.  The FCL may be above or below its respective subcategory standard and is used to establish the CO2 credits earned in Equation IV-1 or the fuel consumption credits earned in Equation IV-2.  The final CO2 and fuel consumption standards are associated with specific regulatory subcategories as described in Sections II.B and II.D (gasoline, light heavy-duty diesel, medium heavy-duty diesel, and heavy heavy-duty diesel).  In the ABT program, engines certified with an FCL below the standard generate positive credits and an FCL above the standard generates negative credits. As discussed in Section II.B and II.D, engine averaging sets that include engine families for which a manufacture elects to use the alternative standard of a percent reduction from the engine family's 2011 MY baseline are ineligible to either generate or use credits.  Credit deficits accumulated in an averaging set where engine families have used the alternate standard can carry that deficit forward for three years following the model year for which that deficit was generated at which time the deficit must be reconciled with surplus credits. 
The volume used in Equations IV-1 and IV-2 refers to the total number of eligible engines sold per family participating in the ABT program during that model year.  The useful life values in Equation IV-1 and IV-2 are the same as the regulatory classifications previously used for the engine subcategories.  Thus, for LHD diesel engines and gasoline engines, the useful life values are 110,000 miles; for MHD diesel engines, 185,000 miles; and for HHD diesel engines, 435,000 miles.  
As described in Section II above, for purposes of EPA's standards, an engine manufacturer may choose to comply with the N2O or CH4 cap standards using CO2 credits.   A manufacturer choosing this option would convert its N2O or CH4 test results into CO2eq to determine the amount of CO2 credits required.  This approach recognizes the correlation of these elements in impacting global warming.  To account for the different global warming potential of these GHGs, manufacturers will determine the amount of CO2 credits required by multiplying the shortfall by the GWP.  For example, a manufacturer would use 25 kg of positive CO2 credits to offset 1 kg of negative CH4 credits.  Or a manufacturer would use 298 kg of positive CO2 credits to offset 1 kg of negative N2O credits.  In general the agencies do not expect manufacturers to use this provision, but are providing it as an alternative in the event an engine manufacturer has trouble meeting the CH4 and/or N2O emission caps.  There are no ABT credits for performance that falls below the CH4 or N2O caps.
Manufacturers of engines that generate a credit deficit at the end of the model year for any of its averaging sets can carry that deficit forward for three years following the model year for which that deficit was generated at which time the deficit must be reconciled with surplus credits.  Manufacturers must use credits once those credits have been generated to offset a shortfall before those credits can be banked or traded for additional model years.  This restriction reduces the chance of an engine manufacturer passing forward deficits before reconciling their shortfalls and exhausting those credits before reconciling past deficits.  Deficits will need to be reconciled at the reporting dates for year three.  Also, surplus credits earned in the engine categories will not have an expiration date.  The agencies will consider during the next phase of rulemaking whether to retain or to reset each manufacturer's banked credit surplus.  
Additional flexibilities for engines are discussed later in Section IV(B).     
Heavy-Duty Vocational Vehicles and Tractors
In addition to the engine ABT program described above, the NPRM also proposed a heavy-duty vehicle ABT program to facilitate reductions in GHG emissions and fuel consumption based on heavy-duty vocational vehicle and tractor design changes and improvements.  EPA and NHTSA had proposed averaging sets which aligned with the proposed twelve regulatory subcategories; however in response to the comments described, which requested that averaging sets be expanded across subcategories within similar weight classes, the agencies are finalizing only three averaging sets  -  LHD, MHD, and HHD based upon the three weight classes.  In other words, all HHD (Class 8) tractors and HHD vocational vehicles will be treated as a single averaging set.  Similarly, all MHD (Class 7) tractors and MHD (Class 6-7) vocational vehicles will be treated as a single averaging set.  For this category, the structure of the final ABT program should create incentives for vehicle manufacturers to advance new, clean technologies, or existing technologies earlier than they otherwise would. ABT provides manufacturers the flexibility to deal with unforeseen shifts in the marketplace that affect sales volumes.  This structure also allows for a straightforward compliance program for each sector, with aspects that are independently quantifiable and verifiable.  
Credit calculation for the final HD Vocational Vehicle and Tractor CO2 and fuel consumption credits, either positive or negative, will be generated according to Equation IV-3 and Equation IV-4:
Equation IV-3:  The Final HD Vocational Vehicle and Tractor CO2 Credit (Deficit)
HD Vocational Vehicle and Tractor CO2 credit (deficit)(metric tons) = (Std-FEL) x (Payload Tons) x (Volume) x (UL) x (10[-6])
	where
Std = the standard associated with the specific regulatory subcategory (g/ton-mile)
Payload tons = the prescribed payload for each class in tons (12.5 tons for Class 7 tractors, 19 tons for Class 8 tractors, 2.85 tons for LHD vocational, 5.6 tons for MHD vocational, and 7.5 tons for HHD vocational vehicles)
FEL = Family Emission Limit for the vehicle family which is equal to the output from GEM (g/ton-mile)
Volume = (projected or actual) production volume of the vehicle family
UL = useful life of the vehicle (435,000 miles for HHD, 185,000 miles for MHD, and 110,000 miles for LHD)
10[-6] converts the grams of CO2 to metric tons
Equation IV-4:	Final HD Vocational Vehicle and Tractor Fuel Consumption credit (deficit) in gallons: 
HD Vocational Vehicle and Tractor Fuel Consumption credit (deficit)(gallons) = (Std-FEL) x (Payload Tons) x (Volume) x (UL) x 10[3]
	where
Std = the standard associated with the specific regulatory subcategory (gallons/1,000 ton-mile)
Payload tons = the prescribed payload for each class in tons (12.5 tons for Class 7 tractors, 19 tons for Class 8 tractors, 2.85 tons for LHD vocational, 5.6 tons for MHD vocational, and 7.5 tons for HHD vocational vehicles)
FEL = Family Emission Limit for the vehicle family (gallons/1,000 ton-mile)
Volume = (projected or actual) production volume of the vehicle family
UL = useful life of the vehicle (435,000 miles for HHD, 185,000 miles for MHD, and 110,000 miles for LHD)
103 = conversion to gallons
Manufacturers of vocational vehicles and tractors that generate a credit deficit at the end of the model year for any of its averaging sets can carry that deficit forward for three years following the model year for which that deficit was generated at which time the deficit must be reconciled with surplus credits.  Manufacturers must use credits once those credits have been generated to offset a shortfall before those credits can be banked or traded for additional model years.  This restriction reduces the chance of a vehicle manufacturer passing forward deficits before reconciling their shortfalls and exhausting those credits before reconciling past deficits.  Deficits will need to be reconciled at the reporting dates for year three.  Also, surplus credits earned in the vehicle categories will not have an expiration date.  The agencies will consider during the next phase of rulemaking whether to retain or to reset each manufacturer's banked credit surplus.  
 Additional flexibilities for HD vocational vehicles and tractors are discussed later in Section IV.B.
Heavy-Duty Pickup Truck and Van Flexibility Provisions
The NPRM included specific flexibility provisions for manufacturers of HD pickups and vans, similar to provisions adopted in the recent rulemaking for light-duty car and truck GHGs and fuel economy.  The agencies are finalizing the flexibilities as proposed in the NPRM.  In the heavy-duty pickup and van category a manufacturer's credit or debit balance will be determined by calculating their fleet average performance and comparing it to the manufacturer's CO2 and fuel consumption standards, as determined by their fleet mix, for a given model year.  A target standard is determined for each vehicle.  These targets, weighted by their associated production volumes, are summed at the end of the model year to derive the production volume-weighted manufacturer annual fleet average standard.  A manufacturer will generate credits if its fleet average CO2 or fuel consumption level is lower than its standard and will generate debits if its fleet average CO2 or fuel consumption level is above that standard. The end-of-year reports will provide the appropriate data to reconcile pre-compliance estimates with final model year figures.  
In addition to production weighting, the EPA credit calculations include a factor for the vehicle useful life, in miles, in order to allow the expression of credits in metric tons, as in the light-duty GHG program.  The NHTSA credit calculation uses standard and performance levels in fuel consumption units (gallons per 100 miles), as opposed to fuel economy units (mpg) as done in the light-duty program, along with the vehicle useful life, in miles, allowing the expression of credits in gallons. The total model year fleet credit (debit) calculations will use the following equations:
CO2 Credits (Mg) = [(CO2 Std  -  CO2 Act) x Volume x UL] / 1,000,000
Fuel Consumption Credits (gallons) = (FC Std  -  FC Act) x Volume x UL x 100 
Where: 
CO2 Std = Fleet average CO2 standard (g/mi) 
FC Std = Fleet average fuel consumption standard (gal/100 mile) 
CO2 Act = Fleet average actual CO2 value (g/mi) 
FC Act = Fleet average actual fuel consumption value (gal/100 mile) 
Volume = the total production of vehicles in the regulatory class 
UL = the useful life for the regulatory class (miles)
As described above, HD pickup and van manufacturers will be able to carry forward deficits from their fleet-wide average for three years before reconciling the shortfall.  Manufacturers will be required to provide a plan in their pre-model year reports showing how they will resolve projected credit deficits.  However, just as in the engine category, manufacturers will need to use credits earned once those credits have been generated to offset a shortfall before those credits can be banked or traded for additional model years.  This restriction reduces the chance of vehicle manufacturers passing forward deficits before reconciling their shortfalls and exhausting those credits before reconciling past deficits. Also, surplus credits earned in the HD pickup and van category will not have an expiration date.  The agencies will consider during the next phase of rulemaking whether to retain or to reset each manufacturer's banked credit surplus.  
Additional flexibilities for heavy-duty pickup and van category are discussed below in Section IV.B. 
Additional Flexibility Provisions
The NPRM proposed additional provisions to facilitate reductions in GHG emissions and fuel consumption beginning in the 2014 model year.  While EPA and NHTSA believed the ABT and flexibility structure would be sufficient to encourage reduction efforts by heavy-duty highway engine and vehicle manufacturers, the agencies understood that other efforts could create additional opportunities for manufacturers to reduce their GHG emissions and fuel consumption. These provisions would provide additional incentives for manufacturers to innovate and to develop new strategies and cleaner technologies.  The agencies requested comment on these provisions, as described below.
In addition, the agencies received several comments from natural gas vehicle (NGV)  interests arguing for greater crediting of NGVs than the proposed approach would have provided.  Clean Energy, Hayday Farms, Border Valley, AGA, Ryder, Encana, and a group of NGV interests commented that the NPRM ignored Congress' intent to incentivize the use of NGVs by not including the conversion factor that exists in the light-duty statutory language.  The commenters argued that Congress' intent to incentivize NGVs is evident in the formula contained in 49 U.S.C. 32905, which deems a gallon equivalent of gaseous fuel to have a fuel content of 0.15 gallon of fuel.  The commenters also argued that Congress implicitly intended NGVs to be incentivized in this rulemaking, as evidenced by the incentives in the light-duty statutory text.  AGA and Hayday suggested that the agencies were not including the NGV incentive from light-duty because Congress did not explicitly include it in 49 U.S.C. 32902(k), and argued that this would contradict the agencies' inclusion of other incentives similar to the light-duty rule. 
The agencies continue to believe that alternative-fueled vehicles, including NGVs, provide fuel consumption benefits that should be accounted for in this program.  However, the agencies do not agree with the commenters' claim that the NGV incentive contained in the light-duty program is an explicit Congressional directive that must be also be applied to the heavy-duty program, nor that the light-duty incentive for NGVs should be interpreted as an implicit Congressional intent for NGVs to be incentivized in the heavy-duty program.  Further, the agencies believe that the fuel consumption benefits that FFVs will obtain in GEM accurately reflect their energy benefits and thus provide sufficient incentives for these vehicles.  The agencies would like to clarify that the decision not to include an NGV incentive was based on this determination, not on a belief that incentives present in the light-duty rule could not be developed for the heavy-duty rule if they were not explicitly included in Section 32902(k).
The American Trucking Association expressed support for estimating natural gas fuel efficiency by using carbon emissions from natural gas rather than energy content to estimate fuel consumption.  ATA explained that two vehicles can achieve the same fuel efficiency, yet one operated on natural gas would have a lower carbon dioxide emissions rate.  A natural gas conversion factor that uses carbon content versus energy content is a more appropriate method for calculating fuel consumption.  A number of other groups commented on the appropriate method to use in establishing fuel consumption from alternative fueled vehicles.  A group of NGV interests, Ryder, Border Valley Trading, Waste Management, Robert Bosch and the Blue Green Alliance encouraged the agencies to adopt the 0.15 conversion factor in estimating fuel consumption for FFVs and alternative fuel vehicles finalized in the LDV 2012-2016 GHG and fuel consumption standards.  The incentive effectively reduces the calculated fuel consumption for FFVs and alternative fuel vehicles by a factor of 85 percent.  The commenters argued that the incentive is needed for heavy-duty vehicles to encourage the use of natural gas and to reduce the nation's dependence on petroleum.    
The agencies have reviewed this issue and continue to believe that the light-duty conversion factor is not appropriate for this rule.  Instead, the agencies are finalizing a conversion process from CO2 to fuel consumption that we believe accurately reflects the fuel consumption of the vehicles while at the same time providing a significant incentive for the alternative fuel use.  Using the agencies' calculation, NGVs will exhibit an approximate 20 percent benefit over conventional fuel use.  We believe this is a substantial enough advantage to spur the market for these vehicles.  The calculation at the same time does not overestimate the benefit from this technology, which could reduce the effectiveness of the regulation.  Therefore, the final rule does not include the light-duty 0.15 conversion factor for NGVs.
Early Credit Option
The NPRM proposed that manufacturers of HD engines, HD pick-up trucks and vans, combination tractors, and vocational vehicles be eligible to generate early credits if they demonstrate improvements in excess of the standards prior to the model year the standards become effective.  As an example, if a manufacturer's MY 2013 subcategory of tractors exceeds the EPA mandatory MY 2014 standard for those same vehicles, then that manufacturer could claim MY 2013 credits or "early credits" to utilize in its ABT program.  As noted in the NPRM, the start dates for EPA's GHG standards and NHTSA's fuel consumption standards vary by regulatory category (see Section II for the model years when the standards become effective), meaning that the early credits provision, if selected by a manufacturer, could begin during different model years.  The NPRM stated that manufacturers would need to certify their engines or vehicles to the standards at least six months before the start of the first model year of the mandatory standards and that limitations on the use of credits in the ABT programs  -  i.e., limiting averaging to within each vehicle or engine averaging set  -  would apply for the early credits as well.  In the NPRM, NHTSA and EPA requested comment on whether a credit multiplier, specifically a multiplier of 1.5, would be appropriate to apply to early credits from HD engines, combination tractors, and vocational vehicles, as a greater incentive for early compliance.  
The agencies received comments from Cummins, DTNA, EMA/TMA, Navistar, Eaton, Bosch, CBD and CALSTART relating to these early credit provisions. All of these commenters supported the early credit provision for the most part, but many requested that the agencies eliminate some of the restrictions relating to this provision.  EMA/TMA argued that MY 2012 should also be considered for early credits and that the requirement to certify six months before the start of the first model year would unnecessarily restrict manufacturers from earning credits for technology introduced within six months of the respective model year.  Additionally, EMA/TMA stated that requiring certification of the entire averaging set instead of individual vehicle configurations would not allow for early introduction of new technologies. Cummins stated that the six month lead time requirement should be removed and that manufacturers be allowed to earn early credits for individual engine families rather than only for the entire averaging set, stating that removal of these restrictions would further benefit the environment. CBD stated that early credits should only be granted if the emission and fuel consumption benefits are in addition to or above the existing performance levels and are quantifiable and verifiable.  
EPA and NHTSA have reviewed these comments and decided to clarify the early credit provision as proposed in the NPRM to account for the above concerns.  Early credits are intended to be an incentive to manufacturers to introduce more efficient engines and vehicles earlier than they would have planned.  However, the agencies do not want to provide a windfall of credits to manufacturers that may already have one or more products that meet the standards.  Therefore, the final rule will include the proposed option for a manufacturer to obtain early credits for products if they certify their entire subcategory at GHG emissions and fuel consumption levels below the standards.  The agencies are making a clarification in this rule that the manufacturers must certify their entire subcategory, not necessarily their entire averaging set, because the averaging sets are broadened under the final rulemaking from the proposed categories in the NPRM.  In addition, the agencies are providing the flexibility for combination tractor manufacturers to obtain early credits for their additional sales, as compared to their 2012 model year sales, of SmartWay certified combination tractors in 2013 model year.  The agencies view this subcategory of vehicles as the only segment of vehicles or engines where the true additional reductions due to the early credits can be quantified outside of certifying an entire subcategory, because the benefit is tied directly to the increase in the SmartWay vehicles manufactured in MY 2013 in excess of those manufactured in MY 2012.
A manufacturer may opt to apply for early credits from their 2013 model year SmartWay combination tractor sales by first calculating the difference between the number of SmartWay certified combination tractors sold in 2012 model year versus 2013 model year.  The increment in sales determines the number of 2013 model year SmartWay tractors which can be used to certify for early credits.  The manufacturer would then determine each tractor configuration's performance by modeling in GEM, using each vehicle configuration's appropriate inputs for coefficient of drag, tire rolling resistance, idle reduction, weight reduction, and vehicle speed limiter.  Next, the difference between a specific tractor configuration's performance and the 2014 MY standard for the appropriate regulatory subcategory (Class 8 sleeper cab high roof tractors) would be calculated.  The CO2 and fuel consumption credits are calculated using Equation IV-4 and IV-5. 
As discussed above and in Section II, during the years when the EPA standards are mandatory, manufacturers will have the option of complying with NHTSA fuel consumption standards equivalent to the EPA emission standards in order to accumulate credits in the ABT program.  NHTSA would like to clarify that for the early credit provision, implementation must occur in MY 2013 exactly as implemented under the EPA emission program, and not in the model year immediately before the NHTSA standards become mandatory.  Further, once a manufacturer opts into the NHTSA program it must stay in the program for all the optional MYs and remain standardized with the implementation approach being used to meet the EPA emission program.  EPA and NHTSA intend for manufacturers' ABT credit balances to remain equivalent wherever possible.
The agencies also received comments from EMA/TMA and Cummins opposing the requirement to certify six months prior to the first model year of the mandatory standards for early credits.  The commenters argued and the agencies agreed that this restriction could cause some delays in technology rollout and are therefore removing this requirement for the final rules.  The agencies reviewed the restriction and evaluated the 2012-2016 MY Light-duty early credit program.  No such restriction exists for LD vehicles.  Upon reconsideration we believe that this requirement is not necessary for our implementation of the program.
Several commenters, including DTNA, Edison Electric Institute, Eaton, and Bosch, supported adding the provision to further incentivize early credits by using a 1.5 multiplier, stating that it would encourage early introduction of technology.  Cummins and UCS opposed the added provision stating that the opportunity to earn credits at their normal value should be sufficient incentive for early compliance. The agencies believe that this incentive will further encourage faster implementation of emission and fuel savings technology and help to reduce the costs manufacturers will incur in efforts to comply with these rules.  The agencies have therefore decided to finalize a 1.5 multiplier for early credits earned in MY 2013.
 With respect to heavy-duty pickups and vans, the agencies proposed that early credits could be generated on a fleetwide basis by comparison of the manufacturer's 2013 heavy-duty pickup and van fleet with the manufacturer's fleetwide targets, using the target standards equations for the 2014 model year.  75 FR at 74255.  The agencies are finalizing these provisions as proposed.  Under the structure for the fleet average standards, this credit opportunity entails certifying a manufacturer's entire HD pickup and van fleet in model year 2013.  Industry commenters argued that early credits should be calculated against a target curve that is less stringent than the 2014 curve.  We disagree.  Because it is the first year of a 5-year phase-in, the 2014 model year has quite modest emissions and fuel consumption reductions targets of only 15 percent.  Targeting even less significant improvements over the baseline would unduly increase the prospect for windfall credits by individual manufacturers who may have better than average baseline fleets.  Again, the agencies consider the availability of early credits to be a valuable complement to the overall program to the extent that they encourage early implementation of effective technologies.
Advanced Technology Credits
The NPRM proposed targeted provisions that were expected to promote the implementation of advanced technologies.  Specifically, manufacturers that incorporate these technologies would be eligible for special credits that could be applied to other heavy-duty vehicles or engines, including those in other heavy-duty categories.  The eligible technologies include: 
         * Hybrid powertrain designs that include energy storage systems
         * Rankine cycle engines
         * All-electric vehicles
         * Fuel cell vehicles 
NHTSA and EPA requested comment on the list of technologies identified as advanced technologies and whether additional technologies should be added to the list.   In addition to the increased fungibility of advanced technology credits, NHTSA and EPA requested comment on whether a credit multiplier, specifically a multiplier of 1.5, would be appropriate to apply to advanced technology credits, as a greater incentive for their introduction.  
MEMA asked that the agencies expand the list of technologies that are eligible for Advanced Technology Credits to include advanced transmission and drivetrain technologies, tire and wheel accessories, and advanced engine accessories technologies (such as electronic air control systems and clutched turbocharged air compressor).  Bendix requested that weight reduction approaches, improved transmission and drivetrains, driver management and coaching, and tire and wheel improvements be allowed to receive credit through the Advanced Technology Credit Program.  
The advanced technology credit program is intended to encourage development of technologies that are not yet commercially available.  In order to provide incentives for the research and development needed to introduce these technologies, Advanced Technology Credits are allowed to be applied to any heavy-duty vehicle or engine and are not limited to the vehicle category generating the credit.  Because of this flexibility in the application of ATCs, it is important that the list of eligible technologies be restricted to those that are not yet available in the market.  In addition, the technologies must lend themselves to straight forward methodologies for quantifying emissions and fuel consumption reductions.  For some of the technologies that MEMA and Bendix asked be included in the program, such as electrified accessories and tires, the agencies have already established a mechanism for quantifying reductions associated with these approaches.  For example, the agencies assumed in the regulatory impact analysis that some electrified accessories will be used to comply with the regulations.  Specifically, improved water and oil pumps are assumed to be used for 2014 LHD, MHD, and HHD FTP and SET diesel engines to comply with standards and would receive credit though engine certification process. (See RIA Chapter 2).  Any reductions in engine load and resulting emissions and fuel consumption resulting from accessory electrification will be accounted for in engine dynamometer testing.  However, other electrified accessories, such as power steering and air conditioning may not  -  if they do not impact engine operation over the FTP and SET cycles.  As such, we are allowing credit to be established through the Innovative Technology Credit Program described in section IV. B (2).  With regard to tire rolling resistance improvements, light weight wheels, and weight reduction associated with the use of super single tires, these are already credited in program and are accounted for in GEM modeling. Some improved transmissions  -  such as automatic manuals - have been available commercially for ten years and as such, this technology would not be eligible for ATC.  However, the agencies acknowledge the importance of including advanced transmissions and drivetrains in the program.  As such, we are allowing credit to be established through the Innovative Technology Credit Program described in Section IV. B (2).  Likewise, with regard to weight reduction, the agencies are allowing additional weight reduction approaches to be used for tractors through GEM modeling.  Weight saving approaches will not be credited for vocational vehicles given the very small percentage improvement that weight reduction provides for vocational vehicles.  And finally, for driver management and coaching  -  while we recognize that there could be significant benefits to this, the difficulty in establishing a baseline condition for driver behavior limits the agencies' ability to establish a reduction for this approach at this time.
The agencies have decided not to change the proposed list of technologies evaluated as advanced technologies, but are providing additional clarity in the advanced technology list.  The agencies proposed that Rankine cycle engines be included, but the agencies are adopting the wording of Rankine cycle waste heat recovery system attached to an engine. 
The agencies received comments from Bendix, Bosch, MEMA, Navistar, Odyne, Green Truck Association, Eaton, ArvinMeritor and Calstart, which supported the 1.5 multiplier for advanced technology credits. MEMA argued that these added flexibilities are absolutely necessary to help advanced technologies penetrate the marketplace and are the primary impetus to integrate these technologies onto vehicles.  The agencies also received comments from several stakeholders, including ACEEE and Cummins opposing the 1.5 multiplier for advanced technology credits. ACEEE argued that multipliers should be avoided because they lessen the total emission reductions by allowing a greater increase in the emissions of other vehicles than they offset. After reviewing these comments, the agencies have determined that the relatively low volumes expected in this timeframe are likely to mitigate any potential adverse impact.  Further, the credit multiplier will provide enough added benefit to the potential hybrid community to help reduce barriers to market entry for these new technologies.  Therefore, the final rule includes a multiplier of 1.5 for advanced technology credits.  However, the agencies are also capping the amount of advanced credits that can be brought into any averaging set into any model year to prevent market distortions.
HD Pickup Truck and Van Hybrids and all Electric Vehicles
For HD pickup and van hybrids, the agencies proposed that testing would be done using adjustments to the test procedures developed for light-duty hybrids.  NHTSA and EPA also proposed that all-electric and other zero tailpipe emission vehicles produced in model years before 2014 be able to earn credits for use in the 2014 and later HD pickup and van compliance program, provided the vehicles are covered by an EPA certificate of conformity for criteria pollutants.  These credits would be calculated based on the 2014 diesel standard targets corresponding to the vehicle's work factor, and treated as though they were earned in 2014 for purposes of credit life.  Manufacturers would not have to early-certify their entire HD pickup and van fleet in a model year as for other early-complying vehicles.  
NHTSA and EPA  also proposed that model year 2014 and later EVs and other zero tailpipe emission vehicles be factored into the fleet average GHG and fuel consumption calculations based on the diesel standards targets for their model year and work factor.  If advanced technology credits generated by pickups and vans are used in another HD vehicle category, these credits would, of course, be subtracted from the manufacturer's pickup and van category credit balance.  Commenters generally supported the introduction of hybrid and zero tailpipe emission vehicles, but did not comment on the specific provisions discussed above.  We are finalizing these provisions as proposed.
The proposal also solicited comment on the handling of upstream GHG emissions.  Some commenters argued that EPA should maintain its traditional focus in mobile source rulemakings on vehicle tailpipe emissions and leave the consideration of GHG emissions from upstream fuel production and distribution-related sources such as refineries and powerplants to EPA regulatory programs that focus specifically on those sources.  Others argued that, since EPA accounts for upstream GHG emissions in its benefits assessments, the agency should reflect upstream GHG emissions impacts in vehicle compliance values as well. After considering these comments, we have decided to maintain consistency with past practice for setting vehicle emissions standards under Clean Air Act section 202(a)(1), whereby we treat all vehicles equally, based on tailpipe-only emissions performance.  We also recognize that the ongoing EPA/NHTSA rulemaking to reduce GHGs and fuel consumption in MY 2017 and later light-duty vehicles is also further examining this issue, and may yield information and policy direction relevant to the planned follow-on rulemaking for the heavy-duty sector.
Vocational Vehicle and Tractor Hybrids
For vocational vehicles or combination tractors incorporating hybrid powertrains, we proposed two methods for establishing the number of credits generated  -  chassis dynamometer and engine dynamometer testing - each of which is discussed next.  As discussed in the NPRM the agencies are not aware of models that have been adequately peer reviewed with data that can assess this technology without the conclusion of a comparison test of the actual physical product.
Chassis Dynamometer Evaluation
For hybrid certification to generate credits we proposed to use chassis testing as an effective way to compare the CO2 emissions and fuel consumption performance of conventional and hybrid vehicles.  We proposed that heavy-duty hybrid vehicles be certified using "A to B" vehicle chassis dynamometer testing.  This concept allows a hybrid vocational vehicle manufacturer to directly quantify the benefit associated with use of its hybrid system on an application-specific basis.  The concept would entail testing the conventional vehicle, identified as "A", using the cycles as defined in Section V.  The "B" vehicle would be the hybrid version of vehicle "A".  The "B" vehicle would need to be the same exact vehicle model as the "A" vehicle.  As an alternative, if no specific "A" vehicle exists for the hybrid vehicle that is the exact vehicle model, the most similar vehicle model would need to be used for testing.  We proposed to define the "most similar vehicle" as a vehicle with the same footprint, same payload, same testing capacity, the same engine power system, the same intended service class, and the same coefficient of drag.  
To determine the benefit associated with the hybrid system for GHG performance, the weighted CO2 emissions results from the chassis test of each vehicle would define the benefit as described below:
         1. (CO2_A  -  CO2_B)/ (CO2_A) = ______ (Improvement Factor)
         2. Improvement Factor x GEM CO2 Result_B = ___ (g/ton mile benefit)
Similarly, the benefit associated with the hybrid system for fuel consumption would be determined from the weighted fuel consumption results from the chassis tests of each vehicle as described below:
         3. (Fuel Consumption_A  -  Fuel Consumption_B)/ (Fuel Consumption_A)= ______ (Improvement Factor)
         4. Improvement Factor x GEM Fuel Consumption Result_B = ___ (gallon/1,000 ton-mile benefit)

The credits for the hybrid vehicle would be calculated as described in the ABT program except that the result from Equation 2 and Equation 4 above replaces the (Std-FEL) value.  
The agencies proposed two sets of duty cycles to evaluate the benefit depending on the vehicle application to assess hybrid vehicle performance  -  without and with PTO systems.  The key difference between these two sets of vehicles is that one set (e.g., delivery trucks) does not operate a PTO while the other set (e.g., bucket and refuse trucks) does. 
The first set of duty cycles would apply to the hybrid powertrains used to improve the motive performance of the vehicles without a PTO system (such as pickup and delivery trucks).  The typical operation of these vehicles is very similar to the overall drive cycles final in Section II.  Therefore, the agencies are finalizing to use the same vehicle drive cycle weightings for testing these vehicles, as shown in Table IV-1.  
Table IV-1: Final Drive Cycle Weightings for Hybrid Vehicles Without PTO

Transient
55 mph
65 mph
Vocational Vehicles
75%
9%
16%
Day Cab Tractors
19%
7%
64%
Sleeper Cab Tractors
5%
9%
86%
 
The second set of duty cycles apply to testing hybrid vehicles used in applications such as utility and refuse trucks which tend to have additional benefits associated with use of stored energy, in terms of avoiding main engine operation and related CO2 emissions and fuel consumption during PTO operation.  To appropriately address benefits, exercising the conventional and hybrid vehicles using their PTO would help to quantify the benefit to GHG emissions and fuel consumption reductions.  The duty cycle to quantify the hybrid CO2 and fuel consumption impact over this broader set of operation would be the three primary drive cycles plus a PTO duty cycle.  Our proposed PTO cycle was based on consideration of using alternate, appropriate duty cycles with Administrator approval in a public process.  The PTO duty cycle takes into account the sales impact and population of utility trucks and refuse haulers.  As described in RIA Chapter 3, the agencies proposed to add an additional PTO cycle to measure the improvement achieved for this type of hybrid powertrain application.  The weightings for the hybrids with PTO are included in Table IV-2. 
Table IV-2: Final Drive Cycle Weightings for Hybrid Vehicles with PTO
                                       
Transient
55 mph
65 mph
PTO
Vocational Vehicles with PTO
30%
15%
27%
28%

A number of comments were received on the proposed hybrid chassis testing approach.  The comments can be grouped into four main categories which are as follows: 1) a better definition is needed for what constitutes a hybrid; 2) improved test cycles are needed; 3) improved methods are needed for hybrid testing; and 4) parity between vehicle and engine cycles is needed to ensure a fair comparison of hybrids using the different approaches proposed by the agencies.
Comments were received from EMA/TMA, ACEEE, stating that the hybrid definition and test methodology needs to be more clearly defined.  Cummins and EMA/TMA asked that the control volumes for the chassis test procedure be specified.  Allison stated that the baseline configuration in A to B testing needs clarification  -  as an example they said it is not clear if the baseline vehicle needs to be the same model year as the hybrid configuration.  They added that it is unclear how to account for hotel or accessory loads.    
EMA/TMA, Allison, Odyne, and American Trucking Association said that the hybrid drive cycles do not match real world hybrid applications, and as such, will result in an underestimation of benefits resulting from hybrid use.  Some or all of these commenters asked that a hybrid drive cycle be developed that consists mainly of transient cycle, increased idle time, low steady state operation, and high acceleration and deceleration rates.  EMA/TMA said the proposed cycle  -  the CARB heavy-heavy duty truck transient mode cycle, was developed as a composite cycle based on a wide range of medium and heavy duty vehicles but does not reflect the high acceleration and deceleration of vehicles used in urban applications and which is typical for hybrid vehicles and does not reflect the level of acceleration and deceleration typical of hybrids.  Eaton asked that the agencies establish four separate test cycles for hybrids rather than two that more closely match what actual hybrids do in use.  Hino said that energy recapture from regenerative braking needs to be built into the test cycle and as currently designed it is not.  Hino also urged the agencies to create test cycles that capture variations in different types of hybrids.  Cummins said that more representative vehicle test cycles should be developed based on the FTP and SET to ensure that the test cycles are functionally equivalent between vehicles and engines to ensure fair evaluation of the technology.  ICCT articulated the same point on the need for parity between engine and vehicle test cycles.   
EMA/TMA, DTNA, and Cummins asked that manufacturers not be required to conduct coast down testing for hybrid vehicles to establish road loads for each type of vehicle.  Instead, they asked that the agencies define default road load values for manufacturers to use for hybrids.  EMA/TMA said that conducting coast down tests is expensive.  They also argued that road load is irrelevant to determining hybrid performance since the chassis dynamometer method requires a comparison of a vehicle that is identical in all respects except those factors directly relating to the hybrid powertrain. 
Cummins, ICCT, and Center for Clean Air Policy expressed general support for chassis dynamometer testing.  Allison said that the lack of dynamometer infrastructure could limit the ability of manufacturers to certify and get hybrids into the market place.  BAE said that hybrids should not have to be tested on a chassis dynamometer.
Given the options available for certification of hybrid systems, the constraints on available infrastructure for traditional chassis testing and coastdown testing has been mitigated.  Should a manufacturer contemplate chassis testing or powerpack testing to assess hybrid vehicle performance, coast down testing will still be needed for vocational applications to develop the road load values.
Engine Dynamometer Evaluation
The engine test procedure proposed in the NPRM for hybrid evaluation involved exercising the conventional engine and hybrid-engine system based on an engine testing strategy.  The basis for the system control volume, which serves to determine the valid test article, would need to be the most accurate representation of real world functionality.  An engine test methodology would be considered valid to the extent the test is performed on a test article that does not mischaracterize criteria pollutant performance or actual system performance.  Energy inputs should not be based on simulation data which is not an accurate reflection of actual real world operation.  Pre-transmission test protocols will include both the engine and the hybrid system for assessing GHG performance, however EPA is not changing criteria pollutant certification at this time for engines.  In effect, the engine will need to be certified for criteria pollutant performance, while the engine and hybrid system in combination may be certified for GHG performance.  It is clearly important to be sure credits are generated based on known physical systems.  This includes testing using the appropriate recovered vehicle kinetic energy.  Additionally, the duty cycle over which this engine-hybrid system would be exercised would need to reflect the use of the application, while not promoting a proliferation of duty cycles which prevent a standardized basis for comparing hybrid system performance.  The agencies proposed the use of the Heavy-duty FTP cycle for evaluation of hybrid vehicles, which is the same test cycle final for engines used in vocational vehicles.  For powerpack testing, which includes the engine and hybrid systems in a pre-transmission format, the engine based testing is applicable for determination of brake-specific emissions benefit versus the engine standard.  For post-transmission powertrain systems and vehicles, the comparison evaluation based on the Improvement Factor and the GEM result based on a vehicle drive trace in a powertrain test cell or chassis dynamometer test cell seem to accurately reflect the performance improvements associated with these test configurations.  It is important that introduction of clean technology be incentivized without compromising the program intent of real world improvements in GHG and fuel consumption performance. The agencies asked for comments on the most appropriate test procedures to accurately reflect the performance improvement associated with hybrid systems tested using these or other protocols. 
 A number of comments were received on the proposed engine testing approaches.  Comments were received from EMA/TMA, Cummins, Allison, Hino, and ICCT, stating that the hybrid test methodology needs to be more clearly defined.  EMA/TMA, Cummins, and Allison stated that the agencies have not defined what they will accept as a "complete hybrid system" and a clearer definition for hybrids needs to be developed.  For example, Allison stated that the DRIA says that a "complete hybrid system" can exclude the transmission.  They added that a hybrid system must include a transmission.  EMA/TMA stated that simulated chassis dynamometer testing should include hybrid components.  EMA/TMA stated that the agencies proposal that part 1065 may be amended, but did not provide specifics on how it might be amended.  They suggested the following changes to part 1065: 1) all engine and hybrid components capable of providing or recovering traction power be included in the control volume; 2) use of hybrid system torque curves rather than engine torque curves; 3) reference to J2711 for management of energy storage devices; 4) adhere to conventional calculation of emissions with only positive work counted; and 5) provide an estimate of maximum available kinetic energy in 1065 to ensure that energy capture is consistent with real world operation of hybrids.  
Hino said that energy recapture from regenerative braking needs to be built into the test cycle and as currently designed it is not.  Regenerative braking provides fuel consumption and GHG reduction benefits.  Eaton said that the proposed powerpack testing does not capture true performance of hybrid vehicles. As noted above, ICCT commented on the need for parity between engine and vehicle test cycles.  They supported hardware-in-the-loop post-transmission testing, but only if an equivalent cycle is used as is used for chassis testing.     
 In response to the concerns detailed above and raised by engine manufacturers, hybrid system manufacturers, environmental groups, and NGOs regarding the lack of transient operation in the hybrid cycles, the agencies are finalizing a change in the weighting of the hybrid vehicle cycles.  The weighting factors will be changed such that a greater emphasis on the type of transient activity seen as more characteristic of hybrid applications will be evident.  The new weighting factors between duty cycles for hybrid certification will be 75% for the transient, 9% for the 55 mph cruise cycle, and 16% for the 65 mph cruise cycle.  The basis for this change may be seen in the memorandum to OAR Docket EPA-HQ-OAR- 2010-0162 which describes the data set used to describe real world vehicle performance. 
Concerns were raised by hybrid system manufacturers that the potential for a competitive advantage could exist for hybrids using different methods for certification based solely on the test method chosen. For determination of the allowable brake energy that may be used for the test cycle with hybrid engines, it is important to provide consistency between test methods.  For that reason EPA is setting a brake energy fraction limit based on the engine FTP duty cycle which would apply to the pre-transmission hybrid and defining that as the limit for the post-transmission maximum available brake energy as well.  The brake energy fraction will need to be determined based on the engine performance and the brake energy fraction limit will apply for all powertrain test cell (powerpack) testing.  This limit on the brake energy fraction will be ratio of negative work to positive work as a function of engine rated power.
The agencies are also adopting the proposed duty cycles.  The agencies proposed a transient duty cycle, a 55 mile-per-hour steady state cruise and a 65 mile-per-hour steady state cruise.  The transient duty cycle, which has been corrected to address a concern related to shift events, is essentially the same transient cycle proposed in the NPRM with the exception that it minimizes inappropriate shift events.  Additionally, the steady state cycles proposed by the agencies remain essentially unchanged.  The modification being adopted with today's final action is to address the distribution of the emissions impact associated with each duty cycle.   
In addition, the agencies are finalizing to allow manufacturers that want to certify a hybrid on a different test cycle than the cycles described above for chassis and engine dynamometer testing can follow the procedure outlined below in the Innovative Technology Credit section.  Likewise, a manufacturer seeking to certify a hybrid using an alternative approach, such as simulation modeling, would need to follow the procedure described in the Innovative Technology Credit section.  Manufacturers whose alternative hybrid testing procedure is approved through the Innovative Technology Credit Program would receive credits through the Advanced Technology Credit Program.  
EMA/TMA also asked that in addition to the above-described engine, chassis, and powerpack testing, other yet-to-be-defined methods should be allowed so that a novel applications of hybrids can be evaluated for credit.  They included hydraulic, kinetic, electro-mechanical, and genset hybrids as examples of additional configurations that should be accommodated by additional test cycles.  Allison asked how emissions and fuel consumption changes associated with ageing of hybrid systems will be accounted for.  ACEEE encouraged the agencies to finalize the three approaches outlined in the NPRM for hybrid testing in the final rule.
Cummins supported three proposed options for evaluating hybrids.  ICCT supported option 1 and 3, but not 2.  EMA/TMA commented that the proposed post-transmission powerpack testing does not provide sufficient detail and control volume should be defined for manufacturers so that they understand which components to include in the test.  ICCT stated that EPA and NHTSA need to ensure that: 1) each hybrid test method/test cycle combination requires the same amount of total energy to run the cycle (for a specific vehicle weight), 2) each test method/test cycle combination has the same amount of total energy available for capture as regeneration by a hybrid system, and 3) that this available regeneration energy appears in similar increments in each test method/test cycle combination.  
In allowing for three options for certification of hybrids, two of those options require the use of a baseline vehicle.  The post-transmission hybrid certification and the chassis dynamometer certification options are designed to allow for an assessment of the improvement offered by incorporating a hybrid system into the vehicle.  Determination of an improvement factor for hybrid vehicle performance is significantly influenced by the selection of the baseline vehicle, test article "A".  The agencies received comments from engine and hybrid system manufacturers that the options for selection of the baseline should be carefully considered to avoid an unintended consequence of limited real world improvement due to selection of a baseline that was inappropriate.  Several concerns regarding an inappropriate baseline were broached including selection of technology that is not actually available in the market, selection of baseline technology that is not representative of the application(s) either by sales volume or use, or selection of a baseline that in other ways provides an advantage to a manufacturer which creates an unfair competitive advantage.  To address the concern of improvement factors that have a basis in reality and demonstrate real world improvements, as well as to continue to incentivize the introduction of new technology the agencies are addressing the issue of the baseline selection, as well as the determination of a "most similar" vehicle basis in the case where there may not be an existing production vehicle upon which the hybrid vehicle was based.  
In making the determination of an appropriate baseline, four options were considered by the agencies.  These options included a fixed baseline weight and definition by vehicle class, a non-hybrid baseline intended for production vehicle and transmission system, a best in class conventional application, or vehicle based on highest sales volume.  Each of these options has benefits and each raises potential concerns.  The determination based solely on a single vehicle by class has the advantage of providing a fixed baseline the entire industry may easily target for assessing improvements.  It raises concerns regarding the suitability of the vehicle selection for all applications in the weight class, as well as the appropriateness of the selection based on performance across the full range of vehicles and weights in the weight class.  The "intended for production" conventional vehicle baseline ensures the baseline and hybrid vehicle pair will represent a real improvement for the specific application.  The challenge exists when the conventional vehicle version of the hybrid may not exist.  Another issue would exist if the conventional vehicle in the pair had performance characteristics such that the hybrid version does not represent significant improvements beyond other conventional vehicles.  The best in class baseline vehicle approach provides some assurance that the improvement factor generated by the hybrid vehicle or system would in fact represent introduction of advanced technology with improvements beyond existing conventional technology.  The opportunity for confusion that exists with a best in class determination includes matching all of the appropriate performance metrics with the appropriate applications in a way that is consistent with how the market values those improvements.  This can become a moving target which could represent an ever evolving design target and eventually prove difficult for the agencies to implement in a way that ensured a level playing field.  The last option attempts to include the benefits of the previous options, while maintaining the clarity needed for manufacturers to design and build with a clear understanding of design targets.  The highest sales volume application by weight class for the previous model year ensures benefits are measured based on how the market values performance.  This has the potential to avoid ambiguity regarding which vehicle technology should serve as the baseline and it addresses a concern raised by some commenters regarding the use of a baseline vehicle that clearly is not a class leader.  The presumption being that the market will value the conventional technology that provides the best value over the lifetime of the vehicle for its intended service class and application.  This approach is intended to be used in conjunction with the basic premise that the "A" vehicle will be the vehicle most similar to the hybrid "B" vehicle.
Should no apparent baseline be available, the vehicle being displaced by the hybrid may be determined based on several characteristics including but not limited to vehicle class, vehicle application, and complete power system rated power (e.g. engine rated power for the base vehicle versus combined rated power for the engine-hybrid system).  The agencies will continue to use the primary method of highest sales volume, by application and vehicle weight class in its assessment of the manufacturers selection of a baseline, however should there be a new application introduced with no apparent existing baseline, the closest baseline vehicle may be selected by the manufacturer and will be evaluated by the agencies.  
Innovative Technology Credits
The agencies proposed a credit opportunity intended to apply to new and innovative technologies that reduce fuel consumption and CO2 emissions, but for which the reduction benefits are not captured over the test procedure used to determine compliance with the standards (i.e., the benefits are "off-cycle").  See 75 FR 25438-25440 where EPA adopted a similar credit program for MY 2012-2016 light-duty vehicles.  The agencies explained in the NPRM that EPA and NHTSA are aware of some emerging and innovative technologies and concepts in various stages of development with CO2 emissions and fuel consumption reduction potential that might not be adequately captured on the final certification test cycles, and that some of these technologies might merit some additional CO2 and fuel consumption credit generating potential for the manufacturer.  Eligible innovative technologies are those technologies that are newly introduced in one or more vehicle models or engines, but that are not yet widely implemented in the heavy-duty fleet.  Examples of such technologies mentioned in the NPRM include predictive cruise control, gear-down protection, active aerodynamic features, and adjustable ride height. This would include known technologies if they are not yet widely utilized in a particular subcategory.  Further, any credits for these technologies would need to be based on real-world fuel consumption and GHG reductions that can be measured with verifiable test methods using representative driving conditions typical of the engine or vehicle application.
In the NPRM, the agencies stated that we would not consider technologies to be eligible for these credits if the technology has a significant impact on CO2 emissions and fuel consumption over the primary test cycles, or it is one of the technologies on whose performance the various vehicle and engine standards are premised.  The agencies believe it is appropriate to provide an incentive to encourage the introduction of these types of technologies and that a credit mechanism is an effective way to do so. The agencies proposed that this optional credit opportunity would be available through the 2018 model year reflecting that technologies may be common by then, but the agencies sought comment on the need to extend beyond model year 2018.
EPA and NHTSA also proposed that credits generated using innovative technologies be restricted within the subcategory averaging set where the credit was generated but requested comments on whether these innovative technology credits should be fungible across vehicle and engine categories. 
The agencies also proposed that manufacturers quantify CO2 and fuel consumption reductions associated with the use of the off-cycle technologies such that the credits could be applied based on the metrics (such as g/mile and gal/100 mile for pickup trucks, g/ton-mile and gal/1,000 ton-mile for tractors and vocational vehicles, and g/bhp-hr and gal/100 bhp-hr for engines).  Credits would have to be based on real additional reductions of CO2 emissions and fuel consumption and would need to be quantifiable and verifiable with a repeatable methodology.  Such data would be submitted to EPA and NHTSA, and would be subject to a public evaluation process in which the public would have opportunity for comment.  See 75 FR 25440.  We proposed that the technologies upon which the credits are based would be subject to full useful life compliance provisions, as with other emissions controls.  Unless the manufacturer can demonstrate that the technology would not be subject to in-use deterioration over the useful life of the vehicle, the manufacturer would have to account for deterioration in the estimation of the credits in order to ensure that the credits are based on real in-use emissions reductions over the life of the vehicle.
In cases where the benefit of a technological approach to reducing CO2 emissions and fuel consumption cannot be adequately represented using existing test cycles, it was proposed that EPA and NHTSA would review and approve as appropriate test procedures and analytical approaches to estimate the effectiveness of the technology for the purpose of generating credits.  The demonstration program would have to be robust, verifiable, and capable of demonstrating the real-world emissions benefit of the technology with strong statistical significance.  See 75 FR 25440.  
Finally, the agencies also explained in the NPRM that the CO2 and fuel consumption benefit of some technologies may have to be demonstrated with a modeling approach.  In other cases manufacturers might have to design on-road test programs that are statistically robust and based on real world driving conditions.  As with the similar procedure for alternative off-cycle credits under the 2012-2016 MY light-duty vehicle program, the agencies would include an opportunity for public comment as part of any approval process.
The agencies requested comments on the proposed approach for off-cycle emissions credits, including comments on how best to structure the program.  EPA and NHTSA particularly requested comments on how the case-by-case approach to assessing off-cycle innovative technology credits could best be designed, including ways to ensure the verification of real-world emissions benefits and to ensure transparency in the process of reviewing manufacturer's proposed test methods.
In response to the NPRM, the agencies received numerous comments relating to all aspects of the innovative technology credit flexibility provision.  The vast majority of the commenters supported this provision as proposed, but have requested further clarification, so the agencies are adopting the full provision as proposed and providing further discussion that addresses and clarifies the provision in response to the comments solicited and the comments received.
A number of organizations, including DTNA, MEMA, Navistar, Green Truck Association, Eaton, ACEEE, and NESCAUM, commented that technologies such as advanced transmissions, engine cooling strategies, idle reduction, light-weight components (including light-weight engines), and advanced drivelines should be able to receive credit through the innovative technology program. The agencies agree with these commenters.  The NPRM did not provide a specific list of technologies that the agencies would consider "innovative" because the agencies intended that a innovative technology could be any technology that can be proven to reduce CO2emissions and fuel consumption but for which the benefits are not captured utilizing the FTP procedures, SET procedures and GEM methodology used to determine compliance with the emission and fuel consumption standards.  Any of the suggested technologies could be considered as an innovative technology if the associated emission and fuel consumption benefit has not already been considered, if the associated emission and fuel savings can be measured and validated, and if the technology and measurement methodology have been approved by the agencies.  
A number of commenters, including Bendix, Bosch, Cummins, EMA/TMA, Eaton, DTNA, Navistar, Volvo, ArvinMeritor and USC requested that the innovative technology process and procedures be more clearly structured and defined.  Bendix requested that the agencies prescribe specific processes and procedures in the final rule by which innovative technologies can be submitted for review and approval.   EMA/TMA requested that the agencies provide guidance on the certification process, and suggested that existing fuel consumption test procedures developed jointly by the Society of Automotive Engineers (SAE) and the Technology & Maintenance Council (TMC), specifically that the Type II and Type III procedures be used.  Eaton requested that the agencies identify test methods that can be used for certification in order to provide transparency and certainty, and promote early technology introduction.  In response to these comments, the agencies are further defining the process for the final rule.   
In cases where the benefit of a technological approach to reducing CO2 emissions and fuel consumption cannot be adequately represented using existing test cycles, EPA and NHTSA will review and approve test procedures and analytical approaches as appropriate to estimate the effectiveness of the technology for the purpose of generating credits.  The innovative technologies will be evaluated in an A-to-B comparison.  The baseline engine and/or vehicle configuration must represent a configuration which is equivalent to the engine and/or vehicle with the innovative technology in terms of the other aspects of the engine and/or vehicle to prevent double counting of emissions reductions or gaming. 
Since innovative credits will be available for use within the same averaging set as the engine or vehicle which employ the innovative technology, the agencies are defining innovative credit approaches by regulatory category.
Heavy-Duty Pickup Truck and Van Innovative Technology Credits
For HD pickups and vans, EPA and NHTSA proposed that they would review and approve manufacturer-provided test preocedures and analytical approaches to estimate the effectiveness of a technology for the purpose of generating credits.  The proposal also expressed the view that the 5-cycle approach currently used in EPA's fuel economy labeling program for light-duty vehicles may provide a suitable test regime, provided it can be reliably conducted on the dynamometer and can capture the impact of the off-cycle technology (see 71 FR 77872, December 27, 2006).  EPA established the 5-cycle test methods to better represent real-world factors impacting fuel economy, including higher speeds and more aggressive driving, colder temperature operation, and the use of air conditioning.  Because we have not firmly established the suitability of the 5-cycle approach for HD pickups and vans at this time, and we received no comments or data helping to establish it, we are not adopting provisions to specify its use.  However, it remains a candidate approach that manufacturers may pursue in making their demonstrations for innovative technology credits, described below.
Manufacturer data submitted to the agencies in pursuit of innovative technology credits would be subject to a public evaluation process in which the public would have opportunity for comment.  Whether the approach involves on-road testing, modeling, or some other analytical approach, the manufacturer would be required to present a final methodology to EPA and NHTSA.  EPA and NHTSA would approve the methodology and credits only if certain criteria were met.  Baseline emissions and control emissions would need to be clearly demonstrated over a wide range of real world driving conditions and over a sufficient number of vehicles to address issues of uncertainty with the data.  Data would need to be on a vehicle model-specific basis unless a manufacturer demonstrated model-specific data was not necessary.  The agencies would publish a notice of availability in the Federal Register notifying the public of a manufacturer's proposed alternative off-cycle credit calculation methodology and provide opportunity for comment.  The notice will include details regarding the methodology, but not include any Confidential Business Information.
The agencies did not receive any adverse comments on using the proposed approach for HD pickup trucks and vans.  Consistent with the proposal, the agencies are adopting the proposed innovative technology credit provisions for HD pickup trucks and vans.
Heavy-Duty Engine, Combination Tractor, and Vocational Vehicle Innovative Technology Credits
Innovative technology credits developed in the HD engine, combination tractor, and vocational vehicle categories will need to be applied to the subcategory in which they were generated.  The agencies are adopting provisions to determine the separation of engine credits and vehicle credits based on the method which is selected by the manufacturer to determine the effectiveness of the innovative technology.  For example, improvements to the engine that are demonstrated in either the engine dynamometer test or powerpack test will clearly be engine credits.  Improvements that are demonstrated using chassis dynamometer or on-road test will be considered vehicle credits.  However, the agencies recognize that there may be exceptions to this approach, and will allow for the manufacturer to request an alternate classification of credits.  A change in credit allocation will require approval from the agencies and would be subject to a public evaluation process.    
Furthermore, the agencies adopting an approach for HD engines and vehicles which provides two paths for approval of the test procedure to measure the CO2 emissions and fuel consumption reductions of an innovative off-cycle technology, used in the HD engine or vehicle, that is similar to the light-duty process to address the concerns of some commenters mentioned above.  The first path would not require a public approval process of the test method.  The "pre-approved" test methods for HD engines and vehicles would include the A-to-B chassis testing, powerpack testing, and on-road testing.  The agencies are also adopting as proposed a second test method approval path which provides a manufacturer the ability to submit an alternative evaluation approach to EPA and NHTSA which must be approved by the agencies prior to the demonstration program.  As with HD pickup trucks and vans, such submissions of data should be submitted to the agencies and would be subject to a public evaluation process in which the public would have opportunity for comment.  Baseline emissions and control emissions would need to be clearly demonstrated over a wide range of real world driving conditions and over a sufficient number of vehicles to address issues of uncertainty with the data.  The agencies will publish a notice of availability in the Federal Register notifying the public of a manufacturer's proposed alternative off-cycle credit calculation methodology and provide opportunity for comment.  The notice will include details regarding the methodology, but not include any Confidential Business Information. Approval of the approach to determining a CO2 and fuel consumption benefit would not imply approval of the results of the program or methodology; when the testing, modeling, or analyses are complete the results would likewise be subject to EPA and NHTSA review and approval.  
The pre-approved test procedures include engine dynamometer, powerpack, chassis dynamometer, and on-road testing.  Each of the test procedures require the evaluation of a baseline and control engine or vehicle (A vs. B testing) to quantify the improvement.  Manufacturers may use the engine dynamometer test procedures using the HD engine FTP or SET cycle.  The chassis testing and powerpack testing would be conducted the same as described above for HD vocational vehicle and tractor hybrid testing in Section IV.B.2.b. using the drive cycles and weightings finalized in this action for the primary program.  If a manufacturer requires the use of an alternate duty cycle, then it will require prior approval from the agencies.  
The on-road testing would be tested according to SAE J1321 Joint TMC/SAE Fuel Consumption Test Procedure Type II Reaffirmed 1986-10 or SAE J1526 Joint TMC/SAE Fuel Consumption In-Service Test Procedure Type III Issues 1987-06, with additional constraints to improve the test repeatability.  The first constraint requires that the minimum route distance be set at 100 miles.  In addition, the route selected must be representative in terms grade.  The agencies will take into account published and relevant research in determining whether the grade is representative.  Similarly, the speed of the route must be representative of the drive cycle weighting adopted for each regulatory subcategory.  For example, if the route selected for an evaluation of a combination tractor with a sleeper cab contains only interstate driving, then the improvement factor would only apply to 86 percent of the weighted result.  Lastly, the ambient air temperature must be between 5 and 35°C.  The agencies also would allow the use of a Portable Emissions Measurement (PEMS) device for the measurement of CO2 emissions during the on-road testing.  The agencies are not pre-approving any routes for the on-road testing.  Manufacturers will be required to submit the proposed route prior to testing for approval.
As discussed in Section II.B.2, e the agencies are finalizing aerodynamic drag values which represent zero degree yaw (i.e., representing wind from directly in front of the vehicle, not from the side).  We recognize that wind conditions, most notably wind direction, have a greater impact on real world CO2 emissions and fuel consumption of heavy-duty trucks than of light-duty vehicles.  To provide additional incentive for manufacturers using innovative aerodynamic techniques (i.e., techniques that use assessment at yaw angles more or less than zero degrees to capture the influence of side winds and calculate wind average drag coefficient), the agencies are defining an approach to allow manufacturers to gain credit for developing technologies which improve the aerodynamic performance in crosswind conditions, similar to those experienced by vehicles in use.  This approach allows a manufacturer to demonstrate that the wind average drag coefficient for a particular model shows an improvement under conditions other than zero degree yaw.  If a manufacturer can demonstrate that the wind average drag coefficient for an aerodynamic configuration is lower than the wind average drag coefficient for the non-aerodynamic configuration, then the manufacturer may take the delta between the aerodynamic and non-aerodynamic wind average drag coefficient (CdA), discount by 25 percent, and subtract this difference from the zero degree yaw Cd A value for that configuration, and use this reduced CdA value to determine the aerodynamic bin for that configuration.  The manufacturer would use the Cd value associated with appropriate bin to determine the Cd value which will be used in GEM for all tractors using this aerodynamic package. 
The agencies requested comments on whether credits generated using innovative technologies should be fungible across vehicle and engine categories and received comments both supporting and opposing the limited fungibility of these credits. Cummins did not support the fungibility of innovative technology credits across subcategories, arguing that it is not advisable given the large number and variability of different technology types and the uncertainty in this provision. DTNA stated that the credits should be fungible across engine and vehicle classes to be treated the same as advanced technology and ABT credits.  EPA and NHTSA acknowledge that the HD program is a new program and though the agencies continue to believe the credit provision is an important flexibility, the agencies also believe it is reasonable to proceed with some caution at this time due to the uncertainty that exists about the credits to be acquired.  Therefore, the final rule includes the restriction on the innovative technology credits.  
The NPRM proposed that this optional credit opportunity be available through the 2018 model year, reflecting that technologies may be common by then, but sought comment on the need to extend beyond model year 2018.  The agencies received comments from DTNA, Navistar, Eaton, Cummins and Bosch supporting the extension of this provision beyond model year 2018.  Eaton stated that though some technologies will be more common in 2018, new technologies will evolve facing the same difficulties concerning implementation and would benefit from this provision.  Bosch explained that extension of the provision past 2018 is important because at the time of the final rules the GEM will not incorporate any newer technology until it is updated in phase two of the program, and manufactures will therefore continue to need the innovative technology provision for receiving credits for technologies not accounted for in GEM.  The agencies have reviewed these concerns and believe that they are valid.  Therefore, the final rules do not state that this provision ends in model year 2018. 

N2O Credit
EPA received a comment from an industry stakeholder requesting a provision to provide allow manufacturers of heavy-duty engines manufacturers to gain credit for redesigning aftertreatment systems to reduce N2O emissions.  It can be argued that such credits would be necessary where the N2O reductions are achieved at the expense of slightly higher CO2 emissions, since both are greenhouse gas emissions.  The agency agrees that it is appropriate to consider all greenhouse gas emissions together for such situations where trade-offs among the emissions exist due to technology selections.  Thus, EPA is adopting an interim provision which allows engine manufacturers to generate CO2 credits for very low N2O emissions.  Specifically, manufacturers that certify engines with full useful life N2O FEL emissions which are less than 0.04 g/hp-hr could generate 2.98 grams of CO2 credit for 0.01 grams of N2O reduced (consistent with the relative global warming potentials of CO2 and N2O).  For example, where a manufacturer certifies an engine family to have low per-brake horsepower hour N2O emissions of 0.01 g/hp-hr and applies the 0.02 g/hp-hr assigned deterioration factor, it could certify the engine family to a 0.03 g/hp-hr N2O FEL and generate enough CO2 credits to offset CO2 emissions 2.98 g/hp-hr above the standard.  The agency is limiting this provision to model years 2014 through 2016, the same years that NHTSA's program is voluntary, to maintain alignment between the CO2 emissions and fuel consumption standards.
NHTSA and EPA Compliance, Certification, and Enforcement Provisions
Overview
     (1) 	  Compliance Approach 
This section describes EPA's and NHTSA's final program to ensure compliance with EPA's final emission standards for CO2, N2O, and CH4 and NHTSA's final fuel consumption standards, as described in Section II.  To achieve the goals projected in the proposal to this rule, it is important for the agencies to have an effective and coordinated compliance program for our respective standards.  As is the case with the Light-Duty GHG and CAFE program, the final compliance program for heavy-duty vehicles and engines has two central priorities:  (1) to address the agencies' respective statutory requirements; and (2) to streamline the compliance process for both manufacturers and the agencies by building on existing practice wherever possible, and by structuring the program such that manufacturers can use a single data set to satisfy the requirements of both agencies.  It is also important to consider the provisions of EPA's existing criteria pollutant program in the development of the approach used for heavy-duty certification and compliance.  The existing EPA heavy-duty highway engine emissions program has an established infrastructure and methodology that will allow for an effective integration with this final GHG and fuel consumption program, without needing to create new unique processes in many instances.  The compliance program will address the importance of the impact of new control methods for heavy-duty vehicles as well as other control systems and strategies that may extend beyond the traditional purview of the criteria pollutant program.    
The heavy-duty compliance program uses a variety of mechanisms to conduct compliance assessments, including preproduction certification and postproduction testing and in-use monitoring once vehicles enter customer service. Specifically, the agencies are establishing a compliance program that utilizes existing EPA testing protocols and certification procedures.  Under the provisions of this program, manufacturers will have significant opportunity to exercise implementation flexibility, based on the program schedule and design, as well as the credit provisions in the program for advanced technologies.  This rule includes a process to foster the use of innovative technologies, not yet contemplated in the current certification process.  EPA will continue to conduct compliance preview meetings which provide the agency an opportunity to review a manufacturer's new product plans and ABT projections.  Given the nature of the final compliance program that involves both engine and vehicle compliance for some categories, it is necessary for manufacturers to begin pre-certification meetings with EPA early enough to address issues of certification and compliance for both integrated and non-integrated product offerings.
Based on feedback EPA and NHTSA received during the light-duty GHG comment period, both agencies are seeking to ensure transparency in the compliance process of this program.  In addition to providing information in published reports annually regarding the status of credit balances and compliance on an industry basis, EPA and NHTSA sought comments in the NPRM on additional strategies for providing information useful to the public regarding industry's progress toward reducing GHG emissions and fuel consumption from this sector while protecting sensitive business information.  In response, commenters (Sierra Club and UCS) also had strong interests for the agencies to ensure that any collected data is made available to the public with an interest especially for providing details on the credit balances for each manufacturer and for data on specific vehicle configuration information data to better understand the market and help with the development of future programs.  Additional requests (ALA and EDF) were also made for the agencies to expand consumer education and outreach for medium and heavy duty vehicles thereby empowering fleet purchasers to make better informed choices.  Another commenter (ACEEE) specifically requested that the agencies publish a heavy duty truck trend report describing vehicles and engines sold, including fuel efficiency and GHG performance and the use of advanced technology.  It was further recommended (by ALA and EDF) that the agencies should create consumer education and outreach programs for medium and heavy duty vehicles such as fuel consumption and GHG emissions information for all vehicles and engines covered by the rule, in buyers guide similar to the fuel economy guides that EPA and NHTSA provide for the light duty CAFE program.  An interest in having a consumer based label for 2b-3 pickup trucks and vans providing fuel economy and emission information like in the light duty CAFE program was also expressed (ICCT and UCS).   
ACEEE, ICCT and UCS requested that the agencies publish annual reports describing the vehicles and engines sold, fuel efficiency and GHG performance results and the technologies used to comply with standards.  Another commenter (ACEEE) specifically requested that the agencies should publish a heavy duty truck trend report describing vehicles and engines sold, including fuel efficiency and GHG performance and the use of advanced technology.  This same commenter requested that the agencies should collect and publicly disseminate existing vehicle performance data and data generated in future model years.  The agencies agree that there is a need for sharing heavy-duty emissions and fuel consumption information and therefore will make information publically available under this program.
Heavy-Duty Pickup Trucks and Vans  
The final compliance regulations (for certification, testing, reporting, and associated compliance activities) for heavy-duty pickup trucks and vans closely track both current practices and the recently adopted greenhouse gas regulations for light-duty vehicles and trucks.  Thus they are familiar to manufacturers. EPA already oversees testing, collects and processes test data, and performs calculations to determine compliance with both CAFE and CAA standards for Light-Duty. For Heavy-Duty products that closely parallel light-duty pick-ups and vans, under a coordinated approach, the compliance mechanisms for both programs for NHTSA and EPA would be consistent and non-duplicative for GHG pollutant standards and fuel consumption requirements. Vehicle emission standards established under the CAA apply throughout a vehicle's full useful life.  
Under EPA existing criteria pollutant emission standard program for heavy-duty pickup trucks and vans, vehicle manufacturers certify a group of vehicles called a test group. A test group typically includes multiple vehicle lines and model types that share critical emissions-related features. The manufacturer generally selects and tests a single vehicle, typically considered "worst case" for criteria pollutant emissions, which is allowed to represent the entire test group for certification purposes. The test vehicle is the one expected to be the worst case for the emission standard at issue.  Emissions from the test vehicle are assigned as the value for the entire test group.  However, the compliance program in the recent GHG regulations for light-duty vehicles, which is essentially the well established CAFE compliance program, allows and may require manufacturers to perform additional testing at finer levels of vehicle models and configurations in order to get more precise model-level fuel economy and CO2 emission levels.  This same approach would be applied to heavy-duty pickups and vans.  Additionally, like the light-duty program, approved use of analytically derived fuel economy (ADFE) will be allowed to predict the fuel efficiency and CO2 levels of some vehicles in lieu of testing when deemed appropriate by the agencies.  The degree to which analytically derived fuel economy is allowed and the design of the adjustment factors is covered in this rule.  
Heavy-duty Engines
Heavy-duty engine certification and compliance for traditional criteria pollutants has been established by EPA in its current general form since 1985.  In developing a program to address GHG pollutants, it is important to build upon the infrastructure for certification and compliance that exists today.  At the same time, it is necessary to develop additional tools to address compliance with GHG emissions requirements, since the final standard reflect control strategies that extend beyond those of traditional criteria pollutants.  In so doing, the agencies are finalizing use of EPA's current engine test based strategy  -  currently used for criteria pollutant compliance -- to also measure compliance for GHG emissions.  The agencies are also finalizing to add new strategies to address vehicle specific designs and hardware which impact GHG emissions.  The traditional engine approach would largely match the existing criteria pollutant control strategy.  This would allow the basic tools for certification and compliance, which have already been developed and implemented, to be expanded for carbon dioxide, methane, and nitrous oxide.  Engines with similar emissions control technology may be certified in engine families, as with criteria pollutants.  
For EPA, the final approach for certification would follow the current process, which would require manufacturer submission of certification applications, approval of the application, and receipt of the certificate of conformity prior to introduction into commerce of any engines.  EPA proposes the certificate of conformity be a single document that would be applicable for both criteria pollutants and greenhouse gas pollutants.  NHTSA would assess compliance with its fuel consumption standards based on the results of the EPA GHG emissions compliance process for each engine family.  
 Class 7 and 8 Combination Tractors and Class 2b-8 Vocational Vehicles
Currently, except for HD pickups and vans, EPA does not directly regulate exhaust emissions from heavy-duty vehicles as a complete entity.   Instead, a compliance assessment of the engine is undertaken as described above.  Vehicle manufacturers installing certified engines are required to do so in a manner that maintains all functionality of the emission control system.  While no process exists for certifying these heavy-duty vehicles, the agencies believe that a process similar to the one we propose for used for heavy-duty engines can be applied to the vehicles.
 The agencies are finalizing related certification programs for heavy-duty vehicles.  Manufacturers would divide their vehicles into families and submit applications to each agency for certification for each family.  However, the demonstration of compliance would not require emission testing of the complete vehicle, but would instead involve a computer simulation model, GEM.  This modeling tool uses a combination of manufacturer-specified and agency-defined vehicle parameters to estimate vehicle emissions and fuel consumption.  This model is then exercised over certain drive cycles. EPA and NHTSA are finalizing the duty cycles over which Class 7 and 8 combination tractors would be exercised to be:  65 mile per hour steady state cruise cycle, the 55 mile per hour steady state cruise cycle, and the California ARB transient cycle.  Additional details regarding these duty cycles will be addressed in Section V.D(1)(b) below.  Over each duty cycle, the simulation tool would return the expected CO2 emissions, in g/ton-mile, and fuel consumption, gal/1,000 ton-mile, which would then be compared to the standards.
Heavy-duty Pickup Trucks and Vans
Compliance Approach
EPA and NHTSA are finalizing, largely as proposed, new emission standards to control greenhouse gases (GHGs) and reduce fuel consumption from heavy-duty trucks between a gross vehicle weight rating between 8,500 and 14,000 pounds that are not already covered under the MY 2012-2016 light-duty truck and medium-duty passenger vehicle GHG standards. In this section "trucks" refers to heavy-duty pickup trucks and vans between 8,500 and 14,000 pounds not already covered under the light-duty rule.  
First, EPA is finalizing fleet average emission standards for CO2 on a gram per mile (g/mile) basis and NHTSA is finalizing fuel consumption standards on a gal/100 mile basis that would apply to a manufacturer's fleet of  heavy-duty trucks and vans  with a GVWR from 8,500 pounds to14,000 pounds (Class 2b and 3).  CO2 is the primary pollutant resulting from the combustion of vehicular fuels, and the amount of CO2 emitted is highly correlated to the amount of fuel consumed.  In addition, the EPA is finalizing separate emissions standards for three other GHG pollutants: CH4, N2O, and HFC.  CH4 and N2O emissions relate closely to the design and efficient use of emission control hardware (i.e., catalytic converters).  The standards for CH4 and N2O would be set as caps that would limit emissions increases and prevent backsliding from current emission levels.  In lieu of meeting the caps, EPA is allowing manufacturers the option of offsetting any N2O emissions or any CH4 emissions above the cap by taking steps to further reduce CO2.  Separately, EPA is finalizing to set standards to control the leakage of HFCs from air conditioning systems.   
Previously, complete vehicles with a Gross Vehicle Weight Rating of 8,500-14,000 pounds could be certified according to 40 CFR part 86, subpart S.  These heavy-duty chassis certified vehicles were required to pass emissions on both the Light-duty FTP and HFET (California requirement).  These  rules will use the same testing procedures already required for heavy-duty chassis certification, namely the Light-duty FTP and the HFET but extend the requirement for chassis certification for CO2 emissions to diesel-powered vehicles.  Using the data from these two tests, EPA and NHTSA will compare the CO2 emissions and fuel consumption results against the attribute-based target.  The attribute upon which the CO2 standard is based is a function of vehicle payload, vehicle towing capacity and two-wheel versus four-wheel drive configuration.  The attribute-based standard targets will be used to determine a manufacturer fleet standard and is subject to an average banking and trading scheme similar to the light-duty GHG rule.  
This rule will require nearly all heavy-duty trucks between 8,500 and 14,000 pounds gross vehicle weight rating that are not already covered under the light-duty truck and medium-duty passenger vehicle GHG standards to have a CO2, CH4 and N2O values assigned to them, either from actual chassis dynamometer testing or from the results of a representative vehicle in the test group with appropriate adjustments made for differences.  This requirement will apply based on whether the vehicle manufacturer sold the vehicle as a complete or nearly complete vehicle.  Manufacturers will be allowed to exclude vehicles they sell to secondary manufacturers without cabs (often known as rolling chassis), as well as a very small number of vehicles sold with cabs.  Specifically, a manufacturer can certify up to two percent of its vehicles with complete cabs, or up to 2,000 vehicles if its total sales in this category was less than 100,000, as vocational vehicles.  To the extent manufacturers are allowed to engine certify for criteria pollutant (non-GHG) requirements today, they will be allowed to continue to do so under the final regulations.
Because this program for heavy-duty pickup trucks and vans is so similar to the program recently adopted for light-duty trucks and codified in 40 CFR part 86, subpart S, EPA will apply most of those subpart S regulatory provisions to heavy-duty pickup trucks and vans and to recodify them in the new part 1037.  Most of the new part 1037 would not apply for heavy-duty pickup trucks and vans.  How 40 CFR part 86 applies, and which provisions of the new 40 CFR part 1037 apply for heavy-duty pickup trucks and vans is described in §1037.104.  
Certification Process
CAA section 203(a)(1) prohibits manufacturers from introducing a new motor vehicle into commerce unless the vehicle is covered by an EPA-issued certificate of conformity.  Section 206(a)(1) of the CAA describes the requirements for EPA issuance of a certificate of conformity, based on a demonstration of compliance with the emission standards established by EPA under section 202 of the Act.  The certification demonstration requires emission testing, and certification is required for each model year.  
Under existing heavy-duty chassis certification and other EPA emission standard programs, vehicle manufacturers certify a group of vehicles called a test group.  A test group typically includes multiple vehicle car lines and model types that share critical emissions-related features.
EPA requires the manufacturer to make a good faith demonstration in the certification application that vehicles in the test group will both 1) comply throughout their useful life within the emissions bin assigned, and 2) contribute to fleetwide compliance with the applicable emissions standards when the year is over.  EPA issues a certificate for the vehicles included in the test group based on this demonstration, and includes a condition in the certificate that if the manufacturer does not comply with the fleet average, then production vehicles from that test group will be treated as not covered by the certificate to the extent needed to bring the manufacturer's fleet average into compliance with the applicable standards.  
The certification process often occurs several months prior to production and manufacturer testing may occur months before the certificate is issued.  The certification process for the existing heavy-duty chassis program is an efficient way for manufacturers to conduct the needed testing well in advance of certification, and to receive certificates in a time frame which allows for the orderly production of vehicles.  The use of conditions on the certificate has been an effective way to ensure that manufacturers comply throughout their useful life and meet fleet standards when the model year is complete and the accounting for the individual model sales is performed.  EPA has also adopted this approach as part of its LD GHG compliance program.
This rule will similarly condition each certificate of conformity for the GHG program upon a manufacturer's good faith demonstration of compliance with the manufacturer's fleetwide average CO2 standard.  The following discussion explains how EPA will integrate this new vehicle certification program into the existing certification program.
An integrated approach with NHTSA has been undertaken to allow manufacturers a single point of entry to address certification and compliance.  Vehicle manufacturers will initiate the formal certification process with their submission of application for a certificate of conformity to EPA similar to the light duty program.
Certification Test Groups and Test Vehicle Selection
For heavy-duty chassis certification to the criteria emission standards, manufacturers currently, as mentioned above, divide their fleet into "test groups" for certification purposes.  The test group is EPA's unit of certification; one certificate is issued per test group/ evaporative family combination.  These groupings cover vehicles with similar emission control system designs expected to have similar emissions performance (see 40 CFR 86.1827-01).  The factors considered for determining test groups include Gross Vehicle Weight, combustion cycle, engine type, engine displacement, number of cylinders and cylinder arrangement, fuel type, fuel metering system, catalyst construction and precious metal composition, among others.  Vehicles having these features in common are generally placed in the same test group.  
This rule will retain the current test group structure for heavy-duty pickups and vans in the certification requirements for CO2.  At the time of certification, manufacturers will use the CO2 emission level from the Emission Data Vehicle as a surrogate to represent all of the models in the test group.  However, following certification further testing will generally be allowed for compliance with the fleet average CO2 standard as described below.  EPA's issuance of a certificate will be conditioned upon the manufacturer's subsequent model level testing and attainment of the actual fleet average, much like light-duty CAFE and GHG compliance requires.  Under the current program, complete heavy-duty Otto-cycle vehicles under 14,000 pounds Gross Vehicle Weight Rating are required to chassis certify (see 40 CFR 86.1801-01(a)).  The current program allows complete heavy-duty diesel vehicles under 14,000 pounds GVWR to optionally chassis certify (see 40 CFR 86.1863-07(a)).  As discussed earlier, this rule will now require all HD vehicles under 14,000 pounds GVWR to chassis certify except as noted in Section II. EPA recognizes that the existing heavy-duty chassis test group criteria do not necessarily relate to CO2 emission levels.  See 75 FR 25472.  For instance, while some of the criteria, such as combustion cycle, engine type and displacement, and fuel metering, may have a relationship to CO2 emissions, others, such as those pertaining to the some exhaust aftertreatment features, may not.  In fact, there are many vehicle design factors that impact CO2 generation and emissions but are not major factors included in EPA's test group criteria.  Most important among these may be vehicle weight, horsepower, aerodynamics, vehicle size, and performance features.  To remedy this, EPA will allow manufacturers provisions that are similar to the LD GHG rule that would yield more accurate CO2 estimates than only using the test group emission data vehicle CO2 emissions.  
EPA believes that the current test group concept is appropriate for N2O and CH4 because the technologies that would be employed to control N2O and CH4 emissions may generally be the same as those used to control the criteria pollutants. However, manufacturers will determine if this approach is adequate method for N2O and CH4 emissions compliance or if testing on additional vehicles is required to ensure their entire fleet meets applicable standards.  
As just discussed, the "worst case" vehicle a manufacturer selects as the Emissions Data Vehicle to represent a test group under the existing regulations (40 CFR 86.1828-01) may not have the highest levels of CO2 in that group.  For instance, there may be a heavier, more powerful configuration that would have higher CO2, but may, due to the way the catalytic converter has been matched to the engine, actually have lower NOX, CO, PM or HC emissions.  Therefore, EPA is allowing the use of a single Emission Data Vehicle to represent the test group for both criteria pollutant and CO2 certification. The manufacturer will be allowed to initially apply the Emission Data Vehicle's CO2 emissions value to all models in the test group, even if other models in the test group are expected to have higher CO2 emissions. However, as a condition of the certificate, this surrogate CO2 emissions value will generally be replaced with actual, model-level CO2 values based on results from additional testing that occurs later in the model year much like the light-duty CAFE program, or through the use of approved methods for analytically derived fuel economy. This model level data will become the official certification test results (as per the conditioned certificate) and will be used to determine compliance with the fleet average.  If the test vehicle is in fact the worst case CO2 vehicle for the test group , the manufacturer may elect to apply the Emission Data Vehicle emission levels to all models in the test group for purposes of calculating fleet average emissions. Manufacturers may be unlikely to make this choice, because doing so would ignore the emissions performance of vehicle models in their fleet with lower CO2 emissions and would unnecessarily inflate their CO2 fleet average.  Testing at the model level, in order to better represent the improved performance of vehicles within a test group other than the Emission Data Vehicle, will necessarily increase testing burden beyond the minimum EDV testing.  
As explained in earlier Sections, there are two standards that the manufacturer will be subject to, the fleet average standard and the in-use standard for the useful life of the vehicle.  Compliance with the fleet average standard is based on production weighted averaging of the test data that applies for each model.  To address commenter concerns regarding test variability due to facility and build variation  for each model, the in-use and SEA standards are set at 10 percent higher than the level used for that model in calculating the fleet average.  The certificate covers both of the fleet and in-use standards, and the manufacturer has to demonstrate compliance with both of these standards for purposes of receiving a certificate of conformity.  The certification process for the in-use standard is discussed above.  
Pre-Model Year (or Compliance Plan) Reporting
EPA and NHTSA are requiring that manufacturers submit a compliance plan for their entire fleet prior to the certification of any test group in a given model year.  Preferably, this compliance plan would be submitted at the manufacturer's annual certification preview meeting. This preview meeting is typically held before the earliest date that the model year can begin.  The earliest a model year can begin is January 2[nd] of the calendar year prior to the model year.  This plan should include the manufacturer's estimate of its attribute-based standard, along with a demonstration of compliance with the standard based on projected model-level CO2 emissions and fuel consumption, and production estimates.  This information will be similar to the information submitted to NHTSA and EPA in the pre-model year report required for CAFE compliance for light-duty vehicles.  Included in the compliance plan, manufacturers seeking to take advantage of credit flexibilities will include these in their compliance demonstration.  Similarly, the compliance demonstration will need to include a credible plan for addressing deficits accrued in prior model years.  EPA and NHTSA will review the compliance plan for technical viability and conduct a certification preview discussion with the manufacturer.  The agencies will view the compliance plan as part of the manufacturer's good faith demonstration, but understands that initial projections can vary considerably from the reality of final production and emission results.  In addition, the compliance plan must be approved by the EPA Administrator prior to any certificate of compliance being issued.  
Demonstrating compliance 
CO2 and Fuel Consumption Fleet Standards
  As noted, attribute-based CO2 standards result in each manufacturer having a fleet average CO2 standard unique to its heavy-duty truck fleet of GVWR between 8,500-14,000 pounds and that standard will be separate from the standard for passenger cars, light-trucks, and other heavy-duty trucks.  The standards depend on those attributes corresponding to the relative capability, or "work factor", of the vehicle models produced by that manufacturer. The final attributes used to determine the stringency of the  CO2 standard are payload and towing capacity as described in Section II. .  Generally, fleets with a mix of vehicles with increased payloads or greater towing capacity (or utilizing four wheel drive configurations) will face numerically less stringent standards (i.e., higher CO2 grams/mile standards) than fleets consisting of less powerful vehicles.  (However, the standards will be expected to be equally challenging and achieve similar percent reductions.)  Although a manufacturer's fleet average standard could be estimated throughout the model year based on projected production volume of its vehicle fleet, the final compliance values will be based on the final model year production figures.  A manufacturer's calculation of fleet average emissions at the end of the model year will be based on the production-weighted average emissions of each model in its fleet.  The payload and towing capacity inputs used to determine manufacturer compliance will be the advertised values.
The agencies will use the same general vehicle category definitions that are used in the current EPA HD chassis certification (See 40 CFR 86.1816-05).  The new vehicle category definitions differ slightly from the EPA definitions for Heavy-duty Vehicle definitions for the existing program, as well as other EPA vehicle programs.  Mainly, manufacturers will be able to test, and possibly model, more configurations of vehicles than were historically.  The existing criteria pollutant program requires the worst case configuration be tested for emissions certification.  For HD chassis certification, this usually meant only testing the vehicle with the highest ALVW, road-load, and engine displacement within a given test group.   This worst case configuration may only represent a small fraction of the test group production volume.  By testing the worst case, albeit possibly small volume, vehicle configuration, the EPA had a reasonable expectation that all represented vehicles would pass the given emissions standards.  Since CO2 standards are a fleet standard based on a combination of sales volume and work factor (i.e., payload and towing capability), it may be in a manufacturer's best interest to test multiple configurations within a given test group to more accurately estimate the fleet average CO2 emission levels and not accept the worst case vehicle test results as representative of all models. Additionally, vehicle models for which a manufacturer desires to use analytically derived fuel economy (ADFE) to estimate CO2 emission levels may need additional actual test data for vehicle models of similar but not identical configurations.   The agencies are allowing the use of ADFE similar to that allowed for light-duty vehicles in 40 CFR 600.006-08(e).  Some commenters, including the American Automotive Policy Council, were concerned that adopting the light duty ADFE program with its current minimum test requirements would unduly increase testing burden.  In addition to concerns over implementing the light duty ADFE program for heavy duty GHG compliance, commenters noted the need to develop a new HD ADFE methodology that addressed unique HD concerns.  EPA and NHTSA have continued to work with stakeholders to address the above concerns with using a modified LD ADFE program.  To address these concerns, the agencies will expand the allowed use of ADFE beyond that which is allowed in the LD program.  Since ADFE equations are not final at the time of this rule, updates to the HD ADFE program will be made through guidance or future rulemaking.   The GHG and fuel economy rulemaking for light-duty vehicles adopted a carbon balance methodology used historically to determine fuel consumption for the light-duty labeling and CAFE programs, whereby the carbon-related combustion products HC and CO are included on an adjusted basis in the compliance calculations, along with CO2.  The resulting carbon-related exhaust emissions (CREE) of each test vehicle are calculated and it is this value, rather than simply CO2 emissions, that is used in compliance determinations.  The difference between the CREE and CO2 is typically very small.
NHTSA and EPA are not adopting the CREE methodology for HD pickups and vans, and so will not adjust CO2 emissions to further account for additional HC and CO.  The basis of the CREE methodology in historical labeling and CAFE programs is not relevant to HD pickups and vans, because these historical programs do not exist for HD vehicles.  Furthermore, test data used in this proposal for standards-setting has not been adjusted for this effect, and so it would create an inconsistency, albeit a small one, to apply it for compliance with the numerical standards we are finalizing.  Finally, it would add complexity to the program with little real world benefit.  
CO2 In-Use Standards and Testing
Section 202(a)(1) of the CAA requires emission standards to apply to vehicles throughout their statutory useful life.  Section II discusses in-use standards.
Currently, EPA regulations require manufacturers to conduct in-use testing as a condition of certification for heavy-duty trucks between 8,500 and 14,000 gross vehicle weight that are chassis certified.  The vehicles are tested to determine the in-use levels of criteria pollutants when they are in their first and third years of service.  This testing is referred to as the In-Use Verification Program, which was first implemented as part of EPA's CAP 2000 certification program (see 64 FR 23906, May 4, 1999).   
An in-use program was already set forth in the 2012  -  2016 MY light-duty vehicle rule similar to the proposed heavy-duty pickups and vans. The In-Use Verification Program for heavy-duty pickups and vans will follow the same general provisions of the light-duty program in regard to testing, vehicle selection, and reporting.  See 75 FR 25474-25476.
Cab-Chassis Vehicles and Complete Class 4 Vehicles
As discussed in Section I.C(2)(a), we are including most cab-chassis Class 2b and 3 vehicles in the complete HD pickup and van program.  Because their numbers are relatively small, and to reduce the testing and compliance tracking burden to manufacturers, we would treat these vehicles as equivalent to the complete van or truck product they are derived from.  The manufacturer would determine which complete vehicle configuration it produces most closely matches the cab-chassis product leaving its facility, and would include each of these cab-chassis vehicles in the fleet averaging calculations as though it were identical to the corresponding complete vehicle.
Any in-use testing of these vehicles would do likewise, with loading of the tested vehicle to a total weight equal to the ALVW of the corresponding complete vehicle configuration.  If the secondary manufacturer had altered or replaced any vehicle components in a way that would substantially affect CO2 emissions from the tested vehicle (e.g., axle ratio has been changed for a special purpose vehicle), the vehicle manufacturer could request that EPA not test the vehicle or invalidate a test result.  Secondary (finisher) manufacturers would not be subject to requirements under this provision, other than to comply with anti-tampering regulations.  However, if they modify vehicle components in such a way that GHG emissions and fuel consumption are substantially affected, they become manufacturers subject to the standards under this proposal.
We realize that this approach does not capture the likely loss of aerodynamic efficiency involved in converting these vehicles from standard pickup trucks or vans to ambulances and the like, and thus it could assign them lower GHG emissions and fuel consumption than they deserve.  However, we feel that this approach strikes a fair balance between the alternatives -- grouping these vehicles with vocational vehicles subject only to engine standards and tire requirements, or creating a complex and burdensome program that forces vehicle manufacturers to track, and perhaps control, a plethora of vehicle configurations they currently do not manage.  We request comment on this final provision and any suggestions for ways to improve it.
EPA and NHTSA requested comment on whether Class 4 trucks that are very similar to complete Class 3 pickup truck models should be regulated as part of the HD pickup and van category, instead of as vocational vehicles.  Commenters argued convincingly that there are a number of important differences between the Class 4 and Class 3 trucks that make such regulation inappropriate.  As a result, we are keeping Class 4 trucks in the vocational vehicle category.   
 Labeling Provisions
HD pickups and vans currently have vehicle emission control information labels showing compliance with criteria pollutant standards, similar to emission control information labels for engines. As with engines, we believe this label is sufficient.
Other Certification Issues
Carryover Certification Test Data
EPA's final certification program for vehicles allows manufacturers to carry certification test data over from one model year to the next, when no significant changes to models are made. EPA will also apply this policy to CO2, N2O and CH4 certification test data. 
Compliance Fees
The CAA allows EPA to collect fees to cover the costs of issuing certificates of conformity for the classes of vehicles and engines covered by this proposal. On May 11, 2004, EPA updated its fees regulation based on a study of the costs associated with its motor vehicle and engine compliance program (69 FR 51402). At the time that cost study was conducted the current rulemaking was not considered. 
At this time the extent of any added costs to EPA as a result of this proposal is not known. EPA will assess its compliance testing and other activities associated with the rule and may amend its fees regulations in the future to include any warranted new costs.
 Compliance Reports
Pre-Model Year Report 
In the NPRM, EPA and NHTSA proposed that manufacturers must submit early model year compliance reports demonstrating how their entire fleets of heavy-duty pickup trucks and vans would comply with GHG emissions and fuel consumption standards.  The agencies understood that early model year reports would contain estimates that may change over the course of a model year and that compliance information manufactures submit prior to the beginning of a new model year may not represent the final compliance outcome.  The agencies viewed the necessity for requiring early model reports as a manufacturer's good faith projection for demonstrating compliance with emission and fuel consumption standards.   The preamble language indicated that the compliance reports would be submitted prior to the beginning of the model year and prior to the certification of any test group.  Preferably, a manufacturer would submit its reports during its annual certification preview meeting.    Precertification preview meetings are typically held with a manufacturer before the earliest date that the model year can begin which is January 2nd of the calendar year prior to the model year.   Manufacturers voluntarily choose to participate in precertification compliance meetings but meetings are not required by EPA and NHTSA regulations.  Manufacturers opt to participate in precertification meetings because of the advantage it gives to exploring with the agencies any possible compliance problems that may arise prior to seeking approval for certificates of conformity.   The NPRM preamble text did not specify an exact date for manufacturers to submit early compliance reports to the agency.  NHTSA attempted to adopt requirements in its regulatory text for manufactures to submit their early compliance reports no later than the end of December two years prior to the model year.  NHTSA also proposed for manufacturers to provide compliance information for the current model year and to the extent possible two years into the future.  NHTSA chose its submission deadline and model years for reporting based upon the same dates required by EPA in its CAFE provisions for light duty pickups and vans beginning in model year 2012.  
The NPRM included requirements for manufacturers to submit early model year compliance reports separately to each agency based upon limitations existing in the statutory authorities prescribed under EISA and CAA and the long-standing precedent set in the LD CAFE programs for receiving reports.  The EPA report, called the pre-model year report, and NHTSA report, called the pre-certification compliance report, were proposed to include an estimate of the manufacturer's attribute-based standards, along with a demonstration of compliance with the standards based on projected model-level and fleet CO2 emissions and fuel consumption results, and were to include an estimate of the manufacturer's production volumes.  The NPRM also included a proposal for submitting a credit plan for manufacturers seeking to take advantage of credit flexibilities and a credit deficit plan for manufacturers planning to accrue deficits during the model years.  Additionally, NHTSA attempted to reduce the burden on manufacturers by allowing them to submit copies of EPA's proposed pre-model year reports or applications for certifications of conformity, as a substitute to its own compliance report, so long as EPA's reports were submitted with equivalent fuel consumption information.  In either case, NHTSA reserved the right to ask manufacturers to provide additional information if necessary to verify its fuel consumption requirements under this program.  EPA and NHTSA also proposed to review the compliance reports for technical viability and to conduct a certification preview discussion with the manufacturer.  It was further proposed that the EPA Administrator would have to approve a manufacturer's compliance plan before it would consider issuing any certificate of compliance for the manufacturer.  
Comments were received to the NPRM from EMA and TMA strongly opposing providing separate reports to EPA and NHTSA and requested that the agencies implement a single uniform reporting template that could be submitted to both agencies simultaneously.  DTNA requested that NHTSA eliminate its pre-certification compliance report, arguing that report was overly burdensome.  
For the final rule, the agencies have decided to require manufacturers to submit a single report, hereafter referenced as the pre-model year report, to satisfy both agencies requirements for receiving compliance reports in advance of the model year.   The agencies considered the commenters' requests and determined that the benefit gained by receiving separate or distinct compliance reports would not outweigh the burden placed on manufacturers in reporting.  Therefore, the final rule establishes a harmonized approach by which manufacturers will submit a single report through the EPA database system as the single point of entry for all information required for this national program and both agencies will have access to the information.  If by model year 2012, the agencies are not prepared to receive information through the EPA database system, manufacturers are expected to submit written reports to the agencies.  EPA and NHTSA have determined that requiring manufacturers to submit a joint pre-model year report for their combined fleet of heavy-duty pickup trucks containing both emissions and equivalent fuel consumption information falls within each agencies' statutory authority.   The final rule requires a manufacturer to submit the joint pre-model year report as early as the date of the manufacturer's annual certification preview meeting, or prior to the manufacturer submitting its first application for a certificate for the given model year.    Consequently, a manufacturer choosing to comply in model year 2014 could submit its pre-model year report during its precertification meeting which could occur before January 2, 2013, or could provide its pre-model year report any time prior to submitting its first application.   In either case, a manufacturer would not be able to certify any of its test groups until the EPA Administrator approves its pre-model year report.  NHTSA will use the pre-model year report as preliminary model year data.  
The final rule adopts for the pre-model year reports similar requirements as proposed in the NPRM.  As mention, the NPRM proposed for reports to include an estimate of the manufacturer's attribute-based standards, expected testing results and estimated production volumes.  The agencies agree that this information is essential for tracking compliance of manufacturers and is therefore adopted for the final rule.  As discussed in the NPRM, the final rule requires manufacturers to identify any vehicle exclusions and other flexibilities afford for heavy-duty pickup and vans. The summary of the required information for each pre-model year report is as follows:
         * A list of each unique vehicle configuration included in the manufacturer's fleet describing the make and model designations, attribute based-values (GVWR, GCWR, Curb Weight and drive configurations) and standards.
         * The emission and fuel consumption fleet average standard derived from the unique vehicle configurations;
         * The estimated vehicle configuration, test group and fleet production volumes;
         * The expected emissions and  fuel consumption test group results and fleet average performance;  
         * A statement declaring whether the manufacturer will use fixed or increasing standards; acknowledging that once selected, the decision cannot be reversed and the manufacturer must continue to comply with the same alternative for subsequent model years;
         * A statement declaring whether the manufacturer chooses to comply early in MY 2013 for EPA and NHTSA.  The manufacturers must acknowledge that once selected, the decision cannot be reversed and the manufacturer will continue to comply with the fuel consumption standards for subsequent model years;
         * A statement declaring whether the manufacturer chooses to comply voluntarily with NHTSA's fuel consumption standards for model years 2014 through 2015.  The manufacturers must acknowledge that once selected, the decision cannot be reversed and the manufacturer will continue to comply with the fuel consumption standards for subsequent model years;
         * The list of cab-complete vehicles and the method use to certify, as vocational vehicles and engines, or as complete pickups and vans identifying the most similar complete vehicles used to derive the target standards and performance test results;
         * The list of vehicles a manufacturer is designating to include in the low volume exclusion; and 
         * A credit plan identifying the manufacturers estimated credit balances, planned credit flexibilities (i.e., credit balances, planned credit trading, innovative, advanced and early credits and etc.) and if needed a credit deficit plan demonstrating how it plans to resolve any credit deficits that might occur for a model year within a period of up to three model years after that deficit has occurred. 
Final Reports
The NPRM proposed for manufacturers participating in the ABT program to provide two types of year end reports; end-of-the-year (EOY) reports and final reports.  The EOY reports for the ABT program were required to be submitted by manufacturers no later than 90 days after the calendar year and final report no later than 270 days after the calendar year.  Manufacturers not participating in the ABT program were required to provide an EOY report within 45 days after the calendar year but no final reports were required.  The final ABT report due was established coinciding with EPA's existing criteria pollutant report for heavy-duty engines.  The EOY report was required in order to receive preliminary final estimates and identifies manufacturers that might have a credit deficit for the given model year.  Manufacturers with a credit surplus at the end of each model could receive a waiver from providing EOY reports.  As proposed, the remaining manufacturers were required to submit reports to EPA and send copies of those reports to NHTSA with equivalent fuel consumption values.     
Comments in response to the NPRM requested that for manufacturers not using ABT provisions, the EOY report due 90 days after the end of the calendar year should be combined with the ABT report due 90 days after the same model year.  Commenters also requested that the exempted off-road vehicle report be consolidated with the EOY report.  
For the final rule, the agencies will retain the NPRM proposal for EOY and final reports.  The final rule establishes a harmonized approach by which manufacturers will submit a single report through the EPA database system as the single point of entry for all information required for this national program and both agencies will have access to the information.  If by model year 2012, the agencies are not prepared to receive information through the EPA database system, manufacturers are expected to submit written reports to the agencies.  The agencies are also combining the EOY reports for all manufacturers whether or not using the ABT program.  A summary of the required information in the final rule for EOY and final reports is as follows: 
         * A finalized list of each unique vehicle configuration included in the manufacturers fleet describing the designations, attribute based-values (GVWR, GCWR, Curb Weight and drive configurations) and standards.
         * The final emission and fuel consumption fleet average standard derived from the unique vehicle configurations;
         * The final vehicle configuration, test group and fleet production volumes;
         * The final emissions and  fuel consumption test group results and fleet average performance;  
         * The final list of cab-complete vehicles and the method use to certify, as vocational vehicles and engine, or as complete pickups and vans identifying the most similar complete vehicles used to derive the target standards and performance test results;
         * The final list of vehicles a manufacturer is designating to include in the low volume exclusion; 
         * A final credit plan identifying the manufacturers estimated credit balances, planned credit flexibilities (i.e., credit balances, planned credit trading, innovative, advanced and early credits and etc.) and if needed a credit deficit plan demonstrating how it plans to resolve any credit deficits that might occur for a model year within a period of up to three model years after that deficit has occurred; 
         * A plan describing the vehicles that were exempted such as for off-road or small business purposes; and
         * A plan describing any alternative fueled vehicles that were produced for the model year identifying the approaches used to determinate compliance and the production volumes. 
Heavy-Duty Engines
 Compliance Approach
Section 203 of the CAA requires that all motor vehicles and engines sold in the United States to carry a certificate of conformity issued by the US EPA.  For heavy-duty engines, the certificate specifies that the engine meets all requirements as set forth in the regulations (40 CFR part 86, subpart N, for criteria pollutants) including the requirement that the engine be compliant with emission standards.  This demonstration is completed through emission testing as well as durability testing to determine the level of emissions deterioration throughout the useful life of the engine. In addition to compliance with emission standards, manufacturers are also required to warrant their products against emission defects, and demonstrate that a service network is in place to correct any such conditions.  The engine manufacturer also bears responsibility in the event that an emission-related recall is necessary.  Finally, the engine manufacturer is responsible for tracking and ensuring correct installation of any emission related components installed by a second party (i.e., vehicle manufacturer).  EPA believes this compliance structure is also valid for administering the final GHG regulations for heavy-duty engines.
Certification Process
In order to obtain a certificate of conformity, engine manufacturers must complete a compliance demonstration, normally consisting of test data from relatively new (low-hour) engines as well as supporting documentation, showing that their product meets emission standards and other regulatory requirements.  To account for aging effects, low-hour test results are coupled with testing-based deterioration factors (DFs), which provide a ratio (or offset) of end-of-life emissions to low-hour emissions for each pollutant being measured.  These factors are then applied to all subsequent low-hour test data points to predict the emissions behavior at the end of the useful life.  
For purposes of this compliance demonstration and certification, engines with similar engine hardware and emission characteristics throughout their useful life may be grouped together in engine families, consistent with current criteria-pollutant certification procedures.  Examples of such characteristics are the combustion cycle, aspiration method, and aftertreatment system.  Under this system, the worst-case engine ("parent rating") is selected based on having the highest fuel feed per engine stroke, and all emissions testing is completed on this model.  All other models within the family ("child ratings") are expected to have emissions at or below the parent model and therefore in compliance with emission standards.  Any engine within the family can be subject to selective enforcement audits, in-use, confirmatory, or other compliance testing.
We are continuing the use of this approach for the selection of the worst-case engine ("parent rating") for fuel consumption and GHG emissions as well.  We believe this is appropriate because this worst case engine configuration would be expected to have the highest in-use fuel consumption and GHG emissions within the family.  We note that lower engine ratings contained within this family would be expected to have a higher fuel consumption rate when measured over the Federal Test Procedures as expressed in terms of fuel consumption per brake horsepower hour.  This higher fuel consumption rate is misleading in the context of comparing engines within a single engine family.  This apparent contradiction can be most easily understood in terms of an example.  For a typical engine family a top rating could be 500 horsepower with a number of lower engine ratings down to 400 horsepower or lower included within the family.  When installed in identical trucks the 400 and 500 horsepower engines would be expected to operate identically when the demanded power from the engines is 400 horsepower or less.  So in the case where in-use driving never included acceleration rates leading to horsepower demand greater than 400 horsepower, the two trucks with the 400 and 500 horsepower engines would give identical fuel consumption and GHG performance.  When the desired vehicle acceleration rates were high enough to require more than 400 horsepower, the 500 horsepower truck would accelerate faster than the 400 horsepower truck resulting in higher average speeds and higher fuel consumption and GHG emissions measured on a per mile or per ton-mile basis.  Hence, the higher rated engine family would be expected to have the highest in-use fuel consumption and CO2 emissions.  
The reason that the lower engine ratings appear to have worse fuel consumption relates to our use of a brake specific work metric.  The brake specific metric measures power produced from the engine and delivered to the vehicle ignoring the parasitic work internal to the engine to overcome friction and air pumping work within the engine.  The fuel consumed and GHG emissions produced to overcome this internal work and to produce useful (brake) work are both measured in the test cycle but only the brake work is reflected in the calculation of the fuel consumption rate.  This is desirable in the context of reducing fuel consumption as this approach rewards engine designs that minimize this internal work through better engine designs.  The less work that is needed internal to the engine, the lower the fuel consumption will be.  If we included the parasitic work in the calculation of the rate, we would provide no incentive to reduce internal friction and pumping losses.  However, when comparing two engines within the very same family with identical internal work characteristics, this approach gives a misleading comparison between two engines as described above.  This is the case because both engines have an identical fuel consumption rate to overcome internal work but different rates of brake work with the higher horsepower rating having more brake work because the test cycle is normalized to 100 percent of the engine's rated power.  The fuel consumed for internal work can be thought of as a fixed offset identical between both engines.  When this fixed offset is added to the fuel consumed for useful (brake) work over the cycle, it increases the overall fuel consumption (the numerator in the rate) without adding any work to the denominator.  This fixed offset identical between the two engines has a bigger impact on the lower engine rating.  In the extreme this can be seen easily.  As the engine ratings decrease and approach zero, the brake work approaches zero and the calculated brake specific fuel consumption approaches infinity. For these reasons, we are finalizing that the same selection criteria, as outlined in 40 CFR part 86, subpart N, be used to define a single engine family designation for both criteria pollutant and GHG emissions.  Further, we are finalizing that for fuel consumption and CO2 emissions only any selective enforcement audits, in-use, confirmatory, or other compliance testing would be limited to the parent rating for the family. This approach is being contemplated for administrative convenience and we seek comments on alternatives to address compliance testing.  Consistent with the current regulations, manufacturers may electively subdivide a grouping of engines which would otherwise meet the criteria for a single family if they have evidence that the emissions are different over the useful life.  
The agency utilizes a 12-digit naming convention for all mobile-source engine families (and test groups for light-duty vehicles).  This convention is also shared by the California Air Resources Board which allows manufacturers to potentially use a single family name for both EPA and California ARB certification. Of the 12 digits, 9 are EPA-defined and provide identifying characteristics of the engine family.  The first digit represents the model year, through use of a predefined code. For example, "A" corresponds to the 2010 model year and "B" corresponds to the 2011 model year.  The 5[th] position corresponds to the industry sector code, which includes such examples as light-duty vehicle (V) and heavy-duty diesel engines (H). The next three digits are a unique alphanumeric code assigned to each manufacturer by EPA.  The next four digits describe the displacement of the engine; the units of which are dependent on the industry segment and a decimal may be used when the displacement is in liters.  For engine families with multiple displacements, the largest displacement is used for the family name.  For on-highway vehicles and engines, the tenth character is reserved for use by California ARB. The final characters (including the 10[th] character in absence of California ARB guidance) left to the manufacturer to determine, such that the family name forms a unique identifying characteristic of the engine family.
This convention is well understood by the regulated industries, provides sufficient detail, and is flexible enough to be used across a wide spectrum of vehicle and engine categories.  In addition, the current harmonization with other regulatory bodies reduces complications for affected manufacturers. For these reasons, we are not finalizing any major changes to this naming convention for this proposal.  There may be additional categories defined for the 5[th] character to address heavy-duty vehicle families, however that will be discussed later.
As with criteria pollutant standards, the heavy-duty diesel regulatory category is subdivided into three regulatory subcategories, depending on the GVW of the vehicle in which the engine will be used.  These regulatory subcategories are defined as light-heavy-duty (LHD) diesel, medium heavy-duty (MHD) diesel, and heavy heavy-duty (HHD) diesel engines. All heavy-duty gasoline engines are grouped into a single subcategory. Each of these regulatory subcategories are expected to be in service for varying amounts of time, so they each carry different regulatory useful lives.  For this reason, expectations for demonstrating useful life compliance differ by subcategory, particularly as related to deterioration factors.
Light heavy-duty diesel engines (and all gasoline heavy-duty engines) have the same regulatory useful life as a light-duty vehicle (110,000 miles), which is significantly shorter than the other heavy-duty regulatory subcategories. Therefore, we believe it is appropriate to maintain commonality with the light-duty GHG rule.  During the light-duty GHG rulemaking, the conclusion was reached that no significant deterioration would occur over the useful life. Therefore, EPA is recommending that manufacturers use assigned DFs for CO2.  For this final action, we believe appropriate values are zero (for additive DFs) and one (for multiplicative DFs).  EPA will continue to collect data regarding deterioration of CO2 emissions and may revisit these assigned values if necessary.
For the medium heavy-duty and heavy heavy-duty diesel engine segments, the regulatory useful lives are significantly longer (185,000 and 435,000 miles, respectively).  For this reason, the agency is not convinced that engine/aftertreatment wear will not have a negative impact on GHG emissions. To address useful life compliance for MHD and HHD diesel engines certified to GHG standards, we believe the criteria pollutant approach for developing DFs is appropriate. Using CO2 as an example, many of the engine deterioration concerns previously identified will affect CO2 emissions. Reduced compression, as a result of wear, will cause higher fuel consumption and increase CO2 production.  In addition, as aftertreatment devices age (primarily particulate traps), regeneration events may become more frequent and take longer to complete. Since regeneration commonly requires an increase in fuel rate, CO2 emissions would likely increase as well. Finally, any changes in EGR levels will affect heat release rates, peak combustion temperatures, and completeness of combustion.  Since these factors could reasonably be expected to change fuel consumption, CO2 emissions would be expected to change accordingly.  
HHD diesel engines may also require some degree of aftertreatment maintenance throughout their useful life.  For example, one major heavy-duty engine manufacturer specifies that their diesel particulate filters be removed and cleaned at intervals between 200,000 and 400,000 miles, depending on the severity of service. Another major engine manufacturer requires servicing diesel particulate filters at 300,000 miles. This maintenance or lack thereof if service is neglected, could have serious negative implications to CO2 emissions. In addition, there may be emissions-related warranty implications for manufacturers to ensure that if rebuilding or specific emissions related maintenance is necessary, it will occur at the prescribed intervals.  Therefore, it is imperative that manufacturers are detailed in their maintenance instructions.  Lean-NOX aftertreatment devices may also facilitate GHG reductions by allowing engines to run with higher engine-out NOX levels in exchange for more efficient calibrations. In most cases, these aftertreatment devices require a consumable reductant, such as diesel exhaust fluid, which requires periodic maintenance by the vehicle operator.  Without such maintenance, the emission control system may be compromised and compliance with emission standards may be jeopardized.  Such maintenance is considered to be critical emission related maintenance and manufacturers must therefore demonstrate that it is likely to be completed at the required intervals.  One example of such a demonstration is an engine power de-rating strategy that will limit engine power or vehicle speed in absence of this required maintenance.
If the manufacturer determines that maintenance is necessary on critical emission-related components within the useful life period, they must have a reasonable basis for ensuring that this maintenance will be completed as scheduled. This includes any adjustment, cleaning, repair, or replacement of critical emission-related components. Typically, the agency has only allowed manufacturers to schedule such maintenance if the manufacturer can demonstrate that the maintenance is reasonably likely to be done at the recommended intervals.  This demonstration may be in the form of survey data showing at least 80 percent of in-use engines get the prescribed maintenance at the correct intervals. Another possibility is to provide the maintenance free of charge.  We see no reason to depart from this approach for GHG-related critical emission-related components.
Demonstrating Compliance With the  Standards
CO2 Standards
The final test results (adjusted for deterioration, if applicable) form the basis for the Family Certification Limit (FCL), which the manufacturer must specify to be at or above the certification test results. This FCL becomes the emission standard for the family and any certification or confirmatory testing must show compliance with this limit.  In addition, manufacturers may choose an FCL at any level above their certified emission level to provide a larger compliance margin.  If subsequent certification or confirmatory testing reveals emissions above the FCL, the new, higher result becomes the FCL.  
The FCL is also used to determine the Family Emission Limit (FEL), which serves as the emission limit for any subsequent field testing conducted after the time of certification.  This would primarily include selective enforcement audits, but also may include in-use testing for GHGs.  The FEL differs from the FCL in that it includes an EPA-defined compliance margin; which has been defined at 3 percent for the final rule. Our initial proposal included a 2 percent margin based on round-robin testing of the same engine at several laboratories.  Since that time, additional data has indicated that it may be more appropriate to use a 3 percent margin to also account for production variability between engines. Under this final rule, the FEL will always be 3final percent higher than the FCL.  
Engine Emission Testing
Under current non-GHG engine emissions regulations, manufacturers are required to demonstrate compliance using two test methods: the heavy-duty transient cycle and the heavy-duty steady state test. Each test is an engine speed versus engine torque schedule intended to be run on an engine dynamometer.  Over each test, emissions are sampled using the equipment and procedures outlined in 40 CFR part 1065, which includes provisions for measuring CO2, N2O, and CH4. Emissions may be sampled continuously or in a batch configuration (commonly known as "bag sampling") and the total mass of emissions over each cycle are normalized by the engine power required to complete the cycle.  Following each test, a validation check is made comparing actual engine speed and torque over the cycle to the commanded values. If these values do not align well, the test is deemed invalid.
The transient Heavy-duty FTP cycle is characteristic of typical urban stop-and-go driving. Also included is a period of more steady state operation that would be typical of short cruise intervals at 45 to 55 miles per hour.  Each transient test consists of two 20 minute tests separated by a "soak" period of 20 minutes.  The first test is run with the engine in a "cold" state, which involves letting the engine cool to ambient conditions either by sitting overnight or by forced cooling provisions outlined in §86.1335-90 (or 40 CFR part 1036).  This portion of the test is meant to assess the ability of the engine to control emissions during the period prior to reaching normal operating temperature. This is commonly a challenging area in criteria pollutant emission control, as cold combustion chamber surfaces tend to inhibit mixing and vaporization of fuel and aftertreatment devices do not tend to function well at low temperatures.  
Following the first test, the engine is shut off for a period of 20 minutes, during which emission analyzer checks are performed and preparations are made for the second test (also known as the "hot" test).  After completion of the second test, the results from the cold and hot tests are weighted and a single composite result is calculated for each pollutant.  Based on typical in-use duty cycles, the cold test results are given a 1/7 weighting and the hot test results are given a 6/7 weighting.  Deterioration factors are applied to the final weighted results and the results are then compared to the emission standards.
Prior to 2007, compliance only needed to be demonstrated over the Heavy-duty FTP. However, a number of events brought to light the fact that this transient cycle may not be as well suited for engines which spend much of their duty cycle at steady cruise conditions, such as those used in line-haul semi-trucks.  As a result, the steady-state SET procedure was added, consisting of 13 steady-state modes. During each mode, emissions were sampled for a period of five minutes.  Weighting factors were then applied to each mode and the final weighted results were compared to the emission standards (including deterioration factors).  In addition, emissions at each mode could not exceed the NTE emission limits. Alternatively, manufacturers could run the test as a ramped-modal cycle. In this case, the cycle still consists of the same speed/torque modes, however linear progressions between points are added and instead of weighting factors, each mode is sampled for various amounts of time.  The result is a continuous cycle lasting approximately 40 minutes. With the implementation of part 1065 test procedures in 2010, manufacturers are now required to run the modal test as a ramped-modal cycle. In addition, the order of the speed/torque modes in the ramped-modal cycle have changed for 2010 and later engines.
It is well known that fuel consumption, and therefore CO2 emissions, are highly dependent on the drive cycle over which they are measured.  Steady cruise conditions, such as highway driving, tend to be more efficient, having lower fuel consumption and CO2 emissions.  In contrast, highly transient operation, such as city driving, tends to lead to lower efficiency and therefore higher fuel consumption and CO2 emissions. One example of this is the difference between EPA-measured city and highway fuel economy ratings assigned to all new light-duty passenger vehicles. 
For this heavy-duty engine and vehicle proposal, we believe it is important to assess CO2 emissions and fuel consumption over both transient and steady state test cycles, as all vehicles will operate in conditions typical of each cycle at some point in their useful life.  However, due to the drive cycle dependence of CO2 emissions, we do not believe it is reasonable to have a single CO2 standard which must be met for both cycles.  A single CO2 standard would likely prove to be too lax for steady-state conditions while being too strict for transient conditions.  Therefore, the agencies are finalizing that all heavy-duty engines be tested over both transient and steady-state tests.  However, only the results from either the transient or steady-state test cycles would be used to assess compliance with GHG standards, depending on the type of vehicle in which the engine will be used.  Engines that will be used in Class 7 and 8 combination tractors would use the ramped-modal cycle for GHG certification, and engines used in vocational vehicles would use the Heavy-duty FTP cycle.  In both cases, results from the other test cycle would be reported but not used for a compliance decision.  Engines will continue to be required to show criteria pollutant compliance over both cycles, in addition to NTE requirements.
The agencies proposed that manufacturers submit both data sets from the transient test at the time of certification. This includes providing both cold start and hot start transient heavy-duty FTP emissions results, as well as the composite emissions at the time of certification.    The proposed rules also required that manufacturers submit modal data from the ramped-modal cycle test..  This was proposed in an effort to improve the accuracy of the simulation model being used for assessing CO2 and fuel consumption performance and overall engine emissions performance.  
However several comments were submitted with concerns that modal data was non-discernable when batch sampling was used for certification testing.  Thus, an additional certification test (or tests) would need to be done using either continuous analyzers or batch sampling at each mode; each option raising the cost and complexity of certification testing.  The agencies agree that (at this time) this raises practical issues for certification testing, however we also believe that manufacturers have significant data from these modal points which could be used to satisfy our model refinement goals. Therefore, we believe it is appropriate to still require the submission of modal data, however manufacturers may submit development data from production-level engine calibrations to satisfy this modal data requirement.  
The agencies also recognize that even minor variations in test fuel properties can have an impact on measured CO2 emissions.  Therefore, measured CO2 results are to be corrected using a reference energy content, which is defined in the regulations.  This correction must be performed for each test and each batch of test fuel.  However, manufacturers may develop robust testing procedures that reduce the variation in test fuel properties to within the level of measurement uncertainty of the fuel properties themselves.  If this is the case, an annual review is still necessary to confirm the validity of this constant value.
As explained above in Section II, the agencies are finalizing an alternative standard whereby manufacturers may elect that certain of their engine families meet an alternative percent reduction standard, measured from the engine family's 2011 baseline, instead of the main 2014 MY standard.  As part of the certification process, manufacturers electing this standard would not only have to notify the agency of the election but also demonstrate the derivation of the 2011 baseline CO2 emission level for the engine family.  Manufacturers would also have to demonstrate that they have exhausted all credit opportunities.
Durability testing
Another element of the current certification process is the requirement to complete durability testing to establish DFs. As previously mentioned, manufacturers are required to demonstrate that their engines comply with emission standards throughout the regulatory compliance period of the engine.  This demonstration is commonly made through the combination of low-hour test results and testing based deterioration factors.
For engines without aftertreatment devices, deterioration factors primarily account for engine wear as service is accumulated.  This commonly includes wear of valves, valve seats, and piston rings, all of which reduce in-cylinder pressure. Oil control seals and gaskets also deteriorate with age, leading to higher lubricating oil consumption.  Additionally, flow properties of EGR systems may change as deposits accumulate and therefore alter the mass of EGR inducted into the combustion chamber.  These factors, amongst others, may serve to reduce power, increase fuel consumption, and change combustion properties; all of which affect pollutant emissions.
For engines equipped with aftertreatment devices, DFs take into account engine deterioration, as described above, in addition to aging affects on the aftertreatment devices.  Oxidation catalysts and other catalytic devices rely on active precious metals to effectively convert and reduce harmful pollutants. These metals may become less active with age and therefore pollutant conversion efficiencies may decrease.  Particulate filters may also experience reduced trapping efficiency with age due to ash accumulation and/or degradation of the filter substrate, which may lead to higher tailpipe PM measurements and/or increased regeneration frequency. If a pollutant is predominantly controlled by aftertreatment, deterioration of emission control depends on the continued operation of the aftertreatment device much more so than on consistent engine-out emissions. 
At this time, we anticipate that most engine component wear will not have a significant negative impact on CO2 emissions. However, wear and aging of aftertreatment devices may or may not have a significant negative impact on CO2 emissions.  In addition, future engine or aftertreatment technologies may experience significant deterioration in CO2 emissions performance over the useful life of the engine.  For these reasons, we believe that the use of DFs for CO2 emissions is both appropriate and necessary. As with criteria pollutant emissions, these DFs are preferably developed through testing the engine over a representative duty cycle for an extended period of time. This is typically either half or full useful life, depending on the regulatory class. The DFs are then calculated by comparing the high-hour to low-hour emission levels, either by division or subtraction (for multiplicative & additive DFs, respectively).  
This testing process may be a significant cost to an engine manufacturer, mainly due to the amount of time and resources required to run the engine out to half or full useful life.  For this reason, durability testing for the determination of DFs is not commonly repeated from model year to model year. In addition, some DFs may be allowed to carry over between families sharing a common architecture and aftertreatment system.  EPA prefers to have manufacturers develop testing-based DFs for their products. However, we do understand that for the reasons stated above, it may be impractical to expect manufacturers to have testing-based deterioration factors available for these  final rules. Therefore, we are allowing manufacturers to use EPA-assigned DFs for CO2.   However, we also understand that CO2 is traditionally measured as part of normal engine dynamometer testing. Therefore, we are requiring that manufacturers include CO2 data over their criteria pollutant durability demonstrations (if available), which will aid the agency in developing more accurate assigned DFs.
IRAFs/Regeneration Impacts on CO2
Heavy-duty engines may be equipped with exhaust aftertreatment devices which require periodic "regeneration" to return the device to a nominal state. A common example is a diesel particulate filter, which accumulates PM as the engine is operated.  When the PM accumulation reaches a threshold such that exhaust backpressure is significantly increased, exhaust temperature is actively increased to oxidize the stored PM.  The increase in exhaust temperature is commonly facilitated through late combustion phasing and/or raw fuel injection into the exhaust system upstream of the filter.  Both methods impact emissions and therefore must be accounted for at the time of certification. In accordance with §86.004-28(i), this type of event would be considered infrequent because in most cases they only occur once every 30 to 50 hours of engine operation (rather than once per transient test cycle), and therefore adjustment factors must be applied at certification to account for these effects.
Similar to DFs, these adjustment factors are based off of manufacturer testing; however this testing is far less time consuming.  Emission results are measured from two test cycles: with and without regeneration occurring.  The differences in emission results are used, along with the frequency at which regeneration is expected to occur, to develop upward and downward adjustment factors. Upward adjustment factors are added to all emission results derived from a test cycle in which regeneration did not occur. Similarly, downward adjustment factors are subtracted from results based on a cycle which did experience a regeneration event.  Each pollutant will have a unique set of adjustment factors and additionally, separate factors are commonly developed for transient and steady-state test cycles.
The impact of regeneration events on criteria pollutants varies by pollutant and the aftertreatment device(s) used. In general, the adjustment factor can have a very significant impact on compliance with the NOX standard.  For this reason, heavy-duty vehicle and engine manufacturers are already very well motivated to extend the regeneration frequency to as long an interval as possible and to reduce the during of the regeneration as much as possible.  Both of these actions significantly reduce the impact of regeneration on CO2 emissions and fuel consumption.  We do not believe that adding an adjustment factor for infrequent regeneration to the CO2 or fuel efficiency standards would provide a significant additional motivation for manufacturers to reduce regenerations.  Moreover, doing so would add significant and unnecessary uncertainty to our projections of CO2 and fuel consumption performance in 2014 and beyond.  In addressing that uncertainty, the agencies would have to set less stringent fuel efficiency and CO2 standards for heavy-duty trucks and engines.  Therefore, we are not  requiring the use of infrequent regeneration adjustment factors for CO2 or fuel efficiency in this program. 
Auxiliary Emission Control Devices
As part of the engine control strategy, there may be devices or algorithms which reduce the effectiveness of emission control systems under certain limited circumstances. These strategies are referred to as Auxiliary Emission Control Devices (AECDs). One example would be the reduced use of EGR during cold engine operation. In this case, low coolant temperatures may cause the electronic control unit to reduce EGR flow to improve combustion stability.  Once the engine warms up, normal EGR rates are resumed and full NOX control is achieved.  
At the time of certification, manufacturers are required to disclose all AECDs and provide a full explanation of when the AECD is active, which sensor inputs effect AECD activation, and what aspect of the emission control system is affected by the AECD.  Manufacturers are further required to attest that their AECDs are not "defeat-devices," which are intentionally targeted at reducing emission control effectiveness.  
Several common AECDs disclosed for criteria pollutant certification will have a similarly negative influence on GHG emissions as well.  One such example is cold-start enrichment, with provides additional fueling to stabilize combustion shortly after initially starting the engine.  From a criteria pollutant perspective, HC emissions can reasonably be expected to increase as a result. From a GHG perspective, the extra fuel does not result in a similar increase in power output and therefore the efficiency of the engine is reduced, which has a negative impact on CO2 emissions. In addition, there may be AECDs that uniquely reduce GHG emission control effectiveness.  Therefore, consistent with today's certification procedures, we are finalizing that a comprehensive list of AECDs covering both criteria pollutant, as well as GHG emissions is required at the time of certification.  
EPA's N2O and CH4 Standards
In 2009, EPA issued rules requiring manufacturers of mobile-source engines to report the emissions of CO2, N2O, and CH4 (74 FR 56260, October 30, 2009). While CO2 is commonly measured during certification testing, CH4 and N2O are not.  CH4 has traditionally not been included in criteria pollutant regulations because it is a relatively stable molecule and does not contribute significantly to ground-level ozone formation.  In addition, N2O is commonly a byproduct of lean-NOX aftertreatment systems. Until recently, these types of systems were not widely used on heavy-duty engines and therefore N2O emissions were insignificant.  Both species, while emitted in small quantities relative to CO2, have much higher global warming potential than CO2 and therefore must be considered as part of a comprehensive GHG regulation.
EPA is  requiring that CH4 and N2O be reported at the time of certification, however we will allow manufacturers to submit  a compliance statement based on good engineering judgment for the first year of the program in lieu of direct measurement of N2O.  However, beginning in the 2015 model year, the agency is  requiring the direct measurement of N2O for certification.  The intent of the CH4 and N2O standards are more focused on prevention of future increases in these compounds, rather than forcing technologies that reduce these pollutants.  As one example, we envision manufacturers satisfying this requirement by continuing to use catalyst designs and formulations that appropriately control N2O emissions rather than pursuing a catalyst that may increase N2O.  In many ways this becomes a design-based criterion in that the decision of one catalyst over another will effectively determine compliance with N2O standards over the useful life of the engine. 
Since catalytic activity generally changes with age and service accumulation, it is not unreasonable to expect changes in N2O and CH4 emissions over the useful life of the engine. We also believe that low-hour test results coupled with deterioration factors provides an adequate representation of end-of-life emission levels for these pollutants. However, the requirement to measure N2O and CH4 during testing is relatively new and we do not expect that manufacturers have consistent durability data to formulate deterioration factors for these final rules. We also do not believe it is appropriate to require all new durability testing to satisfy this requirement, as this would result in a nontrivial burden to engine manufacturers.  Instead we will be assigning deterioration factors for N2O and CH4 for this rule.  If the use of assigned deterioration factors jeopardizes compliance with the emission standards, we will also allow manufacturers to propose unique testing-based deterioration factors for these pollutants. 
Additional Compliance Provisions
Warranty & Defect Reporting
Under section 207 of the CAA, engine manufacturers are required to warrant that their product is free from defects that would cause the engine to not comply with emission standards.  This warranty must be applicable from when the engine is introduced into commerce through a period generally defined as half of the regulatory useful life (specified in hours and years, whichever comes first).  The exact time of this warranty is dependent on the regulatory class of the engine.  In addition, components that are considered "high cost" are required to have an extended warranty. Examples of such components would be exhaust aftertreatment devices and electronic control units.
Current warranty provisions in 40 CFR part 86 define the warranty periods and covered components for heavy-duty engines. The current list of components is comprised of any device or system whose failure would result in an increase in criteria pollutant emissions.  We remain convinced that this list  is adequate for addressing GHG emissions as well, based on comments received from the proposed rules.   The following list identifies items commonly defined as critical emission-related components:
Electronic control units
Aftertreatment devices
Fuel metering components
EGR-System components
Crankcase-ventilation valves
All components related to charge-air compression and cooling
All sensors and actuators associated with any of these components

When a manufacturer experiences an elevated rate of failure of an emission control device, they are required to submit defect reports to the EPA. These reports will generally have an explanation of what is failing, the rate of failure, and any possible corrections taken by the manufacturer. Based on how successful EPA believes the manufacturer to be in addressing these failures, the manufacturer may need to conduct a product recall.  In such an instance, the manufacturer is responsible for contacting all customers with affected units and repairing the defect at no cost to them.  We believe this structure for the reporting of criteria pollutant defects, and recalls, is appropriate for components related to complying with GHG emissions as well.  
Maintenance
Engine manufacturers are required to outline maintenance schedules that ensure their product will remain in compliance with emission standards throughout the useful life of the engine.  This schedule is required to be submitted as part of the application for certification. Maintenance that is deemed to be critical to ensuring compliance with emission standards is classified as "critical emission-related maintenance." Generally, manufacturers are discouraged from specifying that critical emission-related maintenance is needed within the regulatory useful life of the engine. However, if such maintenance is unavoidable, manufacturers must have a reasonable basis for ensuring it is performed at the correct time. This may demonstrated through several methods including survey data indicating that at least 80% of engines receive the required maintenance in-use or manufacturers may provide the maintenance at no charge to the user.  During durability testing of the engine, manufacturers are required to follow their specified maintenance schedule.
Maintenance relating to components relating to reduction of GHG emissions are not expected to present unique challenges. Therefore, we are not finalizing any changes to the provisions for the specification of emission-related maintenance as outlined in 40 CFR part 86.
 Enforcement Provisions
Emission Control Information Labels
Current provisions for engine certification require manufacturers to equip their product with permanent emission control information labels.  These labels list important characteristics, parameters, and specifications related to the emissions performance of the engine.  These include, but are not limited to, the manufacturer, model, displacement, emission control systems, and tune-up specifications. In addition, this label also provides a means for identifying the engine family name, which can then be referenced back to certification documents.  This label provides essential information for field inspectors to determine that an engine is in fact in the certified configuration.
We do not anticipate any major changes needing to be made to emission control information labels as a result of new GHG standards and a single label is appropriate for both criteria pollutant and GHG emissions purposes.  Perhaps the most significant addition will be the inclusion of Family Certification Levels or Family Emission Limits for GHG pollutants, if the manufacturer is participating in averaging, banking, and trading.  In addition, the label will need to indicate whether the engine is certified for use in vocational vehicles, tractors, or both.
In-Use Standards
In-use testing of engines provides a number of benefits for ensuring useful life compliance.  In addition to verifying compliance with emission standards at any given point in the useful life, it can be used along with manufacturer defect reporting, to indentify components failing at a higher than normal rate. In this case, a product recall or other service campaign can be initiated and the problem can be rectified. Another key benefit of in-use testing is the discouragement of control strategies catered to the certification test cycles.  In the past, engine manufacturers were found to be producing engines that performed acceptably over the certification test cycle, while changing to alternate operating strategies "off-cycle" which caused increases in criteria pollutant emissions.  While these strategies are clearly considered defeat devices, in-use testing provides a meaningful way of ensuring that such strategies are not active under normal engine operation.
Currently, manufacturers of certified heavy-duty engines are required to conduct in-use testing programs. The intent of these programs is to ensure that their products are continuing to meet criteria pollutant emission standards at various points within the useful life of the engine.  Since initial certification is based on engine dynamometer testing, and removing in-use engines from their respective vehicles is often impractical, a unique testing procedure was developed. This includes using portable emission measurement systems (PEMS) and testing the engine over typical in-situ drive routes rather than a prescribed test cycle. To assess compliance, emission results from a well defined area of the speed/torque map of the engine, known as the NTE zone, are compared to the emission standards.  To account for potential increases in measurement and operational variability, certain allowances are applied to the standard which results in the standard for NTE measurements (NTE limit) to be at or above the duty cycle emission standards.
In addition, EPA also conducts an annual in-use testing program of heavy-duty engines.  Testing procured vehicles with specific engines over well-defined drive routes using a constant trailer load allows for a consistent comparison of in-use emissions performance.  If potential problems are identified in-situ, the engine may be removed from the vehicle and tested using an engine dynamometer over the certification test cycles. If deficiencies are confirmed the agency will either work with the manufacturer to take corrective action or proceed with enforcement action against the manufacturer.
The GHG reporting rule requires manufacturers to submit CO2 data from all engine testing (beginning in the 2011 model year), which we believe is equally applicable to in-use measurements. Methods of CO2 in-situ measurement are well established and most, if not all, PEMS devices measure and record CO2 along with criteria pollutants.  CH4 and N2O present in-situ measurement challenges that may be impractical to overcome for this testing, and therefore it is not recommended that they be included in in-use testing requirements at this time.  While measurement of CO2 may be practical and important, implementing an NTE emission standard for CO2 is challenging.  As previously discussed, CO2 emissions are highly dependent on the drive cycle of the vehicle, which does not lend itself well to the NTE-based test procedure. Therefore, we propose that manufacturers be required to submit CO2 data from in-situ testing, in both g/bhp-hr and g/ton-mile, but these data will be used for reference purposes only (there would be no NTE limit/standard for CO2).  For engine-based (dynamometer) in-use testing, compliance with CO2 emission standards will be judged off of the FCL of the engine family.
Other Certification Provisions
Carryover/Carry Across Certification Test Data
EPA's current certification program for heavy-duty engines allows manufacturers to carry certification test data over and across certification testing from one model year to the next, when no significant changes to models are made. EPA will also apply this policy to CO2, N2O and CH4 certification test data. 
Certification Fees
The CAA allows EPA to collect fees to cover the costs of issuing certificates of conformity for the classes of engines covered by this proposal. On May 11, 2004, EPA updated its fees regulation based on a study of the costs associated with its motor vehicle and engine compliance program (69 FR 51402). At the time that cost study was conducted, the current rulemaking was not considered. At this time the extent of any added costs to EPA as a result of this proposal is not known. EPA will assess its compliance testing and other activities associated with the rule and may amend its fees regulations in the future to include any warranted new costs.
Onboard Diagnostics
Beginning with the 2010 model year, manufacturers have been phasing in on-board diagnostic systems (OBD) on heavy-duty engines pursuant to the heavy-duty OBD rulemaking finalized by the EPA in 2009.  These systems monitor the activity of the emission control system and issue alerts when faults are detected.  These diagnostic systems are currently being developed based around components and systems that influence criteria pollutant emissions.  Consistent with the light-duty vehicle GHG rule, we believe that monitoring of these components and systems for criteria pollutant emissions will have an equally beneficial effect on CO2 emissions.  Therefore, we have not finalized any additional unique onboard diagnostic provisions for heavy-duty GHG emissions.  The proposal for this action also did not propose new or different diagnostic requirements from those finalized in the previous action taken by EPA.
The Agencies received comments from engine manufacturers, hybrid system manufacturers, and related trade groups which broached concerns regarding the feasibility of applying on-board diagnostics to hybrid applications starting in 2013 and requested a delay until 2020 with a phase-in of enforcement liability starting that same year.  In response to the comments that the agencies should consider delaying implementation of the provisions of a separate action to facilitate introduction of hybrid technology, the agencies are taking an approach that is consistent with certain provisions of the existing final action for heavy-duty OBD.  To that end, manufacturers who certify hybrid systems will continue to have the responsibility of implementing compliant diagnostic systems, however, we are extending the OBD phase-in for engines with hybrid systems only to allow time for them to be able to address communication protocol development concerns (e.g. SAE J1939), component development concerns (e.g. hardware and software), service information (e.g. service website availability), diagnostic communication with generic scantools, etc., and to address the availability of heavy-duty OBD compliant engines with sufficient lead-time for additional hybrid diagnostic system development given resource constraints as engine manufacturers are focused on meeting the 2013 requirements for conventional products at this time.
Hybrid manufacturers have indicated that the interaction between hybrid systems and OBD compliant engines are not well understood at this time, for example if the system shuts down the vehicle at idle, the idle diagnostics cannot run.  In addition, there are many different hybrid systems being developed which make much of this technology both immature and low volume, engine manufacturers are concerned that this would result in high costs due to frequent design changes that could result as this technology develops and have asked for flexibility for unique hybrid applications.  Consistent with the Agencies goals to incentivize the development of hybrid designs (systems designed to capture wasted energy and reuse fuel consumption) we are allowing hybrid manufacturers time to develop their systems while simultaneously  developing the capability to meet HD OBD requirements.
Communication protocol development is an integral part of developing hybrid OBD capability for the heavy-duty industry which is not vertically integrated.  There are different protocols required to be used for OBD communication in a vehicle depending on the type of engine (gasoline or diesel).  These protocols are developed in part to standardize the transmission of electronic signals and control information among vehicle components.  The J1939 communication protocol is developed by committee through SAE and is required for use with diesel engines.  Messages sent through a J1939 network contain a series of information (e.g. an identifier, message priority, data, etc.) and these parameters must be agreed upon through the SAE committee and tailored such that they work for all manufacturers and as such. Development of this communication protocol and criteria for the messages can take a substantial amount of time.  Hybrid manufacturers have stated that until such time as a `plug and play scheme' is available, hybrid volumes will not be able to increase significantly.  At this time, there are only a few such messages that have been developed for use in hybrid systems, and there is much additional development needs to take place.  The type of messages needed must first be identified once 2013 HDOBD compliant engines are available for use in HD hybrid OBD system development.  After needed messages are identified, the content of each message must be developed and agreed upon through a ballot process.  Manufacturers have stated that this will be an iterative process that will likely take at least X years to completely develop the protocol for use with the different variations of hybrid systems and architectures, different types of energy storage systems, and for systems used in the wide variety of applications in the heavy-duty market, and we agree with this assessment.  While we recognize that a level of communication exists today between engines and transmissions for this industry, the level of control and impact on engine system operation becomes much more significant once hybrid technology is introduced.  The purpose of the hybrid energy system is to supplement overall vehicle power demands.  As such, the methods used for integrating the energy from the hybrid system into overall vehicle operation vary from allowing additional internal combustion engine lower power operation to potentially decreasing the amount of engine "on" time.  This range of performance impacts will serve to reduce GHG emissions by reducing demands on the engine.  Existing transmission systems and other powertrain components do not exercise the level of control the hybrid will need to exercise to effectively reduce GHG emissions and improve fuel consumption performance for internal combustion engines.
Component development concerns raised by hybrid manufacturers include both changes that may be required to software and/or hardware systems on both existing hybrid products and on hybrid systems currently under development.  Software systems in existing products have been developed to provide proprietary diagnostic capability (as no standardized system such as J1939 had been developed for these systems), however, these software systems are not OBD complaint.  These products will likely have to have entirely new software systems developed for them which may result in hardware changes as well.  Manufacturers have stated that a complete software system can take up to X years to develop and X to validate.  Hardware may also need to be changed to accommodate OBD on hybrid systems, in particular, affecting current production systems which may not have controllers that can support full OBD.  The low volume sales and high cost of a controller program (which can reach in the X of dollars) cannot support a hardware change for hybrids alone, rather, existing hybrid systems will have to wait until such a hardware upgrade is planned for other reasons.  In addition, new hardware programs, such as developing a new ECU can take X years.  While it is possible for some of this work to be done concurrently, how much can be done this way is dependent on the configuration of each individual system.  In addition, manufacturers may have contractual agreements with hardware and software suppliers that will have to be reconfigured to address a complete OBD program.
Hybrid manufacturers have stated that they will be unable to produce hybrid systems that will be OBD complaint in 2013.  Given the concerns discussed above and the general lack of availability of OBD compliant engines until the completion of the HD OBD phase-in, the Agencies have determined that to require manufacturers of systems that depend on the availability of the OBD compliant engines to then be able to immediately implement additional requirements may be impractical in many instances.  Given the phase-in HD OBD that already exists however, we do not believe a delay to 2019 or 2020 is warranted.  While not all of the engines that would potentially have hybrid systems incorporated into their design are available in their final OBD configuration at the time of this action, it is clear that some engine systems will be available.  Additionally, there is an expectation that engine manufacturers, their suppliers and customers will have to continue to work cooperatively to deliver products for the market.  This cooperation must include a level of concurrent engineering prior to products being brought to market.  At this time we believe a delay to 2016 for the phase-in of OBD for heavy-duty engines equipped with hybrid systems should provide the requisite lead time from the date of this action to the date of implementation provides adequate time for development of components and protocols necessary for successful integration of complete OBD systems for engines equipped with hybrid systems.    
Manufacturers will be required to implement feasible controls for these hybrid systems that do not adversely impact emissions performance in 2013 and by 2016-17 more fully developed OBD systems will need to be applied to certified engine system configurations.  The phase in period takes into account that current production systems are likely to be smaller in terms of sales volume than newly developed systems, and may require more hardware and software development as some of these systems have been in production for nearly a decade and have developed proprietary system diagnostic capability that does not meet OBD requirements, and provides them an additional year of time to comply with the heavy-duty OBD regulations.  Hybrid systems put into production after the publication of this final rulemaking would be required to meet the 2009 heavy-duty OBD requirements in 2016 consistent with the next phase-in date for heavy-duty OBD, while those hybrid systems already in production as of the publication of this final rulemaking have until 2017 to be compliant with these OBD requirements.  
In the interim, engine system diagnostics must meet CARB's Engine Manufacturer Diagnostic Systems Requirements (EMD) including system monitoring requirements for NOX aftertreatment, fuel systems, exhaust gas recirculation, particulate matter traps, and emission-related electronic components.  In addition, these systems must maintain existing OBD capability and calibrations for certified engines used in hybrid applications with the exception of having liability for failure to meet diagnostic performance requirements (e.g. detection thresholds).  Hybrid systems must also continue to maintain existing diagnostic capability to ensure proper function consistent with the performance for which the hybrid system is certified as well as, safe operation of the hybrid system.
Applicability of Current High Altitude Provisions to Greenhouse Gases
EPA is requiringfinalizing that engines covered by this proposal must meet CO2, N2O and CH4 standards at elevated altitudes. The CAA requires emission standards under section 202 for heavy-duty engines to apply at all altitudes.  EPA does not expect engine CO2, CH4, or N2O emissions to be significantly different at high altitudes based on engine calibrations commonly used at all altitudes. Therefore, EPA will retain its current high altitude regulations so manufacturers will not normally be required to submit engine CO2 test data for high altitude. Instead, they will be required to submit an engineering evaluation indicating that common calibration approaches will be utilized at high altitude. Any deviation in emission control practices employed only at altitude will need to be included in the AECD descriptions submitted by manufacturers at certification. In addition, any AECD specific to high altitude will be required to include emissions data to allow EPA evaluate and quantify any emission impact and validity of the AECD.
Emission-Related Installation Instructions
Engine manufacturers are currently required to provide detailed installation instructions to vehicle manufacturers.  These instructions outline how to properly install the engine, aftertreatment, and other supporting systems, such that the engine will operate in its certified configuration. At the time of certification, manufacturers may be required to submit these instructions to EPA to verify that sufficient detail has been provided to the vehicle manufacturer. 
We do not anticipate any major changes to this documentation as a result of regulating GHG emissions. The most significant impact will be the addition of language prohibiting vehicle manufacturers from installing engines into vehicle categories in which they are not certified for. An example would be a tractor manufacturer installing an engine certified for only vocational vehicle use.  Explicit instructions on behalf of the engine manufacturer that such acts are prohibited will serve as sufficient notice to the vehicle manufacturers and failure to follow such instructions will in the vehicle manufacturer being in non-compliance.
Alternate CO2 Emission and Fuel Consumption Standards
Under the final rule, engine manufacturers have the option of certifying to alternate CO2 emission and fuel consumption standards for model years 2014 through 2016.  These alternate standards are defined as6 5 percent below a baseline value established from their corresponding 2011 model-year products.  If a manufacturer elects to participate in this program they must indicate this on their certification application. In addition, sufficient details must be submitted regarding the baseline engine such that the agency can verify that the correct optional CO2 emission and fuel consumption standards have been calculated.  This data will need to include the engine family name of the baseline engine, so references to the original certification application can be made, as well as test data showing the CO2 emissions and fuel consumption of the baseline engine.
Compliance Reports
	Early Model Year Data
NHTSA's regulatory text in the NPRM included specifications for manufacturers to submit pre-certification compliance reports for heavy duty engines.   The pre-certification reports included requirements for manufactures to submit information to identify the types of engines, expected test results, production volumes and credits.  The reporting requirements were general in nature despite having an existing emissions program for heavy duty engines.  The existing ABT program for NOx and PM emissions for heavy-duty engines has existed since 2001 (see 66 FR 5002 signed on January 18, 2001) but does not require reporting early model year compliance information.  The agencies sought comments on the report provisions in the NPRM but commenters failed to offer recommendations on what content should be required. As a result, the agencies have decided to eliminate the pre-certification report because engine manufacturers have no experience in providing GHG information and the proposed information may not be available until subsequent model years.  For the next phase of this GHG program, the agencies may adopt a pre-model year report for engines.   
As an alternative to receiving early compliance model year information in the precertification reports, the agencies have decided to use manufacturer's application for certificates of conformity to obtain early model estimates.  Currently, the applications for certificates are not required to include the fuel consumption information required by NHTSA.  Therefore, the agencies are adopting provisions in the final rule for manufacturers to provide emission and equivalent fuel consumption estimates in the manufacturer's applications for certification.  The agencies will treat information submitted in the applications as a manufacturer's demonstration of providing early compliance information, similar to the pre-model year report submitted for heavy-duty pick trucks and vans.   The final rule establishes a harmonized approach by which manufacturers will submit applications through the EPA VERIFY database system as the single point of entry for all information required for this national program and both agencies will have access to the information.  If by model year 2012, the agencies are not prepared to receive information through the EPA VERIFY database system, manufacturers are expected to submit written applications to the agencies.   This approach should streamline this process and reduce industry burden and provide sufficient information for the agency's to carry out their early compliance activities.     
Final Reports
For engines, the NPRM proposed for manufacturers to submit EOY reports and final reports.  An EOY report for manufacturers using the ABT program was required to be submitted no later than 90 days after the calendar year and final report no later than 270 days after the calendar year.  Manufacturers not participating in the ABT program were required to provide an EOY report within 45 days after the calendar year but no final reports were required.  The final ABT report due was established coinciding with EPA's existing criteria pollutant report for heavy-duty engines complying with NOx and PM standards.  Similar to that program, the proposed EOY and final reports required receiving engine type designation, engine family and credit plans for engine manufacturers.  
In response to the NPRM, there were no comments received on the final reports for engines.  For the final rule, the agencies will retain the NPRM proposal for the EOY and final reports.  However, the agencies will consolidate the reporting as done for other vehicle categories and will require emissions and equivalent fuel consumption information to be submitted to EPA. The final rule establishes a harmonized approach by which manufacturers will submit applications to EPA the as the single point of entry for all information required for this national program and both agencies will have access to the appropriate information.  If by model year 2012, the agencies are not prepared to receive information through a database system, manufacturers are expected to submit written applications to the agencies.  The agencies are also combining the EOY reports for manufacturers not using ABT to provide a product volume report due 90 days after the end of the model year and the ABT report required 90 days after the model year.  A summary of the required information in the final rule for EOY and final reports is as follows: 
         * Engine family designation and averaging set.
         * Engine emissions and fuel consumption standards including any alternative standards used
         * Engine family FCLs.
         * Final production volumes
         * Certified test cycles
         * Useful life values for engine families
         * A credit plan identifying the manufacturers actual credit balances, credit flexibilities, credit trades and a credit deficit plan if needed demonstrating how it plans to resolve any credit deficits that might occur for a model year within a period of up to three model years after that deficit has occurred 
 Additional Required Information
Throughout the model year, manufacturers will be required to submit various submissions to the agencies to comply with various aspects of the rule.  These requests have differing criteria for submission and approval.  Table V-1 below provides a summary of the types of submission, required submission dates and the EPA and NHTSA regulations that apply.  
The agencies will review and grant any requests considering the timeliness of the submissions and the completeness of the requests.  
Table V-1: Summary of Required Information for Compliance

                                       
Class 7 and 8 Combination Tractors
 Compliance Approach
In addition to requiring engine manufacturers to certify their engines, manufacturers of Class 7 and 8 combination tractors must also certify that their vehicles meet the  CO2 emission and fuel consumption standards.  This vehicle certification will ensure that efforts beyond just engine efficiency improvements are undertaken to reduce GHG emissions and fuel consumption.  Some examples include aerodynamic improvements, rolling resistance reduction, idle reduction technologies, and vehicle speed limiting systems.  
Unlike engine certification however, this certification would be based on a load-specific basis (g/ton-mile or gal/1,000 ton-mile as opposed to work-based, or g/bhp-hr). This would take into account the anticipated vehicle loading that would be experienced in use and the associated affects on fuel consumption and CO2 emissions. Vehicle manufacturers would also be required to warrant their products against emission control system defects, and demonstrate that a service network is in place to correct any such conditions.  The vehicle manufacturer also bears responsibility in the event that an emission-related recall is necessary.  
Certification Process
In order to obtain a certificate of conformity for the tractor, vehicle manufacturers would complete a compliance demonstration, showing that their product meets emission standards as well as other regulatory requirements.  For purposes of this demonstration, vehicles with similar emission characteristics throughout their useful life are grouped together in vehicle families, which are defined primarily by the regulatory subclass of the vehicle  Manufacturers may further classify vehicles together into sub-families within a given vehicle family. Examples of characteristics that would define a vehicle sub-family for heavy-duty vehicles are wheel and tire package, aerodynamic profile, tire rolling resistance, and vehicle speed limiting system.  Compliance with the emission standards (or FEL) will be determined at the sub-family level.
Under this system, the worst-case vehicle configuration would be selected based on having the highest fuel consumption, and all other configurations within the family or sub-family are assumed to have emissions and fuel consumption at or below the parent model and therefore in compliance with CO2 emission and fuel consumption standards.  Any vehicle within the family can be subject to selective enforcement auditing in addition to confirmatory or other administrator testing.  
We anticipate vehicle families for Class 7 and 8 combination tractors to utilize the standardized 12-digit naming convention, as outlined in the engine certification section of this chapter.  As with engines, each certifying vehicle manufacturer will have a unique three digit code assigned to them.  Currently, there is no 5[th] digit (industry sector) code for this class of vehicles, for which we propose to use the next available character, "2." Since we are finalizing that the engine is one of several family defining features, we still believe it is appropriate to include engine displacement in the family name. If the test-group consists includes multiple engine models with varying displacements, the largest would be specified in the vehicle family name, consistent with current practices.   The remaining characters would remain available for California ARB and/or manufacturer use, such that the result is a unique vehicle family name.
Class 7 and 8 tractors share several common traits, such as the trailer attachment provisions, number of wheels, and general construction. However, further inspection reveals key differences related to GHG emissions.  Payloads hauled by Class 7 tractors are significantly less than Class 8 tractors. In addition, Class 8 vehicles may have provisions for hoteling ("sleeper cabs"), which results in an increase in size as well as the addition of comfort features like power and climate control for use while the truck is parked.   Both segments may have various degrees of roof fairing to provide better aerodynamic matching to the trailer being pulled. This is a feature which can help reduce CO2 emissions significantly when properly matched to the trailer, but can also increase CO2 emissions if improperly matched.  Based on these differences, it is reasonable to expect differences in CO2 emissions, and therefore these properties form the basis for the final combination tractor regulatory subcategories.
The various combinations of payload, cab size, and roof profile result in eight final regulatory subcategories for Class 7 and 8 tractors.  Class 7 tractors are divided into two regulatory subcategories: one for low and mid roof height profiles, and one for high roof profiles. Both Class 7 subcategories is subject to a 10 year, 185,000 regulatory useful life.  Class 8 tractors are split into six regulatory subcategories reflecting two cab sizes (day and sleeper) and three roof height profiles (low, mid, and high).  All Class 8 tractors are subject to a 10 year, 435,000 mile regulatory useful life.final 
Demonstrating Compliance With the Final Standards
CO2 and Fuel Consumption Standards
Consistent with existing certification processes for light-duty vehicles and heavy-duty pickups and vans, emissions testing of the complete vehicle would be the preferred method for demonstrating compliance with vehicle emission standards.  However, vehicle-level certification is new to the heavy-duty vehicle segment above 14,000 lb.  Therefore, most vehicle manufacturers are not adequately equipped to conduct vehicle-level emission testing for Class 7 and 8 combination tractors.  Chassis dynamometers, emission sampling equipment, and staff engineering support are a few of the factors that would add significant cost to vehicle development in a relatively short amount of time, which may make the prospect of vehicle testing quite onerous.  In addition to the infrastructure and testing facilities the industry would need to add, the agencies have not completed the extensive work ultimately desirable for us to propose new test procedures and standards based on the use of a chassis test procedure. Moreover, as explained in Section II.C, because of the enormous numbers of truck configurations that have an impact on fuel consumption, we do not believe that it would be reasonable, at least initially, to require testing of many combinations of tractor model configurations on a chassis dynamometer.  Recognizing these constraints related to time, staffing, and capitol, we are  requiring only a vehicle simulation model option for demonstrating compliance at the time of certification.  However, we do believe that a chassis based test procedure as currently utilized for vehicles below 14,000 pounds could be a better long-term approach to regulate all heavy-duty vehicles and we will be working towards this goal for future rulemaking efforts. 
Model
Vehicle modeling will be conducted using the agencies' simulation model, GEM, which is described in detail in Chapter 4 of the RIA. Basically, this model functions by defining a vehicle configuration and then exercises the model over various drive cycles.  Several initialization files are needed to define a vehicle, which include mechanical attributes, control algorithms, and driver inputs.  The majority of these inputs will be predetermined by EPA and NHTSA for the purposes of vehicle certification.  The net results from GEM are weighted CO2 emissions and fuel consumption values over the drive cycles.  The CO2 emission result will be used for demonstrating compliance with vehicle CO2 standards while the fuel consumption result will be used for demonstrating compliance with the fuel consumption standards.
The vehicle manufacturer will be responsible for entering up to seven inputs relating to the GHG performance of a vehicle configuration although, depending on the regulatory class, fewer inputs may be required.  These inputs include the regulatory class, coefficient of drag, steer tire rolling resistance, drive tire rolling resistance, vehicle speed limit, vehicle weight reduction, and idle reduction credit.  For GEM inputs relating to aerodynamics, the agencies have finalized lookup tables for frontal area and coefficient of drag based on typical performance levels across the industry. Manufacturers are responsible for assessing the aerodynamic performance of their vehicles through testing or a combination of testing and modeling. This test data is then used to select the most appropriate agency-defined bin for entry into GEM. 
Tire rolling resistance is simply the measured rolling resistance of the tire in kg per metric ton as described in ISO 28580:2009.  This measured value is expected to be the result of three repeat measurements of three different tires of a given design, giving a total of nine data points.  It is the average of these nine results that will be entered into GEM.  Tire rolling resistance may be determined by either the vehicle or tire manufacturer. In the latter case, a signed statement from the tire manufacturer confirming testing was conducted in accordance with this part is required.
As previously described, limiting vehicle speed can have a significant effect on fuel consumption and we believe that manufacturers should be recognized for including technology that facilitates these limits.  Also as described, these vehicle speed limiters are not likely to be a simple device with a fixed top speed.  "Soft" limits based on driver behavior and limit expiration dates (or mileage) are two of the most common scenarios.  To properly assess the GHG and fuel consumption benefits in light of these features, we are defining the proper methodology for entering the vehicle speed limit into GEM. This is based on an equation including terms for VSL expiration (expiration factor) and VSL soft-top (soft-top factor and soft-top VSL). The result will be an effective vehicle speed limit reflecting the expected mileage and time that the limit will be used for.  Additional details regarding this equation and its derivation can be found in RIA chapter 2.
For vehicle weight reduction, the agencies are primarily addressing the reduction of weight and perhaps number of wheels.  This reduction is assessed relative to a standard combination tractor configuration with dual-wide rear tires with conventional steel wheels.  Manufacturers may elect to use single-wide rear tires/wheels and/or aluminum (or light-weight aluminum) wheels to reduce the weight of their vehicles.  The agencies have defined standard weight reduction levels associated with each combination for entry into GEM.  These reductions are listed in pounds per tire or wheel, so manufacturers will need to multiply this reduction by the number of affected wheels for their total GEM entry.
Manufacturers electing to limit idle time to 300 seconds or less can claim a GHG benefit of 5 g/ton-mile and should be entered into GEM as such.  This benefit cannot be scaled to reflect shorter or longer allowed idle times.
The agencies will enter the appropriate engine map reflecting use of a certified engine in the truck (and will enter the same value even if an engine family is certified to the temporary percent reduction alternative standard, in order to evaluate vehicle performance independently of engine performance.)  We believe this approach reduces the testing burden placed upon manufacturers, yet adequately assesses improvements associated with select technologies.  The model will be publicly available and will be found on EPA's website.
The agency reserves the right to independently evaluate the inputs to the model by way of Administrator testing to validate those model inputs.  The agency also reserves the right to evaluate vehicle performance using the inputs to the model provided by the manufacturer to confirm the performance of the system using GEM. This could include generating emissions results using the GEM and the inputs as provided by the manufacturer based on the agency's own runs.  This could also include conducting comparable testing to verify the inputs provided by the manufacturer.  In the event of such testing or evaluation, the Administrator's results become the official certification results. The exception being that the manufacturer may continue to use their data as initially submitted, provided it represents a worst-case condition over the Administrator's results.
To better facilitate the entry of only the appropriate parameters, the agencies will provide a graphical user interface in the model for entering data specific to each vehicle. In addition, EPA will provide a template that facilitates batch processing of multiple vehicle configurations within a given family.  It is expected that this template will be submitted to EPA as part of the certification process for each certified vehicle family or subfamily.
For certification, the model will exercise the vehicle over three test cycles; one transient and two steady-state. For the transient test, we are finalizing to use the heavy-heavy-duty diesel truck (HHDDT) transient test cycle, which was developed by the California Air Resources Board and West Virginia University to evaluate heavy-duty vehicles. The transient mode simulates urban, start-stop driving, featuring 1.8 stops per mile over the 2.9 mile duration.  The two steady state test points are reflective of the tendency for some of these vehicles to operate for extended periods at highway speeds. Based on data from the EPA's MOVES database, and common highway speed limits, we are finalizing these two points to be 55 and 65 mph.  
The model will predict the total emissions results from each configuration using the unique properties entered for each vehicle. These results are then normalized to the payload and distance covered, so as to yield a gram/ton-mile result, as well as a fuel consumption (gal/1,000 ton-mile) result for each test cycle.  As with engine and vehicle testing, certification will be based on the worst-case configuration within a vehicle family  
The results from all three tests are then combined using weighting factors, which reflect typical usage patterns.  The typical usage characteristics of Class 7 and 8 tractors with day cabs differ significantly from Class 8 tractors with sleeper cabs.  The trucks with day cabs tend to operate in more urban areas, have a limited travel range, and tend to return to a common depot at the end of each shift.  Class 8 sleeper cabs, however, are typically used for long distance trips which consist of mostly highway driving in an effort to cover the highest mileage in the shortest time.  For these reasons, we proposed that the cycles be weighted differently for these two groups of vehicles.  For Class 7 and 8 trucks with day cabs, we proposed weights of 64%, 17%, and 19% (65 mph, 55 mph, and transient, resp.).  For Class 8 with sleeper cabs, the high speed cruise tendency results in final weights of 86%, 9%, and 5% (65 mph, 55 mph, and transient, respectively).  These final, weighted emission results are compared to the emission standard to assess compliance.
Durability Testing
As with engine certification, a manufacturer must provide evidence of compliance through the regulatory useful life of the vehicle. Factors influencing vehicle-level GHG performance over the life of the vehicle fall into two basic categories: vehicle attributes and maintenance items. Each category merits different treatment from the perspective of assessing useful life compliance, as each has varying degrees of manufacturer versus owner/operator responsibility.
The category of vehicle attributes generally refers to aerodynamic features, such as fairings, side-skirts, air dams, air foils, etc, which are installed by the manufacturer to reduce aerodynamic drag on the vehicle. These features have a significant impact on GHG emissions and their emission reduction properties are assessed early in the useful life (at the time of certification).  These features are expected to last the full life of the vehicle without becoming detached, cracked/broken, misaligned, or otherwise not in the original state.  In the absence of the aforementioned failure modes, the performance of these features is not expected to degrade over time and the benefit to reducing GHG emissions is expected to last for the life of the vehicle with no special maintenance requirements. To assess useful life compliance, we recommend a design-based approach which would ensure that the manufacturer has robustly designed these features so they can reasonably be expected to last the useful life of the vehicle.
The category of maintenance items refers to items that are replaced, renewed, cleaned, inspected, or otherwise addressed in the preventative maintenance schedule specified by the vehicle manufacturer. Items that have a direct influence on GHG emissions are primarily lubricants.  Synthetic engine oil may be used by vehicle manufacturers to reduce the GHG emissions of their vehicles. Manufacturers may specify that these fluids be changed throughout the useful life of the vehicle.  If this is the case, the manufacturer should have a reasonable basis that the owner/operator will use fluids having the same properties. This may be accomplished by requiring (in service documentation, labeling, etc) that only these fluids can be used as replacements.  
If the vehicle remains in its original certified condition throughout its useful life, it is not believed that GHG emissions would increase as a result of service accumulation.  This is based on the assumption that as components wear, the rolling resistance due to friction is likely to stay the same or decrease. With all other components remaining equal (tires, aerodynamics, etc), the overall drag force would stay the same or decrease, thus not significantly changing GHG emissions at the end of useful life.  It is important to remember however, that this vehicle assessment does not take into account any engine-related wear affects, which may in fact increase GHG emissions over time.
For the reasons explained above, we believe that for the first phase of this program, it is most important to ensure that the vehicle remain in its certified configuration throughout the useful life.  This can most effectively be accomplished through engineering analysis and specific maintenance instructions provided by the vehicle manufacturer. The vehicle manufacturer would be primarily responsible for providing engineering analysis demonstrating that vehicle attributes will last for the full useful life of the vehicle. We anticipate this demonstration will show that components are constructed of sufficiently robust materials and design practices so as not to become dysfunctional under normal operating conditions.  For instance, we expect aerodynamic fairings to be constructed of materials similar to that of the main body of the vehicle (fiberglass, steel, aluminum, etc) and have sufficient support and attachment mechanisms so as not to become detached or broken under normal, on-highway driving. 
EPA's Air Conditioning Leakage Standards
Heavy-duty vehicle air conditioning systems contribute to GHG emissions in two ways. First, operation of the air conditioning unit places an accessory load on the engine, which increases fuel consumption. Second, most modern refrigerants are HFC-based, which have significant global warming potential (GWP=1430). For heavy-duty vehicles, the load added by the air conditioning system is comparatively small compared to other power requirements of the vehicle. Therefore, we are not targeting any GHG reduction due to decreased air conditioning usage or higher efficiency A/C units for this final rule. However, refrigerant leakage, even in very small quantities, can have significant adverse effects on GHG emissions.  
Refrigerant leakage is a concern for heavy-duty vehicles, similar to light-duty vehicles.  To address this, EPA is finalizing a design-based standard for reducing refrigerant leakage from heavy-duty vehicles.  This standard is based off using the best practices for material selection and interface sealing, as outlined in SAE publication J2727.  Based on design criteria in this publication, a leakage "score" can be assessed and an estimated annual leak rate can be made for the A/C system based on the refrigerant capacity.
At the time of certification, manufacturers will be required to outline the design of their system, including the specification of materials and construction methods.  They will also need to supply the leakage score developed using SAE J2727 and the refrigerant volume of their system to determine the leakage rate per year.  If the certifying manufacturer does not complete installation of the air conditioning unit, detailed instructions must be provided to the final installer which ensures that the A/C system is assembled to meet the low-leakage standards.  These instructions will also need to be provided at the time of certification, and manufacturers must retain all records relating to auditing of the final assembler.
In-Use Standards
As previously addressed, the drive-cycle dependence of CO2 emissions makes NTE-based in-use testing impractical.  In addition, we believe the reporting of CO2 data from the criteria pollutant in-use testing program will be helpful in future rulemaking efforts.  For these reasons, we are not finalizing an NTE-based in-use testing program for Class 7 and 8 combination tractors for this rule..
In the absence of NTE-based in-use testing, provisions are necessary for verifying that production vehicles are in the certified configuration, and remain so throughout the useful life.  Perhaps the easiest method for doing this is to verify the presence of installed emission-related components.  This would basically consist of a vehicle audit against what is claimed in the certification application. This includes verifying the presence of aerodynamic components, such as fairings, side-skirts, and gap-reducers. In addition, the presence of idle-reduction and speed limiting devices would be verified.  The presence of LRR tires could be verified at the point of initial sale; however verification at other points throughout the useful life would be non-enforceable for the reasons mentioned previously.
The category of wear items primarily relates to tires.  It is expected that vehicle manufacturers will equip their trucks with LRR tires, as they may provide a substantial reduction in GHG emissions.  The tire replacement intervals for this class of vehicle is normally in the range of 50,000 to 100,000 miles, which means the owner/operator will be replacing the tires at several points within the useful life of the vehicle.  We believe that as LRR tires become more common on new equipment, the aftermarket prices of these tires will also decrease. Along with decreasing tire prices, the fuel savings realized through use of LRR tires will ideally provide enough incentive for owner/operators to continue purchasing these tires.  The inventory modeling in this final action reflects the continued use of LRR tires through the life of the vehicle.  
 Enforcement Provisions
As identified above, a significant amount of vehicle-level GHG reduction is anticipated to come from the use of components specifically designed to reduce GHG emissions.  Examples of such components include LRR tires, aerodynamic fairings, idle reduction systems, and vehicle speed limiters.  At the time of certification, vehicle manufacturers will specify which components will be on their vehicle when introduced into commerce. Based on this list of installed components, GHG emissions performance of the vehicle will be assessed using GEM, and compliance with the family (or subfamily) emissions limit will need to be shown. .  As described in the in-use testing section, it is important to have the ability to determine if the vehicle is in the certified configuration both at the time of sale, as well as at any point within the useful life.
     Perhaps the most practical and basic method of verifying that a vehicle is in its certified configuration is through a vehicle emissions control information label, similar to that used for engines and light-duty vehicles.  We proposed that this label  list identifying features of the vehicle, including model year, vehicle model, certified engine family, vehicle manufacturer, test group, and GHG emissions category.  In addition, this label would list emission-related components that an inspector could reference in the event of a field inspection.  Possible examples may include LRR (for LRR tires), ARF (aerodynamic roof fairing), and ARM (aerodynamic rearview mirrors). With this information, inspectors could verify the presence and condition of attributes listed as part of the certified configuration.
     Several comments were received voicing concern that the large number of vehicle permutations within a given vehicle family (and perhaps vehicle subfamily) would lead to a large number of unique labels, at significant cost and labor burden to the manufacturer. In addition, including generic emission control system (EC) identifiers for vehicles would add a significant burden while providing little usable information for inspectors. A common example given in the comments was that simply identifying "ARF" for a roof fairing would not be sufficiently detailed for an inspector to know whether the correct roof fairing is present.  As a result of these concerns, commenters suggested that vehicle labels only include a minimal amount of information such as a compliance statement, vehicle family name, and date of manufacture.
     The agencies generally agree with the concerns raised by the commenters and do not wish to add burdensome and arbitrary labeling requirements.  Concurrently, we also remain committed to giving agency inspectors adequate tools to ensure a vehicle is in its certification at least at the time of sale. Therefore, we are finalizing a vehicle label requirement that includes:
     -Compliance statement
     -Vehicle manufacture
     -Vehicle family (and subfamily)
     -Date of manufacture
     -Regulatory subcategory
     -Emission control system identifiers
     To address the concerns from vehicle manufacturers identified above, particularly related to emission control (EC) identifiers, we believe a combination of selectable information on the label as well as a set of EPA-defined EC identifiers will provide a useful, but not overly burdensome labeling scheme.  Since the intent of these identifiers is to provide inspectors with a means for simply verifying the presence of a component, we do not believe overly detailed identifiers are necessary, particularly for tires and aerodynamic components.  For instance, current engine regulations require that three-way catalysts be identified on engine labels as "TWC." However, unique details such as catalyst size, loading, location, and even the number of catalysts are not on the label. In similar fashion, we believe that identifying tires and aerodynamic components in a general sense will prove similarly effective in determining if a vehicle has been built as intended or if it has been modified prior to being offered for sale.  
     EPA is requiring that limited aerodynamic components (roof fairings, side skirts, & gap reducers), vehicle speed limiters, LRR tires, and idle reduction components be identified on the label.  The following identifiers must be used for the emission control label:
     Vehicle Speed Limiters
     	-VSL  -  Vehicle speed limiter 
     	-VSLS  -  "Soft-top" vehicle speed limiter
     	-VSLE  -  Expiring vehicle speed limiter
     	-VSLD  -  Vehicle speed limiter with both "soft-top" and expiration
     Idle Reduction Technology 
     	-IRT5  -  Engine shutoff after 5 minutes or less of idling
     Tires
     	-LRRA  -  Low rolling resistance tires (all)
-LRRD  -  Low rolling resistance tires (drive)
-LRRS  -  Low rolling resistance tires (steer)
     Aerodynamic Components
     	-ATS  -  Aerodynamic side skirt and/or fuel tank fairing
     	-ARF  -  Aerodynamic roof fairing
     	-ARFR  -  Adjustable height aerodynamic roof fairing
     	-TGR  -  Gap reducing fairing (tractor to trailer gap)
     On the vehicle label, several (if not all), available EC identifiers available in a given subfamily can be listed and the appropriate selections can be made at the time of assembly based on each unique vehicle configuration. This practice is common on engine ECI labels (normally for month/year of manufacture) and selections are made using a punch, stamp, check mark or other permanent method. This provides inspectors with the information they need while still affording flexibility to manufacturers with several unique vehicle configurations.
     At the time of certification, manufacturers will be required to submit an example of their vehicle emission control label such that EPA can verify that all critical elements mentioned above are present. In addition to the label, manufacturers will also need to describe where the unique vehicle identification number and date of production can be found on the vehicle (if the date is not present on the label)
     The agencies received several comments requesting the inclusion of consumer-focused labels for heavy-duty vehicles.  These requests mainly involved labels similar to that found on passenger vehicles, allowing consumers to easily determine and compare fuel efficiency between vehicles. While we agree that such labels proven to be valuable to consumers in the light-duty market when shopping and comparing vehicles, the vast array of in-use drive cycles for heavy-duty vehicles and significant impact on GHG emissions reduce the intrinsic value of such fuel efficiency data to consumers. Additionally, many heavy-duty vehicles are unique and purpose-built which prevents direct comparison to other vehicles. The agencies may revisit this topic for future rulemaking activities, however there is no consumer label requirement for this final action.
Other Certification Provisions
Warranty
Section 207 of the CAA requires manufacturers to warrant their products to be free from defects that would otherwise cause non-compliance with emission standards.  For purposes of this regulation, vehicle manufacturers must warrant all components installed which act to reduce CO2 emissions at the time of initial sale.  This includes all aerodynamic features, tires, idle reduction systems, speed limiting system, and other equipment added to reduce CO2 emissions. In addition, the manufacturer must ensure these components and systems remain functional for the warranty period defined in 40 CFR Part 86 for the engine used in the vehicle, generally defined as half of the regulatory useful life. As with heavy-duty engines, manufacturers may offer a more generous warranty, however the emissions related warranty may not be shorter than any other warranty offered without charge for the vehicle.  If aftermarket components are installed (unrelated to emissions performance) which offer a longer warranty, this will not impact emission related warranty obligations of the vehicle manufacturer. 
Several comments were received from vehicle manufacturers voicing concern that tire warranties should be the responsibility of the tire manufacturer, not the vehicle manufacturer.  It has been, and remains, agency policy to hold the certifying entities responsible for warranty obligations. In this case, tire manufacturers are not certificate holders and therefore we do not believe it is appropriate for them to independently warrant their products. We see this as no different than requiring turbocharger or fuel injector manufacturers to provide warranties related to heavy-duty engines.  However, we do believe that vehicle manufacturers can and should hold tire manufacturers responsible for warranty of their products as part of their sourcing and purchasing agreements.  As proposed in the NPRM, tires are only required to be warranted for the first life of the tires (vehicle manufacturers are not expected to cover replacement tires).  The vehicle manufacturer is also required to warrant the A/C system  against design or manufacturing defects causing refrigerant leakage in excess of the standard. The warranty period for the A/C system is identical to the vehicle warranty period as described above.
At the time of certification, manufacturers must supply a copy of the warranty statement that will be supplied to the end customer.  This document should outline what is covered under the GHG emissions related warranty as well as the length of coverage.  Customers must also have clear access to the terms of the warranty, the repair network, and the process for obtaining warranty service.
Maintenance
Vehicle manufacturers are required to outline maintenance schedules that ensure their product will remain in compliance with emission standards throughout the useful life of the vehicle.  For heavy-duty vehicles, such maintenance may include fluid/lubricant service, fairing adjustments, or service to the GHG emission control system. This schedule is required to be submitted as part of the application for certification. Maintenance that is deemed to be critical to ensuring compliance with emission standards is classified as "critical emission-related maintenance." Generally, manufacturers are discouraged from specifying that critical emission-related maintenance is needed within the regulatory useful life of the engine. However, if such maintenance is unavoidable, manufacturers must have a reasonable basis for ensuring it is performed at the correct time. This may be demonstrated through several methods including survey data indicating that at least 80% of engines receive the required maintenance in-use or manufacturers may provide the maintenance at no charge to the user.  
Manufacturers will be required to submit the recommended emission-related maintenance schedule (and other service related documentation) at the time of certification.  This documentation should provide sufficient detail to allow the owner/operator of the vehicle to maintain the emission control system in a way that will ensure functionality as intended. This would include items such as periodic inspection of aerodynamic components and maintenance unique to advanced or innovative technologies. In addition, these instructions should provide the owner/operator with adequate information to replace consumable components (such as tires) with comparable replacements.
Since low rolling resistance tires are key emission control components under this rule, and will likely require replacement at multiple points within the life of a vehicle, it is logical to clarify how this fits into the emission-related maintenance requirements.  While the agencies encourage the exclusive use of LRR tires throughout the life of heavy-duty vehicles, we recognize that it is inappropriate at this time to hold vehicle manufacturers responsible for ensuring that this occurs.  Additionally, we believe that owner/operators have a legitimate financial motivation for ensuring their vehicles are as fuel efficient as possible, which includes purchasing LRR replacement tires.  However owner/operators may not have a sound knowledge of which replacement tires to purchase to retain the as-certified fuel efficiency of their vehicle.  Therefore we are requiring that vehicle manufacturers supply adequate information in the owner's manual to allow the owner/operator of the vehicle to purchase tires meeting or exceeding the rolling resistance performance of the original equipment tires. We expect that these instructions will be submitted to EPA as part of the application for certification.
Certification Fees
Similar to engine certification, the agency will assess certification fees for heavy-duty vehicles.  The proceeds from these fees are used to fund the compliance and certification activities related to GHG regulation for this regulatory category.  In addition to the certification process, other activities funded by certification fees include EPA-administered in-use testing, selective enforcement audits, and confirmatory testing.  At this point, the exact costs associated with the heavy-duty vehicle GHG compliance are not well known. EPA will assess its compliance program associated with this proposal and assess the appropriate level of fees. We anticipate that fees will be applied based on vehicle families, following the light-duty vehicle approach. 
	Requirements for Conducting Aerodynamic Assessment Using Allowed Methods
The requirements for conducting aerodynamic assessment using allowed methods includes two key components:  adherence to a minimum set of standardized criteria for each allowed method and submittal of aerodynamic values and supporting information on an annual basis for the purposes of certifying vehicles to a particular aerodynamic bin as discussed in the Section II.
First, we are finalizing requirements for conducting each of the allowed aerodynamic assessment methods.  We will cite approved and published standards and practices, where feasible, but will define criteria where none exists or where more current research indicates otherwise.  A description of the requirements for each method is discussed later in this section.  The manufacturer would be required to provide information showing that the meet these requirements and attest to the accuracy of the information provided.
 Second, to ensure continued compliance, manufacturers will be required to provide a minimum set of information on an annual basis at certification time 1) to support continued use of an aerodynamic assessment method and 2) to assign an aerodynamic value based on the applicable aerodynamic bins.  The information supplied to the agencies should be based on an approved aerodynamic assessment method and adhere to the requirements for conducting aerodynamic assessment mentioned above.
The annual submission may be based on coastdown testing conducted consistent with the enhanced protocol detailed in this rulemaking or with an approved alternative method.  The coastdown testing must be conducted using the Enhance Protocol which uses SAE J1263 and SAE J2263 as a basis, in addition to the modifications developed in response to industry comments which raised concerns regarding test to test variability.  
In addition to 8 valid coastdown runs in each direction, manufacturers using in-house test methods should provide an adjustment factor for relating their drag coefficient based on their in-house method to the reference method, enhanced coastdown.  The basis for the adjustment factor is:

	Adjustment Factor =   Cd in-house        				
                  Cd coastdown
For the test article used for certification that differs from the test article used for reference method testing, determine Cd to use for aerodynamics bin determination as described below.
Cd certification  =  Adjustment Factor x  Cdin-house measured 
                  
The specific requirements for the test article used in reference method testing using the coastdown procedures should meet the following requirements.

Table V-2  Reference Method Test Vehicle Specifications

Table V-3 Reference Method Test Track Condition Specifications

Regardless of the method, all testing using high-roof sleepers should be performed with a tractor-trailer combination to mimic real world usage.  Accordingly, it is important to match the type of tractor with the correct trailer.  Although, as discussed elsewhere in this proposal, the correct tractor-trailer combination is not always present or tractor-only operation may occur, the majority of operation in the real world involves correctly matched tractor-trailer combinations and we will attempt to reflect that here.   Therefore, the following guidelines should be used when performing an aerodynamic assessment:
::	For a Class 7 and 8 tractor truck with a high roof, a standard box trailer must be used.
The definitions of for standard trailer are further detailed in §1037.501(g).  This ensures consistency and continuity in the aerodynamic assessments, and maintains the overlap with real world operation.  As mid-roof and low-roof coastdown testing will be conducted without the trailer if the aerodynamic bin is not extrapolated from a high-roof version, then testing using other methods should also be conducted based on the tractor alone.
Standardized Criteria for Aerodynamic Assessment Methods
Coastdown Procedure Requirements
For coastdown testing, the test runs should be conducted in a manner consistent with SAE J1263 with additional modifications as described in the 40 CFR part 1066, subpart C, and in Chapter 3 of the RIA using the mixed model analysis method.  Since the coastdown procedure is the primary aerodynamic assessment method, the manufacturer would be required to conduct the coastdown procedure according to the requirements in this final action and supply the following to the agency for approval: 
         * Facility information:  name and location, description and/or background/history, equipment and capability, track and facility elevation, track grade and track size/length;
         * Test conditions for each test result including date and time, wind speed and direction, ambient temperature and humidity, vehicle speed, driving distance, manufacturer name, test vehicle/model type, model year, applicable model engine family, tire type and rolling resistance, test weight and driver name(s) and/or ID(s); 
         * Average Cd result as calculated in 40 CFR 1037.520(b) from valid tests including, at a minimum, ten valid test results, with no maximum number, standard deviation, calculated error and error bands, and total number of tests, including number of voided or invalid tests.  
Wind Tunnel Testing Requirements
Wind tunnel testing would conform to the following procedures and modifications, where applicable, including: 
         * SAE J1252, "SAE WIND TUNNEL TEST PROCEDURE FOR TRUCKS AND BUSES" (July 1981) except that article 5.2 that specifies a minimum Reynolds number of 0.7 x 10[6] is not included and is superseded, for the purposes of this rulemaking, by a minimum Reynolds number of 1.0 x 10[6] and, for reduced-scale wind tunnel testing, a one-eighth (1/8[th]) or larger scale model of a heavy-duty tractor and trailer must be used and of sufficient design to simulate airflow through the radiator inlet grill;. 
         * J1594, "VEHICLE AERODYNAMICS TERMINOLOGY" (December 1994); and
         * J2071, "AERODYNAMIC TESTING OF ROAD VEHICLES - OPEN THROAT WIND TUNNEL ADJUSTMENT" (June 1994).
In addition, the wind tunnel used for aerodynamic assessment would be a recognized facility by the Subsonic Aerodynamic Testing Association.  We are finalizing the provisions that manufacturers that perform wind tunnel testingdo sobased on the requirements detailed in this action.  The wind tunnel tests should be conducted at a zero yaw angle and, if so equipped, utilizing the moving/rolling floor (i.e., the moving/rolling floor should be on during the test as opposed to static) for comparison to the coastdown procedure, which corrects to a zero yaw angle for the oncoming wind.  The manufacturer is required to supply the following:
         * Facility information:  name and location, description and background/history, layout, wind tunnel type, diagram of wind tunnel layout, structural and material construction;
         * Wind tunnel design details:  corner turning vane type and material, air settling, mesh screen specification, air straightening method, tunnel volume, surface area, average duct area, and circuit length;
         * Wind tunnel flow quality:  temperature control and uniformity, airflow quality, minimum airflow velocity, flow uniformity, angularity and stability, static pressure variation, turbulence intensity, airflow acceleration and deceleration times, test duration flow quality, and overall airflow quality achievement;
         * Test/Working section information: test section type (e.g., open, closed, adaptive wall) and shape (e.g., circular, square, oval), length, contraction ratio, maximum air velocity, maximum dynamic pressure, nozzle width and height, plenum dimensions and net volume, maximum allowed model scale, maximum model height above road, strut movement rate (if applicable), model support, primary boundary layer slot, boundary layer elimination method and photos and diagrams of the test section;
         * Fan section description:  fan type, diameter, power, maximum rotational speed, maximum top speed, support type, mechanical drive, sectional total weight
         * Data acquisition and control (where applicable):  acquisition type, motor control, tunnel control, model balance, model pressure measurement, wheel drag balances, wing/body panel balances, and model exhaust simulation
         * Moving ground plane or Rolling Road (if applicable):  construction and material, yaw table and range, moving ground length and width, belt type, maximum belt speed, belt suction mechanism, platen instrumentation, temperature control, and steering; and
         * Facility correction factors and purpose.   
CFD Requirements
Currently, there is no existing standard, protocol or methodology governing the use of CFD.  Therefore, we are establishing a minimum set of criteria based on today's practices and coupling the use of CFD with empirical measurements from coastdown and, for gaining innovative technology credits, wind tunnel procedures.  Since there are primarily two-types of CFD software code, Navier-Stokes based and Lattice-Boltzman based, we are outlining two sets of criteria to address both types.  Therefore, the agencies are requiring that manufacturers use commercially-available CFD software code with a turbulence model and Navier-Stokes formula solver, where applicable.  Further details and criteria for each type of commercially-available CFD software code follows immediately and general criteria for all CFD analysis are subsequently described.
For Navier-Stokes based CFD code, manufacturers must perform an unstructured, time-accurate analysis with a mesh grid size with total surface elements of between one hundred and twenty million and one hundred and fifty million cells using hexagonal or polyhedral mesh cell shapes,  a cell size of less than or equal to 1 mm on the vehicle surface, and a surrounding volume element size in millimeters extending to the outer boundary of the volume as described by the equation:  integer of 2 to the power of n  where n equals the distance away from the vehicle surface (e.g., the cell size at 0.1mm (n) away from the surface would be 1mm [2 to the power of 0.1mm equals 1.07; the integer of 1.07 equals 1]).  All Navier-Stokes based CFD analysis should be performed with a turbulence model and mesh deformation (e.g., k-epsilon (k-ε), Reynolds stress or a shear stress transport k-omega (SST k-ω) ) enabled with boundary layer resolution of +/- 95%.  Finally, Navier-Stokes based CFD analysis for the purposes of determining the Cd should be performed once result convergence is achieved. Manufacturers should demonstrate convergence by supplying multiple, successive convergence values.
	For Lattice-Boltzman based CFD code, the agencies propose that manufacturers perform an unstructured, time-accurate analysis  with a mesh grid size with total surface elements of between one hundred and twenty million and one hundred and fifty million cells using using cubic volume elements and triangle and/or quadrilateral surface elements,  a cell size of less than or equal to 1 mm on the vehicle surface, and a surrounding volume element size measured in millimeters and extending to the outer boundary of the volume as described by the equation:  integer of 2 to the power of n  where n equals the distance away from the vehicle surface (e.g., the cell size at 0.1mm (n) away from the surface would be 1mm since 2 to the power of 0.1mm equals 1.07 and the integer of 1.07 equals 1).
Finally, in general for CFD, all analysis should be conducted using the following conditions:  a tractor-trailer combination using the manufacturer's tractor and the trailer according to the trailer specifications in this regulation, an environment with a blockage ration of less than or equal to 0.2 percent to simulate open road conditions, a zero degree yaw angle between the oncoming wind and the tractor-trailer combination, ambient conditions consistent with the modified coastdown test procedures outlined in this regulation, open grill with representative back pressures based on data from the tractor model, and tires and ground plane in motion consistent with and simulating a vehicle moving in the forward direction of travel.
Alternative Aerodynamic Method Comparison to the Coastdown Test Procedure Reference Method
If a manufacturer uses any alternative aerodynamic method, the manufacturer would have to provide a comparison to the coastdown test procedure reference method.  The manufacturer would be required to perform the alternative aerodynamic method and the coastdown test procedure reference method on the same model and compare the Cd results.  The alternative aerodynamic method and coastdown test procedure reference method must be conducted under similar test conditions and adhere to the criteria discussed above for each aerodynamic assessment method.

This demonstration would be performed in the initial year of rule implementation and would require agency review and approval prior to use of the alternative aerodynamic method in future years and for other models.  

The comparison would occur on one model of the manufacturer's highest sales volume, Class 8, high roof, sleeper cab family with a full aerodynamics package, either equipped at the factory or sold through a dealer specifically for that model as an OEM part.  If the manufacturer does not have such a model, the manufacturer may select a comparable model in that family or a model from another highest sales volume family in the manufacturer's fleet. 

For the comparison, the manufacturer would be required to provide information on the test conditions for each test result including but not limited to: test date and time, wind speed (if applicable), temperature, humidity, manufacturer and model, model year, applicable model engine family, tire type and rolling resistance for actual model, model test weight, equivalent vehicle test weight, actual and simulated or equivalent vehicle speed, Reynolds number (if applicable), yaw angle (if applicable), blockage ratio, either calculated or measured (if applicable), model mounting (if applicable), model geometry, body axis force and moments (if applicable), total test duration, test vehicle and type and operator name(s) and/or ID(s).  In addition, the manufacturer must provide the Cd results from valid tests.

Once the comparison is performed in the initial year, the manufacturer is required to perform this comparison every three years on the highest sales volume, Class 8, high roof, sleeper cab family equipped with a full aerodynamics package unless any or all of the following occurs: the  Class 8, high roof, sleeper cab family/model used for the original comparison is no longer commercially available, and/or significantly redesigned, with the meaning of "significantly" based on good engineering judgment, a fundamental change is made to the current alternative aerodynamic method (e.g., change from facility A to facility B as a source), and/or the alternative aerodynamic method is changed to something other than the coastdown test procedure reference method (e.g., switch to wind tunnel testing from coastdown, change wind tunnel testing facilities or CFD software code).  However, the agency reserves the right and has the authority under the Clean Air Act (CAA) to request and have the manufacturer perform a comparison in any year and on any model that the manufacturer has certified.

Finally, the data generated for the purpose of this comparison can be used in annual certification for that model, also called the base model, and for determining Cd for other models and/or sub-families in the base model family, or other families in the manufacturer's fleet. 
   
Annual Certification Data Submittal for Aerodynamic Assessment
For each model in the manufacturer's fleet, the manufacturer is required to supply aerodynamic information on an annual basis to the agencies in their certification application.  Once the manufacturer has performed the coastdown test procedure or the comparison for an alternative aerodynamic method, the aerodynamic assessment method can be used to generate Cd values for all models the manufacturer plans to certify and introduce into commerce.  For each model, the manufacturer would determine a predicted aerodynamic drag (Cd times the frontal area, A).  This reduces burden on the manufacturer to perform aerodynamic assessment but provides data for all the models in a manufacturer's fleet.  If a manufacturer has previously performed aerodynamic assessment on the other models, the manufacturer may submit an experimental Cd in lieu of a predicted Cd.
The aerodynamic assessment data will be used in one of two ways:  the manufacturer will input the values and data including the Cd times A into the agency's model and determine a GHG value/score or the agencies will use the manufacturer's input data into the model and assign a GHG value/score.
Since the agencies may input the data into the model, manufacturers are required to provide the information from the coastdown test procedure, alternative aerodynamic method or the method comparison described above for annual certification.  In addition, the manufacturer would supply manufacturer fleet information to the agency for annual certification purposes along with the acceptance demonstration parameters:  manufacturer name, model year, model line (if different than manufacturer name), model name, engine family, engine displacement, transmission name and type, number of axles, axle ratio, vehicle dimensions, including frontal area, predicted or measured coefficient of drag, assumptions used in developing the predicted or measured Cd, justification for carry-across of aerodynamic assessment data, photos of the model line-up, if available, and model applications and usage options.
	Aerodynamic Validation and Compliance 
 The agencies reserve the right to perform aerodynamic validation of the manufacturers aerodynamic results.  The agencies may conduct a vehicle confirmatory evaluation using a vehicle recruited from the in-use fleet and performing the reference method, coastdown test procedures, either at the manufacturer's facility  or an independent facility using the agencies equipment and tools.  If there is a discrepancy between the manufacturer's data submitted for certification and the agencies' validation results, the agency may perform a full audit of the manufacturer's source data and aerodynamic assessment methods and tools used by the manufacturer to produce the data.  The manufacturer would be required to make all equipment and tools available to the agencies to conduct the full audit.
Based on this audit, the agencies may require the manufacturer to make changes to their aerodynamic assessment methods ranging from minor adjustments to method criteria to switching allowed aerodynamic assessment methods. 
Compliance Reports
	Early Model Year Data
	The regulatory text of the NPRM included specifications for manufacturers to submit pre-certification compliance reports for each of a manufacturer's fleet of heavy-duty tractors.  Navistar and Volvo commented that the requirements specified in the NHTSA pre-certification reports are overbroad and should be eliminated.   The pre-certification reports included requirements for manufactures to submit a wide variety of information on vehicles.  The variety of information was believed to be necessary given that these vehicles had no previous compliance information for meeting fuel efficiency and emission standards and the agencies wanted to ensure that enough information was obtain to ensure sufficient compliance with the program.  The agencies have since reviewed the level of detail required in the precertification reports and are in agreement with commenters that the required information may be overly broad for compliance purposes and given that this is the first time these manufacturers have been regulated, the level of information required may not be available until subsequent model years.   Therefore, the agencies will delete the requirement for manufactures to submit pre-certification compliances reports for these classes of vehicles.     
As an alternative to receiving early compliance model year information in the precertification reports, the agencies have decided to use manufacturer's application for certificates of conformity to obtain early model estimates.  Currently, the applications for certificates are not required to include the fuel consumption information required by NHTSA.  Therefore, the agencies are adopting provisions in the final rule for manufacturers to provide emission and equivalent fuel consumption estimates in the manufacturer's applications for certification.  The agencies will treat information submitted in the applications as a manufacturer's demonstration of providing early compliance information, similar to the pre-model year report submitted for heavy-duty pick trucks and vans.   The final rule establishes a harmonized approach by which manufacturers will submit applications through the EPA VERIFY database system as the single point of entry for all information required for this national program and both agencies will have access to the information.  If by model year 2012, the agencies are not prepared to receive information through the EPA VERIFY database system, manufacturers are expected to submit written applications to the agencies.   This approach should streamline this process and reduce industry burden and provide sufficient information for the agency's to carry out their early compliance activities.     
Final Reports
The NPRM proposed for manufacturers participating in the ABT program to provide EOY and final reports.  The EOY reports for the ABT program were required to be submitted by manufacturers no later than 90 days after the calendar year and final report no later than 270 days after the calendar year.  Manufacturers not participating in the ABT program were required to provide an EOY report within 45 days after the calendar year but no final reports were required.  The final ABT report due was established coinciding with EPA's existing criteria pollutant report for heavy-duty engines.  The EOY report was required in order to receive preliminary final estimates and identifies manufacturers that might have a credit deficit for the given model year.  Manufacturers with a credit surplus at the end of each model could receive a waiver from providing EOY reports.  As proposed, the remaining manufacturers were required to submit reports to EPA and send copies of those reports to NHTSA with equivalent fuel consumption values.     
In response to the NPRM, commenters recommended collecting additional data.  One commenter requested collecting information to develop and refine test cycles that more accurately reflect actual driving cycles for medium and heavy duty trucks.  Several other commenters ( ACEE, Eaton, CALSTART, NRDC and UCS) recommended collecting advanced data on in-service vehicles and that the collected data be analyzed and characterized for each vocational application, especially for hybrid vehicles, in a cooperative government and industry effort.  Commenters (ACEE, DTNA, NRGDC, UCS and Volvo) also requested that the agency's data collection ensure to include information on actual vehicle configurations sold in the fleet.     
Many commenters argued against the burden placed upon the industry in meeting the agencies required reporting provisions.  One commenter argued against providing actual production information due to the variability that exists in building heavy duty vehicles and in the influence of changing fleet interest each year indicating that only estimated information should have to be provided.  Commenters (Volvo and Navistar) generally objected stating that the agency requirements in its reports are both unnecessary and overly burdensome.  Comments in response to the NPRM requested that for manufacturers not using ABT provisions, the EOY report due 45 days after the end of the calendar year should be combined with the ABT report due 90 days after the same model year.  Commenters also requested that the exempted off-road vehicle report be consolidated with the EOY report.  Other concerns raised by commenters were for the agencies to remove any differences in reporting provisions and implement a single uniform reporting template that manufacturers can submit to both agencies.  
One commenter (Volvo) requested that the agencies simply the reporting requirements for vehicle configurations in both the EOY and final reports commenting that the current proposal as outlined in the NPRM was extremely burdensome to vehicle manufacturers.  The NPRM regulation states that the manufacturer must identify each distinguishable vehicle configuration in the vehicle family or sub-family and identification of FELs for each subfamily.  The regulation calls for reporting of results and modeling inputs for each subfamily.  The commeter believed that the burden of meeting these requirements for the vast number of families/subfamilies is substantial and unjustified.   For this commenter, there is a potential for almost 45 million sub-families in the vocation and tractor categories.  This approach should reduce the number of vehicle families to an amount that is be suitable for reporting.  Comments received from the BlueGren Alliance and ACEEE also requested  the agencies should implement a program as part of the final rule to collect data, actual vehicle configurations sold and their performance as estimated by simulation modeling, which will provide information required to develop a full--‐vehicle program in the future.  
For the final rule, the agencies will retain the NPRM proposal for EOY and final reports.  However, the agencies will consolidate the reporting as requested by comments and will provide equivalent fuel consumption information for all reports submitted to EPA.  The final rule establishes a harmonized approach by which manufacturers will submit reports through the EPA VERIFY database system as the single point of entry for all information required for this national program and both agencies will have access to the information.  If by model year 2012, the agencies are not prepared to receive information through the EPA VERIFY database system, manufacturers are expected to submit written reports to the agencies. The agencies are also combining the EOY reports for manufacturers not using ABT provisions with other EOY reports and are requiring a submission date 90 days after the calendar year.  The agencies view the adopted requirements in the final rule for EOY and final reports will provide sufficient data requests to satisfy these requests.  The agencies also agree with Volvo concerns and have adopted a new reclassification for selecting vehicle families as described elsewhere in this Section.  A summary of the required information in the final rule for EOY and final reports is as follows: 
Vehicle family designation and averaging set.
Vehicle emissions and fuel consumption standards including any alternative standards used
Vehicle family FELs.
Final production volumes
Certified test cycles
Useful life values for vehicle families
A credit plan identifying the manufacturers actual credit balances, credit flexibilities, credit trades and a credit deficit plan if needed demonstrating how it plans to resolve any credit deficits that might occur for a model year within a period of up to three model years after that deficit has occurred 
A plan describing the vehicles that were exempted such as for off-road or small business purposes
A plan describing any alternative fueled vehicles that were produced for the model year identifying the approaches used to determinate compliance and the production volumes
Additional Required Information 
Throughout the model year, manufacturers will be required to submit various submissions to the agencies to comply with various aspects of the rule.  These requests have differing criteria for submission and approval.  Table V-4 below provides a summary of the types of submission, required submission dates and the EPA and NHTSA regulations that apply.  The agencies will review and grant any requests considering the timeliness of the submissions and the completeness of the requests.  

Table V-4: Summary of Required Information for Compliance
Submission
Applies to
Required Submissions Date
EPA Regulation Reference
NHTSA Regulation Reference
Small business exemptions
Vehicle manufacturers meeting the Small Business Administration (SBA) size criteria of a small business as described in 13 CFR 121.201.
Before introducing any  excluded vehicle into U.S. commerce
§1037.150 
§535.8
Incentives for early introduction
The provisions apply with respect to tractors and vocational vehicles produced in model years before 2014  
EPA must be notified before the manufacturer submits its application for certificate of conformity
§1037.150 
§535.8
Voluntary Compliance for NHTSA standards
Vehicle manufacturers seeking early compliance in model years 2014 to 2016
NHTSA must be notified before the manufacturer submits its application for certificate of conformity
NA
§535.8
Approval of alternate methods to determine drag coefficients
Tractors meeting §1037.106
EPA must be notified before the manufacturer submits its application for certificate of conformity 
§1037.150
§535.8
Off-road exemption
Manufacturers wanting to exclude tractor from vehicle standards
EPA must be notified before the manufacturer submits its application for certificate of conformity
§1037.150 
§535.8
Vocational Tractor
Manufacturers wanting to reclassify tractor as vocational tractors making them applicable to vocational vehicle standards
EPA must be notified before the manufacturer submits its application for certificate of conformity
§1037.150
§535.8
Exemption from EOY reports
Manufactures with surplus credits at the end of the model year
90-days after the calendar year ends
§1037.730
§535.8

Class 2b-8 Vocational Vehicles
Final Compliance Approach
Like Class 7 and 8 combination tractors, heavy-duty vocational vehicles will be required to have both engine and complete vehicle certificates of conformity.  As discussed in the engine certification section, engines that will be used in vocational vehicles would need to be certified using the heavy-duty FTP cycle for GHG pollutants and show compliance through the useful life of the engine. This certification is in addition to the current requirements for obtaining a certificate of conformity for criteria pollutant emissions.
For this final action, the majority of the GHG reduction for vocational vehicles is expected to come from the use of LRR tires as well as increased utilization of hybrid powertrain systems. Other technologies such as aerodynamic improvements and vehicle speed limiting systems are not as relevant for this class of vehicles, since the typical duty cycle is much more urban, consisting of lower speeds and frequent stopping. Idle reduction strategies are expected to be encompassed by hybrid technology, which we anticipate will ultimately handle PTO operation as well.  Therefore, for this final action, certification of heavy-duty vocational vehicles with conventional powertrains will focus on quantifying GHG benefits due to the use of LRR tires through GEM.
Certification Process
Vehicles will be divided into vehicle families for purposes of certification.  As with Class 7 and 8 combination tractors, these are groups of vehicles within a given regulatory subcategory that are expected to share common emission characteristics.  Vocational vehicle regulatory subcategories share the same structure as those used for heavy-duty engine criteria pollutant certification and are based on GVWR.  This includes light-heavy (LHD) with a GVWR at or below 19,500 pounds, medium-heavy (MHD) with a GVWR above 19,500 pounds and at or below 33,000 pounds, and heavy-heavy (HHD) with a GVWR above 33,000 pounds. We anticipate manufacturers will have one vehicle family per regulatory subcategory, however hybrid vehicles will need to be separated into additional unique vehicle families. Manufacturers may also subdivide families into sub-families if GHG emissions performance is expected to change significantly within the vehicle family. As with Class 7 and 8 combination tractors, we anticipate using the standardized 12-digit naming convention to identify vocational vehicle families.  As with engines and Class 7 and 8 combination tractors, each certifying vehicle manufacturer would have a unique three digit code assigned to them.  Currently, there is no 5[th] digit (industry sector) code for this class of vehicles and EPA will issue an updated to the current guidance explaining which character(s) should be used for vocational vehicles. The agencies originally proposed that engine displacement be included in the vehicle family name, however the wide range of engines available across most regulatory subcategories makes this requirement irrelevant and unnecessary at the time of this rulemaking.  Therefore, we are reserving the remaining characters for California ARB and/or manufacturer use, such that the result is a unique vehicle family name.
Each vehicle family must demonstrate compliance with emission standards using the GEM approach.  GEM inputs for conventional (i.e. non-hybrid) vocational vehicles primarily involves entering tire rolling resistance information. Additional provisions are available for certification of hybrid vehicles or vehicles using unique technologies, which was detailed in Section IV.  If the vehicle family consists of multiple configurations, only results from the worst-case configuration are necessary for certification in addition to  an engineering evaluation demonstrating that the modeled configuration indeed reflects the worst-case configuration.  If the vehicle family is divided into subfamilies, unique GEM results are required for at least one configuration per subfamily.
The agencies have received comments from engine manufacturers, truck manufacturers, and hybrid system manufacturers raising concerns regarding the duty cycle and the weighting factors proposed for evaluating transient applications.  The agencies proposed three methods for evaluating hybrid system performance in an effort to generate credit which could be used to provide incentives to facilitate the introduction of advanced technology.  In response to concerns broached by engine manufacturers and hybrid system manufacturers regarding the operation of vehicles most likely to be hybridized in the near term, the proposed duty cycles considered for the proposal will continue to be used with this final action.  The agencies proposed a transient duty cycle, a 55 mile-per-hour steady state cruise and a 65 mile-per-hour steady state cruise.  The transient duty cycle which has been corrected to address a concern related to shift events is essentially the same transient cycle proposed in the NPRM with the exception that it minimizes inappropriate shift events.  Additionally, the steady state cycles proposed by the agencies remain essentially unchanged.  The modification being adopted with today's final action is to address the distribution of the emissions impact associated with each duty cycle.  The weighting factors will be changed such that a greater emphasis on the type of transient activity seen as more characteristic of hybrid applications will be evident.  The new weighting factors between duty cycles for hybrid certification will be 75% for the transient, 9% for the 55 mph cruise cycle, and 16% for the 65 mph cruise cycle.  The basis for this change may be seen in the memorandum to this rulemaking docket xxxx-xxxx which describes the data set used to describe real world vehicle performance.  In addition to this modification, the Power-Take-Off (PTO) operation will be characterized for vehicles utilizing a PTO system for which there is a benefit for use of the hybrid technology.  The testing provisions for the comparison in the A to B testing for complete vehicle or post-transmission powerpack testing may be seen in 40 CFR 1037.xxx. The testing provisions for work-specific pre-transmission evaluation using an engine based approach may be seen in 40 CFR 1036.xxx and 40 CFR 1065.xxx.   
Demonstrating Compliance With the Final Standards
CO2 and Fuel Consumption Standards
Model
As stated above, the agencies are finalizing that demonstrating compliance with GHG and fuel consumption standards would primarily involve the use of LRR tires and quantifying the associated CO2 and fuel consumption benefit.  Similar to Class 7 and 8 combination tractors, this will be done using GEM. However, the input parameters entered by the vehicle manufacturer would be limited to the properties of the tires.  GEM will use the tire data, along with inputs reflecting a baseline truck and engine, to generate a complete vehicle model.  The test weight used in the model will be based on the vehicle class, as identified above.  Light-heavy-duty vehicles will have a test weight of 16,000 pounds; 25,150 pounds for medium heavy-duty vehicles; and heavy heavy-duty vocational vehicles will use a test weight of 67,000 pounds. The model would then be exercised over the HHDDT transient cycle as well as 55 and 65 mph steady-state cruise conditions.  The results of each of the three tests would be weighted at 37%, 21%, and 42% for 65 mph, 55 mph, and transient tests, respectively.
It may seem more expedient and just as accurate to require manufacturers use tires meeting certain industry standards for qualifying tires as having LRR. In addition, CO2 and fuel consumption benefits could be quantified for different ranges of coefficients of rolling resistance to provide a means for comparison to the standard.  However, we believe that as technology advances, other aspects of vocational vehicles may warrant inclusion in future rulemakings.  For this reason, we remain committed to having the certification framework in place to accommodate such additions.  While the modeling approach may seem to be overly complicated for this phase of the rules, it also serves to create a certification pathway for future rulemakings and therefore we believe this is the best approach.  Should innovative technologies be considered that are currently beyond the scope of the model, it would be necessary for the manufacturer to conduct A to B testing which reflects the improvement associated with the new technology.  The test protocol to be used and the basis of this assessment will require a public vetting process which mayinclude notice and comment.  
In-use Standards
The category of wear items primarily relates to tires.  It is expected that vehicle manufacturers will equip their trucks with LRR tires, since the final vehicle standard is predicated on LRR tire performance.  The tire replacement intervals for this class of vehicle is normally in the range of 50,000 to 100,000 miles, which means the owner/operator will be replacing the tires at several points within the useful life of the vehicle.  We believe that as LRR tires become more common on new equipment, the aftermarket prices of these tires will also decrease. Along with decreasing tire prices, the fuel savings realized through use of LRR tires will ideally provide enough incentive for owner/operators to continue purchasing these tires.  The inventory modeling in this rule package reflects the continued use of LRR tires through the life of the vehicle.  
Evaporative Emission Standards
Evaporative and refueling emissions from heavy-duty highway engines and vehicles are currently regulated under 40 CFR part 86.  Even though these emission standards apply to the same engines and vehicles that must meet exhaust emission standards, we require a separate certificate for complying with evaporative and refueling emission standards.  An important related point to note is that the evaporative and refueling emission standards always apply to the vehicle, while the exhaust emission standards may apply to either the engine or the vehicle.  For vehicles other than pickups and vans, the standards in this rule to address greenhouse gas emissions apply separately to engines and to vehicles.  Since we will be applying both greenhouse gas standards and evaporative/refueling emission standards to vehicle manufacturers, we believe it will be advantageous to have the regulations related to their certification requirements written together as much as possible.  EPA regards these final changes as discrete, minimal, and for the most part clarifications to the existing standards.  We have not finalized any changes to the evaporative or refueling emission standards, but we have come across several provisions that warrant clarification or correction:  
   * When adopting the most recent evaporative emission change we did not carry through the changes to the regulatory text applying evaporative emission standards for methanol-fueled compression-ignition engine.  The final regulations correct this by applying the new standards to all fuels that are subject to standards.
   * We are finalizing provisions to address which standards apply when an auxiliary (nonroad) engine is installed in a motor vehicle, which is currently not directly addressed in the highway regulation.  The final approach requires testing complete vehicles with any auxiliary engines (and the corresponding fuel-system components).  Incomplete vehicles must be tested without the auxiliary engines, but any such engines and the corresponding fuel-system components will need to meet the standards that apply under our nonroad program as specified in 40 CFR part 1060.
   * We have removed the option for secondary vehicle manufacturers to use a larger fuel tank capacity than is specified by the certifying manufacturer without re-certifying the vehicle.  Secondary vehicle manufacturers needing a greater fuel tank capacity will need to either work with the certifying manufacturer to include the larger tank, or go through the effort to re-certify the vehicle itself.  Our understanding is that this provision has not been used and would be better handled as part of certification rather than managing a separate process.  We are also finalizing corresponding changes to the emission control information label.
   * Rewriting the regulations in a new part in conjunction with the greenhouse gas standards allows for some occasions of improved organization and clarity, as well as updating various provisions.  For example, we have finalized a leaner description of evaporative emission families that does not reference sealing methods for carburetors or air cleaners.  We have also clarified how evaporative emission standards affect engine manufacturers and are finalizing more descriptive provisions related to certifying vehicles above 26,000 pounds GVWR using engineering analysis.
   * Since we adopted evaporative emission standards for gaseous-fuel vehicles, we have developed new approaches for design-based certification (see, for example, 40 CFR 1060.240).  We request comment on changing the requirements related to certifying gaseous-fuel vehicles to design-based certification.  This would allow for a simpler assessment for certifying these vehicles without changing the standards that apply.

Demonstrating Compliance With the Final Standards
CO2 and Fuel Consumption Standards
Model
As stated above, the agencies are finalizing that demonstrating compliance with GHG and fuel consumption standards would primarily involve the use of LRR tires and quantifying the associated CO2 and fuel consumption benefit.  Similar to Class 7 and 8 combination tractors, this will be done using GEM. However, the input parameters entered by the vehicle manufacturer would be limited to the properties of the tires.  GEM will use the tire data, along with inputs reflecting a baseline truck and engine, to generate a complete vehicle model.  The test weight used in the model will be based on the vehicle class, as identified above.  Light-heavy-duty vehicles will have a test weight of 16,000 pounds; 25,150 pounds for medium heavy-duty vehicles; and heavy heavy-duty vocational vehicles will use a test weight of 67,000 pounds. The model would then be exercised over the HHDDT transient cycle as well as 55 and 65 mph steady-state cruise conditions.  The results of each of the three tests would be weighted at 37%, 21%, and 42% for 65 mph, 55 mph, and transient tests, respectively.
It may seem more expedient and just as accurate to require manufacturers use tires meeting certain industry standards for qualifying tires as having LRR. In addition, CO2 and fuel consumption benefits could be quantified for different ranges of coefficients of rolling resistance to provide a means for comparison to the standard.  However, we believe that as technology advances, other aspects of vocational vehicles may warrant inclusion in future rulemakings.  For this reason, we remain committed to having the certification framework in place to accommodate such additions.  While the modeling approach may seem to be overly complicated for this phase of the rules, it also serves to create a certification pathway for future rulemakings and therefore we believe this is the best approach.  Should innovative technologies be considered that are currently beyond the scope of the model, it would be necessary for the manufacturer to conduct A to B testing which reflects the improvement associated with the new technology.  The test protocol to be used and the basis of this assessment will require a public vetting process which mayinclude notice and comment.  
In-use Standards
The category of wear items primarily relates to tires.  It is expected that vehicle manufacturers will equip their trucks with LRR tires, since the final vehicle standard is predicated on LRR tire performance.  The tire replacement intervals for this class of vehicle is normally in the range of 50,000 to 100,000 miles, which means the owner/operator will be replacing the tires at several points within the useful life of the vehicle.  We believe that as LRR tires become more common on new equipment, the aftermarket prices of these tires will also decrease. Along with decreasing tire prices, the fuel savings realized through use of LRR tires will ideally provide enough incentive for owner/operators to continue purchasing these tires.  The inventory modeling in this rule package reflects the continued use of LRR tires through the life of the vehicle.  
Evaporative Emission Standards
Evaporative and refueling emissions from heavy-duty highway engines and vehicles are currently regulated under 40 CFR part 86.  Even though these emission standards apply to the same engines and vehicles that must meet exhaust emission standards, we require a separate certificate for complying with evaporative and refueling emission standards.  An important related point to note is that the evaporative and refueling emission standards always apply to the vehicle, while the exhaust emission standards may apply to either the engine or the vehicle.  For vehicles other than pickups and vans, the standards in this rule to address greenhouse gas emissions apply separately to engines and to vehicles.  Since we will be applying both greenhouse gas standards and evaporative/refueling emission standards to vehicle manufacturers, we believe it will be advantageous to have the regulations related to their certification requirements written together as much as possible.  EPA regards these final changes as discrete, minimal, and for the most part clarifications to the existing standards.  We have not finalized any changes to the evaporative or refueling emission standards, but we have come across several provisions that warrant clarification or correction:  
   * When adopting the most recent evaporative emission change we did not carry through the changes to the regulatory text applying evaporative emission standards for methanol-fueled compression-ignition engine.  The final regulations correct this by applying the new standards to all fuels that are subject to standards.
   * We are finalizing provisions to address which standards apply when an auxiliary (nonroad) engine is installed in a motor vehicle, which is currently not directly addressed in the highway regulation.  The final approach requires testing complete vehicles with any auxiliary engines (and the corresponding fuel-system components).  Incomplete vehicles must be tested without the auxiliary engines, but any such engines and the corresponding fuel-system components will need to meet the standards that apply under our nonroad program as specified in 40 CFR part 1060.
   * We have removed the option for secondary vehicle manufacturers to use a larger fuel tank capacity than is specified by the certifying manufacturer without re-certifying the vehicle.  Secondary vehicle manufacturers needing a greater fuel tank capacity will need to either work with the certifying manufacturer to include the larger tank, or go through the effort to re-certify the vehicle itself.  Our understanding is that this provision has not been used and would be better handled as part of certification rather than managing a separate process.  We are also finalizing corresponding changes to the emission control information label.
   * Rewriting the regulations in a new part in conjunction with the greenhouse gas standards allows for some occasions of improved organization and clarity, as well as updating various provisions.  For example, we have finalized a leaner description of evaporative emission families that does not reference sealing methods for carburetors or air cleaners.  We have also clarified how evaporative emission standards affect engine manufacturers and are finalizing more descriptive provisions related to certifying vehicles above 26,000 pounds GVWR using engineering analysis.
   * Since we adopted evaporative emission standards for gaseous-fuel vehicles, we have developed new approaches for design-based certification (see, for example, 40 CFR 1060.240).  We request comment on changing the requirements related to certifying gaseous-fuel vehicles to design-based certification.  This would allow for a simpler assessment for certifying these vehicles without changing the standards that apply.

Final Labeling Provisions
It is crucial that a means exist for allowing field inspectors to identify whether a vehicle is certified, and if so, whether it is in the certified configuration. As with engines and tractors, we believe an emission control information label is a logical first step in facilitating this identification.  For vocational vehicles, the engine will have a label that is permanently affixed to the engine and identify the engine as certified for use in a certain regulatory subcategory of vehicle (i.e., MHD, etc).    
The vehicle will also have a label listing the manufacturer of the vehicle, vehicle family (and subfamily, if applicable), regulatory subcategory, date of manufacture, compliance statement, FEL, and emission control system identifiers.  Since LRR tires are expected to be the primary means for vehicles to comply, it is expected that LRR tires will be the only component identified as part of the emission control system on the label.  In addition, if any other emission related components are present, such as hybrid powertrains, key components will also need to be specified on the label. Like the engine label, this will need to be permanently affixed to the vehicle in an area that is clearly visible to the owner/operator. At the time of certification, manufacturers will be required to submit an example of their vehicle emission control label such that EPA can verify that all critical elements are present. In addition to the label, manufacturers will also need to describe where the unique vehicle identification number and date of production can be found on the vehicle.
Other Certification Issues
Warranty
As with other heavy-duty engine and vehicle regulatory categories, vocational vehicle chassis manufacturers would be required to warrant their product to be free from defects that would adversely affect emissions. This warranty also covers the failure of emission related components for the warranty period of the vehicle.  For vocational vehicles, this primarily applies to tires. 
Manufacturers of chassis for vocational vehicles would be required to warrant tires to be free from defects at the time of initial sale.  As with Class 7 and 8 combination tractors, we expect the chassis manufacturer to only warrant tires the original tires against manufacturing or design-related defects.  This tire warranty would not cover replacement tires or damage from road hazards or improper inflation. 
As with Class 7 and 8 combination tractors, all warranty documentation would be submitted to EPA at the time of certification. This should include the warranty statement provided to the owner/operator, description of the service repair network, list of covered components (both conventional and high-cost), and length of coverage.
EPA Certification Fees
Similar to engine and tractor-trailer vehicle certification, the agency will assess certification fees for vocational vehicles.  The proceeds from these fees are used to fund the compliance and certification activities related to GHG regulation for this industry segment.  In addition to the certification process, other activities funded by certification fees include EPA-administered in-use testing, selective enforcement audits, and confirmatory testing.  At this point, the exact costs associated with the heavy-duty vehicle GHG compliance are not well known. EPA will assess its compliance program associated with this proposal and assess the appropriate level of fees. We anticipate that fees will be applied based on certification families, following the light-duty vehicle approach. 
Maintenance
Vehicle manufacturers are required to outline maintenance schedules that ensure their product will remain in compliance with emission standards throughout the useful life of the vehicle.  For heavy-duty vehicles, such maintenance may include fluid/lubricant service, fairing adjustments, or service to the GHG emission control system. This schedule is required to be submitted as part of the application for certification. Maintenance that is deemed to be critical to ensuring compliance with emission standards is classified as "critical emission-related maintenance." Generally, manufacturers are discouraged from specifying that critical emission-related maintenance is needed within the regulatory useful life of the engine. However, if such maintenance is unavoidable, manufacturers must have a reasonable basis for ensuring it is performed at the correct time. This may demonstrated through several methods including survey data indicating that at least 80% of engines receive the required maintenance in-use or manufacturers may provide the maintenance at no charge to the user.  
General Regulatory Provisions
Statutory Prohibited Acts
Section 203 of the CAA describes acts that are prohibited by law. This section and associated regulations apply equally to the greenhouse gas standards as to any other regulated emission. Acts that are prohibited by section 203 of the CAA include the introduction into commerce or the sale of an engine or vehicle without a certificate of conformity, removing or otherwise defeating emission control equipment, the sale or installation of devices designed to defeat emission controls, and other actions. In addition, vehicle manufacturers, or any other party, may not make changes to the certified engine that would result in it not being in the certified configuration. 
EPA proposes to apply §86.1854 - 12 to heavy-duty vehicles and engines; this codifies the prohibited acts spelled out in the statute.  Although it is not legally necessary to repeat what is in the CAA, EPA believes that including this language in the regulations provides clarity and improves the ease of use and completeness of the regulations.  Since this change merely codifies provisions that already apply, there is no burden associated with the change.
Regulatory Amendments Related to Heavy-Duty Engine Certification
We are finalizing  the adoption of the new engine-based greenhouse gas standards in 40 CFR part 1036 and the new vehicle-based standards in 40 CFR part 1037.  We are finalizing to continue to rely on 40 CFR parts 85 and 86 for conventional certification and compliance provisions related to criteria pollutants, but the final regulations include a variety of amendments that would affect the provisions that apply with respect to criteria pollutants.  We are not intending to change the stringency of, or otherwise substantively change any existing standards.
The introduction of new parts in the CFR is part of a long-term plan to migrate all the regulatory provisions related to highway and nonroad engine and vehicle emissions to a portion of the CFR called Subchapter U, which consists of 40 CFR parts 1,000 through 1299.  We have already adopted emission standards, test procedures, and compliance provisions for several types of engines in 40 CFR parts 1033 through 1074.  We intend eventually to capture all the regulatory requirements related to heavy-duty highway engines and vehicles in these new parts.  Moving regulatory provisions to the new parts allows us to publish the regulations in a way that is better organized, reflects updates to various certification and compliance procedures, provides consistency with other engine programs, and is written in plain language.  We have already taken steps in this direction for heavy-duty highway engines by adopting the engine-testing procedures in 40 CFR part 1065 and the provisions for selective enforcement audits in 40 CFR part 1068.
EPA sought comment on drafting changes and additions.  This solicitation related solely to the appropriate migration, translation, and enhancement of existing provisions.  EPA did not solicitcomment on the substance of these existing rules, and is not finalizing amending, reconsideration of, or otherwise re-examining these provisions' substantive effect.  
The rest of this section describes the most significant of these final redrafting changes. The proposal includes several changes to the certification and compliance procedures, including the following:
         * We are requiring that engine manufacturers provide installation instructions to vehicle manufacturers (see §1036.130).  We expect this is already commonly done; however, the regulatory language spells out a complete list of information we believe is necessary to properly ensure that vehicle manufacturers install engines in a way that is consistent with the engine's certificate of conformity.
         * §1036.30, §1036.250, and §1036.825 spell out several detailed provisions related to keeping records and submitting information to us.
         * We wrote the greenhouse gas regulations to divide heavy-duty engines into "spark-ignition" and "compression-ignition" engines, rather than "Otto-cycle" and "diesel" engines, to align with our terminology in all our nonroad programs.  This will likely involve no effective change in categorizing engines except for natural gas engines.  To address this concern, we are including a provision in §1036.150 to allow manufacturers to meet standards for spark-ignition engines if they were regulated as Otto-cycle engines in 40 CFR part 86, and vice versa.  
         * §1036.205 describes a new requirement for imported engines to describe the general approach to importation (such as identifying authorized agents and ports of entry), and identifying a test lab in the United States where EPA can perform testing on certified engines.  These steps are part of our ongoing effort to ensure that we have a compliance and enforcement program that is as effective for imported engines as for domestically produced engines.  We have already adopted these same provisions for several types of nonroad engines.
         * §1036.210 specifies a process by which manufacturers are able to get preliminary approval for EPA decisions for questions that require lead time for preparing an application for certification.  This might involve, for example, preparing a plan for durability testing, establishing engine families, identifying adjustable parameters, and creating a list of scheduled maintenance items.
         * §1036.225 describes how to amend an application for certification.
         * We are finalizing the exemption and recall provisions as written in 40 CFR part 1068 instead of the comparable provisions in 40 CFR part 85.  This involves only minor changes relative to current practice.
We are aware that it may be appropriate to move several additional provisions in 40 CFR parts 85 and 86 to subchapter U.  For example, highway engine manufacturers may find it preferable to use the same parameters specified for defining nonroad engine families for certifying highway engines.  To the extent that the nonroad provisions would apply appropriately for highway engines, we and the manufacturers would benefit from a consistent approach to certifying both types of engines in a way that does not compromise the degree of emission control achieved under the existing standards.
Another area of particular interest is defect reporting.  Existing regulations require manufacturers to report defects to EPA whenever the same defect occurs at least 25 times.  This approach can be somewhat onerous for manufacturers making high-volume products.  For example, for an engine model with annual sales above 25,000, this represents a defect rate of less than 0.1 percent.  In contrast, the approach to defect reporting in §1068.501 accommodates the high sales volumes associated with highway engines, basing requirements on a percentage of defective products, rather than setting a fixed number for all engine families.  This flexibility is paired with the explicit direction for the manufacturer to actively monitor warranty claims, customer complaints, and other sources of information to evaluate and track potential defects.  We believe this aligns both with the manufacturers' interest in producing quality products and EPA's interest in addressing any quality concerns that arise from the need to repair in-use engines and vehicles.
Test Procedures For Measuring Emissions From Heavy-Duty Vehicles
We are finalizing a new part 1066 that would contain a general chassis-based test procedures in for measuring emissions from a variety of vehicles, including vehicles over 14,000 pounds GVWR.  However, we are not finalizing application of these procedures broadly at this time.  The test procedures in 40 CFR part 86 would continue to apply for vehicles under 14,000 pounds GVWR.  Rather, the final part 1066 procedures would apply only for any testing that would be required for larger vehicles.  This could include "A to B" hybrid vehicle testing, coastdown testing, and potentially limited innovative technology testing.  Nevertheless, we will likely consider in the future applying these procedures also for other heavy-duty vehicle testing and for light-duty vehicles, highway motorcycles, and/or nonroad recreational vehicles that rely on chassis-based testing. 
As noted above, engine manufacturers are already using the test procedures in 40 CFR part 1065 instead of those originally adopted in 40 CFR part 86.  The new procedures are written to apply generically for any type of engine and include the current state of technology for measurement instruments, calibration procedures, and other practices.  We are finalizing the chassis-based test procedures in part 1066 to have a similar structure.  
The final procedures in part 1066 reference large portions of part 1065 to align test specifications that apply equally to engine-based and vehicle-based testing, such as CVS and analyzer specifications and calibrations, test fuels, calculations, and definitions of many terms.  Since several highway engine manufacturers were involved in developing the full range of specified procedures in part 1065, we are confident that many of these provisions are appropriate without modification for vehicle testing.  
The remaining test specifications needed in part 1066 are mostly related to setting up, calibrating, and operating a chassis dynamometer.  This also includes the coastdown procedures that are required for establishing the dynamometer load settings to ensure that the dynamometer accurately simulates in-use driving.
Current testing requirements related to dynamometer specifications rely on a combination of regulatory provisions, EPA guidance documents, and extensive know-how from industry experience that has led to a good understanding of best practices for operating a vehicle in the laboratory to measure emissions.  We attempted in this proposal to capture this range of material, organizing these specifications and verification and calibration procedures to include a complete set of provisions to ensure that a dynamometer meeting these specifications would allow for carefully controlled vehicle operation such that emission measurements are accurate and repeatable.  We request comment on the range of final requirements related to designing, building, and operating chassis dynamometers.  For example, we believe that the final verification and calibration procedures in part 1066, subpart B, for diameter, speed, torque, acceleration, base inertia, friction loss, and other parameters are all necessary to ensure proper dynamometer operation.  It may be that some of these checks are redundant, or could be achieved with different procedures.  There may also be additional checks needed to remove possibilities for inadequate accuracy or precision.
The procedures are written with the understanding that heavy-duty highway manufacturers have, and need to have, single-roll electric dynamometers for testing.  We are aware that this is not the case for other applications, such as all-terrain vehicles.  We are not adopting specific provisions for testing with hydrokinetic dynamometers, we are already including a provision acknowledging that we may approve the use of dynamometers meeting alternative specifications if that is appropriate for the type of vehicle being tested and for the level of stringency represented by the corresponding emission standards.
Drafting a full set of test specifications highlights the mixed use of units for testing.  Some chassis-based standards and procedures are written based largely on the International System of Units (SI), such as gram per kilometer (g/km) standards and kilometers per hour (kph) driving, while others are written based largely on English units (g/mile standards and miles per hour driving).  The proposal includes a mix of SI and English units with instructions about converting units appropriately.  However, most of the specifications and examples are written in English units.  While this seems to be the prevailing practice for testing in the United States, we understand that vehicle testing outside the United States is almost universally done in SI units.  In any case, dynamometers are produced with the capability of operating in either English or SI units.  We believe there would be a substantial advantage toward the goal of achieving globally harmonized test procedures if we would write the test procedures based on SI units.  This would also in several cases allow for more straightforward calculations, and reduced risk of rounding errors.  For comparison, part 1065 is written almost exclusively in SI units.  We sought comment on the use of units throughout part 1066.  At this time we are not finalizing changes from our current approach.
A fundamental obstacle toward using SI units is the fact that some duty cycles are specified based on speeds in miles per hour.  To address this, it would be appropriate to convert the applicable driving schedules to meter-per-second (m/s) values.  Converting speeds to the nearest 0.01 m/s would ensure that the prescribed driving cycle does not change with respect to driving schedules that are specified to the nearest 0.1 mph.  The regulations would include the appropriate mph (or kph) speeds to allow for a ready understanding of speed values (see 40 CFR part 1037, Appendix I).  This would, for example, allow for drivers to continue to follow a mph-based speed trace.  The +-2 mph tolerance on driving speeds could be converted to +-1.0 m/s, which corresponds to an effective speed tolerance of +-2.2 mph.  This may involve a tightening or loosening of the existing speed tolerance, depending on whether manufacturers used the full degree of flexibility allowed for a mph tolerance value that is specified without a decimal place.  Similarly, the Cruise cycles for heavy-duty vehicles could be specified as 24.5+-0.5 m/s (54.8+-1.1 mph) and 29.0+-0.5 m/s (64.9+-1.1 mph).

 Compliance Reports
	Early Model Year Data
Same as Tractors early model year data in Section V.D(4)(a).
Final Reports
Same as Tractors final reports in Section V.D(4)(b).
Additional Required Information 
Table V-5 below provides a summary of the types of requests, required application submission dates and the EPA and NHTSA regulations that apply.     

 -  
Table V-5: Summary of Required Information for Compliance
Submission
Applies to
Required Submissions Date
EPA Regulation Reference
NHTSA Regulation Reference
Small business exemptions
Vehicle or engine manufacturers meeting the Small Business Administration (SBA) size criteria of a small business as described in 13 CFR 121.201.
Before introducing any  excluded vehicle into U.S. commerce
§1037.150 
§535.8
Incentives for early introduction
The provisions apply with respect to tractors and vocational vehicles produced in model years before 2014  
EPA must be notified before the manufacturer submits it applications for certificates of conformity
§1037.150 
§535.8
Air condition leakage exemption for vocational vehicles
Vocational Vehicles excluded from § 1037.115 
EPA must be notified before the manufacturer submits it applications for certificates of conformity
§1037.150 
§535.8
Model year 2014 N2O standards.  
Manufacturers that choose to show compliance with the MY 2014 N2O standards requesting to use an engineering analysis
EPA must be notified before the manufacturer submits it applications for certificates of conformity
§1037.150 
§535.8
Exemption for electric vehicles
All electric vehicles are deemed to have zero emissions of CO2, CH4, and N2O
End of December prior to model year
§1037.150 
§535.8
Off-road exemption
Manufacturers wanting to exclude vocational vehicles from vehicle standards
EPA must be notified before the manufacturer submits it applications for certificates of conformity
§1037.150 
§535.8
Exemption from EOY reports
Manufactures with surplus credits at the end of the model year
90-days after the calendar year ends
§1037.730
§535.8

Penalties
Overview
In the NPRM, NHTSA proposed to assess civil penalties for non-compliance with fuel consumption standards.  NHTSA's authority under EISA, as codified at 49 U.S.C. 32902(k), requires the agency to determine appropriate measurement metrics, test procedures, standards, and compliance and enforcement protocols for HD vehicles.  NHTSA interprets its authority to develop an enforcement program to include the authority to determine and assess civil penalties for noncompliance that would impose penalties based on the following discussions. 
In cases of noncompliance, the agency explained in the NPRM that it would establish civil penalties based on consideration of the following factors:
         Gravity of the violation
         Size of the violator's business
         Violator's history of compliance with applicable fuel consumption standards
         Actual fuel consumption performance related to the applicable standard
         Estimated cost to comply with the regulation and applicable standard
         Quantity of vehicles or engines not complying
         Civil penalties paid under CAA Section 205 (42 U.S.C. 7524) for non-compliance for the same vehicles or engines
 
NHTSA proposed to consider these factors in determining civil penalties in order to help ensure, given the agency's wide discretion, that penalties would be fair and appropriate, and not duplicative of EPA penalties.  The NPRM expressly stated that neither agency intended to impose duplicative civil penalties, and that both agencies would give consideration to civil penalties imposed by the other in the case of non-compliance with its own regulations.  NPRM at 74280.  
EMA, Volvo, the Truck Renting and Leasing Association (TRALA), and Navistar nevertheless commented that a dual enforcement scheme with separate NHTSA and EPA penalties could result in duplicative penalties, as manufacturers could be assessed penalties twice for the same violation. 
The possibility of more than one prosecution or enforcement action arising from the same overall body of facts does not present a novel issue.  It commonly arises where there is overlapping jurisdiction, such as where the federal government and a state government have jurisdiction.  The issue of multiple or sequential prosecutions may be addressed as a matter of administrative policy and discretion.  
Both NHTSA and EPA are charged with regulating medium-duty and heavy-duty trucks.  NHTSA regulates them under EISA and EPA regulates them under the CAA.  Both agencies have compliance review and enforcement responsibilities.  The same body of evidence may establish a violation of EISA and a violation of the CAA.  A manufacturer that violates both EISA and the CAA will be considered to have committed two distinct violations, and may not claim immunity from one simply because it has been subject to an enforcement action under another.  NHTSA will address the concern about multiple enforcement actions both when considering initiating an action and when stating its penalty demand.  Before initiating an action, NHTSA will check with EPA to see if EPA has filed an action.  If EPA has filed an action, NHTSA ordinarily will not file an action.  There are two exceptions.  The first is if the EPA action has become bogged down by the manufacturer and NHTSA faces a statute of limitations.  The second is if, for whatever reason, the EPA action did not result in the payment of what NHTSA views as appropriate penalties to the Treasury.  If a manufacturer has paid a penalty in an EPA action, and NHTSA decides to pursue an action, in that action, NHTSA will offset the payment to the Treasury in an EPA action from NHTSA's penalty demand.
NHTSA believes that the above description adequately describes the process by which civil penalties may be assessed by both agencies.  Therefore, for the final rule, penalties will be based on the gravity of the violation, the size of the violator's business, the violator's history of compliance with applicable fuel consumption standards, the actual fuel consumption performance related to the applicable standard, the estimated cost to comply with the regulation and applicable standard, and the quantity of vehicles or engines not complying.  The collaborative enforcement process will ensure that the total penalties assessed will not be duplicative or excessive.  
NHTSA would also like to clarify that the "estimated cost to comply with the regulation and applicable standard," will be used to ensure that penalties for non-compliance will not be less than the cost of compliance.  It would be contrary to the purpose of the regulation for the penalty scheme to incentivize noncompliance.  
The final civil penalty amount NHTSA could impose would not exceed the limit that EPA is authorized to impose under the CAA.  The potential maximum civil penalty for a manufacturer would be calculated as follows in Equation V-1:
Equation V-1: Aggregate Maximum Civil Penalty
Aggregate Maximum Civil Penalty for a Non-Compliant Regulatory Category = (CAA Limit) x (production volume within the regulatory category)
EPA has occasionally in the past conducted rulemakings to provide for nonconformance penalties-- monetary penalties that allow a manufacturer to sell engines or vehicles that do not meet an emissions standard.  Nonconformance penalties are authorized for heavy-duty engines and vehicles under section 206(g) of the CAA.  Three basic criteria have been established by rulemaking for determining the eligibility of emissions standards for nonconformance penalties in any given model year: (1) the emissions standard in question must become more difficult to meet, (2) substantial work must be required in order to meet the standard, and (3) a technological laggard must be likely to develop (40 CFR 86.1103-87). A technological laggard is a manufacturer who cannot meet a particular emissions standard due to technological (not economic) difficulties and who, in the absence of nonconformance penalties, might be forced from the marketplace.  The process to determine if these criteria are met and to establish penalty amounts and conditions is carried out via rulemaking, as required by the CAA.  The CAA (in section 205) also lays out requirements for the assessment of civil penalties for noncompliance with emissions standards.
As discussed in detail in Section III, the agencies have determined that the final GHG and fuel consumption standards are readily feasible, and we do not believe a technological laggard will emerge in any sector covered by these final standards.  In addition to the standards being premised on use of already-existing, cost-effective technologies, there are a number of flexibilities and alternative standards built into the proposal.  However, we do request comment regarding this assessment and on whether or not it would be appropriate for EPA and NHTSA to initiate rulemaking activity to set nonconformance penalties for the final standards, subject to their respective statutory authorities.  Should nonconformance penalties be warranted, the benefits of establishing them would be threefold: (1) the EPA and NHTSA programs would continue to be equivalent, allowing manufacturers to sell the same vehicles and engines to satisfy both programs, (2) competitiveness in the affected HD sector would be maintained, preserving jobs and consumer choices, and (3) nonconformance penalties would be set through a transparent public process, involving notice and public hearing.
      (1) NHTSA's Penalty Process
NHTSA proposed a detailed enforcement process in the NPRM.  As proposed, enforcement would begin with a notice of violation, after which the respondent may either pay the penalty proposed in the notice of violation or dispute it by requesting an agency hearing.  For a party that did not pay the proposed penalty or request a hearing within 30 days of the notice of violation, a finding of default would be entered and the penalty set forth in the notice of violation assessed.  If a hearing is timely requested, the respondent would receive written notice of the time, date and location of the hearing.  The respondent would have the right to counsel and to examine, respond to and rebut evidence presented by the Chief Counsel.  If civil penalties greater than $250,000,000 were assessed in the Hearing Officer's final order, that order would contain a statement advising the party of the right to appeal to the NHTSA Administrator.  In the event of a timely appeal, the decision of the Administrator would be a final agency action.  This structure was intended to ensure that a party was afforded ample opportunity to be heard.
Several manufacturers commented that NHTSA's penalty procedures should be more formal than was proposed in the NPRM.  EMA, Volvo and Navistar commented that the penalty procedures should be subject to the Administrative Procedure Act (APA) review requirements.  EMA, Volvo and Navistar, and TRALA commented that the penalty procedures violated due process requirements.  EMA argued that NHTSA must expressly grant a right to judicial review, and EMA and Navistar argued that the absence of an administrative appeals process for penalties under $250,000,000 would violate due process. Volvo faulted NHTSA for not classifying the hearing officer's decision as a final agency action, and stated that specifications regarding who could be a hearing officer should align with those specified for the light-duty program, which was laid out in 49 CFR Section 511.3.  
As noted in the NPRM, the APA administrative hearing requirements of Sections 554, 556, and 557 are not required where formal procedures are not required by statute (generally, the organic statute must provide that the administrative proceeding must be an adjudication, determined on the record after the opportunity for an agency hearing, sometimes referenced as an opportunity for hearing on the record).  See e.g., 5 U.S.C. Section 554.  Where a formal adjudication is not required by statute, in general, agencies adopt and apply informal processes.  While the compliance, civil penalty and appeals provisions of 49 U.S.C. Sections 32911 and 32914 require formal adjudication in accordance with APA requirements, those sections only apply to the light-duty fuel economy program.  In contrast, for the heavy-duty program of Section 32902(k), the Congress did not require formal adjudication in accordance with the APA.  Therefore, informal adjudication procedures may be applied. NHTSA will not adopt the procedures of by 5 U.S.C. Sections 554, 556, or 557 for the final rule.
While the APA requirements for formal hearing procedures do not apply to NHTSA's enforcement under Section 32902(k), due process requirements do apply.  NHTSA believes that formal procedures are neither required by statute nor necessary for this enforcement process to meet due process requirements.  NHTSA expects that the cases will not be complex.  In general, there will be one or two issues:  (1) compliance with the regulations and, if not, (2) the appropriate civil penalty.  Compliance likely will involve narrow technical questions under the regulations being adopted today.  Non-compliance with applicable fuel consumption standards will be determined by utilizing the certified and reported CO2 emissions and fuel consumption data provided byEPA as described in this part, and after considering all the flexibilities available under Section 535.7.  Much of the evidence will be materials developed by the respondent.  There likely will not be wide ranging issues.  The parties will have ample opportunity to present their positions.  A hearing officer can readily address the sorts of questions that are likely to arise.  Second, if there is a noncompliance, there will be the question of the appropriate penalty.  NHTSA's regulations contain factors to be considered in assessing penalties.  Again, the parties will have ample opportunity to present their positions.  Ultimately, the agency's final decision must be sufficiently reasoned to withstand judicial review, based on the arbitrary and capricious standard.
To address commenters' concerns about the process provided, NHTSA made several adjustments and clarifications in the final rule.  The final rule provides that there will be a written decision of the Hearing Officer, and the assessment of a civil penalty by a hearing officer shall be set forth in an accompanying final order.  Together, these constitute the final agency action.  NHTSA has also revisited the minimum penalty level for an administrative appeal to the NHTSA Administrator and decided to lower the level significantly, to $1,000,000.  This provides a second level of review.  NHTSA believes this will promote an efficient use of administrative remedies and a further opportunity to be heard at the administrative level. Of course, if a party files an appeal with the NHTSA Administrator, the Hearing Officer's decision and order at that juncture shall no longer be final agency action.   
NHTSA has considered the specifications of the Hearing Officer and determined that they are adequate for informal agency hearings of this nature.  However, the agency will add a clarification to the final rule that specifies that the Hearing Officer will be appointed by the Administrator.  Further, in addition to having no prior connection with the case and no responsibility, direct or supervisory, for the investigation of cases referred for the assessment of civil penalties, the Hearing Officer will have no duties related to the light-duty fuel economy or medium- and heavy-duty fuel efficiency programs. 
NHTSA has also considered EMA's comment that a right to judicial review must be specified in the regulatory text.  The agency does not agree with this concern.  Parties, of course, cannot confer jurisdiction; only Congress can do so.  Whitman v. Department of Transportation, 547 U.S. 512, 514 (2006);  Weinberger v. Bentex Pharmaceuticals, Inc., 412 U.S. 645, 652 (1973).  Moreover, judicial review of a final agency action is presumed. United States v. Fausto, 484 U.S. 439, 452 (1998), citing Abbot Laboratories v. Gardner, 387 U.S. 136, 140 (1967).  See generally, 28 U.S.C. Section 1331. Therefore, NHTSA has determined that the right to judicial review does not need to be specified in the regulatory text.
How Will This Program Impact Fuel Consumption, GHG Emissions, and Climate Change?
What Methodologies Did the Agencies Use to Project GHG Emissions and Fuel Consumption Impacts?
EPA and NHTSA used EPA's official mobile source emissions inventory model named Motor Vehicle Emissions Simulator (MOVES2010), to estimate emission and fuel consumption impacts of these final rules.  MOVES has capability to take in user inputs to modify default data to better estimate emissions for different scenarios, such as different regulatory alternatives, state implementation plans (SIPs), geographic locations, vehicle activity, and microscale projects.  
The agencies performed multiple MOVES runs to establish reference case and control case emission inventories and fuel consumption values.  The agencies ran MOVES with user input databases that reflected characteristics of the final rules, such as emissions improvements and recent sales projections. Some post-processing of the model output was required to ensure proper results.  The agencies ran MOVES for non-GHGs, CO2, CH4, and N2O for calendar years 2005, 2018, 2030, and 2050.  Additional runs were performed for just the three greenhouse gases and for fuel consumption for every calendar year from 2014 to 2050, inclusive, which fed the economy-wide modeling, monetized greenhouse gas benefits estimation, and climate impacts analysis.
The agencies also used MOVES to estimate emissions and fuel consumption impacts for the other alternatives considered and described in Section IX.
MOVES Analysis
Inputs and Assumptions
The analysis performed for the final action mirrors what was done for the proposal.  The methods and models are the same, with differences lying primarily in the inputs, as a result of updates in the program, standards, and baseline data.
Reference run updates
Since MOVES2010a vehicle sales and activity data were developed from AEO2009, EPA first updated these data using sales and activity estimates from AEO2011.  .  MOVES2010a defaults were used for all other parameters to estimate the reference case emissions inventories.  
Control Run Updates
EPA developed additional user input data for MOVES runs to estimate control case inventories.  To account for improvements of engine and vehicle efficiency, EPA developed several user inputs to run the control case in MOVES.  As explained at proposal, since MOVES does not operate based on Heavy-duty FTP cycle results, EPA used the percent reduction in engine CO2 emissions expected due to the final rules to develop energy inputs for the control case runs.  75 FR at 74280.  Also, EPA used the percent reduction in aerodynamic drag and tire rolling resistance coefficients and reduction in average total running weight (gross combined weight) expected from the final rules to develop road load input for the control case.  The fuel supply update used in the reference case was used in the control case.  Details of all the MOVES runs, input data tables, and post-processing are available in the docket (EPA-HQ-OAR-2010-0162).
Table VI-1 and Table VI-2 describe the estimated expected reductions from these final rules, which were input into MOVES for estimating control case emissions inventories.
Table VI-1: Estimated Reductions in Engine CO2 -  Emission Rates
GVWR Class
Fuel
Model Years
CO2 Reduction from 2010 MY
HHD (8a-8b)
Diesel
2014-2016
3%

2017+
6%
MHD (6-7) and LHD 4-5
Diesel
2014-2016
5%

2017+
9%

Gasoline
2016+
5%

Table VI-2: Estimated Reductions in Rolling Resistance Coefficient, Aerodynamic Drag Coefficient, and Gross Combined Weight
TRUCK TYPE
REDUCTION IN TIRE ROLLING RESISTANCE COEFFICIENT FROM BASELINE
REDUCTION IN AERODYNAMIC DRAG COEFFICIENT FROM BASELINE
WEIGHT REDUCTION (LBS.)
Combination long-haul
9.6%
12.1%
400 
Combination short-haul
7.0%
5.9%
321
Straight trucks, refuse trucks, motor homes, transit buses, and other vocational vehicles
10.0%
0%
0
Since nearly all HD pickup trucks and vans will be certified on a chassis dynamometer, the CO2 reductions for these vehicles will not be represented as engine and road load reduction components, but total vehicle CO2 reductions.  These estimated reductions are described in Table VI-3.
Table VI-3: Estimated Total Vehicle CO2 Reductions for HD Pickup Trucks and Vans
GVWR Class
Fuel
Model year
CO2 Reduction from Baseline
HD Pickup Trucks and Vans
Gasoline
2014
1.5%

2015
2%

2016
4%

2017
6%

2018+
10%

Diesel
2014
2.3%

2015
3%

2016
6%

2017
9%

2018+
15%

What Are the Projected Reductions in Fuel Consumption and GHG Emissions?
EPA and NHTSA expect significant reductions in GHG emissions and fuel consumption from these final rules  -  emission reductions from both downstream (tailpipe) and upstream (fuel production and distribution) sources, and fuel consumption reductions from more efficient vehicles.  Increased vehicle efficiency and reduced vehicle fuel consumption will also reduce GHG emissions from upstream sources.  The following subsections summarize the GHG emissions and fuel consumption reductions expected from these final rules.
Downstream (Tailpipe)
Consistent with the proposal, EPA used MOVES to estimate downstream GHG inventories from these final rules.  We expect reductions in CO2 from all heavy-duty vehicle categories.  The reductions come from engine and vehicle improvements.  EPA expects N2O emissions to increase very slightly because of a rebound in vehicle miles traveled (VMT) and because significant vehicle reductions are not expected from these final rules.  In the proposal, we did not account for differences in methane emissions from use of auxiliary power units (APUs) during extended idling from sleeper cab combination tractors.  After accounting for these differences, EPA expects methane emissions to decrease primarily due to differences in hydrocarbon emission characteristics between on-road diesel engines and APUs.  The amount of methane emitted as a fraction of total hydrocarbons is significantly less for APUs than for diesel engines equipped with diesel particulate filters.  Overall, downstream GHG emissions will be reduced significantly, and is described in the following subsections.  
For CO2 -  and fuel consumption, the total energy consumption "pollutant" was run in MOVES rather than CO2 itself.  The energy was converted to fuel consumption based on fuel heating values assumed in the Renewable Fuels Standard and used in the development of MOVES emission and energy rates.  These values are 117,250 kJ/gallon for E10 and 138,451 kJ/gallon for diesel.  To calculate CO - 2, the agencies assumed a CO2 content of 8,576 g/gallon for E10 and 10,180 g/gallon for diesel.  Table VI-4 shows the fleet-wide GHG reductions and fuel savings from reference case to control case through the lifetime of model year 2014 through 2018 heavy-duty vehicles.  Table VI-5 shows the downstream GHG emissions reductions and fuel savings in 2018, 2030, and 2050.  The analysis follows what was done for the proposal.  We did not receive comments indicating that this analysis was inappropriate or insufficient for estimating downstream emissions impacts of this program.

Table VI-4 Model Year 2014 through 2018 Lifetime GHG Reductions and Fuel Savings by Heavy-duty Truck Category 

Downstream GHG Reductions (MMT CO2eq)
Fuel Savings (billion gallons)
HD pickups/vans
18
1.9
Vocational
27
2.7
Combination short-haul (Day cabs)
50
4.9
Combination long-haul (Sleeper cabs)
135
12.9

Table VI-5: Annual Downstream GHG Emissions Reductions and Fuel Savings in 2018, 2030, and 2050

Downstream GHG Reductions (MMT CO2eq)
Diesel Savings (million gallons)
Gasoline Savings (million gallons)
2018
23
2,146
60
2030
62
5,729
355
2050
90
8,428
531

Upstream (Fuel Production and Distribution)
Using the same approach as used in the NPRM, the upstream GHG emission reductions associated with the production and distribution of fuel were projected using emission factors from DOE's "Greenhouse Gases, Regulated Emissions, and Energy Use in Transportation" (GREET1.8) model, with some modifications consistent with the MY 2012-2016 Light-Duty Vehicle rulemaking. More information regarding these modifications can be found in the RIA Chapter 5. These estimates include both international and domestic emission reductions, since reductions in foreign exports of finished gasoline and/or crude make up a significant share of the fuel savings resulting from the GHG standards.  Thus, significant portions of the upstream GHG emission reductions will occur outside of the United States; a breakdown and discussion of projected international versus domestic reductions is included in the RIA Chapter 5. GHG emission reductions from upstream sources can be found in Table VI-6.
Table VI-6: Annual Upstream GHG Emissions Reductions in 2018, 2030, and 2050

CO2 (MMT)
CH4 (MMT CO2eq)
N2O (MMT CO2eq)
Total GHG (MMT CO2eq)
2018
5.1
0.9
0.02
6.0
2030
12.4
1.9
0.06
14.3
2050
16.4
2.5
0.08
19.0

HFC Emissions
Based on projected HFC emission reductions due to the final AC leakage standards, EPA estimates the HFC reductions to be 122,338 metric tons of CO2eq in 2018, 436,483 metric tons of CO2eq emissions in 2030 and 596,396 metric tons CO2eq in 2050, as detailed in RIA Chapter 5.3.4.
Total (Upstream + Downstream + HFC)
Table VI-7 combines downstream results from Table VI-5, upstream results Table VI-6, and HFC results to show total GHG reductions for calendar years 2018, 2030, and 2050.
Table VI-7: Annual Total GHG Emissions Reductions in 2018, 2030, and 2050

GHG Reductions (MMT CO2eq)
2018
29
2030
77
2050
109

Overview of Climate Change Impacts from GHG Emissions
Once emitted, GHGs that are the subject of this regulation can remain in the atmosphere for decades to millenia, meaning that 1) their concentrations become well-mixed throughout the global atmosphere regardless of emission origin, and 2) their effects on climate are long lasting. GHG emissions come mainly from the combustion of fossil fuels (coal, oil, and gas), with additional contributions from the clearing of forests and agricultural activities. Transportation activities, in aggregate, are the second largest contributor to total U.S. GHG emissions (27 percent) despite a decline in emissions from this sector during 2008. 
This section provides a summary of observed and projected changes in GHG emissions and associated climate change impacts. The source document for the section below is the Technical Support Document (TSD) for EPA's Endangerment and Cause or Contribute Findings Under the Clean Air Act (74 FR  66496, December 15, 2009). Below is the Executive Summary of the TSD which provides technical support for the endangerment and cause or contribute analyses concerning GHG emissions under section 202(a) of the CAA.  The TSD reviews observed and projected changes in climate based on current and projected atmospheric GHG concentrations and emissions, as well as the related impacts and risks from climate change that are projected in the absence of GHG mitigation actions, including this program and other U.S. and global actions. The TSD was updated and revised based on expert technical review and public comment as part of EPA's rulemaking process for the final Endangerment Findings.  The key findings synthesized here and the information throughout the TSD are primarily drawn from the assessment reports of the Intergovernmental Panel on Climate Change (IPCC), the U.S. Climate Change Science Program (CCSP), the U.S. Global Change Research Program (USGCRP), and NRC.
In May 2010, the NRC published its comprehensive assessment, "Advancing the Science of Climate Change."  It concluded that "climate change is occurring, is caused largely by human activities, and poses significant risks for -- and in many cases is already affecting -- a broad range of human and natural systems."  Furthermore, the NRC stated that this conclusion is based on findings that are "consistent with the conclusions of recent assessments by the U.S. Global Change Research Program, the Intergovernmental Panel on Climate Change's Fourth Assessment Report, and other assessments of the state of scientific knowledge on climate change."  These are the same assessments that served as the primary scientific references underlying the Administrator's Endangerment Finding.  Importantly, this recent NRC assessment represents another independent and critical inquiry of the state of climate change science, separate and apart from the previous IPCC and USGCRP assessments.  The NRC assessment is a clear affirmation that the scientific underpinnings of the Administrator's Endangerment Finding are robust, credible, and appropriately characterized by EPA.
Observed Trends in Greenhouse Gas Emissions and Concentrations
The primary long-lived GHGs directly emitted by human activities include CO2, CH4, N2O, HFCs, PFCs, and SF6.  Greenhouse gases have a warming effect by trapping heat in the atmosphere that would otherwise escape to space. In 2007, U.S. GHG emissions were 7,150 teragrams of CO2 equivalent (TgCO2eq).  The dominant gas emitted is CO2, mostly from fossil fuel combustion.  Methane is the second largest component of U.S. emissions, followed by N2O and the fluorinated gases (HFCs, PFCs, and SF6).  Electricity generation is the largest emitting sector (34% of total U.S. GHG emissions), followed by transportation (27%) and industry (19%).  
Transportation sources under section 202(a) of the CAA (passenger cars, light-duty trucks, other trucks and buses, motorcycles, and passenger cooling) emitted 1,649 TgCO2eq in 2007, representing 23% of total U.S. GHG emissions. U.S. transportation sources under section 202(a) made up 4.3% of total global GHG emissions in 2005, which, in addition to the United States as a whole, ranked only behind total GHG emissions from China, Russia, and India but ahead of Japan, Brazil, Germany, and the rest of the world's countries.  In 2005, total U.S. GHG emissions were responsible for 18% of global emissions, ranking only behind China, which was responsible for 19% of global GHG emissions. The scope of this final action focuses on GHG emissions under section 202(a) from heavy-duty source categories (see Section II).  
The global atmospheric CO2 concentration has increased about 38% from pre-industrial levels to 2009, and almost all of the increase is due to anthropogenic emissions.  The global atmospheric concentration of CH4 has increased by 149% since pre-industrial levels (through 2007); and the N2O concentration has increased by 23% (through 2007).  The observed concentration increase in these gases can also be attributed primarily to anthropogenic emissions. The industrial fluorinated gases, HFCs, PFCs, and SF6, have relatively low atmospheric concentrations but the total radiative forcing due to these gases is increasing rapidly; these gases are almost entirely anthropogenic in origin.  
Historic data show that current atmospheric concentrations of the two most important directly emitted, long-lived GHGs (CO2 and CH4) are well above the natural range of atmospheric concentrations compared to at least the last 650,000 years.  Atmospheric GHG concentrations have been increasing because anthropogenic emissions have been outpacing the rate at which GHGs are removed from the atmosphere by natural processes over timescales of decades to centuries.
Observed Effects Associated With Global Elevated Concentrations of GHGs
Greenhouse gases, at current (and projected) atmospheric concentrations, remain well below published exposure thresholds for any direct adverse health effects and are not expected to pose exposure risks (i.e., from breathing/inhalation).
The global average net effect of the increase in atmospheric GHG concentrations, plus other human activities (e.g., land-use change and aerosol emissions), on the global energy balance since 1750 has been one of warming.  This total net heating effect, referred to as forcing, is estimated to be +1.6 (+0.6 to +2.4) watts per square meter (W/m[2]), with much of the range surrounding this estimate due to uncertainties about the cooling and warming effects of aerosols.  However, as aerosol forcing has more regional variability than the well-mixed, long-lived GHGs, the global average might not capture some regional effects. The combined radiative forcing due to the cumulative (i.e., 1750 to 2005) increase in atmospheric concentrations of CO2, CH4, and N2O is estimated to be +2.30 (+2.07 to +2.53) W/m[2].  The rate of increase in positive radiative forcing due to these three GHGs during the industrial era is very likely to have been unprecedented in more than 10,000 years.
Warming of the climate system is unequivocal, as is now evident from observations of increases in global average air and ocean temperatures, widespread melting of snow and ice, and rising global average sea level.  Global mean surface temperatures have risen by 1.3 +- 0.32F (0.74°C +- 0.18C) over the last 100 years.  Nine of the 10 warmest years on record have occurred since 2001.  Global mean surface temperature was higher during the last few decades of the 20th century than during any comparable period during the preceding four centuries.  
Most of the observed increase in global average temperatures since the mid-20th century is very likely due to the observed increase in anthropogenic GHG concentrations.  Climate model simulations suggest natural forcing alone (i.e., changes in solar irradiance) cannot explain the observed warming.  
U.S. temperatures also warmed during the 20[th] and into the 21[st] century; temperatures are now approximately 1.3°F (0.7°C) warmer than at the start of the 20[th] century, with an increased rate of warming over the past 30 years.  Both the IPCC and the CCSP reports attributed recent North American warming to elevated GHG concentrations.  In the CCSP (2008) report, the authors find that for North America, "more than half of this warming [for the period 1951-2006] is likely the result of human-caused greenhouse gas forcing of climate change."  
Observations show that changes are occurring in the amount, intensity, frequency and type of precipitation.  Over the contiguous United States, total annual precipitation increased by 6.1% from 1901 to 2008.  It is likely that there have been increases in the number of heavy precipitation events within many land regions, even in those where there has been a reduction in total precipitation amount, consistent with a warming climate.
There is strong evidence that global sea level gradually rose in the 20[th] century and is currently rising at an increased rate.  It is not clear whether the increasing rate of sea level rise is a reflection of short-term variability or an increase in the longer-term trend.  Nearly all of the Atlantic Ocean shows sea level rise during the last 50 years with the rate of rise reaching a maximum (over 2 millimeters [mm] per year) in a band along the U.S. east coast running east-northeast.
Satellite data since 1979 show that annual average Arctic sea ice extent has shrunk by 4.1% per decade.  The size and speed of recent Arctic summer sea ice loss is highly anomalous relative to the previous few thousands of years.
Widespread changes in extreme temperatures have been observed in the last 50 years across all world regions, including the United States.  Cold days, cold nights, and frost have become less frequent, while hot days, hot nights, and heat waves have become more frequent.
Observational evidence from all continents and most oceans shows that many natural systems are being affected by regional climate changes, particularly temperature increases.  However, directly attributing specific regional changes in climate to emissions of GHGs from human activities is difficult, especially for precipitation.
Ocean CO2 uptake has lowered the average ocean pH (increased acidity) level by approximately 0.1 since 1750.  Consequences for marine ecosystems can include reduced calcification by shell-forming organisms, and in the longer term, the dissolution of carbonate sediments.
Observations show that climate change is currently affecting U.S. physical and biological systems in significant ways. The consistency of these observed changes in physical and biological systems and the observed significant warming likely cannot be explained entirely due to natural variability or other confounding non-climate factors.
Projections of Future Climate Change with Continued Increases in Elevated GHG Concentrations
Most future scenarios that assume no explicit GHG mitigation actions (beyond those already enacted) project increasing global GHG emissions over the century, with climbing GHG concentrations.  Carbon dioxide is expected to remain the dominant anthropogenic GHG over the course of the 21[st] century.  The radiative forcing associated with the non-CO2 GHGs is still significant and increasing over time. 
Future warming over the course of the 21[st] century, even under scenarios of low-emission growth, is very likely to be greater than observed warming over the past century.  According to climate model simulations summarized by the IPCC, through about 2030, the global warming rate is affected little by the choice of different future emissions scenarios.  By the end of the 21[st] century, projected average global warming (compared to average temperature around 1990) varies significantly depending on the emission scenario and climate sensitivity assumptions, ranging from 3.2 to 7.2F (1.8 to 4.0C), with an uncertainty range of 2.0 to 11.5F (1.1 to 6.4C).
All of the United States is very likely to warm during this century, and most areas of the United States are expected to warm by more than the global average.  The largest warming is projected to occur in winter over northern parts of Alaska.  In western, central and eastern regions of North America, the projected warming has less seasonal variation and is not as large, especially near the coast, consistent with less warming over the oceans.  
It is very likely that heat waves will become more intense, more frequent, and longer lasting in a future warm climate, whereas cold episodes are projected to decrease significantly.
Increases in the amount of precipitation are very likely in higher latitudes, while decreases are likely in most subtropical latitudes and the southwestern United States, continuing observed patterns. The mid-continental area is expected to experience drying during summer, indicating a greater risk of drought.  
Intensity of precipitation events is projected to increase in the United States and other regions of the world.  More intense precipitation is expected to increase the risk of flooding and result in greater runoff and erosion that has the potential for adverse water quality effects. 
It is likely that hurricanes will become more intense, with stronger peak winds and more heavy precipitation associated with ongoing increases of tropical sea surface temperatures.  Frequency changes in hurricanes are currently too uncertain for confident projections.
By the end of the century, global average sea level is projected by IPCC to rise between 7.1 and 23 inches (18 and 59 centimeter [cm]), relative to around 1990, in the absence of increased dynamic ice sheet loss. Recent rapid changes at the edges of the Greenland and West Antarctic ice sheets show acceleration of flow and thinning.  While an understanding of these ice sheet processes is incomplete, their inclusion in models would likely lead to increased sea level projections for the end of the 21[st] century. 
Sea ice extent is projected to shrink in the Arctic under all IPCC emissions scenarios.  
Projected Risks and Impacts Associated With Future Climate Change
Risk to society, ecosystems, and many natural Earth processes increase with increases in both the rate and magnitude of climate change.  Climate warming may increase the possibility of large, abrupt regional or global climatic events (e.g., disintegration of the Greenland Ice Sheet or collapse of the West Antarctic Ice Sheet).  The partial deglaciation of Greenland (and possibly West Antarctica) could be triggered by a sustained temperature increase of 2 to 7F (1 to 4ºC) above 1990 levels. Such warming would cause a 13 to 20 feet (4 to 6 meter) rise in sea level, which would occur over a time period of centuries to millennia. 
The CCSP reports that climate change has the potential to accentuate the disparities already evident in the American health care system, as many of the expected health effects are likely to fall disproportionately on the poor, the elderly, the disabled, and the uninsured.  The IPCC states with very high confidence that climate change impacts on human health in U.S. cities will be compounded by population growth and an aging population.  
Severe heat waves are projected to intensify in magnitude and duration over the portions of the United States where these events already occur, with potential increases in mortality and morbidity, especially among the elderly, young, and frail.  
Some reduction in the risk of death related to extreme cold is expected.  It is not clear whether reduced mortality from cold will be greater or less than increased heat-related mortality in the United States due to climate change.   
Increases in regional ozone pollution relative to ozone levels without climate change are expected due to higher temperatures and weaker circulation in the United States and other world cities relative to air quality levels without climate change.  Climate change is expected to increase regional ozone pollution, with associated risks in respiratory illnesses and premature death.  In addition to human health effects, tropospheric ozone has significant adverse effects on crop yields, pasture and forest growth, and species composition.  The directional effect of climate change on ambient particulate matter levels remains uncertain. 
Within settlements experiencing climate change, certain parts of the population may be especially vulnerable; these include the poor, the elderly, those already in poor health, the disabled, those living alone, and/or indigenous populations dependent on one or a few resources.  Thus, the potential impacts of climate change raise environmental justice issues.
The CCSP concludes that, with increased CO2 and temperature, the life cycle of grain and oilseed crops will likely progress more rapidly.  But, as temperature rises, these crops will increasingly begin to experience failure, especially if climate variability increases and precipitation lessens or becomes more variable.  Furthermore, the marketable yield of many horticultural crops (e.g., tomatoes, onions, fruits) is very likely to be more sensitive to climate change than grain and oilseed crops.
Higher temperatures will very likely reduce livestock production during the summer season in some areas, but these losses will very likely be partially offset by warmer temperatures during the winter season. 
Cold-water fisheries will likely be negatively affected; warm-water fisheries will generally benefit; and the results for cool-water fisheries will be mixed, with gains in the northern and losses in the southern portions of ranges.
Climate change has very likely increased the size and number of forest fires, insect outbreaks, and tree mortality in the interior West, the Southwest, and Alaska, and will continue to do so. Over North America, forest growth and productivity have been observed to increase since the middle of the 20[th] century, in part due to observed climate change.  Rising CO2 will very likely increase photosynthesis for forests, but the increased photosynthesis will likely only increase wood production in young forests on fertile soils.  The combined effects of expected increased temperature, CO2, nitrogen deposition, ozone, and forest disturbance on soil processes and soil carbon storage remain unclear.
Coastal communities and habitats will be increasingly stressed by climate change impacts interacting with development and pollution.  Sea level is rising along much of the U.S. coast, and the rate of change will very likely increase in the future, exacerbating the impacts of progressive inundation, storm-surge flooding, and shoreline erosion.  Storm impacts are likely to be more severe, especially along the Gulf and Atlantic coasts.  Salt marshes, other coastal habitats, and dependent species are threatened by sea level rise, fixed structures blocking landward migration, and changes in vegetation.  Population growth and rising value of infrastructure in coastal areas increases vulnerability to climate variability and future climate change.
Climate change will likely further constrain already over-allocated water resources in some regions of the United States, increasing competition among agricultural, municipal, industrial, and ecological uses.  Although water management practices in the United States are generally advanced, particularly in the West, the reliance on past conditions as the basis for current and future planning may no longer be appropriate, as climate change increasingly creates conditions well outside of historical observations. Rising temperatures will diminish snowpack and increase evaporation, affecting seasonal availability of water.  In the Great Lakes and major river systems, lower water levels are likely to exacerbate challenges relating to water quality, navigation, recreation, hydropower generation, water transfers, and binational relationships.  Decreased water supply and lower water levels are likely to exacerbate challenges relating to aquatic navigation in the United States.  
Higher water temperatures, increased precipitation intensity, and longer periods of low flows will exacerbate many forms of water pollution, potentially making attainment of water quality goals more difficult.  As waters become warmer, the aquatic life they now support will be replaced by other species better adapted to warmer water.  In the long term, warmer water and changing flow may result in deterioration of aquatic ecosystems.  
Ocean acidification is projected to continue, resulting in the reduced biological production of marine calcifiers, including corals. 
Climate change is likely to affect U.S. energy use and energy production and physical and institutional infrastructures.  It will also likely interact with and possibly exacerbate ongoing environmental change and environmental pressures in settlements, particularly in Alaska where indigenous communities are facing major environmental and cultural impacts. The U.S. energy sector, which relies heavily on water for hydropower and cooling capacity, may be adversely impacted by changes to water supply and quality in reservoirs and other water bodies. Water infrastructure, including drinking water and wastewater treatment plants, and sewer and stormwater management systems, will be at greater risk of flooding, sea level rise and storm surge, low flows, and other factors that could impair performance.
Disturbances such as wildfires and insect outbreaks are increasing in the United States and are likely to intensify in a warmer future with warmer winters, drier soils, and longer growing seasons.  Although recent climate trends have increased vegetation growth, continuing increases in disturbances are likely to limit carbon storage, facilitate invasive species, and disrupt ecosystem services.  
Over the 21[st] century, changes in climate will cause species to shift north and to higher elevations and fundamentally rearrange U.S. ecosystems.  Differential capacities for range shifts and constraints from development, habitat fragmentation, invasive species, and broken ecological connections will alter ecosystem structure, function, and services.
Present and Projected U.S. Regional Climate Change Impacts
Climate change impacts will vary in nature and magnitude across different regions of the United States.   
Sustained high summer temperatures, heat waves, and declining air quality are projected in the Northeast, Southeast, Southwest, and Midwest.  Projected climate change would continue to cause loss of sea ice, glacier retreat, permafrost thawing, and coastal erosion in Alaska. 
Reduced snowpack, earlier spring snowmelt, and increased likelihood of seasonal summer droughts are projected in the Northeast, Northwest, and Alaska.  More severe, sustained droughts and water scarcity are projected in the Southeast, Great Plains, and Southwest. 
The Southeast, Midwest, and Northwest in particular are expected to be impacted by an increased frequency of heavy downpours and greater flood risk.  
Ecosystems of the Southeast, Midwest, Great Plains, Southwest, Northwest, and Alaska are expected to experience altered distribution of native species (including local extinctions), more frequent and intense wildfires, and an increase in insect pest outbreaks and invasive species.  
Sea level rise is expected to increase storm surge height and strength, flooding, erosion, and wetland loss along the coasts, particularly in the Northeast, Southeast, and islands.  
Warmer water temperatures and ocean acidification are expected to degrade important aquatic resources of islands and coasts such as coral reefs and fisheries. 
A longer growing season, low levels of warming, and fertilization effects of carbon dioxide may benefit certain crop species and forests, particularly in the Northeast and Alaska.  Projected summer rainfall increases in the Pacific islands may augment limited freshwater supplies.  Cold-related mortality is projected to decrease, especially in the Southeast.  In the Midwest in particular, heating oil demand and snow-related traffic accidents are expected to decrease.
Climate change impacts in certain regions of the world may exacerbate problems that raise humanitarian, trade, and national security issues for the United States.  The IPCC identifies the most vulnerable world regions as the Arctic, because of the effects of high rates of projected warming on natural systems; Africa, especially the sub-Saharan region, because of current low adaptive capacity as well as climate change; small islands, due to high exposure of population and infrastructure to risk of sea level rise and increased storm surge; and Asian mega-deltas, such as the Ganges-Brahmaputra and the Zhujiang, due to large populations and high exposure to sea level rise, storm surge and river flooding.  Climate change has been described as a potential threat multiplier with regard to national security issues.
Changes in Atmospheric CO2 Concentrations, Global Mean Temperature, Sea Level Rise, and Ocean pH Associated with the Program's GHG Emissions Reductions
EPA examined the reductions in CO2 and other GHGs associated with this rulemaking and analyzed the projected effects on atmospheric CO2 concentrations, global mean surface temperature, sea level rise, and ocean pH which are common variables used as indicators of climate change. The analysis projects that the preferred alternative of this program will reduce atmospheric concentrations of CO2, global climate warming and sea level rise relative to the reference case. Although the projected reductions and improvements are small in comparison to the total projected climate change, they are quantifiable, directionally consistent, and will contribute to reducing the risks associated with climate change.    
EPA determines that the projected reductions in atmospheric CO2, global mean temperature and sea level rise are meaningful in the context of this final action.  In addition, EPA has conducted an analysis to evaluate the projected changes in ocean pH in the context of the changes in emissions from this rulemaking.  The results of the analysis demonstrate that relative to the reference case, projected atmospheric CO2 concentrations are estimated to be reduced by 0.691 to 0.787 part per million by volume (ppmv), global mean temperature is estimated to be reduced by 0.0017 to 0.0042°C, and sea-level rise is projected to be reduced by approximately 0.017-0.040 cm by 2100, based on a range of climate sensitivities. The analysis also demonstrates that ocean pH will increase by 0.0003 pH units by 2100 relative to the reference case.
Estimated Projected Reductions in Atmospheric CO2 Concentration, Global Mean Surface Temperatures, Sea Level Rise, and Ocean pH
EPA estimated changes in the atmospheric CO2 concentration, global mean temperature, and sea level rise out to 2100 resulting from the emissions reductions in this rulemaking using the GCAM (Global Change Assessment Model, formerly MiniCAM), integrated assessment model coupled with the Model for the Assessment of Greenhouse Gas Induced Climate Change (MAGICC, version 5.3v2). GCAM was used to create the globally and temporally consistent set of climate relevant variables required for running MAGICC.  MAGICC was then used to estimate the projected change in these variables over time. Given the magnitude of the estimated emissions reductions associated with this action, a simple climate model such as MAGICC is reasonable for estimating the atmospheric and climate response.  This widely-used, peer reviewed modeling tool was also used to project temperature and sea level rise under different emissions scenarios in the Third and Fourth Assessments of the IPCC. 
The integrated impact of the following pollutant and greenhouse gas emissions changes are considered: CO2, CH4, N2O, HFC-134a, NOX, CO2 and SO2, and volatile organic compounds (VOC).  For CO2, CH4, HFC-134a, and N2O an annual time-series of (upstream + downstream) emissions reductions estimated from the rulemaking were input directly. The GHG emissions reductions, from Section VI.C, were applied as net reductions to a global reference case (or baseline) emissions scenario in GCAM to generate an emissions scenario specific to this rulemaking.  For CO, VOCs, SO2, and NOX, emissions reductions were estimated for 2018, 2030, and 2050 (provided in Section VII.A). EPA then linearly scaled emissions reductions for these gases between a zero input value in 2013 and the value supplied for 2018 to produce the reductions for 2014-2018.  A similar scaling was used for 2019-2029 and 2031-2050.  The emissions reductions past 2050 for all gases were scaled with total U.S. road transportation fuel consumption from the GCAM reference scenario.  Road transport fuel consumption past 2050 does not change significantly and thus emissions reductions remain relatively constant from 2050 through 2100.  Specific details about the GCAM reference case scenario can be found in Chapter 8.4 of the RIA that accompanies this preamble.  
MAGICC calculates the forcing response at the global scale from changes in atmospheric concentrations of CO2, CH4, N2O, HFCs, and tropospheric ozone.  It also includes the effects of temperature changes on stratospheric ozone and the effects of CH4 emissions on stratospheric water vapor. Changes in CH4, NOx, VOC, and CO emissions affect both O3 concentrations and CH4 concentrations. MAGICC includes the relative climate forcing effects of changes in sulfate concentrations due to changing SO2 emissions, including both the direct effect of sulfate particles and the indirect effects related to cloud interactions. However, MAGICC does not calculate the effect of changes in concentrations of other aerosols such as nitrates, black carbon, or organic carbon, making the assumption that the sulfate cooling effect is a proxy for the sum of all the aerosol effects. Therefore, the climate effects of changes in PM2.5 emissions and precursors (besides SO2) which are presented in the RIA Chapter 5 were not included in the calculations in this chapter. MAGICC also calculates all climate effects at the global scale. This global scale captures the climate effects of the long-lived, well-mixed greenhouse gases, but does not address the fact that short-lived climate forcers such as aerosols and ozone can have effects that vary with location and timing of emissions. Black carbon in particular is known to cause a positive forcing or warming effect by absorbing incoming solar radiation, but there are uncertainties about the magnitude of that warming effect and the interaction of black carbon (and other co-emitted aerosol species) with clouds.  While black carbon is likely to be an important contributor to climate change, it would be premature to include quantification of black carbon climate impacts in an analysis of the final standards at this time.

Changes in atmospheric CO2 concentration, global mean temperature, and sea level rise for both the reference case and the emissions scenarios associated with this action were computed using MAGICC. To calculate the reductions in the atmospheric CO2 concentrations as well as in temperature and sea level resulting from this action, the output from the policy scenario associated with the preferred approach of this action was subtracted from an existing Global Change Assessment Model (GCAM, formerly MiniCAM) reference emission scenario. To capture some key uncertainties in the climate system with the MAGICC model, changes in atmospheric CO2, global mean temperature and sea level rise were projected across the most current IPCC range of climate sensitivities, from 1.5°C to 6.0°C.  This range reflects the uncertainty for equilibrium climate sensitivity for how much global mean temperature would rise if the concentration of carbon dioxide in the atmosphere were to double. The information for this range come from constraints from past climate change on various time scales, and the spread of results for climate sensitivity from ensembles of models.  Details about this modeling analysis can be found in the RIA Chapter 8.4. 
The results of this modeling, summarized in Table VI-8, show small, but quantifiable, reductions in atmospheric CO2 concentrations, projected global mean temperature and sea level resulting from this action, across all climate sensitivities. As a result of the emission reductions from the final standards for this action, relative to the reference case the atmospheric CO2 concentration is projected to be reduced by 0.691-0.787 ppmv, the global mean temperature is projected to be reduced by approximately 0.0017-0.0042°C by 2100, and global mean sea level rise is projected to be reduced by approximately 0.017-0.040 cm by 2100.  The range of reductions in global mean temperature and sea level rise is larger than that for CO2 concentrations because CO2 concentrations are only weakly coupled to climate sensitivity through the dependence on temperature of the rate of ocean absorption of CO2, whereas the magnitude of temperature change response to CO2 changes (and therefore sea level rise) is more tightly coupled to climate sensitivity in the MAGICC model. 
Table VI-8: Impact of GHG Emissions Reductions on Projected Changes in Global Climate Associated with the Final Rulemaking (Based on a range of climate sensitivities from 1.5-6°C)
Variable
Units
Year
Projected Change
Atmospheric CO2 Concentration
ppmv
2100
 -0.691 to -0.787
Global Mean Surface Temperature
º C
2100
-0.0017 to -0.0042
Sea Level Rise
cm
2100
-0.017 to -0.040
Ocean pH
pH units
2100
0.0003[a]
  Note:
  [a] The value for projected change in ocean pH is based on a climate sensitivity of 3.0.
The projected reductions are small relative to the change in temperature (1.8  -  4.8 ºC), sea level rise (27  -  51 cm), and ocean acidity (-0.30 pH units) from 1990 to 2100 from the MAGICC simulations for the GCAM reference case. However, this is to be expected given the magnitude of emissions reductions expected from the program in the context of global emissions. This uncertainty range does not include the effects of uncertainty in future emissions. It should also be noted that the calculations in MAGICC do not include the possible effects of accelerated ice flow in Greenland and/or Antarctica: the recent NRC report estimated a likely sea level increase for the A1B SRES scenario of 0.5 to 1.0 meters.  Further discussion of EPA's modeling analysis is found in the RIA, Chapter 8.
EPA used the Program CO2SYS, version 1.05 to estimate projected changes in ocean pH for tropical waters based on the atmospheric CO2 concentration change (reduction) resulting from this action.  The program performs calculations relating parameters of the CO2 system in seawater. EPA used the program to calculate ocean pH as a function of atmospheric CO2 concentrations, among other specified input conditions. Based on the projected atmospheric CO2 concentration reductions resulting from this action, the program calculates an increase in ocean pH of 0.0003 pH units in 2100 relative to the reference case (compared to a decrease of 0.3 pH units from 1990 to 2100 in the reference case). Thus, this analysis indicates the projected decrease in atmospheric CO2 concentrations from the program will result in an increase in ocean pH.  For additional validation, results were generated using different known constants from the literature.  A comprehensive discussion of the modeling analysis associated with ocean pH is provided in the RIA, Chapter 8.  
Program's Effect on Climate
As a substantial portion of CO2 emitted into the atmosphere is not removed by natural processes for millennia, each unit of CO2 not emitted into the atmosphere avoids essentially permanent climate change on centennial time scales.  Reductions in emissions in the near-term are important in determining long-term climate stabilization and associated impacts experienced not just over the next decades but in the coming centuries and millennia.  Though the magnitude of the avoided climate change projected here is small in comparison to the total projected changes, these reductions represent a reduction in the adverse risks associated with climate change (though these risks were not formally estimated for this action) across a range of equilibrium climate sensitivities.
EPA's analysis of the program's impact on global climate conditions is intended to quantify these potential reductions using the best available science.  EPA's modeling results show repeatable, consistent reductions relative to the reference case in changes of CO2 concentration, temperature, sea-level rise, and ocean pH over the next century.

How Will This Final Action Impact Non-GHG Emissions and Their Associated Effects?
Emissions Inventory Impacts
Upstream Impacts of the Program
Increasing efficiency in heavy-duty vehicles will result in reduced fuel demand and therefore reductions in the emissions associated with all processes involved in getting petroleum to the pump.  These projected upstream emission impacts on criteria pollutants are summarized in Table VII-1.  Table VII-2 shows the corresponding projected impacts on upstream air toxic emissions in 2030.  
Table VII-1: Overall estimated upstream impacts on criteria pollutants for calendar years 2018, 2030, and 2050 (short tons)
Calendar Year
NOX 
VOC
CO 
PM2.5 
2018
-6,475
-1,765
-2,217
-971
2030
-10,083
-4,430
-3,367
-1,394
2050
-14,243
-6,379
-4,785
-1,998

Table VII-2: Overall estimated upstream impacts on air toxics for calendar years 2018, 2030, and 2050 (short tons)
Calendar Year
Benzene
1,3-butadiene
Formaldehyde
Acetaldehyde
Acrolein
2018
-12
-0.6
-12
-1
-0.2
2030
-20
-0.9
-26
-3
-0.5
2050
-28
-1.2
-35
-5
-0.6

To project these impacts, EPA estimated the impact of reduced petroleum volumes on the extraction and transportation of crude oil as well as the production and distribution of finished gasoline and diesel. For the purpose of assessing domestic-only emission reductions it was necessary to estimate the fraction of fuel savings attributable to domestic finished gasoline and diesel, and of this fuel what fraction is produced from domestic crude. For this analysis EPA estimated that 50 percent of fuel savings is attributable to domestic finished gasoline and diesel and that 90 percent of this gasoline and diesel originated from imported crude. Emission factors for most upstream emission sources are based on the GREET1.8 model, developed by DOE's Argonne National Laboratory but in some cases the GREET values were modified or updated by EPA to be consistent with the National Emission Inventory. These updates are consistent with those used for the upstream analysis included in the Light-Duty GHG rulemaking. More information on the development of the emission factors used in this analysis can be found in RIA Chapter 5.
Downstream Impacts of the Program
While these final rules do not regulate non-GHG pollutants, EPA expects reductions in downstream emissions of most non-GHG pollutants.  These pollutants include NOX, SO2, VOC, CO, and PM.  The primary reason for this is the improvements in road load (aerodynamics and tire rolling resistance) under the program.  Another reason is that emissions from certain pollutants (e.g., SO2) are proportional to fuel consumption.  For vehicle types not affected by road load improvements, non-GHG emissions may increase very slightly due to VMT rebound.  EPA also anticipates the use of APUs in combination tractors for GHG reduction purposes during extended idling.  These units exhibit different non-GHG emissions characteristics compared to the on-road engines they would replace during extended idling.  EPA used MOVES to determine non-GHG emissions inventories for baseline and control cases.  Further information about the MOVES analysis is available in Section VI and RIA Chapter 5.  The improvements in road load, use of APUs, and VMT rebound were included in the MOVES runs and post-processing.  Table VII-3 summarizes the downstream criteria pollutant impacts of this program. Most of the impacts shown are through projected increased APU use.  Because APUs are required to meet much less stringent PM2.5 standards than on-road engines, the projected widespread use of APUs leads to higher PM2.5.  Table VII-4 summarizes the downstream air toxics impacts of this program.  
Table VII-3: Overall Estimated Downstream Impacts on Criteria Pollutants (short tons)
Calendar Year
Downstream NOX 
Downstream VOC
Downstream SO2
Downstream CO
Downstream PM2.5 [a]
2018
-107,273
-12,956

-25,629
808
2030
-235,400
-25,516

-52,242
1,760
2050
-326,975
-35,147

-72,099
2,456
Note:
[a] Positive number means emissions would increase from baseline to control case. PM2.5 from tire wear and brake wear is included. 

Table VII-4: Overall Estimated Downstream Impacts on Air Toxics (short tons)
Calendar Year
Benzene
1,3-butadiene
Formaldehyde
Acetaldehyde
Acrolein
2018
-158
-0.3
-2,853
-871
-120
2030
-341
0.4
-6,255
-1,908
-263
2050
-472
0.8
-8,689
-2,650
-365

Total Impacts of the Program
    As shown in Table VII-5 and Table VII-6, the agencies estimate that this program would result in reductions of NOX, VOC, CO, PM, and air toxics.  For NOX, VOC, and CO, much of the net reductions are realized through the use of APUs, which emit these pollutants at a lower rate than on-road engines during extended idle operation.  Additional reductions are achieved in all pollutants through reduced road load (improved aerodynamics and tire rolling resistance), which reduces the amount of work required to travel a given distance.  For SOX, downstream emissions are roughly proportional to fuel consumption; therefore a decrease is seen in both upstream and downstream sources. The downstream increase in PM2.5 due to APU use is mostly negated by upstream PM2.5 reductions, though our calculations show a slight net increase in 2030 and 2050.  
Table VII-5: Overall Estimated Total Impacts (Upstream Plus Downstream) on Criteria Pollutants Results are shown in both short tons and percent change from baseline to control case.
CY
                                      NOX
                                      VOC
                                      SO2
                                      CO
                                     PM2.5

short tons
%
short tons
%
short tons
%
short tons
%
short tons
%
2018
-113,748
-6.2
-14,721
-5.6

-27,846
-1.0
-163
-0.2
2030
-245,482
-21.0
-29,945
-16.0

-55,610
-2.1
366
1.1
2050
-341,218
-23.7
-41,526
-18.3

-76,883
-2.2
457
1.1

Table VII-6: Overall Estimated Total Impacts (Upstream Plus Downstream) Impacts on Air Toxics
CY
Benzene
1,3-butadiene
Formaldehyde
Acetaldehyde
Acrolein

short tons
%
short tons
%
short tons
%
short tons
%
short tons
%
2018
-170
-4.8
-0.9
-0.1
-2,865
-18.3
-873
-13.9
-120.0
-12.4
2030
-360
-15.0
-0.5
-0.1
-6,282
-46.2
-1,912
-40.2
-263.0
-40.0
2050
-500
-17.4
-0.4
-0.1
-8,725
-49.5
-2,655
-44.2
-365.4
-44.5

Health Effects of Non-GHG Pollutants
In this section we discuss health effects associated with exposure to some of the criteria and air toxic pollutants impacted by the final heavy-duty vehicle standards. 
Particulate Matter
Background
Particulate matter is a generic term for a broad class of chemically and physically diverse substances. It can be principally characterized as discrete particles that exist in the condensed (liquid or solid) phase spanning several orders of magnitude in size.  Since 1987, EPA has delineated that subset of inhalable particles small enough to penetrate to the thoracic region (including the tracheobronchial and alveolar regions) of the respiratory tract (referred to as thoracic particles). Current National Ambient Air Quality Standards (NAAQS) use PM2.5 as the indicator for fine particles (with PM2.5 referring to particles with a nominal mean aerodynamic diameter less than or equal to 2.5 um), and use PM10 as the indicator for purposes of regulating the coarse fraction of PM10 (referred to as thoracic coarse particles or coarse-fraction particles; generally including particles with a nominal mean aerodynamic diameter greater than 2.5 um and less than or equal to 10 um, or PM10-2.5).  Ultrafine particles are a subset of fine particles, generally less than 100 nanometers (0.1 μm) in aerodynamic diameter.  
Fine particles are produced primarily by combustion processes and by transformations of gaseous emissions (e.g., SOX, NOX, and VOC) in the atmosphere.  The chemical and physical properties of PM2.5 may vary greatly with time, region, meteorology, and source category.  Thus, PM2.5 may include a complex mixture of different pollutants including sulfates, nitrates, organic compounds, elemental carbon and metal compounds.  These particles can remain in the atmosphere for days to weeks and travel hundreds to thousands of kilometers.
Health Effects of PM
Scientific studies show ambient PM is associated with a series of adverse health effects.  These health effects are discussed in detail in EPA's Integrated Science Assessment for Particulate Matter (ISA).  Further discussion of health effects associated with PM can also be found in the RIA for this final action.  The ISA summarizes evidence associated with PM2.5, PM10-2.5, and ultrafine particles.
The ISA concludes that health effects associated with short-term exposures (hours to days) to ambient PM2.5 include mortality, cardiovascular effects, such as altered vasomotor function and hospital admissions and emergency department visits for ischemic heart disease and congestive heart failure, and respiratory effects, such as exacerbation of asthma symptoms in children and hospital admissions and emergency department visits for chronic obstructive pulmonary disease and respiratory infections.  The ISA notes that long-term exposure to PM2.5 (months to years) is associated with the development/progression of cardiovascular disease, premature mortality, and respiratory effects, including reduced lung function growth, increased respiratory symptoms, and asthma development.  The ISA concludes that the currently available scientific evidence from epidemiologic, controlled human exposure, and toxicological studies supports a causal association between short- and long-term exposures to PM2.5 and cardiovascular effects and mortality.  Furthermore, the ISA concludes that the collective evidence supports likely causal associations between short- and long-term PM2.5 exposures and respiratory effects.  The ISA also concludes that the scientific evidence is suggestive of a causal association for reproductive and developmental effects and cancer, mutagenicity, and genotoxicity and long-term exposure to PM2.5.
For PM10-2.5, the ISA concludes that the current evidence is suggestive of a causal relationship between short-term exposures and cardiovascular effects, such as hospitalization for ischemic heart disease.  There is also suggestive evidence of a causal relationship between short-term PM10-2.5 exposure and mortality and respiratory effects.  Data are inadequate to draw conclusions regarding the health effects associated with long-term exposure to PM10-2.5.
For ultrafine particles, the ISA concludes that there is suggestive evidence of a causal relationship between short-term exposures and cardiovascular effects, such as changes in heart rhythm and blood vessel function.  It also concludes that there is suggestive evidence of association between short-term exposure to ultrafine particles and respiratory effects. Data are inadequate to draw conclusions regarding the health effects associated with long-term exposure to ultrafine particles.
Ozone
Background
Ground-level ozone pollution is typically formed by the reaction of VOC and NOX in the lower atmosphere in the presence of sunlight.  These pollutants, often referred to as ozone precursors, are emitted by many types of pollution sources, such as highway and nonroad motor vehicles and engines, power plants, chemical plants, refineries, makers of consumer and commercial products, industrial facilities, and smaller area sources.
The science of ozone formation, transport, and accumulation is complex.  Ground-level ozone is produced and destroyed in a cyclical set of chemical reactions, many of which are sensitive to temperature and sunlight.  When ambient temperatures and sunlight levels remain high for several days and the air is relatively stagnant, ozone and its precursors can build up and result in more ozone than typically occurs on a single high-temperature day.  Ozone can be transported hundreds of miles downwind from precursor emissions, resulting in elevated ozone levels even in areas with low local VOC or NOX emissions.
Health Effects of Ozone
The health and welfare effects of ozone are well documented and are assessed in EPA's 2006 Air Quality Criteria Document and 2007 Staff Paper.[,]  People who are more susceptible to effects associated with exposure to ozone can include children, the elderly, and individuals with respiratory disease such as asthma.  Those with greater exposures to ozone, for instance due to time spent outdoors (e.g., children and outdoor workers), are of particular concern.  Ozone can irritate the respiratory system, causing coughing, throat irritation, and breathing discomfort.  Ozone can reduce lung function and cause pulmonary inflammation in healthy individuals.  Ozone can also aggravate asthma, leading to more asthma attacks that require medical attention and/or the use of additional medication.  Thus, ambient ozone may cause both healthy and asthmatic individuals to limit their outdoor activities.  In addition, there is suggestive evidence of a contribution of ozone to cardiovascular-related morbidity and highly suggestive evidence that short-term ozone exposure directly or indirectly contributes to non-accidental and cardiopulmonary-related mortality, but additional research is needed to clarify the underlying mechanisms causing these effects.  In a recent report on the estimation of ozone-related premature mortality published by NRC, a panel of experts and reviewers concluded that short-term exposure to ambient ozone is likely to contribute to premature deaths and that ozone-related mortality should be included in estimates of the health benefits of reducing ozone exposure.  Animal toxicological evidence indicates that with repeated exposure, ozone can inflame and damage the lining of the lungs, which may lead to permanent changes in lung tissue and irreversible reductions in lung function.  The respiratory effects observed in controlled human exposure studies and animal studies are coherent with the evidence from epidemiologic studies supporting a causal relationship between acute ambient ozone exposures and increased respiratory-related emergency room visits and hospitalizations in the warm season.  In addition, there is suggestive evidence of a contribution of ozone to cardiovascular-related morbidity and non-accidental and cardiopulmonary mortality.
Nitrogen Oxides and Sulfur Oxides
Background
Nitrogen dioxide (NO2) is a member of the NOX family of gases.  Most NO2 is formed in the air through the oxidation of nitric oxide (NO) emitted when fuel is burned at a high temperature.  SO2, a member of the sulfur oxide (SOX) family of gases, is formed from burning fuels containing sulfur (e.g., coal or oil derived), extracting gasoline from oil, or extracting metals from ore.  
SO2 and NO2 can dissolve in water droplets and further oxidize to form sulfuric and nitric acid which react with ammonia to form sulfates and nitrates, both of which are important components of ambient PM.  The health effects of ambient PM are discussed in Section VII. B. (1) (b) of this preamble.  NOX and NMHC are the two major precursors of ozone.  The health effects of ozone are covered in Section VII. B. (2) (b).
Health Effects of NO2
Information on the health effects of NO2 can be found in the EPA Integrated Science Assessment (ISA) for Nitrogen Oxides.  The EPA has concluded that the findings of epidemiologic, controlled human exposure, and animal toxicological studies provide evidence that is sufficient to infer a likely causal relationship between respiratory effects and short-term NO2 exposure. The ISA concludes that the strongest evidence for such a relationship comes from epidemiologic studies of respiratory effects including symptoms, emergency department visits, and hospital admissions.  The ISA also draws two broad conclusions regarding airway responsiveness following NO2 exposure.  First, the ISA concludes that NO2 exposure may enhance the sensitivity to allergen-induced decrements in lung function and increase the allergen-induced airway inflammatory response following 30-minute exposures of asthmatics to NO2 concentrations as low as 0.26 ppm.  In addition, small but significant increases in non-specific airway hyperresponsiveness were reported following 1-hour exposures of asthmatics to 0.1 ppm NO2.  Second, exposure to NO2 has been found to enhance the inherent responsiveness of the airway to subsequent nonspecific challenges in controlled human exposure studies of asthmatic subjects.  Enhanced airway responsiveness could have important clinical implications for asthmatics since transient increases in airway responsiveness following NO2 exposure have the potential to increase symptoms and worsen asthma control.  Together, the epidemiologic and experimental data sets form a plausible, consistent, and coherent description of a relationship between NO2 exposures and an array of adverse health effects that range from the onset of respiratory symptoms to hospital admission.  
Although the weight of evidence supporting a causal relationship is somewhat less certain than that associated with respiratory morbidity, NO2 has also been linked to other health endpoints.  These include all-cause (nonaccidental) mortality, hospital admissions or emergency department visits for cardiovascular disease, and decrements in lung function growth associated with chronic exposure.
Health Effects of SO2
Information on the health effects of SO2 can be found in the EPA Integrated Science Assessment for Sulfur Oxides.  SO2 has long been known to cause adverse respiratory health effects, particularly among individuals with asthma.  Other potentially sensitive groups include children and the elderly. During periods of elevated ventilation, asthmatics may experience symptomatic bronchoconstriction within minutes of exposure.  Following an extensive evaluation of health evidence from epidemiologic and laboratory studies, the EPA has concluded that there is a causal relationship between respiratory health effects and short-term exposure to SO2.  Separately, based on an evaluation of the epidemiologic evidence of associations between short-term exposure to SO2 and mortality, the EPA has concluded that the overall evidence is suggestive of a causal relationship between short-term exposure to SO2 and mortality.
Carbon Monoxide
Information on the health effects of CO can be found in the EPA Integrated Science Assessment (ISA) for Carbon Monoxide.  The ISA concludes that ambient concentrations of CO are associated with a number of adverse health effects.  This section provides a summary of the health effects associated with exposure to ambient concentrations of CO.  
Human clinical studies of subjects with coronary artery disease show a decrease in the time to onset of exercise-induced angina (chest pain) and electrocardiogram changes following CO exposure.  In addition, epidemiologic studies show associations between short-term CO exposure and cardiovascular morbidity, particularly increased emergency room visits and hospital admissions for coronary heart disease (including ischemic heart disease, myocardial infarction, and angina).  Some epidemiologic evidence is also available for increased hospital admissions and emergency room visits for congestive heart failure and cardiovascular disease as a whole.  The ISA concludes that a causal relationship is likely to exist between short-term exposures to CO and cardiovascular morbidity.  It also concludes that available data are inadequate to conclude that a causal relationship exists between long-term exposures to CO and cardiovascular morbidity.  
Animal studies show various neurological effects with in-utero CO exposure.  Controlled human exposure studies report inconsistent neural and behavioral effects following low-level CO exposures.  The ISA concludes the evidence is suggestive of a causal relationship with both short- and long-term exposure to CO and central nervous system effects.
A number of epidemiologic and animal toxicological studies cited in the ISA have evaluated associations between CO exposure and birth outcomes such as preterm birth or cardiac birth defects.  The epidemiologic studies provide limited evidence of a CO-induced effect on preterm births and birth defects, with weak evidence for a decrease in birth weight.  Animal toxicological studies have found associations between perinatal CO exposure and decrements in birth weight, as well as other developmental outcomes.  The ISA concludes these studies are suggestive of a causal relationship between long-term exposures to CO and developmental effects and birth outcomes.
Epidemiologic studies provide evidence of effects on respiratory morbidity such as changes in pulmonary function, respiratory symptoms, and hospital admissions associated with ambient CO concentrations.  A limited number of epidemiologic studies considered copollutants such as ozone, SO2, and PM in two-pollutant models and found that CO risk estimates were generally robust, although this limited evidence makes it difficult to disentangle effects attributed to CO itself from those of the larger complex air pollution mixture.  Controlled human exposure studies have not extensively evaluated the effect of CO on respiratory morbidity.  Animal studies at levels of 50-100 ppm CO show preliminary evidence of altered pulmonary vascular remodeling and oxidative injury.  The ISA concludes that the evidence is suggestive of a causal relationship between short-term CO exposure and respiratory morbidity, and inadequate to conclude that a causal relationship exists between long-term exposure and respiratory morbidity.  
Finally, the ISA concludes that the epidemiologic evidence is suggestive of a causal relationship between short-term exposures to CO and mortality.  Epidemiologic studies provide evidence of an association between short-term exposure to CO and mortality, but limited evidence is available to evaluate cause-specific mortality outcomes associated with CO exposure.  In addition, the attenuation of CO risk estimates which was often observed in copollutant models contributes to the uncertainty as to whether CO is acting alone or as an indicator for other combustion-related pollutants. The ISA also concludes that there is not likely to be a causal relationship between relevant long-term exposures to CO and mortality.
Air Toxics
Heavy-duty vehicle emissions contribute to ambient levels of air toxics known or suspected as human or animal carcinogens, or that have noncancer health effects.  The population experiences an elevated risk of cancer and other noncancer health effects from exposure to the class of pollutants known collectively as "air toxics."  These compounds include, but are not limited to, benzene, 1,3-butadiene, formaldehyde, acetaldehyde, acrolein, diesel particulate matter and exhaust organic gases, polycyclic organic matter, and naphthalene.  These compounds were identified as national or regional risk drivers or contributors in the 2005 National-scale Air Toxics Assessment and have significant inventory contributions from mobile sources.  
Diesel Exhaust
Heavy-duty diesel engines emit diesel exhaust, a complex mixture composed of carbon dioxide, oxygen, nitrogen, water vapor, carbon monoxide, nitrogen compounds, sulfur compounds and numerous low-molecular-weight hydrocarbons.  A number of these gaseous hydrocarbon components are individually known to be toxic, including aldehydes, benzene and 1,3-butadiene.  The diesel particulate matter present in diesel exhaust consists mostly of fine particles (< 2.5 um), including a significant fraction of ultrafine particles (< 0.1 um).  These particles have a large surface area which makes them an excellent medium for adsorbing organics and their small size makes them highly respirable. Many of the organic compounds present in the gases and on the particles, such as polycyclic organic matter, are individually known to have mutagenic and carcinogenic properties.  
Diesel exhaust varies significantly in chemical composition and particle sizes between different engine types (heavy-duty, light-duty), engine operating conditions (idle, accelerate, decelerate), and fuel formulations (high/low sulfur fuel).  Also, there are emissions differences between on-road and nonroad engines because the nonroad engines are generally of older technology.  After being emitted in the engine exhaust, diesel exhaust undergoes dilution as well as chemical and physical changes in the atmosphere.  The lifetime for some of the compounds present in diesel exhaust ranges from hours to days.
Diesel Exhaust: Potential Cancer Effects
In EPA's 2002 Diesel Health Assessment Document (Diesel HAD), exposure to diesel exhaust was classified as likely to be carcinogenic to humans by inhalation from environmental exposures, in accordance with the revised draft 1996/1999 EPA cancer guidelines. A number of other agencies (National Institute for Occupational Safety and Health, the International Agency for Research on Cancer, the World Health Organization, California EPA, and the U.S. Department of Health and Human Services) have made similar classifications.  However, EPA also concluded in the Diesel HAD that it is not possible currently to calculate a cancer unit risk for diesel exhaust due to a variety of factors that limit the current studies, such as limited quantitative exposure histories in occupational groups investigated for lung cancer.
For the Diesel HAD, EPA reviewed 22 epidemiologic studies on the subject of the carcinogenicity of workers exposed to diesel exhaust in various occupations, finding increased lung cancer risk, although not always statistically significant, in 8 out of 10 cohort studies and 10 out of 12 case-control studies within several industries.  Relative risk for lung cancer associated with exposure ranged from 1.2 to 1.5, although a few studies show relative risks as high as 2.6.  Additionally, the Diesel HAD also relied on two independent meta-analyses, which examined 23 and 30 occupational studies respectively, which found statistically significant increases in smoking-adjusted relative lung cancer risk associated with exposure to diesel exhaust of 1.33 to 1.47.  These meta-analyses demonstrate the effect of pooling many studies and in this case show the positive relationship between diesel exhaust exposure and lung cancer across a variety of diesel exhaust-exposed occupations.[,]
In the absence of a cancer unit risk, the Diesel HAD sought to provide additional insight into the significance of the diesel exhaust-cancer hazard by estimating possible ranges of risk that might be present in the population.  An exploratory analysis was used to characterize a possible risk range by comparing a typical environmental exposure level for highway diesel sources to a selected range of occupational exposure levels.  The occupationally observed risks were then proportionally scaled according to the exposure ratios to obtain an estimate of the possible environmental risk.  A number of calculations are needed to accomplish this, and these can be seen in the EPA Diesel HAD.  The outcome was that environmental risks from diesel exhaust exposure could range from a low of 10[-4] to 10[-5] to as high as 10[-3], reflecting the range of occupational exposures that could be associated with the relative and absolute risk levels observed in the occupational studies.  Because of uncertainties, the analysis acknowledged that the risks could be lower than 10[-4] or 10[-5], and a zero risk from diesel exhaust exposure was not ruled out.
Diesel Exhaust: Other Health Effects
Noncancer health effects of acute and chronic exposure to diesel exhaust emissions are also of concern to the EPA.  EPA derived a diesel exhaust reference concentration (RfC) from consideration of four well-conducted chronic rat inhalation studies showing adverse pulmonary effects.,,,  The RfC is 5 ug/m[3] for diesel exhaust as measured by diesel particulate matter.  This RfC does not consider allergenic effects such as those associated with asthma or immunologic effects.  There is growing evidence, discussed in the Diesel HAD, that exposure to diesel exhaust can exacerbate these effects, but the exposure-response data are presently lacking to derive an RfC.  The EPA Diesel HAD states, "With [diesel particulate matter] being a ubiquitous component of ambient PM, there is an uncertainty about the adequacy of the existing [diesel exhaust] noncancer database to identify all of the pertinent [diesel exhaust]-caused noncancer health hazards." (p. 9-19).  The Diesel HAD concludes "that acute exposure to [diesel exhaust] has been associated with irritation of the eye, nose, and throat, respiratory symptoms (cough and phlegm), and neurophysiological symptoms such as headache, lightheadedness, nausea, vomiting, and numbness or tingling of the extremities."
Ambient PM2.5 Levels and Exposure to Diesel Exhaust PM
The Diesel HAD also briefly summarizes health effects associated with ambient PM and discusses the EPA's annual PM2.5 NAAQS of 15 ug/m[3].  There is a much more extensive body of human data showing a wide spectrum of adverse health effects associated with exposure to ambient PM, of which diesel exhaust is an important component.  The PM2.5 NAAQS is designed to provide protection from the noncancer and premature mortality effects of PM2.5 as a whole.
Diesel Exhaust PM Exposures
Exposure of people to diesel exhaust depends on their various activities, the time spent in those activities, the locations where these activities occur, and the levels of diesel exhaust pollutants in those locations.  The major difference between ambient levels of diesel particulate and exposure levels for diesel particulate is that exposure accounts for a person moving from location to location, proximity to the emission source, and whether the exposure occurs in an enclosed environment.
Occupational Exposures
Occupational exposures to diesel exhaust from mobile sources can be several orders of magnitude greater than typical exposures in the non-occupationally exposed population.
Over the years, diesel particulate exposures have been measured for a number of occupational groups.  A wide range of exposures have been reported, from 2 ug/m3 to 1,280 ug/m3, for a variety of occupations.  As discussed in the Diesel HAD, the National Institute of Occupational Safety and Health has estimated a total of 1,400,000 workers are occupationally exposed to diesel exhaust from on-road and nonroad vehicles.
Elevated Concentrations and Ambient Exposures in Mobile Source-Impacted Areas
Regions immediately downwind of highways or truck stops may experience elevated ambient concentrations of directly-emitted PM2.5 from diesel engines.  Due to the unique nature of highways and truck stops, emissions from a large number of diesel engines are concentrated in a small area.  Studies near roadways with high truck traffic indicate higher concentrations of components of diesel PM than other locations.[,][,]  High ambient particle concentrations have also been reported near trucking terminals, truck stops, and bus garages.[,][,]  Additional discussion of exposure and health effects associated with traffic is included below in Section VII. B. (5) (j).  
Benzene
The EPA's Integrated Risk Information System (IRIS) database lists benzene as a known human carcinogen (causing leukemia) by all routes of exposure, and concludes that exposure is associated with additional health effects, including genetic changes in both humans and animals and increased proliferation of bone marrow cells in mice.,,  EPA states in its IRIS database that data indicate a causal relationship between benzene exposure and acute lymphocytic leukemia and suggest a relationship between benzene exposure and chronic non-lymphocytic leukemia and chronic lymphocytic leukemia.  The International Agency for Research on Carcinogens (IARC) has determined that benzene is a human carcinogen and the U.S. Department of Health and Human Services (DHHS) has characterized benzene as a known human carcinogen.,
A number of adverse noncancer health effects including blood disorders, such as preleukemia and aplastic anemia, have also been associated with long-term exposure to benzene.,  The most sensitive noncancer effect observed in humans, based on current data, is the depression of the absolute lymphocyte count in blood.,   In addition, recent work, including studies sponsored by the Health Effects Institute (HEI), provides evidence that biochemical responses are occurring at lower levels of benzene exposure than previously known.,,,  EPA's IRIS program has not yet evaluated these new data.
1,3-Butadiene
EPA has characterized 1,3-butadiene as carcinogenic to humans by inhalation.,  The IARC has determined that 1,3-butadiene is a human carcinogen and the U.S. DHHS has characterized 1,3-butadiene as a known human carcinogen.,  There are numerous studies consistently demonstrating that 1,3-butadiene is metabolized into genotoxic metabolites by experimental animals and humans. The specific mechanisms of 1,3-butadiene-induced carcinogenesis are unknown; however, the scientific evidence strongly suggests that the carcinogenic effects are mediated by genotoxic metabolites.  Animal data suggest that females may be more sensitive than males for cancer effects associated with 1,3-butadiene exposure; there are insufficient data in humans from which to draw conclusions about sensitive subpopulations.  1,3-butadiene also causes a variety of reproductive and developmental effects in mice; no human data on these effects are available.  The most sensitive effect was ovarian atrophy observed in a lifetime bioassay of female mice.
Formaldehyde
Since 1987, EPA has classified formaldehyde as a probable human carcinogen based on evidence in humans and in rats, mice, hamsters, and monkeys.  EPA is currently reviewing recently published epidemiological data.  For instance, research conducted by the National Cancer Institute found an increased risk of nasopharyngeal cancer and lymphohematopoietic malignancies such as leukemia among workers exposed to formaldehyde.,   In an analysis of the lymphohematopoietic cancer mortality from an extended follow-up of these workers, the National Cancer Institute confirmed an association between lymphohematopoietic cancer risk and peak exposures.  A recent National Institute of Occupational Safety and Health study of garment workers also found increased risk of death due to leukemia among workers exposed to formaldehyde.  Extended follow-up of a cohort of British chemical workers did not find evidence of an increase in nasopharyngeal or lymphohematopoietic cancers, but a continuing statistically significant excess in lung cancers was reported.  Recently, the IARC re-classified formaldehyde as a human carcinogen (Group 1).  
Formaldehyde exposure also causes a range of noncancer health effects, including irritation of the eyes (burning and watering of the eyes), nose and throat.  Effects from repeated exposure in humans include respiratory tract irritation, chronic bronchitis and nasal epithelial lesions such as metaplasia and loss of cilia.  Animal studies suggest that formaldehyde may also cause airway inflammation  -  including eosinophil infiltration into the airways.  There are several studies that suggest that formaldehyde may increase the risk of asthma  -  particularly in the young.[,]
Acetaldehyde
Acetaldehyde is classified in EPA's IRIS database as a probable human carcinogen, based on nasal tumors in rats, and is considered toxic by the inhalation, oral, and intravenous routes.  Acetaldehyde is reasonably anticipated to be a human carcinogen by the U.S. DHHS in the 11[th] Report on Carcinogens and is classified as possibly carcinogenic to humans (Group 2B) by the IARC.,  EPA is currently conducting a reassessment of cancer risk from inhalation exposure to acetaldehyde.
The primary noncancer effects of exposure to acetaldehyde vapors include irritation of the eyes, skin, and respiratory tract.  In short-term (4 week) rat studies, degeneration of olfactory epithelium was observed at various concentration levels of acetaldehyde exposure.[,]   Data from these studies were used by EPA to develop an inhalation reference concentration.  Some asthmatics have been shown to be a sensitive subpopulation to decrements in functional expiratory volume (FEV1 test) and bronchoconstriction upon acetaldehyde inhalation.  The agency is currently conducting a reassessment of the health hazards from inhalation exposure to acetaldehyde.  
Acrolein
Acrolein is extremely acrid and irritating to humans when inhaled, with acute exposure resulting in upper respiratory tract irritation, mucus hypersecretion and congestion.  The intense irritancy of this carbonyl has been demonstrated during controlled tests in human subjects, who suffer intolerable eye and nasal mucosal sensory reactions within minutes of exposure.  These data and additional studies regarding acute effects of human exposure to acrolein are summarized in EPA's 2003 IRIS Human Health Assessment for acrolein.  Evidence available from studies in humans indicate that levels as low as 0.09 ppm (0.21 mg/m[3]) for five minutes may elicit subjective complaints of eye irritation with increasing concentrations leading to more extensive eye, nose and respiratory symptoms.  Lesions to the lungs and upper respiratory tract of rats, rabbits, and hamsters have been observed after subchronic exposure to acrolein.  Acute exposure effects in animal studies report bronchial hyper-responsiveness.  In a recent study, the acute respiratory irritant effects of exposure to 1.1 ppm acrolein were more pronounced in mice with allergic airway disease by comparison to non-diseased mice which also showed decreases in respiratory rate.  Based on these animal data and demonstration of similar effects in humans (e.g., reduction in respiratory rate), individuals with compromised respiratory function (e.g., emphysema, asthma) are expected to be at increased risk of developing adverse responses to strong respiratory irritants such as acrolein.    
EPA determined in 2003 that the human carcinogenic potential of acrolein could not be determined because the available data were inadequate.  No information was available on the carcinogenic effects of acrolein in humans and the animal data provided inadequate evidence of carcinogenicity.  The IARC determined in 1995 that acrolein was not classifiable as to its carcinogenicity in humans.
Polycyclic Organic Matter
The term polycyclic organic matter (POM) defines a broad class of compounds that includes the polycyclic aromatic hydrocarbon compounds (PAHs).  One of these compounds, naphthalene, is discussed separately below.  POM compounds are formed primarily from combustion and are present in the atmosphere in gas and particulate form.  Cancer is the major concern from exposure to POM.  Epidemiologic studies have reported an increase in lung cancer in humans exposed to diesel exhaust, coke oven emissions, roofing tar emissions, and cigarette smoke; all of these mixtures contain POM compounds.  Animal studies have reported respiratory tract tumors from inhalation exposure to benzo[a]pyrene and alimentary tract and liver tumors from oral exposure to benzo[a]pyrene.  EPA has classified seven PAHs (benzo[a]pyrene, benz[a]anthracene, chrysene, benzo[b]fluoranthene, benzo[k]fluoranthene, dibenz[a,h]anthracene, and indeno[1,2,3-cd]pyrene) as Group B2, probable human carcinogens.  Recent studies have found that maternal exposures to PAHs in a population of pregnant women were associated with several adverse birth outcomes, including low birth weight and reduced length at birth, as well as impaired cognitive development in preschool children (3 years of age).[,] EPA has not yet evaluated these recent studies.
Naphthalene
Naphthalene is found in small quantities in gasoline and diesel fuels.  Naphthalene emissions have been measured in larger quantities in both gasoline and diesel exhaust compared with evaporative emissions from mobile sources, indicating it is primarily a product of combustion.  EPA released an external review draft of a reassessment of the inhalation carcinogenicity of naphthalene based on a number of recent animal carcinogenicity studies.  The draft reassessment completed external peer review.  Based on external peer review comments received, additional analyses are being undertaken.  This external review draft does not represent official agency opinion and was released solely for the purposes of external peer review and public comment.  The National Toxicology Program listed naphthalene as "reasonably anticipated to be a human carcinogen" in 2004 on the basis of bioassays reporting clear evidence of carcinogenicity in rats and some evidence of carcinogenicity in mice.  California EPA has released a new risk assessment for naphthalene, and the IARC has reevaluated naphthalene and re-classified it as Group 2B: possibly carcinogenic to humans.  Naphthalene also causes a number of chronic non-cancer effects in animals, including abnormal cell changes and growth in respiratory and nasal tissues.
Other Air Toxics
In addition to the compounds described above, other compounds in gaseous hydrocarbon and PM emissions from heavy-duty vehicles will be affected by this final action.  Mobile source air toxic compounds that would potentially be impacted include ethylbenzene, propionaldehyde, toluene, and xylene.  Information regarding the health effects of these compounds can be found in EPA's IRIS database.
Exposure and Health Effects Associated with Traffic
Populations who live, work, or attend school near major roads experience elevated exposure concentrations to a wide range of air pollutants, as well as higher risks for a number of adverse health effects.  While the previous sections of this preamble have focused on the health effects associated with individual criteria pollutants or air toxics, this section discusses the mixture of different exposures near major roadways, rather than the effects of any single pollutant.  As such, this section emphasizes traffic-related air pollution, in general, as the relevant indicator of exposure rather than any particular pollutant.
Concentrations of many traffic-generated air pollutants are elevated for up to 300-500 meters downwind of roads with high traffic volumes.  Numerous sources on roads contribute to elevated roadside concentrations, including exhaust and evaporative emissions, and resuspension of road dust and tire and brake wear.  Concentrations of several criteria and hazardous air pollutants are elevated near major roads.  Furthermore, different semi-volatile organic compounds and chemical components of particulate matter, including elemental carbon, organic material, and trace metals, have been reported at higher concentrations near major roads.
  Populations near major roads experience greater risk of certain adverse health effects.  The Health Effects Institute published a report on the health effects of traffic-related air pollution.  It concluded that evidence is "sufficient to infer the presence of a causal association" between traffic exposure and exacerbation of childhood asthma symptoms.  The HEI report also concludes that the evidence is either "sufficient" or "suggestive but not sufficient" for a causal association between traffic exposure and new childhood asthma cases.  A review of asthma studies by Salam et al. (2008) reaches similar conclusions.  The HEI report also concludes that there is "suggestive" evidence for pulmonary function deficits associated with traffic exposure, but concluded that there is "inadequate and insufficient" evidence for causal associations with respiratory health care utilization, adult-onset asthma, chronic obstructive pulmonary disease symptoms, and allergy.  A review by Holguin (2008) notes that the effects of traffic on asthma may be modified by nutrition status, medication use, and genetic factors.
The HEI report also concludes that evidence is "suggestive" of a causal association between traffic exposure and all-cause and cardiovascular mortality.  There is also evidence of an association between traffic-related air pollutants and cardiovascular effects such as changes in heart rhythm, heart attack, and cardiovascular disease.  The HEI report characterizes this evidence as "suggestive" of a causal association, and an independent epidemiological literature review by Adar and Kaufman (2007) concludes that there is "consistent evidence" linking traffic-related pollution and adverse cardiovascular health outcomes.
Some studies have reported associations between traffic exposure and other health effects, such as birth outcomes (e.g., low birth weight) and childhood cancer.  The HEI report concludes that there is currently "inadequate and insufficient" evidence for a causal association between these effects and traffic exposure.  A review by Raaschou-Nielsen and Reynolds (2006) concluded that evidence of an association between childhood cancer and traffic-related air pollutants is weak, but noted the inability to draw firm conclusions based on limited evidence.
There is a large population in the United States living in close proximity of major roads.  According to the Census Bureau's American Housing Survey for 2007, approximately 20 million residences in the United States, 15.6% of all homes, are located within 300 feet (91 m) of a highway with 4+ lanes, a railroad, or an airport.  Therefore, at current population of approximately 309 million, assuming that population and housing are similarly distributed, there are over 48 million people in the United States living near such sources.  The HEI report also notes that in two North American cities, Los Angeles and Toronto, over 40% of each city's population live within 500 meters of a highway or 100 meters of a major road.  It also notes that about 33% of each city's population resides within 50 meters of major roads.  Together, the evidence suggests that a large U.S. population lives in areas with elevated traffic-related air pollution.
People living near roads are often socioeconomically disadvantaged.  According to the 2007 American Housing Survey, a renter-occupied property is over twice as likely as an owner-occupied property to be located near a highway with 4+ lanes, railroad or airport.  In the same survey, the median household income of rental housing occupants was less than half that of owner-occupants ($28,921/$59,886).  Numerous studies in individual urban areas report higher levels of traffic-related air pollutants in areas with high minority or poor populations.[,][,]
Students may also be exposed in situations where schools are located near major roads.  In a study of nine metropolitan areas across the United States, Appatova et al. (2008) found that on average greater than 33% of schools were located within 400 m of an Interstate, U.S., or state highway, while 12% were located within 100 m.  The study also found that among the metropolitan areas studied, schools in the Eastern United States were more often sited near major roadways than schools in the Western United States.
Demographic studies of students in schools near major roadways suggest that this population is more likely than the general student population to be of non-white race or Hispanic ethnicity, and more often live in low socioeconomic status locations. [,][,]  There is some inconsistency in the evidence, which may be due to different local development patterns and measures of traffic and geographic scale used in the studies.[408]  
Environmental Effects of Non-GHG Pollutants
In this section we discuss some of the environmental effects of PM and its precursors such as visibility impairment, atmospheric deposition, and materials damage and soiling, as well as environmental effects associated with the presence of ozone in the ambient air, such as impacts on plants, including trees, agronomic crops and urban ornamentals, and environmental effects associated with air toxics.
Visibility
Visibility can be defined as the degree to which the atmosphere is transparent to visible light.  Visibility impairment is caused by light scattering and absorption by suspended particles and gases.  Visibility is important because it has direct significance to people's enjoyment of daily activities in all parts of the country.  Individuals value good visibility for the well-being it provides them directly, where they live and work, and in places where they enjoy recreational opportunities.  Visibility is also highly valued in significant natural areas, such as national parks and wilderness areas, and special emphasis is given to protecting visibility in these areas.  For more information on visibility see the final 2009 PM ISA.
EPA is pursuing a two-part strategy to address visibility impairment.  First, EPA developed the regional haze program (64 FR 35714) which was put in place in July 1999 to protect the visibility in Mandatory Class I Federal areas.  There are 156 national parks, forests and wilderness areas categorized as Mandatory Class I Federal areas (62 FR 38680-38681, July 18, 1997).  These areas are defined in CAA section 162 as those national parks exceeding 6,000 acres, wilderness areas and memorial parks exceeding 5,000 acres, and all international parks which were in existence on August 7, 1977.  Second, EPA has concluded that PM2.5 causes adverse effects on visibility in other areas that are not protected by the Regional Haze Rule, depending on PM2.5 concentrations and other factors that control their visibility impact effectiveness such as dry chemical composition and relative humidity (i.e., an indicator of the water composition of the particles), and has set secondary PM2.5 standards to address these areas.  The existing annual primary and secondary PM2.5 standards have been remanded and are being addressed in the currently ongoing PM NAAQS review.  The secondary PM2.5 standards serve as a reasonable complement to the Regional Haze Program.
Plant and Ecosystem Effects of Ozone
Elevated ozone levels contribute to environmental effects, with impacts to plants and ecosystems being of most concern.  Ozone can produce both acute and chronic injury in sensitive species depending on the concentration level and the duration of the exposure.  Ozone effects also tend to accumulate over the growing season of the plant, so that even low concentrations experienced for a longer duration have the potential to create chronic stress on vegetation.  Ozone damage to plants includes visible injury to leaves and impaired photosynthesis, both of which can lead to reduced plant growth and reproduction, resulting in reduced crop yields, forestry production, and use of sensitive ornamentals in landscaping.  In addition, the impairment of photosynthesis, the process by which the plant makes carbohydrates (its source of energy and food), can lead to a subsequent reduction in root growth and carbohydrate storage below ground, resulting in other, more subtle plant and ecosystems impacts.  
These latter impacts include increased susceptibility of plants to insect attack, disease, harsh weather, interspecies competition and overall decreased plant vigor.  The adverse effects of ozone on forest and other natural vegetation can potentially lead to species shifts and loss from the affected ecosystems, resulting in a loss or reduction in associated ecosystem goods and services.  Lastly, visible ozone injury to leaves can result in a loss of aesthetic value in areas of special scenic significance like national parks and wilderness areas.  The final 2006 Ozone Air Quality Criteria Document presents more detailed information on ozone effects on vegetation and ecosystems.
Atmospheric Deposition
Wet and dry deposition of ambient particulate matter delivers a complex mixture of metals (e.g., mercury, zinc, lead, nickel, aluminum, cadmium), organic compounds (e.g., polycyclic organic matter, dioxins, furans) and inorganic compounds (e.g., nitrate, sulfate) to terrestrial and aquatic ecosystems.  The chemical form of the compounds deposited depends on a variety of factors including ambient conditions (e.g., temperature, humidity, oxidant levels) and the sources of the material.  Chemical and physical transformations of the compounds occur in the atmosphere as well as the media onto which they deposit.  These transformations in turn influence the fate, bioavailability and potential toxicity of these compounds.  Atmospheric deposition has been identified as a key component of the environmental and human health hazard posed by several pollutants including mercury, dioxin and PCBs.
Adverse impacts on water quality can occur when atmospheric contaminants deposit to the water surface or when material deposited on the land enters a waterbody through runoff.  Potential impacts of atmospheric deposition to waterbodies include those related to both nutrient and toxic inputs.  Adverse effects to human health and welfare can occur from the addition of excess nitrogen via atmospheric deposition.  The nitrogen-nutrient enrichment contributes to toxic algae blooms and zones of depleted oxygen, which can lead to fish kills, frequently in coastal waters.  Deposition of heavy metals or other toxics may lead to the human ingestion of contaminated fish, impairment of drinking water, damage to the marine ecology, and limits to recreational uses.  Several studies have been conducted in U.S. coastal waters and in the Great Lakes Region in which the role of ambient PM deposition and runoff is investigated.[,][,][,][,]  
Atmospheric deposition of nitrogen and sulfur contributes to acidification, altering biogeochemistry and affecting animal and plant life in terrestrial and aquatic ecosystems across the United States.  The sensitivity of terrestrial and aquatic ecosystems to acidification from nitrogen and sulfur deposition is predominantly governed by geology.  Prolonged exposure to excess nitrogen and sulfur deposition in sensitive areas acidifies lakes, rivers and soils.  Increased acidity in surface waters creates inhospitable conditions for biota and affects the abundance and nutritional value of preferred prey species, threatening biodiversity and ecosystem function.  Over time, acidifying deposition also removes essential nutrients from forest soils, depleting the capacity of soils to neutralize future acid loadings and negatively affecting forest sustainability.  Major effects include a decline in sensitive forest tree species, such as red spruce (Picea rubens) and sugar maple (Acer saccharum), and a loss of biodiversity of fishes, zooplankton, and macro invertebrates.
In addition to the role nitrogen deposition plays in acidification, nitrogen deposition also leads to nutrient enrichment and altered biogeochemical cycling.  In aquatic systems increased nitrogen can alter species assemblages and cause eutrophication.  In terrestrial systems nitrogen loading can lead to loss of nitrogen sensitive lichen species, decreased biodiversity of grasslands, meadows and other sensitive habitats, and increased potential for invasive species.  For a broader explanation of the topics treated here, refer to the description in Section 7.1.2 of the RIA.
Adverse impacts on soil chemistry and plant life have been observed for areas heavily influenced by atmospheric deposition of nutrients, metals and acid species, resulting in species shifts, loss of biodiversity, forest decline and damage to forest productivity.  Potential impacts also include adverse effects to human health through ingestion of contaminated vegetation or livestock (as in the case for dioxin deposition), reduction in crop yield, and limited use of land due to contamination.  
Atmospheric deposition of pollutants can reduce the aesthetic appeal of buildings and culturally important articles through soiling, and can contribute directly (or in conjunction with other pollutants) to structural damage by means of corrosion or erosion.  Atmospheric deposition may affect materials principally by promoting and accelerating the corrosion of metals, by degrading paints, and by deteriorating building materials such as concrete and limestone.  Particles contribute to these effects because of their electrolytic, hygroscopic, and acidic properties, and their ability to adsorb corrosive gases (principally sulfur dioxide).  
Environmental Effects of Air Toxics
Emissions from producing, transporting and combusting fuel contribute to ambient levels of pollutants that contribute to adverse effects on vegetation.  Volatile organic compounds, some of which are considered air toxics, have long been suspected to play a role in vegetation damage.  In laboratory experiments, a wide range of tolerance to VOCs has been observed.  Decreases in harvested seed pod weight have been reported for the more sensitive plants, and some studies have reported effects on seed germination, flowering and fruit ripening.  Effects of individual VOCs or their role in conjunction with other stressors (e.g., acidification, drought, temperature extremes) have not been well studied.  In a recent study of a mixture of VOCs including ethanol and toluene on herbaceous plants, significant effects on seed production, leaf water content and photosynthetic efficiency were reported for some plant species. 
Research suggests an adverse impact of vehicle exhaust on plants, which has in some cases been attributed to aromatic compounds and in other cases to nitrogen oxides., ,   The impacts of VOCs on plant reproduction may have long-term implications for biodiversity and survival of native species near major roadways.  Most of the studies of the impacts of VOCs on vegetation have focused on short-term exposure and few studies have focused on long-term effects of VOCs on vegetation and the potential for metabolites of these compounds to affect herbivores or insects.
Air Quality Impacts of Non-GHG Pollutants
Air quality modeling was performed to assess the impact of the heavy-duty vehicle standards on criteria and air toxic pollutants.  In this section, we present information on current modeled levels of pollution as well as projections for 2030, with respect to ambient PM2.5, ozone, selected air toxics, visibility levels and nitrogen and sulfur deposition.  The results are discussed in more detail in Section 8.2 of the RIA.  
We used the Community Multi-scale Air Quality (CMAQ) photochemical model, version 4.7.1, for our analysis.  This version of CMAQ includes a number of improvements to previous versions of the model.  These improvements are discussed in Section 8.2.2 of the RIA.
Ozone
Current Levels
8-hour ozone concentrations exceeding the level of the ozone NAAQS occur in many parts of the country.  In 2008, the EPA amended the ozone NAAQS (73 FR 16436, March 27, 2008).  The final 2008 ozone NAAQS rule set forth revisions to the previous 1997 NAAQS for ozone to provide increased protection of public health and welfare.  On January 6, 2010, EPA proposed to reconsider the 2008 ozone NAAQS to ensure that they are requisite to protect public health with an ample margin of safety, and requisite to protect public welfare (75 FR 2938, January 19, 2010).  EPA intends to complete the reconsideration by July 31, 2011.  If, as a result of the reconsideration, EPA promulgates different ozone standards, the new 2011 ozone standards would replace the 2008 ozone standards and the requirement to designate areas for the replaced 2008 standards would no longer apply.  
As of April 21, 2011 there are 44 areas designated as nonattainment for the 1997 8-hour ozone NAAQS, comprising 242 full or partial counties with a total population of over 118 million people.  These numbers do not include the people living in areas where there is a future risk of failing to maintain or attain the 1997 8-hour ozone NAAQS.  The numbers above likely underestimate the number of counties that are not meeting the ozone NAAQS because the nonattainment areas associated with the more stringent 2008 8-hour ozone NAAQS have not yet been designated.  Table VII-7 provides an estimate, based on 2006-08 air quality data, of the counties with design values greater than the 2008 8-hour ozone NAAQS of 0.075 ppm. 
Table VII-7 Counties with Design Values Greater Than the Ozone NAAQS

NUMBER OF COUNTIES
POPULATION1997 OZONE STANDARD:  COUNTIES WITHIN THE 54 AREAS CURRENTLY DESIGNATED AS NONATTAINMENT (AS OF 1/6/10)
266
122,343, 799
2008 Ozone Standard:  additional counties that would not meet the 2008 NAAQS (based on 2006-2008 air quality data)[b]
156
36,678,478
Total
422
159,022,277
Notes:
[a] Population numbers are from 2000 census data.
[b] Area designations for the 2008 ozone NAAQS have not yet been made.  Nonattainment for the 2008 Ozone NAAQS would be based on three years of air quality data from later years.  Also, the county numbers in this row include only the counties with monitors violating the 2008 Ozone NAAQS.  The numbers in this table may be an underestimate of the number of counties and populations that will eventually be included in areas with multiple counties designated nonattainment.
Projected Levels without this Final Action
States with 8-hour ozone nonattainment areas are required to take action to bring those areas into compliance in the future.  Based on the final rule designating and classifying 8-hour ozone nonattainment areas for the 1997 standard (69 FR 23951, April 30, 2004), most 8-hour ozone nonattainment areas will be required to attain the ozone NAAQS in the 2007 to 2013 time frame and then maintain the NAAQS thereafter.  As noted, EPA is reconsidering the 2008 ozone NAAQS.  If EPA promulgates different ozone NAAQS in 2011 as a result of the reconsideration, these standards would replace the 2008 ozone NAAQS and there would no longer be a requirement to designate areas for the 2008 NAAQS.  Attainment dates for any 2011 ozone NAAQS would range from 3 to 20 years from designation, depending on the area's classification.   
EPA has already adopted many emission control programs that are expected to reduce ambient ozone levels and assist in reducing the number of areas that fail to achieve the ozone NAAQS.  Even so, our air quality modeling projects that in 2030, with all current controls but excluding the impacts of the heavy-duty standards, up to 10 counties with a population of over 30 million may not attain the 2008 ozone standard of 0.075 ppm (75 ppb).  These numbers do not account for those areas that are close to (e.g., within 10 percent of) the 2008 ozone standard.  These areas, although not violating the standards, will also be impacted by changes in ozone as they work to ensure long-term maintenance of the ozone NAAQS.
Projected Levels with this Final Action
Our modeling indicates ozone design value concentrations will decrease in many areas of the country.  The decreases in ozone design values are likely due to projected tailpipe reductions in NOX and projected upstream emissions decreases in NOX and VOCs from reduced gasoline production.  The majority of the ozone design value decreases are less than 1 ppb.  The maximum projected decrease in an 8-hour ozone design value is 1.57 ppb in Jefferson County, Tennessee.  On a population-weighted basis, the average modeled 8-hour ozone design values are projected to decrease by 0.39 ppb in 2030 and the design values for those counties that are projected to be above the 2008 ozone standard in 2030 will see population-weighted decreases of 0.16 ppb due to the heavy-duty standards. 
Particulate Matter
Current Levels
PM2.5 concentrations exceeding the level of the PM2.5 NAAQS occur in many parts of the country.  In 2005, EPA designated 39 nonattainment areas for the 1997 PM2.5 NAAQS (70 FR 943, January 5, 2005).  These areas are composed of 208 full or partial counties with a total population exceeding 88 million.  The 1997 PM2.5 NAAQS was revised in 2006 and the 2006 24-hour PM2.5 NAAQS became effective on December 18, 2006.  On October 8, 2009, the EPA issued final nonattainment area designations for the 2006 24-hour PM2.5 NAAQS (74 FR 58688, November 13, 2009).  These designations include 32 areas composed of 121 full or partial counties with a population of over 70 million.  In total, there are 54 PM2.5 nonattainment areas composed of 243 counties with a population of almost 102 million people.
Projected Levels without this Final Action
States with PM2.5 nonattainment areas are required to take action to bring those areas into compliance in the future.  Areas designated as not attaining the 1997 PM2.5 NAAQS will need to attain the 1997 standards in the 2010 to 2015 time frame, and then maintain them thereafter.  The 2006 24-hour PM2.5 nonattainment areas will be required to attain the 2006 24-hour PM2.5 NAAQS in the 2014 to 2019 time frame and then be required to maintain the 2006 24-hour PM2.5 NAAQS thereafter.  The heavy-duty standards finalized in this action become effective in 2012 and therefore may be useful to states in attaining or maintaining the PM2.5 NAAQS.  
       EPA has already adopted many emission control programs that are expected to reduce ambient PM2.5 levels and which will assist in reducing the number of areas that fail to achieve the PM2.5 NAAQS.  Even so, our air quality modeling projects that in 2030, with all current controls but excluding the impacts of the heavy-duty standards adopted here, at least 4 counties with a population of almost 7 million may not attain the 1997 annual PM2.5 standard of 15 ug/m[3] and 22 counties with a population of over 33 million may not attain the 2006 24-hour PM2.5 standard of 35 ug/m[3].  These numbers do not account for those areas that are close to (e.g., within 10 percent of) the PM2.5 standards.  These areas, although not violating the standards, will also benefit from any reductions in PM2.5 ensuring long-term maintenance of the PM2.5 NAAQS.  

Projected Levels with this Final Action
Air quality modeling performed for this final action shows that in 2030 the majority of the modeled counties will see decreases of less than 0.01 ug/m[3] in their annual PM2.5 design values.  The decreases in annual PM2.5 design values that we see in some counties are likely due to emission reductions related to lower fuel production at existing oil refineries and/or reductions in PM2.5 precursor emissions (NOX, SOX, and VOCs) due to improvements in road load.  The maximum projected decrease in an annual PM2.5 design value is 0.03 ug/m[3] in Allen County, Indiana and Canyon County, Idaho.  On a population-weighted basis, the average modeled 2030 annual PM2.5 design value is projected to decrease by 0.01 ug/m[3] due to this final action.  
In addition to looking at annual PM2.5 design values, we also modeled the impact of the standards on 24-hour PM2.5 design values.  Air quality modeling performed for this final action shows that in 2030 the majority of the modeled counties will see changes of between -0.05 ug/m[3] and 0 ug/m[3] in their 24-hour PM2.5 design values.  The decreases in annual PM2.5 design values that we see in some counties are likely due to emission reductions related to lower fuel production at existing oil refineries and/or reductions in PM2.5 precursor emissions (NOX, SOX, and VOCs) due to improvements in road load.  The maximum projected decrease in a 24-hour PM2.5 design value is 0.27 ug/m[3] in Canyon County, ID.  There are also some counties that are projected to see increases of less than 0.1 ug/m[3] in their 24-hour PM2.5 design values.  These small increases in 24-hour PM2.5 design values are likely related to downstream emission increases from APUs.  On a population-weighted basis, the average modeled 2030 24-hour PM2.5 design value is projected to decrease by 0.03 ug/m[3] due to this final action.  Those counties that are projected to be above the 24-hour PM2.5 standard in 2030 will see slightly smaller population-weighted decreases of 0.01 ug/m[3] in their design values due to this final action. 
Air Toxics
Current Levels
The majority of Americans continue to be exposed to ambient concentrations of air toxics at levels which have the potential to cause adverse health effects.  The levels of air toxics to which people are exposed vary depending on where people live and work and the kinds of activities in which they engage, as discussed in detail in U.S. EPA's most recent Mobile Source Air Toxics Rule.  According to the National Air Toxic Assessment (NATA) for 2005, mobile sources were responsible for 43 percent of outdoor toxic emissions and over 50 percent of the cancer risk and noncancer hazard.  Benzene is the largest contributor to cancer risk of all 124 pollutants quantitatively assessed in the 2002 NATA and mobile sources were responsible for 59 percent of benzene emissions in 2002.  Over the years, EPA has implemented a number of mobile source and fuel controls resulting in VOC reductions, which also reduce benzene and other air toxic emissions. 
Projected Levels 
Our modeling indicates that the heavy-duty standards have relatively little impact on national average ambient concentrations of the modeled air toxics.  Additional detail on the air toxics results can be found in Section 8.2.3.3 of the RIA. 
Nitrogen and Sulfur Deposition
Current Levels
Over the past two decades, the EPA has undertaken numerous efforts to reduce nitrogen and sulfur deposition across the U.S.  Analyses of long-term monitoring data for the U.S. show that deposition of both nitrogen and sulfur compounds has decreased over the last 17 years although many areas continue to be negatively impacted by deposition.  Deposition of inorganic nitrogen and sulfur species routinely measured in the U.S. between 2005 and 2007 were as high as 9.6 kilograms of nitrogen per hectare (kg N/ha) averaged over three years and 20.8 kilograms of sulfur per hectare (kg S/ha) averaged over three years.  The data show that reductions were more substantial for sulfur compounds than for nitrogen compounds.  These numbers are generated by the U.S. national monitoring network and they likely underestimate nitrogen deposition because neither ammonia nor organic nitrogen is measured.  In the eastern U.S., where data are most abundant, total sulfur deposition decreased by about 44% between 1990 and 2007, while total nitrogen deposition decreased by 25% over the same time frame.
Projected Levels 
Our air quality modeling projects decreases in nitrogen deposition, especially in the Midwest, as a result of the heavy-duty standards required by this final action.  The heavy-duty standards will result in annual percent decreases of 0.5% to more than 2% in some cities in the Midwest, Phoenix, Albuquerque, and some areas in Texas.  The remainder of the country will see only minimal changes in nitrogen deposition, ranging from decreases of less than 0.5% to increases of less than 0.5%.  For a map of 2030 nitrogen deposition impacts and additional information on these impacts, see Section 8.2.3.4 of the RIA.  The impacts of the heavy-duty standards on sulfur deposition are minimal, ranging from decreases of up to 0.5% to increases of up to 0.5%.
Visibility
Current Levels
As mentioned in Section VII.D(1)(a) , millions of people live in nonattainment areas for the PM2.5 NAAQS.   These populations, as well as large numbers of individuals who travel to these areas, are likely to experience visibility impairment.  In addition, while visibility trends have improved in mandatory class I federal areas, the most recent data show that these areas continue to suffer from visibility impairment.  In summary, visibility impairment is experienced throughout the U.S., in multi-state regions, urban areas, and remote mandatory class I federal areas.
Projected Levels 
Air quality modeling conducted for this final action was used to project visibility conditions in 138 mandatory class I federal areas across the U.S. in 2030.  The results show that all the modeled areas will continue to have annual average deciview levels above background in 2030.  The results also indicate that the majority of the modeled mandatory class I federal areas will see very little change in their visibility, but some mandatory class I federal areas will see improvements in visibility due to the heavy-duty standards and a few mandatory class I federal areas will see visibility decreases.  The average visibility at all modeled mandatory class I federal areas on the 20% worst days is projected to improve by 0.01 deciviews, or 0.06%, in 2030.  Section 8.2.3.5 of the RIA contains more detail on the visibility portion of the air quality modeling.

What are the Agencies' Estimated Cost, Economic, and Other Impacts of the Final Program?
In this section, we present the costs and impacts of the final HD National Program.  It is important to note that NHTSA's final fuel consumption standards and EPA's final GHG emissions standards will both be in effect, and each will lead to average fuel efficiency increases and GHG emission reductions.  The two agencies' final standards comprise the HD National Program.
The net benefits of the final HD National Program consist of the effects of the program on: 
the vehicle program costs (costs of complying with the vehicle CO2 standards)
fuel savings associated with reduced fuel usage resulting from the program
reductions in greenhouse gas emissions, 
the reductions in other (non-GHG) pollutants, 
costs associated with increases in noise, congestion, and accidents resulting from increased vehicle use, 
improvements in U.S. energy security impacts,
benefits associated with increased vehicle use due to the "rebound" effect.  
We also present the cost-effectiveness of the standards, or the cost per ton of emissions reduced.  
The program may have other effects that are not included here.  The agencies sought comment on whether any costs or benefits were omitted from this analysis, so that they could be explicitly recognized in the final rules.  In particular, as discussed in Section III and in Chapter 2 of the RIA, the technology cost estimates developed here take into account the costs to hold other vehicle attributes, such as size and performance, constant.  In addition, the analysis assumes that the full technology costs are passed along to vehicle buyers.  With these assumptions, because welfare losses are monetary estimates of how much buyers would have to be compensated to be made as well off as in the absence of the change, the price increase measures the loss to the buyer.  Assuming that the full technology cost gets passed along to the buyer as an increase in price, the technology cost thus measures the welfare loss to the buyer.  Increasing fuel efficiency would have to lead to other changes in the vehicles that buyers find undesirable for there to be additional losses not included in the technology costs.  
The agencies sought comments, including supporting data and quantitative analyses, of any additional impacts of the final standards on vehicle attributes and performance, and other potential aspects that could positively or negatively affect the welfare implications of this final rulemaking, not addressed in this analysis.  
The comments received by the agencies did not provide any clear insights into this question.  Some comments noted the diversity of the trucking industry and expressed a request that the program continue the great variety of options for the industry, because of the variation in needs for different customers.  Additional comments noted that the separate engine and vehicle programs support the maintenance of variety and current market structure.  Though a few commenters raised concerns, no information was offered to indicate that choice will in fact be limited by the program, or that other vehicle attributes are adversely affected.
The total monetized benefits (excluding fuel savings) under the program are projected to be $1.5 to $8.6 billion in 2030, depending on the value used for the social cost of carbon.  These benefits are summarized below in Table VIII-25.  The costs of the program in 2030 are estimated to be approximately $2.7 billion for new engine and truck technology less $20.9 billion in savings realized by trucking operations through fewer fuel expenditures (calculated using pre-tax fuel prices).  These costs are summarized below in Table VIII-24.  The present value of the total monetized benefits (excluding fuel savings) under the program are expected to range from $25.8 billion to $158.4 billion with a 3% discount rate; with a 7% discount rate, the total monetized benefits are expected to range from $16.1 billion to $148.7 billion.  These values, summarized in Table VIII-25, depend on the value used for the social cost of carbon.  The present value of costs of the program for new engine and truck technology, in Table VIII-24, are expected to be $57 billion using a 3% discount rate, and $29.5 billion with a 7% discount rate, less fuel savings (calculated using pre-tax fuel prices) of $380 billion with a 3% discount rate, and $168.6 billion with a 7% discount rate.  Total net present benefits (in Table VIII-26) are thus expected to range from $348.8 billion to $481.4 billion with a 3% discount rate, and $155.2 billion to $287.8 billion with a 7% discount rate.
The estimates developed here are measured against a baseline fuel efficiency associated with MY 2010 vehicles.  The agencies also considered an alternate baseline associated with AEO 2011 projections, which is further discussed in Section IX. All calculations presented in Section VIII use the constant 2010 vehicle baseline.   The extent to which fuel efficiency improvements may have occurred in the absence of the rules affects the net benefits associated with the program.  If trucks wwere to install technologies to achieve the fuel savings and reduced GHG emissions in the absence of this program, then both the costs and benefits of these fuel savings could be attributed to market forces, not the rules.  As a baseline for estimates of the extent of fuel-saving technologies that might have been adopted in the absence of the program, the proposal used the level of these technologies in MY 2010 vehicles.  We sought comment on whether the agencies should use an alternative baseline based on data provided by commenters to estimate the degree to which the technologies discussed in the proposal would have been adopted in the absence of these rules. No comments were received on this issue (?).  One comment cites the EPA draft RIA as noting a historic 1% per year improvement in fuel efficiency, and argues that the rules are therefore not needed; the actual figure in the draft RIA, however, was a 0.09% per year improvement.
EPA has undertaken an analysis of the economy-wide impacts of the final heavy-duty truck fuel efficiency and GHG standards as an exploratory exercise that EPA believes could provide additional insights into the potential impacts of the program.  These results were not a factor regarding the appropriateness of the final standards.  It is important to note that the results of this modeling exercise are dependent on the assumptions associated with how manufacturers would make fuel efficiency improvements and how trucking operations would respond to increases in higher vehicle costs and improved vehicle fuel efficiency as a result of the final program.    
Further information on these and other aspects of the economic impacts of our rules are summarized in the following sections and are presented in more detail in the RIA for this final rulemaking.
Conceptual Framework for Evaluating Impacts
This regulation is motivated primarily by the goals of reducing emissions of greenhouse gases and promoting U.S. energy security by reducing consumption and imports of petroleum-based fuels.  These motivations involve classic externalities, meaning that private decisions do not incorporate all of the costs associated with these problems; these costs are not borne completely by the households or businesses whose actions are responsible for them.  In the absence of some mechanism to "internalize" these costs  -  that is, to transfer their burden to individuals or firms whose decisions impose them  -  individuals and firms will consume more petroleum-based fuels than is socially optimal.  Externalities are a classic motivation for government intervention in markets.  These externalities, as well as effects due to changes in emissions of other pollutants and other impacts, are discussed in Sections VIII.H  -  VIII.K.   
In some cases, these classic externalities are by themselves enough to justify the costs of imposing fuel efficiency standards.  For some discount rates and some projected social costs of carbon, however, the reductions in these external costs are less than the costs of new fuel saving technologies needed to meet the standards. (See Tables 9-18 and 9-19 in the RIA.) Nevertheless, this regulation reduces trucking companies' fuel costs; according to our estimates, these savings in fuel costs are by themselves sufficient to pay for the technologies over periods of time considerably shorter than vehicles' expected lifetimes under the assumptions used for this analysis (e.g., AEO 2011 projected fuel prices).  If these estimates are correct, then the entire value of the reductions in external costs represents additional net benefits of the program, beyond those resulting from the fact that the value of fuel savings exceeds the costs of technologies necessary to achieve them.
It is often asserted that there are cost-effective fuel-saving technologies that truck companies are not taking advantage of.  This is commonly known as the "energy gap" or "energy paradox."  Standard economic theory suggests that in normally functioning competitive markets, interactions between vehicle buyers and producers would lead producers to incorporate all cost-effective technology into the vehicles that they offer, without government intervention.  Unlike in the light-duty vehicle market, the vast majority of vehicles in the medium- and heavy-duty truck market are purchased and operated by businesses with narrow profit margins, and for which fuel costs represent a substantial operating expense.  
Even in the presence of uncertainty and imperfect information  -  conditions that hold to some degree in every market  -  we generally expect firms to attempt to minimize their costs in an effort to survive in a competitive marketplace, and therefore to make decisions that are in the best interest of the company and its owners and/or shareholders.  In this case, the benefits of the rules would be due exclusively to reducing the economic costs of externalities resulting from fuel production and consumption.  However, as discussed below in Section VIII.E, the agencies have estimated that the application of fuel-saving technologies in response to the final standards would, on average, yield private returns to truck owners of 140% to 420% (see Table VIII-21 below).  The agencies have also estimated that the application of these technologies would be significantly lower in the absence of the final standards (i.e., under the "no action" regulatory alternative), meaning that truck buyers and operators ignore opportunities to make investments in higher fuel efficiency that appear to offer significant cost savings.
As discussed in the NPRM, there are several possible explanations in the economics literature for why trucking companies do not adopt technologies that would be expected to increase their profits: there could be a classic market failure in the trucking industry  -  market power, externalities, or asymmetric or incomplete (i.e., missing market) information; there could be institutional or behavioral rigidities in the industry (union rules, standard operating procedures, statutory requirements, loss aversion, etc.), whereby participants collectively do not minimize costs; or the engineering estimates of fuel savings and costs for these technologies might overstate their benefits or understate their costs in real-world applications.
To try to understand why trucking companies have not adopted these seemingly cost-effective fuel-saving technologies, the agencies surveyed published literature about the energy paradox, and held discussions with numerous truck market participants. The proposal discussed five categories of possible explanations derived from these sources. Collectively, these five hypotheses may explain the apparent inconsistency between the engineering analysis, which finds a number of cost-effective methods of improving fuel efficiency, and the observation that many of these technologies are not widely adopted. 
These hypotheses include imperfect information in the original and resale markets, split incentives, uncertainty about future fuel prices, and adjustment and transactions costs.  As the discussion indicated, some of these explanations suggest failures in the private market for fuel-saving technology in addition to the externalities caused by producing and consuming fuel that are the primary motivation for the rules.  Other explanations suggest market-based behaviors that may imply additional costs of regulating truck fuel efficiency that are not accounted for in this analysis.  As noted above, an additional explanation  -  adverse effects on other vehicle attributes --  did not elicit supporting information in the public comments.  Anecdotal evidence from various segments of the trucking industry suggests that many of the hypotheses discussed here may play a role in explaining the puzzle of why truck purchasers appear to under-invest in fuel efficiency, although different explanations may apply to different segments, or even different companies. The published literature does not appear to include empirical analysis or data related to this question.
The agencies invited comment on these explanations, and on any data or information that could be used to investigate the role of any or all of these five hypotheses in explaining this energy paradox as it applies specifically to trucks.  Some comments expressed dissatisfaction about the explanations presented; they argued that these arguments were not sufficient to explain the phenomenon.  These comments argued that the truck owners and operators are better judges of the appropriate amount of fuel efficiency than are government agencies; they choose not to invest because of warranted skepticism about these technologies.  The agencies also requested comment and information regarding any other hypotheses that could explain the appearance that cost-effective fuel-saving technologies have not been widely incorporated into trucks.  The following discussion summarizes the fuller discussion provided in the NPRM and includes discussion of the comments received.
Information Issues in the Original Sale Markets
One potential hypothesis for why the trucking industry does not adopt what appear to be inexpensive fuel saving technologies is that there is inadequate or unreliable information available about the effectiveness of many fuel-saving technologies for new vehicles.  If reliable information on the effectiveness of many new technologies is absent, truck buyers will understandably be reluctant to spend additional money to purchase vehicles equipped with unproven technologies.   
This lack of information can manifest itself in multiple ways. For instance, the problem may arise purely because collecting reliable information on technologies is costly (also see Section VIII.A.5 on transaction costs).  Moreover, information has aspects of a public good, in that no single firm has the incentive to do the costly experimentation to determine whether or not particular technologies are cost-effective, while all firms benefit from the knowledge that would be gained from that experimentation.  Similarly, if multiple firms must conduct the same tests to get the same information, costs could be reduced by some form of coordination of information gathering.
While its effect on information is indirect, we expect the requirement for the use of new technologies included in this program will circumvent these information issues, resulting in their adoption, thus providing more readily available information about their benefits.  The agencies appreciate, however, that the diversity of truck uses, driving situations, and driver behavior willl lead to variation in the fuel savings that individual trucks or fleets experience from using specific technologies.  
One commenter noted that the SmartWay program targets semi-truck owners and thus should have the largest impact on that sector, rather than vocational or medium-duty trucks; however, that the gap between actual investment in fuel efficiency and the agencies' estimates of optimal investment are largest for the combination tractor.  Some of the difference in magnitude is likely to be due to the higher vehicle miles traveled for semi-trucks compared to medium-duty and vocational vehicles:  more driving means more fuel savings.  Additionally, not even a majority of semi-trucks are owned by participants in SmartWay; non-participants are unlikely to get all the benefits of participants.  Other explanations, noted below, are also likely to play a role.  This observation may also suggest some limitations of improved information provision as a means of addressing the "efficiency gap."
	Information Issues in the Resale Market
In addition to issues in the new vehicle market, a second hypothesis for why trucking companies may not adopt what appear to be cost-effective technologies to save fuel is that the resale market may not adequately reward the addition of fuel-saving technology to vehicles to ensure their original purchase by new truck buyers.  This inadequate payback for users beyond the original owner may contribute to the short payback period that new purchasers appear to expect.  The agencies requested data and information on the extent to which costs of fuel saving equipment can be recovered in the resale truck market.  No data were received.  One reviewer disputed this theory on the basis that people are willing to pay more for better vehicles, new or used.  It is not clear, however, whether buyers of used vehicles can tell which are the better vehicles.
Some of this unwillingness to pay for fuel-saving technology may be due to the extension of the information problems in the new vehicle market into resale markets.  Buyers in the resale market have no more reason to trust information on fuel-saving technologies than buyers in the original market.  Because actual fuel efficiency of trucks on the road depends on many factors, including geography and driving styles or habits, even objective sources such as logs of truck performance for used vehicles may not provide reliable information about the fuel efficiency that potential purchasers of used trucks will experience.
A related possibility is that vehicles will be used for different purposes by their second owners than those for which they were originally designed, and the fuel-saving technology  is therefore of less value.  
It is possible, though, that the fuel savings experienced by the secondary purchasers may not match those experienced by their original owners if the optimal secondary new use of the vehicle does not earn as many benefits from the technologies.  One commenter asks whether the fuel-saving technology is unvalued because it is unproven or overrated.  In that case, the premium for fuel-saving technology in the secondary market should accurately reflect its value to potential buyers participating in that market, even if it is lower than its value in the original market, and the market has not failed.  Because the information necessary to optimize use in the secondary market may not be readily available or reliable, however, buyers in the resale market may have less ability than purchasers of new vehicles to identify and gain the advantages of new fuel-saving technologies, and may thus be even less likely to pay a premium for them.
For these reasons, purchasers' willingness to pay for fuel efficiency technologies may be even lower in the resale market than in the original equipment market.  Even when fuel-saving technologies will provide benefits in the resale markets, purchasers of used vehicles may not be willing to compensate their original owners fully for their remaining value.  As a result, the purchasers of original equipment may expect the resale market to provide inadequate appropriate compensation for the new technologies, even when those technologies would reduce costs for the new buyers.  This information issue may partially explain what appears to be the very short payback periods required for new technologies in the new vehicle market.
Split Incentives in the Medium- and Heavy-Duty Truck Industry
A third hypothesis explaining the energy paradox as applied to trucking involves split incentives.  When markets work effectively, signals provided by transactions in one market are quickly transmitted to related markets and influence the decisions of buyers and sellers in those related markets.  For instance, in a well-functioning market system, changes in the expected future price of fuel should be transmitted rapidly to those who purchase trucks, who will then reevaluate the amount of fuel-saving technology to purchase for new vehicles.  If for some reason a truck purchaser will not be directly responsible for future fuel costs, or the individual who will be responsible for fuel costs does not decide which truck characteristics to purchase, then those price signals may not be transmitted effectively, and incentives can be described as "split." 
One place where such a split may occur is between the owners and operators of trucks.  Because they are generally responsible for purchasing fuel, truck operators have strong incentives to economize on its use, and are thus likely to support the use of fuel-saving technology.  However, the owners of trucks or trailers are often different from operators, and may be more concerned about their longevity or maintenance costs than about their fuel efficiency, when purchasing vehicles.  As a result, capital investments by truck owners may be channeled into equipment that improves vehicles' durability or reduces their maintenance costs, rather than into fuel-saving technology.  If operators can choose freely among the trucks they drive, competition among truck owners to employ operators would encourage owners to invest in fuel-saving technology.  However, if truck owners have more ability to choose among operators, then market signals for improved fuel savings that would normally be transmitted to truck owners may be muted.  Truck fleets that rent their vehicles may provide an example:  renters may observe the cost of renting the truck, but not its fuel efficiency; if so, then the purchasers will aim for vehicles with lower costs, to lower the cost of the rental.  
One commenter noted that there are always tradeoffs in an investment decision:  a purchaser may prefer to invest in other vehicle attributes than fuel efficiency.  In an efficient market, however, a purchaser should invest in fuel-saving technology as long as the increase in fuel-saving technology costs less than the expected fuel savings.  This result should hold regardless of the level of investment in other attributes, unless there are constraints on a purchaser's access to investment capital.
Anecdotal information about large truck fleets suggests that, even within a company, the office or department responsible for truck purchases is often different from that responsible for purchasing fuel.  Therefore, the employees who purchase trucks may have strong incentives to lower their initial capital cost, but not equally strong incentives to lower operating costs.  
In addition, the NAS report notes that split incentives can arise between tractor and trailer operators.  Trailers affect the fuel efficiency of shipping, but trailer owners do not face strong incentives to coordinate with truck owners.  EPA and NHTSA are not regulating trailers in this action.
By itself, information provision may be inadequate to address the potential underinvestment in fuel efficiency resulting from such split incentives.  In this setting, regulation may contribute to fuel savings that otherwise may be difficult to achieve.
Uncertainty About Future Cost Savings
Another hypothesis for the lack of adoption of seemingly fuel saving technologies may be uncertainty about future fuel prices or truck maintenance costs.  When purchasers have less than perfect foresight about future operating expenses, they may implicitly discount future savings in those costs due to uncertainty about potential returns from investments that reduce future costs.  In contrast, the immediate costs of the fuel-saving or maintenance-reducing technologies are certain and immediate, and thus not subject to discounting.  In this situation, both the expected return on capital investments in higher fuel efficiency and potential variance about its expected rate may play a role in a firm's calculation of its payback period on such investments.
In the context of energy efficiency investments for the home, Metcalf and Rosenthal (1995) and Metcalf and Hassett (1995) observe that households weigh known, up-front costs that are essentially irreversible against an unknown stream of future fuel savings.  Notably, in this situation, requiring households to adopt technologies more quickly may make them worse off by imposing additional risk on them.
Greene et al (2009) also finds support for this explanation in the context of light-duty fuel economy decisions:  a loss-averse consumer's expected net present value of increasing the fuel economy of a passenger car can be very close to zero, even if a risk-neutral expected value calculation shows that its buyer can expect significant net benefits from purchasing a more fuel-efficient car.  Supporting this hypothesis is a finding by Dasgupta et. al (2007) that consumers are more likely to lease than buy a vehicle with higher maintenance costs because it provides them with the option to return it before those costs become too high.  However, the agencies know of no studies that have estimated the impact of uncertainty on perceived future savings for medium- and heavy-duty vehicles.
Purchasers' uncertainty about future fuel prices implies that mandating improvements in fuel efficiency can reduce the expected utility associated with truck purchases.  This is because adopting such regulation requires purchasers to assume a greater level of risk than they would in its absence, even if the future fuel savings predicted by a risk-neutral calculation actually materialize.  One commenter expressed support for this argument.  Thus the mere existence of uncertainty about future savings in fuel costs does not by itself assure that regulations requiring improved fuel efficiency will necessarily provide economic benefits for truck purchasers and operators.  On the other hand, because risk aversion reduces expected returns for businesses, competitive pressures can reduce risk aversion:  risk-neutral companies can make higher average profits over time.  Thus, significant risk aversion is unlikely to survive competitive pressures.
Adjustment and Transactions Costs
Another hypothesis is that transactions costs of changing to new technologies (how easily drivers will adapt to the changes, e.g.) may slow or prevent their adoption.  Because of the diversity in the trucking industry, truck owners and fleets may like to see how a new technology works in the field, when applied to their specific operations, before they adopt it.  One commenter expressed support for this argument.  If a conservative approach to new technologies leads truck buyers to adopt new technologies slowly, then successful new technologies are likely to be adopted over time without market intervention, but with potentially significant delays in achieving fuel saving, environment, and energy security benefits.
In addition, there may be costs associated with training drivers to realize the potential fuel savings enabled by new technologies, or with accelerating fleet operators' scheduled fleet turnover and replacement to hasten their acquisition of vehicles equipped with new fuel-saving technologies.  Here, again, there may be no market failure; requiring the widespread use of these technologies may impose adjustment and transactions costs not included in this analysis.  As in the discussion of the role of risk, these adjustment and transactions costs are typically immediate and undiscounted, while their benefits are future and uncertain; risk or loss aversion may further discourage companies from adopting new technologies.
To the extent that there may be transactions costs associated with the new technologies, then regulation gives all new truck purchasers a level playing field, because it will require all of them to adjust on approximately the same time schedule.  If experience with the new technologies serves to reduce uncertainty and risk, the industry as a whole may become more accepting of new technologies.  This could increase demand for future new technologies and induce additional benefits in the legacy fleet through complementary efforts such as SmartWay.
Additional Hypotheses
In the public comments, two additional ideas were raised for the lack of adoption of what appears to be cost-effective fuel-saving technology.  The first suggestion is that tighter diesel emissions standards caused fuel efficiency for diesel trucks to decline in the past decade.  Because engine manufacturers would have to invest heavily (both financially and with personnel) in emissions reduction technologies, they would not invest in fuel efficiency.  The costs associated with the decline in fuel efficiency due to the emissions regulations were accounted for in that rulemaking.  
A second suggestion is that a truck may be a "positional good"  -  that is, a good whose value depends on how it compares to the goods owned by others.  If trucks confer status on their owners or operators, and if that status depends on easily observable characteristics, then owners may invest disproportionately in status-granting characteristics rather than less visible characteristics, such as fuel efficiency.  Because status depends on comparisons to others, an "arms race" may develop in which all parties spend additional money on visible characteristics but may not manage to make themselves better off.  In this case, regulation may improve welfare:  by increasing the requirements for non-positional fuel efficiency, regulation could reduce expenditures made purely for competition rather than actual increase in welfare.  In a competitive business, cost reduction provides a major opportunity cost to investing in status rather than in fuel-saving technology; thus, this argument may play less of a role in the heavy-duty market than in the consumer market for vehicles.
Both these hypotheses leave open the question, though, why additional investments were not made in fuel efficiency if they would provide rapid payback.  Truck purchasers should, in principle, be willing to buy additional fuel-saving technology as long as it is cost-effective, regardless of other vehicle attributes.  Limited access to capital, if it is a problem in this sector, might provide some reason for the "crowding out" of the purchase of fuel-saving technology.
Summary
On the one hand, commercial vehicle operators are under competitive pressure to reduce operating costs, and thus their purchasers would be expected to pursue and rapidly adopt cost-effective fuel-saving technologies.  On the other hand, the short payback period required by buyers of new trucks is a symptom that suggests some combination of uncertainty about future cost savings, transactions costs, and imperfectly functioning markets.  In addition, widespread use of tractor-trailer combinations introduces the possibility that owners of trailers may have weaker incentives than truck owners or operators to adopt fuel-saving technology for their trailers.  The market for medium- and heavy-duty trucks may face these problems, both in the new vehicle market and in the resale market.
Provision of information about fuel-saving technologies through voluntary programs such as SmartWay will assist in the adoption of new cost-saving technologies, but diffusion of new technologies can still be obstructed.  Those who are willing to experiment with new technologies expect to find cost savings, but those may be difficult to prove.  As noted above, because individual results of new technologies vary, new truck purchasers may find it difficult to identify or verify the effects of fuel-saving technologies.  Those who are risk-averse are likely to avoid new technologies out of concerns over the possibility of inadequate returns on the investment, or with other adverse impacts.  Competitive pressures in the freight transport industry can provide a strong incentive to reduce fuel consumption and improve environmental performance.  However, not every driver or trucking fleet operating today has the requisite ability or interest to access the technical information, some of which is already provided by SmartWay, nor the resources necessary to evaluate this information within the context of his or her own freight operation.
It is unclear, as discussed above, whether some or many of the technologies would be adopted in the absence of the program.  To the extent that they would have been adopted, the costs and the benefits attributed to those technologies may not in fact be due to the program and may therefore be overstated.  Both baselines used project substantially less adoption than the agencies consider to be cost-effective.  The agencies will continue to explore reasons for this slow adoption of cost-effective technologies.
As noted at the beginning of this section, the agencies seek comments on all these hypotheses as well as any data that could inform our understanding of what appears to be slow adoption of cost-effective fuel-saving technologies in these industries.
Costs Associated With the Final Program
In this section, the agencies present the estimated costs associated with the final program.  The presentation here summarizes the costs associated with new technology expected to be added to meet the new GHG and fuel consumption standards.  The analysis summarized here provides the estimate of incremental costs on a per truck basis and on an annual total basis.  
The presentation here summarizes the best estimate by EPA and NHTSA staff as to the technology mix expected to be employed for compliance.  For details behind the cost estimates associated with individual technologies, the reader is directed to Section III of this preamble and to Chapter 2 of the RIA.  
With respect to the cost estimates presented here, the agencies note that, because these estimates relate to technologies which are in most cases already available, these cost estimates are technically robust. 
Costs per Truck
For the Class 2b and 3 pickup trucks and vans, the agencies have used a methodology consistent with that used for our recent light-duty joint rulemaking since most of the technologies expected for Class 2b and 3 pickup trucks and vans is consistent with that expected for the larger light-duty trucks.  The cost estimates presented in the recent light-duty joint rulemaking were then scaled upward to account for the larger weight, towing capacity, and work demands of the trucks in these heavier classes.  For details on that scaling process and the resultant costs for individual technologies, the reader is directed to Section III of this preamble and to Chapter 2 of the RIA.  Note also that all cost estimates have been updated to 2009 dollars for this analysis while the heavy-duty GHG emissions and fuel efficiency proposal was presented in 2008 dollars and the 2012-2016 MY light-duty joint rulemaking was presented in 2007 dollars.  
For the loose heavy-duty gasoline engines, we have generally used engine-related costs from the Class 2b and 3 pickup truck and van estimates since the loose heavy-duty gasoline engines are essentially the same engines as those sold into the Class 2b and 3 pickup truck and van market.  
For heavy-duty diesel engines, the agencies have estimated costs using a different methodology than that employed in the recent light-duty joint rulemaking.  In the 2012-2016 MY light-duty joint rulemaking, the fixed costs were included in the hardware costs via an indirect cost multiplier.  As such, the hardware costs presented in that analysis, and in the cost estimates for Class 2b and 3 trucks, included both the actual hardware and the associated fixed costs.  For this analysis, some of the fixed costs are estimated separately for HD diesel engines and are presented separately from the hardware costs.  For details, the reader is directed to Chapter 2 of the RIA.  Importantly, both methodologies after the figures are totaled account for all the costs associated with the program.  As noted above, all costs are presented in 2009 dollars.
The estimates of vehicle compliance costs cover the years leading up to  -  2012 and 2013  -  and including implementation of the program  -  2014 through 2018.  Also presented are costs for the years following implementation to shed light on the long term (2022 and later) cost impacts of the program.   The year 2022 was chosen here consistent with the 2012-2016 MY light-duty joint rulemaking.  That year was considered long term in that analysis because the short-term and long-term markup factors described shortly below are applied in five year increments with the 2012 through 2016 implementation span and the 2017 through 2021 span both representing the short-term.  Since many of the costs used in this analysis are based on costs in the 2012-2016 MY light-duty joint rulemaking analysis, consistency with that analysis seems appropriate.  
Some of the individual technology cost estimates are presented in brief in Section III, and account for both the direct and indirect costs incurred in the manufacturing and dealer industries (for a complete presentation of technology costs, please refer to Chapter 2 of the RIA).  To account for the indirect costs on Class 2b and 3 pickup trucks and vans, the agencies have applied an ICM factor to all of the direct costs to arrive at the estimated technology cost.   The ICM factor used was 1.24 in the short-term (2014 through 2021) to account for differences in the levels of R&D, tooling, and other indirect costs that will be incurred. Once the program has been fully implemented, some of the indirect costs will no longer be attributable to these standards and, as such, a lower ICM factor is applied to direct costs in 2022 and later.  The agencies have also applied ICM factors to Class 4 through 8 trucks and to heavy-duty diesel engine technologies.  Markup factors in these categories range from 1.15 to 1.30 in the short term (2014 through 2021) depending on the complexity of the given technology.  We have modified the manner in which ICMs are applied in that they are no longer applied as a simple multiplicative factor on top of the direct manufacturing costs.  Instead, we have broken out the warranty cost portion of the ICM and apply it in a multiplicative manner then add the non-warranty cost portion of the ICM to that.  The latter portion, that for non-warranty costs, is determined for a given year and held constant rather than decreasing year-over-year.  This new approach, which responds to criticisms from some that the multiplicative approach used in the past essentially double counts learning effects, is discussed in Section VIII.C and is detailed in Chapter 2 of the RIA.  Note that, for the HD diesel engines, the agencies have applied the ICMs to ensure that our estimates are conservative since we have estimated fixed costs separately for technologies applied to these categories -- effectively making the use of markups a double counting of indirect costs.  For the details on the background and the concept behind our use of ICMs to calculate indirect costs, please refer to the report that has been placed in the docket for this final action.
The agencies have also considered the impacts of manufacturer learning on the technology cost estimates by reflecting the phenomenon of volume-based learning curve cost reductions in our modeling using two algorithms depending on where in the learning cycle (i.e., on what portion of the learning curve) we consider a technology to be  -  "steep" portion of the curve for newer technologies and "flat" portion of the curve for mature technologies. The observed phenomenon in the economic literature which supports manufacturer learning cost reductions are based on reductions in costs as production volumes increase, and the economic literature suggests these cost reductions occur indefinitely, though the absolute magnitude of the cost reductions decrease as production volumes increase (with the highest absolute cost reduction occurring with the first doubling of production).   The agencies use the terminology "steep" and "flat" portion of the curve to distinguish among newer technologies and more mature technologies, respectively, and how learning cost reductions are applied in cost analyses.   The steep learning algorithm applies for the early, steep portion of the learning curve and is estimated to result in 20 percent lower costs after two full years of implementation (i.e., a 2016 MY cost would be 20 percent lower than the 2014 and 2015 model year costs for a new technology being implemented in 2014).  The flat learning algorithm applies for the flatter portion of the learning curve and is estimated to result in 3 percent lower costs in each of the five years following first introduction of a mature technology added in response to this final action.  Once two steep learning steps have occurred (for technologies having steep learning applied), flat learning would begin.  For technologies to which flat learning is applied, learning would begin in year 2 at 3 percent per year for 5 years.  Beyond 5 years of flat learning at 3 percent per year, 5 years of flat learning at 2 percent per year, then 5 at 1 percent per year become effective.  
Learning impacts have been considered on most but not all of the technologies expected to be used because some of the expected technologies are already used rather widely in the industry and, presumably, learning impacts have already occurred.  The agencies have applied the steep learning algorithm for only a handful of technologies considered to be new or emerging technologies such as energy recovery systems and thermal storage units which might one day be used on big trucks.  For most technologies, the agencies have considered them to be more established and, hence, the agencies have applied the lower flat learning algorithm.  For more discussion of the learning approach and the technologies to which each type of learning has been applied the reader is directed to Chapter 2 of the RIA.
The technology cost estimates discussed in Section III and detailed in Chapter 2 of the RIA are used to build up technology package cost estimates.  For each engine and truck class, a single package for each was developed capable of complying with the final standards and the costs for each package was generated.  The technology packages and package costs are discussed in more detail in Chapter 2 of the RIA.  The compliance cost estimates take into account all credits and trading programs and include costs associated with air conditioning controls.  Table VIII-1 presents the average incremental costs per truck for this final action.  For HD pickup trucks and vans (Class 2b and 3), costs increase as the standards become more stringent in 2014 through 2018.  Following 2018, costs then decrease going forward as learning effects result in decreased costs for individual technologies.  By 2022, the long term ICMs take effect and costs decrease yet again.  For vocational vehicles, cost trends are more difficult to discern as diesel engines begin adding technology in 2014, gasoline engines begin adding technology in 2016, and the trucks themselves begin adding technology in 2014.  With learning effects the costs, in general, decrease each year except for the heavy-duty gasoline engine changes in 2016.  Long term ICMs take effect in 2022 to provide more cost reductions.  For combination tractors, costs generally decrease each year due to learning effects with the exception of 2017 when the engines placed in sleeper cab tractors add turbo compounding.  Following that, learning impacts result in cost reductions and the long term ICMs take effect in 2022 for further cost reductions.  By 2030 and later, cost - per-truck estimates remain constant for all classes.  Regarding the long term ICMs taking effect in 2022, the agencies consider this the point at which some indirect costs decrease or are no longer considered attributable to the program (e.g., warranty costs go down). Costs per truck remain essentially constant thereafter.  
Table VIII-1:  Estimated Cost per Truck (2009 dollars)

HD Pickups & Vans
Vocational
Combination
2014
$232
$414
$6,019
2015
$302
$408
$5,871
2016
$591
$457
$5,677
2017
$885
$450
$6,413
2018
$1,473
$419
$6,215
2020
$1,392
$404
$6,004
2030
$1,384
$336
$5,075
2040
$1,384
$329
$5,075
2050
$1,384
$329
$5,075
These costs would, presumably, have some impact on new truck prices, although the agencies make no attempt at determining what the impact of increased costs would be on new truck prices.  Nonetheless, on a percentage basis, the costs shown in Table VIII-1 for 2018 MY trucks (when all final requirements are fully implemented) would be roughly four percent for a typical HD pickup truck or van, less than one percent for a typical vocational vehicle, and roughly six percent for a typical combination truck/tractor using new truck prices of $40,000, $100,000 and $100,000, respectively.  The costs would represent lower or higher percentages of new truck prices for new trucks with higher or lower prices, respectively.  Given the wide range of new truck prices in these categories -- a Class 4 Vocational work truck might be $40,000 when new while a Class 8 refuse truck (i.e., a large vocational vehicle) might be as much as $200,000 when new -- it is very difficult to reflect incremental costs as percentages of new truck prices for all trucks.  What is presented here is the average cost (Table VIII-1) compared with typical new truck prices.
 As noted above, the fixed costs were estimated separately from the hardware costs for HD diesel engines that are placed in vocational vehicles and combination tractors.  Those fixed costs are not included in Table VIII-1.  The agencies have estimated the R&D costs at $6.8 million per manufacturer per year for five years and the new test cell costs (to accommodate measurement of N2O emissions) at $63,087 per manufacturer.  The test cell costs of N2O emissions measurement has been adjusted for the final rulemaking to reflect comments which stated approximately 75 percent of manufacturers would be required to update existing equipment while the other 25 percent would require new equipment.  These costs apply individually for LHD, MHD and HHD engines.  Given the 14 manufacturers impacted by the final standards, 11 of which are estimated to sell both MHD and HHD engines and 3 of which are estimated to sell LHD engines, we have estimated a five year annual R&D cost of $170.3 million dollars (2 x 11 x $6.8 million plus 3 x $7.75 million for each year 2012-2016) and a one-time test cell cost of $1.6 million dollars (2 x 11 x $63,087 plus 3 x $63,087 in 2013).  Estimating annual sales of HD diesel engines at roughly 600,000 units results in roughly $284 per engine per year for five years beginning in 2012 and ending in 2016.  Again, these costs are not reflected in Table VIII-1, but are included in Table VIII-2 as "Other Engineering Costs." 
The certification and compliance program costs, for all engine and truck types, are estimated at $6.5 million in the first year dropping to $2.3 million in each year thereafter and continuing indefinitely.  These costs are detailed in the "Draft Supporting Statement for Information Collection Request" which is contained in the docket for this final action.  The costs are higher in the first year due to capital expenses required to comply with new reporting burdens (facility upgrade costs are included in engineering costs as described above).  Estimating annual sales of heavy-duty trucks at roughly 1.5 million units would result in just over $4 per engine/truck in the first year and less than $2 per engine/truck per year thereafter.  These costs are not reflected in Table VIII-1, but are included in Table VIII-2 below as "Compliance Program" costs. 
Annual Costs of the HD National Program
The costs presented here represent the incremental costs for newly added technology to comply with the program.  Together with the projected increases in truck sales, the increases in per-truck average costs shown in Table VIII-1, above result in the total annual costs presented in Table VIII-2 below.  Note that the costs presented in Table VIII-2 do not include the savings that will occur as a result of the improvements to fuel consumption.  Those impacts are presented in Section VIII. E.   Note also that the costs presented here represent costs estimated to occur presuming that the final standards will continue in perpetuity.  Any changes to the final standards would be considered as part of a future rulemaking.  In other words, the final standards do not apply only to 2014-2018 model year trucks - they do, in fact, apply to all 2014 and later model year trucks.  We present more detail regarding the 2014-2018 model year trucks in Sections VIII.L and M, where we summarize all monetized costs and benefits.
Table VIII-2: Annual Costs Associated with the Program ($Millions of 2009 dollars)
Year
HD Pickup and Vans
Vocational Vehicles
Combination Tractors
Other
Engineering
Costs
Compliance Program Costs
Annual
Costs
2012
                                                                             $0
                                                                             $0
                                                                             $0
                                                                           $170
                                                                             $0
                                                                           $170
2013
                                                                             $0
                                                                             $0
                                                                             $0
                                                                           $172
                                                                             $0
                                                                           $172
2014
                                                                           $182
                                                                           $233
                                                                         $1,078
                                                                           $170
                                                                           $6.5
                                                                         $1,670
2015
                                                                           $221
                                                                           $216
                                                                           $922
                                                                           $170
                                                                           $2.3
                                                                         $1,532
2016
                                                                           $421
                                                                           $233
                                                                           $820
                                                                           $170
                                                                           $2.3
                                                                         $1,647
2017
                                                                           $627
                                                                           $230
                                                                           $951
                                                                             $0
                                                                           $2.3
                                                                         $1,810
2018
                                                                         $1,055
                                                                           $222
                                                                         $1,000
                                                                             $0
                                                                           $2.3
                                                                         $2,280
2020
                                                                         $1,066
                                                                           $223
                                                                         $1,001
                                                                             $0
                                                                           $2.3
                                                                         $2,292
2030
                                                                         $1,300
                                                                           $234
                                                                         $1,076
                                                                             $0
                                                                           $2.3
                                                                         $2,612
2040
                                                                         $1,450
                                                                           $304
                                                                         $1,372
                                                                             $0
                                                                           $2.3
                                                                         $3,128
2050
                                                                         $1,638
                                                                           $383
                                                                         $1,777
                                                                             $0
                                                                           $2.3
                                                                         $3,800
NPV, 3%
                                                                        $24,155
                                                                         $5,461
                                                                        $24,487
                                                                           $793
                                                                            $52
                                                                        $54,948
NPV, 7%
                                                                        $11,974
                                                                         $2,889
                                                                        $12,855
                                                                           $724
                                                                            $30
                                                                        $28,473
Indirect Cost Multipliers
Markup Factors to Estimate Indirect Costs
For all segments in this analysis, indirect costs are estimated by applying indirect cost multipliers (ICM) to direct cost estimates.  ICMs were calculated by EPA as a basis for estimating the impact on indirect costs of individual vehicle technology changes that would result from regulatory actions.  Separate ICMs were derived for low, medium, and high complexity technologies, thus enabling estimates of indirect costs that reflect the variation in research, overhead, and other indirect costs that can occur among different technologies.  ICMs were also applied in the MY 2012-2016 rulemaking.  
Prior to developing the ICM methodology, EPA and NHTSA both applied a retail price equivalent (RPE) factor to estimate indirect costs.  RPEs are estimated by dividing the total revenue of a manufacturer by the direct manufacturing costs.  As such, it includes all forms of indirect costs for a manufacturer and assumes that the ratio applies equally for all technologies.  ICMs are based on RPE estimates that are then modified to reflect only those elements of indirect costs that would be expected to change in response to a regulatory-induced technology change.  For example, warranty costs would be reflected in both RPE and ICM estimates, while marketing costs might only be reflected in an RPE estimate but not an ICM estimate for a particular technology, if the new regulatory-induced technology change is not one expected to be marketed to consumers.  Because ICMs calculated by EPA are for individual technologies, many of which are small in scale, they often reflect a subset of RPE costs; as a result, the RPE is typically higher than an ICM.  This is not always the case, as ICM estimates for complex technologies may reflect higher than average indirect costs, with the resulting ICM larger than the averaged RPE for the industry.  
 
There is some level of uncertainty surrounding both the ICM and RPE markup factors.  The ICM estimates used in this final action group all technologies into three broad categories and treat them as if individual technologies within each of the three categories (low, medium, and high complexity) will have the same ratio of indirect costs to direct costs.  This simplification means it is likely that the direct cost for some technologies within a category will be higher and some lower than the estimate for the category in general.  More importantly, the ICM estimates have not been validated through a direct accounting of actual indirect costs for individual technologies.  Rather, the ICM estimates were developed using adjustment factors developed in two separate occasions:  the first, a consensus process, was reported in the RTI report; the second, a modified Delphi method, was conducted separately and reported in an EPA memo.  Both these panels were composed of EPA staff members with previous background in the automobile industry; the memberships of the two panels overlapped but were not the same.  The panels evaluated each element of the industry's RPE estimates and estimated the degree to which those elements would be expected to change in proportion to changes in direct manufacturing costs.  The method and estimates in the RTI report were peer reviewed by three industry experts and subsequently by reviewers for the International Journal of Production Economics.   RPEs themselves are inherently difficult to estimate because the accounting statements of manufacturers do not neatly categorize all cost elements as either direct or indirect costs.  Hence, each researcher developing an RPE estimate must apply a certain amount of judgment to the allocation of the costs.  Moreover, RPEs for heavy- and medium-duty trucks and for engine manufacturers are not as well studied as they are for the light-duty automobile industry.  Since empirical estimates of ICMs are ultimately derived from the same data used to measure RPEs, this affects both measures.  However, the value of RPE has not been measured for specific technologies, or for groups of specific technologies.  Thus applying a single average RPE to any given technology by definition overstates costs for very simple technologies, or understates them for advanced technologies.
In the proposal, we requested comment on our ICM factors and whether it was most appropriate to use ICMs or RPEs.  We received no comment on the issue specifically, other than basic comments that perhaps our ICM factors were low.  In response, for this final action, we have adjusted our ICM factors such that they are slightly higher and, importantly, we have changed the way in which the factors are applied.  The first change -- increased ICM factors -- has been done as a result of further thought among the EPA and NHTSA team that the ICM factors presented in the original RTI report for low and medium complexity technologies should no longer be used and that we should rely solely on the modified-Delphi values for these complexity levels.  For that reason, we have eliminated the averaging of original RTI values with modified-Delphi values and instead are relying solely on the modified-Delphi values for low and medium complexity technologies.  The second change -- the way the factors are applied -- results in the warranty portion of the indirect costs being applied as a multiplicative factor (thereby decreasing going forward as direct manufacturing costs decrease due to learning), and the remainder of the indirect costs being applied as an additive factor (thereby remaining constant year-over-year and not being reduced due to learning).  This second change has a comparatively large impact on the resultant technology costs and, we believe, more appropriately estimates costs over time.  These changes to our ICMs and the methodology are described in greater detail in Chapter 2 of the final RIA.   
Cost per Ton of Emissions Reductions
The agencies have calculated the cost per ton of GHG reductions associated with this program on a CO2eq basis using the above costs and the emissions reductions described in Sections VI and VII.  These values are presented in Table VIII-3 through Table VIII-5 for HD pickups & vans, vocational vehicles and combination trucks/tractors, respectively.  The cost per metric ton of GHG emissions reductions has been calculated in the years 2020, 2030, 2040, and 2050 using the annual vehicle compliance costs and emission reductions for each of those years.  The value in 2050 represents the long-term cost per ton of the emissions reduced.  The agencies have also calculated the cost per metric ton of GHG emission reductions including the savings associated with reduced fuel consumption (presented below in Section VIII. E. ).  This latter calculation does not include the other benefits associated with this program such as those associated with energy security benefits as discussed later in Section VIII.I.  By including the fuel savings in the cost estimates, the cost per ton is generally less than $0 since the estimated value of fuel savings outweighs the program costs. The results for CO2eq costs per ton under the HD National Program across all regulated categories are shown in Table VIII-6.
Table VIII-3: Annual Cost per Metric Ton of CO2eq Reduced  -  HD Pickup Trucks & Vans (2009 dollars)
Year
Program Cost
Fuel Savings (post-tax)
CO2eq Reduced
Cost per Ton (without Fuel Savings)
Cost per Ton (with Fuel Savings)
2020
$1,100
$1,000
3
$330
$30
2030
$1,300
$3,300
10
$120
-$190
2040
$1,500
$4,700
14
$110
-$230
2050
$1,600
$5,900
16
$100
-$270

Table VIII-4: Annual Cost per Metric Ton of CO2eq Reduced  -  Vocational Vehicles (2009 dollars)
Year
Program Cost
Fuel Savings (post-tax)
CO2eq Reduced
Cost per Ton (without Fuel Savings)
Cost per Ton (with Fuel Savings)
2020
$200
$1,300
5
$40
-$240
2030
$200
$2,900
9
$20
-$290
2040
$300
$4,200
13
$20
-$310
2050
$400
$5,500
15
$30
-$340

Table VIII-5: Annual Cost per Metric Ton of CO2eq Reduced  -  Combination Tractors (2009 dollars)
Year
Program Cost
Fuel Savings (post-tax)
CO2eq Reduced
Cost per Ton (without Fuel Savings)
Cost per Ton (with Fuel Savings)
2020
$1,000
$8,700
32
$30
-$240
2030
$1,100
$17,000
57
$20
-$280
2040
$1,400
$22,100
68
$20
-$300
2050
$1,800
$28,500
78
$20
-$340

Table VIII-6: Annual Cost per Metric Ton of CO2eq Reduced  -  Final (2009 dollars)
Year
Program Cost
Fuel Savings (post-tax)
CO2eq Reduced
Cost per Ton (without Fuel Savings)
Cost per Ton (with Fuel Savings)
2020
$2,300
$11,000
40
$60
-$220
2030
$2,600
$23,200
76
$30
-$270
2040
$3,100
$31,000
94
$30
-$300
2050
$3,800
$39,900
109
$30
-$330

Impacts of Reduction in Fuel Consumption
What are the Projected Changes in Fuel Consumption
The new CO2 standards will result in significant improvements in the fuel efficiency of affected trucks.  Drivers of those trucks will see corresponding savings associated with reduced fuel expenditures.  The agencies have estimated the impacts on fuel consumption for the tailpipe CO2 standards.  To do this, fuel consumption is calculated using both current CO2 emission levels and the new CO2 standards. The difference between these estimates represents the net savings from the CO2 standards.   Note that the total number of miles that vehicles are driven each year is different under the control case scenario than in the reference case due to the "rebound effect," which is discussed in Section VIII. E. (5) .  EPA also notes that drivers who drive more than our average estimates for vehicle miles traveled (VMT) will experience more fuel savings; drivers who drive less than our average VMT estimates will experience less fuel savings. 
The expected impacts on fuel consumption are shown in Table VIII-7.  The gallons shown in the tables reflect impacts from the new fuel consumption and CO2 standards and include increased consumption resulting from the rebound effect.
Table VIII-7: Fuel Consumption Reductions of the Program (Million gallons)
                                                                           Year
                                                                       Gasoline
                                                                         Diesel
                                                                           2014
                                                                              1
                                                                            479
                                                                           2015
                                                                              3
                                                                            856
                                                                           2016
                                                                             15
                                                                          1,186
                                                                           2017
                                                                             32
                                                                          1,662
                                                                           2018
                                                                             60
                                                                          2,146
                                                                           2020
                                                                            117
                                                                          3,017
                                                                           2030
                                                                            355
                                                                          5,729
                                                                           2040
                                                                            461
                                                                          7,123
                                                                           2050
                                                                            531
                                                                          8,248

Potential Impacts on Global Fuel Use and Emissions 
EPA's quantified reductions in fuel consumption focus on the gains from reducing fuel used by heavy-duty vehicles within the United States. However, as discussed in Section VIII.I, EPA also recognizes that this regulation will lower the world price of oil (the "monopsony" effect).  Lowering oil prices could lead to an uptick in oil consumption globally, leading to a corresponding increase in GHG emissions in other countries.  This global increase in emissions could slightly offset some of the emission reductions achieved domestically as a result of the regulation. 
What are the Monetized Fuel Savings?
Using the fuel consumption estimates presented in Table VIII-7, the agencies can calculate the monetized fuel savings associated with the final standards.  To do this, reduced fuel consumption is multiplied in each year by the corresponding estimated average fuel price in that year, using the reference case taken from the AEO 2011.   These estimates do not account for the significant uncertainty in future fuel prices; the monetized fuel savings will be understated if actual fuel prices are higher (or overstated if fuel prices are lower) than estimated.  AEO is a standard reference used by NHTSA and EPA and many other government agencies to estimate the projected price of fuel. This has been done using both the pre-tax and post-tax fuel prices.  Since the post-tax fuel prices are the prices paid at fuel pumps, the fuel savings calculated using these prices represent the savings consumers would see.  The pre-tax fuel savings are those savings that society would see.  These results are shown in Table VIII-8.  Note that in Sections VIII.L and M, the overall benefits and costs of the rules are presented and, for that reason, only the pre-tax fuel savings are presented there. 
Table VIII-8: Estimated Monetized Fuel Savings ($Millions of 2009 dollars)
Year
Fuel Savings (pre-tax)
Fuel Savings (post-tax)
2014
$1,200
$1,400
2015
$2,300
$2,600
2016
$3,300
$3,800
2017
$4,800
$5,600
2018
$6,500
$7,500
2020
$9,700
$11,000
2030
$20,900
$23,200
2040
$28,300
$31,000
2050
$36,900
$39,900
NPV, 3%
                                                                       $379,500
                                                                       $419,900
NPV, 7%
                                                                       $168,400
                                                                       $187,400

As shown in Table VIII-8, the agencies are projecting that truck consumers would realize very large fuel savings as a result of the final standards.  As discussed further in the introductory paragraphs of Section VIII, it is a conundrum from an economic perspective that these large fuel savings have not been provided by manufacturers and purchased by consumers of these products.  Unlike in the light-duty vehicle market, the vast majority of vehicles in the medium- and heavy-duty truck market are purchased and operated by businesses; for them, fuel costs may represent substantial operating expenses.  Even in the presence of uncertainty and imperfect information  -  conditions that hold to some degree in every market  -  we generally expect firms to be cost-minimizing to survive in a competitive marketplace and to make decisions that are therefore in the best interest of the company and its owners and/or shareholders.
A number of behavioral and market phenomena may lead to a disconnect between how businesses account for fuel savings in their decisions and the way in which we account for the full stream of fuel savings for these rules, including imperfect information in the original and resale markets, split incentives, uncertainty in future fuel prices, and adjustment or transactions costs (see Section VIII.A for a more detailed discussion).  As discussed below in the context of rebound in Section VIII.E.5, the nature of the explanation for this gap may influence the actual magnitude of the fuel savings.  
Payback Period and Lifetime Savings on New Truck Purchases
Another factor of interest is the payback period on the purchase of a new truck that complies with the new standards.  In other words, how long would it take for the expected fuel savings to outweigh the increased cost of a new vehicle?  For example, a new 2018 MY HD pickup truck and van is estimated to cost $1,473 more, a vocational vehicle $419 more, and a combination tractor $6,215 more (all values are on average, and relative to the reference case vehicle) due to the addition of new GHG reducing technology.  This new technology will result in lower fuel consumption and, therefore, savings in fuel expenditures.  But how many months or years would pass before the fuel savings exceed the upfront costs?  Table VIII-9 shows the payback period analysis for HD pickup trucks and vans.  The table shows fuel consumed under the reference case and fuel consumed by a 2018 model year truck under the program, inclusive of fuel consumed due to rebound miles.  The decrease in fuel consumed under the program is then monetized by multiplying by the fuel price reported by AEO (reference case) for 2018 and later.  This value represents the fuel savings expected under the program for a HD pickup or van.  These savings are then discounted each year since future savings are considered to be of less value than current savings.  Shown next are estimated increased costs (costs do not necessarily reflect increased prices which may be higher or lower than costs) for the new truck (refer to Table VIII-1).  The next columns of Table VIII-9 show the period required for the fuel savings to exceed the new truck costs.  As seen in the table, in the third year of ownership, the discounted fuel savings (at both 3% and 7% discount rates) have begun to outweigh the increased cost of the truck.  As shown in the table, the full life savings using 3% discounting would be $5,714 and at 7% discounting would be $4,035.
Costs in this section, and summarized in Section VIII.L, are shown from the greenhouse gas perspective where fuel savings are treated as negative costs, since the primary motivations of this program are U.S. energy security and reductions in GHG emissions.  From that perspective, the benefits of the program are the external effects, and the net effects on truck owners and operators are the costs.  EPA prefers to account for all costs (positive and negative) directly realized by the end user to accurately present the total cost and to differentiate those costs and cost savings from more generally realized societal benefits.  In Section VIII.M, the agencies also present summary tables that show the cost and benefit analysis from the fuel efficiency perspective, where the purpose of a program to regulate fuel efficiency is primarily to save fuel.  From this perspective, fuel savings are counted as benefits that occur over the lifetime of the vehicle as it consumes less fuel, rather than as negative costs that would be experienced either at the time of purchase or over the lifetime of the vehicle.  OMB's Circular A-4, which provides guidance to Federal agencies on the development of regulatory analysis, makes clear that either approach is acceptable.
Table VIII-9:  Payback Period for a 2018 Model Year HD Pickup or Van (2009$)
                               Year of Ownership
                         Reduced Fuel Use (gallons)[b]
                                Fuel Savings[a]
                                Increased Cost
                              Cumulative Savings
                                       
                                   Gasoline
                                    Diesel
                                 3% Discount 
                                  7% Discount
                                       
                                 3% Discount 
                                  7% Discount
                                       1
                                                                             67
                                                                            122
                                                                           $627
                                                                           $616
                                                                        -$1,473
                                                                          -$845
                                                                          -$857
                                       2
                                                                             67
                                                                            122
                                                                           $617
                                                                           $583
                                                                               
                                                                          -$228
                                                                          -$274
                                       3
                                                                             66
                                                                            120
                                                                           $600
                                                                           $546
                                                                               
                                                                           $372
                                                                           $272
                                       4
                                                                             64
                                                                            117
                                                                           $570
                                                                           $499
                                                                               
                                                                           $942
                                                                           $771
                                       5
                                                                             62
                                                                            113
                                                                           $544
                                                                           $458
                                                                               
                                                                         $1,486
                                                                         $1,229
                                       6
                                                                             59
                                                                            108
                                                                           $507
                                                                           $411
                                                                               
                                                                         $1,992
                                                                         $1,641
                                       7
                                                                             56
                                                                            102
                                                                           $474
                                                                           $370
                                                                               
                                                                         $2,466
                                                                         $2,010
                                   Full Life
                                                                            894
                                                                          1,617
                                                                         $7,187
                                                                         $5,507
                                                                        -$1,473
                                                                         $5,714
                                                                         $4,035
Notes:
[a] Fuel savings calculated using the AEO 2011 reference case fuel prices through 2035.  Fuel prices beyond 2035 were extrapolated from an average growth rate for the years 2017 to 2035. Gasoline and diesel fuel prices have been weighted by gasoline and diesel fuel reductions estimated for all 2018 MY heavy-duty trucks during their lifetimes.
[b] Gallons under the control case include gallons consumed during rebound driving.
The story is somewhat different for vocational vehicles and combination tractors.  These cases are shown in Table VIII-10 and Table VIII-11, respectively.  Since these trucks travel more miles in a given year, their payback periods are shorter and are expected to occur within the second year of ownership under both the 3% and 7% discounting cases.  As can be seen in Table VIII-10 and Table VIII-11, the lifetime fuel savings are estimated to be considerable with savings of $6,084 (3%) and $4,716 (7%) for the vocational vehicles and $72,875 (3%) and $58,162 (7%) for the combination tractors.
Table VIII-10: Payback Period for a 2018 Model Year Vocational Vehicle (2009$)
                               Year of Ownership
                         Reduced Fuel Use (gallons)[b]
                                Fuel Savings[a]
                                Increased Cost
                              Cumulative Savings

                                   Gasoline
                                    Diesel
                                 3% Discount 
                                  7% Discount
                                       
                                 3% Discount 
                                  7% Discount
                                       1
                                                                             59
                                                                            173
                                                                           $769
                                                                           $754
                                                                          -$419
                                                                           $350
                                                                           $336
                                       2
                                                                             55
                                                                            158
                                                                           $698
                                                                           $660
                                                                               
                                                                         $1,048
                                                                           $995
                                       3
                                                                             51
                                                                            145
                                                                           $633
                                                                           $576
                                                                               
                                                                         $1,681
                                                                         $1,571
                                       4
                                                                             48
                                                                            132
                                                                           $568
                                                                           $498
                                                                               
                                                                         $2,250
                                                                         $2,069
                                       5
                                                                             44
                                                                            119
                                                                           $511
                                                                           $430
                                                                               
                                                                         $2,760
                                                                         $2,499
                                       6
                                                                             40
                                                                            107
                                                                           $447
                                                                           $363
                                                                               
                                                                         $3,208
                                                                         $2,862
                                       7
                                                                             37
                                                                             95
                                                                           $398
                                                                           $311
                                                                               
                                                                         $3,605
                                                                         $3,173
                                   Full Life
                                                                            642
                                                                          1,587
                                                                         $6,503
                                                                         $5,135
                                                                          -$419
                                                                         $6,084
                                                                         $4,716
Notes:
[a] Fuel savings calculated using the AEO 2011 reference case fuel prices through 2035.  Fuel prices beyond 2035 were extrapolated from an average growth rate for the years 2017 to 2035. Gasoline and diesel fuel prices have been weighted by gasoline and diesel fuel reductions estimated for all 2018 MY heavy-duty trucks during their lifetimes.
[b] Gallons under the control case include gallons consumed during rebound driving.
Table VIII-11: Payback Period for a 2018 Model Year Combination Tractor (2009$)
                               Year of Ownership
                         Reduced Fuel Use (gallons)[b]
                                Fuel Savings[a]
                                Increased Cost
                              Cumulative Savings
                                       
                                   Gasoline
                                    Diesel
                                 3% Discount 
                                  7% Discount
                                       
                                 3% Discount 
                                  7% Discount
                                       1
                                                                              0
                                                                          3,223
                                                                        $10,736
                                                                        $10,539
                                                                        -$6,215
                                                                         $4,522
                                                                         $4,324
                                       2
                                                                              0
                                                                          2,897
                                                                         $9,619
                                                                         $9,089
                                                                               
                                                                        $14,141
                                                                        $13,413
                                       3
                                                                              0
                                                                          2,619
                                                                         $8,564
                                                                         $7,790
                                                                               
                                                                        $22,705
                                                                        $21,203
                                       4
                                                                              0
                                                                          2,359
                                                                         $7,532
                                                                         $6,595
                                                                               
                                                                        $30,237
                                                                        $27,797
                                       5
                                                                              0
                                                                          2,096
                                                                         $6,626
                                                                         $5,585
                                                                               
                                                                        $36,863
                                                                        $33,382
                                       6
                                                                              0
                                                                          1,842
                                                                         $5,684
                                                                         $4,611
                                                                               
                                                                        $42,546
                                                                        $37,993
                                       7
                                                                              0
                                                                          1,617
                                                                         $4,951
                                                                         $3,867
                                                                               
                                                                        $47,497
                                                                        $41,860
                                   Full Life
                                                                              0
                                                                         26,148
                                                                        $79,089
                                                                        $64,376
                                                                        -$6,215
                                                                        $72,875
                                                                        $58,162
Notes:
[a] Fuel savings calculated using the AEO 2011 reference case fuel prices through 2035.  Fuel prices beyond 2035 were extrapolated from an average growth rate for the years 2017 to 2035. Gasoline and diesel fuel prices have been weighted by gasoline and diesel fuel reductions estimated for all 2018 MY heavy-duty trucks during their lifetimes.
[b] Gallons under the control case include gallons consumed during rebound driving.
All of these payback analyses include fuel consumed during rebound VMT in the control case but not in the reference case, consistent with other parts of the analysis.  Further, this analysis does not include other societal impacts such as reduced time spent refueling or noise, congestion and accidents since the focus is meant to be on those factors buyers think about most while considering a new truck purchase.  Note also that operators that drive more miles per year than the average would realize greater fuel savings than estimated here, and those that drive fewer miles per year would realize lesser savings.  The same holds true for operators that keep their vehicles longer (i.e., more years) than average in that they would realize greater lifetime fuel savings than operators that keep their vehicles for fewer years than average.  Likewise, should fuel prices be higher than the AEO 2011 reference case, operators will realize greater fuel savings than estimated here while they would realize lesser fuel savings were fuel prices to be lower than the AEO 2011 reference case.
Rebound Effect
The VMT rebound effect refers to the fraction of fuel savings expected to result from an increase in fuel efficiency that is offset by additional vehicle use.  If truck shipping costs decrease as a result of lower fuel costs, an increase in truck VMT may occur.  Unlike the light-duty rebound effect, the heavy-duty (HD) rebound effect has not been extensively studied.  Because the factors influencing the HD rebound effect are generally different from those affecting the light-duty rebound effect, much of the research on the light-duty rebound effect is not likely to apply to the HD sectors.  One of the major differences between the HD rebound effect and the light-duty rebound effect is that HD vehicles are used primarily for business purposes.  Since these businesses are profit driven, decision makers are highly likely to be aware of the costs and benefits of different shipping decisions, both in the near term and long term.  Therefore, shippers are much more likely to take into account changes in the overall operating costs per mile when making shipping decisions that affect VMT.  
Another difference from the light-duty case is that, as discussed in the recent NAS Report, when calculating the percentage change in trucking costs to determine the rebound effect, all changes in the operating costs should be considered.  The cost of labor and fuel generally constitute the top two shares of truck operating costs, depending on the price of petroleum,, distance traveled, type of truck, and commodity.  Finally, the equipment costs associated with the purchase or lease of the truck is also a significant component of total operating costs.  Even though vehicle costs are lump-sum purchases, they can be considered operating costs for trucking firms, and these costs are, in many cases, expected to be passed onto the final consumers of shipping services on a variable basis.  This shipping cost increase could help temper the rebound effect relative to the case of light-duty vehicles, in which vehicle costs are not considered an operating cost by vehicle owners.
When calculating the net change in operating costs, both the increase in new vehicle costs and the decrease in fuel costs per mile should be taken into consideration.  The higher the net cost savings, the higher the expected rebound effect.  Conversely, if the upfront vehicle costs outweighed future cost savings and total costs increased, shipping costs would rise, which would likely result in a decrease in truck VMT.  In theory, other changes such as maintenance costs and insurance rates would also be taken into account, although information on these potential cost changes is extremely limited.  In the proposal, we invited comments on the most appropriate methodology for factoring new vehicle purchase or leasing costs into the per-mile operating costs.  We also invited comment or data on how these regulations could affect maintenance, insurance, or other operating costs.  We did not receive any comments on these assumptions.
The following sections describe the factors affecting the rebound effect, different methodologies for estimating the rebound effect, and examples of different estimates of the rebound effect to date.  According to the NAS study, it is "not possible to provide a confident measure of the rebound effect," yet NAS concluded that a rebound effect likely exists and that "estimates of fuel savings from regulatory standards will be somewhat misestimated if the rebound effect is not considered."  While we believe the HD rebound effect needs to be studied in more detail, we have attempted to capture the potential impact of the rebound effect in our analysis.  In the proposal, we solicited data on the rebound effect and input on the most appropriate estimates to use for the rebound effect.  However, we did not receive any new data or substantive comments.  Therefore, for this final action, we continue to use a rebound effect for vocational vehicles of 15%, a rebound effect for HD pickup trucks and vans of 10%, and a rebound effect for combination tractors of 5%.  These VMT impacts are reflected in the estimates of total GHG and other air pollution reductions presented in Chapter 5 of the RIA.     
Factors Affecting the Magnitude of the Rebound Effect 
The HD vehicle rebound effect is driven by the interaction of several different factors.  In the short-run, decreasing the fuel cost per mile of driving could lead to a decrease in end product prices.  Lower prices could stimulate additional demand for those products, which would then result in an increase in VMT.  In the long run, shippers could reorganize their logistics and distribution networks to take advantage of lower truck shipping costs.  For example, shippers may shift away from other modes of shipping such as rail, barge, or air.  In addition, shippers may also choose to reduce the number of warehouses, reduce load rates, and make smaller, more frequent shipments, all of which could also lead to an increase in HD VMT.  Finally, the benefits of the fuel savings could ripple through the economy, which could in turn increase overall demand for goods and services shipped by trucks, and therefore increase HD VMT.  
Conversely, if a fuel efficiency regulation leads to net increases in the cost of trucking because fuel savings do not fully offset the increase in upfront vehicle costs, then the price of trucking services could rise, spurring a decrease in HD VMT and a shift to alternative shipping modes. These effects would also ripple through the economy.    
Options for Quantifying the Rebound Effect 
As described in the previous section, the fuel efficiency rebound effect for HD vehicles has not been studied as extensively as the rebound effect for light-duty vehicles, and virtually no research has been conducted on the HD pickup truck and van rebound effect.  In the proposal, we discussed four options for quantifying the rebound effect and requested comments.  We did not receive any substantive comments on the described methodologies.  
Aggregate Estimates
The aggregate approximation approach quantifies the overall change in truck VMT as a result of a percentage change in freight rates.  It is important to note that most of the aggregate estimates measure the change in freight demanded (tons or ton-miles), rather than a change in fuel consumption or VMT.  The change in tons or ton-miles is more accurately characterized as a freight elasticity.  Therefore, it may not be entirely appropriate to interpret these freight elasticities as measures of the rebound effect, although these terms are sometimes used interchangeably in the literature.  Given these caveats, freight elasticity estimates rely on estimates of aggregate price elasticity of demand for trucking services, given a percentage change in trucking prices, which is generally referred to as an "own-price elasticity."  Estimates of trucking own-price elasticities vary widely from positive 1.72 to negative 7.92), and there is no general consensus on the most appropriate values to use, though a 2004 literature survey found aggregate elasticity estimates generally fall in the range of -0.5 to -1.5.  In other words, given an own-price elasticity of -1.5, a 10% decrease in trucking prices leads to a 15% increase in truck shipping demand.  
Another challenge of estimating the rebound effect using freight elasticities is that these values appear to vary substantially based on the demand elasticity measure (e.g., ton or ton-mile), the model specification (e.g., linear functional form or log linear), the length of the trip, and the type of cargo.  In general, elasticity estimates of longer trips tend to be larger than elasticity estimates for shorter trips.  In addition, elasticities tend to be larger for lower-value commodities compared to higher-value commodities.  Although these factors explain some of the differences in estimates, much of the observed variation cannot be explained quantitatively.  For example, a recent study that controlled for these variables only accounted for about half of the observed variation.     
Another important variable influencing freight elasticity estimates is whether potential mode shifting is taken into account.  Although the total demand for freight transport is generally determined by economic activity, there is often the choice of shipping freight on modes other than truck.  This is because the United States has extensive rail, waterway and air transport networks in addition to an extensive highway network; these networks closely parallel each other and are often both viable choices for freight transport for long-distance routes within the continent.  If rates go down for one mode, there will be an increase in demand for that mode and some demand will be shifted from other modes.  This "cross-price elasticity" is a measure of the percentage change in demand for shipping by another mode (e.g., rail) given a percentage change in the price of trucking.  Aggregate estimates of cross-price elasticities also vary widely, and there is no general consensus on the most appropriate value to use for analytical purposes.  The NAS report cites values ranging from 0.35 to 0.59.  Other reports provide significantly different cross-price elasticities, ranging from 0.1 to 2.0.  
When considering intermodal shift, the most relevant kinds of shipments are those that are competitive between rail and truck modes. These trips generally include long-haul shipments greater than 500 miles, which weigh between 50,000 and 80,000 pounds (the legal road limit in many states).  Special kinds of cargo like coal and short-haul deliveries are of less interest because they are generally not economically transferable between truck and rail modes, and they would not be expected to shift modes except under an extreme price change.  However, the total amount of freight that could potentially be subject to mode shifting has also not been studied extensively.  
Sector-Specific Estimates
Given the limited data available regarding the HD rebound effect, the aggregate approach greatly simplifies many of the assumptions associated with calculations of the rebound effect.  In reality, however, responses to changes in fuel efficiency and new vehicle costs will vary significantly based on the commodities affected.  A detailed, sector-specific approach would be expected to more accurately reflect changes in the trucking market in response to the standards in this rule.  For example, input-output tables could be used to determine the trucking cost share of the total delivered price of a commodity.  Using the change in trucking prices described in the aggregate approach, the product-specific demand elasticities could be used to calculate the change in sales and shipments for each product.  The change in shipment increases could then be weighted by the share of the trucking industry total, and then summed to get the total increase in trucking output.  A simplifying assumption could then be made that the increase in output results in an increase in VMT.  To the best of our knowledge, this type of data has not yet been collected.  We did not receive any new information in response to our request for comments in the proposal, therefore we were unable to use this methodology for estimating the rebound effect for this final action.    
Econometric Estimates 
Similar to the methodology used to estimate the light-duty rebound effect, the HD rebound effect could be modeled econometrically by estimating truck demand as a function of economic activity (e.g., GDP) and different input prices (e.g., vehicle prices, driver wages, and fuel costs per mile).  This type of econometric model could be estimated for either truck VMT or ton-miles as a measure of demand.  The resulting elasticity estimates could then be used to determine the change in trucking demand, given the change in fuel cost and truck prices per mile from these standards.  One of the challenges associated with an econometric analysis is the potential for omitted variable bias, which could either overstate or understate the potential rebound effect if the omitted variable is correlated with the controlled variables.
Other Modeling Approaches
Regulation of the heavy-duty industry has been studied in more detail in Europe, as the European Commission (EC) has considered allowing longer and heavier trucks for freight transport.  Part of the analysis considered by the EC relies on country-specific modeling of changes in the freight sector that would result from changes in regulations.  This approach attempts to explicitly calculate modal shift decisions and impacts on GHG emissions.  Although similar types of analysis have not been conducted extensively in the United States, research is currently underway that explores the potential for intermodal shifting in the United States.  For example, Winebrake and Corbett have developed the Geospatial Intermodal Freight Transportation model, which evaluates the potential for GHG emissions reductions based on mode shifting, given existing limitations of infrastructure and other route characteristics in the United States.    This model connects multiple road, rail, and waterway transportation networks and embeds activity-based calculations in the model.  Within this intermodal network, the model assigns various economic, time-of-delivery, energy, and environmental attributes to real-world goods movement routes.  The model can then calculate different network optimization scenarios, based on changes in prices and policies.  However, more work is needed in this area to determine whether this type of methodology is appropriate for the purposes of capturing the rebound effect.  Therefore, we have not been able to use this methodology for estimating the rebound effect for this final action.    
Estimates of the Rebound Effect 
The aggregate methodology was used by Cambridge Systematics, Inc. (CSI) to show several examples of the magnitude of the rebound effect.   In their paper commissioned by the NAS in support of the recent HD report, CSI calculated an effective rebound effect for two different technology cost and fuel savings scenarios associated with an example Class 8 truck.  Scenario 1 increased average fuel economy from 5.59 mpg to 6.8 mpg, with an additional cost of $22,930.  Scenario 2 increased the average fuel economy to 9.1 mpg, at an incremental cost of $71,630 per vehicle.  The CSI examples provided estimates using a range of own-price elasticities (-0.5 to -1.5) and cross-price elasticities (0.35 to 0.59) from the literature.   Based on these two scenarios and a number of simplifying assumptions to aid the calculations, CSI found a rebound effect of 11-31% for Scenario 1 and 5-16% for Scenario 2 when the fuel savings from reduced rail usage were not taken into account ("First rebound effect").  When the fuel savings from reduced rail usage were included in the calculations, the overall rebound effect was between 9-13% for Scenario 1 and 3-15% for Scenario 2 ("Second Rebound Effect").  See Table VIII-12.
CSI included a number of caveats associated with these calculations.  Namely, the elasticity estimates derived from the literature are "heavily reliant on factors including the type of demand measures analyzed (vehicle-miles of travel, ton-miles, or tons), analysis geography, trip lengths, markets served, and commodities transported."  Furthermore, the CSI example only focused on Class 8 combination tractors and did not attempt to quantify the potential rebound effect for any other truck classes.  Finally, these scenarios were characterized as "sketches" and were not included in the final NAS report.  In fact, the NAS report asserted that it is "not possible to provide a confident measure of the rebound effect," yet concluded that a rebound effect likely exists and that "estimates of fuel savings from regulatory standards will be somewhat misestimated if the rebound effect is not considered."  
Table VIII-12: Range of Rebound Effect Estimates from Cambridge Systematics Aggregate Assessment

Scenario 1 
(6.8 mpg, $22,930)
Scenario 2
(9.1 mpg, $71,630)
"First Rebound Effect" (increase in truck VMT resulting from decrease in operating costs)
11-31%
5-16%
"Second Rebound Effect" (net fuel savings when decreases from rail are taken into account)
9-13 %
3-15%
As an alternative, using the econometric approach, NHTSA has estimated the rebound effect in the short run and long run for single unit (Class 4-7) and (Class 8) combination tractors.  As shown in Table VIII-13:, the estimates for the long-run rebound effect are larger than the estimates in the short run, which is consistent with the theory that shippers have more flexibility to change their behavior (e.g., restructure contracts or logistics) when they are given more time.  In addition, the estimates derived from the national data also showed larger rebound effects compared to the state data.  One possible explanation for the difference in the estimates is that the national rebound estimates are capturing some of the impacts of changes in economic activity.  Historically, large increases in fuel prices are highly correlated with economic downturns, and there may not be enough variation in the national data to differentiate the impact of fuel price changes from changes in economic activity.  In contrast, some states may see an increase in output when energy prices increase (e.g., large oil producing states such as Texas and Alaska); therefore, the state data may be more accurately isolating the individual impact of fuel price changes.
Table VIII-13: Range of Rebound Effect Estimates from NHTSA Econometric Analysis
Truck Type
National Data
State Data

Short Run
Long Run
Short Run
Long Run
Single Unit
13-22%
28-45%
3-8%
12-21%
Combination
N/A
12-14%
N/A
4-5%
As discussed throughout this section, there are multiple methodologies for quantifying the rebound effect, and these different methodologies produce a large range of potential values of the rebound effect.  However, for the purposes of quantifying the rebound effect for this program, we have used a rebound effect with respect to changes in fuel costs per mile on the lower range of the long-run estimates.  Given the fact that the long-run state estimates are generally more consistent with the aggregate estimates, for this program we have chosen a rebound effect for vocational vehicles (single unit trucks) of 15% that is within the range of estimates from both methodologies.  Similarly, we have chosen a rebound effect for combination tractors of 5%.   
To date, no estimates of the HD pickup truck and van rebound effect have been cited in the literature.  Since these vehicles are used for very different purposes than heavy-duty vehicles, it does not necessarily seem appropriate to apply one of the heavy-duty estimates to the HD pickup trucks and vans.  These vehicles are more similar in use to large light-duty vehicles, so for the purposes of our analysis, we have chosen to apply the light-duty rebound effect of 10% to this class of vehicles.  
For the purposes of this program, we have not taken into account any potential fuel savings or GHG emission reductions from the rail sector due to mode shifting.  We requested comments on this assumption in the proposal, but we did not receive any new data or input.    
Furthermore, we have made a number of simplifying assumptions in our calculations, which are discussed in more detail in the RIA.  Specifically, we have not attempted to capture how current market failures might impact the rebound effect.  The direction and magnitude of the rebound effect in the HD market are expected to vary depending on the existence and types of market failures affecting the fuel efficiency of the trucking fleet.  If firms are already accurately accounting for the costs and benefits of these technologies and fuel savings, then these regulations would increase their net costs, because trucks would already include all the cost-effective technologies.  As a result, the rebound effect would actually be negative and truck VMT would decrease as a result of these final regulations.  However, if firms are not optimizing their behavior today due to factors such as lack of reliable information (see Section VIII.A. for further discussion), it is more likely that truck VMT would increase.  If firms recognize their lower net costs as a result of these regulations and pass those costs along to their customers, then the rebound effect would increase truck VMT.  This response assumes that trucking rates include both truck purchase costs and fuel costs, and that the truck purchase costs included in the rates spread those costs over the full expected lifetime of the trucks.  If those costs are spread over a shorter period, as the expected short payback period implies, then those purchase costs will inhibit reduction of freight rates, and the rebound effect will be smaller. 
As discussed in more detail in Section VIII.A, if there are market failures such as split incentives, estimating the rebound effect may depend on the nature of the failures.  For example, if the original purchaser cannot fully recoup the higher upfront costs through fuel savings before selling the vehicle nor pass those costs onto the resale buyer, the firm would be expected to raise shipping rates.  A firm purchasing the truck second-hand might lower shipping rates if the firm recognizes the cost savings after operating the vehicle, leading to an increase in VMT.  Similarly, if there are split incentives and the vehicle buyer isn't the same entity that purchases the fuel, than there would theoretically be a positive rebound effect.  In this scenario, fuel savings would lower the net costs to the fuel purchaser, which would result in a larger increase in truck VMT.   
If all of these scenarios occur in the marketplace, the net effect will depend on the extent and magnitude of their relative effects, which are also likely to vary across truck classes (for instance, split incentives may be a much larger problem for Class 7 and 8 tractors than they are for HD pickup trucks).  Additional details on the rebound effect are included in the RIA.  
Class Shifting and Fleet Turnover Impacts
The agencies considered two additional potential indirect costs, benefits, effects, and externalities which may lead to unintended consequences of the program to improve the fuel efficiency and reduce GHG emissions from HD trucks.  The next sections cover the agencies' qualitative discussions on potential class shifting and fleet turnover effects.
Class Shifting
Heavy-duty vehicles are typically configured and purchased to perform a function.  For example, a concrete mixer truck is purchased to transport concrete, a combination tractor is purchased to move freight with the use of a trailer, and a Class 3 pickup truck could be purchased by a landscape company to pull a trailer carrying lawnmowers.  The purchaser makes decisions based on many attributes of the vehicle, including the gross vehicle weight rating of the vehicle which in part determines the amount of freight or equipment that can be carried. If the final HD National Program impacts either the performance of the vehicle or the marginal cost of the vehicle relative to the other vehicle classes, then consumers may choose to purchase a different vehicle, resulting in the unintended consequence of increased fuel consumption and GHG emissions in-use.
The agencies, along with the NAS panel, found that there is little or no literature which evaluates class shifting between trucks.  NHTSA and EPA qualitatively evaluated the final rules in light of potential class shifting.  The agencies looked at four potential cases of shifting: - from light-duty pickup trucks to heavy-duty pickup trucks; from sleeper cabs to day cabs; from combination tractors to vocational vehicles; and within vocational vehicles.
Light-duty pickup trucks, those with a GVWR of less than 8,500 pounds, are currently regulated under the existing CAFE program and will meet GHG emissions standards beginning in 2012.  The increased stringency of the 2012-2016 light-duty GHG and CAFE rule has led some to speculate that vehicle consumers may choose to purchase heavy-duty pickup trucks that are currently unregulated if the cost of the light-duty regulation is high relative to the cost to buy the larger heavy-duty pickup trucks.  Since fuel consumption and GHG emissions rise significantly with vehicle mass, a shift from light-duty trucks to heavy-duty trucks would likely lead to higher fuel consumption and GHG emissions, an untended consequence of the regulations.  Given the significant price premium of a heavy-duty truck (often five to ten thousand dollars more than a light-duty pickup), we believe that such a class shift would be unlikely even absent this program.  With these final regulations, any incentive for such a class shift is significantly diminished. The final regulations for the HD pickup trucks, and similarly for vans, are based on similar technologies and therefore reflect a similar expected increase in cost when compared to the light-duty GHG regulation.  Hence, the combination of the two regulations provides little incentive for a shift from light-duty trucks to HD trucks.  To the extent that our final regulation of heavy-duty pickups and vans could conceivably encourage a class shift towards lighter pickups, this unintended consequence would in fact be expected to lead to lower fuel consumption and GHG emissions as the smaller light-duty pickups are significantly more efficient than heavy-duty pickup trucks.
The projected cost increases for this final action differ significantly between Class 8 day cabs and Class 8 sleeper cabs, reflecting our expectation that compliance with the final standards will lead truck consumers to specify sleeper cabs equipped with APUs while day cab consumers will not.  Since Class 8 day cab and sleeper cab trucks perform essentially the same function when hauling a trailer, this raises the possibility that the higher cost for an APU equipped sleeper cab could lead to a shift from sleeper cab to day cab trucks.  We do not believe that such an intended consequence will occur for the following reasons.  The addition of a sleeper berth to a tractor cab is not a consumer-selectable attribute in quite the same way as other vehicle features.  The sleeper cab provides a utility that long-distance trucking fleets need to conduct their operations -- an on-board sleeping berth that lets a driver comply with federally-mandated rest periods, as required by the Department of Transportation Federal Motor Carrier Safety Administration's hours-of-service regulations.   The cost of sleeper trucks is already higher than the cost of day cabs, yet the fleets that need this utility purchase them.  A day cab simply cannot provide this utility.  The need for this utility would not be changed even if the marginal costs to reduce greenhouse gas emissions from sleeper cabs exceed the marginal costs to reduce greenhouse gas emissions from day cabs.  A trucking fleet could decide to put its drivers in hotels in lieu of using sleeper berths, and switch to day cabs.  However, this is unlikely to occur in any great number, since the added cost for the hotel stays would far overwhelm differences in the marginal cost between day and sleeper cabs.  Even if some fleets do opt to buy hotel rooms and switch to day cabs, they would be highly unlikely to purchase a day cab that was aerodynamically worse than the sleeper cab they replaced, since the need for features optimized for long-distance hauling would not have changed.  So in practice, there would likely be little difference to the environment for any switching that might occur.  Further, while our projected costs assume the purchase of an APU for compliance, in fact our regulatory structure would allow compliance using a near zero cost software utility that eliminates tractor idling after five minutes.  Using this compliance approach, the cost difference between a Class 8 sleeper cab and day cab due to our final regulations is small.  We are providing this alternative compliance approach reflecting that some sleeper cabs are used in team driving situations where one driver sleeps while the other drives.  In that situation, an APU is unnecessary since the tractor is continually being driven when occupied.  When it is parked, it will automatically eliminate any additional idling through the shutdown software.  If trucking companies choose this option, then costs based on purchase of APUs may overestimate the costs of this program to this sector.
Class shifting from combination tractors to vocational vehicles may occur if a customer deems the additional marginal cost of tractors due to the regulation to be greater than the utility provided by the tractor.  The agencies initially considered this issue when deciding whether to include Class 7 tractors with the Class 8 tractors or regulate them as vocational vehicles.  The agencies' evaluation of the combined vehicle weight rating of the Class 7 shows that if these vehicles were treated significantly differently from the Class 8 tractors, then they could be easily substituted for Class 8 tractors.  Therefore, the agencies are finalizing to include both classes in the tractor category.  The agencies believe that a shift from tractors to vocational vehicles would be limited because of the ability of tractors to pick up and drop off trailers at locations which cannot be done by vocational vehicles.
The agencies do not envision that the final regulatory program will cause class shifting within the vocational class.  The marginal cost difference due to the regulation of vocational vehicles is minimal.  The cost of LRR tires on a per tire basis is the same for all vocational vehicles so the only difference in marginal cost of the vehicles is due to the number of axles.  The agencies believe that the utility gained from the additional load carrying capability of the additional axle will outweigh the additional cost for heavier vehicles.
In conclusion, NHTSA and EPA believe that the final regulatory structure for HD trucks does not significantly change the current competitive and market factors that determine purchaser preferences among truck types.  Furthermore, even if a small amount of shifting does occur, any resulting GHG impacts are likely to be negligible because any vehicle class that sees an uptick in sales is also being regulated for fuel efficiency.  Therefore, the agencies did not include an impact of class shifting on the vehicle populations used to assess the benefits of the program.  
Fleet Turnover Effect
A regulation that increases the cost to purchase and/or operate trucks could impact whether a consumer decides to purchase a new truck and the timing of that purchase.  The term pre-buy refers to the idea that truck purchases may occur earlier than otherwise planned to avoid the additional costs associated with a new regulatory requirement.  Slower fleet turnover, or low-buys, may occur when owners opt to keep their existing truck rather than purchase a new truck due to the incremental cost of the regulation.  
The NAS panel discusses the topics associated with HD truck fleet turnover.  NAS noted that there is some empirical evidence of pre-buy behavior in response to the 2004 and 2007 heavy-duty engine emission standards, with larger impacts occurring in response to higher costs.  However, those regulations increased upfront costs to firms without any offsetting future cost savings from reduced fuel purchases. In summary, NAS stated that
      ...during periods of stable or growing demand in the freight sector, pre-buy behavior may have significant impact on purchase patterns, especially for larger fleets with better access to capital and financing.  Under these same conditions, smaller operators may simply elect to keep their current equipment on the road longer, all the more likely given continued improvements in diesel engine durability over time.  On the other hand, to the extent that fuel economy improvements can offset incremental purchase costs, these impacts will be lessened.  Nevertheless, when it comes to efficiency investments, most heavy-duty fleet operators require relatively quick payback periods, on the order of two to three years.    
The final regulations are projected to return fuel savings to the truck owners that offset the cost of the regulation within a few years for vocational vehicles and Class 7 and 8 tractors, the categories where the potential for prebuy and delayed fleet turnover are concerns.  In the case of vocational vehicles, the added cost is small enough that it is unlikely to have a substantial effect on purchasing behavior.  In the case of Class 7 and 8 trucks, the effects of the regulation on purchasing behavior will depend on the nature of the market failures and the extent to which firms consider the projected future fuel savings in their purchasing decisions.  
If trucking firms account for the rapid payback, they are unlikely to strategically accelerate or delay their purchase plans at additional cost in capital to avoid a regulation that will lower their overall operating costs.  As discussed in Section VIII.A, this scenario may occur if this final program reduces uncertainty about fuel-saving technologies.  More reliable information about ways to reduce fuel consumption allows truck purchasers to evaluate better the benefits and costs of additional fuel savings, primarily in the original vehicle market, but possibly in the resale market as well.  
Other market failures may leave open the possibility of some pre-buy or delayed purchasing behavior.  Firms may not consider the full value of the future fuel savings for several reasons.  For instance, truck purchasers may not want to invest in fuel efficiency because of uncertainty about fuel prices.  Another explanation is that the resale market may not fully recognize the value of fuel savings, due to lack of trust of new technologies or changes in the uses of the vehicles.  Lack of coordination (also called split incentives -- see Section VIII.A) between truck purchasers (who emphasize the up-front costs of the trucks) and truck operators, who would like the fuel savings, can also lead to pre-buy or delayed purchasing behavior.  If these market failures prevent firms from fully internalizing fuel savings when deciding on vehicle purchases, then pre-buy and delayed purchase could occur and could result in a slight decrease in the GHG benefits of the regulation.  
Thus, whether pre-buy or delayed purchase is likely to play a significant role in the truck market depends on the specific behaviors of purchasers in that market.  Without additional information about which scenario is more likely to be prevalent, the agencies are not projecting a change in fleet turnover characteristics due to this regulation.  
Benefits of Reducing CO2 Emissions
Social Cost of Carbon
EPA has assigned a dollar value to reductions in CO2 emissions using recent estimates of the social cost of carbon (SCC).  The SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year.  It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change.  The SCC estimates used in this analysis were developed through an interagency process that included EPA, DOT/NHTSA, and other executive branch entities, and concluded in February 2010.  We first used these SCC estimates in the benefits analysis for the final joint EPA/DOT rule to establish MY 2012-2016 light-duty vehicle GHG emission standards and CAFE standards; see that rule's preamble for discussion about application of the SCC.  The SCC Technical Support Document (SCC TSD) provides a complete discussion of the methods used to develop these SCC estimates. 
The interagency group selected four SCC values for use in regulatory analyses, which we have applied in this analysis: $5, $22, $36, and $67 per metric ton of CO2 emissions in 2010, in 2009 dollars.[,]  The first three values are based on the average SCC from three integrated assessment models, at discount rates of 5, 3, and 2.5 percent, respectively.  SCCs at several discount rates are included because the literature shows that the SCC is quite sensitive to assumptions about the discount rate, and because no consensus exists on the appropriate rate to use in an intergenerational context. The fourth value is the 95th percentile of the SCC from all three models at a 3 percent discount rate.  It is included to represent higher-than-expected impacts from temperature change further out in the tails of the SCC distribution. Low probability, high impact events are incorporated into all of the SCC values through explicit consideration of their effects in two of the three models as well as the use of a probability density function for equilibrium climate sensitivity.  Treating climate sensitivity probabilistically results in more high temperature outcomes, which in turn lead to higher projections of damages.
The SCC increases over time because future emissions are expected to produce larger incremental damages as physical and economic systems become more stressed in response to greater climatic change.  Note that the interagency group estimated the growth rate of the SCC directly using the three integrated assessment models rather than assuming a constant annual growth rate.  This helps to ensure that the estimates are internally consistent with other modeling assumptions.  Table VIII-14 presents the SCC estimates used in this analysis.
When attempting to assess the incremental economic impacts of carbon dioxide emissions, the analyst faces a number of serious challenges.  A recent report from the National Academies of Science points out that any assessment will suffer from uncertainty, speculation, and lack of information about (1) future emissions of greenhouse gases, (2) the effects of past and future emissions on the climate system, (3) the impact of changes in climate on the physical and biological environment, and (4) the translation of these environmental impacts into economic damages.  As a result, any effort to quantify and monetize the harms associated with climate change will raise serious questions of science, economics, and ethics and should be viewed as provisional.  
The interagency group noted a number of limitations to the SCC analysis, including the incomplete way in which the integrated assessment models capture catastrophic and non-catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk aversion.  The limited amount of research linking climate impacts to economic damages makes the interagency modeling exercise even more difficult.  The interagency group hopes that over time researchers and modelers will work to fill these gaps and that the SCC estimates used for regulatory analysis by the Federal government will continue to evolve with improvements in modeling. Additional details on these limitations are discussed in the SCC TSD.
We received several comments regarding the SCC estimates used to analyze the proposed standards.  In particular, these commenters discussed the incomplete treatment of impacts as well as discount rate selection.  EPA has reviewed these comments in detail and responded to them in the EPA Response to Comments Document for the Joint Rulemaking.  As noted in that document, the U.S. government intends to revise these estimates, taking into account new research findings that were not included in the first round, and has  set a preliminary goal of revisiting the SCC values in the next few years or at such time as substantially updated models become available, and to continue to support research in this area.  The EPA Response to Comments Document for the Joint Rulemaking discusses ongoing research in greater detail.
Applying the global SCC estimates, shown in Table VIII-14, to the estimated domestic reductions in CO2 emissions under this final program, we estimate the dollar value of the climate related benefits for each analysis year.  For internal consistency, the annual benefits are discounted back to net present value terms using the same discount rate as each SCC estimate (i.e., 5%, 3%, and 2.5%) rather than 3% and 7%.  These estimates are provided in Table VIII-15.
Table VIII-14: Social Cost of CO2, 2012  -  2050[a] (in 2009 dollars)
                                     Year
                          Discount Rate and Statistic
                                          
                                  5% Average
                                  3% Average
                                 2.5% Average
                              3%
95th Percentile
                                     2012
                                                                         $5.28 
                                                                        $23.06 
                                                                        $37.53 
                                                                        $70.14 
                                     2015
                                                                         $5.93 
                                                                        $24.58 
                                                                        $39.57 
                                                                        $75.03 
                                     2020
                                                                         $7.01 
                                                                        $27.10 
                                                                        $42.98 
                                                                        $83.17 
                                     2025
                                                                         $8.53 
                                                                        $30.43 
                                                                        $47.28 
                                                                        $93.11 
                                     2030
                                                                        $10.05 
                                                                        $33.75 
                                                                        $51.58 
                                                                       $103.06 
                                     2035
                                                                        $11.57 
                                                                        $37.08 
                                                                        $55.88 
                                                                       $113.00 
                                     2040
                                                                        $13.09 
                                                                        $40.40 
                                                                        $60.19 
                                                                       $122.95 
                                     2045
                                                                        $14.63 
                                                                        $43.34 
                                                                        $63.59 
                                                                       $131.66 
                                     2050
                                                                        $16.18 
                                                                        $46.27 
                                                                        $66.99 
                                                                       $140.37 
Note:
[a] The SCC values are dollar-year and emissions-year specific.
Table VIII-15:  Monetized CO2 Benefits of Vehicle Program, CO2 Emissions[a] (Million 2009$)
YEAR
CO2 EMISSIONS REDUCTION  (MMT)
                                   BENEFITS
                                       
                                       
Avg SCC at 5% ($5-$16)[a]
Avg SCC at 3% ($23-$46)[a]
Avg SCC at 2.5% ($38-$67)[a]
95[th] percentile SCC at 3% ($70-$140)[a]
2020
38.0
                                                                          $266 
                                                                        $1,030 
                                                                        $1,634 
                                                                        $3,161 
2030
73.7
                                                                          $741 
                                                                        $2,489 
                                                                        $3,803 
                                                                        $7,599 
2040
91.2
                                                                        $1,194 
                                                                        $3,684 
                                                                        $5,489 
                                                                       $11,213 
2050
104.9
                                                                        $1,698 
                                                                        $4,856 
                                                                        $7,030 
                                                                       $14,730 
Net Present Value[b]
                                                                               
                                                                         $9,129
                                                                        $46,499
                                                                        $78,763
                                                                       $141,738
Notes:
a Except for the last row (net present value), the SCC values are dollar-year and emissions-year specific.
[b] Net present value of reduced CO2 emissions is calculated differently from other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.

Non-GHG Health and Environmental Impacts
This section presents EPA's analysis of the non-GHG health and environmental impacts that can be expected to occur as a result of the HD National Program.  GHG emissions are predominantly the byproduct of fossil fuel combustion processes that also produce criteria and hazardous air pollutants.  The vehicles that are subject to the standards are also significant sources of mobile source air pollution such as direct PM, NOX, VOCs and air toxics.  The standards will affect exhaust emissions of these pollutants from vehicles.  They will also affect emissions from upstream sources related to changes in fuel consumption.  Changes in ambient ozone, PM2.5, and air toxics that will result from the standards are expected to affect human health in the form of premature deaths and other serious human health effects, as well as other important public health and welfare effects.  
As many commenters noted, it is important to quantify the health and environmental impacts associated with the final rules because a failure to adequately consider these ancillary co-pollutant impacts could lead to an incorrect assessment of their net costs and benefits.  Moreover, co-pollutant impacts tend to accrue in the near term, while any effects from reduced climate change mostly accrue over a time frame of several decades or longer.  
This section is organized as follows: the first presents the PM- and ozone-related health and environmental impacts associated with final program in calendar year (CY) 2030; the second discusses the related co-benefits associated with the model year (MY) analysis of the program.     
Quantified and Monetized Non-GHG Human Health Benefits of the 2030 Calendar Year Analysis
This analysis reflects the impact of the HD National Program in 2030 compared to a future-year reference scenario without the program in place.  Overall, we estimate that the final rules will lead to a net decrease in PM2.5-related health impacts. See Section VII.D of this preamble for more information about the air quality modeling results.  While the PM-related air quality impacts are relatively small, the decrease in population-weighted national average PM2.5 exposure results in a net decrease in adverse PM-related human health impacts (the decrease in national population-weighted annual average PM2.5 is 0.004 μg/m[3]). 
The air quality modeling also projects decreases in ozone concentrations in many areas.  While the ozone-related impacts are relatively small, the decrease in population-weighted national average ozone exposure results in a net decrease in ozone-related health impacts (population-weighted maximum 8-hour average ozone decreases by 0.0122 ppb).
We base our analysis of the program's impact on human health in 2030 on peer-reviewed studies of air quality and human health effects.[,]  These methods are described in more detail in the RIA that accompanies this action.  Our benefits methods are also consistent with recent rulemaking analyses such as the final Transport Rule, the final 2012-2016 MY Light-Duty Vehicle Rule, and the final Portland Cement National Emissions Standards for Hazardous Air Pollutants (NESHAP) RIA.  To model the ozone and PM air quality impacts of this final action, we used the Community Multiscale Air Quality (CMAQ) model (see Chapter 8.2.2 of the RIA that accompanies this preamble).  The modeled ambient air quality data serves as an input to the Environmental Benefits Mapping and Analysis Program version 4.0 (BenMAP).  BenMAP is a computer program developed by the U.S. EPA that integrates a number of the modeling elements used in previous analyses (e.g., interpolation functions, population projections, health impact functions, valuation functions, analysis and pooling methods) to translate modeled air concentration estimates into health effects incidence estimates and monetized benefits estimates.
The range of total monetized ozone- and PM-related health impacts is presented in Table VIII-16 .  We present total benefits based on the PM- and ozone-related premature mortality function used.  The benefits ranges therefore reflect the addition of each estimate of ozone-related premature mortality (each with its own row in Table VIII-16) to estimates of PM-related premature mortality.  These estimates represent EPA's preferred approach to characterizing a best estimate of benefits.  As is the nature of Regulatory Impact Analyses (RIAs), the assumptions and methods used to estimate air quality benefits evolve to reflect the agency's most current interpretation of the scientific and economic literature.  

Table VIII-16: Estimated 2030 Monetized PM-and Ozone-Related Health Benefits[a]
2030 Total Ozone and PM Benefits  -  PM Mortality Derived from American Cancer Society Analysis and Six-Cities Analysis[a]
                      Premature Ozone Mortality Function
                                   Reference
                                Total Benefits
                   (Millions, 2009$, 3% Discount Rate)[b,c]
                                Total Benefits
                    (Millions, 2009$, 7% Discount Rate) b,c
Multi-city analyses
Bell et al., 2004
Total: $110 - $200
PM: $67 - $160
Ozone: $42
Total: $100 - $190
PM: $60 - $140
Ozone: $42

Huang et al., 2005
Total: $120 - $220
PM: $67 - $160
Ozone: $56
Total: $120 - $200
PM: $60 - $140
Ozone: $56

Schwartz, 2005
Total: $130 - $220
PM: $67 - $160
Ozone: $63
Total: $120 - $210
PM: $60 - $140
Ozone: $63
Meta-analyses
Bell et al., 2005
Total: $200 - $290
PM: $67 - $160
Ozone: $130
Total: $190 - $270
PM: $60 - $140
Ozone: $130

Ito et al., 2005
Total: $240 - $330
PM: $67 - $160
Ozone: $170
Total: $230 - $320
PM: $60 - $140
Ozone: $170

Levy et al., 2005
Total: $250 - $340
PM: $67 - $160
Ozone: $180
Total: $240 - $330
PM: $60 - $140
Ozone: $180
Notes:
a Total includes premature mortality-related and morbidity-related ozone and PM2.5 benefits.  Range was developed by adding the estimate from the ozone premature mortality function to the estimate of PM2.5-related premature mortality derived from either the ACS study (Pope et al., 2002) or the Six-Cities study (Laden et al., 2006).
b Note that total benefits presented here do not include a number of unquantified benefits categories.  A detailed listing of unquantified health and welfare effects is provided in Table VIII-17.
c Results reflect the use of both a 3 and 7 percent discount rate, as recommended by EPA's Guidelines for Preparing Economic Analyses and OMB Circular A-4.  Results are rounded to two significant digits for ease of presentation and computation.
The benefits in Table VIII-16 include all of the human health impacts we are able to quantify and monetize at this time.  However, the full complement of human health and welfare effects associated with PM and ozone remain unquantified because of current limitations in methods or available data.  We have not quantified a number of known or suspected health effects linked with ozone and PM for which appropriate health impact functions are not available or which do not provide easily interpretable outcomes (e.g., changes in heart rate variability).  Additionally, we are unable to quantify a number of known welfare effects, including reduced acid and particulate deposition damage to cultural monuments and other materials, and environmental benefits due to reductions of impacts of eutrophication in coastal areas.  These are listed in Table VIII-17.  As a result, the health benefits quantified in this section are likely underestimates of the total benefits attributable to this final action.

                                       
Table VIII-17: Unquantified and Non-Monetized Potential Effects
Pollutant/Effects
Effects Not Included in Analysis - Changes in:
Ozone Healtha
Chronic respiratory damage[b]
Premature aging of the lungs[b]
Non-asthma respiratory emergency room visits
Exposure to UVb (+/-)e
Ozone Welfare
Yields for 
-commercial forests
-some fruits and vegetables
-non-commercial crops
Damage to urban ornamental plants
Impacts on recreational demand from damaged forest aesthetics
Ecosystem functions
Exposure to UVb (+/-)[e]
PM Healthc
Premature mortality - short term exposuresd
Low birth weight
Pulmonary function
Chronic respiratory diseases other than chronic bronchitis
Non-asthma respiratory emergency room visits
Exposure to UVb (+/-)[e]
PM Welfare
Residential and recreational visibility in non-Class I areas
Soiling and materials damage
Damage to ecosystem functions
Exposure to UVb (+/-)[e]
Nitrogen and Sulfate Deposition Welfare
Commercial forests due to acidic sulfate and nitrate deposition 
Commercial freshwater fishing due to acidic deposition 
Recreation in terrestrial ecosystems due to acidic deposition  
Existence values for currently healthy ecosystems 
Commercial fishing, agriculture, and forests due to nitrogen deposition 
Recreation in estuarine ecosystems due to nitrogen deposition
Ecosystem functions
Passive fertilization
CO Health
Behavioral effects
HC/Toxics Healthf
Cancer (benzene, 1,3-butadiene, formaldehyde, acetaldehyde)
Anemia (benzene)
Disruption of production of blood components (benzene)
Reduction in the number of blood platelets (benzene)
Excessive bone marrow formation (benzene)
Depression of lymphocyte counts (benzene)
Reproductive and developmental effects (1,3-butadiene)
Irritation of eyes and mucus membranes (formaldehyde)
Respiratory irritation (formaldehyde)
Asthma attacks in asthmatics (formaldehyde)
Asthma-like symptoms in non-asthmatics (formaldehyde)
Irritation of the eyes, skin, and respiratory tract (acetaldehyde)
Upper respiratory tract irritation and congestion (acrolein)
HC/Toxics Welfare
Direct toxic effects to animals
Bioaccumulation in the food chain
Damage to ecosystem function
Odor
Notes:
a The public health impact of biological responses such as increased airway responsiveness to stimuli, inflammation in the lung, acute inflammation and respiratory cell damage, and increased susceptibility to respiratory infection are likely partially represented by our quantified endpoints.
[b] The public health impact of effects such as chronic respiratory damage and premature aging of the lungs may be partially represented by quantified endpoints such as hospital admissions or premature mortality, but a number of other related health impacts, such as doctor visits and decreased athletic performance, remain unquantified.
c In addition to primary economic endpoints, there are a number of biological responses that have been associated with PM health effects including morphological changes and altered host defense mechanisms.  The public health impact of these biological responses may be partly represented by our quantified endpoints.
d While some of the effects of short-term exposures are likely to be captured in the estimates, there may be premature mortality due to short-term exposure to PM not captured in the cohort studies used in this analysis.  However, the PM mortality results derived from the expert elicitation do take into account premature mortality effects of short term exposures.
e May result in benefits or disbenefits.
f Many of the key hydrocarbons related to this action are also hazardous air pollutants listed in the CAA. 
While there will be impacts associated with air toxic pollutant emission changes that result from this final action, we do not attempt to monetize those impacts.  This is primarily because currently available tools and methods to assess air toxics risk from mobile sources at the national scale are not adequate for extrapolation to incidence estimations or benefits assessment.  The best suite of tools and methods currently available for assessment at the national scale are those used in the National-Scale Air Toxics Assessment (NATA).  The EPA Science Advisory Board specifically commented in their review of the 1996 NATA that these tools were not yet ready for use in a national-scale benefits analysis, because they did not consider the full distribution of exposure and risk, or address sub-chronic health effects.  While EPA has since improved these tools, there remain critical limitations for estimating incidence and assessing benefits of reducing mobile source air toxics.  
As part of the second prospective analysis of the benefits and costs of the Clean Air Act, EPA conducted a case study analysis of the health effects associated with reducing exposure to benzene in Houston from implementation of the Clean Air Act. While reviewing the draft report, EPA's Advisory Council on Clean Air Compliance Analysis concluded that "the challenges for assessing progress in health improvement as a result of reductions in emissions of hazardous air pollutants (HAPs) are daunting...due to a lack of exposure-response functions, uncertainties in emissions inventories and background levels, the difficulty of extrapolating risk estimates to low doses and the challenges of tracking health progress for diseases, such as cancer, that have long latency periods." EPA continues to work to address these limitations; however, we did not have the methods and tools available for national-scale application in time for the analysis of the final action.  
EPA is also unaware of specific information identifying any effects on listed endangered species from the small fluctuations in pollutant concentrations associated with this program (see Section VII.D).  Furthermore, our current modeling tools are not designed to trace fluctuations in ambient concentration levels to potential impacts on particular endangered species. 
 	Quantified Human Health Impacts
Table VIII-18 and Table VIII-19 present the annual PM2.5 and ozone health impacts, respectively, in the 48 contiguous U.S. states associated with the HD National Program for 2030.  For each endpoint presented in Table VIII-18 and Table VIII-19, we provide both the mean estimate and the 90% confidence interval.    
Using EPA's preferred estimates, based on the American Cancer Society (ACS) and Six-Cities studies and no threshold assumption in the model of mortality, we estimate that the final rules will result in between 7 and 17 cases of avoided PM2.5-related premature mortalities annually in 2030.  As a sensitivity analysis, when the range of expert opinion is used, we estimate between 2 and 23 fewer premature mortalities in 2030 (see Table 8-14 in the RIA that accompanies this action).  For ozone-related premature mortality in 2030, we estimate a range of between 5 to 18 fewer premature mortalities. 
Table VIII-18: Estimated PM2.5-Related Health Impacts[a]
Health Effect
2030 Annual Reduction in Incidence
(5[th]% - 95[th]%ile)
Premature Mortality  -  Derived from epidemiology literature[b]
  Adult, age 30+, ACS Cohort Study (Pope et al., 2002)

  Adult, age 25+, Six-Cities Study (Laden et al., 2006)

  Infant, age <1 year (Woodruff et al., 1997)

7
(2  -  12)
17
(7  -  27)
0
(0  -  0)
Chronic bronchitis (adult, age 26 and over)
9
(0  -  18)
Non-fatal myocardial infarction (adult, age 18 and over)
10
(2  -  17)
Hospital admissions - respiratory (all ages)[c]
2
(1  -  3)
Hospital admissions - cardiovascular (adults, age >18)[d] 
4
(2  -  4)
Emergency room visits for asthma (age 18 years and younger) 
12
(6  -  17)
Acute bronchitis, (children, age 8-12)
25
(0  -  55)
Lower respiratory symptoms (children, age 7-14)
320
(130  -  510)
Upper respiratory symptoms (asthmatic children, age 9-18)
240
(49  -  430)
Asthma exacerbation (asthmatic children, age 6-18)
530
(1  -  1,500)
Work loss days
1,900
(1,700  -  2,200)
Minor restricted activity days (adults age 18-65)
11,000
(9,300  -  13,000)
     Notes:
     [a] Incidence is rounded to two significant digits. Estimates represent incidence within the 48 contiguous United States. 
     [b] PM-related adult mortality based upon the American Cancer Society (ACS) Cohort Study (Pope et al., 2002) and the Six-Cities Study (Laden et al., 2006).  Note that these are two alternative estimates of adult mortality and should not be summed.  PM-related infant mortality based upon a study by Woodruff, Grillo, and Schoendorf, (1997).
     [c] Respiratory hospital admissions for PM include admissions for chronic obstructive pulmonary disease (COPD), pneumonia and asthma.
     d Cardiovascular hospital admissions for PM include total cardiovascular and subcategories for ischemic heart disease, dysrhythmias, and heart failure.
Table VIII-19: Estimated Ozone-Related Health Impacts[a]
Health Effect
2030 Annual Reduction in Incidence
(5th% - 95th%ile)
Premature Mortality, All ages[b]
Multi-City Analyses  
  Bell et al. (2004)  -  Non-accidental

  Huang et al. (2005)  -  Cardiopulmonary

  Schwartz (2005)  -  Non-accidental

Meta-analyses:
  Bell et al. (2005)  -  All cause

  Ito et al. (2005)  -  Non-accidental

  Levy et al. (2005)  -  All cause

4
(2  -  6)
5
(2  -  8)
6
(2  -  9)

13
(7  -  18)
17
(11  -  23)
18
(13  -  23)
Hospital admissions- respiratory causes (adult, 65 and older)c
24
(3  -  44)
Hospital admissions -respiratory causes (children, under 2)
36
(19  -  53)
Emergency room visit for asthma (all ages)
31
(0  -  81)
Minor restricted activity days (adults, age 18-65)
49,000
(25,000  -  74,000)
School absence days
20,000
(8,700  -  28,000
        Notes:
        [a] Incidence is rounded to two significant digits. Estimates represent incidence within the 48 contiguous U.S. 
        [b] Estimates of ozone-related premature mortality are based upon incidence estimates derived from several alternative studies: Bell et al. (2004); Huang et al. (2005); Schwartz (2005) ; Bell et al. (2005); Ito et al. (2005); Levy et al. (2005).  The estimates of ozone-related premature mortality should therefore not be summed.
        [c] Respiratory hospital admissions for ozone include admissions for all respiratory causes and subcategories for COPD and pneumonia. 
	Monetized Benefits
Table VIII-20 presents the estimated monetary value of changes in the incidence of ozone and PM2.5-related health effects.  All monetized estimates are stated in 2009$.  These estimates account for growth in real gross domestic product (GDP) per capita between the present and 2030.  Our estimate of total monetized benefits in 2030 for the program, using the ACS and Six-Cities PM mortality studies and the range of ozone mortality assumptions, is between $110 and $340  million, assuming a 3 percent discount rate, or between $100 and $330 million, assuming a 7 percent discount rate.
Table VIII-20: Estimated Monetary Value of Changes in Incidence of Health and Welfare Effects in 2030 (Millions of 2009$) [a][,b]
PM2.5-Related Health Effect
(5[th] and 95[th] %ile)
Premature Mortality  -  Derived from Epidemiology Studiesc,d,

Adult, age 30+ - ACS study 
(Pope et al., 2002)
          3% discount rate

          7% discount rate

$59
($6.2 - $160)
$53
($5.6 - $140)

Adult, age 25+ - Six-Cities study (Laden et al., 2006)
          3% discount rate

          7% discount rate

$150
($20 - $380)
$140
($18 - $350)

Infant Mortality, <1 year  -  (Woodruff et al. 1997)
$0.6
($0 - $2.3)
Chronic bronchitis (adults, 26 and over)
$4.8
($0.08 - $16)
Non-fatal acute myocardial infarctions 
          3% discount rate

          7% discount rate

$1.1
($0.18 - $2.8)
$0.86
($0.13 - $2.1)
Hospital admissions for respiratory causes
$0.03
($0.01 - $0.05)
Hospital admissions for cardiovascular causes
$0.07
($0.02 - $0.12)
Emergency room visits for asthma
$0.005
($0.002 - $0.007)
Acute bronchitis (children, age 8 - 12)
$0.01
($0 - $0.03)
Lower respiratory symptoms (children, 7 - 14)
$0.007
($0.002 - $0.013)
Upper respiratory symptoms (asthma, 9 - 11)
$0.008
($0.002 - $0.018)
Asthma exacerbations
$0.03
($0 - $0.09)
Work loss days
$0.31
($0.26 - $0.36)
Minor restricted-activity days (MRADs)
$0.77
($0.45 - $1.1)
Ozone-related Health Effect
Premature Mortality, All ages  -  Derived from Multi-city analyses
Bell et al., 2004
$37
($4.9 - $93)

Huang et al., 2005
$50
($6.8 - $130)

Schwartz, 2005
$58
($7.5 - $150)
Premature Mortality, All ages  -  Derived from Meta-analyses
Bell et al., 2005
$120
($18 - $300)

Ito et al., 2005
$170
($24 - $390)

Levy et al., 2005
$180
($26 - $410)
Hospital admissions- respiratory causes (adult, 65 and older)
$0.62
($0.08 - $1.1)
Hospital admissions- respiratory causes (children, under 2)
$0.38
($0.20 - $0.57)
Emergency room visit for asthma (all ages)
$0.01
($0 - $0.03)
Minor restricted activity days (adults, age 18-65)
$3.3
($1.5 - $5.6)
School absence days
$1.9
($0.83 - $2.6)
    Notes:
    a Monetary benefits are rounded to two significant digits for ease of presentation and computation.  PM and ozone benefits are nationwide.  
    b Monetary benefits adjusted to account for growth in real GDP per capita between 1990 and the analysis year (2030).
    c Valuation assumes discounting over the SAB recommended 20 year segmented lag structure.  Results reflect the use of 3 percent and 7 percent discount rates consistent with EPA and OMB guidelines for preparing economic analyses.
	What Are the Limitations of the Benefits Analysis?
Every benefit-cost analysis examining the potential effects of a change in environmental protection requirements is limited to some extent by data gaps, limitations in model capabilities (such as geographic coverage), and uncertainties in the underlying scientific and economic studies used to configure the benefit and cost models.  Limitations of the scientific literature often result in the inability to estimate quantitative changes in health and environmental effects, such as potential decreases in premature mortality associated with decreased exposure to carbon monoxide.  Deficiencies in the economics literature often result in the inability to assign economic values even to those health and environmental outcomes which can be quantified. These general uncertainties in the underlying scientific and economics literature, which can lead to valuations that are higher or lower, are discussed in detail in the RIA and its supporting references.  Key uncertainties that have a bearing on the results of the benefit-cost analysis of the final rules include the following:
The exclusion of potentially significant and unquantified benefit categories (such as health, odor, and ecological benefits of reduction in air toxics, ozone, and PM);
Errors in measurement and projection for variables such as population growth;
Uncertainties in the estimation of future year emissions inventories and air quality;
Uncertainty in the estimated relationships of health and welfare effects to changes in pollutant concentrations including the shape of the C-R function, the size of the effect estimates, and the relative toxicity of the many components of the PM mixture; 
Uncertainties in exposure estimation; and
Uncertainties associated with the effect of potential future actions to limit emissions.
As Table VIII-20 indicates, total benefits are driven primarily by the reduction in premature mortalities each year.  Some key assumptions underlying the premature mortality estimates include the following, which may also contribute to uncertainty:
Inhalation of fine particles is causally associated with premature death at concentrations near those experienced by most Americans on a daily basis.  Although biological mechanisms for this effect have not yet been completely established, the weight of the available epidemiological, toxicological, and experimental evidence supports an assumption of causality.  The impacts of including a probabilistic representation of causality were explored in the expert elicitation-based results of the PM NAAQS RIA.  
All fine particles, regardless of their chemical composition, are equally potent in causing premature mortality.  This is an important assumption, because PM produced via transported precursors emitted from heavy-duty engines may differ significantly from PM precursors released from electric generating units and other industrial sources.  However, no clear scientific grounds exist for supporting differential effects estimates by particle type.
The C-R function for fine particles is approximately linear within the range of ambient concentrations under consideration.  Thus, the estimates include health benefits from reducing fine particles in areas with varied concentrations of PM, including both regions that may be in attainment with PM2.5 standards and those that are at risk of not meeting the standards.
There is uncertainty in the magnitude of the association between ozone and premature mortality.  The range of ozone benefits associated with the coordinated strategy is estimated based on the risk of several sources of ozone-related mortality effect estimates.  In a report on the estimation of ozone-related premature mortality published by the National Research Council, a panel of experts and reviewers concluded that short-term exposure to ambient ozone is likely to contribute to premature deaths and that ozone-related mortality should be included in estimates of the health benefits of reducing ozone exposure.  EPA has requested advice from the National Academy of Sciences on how best to quantify uncertainty in the relationship between ozone exposure and premature mortality in the context of quantifying benefits.
Despite the uncertainties described above, we believe this analysis provides a conservative estimate of the estimated non-GHG health and environmental benefits of the standards in future years because of the exclusion of potentially significant benefit categories that are not quantifiable at this time.  Acknowledging benefits omissions and uncertainties, we present a best estimate of the total benefits based on our interpretation of the best available scientific literature and methods supported by EPA's technical peer review panel, the Science Advisory Board's Health Effects Subcommittee (SAB-HES).  The National Academies of Science (NRC, 2002) has also reviewed EPA's methodology for analyzing the health benefits of measures taken to reduce air pollution.  EPA addressed many of these comments in the analysis of the final PM NAAQS.[,]  This analysis incorporates this work to the extent possible. 
	Non-GHG Human Health Benefits of the Model Year (MY) Analysis
As described in Section VII, the final standards will reduce emissions of several criteria and toxic pollutants and precursors.  EPA typically analyzes rule impacts (emissions, air quality, costs and benefits) in the year in which they occur; for the analysis of non-GHG ambient air quality and health impacts, we selected 2030 as a representative future year since resource and time constraints precluded EPA from considering multiple calendar years.  We refer to this analysis as the "Calendar Year" (CY) analysis because the benefits of the program reflect impacts across all regulated vehicles in a calendar year.  
EPA also conducted a separate analysis of the impacts over the model year lifetimes of the 2014 through 2018 model year vehicles.  We refer to this analysis as the "Model Year" (MY) analysis (see Chapter 6 of the RIA that accompanies this preamble).  In contrast to the CY analysis, the MY analysis estimates the impacts of the program on each MY fleet over the course of its lifetime.  Due to analytical and resource limitations, however, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis.  Because MY impacts are measured in relation to only the lifetime of a particular vehicle model year (2014, 2015, 2016, 2017, and 2018), and assumes no additional controls to model year vehicles beyond 2018, the impacts are smaller than if the impacts of all regulated vehicles were considered.  We therefore expect that the non-GHG health-related benefits associated with the MY analysis will be smaller than those estimated for the CY analysis, both in a given year (such as 2030) and in present value terms across a given time period (such as 2014  -  2050). 

Energy Security Impacts 
The HD National Program is designed to reduce fuel consumption and GHG emissions in medium and heavy-duty (HD) vehicles, which will result in improved fuel efficiency and, in turn, help to reduce U.S. petroleum imports.  A reduction of U.S. petroleum imports reduces both financial and strategic risks caused by potential sudden disruptions in the supply of imported petroleum to the U.S.  This reduction in risk is a measure of improved U.S. energy security.  This section summarizes the agencies' estimates of U.S. oil import reductions and energy security benefits of the final HD National Program.  Additional discussion of this issue can be found in Chapter 9.5 of the RIA.
         Implications of Reduced Petroleum Use on U.S. Imports
In 2008, U.S. petroleum import expenditures represented 21 percent of total U.S. imports of all goods and services.  In 2008, the United States imported 66 percent of the petroleum it consumed, and the transportation sector accounted for 70 percent of total U.S. petroleum consumption.  This compares to approximately 37 percent of petroleum from imports and 55 percent of consumption from petroleum in the transportation sector in 1975.  It is clear that petroleum imports have a significant impact on the U.S. economy.
Requiring lower GHG vehicle technology and fuel efficient technology in HD vehicles in the U.S. is expected to lower U.S. oil imports.  EPA used the MOVES model to estimate the fuel savings due to this program.  A detailed explanation of the MOVES model can be found in Chapter 5 of the RIA.
Based on a detailed analysis of differences in fuel consumption, petroleum imports, and imports of refined petroleum products and crude oil using the Reference Case presented in the Energy Information Administration's Annual Energy Outlook (AEO) 2011 Early Release, EPA and NHTSA estimate that approximately 50 percent of the reduction in fuel consumption resulting from adopting improved GHG emissions standards and fuel efficiency standards is likely to be reflected in reduced U.S. imports of refined fuel, while the remaining 50 percent is expected to be reflected in reduced domestic fuel refining.  Of this latter figure, 90 percent is anticipated to reduce U.S. imports of crude petroleum for use as a refinery feedstock, while the remaining 10 percent is expected to reduce U.S. domestic production of crude petroleum.  Thus, on balance, each gallon of fuel saved as a consequence of the HD GHG and fuel efficiency standards is anticipated to reduce total U.S. imports of petroleum by 0.95 gallons.  The agencies' estimates of the reduction in U.S. oil imports from this program for selected years, in millions of barrels per day, are presented in below.  These estimates assume that the fuel efficiency of HD vehicles remains constant in the baseline. 
Table VIII-21: U.S. Oil Import Reductions from the HD National Program for Selected Years 
(Millions of Barrels per Day, mmbd)
Year
mmbd
2020
0.204
2030
0.397
2040
0.495
2050
0.573

         Energy Security Implications
In order to understand the energy security implications of reducing U.S. petroleum imports, EPA worked with Oak Ridge National Laboratory (ORNL), which has developed approaches for evaluating the economic costs and energy security implications of oil use.  The energy security estimates provided below are based upon a methodology developed in a peer-reviewed study entitled "The Energy Security Benefits of Reduced Oil Use, 2006-2015," completed in March 2008.  This study is included as part of the docket for this final action.[,]
When conducting this analysis, ORNL considered the full economic cost of importing petroleum into the United States.  The economic cost of importing petroleum into the U.S. is defined to include two components in addition to the purchase price of petroleum itself.  These are: (1) the higher costs for oil imports resulting from the effect of increasing U.S. import demand on the world oil price and on the market power of the Organization of the Petroleum Exporting Countries (i.e., the "demand" or "monopsony" costs); and (2) the risk of reductions in U.S. economic output and disruption of the U.S. economy caused by sudden disruptions in the supply of imported petroleum to the U.S.  (i.e., macroeconomic disruption/adjustment costs).  Maintaining a U.S. military presence to help secure stable oil supply from potentially vulnerable regions of the world was not included in this analysis because its attribution to particular missions or activities is hard to quantify.
For this action, ORNL estimated energy security premiums by incorporating the most recent available AEO 2011 Early Release oil price forecasts and market trends. Energy security premiums for the years 2020, 2030, 2040, and 2050 are presented inTable VIII-22, as well as a breakdown of the components of the energy security premiums for each of these years.  The components of the energy security premiums and their values are discussed in detail in Chapter 9.4 of the RIA. 
Table VIII-22: Energy Security Premiums in Selected Years  (2009$/Barrel)
                                 Year (range)
                                   Monopsony
                   Macroeconomic Disruption/Adjustment Costs
                                Total Mid-Point
2020
                                    $11.29
                               ($3.86 - $21.32)
                                     $7.11
                               ($3.50 - $11.40)
                                    $18.41
                               ($9.70 - $28.94)
2030
                                    $11.17
                               ($3.92 - $20.58) 
                                     $8.32
                               ($4.04 - $13.33)
                                    $19.49
                               ($10.49 -$29.63)
2035
                                    $10.56
                               ($3.69 - $19.62)
                                     $8.71
                               ($3.86 - $14.35)
                                    $19.27
                               ($10.32 - $29.13)
The literature on the energy security for the last two decades has routinely combined the monopsony and the macroeconomic disruption components when calculating the total value of the energy security premium.  However, in the context of using a global SCC value, the question arises: how should the energy security premium be determined when a global perspective is taken?  Monopsony benefits represent avoided payments by the United States to oil producers in foreign countries that result from a decrease in the world oil price as the U.S. decreases its consumption of imported oil. 
Although there is clearly a benefit to the U.S. when considered from a domestic perspective, the decrease in price due to decreased demand in the U.S. also represents a loss to other countries.  Given the redistributive nature of this monopsony effect from a global perspective, it is excluded in the energy security benefits calculations for this program.  In contrast, the other portion of the energy security premium, the U.S. macroeconomic disruption and adjustment cost that arises from U.S. petroleum imports, does not have offsetting impacts outside of the U.S., and, thus, is included in the energy security benefits estimated for this program.  To summarize, the agencies have included only the macroeconomic disruption portion of the energy security benefits to estimate the monetary value of the total energy security benefits of this program.  
Several commenters commented on the agencies' energy security analysis of this program.  One commenter felt that there is no relationship between reduced U.S. oil imports and U.S. energy security; the commenter sees no relationship between reduced oil imports and, for example, the number of hijackings, bombings, and other terrorist-related activities that have occurred through time.  As outlined above, the agencies view energy security in very specific terms, as the reduction of both financial and strategic risks caused by potential sudden disruptions in the supply of imported petroleum to the U.S.  Reducing the amount of oil imported reduces those risks, and thus increases the nation's energy security.  The agencies did not examine whether reducing U.S. oil imports would make the U.S. "safer" from terrorists.
Another commenter, citing Administration guidelines (OMB Circular A-4) for conducting economic analyses, felt that the agency should include the monopsony benefit as part of its overall costs and benefits analysis.  After reviewing the guidelines cited by the commenter, the agencies have concluded that excluding the monopsony benefit from its overall costs and benefits analysis continues to be appropriate when a global perspective is taken.  However, the agencies recognize that the monopsony benefit has distributional impacts for the U.S., and continue to describe and discuss the monopsony benefit in this section of the Preamble.
The total annual energy security benefits for the final HD National Program are reported in Table VIII-23 for the years 2020, 2030, 2040 and 2050.  
Table VIII-23: Total Annual Energy Security Benefits from the HD National Program
in 2020, 2030, 2040 and 2050  (Millions, 2009$)
Year
Benefits
2020
$504
2030
$1,144
2040
$1,494
2050
$1,730
Other Impacts
         Noise, Congestion and Accidents
Increased vehicle use associated with a positive rebound effect also contributes to increased traffic congestion, motor vehicle accidents, and highway noise.  Depending on how the additional travel is distributed throughout the day and on where it takes place, additional vehicle use can contribute to traffic congestion and delays by increasing traffic volumes on facilities that are already heavily traveled during peak periods.  These added delays impose higher costs on drivers and other vehicle occupants in the form of increased travel time and operating expenses, increased costs associated with traffic accidents, and increased traffic noise.  Because drivers do not take these added costs into account in deciding when and where to travel, they must be accounted for separately as a cost of the added driving associated with the rebound effect.
EPA and NHTSA rely on estimates of congestion, accident, and noise costs caused by pickup trucks and vans, single unit trucks, buses, and combination tractors developed by the Federal Highway Administration to estimate the increased external costs caused by added driving due to the rebound effect.  The Federal Highway Administration (FHWA) estimates are intended to measure the increases in costs from added congestion, property damages and injuries in traffic accidents, and noise levels caused by various types of trucks that are borne by persons other than their drivers (or "marginal" external costs).  EPA and NHTSA employed estimates from this source previously in the analysis accompanying the 2012-16 MY Light-Duty GHG final rule.  The agencies continue to find them appropriate for this analysis after reviewing the procedures used by FHWA to develop them and considering other available estimates of these values.  
FHWA's congestion cost estimates for trucks, which are weighted averages based on the estimated fractions of peak and off-peak freeway travel for each class of trucks, already account for the fact that trucks make up a smaller fraction of peak period traffic on congested roads because they try to avoid peak periods when possible.  FHWA's congestion cost estimates focus on freeways because non-freeway effects are less serious due to lower traffic volumes and opportunities to re-route around the congestion.  The agencies, however, applied the congestion cost to the overall VMT increase, though the fraction of VMT on each road type used in MOVES range from 27 to 29 percent of the vehicle miles on freeways for vocational vehicles and 53 percent for combination tractors.  The results of this analysis potentially overestimate the costs and provide a conservative estimate.  
The agencies are using FHWA's "Middle" estimates for marginal congestion, accident, and noise costs caused by increased travel from trucks.  This approach is consistent with the current methodology used in the Light-Duty GHG rulemaking analysis.  These costs are multiplied by the annual increases in vehicle miles travelled from the positive rebound effect to yield the estimated cost increases resulting from increased congestion, accidents, and noise during each future year.  The values the agencies used to calculate these increased costs are included in Table VIII-24:.
Table VIII-24: Noise, Accident, and Congestion Costs per Mile (2009$)
External Costs
Pickup truck and vans ($/VMT)
Vocational vehicles ($/VMT)
Combination tractors ($/VMT)
Congestion
$0.049
$0.111
$0.108
Accidents
$0.027
$0.019
$0.022
Noise
$0.001
$0.009
$0.020
In aggregate, the increased costs due to noise, accidents, and congestion from the additional truck driving are presented in Table VIII-25.
Table VIII-25: Accident, Noise, and Congestion Costs (Millions, 2009$)
Year
Class 2b&3
Vocational
Combination
Total Costs
2012
$0
$0
$0
$0
2013
$0
$0
$0
$0
2014
$8
$21
$18
$46
2015
$15
$38
$31
$84
2016
$22
$55
$43
$120
2017
$29
$71
$54
$153
2018
$36
$85
$64
$186
2020
$51
$112
$83
$246
2030
$105
$195
$138
$437
2040
$130
$256
$166
$551
2050
$148
$298
$191
$638
NPV, 3%
$1,818
$3,620
$2,492
$7,929
NPV, 7%
$832
$1,680
$1,184
$3,695

         Savings Due to Reduced Refueling Time
Reducing the fuel consumption of heavy-duty trucks may either increase their driving range before they require refueling, or motivate truck purchasers to buy, and manufacturers to offer, smaller fuel tanks.  Keeping the fuel tank the same size allows truck operators to reduce the frequency with which drivers typically refuel their vehicles; it thus extends the upper limit of the range they can travel before requiring refueling.  Alternatively, if purchasers and manufacturers respond to improved fuel efficiency by reducing the size of fuel tanks to maintain a constant driving range, the smaller tank will require less time in actual refueling.  
Because refueling time represents a time cost of truck operation, these time savings should be incorporated into truck purchasers' decisions over how much fuel-saving technology they want in their vehicles.  The savings calculated here thus raise the same questions discussed in Preamble VIII.A and RIA Section 9.1:  does the apparent existence of these savings reflect failures in the market for fuel efficiency, or does it reflect costs not addressed in this analysis?  The response to these questions could vary across truck segment.  See those sections for further analysis of this question.
This analysis estimates the reduction in the annual time spent filling the fuel tank; this reduced time could come either from fewer refueling events, if the fuel tank stays the same size, or less time spent during each refueling event, if the fuel tank is made proportionately smaller.  The refueling savings are calculated as the savings in the amount of time that would have been necessary to pump the fuel.  The calculation does not include time spent searching for a fuel station or other time spent at the station; it is assumed that the time savings occur only during refueling.  The value of the time saved is estimated at the hourly rate recommended for truck operators ($22.36 in 2009 dollars) in DOT guidance for valuing time savings.
The refueling savings include the increased fuel consumption resulting from additional mileage associated with the rebound effect.  However, the estimate of the rebound effect does not account for any reduction in net operating costs from lower refueling time. As discussed earlier, the rebound effect should be a measure of the change in VMT with respect to the net change in overall operating costs.  Ideally, changes in refueling time would factor into this calculation, although the effect is expected to be minor because refueling time savings are small relative to the value of reduced fuel expenditures.
The details of this calculation are discussed in the RIA Chapter 9.3.2.  The savings associated with reduced refueling time for a truck of each type throughout its lifetime are shown in Table VIII-26.  The aggregate savings associated with reduced refueling time are shown in Table VIII-27 for vehicles sold in 2014 through 2050.  
Table VIII-26: Lifetime Refueling Savings for a 2018 MY Truck of Each Type (2009$)

Pickup Trucks and Vans
Vocational Vehicles
Combination Tractor
3% Discount Rate
$31
$37
$341
7% Discount Rate
$19
$24
$223

Table VIII-27: Annual Refueling Savings (Millions, 2009$) 
Year
Pickup Trucks and Vans
Vocational Vehicles
Combination Tractor
Total
2012
$0.0
$0.0
$0.0
$0.0
2013
$0.0
$0.0
$0.0
$0.0
2014
$0.2
$1.6
$8.0
$9.8
2015
$0.5
$3.0
$14.3
$17.7
2016
$1.3
$4.3
$19.6
$25.2
2017
$2.7
$7.0
$26.7
$36.4
2018
$5.2
$9.5
$33.8
$48.4
2020
$10.5
$14.0
$46.2
$70.6
2030
$32.6
$28.2
$82.9
$143.8
2040
$43.4
$38.2
$100.5
$182.1
2050
$50.1
$44.9
$116.1
$211.1
NPV, 3%
$541
$512
$1,467
$2,520
NPV, 7%
$231
$230
$685
$1,146
The Effect of Safety Standards and Voluntary Safety Improvements on Vehicle Weight
Safety standards developed by NHTSA in previous rulemakings may make compliance with the fuel efficiency and CO2 emissions standards more difficult or may reduce the projected benefits of the program.  The primary way that safety regulations can impact fuel efficiency and CO2 emissions is through increased vehicle weight, which reduces the fuel efficiency (and thus increases the CO2 emissions) of the vehicle.  Using MY 2010 as a baseline, this section discusses the effects of other government regulations on MYs 2014-2016 medium and heavy-duty vehicle fuel efficiency and CO2 emissions. At this time, no known safety standards will affect new models in MY 2017 or 2018.  NHTSA's estimates are based on cost and weight tear-down studies of a few vehicles and cannot possibly cover all the variations in the manufacturers' fleets.  NHTSA also requested, and various manufacturers provided, confidential estimates of increases in weight resulting from safety improvements.  Those increases are shown in subsequent tables.  
We have broken down our analysis of the impact of safety standards that might affect the MYs 2014-2016 fleets into three parts:  1) those NHTSA final rules with known effective dates, 2) proposed rules or soon-to-be proposed rules by NHTSA with or without final effective dates, and 3) currently voluntary safety improvements planned by the manufacturers.  
         Weight Impacts of Required Safety Standards 
NHTSA has undertaken several rulemakings in which several standards would become effective for medium- and heavy-duty (MD/HD) vehicles between MY 2014 and MY 2016.  We will examine the potential impact on MD/HD vehicle weights for MYs 2014-2016 using MY 2010 as a baseline.  
FMVSS 119, Heavy Truck Tires Endurance and High Speed Tests
FMVSS 121, Air Brake Systems Stopping Distance 
FMVSS 214, Motor Coach Lap/Shoulder Belts
MD/HD Vehicle Electronic Stability Control Systems
FMVSS 119, Heavy Truck Tires Endurance and High Speed Tests
NHTSA tentatively determined that the FMVSS No. 119 performance tests developed in 1973 should be updated to reflect the increased operational speeds and duration of truck tires in commercial service. A Notice of Proposed Rulemaking (NPRM) was issued December 7, 2010 (75 FR 60036).  It proposed to increase significantly the stringency of the endurance test and to add a new high speed test.  The data in the large truck crash causation study (LTCCS) that preceded that NPRM found that J and L load range tires were having proportionately more problems than the other sizes and the agency's test results indicate that H, J, and L load range tires are more likely to fail the proposed requirements among the targeted F, G, H, J and L load range tires.  To address these problems, the H and J load range tires could potentially use improved rubber compounds, which would add no weight to the tires, to reduce heat retention and improve the durability of the tires.  The L load range tires, in contrast, appear to need to use high tensile strength steel chords in the tire bead, carcass and belt areas, which would enable a weight reduction with no strength penalties.  Thus, if the update to FMVSS No. 119 was finalized, we anticipate no change in weight for H and J load range tires and a small reduction in weight for L load range tires.  This proposal could become a final rule with an effective date of MY 2016.
 FMVSS No. 121, Airbrake Systems Stopping Distance
FMVSS No. 121 contains performance and equipment requirements for braking systems on vehicles with air brake systems.  The most recent major final rule affecting FMVSS No. 121 was published on July 27, 2009, and became effective on November 24, 2009 (MY 2009).  The final rule requires the vast majority of new heavy truck tractors (approximately 99 percent of the fleet) to achieve a 30 percent reduction in stopping distance compared to currently required levels.  Three-axle tractors with a gross vehicle weight rating (GVWR) of 59,600 pounds or less must meet the reduced stopping distance requirements by August 1, 2011 (MY 2011), while two-axle tractors and tractors with a GVWR above 59,600 pounds must meet the reduced stopping distance requirements by the later date of August 1, 2013 (MY 2013).  NHTSA determined that there are several brake systems that can meet the requirements established in the final rule, including installation of larger S-cam drum brakes or disc brake systems at all positions, or hybrid disc and larger rear S-cam drum brake systems.   
According to data provided by a manufacturer (Bendix) in response to the NPRM, the heaviest drum brakes weigh more than the lightest disc brakes, while the heaviest disc brakes weigh more than the lightest drum brakes.  For a three-axle tractor equipped with all disc brakes, then, the total weight could increase by 212 pounds or could decrease by 134 pounds compared to an all-drum-braked tractor, depending on which disc or drum brakes are used for comparison.  The improved brakes may add a small amount of weight to the affected vehicles for MYs 2014-2016, resulting in a slight increase in fuel consumption.  
FMVSS No. 208, Motor coach Lap/Shoulder Belts
NHTSA is proposing lap/shoulder belts for all motorcoach seats.  About 2,000 motorcoaches are sold per year in the United States.  Based on preliminary results from the agency's cost/weight teardown studies of motor coach seats, NHTSA estimates that the weight added by 3-point lap/shoulder belts ranges from 5.96 to 9.95 pounds per 2-person seat.  This is the weight only of the seat belt assembly itself, and does not include changing the design of the seat, reinforcing the floor, walls or other areas of the motor coach.  Few current production motor coaches have been installed with lap/shoulder belts on their seats, and the number of vehicles with these belts already installed could be negligible.  Assuming a 54 passenger motor coach, the added weight for the 3-point lap/shoulder belt assembly would be in the range of 161 to 269 pounds (27 * (5.96 to 9.95)) per vehicle.  This proposal could become a final rule with an effective date of MY 2016. 
 Electronic Stability Control Systems (ESC) for Medium- and Heavy-Duty (MD/HD) Vehicles
The purpose of an ESC system for MD/HD vehicles is to reduce crashes caused by rollover or by directional loss-of-control.  ESC monitors a vehicle's rollover threshold and lateral stability using vehicle speed, wheel speed, steering wheel angle, lateral acceleration, side slip and yaw rate data and upon sensing an impending rollover or loss of directional control situation automatically reduces engine throttle and applies braking forces to individual wheels or sets of wheel to slow the vehicle down and regain directional control.    ESC is not currently required in MD/HD vehicles, but could be proposed to be required in these vehicles by NHTSA.  FMVSS No. 105, Hydraulic and electric brake systems, requires multipurpose passenger vehicles, trucks and buses with a GVWR greater than 4,536 kg (10,000 pounds) to be equipped with an antilock brake system (ABS).  All MD/HD vehicles having a GVWR of more than 10,000 pounds, are required to have ABS installed by that standard.
In addition to the existing ABS functionality, ESC requires sensors including a yaw rate sensor, lateral acceleration sensor, steering angle sensor and brake pressure sensor along with a brake solenoid valve.  According to data provided by Meritor WABCO, the weight of an ESC system for the model 4S4M tractor is estimated to be around 55.5 pounds, and the weight of the ABS only is estimated to be 45.5 pounds.   Thus, we estimate the added weight for the ESC for the vehicle to be 10 (55.5  -  45.5) pounds.  
         Summary  -  Overview of Anticipated Weight Increases
Table VIII-28 summarizes estimates made by NHTSA regarding the weight added by the above discussed standards or likely rulemakings.  NHTSA estimates that weight additions required by final rules and likely NHTSA regulations effective in MY 2016 compared to the MY 2010 fleet will increase motor coach vehicle weight by 171 to 279 pounds and will increase other heavy-duty truck weights by 10 pounds. 
Table VIII-28: Weight Additions Due to Final Rules or Likely NHTSA Regulations: Comparing MY 2016 to the MY 2010 Baseline Fleet
Standard Number
Added Weight in pounds
 MD/HD Vehicle
Added Weight in kilograms
MD/HD Vehicle
119
0
0
121
0 (?)
0 (?)
208
Motor coaches only
161-269
73-122
MD/HD Vehicle Electronic Stability Control Systems
10
4.5
Total 
Motor coaches
171- 279
77.5-126.5
Total
All other MD/HD vehicles
10
4.5
         Effects of Vehicle Mass Reduction on Safety
NHTSA and EPA have been considering the effect of vehicle weight on vehicle safety for the past several years in the context of our joint rulemaking for light-duty vehicle CAFE and GHG standards, consistent with NHTSA's long-standing consideration of safety effects in setting CAFE standards.  Combining all modes of impact, the latest analysis by NHTSA for the MY 2012-2016 final rule found that reducing the weight of the heavier light trucks (LT > 3,870) had a positive overall effect on safety, reducing societal fatalities.
In the context of the current rulemaking for HD fuel consumption and GHG standards, one would expect that reducing the weight of medium-duty trucks similarly would, if anything, have a positive impact on safety.  However, given the large difference in weight between light-duty vehicles and medium-duty trucks, and even larger difference between light-duty vehicles and heavy-duty vehicles with loads, the agencies believe that the impact of weight reductions of medium- and heavy-duty trucks would not have a noticeable impact on safety for any of these classes of vehicles.
However, the agencies recognize that it is important to conduct further study and research into the interaction of mass, size and safety to assist future rulemakings, and we expect that the collaborative interagency work currently on-going to address this issue for the light-duty vehicle context may also be able to inform our evaluation of safety effects for the final HD vehicle rule.  We intend to continue monitoring this issue going forward, and may take steps in a future rulemaking if it appears that the MD/HD fuel efficiency and GHG standards have unforeseen safety consequences.  The American Chemistry Council stated in comments to the agencies that plastics and plastic composite materials provide a new way to lighten vehicles while maintaining passenger safety.  They added that properties of plastics including strength to weight ratio, energy absorption, and flexible design make these materials well suited for the manufacture of medium- and heavy-duty vehicles.  They submitted supporting analyses with their comments.  The National School Transportation Association stated that added structural integrity requirements increase weight of school buses, and thus decrease fuel economy.  They asked that if there are safety and fuel economy trade-offs, manufacturers should be able to receive a waiver from the regulation's requirements.  Since no weight reduction is required for school buses  -  or any other vocational vehicle  -  the agencies do not believe this is an issue with the current regulation.
Summary of Costs and Benefits from the Greenhouse Gas Emissions Perspective
As noted in Section VIII.A, the primary motivations of the HD National Program are improved energy security and GHG emissions reductions in the United States.  From that perspective, the benefits of the program are the external effects, and the net effects on truck owners and operators are the costs.  In this section, the agencies present a summary of costs, benefits, and net benefits of the program.  Section VIII.M presents the benefits and costs from the perspective that the motivation of the program is to improve fuel efficiency.
Table VIII-29 shows the estimated annual monetized costs of the final program for the indicated calendar years.  The table also shows the net present values of those costs for the calendar years 2012-2050 using both 3 percent and 7 percent discount rates.  In this table, the aggregate value of fuel savings is calculated using pre-tax fuel prices since savings in fuel taxes do not represent a reduction in the value of economic resources utilized in producing and consuming fuel. Note that fuel savings shown here result from reductions in fleet-wide fuel use.  Thus, they grow over time as an increasing fraction of the fleet meets the 2018 standards. 
Table VIII-29: Estimated Monetized Costs of the Final Program (Millions, 2009$ )[a]

2020
2030
2040
2050
NPV, Years 2012-2050, 3% Discount Rate
NPV, Years 2012-2050, 7% Discount Rate
Technology Costs
$2,300
$2,600
$3,1000
$3,800
$54,900
$28,500
Fuel Savings (pre-tax)
-$9,700
-$20,900
-$28,300
-$36,900
-$379,500
-$168,400
Monetized Annual Costs
-$7,400
-$18,300
-$25,200
-$33,100
-$324,600
-$139,900
Note:
[a] Technology costs and fuel savings for separate truck segments can be found in Section VIII.B.1.
Table VIII-30 presents estimated annual monetized benefits for the indicated calendar years.  The table also shows the net present values of those benefits for the calendar years 2012-2050 using both 3 percent and 7 percent discount rates.  The table shows the benefits of reduced CO2 emissions -- and consequently the annual quantified benefits (i.e., total benefits) -- for each of four SCC values estimated by the interagency working group.  As discussed in the RIA Section 9.3, there are some limitations to the SCC analysis, including the incomplete way in which the integrated assessment models capture catastrophic and non-catastrophic impacts, their incomplete treatment of adaptation and technological change, uncertainty in the extrapolation of damages to high temperatures, and assumptions regarding risk aversion.     
In addition, these monetized GHG benefits exclude the value of net reductions in non-CO2 GHG emissions (CH4, N2O, HFC) expected under this action.  Although EPA has not monetized the benefits of reductions in non-CO2 GHGs, the value of these reductions should not be interpreted as zero.  Rather, the net reductions in non-CO2 GHGs will contribute to this program's climate benefits, as explained in Section VI.C.  
Table VIII-30: Monetized Benefits Associated with the Final Program (Millions, 2009$)

2020
2030
2040
2050
NPV, Years 2012-2050, 3% Discount Rate[a]
NPV, Years 2012-2050, 7% Discount Rate[a]
Reduced CO2 Emissions at each assumed SCC value b
5% (avg SCC)
$300
$700
$1,200
$1,700
$9,100
$9,100
3% (avg SCC)
$1,000
$2,500
$3,700
$4,900
$46,500
$46,500
2.5% (avg SCC)
$1,600
$3,800
$5,500
$7,000
$78,800
$78,800
3% (95th percentile)
$3,200
$7,600
$11,200
$14,700
$141,700
$141,700
Energy Security Impacts (price shock)
$500
$1,100
$1,500
$1,700
$20,000
$8,900
Accidents, Congestion, Noise
-$200
-$400
-$600
-$600
-$7,900
-$3,700
Refueling Savings
$100
$100
$200
$200
$2,500
$1,100
Non-GHG Impacts [c,d]
B
$200
$200
$200
$2,100
$700
      Non-CO2 GHG Impacts[e]
n/a
n/a
n/a
n/a
n/a
n/a
Total Annual Benefits at each assumed SCC value b
5% (avg SCC)
$700
$1,700
$2,500
$3,200
$25,800
$16,100
3% (avg SCC)
$1,400
$3,500
$5,000
$6,400
$63,200
$53,500
2.5% (avg SCC)
$2,000
$4,800
$6,800
$8,500
$95,500
$85,800
3% (95[th] percentile)
$3,600
$8,600
$12,500
$16,200
$158,400
$148,700
Notes:
[a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail. 
[b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95[th] percentile SCC at 3%:  $66-$139.  See Section VIII.F.
[c] Note that "B" indicates unquantified criteria pollutant benefits in the year 2020.  For the analysis of the final program, we only modeled the rule's PM2.5- and ozone-related impacts in the calendar year 2030.  For the purposes of estimating a stream of future-year criteria pollutant benefits, we assume that the benefits out to 2050 are equal to, and no less than, those modeled in 2030 as reflected by the stream of estimated future emission reductions.  The NPV of criteria pollutant-related benefits should therefore be considered a conservative estimate of the potential benefits associated with the final program.
[d] Non-GHG-related health and welfare impacts (related to PM2.5 and ozone exposure) range between $110 and $340 million in 2030, 2040, and 2050.  $200 was chosen as the mid-point of this range for the purposes of estimating total benefits across all monetized categories. [e] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this program (See RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.  
Table VIII-31 presents estimated annual net benefits for the indicated calendar years.  The table also shows the net present values of those net benefits for the calendar years 2012-2050 using both 3 percent and 7 percent discount rates.  The table includes the benefits of reduced CO2 emissions (and consequently the annual net benefits) for each of four SCC values considered by EPA.  
Table VIII-31: Monetized Net Benefits Associated with the Final Program (Millions, 2009$)

2020
2030
2040
2050
NPV, 3%[a]
NPV, 7%[a]
Total Annual Costs[b]
Total Annual Costs
-$7,400
-$18,300
-$25,200
-$33,100
-$324,600
-$139,900
Total Annual Benefits at each assumed SCC value c
5% (avg SCC)
$700
$1,700
$2,500
$3,200
$25,800
$16,100
3% (avg SCC)
$1,400
$3,500
$5,000
$6,400
$63,200
$53,500
2.5% (avg SCC)
$2,000
$4,800
$6,800
$8,500
$95,500
$85,800
3% (95th percentile)
$3,600
$8,600
$12,500
$16,200
$158,400
$148,700
Monetized Net Benefits at each assumed SCC value c
5% (avg SCC)
$8,100
$20,000
$27,700
$36,300
$350,400
$156,000
3% (avg SCC)
$8,800
$21,800
$30,200
$39,500
$387,800
$193,400
2.5% (avg SCC)
$9,400
$23,100
$32,000
$41,600
$420,100
$225,700
3% (95th percentile)
$11,000
$26,900
$37,700
$49,300
$483,000
$288,600
Notes: 
[a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.
[b] Negative costs represent savings.
[c] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95th percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
EPA also conducted a separate analysis of the total benefits over the model year lifetimes of the 2014 through 2018 model year trucks.  In contrast to the calendar year analysis presented above in Table VIII-29 through Table VIII-31, the model year lifetime analysis below shows the impacts of the final program on vehicles produced during each of the model years 2014 through 2018 over the course of their expected lifetimes.  The net societal benefits over the full lifetimes of vehicles produced during each of the five model years from 2014 through 2018 are shown in Table VIII-32 and Table VIII-33 at both 3 percent and 7 percent discount rates, respectively.  
Table VIII-32: Monetized Costs, Benefits, and Net Benefits Associated with the Lifetimes of 2014-2018 Model Year Trucks (Millions, 2009$; 3% Discount Rate)

2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Sum
Technology 
-$1,700
-$1,500
-$1,600
-$1,800
-$2,300
-$8,900
Fuel Savings (pre-tax)
$9,500
$8,400
$8,200
$11,600
$13,100
$50,800
Energy Security Impacts (price shock)
$500
$400
$400
$600
$700
$2,600
Accidents, Congestion, Noise
-$300
-$300
-$300
-$300
-$300
-$1,500
Refueling Savings
$100
$100
$100
$100
$100
$500
Non-CO2 GHG Impacts and Non-GHG Impacts [c,d]
n/a
n/a
n/a
n/a
n/a
n/a
Reduced CO2 Emissions at each assumed SCC value a, b
5% (avg SCC)
$200
$200
$200
$300
$300
$1,200
3% (avg SCC)
$1,100
$1,000
$900
$1,300
$1,500
$5,800
2.5% (avg SCC)
$1,800
$1,600
$1,500
$2,200
$2,500
$9,600
3% (95th percentile)
$3,300
$2,900
$2,800
$4,000
$4,500
$17,500
Monetized Net Benefits at each assumed SCC value a, b
5% (avg SCC)
$8,300
$7,300
$7,000
$10,500
$11,600
$44,700
3% (avg SCC)
$9,200
$8,100
$7,700
$11,500
$12,800
$49,300
2.5% (avg SCC)
$9,900
$8,700
$8,300
$12,400
$13,800
$53,100
3% (95th percentile)
$11,400
$10,000
$9,600
$14,200
$15,800
$61,000
Notes: 
[a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.  
[b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95th percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
[c] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this proposal (see RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.  
[d] Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis. 

Table VIII-33: Monetized Costs, Benefits, and Net Benefits Associated with the Lifetimes of 2014-2018 Model Year Trucks (Millions, 2009$; 7% Discount Rate)

2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Sum
Technology
-$1,700
-$1,500
-$1,600
-$1,800
-$2,300
-$8,900
Fuel Savings (pre-tax)
$7,000
$6,000
$5,700
$7,700
$8,400
$34,800
Energy Security Impacts (price shock)
$400
$300
$300
$400
$400
$1,800
Accidents, Congestion, Noise
-$300
-$200
-$200
-$200
-$200
-$1,100
Refueling Savings
$0
$0
$0
$100
$100
$200
Non-CO2 GHG Impacts and Non-GHG Impacts [c,d]
n/a
n/a
n/a
n/a
n/a
n/a
Reduced CO2 Emissions at each assumed SCC value a, b
5% (avg SCC)
$200
$200
$200
$300
$300
$1,200
3% (avg SCC)
$1,100
$1,000
$900
$1,300
$1,500
$5,800
2.5% (avg SCC)
$1,800
$1,600
$1,500
$2,200
$2,500
$9,600
3% (95th percentile)
$3,300
$2,900
$2,800
$4,000
$4,500
$17,500
Monetized Net Benefits at each assumed SCC value a, b
5% (avg SCC)
$5,600
$4,800
$4,400
$6,500
$6,700
$28,000
3% (avg SCC)
$6,500
$5,600
$5,100
$7,500
$7,900
$32,600
2.5% (avg SCC)
$7,200
$6,200
$5,700
$8,400
$8,900
$36,400
3% (95th percentile)
$8,700
$7,500
$7,000
$10,200
$10,900
$44,300
Notes: 
[a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.  
[b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95[th] percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
[c] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this proposal (see RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.  
[d] Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis.

Summary of Costs and Benefits from the Fuel Efficiency Perspective
The purpose of a program to regulate fuel efficiency is primarily to save fuel, as compared to the purpose of a program to regulate GHG emissions, which is primarily to reduce the impact of climate change.  Considering costs and benefits from a fuel efficiency perspective, technology costs occur when the vehicle is purchased, just as they do from a GHG emissions perspective, but fuel savings will be counted as benefits that occur over the lifetime of the vehicle as it consumes less fuel, rather than as negative costs experienced either at the time of purchase or over the lifetime of the vehicle.  Table VIII-35 (these 2 below) show the same model year estimates as those provided above in Tables VIII-27 and VIII-28 (the same ones above in L), but with the categories relabeled to illustrate the fuel efficiency perspective.
Table VIII-34: Monetized Costs, Benefits, and Net Benefits Associated with the Lifetimes of 2014-2018 Model Year Trucks (Millions, 2009$; 3% Discount Rate)

2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Sum
Technology Costs
-$1,700
-$1,500
-$1,600
-$1,800
-$2,300
-$8,900
Benefits
Fuel Savings (pre-tax)
$9,500
$8,400
$8,200
$11,600
$13,100
$50,800
Energy Security Impacts (price shock)
$500
$400
$400
$600
$700
$2,600
Accidents, Congestion, Noise
-$300
-$300
-$300
-$300
-$300
-$1,500
Refueling Savings
$100
$100
$100
$100
$100
$500
Non-CO2 GHG Impacts and Non-GHG Impacts [c,d]
n/a
n/a
n/a
n/a
n/a
n/a
Reduced CO2 Emissions at each assumed SCC value a, b
5% (avg SCC)
$200
$200
$200
$300
$300
$1,200
3% (avg SCC)
$1,100
$1,000
$900
$1,300
$1,500
$5,800
2.5% (avg SCC)
$1,800
$1,600
$1,500
$2,200
$2,500
$9,600
3% (95th percentile)
$3,300
$2,900
$2,800
$4,000
$4,500
$17,500
Monetized Net Benefits at each assumed SCC value a, b
5% (avg SCC)
$8,300
$7,300
$7,000
$10,500
$11,600
$44,700
3% (avg SCC)
$9,200
$8,100
$7,700
$11,500
$12,800
$49,300
2.5% (avg SCC)
$9,900
$8,700
$8,300
$12,400
$13,800
$53,100
3% (95th percentile)
$11,400
$10,000
$9,600
$14,200
$15,800
$61,000
Notes: 
[a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.  
[b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95th percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
[c] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this proposal (see RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.  
[d] Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis.

Table VIII-35: Monetized Costs, Benefits, and Net Benefits Associated with the Lifetimes of 2014-2018 Model Year Trucks (Millions, 2009$; 7% Discount Rate)

2014 MY
2015 MY
2016 MY
2017 MY
2018 MY
Sum
Technology Costs
-$1,700
-$1,500
-$1,600
-$1,800
-$2,300
-$8,900
Benefits
Fuel Savings (pre-tax)
$7,000
$6,000
$5,700
$7,700
$8,400
$34,800
Energy Security Impacts (price shock)
$400
$300
$300
$400
$400
$1,800
Accidents, Congestion, Noise
-$300
-$200
-$200
-$200
-$200
-$1,100
Refueling Savings
$0
$0
$0
$100
$100
$200
Non-CO2 GHG Impacts and Non-GHG Impacts [c,d]
n/a
n/a
n/a
n/a
n/a
n/a
Reduced CO2 Emissions at each assumed SCC value a, b
5% (avg SCC)
$200
$200
$200
$300
$300
$1,200
3% (avg SCC)
$1,100
$1,000
$900
$1,300
$1,500
$5,800
2.5% (avg SCC)
$1,800
$1,600
$1,500
$2,200
$2,500
$9,600
3% (95th percentile)
$3,300
$2,900
$2,800
$4,000
$4,500
$17,500
Monetized Net Benefits at each assumed SCC value a, b
5% (avg SCC)
$5,600
$4,800
$4,400
$6,500
$6,700
$28,000
3% (avg SCC)
$6,500
$5,600
$5,100
$7,500
$7,900
$32,600
2.5% (avg SCC)
$7,200
$6,200
$5,700
$8,400
$8,900
$36,400
3% (95th percentile)
$8,700
$7,500
$7,000
$10,200
$10,900
$44,300
Notes: 
[a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.  
[b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95[th] percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
[c] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this proposal (see RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero.[d] Due to analytical and resource limitations, MY non-GHG emissions (direct PM, VOCs, NO2 and SO2) were not estimated for this analysis.
Employment Impacts
         Introduction
Although analysis of employment impacts is not part of a cost-benefit analysis (except to the extent that labor costs contribute to costs), employment impacts of federal rules are of particular concern in the current economic climate of sizeable unemployment.  The recently issued Executive Order 13563, "Improving Regulation and Regulatory Review" (January 18, 2011), states, "Our regulatory system must protect public health, welfare, safety, and our environment while promoting economic growth, innovation, competitiveness, and job creation" (emphasis added).  Although EPA and NHTSA did not undertake an employment analysis of the proposed rules, several commenters suggested that we undertake an employment analysis for the final rulemaking.  Therefore, we have provided a robust qualitative discussion of the potential employment impacts of the Heavy-Duty National Program.  
When the economy is at full employment, an environmental regulation is unlikely to have much impact on net overall U.S. employment; instead, labor would primarily be shifted from one sector to another. These shifts in employment impose an opportunity cost on society, approximated by the wages of the employees, as regulation diverts workers from other activities in the economy.  In this situation, any effects on net employment are likely to be transitory as workers change jobs (e.g., some workers may need to be retrained or require time to search for new jobs, while shortages in some sectors or regions could bid up wages to attract workers).  
On the other hand, if a regulation comes into effect during a period of high unemployment, a change in labor demand due to regulation may affect net overall U.S. employment because the labor market is not in equilibrium. Schmalansee and Stavins point out that net positive employment effects are possible in the near term when the economy is at less than full employment due to the potential hiring of idle labor resources by the regulated sector to meet new requirements (e.g., to install new equipment) and new economic activity in sectors related to the regulated sector. In the longer run, the net effect on employment is more difficult to predict and will depend on the way in which the related industries respond to the regulatory requirements. As Schmalansee and Stavins note, it is possible that the magnitude of the effect on employment could vary over time, region, and sector, and positive effects on employment in some regions or sectors could be offset by negative effects in other regions or sectors.  For this reason, they urge caution in reporting partial employment effects since it can "paint an inaccurate picture of net employment impacts if not placed in the broader economic context."    
This rulemaking is expected to have a relatively small effect on net employment in the United States through the regulated sector  -  the truck and engine manufacturer industry  -  and several related sectors, specifically, industries that supply the truck and engine manufacturing industry (e.g., truck parts), the trucking industry itself, other industries involved in transporting goods (e.g., rail and shipping); the petroleum refining sector, and the retail sector.  According to the U.S. Bureau of Labor Statistics, about 1.25 million people were employed in the truck transportation industry and about 675,000 people were employed in the motor vehicle parts industry between 2010 and 2011.  Although heavy-duty vehicles (HD) account for approximately 4% of the vehicles on the road, these vehicles consume more than 20% of on-road gasoline and diesel fuel use.  As discussed in Chapter 5 of this RIA, this rulemaking is predicted to reduce the amount of fuel these vehicles use, and thus affect the petroleum refinery industry.  The petroleum refinery industry employed about 65,000 people in the U.S. in 2009, the most recent year that employment estimates are available for this sector.  Although heavy-duty vehicles (HD) account for approximately 4% of the vehicles on the road, these vehicles consume more than 20% of on-road gasoline and diesel fuel use.  As discussed in Chapter 5 of this RIA, this rulemaking is predicted to reduce the amount of fuel these vehicles use, and thus affect the petroleum refinery industry.  The petroleum refinery industry employed about 65,000 people in the U.S. in 2009, the most recent year that employment estimates are available for this sector.  Finally, since the net reduction in cost associated with these rules is expected to lead to lower transportation and shipping costs, in a competitive market a substantial portion of those cost savings will be passed along to consumers, who then will have additional discretionary income (how much of the cost is passed along to consumers depends on market structure and the relative price elasticities).  
Several commenters suggested that the HD vehicle rules would lead to an increase in employment in affected sectors by offering the potential for new employment opportunities in the design and production of new vehicle technologies.  Also, these commenters suggested that since the U.S. manufacturers and suppliers are leaders in certain advanced truck technologies, this program has the potential to help them consolidate their leadership and thrive in a global market.  In this context, several commenters referred to an assessment by the Union of Concerned Scientists (UCS) and CalStart of the economic and employment benefits of the improved efficiency in HD vehicles.  The study predicts an increase in 63,000 jobs in 2020 and 124,000 in 2030, as result of higher fuel efficiency for HD vehicles.  These quantitative estimates were derived using a standard input-output model, though the estimates themselves have not yet been peer reviewed.  Input-output (I/O) models do not account for opportunity costs of labor  -  that is, all employment needs due to the regulatory change will be met by unemployed workers.  In addition, I/O models assume no changes in the average use of labor per dollar of output in the affected sectors.  For these and other reasons, these may at best be considered an imprecise upper bound on actual employment impacts. 
       Determining the direction of employment effects even in the regulated industry may be difficult due to the presence of competing effects that lead to an ambiguous adjustment in employment as a result of environmental regulation. Morgenstern, Pizer and Shih identify three separate ways employment levels may change in the regulated industry in response to a new (or more stringent) regulation. First, higher production costs due to the regulation will lead to higher market prices; higher prices in turn  reduce demand for the good, reducing the demand for labor to make that good ("demand effect").  Second, costs rise because of increased use of inputs, including labor, in order to comply with the new regulatory requirements ("cost effect"). Third, post-regulation production technologies may be more or less labor-intensive (i.e., more/less labor is required per dollar of output) ("factor-shift effect").  The "demand effect" is expected to have a negative effect on employment, the "cost effect" to have a positive effect on employment, and the "factor-shift effect" has an ambiguous effect on employment.  Without more information as to the magnitudes of these competing effects, it is not possible to predict the total effect environmental regulation will have on employment levels in a regulated sector
Morgenstern et al. estimated the effects on employment of spending on pollution abatement for four highly polluting/regulated industries (pulp and paper, plastics, steel, and petroleum refining).  They conclude that increased abatement expenditures generally have not caused a significant change in employment in those sectors. More specifically, their results show that, on average across the industries studied, each additional $1 million spent on pollution abatement results in a (statistically insignificant) net increase of 1.5 jobs. While the specific sectors Morgenstern et al. examined are different that the sectors considered here, the methodology that Morgenstern et al. developed is still useful in this context.
         Overview of Affected Sectors
The above discussion focuses on employment changes in the regulated sector, but the regulated sector is not the only source of changes in employment.  In these rules, the regulated sectors are truck and engine manufacturers; they are responsible for meeting the standards set in these rules.  The effects of these rules are also likely to have impacts beyond the directly regulated sector.  The related sectors which these rules are also likely to impact include:  motor vehicle parts producers, to the extent that the truck and engine industries purchase components rather than manufacture them in-house; shipping and transport, because many companies in this sector purchase trucks and their operating costs will be affected by both higher truck prices and fuel savings; oil refineries due to reduced demand for petroleum-based fuels; and the final retail market, which is where any net cost reductions due to fuel savings are ultimately expected to be experienced.  The following discussion describes the direction of impacts on employment in these industries.  The effects of the HD rule on net U.S. employment depend, not only on their relative magnitudes, but also on employment levels in the overall economy.  As previously discussed, in a full-employment economy these sector-specific impacts will be mostly offset by employment changes elsewhere in the economy and would not be expected to result in a net change in jobs.  However, in an economy with significant unemployment these changes may affect net employment in the U.S.
       Truck and Engine Manufacturers
The regulated sector consists of truck and engine manufacturers.  Employment associated with manufacturing trucks and engines may be affected by the demand, cost, and factor-shift effects.  
The demand effect depends on the effects of this rulemaking on HD vehicle sales.  If vehicle sales increase, then more people will be required to assemble trucks and their components.  If vehicle sales decrease, employment associated with these activities will decrease.  The effects of this rulemaking on HD vehicle sales depend on the perceived desirability of the new vehicles.  On one hand, this rulemaking will increase vehicle costs; by itself, this effect would reduce vehicle sales.  On the other hand, this rulemaking will reduce the fuel costs of operating the vehicle; by itself, this effect would increase vehicle sales, especially if potential buyers have an expectation of higher fuel prices.    The agencies have not made an estimate of the potential change in vehicle sales.  However as discussed in Preamble Section VIII.E.5 the agencies have estimated an increase in vehicle miles traveled (i.e., VMT rebound) due to the reduced operating costs of trucks meeting these new standards.  Since increased VMT is most likely to be met with more drivers and more trucks, our projection of VMT rebound is suggestive of an increase in vehicle sales and truck driver employment (recognizing that these increases may be partially offset by a decrease in manufacturing and sales for equipment of other modes of transportation such as rail cars or barges).  
As discussed above in Section VIII.A, the agencies find that the reduction in fuel costs associated with this rulemaking outweigh the increase in vehicle cost.  This finding is puzzling: market forces should lead truck manufacturers and buyers to install all cost-effective fuel-saving technology, but the agencies find that they have not.  Section VIII.A discusses various hypotheses that have been suggested to explain this phenomenon.  Some of the explanations suggest that vehicle manufacturers and buyers will benefit from the rulemaking, and vehicle sales will increase; others suggest that the opposite might occur.  The agencies do not have strong evidence supporting one specific explanation over another.  However, some in the heavy-duty industry indicate the potential for an increase in jobs.  As stated by Tom Linebarger (President and Chief Operating Officer of Cummins) and Fred Krupp (President of the Environmental Defense Fund),  "Finally, strong environmental standards play a crucial role in getting innovations to market that will create economic opportunity for American companies and jobs for American workers. . . . It helps that Cummins and other forward-thinking businesses view this as an opportunity to innovate and increase international market share."	
One commenter raised the issue of whether there could be a loss of recreation vehicle (RV) industry jobs due to a reduction in the sales of motor homes and towable RVs.  As mentioned above, the effects of this rulemaking on HD vehicle sales depend on the desirability of the new vehicles.  
The truck and engine manufacturing sector has great flexibility in how to respond to the requirement for reduced greenhouse gases and increasing fuel efficiency, with a broad suite of technologies being available to achieve the standards.  These technologies are described in detail in Chapter 2 of this RIA.  Among these technologies, a distinction can be made between technologies that can be "added on" to conventional trucks versus those that replace features of a conventional truck.  "Added on" features require additional labor to install the technologies on trucks, thus clearly increasing labor demand (the "cost effect").  For "replacement" technologies, the predicted impact on labor demand from regulation depends on the change in the amount of labor used to install one type of technology compared to another.  In many cases, the new technologies are predicted to be more complex than the existing technologies and are therefore likely to require additional labor installation inputs. However, most of the technologies that are expected to be used to meet these standards are replacement technologies, therefore overall changes in the labor intensity are expected to be relatively small.  For example, almost all of the engine improvements involve replacement technologies that are not expected to significantly change the labor requirements.  Similarly, regulations of the chassis on vocational vehicles will only require the installation of a different type of tire, which is also not expected to have large labor intensity impacts.  Therefore, the potential magnitude of the factor shift effect is expected to be relatively small, though slightly positive due to the additional labor needed to install more complex technologies.   
For the truck and engine manufacturing sector, the demand effect may result in either increased or decreased employment; the cost effect is expected to increase employment; and the factor-shift effect may have a slightly positive effect on employment in this sector.   
       Motor Vehicle Parts Manufacturing Sector
Some vehicle parts are made in-house and would be included directly in the regulated sector; alternatively, some are made by independent suppliers and are not directly regulated, but they will be affected by the rules as well.  The parts manufacturing sector will be involved primarily in providing "add-on" parts, or components for replacement parts built internally.  Because demand for these parts is expected to increase, employment effects in this sector are expected to be positive.
       Transport and Shipping Sectors
Although not directly regulated by these rules, employment effects in the transport and shipping sector are likely to result from these regulations.  If the overall cost of shipping a ton of freight decreases because of increased fuel efficiency (taking into account the increase in upfront purchasing costs), in a perfectly competitive industry these costs savings will be passed along to customers.  With lower prices, demand for shipping would lead to an increase in demand for truck shipping services (consistent with the VMT rebound effect analysis) and therefore an increase in employment.  In addition, if the relative cost of shipping freight via trucks becomes cheaper than shipping by other modes (e.g., rail or barge), then employment in the truck transport industry is likely to increase.  To the extent that the trucking industry is more labor intensive than other modes, we would expect this effect to lead to an overall increase in employment in the transport and shipping sectors.
       Fuel Suppliers
In addition to the effects on the trucking industry and related truck parts sector, these rules will result in reductions in fuel use that lower GHG emissions.  Fuel saving, principally reductions in liquid fuels such as diesel and gasoline, will affect employment in the fuel suppliers industry sectors, principally the Petroleum Refinery sector.  
Expected fuel consumption reductions by fuel type, and by heavy-duty vehicle type, can be found in Table VIII-7.  These reductions reflect impacts from the new fuel efficiency and GHG standards and include increased consumption from the rebound effect.  These fuel savings are monetized in Table VIII-8 by multiplying the reduced fuel consumption in each year by the corresponding estimated average fuel price in that year, using the Reference Case from the AEO 2011.  In 2014, the pre-tax fuel savings is $1.2 billion (2009$).  While these figures represent a level of fuel savings for purchasers of fuel, it also represents a loss in value of output for the petroleum refinery industry.  Since 50 percent of the fuel would have been refined in the U.S., the loss in output to the U.S. Petroleum Refinery sector is $600 million (2009$), which will result in reduced sectoral employment.  Because this sector is very capital-intensive, the employment effect is not expected to be large.
       Fuel Savings
As a result of this rulemaking, it is anticipated that trucking firms will experience fuel savings.  Fuel savings lower the costs of transportation goods and services and, as a result, could increase the profitability of trucking firms operating in the U.S.  In a competitive market, the fuel saving that initially accrue to trucking firms are likely to be passed along as lower transportation costs that, in turn, could result in lower prices for final goods and services.  In either case, the savings will accrue to some segment of consumers: either owners of trucking firms or the general public.  In both cases, the effect will be increased spending by consumers in other sectors of the economy, creating jobs in a diverse set of sectors, including retail and service industries.  
As mentioned above, the value of fuel savings from this rulemaking is projected to be $1.2 billion (2009$) in 2014, according to Table VIII-8.  If all those savings are spent by consumers or trucking firm owners, the fuel savings will stimulate increased employment in the economy through those expenditures.  If the fuel savings accrue primarily to firm owners, they may either reinvest the money or take it as profit.  Reinvesting the money in firm operations would increase employment directly.  If they take the money as profit, to the extent that these owners are wealthier than the general public, they may spend less of the savings, and the resulting employment impacts would be smaller than if the savings went to the public.
         Summary
The net employment effects of this rulemaking are expected to be found throughout several key sectors: truck and engine manufacturers, the trucking industry, truck parts manufacturing, fuel production, and consumers.  For the regulated sector, the demand effect may result in either increased or decreased employment, depending on the net effect on HD vehicle sales.  The cost effect is expected to increase employment in the regulated sector; and the factor-shift effect may have a slightly positive effect on employment, though we cannot definitively say this is the case without quantification.  Increased expenditures by truck and engine manufacturers are expected to require increased labor to build parts, though this effect also depends on any changes in the labor intensity of production; increased complexity of technologies may imply increased labor inputs.  Lower prices for shipping are expected to lead to an increase in demand for truck shipping services and, therefore, an increase in employment, though this effect may be offset somewhat by changes in employment in other shipping sectors.  Reduced fuel production implies less employment in the fuel provision sectors.  Finally, any net cost savings would be expected to be passed along to some segment of consumers: either the general public or the owners of trucking firms, who are expected then to increase employment through their expenditures.  Given the job creation as a result of the $1.2B (2009$) in fuel savings in 2014 and the possible employment increases in the manufacturing and parts sectors, we find it highly unlikely that there would be significant net job losses related to this policy.

Analysis of the Alternatives 
The heavy-duty truck segment is very complex. The sector consists of a diverse group of impacted parties, including engine manufacturers, chassis manufacturers, truck manufacturers, trailer manufacturers, truck fleet owners and the public. The final standards that the agencies have adopted today maximize the environmental and fuel savings benefits of the program while taking into consideration the unique and varied nature of the regulated industries.  In developing this final rulemaking, we considered a number of alternatives that could have resulted in fewer or potentially greater GHG and fuel consumption reductions than the program we are finalizing.  This section summarizes the alternatives we considered and presents assessments of technology costs, CO2 reductions, and fuel savings associated with each alternative.  The agencies reduced the number of alternatives analyzed in this final rulemaking compared to the proposal because we did not receive any comments supporting standard setting for a smaller subset than HD pickup trucks, combination tractors, and vocational vehicles (as well as engines used in vocational vehicles and combination tractors).  As discussed below, the agencies have also refined some of the alternatives analyzed in response to the comments received.
  What Are the Alternatives that the Agencies Considered?
In developing alternatives, NHTSA must consider EISA's requirement for the MD/HD fuel efficiency program noted above. 49 U.S.C. 32902(k)(2) and (3) contain the following three requirements specific to the MD/HD vehicle fuel efficiency improvement program: (1) The program must be "designed to achieve the maximum feasible improvement"; (2) the various required aspects of the program must be appropriate, cost-effective, and technologically feasible for MD/HD vehicles; and (3) the standards adopted under the program must provide not less than four model years of lead time and three model years of regulatory stability. In considering these various requirements, NHTSA will also account for relevant environmental and safety considerations.
The alternatives below represent a broad range of approaches for a HD vehicle fuel efficiency and GHG emissions program.  Details regarding the modeling of each alternative are included in RIA Chapter 6.  The alternatives in order of increasing fuel efficiency and GHG emissions reductions are:
   Alternative 1: No Action
A "no action" alternative assumes that the agencies would not issue rules regarding a MD/HD fuel efficiency improvement program.  This alternative is presented in order for NHTSA to comply with National Environmental Policy Act (NEPA) and to provide an analytical baseline against which to compare environmental impacts of the other regulatory alternatives.  The agencies refer to this as the "No Action Alternative" or as a "no increase" or "baseline" alternative.  As described in RIA Chapter 5, this no-action alternative is considered the reference case.  
The no action alternative first presented in this final rule is based on the assumption that the new vehicle fleet continues to perform at the same level as new 2010 vehicles.  In this way, it provides a comparison between today's new trucks and the increased cost and reduced fuel consumption of future compliant vehicles.  
The agencies recognize that there is substantial uncertainty in determining an appropriate baseline against which to compare the effects of the proposed action.  The lack of prior regulation of HD fuel efficiency means that there is a lack of historic data regarding trends in this sector.  Therefore, in this final rule the agencies have also included an analysis using a baseline derived from annual projections developed by the U.S. Energy Information Administration (EIA) for the Annual Energy Outlook (AEO).  For this alternative baseline, the agencies analyzed the new truck fuel economy projections for the Light Commercial Trucks, along with the Medium- and Heavy-Duty Freight Vehicles developed in AEO 2011.  The agencies converted the fuel economy improvements into CO2 emissions reductions relative to a 2010 model year (see RIA Chapter 6).
The baseline derived from the AEO forecast provides a comparison between the impacts of the proposed standards and EIA's projection of future new truck performance absent regulation.  This alternative baseline is informative in showing one possible projection of future vehicle performance based on other factors beyond the regulation the agencies are finalizing today.  The AEO forecast makes a number of assumptions that should be noted.  AEO 2011 assumes improved fuel efficiency for 8,500-10,000 lb. GVWR heavy-duty pickups due to the light-duty 2012-2016 MY regulations.  We project a similar capability for fuel economy improvement as AEO does for this class of vehicles; however, the agencies recognize that absent regulation manufacturers may decline to add the necessary technologies to reach the level of our proposed standards.  For medium and heavy-duty vocational vehicles, AEO 2011 projects a small reduction in fuel efficiency over time (an increase in fuel consumption), similar to that achieved under the MY 2010 baseline.  For Class 8 combination tractors, the AEO 2011 baseline projections an annual improvement of approximately 0.3 percent.
We are not able to make an estimate of the cost of the AEO 2011 alternative baseline because we are not able to accurately determine the technology mix used in the AEO 2011 analysis to achieve the projected improvements in fuel efficiency.  We do know they differ significantly from our own analysis as the EIA projections do not include the full range of technologies considered by the agencies (e.g. EIA's analysis does not consider the use of idle reduction technologies and diesel auxiliary power units to reduce fuel consumption associated with vehicle hoteling).  If one were to assume that the cost of the AEO2011 baseline was proportional to projected improvement relative to our preferred alternative, the total AEO2011 baseline cost estimate would be approximately equal to the total cost of the preferred case, but vary by category.
   Alternative 2: 12 Percent Less Stringent than the Preferred Alternative
Alternative 2 represents an alternative stringency level to the agencies' preferred approach.  Alternative 2 represents a stringency level which is approximately 12 percent less stringent than the preferred approach.  The agencies calculated the Alternative 2 stringency level in order to meet two goals.  First, we sought to create an alternative that regulated the same engine and vehicle categories as the preferred alternative, but at lower stringency (10-20 percent lower) than the preferred alternative.  Second we wanted an alternative that reflected removal of the least cost effective technology that we believed manufacturers would add last in order to meet the preferred alternative.  In other words, we wanted an alternative that as closely as possible reflected the last increment in stringency prior to reaching our preferred alternative.  Please see Table 2.35 in RIA Chapter 2 for a list of all of the technologies, their cost and relative effectiveness. The resulting Alternative 2 is based on the same technologies used in Alternative 3 except as follows for each of the three categories.
The combination tractor standard would be based removal of the Advanced SmartWay aerodynamic package and weight reduction technologies which decreases the average combination tractor GHG emissions and fuel consumption reduction by approximately 1 percent.  
The HD pickup truck and van standard would be based on removal of the 5 percent mass reduction technology which decreases the average truck reduction of fuel consumption and GHG emissions by approximately 1.6 percent.
The vocational vehicle standard would be based on removal of low rolling resistance tires  -  in essence meaning that there would be no expected improvement in performance from vocational vehicles, only from engines used to power them, which cuts the average vehicle and engine GHG emissions and fuel consumption reduction by approximately 2 percent for these vehicles.
The agencies have decided not to finalize Alternative 2 because as shown below Alternative 3 is more stringent, is technically feasible and results in a greater net benefit to society. 
   Alternative 3: Preferred Alternative and Final Standards
Alternative 3 represents the agencies' preferred approach.  This alternative consists of the finalized fuel efficiency and GHG standards for HD engines, HD pickup trucks and vans, Class 2b through Class 8 vocational vehicles, and Class 7 and 8 combination tractors.  Details regarding modeling of this alternative are included in RIA Chapter 5 as the control case.  
The agencies selected Alternative 3 over Alternatives 4 and 5 described below because the agencies concluded that alternatives 4 and 5 were not technically feasible to achieve given the leadtime provided in this final rule.  Hence, we have concluded that Alternative 3 represents the maximum feasible improvement.  Section 2 of this preamble provides an explanation of the consideration that agencies gave to setting more stringent standards based on the application of additional technologies and our reasons for concluding that the identified technologies for each of the vehicle and engine standards that constitute Alternative 3 represented the maximum feasible improvement based on technological feasibility.  In general, we reached this conclusion for one of two reasons.  For some technologies such as Rankine Waste Heat Recovery engine technologies, the agencies have concluded that the technology is still in the research phase and will not be developed fully for new engine production in the timeframe of this first regulatory action.  In other cases, the agencies concluded that the manufacturing capacity for technologies such as advanced battery systems for heavy-duty hybrid drivetrains could not be expanded quickly enough to allow for significant vehicle production volume in the timeframe of this rule.  
   Alternative 4: 20 Percent More Stringent than the Preferred Alternative
Alternative 4 represents a modeled alternative which is 20 percent more stringent than the preferred approach.  The agencies derived the stringency level based on similar goals as for Alternative 2.  Specifically, we wanted an alternative that would reflect an incremental improvement over the preferred alternative based on adding the next most cost effective technology in each of the categories.  In general, we thought these were the technologies most likely to be attempted by manufacturers if a more stringent standard were established.  However, as discussed above and in the feasibility discussion in Section III, we are not finalizing Alternative 4 because we do not believe that these technologies can be developed and introduced in the timeframe of this rulemaking.  We note that the estimated costs for this alternative are denoted as `+c.'  The +c is intended to make clear that the cost estimates we are showing do not include additional costs related to pulling ahead the development and expanding manufacturing base for these technologies (for example, building new factories in the next few years).  The resulting Alternative 4 is based on the same technologies used in Alternative 3 except as follows for each of the three categories.
The combination tractor standard would be based on the addition of Rankine waste heat recovery systems and 100 percent application of advanced aerodynamic technologies, such as underbody airflow treatment, advanced gap reduction, rearview cameras to replace mirrors, and wheel system streamlining, to high roof sleeper cab combination tractors.  The agencies do not believe that either advanced aerodynamic technologies or Rankine waste heat recovery systems should be used to set the standard for HD engines in 2017 MY because this technology is still in the research phase.  The agencies assumed 59 percent of all combination tractors are sleeper cabs and of those, 80 percent are high roof sleeper cabs.  The agencies assumed a 12 kWh waste heat recovery system would reduce CO2 emissions by 6 percent at a cost of $8,400 per truck.  The estimated reduction in CO2 emissions from the engine for this alternative is included in RIA Chapter 6.  The impact of 100 percent application of the advanced aerodynamic technology package would lead to a total 20.7 percent reduction in Cd values for high roof sleeper cabs over a 2010 MY baseline tractor.  The incremental cost of this technology over the preferred case is $1,027 per vehicle.  
The HD pickup truck and van standard would be based on the addition of the turbocharged, downsized technology to gasoline engines which would bring the total reduction for gasoline HD pickup trucks and vans to 15 percent and match the level of reduction for the diesel pickup trucks.  The agencies do not consider this to be a technology from which the 2017MY gasoline HD pickup truck standards should be premised on because we are not yet convinced that turbocharged downsized gasoline engines can be applied to heavy-duty truck applications in a durable manner.  We are aware that manufacturers are testing such engines and that in pickup trucks with a duty cycle representing a mix of passenger vehicle and work applications the engines can be durable.  However, we are unable to conclude today that such engines will be durable and hence technically feasible when applied in heavy-duty truck applications with an expected higher average load factor.  The estimated incremental cost increase to HD pickup trucks and vans to replace a stoichiometric gasoline direct injected V8 engine with coupled cam phasing used in Alternative 3 with a V6 stoichiometric gasoline direct injection DOHC with dual cam phasing, discrete valve lift, and twin turbochargers is estimated to be $1,743.
The vocational vehicle standard would be based on the addition hybrid powertrains to 6 percent of the vehicles.  The agencies assumed a 32 percent per vehicle reduction in GHG emissions and fuel consumption due to the hybrid with a cost of $26,667 per vehicle based on the average effectiveness and costs developed in the NAS report for box trucks, bucket trucks, and refuse haulers.  
   Alternative 5: Maximum Technology Penetration plus Trailers 
Alternative 5 builds on Alternative 4 through additional hybrid powertrain application rates in the HD sector and by adding a performance standard for fuel efficiency and GHG emissions to commercial trailers. This alternative includes all elements of Alternative 4 (some of which we already regard as infeasible in the model years covered by the final rule), plus the application of additional hybrid powertrains to the pickup trucks, vans, vocational vehicles, and tractors.  In addition, the agencies applied aerodynamic technologies to commercial box trailers, along with tire technologies for all commercial trailers.  
The agencies set the hybrid penetration for each category such that it represents 50 percent of the HD pickup truck and van segment, 50 percent of vocational vehicles, and 5 percent of tractors in 2017 model year.  The agencies do not believe that it is possible to achieve hybrid technology penetration rates at or even near these levels in the timeframe of this rulemaking.  However, we believe it is useful to consider what a future standard based on the use of such advanced technologies could achieve.  As with Alternative 4, we include a +c in our cost estimates for this alternative to reflect additional costs not estimated by the agencies. The agencies assumed that a hybrid powertrain would provide a 32 percent reduction in CO2 emissions and fuel consumption of a vocational vehicle at a projected cost of $26,667 per vehicle, based on the average of the NAS report findings for box trucks, bucket trucks, and refuse vehicles.  The agencies are projecting a cost of $9,000 per vehicle for the HD pickup trucks and vans with an effectiveness of 18 percent, again based on the NAS report.  Lastly, the effectiveness of hybrid powertrains installed in tractors was assumed to be 10 percent at a cost of $25,000 based on the NAS report.
The combination tractor technology package for Alternative 5 includes the preferred alternative technologies, waste heat recovery and Advanced SmartWay aerodynamic package used in Alternative 4, application of hybrid powertrains discussed above, in addition to a regulation for commercial trailers pulled by combination tractors.  The agencies assumed a box trailer program would mirror the SmartWay program and include tire and aerodynamic requirements.  The agencies added low rolling resistance tires to all commercial trailers, which are assumed to have 15 percent lower rolling resistance than the baseline trailer tire and is equivalent to the target value required by SmartWay.  The aerodynamics of the box trailers were assumed to improve the coefficient of drag for the combination tractor-trailer by 10 percent through the application of technologies such as trailer skirts and gap reducers.  These technologies would result in further reductions in drag coefficient and rolling resistance coefficient from the MY 2010 baseline.  As stated above for hybrids, the agencies do not believe that it is possible to achieve technology penetration rates at or even near these levels in the timeframe of this rulemaking.    
The combination tractor costs for this alternative are equal to the costs in Alternative 4, plus $25,000 for hybrid powertrains in ten percent of tractors, plus the costs of trailers.  The costs for the trailer program of Alternative 5 were derived based on the assumption that trailer aerodynamic improvements would cost $2,150 per trailer.  This cost assumes side fairings and gap reducers and is based on the ICF cost estimate.  The agencies applied the aerodynamic improvement to only box trailers, which represent approximately 60 percent of the trailer sales.  The agencies used $528 per trailer (2014 MY cost) for low rolling resistance based on the agencies' estimate of $66 per tire in the tractor program.  Lastly, the agencies assumed the trailer volume is equal to three times the tractor volume based on the 3:1 ratio of trailers to tractors in the market today.  
  How Do These Alternatives Compare in Overall GHG Emissions Reductions and Fuel Efficiency and Cost?
The agencies analyzed all five alternatives through the MOVES model to evaluate the impact of each alternative, as shown in Table IX-1.  The table contains the annual CO2 and fuel savings in 2030 and 2050 for each alternative (relative to the reference scenario of Alternative 1), presenting both the total savings across all regulatory categories, and for each regulatory category.  Table IX-2 presents the annual technology costs associated with each alternative (relative to the reference scenario of Alternative 1) in 2030 and 2050 for each regulatory category.  In addition, the total annual downstream impacts of NOX, CO, PM, and VOC emissions in 2030 for each of the alternatives are included in Table IX-3.  
Lastly, the agencies project the monetized net benefits associated with each alternative in 2030 and 2050 as shown in Table IX-4 and Table IX-5.
Table IX-1: Annual CO2 and Oil Reductions Relative to Alternative 1 in 2030 and 2050
DOWNSTREAM CO2 REDUCTIONS (MMT)
OIL REDUCTIONS (BILLION GALLONS)

2030
2050
2030
2050
Alt. 1 Baseline
0
0
0
0

Alt. 1a AEO 2011 Baseline- Total
39
90
3.9
9.0
                                                                       TRACTORS
29
73
2.9
7.1
                                                               HD PICKUP TRUCKS
9
16
0.9
1.7
                                                            VOCATIONAL VEHICLES
1
2
0.1
0.2

Alt. 2 Less Stringent- Total
54
78
5.4
7.7
                                                                       Tractors
42
59
4.2
5.8
                                                               HD Pickup Trucks
7
11
0.8
1.2
                                                            Vocational Vehicles
5
7
0.4
0.7

Alt. 3 Preferred  -  Total
61
89
6.1
8.8
                                                                       Tractors
45
63
4.4
6.2
                                                               HD Pickup Trucks
8
13
0.9
1.3
                                                            Vocational Vehicles
8
12
0.8
1.2

Alt. 4 More Stringent -  Total
74
107
7.4
10.7
                                                                       Tractors
53
74
5.2
7.3
                                                               HD Pickup Trucks
10
15
1.0
1.6
                                                            Vocational Vehicles
11
18
1.1
1.8

Alt. 5 Max Technology -  Total
99
146
9.8
14.5
                                                                       Tractors
61
85
6.0
8.3
                                                               HD Pickup Trucks
15
24
1.6
2.5
                                                            Vocational Vehicles
23
37
2.2
3.6

Table IX-2: Technology Cost Projections Relative to Alternative 1 for Each Alternative[a]
TECHNOLOGY COSTS (2009$ MILLIONS)

2030
2050
Alt. 1 Baseline
$0
$0

Alt. 1a AEO 2011 Baseline- Total b
--
--
                                                                       Tractors
--
--
                                                               HD Pickup Trucks
--
--
                                                            Vocational Vehicles
--
--

Alt. 2 Less Stringent - Total
$1,732
$2,536
                                                                       Tractors
$743
$1,227
                                                               HD Pickup Trucks
$817
$1,029
                                                            Vocational Vehicles
$173
$281

Alt. 3 Preferred  -  Total
$2,610
$3,798
                                                                       Tractors
$1,076
$1,777
                                                               HD Pickup Trucks
$1,300
$1,638
                                                            Vocational Vehicles
$234
$383

Alt. 4 More Stringent -  Total
$5,611+c
$7,506+c
                                                                       Tractors
$1,953+c
$3,225+c
                                                               HD Pickup Trucks
$1,824+c
$2,298+c
                                                            Vocational Vehicles
$1,834+c
$1,983+c

Alt. 5 Max Technology -  Total
$18,308 +c
$27,816 +c
                                                                       Tractors
$2,747 +c
$4,292 +c
                                                               HD Pickup Trucks
$6,051+c
$7,623 +c
                                                            Vocational Vehicles
$9,510 +c
$15,901 +c
      Notes:
      [a] The +c is intended to make clear that the cost estimates we are showing do not include additional costs related to pulling ahead the development and expanding manufacturing base for these technologies.
      [b] The agencies did not conduct a cost analysis for the AEO2011 baseline.
Table IX-3: Downstream Impacts Relative to Alternative 1 of Key Non-GHGs for Each Alternative in 2030
NOX
                                      CO
                                     PM2.5
                                      VOC
Alt. 1 Baseline
                                      0%
                                      0%
                                      0%
                                      0%
Alt. 1a AEO 2011 Baseline
                                     8.8%
                                     1.0%
                                     -3.8%
                                     7.2%
Alt. 2 Less Stringent
                                    -21.9%
                                     -2.0%
                                     8.4%
                                    -19.0%
Alt. 3 Preferred
                                    -22.0%
                                     -2.0%
                                     8.5%
                                    -19.1%
Alt. 4 More Stringent
                                    -22.5%
                                     -2.0%
                                     8.7%
                                    -19.5%
Alt. 5 Max Technology
                                    -22.9%
                                     -2.1%
                                     8.4%
                                    -20.0%
Table IX-4: Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for Lifetime of 2014 through 2018 Model Year Vehicles(3% discount rate, Million 2009 dollars)

                                Alt.1 Baseline
                             Alt.2 Less Stringent
                                Alt.3 Preferred
                             Alt.4 More Stringent
                             Alt.5 Max Technology
Truck Program Costs [d]
                                                                             $0
                                                                        -$5,900
                                                                        -$8,900
                                                                     -$21,800+c
                                                                     -$38,000+c
Fuel Savings (pre-tax)
                                                                             $0
                                                                        $45,000
                                                                        $50,800
                                                                        $63,800
                                                                        $79,100
Reduced CO2 Emissions at Each Assumed SCC Value [a,b]
5% (avg SCC)
                                                                             $0
                                                                           $700
                                                                           $700
                                                                           $900
                                                                         $1,200
3% (avg SCC)
                                                                             $0
                                                                         $2,200
                                                                         $2,500
                                                                         $3,000
                                                                         $4,000
2.5% (avg SCC)
                                                                             $0
                                                                         $3,400
                                                                         $3,800
                                                                         $4,600
                                                                         $6,100
3% (95th percentile)
                                                                             $0
                                                                         $6,700
                                                                         $7,600
                                                                         $9,200
                                                                        $12,200
Energy Security Impacts (price shock)
                                                                             $0
                                                                         $2,400
                                                                         $2,600
                                                                         $3,400
                                                                         $4,200
Accidents, Congestion, Noise
                                                                             $0
                                                                        -$1,400
                                                                        -$1,500
                                                                        -$1,600
                                                                        -$1,600
Refueling Savings
                                                                             $0
                                                                           $500
                                                                           $500
                                                                           $500
                                                                           $700
Non-CO2 GHG Impacts and Non-GHG Impacts [c]
                                                                            N/A
                                                                            N/A
                                                                            N/A
                                                                            N/A
                                                                            N/A
Monetized Net Benefits at Each Assumed SCC Value [a,b]
5% (avg SCC)
                                                                             $0
                                                                        $18,100
                                                                        $19,800
                                                                      $21,700+c
                                                                      $18,400+c
3% (avg SCC)
                                                                             $0
                                                                        $19,600
                                                                        $21,600
                                                                      $23,800+c
                                                                      $21,200+c
2.5% (avg SCC)
                                                                             $0
                                                                        $20,800
                                                                        $22,900
                                                                      $25,400+c
                                                                      $23,300+c
3% (95th percentile)
                                                                             $0
                                                                        $24,100
                                                                        $26,700
                                                                      $30,000+c
                                                                      $29,400+c
 Notes: 
 [a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.  
 [b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95th percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
 [c] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this rulemaking (see RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero. 
 d  "+c" indicates additional costs not estimated in this rulemaking.
Table IX-5 Monetized Net Benefits Associated with Each Alternative Relative to Alternative 1 for Lifetime of 2014 through 2018 Model Year Vehicles(7% discount rate, Million 2009 dollars)

                                Alt.1 Baseline
                             Alt.2 Less Stringent
                                Alt.3 Preferred
                             Alt.4 More Stringent
                             Alt.5 Max Technology
Truck Program Costs [d]
                                                                             $0
                                                                         $2,700
                                                                         $3,900
                                                                       $7,500+c
                                                                     $27,800 +c
Fuel Savings (pre-tax)
                                                                             $0
                                                                       -$32,600
                                                                       -$37,100
                                                                       -$45,000
                                                                       -$61,000
Reduced CO2 Emissions at Each Assumed SCC Value [a,b]
5% (avg SCC)
                                                                             $0
                                                                         $1,500
                                                                         $1,700
                                                                         $2,100
                                                                         $2,800
3% (avg SCC)
                                                                             $0
                                                                         $4,300
                                                                         $4,900
                                                                         $5,900
                                                                         $8,000
2.5% (avg SCC)
                                                                             $0
                                                                         $6,200
                                                                         $7,000
                                                                         $8,500
                                                                        $11,600
3% (95th percentile)
                                                                             $0
                                                                        $12,900
                                                                        $14,700
                                                                        $17,900
                                                                        $24,200
Energy Security Impacts (price shock)
                                                                             $0
                                                                         $1,600
                                                                         $1,800
                                                                         $2,200
                                                                         $3,000
Accidents, Congestion, Noise
                                                                             $0
                                                                          -$600
                                                                          -$600
                                                                          -$700
                                                                          -$700
Refueling Savings
                                                                             $0
                                                                           $200
                                                                           $200
                                                                           $300
                                                                           $400
Non-CO2 GHG Impacts and Non-GHG Impacts [c]
                                                                            N/A
                                                                            N/A
                                                                            N/A
                                                                            N/A
                                                                            N/A
Monetized Net Benefits at Each Assumed SCC Value [a,b]
5% (avg SCC)
                                                                             $0
                                                                        $32,600
                                                                        $36,300
                                                                      $41,400+c
                                                                     $38,700 +c
3% (avg SCC)
                                                                             $0
                                                                        $35,400
                                                                        $39,500
                                                                      $45,200+c
                                                                     $43,900 +c
2.5% (avg SCC)
                                                                             $0
                                                                        $37,300
                                                                        $41,600
                                                                      $47,800+c
                                                                     $47,500 +c
3% (95th percentile)
                                                                             $0
                                                                        $44,000
                                                                        $49,300
                                                                      $57,200+c
                                                                     $60,100 +c
  Notes: 
  [a] Net present value of reduced CO2 emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to the SCC TSD for more detail.  
  [b] Section VIII.G notes that SCC increases over time.  Corresponding to the years in this table, the SCC estimates range as follows:  for Average SCC at 5%:  $5-$16; for Average SCC at 3%:  $22-$46; for Average SCC at 2.5%:  $36-$66; and for 95th percentile SCC at 3%:  $66-$139.  Section VIII.G also presents these SCC estimates.
  [c] The monetized GHG benefits presented in this analysis exclude the value of changes in non-CO2 GHG emissions expected under this rulemaking (see RIA Chapter 5).  Although EPA has not monetized changes in non-CO2 GHGs, the value of any increases or reductions should not be interpreted as zero. 
  d  "+c" indicates additional costs not estimated in this rulemaking.

What Is the Agencies' Decision Regarding Trailer Standards?
A central theme throughout our HD Program is the recognition of the diversity and complexity of the heavy-duty vehicle segment.  Trailers are an important part of this segment and are no less diverse in the range of functions and applications they serve.  They are the primary vehicle for moving freight in the United States.  The type of freight varies from retail products to be sold in stores, to bulk goods such as stones, to industrial liquids such as chemicals, to equipment such as bulldozers.  Semi-trailers come in a large variety of styles  -  box, refrigerated box, flatbed, tankers, bulk, dump, grain, and many others.  The most common type of trailer is the box trailer, but even box trailers come in many different lengths ranging from 28 feet to 53 feet or greater, and in different widths, heights, depths, materials (wood, composites, and/or aluminum), construction (curtain side or hard side), axle configuration (sliding tandem or fixed tandem), and multiple other distinct features.  NHTSA and EPA believe trailers impact the fuel consumption and CO2 emissions from combination tractors and the agencies see opportunities for reductions.  Unlike our experience with trucks and engines, the agencies have very limited experience related to regulating trailers for fuel efficiency or emissions.  Likewise, the trailer manufacturing industry has only the most limited experience complying with regulations related to emissions and none with regard to EPA or NHTSA certification and compliance procedures.
The agencies broadly solicited comments on controlling fuel efficiency and GHG emissions through eventual trailer regulations as we described in the notice of proposed rulemaking which could set the foundation of a future rulemaking for trailers.  75 FR at 74345-351 (although this was a solicitation for comment regarding future action outside the present rulemaking). The general theme of the comments received was that technologies exist today that can improve trailer efficiency.  We received several comments from stakeholders which encouraged the agencies to set fuel efficiency and GHG emissions standards for trailers in this rulemaking.  The agencies also received comments supporting a delay in trailer regulations.  One commenter recognized that there are well over 100 trailer manufacturers in the U.S., with almost all being small businesses.  They stressed the need for the agencies to reach out to the trailer industry and associations prior to developing a regulatory program for this industry.  In addition, they stated that time is needed to develop sufficient research into the area.  None of the commenters that supported trailer regulation in this action addressed the complexities of the trailer industry, nor a method to measure trailer aerodynamic improvements. In the NPRM, the agencies discussed relatively conceptual approaches to how a future trailer regulation could be developed; however, we did not provide a proposed test procedure or proposed standard.  The agencies will develop the necessary test procedures in order to propose standards for trailers and will go through a full notice and comment rulemaking process to set those standards.  The agencies intend to begin a rulemaking process to regulate trailers in the near future and will work with all interest stakeholders as we begin that process.  Until that time, EPA will continue to rely on the SmartWay Transport Partnership Program to encourage the development and use of technologies to reduce fuel consumption and CO2 emissions from trailers.
Public Participation 
Two public hearings were held to provide interested parties the opportunity to present data, views, or arguments concerning the proposal; the first hearing was held in Chicago, IL on November 15, 2010, and the second in Cambridge, MA on November 18, 2010.  The public was invited to submit written comments on the proposal during the formal comment period, which ended on January 31, 2011.  The agencies received over 41,000 comments - over 3,000 of them unique - from industry, environmental organizations, states, and individuals.  A detailed summary and response to these comments can be found in the Summary and Analysis of Comments document in the docket (Docket ID EPA - HQ - OAR - 2010 - 0162, or NHTSA-2010-0079). 
Statutory and Executive Order Reviews
Executive Order 12866: Regulatory Planning and Review
Under section 3(f)(1) of Executive Order 12866 (58 FR 51735, October 4, 1993), this action is an "economically significant regulatory action" because it is likely to have an annual effect on the economy of $100 million or more.  Accordingly, the agencies submitted this action to the Office of Management and Budget (OMB) for review under Executive Order 12866 and any changes made in response to OMB recommendations have been documented in the docket for this action.
NHTSA is also subject to Executive Order 13563 (76 FR 3821, January 21, 2011) and the Department of Transportation's Regulatory Policies and Procedures.  These final rules are also significant within the meaning of the DOT Regulatory Policies and Procedures.  Executive Order 12866 additionally requires NHTSA to submit this action to OMB for review and document any changes made in response to OMB recommendations.
In addition, the agencies prepared an analysis of the potential costs and benefits associated with this action.  This analysis is contained in the Regulatory Impact Analysis, which is available in the docket for these rules and at the docket internet address listed under ADDRESSES above.
National Environmental Policy Act

[FORTHCOMING]

Paperwork Reduction Act
The information collection requirements in these rules have been submitted for approval to OMB under the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.  The information collection requirements are not enforceable until OMB approves them.
The agencies propose to collect information to ensure compliance with the provisions in these rules.  This includes a variety of testing, reporting and recordkeeping requirements for vehicle manufacturers.  Section 208(a) of the CAA requires that vehicle manufacturers provide information the Administrator may reasonably require to determine compliance with the regulations; submission of the information is therefore mandatory.  We will consider confidential all information meeting the requirements of section 208(c) of the CAA.  
It is estimated that this collection affects approximately 35 engine and vehicle manufacturers.  The information that is subject to this collection is collected whenever a manufacturer applies for a certificate of conformity.  Under section 206 of the CAA (42 U.S.C. 7521), a manufacturer must have a certificate of conformity before a vehicle or engine can be introduced into commerce.  
The burden to the manufacturers affected by these rules has a range based on the number of engines and vehicles a manufacturer produces.  The total estimated burden associated with these rules is 25,052 hours annually (see Table XI-1:).  This estimated burden for engine and vehicle manufacturers is a total estimate for new reporting requirements.  Burden is defined at 5 CFR 1320.3(b).
Table XI-1: Burden for Reporting and Recordkeeping Requirements
Number of Affected Vehicle Manufacturers
34
Annual Labor Hours for Each Manufacturer to Prepare and Submit Required Information
Varies  
Total Annual Information Collection Burden
35.804 Hours 
An agency may not conduct or sponsor, and a person is not required to respond to a collection of information unless it displays a currently valid OMB control number.  The OMB control numbers for EPA's regulations are listed in 40 CFR part 9. When this ICR is approved by OMB, the agency will publish a technical amendment to 40 CFR part 9 in the Federal Register to display the OMB control number for the approved information collection requirements contained in this final action.
	Regulatory Flexibility Act
Overview
The Regulatory Flexibility Act generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statute unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.  Small entities include small businesses, small organizations, and small governmental jurisdictions.
For purposes of assessing the impacts of these rules on small entities, small entity is defined as: (1) a small business as defined by SBA regulations at 13 CFR 121.201; (2) a small governmental jurisdiction that is a government of a city, county, town, school district or special district with a population of less than 50,000; and (3) a small organization that is any not-for-profit enterprise which is independently owned and operated and is not dominant in its field.
Summary of Potentially Affected Small Entities
The agencies have not conducted an Initial Regulatory Flexibility Analysis for this action because we are certifying that these rules would not have a significant economic impact on a substantial number of small entities.  The agencies are deferring standards for manufacturers meeting SBA's definition of small business as described in 13 CFR 121.201 due to the extremely small fuel savings and emissions contribution of these entities, and the short lead time to develop these rules, , especially with our expectation that the program would need to be structured differently for them (which would require more time).  The agencies are instead envisioning fuel consumption and GHG emissions standards for these entities as part of a future regulatory action.  This includes small entities in several distinct categories of businesses for heavy-duty engines and vehicles: chassis manufacturers, combination tractor manufacturers, and alternative fuel engine converters.  
Based on a preliminary assessment, the agencies have identified a total of about 17 engine manufacturers, 3 complete pickup truck and van manufacturers, 11 combination tractor manufacturers and 43 heavy-duty chassis manufacturers.  Notably, several of these manufacturers produce vehicles in more than just one regulatory category (HD pickup trucks/vans, combination tractors, or vocational vehicles (i.e. heavy-duty chassis manufacturers)).  Based on the types of vehicles they manufacture, these companies, however, would be subject to slightly different testing and reporting requirements.  Taking this feature of the heavy-duty trucking sector into account, the agencies estimate that although there are fewer than 30 manufacturers covered by the program, there close to 60 divisions with these companies that will be subject to the final regulations.  Of these, about 15 entities fit the SBA criteria of a small business.  There are approximately three engine converters, two tractor manufacturers, and ten heavy-duty chassis manufacturers in the heavy-duty engine and vehicle market that are small businesses. (No major heavy-duty engine manufacturers, heavy-duty chassis manufacturers, or tractor manufacturers meet the small-entity criteria as defined by SBA).  The agencies estimate that these small entities comprise less than 0.35 percent of the total heavy-duty vehicle sales in the United States, and therefore the deferment will have a negligible impact on the fuel consumption and GHG emissions reductions from the final standards.  
To ensure that the agencies are aware of which companies are being deferred, the agencies are requiring that such entities submit a declaration to the agencies containing a detailed written description of how that manufacturer qualifies as a small entity under the provisions of 13 CFR 121.201.  Some small entities, such as heavy-duty tractor and chassis manufacturers, are not currently covered under criteria pollutant motor vehicle emissions regulations.  Small engine entities are currently covered by a number of EPA motor vehicle emission regulations, and they routinely submit information and data on an annual basis as part of their compliance responsibilities.  Because such entities are not automatically exempted from other EPA regulations for heavy-duty engines and vehicles, absent such a declaration, EPA would assume that the entity was subject to the greenhouse gas control requirements in this program.  The declaration to the agencies will need to be submitted at the time of either engine or vehicle emissions certification under the HD highway engine program for criteria pollutants. The agencies expect that the additional paperwork burden associated with completing and submitting a small entity declaration to gain deferral from the final GHG and fuel consumption standards will be negligible and easily done in the context of other routine submittals to the agencies.  However, the agencies have accounted for this cost with a nominal estimate included in the Information Collection Request completed under the Paperwork Reduction Act.  Additional information can be found in the Paperwork Reduction Act discussion in Section XI. (3) Paperwork Reduction Act.  Based on this, the agencies are certifying that the rules will not have a significant economic impact on a substantial number of small entities.  
Unfunded Mandates Reform Act
Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Pub. L. 104-4, establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. Under section 202 of the UMRA, the agencies generally must prepare a written statement, including a cost-benefit analysis, for proposed and final rules with "Federal mandates" that may result in expenditures to State, local, and tribal governments, in the aggregate, or to the private sector, of $100 million or more in any one year.  Before promulgating a rule for which a written statement is needed, section 205 of the UMRA generally requires the agencies to identify and consider a reasonable number of regulatory alternatives and adopt the least costly, most cost-effective or least burdensome alternative that achieves the objectives of the rule. The provisions of section 205 do not apply when they are inconsistent with applicable law. Moreover, section 205 allows the agencies to adopt an alternative other than the least costly, most cost-effective or least burdensome alternative if the Administrator (of either agency) publishes with the final rule an explanation why that alternative was not adopted. 
Before the agencies establish any regulatory requirements that may significantly or uniquely affect small governments, including tribal governments, they must have developed under section 203 of the UMRA a small government agency plan. The plan must provide for notifying potentially affected small governments, enabling officials of affected small governments to have meaningful and timely input in the development of EPA and NHTSA regulations with significant Federal intergovernmental mandates, and informing, educating, and advising small governments on compliance with the regulatory requirements. 
These rules contain no Federal mandates (under the regulatory provisions of Title II of the UMRA) for State, local, or tribal governments.  The rules impose no enforceable duty on any State, local or tribal governments.  The agencies have determined that these rules contain no regulatory requirements that might significantly or uniquely affect small governments.  The agencies have determined that these rules contain a Federal mandate that may result in expenditures of $100 or more for the private sector in any one year.  The agencies believe that the program represents the least costly, most cost-effective approach to achieve the statutory requirements of the rules.  Section VIII.L, above, explains why the agencies believe that the fuel savings that will result from these rules will lead to lower prices economy-wide, improving U.S. international competitiveness. The costs and benefits associated with the program are discussed in more detail above in Section VIII and in the Regulatory Impact Analysis, as required by the UMRA.
Table XI-3 presents the rule-related benefits, costs and net benefits in both present value terms and in annualized terms.  In both cases, the discounted values are based on an underlying time varying stream of cost and benefit values that extend into the future (2012 through 2050).  The distribution of each monetized economic impact over time can be viewed in the RIA that accompanies these rules.  
Present values represent the total amount that a stream of monetized costs/benefits/net benefits that occur over time are worth now (in year 2009 dollar terms for this analysis), accounting for the time value of money by discounting future values using either a 3 or 7 percent discount rate, per OMB Circular A-4 guidance.  An annualized value takes the present value and converts it into a constant stream of annual values through a given time period (2012 through 2050 in this analysis) and thus averages (in present value terms) the annual values.  The present value of the constant stream of annualized values equals the present value of the underlying time varying stream of values. The ratio of benefits to costs is identical whether it is measured with present values or annualized values. 
It is important to note that annualized values cannot simply be summed over time to reflect total costs/benefits/net benefits; they must be discounted and summed.  Additionally, the annualized value can vary substantially from the time varying stream of cost/benefit/net benefit values that occur in any given year (e.g., the streams of costs represented by $0.4B and $0.7B in Table XI-3 below average $1.5B from 2014 through 2018 and are zero from 2019-2050). 
Table XI-3: Estimated Lifetime and Annualized Discounted Costs, Benefits, and Net Benefits for 2014-2018 Model Year HD Vehicles assuming the $22/ton SCC Value[a,b] (billions 2009 dollars)

Costs 
Benefits
Net Benefits
Lifetime Present Value[c,d]  -  3% Discount Rate 
$8.9
$58.4
$49
Annualized Value[c,e]  -  3% Discount Rate 
$0.4
$2.6
$2.2
Lifetime Present Value[c,d]  -  7% Discount Rate 
$8.9
$42
$33
Annualized Value[c,e]  -  7% Discount Rate 
$0.7
$3.1
$2.4
  Notes:
  [a] Although the agencies estimated the benefits associated with four different values of a one ton CO2 reduction (SCC: $5, $22, $36, $66), for the purposes of this overview presentation of estimated costs and benefits we are showing the benefits associated with the marginal value deemed to be central by the interagency working group on this topic:  $22 per ton of CO2, in 2008 dollars and 2010 emissions and fuel consumption.  As noted in Section VIII.G, SCC increases over time.
  [b] Note that net present value of reduced GHG emissions is calculated differently than other benefits.  The same discount rate used to discount the value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency.  Refer to Section VIII.G for more detail.
  [c] Discounted values presented in this table are based on an underlying series of cost and benefit values that extend into the future (2012 through 2050).  The distribution of each monetized economic impact over time can be viewed in the RIA that accompanies this preamble.
  d  Present value is the total, aggregated amount that a series of monetized costs or benefits that occur over time is worth now (in year 2008 dollar terms), discounting future values to the present.
  [e] The annualized value is the constant annual value through a given time period (2012 through 2050 in this analysis) whose summed present value equals the present value from which it was derived.
Executive Order 13132 (Federalism)
This action does not have federalism implications.  It will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government, as specified in Executive Order 13132.  These rules will apply to manufacturers of motor vehicles and not to state or local governments. Thus, Executive Order 13132 does not apply to this action.  Although section 6 of Executive Order 13132 does not apply to this action, the agencies did consult with representatives of state governments in developing this action.
NHTSA notes that EPCA contains a provision (49 U.S.C. 32919(a)) that expressly preempts any State or local government from adopting or enforcing a law or regulation related to fuel economy standards or average fuel economy standards for automobiles covered by an average fuel economy standard under 49 U.S.C. Chapter 329.  However, commercial medium- and heavy-duty on-highway vehicles and work trucks are not "automobiles," as defined in 49 U.S.C. 32901(a)(3).  Accordingly, NHTSA has tentatively concluded that EPCA's express preemption provision would not reach the fuel efficiency standards to be established in this rulemaking.    
NHTSA also considered the issue of implied or conflict preemption.  The possibility of such preemption is dependent upon there being an actual conflict between a standard established by NHTSA in this rulemaking and a State or local law or regulation.  See Spriestma v. Mercury Marine, 537 U.S. 51, 64-65 (2002).  At present, NHTSA has no knowledge of any State or local law or regulation that would actually conflict with one of the fuel efficiency standards being established in this rulemaking.  
Executive Order 13175 (Consultation and Coordination with Indian Tribal Governments)
These final rules do not have tribal implications, as specified in Executive Order 13175 (65 FR 67249, November 9, 2000).  These rules will be implemented at the Federal level and impose compliance costs only on vehicle manufacturers.  Tribal governments would be affected only to the extent they purchase and use regulated vehicles.  Thus, Executive Order 13175 does not apply to these rules.
Executive Order 13045: "Protection of Children from Environmental Health Risks and Safety Risks"
This action is subject to Executive Order 13045 (62 FR 19885, April 23, 1997) because it is an economically significant regulatory action as defined by Executive Order 12866, and the agencies believe that the environmental health or safety risk addressed by this action may have a disproportionate effect on children.  A synthesis of the science and research regarding how climate change may affect children and other vulnerable subpopulations is contained in the Technical Support Document for Endangerment or Cause or Contribute Findings for Greenhouse Gases under Section 202(a) of the Clean Air Act, which can be found in the public docket for these rules.  A summary of the analysis is presented below.
With respect to GHG emissions, the effects of climate change observed to date and projected to occur in the future include the increased likelihood of more frequent and intense heat waves. Specifically, EPA's analysis of the scientific assessment literature has determined that severe heat waves are projected to intensify in magnitude, frequency, and duration over the portions of the United States where these events already occur, with potential increases in mortality and morbidity, especially among the young, elderly, and frail.  EPA has estimated reductions in projected global mean surface temperatures as a result of reductions in GHG emissions associated with the final standards  in this action (Section II).  Children may receive benefits from reductions in GHG emissions because they are included in the segment of the population that is most vulnerable to extreme temperatures.
For non-GHG pollutants, EPA has determined that climate change is expected to increase regional ozone pollution, with associated risks in respiratory infection, aggravation of asthma, and premature death. The directional effect of climate change on ambient PM levels remains uncertain.  However, disturbances such as wildfires are increasing in the United States and are likely to intensify in a warmer future with drier soils and longer growing seasons. PM emissions from forest fires can contribute to acute and chronic illnesses of the respiratory system, particularly in children, including pneumonia, upper respiratory diseases, asthma and chronic obstructive pulmonary diseases.  
Executive Order 13211 (Energy Effects)
This rulemaking is not a "significant energy action" as defined in Executive Order 13211, "Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use" (66 FR 28355, May 22, 2001) because it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.  In fact, these rules have a positive effect on energy supply and use.  Because the final GHG emission and fuel consumption standards will result in significant fuel savings, these rules encourage more efficient use of fuels.  Therefore, we have concluded that these rules are not likely to have any adverse energy effects.  Our energy effects analysis is described above in Section VIII.H.
National Technology Transfer Advancement Act
Section 12(d) of the National Technology Transfer and Advancement Act of 1995 ("NTTAA"), Public Law No. 104-113, 12(d) (15 U.S.C. 272 note) directs the agencies to use voluntary consensus standards in its regulatory activities unless to do so would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., materials, specifications, test methods, sampling procedures, and business practices) that are developed or adopted by voluntary consensus standards bodies.  NTTAA directs the agencies to provide Congress, through OMB, explanations when the agencies decide not to use available and applicable voluntary consensus standards.
For CO2, N2O, and CH4 emissions and fuel consumption from heavy-duty engines, the agencies will collect data over the same tests that are used for the heavy-duty highway engine program for criteria pollutants.  This will minimize the amount of testing done by manufacturers, since manufacturers are already required to run these tests.  
For CO2, N2O, and CH4 emissions and fuel consumption from complete pickup trucks and vans, the agencies will collect data over the same tests that are used for EPA's heavy-duty highway engine program for criteria pollutants and for the California Air Resources Board.  This will minimize the amount of testing done by manufacturers, since manufacturers are already required to run these tests.
For CO2 emissions and fuel consumption from heavy-duty combination tractors and vocational vehicles, the agencies will collect data through the use of a simulation model instead of a full-vehicle chassis dynamometer testing.  This will minimize the amount of testing done by manufacturers.  EPA's compliance assessment tool is based upon well-established engineering and physics principals that are the basis of general academic understanding in this area, and the foundation of any dynamic vehicle simulation model, including the models cited by ICCT in its study.  Therefore, the EPA's compliance assessment tool satisfies the description of a consensus.  For the evaluation of tire rolling resistance input to the model, EPA is finalizing to use the ISO 28580 test, a voluntary consensus methodology.  EPA is adopting several alternatives for the evaluation of aerodynamics which allows the industry to continue to use their own evaluation tools because EPA does not know of a single consensus standard available for heavy-duty truck aerodynamic evaluation.
For air conditioning standards, EPA is finalizing a consensus methodology developed by the Society of Automotive Engineers (SAE).  
Executive Order 12898:  Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations
Executive Order 12898 (59 FR 7629, February 16, 1994) establishes federal executive policy on environmental justice.  Its main provision directs federal agencies, to the greatest extent practicable and permitted by law, to make environmental justice part of their mission by identifying and addressing, as appropriate, disproportionately high and adverse human health or environmental effects of their programs, policies, and activities on minority populations and low-income populations in the United States.  
With respect to GHG emissions, EPA has determined that these final rules will not have disproportionately high and adverse human health or environmental effects on minority or low-income populations because they increase the level of environmental protection for all affected populations without having any disproportionately high and adverse human health or environmental effects on any population, including any minority or low-income population.  The reductions in CO2 and other GHGs associated with the standards will affect climate change projections, and EPA has estimated reductions in projected global mean surface temperatures (Section VI).  Within communities experiencing climate change, certain parts of the population may be especially vulnerable; these include the poor, the elderly, those already in poor health, the disabled, those living alone, and/or indigenous populations dependent on one or a few resources.  In addition, the U.S. Climate Change Science Program stated as one of its conclusions: "The United States is certainly capable of adapting to the collective impacts of climate change.  However, there will still be certain individuals and locations where the adaptive capacity is less and these individuals and their communities will be disproportionally impacted by climate change."   Therefore, these specific sub-populations may receive benefits from reductions in GHGs.  
For non-GHG co-pollutants such as ozone, PM2.5, and toxics, EPA has concluded that it is not practicable to determine whether there would be disproportionately high and adverse human health or environmental effects on minority and/or low income populations from these rules.
Congressional Review Act
The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States.  EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register.  A Major rule cannot take effect until 60 days after it is published in the Federal Register.  This action is a "major rule" as defined by 5 U.S.C. 804(2). This rule will be effective [Insert date 60 days after publication in the Federal Register], sixty days after date of publication in the Federal Register.
Statutory Provisions and Legal Authority
EPA
Statutory authority for the vehicle controls in these rules is found in CAA section 202(a) (which  authorizes standards for emissions of pollutants from new motor vehicles which emissions cause or contribute to air pollution which may reasonably be anticipated to endanger public health or welfare), sections 202(d), 203-209, 216, and 301 of the CAA, 42 U.S.C. 7521 (a), 7521 (d), 7522, 7523, 7524, 7525, 7541, 7542, 7543, 7550, and 7601.
NHTSA
Statutory authority for the fuel consumption standards in these rules is found in EISA section 103 (which authorizes a fuel efficiency improvement program, designed to achieve the maximum feasible improvement to be created for commercial medium- and heavy-duty on-highway vehicles and work trucks, to include appropriate test methods, measurement metrics, standards, and compliance and enforcement protocols that are appropriate, cost-effective and technologically feasible) of the Energy Independence and Security Act of 2007, 49 U.S.C. 32902(k).
 List of Subjects
40 CFR Part 85
Confidential business information, Imports, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Research, Warranties.

40 CFR Part 86
Administrative practice and procedure, Confidential business information, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements.

40 CFR Parts 1036 and 1037
Administrative practice and procedure, Air pollution control, Confidential business information, Environmental protection, Incorporation by reference, Labeling, Motor vehicle pollution, Reporting and recordkeeping requirements, Warranties.

40 CFR Parts 1065 and 1066
Administrative practice and procedure, Air pollution control, Reporting and recordkeeping requirements, Research.

40 CFR Part 1068
Environmental protection, Administrative practice and procedure, Confidential business information, Imports, Incorporation by reference, Motor vehicle pollution, Penalties, Reporting and recordkeeping requirements, Warranties.

49 CFR Parts 523, 534, and 535
Fuel economy