Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles-Phase 3

Federal RegisterApr 22, 2024

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 86, 1036, 1037, 1039, 1054, and 1065

[EPA-HQ-OAR-2022-0985; FRL-8952-02-OAR]

RIN 2060-AV50

Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3

AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

The Environmental Protection Agency (EPA) is promulgating new greenhouse gas (GHG) emissions standards for model year (MY) 2032 and later heavy-duty highway vehicles that phase in starting as early MY 2027 for certain vehicle categories. The phase in revises certain MY 2027 GHG standards that were established previously under EPA's Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2 rule (“HD GHG Phase 2”). This document also updates discrete elements of the Averaging Banking and Trading program, including providing additional flexibilities for manufacturers to support the implementation of the Phase 3 program balanced by limiting the availability of certain advanced technology credits initially established under the HD GHG Phase 2 rule. EPA is also adding warranty requirements for batteries and other components of zero-emission vehicles and requiring customer-facing battery state-of-health monitors for plug-in hybrid and battery electric vehicles. In this action, we are also finalizing additional revisions, including clarifying and editorial amendments to certain highway heavy-duty vehicle provisions and certain test procedures for heavy-duty engines.

DATES:

This final rule is effective on June 21, 2024. The incorporation by reference of certain material listed in this rule is approved by the Director of the Federal Register beginning June 21, 2024. The incorporation by reference of certain other material listed in this rule was previously approved by the Director of the Federal Register as of March 27, 2023.

ADDRESSES:

Docket:

EPA has established a docket for this action under Docket ID No. EPA-HQ-OAR-2022-0985. Publicly available docket materials are available either electronically at

www.regulations.gov

or in hard copy at Air and Radiation Docket and Information Center, EPA Docket Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW, Room 3334, Washington, DC. For further information on EPA Docket Center services and the current status, please visit us online at

www.epa.gov/dockets

Public Participation:

Docket: All documents in the docket are listed on the

www.regulations.gov

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

e.g.,

confidential business information (CBI) or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the internet and will be publicly available only in hard copy form through the EPA Docket Center at the location listed in the

ADDRESSES

section of this document.

FOR FURTHER INFORMATION CONTACT:

Brian Nelson, Assessment and Standards Division, Office of Transportation and Air Quality, Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: (734) 214-4278; email address:

nelson.brian@epa.gov

SUPPLEMENTARY INFORMATION:

Does this action apply to me?

This action relates to companies that manufacture, sell, or import into the United States new heavy-duty highway vehicles and engines. This action also relates to state and local governments. Potentially affected categories and entities include the following:

ER22AP24.000

This table is not intended to be exhaustive, but rather provides a guide for readers regarding entities potentially affected by this action. This table lists the types of entities that EPA is now aware could potentially be affected by this action. Other types of entities not listed in the table could also be affected. To determine whether your entity is regulated by this action, you should carefully examine the applicability criteria found in 40 CFR parts 86, 1036, 1037, 1039, 1054, and 1065.

If you have questions regarding the applicability of this action to a particular entity, consult the person listed in the

FOR FURTHER INFORMATION CONTACT

section.

See 40 CFR 1036.1 through 1036.15 and 1037.1 through 1037.15.

What action is the agency taking?

The Environmental Protection Agency (EPA) is promulgating new GHG standards for model year (MY) 2032 and later heavy-duty highway vehicles that phase in starting as early MY 2027 for certain vehicle categories. The phase in revises certain MY 2027 GHG standards that were established previously under EPA's Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2 rule. We believe these “Phase 3” standards are appropriate and feasible considering lead time, costs, and other factors. EPA also finds that it is appropriate (1) to limit the availability of certain advanced technology credits initially established under the HD GHG Phase 2 rule, and (2) to include additional flexibilities for manufacturers in applying credits from these incentives in the early model years of this Phase 3 program. EPA is also adding warranty requirements for batteries and other components of zero-emission vehicles and requiring customer-facing battery state-of-health monitors for plug-in hybrid and battery electric vehicles. We are also finalizing

revisions and clarifying and editorial amendments to certain highway heavy-duty vehicle provisions of 40 CFR part 1037 and certain test procedures for heavy-duty engines in 40 CFR parts 1036 and 1065. We also note that EPA included in this action's notice of proposed rulemaking (hereafter referred to as the “HD GHG Phase 3 NPRM”) a proposal to revise its regulations addressing preemption of state regulation of new locomotives and new engines used in locomotives; those revisions were finalized in a separate action on November 8, 2023.

2 3

Notice of Proposed Rulemaking for Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3. 88 FR 25926, April 27, 2023.

Final Rulemaking for Locomotives and Locomotive Engines; Preemption of State and Local Regulations. 88 FR 77004, November 8, 2023.

What is the agency's authority for taking this action?

Clean Air Act (CAA) section 202(a), 42 U.S.C. 7521(a), requires that EPA establish emission standards for air pollutants from new motor vehicles or new motor vehicle engines, which, in the Administrator's judgment, cause or contribute to air pollution that may reasonably be anticipated to endanger public health or welfare. The Administrator has found that GHG emissions from highway heavy-duty vehicles and engines cause or contribute to air pollution that may endanger public health or welfare. Therefore, the Administrator is exercising his authority under CAA section 202(a)(1)-(2) to establish standards for GHG emissions from highway heavy-duty vehicles. See section I.D of this preamble for more information on the agency's authority for this action.

Did EPA conduct a peer review before issuing this action?

This regulatory action is supported by influential scientific information. EPA, therefore, conducted peer review in accordance with the Office of Management and Budget's (OMB) Final Information Quality Bulletin for Peer Review. First, we conducted a peer review of the underlying data and algorithms in MOVES4 that served as the basis for MOVES4.R3 used to estimate the emissions impacts of the final standards. In addition, we conducted a peer review of the Heavy-Duty Technology Resource Use Case Scenario (HD TRUCS) tool used to analyze HD vehicle energy usage and associated component costs. We also conducted a peer review of a Heavy-Duty Vehicle Industry Characterization, Technology Assessment, and Costing Report developed by FEV Consulting. All peer review was in the form of letter reviews conducted by a contractor. The peer review reports for each analysis are in the docket for this action and at EPA's Science Inventory (

https://cfpub.epa.gov/si/

Table of Contents

Executive Summary

A. Purpose of This Regulatory Action

B. The Opportunity for New Standards Based on Advancements in Heavy-Duty Vehicle Technologies Which Prevent or Control GHG Emissions

C. Overview of the Final Regulatory Action

D. Impacts of the Standards

E. Coordination With Federal and State Partners

F. Stakeholder Engagement

I. Statutory Authority for the Final Rule

A. Summary of Key Clean Air Act Provisions

B. Authority To Consider Technologies in Setting Motor Vehicle GHG Standards

C. Response to Other Comments Raising Legal Issues

II. Final HD Phase 3 GHG Emission Standards

A. Public Health and Welfare Need for GHG Emission Reductions

B. Summary of Comments and the HD GHG Phase 3 Standards and Updates From Proposal

C. Background on the CO2 Emission Standards in the HD GHG Phase 2 Program

D. Vehicle Technologies and Supporting Infrastructure

E. Technology, Charging Infrastructure, and Operating Costs

F. Final Standards

G. EPA's Basis for Concluding That the Final Standards Are Feasible and Appropriate Under the Clean Air Act

H. Alternatives Considered

I. Small Businesses

III. Compliance Provisions, Flexibilities, and Test Procedures

A. Revisions to the ABT Program

B. Battery Durability Monitoring and Warranty Requirements

C. Additional Revisions to the Regulations

IV. Program Costs

A. IRA Tax Credits

B. Technology Package Costs

C. Manufacturer Costs

D. Purchaser Costs

E. Social Costs

V. Estimated Emission Impacts From the Final Standards

A. Model Inputs

B. Estimated Emission Impacts From the Final Standards

VI. Climate, Health, Air Quality, Environmental Justice, and Economic Impacts

A. Climate Change Impacts

B. Health and Environmental Effects Associated With Exposure to Non-GHG Pollutants

C. Air Quality Impacts of Non-GHG Pollutants

D. Environmental Justice

E. Economic Impacts

F. Oil Imports and Electricity and Hydrogen Consumption

VII. Benefits of the Program

A. Climate Benefits

B. Non-GHG Health Benefits

C. Energy Security

VIII. Comparison of Benefits and Costs

A. Methods

B. Results

IX. Analysis of Alternative CO

Emission Standards

A. Comparison of Final Standards and Alternative

B. Emission Inventory Comparison of Final Rule and Slower Phase-In Alternative

C. Program Costs Comparison of the Final Rule and Alternative

D. Benefits

E. How do the final standards and alternative compare in overall benefits and costs?

X. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive Order 14094: Modernizing Regulatory Review

B. Paperwork Reduction Act (PRA)

C. Regulatory Flexibility Act (RFA)

D. Unfunded Mandates Reform Act (UMRA)

E. Executive Order 13132: Federalism

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

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

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

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR Part 51

J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations and Executive Order 14096: Revitalizing Our Nation's Commitment to Environmental Justice for All

K. Congressional Review Act (CRA)

L. Judicial Review

M. Severability

XI. Statutory Authority and Legal Provisions

Executive Summary

A. Purpose of This Regulatory Action

The Environmental Protection Agency (EPA) is finalizing this action to further reduce greenhouse gas (GHG) air pollution from highway heavy-duty (hereafter referred to as “heavy-duty” or HD) engines and vehicles across the United States. This final rule establishes new CO

emission standards for MY 2032 and later HD vehicles with more stringent CO

standards phasing in as early as MY 2027 for certain vehicle categories. We have assessed and demonstrated that these standards are appropriate and feasible considering cost, lead time, and other relevant factors, as described throughout this preamble and supporting materials in the docket for this final rule. Under the

Clean Air Act (CAA) “the Administrator shall by regulation prescribe (and from time to time revise) . . . standards applicable to the emission of any air pollutant from any class or classes of new motor vehicles or new motor vehicle engines, . . . which in his judgment cause, or contribute to, air pollution which may reasonably be anticipated to endanger public health or welfare.” The regulation “shall take effect after such period as the Administrator finds necessary to permit the development and application of the requisite technology, giving appropriate consideration to the cost of compliance within such period.” Despite the significant emissions reductions achieved by previous rulemakings, GHG emissions from HD vehicles continue to adversely impact public health and welfare, and there is a critical need for further GHG reductions. The transportation sector is the largest U.S. source of GHG emissions, representing 29 percent of total GHG emissions,

and within this, heavy-duty vehicles are the second largest contributor to GHG emissions and are responsible for 25 percent of GHG emissions in the sector.

At the same time, there have been significant advances in technologies to prevent and control GHG emissions from heavy-duty vehicles, and we project there will be more such advances. These final regulations appropriately take advantage of those projected available and cost-reasonable motor vehicle technologies to set more stringent GHG standards that will significantly reduce GHG emissions from heavy-duty vehicles. In general, the final standards are less stringent than proposed for the early model years of the program and more stringent or equivalent to the proposed standards in later model years (expect for heavy-heavy vocational vehicles which are less stringent in later model years; see section ES.C.2.ii of this preamble for more details).

EPA (2023). Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-2021 (EPA-430-R-23-002, published April 2023).

GHG emissions have significant adverse impacts on public health and welfare. In 2009, the Administrator issued an Endangerment Finding under CAA section 202(a), concluding that GHG emissions from new motor vehicles and engines, including heavy-duty vehicles and engines, cause or contribute to air pollution that may endanger public health or welfare.

After making such a finding, EPA is mandated to issue GHG standards “to regulate emissions of the deleterious pollutant from new motor vehicles.”

State of Massachusetts

EPA,

549 U.S. 497, 533 (2007). Therefore, following the 2009 Endangerment Finding, EPA promulgated GHG regulations for heavy-duty vehicles and engines in 2011 and 2016.

We refer to the EPA-specific GHG regulations found within the “Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 1” and “Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and Vehicles—Phase 2” final rulemakings as “HD GHG Phase 1” and “HD GHG Phase 2” respectively throughout this preamble (

i.e.,

we are not including any reference to the Department of Transportation (DOT) fuel efficiency standards in those rulemakings in using these terms in this preamble). In the HD GHG Phase 1 and Phase 2 programs, EPA set GHG emission standards that the Agency found appropriate and feasible at that time, considering cost, lead time, and other relevant factors, in 2011 and 2016, respectively.

Meanwhile, major scientific assessments continue to be released that further advance our understanding of the climate system and the impacts that GHGs have on public health and welfare both for current and future generations, as discussed in detail in section II.A.

74 FR 66496, December 15, 2009.

76 FR 57106, September 15, 2011; 81 FR 73478, October 25, 2016.

See,

e.g.,

40 CFR 1036.101(a)(2) (engines, overview of emission standards); 40 CFR 1036.108 (engine GHG standards, exhaust emissions of CO2, CH4, and N2O); 40 CFR 1037.101(a)(2) (vehicles, overview of emission standards); 40 CFR 1037.105 and 1037.106 (vehicle GHG standards, exhaust emissions of CO2 for vocational vehicles and tractors).

At the same time, manufacturers have continued to find ways to further reduce and eliminate tailpipe emissions from new motor vehicles, resulting in a range of technologies with the potential for further significant reductions of GHG emissions from HD motor vehicles. These include but are not limited to reductions reflecting increased use of advanced internal combustion vehicle and engine technologies and including increased use of hybrid technologies. These also include technologies with the greatest potential HD vehicle GHG emission reductions, such as battery electric vehicle technologies (BEV) and fuel cell electric vehicle technologies (FCEV). These technologies—which are already being adopted by the HD industry—present an opportunity for significant reductions in heavy-duty GHG emissions over the long term. While standards promulgated pursuant to CAA section 202(a)(1)-(2) are based on application of technology, the statute does not specify a particular technology or technologies that must be used to set such standards; rather, Congress has authorized and directed EPA to adapt its standards to “the development and application of the requisite technology” as determined by the Administrator.

CAA section 202(a)(2).

Major trucking fleets, HD vehicle and engine manufacturers, and U.S. states have announced plans to increase the use of these technologies in the coming years. Tens of billions of dollars are being invested not only in these technologies, but also to increase the infrastructure necessary for their successful deployment, including electric charging and hydrogen refueling infrastructure, manufacturing and production of batteries, and domestic sources of critical minerals and other important elements of the supply chain. The 2021 Infrastructure Investment and Jobs Act (commonly referred to as the “Bipartisan Infrastructure Law” or BIL) and the Inflation Reduction Act of 2022 (“Inflation Reduction Act” or IRA) accelerate these ongoing trends by together including many incentives for the development, production, and sale of a wide range of advanced technologies (including BEVs, plug-in hybrid electric vehicles (PHEVs), FCEVs, and others), electric charging infrastructure, and hydrogen, which are expected to spur significant innovation in the heavy-duty sector.

Technical assessments and data provided by commenters during the public comment period for this action's notice of proposed rulemaking (hereafter referred to as the “HD GHG Phase 3 NPRM”) as well as comments on related rules, which proposed strengthening existing MY 2027 GHG standards for heavy-duty vehicles, support that significant adoption of technologies with the greatest potential to reduce GHG emissions and associated infrastructure growth is expected to occur over the next decade.

11 12 13 14

We summarize

these developments in section B of this Executive Summary, and provide further detail in section I of the HD GHG Phase 3 NPRM, section II of this final rule, and Regulatory Impact Analysis (RIA) Chapters 1 and 2.

15 16

Infrastructure Investment and Jobs Act, Public Law 117-58, 135 Stat. 429 (2021) (“Bipartisan Infrastructure Law” or “BIL”), available at

https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf

; Inflation Reduction Act of 2022, Public Law 117-169, 136 Stat. 1818 (2022) (“Inflation Reduction Act” or “IRA”), available at

https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf

Notice of Proposed Rulemaking for Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards. 87 FR 17414 (March 28, 2022).

U.S. EPA, “Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle

Standards—Response to Comments.” Section 28. Docket EPA-HQ-OAR-2019-0055.

Notice of Proposed Rulemaking for Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3. 88 FR 25926, April 27, 2023.

U.S. EPA. Response to Comments (RTC)—Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles: Phase 3. EPA-420-R-24-007. March 2024.

Notice of Proposed Rulemaking for Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3. 88 FR 25926, April 27, 2023.

U.S. EPA. Regulatory Impact Analysis—Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles: Phase 3. EPA-420-R-24-006. March 2024.

In addition, technologies for vehicles with ICE, along with a range of electrification, exist today and continue to evolve to further reduce and eliminate exhaust emissions from new motor vehicles. For example, some of these technologies include improvements to the efficiency of the engine, transmission, drivetrain, aerodynamics, and tire rolling resistance in HD vehicles that reduce their GHG emissions. Another example of a technology under development by manufacturers that reduces vehicle GHG emissions is HD vehicles that use hydrogen-fueled internal combustion engines (H2-ICE), which have zero engine-out CO

emissions. The heavy-duty industry has also been developing hybrid powertrains, which consist of an ICE as well as an electric drivetrain and some designs also incorporate plug-in capability. Hybrid powered vehicles may provide CO

emission reductions through the use of downsized engines, recovering energy through regenerative braking system that is normally lost while braking, and providing additional engine-off operation during idling and coasting. Hybrid powertrains are available today in a number of heavy-duty vocational vehicles including passenger van/shuttle bus, transit bus, street sweeper, refuse hauler, and delivery truck applications—and as noted in the preceding paragraph, plug-in hybrid technologies are included in advanced technology incentives under IRA. We discuss these technology developments further in section II of this final rule, and Regulatory Impact Analysis (RIA) Chapters 1 and 2.

With respect to the need for GHG reductions and after consideration of these and other heavy-duty sector developments, EPA is finalizing in this action new CO

emission standards for MY 2032 and later HD vehicles with more stringent CO

standards phasing in as early as MY 2027 for certain vehicle categories (

i.e.,

more stringent than what was finalized in HD GHG Phase 2). We have assessed and demonstrated that these standards are appropriate and feasible considering cost, lead time, and other relevant factors, as described throughout this preamble and supporting materials in the docket for this final rule. EPA considers safety, consistent with CAA section 202(a)(4), and may consider other factors such as the impacts of potential GHG standards on the industry, fuel savings, oil conservation, energy security, and other relevant considerations. These standards build on decades of EPA regulation of harmful pollution from HD vehicles. Pursuant to our section 202(a) authority, EPA first established standards for the heavy-duty sector in the 1970s. Since then, the Agency has revised the standards multiple times based upon updated data and information, the continued need to mitigate air pollution, and congressional enactments directing EPA to regulate emissions from the heavy-duty sector more stringently. Since 1985, HD engine and vehicle manufacturers have been able to comply with standards using averaging;

EPA also introduced banking and trading compliance flexibilities in the HD program in 1990;

and EPA explained that manufacturers could use the Averaging, Banking and Trading (ABT) flexibilities to meet more stringent standards at lower cost. EPA's HD GHG standards and regulations have consistently included an ABT program from the start,

and have relied on averaging as the basis for standards of greater stringency.

Since the first CAA section 202(a) HD standards in 1972, subsequent standards have extended to additional pollutants (

e.g.,

particulate matter and GHGs), have increased in stringency, and have spurred the development and deployment of numerous new vehicle and engine technologies to reduce pollution. For example, the Phase 2 GHG standards for HD vehicles (81 FR 73478, October 25, 2016) were projected to reduce CO

emissions by approximately 1.1 billion metric tons over the lifetime of the new vehicles sold under the program (see,

e.g.,

81 FR 73482), and the most recent “criteria-pollutant”

standards are projected to reduce oxides of nitrogen (NO

) emissions from the in-use HD fleet by almost 50 percent by 2045 (“Control of Air Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle Standards” (hereafter referred to as “HD2027 Low NO

final rule,” 88 FR 4296, January 24, 2023)). This final rule builds upon EPA's multi-decadal tradition of regulating heavy-duty vehicles and engines, by applying the Agency's clear and longstanding statutory authority to consider the feasibility and costs of reducing harmful pollution using new real-world data and information, including the effects of recent congressional action in the BIL and IRA.

50 FR 10606, March 15, 1985; see also

NRDC

Thomas,

805 F.2d 410, 425 (D.C. Cir. 1986) (upholding emissions averaging in the 1985 HD final rule).

55 FR 30584, July 26, 1990.

76 FR 57128, September 15, 2011 (explaining ABT is a flexibility that provides an opportunity for manufacturers to make necessary technological improvements while reducing the overall cost of the program); 81 FR 73495, October 25, 2016 (explaining that ABT plays an important role in providing manufacturers flexibilities, including helping reduce costs).

For example, in promulgating the HD GHG Phase 2 standards, we explained that the stringency of the HD GHG Phase 2 standards were derived on a fleet average technology mix basis and that the emission averaging provisions of ABT meant that the regulations did not require all vehicles to meet the standards. See,

e.g.,

81 FR 73715.

We refer to PM, oxides of nitrogen (NO

), Volatile Organic Compounds (VOCs), hydrocarbons (HC), carbon monoxide (CO), sulfur dioxide (SO

), more generally as “criteria pollutants” throughout this preamble.

We are issuing this HD vehicle GHG Phase 3 Final Rulemaking (“HD GHG Phase 3 final rule”) which finalizes certain revised HD vehicle carbon dioxide (CO

) standards for MY 2027 and certain new HD vehicle CO

standards for MYs 2028, 2029, 2030, 2031, and 2032 that will achieve significant GHG reductions for these and later model years. (Note that the MY 2032 standards will remain in place for MY 2033 and thereafter unless and until new standards are promulgated.) The final standards we are promulgating take into account the ongoing technological innovation in the HD vehicle space and reflect CO

emission standards that we have assessed and demonstrated are appropriate and feasible considering cost, lead time, and other relevant factors, as described throughout this preamble and supporting materials in the docket for this final rule.

We note that EPA also included in the HD GHG Phase 3 NPRM a proposal to revise its regulations addressing preemption of state regulation of new locomotives and new engines used in locomotives; those revisions were finalized in a separate action on November 8, 2023, and therefore are not discussed further in this final rule. Final Rulemaking for Locomotives and Locomotive Engines; Preemption of State and Local Regulations. 88 FR 77004, November 8, 2023.

In this rulemaking, EPA did not reopen (1) the other HD GHG standards, including nitrous oxide (N

O), methane

(CH

), and CO

emission standards that apply to heavy-duty engines and the hydrofluorocarbon (HFC) emission standards that apply to heavy-duty vehicles, (2) any portion of our heavy-duty compliance provisions, flexibilities, and testing procedures, including those in 40 CFR parts 1037, 1036, and 1065, other than those specifically identified in our proposal (

e.g.,

EPA did not reopen the general availability of Averaging, Banking, and Trading), and (3) the existing approach taken in both HD GHG Phase 1 and Phase 2 that compliance with vehicle emission standards is based on emissions from the vehicle, including that compliance with vehicle exhaust CO

emission standards is based on CO

emissions from the vehicle. We further note that we did not reopen anything on which we did not propose or solicit comment.

B. The Opportunity for New Standards Based on Advancements in Heavy-Duty Vehicle Technologies Which Prevent or Control GHG Emissions

1. Brief Overview of the Heavy-Duty Industry

Heavy-duty highway vehicles range from commercial pickup trucks; to vocational vehicles that support local and regional transportation, construction, refuse collection, and delivery work; to line-haul tractors (semi-trucks) that move freight cross-country. This diverse array of vehicles is categorized into weight classes based on gross vehicle weight ratings (GVWR). These weight classes span Class 2b pickup trucks and vans from 8,500 to 10,000 pounds GVWR through Class 8 line-haul tractors and other commercial vehicles that exceed 33,000 pounds GVWR. While Class 2b and 3 complete pickups and vans are not included in this rulemaking, Class 2b and 3 vocational vehicles are included in this rulemaking (as discussed further in section II.C).

Class 2b and 3 vehicles with GVWR between 8,500 and 14,000 pounds are primarily commercial pickup trucks and vans and are sometimes referred to as “medium-duty vehicles”. The vast majority of Class 2b and 3 vehicles are chassis-certified vehicles, and we included those vehicles in the proposed combined light-duty and medium-duty rulemaking action, consistent with E.O. 14037, section 2a. Heavy-duty engines and vehicles are also used in nonroad applications, such as construction equipment; nonroad heavy-duty engines, equipment, and vehicles are not within the scope of this FRM.

Heavy-duty highway vehicles are powered through an array of different means. Currently, the HD vehicle fleet is primarily powered by diesel-fueled, compression-ignition (CI) engines. However, gasoline-fueled, spark-ignition (SI) engines are common in the lighter weight classes, and smaller numbers of alternative fuel engines (

e.g.,

liquified petroleum gas, compressed natural gas) are found in the heavy-duty fleet. We refer to the vehicles powered by internal combustion engines as ICE vehicles (or ICEV) throughout this preamble. An increasing number of HD vehicles are powered by technologies that do not have any tailpipe emissions such as battery electric vehicle (BEV) technologies and hydrogen fuel cell electric vehicles (FCEVs). These technologies have seen significant growth in recent years, for example, EPA certified approximately 400 HD BEVs in MY 2020, 1,200 HD BEVs in MY 2021, and 3,400 HD BEVs in MY 2022 across several vehicle categories. We use the term zero-emission vehicle (ZEV) technologies throughout the preamble to refer to technologies that result in zero tailpipe emissions, and vehicles that use these ZEV technologies we refer to collectively as ZEVs in this preamble.

Hybrid vehicles (including plug-in hybrid electric vehicles) include energy storage features such as batteries and also include an ICE.

Further background on the HD industry can be found in section II.D, RIA Chapter 1, and HD GHG Phase 3 NPRM section I.A.

Throughout the preamble, we use the term ZEV technologies to refer to technologies that result in zero tailpipe emissions. Example ZEV technologies include battery electric vehicles and fuel cell vehicles.

Furthermore, hydrogen-powered internal combustion engines (H2-ICE) fueled with neat hydrogen emit zero engine-out CO

emissions (as well as zero engine-out HC, CH

, CO emissions). We recognize that there may be negligible, but non-zero, CO

emissions at the tailpipe of H2-ICE that use selective catalytic reduction (SCR) aftertreatment systems and are fueled with neat hydrogen due to contributions from the aftertreatment system from urea decomposition. As further explained in preamble section III, H2-ICE are considered to emit near zero CO

emissions under our part 1036 regulations and are deemed zero under out part 1037 regulations, consistent with our treatment of CO

emissions that are attributable to the aftertreatment systems in compression-ignition ICEs. H2-ICE also emit certain criteria pollutants. H2-ICE are not included in what we refer to collectively as ZEVs throughout this final rule. Note, NO

and PM emission testing is required under existing 40 CFR part 1036 for engines fueled with neat hydrogen.

Notice of Proposed Rulemaking for Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3. 88 FR 25926, April 27, 2023.

The industry that designs and manufactures HD vehicles is composed of three primary segments: vehicle manufacturers, engine manufacturers and other major component manufacturers, and secondary manufacturers (

i.e.,

body builders). Some vehicle manufacturers are vertically integrated (designing, developing, and testing their engines in-house for use in their vehicles). Others purchase some or all of their engines from independent engine suppliers. At the time of this rulemaking, only one major independent engine manufacturer supports the HD industry, though some vehicle manufacturers sell their engines or “incomplete vehicles” (

i.e.,

a chassis that includes the engine, the frame, and a transmission) to body builders who design and assemble the final vehicle. Each of these subindustries is often supported by common suppliers for subsystems such as transmissions, axles, engine controls, and emission controls.

In addition to the manufacturers and suppliers responsible for producing HD vehicles, an extended network of dealerships, repair and service facilities, and rebuilding facilities contributes to the sale, maintenance, and extended life of these vehicles and engines. HD vehicle dealerships offer customers a place to order such vehicles from a specific manufacturer and often include service facilities for those vehicles and their engines. Dealership service technicians are generally trained to perform regular maintenance and make repairs, which generally include repairs under warranty and in response to manufacturer recalls. Some trucking fleets, businesses, and large municipalities hire their own technicians to service their vehicles in their own facilities. Many refueling centers along major trucking routes have also expanded their facilities to include roadside assistance and service stations to diagnose and repair common problems.

The end-users for HD vehicles are as diverse as the applications for which these vehicles are purchased. Smaller weight class HD vehicles are commonly purchased by delivery services, contractors, and municipalities. The middle weight class vehicles tend to be used as commercial vehicles for business purposes and municipal work that transport people and goods locally and regionally or provide services such as utilities. Vehicles in the heaviest weight classes are generally purchased by businesses with high load demands, such as construction, towing or refuse collection, or freight delivery fleets and owner-operators for regional and long-haul goods movement. The competitive nature of the businesses and owner-operators that purchase and operate HD vehicles means that any time at which the vehicle is unable to operate due to maintenance or repair (

i.e.,

downtime) can lead to a loss in income. The customers' need for reliability drives much of the vehicle manufacturers' innovation and research efforts.

2. History of Greenhouse Gas Emission Standards for Heavy-Duty Engines and Vehicles

EPA has a longstanding practice of regulating GHG emissions from the HD sector. In 2009, EPA and the U.S. Department of Transportation's (DOT's) National Highway Traffic Safety Administration (NHTSA) began working on a coordinated regulatory program to reduce GHG emissions and fuel consumption from HD vehicles and engines.

The first phase of the HD GHG and fuel efficiency program was finalized in 2011 (76 FR 57106, September 15, 2011) (“HD GHG Phase 1”).

The HD GHG Phase 1 program set performance-based standards and largely adopted approaches consistent with recommendations from the National Academy of Sciences. The HD GHG Phase 1 program, which began in MY 2014 and was phased in through MY 2018, included separate standards for HD vehicles and HD engines. The program offered flexibility allowing manufacturers to attain these standards through any mix of technologies and the option to participate in an ABT program.

Greenhouse gas emissions from heavy-duty vehicles are primarily carbon dioxide (CO

), but also include methane (CH

), nitrous oxide (N

O), and hydrofluorocarbons (HFC).

National Research Council; Transportation Research Board. The National Academies' Committee to Assess Fuel Economy Technologies for Medium- and Heavy-Duty Vehicles; “Technologies and Approaches to Reducing the Fuel Consumption of Medium- and Heavy-Duty Vehicles.” 2010. Available online:

https://www.nap.edu/catalog/12845/technologies-and-approaches-to-reducing-the-fuel-consumption-of-medium-and-heavy-duty-vehicles

In 2016, EPA and NHTSA finalized the HD GHG Phase 2 program.

The HD GHG Phase 2 program included more stringent, performance-based emission standards for HD vehicles and HD engines that phase in over the long term, with initial standards for most vehicles and engines commencing in MY 2021, increasing in stringency in MY 2024, and culminating in even more stringent MY 2027 standards. HD GHG Phase 2 built upon the Phase 1 program and set standards based not only on then-currently available technologies, but also on technologies that were either still under development or not yet widely deployed at the time of the HD GHG Phase 2 final rule. To ensure adequate time for technology development, HD GHG Phase 2 provided up to 10 years lead time to allow for the development and phase-in of these control technologies. EPA recently finalized technical amendments to the HD GHG Phase 2 rulemaking (“HD Technical Amendments”) that included changes to the test procedures for heavy-duty engines and vehicles to improve accuracy and reduce testing burden.

81 FR 73478, October 25, 2016.

86 FR 34308, June 29, 2021.

As with the previous HD GHG Phase 1 and Phase 2 rules and light-duty GHG rules, EPA has coordinated with the DOT and NHTSA during the development of this final rule. This included coordination prior to and during the interagency review conducted under E.O. 12866. EPA has also consulted with the California Air Resources Board (CARB) during the development of this final rule, as EPA also did during the development of the HD GHG Phase 1 and 2 and light-duty rules. See section ES.E of this preamble for additional detail on EPA's coordination with DOT/NHTSA, additional Federal agencies, and CARB.

3. What has changed since EPA finalized the HD GHG Phase 2 rule?

i. Technology Advancements

When EPA promulgated the HD GHG Phase 2 rule in 2016, the agency established the CO

standards on the premise of GHG-reducing technologies for vehicles with ICE including technologies such as hybrid powertrains. However, in 2016 we projected that ZEV technologies, such as BEVs and FCEVs, would become more widely available in the heavy-duty market over time, but would not be available and cost-competitive in significant volume in the timeframe of the Phase 2 program. EPA finalized BEV, PHEV, and FCEV advanced technology credit multipliers to encourage the development and availability of these advanced technologies at a faster pace because of their potential for large GHG emissions reductions.

Several significant developments have occurred since 2016 that point to ZEV technologies becoming more readily available much sooner than EPA had previously projected for the HD sector. These developments are summarized here, but more detail can be found in the section II and HD GHG NPRM section ES.B or I.C).

These developments support the feasibility of ZEV technologies and render adoption of ZEV technologies to reduce GHG emissions more cost-competitive than ever before. First, the HD market has evolved such that early ZEV models are in use today for some applications and are expected to expand to many more; costs of ZEV technologies have gone down and are projected to continue to fall; and manufacturers have announced and begun to implement plans to rapidly increase their investments in ZEV technologies over the next decade. While some HD vehicle manufacturers and firms that purchase HD fleets cautioned in comments that such announcements may change, several HD vehicle manufacturers also commented that their MYs 2024-2027 production plans include ZEVs for their planned compliance with the previously promulgated Phase 2 standards.

In 2022 and 2023, there were several manufacturers producing fully electric HD vehicles for use in a variety of applications, and these volumes are expected to rise (see RIA Chapter 1.5). The cost to manufacture lithium-ion batteries (the single most expensive component of a BEV) has dropped significantly in the past eight years, and that cost is projected to continue to fall during this decade, all while the performance of the batteries (in terms of energy density) improves.

Many of the manufacturers that produce HD vehicles and major firms that purchase HD vehicles have announced billions of dollars' worth of investments in ZEV technologies and significant plans to transition to a zero-carbon fleet over the next ten to fifteen years.

35 36 37

See section II.D of this preamble, RIA Chapter 1, and HD GHG NPRM section I.C.1 for further information.

Furthermore, we also have seen development of technologies such as H2-ICE that also will significantly reduce CO

emissions from HD vehicles.

Notice of Proposed Rulemaking for Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles—Phase 3. 88 FR 25926, April 27, 2023.

See RTC section 10.3.1.

Mulholland, Eamonn. “Cost of electric commercial vans and pickup trucks in the United States through 2040.” Page 7. January 2022. Available at

https://theicct.org/wp-content/uploads/2022/01/cost-ev-vans-pickups-us-2040-jan22.pdf

Sharpe, Ben and Hussein Basma. “A meta-study of purchase costs for zero-emission trucks”. The International Council on Clean Transportation, Working Paper 2022-09 (February 2022). Available online:

https://theicct.org/publication/purchase-cost-ze-trucks-feb22

Environmental Defense Fund (2022) September 2022 Electric Vehicle Market Update: Manufacturer Commitments and Public Policy Initiatives Supporting Electric Mobility in the U.S. and Worldwide, available online at:

https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf

EDF Comments to the HD GHG Phase 3 NPRM. EPA-HQ-OAR-2022-0985-1644-A1.

Heavy Duty Trucking Staff, `Autocar, GM to Produce Fuel-Cell Electric Vocational Trucks,' Trucking Info (December 11, 2023).

https://www.truckinginfo.com/10211875/autocar-and-gm-announce-electric-truck-joint-venture

88 FR 25926, April 27, 2023.

Second, in enacting the 2021 BIL and the 2022 IRA laws, Congress chose to provide significant and unprecedented

monetary incentives for the production and purchase of qualified ZEVs in the HD market, as well as certain key components. These laws also provide incentives for qualifying electric charging infrastructure and for clean hydrogen production and refueling infrastructure, which will further support a rapid increase in market penetration of HD ZEVs. As a few examples, BIL provisions include $5 billion to fund the replacement of school buses with clean and zero- or low-emission buses (EPA's “Clean School Bus Program”) and over $5.5 billion to support the purchase of zero- or low-emission transit buses and associated infrastructure, with up to $7.5 billion to help build out a national network of EV charging and hydrogen refueling infrastructure through DOT's Federal Highway Administration (FHWA), some of which can be used for refueling of heavy-duty vehicles.

The IRA creates a tax credit available from calendar year (CY) 2023 through CY 2032 of up to $40,000 per vehicle for vehicles over 14,000 pounds (and up to $7,500 per vehicle for vehicles under 14,000 pounds) for the purchase of qualified commercial clean vehicles; provides tax credits available from CY 2023 through CY 2032 (phasing down starting in CY 2030) for the production and sale of battery cells and modules of up to $45 per kilowatt-hour (kWh); and also provides tax credits for 10 percent of the cost of producing applicable critical minerals (including those found in batteries and fuel cells, provided that the minerals meet certain specifications), when such components or minerals are produced in the United States. The IRA also modifies an existing tax credit that applies to alternative fuel refueling property (

e.g.,

electric vehicle chargers and hydrogen fueling stations) and extends the tax credit through CY 2032; starting in CY 2023, this provision provides a tax credit of up to 30 percent of the cost of the qualified alternative fuel refueling property (

e.g.,

HD BEV charging and hydrogen refueling equipment) and up to $100,000 per item when located in low-income or non-urban area census tracts and certain other requirements are met. Further, the IRA includes the “Clean Heavy-Duty Vehicles” program, which includes $400 million to make awards to eligible recipients/contractors that propose to replace eligible vehicles to serve one or more communities located in an air quality area designated pursuant to CAA section 107 as nonattainment for any air pollutant, in fiscal year (FY) 2022 and available through FY 2031. The IRA also includes the “Grants to Reduce Air Pollution at Ports” program, which appropriates $3 billion ($750 million of which is for projects located in areas of nonattainment for any air pollutant) in FY 2022 and available through FY 2027, to reduce air pollution at ports. These are only a few examples of a wide array of incentives in both laws that will help to reduce the costs to manufacture, purchase, and operate ZEVs, thereby bolstering their adoption in the market. See section II.E.4 of this preamble, RIA Chapter 1, and HD GHG NPRM section I.C.2 for further information.

While jurisdictions are not required to build stations specifically for heavy-duty vehicles, FHWA's guidance encourages states to consider station designs and power levels that could support heavy-duty vehicles. U.S. Department of Transportation, Federal Highway Administration. “National Electric Vehicle Infrastructure Formula Program: Bipartisan Infrastructure Law—Program Guidance (Update)”. June 2, 2023. Available online:

https://www.fhwa.dot.gov/environment/nevi/formula_prog_guid/90d_nevi_formula_program_guidance.pdf

88 FR 25926, April 27, 2023.

Third, there have been multiple actions by states to accelerate the adoption of HD ZEV technologies. As of February 15, 2023, the State of California and ten other states have adopted the Advanced Clean Trucks (ACT) program that includes a manufacturer requirement for zero-emission truck sales, and CAA section 177 empowers additional states to adopt California's ACT program if they wish.

The ACT program requires that “manufacturers who certify Class 2b-8 chassis or complete vehicles with combustion engines would be required to sell zero-emission or near-zero emission such as plug-in hybrid trucks as an increasing percentage of their annual [state] sales from 2024 to 2035.”

In addition, 17 states plus the District of Columbia and Quebec (in Canada) have signed a Memorandum of Understanding establishing goals to support widespread electrification of the HD vehicle market.

See RIA Chapter 1 and HD GHG NPRM section I.C.3 for further information.

While independent of EPA's section 202 standards, these efforts nonetheless indicate the interest at the state level for increasing electrification of the HD vehicle market.

California Air Resources Board, Final Regulation Order—Advanced Clean Trucks Regulation. Filed March 15, 2021. Available at:

https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf

Oregon, Washington, New York, New Jersey, and Massachusetts adopted ACT beginning in MY 2025 while Vermont and New Mexico adopted ACT beginning in MY 2026, and Colorado, Maryland, and Rhode Island in MY 2027.

California Air Resources Board. States that have Adopted California's Vehicle Regulations. Available at:

https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program/states-have-adopted-californias-vehicle-regulations

; See also,

e.g.,

Final Advanced Clean Truck Amendments, 1461 Mass. Reg. 29 (January 21, 2022) (Massachusetts).; Medium- and Heavy-Duty (MHD) Zero Emission Truck Annual Sales Requirements and Large Entity Reporting, 44 N.Y. Reg. 8 (January 19, 2022) (New York), available at

https://dos.ny.gov/system/files/documents/2022/01/011922.pdf

.; Advanced Clean Trucks Program and Fleet Reporting Requirements, 53 N.J.R. 2148(a) (December 20, 2021) (New Jersey), available at

https://www.nj.gov/dep/rules/adoptions/adopt_20211220a.pdf

(pre-publication version); Clean Trucks Rule 2021, DEQ-17-2021 (November 17, 2021), available at

http://records.sos.state.or.us/ORSOSWebDrawer/Recordhtml/8581405

(Oregon); Low emission vehicles, Wash. Admin. Code 173-423-070 (2021), available at

https://app.leg.wa.gov/wac/default.aspx?cite=173-423-070

; 2021 Wash. Reg. 587356 (December 15, 2021); Wash. Reg. 21-24-059 (November 29, 2021) (amending Wash. Admin. Code 173-423 and 173-400), available at

https://lawfilesext.leg.wa.gov/law/wsrpdf/2021/24/21-24-059.pdf

(Washington); “More electric, hydrogen, and hybrid passenger and commercial vehicles coming to New Mexico starting in 2026”

https://www.env.nm.gov/wp-content/uploads/2023/11/2023-11-16-COMMS-More-electric-hydrogen-and-hybrid-passenger-and-commercial-vehicles-coming-to-New-Mexico-starting-in-2026-Final.pdf

California Air Resources Board, Advanced Clean Trucks Fact Sheet (August 20, 2021), available at

https://ww2.arb.ca.gov/resources/fact-sheets/advanced-clean-trucks-fact-sheet

. See also California Air Resources Board, Final Regulation Order—Advanced Clean Trucks Regulation. Filed March 15, 2021. Available at:

https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf

EPA granted the ACT rule waiver requested by California under CAA section 209(b) on March 30, 2023. 88 FR 20688, April 6, 2023 (signed by the Administrator on March 30, 2023).

Multi-State MOU (July 2022), available at

https://www.nescaum.org/documents/multi-state-medium-and-heavy-duty-zev-action-plan.pdf.

States include California, Colorado, Connecticut, Hawaii, Maine, Maryland, Massachusetts, Nevada, New Jersey, New York, North Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Virginia, and Washington.

88 FR 25926, April 27, 2003.

ii. Development of a HD GHG Phase 3 Program

Recognizing the need for additional GHG reductions from HD vehicles and the growth of advanced HD vehicle technologies, including ZEV technologies, EPA believes this increased application of technologies in the HD sector that prevent and control GHG emissions from HD vehicles presents an opportunity to strengthen GHG standards, which can result in significant reductions in heavy-duty vehicle emissions. Based on an in-depth analysis of the potential for the development and application of such technologies in the HD sector, in April 2023 we proposed in the HD GHG Phase 3 NPRM GHG standards for MYs 2027 through 2032 and later HD vehicles more stringent than the Phase 2 GHG standards.

The proposed Phase 3

standards included (1) revised GHG standards for many MY 2027 HD vehicles, with a subset of standards that we did not propose to change, and (2) new GHG standards starting in MYs 2028 through 2032, of which the MY 2032 standards would remain in place for MYs 2033 and later. In the HD GHG Phase 3 NPRM, EPA requested comment on setting more stringent GHG standards beyond the MYs proposed for MYs 2033 through 2035. EPA also requested comment on an alternative set of GHG standards for MYs 2027 through 2032 that were less stringent than those proposed yet still more stringent than the Phase 2 standards. We also requested comment, including supporting data and analysis, as to whether there are certain market segments, such as heavy-haul vocational trucks or long-haul tractors which may require significant energy content for their intended use, for which it may be appropriate to set standards less stringent than the alternative for the specific corresponding regulatory subcategories in order to provide additional lead time to develop and introduce ZEV or other low emission HD vehicle technologies for those specific vehicle applications. In consideration of the environmental impacts of HD vehicles and the need for significant emission reductions, we also requested comment on a more stringent set of GHG standards starting in MYs 2027 through 2032 whose values would go beyond the proposed standards, such as values that would be comparable to the stringency levels in California's ACT program, values in between these proposed standards and those that would be comparable to stringency levels in ACT, and values beyond those that would be comparable to stringency levels in ACT, such as stringency levels comparable to the 50-60 percent ZEV adoption range represented by the publicly stated goals of several major original equipment manufacturers (OEMs) for 2030.

49 50 51 52 53

Finally, after considering the state of the HD market, new incentives, and comments received on the HD2027 NPRM regarding Advanced Technology Credit Multipliers (“credit multipliers”) under the HD GHG Phase 2 program, EPA proposed to end credit multipliers for BEVs and PHEVs one year earlier than provided in the existing HD GHG Phase 2 program (

i.e.,

no credit multipliers for BEVs and PHEVs in MYs 2027 and later).

88 FR 25926, April 27, 2003.

California Air Resources Board, Final Regulation Order—Advanced Clean Trucks Regulation. Filed March 15, 2021. Available at:

https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf

Scania, `Scania's Electrification Roadmap,' Scania Group, November 24, 2021,

https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html

AB Volvo, `Volvo Trucks Launches Electric Truck with Longer Range,' Volvo Group, January 14, 2022,

https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html

Deborah Lockridge, `What Does Daimler Truck Spin-off Mean for North America?,' Trucking Info (November 11, 2021).

https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america

Navistar presentation at the Advanced Clean Transportation (ACT) Expo, Long Beach, CA (May 9-11, 2022).

The final standards and requirements we are promulgating in this action are based on further consideration of the data and analyses included in the proposed rule, additional supporting data and analyses we conducted in support of this final rule, and consideration of the extensive public input EPA received in response to the proposed rule. These considerations and analyses are described in detail throughout this preamble, the RIA, and the Response to Comments document (RTC) accompanying this preamble, found in the docket to this rule (EPA-HQ-OAR_2022-0985). In the remainder of this section, we summarize the final program and key changes from the proposal in the section immediately following, followed by a summary of the impacts of the standards, EPA's statutory authority, and coordination with partners and stakeholders.

C. Overview of the Final Regulatory Action

EPA carefully considered input from stakeholders, as discussed throughout this preamble and in our accompanying RTC. This preamble section contains an overview of stakeholders' key concerns, an overview of how EPA has adjusted approaches in the final rule after further consideration, and an overview of the final standards. More detailed discussion of the final rule and key comments and EPA's consideration of them is included in the rest of the preamble, and the RTC contains detailed comment excerpts, comment summaries and EPA's responses.

1. Overview of Stakeholder Positions on Standards' Stringency

EPA's HD GHG Phase 3 Proposed Rule was signed by Administrator Michael Regan on April 11, 2023, and published in the

Federal Register

on April 27, 2023 (88 FR 25926). EPA held two days of public hearings on May 2 and 3, 2023, and the public comment period ended on June 16, 2023. EPA received over 172,000 comments in the public docket, of which over 230 had detailed comments. In addition, 185 people testified over the two-day public hearing period and EPA held dozens of follow-up meetings with a broad range of stakeholders including environmental justice (EJ) stakeholders, labor unions, manufacturers, fleets, truck dealerships, power sector-related organizations, environmental and public health non-governmental organizations (NGOs), and states. Memoranda regarding these meetings are in the rulemaking docket.

We note that very generally, in comments on the NPRM stakeholders demonstrated strong and opposing views on major issues, including: stringency of the standards, the rate of increasing stringency of the standards year over year from early model years to later model years, availability and readiness of future ZEV infrastructure, availability of minerals critical to battery production and assurance of supply chain readiness for those materials, impact of the IRA tax credits, and key elements of EPA's analysis such as technical feasibility, costs of ZEV technologies, and other elements. For example, many commenters representing environmental NGOs, public health NGOs, environmental justice organizations, front-line communities and some state and local governments supported standards that would be more stringent than our proposed standards in terms of both stringency level and year-over-year pacing of increased stringency, with many supporting standards comparable with stringency levels used in California's ACT program, and some supporting even higher levels (

e.g.,

100 percent ZEVs by 2035). A number of these commenters provided EPA with technical analyses and data to support their view that infrastructure necessary to support ZEVs is projected to be ready within the rule time frame, and that there would be sufficient critical minerals as well, such that standards more stringent than those EPA proposed are feasible. Generally, many of these commenters included various technical submissions on how EPA purportedly underestimated ZEV feasibility and adoption, underestimated the impacts of the BIL and IRA in contributing to the further development of the ZEV market, and overestimated ZEV-related costs—which, they argue when accounted for, would have led EPA to consider standards that are more stringent than those proposed. Citing the public health and environmental needs for pollutant reductions that can be achieved with ZEV technology, especially in places such as fence-line and overburdened

communities, many of these commenters also suggested more stringent or faster pacing of standards for specific subcategories of vehicles such as tractors, school/transit buses, etc. These commenters generally supported EPA's proposed elimination of credit multipliers for BEVs and PHEVs one year earlier than provided in the existing HD GHG Phase 2 program and some asked EPA to finalize even further limitations of the credit multipliers. EPA requested comment on what, if any, additional information and data EPA should consider collecting and monitoring during the implementation of the Phase 3 standards, including with respect to the important issues of refueling and charging infrastructure for ZEVs; on this topic, this general set of commenters expressed strong opposition to any action EPA would take to create a regulatory self-adjusting link between such monitoring and amending standards to decrease their stringency.

In stark contrast, commenters representing many truck manufacturers, owners, fleets, and dealers, along with some labor groups and some states, voiced support for standards less stringent than even the lowest levels of stringency on which we requested comment in the proposal,

i.e.,

considerably less stringent than the alternative presented in the HD GHG Phase 3 NPRM. A few commenters representing certain truck manufacturers supported the proposed MY 2032 standards but were concerned about the stringency of the early model year standards. Many commenters representing truck manufacturers, owners, fleets, and dealers opposed any revision to the model year 2027 standards and, even at lower overall stringency levels, voiced support for a much more gradual pace of increasing stringency of the standards—with some suggesting standards not commencing until model years 2030 and 2033. Part of their argument is that Phase 2 established GHG vehicle and engine standards for MY 2027 which are challenging, and manufacturers have made compliance plans to meet those standards. In their view, amending those MY 2027 standards cuts against these plans. These commenters also state that, although manufacturers intend to introduce ZEVs in larger numbers over time (and have invested billions of dollars already to do so),

there is too much uncertainty regarding availability of supporting electrification (or hydrogen) infrastructure, critical minerals, and supply chains to increase the stringency of the MY 2027 standards. Some of these commenters further asserted that the CAA mandates four years of lead time and three years of standard stability for revisions of heavy-duty vehicle and engine emissions standards for any pollutant, including GHGs, citing CAA section 202(a)(3)(B) and (C). A number of these commenters provided EPA with technical analyses and data to support their view that ZEV infrastructure would fall far short of what would be needed to support ZEV adoption levels presented in the potential compliance pathway on which the proposed standards were predicated, and that critical minerals would remain a limitation to ZEV growth in the HD sector. Generally, many of these commenters included various technical submissions on how EPA purportedly overestimated ZEV adoption, overestimated the impacts of the BIL and IRA in contributing to the further development of the ZEV market, and underestimated ZEV-related costs. Citing the concerns that unexpectedly slow infrastructure development could impact manufacturers' ability to comply with Phase 3, a number of these commenters called for EPA to conduct extensive monitoring of post-rule infrastructure buildout and further suggested that EPA establish mechanisms for the standards to self-adjust to become less stringent if the infrastructure deployment was found to be insufficient. These commenters generally opposed EPA's proposed elimination of credit multipliers for BEVs and PHEVs one year earlier than provided in the existing HD GHG Phase 2 program and some asked for an extension of certain technology credit multipliers beyond MY 2027. The commenters representing certain truck manufacturers who supported the proposed MY 2032 standards but expressed concern with early model year standards more specifically cited the early MY standards as being too stringent and progressing in stringency at too steep of an increase given uncertainties associated with sufficiency of supportive electrical infrastructure in the program's initial years.

See, for example, comments from the Truck and Engine Manufactures (EMA), EPA-HQ-OAR-2022-0985-2668-A1.

Commenters from the petroleum industry and others challenged EPA's authority to issue the proposed standards at all.

Terming the proposal a “ZEV mandate,” they asserted that the question of whether EPA has authority to issue standards reflecting performance of different vehicle powertrains under the CAA implicates the Major Questions Doctrine, and assert that CAA section 202(a) does not contain the correspondingly requisite clear statement authorizing EPA to do so. These commenters also assert that EPA predicating the proposed standards on averaging under the ABT program, such that vehicles with zero tailpipe emissions purportedly must be averaged with emitting vehicles for manufacturers to be able to meet the standards, is beyond EPA's authority. These commenters stated they were asserting this lack of authority both because, in their view, such averaging implicates the Major Questions Doctrine and EPA lacks a clear statement of authorization from Congress to do so, and because, in their view, averaging and the ABT program are inconsistent with CAA statutory provisions for certification, warranty, and civil penalties, all of which they state contemplate individualized determinations, not determinations on average.

See, for example, comments from American Free Enterprise Chamber of Commerce, EPA-HQ-OAR-2022-0985-1660.

EPA heard from some representatives from the heavy-duty vehicle manufacturing industry both optimism regarding the heavy-duty industry's ability to produce ZEV applications in future years at high volume, but also concern that a slow deployment of electrification infrastructure (magnitude of potential upgrades to the electrical distribution system necessary to support depot charging, and public charging infrastructure) could slow the growth of heavy-duty ZEV adoption, and that this may present challenges for vehicle manufacturers' ability to comply with EPA HD GHG Phase 3 standards. Concerns about uncertainties relating to supporting infrastructure included: limited nature of today's HD charging infrastructure, the magnitude of buildout of electrical distribution systems necessary to support (BEVs especially in the early model years of the program), the cost and length of time needed for infrastructure buildout, a chicken-egg dynamic whereby prospective BEV purchasers will not act until assured of adequate supporting infrastructure, and utilities will not build out the infrastructure without assurance of demand, and the lack of availability of hydrogen infrastructure. Some commenters further noted that fleets and owners will be reluctant to buy, or may cancel orders for, ZEVs, if/when ZEV infrastructure is a barrier. Commenters raised these concerns on top of those voiced by some

manufacturers that more lead time is needed for product development, especially given uncertainty regarding purchasers' decisions, noting customer reluctance to utilize an unfamiliar technology, and asserted barriers associated with limited range and cargo penalty due to need for large batteries. These comments are discussed in more detail in section II and in Chapters 6, 7, and 8 of the RTC.

2. Overview of Consideration of Key Concerns From Stakeholders and the Final Standards

i. Improvements to EPA's Technical and Infrastructure Analyses

EPA considered the wide-ranging perspectives, data and analyses submitted in support of stakeholder positions, as well as new studies and data that became available after the proposal. As a consequence, EPA believes that the technical analyses supporting the final rule are improved and more robust. For example, in our technology analysis tool (HD TRUCS, see section II of this preamble) we have adjusted our battery and other component cost assumptions, revised vehicle efficiency values, refined the battery sizing determination, added public charging, increased depot charging costs and diesel prices, added Federal excise tax (FET) and state tax, increased charging equipment installation costs, included more charger sharing, and increased hydrogen fuel costs. Based on consideration of feedback from commenters, in HD TRUCS we also adjusted the technology payback schedule using a publicly-available model. After consideration of comment (and as EPA signaled at proposal), we also have adjusted our analytical baseline by increasing the amount of ZEV adoption in our “no-action” scenario (

i.e.,

without this rule) to reflect ZEV adoption required by California's ACT program, as well as further ZEV adoption in other states. These and many more updates described throughout this preamble and the RIA strengthen the analyses supporting the final standards.

We also improved our analysis of infrastructure readiness and cost by including projected needed upgrades to the electricity distribution system under our potential compliance pathway in our analysis. As described in section II of this preamble, our improved analysis of charging infrastructure needs and costs supports the feasibility of the future growth of ZEV technology of the magnitude EPA is projecting in this final rule's potential compliance pathway's technology packages. EPA further notes that we recognize that charging and refueling infrastructure for BEVs and FCEVs is necessary for success in the increasing development and adoption of those vehicle technologies (further discussed in section II and RIA Chapters 1 and 2). There are significant efforts already underway to develop and expand heavy-duty vehicle electric charging and hydrogen refueling infrastructure. The U.S. government is making large investments through the BIL and the IRA, as discussed in more detail in RIA Chapter 1.3 (

e.g.,

this includes a tax credit for charging or hydrogen refueling infrastructure as well as billions of additional dollars for programs that could help fund charging infrastructure if purchased alongside an electric vehicle).

56 57

Private investments will also play a critical role in meeting future infrastructure needs, as discussed in more detail in RIA Chapter 1.6. We expect many BEV or fleet owners to invest in depot-based charging infrastructure (see RIA Chapter 2.6 for information on our analysis of charging needs and costs). Manufacturers, charging network providers, energy companies and others are also investing in high-power public or other stations that will support public charging. For example, Daimler Truck North America is partnering with electric power generation company NextEra Energy Resources and BlackRock Renewable Power to collectively invest $650 million to create a nationwide U.S. charging network for commercial vehicles with a later phase of the project also supporting hydrogen fueling stations.

Volvo Group and Pilot announced their intent to offer public charging for medium- and heavy-duty BEVs at priority locations throughout the network of 750 Pilot and Flying J North American truck stops and travel plazas.

A recent assessment by Atlas Public Policy estimated that $30 billion in public and private investments had been committed as of the end of 2023 specifically for charging infrastructure for medium- and heavy-duty BEVs.

Inflation Reduction Act, Public Law 117-169 (2022).

Bipartisan Infrastructure Law, Public Law 117-58, 135 Stat. 429 (2021).

NextEra Energy. News Release: “Daimler Truck North America, NextEra Energy Resources and BlackRock Renewable Power Announce Plans to Accelerate Public Charging Infrastructure for Commercial Vehicles Across The U.S.” January 31, 2022. Available online:

https://newsroom.nexteraenergy.com/news-releases?item=123840

Adler, Alan. “Pilot and Volvo Group add to public electric charging projects.” FreightWaves. November 16, 2022. Available online:

https://www.freightwaves.com/news/pilot-and-volvo-group-add-to-public-electric-charging-projects

Lepre, Nicole. “Estimated $30 Billion Committed to Medium- and Heavy-Duty Charging Infrastructure in the United States.” Atlas Public Policy. EV Hub. January 26, 2024. Available online:

https://www.atlasevhub.com/data_story/estimated-30-billion-committed-to-medium-and-heavy-duty-charging-infrastructure-in-the-united-states

Domestic manufacturing capacity is also increasing. Department of Energy (DOE) estimates over $500 million in announced investments have been made to support the domestic manufacturing of BEV charging equipment, with companies planning to produce more than one million BEV chargers in the U.S. each year.

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Workforce development is on the rise. For example, the Siemens Foundation announced they will invest $30 million over ten years focused on the EV charging sector.

As of early 2023, about 20,000 people had been certified through a national Electric Vehicle Infrastructure Training Program.

64 65

These important early actions and market indicators suggest strong growth in charging and refueling ZEV infrastructure in the coming years. See RIA Chapters 1.3 and 1.6 for more information on public and private investments in charging infrastructure.

DOE, “Building America's Clean Energy Future”. 2024. Available online:

https://www.energy.gov/invest

U.S. Department of Energy, Vehicle Technologies Office. “FOTW #1314, October 30, 2023: Manufacturers Have Announced Investments of Over $500 million in More Than 40 American-Made Electric Vehicle Charger Plants”. October 30, 2023. Available online:

https://www.energy.gov/eere/vehicles/articles/fotw-1314-october-30-2023-manufacturers-have-announced-investments-over-500

Lienert, Paul. “Siemens to invest $30 million to train U.S. EV charger technicians”. Reuters. September 6, 2023. Available online:

https://www.reuters.com/business/autos-transportation/siemens-invest-30-million-train-us-ev-charger-technicians-2023-09-06

IBEW. “IBEW Members Answer Call for National Electric Vehicle Program”. April 2023. Available online:

https://www.ibew.org/articles/23ElectricalWorker/EW2304/Politics.0423.html

The White House. “FACT SHEET: Biden Harris Administration Announces New Standards and Major Progress for a Made-in-America National Network of EV Chargers.” February 15, 2023. Available online:

https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/15/fact-sheet-biden-harris-administration-announces-new-standards-and-major-progress-for-a-made-in-america-national-network-of-electric-vehicle-chargers

ii. Summary of Final Standards

Our improved analyses for the final rule continue to show that it is appropriate and feasible to revise the MY 2027 standards promulgated under the HD GHG Phase 2 program for most vehicles, and to set new standards for MYs 2028 through 2032 with year-over-

year increases in stringency. In consideration of the opposing concerns raised by commenters, EPA believes it is critical to balance the public health and welfare need for GHG emissions reductions over the long term with the time needed for product development and manufacturing as well as infrastructure development in the near term. After further consideration of the lead times necessary to support both the vehicle technologies' development and deployment and the infrastructure needed, as applicable, under the potential compliance pathway's technology packages described in section ES.C.2.iii, EPA is finalizing GHG emission standards for heavy-duty vehicles that, compared to the proposed standards, include less stringent standards for all vehicle categories in MYs 2027, 2028, 2029, and 2030. The final standards increase in stringency at a slower pace through MYs 2027 to 2030 compared to the proposal, and day cab tractor standards start in MY 2028 and heavy heavy-duty vocational vehicles start in MY 2029 (we proposed Phase 3 standards for day cabs and heavy heavy-duty vocational vehicles starting in MY 2027). As proposed, the final standards for sleeper cabs start in MY 2030 but are less stringent than proposed in that year and in MY 2031, and equivalent in stringency to the proposed standards in MY 2032. Our updated analyses for the final rule show that model years 2031 and 2032 GHG standards in the range of those we requested comment on in the HD GHG Phase 3 NPRM are feasible and appropriate considering feasibility, lead time, cost, and other relevant factors as described throughout this preamble and particularly section II. Specifically, we are finalizing MY 2031 standards that are on par with the proposal for light and medium heavy-duty vocational vehicles and day cab tractors. Heavy heavy-duty vocational vehicle final standards are less stringent than proposed for all model years, including 2031 and 2032. For MY 2032, we are finalizing more stringent standards than proposed for light and medium heavy-duty vocational vehicles and day cab tractors. Our assessment is that setting this level of standards starting in MY 2032 achieves meaningful GHG emission reductions at reasonable cost, and that heavy-duty vehicle technologies, charging and refueling infrastructure, and critical minerals and related supply chains will be available to support this level of stringency (as many commenters agreed with and provided technical information to support). Our assessment of the final program as a whole is that it takes a balanced and measured approach while still applying meaningful requirements in MY 2027 and later to reducing GHG emissions from the HD sector.

A summary of the final standards can be found in this Executive Summary, with more details on the standards themselves and our supporting analysis found in section II and Chapter 2 of the RIA. The standards for MY 2027 through 2032 and later are presented in Table ES-1 and Table ES-2 with additional tables showing the final custom chassis and heavy-haul tractor standards in section II.F.

When compared to the existing Phase 2 standards, the Phase 3 standards begin in MY 2027 with a 13 percent increase in the stringency of the medium heavy-duty vocational vehicle standards and a 17 percent increase in the light heavy-duty vocational vehicle standards, the Phase 3 day cab tractor standards begin in MY 2028 with an 8 percent increase in stringency over the Phase 2 standards, the heavy heavy-duty vocational standards begin in MY 2029 with a 13 percent increase over Phase 2, and the sleeper cab tractor standards begin in MY 2030 with a 6 percent increase over Phase 2. Each vehicle category then increases in stringency each year, through MY 2032, at which time compared to the Phase 2 program the light heavy-duty vocational standards are a 60 percent increase in stringency of the CO

standard, the medium heavy-duty vocational vehicle standards are a 40 percent increase, the day cab standards are a 40 percent increase, the heavy heavy-duty vocational standards are a 30 percent increase, and the sleeper cab standards are a 25 percent increase in the stringency of the standards. As described in section II of this preamble, our analysis shows that the final Phase 3 standards, including revisions to HD GHG Phase 2 CO

standards for MY 2027 and the new, progressively more stringent numeric values of the CO

standards starting in MYs 2028 through 2032, are feasible and appropriate considering feasibility, lead time, costs, and other relevant factors.

See regulations 40 CFR 1037.105 and 1037.106.

Table ES-1 MY 2027 through 2032 and Later Vocational Vehicle CO

Emission Standards (grams/ton-mile) by Regulatory Subcategory (with Phase 2 2024 through 2026 Standards for Reference)

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iii. Updated Technology Packages for Example Potential Compliance Pathways

The standards do not mandate the use of a specific technology, and EPA anticipates that a compliant fleet under the standards would include a diverse range of HD motor vehicle technologies (

e.g.,

transmission technologies, aerodynamic improvements, engine technologies, hybrid technologies, battery electric powertrains, hydrogen fuel cell powertrains, etc.). The technologies that have played (and that the Phase 2 rule projected would play) a fundamental role in meeting the Phase 2 GHG standards will continue to play an important role going forward, as they remain key to reducing the GHG emissions of HD vehicles powered by internal combustion engines. In our assessment that supports the appropriateness and feasibility of these final standards, we developed projected technology packages for potential compliance pathways that could be used to meet each of the final standards.

Because our standards are technology neutral and there are flexibilities built into the ABT program, there are many variations in the exact mix of technologies manufacturers can use to meet the standards, and this mix can include technologies that EPA has not envisioned. We have projected a few compliance pathways with technology packages that are purposely different. One example potential compliance pathway's projected technology package includes a mix of HD motor vehicle technologies that prevent and control GHG emissions, including technologies for vehicles with ICE and ZEV technologies (Table ES-3). In Table ES-4, we present another example compliance pathway's technology package that does not include ZEVs but does include a suite of GHG-reducing technologies for vehicles with ICE ranging from: ICE improvements in engine, transmission, drivetrain, aerodynamics, and tire rolling resistance; the use of lower carbon fuels (Compressed Natural Gas (CNG)/Liquified Natural Gas (LNG)); hybrid powertrains (Hybrid Electric Vehicles (HEV) and Plug-in Hybrid Electric Vehicles (PHEV)); and hydrogen-fueled ICE (H2-ICE). Except for H2-ICE, these technologies exist today and continue to evolve to improve their CO

emissions reductions. To demonstrate feasibility and project emissions impacts, costs, benefits, etc. in this final rule, we present a detailed analysis of the compliance pathway represented by the technology packages shown in Table ES-3, which we believe is one reasonable pathway. Details on several additional example potential technology compliance pathways we considered can be found in section II.F.4 and RIA Chapter 2.11, and details on our projected technology mix in a “reference” scenario that represents the United States without the final standards can be found in section V and RIA Chapter 4. EPA emphasizes that its standards are performance-based, and manufacturers are not required to use particular technologies to meet the standards. Tables ES-3 and ES-4 are just two examples of potential technology compliance pathways and do not reflect a requirement of how manufacturers will ultimately meet the standards finalized in this rule.

As further explained in sections I and II (including II.G), EPA is required by law to assess feasibility and compliance costs of standards issued pursuant to CAA section 202(a), and thus practically must demonstrate a potential means of complying with the standards in order to do so (

e.g.,

a potential compliance pathway's projected technology packages that manufacturers may, but are not required, to utilize). Long-standing case law regarding EPA's CAA section 202(a) authority supports the necessity of this approach. See

NRDC

EPA,

655 F. 2d 321, 332 (D.C. Cir. 1981) (indicating that EPA is to state the engineering basis underlying a section 202 standard (

i.e.,

the technology package which could be utilized to meet a standard), indicate potential impediments to that technology package's feasibility, and plausibly explain how those impediments could be resolved within the lead time afforded).

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iv. Revisions to Advanced Technology Vehicle Credit Multipliers

Along with retaining EPA's historical approach to setting performance-based standards and providing manufacturers flexibility in meeting the standards by allowing them to choose their own mix of vehicle technologies, we are retaining and did not reopen the general structure of the Averaging, Banking and Trading (ABT) program, which allows manufacturers further flexibility in meeting standards using averaging provisions. In other words, consistent with EPA's practice for over fifty years of setting emissions standards for HD vehicles, we are retaining the existing regulatory scheme that does not require each vehicle to meet the standards individually and instead allows manufacturers to meet the standards on average within each weight class of their fleet.

As described in section III.A of this preamble, we are finalizing updates to the advanced technology incentives in the ABT program for HD GHG Phase 2 for PHEVs, BEVs, and FCEVs. As further explained in section III, after consideration of comments, we are retaining the advanced technology vehicle credit multipliers for PHEV, BEV, and FCEV technologies through MY 2027, consistent with the previously promulgated HD GHG Phase 2 program. In order to ensure meaningful vehicle GHG emission reductions under the Phase 3 program, we are limiting the period over which manufacturers can use the multiplier portion of credits earned from advanced technologies. However, in recognition that the final HD GHG Phase 3 standards will require meaningful investments from manufacturers to reduce GHG emissions from HD vehicles, we requested comment on and are finalizing certain additional transitional flexibilities to assist manufacturers in the implementation of Phase 3. See section III of this preamble for further details.

As further described in section III, as has been the case since the ABT program was first promulgated, although manufacturers choosing to use ABT as a compliance strategy must assure that their vehicle families comply with the standard on average, each individual vehicle is certified to an individual limit (called a Family Emission Limit) as well.

v. Commitment to Engagement and Monitoring Elements of Phase 3 Compliance and Supporting Technology and Infrastructure Development

As we noted in the HD GHG Phase 3 NPRM, EPA has a vested interest in monitoring industry's performance in complying with mobile source emission standards, including the highway heavy-duty industry. In fact, EPA already monitors and reports out industry's performance through a range of approaches, including publishing industry compliance reports (such as has been done during the heavy-duty GHG Phase 1 program).

After consideration of the divergent comments received on the topic of collecting and monitoring ZEV infrastructure during the implementation of the Phase 3 standards, as further described in section II, we are committing in this final rule to actively engage and monitor both manufacturer compliance and the major elements of heavy-duty technology and supporting infrastructure development. EPA, in consultation with other Federal agencies, will issue periodic reports reflecting collected information. These reports will track HD electric charging and hydrogen refueling infrastructure buildout throughout Phase 3 implementation as well as an evaluation of zero and low GHG-emitting HD vehicle production and the evolution of the HD battery production and material supply, including supply of critical minerals. Based on these reports, as appropriate and consistent with CAA section 202(a) authority, EPA may decide to issue guidance documents, initiate a rulemaking to consider modifications to the Phase 3 rule, or make no changes to the Phase 3 rule program. We are not finalizing any mechanisms for including a self-adjusting linkage between the standards' stringency and ZEV infrastructure as requested by some industry stakeholders. Further details on EPA's Phase 3 rule implementation engagement, data collection and monitoring and reporting commitments can be found in section II.B.2 of this preamble.

See EPA Reports EPA-420-R-21-001B covering Model Years 2014-2018, and EPA report EPA-420-R-22-028B covering Model Years 2014—2020, available online at

https://www.epa.gov/compliance-and-fuel-economy-data/epa-heavy-duty-vehicle-and-engine-greenhouse-gas-emissions

D. Impacts of the Standards

Our estimated emission impacts, average per-vehicle costs, monetized program costs, and monetized benefits of the final program are summarized in this section and detailed in sections IV through VIII of the preamble and Chapters 3 through 8 of the RIA. EPA notes that, consistent with CAA section 202(a)(1) and (2), in evaluating potential GHG standards, we carefully weigh the statutory factors, including GHG emissions impacts of the GHG standards, and the feasibility of the standards (including cost of compliance and available lead time).

We monetize benefits of the GHG standards and evaluate costs in part to

better enable a comparison of costs and benefits pursuant to E.O. 12866, but we recognize that there are benefits that we are currently unable to fully quantify and monetize. EPA's consistent practice has been to set standards to achieve improved air quality consistent with CAA section 202(a), and not to rely on cost-benefit calculations, with their uncertainties and limitations, in identifying the appropriate standards. Nonetheless, our conclusion that the estimated benefits exceed the estimated costs of the final program reinforces our view that the GHG standards represent an appropriate weighing of the statutory factors and other relevant considerations.

Our analysis of emissions impacts accounts for downstream emissions,

i.e.,

from emission processes such as engine combustion, engine crankcase exhaust, vehicle evaporative emissions, vehicle refueling emissions, and brake and tire wear. Vehicle technologies would also affect emissions from upstream sources,

i.e.,

emissions that are attributable to a vehicle's operation but not the vehicle itself, for example, electricity generation and the refining and distribution of fuel. Our analyses include emissions impacts from electrical generating units (EGUs) and refinery emission impacts.

We are continuing and are not reopening the existing approach taken in both HD GHG Phase 1 and Phase 2, that compliance with the vehicle exhaust CO

emission standards is based solely on CO

emissions from the vehicle. Indeed, all of our vehicle emission standards are based on vehicle emissions.

The estimated impacts summarized in this section are based on our projection of a scenario that represents the United States with the final standards in place, relative to our projection of a “reference” scenario that represents the United States without the final standards. For a similar estimate for the alternative standards, please see preamble section IX. As suggested by many commenters, and as EPA suggested at proposal (88 FR 25989), we updated our reference scenario between the proposal and this final rule to include California's ACT program implementation in California and in the states that have adopted the ACT rule under CAA section 177, thus increasing the amount of ZEV technology in our projection of the United States without the final standards in place.

Further, we improved our projections of the rate of expected ZEV adoption across vehicle categories for the reference scenario, the result of which in the modeled compliance pathway was increased projected adoption in the light heavy-duty vocational vehicle subcategory and decreased adoption in other subcategories compared to the reference scenario in the proposal. These updates to the reference scenario resulted in changes to the estimated numeric values of emissions and costs as shown but reflect the same general expected impacts of the standards as we projected at the time of proposal,

i.e.,

significant reductions in downstream GHG emissions, reductions in GHGs from lower demand for onroad fuels and therefore reduced emissions from fuel refineries, and increases in GHG emissions from EGUs (which we expect to decline over time as the electricity grid becomes cleaner). This same trend is expected for non-GHG pollutants as well, which are affected to the extent that zero- or lower-non-GHG emitting technologies are used to meet the GHG standards,

i.e.,

we project significant reductions in downstream emissions of non-GHG pollutants, reductions in non-GHG pollutants resulting from lower demand for onroad fuels and therefore reduced emissions from fuel refineries, and increases in non-GHG pollutant emissions from EGUs (which we expect to decrease over time as previously noted).

EPA granted California's waiver request on March 30, 2023, which left EPA insufficient time to develop an alternative reference case for the proposal. 88 FR 25989.

As seen in Table ES-5, through 2055 the program will result in significant downstream GHG emission reductions—approximately 1.4 billion metric tons in reduced CO

-equivalent emissions.

From calendar years 2027 through 2055, we project a cumulative increase of approximately 0.39 billion metric tons of CO

-equivalent emissions from EGUs as a result of the increased demand for electricity associated with the rule. We also project reductions in CO

-equivalent emissions from refineries on the order of 0.013 billion metric tons during this time period. Considering both downstream and upstream cumulative emissions from calendar years 2027 through 2055 (a year when most of the regulated fleet will consist of HD vehicles subject to the Phase 3 standards due to fleet turnover), the standards will achieve approximately 1 billion metric tons in net CO

-equivalant emission reductions (see section V of this preamble and Chapter 4 of the RIA for more detail). Following improvements to our technical analysis as described in more detail in sections II and V of this preamble, we remodeled the GHG emission reductions from the proposed standards, and the results show the reductions from the final rule are close to but greater than projected reductions from the proposed standards (

e.g.,

net reductions are 998 million metric ton for the proposed standards). As summarized in section C2.ii of the Executive Summary and detailed in section II of this preamble, the final standards are less stringent and increase in stringency at a slower pace compared to the proposal in the early model years of the program, but the later model year final standards are more stringent than proposed for light and medium heavy-duty vocational vehicles and day cab tractors. This final rule's GHG emission reductions will make an important contribution to efforts to limit climate change and its anticipated impacts. These GHG reductions will benefit all U.S. residents, including populations such as people of color, low-income populations, indigenous peoples, and/or children that may be especially vulnerable to various forms of damages associated with climate change.

Note that these reductions are lower in the final rule than the proposal primarily due to the increased number of ZEVs considered in the reference case, see section V of this preamble for details.

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In our modeled potential compliance pathway, we project that the GHG emission standards will lead to an increase in HD ZEVs relative to our reference case (

i.e.,

without the rule), which will also result in downstream reductions of vehicle emissions of non-GHG pollutants that contribute to ambient concentrations of ozone, particulate matter (PM

2.5

), nitrogen dioxide (NO

), CO, and air toxics. Exposure to these non-GHG pollutants is linked to adverse human health impacts such as premature death as well as other adverse public health and environmental effects (see section VI). As shown in Table ES-6, in 2055, we estimate a decrease in emissions from all criteria pollutants modeled (

i.e.,

, PM

2.5

, VOC, and SO

) from downstream sources. The reductions in non-GHG emissions from vehicles will reduce air pollution near roads. As described in section VI of this preamble, there is substantial evidence that people who live or attend school near major roadways are more likely to be of a non-White race, Hispanic ethnicity, and/or low socioeconomic status. In addition, emissions from HD vehicles and engines can significantly and adversely affect individuals living near truck freight routes. Based on a study EPA conducted of people living near truck routes, an estimated 72 million people live within 200 meters of a truck freight route.

Relative to the rest of the population, people of color and those with lower incomes are more likely to live near truck routes.

In addition, children who attend school near major roads are disproportionately more highly represented by children of color and children from low-income households.

U.S. EPA (2021). Estimation of Population Size and Demographic Characteristics among People Living Near Truck Routes in the Conterminous United States. Memorandum to the Docket EPA-HQ-OAR-2019-0055.

See section VI.D of this preamble for additional discussion on our analysis of environmental justice impacts of this final rule.

Kingsley, S., Eliot, M., Carlson, L. et al. Proximity of U.S. schools to major roadways: a nationwide assessment. J Expo Sci Environ Epidemiol 24, 253-259 (2014).

https://doi.org/10.1038/jes.2014.5

Table ES-6 also shows impacts on EGU and refinery emissions. Similar to GHG emissions, we project that non-GHG emissions from EGUs will increase in the near term as a result of the increased demand for electricity associated with the rule, and we expect those projected impacts to decrease over time as the electricity grid becomes cleaner. We project reductions in non-GHG emissions from refineries.

We project net reductions in NO

, VOC, and SO

emissions in 2055. Although there is a small net increase in direct PM

2.5

emissions in 2055, ambient PM

2.5

is formed from emissions of direct PM

2.5

as well as emissions of other precursors such as NOx and SO

We project overall PM

2.5

-related benefits based on the contribution of emissions from each of these pollutants (see Table ES-8). See section V of this preamble and RIA Chapter 4 for more details.

We note here that there is uncertainty surrounding how refinery activity would change in response to lower domestic demand for liquid transportation fuels and in response to comments received on the proposal, the estimates in Table ES-6 reflect the assumption that half of the projected drop in domestic fuel demand would be offset by an increase in exports.

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EPA believes the non-GHG emissions reductions of this rule provide important health benefits to the 72 million people living near truck routes and even more broadly over the longer term. We note that the agency has broad authority to regulate emissions from the power sector (

e.g.,

the mercury and air toxics standards, and new source performance standards), as do the States and EPA through cooperative federalism programs (

e.g.,

in response to PM National Ambient Air Quality Standards (NAAQS) implementation requirements, interstate transport, emission guidelines, and regional haze),

and that EPA reasonably may address air pollution incrementally across multiple rulemakings, particularly across multiple industry sectors. For example, EPA has separately proposed new source performance standards and emission guidelines for greenhouse gas emissions from fossil fuel-fired power plants, which would also reduce emissions of criteria air pollutants such as PM

2.5

and SO

(88 FR 33240, May 23, 2023).