Document ID: EPA-HQ-OAR-2010-0799-0001
Agency: epa
Document Type: Proposed Rule
Title: 2017 and Later Model Year Light Duty Vehicle GHG Emissions and CAFE Standards; Notice of Intent
Posted Date: 2010-10-13T04:00Z

[Federal Register: October 13, 2010 (Volume 75, Number 197)]
[Proposed Rules]               
[Page 62739-62750]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr13oc10-18]                         

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, and 600

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 531 and 533

[FRL-9212-4]
RIN 2127-AK79

 
2017 and Later Model Year Light Duty Vehicle GHG Emissions and 
CAFE Standards; Notice of Intent

AGENCIES:  Environmental Protection Agency (EPA) and the National 
Highway Traffic Safety Administration (NHTSA), Department of 
Transportation (DOT).

ACTION: Notice of intent to conduct a joint rulemaking.

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SUMMARY: On May 21, 2010, President Obama issued a Presidential 
Memorandum requesting that the Environmental Protection Agency (EPA) 
and the National Highway Traffic Safety Administration (NHTSA), on 
behalf of the Department of Transportation develop, through notice and 
comment rulemaking, a coordinated National Program under the Clean Air 
Act (CAA) and the Energy Policy and Conservation Act (EPCA), as amended 
by the Energy Independence and Security Act (EISA) to improve fuel 
efficiency and to reduce greenhouse gas emissions of light-duty 
vehicles for model years 2017-2025. President Obama requested that the 
agencies issue a Notice of Intent to issue a proposed rule that 
announces plans for setting stringent fuel economy and greenhouse gas 
emissions standards for light-duty vehicles of model year 2017 and 
beyond. This joint Notice describes the agencies' initial assessment of 
potential levels of stringency for a National Program for model years 
2017-2025, and describes additional work that the agencies will 
undertake over the next two months to refine this assessment further. 
This Notice fulfills that request and discusses the agencies' plans to 
issue a Supplemental Notice of Intent by November 30, 2010 that will 
describe plans for the National Program, including an updated analysis 
of potential GHG and fuel economy standards for model years 2017-2025. 
This joint Notice also announces the plans by the two agencies to 
propose such a coordinated National Program by the fall of 2011.

DATES: Comments: In order for comments to be most helpful to this 
ongoing process of ultimately developing a proposed rulemaking, the 
agencies encourage parties wishing to comment on this Notice to submit 
their comments by October 31, 2010. See the SUPPLEMENTARY INFORMATION, 
Section I (Introduction), for more information about the rulemaking 
process.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-0799 and/or NHTSA-2010-0131, by one of the following methods:
     http://www.regulations.gov: Follow the on-line 
instructions for submitting comments.
     E-mail: a-and-r-Docket@epa.gov.
     Fax: EPA: (202) 566-1741; NHTSA: (202) 493-2251.
     Mail:
     [cir] EPA: Environmental Protection Agency, Mailcode: 2822T, 1200 
Pennsylvania Ave., NW., Washington, DC 20460, Attention: Docket ID No. 
EPA-HQ-OAR-2010-0799.
     [cir] NHTSA: Docket Management Facility, M-30, U.S. Department of 
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590.
     Hand Delivery:
     [cir] EPA: EPA Docket Center, EPA/DC, EPA West, Room 3334, 1301 
Constitution Ave., NW., Washington, DC 20004, Attention: Docket ID No. 
EPA-HQ-OAR-0799. Such deliveries are only accepted during the Docket's 
normal hours of operation, and special arrangements should be made for 
deliveries of boxed information.
     [cir] NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New 
Jersey Avenue, SE., Washington, DC 20590, between 9 a.m. and 4 p.m. 
Eastern Time, Monday through Friday, except Federal Holidays.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-0799 
and/or Docket ID No. NHTSA-2010-0131. NHTSA and EPA request comment on 
all aspects of this joint Notice. See the SUPPLEMENTARY INFORMATION 
section on ``Public Participation'' for more information about 
submitting written comments.
    Docket: All documents listed in the dockets are listed in the 
http://www.regulations.gov index. Although listed in the index, some 
information is not publicly available, e.g., confidential business 
information (CBI) or other information whose disclosure is restricted 
by statute. Certain other material, such as copyrighted material, will 
be publicly available only in hard copy. Publicly available docket 
materials are available either electronically at http://
www.regulations.gov or in hard copy at the following locations: EPA: 
EPA Docket Center, EPA/DC, EPA West, Room 3334, 1301 Constitution Ave., 
NW., Washington, DC. The Public Reading Room is open from 8:30 a.m. to 
4:30 p.m., Monday through Friday, excluding legal holidays. The 
telephone number for the Public Reading Room is (202) 566-1744. NHTSA: 
Docket Management Facility, M-30, U.S. Department of Transportation, 
West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue, SE., 
Washington, DC 20590. The Docket Management Facility is open between 9 
a.m. and 5 p.m. Eastern Time, Monday through Friday, except Federal 
holidays.

FOR FURTHER INFORMATION CONTACT: EPA: Tad Wysor, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; telephone number: (734) 214-4332; fax number: (734) 214-4816; e-
mail address: wysor.tad@epa.gov or Assessment and Standards Division 
Hotline, telephone number (734) 214-4636; e-mail address 
asdinfo@epa.gov. DOT/NHTSA: Rebecca Yoon, Office of Chief Counsel, 
National Highway Traffic Safety Administration, 1200 New Jersey Avenue, 
SE., Washington, DC 20590. Telephone: (202) 366-2992.

SUPPLEMENTARY INFORMATION:

Public Participation

    NHTSA and EPA request comment on all aspects of this Notice and the 
accompanying Interim Joint Technical Assessment Report discussed below.

[[Page 62740]]

This section describes how you can participate in this process.

How do I prepare and submit comments?

    For the convenience of all parties, comments submitted to the EPA 
docket will be considered comments submitted to the NHTSA docket, and 
vice versa. Therefore, the public only needs to submit comments to 
either one of the two agency dockets. Comments that are submitted for 
consideration by one agency should be identified as such, and comments 
that are submitted for consideration by both agencies should be 
identified as such.
    Further instructions for submitting comments to either the EPA or 
NHTSA docket are described below.
    EPA: Direct your comments to Docket ID No EPA-HQ-OAR-2010-0799. 
EPA's policy is that all comments received will be included in the 
public docket without change and may be made available online at http:/
/www.regulations.gov, including any personal information provided, 
unless the comment includes information claimed to be Confidential 
Business Information (CBI) or other information whose disclosure is 
restricted by statute.\1\ Do not submit information that you consider 
to be CBI or otherwise protected through http://www.regulations.gov or 
e-mail. The http://www.regulations.gov Web site is an ``anonymous 
access'' system, which means EPA will not know your identity or contact 
information unless you provide it in the body of your comment. If you 
send an e-mail comment directly to EPA without going through http://
www.regulations.gov your e-mail address will be automatically captured 
and included as part of the comment that is placed in the public docket 
and made available on the Internet. If you submit an electronic 
comment, EPA recommends that you include your name and other contact 
information in the body of your comment and with any disk or CD-ROM you 
submit. If EPA cannot read your comment due to technical difficulties 
and cannot contact you for clarification, EPA may not be able to 
consider your comment. Electronic files should avoid the use of special 
characters, any form of encryption, and be free of any defects or 
viruses. For additional information about EPA's public docket visit the 
EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
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    \1\ This statement constitutes notice to commenters pursuant to 
40 CFR 2.209(c) that EPA will share confidential information 
received with NHTSA unless commenters specify that they wish to 
submit their CBI only to EPA and not to both agencies.
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    NHTSA: Your comments must be written and in English. To ensure that 
your comments are correctly filed in the Docket, please include the 
Docket number NHTSA-2010-0131 in your comments. Your comments must not 
be more than 15 pages long. NHTSA established this limit to encourage 
you to write your primary comments in a concise fashion. However, you 
may attach necessary additional documents to your comments. There is no 
limit on the length of the attachments. If you are submitting comments 
electronically as a PDF (Adobe) file, we ask that the documents 
submitted be scanned using the Optical Character Recognition (OCR) 
process, thus allowing the agencies to search and copy certain portions 
of your submissions. Please note that pursuant to the Data Quality Act, 
in order for the substantive data to be relied upon and used by the 
agencies, it must meet the information quality standards set forth in 
the OMB and Department of Transportation (DOT) Data Quality Act 
guidelines. Accordingly, we encourage you to consult the guidelines in 
preparing your comments. OMB's guidelines may be accessed at http://
www.whitehouse.gov/omb/fedreg/reproducible.html. DOT's guidelines may 
be accessed at http://www.dot.gov/dataquality.htm.

Tips for Preparing Your Comments

    When submitting comments, remember to:
     Identify the rulemaking by docket number and other 
identifying information (subject heading, Federal Register date and 
page number).
     Explain why you agree or disagree, suggest alternatives, 
and substitute language for your requested changes.
     Describe any assumptions and provide any technical 
information and/or data that you used.
     If you estimate potential costs or burdens, explain how 
you arrived at your estimate in sufficient detail to allow for it to be 
reproduced.
     Provide specific examples to illustrate your concerns, and 
suggest alternatives.
     Explain your views as clearly as possible, avoiding the 
use of profanity or personal threats.

How can I be sure that my comments were received?

    NHTSA: If you submit your comments by mail and wish Docket 
Management to notify you upon its receipt of your comments, enclose a 
self-addressed, stamped postcard in the envelope containing your 
comments. Upon receiving your comments, Docket Management will return 
the postcard by mail.

How do I submit confidential business information?

    Any confidential business information (CBI) submitted to one of the 
agencies will also be available to the other agency. However, as with 
all public comments, any CBI information only needs to be submitted to 
either one of the agencies' dockets and it will be available to the 
other. Following are specific instructions for submitting CBI to either 
agency.
    EPA: Do not submit CBI to EPA through http://www.regulations.gov or 
e-mail. Clearly mark the part or all of the information that you claim 
to be CBI. For CBI information in a disk or CD-ROM that you mail to 
EPA, mark the outside of the disk or CD-ROM as CBI and then identify 
electronically within the disk or CD-ROM the specific information that 
is claimed as CBI. In addition to one complete version of the comment 
that includes information claimed as CBI, a copy of the comment that 
does not contain the information claimed as CBI must be submitted for 
inclusion in the public docket. Information so marked will not be 
disclosed except in accordance with procedures set forth in 40 CFR part 
2.
    NHTSA: If you wish to submit any information under a claim of 
confidentiality, you should submit three copies of your complete 
submission, including the information you claim to be confidential 
business information, to the Chief Counsel, NHTSA, at the address given 
below under FOR FURTHER INFORMATION CONTACT. When you send a comment 
containing confidential business information, you should include a 
cover letter setting forth the information specified in our 
confidential business information regulation.
    In addition, you should submit a copy from which you have deleted 
the claimed confidential business information to the Docket by one of 
the methods set forth above.

How can I read the comments submitted by other people?

    You may read the materials placed in the docket for this document 
(e.g., the comments submitted in response to this document by other 
interested persons) at any time by going to http://www.regulations.gov. 
Follow the online instructions for accessing the dockets. You may also 
read the materials at the EPA Docket Center or NHTSA Docket Management 
Facility by going to the

[[Page 62741]]

street addresses given above under ADDRESSES.

I. Introduction

    This joint Notice announces plans by the Environmental Protection 
Agency (EPA) and the National Highway Traffic Safety Administration 
(NHTSA), on behalf of the Department of Transportation, to propose 
stringent Federal greenhouse gas and fuel economy standards for light-
duty vehicles for the 2017-2025 model years (MY) as part of a 
coordinated National Program. This rulemaking will build on the first 
phase of the National Program for fuel economy and greenhouse gas (GHG) 
emissions standards, for MY 2012-2016 vehicles, which was issued in 
April 2010.\2\ This Notice of Intent does not propose specific 
standards, but along with the accompanying Interim Joint Technical 
Assessment Report (TAR) discussed later in this Notice, is an important 
step in the process that will lead to a formal proposal.
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    \2\ See 75 FR 25324 (May 7, 2010).
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    NHTSA and EPA welcome comment on all aspects of this Notice and the 
accompanying TAR. Although this Notice discusses important initial 
assessments performed by the agencies, it also discusses the 
significant additional work that must be done to provide the agencies 
with information to support a joint Notice of Proposed Rulemaking 
(NPRM). EPA and NHTSA will continue to seek input from a broad range of 
stakeholders over the coming months, and we will continue to work 
closely with the California Air Resources Board (CARB) in order to 
ensure the continuation of a National Program. In an effort to guide 
the eventual development of the NPRM, over the next two months, EPA and 
NHTSA, working closely with CARB, will continue to analyze potential 
GHG and fuel economy standards for MYs 2017-2025 by developing and 
reviewing additional technical data and information and by considering 
additional stakeholder input. Based on this additional work, EPA and 
NHTSA expect to issue, by November 30, 2010, a Supplemental Notice of 
Intent that will describe further design elements for the National 
Program and present an updated analysis of potential stringencies for 
model years 2017-2025 standards for GHGs and fuel economy. A principal 
goal of the Supplemental Notice will be to narrow the range of 
potential stringencies for the future proposed standards, as well as to 
reflect new technical data and information and, as appropriate, further 
analysis supplementing the Interim Joint TAR. While the agencies do not 
intend to issue another TAR we do plan to do additional analysis and 
make it available as a part of the Supplemental Notice of Intent. In 
recent months, the agencies have had important discussions with many 
individual automobile manufacturers and other stakeholders, and our 
intention is to continue such discussions. In order for comments to be 
most helpful to this ongoing process, the agencies encourage parties 
wishing to comment at this stage of the process to submit their 
comments by the end of October 2010. The May 21, 2010 Presidential 
Memorandum discussed below called for EPA and NHTSA to include in this 
Notice of Intent a ``schedule for setting those standards as 
expeditiously as possible, consistent with providing sufficient 
leadtime to vehicle manufacturers.'' The agencies plan to issue a joint 
Notice of Proposed Rulemaking (NPRM) by September 30, 2011 and a Final 
Rule by July 31, 2012.
    As with any notice-and-comment rulemaking process, the agencies 
will provide full opportunity for the public to participate in the 
rulemaking process, consistent with the Administrative Procedure Act, 
other applicable law, and Administration policies on openness and 
transparency in government.\3\ EPA and NHTSA have established dockets 
to receive such information: EPA's Docket is located at Docket ID No. 
EPA-HQ-OAR-2010-0799 and NHTSA's docket is located at Docket ID No. 
NHTSA-2010-0131. The ADDRESSES section at the beginning of this Notice 
provides several methods for submitting information into these dockets.
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    \3\ Upon publication of the NPRM, the agencies will open a 
public comment period for receiving written comments and will hold 
at least one joint public hearing to receive oral comments. We will 
announce all of these avenues for public involvement in the Federal 
Register notice announcing the NPRM and we will post this 
information on each agency's Web site associated with this 
rulemaking.
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A. President's May 21, 2010, Memorandum

    On May 21, 2010, President Obama issued a Presidential Memorandum 
requesting that the Environmental Protection Agency (EPA) and the 
National Highway Traffic Safety Administration (NHTSA), on behalf of 
the Department of Transportation, take ``* * * additional coordinated 
steps * * * to produce a new generation of clean vehicles.'' He 
specifically requested that the agencies develop ``, * * * a 
coordinated national program under the CAA [Clean Air Act] and the EISA 
[Energy Independence and Security Act of 2007] to improve fuel 
efficiency and to reduce greenhouse gas emissions of passenger cars and 
light-duty trucks of model years 2017-2025.'' \4\ The President 
recognized that by acting expeditiously, our country could take a 
leadership role in addressing the global challenges of improving energy 
security and reducing greenhouse gas pollution, stating that ``America 
has the opportunity to lead the world in the development of a new 
generation of clean cars and trucks through innovative technologies and 
manufacturing that will spur economic growth and create high-quality 
domestic jobs, enhance our energy security, and improve our 
environment.''
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    \4\ The Presidential Memorandum is found at: http://
www.whitehouse.gov/the-press-office/presidential-memorandum-
regarding-fuel-efficiency-standards.
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    As a first step in the process, the President requested EPA and 
NHTSA to ``[t]ake all measures consistent with law to issue by 
September 30, 2010, a Notice of Intent to Issue a Proposed Rule that 
announces plans for setting stringent fuel economy and greenhouse gas 
emissions standards for light-duty vehicles of model year 2017 and 
beyond, including plans for initiating joint rulemaking and gathering 
any additional information needed to support regulatory action. The 
Notice should describe the key elements of the program that the EPA and 
the NHTSA intend jointly to propose, under their respective statutory 
authorities, including potential standards that could be practicably 
implemented nationally for the 2017-2025 model years and a schedule for 
setting those standards as expeditiously as possible, consistent with 
providing sufficient lead time to vehicle manufacturers.''
    The Presidential Memorandum also called on the agencies, working 
with the State of California, to develop a technical assessment to 
inform a potential rulemaking. The EPA, NHTSA, and CARB have completed 
this assessment, which is discussed in Section I.E below.

B. Background on the MY 2012-2016 National Program

    On April 1, 2010, NHTSA and EPA issued joint final rules 
establishing standards for GHG emissions and fuel economy for MYs 2012-
2016 passenger cars, light-duty-trucks, and medium-duty passenger 
vehicles (``light-duty vehicles''), collectively referred to as the 
National Program.\5\ The agencies

[[Page 62742]]

concluded that the automobile industry will achieve the substantial 
benefits of that first phase of the National Program based on 
technology that is already being commercially applied in many cases and 
that can be incorporated in these future model year vehicles at a 
reasonable expense and with benefits far in excess of costs. This 
initial phase of the National Program will result in large fuel savings 
and large reductions in GHG emissions and oil use, and thus in 
increased energy security and reductions in the rate of climate change. 
This joint rulemaking was consistent with the President's announcement 
on May 19, 2009 of a National Fuel Efficiency Policy for establishing 
consistent, harmonized, and streamlined requirements that would reduce 
GHG emissions and improve fuel economy for new cars and light trucks 
sold in the United States.
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    \5\ The joint final rules were published at 75 FR 25324 (May 7, 
2010).
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    In this recent rulemaking, EPA and NHTSA established two separate 
but harmonized sets of standards, each under its respective statutory 
authorities.\6\ The standards for both agencies begin with model year 
2012, with standards increasing in stringency through model year 2016. 
EPA set national CO2 emissions standards for light-duty 
vehicles under section 202(a) of the Clean Air Act (CAA), and NHTSA set 
corporate average fuel economy (CAFE) standards in accordance with the 
Energy Policy and Conservation Act (EPCA), as amended by the Energy 
Independence and Security Act of 2007 (EISA). The EPA standards will 
require light-duty vehicles to meet an estimated combined average 
emissions level of 250 grams/mile of CO2 in model year 2016, 
equivalent to a fuel economy level of 35.5 miles per gallon if all the 
reductions were achieved through improvements in fuel economy. The 
CO2 standards also allow manufacturers to earn credits for 
air conditioning system improvements that reduce GHGs other than 
CO2.
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    \6\ For a detailed discussion of NHTSA's and EPA's respective 
statutory authorities, see 75 FR 25324, 25348 (May 7, 2010) and 74 
FR 49454, 49460 (September 28, 2009).
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    The NHTSA CAFE standards are only based on technologies that 
improve fuel economy and are not based on consideration of air 
conditioning improvements (which NHTSA cannot consider given that the 
federal test procedures used to calculate fuel economy for passenger 
cars may not include air conditioning usage). The maximum feasible CAFE 
standards should require manufacturers of passenger cars and light 
trucks to meet an estimated combined average fuel economy level of 34.1 
mpg in model year 2016. These standards represent a harmonized approach 
that will allow industry to build a single national fleet that will 
satisfy both the GHG requirements under the CAA and CAFE requirements 
under EPCA/EISA.
    The NHTSA and EPA standards were informed in part by state 
regulatory action. In 2004, the California Air Resources Board (CARB) 
adopted GHG standards for new light-duty vehicles covering MYs 2009-
2016. Subsequently, thirteen states and the District of Columbia, 
comprising approximately 40 percent of the light-duty vehicle market, 
have adopted California's standards. On June 30, 2009, EPA granted 
California's request for a waiver of preemption under section 209(b) of 
the CAA.\7\ The granting of the waiver allows California and the other 
states to proceed with implementing the California emission standards. 
To promote the National Program for MYs 2012-2016 vehicles, in April 
2010 California revised its GHG emissions program for MYs 2012-2016 
vehicles such that compliance with EPA's GHG standards will be deemed 
to be in compliance with California's GHG emission standards.\8\ This 
action makes it possible for automakers to produce a single fleet of 
vehicles nationwide that meets all the requirements of the two federal 
programs as well as those of the California program.
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    \7\ See 74 FR 32744, July 8, 2009.
    \8\ See CARB April 1, 2010 action at http://www.arb.ca.gov/
regact/2010/ghgpv10/ghgpv10.htm.
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    As described in the recent final rule, EPA and NHTSA expect that 
automobile manufacturers will meet the MYs 2012-2016 CAFE and GHG 
standards primarily by using currently-available technologies, and 
simply incorporating these technologies more broadly across the light-
duty vehicle fleet. These technologies include improvements to engines, 
transmissions, and vehicles, including increased use of start-stop 
technology, improvements in air conditioning systems, and increased use 
of hybrid and other advanced technologies. The program also provides 
incentives for the initial commercialization of electric vehicles and 
plug-in hybrids. NHTSA's and EPA's assessment of likely vehicle 
technologies that manufacturers could employ to meet the MYs 2012-2016 
standards provides an important foundation for the agencies' 
consideration of potential 2017-2025 standards.
    The MY 2012-2016 standards also provide a number of compliance 
flexibilities to manufacturers. These flexibilities are discussed 
further in Section III.B below. As noted above, the benefits of these 
standards far exceed the costs.

C. Stakeholder Support for Continuing the National Program in 2017 and 
Beyond

    During the public comment period for the MY 2012-2016 proposed 
rulemaking, many stakeholders strongly encouraged EPA and NHTSA to 
begin working toward standards for MY 2017 and beyond that would 
maintain a single nationwide program. Following the President's May 
announcement, several major automobile manufacturers and the CARB sent 
letters to EPA and NHTSA in support of the 2017 to 2025 MY rulemaking 
initiative outlined in the President's Memorandum.\9\
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    \9\ These commitment letters are posted at http://www.epa.gov/
otaq/climate/regulations.htm and at http://www.nhtsa.gov/
Laws+&+Regulations/CAFE+-+Fuel+Economy/
Stakeholder+Committment+Letters.
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D. Presidential Memorandum's Request for EPA, NHTSA, and California to 
Develop a Technical Assessment

    In addition to the President's request for EPA and NHTSA to issue 
this Notice announcing plans ``for setting stringent fuel economy and 
greenhouse gas emissions standards for light-duty vehicles of model 
year 2017 and beyond,'' the May 21, 2010 Presidential Memorandum also 
requested that the agencies work with the State of California to 
develop a technical assessment to inform the rulemaking process. The 
memorandum states that the report should reflect input from an array of 
stakeholders on relevant factors, including ``viable technologies, 
costs, benefits, lead time to develop and deploy new and emerging 
technologies, incentives and other flexibilities to encourage 
development and deployment of new and emerging technologies, impacts on 
jobs and the automotive manufacturing base in the United States, and 
infrastructure for advanced vehicle technologies.'' \10\
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    \10\ Presidential Memorandum, section 2(a).
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    EPA and NHTSA have worked collaboratively with CARB to develop this 
technical assessment based on currently available data, consistent with 
the President's request. The agencies are releasing an Interim Joint 
Technical Assessment Report (TAR) in conjunction with this Notice.\11\ 
The

[[Page 62743]]

TAR provides an initial technical assessment for this Notice and 
discusses the significant additional technical information and analysis 
that will be needed to support the rulemaking development process. 
While the TAR is an important step in a continuation of the National 
Program, significant work remains to be done to support a future 
federal rulemaking, as discussed below in Section I.E.4. The key 
elements and findings of the TAR are discussed further in this Notice.
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    \11\ ``Interim Joint Technical Assessment Report: Light-Duty 
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel 
Economy Standards for Model Years 2017-2025,'' issued jointly by 
EPA, NHTSA and CARB, September 2010. Available at http://
www.nhtsa.gov/fuel-economy and http://www.epa.gov/OTAQ/climate/
regulations.htm.
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1. Stakeholder Outreach Conducted To Inform the Technical Assessment
    During June through August 2010, EPA, NHTSA, and CARB held numerous 
meetings with a wide variety of stakeholders to gather input to 
consider in developing the TAR, and to ensure that the agencies had 
available to them the most recent technical information. These 
stakeholders included the automobile original equipment manufacturers 
(OEMs), automotive suppliers, non-governmental organizations, states 
and state organizations, infrastructure providers, and labor unions. 
The agencies sought these stakeholders' technical input and 
perspectives, consistent with the President's request, on the key 
issues that should be considered in assessing a continued National 
Program to reduce greenhouse gas emissions and improve fuel economy for 
light-duty vehicles in model years 2017-2025. The input from these 
stakeholders is discussed in detail in Chapter 2 of the TAR.
    In response to the agencies' request, OEMs provided detailed and 
confidential input regarding several key areas including technology 
development, key regulatory design elements, infrastructure issues, 
perspective on the impacts on the U.S. manufacturing base and jobs, 
costs, and potential regulatory incentives and flexibilities. A common 
theme across the auto firms is that they are all heavily investing in 
advanced technologies including hybrids (HEVs), plug-in hybrid electric 
vehicles (PHEVs), electric vehicles (EVs), next generation internal 
combustion engines, and mass reduction technologies, and companies 
expect to increase their offerings and sales of these technologies 
significantly in the future. The companies generally stated, however, 
that the degree to which these advanced technologies will penetrate the 
U.S. market in the MYs 2017-2025 timeframe is dependent upon a number 
of challenges and factors, including future gasoline fuel prices, 
future decreases in battery costs, future regulatory fuel economy/GHG 
requirements, and government incentives for vehicle purchasers and 
owners such as the existing tax credits for EVs and PHEVs. EPA, NHTSA 
and CARB also met with a cross section of automotive suppliers as well 
as advanced technology infrastructure providers.
    The agencies also requested input from numerous non-governmental 
organizations, including environmental organizations and labor 
organizations, and from state and local governments and their 
organizations. These stakeholders strongly supported the President's 
call for continuing the National Program approach and setting new fuel 
economy and greenhouse gas standards for light-duty vehicles for the 
2017-2025 model years. Chapter 2 of the TAR provides an overview of the 
input we received during discussions with these organizations.
2. Overview of Initial Assessment of Available Technologies, Costs, 
Technology Effectiveness, and Lead-time
    EPA and NHTSA, working with CARB, have conducted an initial 
assessment of the expected technology costs, effectiveness, and lead-
time for potential MYs 2017-2025 GHG emission standards and the 
equivalent fuel economy. The agencies and CARB assessed over 30 vehicle 
technologies that manufacturers could use to improve the fuel economy 
and reduce the CO2 emissions of their vehicles during MYs 
2017-2025. The technologies considered fall into five broad categories: 
Engine technologies, transmission technologies, vehicle technologies 
(including mass reduction), electrification/accessory technologies, and 
hybrid/vehicle electrification technologies. The agencies and CARB 
considered not only technologies that are readily available today, but 
also other technologies that may not currently be in production but are 
beyond the research phase and under development, and which are expected 
to be in production in the MYs 2017-2025 timeframe. To be sure, the 
assessment of new technologies up to 15 years in the future has 
uncertainties. Nonetheless, the agencies and CARB have determined, on 
the basis of the initial analysis in the TAR, that automotive 
technologies are available, or are expected to be available, to support 
a reduction in greenhouse gas emissions and commensurate increase in 
fuel economy in 2017-2025 MY timeframe for the full range of scenarios 
examined in the TAR. The agencies have also determined, on the basis of 
the initial analysis, that increases come at increasing incremental 
cost. Of course the agencies must take into account the statutory 
obligations that have not been fully considered in this analysis.
    Consistent with stakeholder input obtained over the summer, we 
believe that in addition to advanced gasoline and diesel vehicles, 
electric drive vehicles can be an important part of the vehicle mix 
that will likely be used to meet future fuel economy and GHG emission 
standards. Electric drive vehicles including HEVs, PHEVs, EVs, and 
hydrogen fuel cell vehicles (FCVs), can dramatically reduce petroleum 
consumption and tailpipe GHG emissions compared to conventional 
technologies.
    The initial assessment by EPA, NHTSA, and CARB of technology costs, 
effectiveness and lead-time issues is presented in Chapter 3 of the 
TAR. The TAR introduces a number of new studies that are in progress 
and several that have been completed since the 2012-2016 MY light duty 
vehicle rule was issued. These studies have resulted in new estimates 
for costs and effectiveness for a number of technologies including 
engines, transmissions, batteries, and mass reduction. All of these are 
critical technologies in the 2017-2025 MY timeframe. The agencies and 
CARB expect to update these estimates going forward as more information 
becomes available from on-going studies of technology, effectiveness, 
and costs, as well as mass reduction and safety, as discussed in 
Section I.E.4 below.
3. Other Issues Addressed in the Technical Assessment
    Beyond the issues of the technology cost, effectiveness, and lead 
time for potential MYs 2017-2025 standards, the Presidential Memorandum 
requested that the technical assessment include input on some other 
areas, including impacts on jobs and the automotive manufacturing 
sector, and infrastructure for advanced vehicle technologies.
    In the TAR, the agencies and CARB include a discussion of input 
from stakeholders, including the OEMs and labor unions, on the 
potential impacts of standards on jobs and the automotive sector. 
Several OEMs and the labor unions noted that Federal government 
Recovery Act investments, as well as incentives provided by some state 
and local governments, were an important factor in locating 
manufacturing operations for advanced battery, electric motor, and 
vehicle assembly plants in the U.S., and that continuation of this type 
of investment would be an important consideration in the decision 
whether to locate future facilities in the U.S. Chapter 7 of the TAR 
also includes

[[Page 62744]]

a discussion of the key issues surrounding the potential employment 
impacts of more stringent light duty vehicle GHG and fuel economy 
standards. With the global drivers of competitiveness and increased 
importance of clean and efficient technologies, auto companies have 
already begun to invest in new technologies that can help meet future 
GHG/fuel economy standards. These investments will help the U.S. auto 
sector to stay on the cutting edge of auto technology. The agencies 
expect that the new standards will have effects on vehicle sales. For 
the forthcoming rulemaking, EPA and NHTSA will further investigate the 
impacts of the proposed standards on the auto industry, including 
employment.
    The TAR also includes a discussion of the electric charging and 
infrastructure development needed to support successful deployment of 
certain types of advanced technology vehicles. In the case of EVs and 
PHEVs, electric charging systems are needed to facilitate market 
penetration of these vehicle technologies. On the basis of stakeholder 
input, the agencies expect that these charging systems will be located 
most often at homes. In addition, charging systems at workplaces and 
potentially also at public facilities such as parking lots or retail 
stores could become important enablers for significant market 
penetration of these vehicles. In the case of fuel cell vehicles, 
hydrogen fueling stations are needed to support commercialization. 
Chapter 4 of the TAR provides an assessment of current charging systems 
and infrastructure technologies and costs, prospects for technology 
improvement, infrastructure deployment programs underway, and further 
infrastructure needs. The agencies and CARB worked closely with the 
Department of Energy (DOE) in our assessment of infrastructure issues, 
as well as other aspects of the TAR.
    The agencies also discuss the major relevant factors which can 
impact future automotive manufacturing jobs in the United States in 
Chapter 7 of the TAR. The TAR does not provide a quantitative 
assessment of these effects, rather, the agencies discuss the potential 
impacts of advanced technologies on the auto industry in general and 
employment in the auto sector. The automotive market is becoming 
increasingly global. The U.S. auto companies produce and sell 
automobiles around the world, and foreign auto companies produce and 
sell in the U.S. As a result, the industry has become increasingly 
competitive. Staying at the cutting edge of automotive technology, 
while maintaining profitability and consumer acceptance, has become 
increasingly important for the sustainability of auto companies. Trends 
in the world automotive market suggest that investments in improved 
fuel economy and advanced technology vehicles are a necessary component 
for maintaining competitiveness in coming years. As automakers seek 
greater commonality across the vehicles they produce for the domestic 
and foreign markets, improving fuel economy and reducing GHGs in U.S. 
vehicles should have spillovers to foreign production, and vice versa, 
thus yielding the ability to amortize investment in research and 
production over a broader product and geographic spectrum. The effects 
of the use of advanced technologies on U.S. auto sector employment 
depend on how the standards affect several factors: the number of 
vehicles produced, the labor intensity of vehicle production, potential 
changes in automotive sales, and any changes in market shares between 
domestically produced and imported vehicles and auto parts. With 
respect to this last factor, the location of production will depend on 
how domestic production costs, especially for advanced technologies, 
compare to foreign production costs, and on the cost of transporting 
vehicles and parts between the U.S. and other countries. Investments in 
advanced technology production facilities, such as battery 
manufacturing and vehicle electrification projects, supported by the 
Recovery Act (for example) reduce the need for importing these parts 
from overseas.\12\ These investments by the Department of Energy have 
created immediate jobs in building this capacity, and they also help 
ensure that these components can be produced in the U.S. Tax breaks and 
other manufacturing incentives provided by a number of local and state 
governments for advanced vehicle technologies, such as in Michigan, 
have also contributed incentives for domestic production. For the 
forthcoming notice of proposed rulemaking for 2017-2025 GHG and CAFE 
standards, EPA and NHTSA will further investigate the impacts of the 
proposed standards on the auto industry and employment.
---------------------------------------------------------------------------

    \12\ ``Recovery Act Awards for Electric Drive Vehicle Battery 
and Component Manufacturing Initiative'' and ``Recovery Act Awards 
for Transportation Electrification,'' http://www1.eere.energy.gov/
recovery/pdfs/battery_awardee_list.pdf.
---------------------------------------------------------------------------

    The TAR also includes an initial assessment of the costs, benefits, 
and technology that could be used to achieve a range of potential 
future stringencies, as discussed in section II.A below.
4. Future Technical Work and Analysis for the Joint Federal Rulemaking
    The two agencies have a number of significant, on-going projects 
that will inform the joint proposed rule for MYs 2017-2025 vehicles. 
These include new technical assessments of advanced gasoline, diesel, 
and hybrid vehicle technology effectiveness; several new projects to 
evaluate the cost, feasibility, and safety impacts of mass reduction 
from vehicles; and an ongoing project to improve our cost estimates for 
advanced technologies.\13\ For the MYs 2017-2025 rulemaking, NHTSA and 
EPA will conduct an analysis of the effects of the proposed standards 
on vehicle safety, including societal effects. EPA and NHTSA are 
coordinating with CARB on their study of the safety effects of a future 
vehicle designed for high levels of mass reduction. In addition, EPA 
and NHTSA will continue to meet with and consider input from the full 
range of stakeholders as we develop the joint Federal rulemaking. All 
of this future information will enhance the accuracy of our 
technological assessment.
---------------------------------------------------------------------------

    \13\ This ongoing work is discussed in Chapter 3 of the TAR.
---------------------------------------------------------------------------

II. Key Elements of the MY 2017-2025 National Program

A. Initial Assessment of a Range of Potential MY 2017-2025 GHG and CAFE 
Scenarios

1. Overview of Scenarios Analyzed and the Agencies' Approach to the 
Analysis
    In the technical assessment, the agencies and CARB conducted an 
initial fleet-level analysis of improvements in overall average GHG 
emissions and fuel economy levels. We analyzed a range of potential 
stringencies for model years 2020 and 2025. Specifically, we analyzed 
four potential GHG targets, representing a 3, 4, 5, and 6 percent per 
year decrease in GHG levels from the MY 2016 fleet-wide average of 250 
gram/mile (g/mi). Thus, the MY 2025 targets analyzed range from 190 g/
mi (equivalent to 47 mpg) under the 3 percent per year reduction 
scenario to 143 g/mi (equivalent to 62 mpg) under the 6 percent per 
year scenario.\14\ For purposes of an initial assessment, this range 
represents a reasonably broad range of stringency increases for

[[Page 62745]]

potential future GHG emissions standards and is also consistent with 
the increases suggested by CARB in its letter of commitment in response 
to the President's memorandum.
---------------------------------------------------------------------------

    \14\ The modeled stringencies, like the EPA's MY 2012-2016 
standards, include the potential use of air conditioning emission 
reductions, estimated at 15 grams (compared to a 2008 baseline) in 
2025 for all four technology paths. The estimates for further air 
conditioning reductions are largely due to an anticipated increase 
in the use of alternative refrigerants.
---------------------------------------------------------------------------

    The specific average required GHG and MPG equivalent levels 
analyzed are shown in Table 1:

    Table 1--GHG and MPG Equivalent Levels Analyzed for Scenarios \1\
------------------------------------------------------------------------
                                                Level in MY
                   Scenario                      2025 (gram      MPG-
                                                 CO2/mile)    equivalent
------------------------------------------------------------------------
3% per year...................................          190           47
4% per year...................................          173           51
5% per year...................................          158           56
6% per year...................................          143           62
------------------------------------------------------------------------
\1\ Real-world CO2 is typically 25 percent higher and real-world fuel
  economy is typically 20 percent lower. Thus the 3% to 6% range
  evaluated in this assessment would span a range of real-world fuel
  economy values of approximately 37 to 50 mpg, which correspond to the
  regulatory test procedure values of 47 to 62, respectively.

    For each of these levels of stringency, we also analyzed four 
``technological pathways'' by which they could be met. We chose this 
``technological pathway'' approach to capture both the diversity in 
strategies expressed by OEMs in this summer's stakeholder meetings, and 
uncertainties in forecasting 10-15 years into the future the potential 
costs and use of various advanced technologies in the light-duty 
vehicle fleet. We defined each of these technology pathways to 
emphasize a different mix of advanced technologies, by assuming various 
degrees of penetration of advanced gasoline technologies, mass 
reduction, hybrids, plug-in hybrids, and electric vehicles. For 
purposes of the assessment, the agencies denominated the pathways as 
Pathway A, Pathway B, Pathway C and Pathway D, respectively.
     Pathway A represents an approach where the industry 
focuses on HEVs, with less reliance on advanced gasoline vehicles and 
mass reduction, relative to Pathways B and C.
     Pathway C represents an approach where the industry 
focuses most on advanced gasoline vehicles and mass reduction, and to a 
lesser extent on HEVs.
     Pathway B represents an approach where the industry 
utilizes advanced gasoline vehicles and mass reduction at a more 
moderate level, higher than in Pathway A but less than in Pathway C.
     Pathway D represents an approach where the industry 
focuses on the use of PHEV, EV, and HEV technology, and relies less on 
advanced gasoline vehicles and mass reduction.\15\
---------------------------------------------------------------------------

    \15\ Further information on the four technology pathways is 
provided in Section II.A.3. below and Section 6.3 of the TAR.
---------------------------------------------------------------------------

    All four of these technology pathways include significant amounts 
of mass reduction, relative to 2008 model year vehicles, ranging from 
15 to 30 percent in 2025. The ability of the industry to reduce mass at 
the higher end of this range, while not adversely affecting safety and 
other vehicle attributes, is an open technical issue which the agencies 
are carefully evaluating and will continue to as we move forward. The 
agencies and CARB note that these pathways are meant to represent ways 
that manufacturers could respond to eventual standards, and do not 
represent ways that they must or necessarily will respond to those 
standards. We further believe it is appropriate to consider more than 
one potential technology pathway, since NHTSA, EPA, and CARB have on-
going technology cost, effectiveness, and safety work which has not 
been completed, as discussed further in Section I.E.4 above.
    For this initial assessment, we analyzed the vehicle fleet as one 
single industry-wide fleet, irrespective of individual manufacturer 
differences. This analysis focuses on the technology itself, 
independent of the individual manufacturer, and produces results that 
indicate how the single fleet could hypothetically achieve greater GHG 
reductions and improved fuel economy in the most efficient manner. 
Treating the entire fleet as a single fleet assumes, for example, 
averaging GHG performance across all vehicle platforms is possible 
irrespective of who the individual manufacturer is for a particular 
vehicle platform. This can be thought of as analyzing the fleet as if 
there was a single large manufacturer, instead of multiple individual 
manufacturers. In addition, this analysis assumes there are no 
statutory or other limits on manufacturers' ability to transfer credits 
between passenger car and light truck fleets, no limits on the ability 
to trade credits between manufacturers, and that all manufacturers 
fully utilize such flexibilities with no transfer costs in doing so. 
This approach also allows an assessment to be performed without 
consideration of the particular shapes of the passenger car and light 
truck attribute-based curves.\16\
---------------------------------------------------------------------------

    \16\ See section II.B.1 for more information on attribute based 
curves.
---------------------------------------------------------------------------

    These analyses build upon methods and information applied for the 
final rule for MY 2012-2016 vehicles, as well as updated forecasts of 
the future light-duty vehicle fleet, updated projections of technology 
costs and effectiveness, and updates to several key inputs such as fuel 
prices \17\ and vehicle miles traveled projections.\18\ We did not 
explicitly model any crediting schemes in this analysis. However the 
assumption of full car-truck credit transfer and inter-manufacturer 
trading is inherent in analyzing a single industry-wide fleet. Air 
conditioning emission reductions were also accounted for, as a 
fundamental component of EPA's MYs 2012-2016 program. The agencies used 
the OMEGA model, developed by EPA for the MY 2012-2016 light-duty 
vehicle rulemaking.\19\ The key inputs for this analysis (e.g., the 
technology costs and effectiveness) are a result of the joint technical 
assessment of EPA, CARB, and NHTSA, as described in Chapter 3 of the 
TAR.
---------------------------------------------------------------------------

    \17\ The fuel prices used are based on the Energy Information 
Administration's Annual Energy Outlook 2010, which includes an 
estimated gasoline price in 2025 of approximately $3.50 per gallon.
    \18\ See the TAR, Chapter 3 for a full discussion of technology 
costs and effectiveness, Chapter 6 for a full description of the 
modeling methods, Appendix A for a description of the future vehicle 
fleet projections, and Appendix E for the key inputs used in the 
modeling analysis.
    \19\ See 75 FR at 25446 (May 7, 2010).
---------------------------------------------------------------------------

    EPA and NHTSA believe that the approach used for these analyses 
permits an initial and approximate evaluation of the potential costs 
and benefits of the fleetwide stringency levels modeled. This approach 
incorporates significant simplifying assumptions that are useful for 
this initial assessment. However, the simplified analyses would not be 
appropriate in the context of the future joint federal rulemaking, 
taking into account each agency's respective statutory requirements. 
Consequently, in the full rulemaking analysis, both EPA and NHTSA will 
perform additional analyses before proposing standards. These 
simplifying assumptions and their relationship to the future federal 
rulemaking are discussed in detail in Section II.A.4 below and in 
Chapter 6 of the TAR.
2. Summary of Preliminary Costs and Benefits for Potential Scenarios
    The agencies and CARB assessed four scenarios for potential fleet-
wide average GHG levels, with annual CO2 reductions in the 
range of 3 to 6 percent per year, which would be equivalent to 47 to 62 
mpg if all improvements were due to fuel-economy improving 
technologies, for MY 2025 light-duty

[[Page 62746]]

vehicles, and four potential technology pathways, as described above, 
for each of these stringency levels.\20\ We evaluated the costs and 
benefits of these scenarios based on five broad metrics: increased cost 
per vehicle, lifetime fuel reductions, lifetime greenhouse gas 
reductions, consumer net lifetime savings, and payback period.
---------------------------------------------------------------------------

    \20\ In Chapter 6 of the TAR, the agencies also present results 
for MY 2020 for Pathways A, B, and C.
---------------------------------------------------------------------------

    The results presented in Tables 2 and 3 indicate that substantial 
reductions in fuel consumption and GHGs can be achieved with the use of 
advanced technologies. The preliminary estimated per-vehicle cost 
increases for a MY 2025 vehicle ranged from $770 to $3,500 across the 
range of stringency targets and technology pathways. Due to the fuel 
savings consumers experience by purchasing vehicles with improved fuel 
economy, the net lifetime owner savings would be $5,000 to $7,400, or a 
payback period of 1.4 to 4.2 years, for these same scenarios.\21\ The 
aggregate fuel reductions achieved by these scenarios would range from 
0.7 to 1.3 billion barrels over the lifetime of MY 2025 vehicles.\22\ 
Total greenhouse gas reductions would range from 340 to 590 million 
metric tons (MMT) over the lifetime of MY 2025 vehicles, depending on 
the stringency target and technology pathway.\23\ It is also important 
to recognize that the preliminary estimates in Tables 2 and 3 do not 
include all relevant costs, which will be analyzed in detail in 
connection with the rulemaking.
---------------------------------------------------------------------------

    \21\ The gasoline price used for this estimate is $3.49/gallon 
in 2025 and increases over time to a maximum of $4.34/gallon in 
2050.
    \22\ For comparison, the MY 2016 standards by themselves are 
projected to result in fuel reductions of 0.6 billion barrels and 
CO2-e reductions of 325 million metric tons (MMT) over 
the lifetime of MY 2016 vehicles.
    \23\ While fuel savings are the same for each technology pathway 
at a given stringency level, CO2 reductions vary as a 
function of the penetration of PHEVs and EVs projected for a given 
technology pathway, due to an increase in upstream CO2 
emissions.

  Table 2--Projections for MY 2025 Preliminary Per-Vehicle Cost Estimates, Vehicle Owner Payback, and Net Owner
                                              Lifetime Savings \1\
----------------------------------------------------------------------------------------------------------------
                                                          Preliminary per-                        Net lifetime
             Scenario                 Technology path       vehicle cost      Payback period     owner  savings
                                                           estimates  ($)        (years)              ($)
----------------------------------------------------------------------------------------------------------------
3%/year..........................  A...................                930                1.6              5,000
                                   B...................                850                1.5              5,100
                                   C...................                770                1.4              5,200
                                   D...................              1,050                1.9              4,900
4%/year..........................  A...................              1,700                2.5              5,900
                                   B...................              1,500                2.2              6,000
                                   C...................              1,400                1.9              6,200
                                   D...................              1,900                2.9              5,300
5%/year..........................  A...................              2,500                3.1              6,500
                                   B...................              2,300                2.8              6,700
                                   C...................              2,100                2.5              7,000
                                   D...................              2,600                3.6              5,500
6%/year..........................  A...................              3,500                4.1              6,200
                                   B...................              3,200                3.7              6,600
                                   C...................              2,800                3.1              7,400
                                   D...................              3,400                4.2              5,700
----------------------------------------------------------------------------------------------------------------
\1\ Per-vehicle costs represent the increase in costs to consumers from the MY 2016 standards, including the
  direct manufacturing costs for the new technologies, indirect costs for the auto manufacturer (e.g., product
  development, warranty) as well as auto manufacturer profit, and indirect costs at the dealership--see Chapter
  3.2.5 of the TAR for additional detail on our estimation of indirect costs. Payback period and lifetime owner
  savings use a 3% discount rate and AEO 2010 reference case energy prices. The gasoline price used for this
  estimate is $3.49/gallon in 2025 and increases over time to a maximum of $4.34/gallon in 2050.

Table 3--Estimated Total CO2e and Fuel Reductions for the Lifetime of MY
                          2025 Vehicles 1, 2, 3
------------------------------------------------------------------------
                                                  Lifetime
                                                    CO2e       Lifetime
                                                 reduction       fuel
                   Scenario                       (million    reduction
                                                   metric      (billion
                                                 tons, MMT)    barrels)
------------------------------------------------------------------------
3%/year.......................................          340          0.7
4%/year.......................................          440          0.9
5%/year.......................................      520-530          1.1
6%/year.......................................      530-590          1.3
------------------------------------------------------------------------
\1\ Fuel reductions are the same for each of the four technology
  pathways, but CO2e reductions vary as a function of the penetration of
  EVs and PHEVs in each of the four technology pathways evaluated (due
  to an increase in upstream emissions).
\2\ For reference, the National Program in MY 2016 is projected to
  reduce 0.6 billion barrels of fuel and 325 MMT CO2e over the lifetime
  of MY 2016 vehicles.
\3\ We note that the total lifetime benefits of the program over MYs
  2017-2025 will be significantly greater than those of MY 2025 alone.

    The results in Table 2 shows high positive net lifetime fuel 
savings are estimated to accrue to the vehicle owners, for each of the 
stringency scenario's examined and for each of the technology paths. 
Because these benefits will show up as direct savings to consumers who 
buy these vehicles, the question arises whether private markets will 
provide these benefits, or whether there may be unidentified additional 
costs associated with these technologies or other economic assumptions 
not included in the analysis. In the 2012-2016 light-duty GHG/CAFE 
rule, both EPA and NHTSA discussed these issues in detail, and the 
agencies will continue to evaluate this issue as we work towards the 
development of a joint NPRM.\24\ The results presented for this initial 
assessment represent what the agencies expect a hypothetical full-line 
vehicle manufacturer could achieve, if the composition of the 
manufacturer's fleet has the same vehicle types and sales mix as the 
aggregate fleet and the availability, cost, and effectiveness of 
various technologies are the same as estimated in this assessment. Note 
that the results presented here assume trading between auto firms, 
which may or may not occur in the future. The results also assume that 
the transfer of credits between car and light truck fleets

[[Page 62747]]

are unlimited, whereas there are statutory limits for CAFE. Among 
actual full-line vehicle manufacturers, we expect that a manufacturer-
specific assessment based on footprint-attribute standard curves will 
result in costs which are in aggregate higher than those presented here 
and will be higher for some manufacturers and lower for others due to 
the differences among their offerings.\25\ With respect to smaller 
volume manufacturers and very low volume manufacturers (many of whom 
only produce high-performance luxury vehicles), the agencies would 
expect that, in general, the level of technology they would require and 
the costs they would incur would generally be higher than for full line 
manufacturers.
---------------------------------------------------------------------------

    \24\ See Environmental Protection Agency and Department of 
Transportation, ``Light-Duty Vehicle Greenhouse Gas Emissions 
Standards and Corporate Average Fuel Economy Standards; Final 
Rule,'' Federal Register 75(88) (May 7, 2010): Section III.H.1 (pp. 
25510-25513) and Section IV.G.6 (pp. 25651-25657).
    \25\ All other things being equal, limiting credit transfers 
between passenger cars and light trucks within a firm, and limiting 
credit trading among manufacturers, are two factors that would 
likely lead to higher cost estimates.
---------------------------------------------------------------------------

    In the full analysis for the rulemaking, as required by EPCA/EISA 
and as permitted by the CAA, the agencies will make more refined 
assessments, including separate analyses for car and light truck 
vehicle fleets, year-by-year attribute-based standards, and 
manufacturer-specific estimates of potential attribute-based standard 
targets and costs, and other statutory requirements. The agencies note 
that consideration of these statutory factors may affect the potential 
range of standards. NHTSA and EPA also will perform a more thorough 
assessment of the impacts of proposed standards, as was done for the MY 
2012-2016 rulemaking, including analysis of improved energy security, 
monetized benefits of CO2 reductions, co-pollutant impacts, 
an assessment of the societal costs and benefits of potential 
standards, an assessment of potential safety impacts, an assessment of 
impacts on automobile sales and related employment, and other relevant 
impacts.
3. Potential Technology Penetration Estimates for Various Pathways
    As described above, the agencies and CARB analyzed four potential 
technology pathways to achieve more stringent targets, recognizing 
there are a wide range of pathways manufacturers could pursue. To 
illustrate several alternative ways that the industry as a whole could 
achieve a given level of stringency, each of these four technology 
pathways was applied to each of the four stringency targets. As noted 
above, Pathway A focuses on HEVs, Pathway C focuses most on advanced 
gasoline vehicles and mass reduction, Pathway B represents a more 
moderate level of advanced gasoline vehicles, between Pathway A and 
Pathway C, and Pathway D focuses most on PHEV, EV, and HEV 
technology.\26\ The results of the assessment presented in the TAR are 
presented in Table 4.
---------------------------------------------------------------------------

    \26\ Further description of these technology pathways can be 
found in Chapter 6 of the TAR.

                       Table 4--Technology Penetration Estimates for MY 2025 Vehicle Fleet
----------------------------------------------------------------------------------------------------------------
                                                             New vehicle fleet technology penetration
                                                ----------------------------------------------------------------
                                                     Mass      Gasoline &
           Scenario             Technology path   reduction      diesel        HEVs      PHEVs \2\       EVs
                                                     \1\        vehicles    (percent)    (percent)    (percent)
                                                  (percent)    (percent)
----------------------------------------------------------------------------------------------------------------
3%/year......................  Path A..........           15           89           11            0            0
                               Path B..........           18           97            3            0            0
                               Path C..........           18           97            3            0            0
                               Path D..........           15           75           25            0            0
4%/year......................  Path A..........           15           65           34            0            0
                               Path B..........           20           82           18            0            0
                               Path C..........           25           97            3            0            0
                               Path D..........           15           55           41            0            4
5%/year......................  Path A..........           15           35           65            0            1
                               Path B..........           20           56           43            0            1
                               Path C..........           25           74           25            0            0
                               Path D..........           15           41           49            0           10
6%/year......................  Path A..........           14           23           68            2            7
                               Path B..........           19           48           43            2            7
                               Path C..........           26           53           44            0            4
                               Path D..........           14           29           55            2           14
----------------------------------------------------------------------------------------------------------------
\1\ Mass reduction is the overall reduction of the 2025 fleet relative to MY 2008 vehicles.
\2\ Our assessment considered both PHEVs and EVs. These initial results indicate a higher relative percent of
  EVs compared to PHEVs. The agencies do believe that PHEV technology may be used more broadly than what this
  analysis indicates.

    The penetration of HEVs, EVs, and PHEV in MY 2025 varies 
considerably depending on the technology pathway and scenario, as can 
be seen in Table 4. As discussed in Chapter 6.3 of the TAR, Pathway A 
is intended to portray a technology path focused on HEV technology, 
with less reliance on advanced gasoline vehicles mass reduction, 
relative to Pathways B and C. Thus, in the 3%/year scenario, Pathway A 
results in 11% HEV penetration, and the most stringent 6% scenario 
increases HEV penetration to 68% for Path A, all with approximately a 
15% reduction in mass for the new vehicle fleet. Pathway C represents 
an approach where the industry focuses most on advanced gasoline 
vehicles and mass reduction, and to a lesser extent on HEVs, resulting 
in a penetration of HEVs that ranges from 3% up to 44% of the new 
vehicle fleet. Given the approach that Pathway C represents, the 
penetration of gasoline and diesel vehicles for each of the stringency 
scenarios is highest for Pathway C, as is the degree of mass reduction. 
Pathway B represents an approach where advanced gasoline vehicles and 
mass reduction are utilized at a more moderate level, higher than for 
Pathway A but less than for Pathway C. Pathway D represents an approach 
focused on the use of PHEV, EV, and HEV technology, and less reliance 
on advanced gasoline vehicle and mass reduction.

[[Page 62748]]

4. Future Analysis of Potential Standards for MY 2017-2025
    The agencies emphasize that the analysis presented in this notice, 
while reasonable for conducting an initial assessment, is a first step. 
Much more work must be completed for the upcoming NPRM. As noted above, 
we expect to issue updated assessments by November 30 of this year. The 
upcoming rulemaking to develop the next phase of the National Program 
will be based on a full analysis that is consistent with both the 
statutory framework that NHTSA must account for, and the flexibilities 
that EPA may account for, just as the detailed analysis for the MYs 
2012-2016 was conducted.\27\ For purposes of this initial assessment, 
the agencies examined stringencies in the 3% to 6% per year range. 
However, the agencies have not reached any conclusions at this time 
regarding the appropriate level of stringency for MY 2017 and later, 
and the assessment presented in this Joint Notice does not preclude the 
agencies from considering standards outside of this range for the 
upcoming rulemaking. The future Joint NPRM will consider a number of 
alternative levels of stringency, including an alternative which is 
estimated to maximize net benefits. While the single fleet analysis 
approach simplifies some aspects of the analysis and offers some 
advantages, there are also important limitations which will be 
addressed during the rulemaking process.
---------------------------------------------------------------------------

    \27\ For further information on the kinds of comprehensive 
analyses performed for the MYs 2012-2016 rulemaking, see 75 FR 
25348-396.
---------------------------------------------------------------------------

    For the same reasons discussed in detail in the MYs 2012-2016 
rulemaking, NHTSA and EPA expect to develop new standards for CAFE and 
GHG emissions that are consistent with each other and can be met by 
each auto manufacturer through the production of one single fleet. 
NHTSA and EPA believe the TAR provides a useful means of comparing the 
scenarios discussed above.
    As the agencies proceed to develop a joint proposed rulemaking for 
light-duty vehicle GHG emissions and fuel economy, we will continue 
technical and policy discussions with a broad range of stakeholders. We 
expect to gain information through these conversations, as well as from 
ongoing technical assessments by the agencies and other parties, that 
will build on the work presented in this Notice and the TAR as we 
continue to respond to the May 21, 2010 Presidential Memorandum.

B. Form of the Standards, Compliance and Flexibilities, and Other Key 
Elements

    EPA and NHTSA sought initial input about the appropriate design of 
a MYs 2017-2025 National Program from a range of stakeholders. Most of 
the program design input that we have received to date has come from 
OEMs, although many of their suggestions relate to specific potential 
compliance strategies that the companies consider confidential. 
However, there was consensus among stakeholders that a National Program 
should continue, and that the program's design should allow a single 
national fleet to comply with Federal GHG standards, Federal CAFE 
standards, and California GHG standards.
1. Form of the Standards
    In the future rulemaking, the agencies plan to continue an 
attribute-based approach to setting the MYs 2017-2025 standards, as was 
done for the MYs 2012-2016 program and as required for CAFE standards 
per EPCA/EISA. In our outreach with stakeholders, we heard general 
support for continuing an attribute-based approach and for continuing 
to use vehicle footprint as the attribute. Under an attribute-based 
standard, each manufacturer has a required GHG and CAFE fleet average 
unique to its fleet, depending on the attributes and production levels 
of the vehicle models that a manufacturer produces. The MYs 2012-2016 
rule was based on vehicle footprint, which is essentially the area 
enclosed by the points at which the four wheels meet the ground. In 
developing a proposed rule, we plan to consider continuing the 
footprint-based attribute, for which most stakeholders generally 
offered support.
    A key consideration for the MYs 2017-2025 standards that has not 
yet been addressed will be development of the separate attribute-based 
standards, or ``curves,'' for passenger cars and light trucks. The 
attribute-based curves for passenger cars and light trucks essentially 
assign a GHG/fuel economy level or ``target'' to an individual 
vehicle's footprint value. For each manufacturer, the CO2/
mpg values are then weighted, based on that manufacturer's production 
mix to determine that manufacturer's fleet average standard for its 
cars and trucks. Compliance is determined by comparing the actual 
CO2 or mpg values for the vehicles, production-weighted, to 
this fleet average standard.
    In developing the MYs 2012-2016 footprint-based curves, the 
agencies considered many key issues, including the steepness of the 
slopes of the curves and the difference between the car and truck 
curves for vehicles of the same footprint. We expect that these issues 
will again be key considerations in developing the methodology and the 
shape of the curves for the MYs 2017-2025 standards. Several OEMs 
expressed support for the continuation of separate attribute-based 
standards for cars and trucks, which is required for CAFE standards 
under EPCA/EISA and which the agencies will also evaluate further for 
the rulemaking.
2. Potential Regulatory Flexibilities
    During the agencies' outreach discussions with stakeholders, 
manufacturers provided early input that several of the flexibility 
provisions in place for MYs 2012-2016 should be retained for MY 2017 
and later. Environmental groups also provided early input, as discussed 
below. As EPA and NHTSA develop the proposal for the MYs 2017-2025 
program, the agencies will continue to consider the potential need for 
and benefits of incentives and flexibility provisions beyond those 
mandated by statute. The agencies will consider whether and how some of 
the flexibility provisions included in the MYs 2012-2016 program might 
be applied to the new program, consistent with each agency's statutory 
authority.
    The EPCA/EISA statutory framework for the CAFE program includes a 
5-year credit carry-forward provision and a 3-year credit carry-back 
provision. In the MYs 2012-2016 program, EPA chose to follow this 
approach to maintain consistency between the agencies' provisions. Most 
manufacturers support EPA's continuing to incorporate a 3-year credit 
carry-back provision to cover prior debits, a 5-year credit carry-
forward provision, credit transfers between car and truck categories, 
and credit trading between manufacturers. For EPA's purposes, these 
kinds of provisions, collectively termed here as Averaging, Banking, 
and Trading (ABT), have been an important part of many mobile source 
programs under CAA Title II, both for fuels programs as well as for 
engine and vehicle programs.\28\ Manufacturers have stated that ABT 
options are important to address many issues of technological 
feasibility and lead time, as well as considerations of cost. The 
agencies plan to propose to continue flexibility provisions in the MYs 
2017-2025 program, since these types of compliance flexibilities will

[[Page 62749]]

likely remain important as standards become more stringent.
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    \28\ See 75 FR 25412-413.
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    Several smaller volume manufacturers have expressed continued 
concerns regarding lead-time, and support additional flexibility to 
address the unique needs of small volume manufacturers. EPA's GHG 
standards provided smaller volume manufacturers additional lead time to 
meet the GHG standards, recognizing their higher CO2 
baseline levels and more limited vehicle product lines across which to 
average compared to other manufacturers. The need for this type of 
flexibility for the standards will be tied closely to the level of 
stringency of those standards.
    Several manufacturers also have expressed support for the 
continuation of air conditioning (A/C) system credits. EPA is strongly 
considering A/C credits for the MYs 2017-2025 program. EPA has included 
A/C reductions in the initial emissions modeling done to support the 
technical assessment.\29\ EPA plans to evaluate further the methodology 
used to determine A/C-related reductions, including A/C-related test 
procedures.
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    \29\ See Chapter 6 and Appendix D of the TAR.
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    Some manufacturers also have expressed support for the continuation 
of EPA's off-cycle credits program.\30\ This program provides an option 
for manufacturers to generate credits for employing new and innovative 
technologies that achieve GHG reductions that are not reflected on 
current test procedures. Credits must be based on real additional 
reductions of CO2 emissions and must be quantifiable and 
verifiable with a repeatable methodology. The off-cycle credits for new 
and innovative technologies are currently available only through MY 
2016. Manufacturers have noted that as long as the credits represent 
real-world off-cycle emissions reductions, the credits should be able 
to be generated for innovations that are introduced after MY 2016, 
providing additional incentives for investment in innovation and 
research and development. EPA recognizes this perspective and will 
evaluate the off-cycle credits provisions in the context of the MYs 
2017-2025 program.
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    \30\ See 75 FR 25438-440 for more on the Federal Test Procedure 
and Highway Fuel Economy Test.
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    Some manufacturers encouraged EPA to continue to offer flexible 
fuel vehicle (FFV) credits. EPA finalized provisions in the MYs 2012-
2016 Final Rule to treat MY 2016 and later FFVs similarly to 
conventional fueled vehicles, in that FFV emissions would be based on 
actual CO2 results from emissions testing on the fuels on 
which it operates.\31\ In calculating the emissions performance of an 
FFV, manufacturers may base FFV emissions in part on vehicle emissions 
test results on the alternative fuel, if they can demonstrate that the 
alternative fuel is being used in the vehicles. EPA will consider 
whether it is appropriate to retain this approach in the MYs 2017-2025 
rulemaking, or to consider other approaches. NHTSA will continue to 
provide incentives for dual fueled vehicles as defined in statute.\32\ 
Under the statute, for all dual fueled vehicles such as FFVs, the 
maximum credit that a manufacturer can apply to CAFE compliance will be 
limited to 0.6 mpg in 2017, 0.4 mpg in 2018, 0.2 mpg in 2019, and zero 
in MY 2020 or after. Dual fueled electric vehicles, such as PHEVs, are 
not subject to this limitation.
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    \31\ See 75 FR 25434.
    \32\ See 49 U.S.C. 32905 and 49 U.S.C. 32906.
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    For EVs and PHEVs, manufacturers have generally expressed strong 
support for a tailpipe-only CO2 measurement approach in the 
form of a 0 g/mile compliance value for electric operation for the MY 
2017-2025 program. Some manufacturers also expressed support for 
additional credits in the form of ``bonus'' credits or multipliers for 
EVs and PHEVs. EPA proposed a credit multiplier for MYs 2012-2016 
electricity-based advanced technology vehicles but did not finalize it, 
for a number of reasons described in the preamble to the Final 
Rule.\33\ Some environmental and public interest groups expressed 
concern that the 0 g/mi value does not capture upstream emissions from 
the charging of electrified vehicles, and believe an upstream emissions 
factor should be included in the compliance calculation for electrified 
vehicles. The agencies understand that the treatment of upstream 
emissions generated in the production of electricity and other energy 
sources used to fuel vehicles in GHG compliance calculations is an 
important issue for the upcoming rulemaking. EPA will fully evaluate 
this issue for the MY 2017-2025 Joint NPRM based on the status of 
commercialization of EVs, PHEVs, and FCVs, the potential of these 
technologies to provide long-term GHG emissions savings, the status of 
and outlook for upstream GHG control programs, and other relevant 
factors. For CAFE, NHTSA will continue to follow EPCA/EISA statutory 
guidance to calculate fuel economy for EVs and PHEVs, and will continue 
to use a petroleum-equivalency factor (PEF) defined by the DOE to 
determine fuel economy for EVs and a PEF and incentives for dual fueled 
automobiles that are defined in 49 U.S.C. 32905(b) for PHEVs.
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    \33\ See 75 FR 25434-437.
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3. Other Key Issues
a. Duration of NHTSA CAFE Standards
    EPCA/EISA states that ``The Secretary [of Transportation] shall * * 
* issue regulations under this title prescribing average fuel economy 
standards for at least 1, but not more than 5, model years.'' NHTSA is 
assessing how rulemaking will be structured to support the MYs 2017-
2025 National Program. In particular, we are examining how to ensure 
that CAFE standards for MY 2017-MY 2025, while harmonized with final 
EPA greenhouse gas emissions standards, would still meet the 
independent standards development framework of EPCA/EISA.
b. Potential Mid-Term Standards Review
    Many OEMs have stressed the importance of a mid-term technology 
review that would occur after the MYs 2017-2025 standards are 
promulgated.\34\ Some OEMs believe the future standards, especially 
those for MY 2020 and beyond, should be reevaluated at some future 
point based on the actual progress of advanced vehicle technology 
development. Several environmental groups emphasized that a mid-term 
technology review, if conducted, should not undermine innovation, and 
may not be necessary if the MYs 2017-2025 standards can be achieved 
through multiple technology pathways. The agencies believe it is 
appropriate to consider a mid-term technology review. As we develop the 
proposed standards, the agencies will consider the potential form that 
such a review could take as well as other potential ways to address the 
issues of uncertainty in longer-term standards setting.
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    \34\ The May 19, 2010 support letters from OEMs and the two 
major automotive trade associations also supported the concept of a 
mid-term technology review.
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c. Non-Regulatory Incentives
    The agencies recognize that there are many non-regulatory 
approaches, outside of the scope of this rulemaking, that can help 
promote the successful commercialization of low-GHG light-duty vehicle 
technologies. Some automaker stakeholders told the agencies that 
federal and state income tax credits and grants, targeted at consumers 
who purchased new advanced technology vehicles, played an important 
role in sparking the initial market for conventional hybrid electric 
vehicles, and could play an even more

[[Page 62750]]

important role in promoting future technologies such as plug-in hybrid 
electric and dedicated battery electric vehicles as well. Additional 
examples of non-regulatory approaches include federal research and 
development activities, federal financial assistance to the private 
sector to support research and development, vehicle and component 
manufacturing capacity, and infrastructure to support advanced 
technologies, and non-economic incentives such as use of high occupancy 
vehicle lanes and preferential parking, which are typically local 
decisions. While these are useful approaches for promoting low GHG 
technologies they cannot be accomplished by the agencies in the 
upcoming rulemaking.

III. EPA's Evaluation of Need for Potential Further Standards for 
Criteria Pollutants and Gasoline Fuel Quality

    In addition to addressing GHGs and fuel consumption, the May 21, 
2010 Presidential Memorandum also requested that EPA examine its 
broader motor vehicle air pollution control program. In the Memorandum, 
the President requested that ``[t]he Administrator of the EPA review 
for adequacy the current nongreenhouse gas emissions regulations for 
new motor vehicles, new motor vehicle engines, and motor vehicle fuels, 
including tailpipe emissions standards for nitrogen oxides and air 
toxics, and sulfur standards for gasoline. If the Administrator of the 
EPA finds that new emissions regulations are required, then I request 
that the Administrator of the EPA promulgate such regulations as part 
of a comprehensive approach toward regulating motor vehicles. * * *''
    EPA is currently in the process of conducting an assessment of the 
potential need for additional controls on light-duty vehicles' non-
greenhouse gas emissions and gasoline fuel quality. EPA will engage in 
technical conversations with the automobile industry, the oil industry, 
non-governmental organizations, the states, and other stakeholders on 
the potential need for new regulatory action, including the areas that 
are specifically mentioned in the Presidential Memorandum. EPA expects 
to coordinate the timing of any final action on new non-greenhouse gas 
emissions regulations for light-duty vehicles and gasoline with the 
final action on greenhouse gas emissions and CAFE regulations discussed 
in this Notice of Intent.

IV. Conclusions

    EPA and NHTSA believe that the recent final rule addressing MYs 
2012-2016 light-duty vehicle GHG emissions and fuel economy provides an 
important starting point for developing a continued National Program 
for MY 2017 and later vehicles. The agencies have received important 
input from a range of stakeholders to inform the extension of the 
National Program to MYs 2017-2025. Auto manufacturers, states, 
environmental groups and the United Auto Workers have expressed support 
for a continuation of the National Program. All auto firms are 
seriously committed to developing advanced technologies which can 
reduce fuel consumption and GHGs significantly beyond the MYs 2012-2016 
standards. Manufacturers are developing many technologies that would 
enable them to eventually achieve appreciable improvements in fuel 
economy levels, including advanced gasoline engines, hybrid electric 
vehicles, EVs, and PHEVs.
    As discussed in Section III above, the agencies and CARB have 
performed an initial assessment of potential stringencies with annual 
reductions in the range of 3 to 6% per year, or 47 to 62 mpg-equivalent 
in 2025, which demonstrates that substantial reductions in fuel 
consumption and GHGs can be achieved with the use of advanced 
technologies. EPA and NHTSA emphasize that this is an initial 
assessment, and significant data and additional analysis will be done 
to support the future joint Federal rulemaking.
    EPA and NHTSA will continue to meet with stakeholders and assess 
new technical information as we develop the new proposed program. Over 
the next two months, EPA and NHTSA will work to update our analysis of 
potential standards for 2017-2025. EPA and NHTSA will work closely with 
CARB in developing and reviewing additional technical data and 
information as part of conducting this more refined joint analysis. EPA 
and NHTSA expect to issue, by the end of November 2010, a Supplemental 
Notice of Intent that will outline additional details regarding the 
design of a National Program, including a more refined analysis of 
potential scenarios for MY 2017-2025 standards for GHGs and fuel 
economy. The agencies expect to issue a joint proposed rulemaking by 
September 30, 2011 and to issue a final rule by July 31, 2012.

    Dated: September 30, 2010.
Ray LaHood,
Secretary, Department of Transportation.
    Dated: September 30, 2010.
Lisa P. Jackson,
Administrator, Environmental Protection Agency.
[FR Doc. 2010-25444 Filed 10-12-10; 8:45 am]
BILLING CODE 6560-50-P