2010........  1.6.......  0.9.......  1.0.......  2.3.......  3.2.......  4.7.......  13.7......  4.9.........  5.4.......  5.8.......  5.7.......  35.5
Combined......................  2008........  3.7 -.....  2.5 -.....  4.6 -.....  7.3 -.....  11.1 -....  14.2 -....  43.4 -....  16.4 -......  17.8 -....  20.6 -....  23.3 -....  121.4 -
                                2010........  6.2.......  3.7.......  5.2.......  8.3.......  10.8......  14.0......  48.2......  15.3........  16.9......  19.7......  20.0......  120.1
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

    NHTSA projects that manufacturers will recover most or all of these
additional costs through higher selling prices for new cars and light
trucks. To allow manufacturers to recover these increased outlays (and,
to a much less extent, the civil penalties that some manufacturers are
expected to pay for non-compliance), the agency estimates that the
standards will lead to increase in average new vehicle prices ranging
from $183 to $287 per vehicle in MY 2017 to between $1,461 and $1,616
per vehicle in MY 2025:

                Table I-15--NHTSA's Incremental Increases in Average New Vehicle Costs ($) Under the CAFE Standards (Estimated Required)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 MY baseline     2017        2018        2019        2020        2021        2022        2023        2024        2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger cars................  2008........  244 -.....  455 -.....  631 -.....  930 -.....  1,143 -...  1,272 -...  1,394 -...  1,751 -...  1,827 -

                                2010........  364.......  484.......  659.......  858.......  994.......  1,091.....  1,221.....  1,482.....  1,578
Light trucks..................  2008........  78 -......  192 -.....  423 -.....  622 -.....  854 -.....  951 -.....  997 -.....  1,081 -...  1,183 -
                                2010........  147.......  196.......  397.......  629.......  908.......  948.......  1,056.....  1,148.....  1,226
Combined......................  2008........  183 -.....  360 -.....  557 -.....  823 -.....  1,043 -...  1,162 -...  1,259 -...  1,528 -...  1,616 -
                                2010........  287.......  382.......  567.......  779.......  964.......  1,042.....  1,165.....  1,370.....  1,461
--------------------------------------------------------------------------------------------------------------------------------------------------------

    And as before, NHTSA estimates that manufacturers employing
compliance flexibilities and advance technologies to meet the standards
will significantly reduce these increases.

                Table I-16--NHTSA's Incremental Increases in Average New Vehicle Costs ($) Under the CAFE Standards (Estimated Achieved)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                 MY baseline     2017        2018        2019        2020        2021        2022        2023        2024        2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger cars................  2008........  208-......  377-......  571-......  837-......  1,034-....  1,168-....  1,255-....  1,440-....  1,577-
                                2010........  284.......  424.......  603.......  762.......  934.......  1,024.....  1,129.....  1,328.....  1,361
Light trucks..................  2008........  87-.......  179-......  331-......  470-......  648-......  752-......  808-......  888-......  1,040-
                                2010........  158.......  187.......  416.......  596.......  863.......  911.......  1,000.....  1,081.....  1,047
Combined......................  2008........  164-......  306-......  486-......  709-......  900-......  1,025-....  1,104-....  1,256-....  1,400-
                                2010........  239.......  340.......  537.......  704.......  909.......  985.......  1,085.....  1,245.....  1,257
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Despite estimated increases in average vehicle prices of between
$183 to $287 per vehicle in MY 2017 to between $1,461 and $1,616 per
vehicle in MY 2025, NHTSA estimates that discounted fuel savings over
the vehicles' lifetimes will be sufficient to offset initial costs.
Even discounted at 7%, lifetime fuel savings are estimated to be more
than 2.5 times the incremental price increase induced by manufacturers'
compliance with the standards. Although NHTSA estimates lifetime fuel
cost savings using 3% and 7% discount rates based on OMB guidance, it
is possible that consumers use different discount rates when valuing
fuel savings, or value savings over a period of time shorter than the
vehicle's full useful life. A more nuanced discussion of consumer
valuation of fuel savings appears in Section IV.G.6.

[GRAPHIC] [TIFF OMITTED] TR15OC12.006

    As is the case with technology costs, accounting for the program's
compliance flexibilities reduces savings in lifetime fuel expenditures
due to lower levels of achieved fuel economy than are required under
the standards.

[GRAPHIC] [TIFF OMITTED] TR15OC12.007

    The CAFE standards are projected to produce net benefits in a range
from $498 billion to $507 billion at a 3 percent discount rate (a range
of $476 billion to $483 billion, with compliance flexibilities), or
between $372 billion and $377 billion at a 7 percent discount rate (a
range of $356 billion to $362 billion, with compliance flexibilities),
over the useful lives of the light duty vehicles sold during MYs 2017-
2025.
    While the estimated incremental technology outlays and incremental
increases in average vehicle costs for the final MYs 2017-2021
standards in today's analysis are similar to the estimates in the
proposal, we note for the reader's reference that the incremental cost
estimates for the augural standards in MYs 2022-2025 are lower than in
the proposal. The lower costs in those later model years result from
the updated analysis used in this final rule. In MY 2021, the estimated
incremental technology outlays for the combined fleet range from $14.9
billion to $16.5 billion as compared to $17 billion in the proposal,
while the estimated incremental increases in average vehicle costs
range from $964 to $1,043, as compared to $1,104 in the proposal. In MY
2025, the estimated incremental technology outlays for the combined
fleet range from $23.3 billion to $26.8 billion, as compared to $32.4
billion in the proposal, while the estimated incremental increases in
average vehicle costs range from $1,461 to $1,616, as compared to
$1,988 in the proposal. The changes in the MY 2025 incremental costs
reflect the combined result of a number of changes and corrections to
the CAFE model and inputs, including (but not limited to) the following
items:
     Focused corrections were made to the MY2008-based market
forecast;
     A new MY2010-based market forecast was introduced;
     Mild HEV technology and off-cycle technologies are now
available in the analysis;
     The amount of mass reduction applied in the analysis \102\
has changed;
---------------------------------------------------------------------------

    \102\ The agencies limited the maximum amount of mass reduction
technology that was applied to lighter vehicles in order that the
analysis would show a way manufacturers could comply with the
standards while maintaining overall societal safety. to demonstrate
a path that industry could use to meet standards while maintaining
societal safety
---------------------------------------------------------------------------

     The effectiveness of advanced transmissions when applied
to conventional naturally aspirated engines has been revised based on a
study completed by Argonne National Laboratory for NHTSA;
     Estimates of future fuel prices were updated;
     The model was corrected to ensure that post-purchase fuel
prices are

applied when calculating the effective cost of available options to add
technologies to specific vehicle models; and
     The model was corrected to ensure that the incremental
costs and fuel savings are fully accounted for when applying diesel
engines.
    These changes to the model and inputs are discussed in detail in
Sections II.G, IV.C.2, and IV.C.4 of the preamble; Chapter V of NHTSA's
FRIA, and Chapters 3 and 4 of the joint TSD.
    Acting together, these changes and corrections caused technology
costs attributable to the baseline MYs 2009-2016 CAFE standards to
increase for both fleets in most model years. In addition, the changes
and corrections had the combined effect of reducing the total
technology costs (i.e., including technology attributable to the
baseline standards) in MYs 2022-2025, when greater levels of fuel
economy-improving technologies would be required to comply with the
augural standards. Because today's analysis applies these changes
simultaneously, and because they likely interact in ways that would
complicate attribution of impact, the agency has not attempted to
quantify the extent to which each change impacted results. The combined
effect of the increase in the baseline technology costs and reduction
in the total technology costs in MYs 2022-2025 led to a reduction in
the estimated incremental technology cost in MYs 2022-2025 in NHTSA's
analysis, although estimated incremental technology costs were higher
than or very similar to those reported in the NPRM for model years
prior to MY 2022.
    While the incremental costs for MYs 2022-2025 are lower than in the
NPRM, the total estimated costs for compliance (inclusive of baseline
costs) were reduced to a lesser extent. In assessing the appropriate
level for maximum feasible standards, NHTSA takes into consideration a
number of factors, including technological feasibility, economic
practicability (which includes the consideration of cost as well as
many other factors), the effect of other motor vehicle standards of the
Government on fuel economy, the need of the United States to conserve
energy, and safety, as well as other factors. Considering all of these
factors, NHTSA continues to believe that the final standards are
maximum feasible, as discussed below in Section IV.F.
2. Summary of Costs and Benefits for the EPA's GHG Standards
    EPA has analyzed in detail the projected costs and benefits of the
2017-2025 GHG standards for light-duty vehicles. Table I-19 shows EPA's
estimated lifetime discounted cost, fuel savings, and benefits for all
such vehicles projected to be sold in model years 2017-2025. The
benefits include impacts such as climate-related economic benefits from
reducing emissions of CO2 (but not other GHGs), reductions
in energy security externalities caused by U.S. petroleum consumption
and imports, the value of certain particulate matter-related health
benefits (including premature mortality), the value of additional
driving attributed to the VMT rebound effect, the value of reduced
refueling time needed to fill up a more fuel efficient vehicle. The
analysis also includes estimates of economic impacts stemming from
additional vehicle use, such as the economic damages caused by
accidents, congestion and noise (from increased VMT rebound driving).

  Table I-19--EPA's Estimated 2017-2025 Model Year Lifetime Discounted
   Costs, Benefits, and Net Benefits Assuming the 3% Discount Rate SCC
                               Value a b c
                       [Billions of 2010 dollars]
------------------------------------------------------------------------

------------------------------------------------------------------------
               Lifetime Present Value d--3% Discount Rate
------------------------------------------------------------------------
Program Costs...........................................           -$150
Fuel Savings............................................             475
Benefits................................................             126
Net Benefits\d\.........................................             451
------------------------------------------------------------------------
                  Annualized Value f--3% Discount Rate
------------------------------------------------------------------------
Annualized costs........................................           -6.49
Annualized fuel savings.................................            20.5
Annualized benefits.....................................            5.46
Net benefits............................................            19.5
------------------------------------------------------------------------
               Lifetime Present Value d--7% Discount Rate
------------------------------------------------------------------------
Program Costs...........................................            -144
Fuel Savings............................................             364
Benefits................................................             106
Net Benefits \e\........................................             326
------------------------------------------------------------------------
                  Annualized Value f--7% Discount Rate
------------------------------------------------------------------------
Annualized costs........................................           -10.8
Annualized fuel savings.................................            27.3
Annualized benefits.....................................            7.96
Net benefits............................................            24.4
------------------------------------------------------------------------
Notes:
a The agencies estimated the benefits associated with four different
  values of a one ton CO2 reduction (model average at 2.5% discount
  rate, 3%, and 5%; 95th percentile at 3%), which each increase over
  time. For the purposes of this overview presentation of estimated
  costs and benefits, however, we are showing the benefits associated
  with the marginal value deemed to be central by the interagency
  working group on this topic: the model average at 3% discount rate, in
  2010 dollars. Section III.H provides a complete list of values for the
  4 estimates.
b Note that net present value of reduced GHG emissions is calculated
  differently than other benefits. The same discount rate used to
  discount the value of damages from future emissions (SCC at 5, 3, and
  2.5 percent) is used to calculate net present value of SCC for
  internal consistency. Refer to Section III.H for more detail.
c Projected results using 2008 based fleet projection analysis.
d Present value is the total, aggregated amount that a series of
  monetized costs or benefits that occur over time is worth in a given
  year. For this analysis, lifetime present values are calculated for
  the first year of each model year for MYs 2017-2025 (in year 2010
  dollar terms). The lifetime present values shown here are the present
  values of each MY in its first year summed across MYs.
e Net benefits reflect the fuel savings plus benefits minus costs.
f The annualized value is the constant annual value through a given time
  period (the lifetime of each MY in this analysis) whose summed present
  value equals the present value from which it was derived. Annualized
  SCC values are calculated using the same rate as that used to
  determine the SCC value, while all other costs and benefits are
  annualized at either 3% or 7%.

    Table I-20 shows EPA's estimated lifetime fuel savings and
CO2 equivalent emission reductions for all light-duty
vehicles sold in the model years 2017-2025. The values in Table I-20
are projected lifetime totals for each model year and are not
discounted. As documented in EPA's RIA, the potential credit transfer
between cars and trucks may change the distribution of the fuel savings
and GHG emission impacts between cars and trucks.

                   Table I-20--EPA's Estimated 2017-2025 Model Year Lifetime Fuel Saved and GHG Emissions Avoided (Primary Analysis) a
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  2017     2018     2019     2020     2021     2022     2023     2024     2025
                                                                   MY       MY       MY       MY       MY       MY       MY       MY       MY     Total
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars:
    Fuel (billion gallons)...........................      2.4      4.5      6.8      9.3     11.9     14.8     17.4     20.2     23.0    110.3
    Fuel (billion barrels)...........................     0.06     0.11     0.16     0.22     0.28     0.35     0.41     0.48     0.55     2.63
    CO2 EQ (mmt).....................................     29.7     55.7     83.0      113      146      178      207      238      269    1,319
Light Trucks:
    Fuel (billion gallons)...........................      0.1      1.0      1.7      2.6      5.5      7.5      9.4     11.3     13.1     52.2
    Fuel (billion barrels)...........................     0.00     0.02     0.04     0.06     0.13     0.18     0.22     0.27     0.31     1.24
    CO2 EQ (mmt).....................................      0.8     13.9     24.6       36       70       92      113      134      154      638
Combined:
    Fuel (billion gallons)...........................      2.5      5.5      8.5     11.9     17.4     22.3     26.8     31.5     36.2    162.5
    Fuel (billion barrels)...........................     0.06     0.13     0.20     0.28     0.41     0.53     0.64     0.75     0.86     3.87
    CO2 EQ (mmt).....................................     30.5     69.6      108      149      216      270      320      371      423    1,956
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Projected results using 2008 based fleet projection analysis.

    Table I-21 shows EPA's estimated lifetime discounted benefits for
all light-duty vehicles sold in model years 2017-2025. Although EPA
estimated the benefits associated with four different values of a one
ton CO2 reduction ($6, $26, $41, $79 in CY 2017 and in 2010
dollars, see Section III.H), for the purposes of this overview
presentation of estimated benefits EPA is showing the benefits
associated with one of these marginal values, $26 per ton of
CO2, in 2010 dollars and 2017 emissions. The values in Table
I-21 are discounted values for each model year of vehicles throughout
their projected lifetimes. The estimated benefits include GHG
reductions, particulate matter-related health impacts (including
premature mortality), energy security, reduced refueling time and
additional driving as well as the impacts of accidents, congestion and
noise from VMT rebound driving. The values in Table I-21 do not include
costs associated with new technology projected to be needed to meet the
GHG standards and they do not include the fuel savings expected from
that technology.

                  Table I-21--EPA's Estimated 2017-2025 Model Year Lifetime Discounted Benefits Assuming the $26/ton SCC Value a b c d
                                                               [Billions of 2010 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Model year
                                           -------------------------------------------------------------------------------------------------------------
               Discount rate                                                                                Sum of
                                               2017       2018       2019       2020       2021       2022       2023       2024       2025     Present
                                                                                Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
3%........................................      $1.81      $4.05      $6.37       $9.0      $13.4      $17.3      $20.9      $24.7      $28.6       $126
7%........................................      $1.52      $3.41      $5.35       $7.6      $11.3      $14.6      $17.6      $20.8      $24.1       $106
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Note that net present value of reduced CO2 emissions is calculated differently than other benefits. The same discount rate used to discount the
  value of damages from future emissions (SCC at 5, 3, and 2.5 percent) is used to calculate net present value of SCC for internal consistency. The
  estimates in this table are based on the average SCC at a 3 percent discount rate. Refer to Section III.H.6 for more detail.
\b\ As noted in Section III.H.6, the $26/ton (2010$) value applies to 2017 emissions and grows larger over time. The estimates in this table include
  monetized benefits for CO2 impacts but exclude the monetized benefits of impacts on non-CO2 GHG emissions (HFC, CH4, N2O). EPA has instead conducted a
  sensitivity analysis of the final rule's monetized non-CO2 GHG impacts in section III.H.6.
\c\ Model year values are discounted to the first year of each model year; the ``Sum'' represents those discounted values summed across model years.
\d\ Projected results using 2008 based fleet projection analysis.

    Table I-22 shows EPA's estimated lifetime fuel savings, lifetime
CO2 emission reductions, and the monetized net present
values of those fuel savings and CO2 emission reductions.
The fuel savings and CO2 emission reductions are projected
lifetime values for all light-duty vehicles sold in the model years
2017-2025. The estimated fuel savings in billions of gallons and the
GHG reductions in million metric tons of CO2 shown in Table
I-22 are totals for the nine model years throughout these vehicles'
projected lifetime and are not discounted. The monetized values shown
in Table I-22 are the summed values of the discounted monetized fuel
savings and monetized CO2 reductions for the model years
2017-2025 vehicles throughout their lifetimes. The monetized values in
Table I-22 reflect both a 3 percent and a 7 percent discount rate as
noted.

 Table I-22--EPA's Estimated 2017-2025 Model Year Lifetime Fuel Savings,
CO2 Emission Reductions, and Discounted Monetized SCC Benefits Using the
                         $26/ton SCC Value a,b,c
                   [Monetized values in 2010 dollars]
------------------------------------------------------------------------
                                                              $ value
                                          Amount            (billions)
------------------------------------------------------------------------
Fuel savings (3% discount rate)  163 billion gallons....            $475
                                 (3.9 billion barrels)..
Fuel savings (7% discount rate)  163 billion gallons....            $364
                                 (3.9 billion barrels)..
CO2e emission reductions
(CO2 portion valued assuming     1,956 MMT CO2e.........      a, b $46.6
 $22/ton CO2 in 2010).
------------------------------------------------------------------------
\a\ $46.6 billion for 1,747 MMT of reduced CO2 emissions. As noted in
  Section III.H.6, the $26/ton (2010$) value applies to 2017 emissions
  and grows larger over time. The estimates in this table include
  monetized benefits for CO2 impacts but exclude the monetized benefits
  of impacts on non-CO2 GHG emissions (HFC, CH4, N2O). EPA has instead
  conducted a sensitivity analysis of the final rule's monetized non-CO2
  GHG impacts in section III.H.6.
\b\ Note that net present value of reduced CO2 emissions is calculated
  differently than other benefits. The same discount rate used to
  discount the value of damages from future emissions (SCC at 5, 3, and
  2.5 percent) is used to calculate net present value of SCC for
  internal consistency. The estimates in this table are based on one of
  four SCC estimates (average SCC at a 3 percent discount rate). Refer
  to Section III.H.6 for more detail.
\c\ Projected results using 2008 based fleet projection analysis.

    Table I-23 shows EPA's estimated incremental and total technology
outlays for cars and trucks for each of the model years 2017-2025. The
technology outlays shown in Table I-21 are for the industry as a whole
and do not account for fuel savings associated with the program. Also,
the technology outlays shown in Table I-21 do not include the estimated
maintenance costs which are included in the program costs presented in
Table I-19. Table I-24 shows EPA's estimated incremental cost increase
of the average new vehicle for each model year 2017-2025. The values
shown are incremental to a baseline vehicle and are not cumulative. In
other words, the estimated increase for 2017 model year cars is $206
relative to a 2017 model year car meeting the MY 2016 standards. The
estimated increase for a 2018 model year car is $374 relative to a 2018
model year car meeting the MY 2016 standards (not $206 plus $374).

                              Table I-23--EPA's Estimated Incremental Technology Outlays Associated With the Standards a b
                                                               [Billions of 2010 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Sum of
                                                              2017 MY  2018 MY  2019 MY  2020 MY  2021 MY  2022 MY  2023 MY  2024 MY  2025 MY   present
                                                                                values
--------------------------------------------------------------------------------------------------------------------------------------------------------
3% discount rate:
    Cars....................................................    $2.03    $3.65    $5.02    $6.43    $7.94    $11.4    $14.7    $18.0    $19.6      $88.8
    Trucks..................................................     0.33     1.10     1.67     2.29     4.28     6.67     8.75    10.70     11.6       47.4
    Combined................................................     2.40     4.78     6.72     8.73     12.2     18.1     23.4     28.7     31.2        136
7% discount rate:
    Cars....................................................     1.99     3.58     4.93     6.32     7.80     11.2     14.4     17.7     19.3       87.2
    Trucks..................................................     0.32     1.08     1.64     2.25     4.20     6.54     8.59    10.51     11.4       46.5
    Combined................................................     2.36     4.69     6.59     8.57     12.0     17.7     23.0     28.1     30.6        134
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Model year values are discounted to the first year of each model year; the ``Sum'' represents those discounted values summed across model years.
\b\ Projected results from using 2008 based fleet projection analysis.

                     Table I-24--EPA's Estimated Incremental Increase in Average New Vehicle Cost Relative to the Reference Case a b
                                                                 [2010 dollars per unit]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 2017 MY   2018 MY   2019 MY   2020 MY   2021 MY   2022 MY   2023 MY   2024 MY   2025 MY
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars..........................................................      $206      $374      $510      $634      $767    $1,079    $1,357    $1,622    $1,726
Trucks........................................................        57       196       304       415       763     1,186     1,562     1,914     2,059
Combined......................................................       154       311       438       557       766     1,115     1,425     1,718     1,836
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The reference case assumes the 2016MY standards continue indefinitely.
\b\ Projected results from using 2008 based fleet projection analysis.

3. Why are the EPA and NHTSA MY 2025 Estimated Per-Vehicle Costs
Different?
    In Section I.C.1 and I.C.2 NHTSA and EPA present the agencies'
estimates of the incremental costs and benefits of the final CAFE and
GHG standards, relative to costs and benefits estimated to occur absent
the new standards. Taken as a whole, these represent the incremental
costs and benefits of the National Program for Model Years 2017-2025.
On a year-by-year comparison for model years 2017-2025, the two
agencies' per-vehicle cost estimates are similar for the beginning
years of the program, but in the last few model years, EPA's cost
estimates are significantly higher than the NHTSA cost estimates. When
comparing the CAFE required new vehicle cost estimate in Table I-15
with the GHG standard new vehicle cost estimate in Table I-24, we see
that the model year 2025 CAFE incremental new vehicle cost estimate is
$1,461-$1,616 per vehicle (when, as required by EISA/EPCA, NHTSA sets
aside EVs, pre-MY2019 PHEVs, and credit-based CAFE flexibilities), and
the GHG standard incremental cost estimate is $1,836 per vehicle--a
difference of $220-$375. The agencies have examined these cost estimate
differentials, and as discussed below, it is principally explained by
how the two agencies modeled future compliance with their respective
standards, and by the application of low-GWP refrigerants attributable
only to EPA's standards. As also described below, in reality auto
companies will build a single fleet of vehicles to comply with both the
CAFE and GHG standards, and the only significant real-world difference
in the program costs are is limited to the hydrofluorocarbon (HFC)
reductions expected under the GHG standards, which EPA estimates at
$68/vehicle cost.
    As documented below in Section IV, although NHTSA is precluded by
EISA/EPCA from considering CAFE credits, EVs, and pre-MY2019 PHEVs when
determining the maximum feasible stringency of new CAFE standards,
NHTSA has conducted additional analysis that accounts for EISA/EPCA's
provisions regarding CAFE credits, EVs, and PHEVs. Under that analysis,
as shown in Table I-16, NHTSA's estimate of the incremental new vehicle
costs attributable to the new CAFE standards ranges from $1,257 to
$1,400. Insofar as EPA's analysis focuses on the agencies' MY 2008-
based market forecast and attempts to account for some CAA-based
flexibilities (most notably, unlimited credit transfers between the PC
and LT fleets), NHTSA's $1,400 result is based on methods conceptually
more similar to those applied by EPA. Therefore, although the
difference in MY 2025 is considerably greater than differences in
earlier model years, the agencies have focused on understanding the
$436 difference between NHTSA's $1,400 result and EPA's $1,836 result,
both for the MY 2008-based market forecast.
    Of this $436 difference, $247 is explained by NHTSA's simulation of
EISA/EPCA's credit carry-forward provisions. EISA/EPCA allows
manufacturers to ``carry forward'' credits up to five model years,
applying those credits to offset compliance shortfalls and thereby
avoid civil penalties.\103\ In meetings with the agency, some
manufacturers have indicated that, even under the preexisting MY 2012-
2016 standards, they would make full use of these provisions,
effectively entering MY 2017 with little, if any, credit ``in
reserve.'' \104\ As in the NPRM, NHTSA's analysis exercises its CAFE
model in a manner that simulates manufacturers' carrying-forward and
use of CAFE credits. This simulation of credit carry-forward acts in
combination with the model's explicit simulation of multiyear
planning--that is, the tendency of manufacturers to apply ``extra''
technology in earlier model years if doing so would economically
facilitate compliance in later model years, considering estimated
product cadence (i.e., estimated timing of vehicle redesigns)
facilitate. When the potential to carry forward CAFE credits is also
simulated, multiyear planning simulation estimates the extent to which
manufacturers could generate CAFE credits in earlier model years and
use those credits in later model years. In meetings with the agency,
manufacturers have often provided forward-looking plans exhibiting this
type of strategic timing of investment in technology. For the NPRM,
NHTSA estimated that in MY 2025, accounting for credit carry-forward
(and other flexibilities offered under EISA/EPCA), manufacturers could,
on average, achieve 47.0 mpg, 2.6 mpg less than the agency's 49.6 mpg
estimate of the average of manufacturers' fuel economy requirements in
that model year. Using the corrected MY 2008-based market forecast,
NHTSA today estimates that in MY 2025, manufacturers could achieve 47.4
mpg, 2.3 mpg less than the agency's current 49.7 mpg estimate (also
under the corrected MY 2008-based market forecast) of the average of
the manufacturers' fuel economy requirements in MY 2025. This 47.4 mpg
estimate corresponds to the incremental cost estimate of $1,400 cited
above. When credit carry-forward is excluded from this analysis,
NHTSA's estimate of manufacturers' average achieved fuel economy in MY
2025 increases to 49.0 mpg, and NHTSA's estimate of the average
incremental cost in MY 2025 increases to $1,647, an increase of $247.
Although EPA's GHG standards allow manufacturers to bank (i.e., carry
forward) GHG-based credits up to five years, EPA's OMEGA model was
designed to estimate the costs of a specific standard in a specific
year and EPA for this action did not estimate the potential credit bank
companies could have on a year-by-year basis. As explained, this
difference in simulation capabilities explains $247 of the $436
difference mentioned above.
---------------------------------------------------------------------------

    \103\ 49 U.S.C. 32903.
    \104\ On the other hand, although EISA/EPCA also allows
manufacturers to carry back CAFE credits, most manufacturers have
indicated extreme reluctance to make use of these provisions,
insofar as doing so would constitute ``borrowing against the
future'' and incurring risk of paying civil penalties in the future.
---------------------------------------------------------------------------

    As it has in past rulemakings and in the NPRM preceding today's
final rule, NHTSA has also applied its CAFE model in a manner that
simulates the potential that, as allowed under EISA/EPCA and as
suggested by their past CAFE levels, some manufacturers could elect to
pay civil penalties rather than achieving compliance with future CAFE
standards.\105\ EISA/EPCA allows NHTSA to take this flexibility into
account when determining the maximum feasible stringency of future CAFE
standards. As in the NPRM, simulating this flexibility leads NHTSA to
estimate that, under EISA/EPCA, some manufacturers (e.g., BMW,
Mercedes, Porsche, and Volkswagen) could achieve fuel economy levels 6
to 9 mpg or more short of their respective required CAFE levels in MY
2025. Having set aside the potential to carry forward CAFE credits,
when NHTSA also sets aside the potential to pay civil penalties, NHTSA
estimates that manufacturers could achieve a fuel economy average of
49.7 mpg in MY 2025, reflecting, on average, manufacturers' achievement
of their respective required CAFE levels. For MY 2025, this analysis
shows this 0.7 mpg increase in average achieved fuel economy
accompanied by a $119 increase in average incremental cost, increasing
the average incremental cost to $1,766. Because the Clean Air Act,
unlike EISA/EPCA, does not allow manufacturers to pay civil penalties
rather than achieving compliance with GHG standards, EPA's OMEGA model

does not simulate this type of flexibility.\106\ Therefore, this
further difference in simulation capabilities explains $119 of the $436
difference mentioned above, and results in an estimated average
incremental cost of $1,766 in MY 2025.
---------------------------------------------------------------------------

    \105\ 49 U.S.C. 32912.
    \106\ See 75 FR 25341.
---------------------------------------------------------------------------

    In addition to these differences in modeling of programmatic
features, EPA projects that manufacturers will achieve significant GHG
emissions reductions through the use of different air conditioning
refrigerants (the HFC refrigerant in today's vehicles is a powerful
greenhouse gas, with a global warming potential 1,430 times that of
CO2).\107\ EPA estimates that in 2025, the incremental cost of the
substitute is $68/vehicle. While all other technologies in the
agencies' analyses are equally relevant to compliance with both CAFE
and GHG standards, CAFE standards do not address HFC emissions, and
NHTSA's analysis therefore does not include the costs of this HFC
substitution. This factor results in the EPA 2025 cost estimate being
$68/vehicle higher than the NHTSA MY 2025 per-vehicle cost estimate.
---------------------------------------------------------------------------

    \107\ As with the MY 2012-2016 Light Duty rule and the MY 2014-
2018 Medium and Heavy Duty rule, the GWPs used in this rule are
consistent with 100-year time frame values in the 2007
Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment
Report (AR4). At this time, the 100-year GWP values from the 1995
IPCC Second Assessment Report are used in the official U.S. GHG
inventory submission to the United Nations Framework Convention on
Climate Change (UNFCCC) per the reporting requirements under that
international convention. The UNFCCC recently agreed on revisions to
the national GHG inventory reporting requirements, and will begin
using the 100-year GWP values from AR4 for inventory submissions in
the future.
---------------------------------------------------------------------------

    Taken together, as shown in Table I-25, these three factors suggest
a difference of $434, based on $247 and $119 for NHTSA's simulation of
EISA/EPCA's credit carry-forward and civil penalty provisions,
respectively, and $68 for EPA's estimate of HFC costs. While $2 lower
than the $436 difference mentioned above, the agencies consider this
remaining difference to be small (about 0.1% of average incremental
cost) and well within the range of differences to be anticipated given
other structural differences between the agencies analyses and modeling
systems.

 Table I--25--Major Factors Contributing to Difference in EPA and NHTSA
        Achieved MY2025 Per-Vehicle Cost Estimates (2010 dollars)
------------------------------------------------------------------------
                                                           Average per-
 Factor contributing to epa and nhtsa my2025 per-vehicle   vehicle cost
                cost estimate difference                   impact in MY
                                                               2025
------------------------------------------------------------------------
Air conditioning refrigerant substitution...............             $68
CAFE program provisions for civil penalties.............             119
CAFE program credit carry-forward value.................             247
                                                         ---------------
    Total impact on the difference between EPAs 2025                 434
     estimate and NHTSA's 2025 achieved estimate (sum of
     individual factors)................................
------------------------------------------------------------------------

    The agencies' estimates are based on each agency's different
modeling tools for forecasting costs and benefits between now and MY
2025. As described in detail in the Joint Technical Support Document,
the agencies harmonized inputs for our modeling tools. However, our
modeling tools (the NHTSA-developed CAFE model and the EPA-developed
OMEGA model), while similar in core function, were developed to
estimate the program costs based on each agencies' respective statutory
authorities, which in some cases include specific constraints. It is
important to note that these are modeling tool differences, but that,
while the models result in different estimates of the costs of
compliance, manufacturers will ultimately produce a single fleet of
vehicles to be sold in the United States that considers both EPA
greenhouse gas emissions standards and NHTSA CAFE standards.
Manufacturers are currently selling MY2012 and MY2013 vehicles based on
considering these standards. Every technology an automotive company
applies to its vehicles that improves fuel economy will also lower
CO2 emissions--thus each dollar of technology investment
will count towards the company's overall compliance with the CAFE
standard as well as the CO2 standard. The agencies' final
footprint curve standards for passenger cars and for light trucks have
been closely coordinated, with the principle difference being EPA's
estimate of the application of HFC air conditioning refrigerant
technology across a company's fleet of vehicles. Thus, within the
entire fleet of vehicle models ultimately produced for sale in the
United States, the agencies expect the only technology attributable
solely to EPA's standards will be the low-GWP refrigerants, which EPA
estimates at an average incremental unit cost of $68 in 2025.

E. Background and Comparison of NHTSA and EPA Statutory Authority

    Section I.E of the preamble contains a detailed overview discussion
of the NHTSA and EPA respective statutory authorities. In addition,
each agency discusses comments pertaining to its statutory authority
and the agencies' responses in Sections III and IV, respectively and
EPA responds as well in its response to comment documents.
1. NHTSA Statutory Authority
    NHTSA establishes CAFE standards for passenger cars and light
trucks for each model year under EPCA, as amended by EISA. EPCA
mandates a motor vehicle fuel economy regulatory program to meet the
various facets of the need to conserve energy, including the
environmental and foreign policy implications of petroleum use by motor
vehicles. EPCA allocates the responsibility for implementing the
program between NHTSA and EPA as follows: NHTSA sets CAFE standards for
passenger cars and light trucks; EPA establishes the procedures for
testing, tests vehicles, collects and analyzes manufacturers' data, and
calculates the individual and average fuel economy of each
manufacturer's passenger cars and light trucks; and NHTSA enforces the
standards based on EPA's calculations.
a. Standard Setting
    We have summarized below the most important aspects of standard
setting under EPCA, as amended by EISA. For each future model year,
EPCA requires that NHTSA establish separate passenger car and light
truck standards at ``the maximum feasible average fuel

economy level that it decides the manufacturers can achieve in that
model year,'' based on the agency's consideration of four statutory
factors: technological feasibility, economic practicability, the effect
of other standards of the Government on fuel economy, and the need of
the nation to conserve energy. EPCA does not define these terms or
specify what weight to give each concern in balancing them; thus, NHTSA
defines them and determines the appropriate weighting that leads to the
maximum feasible standards given the circumstances in each CAFE
standard rulemaking.\108\ For MYs 2011-2020, EPCA further requires that
separate standards for passenger cars and for light trucks be set at
levels high enough to ensure that the CAFE of the industry-wide
combined fleet of new passenger cars and light trucks reaches at least
35 mpg not later than MY 2020. For model years after 2020, standards
need simply be set at the maximum feasible level.
---------------------------------------------------------------------------

    \108\ See Center for Biological Diversity v. NHTSA, 538 F.3d.
1172, 1195 (9th Cir. 2008) (``The EPCA clearly requires the agency
to consider these four factors, but it gives NHTSA discretion to
decide how to balance the statutory factors--as long as NHTSA's
balancing does not undermine the fundamental purpose of the EPCA:
energy conservation.'').
---------------------------------------------------------------------------

    Because EPCA states that standards must be set for ``* * *
automobiles manufactured by manufacturers,'' and because Congress
provided specific direction on how small-volume manufacturers could
obtain exemptions from the passenger car standards, NHTSA has long
interpreted its authority as pertaining to setting standards for the
industry as a whole. Prior to this NPRM, some manufacturers raised with
NHTSA the possibility of NHTSA and EPA setting alternate standards for
part of the industry that met certain (relatively low) sales volume
criteria--specifically, that separate standards be set so that
``intermediate-size,'' limited-line manufacturers do not have to meet
the same levels of stringency that larger manufacturers have to meet
until several years later. NHTSA sought comment in the NPRM on whether
or how EPCA, as amended by EISA, could be interpreted to allow such
alternate standards for certain parts of the industry. Suzuki requested
that NHTSA and EPA both adopt an approach similar to California's of
providing more lead time to manufacturers with national average sales
below 50,000 units, by allowing those ``limited line manufacturers'' to
meet the MY 2017 standards in MY 2020, the MY 2018 standards in MY
2021, and so on, with a 3-year time lag in complying with the standards
generally applicable for a compliance category. Suzuki stated simply
that the standards are harder for small manufacturers to meet than for
larger manufacturers, because the per-vehicle cost of developing or
purchasing the necessary technology is higher, and that since the GHG
emissions attributable to vehicles built by manufacturers who would be
eligible for this option represent a very small portion of overall
emissions, the impact should be minimal.\109\
---------------------------------------------------------------------------

    \109\ Suzuki comments, at 2-3. Available at http://www.regulations.gov, Docket No. ID No. EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

    Although EPA is adopting such an approach as part of its final rule
(see Section I.C.7.c above and III.X), no commenter provided legal
analysis that might lead NHTSA to change its current interpretation of
EPCA/EISA. Thus, NHTSA is not finalizing such an option for purposes of
this rulemaking.
i. Factors That Must Be Considered in Deciding the Appropriate
Stringency of CAFE Standards
(1) Technological Feasibility
    ``Technological feasibility'' refers to whether a particular method
of improving fuel economy can be available for commercial application
in the model year for which a standard is being established. Thus, the
agency is not limited in determining the level of new standards to
technology that is already being commercially applied at the time of
the rulemaking, a consideration which is particularly relevant for a
rulemaking with a timeframe as long as the present one. For this
rulemaking, NHTSA has considered all types of technologies that improve
real-world fuel economy, including air-conditioner efficiency, due to
EPA's decision to allow generation of fuel consumption improvement
values for CAFE purposes based on improvements to air-conditioner
efficiency that improves fuel efficiency.
(2) Economic Practicability
    ``Economic practicability'' refers to whether a standard is one
``within the financial capability of the industry, but not so stringent
as to'' lead to ``adverse economic consequences, such as a significant
loss of jobs or the unreasonable elimination of consumer choice.''
\110\ The agency has explained in the past that this factor can be
especially important during rulemakings in which the automobile
industry is facing significantly adverse economic conditions (with
corresponding risks to jobs). Consumer acceptability is also an element
of economic practicability, one which is particularly difficult to
gauge during times of uncertain fuel prices.\111\ In a rulemaking such
as the present one, looking out into the more distant future, economic
practicability is a way to consider the uncertainty surrounding future
market conditions and consumer demand for fuel economy in addition to
other vehicle attributes. In an attempt to ensure the economic
practicability of attribute-based standards, NHTSA considers a variety
of factors, including the annual rate at which manufacturers can
increase the percentage of their fleet that employ a particular type of
fuel-saving technology, the specific fleet mixes of different
manufacturers, and assumptions about the cost of the standards to
consumers and consumers' valuation of fuel economy, among other things.
---------------------------------------------------------------------------

    \110\ 67 FR 77015, 77021 (Dec. 16, 2002).
    \111\ See, e.g., Center for Auto Safety v. NHTSA (CAS), 793 F.2d
1322 (D.C. Cir. 1986) (Administrator's consideration of market
demand as component of economic practicability found to be
reasonable); Public Citizen v. NHTSA, 848 F.2d 256 (Congress
established broad guidelines in the fuel economy statute; agency's
decision to set lower standard was a reasonable accommodation of
conflicting policies).
---------------------------------------------------------------------------

    It is important to note, however, that the law does not preclude a
CAFE standard that poses considerable challenges to any individual
manufacturer. The Conference Report for EPCA, as enacted in 1975, makes
clear, and the case law affirms, ``a determination of maximum feasible
average fuel economy should not be keyed to the single manufacturer
which might have the most difficulty achieving a given level of average
fuel economy.'' \112\ Instead, NHTSA is compelled ``to weigh the
benefits to the nation of a higher fuel economy standard against the
difficulties of individual automobile manufacturers.'' \113\ The law
permits CAFE standards exceeding the projected capability of any
particular manufacturer as long as the standard is economically
practicable for the industry as a whole. Thus, while a particular CAFE
standard may pose difficulties for one manufacturer, it may also
present opportunities for another. NHTSA has long held that the CAFE
program is not necessarily intended to maintain the competitive
positioning of each particular company. Rather, it is intended to
enhance the fuel economy of the vehicle fleet on American roads, while
protecting motor vehicle safety and being mindful of the risk to the
overall United States economy.
---------------------------------------------------------------------------

    \112\ CEI-I, 793 F.2d 1322, 1352 (D.C. Cir. 1986).
    \113\ Id.

---------------------------------------------------------------------------

(3) The Effect of Other Motor Vehicle Standards of the Government on
Fuel Economy
    ``The effect of other motor vehicle standards of the Government on
fuel economy,'' involves an analysis of the effects of compliance with
emission, safety, noise, or damageability standards on fuel economy
capability and thus on average fuel economy. In previous CAFE
rulemakings, the agency has said that pursuant to this provision, it
considers the adverse effects of other motor vehicle standards on fuel
economy. It said so because, from the CAFE program's earliest years
\114\ until present, the effects of such compliance on fuel economy
capability over the history of the CAFE program have been negative
ones. For example, safety standards that have the effect of increasing
vehicle weight lower vehicle fuel economy capability and thus decrease
the level of average fuel economy that the agency can determine to be
feasible.
---------------------------------------------------------------------------

    \114\ 42 FR 63184, 63188 (Dec. 15,1977). See also 42 FR 33534,
33537 (Jun. 30, 1977).
---------------------------------------------------------------------------

    In the wake of Massachusetts v. EPA, 549 U.S. 497 (2007), and of
EPA's endangerment finding, granting of a waiver to California for its
motor vehicle GHG standards, and its own establishment of GHG
standards, NHTSA is confronted with the issue of how to treat those
standards under EPCA/EISA, such as in the context of the ``other motor
vehicle standards'' provision. To the extent the GHG standards result
in increases in fuel economy, they would do so almost exclusively as a
result of inducing manufacturers to install the same types of
technologies used by manufacturers in complying with the CAFE
standards.
    In the NPRM, NHTSA sought comment on whether and in what way the
effects of the California and EPA standards should be considered under
EPCA/EISA, e.g., under the ``other motor vehicle standards'' provision,
consistent with NHTSA's independent obligation under EPCA/EISA to issue
CAFE standards. NHTSA explained that the agency had already considered
EPA's proposal and the harmonization benefits of the National Program
in developing its own proposal. The only comment received was from the
Sierra Club, noting that the structure of the National Program accounts
for both NHTSA's and EPA's authority and requires no separate
action.\115\ NHTSA agrees that no further action is required as part of
this rulemaking.
---------------------------------------------------------------------------

    \115\ Sierra Club et al. comments, at 10. Available at http://www.regulations.gov, Docket No. ID No. EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

(4) The Need of the United States To Conserve Energy
    ``The need of the United States to conserve energy'' means ``the
consumer cost, national balance of payments, environmental, and foreign
policy implications of our need for large quantities of petroleum,
especially imported petroleum.'' \116\ Environmental implications
principally include reductions in emissions of carbon dioxide and
criteria pollutants and air toxics. Prime examples of foreign policy
implications are energy independence and security concerns.
---------------------------------------------------------------------------

    \116\ 42 FR 63184, 63188 (1977).
---------------------------------------------------------------------------

(5) Fuel Prices and the Value of Saving Fuel
    Projected future fuel prices are a critical input into the economic
analysis of alternative CAFE standards, because they determine the
value of fuel savings both to new vehicle buyers and to society, which
is related to the consumer cost (or rather, benefit) of our need for
large quantities of petroleum. In this rule, NHTSA relies on fuel price
projections from the U.S. Energy Information Administration's (EIA)
most recent Annual Energy Outlook (AEO) for this analysis. Federal
government agencies generally use EIA's projections in their
assessments of future energy-related policies.
(6) Petroleum Consumption and Import Externalities
    U.S. consumption and imports of petroleum products impose costs on
the domestic economy that are not reflected in the market price for
crude petroleum, or in the prices paid by consumers of petroleum
products such as gasoline. These costs include (1) higher prices for
petroleum products resulting from the effect of U.S. oil import demand
on the world oil price; (2) the risk of disruptions to the U.S. economy
caused by sudden reductions in the supply of imported oil to the U.S.;
and (3) expenses for maintaining a U.S. military presence to secure
imported oil supplies from unstable regions, and for maintaining the
strategic petroleum reserve (SPR) to provide a response option should a
disruption in commercial oil supplies threaten the U.S. economy, to
allow the United States to meet part of its International Energy Agency
obligation to maintain emergency oil stocks, and to provide a national
defense fuel reserve. Higher U.S. imports of crude oil or refined
petroleum products increase the magnitude of these external economic
costs, thus increasing the true economic cost of supplying
transportation fuels above the resource costs of producing them.
Conversely, reducing U.S. imports of crude petroleum or refined fuels
or reducing fuel consumption can reduce these external costs.
(7) Air Pollutant Emissions
    While reductions in domestic fuel refining and distribution that
result from lower fuel consumption will reduce U.S. emissions of
various pollutants, additional vehicle use associated with the rebound
effect \117\ from higher fuel economy will increase emissions of these
pollutants. Thus, the net effect of stricter CAFE standards on
emissions of each pollutant depends on the relative magnitudes of its
reduced emissions in fuel refining and distribution, and increases in
its emissions from vehicle use. Fuel savings from stricter CAFE
standards also result in lower emissions of CO2, the main
greenhouse gas emitted as a result of refining, distribution, and use
of transportation fuels. Reducing fuel consumption reduces carbon
dioxide emissions directly, because the primary source of
transportation-related CO2 emissions is fuel combustion in
internal combustion engines.
---------------------------------------------------------------------------

    \117\ The ``rebound effect'' refers to the tendency of drivers
to drive their vehicles more as the cost of doing so goes down, as
when fuel economy improves.
---------------------------------------------------------------------------

    NHTSA has considered environmental issues, both within the context
of EPCA and the National Environmental Policy Act, in making decisions
about the setting of standards from the earliest days of the CAFE
program. As courts of appeal have noted in three decisions stretching
over the last 20 years,\118\ NHTSA defined the ``need of the Nation to
conserve energy'' in the late 1970s as including ``the consumer cost,
national balance of payments, environmental, and foreign policy
implications of our need for large quantities of petroleum, especially
imported petroleum.'' \119\ In 1988, NHTSA included climate change
concepts in its CAFE notices and prepared its first environmental
assessment addressing that subject.\120\ It cited concerns about
climate change as

one of its reasons for limiting the extent of its reduction of the CAFE
standard for MY 1989 passenger cars.\121\ Since then, NHTSA has
considered the benefits of reducing tailpipe carbon dioxide emissions
in its fuel economy rulemakings pursuant to the statutory requirement
to consider the nation's need to conserve energy by reducing fuel
consumption.
---------------------------------------------------------------------------

    \118\ Center for Auto Safety v. NHTSA, 793 F.2d 1322, 1325 n. 12
(D.C. Cir. 1986); Public Citizen v. NHTSA, 848 F.2d 256, 262-3 n. 27
(D.C. Cir. 1988) (noting that ``NHTSA itself has interpreted the
factors it must consider in setting CAFE standards as including
environmental effects''); and Center for Biological Diversity v.
NHTSA, 538 F.3d 1172 (9th Cir. 2007).
    \119\ 42 FR 63184, 63188 (Dec. 15, 1977) (emphasis added).
    \120\ 53 FR 33080, 33096 (Aug. 29, 1988).
    \121\ 53 FR 39275, 39302 (Oct. 6, 1988).
---------------------------------------------------------------------------

ii. Other Factors Considered by NHTSA
    NHTSA considers the potential for adverse safety consequences when
establishing CAFE standards. This practice is recognized approvingly in
case law.\122\ Under the universal or ``flat'' CAFE standards that
NHTSA was previously authorized to establish, the primary risk to
safety came from the possibility that manufacturers would respond to
higher standards by building smaller, less safe vehicles in order to
``balance out'' the larger, safer vehicles that the public generally
preferred to buy. Under the attribute-based standards being presented
in this final rule, that risk is reduced because building smaller
vehicles tends to raise a manufacturer's overall CAFE obligation,
rather than only raising its fleet average CAFE. However, even under
attribute-based standards, there is still risk that manufacturers will
rely on down-weighting to improve their fuel economy (for a given
vehicle at a given footprint target) in ways that may reduce
safety.\123\
---------------------------------------------------------------------------

    \122\ As the United States Court of Appeals pointed out in
upholding NHTSA's exercise of judgment in setting the 1987-1989
passenger car standards, ``NHTSA has always examined the safety
consequences of the CAFE standards in its overall consideration of
relevant factors since its earliest rulemaking under the CAFE
program.'' Competitive Enterprise Institute v. NHTSA (CEI I), 901
F.2d 107, 120 at n.11 (D.C. Cir. 1990).
    \123\ For example, by reducing the mass of the smallest vehicles
rather than the largest, or by reducing vehicle overhang outside the
space measured as ``footprint,'' which results in less crush space.
---------------------------------------------------------------------------

iii. Factors That NHTSA Is Statutorily Prohibited From Considering in
Setting Standards
    EPCA provides that in determining the level at which it should set
CAFE standards for a particular model year, NHTSA may not consider the
ability of manufacturers to take advantage of several EPCA provisions
that facilitate compliance with the CAFE standards and thereby reduce
the costs of compliance. Specifically, in determining the maximum
feasible level of fuel economy for passenger cars and light trucks,
NHTSA cannot consider the fuel economy benefits of ``dedicated''
alternative fuel vehicles (like battery electric vehicles or natural
gas vehicles), must consider dual-fueled automobiles to be operated
only on gasoline or diesel fuel, and may not consider the ability of
manufacturers to use, trade, or transfer credits.\124\ This provision
limits, to some extent, the fuel economy levels that NHTSA can find to
be ``maximum feasible''--if NHTSA cannot consider the fuel economy of
electric vehicles, for example, NHTSA cannot set a standards predicated
on manufacturers' usage of electric vehicles to meet the standards.
---------------------------------------------------------------------------

    \124\ 49 U.S.C. 32902(h). We note, as discussed in greater
detail in Section IV, that NHTSA interprets 32902(h) as reflecting
Congress' intent that statutorily-mandated compliance flexibilities
remain flexibilities. When a compliance flexibility is not
statutorily mandated, therefore, or when it ceases to be available
under the statute, we interpret 32902(h) as no longer binding the
agency's determination of the maximum feasible levels of fuel
economy. For example, when the manufacturing incentive for dual-
fueled automobiles under 49 U.S.C. 32905 and 32906 expires in MY
2019, there is no longer a flexibility left to protect per 32902(h),
so NHTSA considers the calculated fuel economy of plug-in hybrid
electric vehicles for purposes of determining the maximum feasible
standards in MYs 2020 and beyond.
---------------------------------------------------------------------------

iv. Weighing and Balancing of Factors
    NHTSA has broad discretion in balancing the above factors in
determining the average fuel economy level that the manufacturers can
achieve. Congress ``specifically delegated the process of setting * * *
fuel economy standards with broad guidelines concerning the factors
that the agency must consider.'' \125\ The breadth of those guidelines,
the absence of any statutorily prescribed formula for balancing the
factors, the fact that the relative weight to be given to the various
factors may change from rulemaking to rulemaking as the underlying
facts change, and the fact that the factors may often be conflicting
with respect to whether they militate toward higher or lower standards
give NHTSA discretion to decide what weight to give each of the
competing policies and concerns and then determine how to balance
them--``as long as NHTSA's balancing does not undermine the fundamental
purpose of the EPCA: Energy conservation,'' \126\ and as long as that
balancing reasonably accommodates ``conflicting policies that were
committed to the agency's care by the statute.'' \127\ Thus, EPCA does
not mandate that any particular number be adopted when NHTSA determines
the level of CAFE standards.
---------------------------------------------------------------------------

    \125\ Center for Auto Safety v. NHTSA, 793 F.2d 1322, at 1341
(D.C. Cir. 1986).
    \126\ CBD v. NHTSA, 538 F.3d at 1195 (9th Cir. 2008).
    \127\ Id.
---------------------------------------------------------------------------

v. Other Requirements Related to Standard Setting
    The standards for passenger cars and for light trucks must increase
ratably each year through MY 2020.\128\ This statutory requirement is
interpreted, in combination with the requirement to set the standards
for each model year at the level determined to be the maximum feasible
level that manufacturers can achieve for that model year, to mean that
the annual increases should not be disproportionately large or small in
relation to each other.\129\ Standards after 2020 must simply be set at
the maximum feasible level.\130\
---------------------------------------------------------------------------

    \128\ 49 U.S.C. 32902(b)(2)(C).
    \129\ See 74 FR 14196, 14375-76 (Mar. 30, 2009).
    \130\ 49 U.S.C. 32902(b)(2)(B).
---------------------------------------------------------------------------

    The standards for passenger cars and light trucks must also be
based on one or more vehicle attributes, like size or weight, which
correlate with fuel economy and must be expressed in terms of a
mathematical function.\131\ Fuel economy targets are set for individual
vehicles and increase as the attribute decreases and vice versa. For
example, footprint-based standards assign higher fuel economy targets
to smaller-footprint vehicles and lower ones to larger footprint-
vehicles. The fleetwide average fuel economy that a particular
manufacturer is required to achieve depends on the footprint mix of its
fleet, i.e., the proportion of the fleet that is small-, medium- or
large-footprint.
---------------------------------------------------------------------------

    \131\ 49 U.S.C. 32902(b)(3).
---------------------------------------------------------------------------

    This approach can be used to require virtually all manufacturers to
increase significantly the fuel economy of a broad range of both
passenger cars and light trucks, i.e., the manufacturer must improve
the fuel economy of all the vehicles in its fleet. Further, this
approach can do so without creating an incentive for manufacturers to
make small vehicles smaller or large vehicles larger, with attendant
implications for safety.
b. Test Procedures for Measuring Fuel Economy
    EPCA provides EPA with the responsibility for establishing
procedures to measure fuel economy and to calculate CAFE. Current test
procedures measure the effects of nearly all fuel saving technologies.
EPA is revising the procedures for measuring fuel economy and
calculating average fuel economy for the CAFE program, however, to
account for certain impacts on fuel economy not currently included

in these procedures, specifically increases in fuel economy because of
increases in efficiency of the air conditioning system; increases in
fuel economy because of technology improvements that achieve ``off-
cycle'' benefits; incentives for use of certain hybrid technologies in
a significant percentage of pick-up trucks; and incentives for
achieving fuel economy levels in a significant percentage pick-up
trucks that exceeds the target curve by specified amounts, in the form
of increased values assigned for fuel economy. NHTSA has considered
manufacturers' ability to comply with the CAFE standards using these
efficiency improvements in determining the stringency of the fuel
economy standards presented in this final rule. These changes would be
the same as program elements that are part of EPA's greenhouse gas
performance standards, discussed in Section III.B.10. As discussed
below, these three elements will be implemented in the same manner as
in the EPA's greenhouse gas program--a vehicle manufacturer would have
the option to generate these fuel economy values for vehicle models
that meet the criteria for these elements and to use these values in
calculating their fleet average fuel economy. This revision to the CAFE
calculations is discussed in more detail in Sections III.B.10 and III.C
and IV.I.4 below.
c. Enforcement and Compliance Flexibility
    NHTSA determines compliance with the CAFE standards based on
measurements of automobile manufacturers' CAFE from EPA. If a
manufacturer's passenger car or light truck CAFE level exceeds the
applicable standard for that model year, the manufacturer earns credits
for over-compliance. The amount of credit earned is determined by
multiplying the number of tenths of a mpg by which a manufacturer
exceeds a standard for a particular category of automobiles by the
total volume of automobiles of that category manufactured by the
manufacturer for a given model year. As discussed in more detail in
Section IV.I, credits can be carried forward for 5 model years or back
for 3, and can also be transferred between a manufacturer's fleets or
traded to another manufacturer.
    If a manufacturer's passenger car or light truck CAFE level does
not meet the applicable standard for that model year, NHTSA notifies
the manufacturer. The manufacturer may use ``banked'' credits to make
up the shortfall, but if there are no (or not enough) credits
available, then the manufacturer has the option to submit a ``carry
back plan'' to NHTSA. A carry back plan describes what the manufacturer
plans to do in the following three model years to earn enough credits
to make up for the shortfall through future over-compliance. NHTSA must
examine and determine whether to approve the plan.
    In the event that a manufacturer does not comply with a CAFE
standard, even after the consideration of credits, EPCA provides for
the assessing of civil penalties.\132\ The Act specifies a precise
formula for determining the amount of civil penalties for such a
noncompliance. The penalty, as adjusted for inflation by law, is $5.50
for each tenth of a mpg that a manufacturer's average fuel economy
falls short of the standard for a given model year multiplied by the
total volume of those vehicles in the affected fleet (i.e., import or
domestic passenger car, or light truck), manufactured for that model
year.\133\ The amount of the penalty may not be reduced except under
the unusual or extreme circumstances specified in the statute, which
have never been exercised by NHTSA in the history of the CAFE program.
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    \132\ EPCA does not provide authority for seeking to enjoin
violations of the CAFE standards.
    \133\ 49 U.S.C. 32912(b), 49 CFR 578.6(h)(2).
---------------------------------------------------------------------------

    Unlike the National Traffic and Motor Vehicle Safety Act, EPCA does
not provide for recall and remedy in the event of a noncompliance. The
presence of recall and remedy provisions \134\ in the Safety Act and
their absence in EPCA is believed to arise from the difference in the
application of the safety standards and CAFE standards. A safety
standard applies to individual vehicles; that is, each vehicle must
possess the requisite equipment or feature that must provide the
requisite type and level of performance. If a vehicle does not, it is
noncompliant. Typically, a vehicle does not entirely lack an item or
equipment or feature. Instead, the equipment or features fails to
perform adequately. Recalling the vehicle to repair or replace the
noncompliant equipment or feature can usually be readily accomplished.
---------------------------------------------------------------------------

    \134\ 49 U.S.C. 30120, Remedies for defects and noncompliance.
---------------------------------------------------------------------------

    In contrast, a CAFE standard applies to a manufacturer's entire
fleet for a model year. It does not require that a particular
individual vehicle be equipped with any particular equipment or feature
or meet a particular level of fuel economy. It does require that the
manufacturer's fleet, as a whole, comply. Further, although under the
attribute-based approach to setting CAFE standards fuel economy targets
are established for individual vehicles based on their footprints, the
individual vehicles are not required to meet or exceed those targets.
However, as a practical matter, if a manufacturer chooses to design
some vehicles that fall below their target levels of fuel economy, it
will need to design other vehicles that exceed their targets if the
manufacturer's overall fleet average is to meet the applicable
standard.
    Thus, under EPCA, there is no such thing as a noncompliant vehicle,
only a noncompliant fleet. No particular vehicle in a noncompliant
fleet is any more, or less, noncompliant than any other vehicle in the
fleet.
2. EPA Statutory Authority
    Title II of the Clean Air Act (CAA) provides for comprehensive
regulation of mobile sources, authorizing EPA to regulate emissions of
air pollutants from all mobile source categories. Pursuant to these
sweeping grants of authority, EPA considers such issues as technology
effectiveness, its cost (both per vehicle, per manufacturer, and per
consumer), the lead time necessary to implement the technology, and
based on this the feasibility and practicability of potential
standards; the impacts of potential standards on emissions reductions
of both GHGs and non-GHGs; the impacts of standards on oil conservation
and energy security; the impacts of standards on fuel savings by
consumers; the impacts of standards on the auto industry; other energy
impacts; as well as other relevant factors such as impacts on safety
    Pursuant to Title II of the Clean Air Act, EPA has taken a
comprehensive, integrated approach to mobile source emission control
that has produced benefits well in excess of the costs of regulation.
In developing the Title II program, the Agency's historic, initial
focus was on personal vehicles since that category represented the
largest source of mobile source emissions. Over time, EPA has
established stringent emissions standards for large truck and other
heavy-duty engines, nonroad engines, and marine and locomotive engines,
as well. The Agency's initial focus on personal vehicles has resulted
in significant control of emissions from these vehicles, and also led
to technology transfer to the other mobile source categories that made
possible the stringent standards for these other categories.
    As a result of Title II requirements, new cars and SUVs sold today
have emissions levels of hydrocarbons, oxides of nitrogen, and carbon
monoxide that are 98-99% lower than new vehicles sold in the 1960s, on
a per

mile basis. Similarly, standards established for heavy-duty highway and
nonroad sources require emissions rate reductions on the order of 90%
or more for particulate matter and oxides of nitrogen. Overall ambient
levels of automotive-related pollutants are lower now than in 1970,
even as economic growth and vehicle miles traveled have nearly tripled.
These programs have resulted in millions of tons of pollution reduction
and major reductions in pollution-related deaths (estimated in the tens
of thousands per year) and illnesses. The net societal benefits of the
mobile source programs are large. In its annual reports on federal
regulations, the Office of Management and Budget reports that many of
EPA's mobile source emissions standards typically have projected
benefit-to-cost ratios of 5:1 to 10:1 or more. Follow-up studies show
that long-term compliance costs to the industry are typically lower
than the cost projected by EPA at the time of regulation, which result
in even more favorable real world benefit-to-cost ratios.\135\
Pollution reductions attributable to Title II mobile source controls
are critical components to attainment of primary National Ambient Air
Quality Standards, significantly reducing the national inventory and
ambient concentrations of criteria pollutants, especially
PM2.5 and ozone. See e.g. 69 FR 38958, 38967-68 (June 29,
2004) (controls on non-road diesel engines expected to reduce entire
national inventory of PM2.5 by 3.3% (86,000 tons) by 2020).
Title II controls have also made enormous reductions in air toxics
emitted by mobile sources. For example, as a result of EPA's 2007
mobile source air toxics standards, the cancer risk attributable to
total mobile source air toxics will be reduced by 30% in 2030 and the
risk from mobile source benzene (a leukemogen) will be reduced by 37%
in 2030. (reflecting reductions of over three hundred thousand tons of
mobile source air toxic emissions) 72 FR 8428, 8430 (Feb. 26, 2007).
---------------------------------------------------------------------------

    \135\ OMB, 2011. 2011 Report to Congress on the Benefits and
Costs of Federal Regulations and Unfunded Mandates on State, Local,
and Tribal Entities. Office of Information and Regulatory Affairs.
June, 2011. http://www.whitehouse.gov/omb/inforeg_regpol_reports_congress/ (Last accessed on August 12, 2012). Several commenters
asserted that EPA had underestimated costs of rules controlling
emissions of criteria pollutants from heavy duty diesel engines.
These comments, which are incorrect and misplaced, are addressed in
EPA's Response to Comments Section 18.2.
---------------------------------------------------------------------------

    Title II emission standards have also stimulated the development of
a much broader set of advanced automotive technologies, such as on-
board computers and fuel injection systems, which are the building
blocks of today's automotive designs and have yielded not only lower
pollutant emissions, but improved vehicle performance, reliability, and
durability.
    This final rule implements a specific provision from Title II,
section 202(a).\136\ Section 202(a)(1) of the Clean Air Act (CAA)
states that ``the Administrator shall by regulation prescribe (and from
time to time revise) * * * standards applicable to the emission of any
air pollutant from any class or classes of new motor vehicles * * *
which in his judgment cause, or contribute to, air pollution which may
reasonably be anticipated to endanger public health or welfare.'' If
EPA makes the appropriate endangerment and cause or contribute
findings, then section 202(a) authorizes EPA to issue standards
applicable to emissions of those pollutants. Indeed, EPA's obligation
to do so is mandatory: ``Coalition for Responsible Regulation v. EPA,
No. 09-1322, slip op. at pp. 40-1 (D.C. Cir. June 26, 2012);
Massachusetts v. EPA, 549 U.S. at 533. Moreover, EPA's mandatory legal
duty to promulgate these emission standards derives from ``a statutory
obligation wholly independent of DOT's mandate to promote energy
efficiency.'' Massachusetts, 549 U.S. at 532. Consequently, EPA has no
discretion to decline to issue greenhouse standards under section
202(a), or to defer issuing such standards due to NHTSA's regulatory
authority to establish fuel economy standards. Rather, ``[j]ust as EPA
lacks authority to refuse to regulate on the grounds of NHTSA's
regulatory authority, EPA cannot defer regulation on that basis.''
Coalition for Responsible Regulation v. EPA, slip op. at p. 41.
---------------------------------------------------------------------------

    \136\ 42 U.S.C. 7521 (a)
---------------------------------------------------------------------------

    Any standards under CAA section 202(a)(1) ``shall be applicable to
such vehicles * * * for their useful life.'' Emission standards set by
the EPA under CAA section 202(a)(1) are technology-based, as the levels
chosen must be premised on a finding of technological feasibility.
Thus, standards promulgated under CAA section 202(a) are to take effect
only ``after providing such period as the Administrator finds necessary
to permit the development and application of the requisite technology,
giving appropriate consideration to the cost of compliance within such
period'' (section 202 (a)(2); see also NRDC v. EPA, 655 F. 2d 318, 322
(D.C. Cir. 1981)). EPA must consider costs to those entities which are
directly subject to the standards. Motor & Equipment Mfrs. Ass'n Inc.
v. EPA, 627 F. 2d 1095, 1118 (D.C. Cir. 1979). Thus, ``the [s]ection
202 (a)(2) reference to compliance costs encompasses only the cost to
the motor-vehicle industry to come into compliance with the new
emission standards.'' Coalition for Responsible Regulation v. EPA, slip
op. p. 44; see also id. at pp. 43-44 rejecting arguments that EPA was
required to, or should have considered costs to other entities, such as
stationary sources, which are not directly subject to the emission
standards. EPA is afforded considerable discretion under section 202(a)
when assessing issues of technical feasibility and availability of lead
time to implement new technology. Such determinations are ``subject to
the restraints of reasonableness'', which ``does not open the door to
`crystal ball' inquiry.'' NRDC, 655 F. 2d at 328, quoting International
Harvester Co. v. Ruckelshaus, 478 F. 2d 615, 629 (D.C. Cir. 1973).
However, ``EPA is not obliged to provide detailed solutions to every
engineering problem posed in the perfection of the trap-oxidizer. In
the absence of theoretical objections to the technology, the agency
need only identify the major steps necessary for development of the
device, and give plausible reasons for its belief that the industry
will be able to solve those problems in the time remaining. The EPA is
not required to rebut all speculation that unspecified factors may
hinder `real world' emission control.'' NRDC, 655 F. 2d at 333-34. In
developing such technology-based standards, EPA has the discretion to
consider different standards for appropriate groupings of vehicles
(``class or classes of new motor vehicles''), or a single standard for
a larger grouping of motor vehicles (NRDC, 655 F. 2d at 338). Finally,
with respect to regulation of vehicular greenhouse gas emissions, EPA
is not ``required to treat NHTSA's * * * regulations as establishing
the baseline for the [section 202 (a) standards].'' Coalition for
Responsible Regulation v. EPA, slip op. at p. 42 (noting further that
``the [section 202 (a) standards] provid[e] benefits above and beyond
those resulting from NHTSA's fuel-economy standards''.)
    Although standards under CAA section 202(a)(1) are technology-
based, they are not based exclusively on technological capability. EPA
has the discretion to consider and weigh various factors along with
technological feasibility, such as the cost of compliance (see section
202(a) (2)), lead time necessary for compliance (section 202(a)(2)),
safety (see NRDC, 655 F. 2d at 336 n. 31) and other impacts on

consumers,\137\ and energy impacts associated with use of the
technology. See George E. Warren Corp. v. EPA, 159 F.3d 616, 623-624
(D.C. Cir. 1998) (ordinarily permissible for EPA to consider factors
not specifically enumerated in the Act).
---------------------------------------------------------------------------

    \137\ Since its earliest Title II regulations, EPA has
considered the safety of pollution control technologies. See 45
Fed.Reg. 14,496, 14,503 (1980). (``EPA would not require a
particulate control technology that was known to involve serious
safety problems. If during the development of the trap-oxidizer
safety problems are discovered, EPA would reconsider the control
requirements implemented by this rulemaking'').
---------------------------------------------------------------------------

    In addition, EPA has clear authority to set standards under CAA
section 202(a) that are technology forcing when EPA considers that to
be appropriate, but is not required to do so (as compared to standards
set under provisions such as section 202(a)(3) and section 213(a)(3)).
EPA has interpreted a similar statutory provision, CAA section 231, as
follows:

    While the statutory language of section 231 is not identical to
other provisions in title II of the CAA that direct EPA to establish
technology-based standards for various types of engines, EPA
interprets its authority under section 231 to be somewhat similar to
those provisions that require us to identify a reasonable balance of
specified emissions reduction, cost, safety, noise, and other
factors. See, e.g., Husqvarna AB v. EPA, 254 F.3d 195 (D.C. Cir.
2001) (upholding EPA's promulgation of technology-based standards
for small non-road engines under section 213(a)(3) of the CAA).
However, EPA is not compelled under section 231 to obtain the
``greatest degree of emission reduction achievable'' as per sections
213 and 202 of the CAA, and so EPA does not interpret the Act as
requiring the agency to give subordinate status to factors such as
cost, safety, and noise in determining what standards are reasonable
for aircraft engines. Rather, EPA has greater flexibility under
section 231 in determining what standard is most reasonable for
aircraft engines, and is not required to achieve a ``technology
forcing'' result.\138\
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    \138\ 70 FR 69664, 69676, November 17, 2005.

    This interpretation was upheld as reasonable in NACAA v. EPA, (489
F.3d 1221, 1230 (D.C. Cir. 2007)). CAA section 202(a) does not specify
the degree of weight to apply to each factor, and EPA accordingly has
discretion in choosing an appropriate balance among factors. See Sierra
Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003) (even where a provision
is technology-forcing, the provision ``does not resolve how the
Administrator should weigh all [the statutory] factors in the process
of finding the `greatest emission reduction achievable' ''). Also see
Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir. 2001) (great
discretion to balance statutory factors in considering level of
technology-based standard, and statutory requirement ``to [give
appropriate] consideration to the cost of applying * * * technology''
does not mandate a specific method of cost analysis); see also Hercules
Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 1978) (``In reviewing a
numerical standard we must ask whether the agency's numbers are within
a zone of reasonableness, not whether its numbers are precisely
right''); Permian Basin Area Rate Cases, 390 U.S. 747, 797 (1968)
(same); Federal Power Commission v. Conway Corp., 426 U.S. 271, 278
(1976) (same); Exxon Mobil Gas Marketing Co. v. FERC, 297 F. 3d 1071,
1084 (D.C. Cir. 2002) (same).
    One commenter mistakenly characterized section 202(a) as a
``technology-forcing'' provision. Comments of CBD p. 5. As just
explained, it is not, but even if it were, EPA retains considerable
discretion to balance the various relevant statutory factors, again as
just explained. The same commenter maintained that the GHG standards
should ``protect the public health and welfare with an adequate margin
of safety.'' Id. p. 2. The commenter paraphrases the statutory standard
for issuing health-based National Ambient Air Quality Standards under
section 109(b) of the CAA.\139\ Section 202(a) is a technology-based
provision with an entirely different legal standard. Moreover, the
commenter's assertion that the standards must reduce the amount of
greenhouse gases emitted by light duty motor vehicles (id. pp. 2-3) has
no statutory basis. Section 202(a)(2) does not spell out any minimum
level of effectiveness for standards, but instead directs EPA to set
the standards at a level that is reasonable in light of applicable
compliance costs and technology considerations. Nor is there any
requirement that the GHG standards result in some specific quantum of
amelioration of the endangerment to which light-duty vehicle emissions
contribute. See Coalition for Responsible Regulation v. EPA, slip op.
pp. 42-43. In addition, substantial GHG emission reductions required by
section 202(a) standards in and of themselves constitute ``meaningful
mitigation of greenhouse gas emissions'' without regard to the extent
to which these reductions ameliorate the endangerment to public health
and welfare caused by greenhouse gas emissions. Coalition for
Responsible Regulation v. EPA, slip op. p. 43.
---------------------------------------------------------------------------

    \139\ 42 U.S.C. 7409(b).
---------------------------------------------------------------------------

a. EPA's Testing Authority
    Under section 203 of the CAA, sales of vehicles are prohibited
unless the vehicle is covered by a certificate of conformity. EPA
issues certificates of conformity pursuant to section 206 of the Act,
based on (necessarily) pre-sale testing conducted either by EPA or by
the manufacturer. The Federal Test Procedure (FTP or ``city'' test) and
the Highway Fuel Economy Test (HFET or ``highway'' test) are used for
this purpose. Compliance with standards is required not only at
certification but throughout a vehicle's useful life, so that testing
requirements may continue post-certification. Useful life standards may
apply an adjustment factor to account for vehicle emission control
deterioration or variability in use (section 206(a)).
    Pursuant to EPCA, EPA is required to measure fuel economy for each
model and to calculate each manufacturer's average fuel economy.\140\
EPA uses the same tests--the FTP and HFET--for fuel economy testing.
EPA established the FTP for emissions measurement in the early 1970s.
In 1976, in response to the Energy Policy and Conservation Act (EPCA)
statute, EPA extended the use of the FTP to fuel economy measurement
and added the HFET.\141\ The provisions in the 1976 regulation,
effective with the 1977 model year, established procedures to calculate
fuel economy values both for labeling and for CAFE purposes. Under
EPCA, EPA is required to use these procedures (or procedures which
yield comparable results) for measuring fuel economy for cars for CAFE
purposes, but not for labeling purposes.\142\ EPCA does not pose this
restriction on CAFE test procedures for light trucks, but EPA does use
the FTP and HFET for this purpose. EPA determines fuel economy by
measuring the amount of CO2 and all other carbon compounds
(e.g. total hydrocarbons (THC) and carbon monoxide (CO)), and then, by
mass balance, calculating the amount of fuel consumed. EPA's final
changes to the procedures for measuring fuel economy and calculating
average fuel economy are discussed in section III.B.10.
---------------------------------------------------------------------------

    \140\ See 49 U.S.C. 32904(c).
    \141\ See 41 FR 38674 (Sept. 10, 1976), which is codified at 40
CFR Part 600.
    \142\ See 49 U.S.C. 32904(c).
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b. EPA Enforcement Authority
    Section 207 of the CAA grants EPA broad authority to require
manufacturers to remedy vehicles if EPA determines there are a
substantial number of noncomplying vehicles. In addition, section 205
of the CAA

authorizes EPA to assess penalties of up to $37,500 per vehicle for
violations of various prohibited acts specified in the CAA. In
determining the appropriate penalty, EPA must consider a variety of
factors such as the gravity of the violation, the economic impact of
the violation, the violator's history of compliance, and ``such other
matters as justice may require.'' Unlike EPCA, the CAA does not
authorize vehicle manufacturers to pay fines in lieu of meeting
emission standards.
c. Compliance
    EPA oversees testing, collects and processes test data, and
performs calculations to determine compliance with both CAA and CAFE
standards. CAA standards apply not only at the time of certification
but also throughout the vehicle's useful life, and EPA is accordingly
finalizing in-use standards as well as standards based on testing
performed at time of production. See section III.E. Both the CAA and
EPCA provide for penalties should manufacturers fail to comply with
their fleet average standards, but, unlike EPCA, there is no option for
manufacturers to pay fines in lieu of compliance with the standards.
Under the CAA, penalties are typically determined on a vehicle-specific
basis by determining the number of a manufacturer's highest emitting
vehicles that cause the fleet average standard violation. Penalties
under Title II of the CAA are capped at $25,000 per day of violation
and apply on a per vehicle basis. See CAA section 205(a).
d. Test Procedures
    EPA establishes the test procedures under which compliance with
both the CAA GHG standards and the EPCA fuel economy standards are
measured. EPA's testing authority under the CAA is flexible, but
testing for fuel economy for passenger cars is by statute is limited to
the Federal Test procedure (FTP) or test procedures which provide
results which are equivalent to the FTP. 49 U.S.C. Sec.  32904 and
section III.B, below. EPA developed and established the FTP in the
early 1970s and, after enactment of EPCA in 1976, added the Highway
Fuel Economy Test (HFET) to be used in conjunction with the FTP for
fuel economy testing. EPA has also developed tests with additional
cycles (the so-called 5-cycle test) which test is used for purposes of
fuel economy labeling and is also used in the EPA program for extending
off-cycle credits under both the light-duty and (along with NHTSA)
heavy-duty vehicle GHG programs. See 75 FR 25439; 76 FR 57252. In this
rule, EPA is retaining the FTP and HFET for purposes of testing the
fleetwide average standards, and is further modifying the N2O
measurement test procedures and the A/C CO2 efficiency test
procedures EPA initially adopted in the 2012-2016 rule.
3. Comparing the Agencies' Authority
    As the above discussion makes clear, there are both important
differences between the statutes under which each agency is acting as
well as several important areas of similarity. One important difference
is that EPA's authority addresses various GHGs, while NHTSA's authority
addresses fuel economy as measured under specified test procedures and
calculated by EPA. This difference is reflected in this rulemaking in
the scope of the two standards: EPA's rule takes into account
reductions of direct air conditioning emissions, and establishes
standards for methane and N2O, but NHTSA's do not, because
these emissions generally do not relate to fuel economy. A second
important difference is that EPA is adopting certain compliance
flexibilities, such as the multiplier for advanced technology vehicles,
and has taken those flexibilities into account in its technical
analysis and modeling supporting the GHG standards. EPCA specifies a
number of particular compliance flexibilities for CAFE, and expressly
prohibits NHTSA from considering the impacts of those statutory
compliance flexibilities in setting the CAFE standard so that the
manufacturers' election to avail themselves of the permitted
flexibilities remains strictly voluntary.\143\ The Clean Air Act, on
the other hand, contains no such prohibition. As explained earlier,
these considerations result in some differences in the technical
analysis and modeling used to support the agencies' respective
standards.
---------------------------------------------------------------------------

    \143\ 49 U.S.C. 32902(h).
---------------------------------------------------------------------------

    Another important area where the two agencies' authorities are
similar but not identical involves the transfer of credits between a
single firm's car and truck fleets. EISA revised EPCA to allow for such
credit transfers, but placed a cap on the amount of CAFE credits which
can be transferred between the car and truck fleets. 49 U.S.C.
32903(g)(3). Under CAA section 202(a), EPA is continuing to allow
CO2 credit transfers between a single manufacturer's car and
truck fleets, with no corresponding limits on such transfers. In
general, the EISA limit on CAFE credit transfers is not expected to
have the practical effect of limiting the amount of CO2
emission credits manufacturers may be able to transfer under the CAA
program, recognizing that manufacturers must comply with both the CAFE
standards and the GHG standards. However, it is possible that in some
specific circumstances the EPCA limit on CAFE credit transfers could
constrain the ability of a manufacturer to achieve cost savings through
unlimited use of GHG emissions credit transfers under the CAA program.
    These differences, however, do not change the fact that in many
critical ways the two agencies are charged with addressing the same
basic issue of reducing GHG emissions and improving fuel economy. The
agencies are looking at the same set of control technologies (with the
exception of the air conditioning leakage-related technologies). The
standards set by each agency will drive the kind and degree of
penetration of this set of technologies across the vehicle fleet. As a
result, each agency is trying to answer the same basic question--what
kind and degree of technology penetration is necessary to achieve the
agencies' objectives in the rulemaking time frame, given the agencies'
respective statutory authorities?
    In making the determination of what standards are appropriate under
the CAA and EPCA, each agency is to exercise its judgment and balance
many similar factors. NHTSA's factors are provided by EPCA:
Technological feasibility, economic practicability, the effect of other
motor vehicle standards of the Government on fuel economy, and the need
of the United States to conserve energy. EPA has the discretion under
the CAA to consider many related factors, such as the availability of
technologies, the appropriate lead time for introduction of technology,
and based on this the feasibility and practicability of their
standards; the impacts of their standards on emissions reductions (of
both GHGs and non-GHGs); the impacts of their standards on oil
conservation; the impacts of their standards on fuel savings by
consumers; the impacts of their standards on the auto industry; as well
as other relevant factors such as impacts on safety. Conceptually,
therefore, each agency is considering and balancing many of the same
concerns, and each agency is making a decision that at its core is
answering the same basic question of what kind and degree of technology
penetration is it appropriate to call for in light of all of the
relevant factors in a given rulemaking, for the model years concerned.
Finally, each agency has the authority to take into consideration
impacts of the standards of the other agency. Among the other factors
that is considers in determining maximum

feasible standards, EPCA calls for NHTSA to take into consideration the
effects of EPA's emissions standards on fuel economy capability (see 49
U.S.C. 32902(f)), and EPA has the discretion to take into consideration
NHTSA's CAFE standards in determining appropriate action under section
202(a).\144\ This is consistent with the Supreme Court's statement that
EPA's mandate to protect public health and welfare is wholly
independent from NHTSA's mandate to promote energy efficiency, but
there is no reason to think the two agencies cannot both administer
their obligations and yet avoid inconsistency. Massachusetts v. EPA,
549 U.S. 497, 532 (2007).
---------------------------------------------------------------------------

    \144\ It should be noted, however, that the D.C. Circuit noted
the absence of an explicit obligation for EPA to consider NHTSA fuel
economy standards as one basis for holding that the existence of
NHTSA's fuel economy regulatory program provides no basis for EPA
deferring regulation of vehicular greenhouse gas emissions.
Coalition for Responsible Regulation v. EPA, slip op. pp. 41-42.
---------------------------------------------------------------------------

    In this context, it is in the Nation's interest for the two
agencies to continue to work together in developing these standards,
and they have done so. For example, the agencies have committed
considerable effort to develop a joint Technical Support Document that
provides a technical basis underlying each agency's analyses. The
agencies also have worked closely together in developing and reviewing
their respective modeling, to develop the best analysis and to promote
technical consistency. The agencies have developed a common set of
attribute-based curves that each agency supports as appropriate both
technically and from a policy perspective. The agencies have also
worked closely to ensure that their respective programs will work in a
coordinated fashion, and will provide regulatory compatibility that
allows auto manufacturers to build a single national light-duty fleet
that would comply with both the GHG and the CAFE standards. The
resulting overall close coordination of the GHG and CAFE standards
should not be surprising, however, as each agency is using a jointly
developed technical basis to address the closely intertwined challenges
of energy security and climate change.
    As set out in detail in Sections III and IV of this notice, both
EPA and NHTSA believe the agencies' standards are fully justified under
their respective statutory criteria. The standards are feasible in each
model year within the lead time provided, based on the agencies'
projected increased use of various technologies which in most cases are
already in commercial application in the fleet to varying degrees.
Detailed assessment of the technologies that could be employed by each
manufacturer supports this conclusion. The agencies also carefully
assessed the costs of the rules, both for the industry as a whole and
per manufacturer, as well as the costs per vehicle, and consider these
costs to be reasonable during the rulemaking time frame and recoverable
(from fuel savings). The agencies recognize the significant increase in
the application of technology that the standards would require across a
high percentage of vehicles, which will require the manufacturers to
devote considerable engineering and development resources before 2017
laying the critical foundation for the widespread deployment of
upgraded technology across a high percentage of the 2017-2025 fleet.
This clearly will be challenging for automotive manufacturers and their
suppliers, especially in the current economic climate, and given the
stringency of the recently-established MYs 2012-2016 standards.
However, based on all of the analyses performed by the agencies, our
judgment is that it is a challenge that can reasonably be met.
    The agencies also evaluated the impacts of these standards with
respect to the expected reductions in GHGs and oil consumption and,
found them to be very significant in magnitude. The agencies considered
other factors such as the impacts on noise, energy, and vehicular
congestion. The impact on safety was also given careful consideration.
Moreover, the agencies quantified the various costs and benefits of the
standards, to the extent practicable. The agencies' analyses to date
indicate that the overall quantified benefits of the standards far
outweigh the projected costs. All of these factors support the
reasonableness of the standards. See Section III (GHG standards) and
Section IV (CAFE standards) for a detailed discussion of each agency's
basis for its selection of its standards.
    The fact that the benefits are estimated to considerably exceed
their costs supports the view that the standards represent an
appropriate balance of the relevant statutory factors.\145\ In drawing
this conclusion, the agencies acknowledge the uncertainties and
limitations of the analyses. For example, the analysis of the benefits
is highly dependent on the estimated price of fuel projected out many
years into the future. There is also significant uncertainty in the
potential range of values that could be assigned to the social cost of
carbon. There are a variety of impacts that the agencies are unable to
quantify, such as non-market damages, extreme weather, socially
contingent effects, or the potential for longer-term catastrophic
events, or the impact on consumer choice. The cost-benefit analyses are
one of the important things the agencies consider in making a judgment
as to the appropriate standards to propose under their respective
statutes. Consideration of the results of the cost-benefit analyses by
the agencies, however, includes careful consideration of the
limitations discussed above.
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    \145\ The comment that the standards are insufficiently
stringent because estimated benefits of the standards substantially
exceed the estimated costs shows (Comment of CBD p.8) is misplaced.
Neither EPCA/EISA nor the CAA dictates a particular weighing of
costs and benefits, so the commenter's insistence that the
respective statutes require ``maximized societal benefits, where the
benefits most optimally compare to the anticipated costs'' (id. p.
23) is not correct.
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II. Joint Technical Work Completed for This Final Rule

A. Introduction

    In this section, NHTSA and EPA discuss several aspects of our joint
technical analyses. These analyses are common to the development of
each agency's standards. Specifically we discuss: The development of
the vehicle market forecasts used by each agency for assessing costs,
benefits, and effects; the development of the attribute-based standard
curve shapes; the technologies the agencies evaluated and their costs
and effectiveness; the economic assumptions the agencies included in
their analyses; a description of the credit programs for air
conditioning; off-cycle technology, and full-sized pickup trucks; as
well as the effects of the standards on vehicle safety. The Joint
Technical Support Document (TSD) discusses the agencies' joint
technical work in more detail.
    The agencies have based this final rule on a very significant body
of data and analysis that we believe is the best information currently
available on the full range of technical and other inputs utilized in
our respective analyses. As noted in various places throughout this
preamble, the Joint TSD, the NHTSA RIA, and the EPA RIA, new
information has become available since the proposal from a range of
sources. These include work the agencies have completed (e.g., work on
technology costs and effectiveness and creating a second future fleet
forecast based on model year 2010 baseline data). In addition,
information from other sources is now incorporated into our analyses,
including the Energy Information

Agency's Annual Energy Outlook 2012 Early Release, as well as other
information from the public comment process. Wherever appropriate, and
as summarized throughout this preamble, we have used inputs for the
final rule based on information from the proposal as well as new data
and information that has become available since the proposal (either
through the comments or through the agencies' analyses).

B. Developing the Future Fleet for Assessing Costs, Benefits, and
Effects

1. Why did the agencies establish baseline and reference vehicle
fleets?
    In order to calculate the impacts of the EPA and NHTSA regulations,
it is necessary to estimate the composition of the future vehicle fleet
absent regulatory action, to provide a reference point relative to
which costs, benefits, and effects of the regulations are assessed. As
in the NPRM, EPA and NHTSA have developed comparison fleets in two
parts. The first step was to develop baseline estimates of the fleets
of new vehicles to be produced for sale in the U.S. through MY2025, one
starting with the actual MY 2008 fleet, and one starting with the
actual MY 2010 fleet. These baselines include vehicle sales volumes,
GHG/fuel economy performance levels, and contain listings of the base
technologies on every MY 2008 or MY 2010 vehicle sold. This information
comes from CAFE certification data submitted by manufacturers to EPA,
and for purposes of rulemaking analysis, was supplemented with publicly
and commercially available information regarding some vehicle
characteristics (e.g., footprint). The second step was to project the
baseline fleet volumes into model years 2017-2025. The vehicle volumes
projected out to MY 2025 are referred to as the reference fleet
volumes. The third step was to modify those MY 2017-2025 reference
fleets such that they reflect the technology that manufacturers could
apply if the MY 2016 standards were extended without change through MY
2025.\146\ Each agency used its modeling system to develop modified or
final reference fleets, or adjusted baselines, for use in its analysis
of regulatory alternatives, as discussed below and in each agency's
RIA. All of the agencies' estimates of emission reductions, fuel
economy improvements, costs, and societal impacts are developed in
relation to the respective reference fleets. This section discusses the
first two steps, development of the baseline fleets and the reference
fleets.
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    \146\ EPA's MY 2016 GHG standards under the CAA would continue
into the future absent this final rule. While NHTSA must actively
promulgate standards in order for CAFE standards to extend past MY
2016, the agency has, as in all recent CAFE rulemakings, defined a
no-action (i.e., baseline) regulatory alternative as an indefinite
extension of the last-promulgated CAFE standards for purposes of the
main analysis of the standards in this preamble.
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    EPA and NHTSA used a transparent approach to developing the
baseline and reference fleets, largely working from publicly available
data. Because both input and output sheets from our modeling are
public, stakeholders can verify and check EPA's and NHTSA's modeling,
and perform their own analyses with these datasets.\147\
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    \147\ EPA's Omega Model and input sheets are available at http://www.epa.gov/oms/climate/models.htm; DOT/NHTSA's CAFE Compliance and
Effects Modeling System (commonly known as the ``Volpe Model'') and
input and output sheets are available at http://www.nhtsa.gov/fuel-economy.
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2. What comments did the agencies receive regarding fleet projections
for the NPRM?
    During the comment period, the agencies also received formal
comments regarding the NPRM baseline and reference fleets. Chrysler
questioned the agencies' assumption that the company's sales would
decline by 53% over 17 years, and stated that the forecast had
implications not just for the agencies' analysis, but also, indirectly,
for Chrysler's competitiveness, because suppliers and customers who
``see [such] projections supported by Federal agencies * * * are
potentially given a highly negative view of the viability of the
company * * * [which] may result in less favorable contracts with
suppliers and lower sales to customers.'' Chrysler requested that the
agencies update their volume projections for the final rule.\148\
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    \148\ Chrysler, Docket No. NHTSA-2010-0131-0241, at 21.
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    The agencies' projection that Chrysler's sales would steadily
decline was primarily attributable to the manufacturer- and segment-
level forecasts provided in December 2009 by CSM. The agencies thought
that forecast to have been credible at the time considering economic
and industry conditions during the months before CSM provided the
agencies with a long-range forecast, when the overall light vehicle
market was severely depressed and Chrysler and GM were--with nascent
federal assistance--in the process of reorganizing. We recognize that
Chrysler's production has since recovered to levels suggesting much
better long-term prospects than forecast by CSM in 2009. While the
agencies are continuing to use the market forecast developed for the
NPRM (after minor corrections unrelated to Chrysler's comments), we are
also using a second market forecast we have developed for today's final
rule, making use of a newer forecast (in this case, from LMC) of
manufacturer- and segment-level shares, a forecast that shows
significantly higher sales (more than double that of the earlier
forecast) for Chrysler in 2025.
    Environmental Consultants of Michigan commented that use of 4-year-
old certification data was ``unconscionable'' and unreflective of
technology improvements already made to vehicles since then, requesting
that the agencies delay the final rule until the market forecast can be
updated with appropriate data.\149\ As described in this chapter, even
though the year of publication of this rule is 2012, model year 2010
was the most recent baseline dataset available due to the lag between
the actual conclusion of a given model year and the submission (for
CAFE compliance purposes) of production volumes for that model year.
Moreover, as explained below in the joint TSD and in our respective
RIAs, EPA and NHTSA measure the costs and benefits of new standards as
incremental levels beyond those that would result from the application
of technology given continuation of baseline standards (i.e.,
continuation of the standards that will be in place in MY 2016).
Therefore, our analysis of manufacturers' capabilities is informed by
analysis of technology that could be applied in the future even absent
the new standards, not just technology that had been applied in 2008 or
2010. We further note that, while NHTSA has, in the past, made use of
confidential product planning information provided to the agency by
many manufacturers--information that typically extended roughly five
years into the future--other stakeholders previously commented
negatively regarding the agency's resultant inability to publish some
of the detailed inputs to and outputs of its analysis. As during the
rulemaking establishing the MYs 2012-2016 standards, EPA and NHTSA have
determined that the benefits of a fully transparent market forecast
outweigh the disbenefits of a market forecast that may not fully
reflect likely forthcoming changes in manufacturers' products.
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    \149\ Environmental Consultants of Michigan, Docket No. NHTSA-
2010-0131-0166, at 7.
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    The agencies also received a comment from Volkswagen, stating that
``Volkswagen sees no evidence that would suggest a near 30% decline in
truck market share from domestic OEMs

[original emphasis].'' \150\ Volkswagen further suggested that the
agencies' forecast was based on confidential ``strategic plans by
[Volkswagen's] competitors''. On the contrary, the agencies' forecast
was based on public and commercial information made fully available to
all stakeholders, including Volkswagen. Also, while the agencies' 2008
based fleet projection showed a decline in the share of light trucks
expected to be produced by the aggregate of Chrysler, Ford, and General
Motors, Volkswagen's statement mischaracterized the magnitude and
nature of the decline. Between MY2008 and MY2025, the agencies'
forecast showed declines from 17.8% to 5.8% for Chrysler, from 14.5% to
12.0% for Ford, from 26.8% to 27.8% from General Motors, and from 58.3%
to 44.5% for the aggregate of these three manufacturers. The latter
represents a 22.5% reduction, not the 30% reduction cited by
Volkswagen, and is dominated by the underlying forecast regarding
Chrysler's overall position in the market; for General Motors, the
agencies' forecast showed virtually no loss of share in the light truck
market. As discussed above, the agencies' market forecast for the NPRM
was informed by CSM's forecast of manufacturer- and segment-level
shares, and by EIA's forecast of overall volumes of the passenger car
and light truck markets, and CSM's forecast, in particular, was
provided at a time when market conditions were economically severe.
While the agencies are continuing to use this forecast, this agency is
also using a second forecast, informed by MY 2010 certification data,
an updated AEO-based forecast of overall volumes of passenger cars and
light trucks, and an updated manufacturer- and segment-level market
forecast from LMC Automotive.
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    \150\ Volkswagen, NHTSA-2010-0131-0247, at 9.
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    The Union of Concerned Scientists (UCS) expressed concern that if
the light vehicle market does not shift toward passenger cars as
indicated in the agencies' market forecast, energy and environmental
benefits of the new standards could be less than projected.\151\ As
discussed below, our MY 2008-based and MY 2010-based market forecasts,
while both subject to uncertainty, reflect passenger car market shares
estimated using EIA's National Energy Modeling System (NEMS). For both
market forecasts, we re-ran NEMS by holding standards constant after MY
2016 and also preventing the model from increasing the passenger car
market share to achieve increases in fleetwide average fuel economy
levels. Having done so, we obtained a somewhat lower passenger car
market share than EIA obtained for AEO 2011 and AEO 2012, respectively.
In our judgment, this approach provides a reasonable basis for
developing a forecast of the overall sales of passenger cars and light
trucks, while remaining consistent with our use of EIA's reference case
estimates of future fuel prices. In any event, we note that EPCA/EISA
requires NHTSA to ensure that the overall new vehicle fleet achieves
average fuel economy of at least 35 mpg by MY 2020. Our analysis,
discussed below, indicates based on the information currently before us
that the fleet could achieve 39.9-40.8 mpg by MY 2020 (accounting for
flexibilities available under EPCA)--well above the 35 mpg statutory
requirement. However, NHTSA will monitor the fleet's progress and, if
necessary, adjust standards to ensure that EPCA/EISA's ``35-by-2020''
requirement is met, even if this requires issuing revised fuel economy
standards before the planned joint mid-term evaluation process has been
completed. However, insofar as NHTSA's current analysis indicates the
fleet could achieve 40-41 mpg by MY 2020, NHTSA currently expects the
need for such a rulemaking to be unlikely. Beyond MY 2020, EPCA/EISA
does not provide a minimum requirement for the overall fleet, but
requires NHTSA to continue setting separate standards for passenger
cars and light trucks, such that each standard is at the maximum
feasible level in each model year. In other words, as long as the ``35-
by-2020'' requirement is achieved, NHTSA is required to consider
stringency for passenger cars and light trucks separately, not to set
those standards at levels achieving any particular level of average
performance for the overall fleet.
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    \151\ UCS, Docket No. EPA-HQ-OAR-2010-0799-9567, p. 8.
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    Nonetheless, the agencies recognize that overall fuel consumption
and GHG emissions by the light vehicle fleet will depend on, among many
other things, the relative market shares of passenger cars and light
trucks. In its probabilistic uncertainty analysis, presented in NHTSA's
RIA accompanying today's notice as required by OMB for significant
rulemakings, NHTSA has varied the passenger car share (as a function of
fuel price), such that the resultant distributions of estimated model
results--including fuel savings and CO2 emission
reductions--reflect uncertainty regarding the relative market shares of
passenger cars and light trucks. The results of the probabilistic
uncertainty analysis along with the other analysis in this rulemaking
support that the NHTSA standards are maximum feasible standards. The
probabilistic uncertainty analysis is discussed in NHTSA's RIA Chapter
XII. Like all other aspects of the outlook for the future light vehicle
market, the agencies will closely monitor the relative market shares of
passenger cars and light trucks in preparation for the planned midterm
review.
3. Why were two fleet projections created for the FRM?
    Although much of the discussion in this and following sections
describes the methodology for creating a single baseline and reference
fleet, for this final rule the agencies actually developed two baseline
and reference fleets. In the NPRM, the agencies used MY 2008 CAFE
certification data to establish the ``2008-based fleet projection.''
\152\ The agencies noted that MY 2009 CAFE certification data was not
likely to be representative of future conditions since it was so
dramatically influenced by the economic recession (Joint Draft TSD
section 1.2.1). The agencies further noted that MY 2010 CAFE
certification data might be available for use in the final rulemaking
for purposes of developing a baseline fleet. The agencies stated that a
copy of the MY 2010 CAFE certification data would be put in the public
docket if it became available during the comment period. The MY 2010
data was reported by the manufacturers throughout calendar year 2011 as
the final sales figures were compiled and submitted to the EPA
database. Due to the lateness of the CAFE data submissions,\153\
however, it was not possible to submit the new 2010 data into the
docket during the public comment period. As explained below, however,
consistent with the agencies' expectations at proposal, and with the
agencies' standard practice of updating relevant information as
practicable between proposals and final rules, the agencies are using
these data in one of the two fleet-based projections we are using to
estimate the impacts of the final rules.
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    \152\ ``2008 based fleet projection'' is a new term that is the
same as the reference fleet. The term is added to clarify when we
are using the 2008 baseline and reference fleet vs. the 2010
baseline and reference fleet.
    \153\ Partly due to the earthquake and tsunami in Japan and the
significant impact this had on their facilities, some manufacturers
requested and were granted an extension on the deadline to submit
their CAFE data.
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    For analysis supporting the NPRM, the agencies developed a forecast
of the light vehicle market through MY 2025

based on (a) the vehicle models in the MY 2008 CAFE certification data,
(b) the AEO 2011 interim projection of future fleet sales volumes, and
(c) the future fleet forecast conducted by CSM in 2009. In the
proposal, the agencies stated we would consider using MY 2010 CAFE
certification data, if available, for analysis supporting the final
rule (Joint Draft TSD, p. 1-2). Shortly after the NPRM was issued, the
agencies reiterated this intention in statements to Automotive News in
response to a pending article by that publication.\154\ The agencies
also indicated our intention to, for analysis supporting the final
rule, use the most recent version of EIA's AEO available, and a market
forecast updated relative to that purchased from CSM (Joint Draft TSD
section 1.3.5).