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

Federal RegisterJul 13, 2015

Ask Donna

What actually matters in this document.

Text

ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 22, 85, 86, 600, 1033, 1036, 1037, 1039, 1042, 1043, 1065, 1066, and 1068

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 512, 523, 534, 535, 537, and 538

[EPA-HQ-OAR-2014-0827; NHTSA-2014-0132; FRL-9927-21-OAR]

RIN 2060-AS16; RIN 2127-AL52

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

AGENCY:

Environmental Protection Agency (EPA) and Department of Transportation (DOT) National Highway Traffic Safety Administration (NHTSA)

ACTION:

Proposed rule.

SUMMARY:

EPA and NHTSA, on behalf of the Department of Transportation, are each proposing rules to establish a comprehensive Phase 2 Heavy-Duty (HD) National Program that will reduce greenhouse gas (GHG) emissions and fuel consumption for new on-road heavy-duty vehicles. This technology-advancing program would phase in over the long-term, beginning in the 2018 model year and culminating in standards for model year 2027, responding to the President's directive on February 18, 2014, to develop new standards that will take us well into the next decade. NHTSA's proposed fuel consumption standards and EPA's proposed carbon dioxide (CO

) emission standards are tailored to each of four regulatory categories of heavy-duty vehicles: Combination tractors; trailers used in combination with those tractors; heavy-duty pickup trucks and vans; and vocational vehicles. The proposal also includes separate standards for the engines that power combination tractors and vocational vehicles. Certain proposed requirements for control of GHG emissions are exclusive to EPA programs. These include EPA's proposed hydrofluorocarbon standards to control leakage from air conditioning systems in vocational vehicles, and EPA's proposed nitrous oxide (N

O) and methane (CH

) standards for heavy-duty engines. Additionally, NHTSA is addressing misalignment in the Phase 1 standards between EPA and NHTSA to ensure there are no differences in compliance standards between the agencies. In an effort to promote efficiency, the agencies are also proposing to amend their rules to modify reporting requirements, such as the method by which manufacturers submit pre-model, mid-model, and supplemental reports. EPA's proposed HD Phase 2 GHG emission standards are authorized under the Clean Air Act and NHTSA's proposed HD Phase 2 fuel consumption standards authorized under the Energy Independence and Security Act of 2007. These standards would begin with model year 2018 for trailers under EPA standards and 2021 for all of the other heavy-duty vehicle and engine categories. The agencies estimate that the combined standards would reduce CO

emissions by approximately 1 billion metric tons and save 1.8 billion barrels of oil over the life of vehicles and engines sold during the Phase 2 program, providing over $200 billion in net societal benefits. As noted, the proposal also includes certain EPA-specific provisions relating to control of emissions of pollutants other than GHGs. EPA is seeking comment on non-GHG emission standards relating to the use of auxiliary power units installed in tractors. In addition, EPA is proposing to clarify the classification of natural gas engines and other gaseous-fueled heavy-duty engines, and is proposing closed crankcase standards for emissions of all pollutants from natural gas heavy-duty engines. EPA is also proposing technical amendments to EPA rules that apply to emissions of non-GHG pollutants from light-duty motor vehicles, marine diesel engines, and other nonroad engines and equipment. Finally, EPA is proposing to require that rebuilt engines installed in new incomplete vehicles meet the emission standards applicable in the year of assembly, including all applicable standards for criteria pollutants.

DATES:

Comments on all aspects of this proposal must be received on or before September 11, 2015. Under the Paperwork Reduction Act (PRA), comments on the information collection provisions are best assured of consideration if the Office of Management and Budget (OMB) receives a copy of your comments on or before August 12, 2015.

EPA and NHTSA will announce the public hearing dates and locations for this proposal in a supplemental

Federal Register

document.

ADDRESSES:

Submit your comments, identified by Docket ID No. EPA-HQ-OAR-2014-0827 (for EPA's docket) and NHTSA-2014-0132 (for NHTSA's docket) by one of the following methods:

•

Online:

www.regulations.gov:

Follow the on-line instructions for submitting comments.

•

Email:

a-and-r-docket@epa.gov

•

Mail:

EPA:

Air and Radiation Docket and Information Center, Environmental Protection Agency, Mail code: 28221T, 1200 Pennsylvania Ave. NW., Washington, DC 20460.

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:

EPA:

EPA Docket Center, EPA WJC West Building, Room 3334, 1301 Constitution Ave. NW., Washington, DC 20460. Such deliveries are only accepted during the Docket's normal hours of operation, and special arrangements should be made for deliveries of boxed information.

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:

EPA and NHTSA have established dockets for this action under Direct your comments to Docket ID No. EPA-HQ-OAR-2014-0827 and/or NHTSA-2014-0132, respectively. See the

SUPPLEMENTARY INFORMATION

section on “Public Participation” for more information about submitting written comments.

Docket:

All documents in the docket are listed on the

www.regulations.gov

Web site. Although listed in the index, some information is not publicly available,

e.g.,

confidential business information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through

www.regulations.gov

or in hard copy at the following locations:

EPA:

Air and Radiation Docket and Information Center, EPA Docket Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW., Room 3334, Washington, DC. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the Air Docket is (202) 566-1742.

NHTSA:

Docket Management Facility, M-30, U.S. Department of

Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. The telephone number for the docket management facility is (202) 366-9324. 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:

For hearing information or to register, please contact: JoNell Iffland, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; Telephone number: (734) 214-4454; Fax number: (734) 214-4816; Email address:

iffland.jonell@epa.gov

. For all other information related to the rule, please contact: Tad Wysor, Office of Transportation and Air Quality, Assessment and Standards Division (ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4332; email address:

wysor.tad@epa.gov

NHTSA:

Ryan Hagen or Analiese Marchesseault, Office of Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590. Telephone: (202) 366-2992;

ryan.hagen@dot.gov

analiese.marchesseault@dot.gov

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

This proposed action would affect companies that manufacture, sell, or import into the United States new heavy-duty engines and new Class 2b through 8 trucks, including combination tractors, all types of buses, vocational vehicles including municipal, commercial, recreational vehicles, and commercial trailers as well as

3/4

-ton and 1-ton pickup trucks and vans. The heavy-duty category incorporates all motor vehicles with a gross vehicle weight rating of 8,500 lbs or greater, and the engines that power them, except for medium-duty passenger vehicles already covered by the greenhouse gas standards and corporate average fuel economy standards issued for light-duty model year 2017-2025 vehicles. Proposed regulated categories and entities include the following:

Category

NAICS code

Examples of potentially affected entities

Industry

336111

Motor Vehicle Manufacturers, Engine Manufacturers, Truck Manufacturers, Truck Trailer Manufacturers.

336112

333618

336120

336212

Industry

541514

Commercial Importers of Vehicles and Vehicle Components.

811112

811198

Industry

336111

Alternative Fuel Vehicle Converters.

336112

422720

454312

541514

541690

811198

Note:

North American Industry Classification System (NAICS).

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

FOR FURTHER INFORMATION CONTACT

section.

B. Public Participation

EPA and NHTSA request comment on all aspects of this joint proposed rule. This section describes how you can participate in this process.

(1) How do I prepare and submit comments?

In this joint proposal, there are many issues common to both EPA's and NHTSA's proposals. For the convenience of all parties, comments submitted to the EPA docket will be considered comments submitted to the NHTSA docket, and vice versa. An exception is that comments submitted to the NHTSA docket on NHTSA's Draft Environmental Impact Statement (EIS) will not be considered submitted to the EPA docket. Therefore, the public only needs to submit comments to either one of the two agency dockets, although they may submit comments to both if they so choose. Comments that are submitted for consideration by one agency should be identified as such, and comments that are submitted for consideration by both agencies should be identified as such. Absent such identification, each agency will exercise its best judgment to determine whether a comment is submitted on its proposal.

Further instructions for submitting comments to either EPA or NHTSA docket are described below.

EPA:

Direct your comments to Docket ID No. EPA-HQ-OAR-2014-0827. EPA's policy is that all comments received will be included in the public docket without change and may be made available online at

www.regulations.gov

, including any personal information provided, unless the comment includes information claimed to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Do not submit information that you consider to be CBI or otherwise protected through

www.regulations.gov

or email. The

www.regulations.gov

Web site is an “anonymous access” system, which means EPA will not know your identity or contact information unless you provide it in the body of your comment. If you send an email comment directly to EPA without going through

www.regulations.gov

your email address will be automatically captured and included as part of the comment that is placed in the public docket and made available on the Internet. If you submit an electronic comment, EPA recommends that you include your

name and other contact information in the body of your comment and with any disk or CD-ROM you submit. If EPA cannot read your comment due to technical difficulties and cannot contact you for clarification, EPA may not be able to consider your comment. Electronic files should avoid the use of special characters, any form of encryption, and be free of any defects or viruses. For additional information about EPA's public docket visit the EPA Docket Center homepage at

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

NHTSA:

Your comments must be written and in English. To ensure that your comments are correctly filed in the Docket, please include the Docket number NHTSA-2014-0132 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, and 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 agency, 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

See 49 CFR 553.21.

Optical character recognition (OCR) is the process of converting an image of text, such as a scanned paper document or electronic fax file, into computer-editable text.

(2) Tips for Preparing Your Comments

When submitting comments, please 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.

• Make sure to submit your comments by the comment period deadline identified in the

DATES

section above.

(3) 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.

(4) 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. If you have any questions about CBI or the procedures for claiming CBI, please consult the persons identified in the

FOR FURTHER INFORMATION CONTACT

section.

EPA:

Do not submit CBI to EPA through

www.regulations.gov

or email. 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. Information not marked as CBI will be included in the public docket without prior notice. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

NHTSA:

If you wish to submit any information under a claim of confidentiality, you should submit three copies of your complete submission, including the information you claim to be confidential business information, to the Chief Counsel, NHTSA, at the address given above under

FOR FURTHER INFORMATION CONTACT

. When you send a comment containing confidential business information, you should include a cover letter setting forth the information specified in our confidential business information regulation.

See 49 CFR part 512.

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.

(5) How can I read the comments submitted by other people?

You may read the materials placed in the docket for this document (

e.g.,

the comments submitted in response to this document by other interested persons) at any time by going to

http://www.regulations.gov

. Follow the online instructions for accessing the dockets. You may also read the materials at the EPA Docket Center or NHTSA Docket Management Facility by going to the street addresses given above under

ADDRESSES

(6) How do I participate in the public hearings?

EPA and NHTSA will announce the public hearing dates and locations for this proposal in a supplemental

Federal Register

document. At all hearings, both agencies will accept comments on the rulemaking, and NHTSA will also accept comments on the EIS.

If you would like to present testimony at the public hearings, we ask that you notify EPA and NHTSA contact persons listed in the

FOR FURTHER INFORMATION CONTACT

section at least ten days before the hearing. Once EPA and NHTSA learn how many people have registered to speak at the public hearing, we will allocate an appropriate amount of time to each participant. For planning purposes, each speaker should anticipate speaking for approximately ten minutes, although we may need to adjust the time for each speaker if there is a large turnout. We suggest that you bring copies of your statement or other material for EPA and NHTSA panels. It would also be helpful if you send us a copy of your statement or other materials before the hearing. To accommodate as many speakers as possible, we prefer that speakers not use technological aids (

e.g.,

audio-visuals, computer slideshows). However, if you plan to do so, you must notify the contact persons in the

FOR FURTHER INFORMATION CONTACT

section above. You also must make arrangements to provide your presentation or any other

aids to EPA and NHTSA in advance of the hearing in order to facilitate set-up. In addition, we will reserve a block of time for anyone else in the audience who wants to give testimony. The agencies will assume that comments made at the hearings are directed to the proposed rule unless commenters specifically reference NHTSA's EIS in oral or written testimony.

The hearing will be held at a site accessible to individuals with disabilities. Individuals who require accommodations such as sign language interpreters should contact the persons listed under

FOR FURTHER INFORMATION CONTACT

section above no later than ten days before the date of the hearing.

EPA and NHTSA will conduct the hearing informally, and technical rules of evidence will not apply. We will arrange for a written transcript of the hearing and keep the official record of the hearing open for 30 days to allow you to submit supplementary information. You may make arrangements for copies of the transcript directly with the court reporter.

C. Did EPA conduct a peer review before issuing this notice?

This regulatory action is supported by influential scientific information. Therefore, EPA conducted a peer review consistent with OMB's Final Information Quality Bulletin for Peer Review. As described in Section II.C.3, a peer review of updates to the vehicle simulation model (GEM) for the proposed Phase 2 standards has been completed. This version of GEM is based on the model used for the Phase 1 rule, which was peer-reviewed by a panel of four independent subject matter experts (from academia and a national laboratory). The peer review report and the agency's response to the peer review comments are available in Docket ID No. EPA-HQ-OAR-2014-0827.

D. Executive Summary

(1) Commitment to Greenhouse Gas Emission Reductions and Vehicle Fuel Efficiency

As part of the Climate Action Plan announced in June 2013,

the President directed the Environmental Protection Agency (EPA) and the Department of Transportation's (DOT) National Highway Traffic Safety Administration (NHTSA) to set the next round of standards to reduce greenhouse gas (GHG) emissions and improve fuel efficiency for medium- and heavy-duty vehicles. More than 70 percent of the oil used in the United States and 28 percent of GHG emissions come from the transportation sector, and since 2009 EPA and NHTSA have worked with industry and states to develop ambitious, flexible standards for both the fuel economy and GHG emissions of light-duty vehicles and the fuel efficiency and GHG emissions of heavy-duty vehicles.

5 6

The standards proposed here (referred to as Phase 2) would build on the light-duty vehicle standards spanning model years 2011 to 2025 and on the initial phase of standards (referred to as Phase 1) for new medium and heavy-duty vehicles (MDVs and HDVs) and engines in model years 2014 to 2018. Throughout every stage of development for these programs, EPA and NHTSA (collectively, the agencies, or “we”) have worked in close partnership not only with one another, but with the vehicle manufacturing industry, environmental community leaders, and the State of California among other entities to create a single, effective set of national standards.

The White House, The President's Climate Action Plan (June, 2013).

http://www.whitehouse.gov/share/climate-action-plan

The White House, Improving the Fuel Efficiency of American Trucks—Bolstering Energy Security, Cutting Carbon Pollution, Saving Money and Supporting Manufacturing Innovation (Feb. 2014), 2.

U.S. Environmental Protection Agency. 2014. Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012. EPA 430-R-14-003. Mobile sources emitted 28 percent of all U.S. GHG emissions in 2012. Available at

http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2014-Main-Text.pdf

Through two previous rulemakings, EPA and NHTSA have worked with the auto industry to develop new fuel economy and GHG emission standards for light-duty vehicles. Taken together, the light-duty vehicle standards span model years 2011 to 2025 and are the first significant improvement in fuel economy in approximately two decades. Under the final program, average new car and light truck fuel economy is expected to double by 2025.

This is projected to save consumers $1.7 trillion at the pump—roughly $8,200 per vehicle for a MY2025 vehicle—reducing oil consumption by 2.2 million barrels a day in 2025 and slashing GHG emissions by 6 billion metric tons over the lifetime of the vehicles sold during this period.

These fuel economy standards are already delivering savings for American drivers. Between model years 2008 and 2013, the unadjusted average test fuel economy of new passenger cars and light trucks sold in the United States has increased by about four miles per gallon. Altogether, light-duty vehicle fuel economy standards finalized after 2008 have already saved nearly one billion gallons of fuel and avoided more than 10 million tons of carbon dioxide emissions.

Id.

at 3.

Similarly, EPA and NHTSA have previously developed joint GHG emission and fuel efficiency standards for MDVs and HDVs. Prior to these Phase 1 standards, heavy-duty trucks and buses—from delivery vans to the largest tractor-trailers—were required to meet pollution standards for soot and smog-causing air pollutants, but no requirements existed for the fuel efficiency or carbon pollution from these vehicles.

By 2010, total fuel consumption and GHG emissions from MDVs and HDVs had been growing, and these vehicles accounted for 23 percent of total U.S. transportation-related GHG emissions.

In August 2011, the agencies finalized the groundbreaking Phase 1 standards for new MDVs and HDVs in model years 2014 through 2018. This program, developed with support from the trucking and engine industries, the State of California, Environment Canada, and leaders from the environmental community, set standards that are expected to save a projected 530 million barrels of oil and reduce carbon emissions by about 270 million metric tons, representing one of the most significant programs available to reduce domestic emissions of GHGs.

The Phase 1 program, as well as the many additional actions called for in the President's 2013 Climate Action Plan

including this Phase 2 rulemaking, not only result in meaningful decreases in GHG emissions, but support—indeed are critical for—United States leadership to encourage other countries to also achieve meaningful GHG reductions.

Id.

at 4.

The President's Climate Action Plan calls for GHG-cutting actions including, for example, reducing carbon emissions from power plants and curbing hydrofluorocarbon and methane emissions.

This proposal builds on our commitment to robust collaboration with stakeholders and the public. It follows an expansive and thorough outreach effort in which the agencies gathered input, data and views from many interested stakeholders, involving over 200 meetings with heavy-duty vehicle and engine manufacturers, technology suppliers, trucking fleets, truck drivers, dealerships, environmental organizations, and state agencies. As with the previous light-duty rules and the heavy-duty Phase 1 rule, the agencies have consulted

frequently with the California Air Resources Board staff during the development of this Phase 2 proposal, given California's unique ability among the states to adopt their own GHG standards for on-highway engines and vehicles. The agencies look forward to feedback and ongoing conversation following the release of this proposed rule from all stakeholders—including through planned public hearings, written comments, and other opportunities for input.

(2) Overview of Phase 1 Medium- and Heavy-Duty Vehicle Standards

The President's direction to EPA and NHTSA to develop GHG emission and fuel efficiency standards for MDVs and HDVs resulted in the agencies' promulgation of the Phase 1 program in 2011, which covers new trucks and heavy vehicles in model years 2014 to 2018. The Phase 1 program includes specific standards for combination tractors, heavy-duty pickup trucks and vans, and vocational vehicles, and includes separate standards for both vehicles and engines. The program offers extensive flexibility, allowing manufacturers to reach standards through average fleet calculations, a mix of technologies, and the use of various credit and banking programs.

The Phase 1 program was developed through close consultation with industry and other stakeholders, resulting in standards tailored to the specifics of each different class of vehicles and engines.

• Heavy-duty combination tractors. Combination tractors—semi trucks that typically pull trailers—are regulated under nine subcategories based on weight class, cab type, and roof height. These vehicles represent approximately two-thirds of all fuel consumption and GHG emissions from MDVs and HDVs.

• Heavy-duty pickup trucks and vans. Heavy-duty pickup and van standards are based on a “work factor” attribute that combines a vehicle's payload, towing capabilities, and the presence of 4-wheel drive. These vehicles represent about 15 percent of the fuel consumption and GHG emissions from MDVs and HDVs.

• Vocational vehicles. Specialized vocational vehicles, which consist of a very wide variety of truck and bus types (

e.g.,

delivery, refuse, utility, dump, cement, transit bus, shuttle bus, school bus, emergency vehicles, and recreational vehicles) are regulated in three subcategories based on engine classification. These vehicles represent approximately 20 percent of the fuel consumption and GHG emissions from MDVs and HDVs. The Phase 1 program includes EPA GHG standards for recreational vehicles, but not NHTSA fuel efficiency standards.

The proposed Phase 2 program would also include NHTSA recreational vehicle fuel efficiency standards.

• Heavy-duty engines. In addition to vehicle types, the Phase 1 rule has separate standards for heavy-duty engines, to assure they contribute to the overall vehicle reductions in fuel consumption and GHG emissions.

The Phase 1 standards are premised on utilization of immediately available technologies. The Phase 1 program provides flexibilities that facilitate compliance. These flexibilities help provide sufficient lead time for manufacturers to make necessary technological improvements and reduce the overall cost of the program, without compromising overall environmental and fuel consumption objectives. The primary flexibility provisions are an engine averaging, banking, and trading (ABT) program and a vehicle ABT program. These ABT programs allow for emission and/or fuel consumption credits to be averaged, banked, or traded within each of the regulatory subcategories. However, credits are not allowed to be transferred across subcategories.

The Phase 1 program is projected to save 530 million barrels of oil and avoid 270 million metric tons of GHG emissions.

At the same time, the program is projected to produce $50 billion in fuel savings, and net societal benefits of $49 billion. Today, the Phase 1 fuel efficiency and GHG reduction standards are already reducing GHG emissions and U.S. oil consumption, and producing fuel savings for America's trucking industry. The market appears to be very accepting of the new technology, and the agencies have seen no evidence of “pre-buy” effects in response to the standards.

The White House, Improving the Fuel Efficiency of American Trucks—Bolstering Energy Security, Cutting Carbon Pollution, Saving Money and Supporting Manufacturing Innovation (Feb. 2014), 4.

(3) Overview of Proposed Phase 2 Medium- and Heavy-Duty Vehicle Standards

The Phase 2 GHG and fuel efficiency standards for MDVs and HDVs are a critical next step in improving fuel efficiency and reducing GHG. The proposed Phase 2 standards carry forward our commitment to meaningful collaboration with stakeholders and the public, as they build on more than 200 meetings with manufacturers, suppliers, trucking fleets, dealerships, state air quality agencies, non-governmental organizations (NGOs), and other stakeholders to identify and understand the opportunities and challenges involved with this next level of fuel saving technology. These meetings have been invaluable to the agencies, enabling the development of a proposal that appropriately balances all potential impacts and effectively minimizes the possibility of unintended consequences.

Phase 2 would include technology-advancing standards that would phase in over the long-term (through model year 2027) to result in an ambitious, yet achievable program that would allow manufacturers to meet standards through a mix of different technologies at reasonable cost. The Phase 2 standards would maintain the underlying regulatory structure developed in the Phase 1 program, such as the general categorization of MDVs and HDVs and the separate standards for vehicles and engines. However, the Phase 2 program would build on and advance Phase 1 in a number of important ways including: Basing standards not only on currently available technologies but also on utilization of technologies now under development or not yet widely deployed while providing significant lead time to assure adequate time to develop, test, and phase in these controls; developing standards for trailers; further encouraging innovation and providing flexibility; including vehicles produced by small business manufacturers; incorporating enhanced test procedures that (among other things) allow individual drivetrain and powertrain performance to be reflected in the vehicle certification process; and using an expanded and improved compliance simulation model.

• Strengthening standards to account for ongoing technological advancements. Relative to the baseline as of the end of Phase 1, the proposed standards (labeled Alternative 3 or the “preferred alternative” throughout this proposal) would achieve vehicle fuel savings of up to 8 percent and 24 percent, depending on the vehicle category. While costs are higher than for Phase 1, benefits greatly exceed costs, and payback periods are short, meaning that consumers will see substantial net savings over the vehicle lifetime. Payback is estimated at about two years for tractors and trailers, about five years for vocational vehicles, and about three years for heavy-duty pickups and vans. The agencies are further proposing to phase in these MY 2027 standards with interim standards for model years 2021 and 2024 (and for certain types of trailers, EPA is proposing model year 2018 phase-in standards as well).

In addition to the proposed standards, the agencies are considering another alternative (Alternative 4), which would achieve the same performance as the proposed standards 2-3 years earlier, leading to overall reductions in fuel use and greenhouse gas emissions. The agencies believe Alternative 4 has the potential to be the maximum feasible and appropriate alternative; however, based on the evidence currently before us, EPA and NHTSA have outstanding questions regarding relative risks and benefits of Alternative 4 due to the timeframe envisioned by that alternative. The agencies are proposing Alternative 3 based on their analyses and projections, and taking into account the agencies' respective statutory considerations. The comments that the agencies receive on this proposal will be instrumental in helping us determine standards that are appropriate (for EPA) and maximum feasible (for NHTSA), given the discretion that both agencies have under our respective statutes. Therefore, the agencies have presented different options and raised specific questions throughout the proposed rule, focusing in particular on better understanding the perspectives on the feasible adoption rates of different technologies, considering associated costs and necessary lead time.

• Setting standards for trailers for the first time. In addition to retaining the vehicle and engine categories covered in the Phase 1 program, which include semi tractors, heavy-duty pickup trucks and work vans, vocational vehicles, and separate standards for heavy-duty engines, the Phase 2 standards propose fuel efficiency and GHG emission standards for trailers used in combination with tractors. Although the agencies are not proposing standards for all trailer types, the majority of new trailers would be covered.

• Encouraging technological innovation while providing flexibility and options for manufacturers. For each category of HDVs, the standards would set performance targets that allow manufacturers to achieve reductions through a mix of different technologies and leave manufacturers free to choose any means of compliance. For tractors and vocational vehicles, enhanced test procedures and an expanded and improved compliance simulation model enable the proposed vehicle standards to encompass more of the complete vehicle and to account for engine, transmission and driveline improvements than the Phase 1 program. With the addition of the powertrain and driveline to the compliance model, representative drive cycles and vehicle baseline configurations become critically important to assure the standards promote technologies that improve real world fuel efficiency and GHG emissions. This proposal updates drive cycles and vehicle configurations to better reflect real world operation. For tractor standards, for example, different combinations of improvements like advanced aerodynamics, engine improvements and waste-heat recovery, automated transmission, and lower rolling resistance tires and automatic tire inflation can be used to meet standards. Additionally, the agencies' analyses indicate that this proposal should have no adverse impact on vehicle or engine safety.

• Providing flexibilities to help minimize effect on small businesses. All small businesses are exempt from the Phase 1 standards. The agencies are proposing to regulate small business entities under Phase 2 (notably certain trailer manufacturers), but have conducted extensive proceedings pursuant to Section 609 of the Regulatory Flexibility Act, and otherwise have engaged in extensive consultation with stakeholders, and developed a proposed approach to provide targeted flexibilities geared toward helping small businesses comply with the Phase 2 standards. Specifically, the agencies are proposing to delay all new requirements by one year and simplify certification requirements for small businesses, and are further proposing additional specific flexibilities adapted to particular types of trailers.

Summary of the Proposed Phase 2 Medium- and Heavy-Duty Vehicle Rule Impacts to Fuel Consumption, GHG Emissions, Benefits and Costs Over the Lifetime of Model Years 2018-2029, Based on Analysis Method A

Fuel Reductions (billion gallons)

72-77

GHG Reductions (MMT, CO

eq)

974-1034

Pre-Tax Fuel Savings ($billion)

165-175

89-94

Discounted Technology Costs ($billion)

25-25.4

16.8 -17.1

Value of reduced emissions ($billion)

70.1-73.7

52.9-55.6

Total Costs ($billion)

30.5-31.1

20.0-20.5

Total Benefits ($billion)

261-276

156-165

Net Benefits ($billion)

231-245

136-144

Notes:

For an explanation of analytical Methods A and B, please see Section I.D; for an explanation of the less dynamic baseline, 1a, and more dynamic baseline, 1b, please see Section X.A.1.

Range reflects two reference case assumptions, one that projects very little improvement in new vehicle fuel efficiency absent new standards, and the second that projects more significant improvements in vehicle fuel efficiency absent new standards.

Benefits and net benefits (including those in the 7% discount rate column) use the 3 percent average SCC-CO

value applied only to CO

emissions; GHG reductions include CO

, CH

, N

O and HFC reductions.

Summary of the Proposed Phase 2 Medium- and Heavy-Duty Vehicle Annual Fuel and GHG Reductions, Program Costs, Benefits and Net Benefits in Calendar Years 2035 and 2050, Based on Analysis Method B

2035

2050

Fuel Reductions (Billion Gallons)

9.3

13.4

GHG Reduction (MMT, CO

eq)

127.1

183.4

Vehicle Program Costs (including Maintenance; Billions of 2012$)

−$6.0

−$7.1

Fuel Savings (Pre-Tax; Billions of 2012$)

$37.2

$57.5

Benefits (Billions of 2012$)

$20.5

$32.9

Net Benefits (Billions of 2012$)

$51.7

$83.2

Note:

Benefits and net benefits use the 3 percent average SCC-CO

value applied only to CO

emissions; GHG reductions include CO

, CH

, N

O and HFC reductions; values reflect the preferred alternative relative to the less dynamic baseline (a reference case that projects very little improvement in new vehicle fuel economy absent new standards.

Summary of the Proposed Phase 2 Medium- and Heavy-Duty Vehicle Program Expected Per-Vehicle Fuel Savings, GHG Emission Reductions, and Cost for Key Vehicle Categories, Based on Analysis Method B

MY 2021

MY 2024

MY 2027

Maximum Vehicle Fuel Savings and Tailpipe GHG Reduction (%)

Tractors

Trailers

Vocational Vehicles

Pickups/Vans

2.5

Per Vehicle Cost ($)

(% Increase in Typical Vehicle Price)

Tractors

$6,710 (7%)

$9,940 (10%)

$11,680 (12%)

Trailers

$900 (4%)

$1,010 (4%)

$1,170 (5%)

Vocational Vehicles

$1,150 (2%)

$1,770 (3%)

$3,380 (5%)

Pickups/Vans

$520 (1%)

$950 (2%)

$1,340 (3%)

Notes:

Note that the proposed EPA standards for some categories of box trailers begin in model year 2018; values reflect the preferred alternative relative to the less dynamic baseline (a reference case that projects very little improvement in new vehicle fuel economy absent new standards.

All engine costs are included.

For this table, we use a minimum vehicle price today of $100,000 for tractors, $25,000 for trailers, $70,000 for vocational vehicles and $40,000 for HD pickups/vans.

Payback Periods for MY2027 Vehicles Under the Proposed Standards, Based on Analysis Method B

[Payback occurs in the year shown; using 7% discounting]

Proposed standards

Tractors/Trailers

2nd

Vocational Vehicles

6th

Pickups/Vans

3rd

(4) Issues Addressed in This Proposed Rule

This proposed rule contains extensive discussion of the background, elements, and implications of the proposed Phase 2 program. Section I includes information on the MDV and HDV industry, related regulatory and non-regulatory programs, summaries of Phase 1 and Phase 2 programs, costs and benefits of the proposed standards, and relevant statutory authority for EPA and NHTSA. Section II discusses vehicle simulation, engine standards, and test procedures. Sections III, IV, V, and VI detail the proposed standards for combination tractors, trailers, vocational vehicles, and heavy-duty pickup trucks and vans. Sections VII and VIII discuss aggregate GHG impacts, fuel consumption impacts, climate impacts, and impacts on non-GHG emissions. Section IX evaluates the economic impacts of the proposed standards. Sections X, XI, and XII present the alternatives analyses, consideration of natural gas vehicles, and the agencies' initial response to recommendations from the Academy of Sciences. Finally, Sections XIII and XIV discuss the changes that the proposed Phase 2 rules would have on Phase 1 standards and other regulatory provisions. In addition to this preamble, the agencies have also prepared a joint Draft Regulatory Impact Analysis (DRIA) which is available on our respective Web sites and in the public docket for this rulemaking which provides additional data, analysis and discussion of the proposed standards and the alternatives analyzed by the agencies. We request comment on all aspects of this proposed rulemaking, including the DRIA.

Table of Contents

A. Does this action apply to me?

B. Public Participation

C. Did EPA conduct a peer review before issuing this notice?

D. Executive Summary

I. Overview

A. Background

B. Summary of Phase 1 Program

C. Summary of the Proposed Phase 2 Standards and Requirements

D. Summary of the Costs and Benefits of the Proposed Rule

E. EPA and NHTSA Statutory Authorities

F. Other Issues

II. Vehicle Simulation, Engine Standards and Test Procedures

A. Introduction and Summary of Phase 1 and Phase 2 Regulatory Structures

B. Phase 2 Proposed Regulatory Structure

C. Proposed Vehicle Simulation Model—Phase 2 GEM

D. Proposed Engine Test Procedures and Engine Standards

III. Class 7 and 8 Combination Tractors

A. Summary of the Phase 1 Tractor Program

B. Overview of the Proposed Phase 2 Tractor Program

C. Proposed Phase 2 Tractor Standards

D. Feasibility of the Proposed Tractor Standards

E. Proposed Compliance Provisions for Tractors

F. Flexibility Provisions

IV. Trailers

A. Summary of Trailer Consideration in Phase 1

B. The Trailer Industry

C. Proposed Phase 2 Trailer Standards

D. Feasibility of the Proposed Trailer Standards

E. Alternative Standards and Feasibility Considered

F. Trailer Standards: Compliance and Flexibilities

V. Class 2b-8 Vocational Vehicles

A. Summary of Phase 1 Vocational Vehicle Standards

B. Proposed Phase 2 Standards for Vocational Vehicles

C. Feasibility of the Proposed Vocational Vehicle Standards

D. Alternative Vocational Vehicle Standards Considered

E. Compliance Provisions for Vocational Vehicles

VI. Heavy-Duty Pickups and Vans

A. Introduction and Summary of Phase 1 HD Pickup and Van Standards

B. Proposed HD Pickup and Van Standards

C. Feasibility of Pickup and Van Standards

D. DOT CAFE Model Analysis of the Regulatory Alternatives for HD Pickups and Vans

E. Compliance and Flexibility for HD Pickup and Van Standards

VII. Aggregate GHG, Fuel Consumption, and Climate Impacts

A. What methodologies did the agencies use to project GHG emissions and fuel consumption impacts?

B. Analysis of Fuel Consumption and GHG Emissions Impacts Resulting From Proposed Standards and Alternative 4

C. What are the projected reductions in fuel consumption and GHG emissions?

VIII. How will this proposed action impact non-GHG emissions and their associated effects?

A. Emissions Inventory Impacts

B. Health Effects of Non-GHG Pollutants

C. Environmental Effects of Non-GHG Pollutants

D. Air Quality Impacts of Non-GHG Pollutants

IX. Economic and Other Impacts

A. Conceptual Framework

B. Vehicle-Related Costs Associated With the Program

C. Changes in Fuel Consumption and Expenditures

D. Maintenance Expenditures

E. Analysis of the Rebound Effect

F. Impact on Class Shifting, Fleet Turnover, and Sales

G. Monetized GHG Impacts

H. Monetized Non-GHG Health Impacts

I. Energy Security Impacts

J. Other Impacts

K. Summary of Benefits and Costs

L. Employment Impacts

M. Cost of Ownership and Payback Analysis

N. Safety Impacts

X. Analysis of the Alternatives

A. What are the alternatives that the agencies considered?

B. How do these alternatives compare in overall fuel consumption and GHG emissions reductions and in benefits and costs?

XI. Natural Gas Vehicles and Engines

A. Natural Gas Engine and Vehicle Technology

B. GHG Lifecycle Analysis for Natural Gas Vehicles

C. Projected Use of LNG and CNG

D. Natural Gas Emission Control Measures

E. Dimethyl Ether

XII. Agencies' Response to Recommendations From the National Academy of Sciences

A. Overview

B. Major Findings and Recommendations of the NAS Phase 2 First Report

XIII. Amendments to Phase 1 Standards

A. EPA Amendments

B. Other Compliance Provisions for NHTSA

XIV. Other Proposed Regulatory Provisions

A. Proposed Amendments Related to Heavy-Duty Highway Engines and Vehicles

B. Amendments Affecting Gliders and Glider Kits

C. Applying the General Compliance Provisions of 40 CFR Part 1068 to Light-Duty Vehicles, Light-Duty Trucks, Chassis-Certified Class 2B and 3 Heavy-Duty Vehicles and Highway Motorcycles

D. Amendments to General Compliance Provisions in 40 CFR Part 1068

E. Amendments to Light-Duty Greenhouse Gas Program Requirements

F. Amendments to Highway and Nonroad Test Procedures and Certification Requirements

G. Amendments Related to Nonroad Diesel Engines in 40 CFR Part 1039

H. Amendments Related to Marine Diesel Engines in 40 CFR Parts 1042 and 1043

I. Amendments Related to Locomotives in 40 CFR Part 1033

J. Miscellaneous EPA Amendments

K. Amending 49 CFR Parts 512 and 537 To Allow Electronic Submissions and Defining Data Formats for Light-Duty Vehicle Corporate Average Fuel Economy (CAFE) Reports

XV. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

B. National Environmental Policy Act

C. Paperwork Reduction Act

D. Regulatory Flexibility Act

E. Unfunded Mandates Reform Act

F. Executive Order 13132: Federalism

G. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

H. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

I. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

J. National Technology Transfer and Advancement Act and 1 CFR Part 51

K. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

L. Endangered Species Act

XVI. EPA and NHTSA Statutory Authorities

A. EPA

B. NHTSA

C. List of Subjects

I. Overview

A. Background

This background and summary of the proposed Phase 2 GHG emissions and fuel efficiency standards includes an overview of the heavy-duty truck industry and related regulatory and non-regulatory programs, a summary of the Phase 1 GHG emissions and fuel efficiency program, a summary of the proposed Phase 2 standards and requirements, a summary of the costs and benefits of the proposed Phase 2 standards, discussion of EPA and NHTSA statutory authorities, and other issues.

For purposes of this preamble, the terms “heavy-duty” or “HD” are used to apply to all highway vehicles and engines that are not within the range of light-duty passenger cars, light-duty trucks, and medium-duty passenger vehicles (MDPV) covered by separate GHG and Corporate Average Fuel Economy (CAFE) standards.

They do not include motorcycles. Thus, in this rulemaking, unless specified otherwise, the heavy-duty category incorporates all vehicles with a gross vehicle weight rating above 8,500 lbs, and the engines that power them, except for MDPVs.

17 18

2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions and Corporate Average Fuel Economy Standards; Final Rule, 77 FR 62623, October 15, 2012.

The CAA defines heavy-duty as a truck, bus or other motor vehicles with a gross vehicle weight rating exceeding 6,000 lbs (CAA section 202(b)(3)). The term HD as used in this action refers to a subset of these vehicles and engines.

The Energy Independence and Security Act of 2007 requires NHTSA to set standards for commercial medium- and heavy-duty on-highway vehicles, defined as on-highway vehicles with a GVWR of 10,000 lbs or more, and work trucks, defined as vehicles with a GVWR between 8,500 and 10,000 lbs and excluding medium duty passenger vehicles.

Consistent with the President's direction, over the past two years as we have developed this proposal, the agencies have met on an on-going basis with a very large number of diverse stakeholders. This includes meetings, and in many cases site visits, with truck, trailer, and engine manufacturers; technology supplier companies and their trade associations (

e.g.,

transmissions, drive lines, fuel systems, turbochargers, tires, catalysts, and many others); line haul and vocational trucking firms and trucking associations; the trucking industries owner-operator association; truck dealerships and dealers associations; trailer manufacturers and their trade association; non-governmental organizations (NGOs, including environmental NGOs, national security NGOs, and consumer advocacy NGOs); state air quality agencies; manufacturing labor unions; and many other stakeholders. In particular, NHTSA and EPA have consulted on an on-going basis with the California Air Resources Board (CARB) over the past two years as we have developed the Phase 2 proposal. In addition, CARB staff and managers have also participated with EPA and NHTSA in meetings with

many external stakeholders, in particular with vehicle OEMs and technology suppliers.

Vehicle chassis manufacturers are known in this industry as original equipment manufacturers or OEMs.

NHTSA and EPA staff also participated in a large number of technical and policy conferences over the past two years related to the technological, economic, and environmental aspects of the heavy-duty trucking industry. The agencies also met with regulatory counterparts from several other nations who either have already or are considering establishing fuel consumption or GHG requirements, including outreach with representatives from the governments of Canada, the European Commission, Japan, and China.

These comprehensive outreach actions by the agencies provided us with information to assist in our identification of potential technologies that can be used to reduce heavy-duty GHG emissions and improve fuel efficiency. The outreach has also helped the agencies to identify and understand the opportunities and challenges involved with the proposed standards for the heavy-duty trucks, trailers, and engines detailed in this preamble, including time needed for implementation of various technologies and potential costs and fuel savings. The scope of this outreach effort to gather input for the proposal included well over 200 meetings with stakeholders. These meetings and conferences have been invaluable to the agencies. We believe they have enabled us to develop this proposal in such a way as to appropriately balance all of the potential impacts, to minimize the possibility of unintended consequences, and to ensure that we are requesting comment on a wide range of issues that can inform the final rule.

(1) Brief Overview of the Heavy-Duty Truck Industry

The heavy-duty sector is diverse in several respects, including the types of manufacturing companies involved, the range of sizes of trucks and engines they produce, the types of work for which the trucks are designed, and the regulatory history of different subcategories of vehicles and engines. The current heavy-duty fleet encompasses vehicles from the “18-wheeler” combination tractors one sees on the highway to the largest pickup trucks and vans, as well as vocational vehicles covering a range between these extremes. Together, the HD sector spans a wide range of vehicles with often specialized form and function. A primary indicator of the diversity among heavy-duty trucks is the range of load-carrying capability across the industry. The heavy-duty truck sector is often subdivided by vehicle weight classifications, as defined by the vehicle's gross vehicle weight rating (GVWR), which is a measure of the combined curb (empty) weight and cargo carrying capacity of the truck.

Table I-1 below outlines the vehicle weight classifications commonly used for many years for a variety of purposes by businesses and by several Federal agencies, including the Department of Transportation, the Environmental Protection Agency, the Department of Commerce, and the Internal Revenue Service.

GVWR describes the maximum load that can be carried by a vehicle, including the weight of the vehicle itself. Heavy-duty vehicles (including those designed for primary purposes other than towing) also have a gross combined weight rating (GCWR), which describes the maximum load that the vehicle can haul, including the weight of a loaded trailer and the vehicle itself.

Table I-1—Vehicle Weight Classification

Class

GVWR (lb)

8,501-10,000

10,001-14,000

14,001-16,000

16,001-19,500

19,501-26,000

26,001-33,000

>33,000

In the framework of these vehicle weight classifications, the heavy-duty truck sector refers to “Class 2b” through “Class 8” vehicles and the engines that power those vehicles.

Class 2b vehicles manufactured as passenger vehicles (Medium Duty Passenger Vehicles, MDPVs) are covered by the light-duty GHG and fuel economy standards and therefore are not addressed in this rulemaking.

Unlike light-duty vehicles, which are primarily used for transporting passengers for personal travel, heavy-duty vehicles fill much more diverse operator needs. Heavy-duty pickup trucks and vans (Classes 2b and 3) are used chiefly as work trucks and vans, and as shuttle vans, as well as for personal transportation, with an average annual mileage in the range of 15,000 miles. The rest of the heavy-duty sector is used for carrying cargo and/or performing specialized tasks. “Vocational” vehicles, which may span Classes 2b through 8, vary widely in size, including smaller and larger van trucks, utility “bucket” trucks, tank trucks, refuse trucks, urban and over-the-road buses, fire trucks, flat-bed trucks, and dump trucks, among others. The annual mileage of these vehicles is as varied as their uses, but for the most part tends to fall in between heavy-duty pickups/vans and the large combination tractors, typically from 15,000 to 150,000 miles per year.

Class 7 and 8 combination tractor-trailers—some equipped with sleeper cabs and some not—are primarily used for freight transportation. They are sold as tractors and operate with one or more trailers that can carry up to 50,000 lbs or more of payload, consuming significant quantities of fuel and producing significant amounts of GHG emissions. Together, Class 7 and 8 tractors and trailers account for approximately two-thirds of the heavy-duty sector's total CO

emissions and fuel consumption. Trailer designs vary significantly, reflecting the wide variety of cargo types. However, the most common types of trailers are box vans (dry and refrigerated), which are a focus of this Phase 2 rulemaking. The tractor-trailers used in combination applications can and frequently do travel more than 150,000 miles per year and can operate for 20-30 years.

EPA and NHTSA have designed our respective proposed standards in careful consideration of the diversity and complexity of the heavy-duty truck industry, as discussed in Section I.B.

(2) Related Regulatory and Non-Regulatory Programs

(a) History of EPA's Heavy-Duty Regulatory Program and Impacts of Greenhouse Gases on Climate Change

This subsection provides an overview of the history of EPA's heavy-duty regulatory program and impacts of greenhouse gases on climate change.

(i) History of EPA's Heavy-Duty Regulatory Program

Since the 1980s, EPA has acted several times to address tailpipe emissions of criteria pollutants and air toxics from heavy-duty vehicles and engines. During the last two decades these programs have primarily

addressed emissions of particulate matter (PM) and the primary ozone precursors, hydrocarbons (HC) and oxides of nitrogen (NO

). These programs, which have successfully achieved significant and cost-effective reductions in emissions and associated health and welfare benefits to the nation, were an important basis of the Phase 1 program. See

e.g.

66 FR 5002, 5008, and 5011-5012 (January 18, 2001) (detailing substantial public health benefits of controls of criteria pollutants from heavy-duty diesel engines, including bringing areas into attainment with primary (public health) PM NAAQS, or contributing substantially to such attainment);

National Petrochemical Refiners Association

EPA,

287 F.3d 1130, 1134 (D.C. Cir. 2002) (referring to the “dramatic reductions” in criteria pollutant emissions resulting from those on-highway heavy-duty engine standards, and upholding all of the standards).

As required by the Clean Air Act (CAA), the emission standards implemented by these programs include standards that apply at the time that the vehicle or engine is sold and continue to apply in actual use. EPA's overall program goal has always been to achieve emissions reductions from the complete vehicles that operate on our roads. The agency has often accomplished this goal for many heavy-duty truck categories by regulating heavy-duty engine emissions. A key part of this success has been the development over many years of a well-established, representative, and robust set of engine test procedures that industry and EPA now use routinely to measure emissions and determine compliance with emission standards. These test procedures in turn serve the overall compliance program that EPA implements to help ensure that emissions reductions are being achieved. By isolating the engine from the many variables involved when the engine is installed and operated in a HD vehicle, EPA has been able to accurately address the contribution of the engine alone to overall emissions.

(ii) Impacts of Greenhouse Gases on Climate Change

In 2009, the EPA Administrator issued the document known as the Endangerment Finding under CAA Section 202(a)(1).

In the Endangerment Finding, which focused on public health and public welfare impacts within the United States, the Administrator found that elevated concentrations of GHG emissions in the atmosphere may reasonably be anticipated to endanger public health and welfare of current and future generations. See also

Coalition for Responsible Regulation

EPA,

684 F.3d 102, 117-123 (D.C. Cir. 2012) (upholding the endangerment finding in all respects). The following sections summarize the key information included in the Endangerment Finding.

“Endangerment and Cause or Contribute Findings for Greenhouse Gases Under Section 202(a) of the Clean Air Act,”

74 FR 66496

(December 15, 2009) (“Endangerment Finding”).

Climate change caused by human emissions of GHGs threatens public health in multiple ways. By raising average temperatures, climate change increases the likelihood of heat waves, which are associated with increased deaths and illnesses. While climate change also increases the likelihood of reductions in cold-related mortality, evidence indicates that the increases in heat mortality will be larger than the decreases in cold mortality in the United States. Compared to a future without climate change, climate change is expected to increase ozone pollution over broad areas of the U.S., including in the largest metropolitan areas with the worst ozone problems, and thereby increase the risk of morbidity and mortality. Other public health threats also stem from projected increases in intensity or frequency of extreme weather associated with climate change, such as increased hurricane intensity, increased frequency of intense storms and heavy precipitation. Increased coastal storms and storm surges due to rising sea levels are expected to cause increased drownings and other adverse health impacts. Children, the elderly, and the poor are among the most vulnerable to these climate-related health effects. See also 79 FR 75242 (December 17, 2014) (climate change, and temperature increases in particular, likely to increase O3 (Ozone) pollution “over broad areas of the U.S., including the largest metropolitan areas with the worst O3 problems, increas[ing] the risk of morbidity and mortality”).

Climate change caused by human emissions of GHGs also threatens public welfare in multiple ways. Climate changes are expected to place large areas of the country at serious risk of reduced water supplies, increased water pollution, and increased occurrence of extreme events such as floods and droughts. Coastal areas are expected to face increased risks from storm and flooding damage to property, as well as adverse impacts from rising sea level, such as land loss due to inundation, erosion, wetland submergence and habitat loss. Climate change is expected to result in an increase in peak electricity demand, and extreme weather from climate change threatens energy, transportation, and water resource infrastructure. Climate change may exacerbate ongoing environmental pressures in certain settlements, particularly in Alaskan indigenous communities. Climate change also is very likely to fundamentally rearrange U.S. ecosystems over the 21st century. Though some benefits may balance adverse effects on agriculture and forestry in the next few decades, the body of evidence points towards increasing risks of net adverse impacts on U.S. food production, agriculture and forest productivity as temperature continues to rise. These impacts are global and may exacerbate problems outside the U.S. that raise humanitarian, trade, and national security issues for the U.S. See also 79 FR 75382 (December 17, 2014) (welfare effects of O3 increases due to climate change, with emphasis on increased wildfires).

As outlined in Section VIII.A. of the 2009 Endangerment Finding, EPA's approach to providing the technical and scientific information to inform the Administrator's judgment regarding the question of whether GHGs endanger public health and welfare was to rely primarily upon the recent, major assessments by the U.S. Global Change Research Program (USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the National Research Council (NRC) of the National Academies. These assessments addressed the scientific issues that EPA was required to examine, were comprehensive in their coverage of the GHG and climate change issues, and underwent rigorous and exacting peer review by the expert community, as well as rigorous levels of U.S. government review. Since the administrative record concerning the Endangerment Finding closed following EPA's 2010 Reconsideration Denial, a number of such assessments have been released. These assessments include the IPCC's 2012 “Special Report on Managing the Risks of Extreme Events and Disasters to Advance Climate Change Adaptation” (SREX) and the 2013-2014 Fifth Assessment Report (AR5), the USGCRP's 2014 “Climate Change Impacts in the United States” (Climate Change Impacts), and the NRC's 2010 “Ocean Acidification: A National Strategy to Meet the Challenges of a Changing Ocean” (Ocean Acidification), 2011 “Report on Climate Stabilization Targets: Emissions, Concentrations, and Impacts over Decades to Millennia” (Climate Stabilization Targets), 2011 “National Security Implications for U.S. Naval

Forces” (National Security Implications), 2011 “Understanding Earth's Deep Past: Lessons for Our Climate Future” (Understanding Earth's Deep Past), 2012 “Sea Level Rise for the Coasts of California, Oregon, and Washington: Past, Present, and Future”, 2012 “Climate and Social Stress: Implications for Security Analysis” (Climate and Social Stress), and 2013 “Abrupt Impacts of Climate Change” (Abrupt Impacts) assessments.

EPA has reviewed these new assessments and finds that the improved understanding of the climate system they present strengthens the case that GHG emissions endanger public health and welfare.

In addition, these assessments highlight the urgency of the situation as the concentration of CO

in the atmosphere continues to rise. Absent a reduction in emissions, a recent National Research Council of the National Academies assessment projected that concentrations by the end of the century would increase to levels that the Earth has not experienced for millions of years.

In fact, that assessment stated that “the magnitude and rate of the present greenhouse gas increase place the climate system in what could be one of the most severe increases in radiative forcing of the global climate system in Earth history.”

What this means, as stated in another NRC assessment, is that:

National Research Council, Understanding Earth's Deep Past, p. 1

Id., p.138.

Emissions of carbon dioxide from the burning of fossil fuels have ushered in a new epoch where human activities will largely determine the evolution of Earth's climate. Because carbon dioxide in the atmosphere is long lived, it can effectively lock Earth and future generations into a range of impacts, some of which could become very severe. Therefore, emission reductions choices made today matter in determining impacts experienced not just over the next few decades, but in the coming centuries and millennia.

National Research Council, Climate Stabilization Targets, p. 3.

Moreover, due to the time-lags inherent in the Earth's climate, the Climate Stabilization Targets assessment notes that the full warming from any given concentration of CO

reached will not be realized for several centuries.

The recently released USGCRP “National Climate Assessment”

emphasizes that climate change is already happening now and it is happening in the United States. The assessment documents the increases in some extreme weather and climate events in recent decades, the damage and disruption to infrastructure and agriculture, and projects continued increases in impacts across a wide range of peoples, sectors, and ecosystems.

U.S. Global Change Research Program, Climate Change Impacts in the United States: The Third National Climate Assessment, May 2014 Available at

http://nca2014.globalchange.gov/

These assessments underscore the urgency of reducing emissions now: Today's emissions will otherwise lead to raised atmospheric concentrations for thousands of years, and raised Earth system temperatures for even longer. Emission reductions today will benefit the public health and public welfare of current and future generations.

Finally, it should be noted that the concentration of carbon dioxide in the atmosphere continues to rise dramatically. In 2009, the year of the Endangerment Finding, the average concentration of carbon dioxide as measured on top of Mauna Loa was 387 parts per million.

The average concentration in 2013 was 396 parts per million. And the monthly concentration in April of 2014 was 401 parts per million, the first time a monthly average has exceeded 400 parts per million since record keeping began at Mauna Loa in 1958, and for at least the past 800,000 years according to ice core records.

ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt

http://www.esrl.noaa.gov/gmd/ccgg/trends/

(b) The NHTSA and EPA Light-Duty National GHG and Fuel Economy Program

On May 7, 2010, EPA and NHTSA finalized the first-ever National Program for light-duty cars and trucks, which set GHG emissions and fuel economy standards for model years 2012-2016 (see 75 FR 25324). More recently, the agencies adopted even stricter standards for model years 2017 and later (77 FR 62624, October 15, 2012). The agencies have used the light-duty National Program as a model for the HD National Program in several respects. This is most apparent in the case of heavy-duty pickups and vans, which are similar to the light-duty trucks addressed in the light-duty National Program both technologically as well as in terms of how they are manufactured (

i.e.,

the same company often makes both the vehicle and the engine, and several light-duty manufacturers also manufacture HD pickups and vans).

For HD pickups and vans, there are close parallels to the light-duty program in how the agencies have developed our respective heavy-duty standards and compliance structures. However, HD pickups and vans are true work vehicles that are designed for much higher towing and payload capabilities than are light-duty pickups and vans. The technologies applied to light-duty trucks are not all applicable to heavy-duty pickups and vans at the same adoption rates, and the technologies often produce a lower percent reduction in CO

emissions and fuel consumption when used in heavy-duty vehicles. Another difference between the light-duty and the heavy-duty standards is that each agency adopts heavy-duty standards based on attributes other than vehicle footprint, as discussed below.

This is more broadly true for heavy-duty pickup trucks than vans because every manufacturer of heavy-duty pickup trucks also makes light-duty pickup trucks, while only some heavy-duty van manufacturers also make light-duty vans.

Due to the diversity of the remaining HD vehicles, there are fewer parallels with the structure of the light-duty program. However, the agencies have maintained the same collaboration and coordination that characterized the development of the light-duty program throughout the Phase 1 rulemaking and the continued efforts for Phase 2. Most notably, as with the light-duty program, manufacturers would continue to be able to design and build vehicles to meet a closely coordinated, harmonized national program, and to avoid unnecessarily duplicative testing and compliance burdens. In addition, the averaging, banking, and trading provisions in the HD program, although structurally different from those of the light-duty program, serve the same purpose, which is to allow manufacturers to achieve large reductions in fuel consumption and emissions while providing a broad mix of products to their customers. The agencies have also worked closely with CARB to provide harmonized national standards.

EPA's voluntary SmartWay Transport Partnership program encourages businesses to take actions that reduce fuel consumption and CO

emissions while cutting costs by working with the shipping, logistics, and carrier communities to identify low carbon strategies and technologies across their transportation supply chains. SmartWay provides technical information, benchmarking and tracking tools, market incentives, and partner recognition to facilitate and accelerate the adoption of these strategies. Through the SmartWay program and its related technology assessment center, EPA has worked closely with truck and trailer manufacturers and truck fleets over the last ten years to develop test

procedures to evaluate vehicle and component performance in reducing fuel consumption and has conducted testing and has established test programs to verify technologies that can achieve these reductions. SmartWay partners have demonstrated these new and emerging technologies in their business operations, adding to the body of technical data and information that EPA can disseminate to industry, researchers and other stakeholders. Over the last several years, EPA has developed hands-on experience testing the largest heavy-duty trucks and trailers and evaluating improvements in tire and vehicle aerodynamic performance. In developing the Phase 1 program, the agencies drew from this testing and from the SmartWay experience. In the same way, the agencies benefitted from SmartWay in developing the proposed Phase 2 trailer program.

(d) The State of California

California has established ambitious goals for reducing GHG emissions from heavy-duty vehicles and engines as part of an overall plan to reduce GHG emissions from the transportation sector in California.

Heavy-duty vehicles are responsible for one-fifth of the total GHG emissions from transportation sources in California. In the past several years the California Air Resources Board (CARB) has taken a number of actions to reduce GHG emissions from heavy-duty vehicles and engines. For example, in 2008, the CARB adopted regulations to reduce GHG emissions from heavy-duty tractors that pull box-type trailers through improvements in tractor and trailer aerodynamics and the use of low rolling resistance tires.

The tractors and trailers subject to the CARB regulation are required to use SmartWay certified tractors and trailers, or retrofit their existing fleet with SmartWay verified technologies, consistent with California's state authority to regulate both new and in-use vehicles. Recently, in December 2013, CARB adopted regulations that establish its own parallel Phase 1 program with standards consistent with EPA Phase 1 standards. On December 5, 2014, California's Office of Administrative Law approved CARB's adoption of the Phase 1 standards, with an effective date of December 5, 2014.

Complementary to its regulatory efforts, CARB and other California agencies are investing significant public capital through various incentive programs to accelerate fleet turnover and stimulate technology innovation within the heavy-duty vehicle market (

e.g.,

Air Quality Improvement, Carl Moyer, Loan Incentives, Lower-Emission School Bus and Goods Movement Emission Reduction Programs).

And, recently, California Governor Jerry Brown established a target of up to 50 percent petroleum reduction by 2030.

See

http://www.arb.ca.gov/cc/cc.htm

for details on the California Air Resources Board climate change actions, including a discussion of Assembly Bill 32, and the Climate Change Scoping Plan developed by CARB, which includes details regarding CARB's future goals for reducing GHG emissions from heavy-duty vehicles.

See

http://www.arb.ca.gov/msprog/truckstop/trailers/trailers.htm

for a summary of CARB's “Tractor-Trailer Greenhouse Gas Regulation”.

See

http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm

for details regarding CARB's adoption of the Phase 1 standards.

See

http://www.arb.ca.gov/ba/fininfo.htm

for detailed descriptions of CARB's mobile source incentive programs. Note that EPA works to support CARB's heavy-duty incentive programs through the West Coast Collaborative (

http://westcoastcollaborative.org/

) and the Clean Air Technology Initiative (

http://www.epa.gov/region09/cleantech/

In addition to California's efforts to reduce GHG emissions that contribute to climate change, California also faces unique air quality challenges as compared to many other regions of the United States. Many areas of the state are classified as non-attainment for both the ozone and particulate matter National Ambient Air Quality Standards (NAAQS) with California having the nation's only two “Extreme” ozone non-attainment airsheds (the San Joaquin Valley and South Coast Air Basins).

By 2016, California must submit to EPA its Clean Air Act State Implementation Plans (SIPs) that demonstrate how the 2008 ozone and 2006 PM

2.5

NAAQS will be met by Clean Air Act deadlines. Extreme ozone areas must attain the 2008 ozone NAAQS by no later than 2032 and PM

2.5

moderate areas must attain the 2006 PM

2.5

standard by 2021 or, if reclassified to serious, by 2025.

See

http://www.epa.gov/airquality/greenbk/index.html

for more information on EPA's nonattainment designations.

Heavy-duty vehicles are responsible today for one-third of the state's oxides of nitrogen (NO

) emissions. California has estimated that the state's South Coast Air Basin will need nearly a 90 percent reduction in heavy-duty vehicle NO

emissions by 2032 from 2010 levels to attain the 2008 NAAQS for ozone. Additionally, on November 25, 2014, EPA issued a proposal to strengthen the ozone NAAQS. If a change to the ozone NAAQS is finalized, California and other areas of the country will need to identify and implement measures to reduce NO

as needed to complement Federal emission reduction measures. While this section is focused on California's regulatory programs and air quality needs, EPA recognizes that other states and local areas are concerned about the challenges of reducing NO

and attaining, as well as maintaining, the ozone NAAQS (further discussed in Section VIII.D.1 below).

In order to encourage the use of lower NO

emitting new heavy-duty vehicles in California, in 2013 CARB adopted a voluntary low NO

emission standard for heavy-duty engines.

In addition, in 2013 CARB awarded a major new research contract to Southwest Research Institute to investigate advanced technologies that could reduce heavy-duty vehicle NO

emissions well below the current EPA and CARB standards.

See

http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm

for a description of the CARB optional reduced NO

emission standards for on-road heavy-duty engines.

California has long had the unique ability among states to adopt its own separate new motor vehicle standards per Section 209 of the Clean Air Act (CAA). Although section 209(a) of the CAA expressly preempts states from adopting and enforcing standards relating to the control of emissions from new motor vehicles or new motor vehicle engines (such as state controls for new heavy-duty engines and vehicles) CAA section 209(b) directs EPA to waive this preemption under certain conditions. Under the waiver process set out in CAA Section 209(b), EPA has granted CARB a waiver for its initial heavy-duty vehicle GHG regulation.

Even with California's ability under the CAA to establish its own emission standards, EPA and CARB have worked closely together over the past several decades to largely harmonize new vehicle criteria pollutant standard programs for heavy-duty engines and heavy-duty vehicles. In the past several years EPA and NHTSA also consulted with CARB in the development of the Federal light-duty vehicle GHG and CAFE rulemakings for the 2012-2016 and 2017-2025 model years.

See

EPA's waiver of CARB's heavy-duty tractor-trailer greenhouse gas regulation applicable to new 2011 through 2013 model year Class 8 tractors equipped with integrated sleeper berths (sleeper-cab tractors) and 2011 and subsequent model year dry-can and refrigerated-van trailers that are pulled by such tractors on California highways at 79 FR 46256 (August 7, 2014).

As discussed above, California operates under state authority to establish its own new heavy-duty vehicle and engine emission standards, including standards for CO

, methane, N

O, and hydrofluorocarbons. EPA recognizes this independent authority, and we also recognize the potential

benefits for the regulated industry if the Federal Phase 2 standards could result in a single, National Program that would meet the NHTSA and EPA's statutory requirements to set appropriate and maximum feasible standards, and also be equivalent to potential future new heavy-duty vehicle and engine GHG standards established by CARB (addressing the same model years as addressed by the final Federal Phase 2 program and requiring the same technologies).

Similarly, CARB has expressed support in the past for a Federal heavy-duty Phase 2 program that would produce significant GHG reductions both at the Federal level and in California that could enable CARB to adopt the same standards at the state level. This is similar to CARB's approach for the Federal heavy-duty Phase 1 program, and with past EPA criteria pollutant standards for heavy-duty vehicles and engines. In order to further the opportunity for maintaining coordinated Federal and California standards in the Phase 2 timeframe (as well as to benefit from different technical expertise and perspective), NHTSA and EPA have consulted on an on-going basis with CARB over the past two years as we have developed the Phase 2 proposal. The agencies' technical staff have shared information on technology cost, technology effectiveness, and feasibility with the CARB staff. We have also received information from CARB on these same topics. EPA and NHTSA have also shared preliminary results from several of our modeling exercises with CARB as we examined different potential levels of stringency for the Phase 2 program. In addition, CARB staff and managers have also participated with EPA and NHTSA in meetings with many external stakeholders, in particular with vehicle OEMs and technology suppliers.

In addition to information on GHG emissions, CARB has also kept EPA and NHTSA informed of the state's need to consider opportunities for additional NO

emission reductions from heavy-duty vehicles. CARB has asked the agencies to consider opportunities in the Heavy-Duty Phase 2 rulemaking to encourage or incentivize further NO

emission reductions, in addition to the petroleum and GHG reductions which would come from the Phase 2 standards. When combined with the Phase 1 standards, the technologies the agencies are projecting to be used to meet the proposed GHG emission and fuel efficiency standards would be expected to reduce NO

emissions by over 450,000 tons in 2050 (see Section VIII).

EPA and NHTSA believe that through this information sharing and dialog we will enhance the potential for the Phase 2 program to result in a National Program that can be adopted not only by the Federal agencies, but also by the State of California, given the strong interest from the regulated industry for a harmonized State and Federal program.

The agencies will continue to seek input from CARB, and from all stakeholders, throughout this rulemaking.

(e) Environment Canada

On March 13, 2013, Environment Canada (EPA's Canadian counterpart) published its own regulations to control GHG emissions from heavy-duty vehicles and engines, beginning with MY 2014. These regulations are closely aligned with EPA's Phase 1 program to achieve a common set of North American standards. Environment Canada has expressed its intention to amend these regulations to further limit emissions of greenhouse gases from new on-road heavy-duty vehicles and their engines for post-2018 MYs. As with the development of the current regulations, Environment Canada is committed to continuing to work closely with EPA to maintain a common Canada-United States approach to regulating GHG emissions for post-2018 MY vehicles and engines. This approach will build on the long history of regulatory alignment between the two countries on vehicle emissions pursuant to the Canada-United States Air Quality Agreement.

Environment Canada has also been of great assistance during the development of this Phase 2 proposal. In particular, Environment Canada supported aerodynamic testing, and conducted chassis dynamometer emissions testing.

http://www.ijc.org/en_/Air_Quality__Agreement.

(f) Recommendations of the National Academy of Sciences

In April 2010 as mandated by Congress in the Energy Independence and Security Act of 2007 (EISA), the National Research Council (NRC) under the National Academy of Sciences (NAS) issued a report to NHTSA and to Congress evaluating medium- and heavy-duty truck fuel efficiency improvement opportunities, titled “Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-duty Vehicles.” That NAS report was far reaching in its review of the technologies that were available and that might become available in the future to reduce fuel consumption from medium- and heavy-duty vehicles. In presenting the full range of technical opportunities, the report included technologies that may not be available until 2020 or even further into the future. The report provided not only a valuable list of off the shelf technologies from which the agencies drew in developing the Phase 1 program, but also provided useful information the agencies have considered when developing this second phase of regulations.

In April 2014, the NAS issued another report: “Reducing the Fuel Consumption and Greenhouse Gas Emissions of Medium and Heavy-Duty Vehicles, Phase Two, First Report.” This study outlines a number of recommendations to the U.S. Department of Transportation and NHTSA on technical and policy matters to consider when addressing the fuel efficiency of our nation's medium- and heavy-duty vehicles. In particular, this report provided recommendations with respect to:

• The Greenhouse Gas Emission Model (GEM) simulation tool used by the agencies to assess compliance with vehicle standards

• Regulation of trailers

• Natural gas-fueled engines and vehicles

• Data collection on in-use operation

As described in Sections II, IV, and XII, the agencies are proposing to incorporate many of these recommendations into this proposed Phase 2 program, especially those recommendations relating to the GEM simulation tool and to trailers.

B. Summary of Phase 1 Program

(1) EPA Phase 1 GHG Emission Standards and NHTSA Phase 1 Fuel Consumption Standards

The EPA Phase 1 GHG mandatory standards commenced in MY 2014 and include increased stringency for standards applicable to MY 2017 and later MY vehicles and engines. NHTSA's fuel consumption standards are voluntary for MYs 2014 and 2015, due to lead time requirements in EISA, and apply on a mandatory basis thereafter. They also increase in stringency for MY 2017. Both agencies have allowed voluntary early compliance starting in MY 2013 and encouraged manufacturers' participation through credit incentives.

Given the complexity of the heavy-duty industry, the agencies divided the industry into three discrete categories for purposes of setting our respective Phase 1 standards—combination

tractors, heavy-duty pickups and vans, and vocational vehicles—based on the relative degree of homogeneity among trucks within each category. The Phase 1 rule also include separate standards for the engines that power combination tractors and vocational vehicles. For each regulatory category, the agencies adopted related but distinct program approaches reflecting the specific challenges in these segments. In the following paragraphs, we summarize briefly EPA's final GHG emission standards and NHTSA's final fuel consumption standards for the three regulatory categories of heavy-duty vehicles and for the engines powering vocational vehicles and tractors. See Sections III, V, and VI for additional details on the Phase 1 standards. To respect differences in design and typical uses that drive different technology solutions, the agencies segmented each regulatory class into subcategories. The category-specific structure enabled the agencies to set standards that appropriately reflect the technology available for each regulatory subcategory of vehicles and the engines for use in each type of vehicle. The Phase 1 program also provided several flexibilities, as summarized in Section I.B(3).

The agencies are proposing to base the Phase 2 standards on test procedures that differ from those used for Phase 1, including the revised GEM simulation tool. Significant revisions to GEM are discussed in Section II and the draft RIA Chapter 4, and other test procedures are discussed further in the draft RIA Chapter 3. It is important to note that due to these test procedure changes, the Phase 1 standards and the proposed Phase 2 standards are not directly comparable in an absolute sense. In particular, the proposed revisions to the 55 mph and 65 mph highway cruise cycles for tractors and vocational vehicles have the effect of making the cycles more challenging (albeit more representative of actual driving conditions). We are not proposing to apply these revisions to the Phase 1 program because doing so would significantly change the stringency of the Phase 1 standards, for which manufacturers have already developed engineering plans and are now producing products to meet. Moreover, the agencies intend such changes to address a broader range of technologies not part of the projected compliance path for use in Phase 1.

(a) Class 7 and 8 Combination Tractors

Class 7 and 8 combination tractors and their engines contribute the largest portion of the total GHG emissions and fuel consumption of the heavy-duty sector, approximately two-thirds, due to their large payloads, their high annual miles traveled, and their major role in national freight transport. These vehicles consist of a cab and engine (tractor or combination tractor) and a detachable trailer. The primary manufacturers of combination tractors in the United States are Daimler Trucks North America, Navistar, Volvo/Mack, and PACCAR. Each of the tractor manufacturers and Cummins (an independent engine manufacturer) also produce heavy-duty engines used in tractors. The Phase 1 standards require manufacturers to reduce GHG emissions and fuel consumption for these vehicles and engines, which we expect them to do through improvements in aerodynamics and tires, reductions in tractor weight, reduction in idle operation, as well as engine-based efficiency improvements.

We note although the standards' stringency is predicated on use of certain technologies, and the agencies' assessed the cost of the rule based on the cost of use of those technologies, the standards can be met by any means. Put another way, the rules create a performance standard, and do not mandate any particular means of achieving that level of performance.

The Phase 1 tractor standards differ depending on gross vehicle weight rating (GVWR) (

i.e.,

whether the truck is Class 7 or Class 8), the height of the roof of the cab, and whether it is a “day cab” or a “sleeper cab.” The agencies created nine subcategories within the Class 7 and 8 combination tractor category reflecting combinations of these attributes. The agencies set Phase 1 standards for each of these subcategories beginning in MY 2014, with more stringent standards following in MY 2017. The standards represent an overall fuel consumption and CO

emissions reduction up to 23 percent from the tractors and the engines installed in them when compared to a baseline MY 2010 tractor and engine.

For Phase 1, manufacturers demonstrate compliance with the tractor CO

and fuel consumption standards using a vehicle simulation tool described in Section II. The tractor inputs to the simulation tool in Phase 1 are the aerodynamic performance, tire rolling resistance, vehicle speed limiter, automatic engine shutdown, and weight reduction. The agencies have verified, through our own confirmatory testing, that the values inputs into the model by manufacturers are generally correct. Prior to and after adopting the Phase 1 standards, the agencies worked with manufacturers to minimize impacts of this process on their normal business practices.

In addition to the final Phase 1 tractor-based standards for CO

, EPA adopted a separate standard to reduce leakage of hydrofluorocarbon (HFC) refrigerant from cabin air conditioning (A/C) systems from combination tractors, to apply to the tractor manufacturer. This HFC leakage standard is independent of the CO

tractor standard. Manufacturers can choose technologies from a menu of leak-reducing technologies sufficient to comply with the standard, as opposed to using a test to measure performance. Given that HFC leakage does not relate to fuel efficiency, NHTSA did not adopt corresponding HFC standards.

(b) Heavy-Duty Pickup Trucks and Vans (Class 2b and 3)

Heavy-duty vehicles with a GVWR between 8,501 and 10,000 lb are classified as Class 2b motor vehicles. Heavy-duty vehicles with a GVWR between 10,001 and 14,000 lb are classified as Class 3 motor vehicles. Class 2b and Class 3 heavy-duty vehicles (referred to in these rules as “HD pickups and vans”) together emit about 15 percent of today's GHG emissions from the heavy-duty vehicle sector.

EPA MOVES Model,

http://www.epa.gov/otaq/models/moves/index.htm.

The majority of HD pickups and vans are

3/4

-ton and 1-ton pickup trucks, 12- and 15-passenger vans,

and large work vans that are sold by vehicle manufacturers as complete vehicles, with no secondary manufacturer making substantial modifications prior to registration and use. These vehicles can also be sold as cab-complete vehicles (

i.e.,

incomplete vehicles that include complete or nearly complete cabs that are sold to secondary manufacturers). The majority of heavy-duty pickups and vans are produced by companies with major light-duty markets in the United States. Furthermore, the technologies available to reduce fuel consumption and GHG emissions from this segment are similar to the technologies used on light-duty pickup trucks, including both engine efficiency improvements (for gasoline and diesel engines) and vehicle efficiency improvements. For these reasons, EPA and NHTSA concluded that it was appropriate to adopt GHG standards, expressed as grams per mile, and fuel consumption standards, expressed as gallons per 100 miles, for HD pickups and vans based on the whole vehicle (including the engine), consistent with the way these vehicles

have been regulated by EPA for criteria pollutants and also consistent with the way their light-duty counterpart vehicles are regulated by NHTSA and EPA. This complete vehicle approach adopted by both agencies for HD pickups and vans was consistent with the recommendations of the NAS Committee in its 2010 Report.

Note that 12-passenger vans are subject to the light-duty standards as medium-duty passenger vehicles (MDPVs) and are not subject to this proposal.

For the light-duty GHG and fuel economy standards, the agencies based the emissions and fuel economy targets on vehicle footprint (the wheelbase times the average track width). For those standards, passenger cars and light trucks with larger footprints are assigned higher GHG and lower fuel economy target levels reflecting their inherent tendency to consume more fuel and emit more GHGs per mile. For HD pickups and vans, the agencies believe that setting standards based on vehicle attributes is appropriate, but have found that a work-based metric would be a more appropriate attribute than the footprint attribute utilized in the light-duty vehicle rulemaking, given that work-based measures such as towing and payload capacities are critical elements of these vehicles' functionality. EPA and NHTSA therefore adopted standards for HD pickups and vans based on a “work factor” attribute that combines their payload and towing capabilities, with an added adjustment for 4-wheel drive vehicles.

Each manufacturer's fleet average Phase 1 standard is based on production volume-weighting of target standards for all vehicles, which in turn are based on each vehicle's work factor. These target standards are taken from a set of curves (mathematical functions), with separate curves for gasoline and diesel.

However, both gasoline and diesel vehicles in this category are included in a single averaging set. EPA phased in the CO

standards gradually starting in the 2014 MY, at 15-20-40-60-100 percent of the MY 2018 standards stringency level in MYs 2014-2015-2016-2017-2018, respectively. The phase-in takes the form of a set of target curves, with increasing stringency in each MY.

As explained in Section XII, EPA is proposing to recodify the Phase 1 requirements for pickups and vans from 40 CFR 1037.104 into 40 CFR part 86, which is also the regulatory part that applies for light-duty vehicles.

NHTSA allowed manufacturers to select one of two fuel consumption standard alternatives for MYs 2016 and later. The first alternative defined individual gasoline vehicle and diesel vehicle fuel consumption target curves that will not change for MYs 2016-2018, and are equivalent to EPA's 67-67-67-100 percent target curves in MYs 2016-2017-2018-2019, respectively. The second alternative defined target curves that are equivalent to EPA's 40-60-100 percent target curves in MYs 2016-2017-2018, respectively. NHTSA allowed manufacturers to opt voluntarily into the NHTSA HD pickup and van program in MYs 2014 or 2015 at target curves equivalent to EPA's target curves. If a manufacturer chose to opt in for one category, they would be required to opt in for all categories. In other words a manufacturer would be unable to opt in for Class 2b vehicles, but opt out for Class 3 vehicles.

EPA also adopted an alternative phase-in schedule for manufacturers wanting to have stable standards for model years 2016-2018. The standards for heavy-duty pickups and vans, like those for light-duty vehicles, are expressed as set of target standard curves, with increasing stringency in each model year. The final EPA standards for 2018 (including a separate standard to control air conditioning system leakage) represent an average per-vehicle reduction in GHG emissions of 17 percent for diesel vehicles and 12 percent for gasoline vehicles (relative to pre-control baseline vehicles). The NHTSA standard will require these vehicles to achieve up to about 15 percent reduction in fuel consumption and greenhouse gas emissions by MY 2018 (relative to pre-control baseline vehicles). Manufacturers demonstrate compliance based on entire vehicle chassis certification using the same duty cycles used to demonstrate compliance with criteria pollutant standards.

Class 2b-8 vocational vehicles include a wide variety of vehicle types, and serve a vast range of functions. Some examples include service for urban delivery, refuse hauling, utility service, dump, concrete mixing, transit service, shuttle service, school bus, emergency, motor homes, and tow trucks. In Phase 1, we defined Class 2b-8 vocational vehicles as all heavy-duty vehicles that are not included in either the heavy-duty pickup and van category or the Class 7 and 8 tractor category. EPA's and NHTSA's Phase 1 standards for this vocational vehicle category generally apply at the chassis manufacturer level. Class 2b-8 vocational vehicles and their engines emit approximately 20 percent of the GHG emissions and burn approximately 21 percent of the fuel consumed by today's heavy-duty truck sector.

EPA MOVES model,

http://www.epa.gov/otaq/models/moves/index.htm.

The Phase 1 program for vocational vehicles has vehicle standards and separate engine standards, both of which differ based on the weight class of the vehicle into which the engine will be installed. The vehicle weight class groups mirror those used for the engine standards—Classes 2b-5 (light heavy-duty or LHD in EPA regulations), Classes 6 & 7 (medium heavy-duty or MHD in EPA regulations) and Class 8 (heavy heavy-duty or HHD in EPA regulations). Manufacturers demonstrate compliance with the Phase 1 vocational vehicle CO

and fuel consumption standards using a vehicle simulation tool described in Section II. The Phase 1 program for vocational vehicles limited the simulation tool inputs to tire rolling resistance. The model assumes the use of a typical representative, compliant engine in the simulation, resulting in one overall value for CO

emissions and one for fuel consumption.

Engines used in vocational vehicles are subject to separate Phase 1 engine-based standards. Optional certification paths, for EPA and NHTSA, are also provided to enhance the flexibilities for vocational vehicles. Manufacturers producing spark-ignition (or gasoline) cab-complete or incomplete vehicles weighing over 14,000 lbs GVWR and below 26,001 lbs GVWR have the option to certify to the complete vehicle standards for heavy-duty pickup trucks and vans rather than using the separate engine and chassis standards for vocational vehicles.

(d) Engine Standards

The agencies established separate Phase 1 performance standards for the engines manufactured for use in vocational vehicles and Class 7 and 8 tractors.

These engine standards vary depending on engine size linked to intended vehicle service class. EPA's engine-based CO

standards and NHTSA's engine-based fuel consumption standards are being implemented using EPA's existing test procedures and regulatory structure for criteria pollutant emissions from heavy-duty engines.

See 76 FR 57114 explaining why NHTSA's authority under the Energy Independence and Safety Act includes authority to establish separate engine standards.

The agencies also finalized a regulatory alternative whereby a manufacturer, for an interim period of the 2014-2016 MYs, would have the option to comply with a unique standard based on a three percent reduction from an individual engine model's own 2011 MY baseline level.

See 76 FR 57144.

(e) Manufacturers Excluded From the Phase 1 Standards

Phase 1 temporarily deferred greenhouse gas emissions and fuel consumption standards for any manufacturers of heavy-duty engines, manufacturers of combination tractors, and chassis manufacturers for vocational vehicles that meet the “small business” size criteria set by the Small Business Administration (SBA). 13 CFR 121.201 defines a small business by the maximum number of employees; for example, this is currently 1,000 for heavy-duty vehicle manufacturing and 750 for engine manufacturing. In order to utilize this exemption, qualifying small businesses must submit a declaration to the agencies. See Section I.F.(1)(b) for a summary of how Phase 2 would apply for small businesses.

The agencies stated that they would consider appropriate GHG and fuel consumption standards for these entities as part of a future regulatory action. This includes both U.S.-based and foreign small-volume heavy-duty manufacturers.

(2) Costs and Benefits of the Phase 1 Program

Overall, EPA and NHTSA estimated that the Phase 1 HD National Program will cost the affected industry about $8 billion, while saving vehicle owners fuel costs of nearly $50 billion over the lifetimes of MY 2014-2018 vehicles. The agencies also estimated that the combined standards will reduce CO

emissions by about 270 million metric tons and save about 530 million barrels of oil over the life of MY 2014 to 2018 vehicles. The agencies estimated additional monetized benefits from CO

reductions, improved energy security, reduced time spent refueling, as well as possible disbenefits from increased driving accidents, traffic congestion, and noise. When considering all these factors, we estimated that Phase 1 of the HD National Program will yield $49 billion in net benefits to society over the lifetimes of MY 2014-2018 vehicles.

EPA estimated the benefits of reduced ambient concentrations of particulate matter and ozone resulting from the Phase 1 program to range from $1.3 to $4.2 billion in 2030.

Note:

These calendar year benefits do not represent the same time frame as the model year lifetime benefits described above, so they are not additive.

In total, we estimated the combined Phase 1 standards will reduce GHG emissions from the U.S. heavy-duty fleet by approximately 76 million metric tons of CO

-equivalent annually by 2030. In its Environmental Impact Statement for the Phase 1 rule, NHTSA also quantified and/or discussed other potential impacts of the program, such as the health and environmental impacts associated with changes in ambient exposures to toxic air pollutants and the benefits associated with avoided non-CO

GHGs (methane, nitrous oxide, and HFCs).

(3) Phase 1 Program Flexibilities

As noted above, the agencies adopted numerous provisions designed to give manufacturers a degree of flexibility in complying with the Phase 1 standards. These provisions, which are essentially identical in structure and function in NHTSA's and EPA's regulations, enabled the agencies to consider overall standards that are more stringent and that will become effective sooner than we could consider with a more rigid program, one in which all of a manufacturer's similar vehicles or engines would be required to achieve the same emissions or fuel consumption levels, and at the same time.

NHTSA explained that it has greater flexibility in the HD program to include consideration of credits and other flexibilities in determining appropriate and feasible levels of stringency than it does in the light-duty CAFE program.

Cf.

49 U.S.C. 32902(h), which applies to light-duty CAFE but not heavy-duty fuel efficiency under 49 U.S.C. 32902(k).

Phase 1 included four primary types of flexibility: Averaging, banking, and trading (ABT) provisions; early credits; advanced technology credits (including hybrid powertrains); and innovative technology credit provisions. The ABT provisions were patterned on existing EPA and NHTSA ABT programs (including the light-duty GHG and fuel economy standards) and will allow a vehicle manufacturer to reduce CO

emission and fuel consumption levels further than the level of the standard for one or more vehicles to generate ABT credits. The manufacturer can use those credits to offset higher emission or fuel consumption levels in the same averaging set, “bank” the credits for later use, or “trade” the credits to another manufacturer. As also noted above, for HD pickups and vans, we adopted a fleet averaging system very similar to the light-duty GHG and CAFE fleet averaging system. In both programs, manufacturers are allowed to carry-forward deficits for up to three years without penalty.

The agencies provided in the ABT programs flexibility for situations in which a manufacturer is unable to avoid a negative credit balance at the end of the year. In such cases, manufacturers are not considered to be out of compliance unless they are unable to make up the difference in credits by the end of the third subsequent model year.

In total, the Phase 1 program divides the heavy-duty sector into 19 subcategories of vehicles. These subcategories are grouped into 9 averaging sets to provide greater opportunities in leveraging compliance. For tractors and vocational vehicles, the fleet averaging sets are Classes 2b through 5, Classes 6 and 7, and Class 8 weight classes. For engines, the fleet averaging sets are gasoline engines, light heavy-duty diesel engines, medium heavy-duty diesel engines, and heavy heavy-duty diesel engines. Complete HD pickups and vans (both spark-ignition and compression-ignition) are the final fleet averaging set.

As noted above, the agencies included a restriction on averaging, banking, and trading of credits between the various regulatory subcategories by defining three HD vehicle averaging sets: Light heavy-duty (Classes 2b-5); medium heavy-duty (Class 6-7); and heavy heavy-duty (Class 8). This allows the use of credits between vehicles within the same weight class. This means that a Class 8 day cab tractor can exchange credits with a Class 8 high roof sleeper tractor but not with a smaller Class 7 tractor. Also, a Class 8 vocational vehicle can exchange credits with a Class 8 tractor. However, we did not allow trading between engines and chassis. We similarly allowed for trading among engine categories only within an averaging set, of which there are four: Spark-ignition engines, compression-ignition light heavy-duty engines, compression-ignition medium heavy-duty engines, and compression-ignition heavy heavy-duty engines.

In addition to ABT, the other primary flexibility provisions in the Phase 1 program involve opportunities to generate early credits, advanced technology credits (including for use of hybrid powertrains), and innovative technology credits.

For the early credits and advanced technology credits, the agencies adopted a 1.5 × multiplier, meaning that manufacturers would get 1.5 credits for each early credit and each advanced technology credit. In addition, advanced technology credits for Phase 1 can be used anywhere within the heavy-duty sector (including both vehicles and engines). Put another way, as a means of promoting this promising technology,

the Phase 1 rule does not restrict averaging or trading by averaging set in this instance.

Early credits are for engines and vehicles certified before EPA standards became mandatory, advanced technology credits are for hybrids and/or Rankine cycle engines, and innovative technology credits are for other technologies not in the 2010 fleet whose benefits are not reflected using the Phase 1 test procedures.

For other vehicle or engine technologies that can reduce CO

and fuel consumption, but for which there do not yet exist established methods for quantifying reductions, the agencies wanted to encourage the development of such innovative technologies, and therefore adopted special “innovative technology” credits. These innovative technology credits apply to technologies that are shown to produce emission and fuel consumption reductions that are not adequately recognized on the Phase 1 test procedures and that were not yet in widespread use in the heavy-duty sector before MY 2010. Manufacturers need to quantify the reductions in fuel consumption and CO

emissions that the technology is expected to achieve, above and beyond those achieved on the existing test procedures. As with ABT, the use of innovative technology credits is allowed only among vehicles and engines of the same defined averaging set generating the credit, as described above. The credit multiplier likewise does not apply for innovative technology credits.

(4) Implementation of Phase 1

Manufacturers have already begun complying with the Phase 1 standards. In some cases manufacturers voluntarily chose to comply early, before compliance was mandatory. The Phase 1 rule allows manufacturers to generate credits for such early compliance. The market appears to be very accepting of the new technology, and the agencies have seen no evidence of “pre-buy” effects in response to the standards. In fact sales have been higher in recent years than they were before Phase 1 began. Moreover, manufacturers' compliance plans are taking advantage of the Phase 1 flexibilities, and we have yet to see significant non-compliance with the standards.

(5) Litigation on Phase 1 Rule

The D.C. Circuit recently rejected all challenges to the agencies' Phase 1 regulations. The court did not reach the merits of the challenges, holding that none of the petitioners had standing to bring their actions, and that a challenge to NHTSA's denial of a rulemaking petition could only be brought in District Court. See

Delta Construction Co.

EPA,

783 F. 3d 1291 (D.C. Cir. 2015), U.S. App. LEXIS 6780, F.3d (D.C. Cir. April 24, 2015).

C. Summary of the Proposed Phase 2 Standards and Requirements

The agencies are proposing new standards that build on and enhance existing Phase 1 standards, as well as proposing the first ever standards for certain trailers used in combination with heavy-duty tractors. Taken together, the proposed Phase 2 program would comprise a set of largely technology-advancing standards that would achieve greater GHG and fuel consumption savings than the Phase 1 program. As described in more detail in the following sections, the agencies are proposing these standards because, based on the information available at this time, we believe they would best match our respective statutory authorities when considered in the context of available technology, feasible reductions of emissions and fuel consumption, costs, lead time, safety, and other relevant factors. The agencies request comment on all aspects of our feasibility analysis including projections of feasible market adoption rates and technological effectiveness for each technology.

The proposed Phase 2 standards would represent a more technology-forcing

approach than the Phase 1 approach, predicated on use of both off-the-shelf technologies and emerging technologies that are not yet in widespread use. The agencies are proposing standards for MY 2027 that would likely require manufacturers to make extensive use of these technologies. For existing technologies and technologies in the final stages of development, we project that manufacturers would likely apply them to nearly all vehicles, excluding those specific vehicles with applications or uses that would prevent the technology from functioning properly. We also project as one possible compliance pathway that manufacturers could apply other more advanced technologies such as hybrids and waste engine heat recovery systems, although at lower application rates.

In this context, the term “technology-forcing” is used to distinguish standards that will effectively require manufacturers to develop new technologies (or to significantly improve technologies) from standards that can be met using off-the-shelf technology alone. Technology-forcing standards do not require manufacturers to use any specific technologies.

Under Alternative 3, the preferred alternative, the agencies propose to provide ten years of lead time for manufacturers to meet these 2027 standards, which the agencies believe is adequate to implement the technologies industry could use to meet the proposed standards. For some of the more advanced technologies production prototype parts are not yet available, though they are in the research stage with some demonstrations in actual vehicles.

Additionally, even for the more developed technologies, phasing in more stringent standards over a longer timeframe may help manufacturers to ensure better reliability of the technology and to develop packages to work in a wide range of applications. Moving more quickly, however, as in Alternative 4, would lead to earlier and greater cumulative fuel savings and greenhouse gas reductions.

“Prototype” as it is used here refers to technologies that have a potentially production-feasible design that is expected to meet all performance, functional, reliability, safety, manufacturing, cost and other requirements and objectives that is being tested in laboratories and on highways under a full range of operating conditions, but is not yet available in production vehicles already for sale in the market.

As discussed later, the agencies are also proposing new standards in MYs 2018 (trailers only), 2021, and 2024 to ensure manufacturers make steady progress toward the 2027 standards, thereby achieving steady and feasible reductions in GHG emissions and fuel consumption in the years leading up to the MY 2027 standards. Moving more quickly, however, as in Alternative 4, would lead to earlier and greater cumulative fuel and greenhouse gas savings.

Providing additional lead time can often enable manufacturers to resolve technological challenges or to find lower cost means of meeting new regulatory standards, effectively making them more feasible in either case. See generally

NRDC

EPA,

655 F. 2d 318, 329 (D.C. Cir. 1981). On the other hand, manufacturers and/or operators may incur additional costs if regulations require them to make changes to their products with less lead time than manufacturers would normally have when bringing a new technology to the market or expanding the application of existing technologies. After developing a new technology, manufacturers typically conduct extensive field tests to ensure its durability and reliability in actual use. Standards that accelerate technology deployment can lead to manufacturers incurring additional costs to accelerate this development work, or can lead to manufacturers beginning production before such testing can be completed. Some industry stakeholders have informed EPA that when manufacturers introduced new emission control technologies (primarily diesel particulate filters) in response to the 2007 heavy-duty engine standards

they did not perform sufficient product development validation, which led to additional costs for operators when the technologies required repairs or other resulted in other operational issues in use. Thus, the issues of costs, lead time, and reliability are intertwined for the agencies' determination of whether standards are reasonable.

Another important consideration is the possibility of disrupting the market, such as might happen if we were to adopt standards that manufacturers respond to by applying a new technology too suddenly. Several of the heavy-duty vehicle manufacturers, fleets, and commercial truck dealerships informed the agencies that for fleet purchases that are planned more than a year in advance,

expectations

of reduced reliability, increased operating costs, reduced residual value, or of large increases in purchase prices can lead the fleets to pull-ahead by several months planned future vehicle purchases by pre-buying vehicles without the newer technology. In the context of the Class 8 tractor market, where a relatively small number of large fleets typically purchase very large volumes of tractors, such actions by a small number of firms can result in large swings in sales volumes. Such market impacts would be followed by some period of reduced purchases that can lead to temporary layoffs at the factories producing the engines and vehicles, as well as at supplier factories, and disruptions at dealerships. Such market impacts also can reduce the overall environmental and fuel consumption benefits of the standards by delaying the rate at which the fleet turns over. See

International Harvester

EPA,

478 F. 2d 615, 634 (D.C. Cir. 1973). A number of industry stakeholders have informed EPA that the 2007 EPA heavy-duty engine criteria pollutant standard resulted in this pull-ahead phenomenon for the Class 8 tractor market. The agencies understand the potential impact that a pull-ahead can have on American manufacturing and labor, dealerships, truck purchasers, and on the program's environmental and fuel savings goals, and have taken steps in the design of the proposed program to avoid such disruption. These steps include the following:

• Providing considerable lead time, including two to three additional years for the preferred alternative compared to Alternative 4

• The standards will result in significantly lower operating costs for vehicle owners (unlike the 2007 standard, which increased operating costs)

• Phasing in the standards

• Structuring the program so the industry will have a significant range of technology choices to be considered for compliance, rather than the one or two new technologies the OEMs pursued in 2007

• Allowing manufacturers to use emissions averaging, banking and trading to phase in the technology even further

We request comment on the sufficiency of the proposed Phase 2 structure, lead time, and stringency to avoid market disruptions. We note an important difference, however, between standards for criteria pollutants, with generally no attendant fuel savings, and the fuel consumption/GHG emission standards proposed today, which provide immediate and direct financial benefits to vehicle purchasers, who will begin saving money on fuel costs as soon as they begin operating the vehicles. It would seem logical, therefore, that vehicle purchasers (and manufacturers) would weigh those significant fuel savings against the potential for increased costs that could result from applying fuel-saving technologies sooner than they might otherwise choose in the absence of the standards.

As discussed in the Phase 1 final rule, NHTSA has certain statutory considerations to take into account when determining feasibility of the preferred alternative.

The Energy Independence and Security Act (EISA) states that NHTSA (in consultation with EPA and the Secretary of Energy) shall develop a commercial medium- and heavy-duty fuel efficiency program designed “to achieve the maximum feasible improvement.”

Although there is no definition of maximum feasible standards in EISA, NHTSA is directed to consider three factors when determining what the maximum feasible standards are. Those factors are, appropriateness, cost-effectiveness, and technological feasibility,

which modify “feasible” beyond its plain meaning.

75 FR 57198.

49 U.S.C. 32902(k).

Id.

NHTSA has the broad discretion to weigh and balance the aforementioned factors in order to accomplish EISA's mandate of determining maximum feasible standards. The fact that the factors may often be at odds gives NHTSA significant discretion to decide what weight to give each of the competing factors, policies and concerns and then determine how to balance them—as long as NHTSA's balancing does not undermine the fundamental purpose of the EISA: Energy conservation, and as long as that balancing reasonably accommodates “conflicting policies that were committed to the agency's care by the statute.”

Center for Biological Diversity v. National Highway Traffic Safety Admin.,

538 F.3d 1172, 1195 (9th Cir. 2008).

EPA also has significant discretion in assessing, weighing, and balancing the relevant statutory criteria. Section 202(a)(2) of the Clean Air Act requires that the standards “take effect after such period as the Administrator finds necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period.” This language affords EPA considerable discretion in how to weight the critical statutory factors of emission reductions, cost, and lead time (76 FR 57129-57130). Section 202(a) also allows (although it does not compel) EPA to adopt technology-forcing standards. Id. at 57130.

Giving due consideration to the agencies' respective statutory criteria discussed above, the agencies are proposing these technology-forcing standards for MY 2027. The agencies nevertheless recognize that there is some uncertainty in projecting costs and effectiveness, especially for those technologies not yet widely available, but believe that the thresholds proposed for consideration account for realistic projections of technological development discussed throughout this notice and in the draft RIA. The agencies are requesting comment on the alternatives described in Section X below. These alternatives range from Alternative 1 (which is a no-action alternative that serves as the baseline for our cost and benefit analyses) to Alternative 5 (which includes the most stringent of the alternative standards analyzed by the agencies). The assessment of these different alternatives considers the importance of allowing manufacturers sufficient flexibility and discretion while achieving meaningful fuel consumption and GHG emissions reductions across vehicle types. The agencies look forward to receiving comments on questions of feasibility and long-term projections of costs and effectiveness.

As discussed throughout this document, the agencies believe Alternative 4 has potential to be the maximum feasible alternative, however, based on the evidence currently before us, the agencies have outstanding questions regarding relative risks and

benefits of that option in the timeframe envisioned. We are seeking comment on these relative risks and benefits. Alternative 3 is generally designed to achieve the vehicle levels of fuel consumption and GHG reduction that Alternative 4 would achieve, but with two to three years of additional lead-time—

i.e.,

the Alternative 3 standards would end up in the same place as the Alternative 4 standards, but two to three years later, meaning that manufacturers could, in theory, apply new technology at a more gradual pace and with greater flexibility as discussed above. However, Alternative 4 would lead to earlier and greater cumulative fuel savings and greenhouse gas reductions.

In the sections that follow, the agencies have closely examined the potential feasibility of Alternative 4 for each subcategory. The agencies may consider establishing final fuel efficiency and GHG standards in whole or in part in the Alternative 4 timeframe if we deem them to be maximum feasible and reasonable for NHTSA and EPA, respectively. The agencies seek comment on the feasibility of Alternative 4, whether for some or for all segments, including empirical data on its appropriateness, cost-effectiveness, and technological feasibility. The agencies also note the possibility of adoption in MY 2024 of a standard reflecting deployment of some, rather than all, of the technologies on which Alternative 4 is predicated. It is also possible that the agencies could adopt some or all of the proposal (Alternative 3) earlier than MY 2027, but later than MY 2024, based especially on lead time considerations. Any such choices would involve a considered weighing of the issues of feasibility of projected technology penetration rates, associated costs, and necessary lead time, and would consider the information on available technologies, their level of performance and costs set out in the administrative record to this proposal.

Sections II through VI of this notice explain the consideration that the agencies took into account in considering options and proposing a preferred alternative based on balancing of the statutory factors under 42 U.S.C. 7521(a)(1) and (2), and under 49 U.S.C. 32902(k).

(1) Carryover From Phase 1 Program and Proposed Compliance Changes

Phase 2 will carry over many of the compliance approaches developed for Phase 1, with certain changes as described below. Readers are referred to the proposed regulatory text for much more detail. Note that some of these provisions are being carried over with revisions or additions (such as those needed to address trailers).

(a) Certification

EPA and NHTSA are proposing to apply the same general certification procedures for Phase 2 as are currently being used for certifying to the Phase 1 standards. The agencies, however, are proposing changes to the simulation tool used for the vocational vehicle, tractor and trailer standards that would allow the simulation tool to more specifically reflect improvements to transmissions and drivetrains.

Rather than the model using default values for transmissions and drivetrains, manufacturers would enter measured or tested values as inputs reflecting performance of their actual transmission and drivetrain technologies.

As described in Section IV, although the proposed trailer standards were developed using the simulation tool, the agencies are proposing a compliance structure that does not require trailer manufacturers to actually use the compliance tool.

The agencies apply essentially the same process for certifying tractors and vocational vehicles, and propose largely to apply it to trailers as well. The Phase 1 certification process for engines used in tractors and vocational vehicles was based on EPA's process for showing compliance with the heavy-duty engine criteria pollutant standards, and the agencies propose to continue it for Phase 2. Finally, we also propose to continue certifying HD pickups and vans using the Phase 1 vehicle certification process, which is very similar to the light-duty vehicle certification process.

EPA and NHTSA are also proposing to clarify provisions related to confirming a manufacturer's test data during certification (

i.e.,

confirmatory testing) and verifying a manufacturer's vehicles are being produced to perform as described in the application for certification (

i.e.,

selective enforcement audits or SEAs). The EPA confirmatory testing provisions for engines and vehicles are in 40 CFR 1036.235 and 1037.235. The SEA provisions are in 40 CFR 1036.301 and 1037.301. The NHTSA provisions are in 49 CFR 535.9(a). Note that these clarifications would also apply for Phase 1 engines and vehicles. The agencies welcome suggestions for alternative approaches that would offer the same degree of compliance assurance for GHGs and fuel consumption as these programs offer with respect to EPA's criteria pollutants.

(b) Averaging, Banking and Trading (ABT)

The Phase 1 ABT provisions were patterned on established EPA ABT programs that have proven to work well. In Phase 1, the agencies determined this flexibility would provide an opportunity for manufacturers to make necessary technological improvements and reduce the overall cost of the program without compromising overall environmental and fuel economy objectives. We propose to generally continue this Phase 1 approach with few revisions for vehicles regulated in Phase 1. As described in Section IV, we are proposing a more limited averaging program for trailers. The agencies see the ABT program as playing an important role in making the proposed technology-advancing standards feasible, by helping to address many issues of technological challenges in the context of lead time and costs. It provides manufacturers flexibilities that assist the efficient development and implementation of new technologies and therefore enable new technologies to be implemented at a more aggressive pace than without ABT.

ABT programs are more than just add-on provisions included to help reduce costs, and can be, as in EPA's Title II programs generally, an integral part of the standard setting itself. A well-designed ABT program can also provide important environmental and energy security benefits by increasing the speed at which new technologies can be implemented (which means that more benefits accrue over time than with later-commencing standards) and at the same time increase flexibility for, and reduce costs to, the regulated industry and ultimately consumers. Without ABT provisions (and other related flexibilities), standards would typically have to be numerically less stringent since the numerical standard would have to be adjusted to accommodate issues of feasibility and available lead time. See 75 FR 25412-25413. By offering ABT credits and additional flexibilities the agencies can offer progressively more stringent standards that help meet our fuel consumption reduction and GHG emission goals at a faster and more cost-effective pace.

See NRDC v. Thomas, 805 F. 2d 410, 425 (D.C. Cir. 1986) (upholding averaging as a reasonable and permissible means of implementing a statutory provision requiring technology-forcing standards).

(i) Carryover of Phase 1 Credits and Credit Life

The agencies propose to continue the five-year credit life provisions from Phase 1, and are not proposing any

additional restriction on the use of banked Phase 1 credits in Phase 2. In other words, Phase 1 credits in MY2019 could be used in Phase 1 or in Phase 2 in MYs 2021-2024. Although, as we have already noted, the numerical values of proposed Phase 2 standards are not directly comparable in an absolute sense to the existing Phase 1 standards (in other words, a given vehicle would have a different g/ton-mile emission rate when evaluated using Phase 1 GEM than it would when evaluated using Phase 2 GEM), we believe that the Phase 1 and Phase 2 credits are largely equivalent. Because the standards and emission levels are included in a relative sense (as a difference), it is not necessary for the Phase 1 and Phase 2 standards to be directly equivalent in an absolute sense in order for the credits to be equivalent.

This is best understood by examining the way in which credits are calculated. For example, the credit equations in 40 CFR 1037.705 and 49 CFR 535.7 calculate credits as the product of the difference between the standard and the vehicle's emission level (g/ton-mile or gallon/1,000 ton-mile), the regulatory payload (tons), production volume, and regulatory useful life (miles). Phase 2 would not change payloads, production volumes, or useful lives for tractors, medium and heavy heavy-duty engines, or medium and heavy heavy-duty vocational vehicles. However, EPA is proposing to change the regulatory useful lives of HD pickups and vans, light heavy-duty vocational vehicles, spark-ignited engines, and light heavy-duty compression-ignition engines. Because useful life is a factor in determining the value of a credit, the agencies are proposing interim adjustment factors to ensure banked credits maintain their value in the transition from Phase 1 to Phase 2.

For Phase 1, EPA aligned the useful life for GHG emissions with the useful life already in place for criteria pollutants. After the Phase 1 rules were finalized, EPA updated the useful life for criteria pollutants as part of the Tier 3 rulemaking.

The new useful life implemented for Tier 3 is 150,000 miles or 15 years, whichever occurs first. This is the same useful life proposed in Phase 2 for HD pickups and vans, light heavy-duty vocational vehicles, spark-ignited engines, and light heavy-duty compression-ignition engines.

The numerical value of the adjustment factor for each of these regulatory categories depends on the Phase 1 useful life. These are described in detail below in this preamble in Sections II, V, and VI. Without these adjustment factors the proposed changes in useful life would effectively result in a discount of banked credits that are carried forward from Phase 1 to Phase 2, which is not the intent of the changes in the useful life. With the relatively flat deterioration generally associated with CO

, EPA does not believe the proposed changes in useful life would significantly affect the feasibility of the proposed Phase 2 standards. EPA requests comments on the proposed changes to useful life. We note that the primary purpose of allowing manufacturers to bank credits is to provide flexibility in managing transitions to new standards. The five-year credit life is substantial, and would allow credits generated in either Phase 1 or early in Phase 2 to be used for the intended purpose. The agencies believe longer credit life is not necessary to accomplish this transition. Restrictions on credit life serve to reduce the likelihood that any manufacturer would be able to use banked credits to disrupt the heavy-duty vehicle market in any given year by effectively limiting the amount of credits that can be held. Without this limit, one manufacturer that saved enough credits over many years could achieve a significant cost advantage by using all the credits in a single year. The agencies believe, subject to consideration of public comment, that allowing a five year credit life for all credits, and as a consequence allowing use of Phase 1 credits in Phase 2, creates appropriate flexibility and appropriately facilitates a smooth transition to each new level of standards.

79 FR 23492, April 28, 2014 and 40 CFR 86.1805-17.

NHTSA's useful life is based on mileage and years of duration.

Although we are not proposing any additional restrictions on the use of Phase 1 credits, we are requesting comment on this issue. Early indications suggest that positive market reception to the Phase 1 technologies could lead to manufacturers accumulating credit surpluses that could be quite large at the beginning of the proposed Phase 2 program. This appears especially likely for tractors. The agencies are specifically requesting comment on the likelihood of this happening, and whether any regulatory changes would be appropriate in response. For example, should the agencies limit the amount of credits that could be carried over from Phase1 or limit them to the first year or two of the Phase 2 program? Also, if we determine that large surpluses are likely, how should that factor into our decision on the feasibility of more stringent standards in MY 2021?

(ii) Averaging Sets

EPA has historically restricted averaging to some extent for its HD emission standards to avoid creating unfair competitive advantages or environmental risks due to credits being inconsistent. Under Phase 1, averaging, banking and trading can only occur within and between specified “averaging sets” (with the exception of credits generated through use of specified advanced technologies). We propose to continue this regime in Phase 2, to retain the existing vehicle and engine averaging sets, and create new trailer averaging sets. We also propose to continue the averaging set restrictions from Phase 1 in Phase 2. These averaging sets for vehicles are:

• Complete pickups and vans

• Other light heavy-duty vehicles (Classes 2b-5)

• Medium heavy-duty vehicles (Class 6-7)

• Heavy heavy-duty vehicles (Class 8)

• Long dry van trailers

• Short dry van trailers

• Long refrigerated trailers

• Short refrigerated trailers

We also propose not to allow trading between engines and chassis, even within the same vehicle class. Such trading would essentially result in double counting of emission credits, because the same engine technology would likely generate credits relative to both standards. We similarly would limit trading among engine categories to trades within the designated averaging sets:

• Spark-ignition engines

• Compression-ignition light heavy-duty engines

• Compression-ignition medium heavy-duty engines

• Compression-ignition heavy heavy-duty engines

The agencies continue to believe that restricting trading to within the same eight classes would provide adequate opportunities for manufacturers to make necessary technological improvements and to reduce the overall cost of the program without compromising overall environmental and fuel efficiency objectives, and is therefore appropriate and reasonable under EPA's authority and maximum feasible under NHTSA's authority, respectively. We do not expect emissions from engines and vehicles—when restricted by weight class—to be dissimilar. We therefore expect that the lifetime vehicle performance and emissions levels will be very similar across these defined

categories, and the estimated credit calculations will fairly ensure the expected fuel consumption and GHG emission reductions.

We continue to believe, subject to consideration of public comment, that the Phase 1 averaging sets create the most flexibility that is appropriate without creating an unfair advantage for manufacturers with erratically integrated portfolios, including engines and vehicles. See 76 FR 57240. The agencies committed in Phase 1 to seek public comment after credit trading begins with manufacturers certifying in 2014 on whether broader credit trading is more appropriate in developing the next phase of HD regulations (76 FR 57128, September 15, 2011). The 2014 model year end of year reports will become available to the agencies in mid-2015. Therefore, the agencies will provide information at that point. We welcome comment on averaging set restrictions. The agencies propose to continue this carry forward provision for phase 2 for the same reasons.

(iii) Credit Deficits

The Phase 1 regulations allow manufacturers to carry-forward deficits for up to three years without penalty. This is an important flexibility because the program is designed to address the diversity of the heavy-duty industry by allowing manufacturers to sell a mix of engines or vehicles that have very different emission levels and fuel efficiencies. Under this construct, manufacturers can offset sales of engines or vehicles not meeting the standards by selling others (within the same averaging set) that are much better than required. However, in any given year it is possible that the actual sales mix will not balance out and the manufacturer may be short of credits for that model year. The three year provision allows for this possibility and creates additional compliance flexibility to accommodate it.

(iv) Advanced Technology Credits

At this time, the agencies believe it is no longer appropriate to provide extra credit for the technologies identified as advanced technologies for Phase 1, although we are requesting comment on this issue. The Phase 1 advanced technology credits were adopted to promote the implementation of advanced technologies, such as hybrid powertrains, Rankine cycle engines, all-electric vehicles, and fuel cell vehicles (see 40 CFR 1037.150(i)). As the agencies stated in the Phase 1 final rule, the Phase 1 standards were not premised on the use of advanced technologies but we expected these advanced technologies to be an important part of the Phase 2 rulemaking (76 FR 57133, September 15, 2011). The proposed Phase 2 heavy-duty engine and vehicles standards are premised on the use of some advanced technologies, making them equivalent to other fuel-saving technologies in this context. We believe the Phase 2 standards themselves would provide sufficient incentive to develop them.

We request comment on this issue, especially with respect to electric vehicle, plug-in hybrid, and fuel cell technologies. Although the proposed standards are premised on some use of Rankine cycle engines and hybrid powertrains, none of the proposed standards are based on projected utilization of the use of the other advanced technologies. (Note that the most stringent alternative is based on some use of these technologies). Commenters are encouraged to consider the recently adopted light-duty program, which includes temporary incentives for these technologies.

The agencies propose to largely continue the Phase 1 innovative technology program but to redesignate it as an off-cycle program for Phase 2. In other words, beginning in MY 2021 technologies that are not fully accounted for in the GEM simulation tool, or by compliance dynamometer testing would be considered “off-cycle”, including those technologies that may no longer be considered innovative technologies. However, we are not proposing to apply this flexibility to trailers (which were not part of Phase 1) in order to simplify the program for trailer manufacturers.

The agencies propose to maintain that, in order for a manufacturer to receive credits for Phase 2, the off-cycle technology would still need to meet the requirement that it was not in common use prior to MY 2010. Although, we have not identified specific off-cycle technologies at this time that should be excluded, we believe it may be prudent to continue this requirement to avoid the potential for manufacturers to receive windfall credits for technologies that they were already using before MY 2010. Nevertheless, the agencies seek comment on whether off-cycle technologies in the Phase 2 program should be limited in this way. In particular, the agencies are concerned that because the proposed Phase 2 program would be implemented MY 2021 and may extend beyond 2027, the agencies and manufacturers may have difficulty in the future determining whether an off-cycle technology was in common use prior to MY 2010. Moreover, because we have not identified a single off-cycle technology that should be excluded by this provision at this time, we are concerned that this approach may create an unnecessary hindrance to the off-cycle program.

Manufacturers would be able to carry over an innovative technology credits from Phase 1 into Phase 2, subject to the same restrictions as other credits. Manufacturers would also be able to carry over the improvement factor (not the credit value) of a technology, if certain criteria were met. The agencies would require documentation for all off-cycle requests similar to those required by EPA for its light-duty GHG program.

Additionally, NHTSA would not grant any off-cycle credits for crash avoidance technologies. NHTSA would also require manufacturers to consider the safety of off-cycle technologies and would request a safety assessment from the manufacturer for all off-cycle technologies.

The agencies seek comment on these proposed changes, as well as the possibility of adopting aspects of the light-duty off-cycle program.

(d) Alternative Fuels

The agencies are proposing to largely continue the Phase 1 approach for engines and vehicles fueled by fuels other than gasoline and diesel.

Phase 1 engine emission standards applied uniquely for gasoline-fueled and diesel-fueled engines. The regulations in 40 CFR part 86 implement these distinctions for alternative fuels by dividing engines into Otto-cycle and Diesel-cycle technologies based on the combustion cycle of the engine. The agencies are, however, proposing a small change that is described in Section II. Under the proposed change, we would require manufacturers to divide their natural gas engines into primary intended service classes, like the current requirement for compression-ignition engines. Any alternative fuel-engine qualifying as a medium heavy-duty engine or a heavy heavy-duty engine would be subject to all the emission standards and other requirements that apply to compression-ignition engines. Note that this small change in approach would also apply with respect to EPA's criteria pollutant program.

See Section I. F. (1) (a) for a summary of certain specific changes we are proposing or considering for natural gas-fueled engines and vehicles.

We are also proposing that the Phase 2 standards apply exclusively at the

vehicle tailpipe. That is, compliance is based on vehicle fuel consumption and GHG emission reductions, and does not reflect any so-called lifecycle emission properties. The agencies have explained why it is reasonable that the heavy duty standards be fuel neutral in this manner. See 76 FR 57123; see also 77 FR 51705 (August 24, 2012) and 77 FR 51500 (August 27, 2012). In particular, EPA notes that there is a separate, statutorily-mandated program under the Clean Air Act which encourages use of renewable fuels in transportation fuels, including renewable fuel used in heavy-duty diesel engines. This program considers lifecycle greenhouse gas emissions compared to petroleum fuel. NHTSA notes that the fuel efficiency standards are necessarily tailpipe-based, and that a lifecycle approach would likely render it impossible to harmonize the fuel efficiency and GHG emission standards, to the great detriment of our goal of achieving a coordinated program. 77 FR 51500-51501; see also 77 FR 51705 (similar finding by EPA); see also section I.F. (1) (a) below.

One consequence of the tailpipe-based approach is that the agencies are proposing to treat vehicles powered by electricity the same as in Phase 1. In Phase 1, EPA treated all electric vehicles as having zero emissions of CO

, CH

, and N

O (see 40 CFR 1037.150(f)). Similarly, NHTSA adopted regulations in Phase 1 that set the fuel consumption standards based on the fuel consumed by the vehicle. The agencies also did not require emission testing for electric vehicles in Phase 1. The agencies considered the potential unintended consequence of not accounting for upstream emissions from the charging of heavy-duty electric vehicles. In our reassessment for Phase 2, we have not found any all-electric heavy-duty vehicles that have certified by 2014. As we look to the future, we project very limited adoption of all-electric vehicles into the market. Therefore, we believe that this provision is still appropriate. Unlike the 2017-2025 light-duty rule, which included a cap whereby upstream emissions would be counted after a certain volume of sales (see 77 FR 62816-62822), we believe there is no need to propose a cap for heavy-duty vehicles because of the small likelihood of significant production of EV technologies in the Phase 2 timeframe. We welcome comments on this approach.

Note that we also request comment on upstream emissions for natural gas in Section XI.

See also Section I. C. (1) (b)(iv) above (soliciting comment on need for advanced technology incentive credits for heavy duty EVs).

(e) Phase 1 Interim Provisions

EPA adopted several flexibilities for the Phase 1 program (40 CFR 1036.150 and 1037.150) as interim provisions. Because the existing regulations do not have an end date for Phase 1, most of these provisions did not have an explicit end date. NHTSA adopted similar provisions. With few exceptions, the agencies are proposing not to apply these provisions to Phase 2. These will generally remain in effect for the Phase 1 program. In particular, the agencies note that we do not propose to continue the blanket exemption for small manufacturers. Instead, the agencies propose to adopt narrower and more targeted relief.

(f) In-Use Standards

Section 202(a)(1) of the CAA specifies that EPA is to adopt emissions standards that are applicable for the useful life of the vehicle and for the engine. EPA finalized in-use standards for the Phase 1 program whereas NHTSA adopted an approach which does not include these standards. For the Phase 2 program, EPA will carry-over its in-use provisions and NHTSA proposes to adopt EPA's useful life requirements for its vehicle and engine fuel consumption standards to ensure manufacturers consider in the design process the need for fuel efficiency standards to apply for the same duration and mileage as EPA standards. If EPA determines a manufacturer fails to meet its in-use standards, civil penalties may be assessed. NHTSA seeks comment on the appropriateness of seeking civil penalties for failure to comply with its fuel efficiency standards in these instances. NHTSA would limit such penalties to situations in which it determined that the vehicle or engine manufacturer failed to comply with the standards.

(2) Proposed Phase 2 Standards

This section briefly summarizes the proposed Phase 2 standards for each category and identifies the technologies that the agencies project would be needed to meet the standards. Given the large number of different regulatory categories and model years for which separate standards are being proposed, the actual numerical standards are not listed. Readers are referred to Sections II through IV for the tables of proposed standards.

(a) Summary of the Proposed Engine Standards

The agencies are proposing to continue the basic Phase 1 structure for the Phase 2 engine standards. There would be separate standards and test cycles for tractor engines, vocational diesel engines, and vocational gasoline engines. However, as described in Section II, we are proposing a revised test cycle for tractor engines to better reflect actual in-use operation.

For diesel engines, the agencies are proposing standards for MY 2027 requiring reduction in CO

emissions and fuel consumption of 4.2 percent better than the 2017 baseline.

We are also proposing standards for MY 2021 and MY 2024, requiring reductions in CO

emissions and fuel consumption of 1.5 to 3.7 percent better than the 2017 baseline. The agencies project that these reductions would be feasible based on technological changes that would improve combustion and reduce energy losses. For most of these improvements, the agencies project manufacturers will begin applying them to about 50 percent of their heavy-duty engines by 2021, and ultimately apply them to about 90 percent of their heavy-duty engines by 2024. However, for some of these improvements we project more limited application rates. In particular, we project a more limited use of waste exhaust heat recovery systems in 2027, projecting that about 10 percent of tractor engines will have turbo-compounding systems, and an additional 15 percent of tractor engines would employ Rankine-cycle waste heat recovery. We do not project that turbo-compounding or Rankine-cycle waste heat recovery technology will be utilized in vocational engines. Although we see great potential for waste heat recovery systems to achieve significant fuel savings and CO

emission reductions, we are not projecting that the technology could be available for more wide-spread use in this time frame.

Phase 1 standards for diesel engines will be fully phased-in by MY 2017.

For gasoline vocational engines, we are not proposing new more stringent

engine

standards. Gasoline engines used in vocational vehicles are generally the same engines as are used in the complete HD pickups and vans in the Class 2b and 3 weight categories. Given the relatively small sales volumes for gasoline-fueled vocational vehicles, manufacturers typically cannot afford to invest significantly in developing separate technology for these vocational vehicle engines. Thus, we project that vocational gasoline engines would

include the same technology as would be used to meet the pickup and van chassis standards, and this would result in some real world reductions in CO

emissions and fuel consumption. Although it is difficult at this time to project how much improvement would be observed during certification testing, it seems likely that these improvements would reduce measured CO

emissions and fuel consumption by about one percent. Therefore, we are requesting comment on finalizing a Phase 2 standard of 621 g/hp-hr for gasoline engines (

i.e.,

one percent more stringent than the 2016 Phase 1 standard of 627 g/hp-hr) in MY 2027. We note that the proposed MY 2027 vehicle standards for gasoline-fueled vocational vehicles are predicated in part on the use of advanced friction reduction technology with effectiveness over the GEM cycles of about one percent. We also request comment on whether not proposing more stringent standards for gasoline engines would create an incentive for purchasers who would have otherwise chosen a diesel vehicle to instead choose a gasoline vehicle.

Table I-2—Summary of Phase 1 and Proposed Phase 2 Requirements for Engines in Combination Tractors and Vocational Vehicles

Phase 1 program

Alternative 3-2027

(proposed standard)

Alternative 4-2024

(also under consideration)

Covered in this category

Engines installed in tractors and vocational chassis.

Share of HDV fuel consumption and GHG emissions

Combination tractors and vocational vehicles account for approximately 85 percent of fuel use and GHG emissions in the medium and heavy duty truck sector.

Per vehicle fuel consumption and CO

improvement

5%-9% improvement over MY 2010 baseline, depending vehicle application. Improvements are in addition to improvements from tractor and vocational vehicle standards

4% improvement over MY 2017 for diesel engines. Note that improvements are captured in complete vehicle tractor and vocational vehicle standards, so that engine improvements and the vehicle improvement shown below are not additive.

Form of the standard

EPA: CO

grams/horsepower-hour and NHTSA: Gallons of fuel/horsepower-hour.

Example technology options available to help manufacturers meet standards

Combustion, air handling, friction and emissions after-treatment technology improvements

Further technology improvements and increased use of all Phase 1 technologies, plus waste heat recovery systems for tractor engines (e.g., turbo-compound and Rankine-cycle).

Flexibilities

ABT program which allows emissions and fuel consumption credits to be averaged, banked, or traded (five year credit life). Manufacturers allowed to carry-forward credit deficits for up to three model years. Interim incentives for advanced technologies, recognition of innovative (off-cycle) technologies not accounted for by the HD Phase 1 test procedures, and credits for certifying early

Same as Phase 1, except no advanced technology incentives.

Adjustment factor of 1.36 proposed for credits carried forward from Phase 1 to Phase 2 for SI and LHD CI engines due to proposed change in useful life.

(b) Summary of the Proposed Tractor Standards

As explained in Section III, the agencies are proposing to largely continue the Phase 1 tractor program but to propose new standards. The tractor standards proposed for MY 2027 would achieve up to 24 percent lower CO

This text is long and has been trimmed here. Open the source document for the complete record.

This is a copy of a public record, reproduced as it was published. It is not legal advice, and it may not be the version a court would rely on. Check the official source before you cite it.