Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles

July 18, 2018

Phase 2 Greenhouse Gas Emissions and Fuel Efficiency

Standards for Medium- and Heavy-Duty Engines and Vehicles

On October 25, 2016, the U.S. Environmental Protection

Agency (EPA) and the National Highway Traffic Safety

Administration (NHTSA) jointly published the second

phase of greenhouse gas (GHG) emissions and fuel

efficiency standards for medium- and heavy-duty vehicles

and engines (81 Federal Register 73478) through their

authorities under the Clean Air Act (CAA), as amended,

and the Energy Independence and Security Act of 2007

(P.L. 110-140).

The Phase 2 rule sets emission standards for tractor-trailers,

vocational vehicles, and heavy-duty pickup trucks and vans.

The rule expands on the Phase 1 standards (promulgated on

September 15, 2011, for model years [MYs] 2014 through

2018; 76 Federal Register 57106) and introduces first-ever

controls on trailers (i.e., the part of the vehicle pulled by the

tractor) and glider vehicles (i.e., a new chassis combined

with an older engine). The standards phase in between MY

2021 and MY 2027 for engines and vehicles and between

MY 2018 and MY 2027 for trailers and gliders. The

agencies outline several benefits of the rule, including (1)

reducing carbon dioxide (CO2) emissions and fuel

consumption from new on-road vehicles, (2) reducing the

costs for transporting goods, and (3) spurring innovation in

the clean energy technology sector.

The agencies estimate that the Phase 2 standards will

achieve vehicle fuel savings of up to 25% beyond Phase 1

when fully implemented and depending on the vehicle

category (see Figure 1). Overall, the agencies estimate it

could cut GHG emissions by 1.1 billion metric tons of CO2

and conserve 2 billion barrels of oil over the lifetime of the

vehicles sold in the regulatory time frame.

Under the agencies’ cost modeling, the Phase 2 standards

result in up to $260 billion in total benefits while costing

the affected industry approximately $30 billion. Payback

periods for truck owners were determined to be favorable—

with the buyer of a new long-haul truck in 2027 recouping

the extra cost of the technology through fuel savings in less

than two years. Overall, vehicle owners could save an

estimated $170 billion in fuel costs over the lifetime of the

vehicles sold in the regulatory time frame.

Selected Issues

In general, reaction to the standards has been favorable.

Many truck and engine manufacturers, drivers, fuel groups,

and environmental organizations provided comments in

support of the rule upon its proposal. Nevertheless, several

issues may be of interest to Congress:

Remarks by President Obama, February 18, 2014.

Emissions Reductions

The California Air Resources Board (CARB) and some

health and environmental organizations say that the rule is

not aggressive enough, and they have pushed for more

stringent standards. On December 29, 2016, EPA approved

California’s waiver request under Section 209(b) of the

CAA to adopt its own MY 2014-2018 Phase 1 standards.

CARB expects to finalize its Phase 2 regulatory program by

the end of 2018, which is similar to but distinct from the

federal program.

The Phase 2 rule maintains the underlying regulatory

structure developed in Phase 1, such as the general

categorization of medium- and heavy-duty vehicles and the

separate standards for engines and vehicles. It also retains

the Phase 1 averaging, banking, and trading compliance

provisions and its flexibilities for small businesses.

However, unlike Phase 1, the rule puts forth “technologyadvancing standards” (i.e., standards based “not only on

currently available technologies but also on utilization of

technologies now under development or not yet widely

deployed”). These may include advancements in the engine,

transmission, driveline, aerodynamic design, lower rolling

resistance tires, and extended idle reduction technologies.

Nitrogen Oxide (NOx) Standards

Controls for NOx emissions (a precursor to ground-level

ozone) generally compete against fuel efficiency efforts.

Air quality regulators from Southern California and 10

other local and state agencies across the nation filed a

petition to EPA to promulgate more stringent NOx

standards subsequent to the Phase 2 rule. EPA issued a

memorandum in response to the petition on December 20,

2016, stating that the agency would initiate rulemaking “for

a new on-highway heavy-duty NOx program with the

intention of proposing standards that could begin in Model

Year 2024.” However, under the Trump Administration,

sources are reporting the expectation of delays before EPA

officials begin developing the standards.

”Heavy-duty trucks account for just 4% of all the vehicles on the

highway.... But they’re responsible for about 20% of carbon

pollution in the transportation sector.... And because they haul

about 70% of all domestic freight—70% of the stuff we use,

everything from flat-screen TVs to diapers to produce to you

name it—every mile that we gain in fuel efficiency is worth

thousands of dollars of savings every year.”

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Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles

Figure 1. CO2 and Fuel Efficiency Reductions from the Medium- and Heavy-Duty Vehicle Standards

Source: Courtesy of International Council on Clean Transportation, under a Share Alike license of Creative Commons.

Notes: Classifications defined at 49 CFR 523.2 and 49 CFR 565.15.

Trailer Provisions

The Phase 2 rule includes standards for both engine

emissions and the vehicle as a whole, including

requirements for improvements to the aerodynamics of

freight trailers. On September 22, 2016, the Truck Trailer

Manufacturing Association (TTMA) filed petitions to EPA

and the U.S. Court of Appeals for the D.C. Circuit, which

contend that EPA lacks statutory authority under the CAA

to regulate the non-engine parts of vehicles. The court

granted EPA’s and NHTSA’s request to put the case on

hold and stayed the trailer provisions as EPA reconsiders

them. EPA is working to develop a proposal.

Racecar Provisions

In the Phase 2 proposal, EPA included language that was

intended to clarify tampering provisions with respect to

nonroad vehicles. However, industry groups claimed that

the provisions would prevent owners from modifying motor

vehicles used exclusively for racing. EPA removed the

language from the final rule. Nevertheless, some argue that

the underlying compliance uncertainty remains. Legislation

to clarify it had been proposed in the 114th Congress (see

H.R. 4715/S. 2659) and the 115th Congress (see H.R. 350/S.

203 and S.Hrg. 115-127). On December 27, 2016, the

Racing Enthusiasts and Suppliers Coalition filed petitions

with EPA and the D.C. Circuit to address the uncertainty.

The petition was combined with TTMA’s and others and

the case was put on hold (see above).

Glider Kit and Glider Vehicle Provisions

The term glider kit is used in the vehicle industry to

describe a chassis and cab assembly that is generally

produced by a vehicle manufacturer without a new engine,

transmission, or rear axle. A third party then typically

installs used parts to complete the assembly. Historically,

gliders have been used as a means to salvage valuable

components from vehicles that were badly damaged in

collisions. Prior to the Phase 2 rulemaking, EPA and

NHTSA observed a sharp increase in glider sales,

suggesting to them that gliders were being used to

circumvent standards for safety and emissions (e.g. NOx

and particulates). For this reason, EPA moved to apply

current emission standards to gliders under the Phase 2 rule.

On July 10, 2017, several glider kit manufacturers filed a

petition to EPA arguing that gliders should not be

considered “new motor vehicles” under the CAA, and thus

EPA does not have the authority to regulate them. On

November 16, 2017, EPA issued a proposed repeal of the

requirements (82 Federal Register 53442). Upon review,

the White House Office of Information and Regulatory

Affairs reportedly informed EPA that it needs a regulatory

impact analysis before a final repeal can take effect. On

July 6, 2018, EPA announced an 18-month enforcement

pause on the Phase 2 production limits for glider vehicles as

it reconsiders the rule.

Richard K. Lattanzio, Specialist in Environmental Policy

https://crsreports.congress.gov

IF10927

Phase 2 Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles

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https://crsreports.congress.gov | IF10927 · VERSION 2 · NEW