pickup trucks, 12- and 15-passenger vans, and large work vans that are
sold by vehicle manufacturers as complete vehicles, with no secondary
manufacturer making substantial modifications prior to registration and
use. Most of these vehicles are produced by companies with major light-
duty markets in the United States, primarily Ford, General Motors, and
Fiat Chrysler. Often, the technologies available to reduce fuel
consumption and GHG emissions from this segment are similar to the
technologies used for the same purpose on light-duty pickup trucks and
vans, including both engine efficiency improvements (for gasoline and
diesel engines) and vehicle efficiency improvements.
    In the Phase 1 rule, EPA adopted GHG standards for HD pickups and
vans based on the whole vehicle (including the engine), expressed as
grams of CO2 per mile, consistent with the way these
vehicles are regulated by EPA today for criteria pollutants. NHTSA
adopted corresponding gallons per 100 mile fuel consumption standards
that are likewise based on the whole vehicle. This complete vehicle
approach adopted by both agencies for HD pickups and vans was
consistent with the recommendations of the NAS Committee in its 2010
Report. EPA and NHTSA adopted a structure for the Phase 1 HD pickup and
van standards that in many respects paralleled long-standing NHTSA CAFE
standards and more recent coordinated EPA GHG standards for
manufacturers' fleets of new light-duty vehicles. These commonalities
include a new vehicle fleet average standard for each manufacturer in
each model year and the determination of these fleet average standards
based on production volume-weighted targets for each model, with the
targets varying based on a defined vehicle attribute. Vehicle testing
for both the HD and light-duty vehicle programs is conducted on chassis
dynamometers using the drive cycles from the EPA Federal Test Procedure
(Light-duty FTP or ``city'' test) and Highway Fuel Economy Test (HFET
or ``highway'' test).\456\
---------------------------------------------------------------------------

    \456\ The Light-duty FTP is a vehicle driving cycle that was
originally developed for certifying light-duty vehicles and
subsequently applied to HD chassis testing for criteria pollutants.
This contrasts with the Heavy-duty FTP, which refers to the
transient engine test cycles used for certifying heavy-duty engines
(with separate cycles specified for diesel and spark-ignition
engines).
---------------------------------------------------------------------------

    For the light-duty GHG and fuel economy \457\ standards, the
agencies factored in vehicle size by basing the emissions and fuel
economy targets on vehicle footprint (the wheelbase times the average
track width).\458\ For those standards, passenger cars and light trucks
with larger footprints are assigned higher GHG and lower fuel economy
target levels in acknowledgement of their inherent tendency to consume
more fuel and emit more GHGs per mile. EISA requires that NHTSA study
``the appropriate metric for measuring and expressing commercial
medium- and heavy-duty vehicle and work truck fuel efficiency
performance, taking into consideration, among other things, the work
performed by such on-highway vehicles and work trucks . . .'' See 49
U.S.C. 32902(k)(1)(B).\459\ For HD pickups and vans, the agencies also
set standards based on a vehicle attribute, but used a work-based
metric as the attribute rather than the footprint attribute utilized in
the light-duty vehicle rulemaking. Work-based measures such as payload
and towing capability are key among the parameters that characterize
differences in the design of these vehicles, as well as differences in
how the vehicles will be utilized. Buyers consider these utility-based
attributes when purchasing a HD pickup or van. EPA and NHTSA therefore
finalized Phase 1 standards for HD pickups and vans based on a ``work
factor'' attribute that combines the vehicle's payload and towing
capabilities, with an added adjustment

for 4-wheel drive vehicles. See generally 76 FR 57161-57162.
---------------------------------------------------------------------------

    \457\ Light duty fuel economy standards are expressed as miles
per gallon (mpg), which is inverse to the HD fuel consumption
standards which are expressed as gallons per 100 miles.
    \458\ EISA requires CAFE standards for passenger cars and light
trucks to be attribute-based; See 49 U.S.C. 32902(b)(3)(A).
    \459\ The NAS 2010 report likewise recommended standards
recognizing the work function of HD vehicles. See 76 FR 57161.
---------------------------------------------------------------------------

    For Phase 1, the agencies adopted provisions such that each
manufacturer's fleet average standard is based on production volume-
weighting of target standards for all vehicles that in turn are based
on each vehicle's work factor. These target standards are taken from a
set of curves (mathematical functions). The Phase 1 curves are shown in
the figures below for reference and are described in detail in the
Phase 1 final rule.\460\ The agencies established separate curves for
diesel and gasoline HD pickups and vans. The agencies will continue to
use the work-based attribute and gradually declining standards approach
for the Phase 2 standards, as discussed in Section VI.B. below. Note
that this approach does not create an incentive to reduce the
capabilities of these vehicles because less capable vehicles are
required to have proportionally lower emissions and fuel consumption
targets.
---------------------------------------------------------------------------

    \460\ The Phase 1 Final Rule provides a full discussion of the
standard curves including the equations and coefficients. See 76 FR
57162-57165, September 15 2011. The standards were previously
provided in the regulations at 40 CFR 1037.104, but they are now
being redesignated as 40 CFR 86.1819-14.
    \461\ The NHTSA program provides voluntary standards for model
years 2014 and 2015. Target line functions for 2016-2018 are for the
second NHTSA alternative described in the Phase 1 Preamble Section
II.C.(d)(ii).
[GRAPHIC] [TIFF OMITTED] TR25OC16.010

[GRAPHIC] [TIFF OMITTED] TR25OC16.011

    EPA phased in its CO2 standards gradually starting in
the 2014 model year, at 15-20-40-60-100 percent of the model year 2018
standards stringency level in model years 2014-2015-2016-2017-2018,
respectively. The phase-in takes the form of the set of target standard
curves shown above, with increasing stringency in each model year. The
final EPA Phase 1 standards for 2018 (including a separate standard to
control air conditioning system leakage) represent an average per-
vehicle reduction in GHGs of 17 percent for diesel vehicles and 12
percent for gasoline vehicles, compared to a common MY 2010 baseline.
EPA also finalized a compliance alternative whereby manufacturers can
phase in different percentages: 15-20-67-67-67-100 percent of the model
year 2019 standards stringency level in model years 2014-2015-2016-
2017-2018-2019, respectively. This compliance alternative parallels and
is equivalent to NHTSA's first alternative described below.
    NHTSA's Phase 1 program allows manufacturers to select one of two
fuel consumption standard alternatives for model years 2016 and later.
The first alternative defines individual gasoline vehicle and diesel
vehicle fuel consumption target curves that will not change for model
years 2016-2018, and are equivalent to EPA's 67-67-67-100 percent
target curves in model years 2016-2017-2018-2019, respectively. This
option is consistent with EISA requirements that NHTSA provide 4 years
lead-time and 3 years of stability for standards. See 49 U.S.C.
32902(k)(3). The second alternative uses target curves that are
equivalent to EPA's 40-60-100 percent target curves in model years
2016-2017-2018, respectively. This option is also consistent with EISA
lead-time and stability requirements. Stringency for the alternatives
in Phase 1 was selected by the agencies to allow a manufacturer,
through the use of the credit carry-forward and carry-back provisions
that the agencies also finalized, to meet both NHTSA fuel efficiency
and EPA GHG emission standards using a single compliance strategy. If a
manufacturer cannot meet an applicable standard in a given model year,
it may make up its shortfall by over-complying in a subsequent year.
NHTSA also allows manufacturers to voluntarily opt into the NHTSA HD
pickup and van program in model years 2014 or 2015. For these model
years, NHTSA's fuel consumption target curves are equivalent to EPA's
target curves. The Phase 1 phase-in options are summarized in Table VI-
1.

                                                     Table VI-1--Phase 1 Standards Phase-In Options
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              2014  %         2015  %         2016  %         2017  %         2018  %         2019  %
--------------------------------------------------------------------------------------------------------------------------------------------------------
EPA Primary Phase-in....................................              15              20              40              60             100             100
EPA Compliance Option...................................              15              20              67              67              67             100

NHTSA First Option......................................               0               0              67              67              67             100
NHTSA Second Option.....................................               0               0              40              60             100             100
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The form and stringency of the Phase 1 standards curves are based
on the performance of a set of vehicle, engine, and transmission
technologies expected (although not required) to be used to meet the
GHG emissions and fuel economy standards for model year 2012-2016
light-duty vehicles, with full consideration of how these technologies
are likely to perform in heavy-duty vehicle testing and use. All of
these technologies are already in use or have been announced for
upcoming model years in some light-duty vehicle models, and some are in
use in a portion of HD pickups and vans as well. The technologies
include:

 advanced 8-speed automatic transmissions
 aerodynamic improvements
 electro-hydraulic power steering
 engine friction reductions
 improved accessories
 low friction lubricants in powertrain components
 lower rolling resistance tires
 lightweighting
 gasoline direct injection
 diesel aftertreatment optimization
 air conditioning system leakage reduction (for EPA program
only)

B. HD Pickup and Van Final Phase 2 Standards

    As described in this section, NHTSA and EPA are adopting as
proposed Phase 2 standards that will be phased in over model years
2021-2027 and continue thereafter unless and until amended. These
standards are identical to those proposed as Alternative 3 (the
preferred alternative at proposal). The agencies are adopting standards
based on a year-over-year increase in stringency of 2.5 percent over
MYs 2021-2027 for a total increase in stringency for the Phase 2
program of about 16 percent compared to the MY 2018 Phase 1 standard.
Note that an individual manufacturer's fleet-wide target may differ
from this stringency increase due to changes in vehicle sales mix and
changes in work factor. We believe the standards the agencies are
adopting are feasible in the time frame of this rule.
    As discussed in detail below in Sections C through F, the agencies
performed separate analyses, which we refer to as ``Method A'' and
``Method B.'' NHTSA considered Method A as the central analysis in its
determination of the stringency of the Phase 2 standards. EPA
considered the results of Method B as the central analysis for its
determination of the stringency of the Phase 2 standards. These
analyses are complementary, and independently support the same
conclusion.
    In the proposal, the agencies also sought comment on a number of
alternatives, including an alternative (`Alternative 4') which would
have resulted in approximately the same stringency increase, but would
have done so two years earlier (in MY 2025 rather than MY 2027), so
that the effective year-over-year stringency would have been 3.5%. The
agencies are not adopting this alternative. The agencies' analyses show
that the additional lead-time provided by the Phase 2 standards that
the agencies are adopting will allow manufacturers to more fully
utilize lower cost technologies over vehicle life-cycles. In addition,
under the method B analysis, this would reduce the projected adoption
rate of more advanced higher cost technologies such as strong hybrids
compared to Alternative 4. As discussed in more detail in E.1 below,
both of the considered phase-ins are projected to require comparable
penetration rates of several non-hybrid technologies with some
approaching 100 percent penetration. However, as discussed below, the
additional lead-time provided by the final standards will allow
manufacturers more flexibility to implement technologies at later
redesigns and refreshes. The agencies received several comments
regarding the timing and stringency of the standards. These comments
are discussed in detail in Section E.1 below and in Chapter 7 of the
Response to Comments document.
    When considering potential Phase 2 standards, the agencies
anticipate that the technologies listed above that were considered in
Phase 1 will continue to be available in the future, if not already
applied under Phase 1 standards, and that additional technologies will
also be available:

 advanced engine improvements for friction reduction and low
friction lubricants
 improved engine parasitics, including fuel pumps, oil pumps,
and coolant pumps
 valvetrain variable lift and timing
 cylinder deactivation
 direct gasoline injection
 cooled exhaust gas recirculation
 turbo downsizing of gasoline engines
 Diesel engine efficiency improvements
 downsizing of diesel engines
 8-speed automatic transmissions
 electric power steering
 high efficiency transmission gear boxes and driveline
 further improvements in accessory loads
 additional improvements in aerodynamics and tire rolling
resistance
 low drag brakes
 mass reduction
 mild hybridization
 strong hybridization

    Sections VI.C below and Section 2 of the RIA provide a detailed
analysis of these and other potential technologies for Phase 2,
including their feasibility, costs, and effectiveness and projected
application rates for reducing fuel consumption and CO2
emissions when utilized in HD pickups and vans. Sections VI.D and
Section X also discuss the selection of the Phase 2 standards and the
alternatives considered.
    In addition to EPA's CO2 emission standards and NHTSA's
fuel consumption standards for HD pickups and vans, EPA in Phase 1 also
finalized standards for two additional GHGs--N2O and
CH4, as well as standards for air conditioning-related HFC
emissions. EPA will continue these standards in Phase 2. Also,
consistent with CAA section 202(a)(1), EPA finalized Phase 1 standards
that apply to HD pickups and vans in use and EPA is likewise adopting
in-use standards for these vehicles in Phase 2. All of these standards
are discussed in more detail below. Program flexibilities and
compliance provisions related to the standards for HD pickups and vans
are discussed in Section VI.E.
    A relatively small number of HD pickups and vans are sold by
vehicle manufacturers as incomplete vehicles, without the primary load-
carrying device or container attached. A sizeable

subset of these incomplete vehicles, often called cab-chassis vehicles,
are sold by the vehicle manufacturers in configurations with complete
cabs plus many of the components that affect GHG emissions and fuel
consumption identical to those on complete pickup truck or van
counterparts--including engines, cabs, frames, transmissions, axles,
and wheels. The Phase 1 program includes provisions that allow
manufacturers to include these incomplete vehicles, as well as some
Class 4 through 6 vehicles, to be regulated under the chassis-based HD
pickup and van program (i.e. subject to the standards and chassis
certification for HD pickups and vans), rather than under the
vocational vehicle program.\462\ The agencies are continuing to allow
such incomplete vehicles the option of certifying under either the
heavy duty pickup and van standards or the standards for vocational
vehicles. As in Phase 1, if such an incomplete vehicle is certified as
a vocational vehicle, the engine would have to be certified separately
to the applicable engine standard.
---------------------------------------------------------------------------

    \462\ See 76 FR 57259-57260, September 15, 2011 and 78 FR 36374,
June 17, 2013.
---------------------------------------------------------------------------

    Phase 1 also includes optional compliance paths for spark-ignition
engines identical to engines used in heavy-duty pickups and vans to
comply with 2b/3 standards. See 40 CFR 1037.150(m) and 49 CFR
535.5(a)(7). Manufacturers sell such engines as ``loose engines'' or
install these engines in incomplete vehicles that are not cab-complete
vehicles. The agencies are providing a temporary loose engine provision
for Phase 2 as described in Section V.D.3.e, under Compliance
Flexibility Provisions. These program elements are discussed above in
Section V.D. on vocational vehicles and XIII.A.2 on engines.
(1) Vehicle-Based Standards
    For Phase 1, EPA and NHTSA chose to set vehicle-based standards
whereby the entire vehicle is chassis-tested. The agencies will retain
this approach for Phase 2. About 90 percent of Class 2b and 3 vehicles
are pickup trucks, passenger vans, and work vans that are sold by the
original equipment manufacturers as complete vehicles, ready for use on
the road. In addition, most of these complete HD pickups and vans are
covered by CAA vehicle emissions standards for criteria pollutants
(i.e., they are chassis tested similar to light-duty), expressed in
grams per mile. This distinguishes this category from other, larger
heavy-duty vehicles that typically have engines covered by CAA engine
emission standards for criteria pollutants, expressed in grams per
brake horsepower-hour. As a result, Class 2b and 3 complete vehicles
share both substantive elements and a regulatory structure much more in
common with light-duty trucks than with the other heavy-duty vehicles.
    Three of these features in common are especially significant: (1)
Over 95 percent of the HD pickups and vans sold in the United States
are produced by Ford, General Motors, and Fiat Chrysler--three
companies with large light-duty vehicle and light-duty truck sales in
the United States; (2) these companies typically base their HD pickup
and van designs on higher sales volume light-duty truck platforms and
technologies, often incorporating new light-duty truck design features
into HD pickups and vans at their next design cycle, and (3) at this
time most complete HD pickups and vans are certified to vehicle-based
rather than engine-based EPA criteria pollutant and GHG standards.
There is also the potential for substantial GHG and fuel consumption
reductions from vehicle design improvements beyond engine changes (such
as through optimizing aerodynamics, weight, tires, and accessories),
and a single manufacturer is generally responsible for both engine and
vehicle design. All of these factors together suggest that it is still
appropriate and reasonable to base standards on performance of the
vehicle as a whole, rather than to establish separate engine and
vehicle GHG and fuel consumption standards, as is being done for the
other heavy-duty categories. The chassis-based standards approach for
complete vehicles is also consistent with NAS \463\ recommendations and
there was consensus in the public comments in the Phase 1 rulemaking
supporting this approach. For all of these reasons, the agencies
proposed to continue this approach, and there was again supporting
consensus in the public comments.
---------------------------------------------------------------------------

    \463\ The NAS 2010 report. See 76 FR 57161.
---------------------------------------------------------------------------

(a) Work-Based Attributes
    In developing the Phase 1 HD rulemaking, the agencies emphasized
creating a program structure that achieves reductions in fuel
consumption and GHGs based on how vehicles are used and on the work
they perform in the real world. Work-based measures such as payload and
towing capability are key among the things that characterize
differences in the design of vehicles, as well as differences in how
the vehicles will be used. Vehicles in the 2b and 3 categories have a
wide range of payload and towing capacities. These work-based
differences in design and in-use operation are key factors in
evaluating technological improvements for reducing CO2
emissions and fuel consumption. Payload has a particularly important
impact on the test results for HD pickup and van emissions and fuel
consumption, because testing under existing EPA procedures for criteria
pollutants and the Phase 1 standards is conducted with the vehicle
loaded to half of its payload capacity (rather than to a flat 300 lbs.
as in the light-duty program), and the correlation between test weight
and fuel use is strong.
    Towing, on the other hand, does not directly factor into test
weight as nothing is towed during the test. Hence, setting aside any
interdependence between towing capacity and payload, only the higher
curb weight caused by any heavier truck components plays a role in
affecting measured test results. However towing capacity can be a
significant factor to consider because HD pickup truck towing
capacities can be quite large, with a correspondingly large effect on
vehicle design.
    We note too that, from a purchaser perspective, payload and towing
capability typically play a greater role than physical dimensions in
influencing purchaser decisions on which heavy-duty vehicle to buy. For
passenger vans, seating capacity is of course a major consideration,
but this correlates closely with payload weight.
    For these reasons, as noted above, EPA and NHTSA set Phase 1
standards for HD pickups and vans based on a ``work factor'' attribute
that combines vehicle payload capacity and vehicle towing capacity, in
lbs., with an additional fixed adjustment for four-wheel drive (4wd)
vehicles. This adjustment accounts for the fact that 4wd, critical to
enabling many off-road heavy-duty work applications, adds roughly 500
lbs. to the vehicle weight. The work factor is calculated as follows:
75 percent maximum payload + 25 percent of maximum towing + 375 lbs. if
4wd. Under this approach, target GHG and fuel consumption standards are
determined for each vehicle with a unique work factor (analogous to a
target for each discrete vehicle footprint in the light-duty vehicle
rules). These targets will then be production weighted and summed to
derive a manufacturer's annual fleet average standard for its heavy-
duty pickups and vans. There was widespread support (and no opposition)
for the work factor-based approach to standards and fleet average
approach to compliance expressed in

the comments we received on the Phase 1 rule.
    For Phase 2, the agencies proposed to continue using the work-based
attribute. The agencies received a variety of comments on the details
of the work factor approach. The agencies received comments from The
American Council for an Energy-Efficient Economy (ACEEE) regarding the
definition of payload and towing and manufacturer's discretion at
determining GVWR, GCWR and curb weight of the vehicle. In response, the
formula for payload, GVWR minus curb weight, is specified such that it
uses the same definition of the input terms as those which have always
been used by the agencies for light and heavy duty vehicle regulations,
including criteria pollutant emission standards and safety related
designations. The agencies feel that there is no ambiguity in the
definition of these terms and therefore that payload calculation
remains clearly defined with little or no opportunity for manipulation.
The agencies have successfully used the previously established
definitions of GVWR and curb weight to implement emissions and safety
related programs and have not experienced any adverse issues in
applying these definitions. The same is true for the definitions of
terms used to calculate towing--GCWR minus GVWR. While this definition
for towing capacity does not match the method used by manufacturers in
their consumer advertising, the agencies determined that the inputs of
GCWR and GVWR are clearly defined in our regulations and used for many
other emission and safety related determinations and therefore also
remain a clear and consistent method to define towing for the purposes
of calculating work factor. Again, the agencies have successfully used
the previously established definitions of GCWR and have not experienced
any issues that would warrant a change to the definition or use of
these parameters.
    ACEEE commented on recent announcements from two manufacturers that
reported increases in payload capacity in their pick-ups due to a
decrease in the curb weight of the vehicles from changes to light-
weight materials. A reduction in vehicle weight while maintaining the
same GVWR will result in a higher payload capacity which will then
increase that vehicle's calculated work factor and therefore result in
a higher (less stringent) target GHG and fuel consumption standard.
Similar to the light-duty (LD) footprint based approach which allows
increases in GHG emissions and fuel consumption with increasing
footprints, the work factor is designed to allow increases in GHG
emissions and fuel consumption with increases in capability to do work,
primarily hauling payload and towing. Decreases in curb weight as
described in the comment actually demonstrate that the work factor is
operating both appropriately and as the agencies intended. By reducing
curb weight, these manufacturers are increasing the work capability of
their trucks specifically purchased by consumers to transport payload
and (sometimes) to tow. Additional payload capacity, while not always
needed, will allow the user to transport more goods resulting in an
overall reduction in GHGs and fuel used versus taking additional trips
to do the same work. This may differ from light-duty pick-ups where
transportation of goods may not be the primary use of the vehicle.
Additionally, the reduction in curb weight will be beneficial in all
other situations of unloaded and partially loaded transport of goods
because a reduction in curb weight of the vehicle results in less
energy wasted simply to move the vehicle regardless of payload. For
this reason, the agencies included mass reduction as among the
technologies on which the stringency of the final standards (as well as
the phase 1 standards) is based. Mass reduction is discussed in detail
in the technology descriptions section below.
    Most of the comments supported the continued use of work factor-
based standards for heavy duty pickups and vans. The agencies received
several comments regarding surplus towing. The American Automotive
Policy Council (AAPC) commented that existing NHTSA Federal Motor
Vehicle Safety Standards effectively cap the towing and GCWR in this
vehicle segment. Cummins noted that the curves were data-based in Phase
1 and any changes to the curves would require a full study, similar to
Phase 1, in order to ensure feasibility and a fair framework for all
OEMs. Daimler commented in support of changing weighting of payload to
80 percent and towing to 20 percent of work factor formula and did not
oppose a cap on towing. Several commenters supported adopting a
mechanism to minimize the incentive the standards provide to increase
work factor. ACEEE supported further considering changing the shape of
the standards curves, shown below in Figure VI-3 and Figure VI-4, to be
flatter at higher work factors. Honeywell commented that towing
capacity has increased significantly over the last five years, beyond
the needs of most buyers, and that the curves should be flattened
starting at 7,500 lbs, noting that this change would impact less that
10 percent of all class 2b/3 vehicles. The International Council on
Clean Transportation (ICCT) similarly suggested a cut point of 5,500
lbs. for gasoline trucks and 8,000 lbs. for diesels, based on these
cutpoints being near the 90th percentile for the model year 2014 fleet.
The Union of Concerned Scientists (UCS) (like ACEEE) commented that
light-weighting is being used to increase payload and also supported
leveling off the curves to eliminate the incentive to add payload and
towing capacity.
    After considering these comments, the agencies concluded that the
work factor approach established in the Phase 1 rule appropriately
accounts for the different utility aspects of heavy-duty vehicles.
While trucks and vans may be used differently depending on the required
job, the three main attributes of payload, towing and four wheel drive
remain properly accounted for at this time in the work factor equation
at the current weightings. While a small portion of the fleet may be
considered to have excess towing capacity relative to the actual
required towing capacity by the customer, the agencies determined that
the work factor design does not necessarily result in an incentive for
manufacturers to build excessive towing into the vehicle design. Towing
capacity increases require improvements to vehicle powertrains, cooling
and brakes, generally at the expense of payload, and therefore the work
factor reasonably balances an increase in towing with a reduction in
payload. Additionally, increases in vehicle weight for additional
towing capacity may result in an increase in the emission test weight,
further penalizing unnecessary towing capacity. Moreover, as AAPC
discusses in their comments, towing and payload are effectively already
capped by existing NHTSA safety requirements in this segment. Consumers
will ultimately decide on the appropriate balance of payload and towing
for their applications, and the agencies therefore believe that
establishing a work factor cap for the small percentage of vehicles
with the highest towing capabilities is not necessary and will not
result in emission increases or fuel consumption reductions under the
high towing conditions for which those vehicles were purchased.
    The agencies also received comments regarding making changes to the
work factor formula for vans. AAPC commented that the payload, towing,
and 4wd inputs do not fully represent the intended uses of cargo and
passenger vans, where cargo or

passenger volumes are of primary importance. AAPC recommended that the
agencies add a volumetric term to the work factor for vans with high
(208 cubic feet or greater) cargo and passenger volumes. Vans with high
volumes would have higher work factors and therefore less stringent
targets with the AAPC recommended formula compared to the current
formula. ACEEE commented that the work factor is a far better predictor
of fuel efficiency for pickups than for vans and offered general
support for adopting different work factor formulas for pickups and
vans.
    While it is likely that a portion of the vans are used exclusively
for cargo volume and that towing is not an important attribute for
these vans, the commenter failed to provide sufficient new information
to support a new work factor metric specifically to address cargo
focused vans. The commenter's suggested modification does not
sufficiently represent the different van cargo volumes available to
consumers today. A cargo volume based modification requires a complete
industry van analysis of all available van cargo volumes and GHG and
fuel economy performance levels from which an appropriately normalized
adjustment would be determined, consistent with the approach used to
establish the existing work factor equation for the attributes of
payload, towing and four wheel drive. The agencies did not receive the
level of detailed information required to determine the impact of cargo
volume and establish a work factor correlation. Accordingly, the
agencies are not incorporating the suggested change to the work factor
for vans.
    As noted in the Phase 1 rule, the attribute-based CO2
and fuel consumption standards are meant to be as consistent as
practicable from a stringency perspective. Vehicles across the entire
range of the HD pickup and van segment have their respective target
values for CO2 emissions and fuel consumption, and therefore
all HD pickups and vans will be affected by the standard. With this
attribute-based standards approach, EPA and NHTSA continue to believe
there should be no significant effect on the relative distribution of
vehicles with differing capabilities in the fleet, which means that
buyers should still be able to purchase the vehicle that meets their
needs.
(b) Standards
    The agencies are adopting Phase 2 standards as proposed based on
analyses performed to determine the appropriate HD pickup and van Phase
2 standards and the most appropriate phase in of those standards. These
analyses, described below and in the Final RIA, considered:

 projections of future U.S. sales for HD pickups and vans
 the estimates of corresponding CO2 emissions and
fuel consumption for these vehicles
 forecasts of manufacturers' product redesign schedules
 the technology available in new MY 2014 HD pickups and vans to
specify preexisting technology content to be included in the analysis
fleet (the fleet of vehicles used as a starting point for analysis)
extending through MY 2030
 the estimated effectiveness, cost, applicability, and
availability of technologies for HD pickup and vans
 manufacturers' ability to use credit carry-forward
 the levels of technology that are projected to be added to the
analysis fleet through MY 2030 \464\ considering improvements needed in
order to achieve compliance with the Phase 1 standards (thus defining
the reference fleet--i.e., under the No-Action Alternative--relative to
which to measure incremental impacts of Phase 2 standards), and
---------------------------------------------------------------------------

    \464\ Although the final standards are implemented in MY 2027,
the model looks out to MY 2030 to help account for the potential use
of credit carry-forward provisions.
---------------------------------------------------------------------------

 the levels of technology that are projected to be added to the
analysis fleet through MY 2030 considering further improvements needed
in order to achieve compliance with standards defining each regulatory
(action) alternative for Phase 2.

    Based on this analysis, EPA is adopting as proposed CO2
attribute-based target standards shown in Figure VI-3 and Figure VI-4,
and NHTSA is adopting as proposed the equivalent attribute-based fuel
consumption target standards, also shown in Figure VI-3 and Figure VI-
4, applicable in model year 2021-2027. As shown in these figures, the
Phase 2 standards will be phased in year-by-year commencing in MY 2021.
The agencies did not propose and are not adopting changes to the
standards for 2018-2020 and therefore the standards will remain at the
MY 2018 Phase 1 levels for MYs 2019 and 2020. EISA requires four years
of lead-time and three years stability for NHTSA standards and this
period of lead-time and stability for 2018-2020 is thus consistent with
the EISA requirements. For MYs 2021-2027, the agencies are finalizing
as proposed annual reductions (i.e., increases in stringency) in the
standards. These standards become 16 percent more stringent overall
between MY 2020 and MY 2027, compared to the MY 2018 Phase 1 levels.
This approach to the Phase 2 standards as a whole can be considered a
phase-in or implementation schedule of the MY 2027 standards (which, as
noted, will apply thereafter unless and until amended).
    For EPA, Section 202(a) (1) provides the Administrator with the
authority to establish standards, and to revise those standards ``from
time to time,'' thus providing the Administrator with considerable
discretion in deciding when to revise the Phase 1 MY 2018 standards. As
noted above, EISA requires that NHTSA provide four full model years of
regulatory lead time and three full model years of regulatory stability
for its fuel economy standards. See 49 U.S.C. 32902(k)(3).
    Congress has not spoken directly to the meaning of the words
''regulatory stability.'' NHTSA believes that the ''regulatory
stability'' requirement exists to ensure that manufacturers will not be
subject to new standards in repeated rulemakings too rapidly, given
that Congress did not include a minimum duration period for the MD/HD
standards.\465\ NHTSA further believes that standards, which as set
provide for increasing stringency during the period that the standards
are applicable under this rule to be the maximum feasible during the
regulatory period, are within the meaning of the statute. In this
statutory context, NHTSA interprets the phrase ``regulatory stability''
in Section 32902(k)(3)(B) as requiring that the standards remain in
effect for three years before they may be increased by amendment. It
does not prohibit standards which contain predetermined stringency
increases.''
---------------------------------------------------------------------------

    \465\ In contrast, light-duty standards must remain in place for
``at least 1, but not more than 5, model years.'' 49 U.S.C.
32902(b)(3)(B).
---------------------------------------------------------------------------

    Consistent with these authorities, the agencies are adopting more
stringent standards beginning with MY 2021, and ending with MY 2027,
that consider the level of technology we judge can be applied to new
vehicles at reasonable cost to meet the standards. EPA believes the
Phase 2 standards are consistent with CAA requirements regarding lead-
time, cost, feasibility, and safety. NHTSA believes the Phase 2
standards are the maximum feasible under EISA. Manufacturers in the HD
pickup and van market segment have relatively few vehicle lines and
redesign cycles are typically longer compared to light-duty vehicles.
Also, the timing of vehicle

redesigns differs among manufacturers. To provide lead time needed to
accommodate these longer redesign cycles, the Phase 2 GHG standards
will not reach their highest stringency until 2027. Although these
standards will become more stringent each year between MYs 2021 and
2027, the agencies expect manufacturers will likely make improvements
as part of planned redesigns, such that some model years will likely
involve significant advances, while other model years will likely
involve little change. The agencies also expect manufacturers to use
program flexibilities (e.g., credit carry-forward provisions and
averaging and banking provisions) to help achieve compliance without
compressing redesign schedules and to efficiently manage resources and
capital over time. The MY 2018 standards are unchanged in MYs 2019-2020
to provide necessary lead time for the Phase 2 standards. However, some
manufacturers may choose to begin implementing technologies earlier (in
some cases potentially as soon as MY 2017) depending on their vehicle
redesign cycles. Although standards are not changing in MYs 2019-2020,
manufacturers may introduce additional technologies in order to earn
credits that may be carried-forward under the 5 year credit carry-
forward provisions established in Phase 1 and continuing for Phase 2.
    The agencies received several comments on the Phase 2 standards and
the technological basis and feasibility of the standards. The comments
are discussed in Sections VI.D and 0below, which provide additional
discussion of vehicle redesign cycles and the feasibility of the final
Phase 2 standards, and also in Section 7 of the Response to Comments
document.
    Recognizing that it is unlikely that there is a phase-in approach
that equally fits with all manufacturers' unique product redesign
schedules, the agencies requested comments on other ways the Phase 2
standards could be phased in. The agencies suggested one alternative
approach would be to phase in the standards in a few step changes, for
example in MYs 2021, 2024 and 2027 (as with the standards for
vocational vehicles, tractors, trailers, and the heavy duty engine
standards). Under this example, if the step changes on the order of 5
percent, 10 percent, and 16 percent improvements from the MY 2020
baseline in MYs 2021, 2024 and 2027 respectively, the program would
provide CO2 reductions and fuel improvements roughly
equivalent to the approach being adopted. EPA did not receive comments
on this alternative phase-in approach, which closely resembles the
phase-in approach used for the other sectors.
    AAPC commented in support of an alternative year-over-year phase-in
that would phase-in stringency more gradually than proposed (and now
adopted). AAPC recommended that rather than a 2.5 percent per year
improvement, the increase should be at 1.75 percent per year through MY
2024 and then 3.5 percent per year for MY 2025 through 2027 with the MY
2027 level of stringency equally the proposed level. AAPC commented
that this more gradual approach was consistent with the Phase 1 phase-
in approach and would help manufacturers manage the long lead time
associated with developing the new vehicles and powertrains that will
be required in order to comply with the Phase 2 proposal.
    The agencies are finalizing the proposed phase-in rather than
adopting the approach recommended by AAPC. The more gradual phase-in
recommended by AAPC would result in a loss of program benefits in each
of the interim years of the program compared to the promulgated
standards until the phase-in caught up with that phase-in in MY 2027.
Because of the slower phase-in, the overall reduction in each interim
year is lower than the phase-in being finalized. The phase-in adopted
for Phase 1 with a more gradual ramp-up in standards took into
consideration the shorter lead time associated with the Phase 1
standards and the uncertainty associated with implementing a new
program. Phase 2 provides more lead-time than Phase 1 and the agencies
believe based on their analyses of the standards that the lead-time
provided is sufficient, particularly considering the flexibility also
provided by credit carry-forward and carry-back provisions.
    As with Phase 1 (and like the light-duty vehicle standards), the
Phase 2 standards must be met on a production-weighted fleet average
basis. No individual vehicle will have to meet a particular target (or
the individual fleet average level). Each manufacturer will also have
its own fleet average standard. Specifically, each manufacturer will
have its own unique fleet average requirement based on the production-
weighted average of the heavy duty pickups and vans it chooses to
produce. Moreover, averaging, banking, and trading provisions, just
alluded to and discussed further below, will provide significant
additional compliance flexibility in implementing the standards. It is
important to note, however, that while the standards will differ
numerically from manufacturer to manufacturer, effective stringency
should be essentially the same for each manufacturer. The agencies did
not receive comments suggesting changes to this general averaging
approach to establishing the standards.
    Also, as with the Phase 1 standards, the agencies proposed and are
finalizing separate Phase 2 targets for gasoline-fueled (and any other
Otto-cycle) vehicles and diesel-fueled (and any other diesel-cycle)
vehicles. See 80 FR 40337. The targets will be used to determine the
production-weighted fleet average standards that apply to the combined
diesel and gasoline fleet of HD pickups and vans produced by a
manufacturer in each model year. The stringency increase discussed
above for Phase 2 applies equally to the separate gasoline and diesel
targets. For the proposal, the agencies considered different rates of
increase for the gasoline and diesel targets in order to more equally
balance compliance burdens across manufacturers with varying gasoline/
diesel fleet mixes. However, at least among major HD pickup and van
manufacturers, our analyses suggested limited potential for such
optimization, especially considering uncertainties involved with
manufacturers' future fleet mix. The agencies did not receive comments
on the specific topic of maintaining equivalent rates of increase for
gasoline and diesel-fueled vehicles. The agencies, however, received
several comments regarding maintaining separate standards for the two
vehicle types. Some of the comments recommended closing the gap between
diesel and gasoline-fueled vehicles by making the gasoline-fueled
vehicle standards more stringent. These comments are discussed below.

[GRAPHIC] [TIFF OMITTED] TR25OC16.012

    Described mathematically, EPA's and NHTSA's target standards are
defined by the following formulas:

EPA CO2 Target (g/mile) = [a x WF] + b
NHTSA Fuel Consumption Target (gallons/100 miles) = [c x WF] + d

Where:
WF = Work Factor = [0.75 x (Payload Capacity + xwd)] + [0.25 x
Towing Capacity]
Payload Capacity = GVWR (lb.) - Curb Weight (lb.)
xwd = 500 lbs. if the vehicle is equipped with 4wd, otherwise equals
0 lbs.
Towing Capacity = GCWR (lb.) - GVWR (lb.)
Coefficients a, b, c, and d are taken from TableVI-2.

                     TableVI-2--Phase 2 Coefficients for HD Pickup and Van Target Standards
----------------------------------------------------------------------------------------------------------------
                   Model year                            a               b               c               d
----------------------------------------------------------------------------------------------------------------
                                                 Diesel Vehicles
----------------------------------------------------------------------------------------------------------------
2018-2020 \ a\..................................          0.0416             320       0.0004086           3.143
2021............................................          0.0406             312       0.0003988           3.065
2022............................................          0.0395             304       0.0003880           2.986
2023............................................          0.0386             297       0.0003792           2.917
2024............................................          0.0376             289       0.0003694           2.839
2025............................................          0.0367             282       0.0003605           2.770
2026............................................          0.0357             275       0.0003507           2.701
2027 and later..................................          0.0348             268       0.0003418           2.633
----------------------------------------------------------------------------------------------------------------
                                                Gasoline Vehicles
----------------------------------------------------------------------------------------------------------------
2018-2020 \ a\..................................           0.044             339       0.0004951           3.815
2021............................................          0.0429             331       0.0004827           3.725
2022............................................          0.0418             322       0.0004703           3.623
2023............................................          0.0408             314       0.0004591           3.533
2024............................................          0.0398             306       0.0004478           3.443
2025............................................          0.0388             299       0.0004366           3.364
2026............................................          0.0378             291       0.0004253           3.274
2027 and later..................................          0.0369             284       0.0004152           3.196
----------------------------------------------------------------------------------------------------------------
Note:
\a\ Phase 1 primary phase-in coefficients. Alternative phase-in coefficients are different in MY 2018 only.

    As noted above, the agencies did not propose and are not adopting
changes from the final Phase 1 standards for MYs 2018-2020. The MYs
2018-2020 standards are shown in the figures and tables above for
reference. The agencies did not receive comments recommending changes
to the standards in these model years.
    NHTSA and EPA have also analyzed regulatory alternatives to these
standards, as discussed in Sections VI.D and 0and Section X. below. The
agencies requested comment on all of the alternatives analyzed for the
proposal, but requested comment on Alternative 4 in particular. The
agencies did not propose Alternative 4 because EPA and NHTSA had
outstanding questions regarding relative risks and benefits of
Alternative 4 due to the timeframe envisioned by that alternative. As
noted above, Alternative 4 would have provided less lead time for the
complete phase-in of the Phase 2 standards based on an annual
improvement of 3.5 percent per year in MYs 2021-2025 compared to the
Alternative 3 per year improvement of 2.5 percent in MYs 2021-2027.
    In the proposal, the agencies requested comments, data, and
information that would help inform determination of the maximum
feasible (for NHTSA) and appropriate (for EPA) stringency for HD
pickups and vans and are particularly interested in information and
data related to the expected adoption rates of different emerging
technologies, such as mild and strong hybridization. The agencies
received comments both in support of and not in support of Alternative
4 and also received comments in support of standards more stringent
than either the proposal or the Alternative 4 pull ahead. The comments
regarding stringency and feasibility are discussed in Sections VI.D and
E. As described in these sections, and in Section X and RIA Chapter 11,
NHTSA and EPA believe the final Phase 2 standards represent,
respectively, the maximum feasible standards under EISA and the most
stringent standards reasonably achievable under the CAA considering
lead-time, reasonable cost, feasibility, and safety.
    As with Phase 1 standards, to calculate a manufacturer's HD pickup
and van fleet average standard, the agencies proposed and are
finalizing separate target curves for gasoline and diesel vehicles in
Phase 2. While diesel and gasoline vehicles have separate work factor-
based target standard curves, all of a manufacturer's vehicles are
averaged together as a single averaging set to demonstrate compliance.
As noted above, the agencies' Phase 2 standards are estimated to result
in approximately 16 percent reductions in CO2 and fuel
consumption for both diesel and gasoline vehicles relative to the MY
2018 Phase 1 standards for HD pickup trucks and vans.
    The agencies requested comment on both the level of stringency of
the standards and the continued separate targets for gasoline and
diesel HD pickups and vans. AAPC supported the agencies' proposal to
maintain separate targets noting that the approach ensures that
manufacturers of either engine type will implement the latest
CO2 reducing technologies. AAPC further commented that
significant technological and market-based differences exist between
heavy-duty gasoline and heavy-duty diesel engines. According to the
commenter, maintaining separate but comparably stringent spark ignition
and compression ignition targets will allow customers for specific
applications to take advantage of the combustion technology that best
meets their specific application requirements.
    Several commenters did not support the proposed approach but
instead supported setting a single fuel-neutral set of targets. Cummins
commented that there is sufficient lead-time and technology to create a
pathway to fuel-neutral targets, and that fuel neutral targets would
eliminate any competitive advantage or preference to a particular GHG/
FE technology and maintain the environmental benefits envisioned for
the program. Daimler, Honeywell, and MEMA similarly commented in
support of fuel-neutral standards. Honeywell and Motor and Equipment
Manufacturers Association (MEMA) suggested basing the standards on a 16
percent improvement from the projected MY 2018 gasoline/diesel combined
baseline. ACEEE and ICCT commented in support of a single set of
standards set at or close to the capabilities of diesel technology.
These commenters suggested that gasoline engines should be subject to
more stringent standards than proposed and that gasoline and diesel
engines should be held to the same performance-based standards.

    Bosch disagreed with maintaining separate targets for gasoline and
diesel HD pickups and vans. Bosch recommended that targets be fuel
neutral, as they are in the light-duty vehicle programs. Bosch
commented that it ``believes that a market shift towards spark-ignited
vehicles and away from HD pickups and vans powered by ``fundamentally
more efficient'' CI engines would be a very real possibility under
Phase 2 if the separate gasoline and diesel targets are finalized as
proposed.'' Bosch continues that ``any such shift would signify not
only a move towards less efficient internal combustion engines, but
would be counterproductive from a programmatic/environmental and energy
standpoint.'' Bosch further commented that ``diesels from a criteria
pollutant (especially NOX emissions perspective, have made
far greater strides over the years than gasoline engines, and for that
reason have incurred greater technological development costs than the
latter. While equivalent CO2 target values may be more
expensive, comparatively speaking, for SI engines to achieve (based on
the agencies' cost analysis), the additional cost imposed on these
engines likely would not rise to the level of, much less overtake CI
engines' historically higher technological development and system
costs.''
    The agencies generally prefer to set standards that do not
distinguish between fuel types where technological or market-based
reasons do not strongly argue otherwise. However, as with Phase 1, we
continue to believe that fundamental differences between spark ignition
and compression ignition engines warrant unique fuel standards, which
is also important in ensuring that our program maintains product
choices available to vehicle buyers. In fact, gasoline and diesel fuel
behave so differently in the internal combustion engine that they have
historically required unique test procedures, emission control
technologies and emission standards. These technological differences
between gasoline and diesel engines for GHGs and fuel consumption exist
presently and will continue to exist after Phase 1 and through Phase 2
until advanced research evolves the gasoline fueled engine to diesel-
like efficiencies. This will require significant technological
breakthroughs currently in early stages of research such as homogeneous
charge compression ignition (HCCI) or similar concepts. Because these
technologies are still in the early research stages, we believe the
separate fuel type standards are appropriate in the timeframe of this
rule to assure the availability of both gasoline and diesel engines. We
also project that these separate standards will result in roughly
equivalent redesign burdens for engines of both fuel types as evidenced
by feasibility and cost analysis in RIA Chapter 10. For the same
reasons, the agencies are adopting separate standards for diesel and SI
vocational engines. See Section V. above.
    In order to maintain the same overall level of stringency as
proposed for the program, a fuel neutral standard would result in an
increase in stringency for gasoline or spark ignition vehicles with a
matching relaxation of stringency for diesel or compression ignition
vehicles relative to the separate numerical levels established in the
proposal for gasoline and diesel vehicles. Based on the analysis of
available technologies for both types of vehicles, the agencies do not
feel it is appropriate to adopt such a change for either gasoline or
diesel vehicles. This change could lead to an undesirable reduction in
penetration of fuel efficient technologies in diesels, particularly
from manufacturers who produce predominately diesel vehicles, while
requiring a higher penetration of advanced technologies like strong
hybridization in gasoline vehicles, distorting consumer choice.
Additionally, the agencies do not agree with the comment stating that
maintaining separate gasoline and diesel targets of equal increases in
stringency of 2.5 percent per year from the Phase 1 final standards
will result in a shift to less efficient gasoline vehicles. The
agencies determined that manufacturers have similar technology
challenges and corresponding costs regardless of fuel type and
therefore manufacturers do not have an easier or lower cost long term
path to compliance by simply shifting production from one fuel type to
the other.
    Note further that a manufacturer's fleet average standard is the
production weighted average of all its targets, both gasoline and
diesel. Thus, there is no separate gasoline vehicle standard, or
separate diesel standard. Commenters may have been confused on this
point (several of the commenters referred to gasoline `standards', or
diesel `standards'). This averaging feature of the standard further
increases incentives to add advanced technologies to either gasoline or
diesel vehicles if manufacturers perceive it advantageous to do so,
since the benefit is experienced fleet wide, not just for the gasoline
or diesel segment of a manufacturer's production line.
    The NHTSA fuel consumption target curves and EPA GHG target curves
are equivalent. The agencies established the target curves using the
direct relationship between fuel consumption and CO2 using
conversion factors of 8,887 g CO2/gallon for gasoline and
10,180 g CO2/gallon for diesel fuel.
    It is expected that measured performance values for CO2
will generally be equivalent to fuel consumption. However, Phase 1
established a provision that EPA is not changing for Phase 2 that
allows manufacturers, if they choose, to use CO2 credits to
help demonstrate compliance with N2O and CH4
emissions standards, by expressing any N2O and
CH4 under compliance in terms of their CO2-
equivalent and applying CO2 credits as needed. For test
families that do not use this compliance alternative, the measured
performance values for CO2 and fuel consumption will be
equivalent because the same test runs and measurement data will be used
to determine both values, and calculated fuel consumption will be based
on the same conversion factors that are used to establish the
relationship between the CO2 and fuel consumption target
curves (8,887 g CO2/gallon for gasoline and 10,180 g
CO2/gallon for diesel fuel). For manufacturers that choose
to use EPA provision for CO2 credit use in demonstrating
N2O and CH4 compliance, compliance with the
CO2 standard will not be directly equivalent to compliance
with the NHTSA fuel consumption standard.
(2) What are the HD pickup and van test cycles and procedures?
    The Phase 1 program established testing procedures for HD pickups
and vans and NHTSA and EPA are maintaining these testing protocols. The
vehicles will continue to be tested using the same heavy-duty chassis
test procedures currently used by EPA for measuring criteria pollutant
emissions from these vehicles, including the city fuel economy test
cycle (FTP) and the highway fuel economy test cycle (HFET). These test
procedures are used by manufacturers for certification and emissions
compliance demonstrations and by the agencies for compliance
verification and enforcement. While the FTP and the HFET driving
patterns are identical to that of the light-duty test cycles, other
test parameters for running them, such as test vehicle loaded weight,
are specific to complete heavy-duty vehicles. Please see Section II.C
(2) of the Phase 1 Preamble (76 FR 57166) for a discussion of how HD
pickups and vans are tested.

    The test procedures for HD pickups and vans currently specify using
a fuel with properties established under the light-duty (LD) vehicle
Tier 2 program. EPA recently finalized new emission standards under the
Tier 3 program for both LD vehicles and HD pickups and vans which will
begin to phase-in in MY 2017 for LD vehicles and MY 2018 for vehicles
over 6000 pounds GVWR, including HD pickups and vans. As part of the
Tier 3 program, new test procedures for gasoline-fueled vehicles
requiring the use of a new test fuel containing 10 percent ethanol
which is more representative of in-use fuel that the vehicles will
encounter. The agencies are investigating any potential impact of
changes to the fuel properties on GHG emissions and fuel consumption
and have committed to providing appropriate adjustment to the test
procedures if necessary to ensure no change in stringency of the Phase
1 or the Phase 2 standards.
    AAPC commented that the current methodology of grouping vehicles by
the Equivalent Test Weight (ETW) in increments of 500 pounds for
determining their GHG and FE performance is too large to capture weight
reductions that may occur within a 500 pound grouping. Under the
current test procedures, vehicles are tested at 500 lb. increments of
inertial weight classes when testing at or above 5500 lbs. test weight.
For example, the commenter stated that all vehicles having a calculated
test weight basis of 11,251 to 11,750 lbs. are tested at 11,500 lbs.
(i.e., the midpoint of the range). However, for some vehicles, the
existence of these bins and the large intervals between bins may reduce
or eliminate the incentive for mass reduction for some vehicles, as a
vehicle may require significant mass reduction before it could switch
from one test weight bin to the next lower bin. For other vehicles,
these bins may unduly reward relatively small reductions of vehicle
mass, as a vehicle's mass may be only slightly greater than that needed
to be assigned a 500-pound lighter inertia weight class. For example,
for a vehicle with a calculated test weight basis of 11,700 lbs., a
manufacturer would receive no regulatory benefit for reducing the
vehicle weight by 400 lbs., because the vehicle would stay within the
same weight bracket.
    The agencies believe this (and similar comments) have some merit.
In response, the agencies are finalizing an option allowing
manufacturers to divide vehicle models into finer weight groupings of
vehicles for the different Adjusted Loaded Vehicle Weights (ALVW) for
purposes of more precise calculation of CO2 emissions
performance within the 500 pound increment test weight classes.
Manufacturers will be able to select 50, 100, 250, or 500 weight groups
for reporting emissions. ALVW will vary within a single ETW largely
depending on the varying models curb weights from customer option
selection and other production variations. The calculation of
CO2 emissions performance for the finer groupings is
performed as described in 40 CFR 86.1819-14(g))) for analytically
adjusting CO2 (ADCO2) emissions. The test results
at the existing 500 pound increment ETWs will be used to determine the
CO2 emissions performance level of the new groupings using
the analytically derived equation. This new ADCO2 emissions
level is only used for this new grouping and cannot be used to extend
determination of other ALVW groupings emission performance levels. The
vehicle specific values used to determine the change in ETW in the
ADCO2 emissions calculation to estimate the performance of
the smaller grouping should be consistent with value used to calculate
the single work factor of that same grouping. This change does not
impact the ETW of a group of vehicle models that are contained in the
500 pound increment of ETW when performing testing nor does it
eliminate any vehicle in that grouping from being responsible for
emission performance at the 500 pound increment test weight classes. As
described, this change only allows for more precise CO2
emissions estimation for the potentially different curb weights of
vehicles grouped in a single ETW class for purposes of fleet average
calculation. If a manufacturer chooses to use less than 500 pound
increments, they are required to use this option for all of their HD
vehicles that are chassis certified (including loose engines).
(3) Fleet Average Standards
    As proposed, and as noted above, NHTSA and EPA are retaining the
fleet average standards approach finalized in the Phase 1 rule and
structurally similar to light-duty Corporate Average Fuel Economy
(CAFE) and GHG standards. The fleet average standard for a manufacturer
is a production-weighted average of the work factor-based targets
assigned to unique vehicle configurations within each model type
produced by the manufacturer in a model year, with separate targets for
gasoline and diesel vehicles (which are then combined into a production
weighted average which comprises that manufacturer's fleet average
standard). Each manufacturer will continue to have an average GHG
requirement and an average fuel consumption requirement unique to its
new HD pickup and van fleet in each model year, depending on the
characteristics (payload, towing, and drive type, as well as gasoline
and diesel) of the vehicle models produced by that manufacturer, and on
the U.S.-directed production volume of each of those models in that
model year. Vehicle models with larger payload/towing capacities and/or
four-wheel drive have individual targets at numerically higher
CO2 and fuel consumption levels than less capable vehicles,
as discussed in Section VI.B.(1). The agencies did not receive comments
suggesting changes to this fundamental approach to the standards.
    The fleet average standard with which the manufacturer must comply
will continue to be based on its final production figures for the model
year, and thus a final assessment of compliance will occur after
production for the model year ends. The assessment of compliance also
must consider the manufacturer's use of carry-forward and carry-back
credit provisions included in the averaging, banking, and trading
program. Because compliance with the fleet average standards depends on
actual test group production volumes, it is not possible to determine
compliance at the time the manufacturer applies for and receives an
(initial) EPA certificate of conformity for a test group. Instead, at
certification the manufacturer will demonstrate a level of performance
for vehicles in the test group, and make a good faith demonstration
that its fleet, regrouped by unique vehicle configurations within each
model type, is expected to comply with its fleet average standard when
the model year is over. EPA will issue a certificate for the vehicles
covered by the test group based on this demonstration, and will include
a condition in the certificate that if the manufacturer does not comply
with the fleet average, then production vehicles from that test group
will be treated as not covered by the certificate to the extent needed
to bring the manufacturer's fleet average into compliance. As in the
parallel program for light-duty vehicles, additional ``model type''
testing will be conducted by the manufacturer over the course of the
model year to supplement the initial test group data. The emissions and
fuel consumption levels of the test vehicles will be used to calculate
the production-weighted fleet averages for the manufacturer, after
application of the appropriate deterioration factor to each result to
obtain a full useful life value.

Please see Section II.C.(3)(a) of the Phase 1 Preamble (76 FR 57167)
for further discussion of the fleet average approach for HD pickups and
vans.
(4) In-Use Standards
    Section 202(a)(1) of the CAA specifies that EPA set emissions
standards that are applicable for the useful life of the vehicle. EPA
will continue the in-use standards approach for individual vehicles
that EPA finalized for the Phase 1 program. NHTSA did not adopt Phase 1
in-use standards and did not propose in-use standards for Phase 2. For
the EPA program, compliance with the in-use standard for individual
vehicles and vehicle models does not impact compliance with the fleet
average standard, which will be based on the production-weighted
average of the new vehicles. Vehicles that fail to meet their in-use
emission standards will be subject to recall to correct the
noncompliance. NHTSA is finalizing the use of EPA's useful life
requirements to ensure manufacturers consider in the design process the
need for fuel efficiency standards to apply for the same duration and
mileage as EPA standards. NHTSA will limit such penalties to situations
in which it determined that the vehicle or engine manufacturer failed
to comply with the standards.
    As with Phase 1, the in-use Phase 2 GHG standards for HD pickups
and vans will be established by adding an adjustment factor to the full
useful life emissions used to calculate the GHG fleet average. Each
model's in-use CO2 standard will be the model-specific level
used in calculating the fleet average, plus 10 percent. No adverse
comments were received on this provision. Please see Section
II.C.(3)(b) of the Phase 1 Preamble (76 FR 57167) for further
discussion of in-use standards for HD pickups and vans. This provision,
along with the continuation of the Phase 1 test procedures, eliminates
that need for the agencies to include any additional compliance margin
in our feasibility analysis.
    For Phase 1, EPA aligned the useful life for GHG emissions with the
useful life that was in place for criteria pollutants: 11 years or
120,000 miles, whichever occurs first (40 CFR 86.1805-04(a)). Since the
Phase 1 rule was finalized, EPA updated the useful life for criteria
pollutants as part of the Tier 3 rulemaking.\466\ The new useful life
implemented for Tier 3 is 150,000 miles or 15 years, whichever occurs
first. As proposed, the useful life for GHG emissions and fuel
consumption will also be 150,000 miles/15 years starting in MY 2021
when the Phase 2 standards begin so that the useful life remains
aligned for GHG and criteria pollutant standards long term. The
agencies did not receive adverse comments on this provision.
---------------------------------------------------------------------------

    \466\ 79 FR 23492, April 28, 2014 and 40 CFR 86.1805-17.
---------------------------------------------------------------------------

(5) Other GHG Standards for HD Pickups and Vans
    This section addresses greenhouse gases other than CO2.
Note that since these are greenhouse gases not directly related to fuel
consumption, NHTSA does not have equivalent standards.
(a) Nitrous Oxide (N2O) and Methane (CH4)
    In the Phase 1 rule, EPA established emission standards for HD
pickups and vans for both nitrous oxide (N2O) and methane
(CH4). Similar to the CO2 standard approach, the
N2O and CH4 emission levels of a vehicle are
based on a composite of the light-duty FTP and HFET cycles with the
same 55 percent city weighting and 45 percent highway weighting. The
N2O and CH4 standards were both set by EPA at
0.05 g/mile. Unlike the CO2 standards, averaging between
vehicles is not allowed. The standards are designed to prevent
increases in N2O and CH4 emissions from current
levels, i.e., a no-backsliding standard. EPA did not propose and is not
adopting any changes the N2O or CH4 standards or
related provisions established in the Phase 1 rule. Please see Phase 1
Preamble Section II.E. (76 FR 57188-57193) for additional discussion of
N2O and CH4 emissions and standards.
    Across both current gasoline- and diesel-fueled heavy-duty vehicle
designs, emissions of CH4 and N2O are relatively
low and the intent of the cap standards is to ensure that future
vehicle technologies or fuels do not result in an increase in these
emissions. Given the global warning potential (GWP) of CH4,
the 0.05 g/mile cap standard is equivalent to about 1.7 g/mile
CO2, which is much less than 1 percent of the overall GHG
emissions of most HD pickups and vans.\467\ The effectiveness of
oxidation of CH4 using a three-way or diesel oxidation
catalyst is limited by the activation energy, which tends to be higher
where the number of carbon atoms in the hydrocarbon molecule is low and
thus CH4 is very stable. At this time we are not aware of
any technologies beyond the already present catalyst systems which are
highly effective at oxidizing most hydrocarbon species for gasoline and
diesel fueled engines that would further lower the activation energy
across the catalyst or increase the energy content of the exhaust
(without further increasing fuel consumption and CO2
emissions) to further reduce CH4 emissions at the tailpipe.
The CH4 standard remains an important backstop to prevent
future increases in CH4 emissions. EPA did not receive
adverse comments regarding the proposal to not change the
CH4 standard for HD pickups and vans.
---------------------------------------------------------------------------

    \467\ N2O has a GWP of 298 and CH4 has a
GWP of 34 according to the IPCC AR5.
---------------------------------------------------------------------------

    N2O is emitted from gasoline and diesel vehicles mainly
during specific catalyst temperature conditions conducive to
N2O formation. The 0.05 g/mile standard, which translates to
a CO2-equivalent value of 14.9 g/mile, ensures that systems
are not designed in a way that emphasizes efficient NOX
control while allowing the formation of significant quantities of
N2O. The Phase 1 N2O standard of 0.05 g/mile for
pickups and vans was finalized knowing that it is more stringent than
the Phase 1 N2O engine standard of 0.10 g/hp-hr, which is
being continued for Phase 2, as discussed in Section II.D.3. EPA
continues to believe that the 0.05 g/mile standard provides the
necessary assurance that N2O will not significantly
increase, given the mix of gasoline and diesel fueled engines in this
market and the upcoming implementation of the light-duty and heavy-duty
(up to 14,000 lbs. GVWR) Tier 3 NOX standards. EPA knows of
no technologies that would lower N2O emissions beyond the
control provided by the precise emissions control systems already being
implemented to meet EPA's criteria pollutant standards. Therefore, EPA
continues to believe the 0.05 g/mile N2O standard remains
appropriate.
    The California Air Resources Board (CARB) suggested that EPA
investigate the feasibility of more stringent tailpipe standards. EPA
may consider more stringent standards in the future if data is
available to support adjustments to the standards as appropriate and
consistent with the CAA, but we repeat that at present we know of no
further emission reduction technologies for either N2O or
CH4.
    If a manufacturer is unable to meet the N2O or
CH4 cap standards, the EPA program allows the manufacturer
to comply using CO2 credits. In other words, a manufacturer
may offset any N2O or CH4 emissions above the
standard by taking steps to further reduce CO2. A
manufacturer choosing this option would use GWPs to convert its
measured N2O and CH4 test results that are in
excess of the applicable

standards into CO2eq to determine the amount of
CO2 credits required. For example, for Phase 1, a
manufacturer would use 25 Mg of positive CO2 credits to
offset 1 Mg of negative CH4 credits or use 298 Mg of
positive CO2 credits to offset 1 Mg of negative
N2O credits.\468\ By using the GWP of N2O and
CH4, the approach recognizes the inter-correlation of these
compounds in impacting global warming and is environmentally neutral
for demonstrating compliance with the individual emissions caps.
Because fuel conversion manufacturers certifying under 40 CFR part 85,
subpart F, do not participate in ABT programs, EPA included in the
Phase 1 rule a compliance option for fuel conversion manufacturers to
comply with the N2O and CH4 standards that is
similar to the credit program described above. See 76 FR 57192. The
compliance option will allow conversion manufacturers, on an individual
engine family basis, to convert CO2 over compliance into
CO2 equivalents (CO2 eq) of N2O and/or
CH4 that can be subtracted from the CH4 and
N2O measured values to demonstrate compliance with
CH4 and/or N2O standards. EPA did not include
similar provisions allowing over compliance with the N2O or
CH4 standards to serve as a means to generate CO2
credits because the CH4 and N2O standards are cap
standards representing levels that all but the worst vehicles should
already be well below. Allowing credit generation against such cap
standard would provide a windfall credit without any true GHG
reduction. As proposed, EPA is maintaining these provisions for Phase 2
as they provide important flexibility without reducing the overall GHG
benefits of the program.
---------------------------------------------------------------------------

    \468\ IPCC AR4 included a N2O GWP of 298 and a
CH4 GWP of 25. These factors are used in the Phase 1 rule
credits calculations.
---------------------------------------------------------------------------

    EPA requested comments on updating GWPs used in the calculation of
credits discussed above. For Phase 2, EPA is updating the GWP for
methane from 25 to 34 based on IPCC AR5. Please see the full discussion
of this issue provided in Sections II.D and XI.D.
    CARB suggested that EPA consider eliminating or at least phasing
out the use of CO2 credits in lieu of compliance with
tailpipe methane standards. In contrast, NGVAmerica strongly supported
extending this compliance option, noting that the ability to offset
methane (and also nitrous oxide) emissions with CO2 credits
is critical for new natural gas engines and vehicles. Cummins also
commented in support of continuing to allow the use of CO2-
equivalent credits to comply with N2O and CH4 standards.
Cummins commented that the flexibility has been applied by various
manufacturers in Phase 1 and is necessary for Phase 2. Review of MY
2014 certification GHG data confirmed that several manufacturers
utilized this Phase 1 program flexibility for either N2O or
CH4 debits on their diesel vehicles. EPA continues to
believe this flexibility is appropriate as it provides important
flexibility to manufacturers in an environmentally neutral manner.

(b) Air Conditioning Related Emissions

    Air conditioning systems contribute to GHG emissions in two ways--
direct emissions through refrigerant leakage and indirect exhaust
emissions due to the extra load on the vehicle's engine to provide
power to the air conditioning system. HFC refrigerants, which are
powerful GHG pollutants, can leak from the A/C system. This includes
the direct leakage of refrigerant as well as the subsequent leakage
associated with maintenance and servicing, and with disposal at the end
of the vehicle's life.\469\ Currently, the most commonly used
refrigerant in automotive applications--R134a, has a high GWP. Due to
the high GWP of R134a, a small leakage of the refrigerant has a much
greater global warming impact than a similar amount of emissions of
CO2 or other mobile source GHGs.
---------------------------------------------------------------------------

    \469\ The U.S. EPA has reclamation requirements for refrigerants
in place under Title VI of the Clean Air Act. See 40 CFR part 82
Subpart B.
---------------------------------------------------------------------------

    In Phase 1, EPA finalized low leakage requirement for all air
conditioning systems installed in 2014 model year and later HDVs, with
the exception of Class 2b-8 vocational vehicles. As discussed in
Section V.B.(2)(c), EPA is extending leakage standards to vocational
vehicles for Phase 2. For air conditioning systems with a refrigerant
capacity greater than 733 grams, EPA finalized a leakage standard which
is a ``percent refrigerant leakage per year'' to assure that high-
quality, low-leakage components are used in each air conditioning
system design. EPA finalized a standard of 1.50 percent leakage per
year for heavy-duty pickup trucks and vans and Class 7 and 8 tractors.
See Section II.E.5. of the Phase 1 Preamble (76 FR 57194-57195) for
further discussion of the A/C leakage standard. The leakage standard
continues to apply for Phase 2 regardless of the refrigerant used in
the A/C system. See Section I.F. for how the Phase 2 program handles
the use of alternative refrigerants.
    In addition to direct emissions from refrigerant leakage, air
conditioning systems create indirect exhaust emissions due to the extra
load on the vehicle's engine to provide power to the air conditioning
system. These indirect emissions are in the form of the additional
CO2 emitted from the engine when A/C is being used due to
the added loads. Unlike direct emissions which tend to be a set annual
leak rate not directly tied to usage, indirect emissions are fully a
function of A/C usage. These indirect CO2 emissions are
associated with air conditioner efficiency, since (as just noted) air
conditioners create load on the engine. See 74 FR 49529. In Phase 1,
the agencies did not set air conditioning efficiency standards for
vocational vehicles, combination tractors, or heavy-duty pickup trucks
and vans. The CO2 emissions due to air conditioning systems
in these heavy-duty vehicles were estimated to be minimal compared to
their overall emissions of CO2. 76 FR 57194-57196. This
continues to be the case. For this reason, EPA did not propose and is
not establishing A/C efficiency standards for Phase 2. This differs
from light-duty vehicles where CO2 emissions related to A/C
systems can be a significant portion of overall vehicle CO2
emissions and EPA has established appropriate standards and test
procedures.
    AAPC and Nissan commented that the agencies should provide A/C
efficiency credits similar to those included in the light-duty vehicle
program. AAPC also commented that the AC17 test, included in the light-
duty vehicle program to confirm A/C system performance, would be
impractical and should not be required for heavy-duty vehicles. The
agencies did not propose and are not adopting A/C efficiency credits
for heavy-duty pickups and vans. AAPC suggests that the agencies could
allow the same credits as are available in the light-duty vehicle
program but no data is provided regarding the appropriateness of the
credits. The EPA would need to resolve a number of open issues relating
to environmental implications of A/C efficiency credits for these
vehicles (among them, potential credit generation rate, whether credits
would be windfall, implications for the standard stringency) before
considering adopting an A/C efficiency credit regime. Also, the AC17
test is an integral part of the light-duty vehicle program serving as a
confirmation that the credits are based on actual performance
improvements. EPA does not believe that it would be appropriate to
provide credits based only on the presumption that systems similar to
those used in light-duty trucks will

provide the same improvements in heavy-duty pickups and vans with no
confirmation through testing.
    AAPC also recommended that EPA provide credits for reduced
refrigerant leakage and alternative refrigerant usage similar to the
light-duty vehicle program. In response, as discussed above and in
Section I.F, EPA has established standards for refrigerant leakage. EPA
does not believe that it would be appropriate to provide credits for
items that are essentially required. Providing such credits without an
increase in total program stringency similar to the light-duty approach
to A/C efficiency and refrigerant leakage would result in a loss of
program benefits.

C. Use of the CAFE Model in Heavy-Duty Rulemaking

    NHTSA developed the CAFE model in 2002 to support the 2003 issuance
of CAFE standards for MYs 2005-2007 light trucks. NHTSA has since
significantly expanded and refined the model, and has applied the model
to support every ensuing CAFE rulemaking for both light-duty and heavy-
duty. For this analysis, the model was reconfigured to use the work
based attribute metric of ``work factor'' established in the Phase 1
rule instead of the light duty ``footprint'' attribute metric.
    Past analyses conducted using the CAFE model have been subjected to
extensive and detailed review and comment, much of which has informed
the model's expansion and refinement. NHTSA's use of the model was
considered and supported in Center for Biological Diversity v. National
Highway Traffic Safety Admin., 538 F.3d 1172, 1194 (9th Cir. 2008). For
further discussion see 76 FR 57198, and the model has been subjected to
formal peer review and review by the General Accounting Office (GAO)
and National Research Council (NRC). NHTSA makes public the model,
source code, and--except insofar as doing so will compromise
confidential business information (CBI) manufacturers have provided to
NHTSA--all model inputs and outputs underlying published rulemaking
analyses.
    Although the CAFE model can also be used for more aggregated
analysis (e.g., involving ``representative vehicles,'' single-year
snapshots, etc.), NHTSA designed the model with a view toward (a)
detailed simulation of manufacturers' potential actions given a defined
set of standards, followed by (b) calculation of resultant impacts and
economic costs and benefits. The model is intended to describe actions
manufacturers could take in light of defined standards and other input
assumptions and estimates, not to predict actions manufacturers will
take in light of competing product and market interests (e.g. engine
power, customer features, technology acceptance, etc.).
    For the proposal, the agencies conducted coordinated and
complementary analyses using two analytical methods for the heavy-duty
pickup and van segment by employing both NHTSA's CAFE model and EPA's
MOVES model. The agencies used EPA's MOVES model to estimate fuel
consumption and emissions impacts for tractor-trailers (including the
engine that powers the tractor), and vocational vehicles (including the
engine that powers the vehicle). Additional calculations were performed
to determine corresponding monetized program costs and benefits. For
heavy-duty pickups and vans, the agencies performed complementary
analyses, which we refer to as ``Method A'' and ``Method B.''
    For the final rule, NHTSA's Method A uses a modified version of the
CAFE model developed since the NPRM, as well as accompanying updates to
CAFE model inputs, to project a pathway the industry could use to
comply with each regulatory alternative and the estimated effects on
fuel consumption, emissions, benefits and costs were industry to do so.
Method A is presented below in Section D and differs from the Method A
analysis provided in the NPRM. NHTSA considered the results of the
Method A analysis for decision making for the final rule.
    EPA's Method B analysis continues to use the CAFE model and inputs
developed for the NPRM to identify technology pathways the industry
could potentially use to comply with each regulatory alternative, along
with resultant impacts on per vehicle costs should that compliance path
be utilized, and the MOVES model was used to calculate corresponding
changes in total fuel consumption and annual emissions. The results are
presented in Section E. Additional calculations were performed to
determine corresponding monetized program costs and benefits. NHTSA's
consideration of the Method A analysis and EPA's consideration of the
Method B analysis led the agencies to the same conclusions regarding
the selection of the Phase 2 standards. See Sections D and E for
additional discussion of these two methods and the feasibility of the
standards.
(1) Overview of the CAFE Model
    As a starting point, the model makes use of an input file defining
the analysis fleet--that is, a set of specific vehicle models (e.g.,
Ford F250) and model configurations (e.g., Ford F250 with 6.2-liter V8
engine, 4WD, and 6-speed manual transmission) estimated or assumed to
be produced by each manufacturer in each model year to be included in
the analysis. The analysis fleet includes key engineering attributes
(e.g., curb weight, payload and towing capacities, dimensions, presence
of various fuel-saving technologies) of each vehicle model, engine, and
transmissions, along with estimates or assumptions of future production
volumes. It also specifies the extent to which specific vehicle models
share engines, transmissions, and vehicle platforms, and describes each
manufacturer's estimated or assumed product cadence (i.e., timing for
freshening and redesigning different vehicles and platforms). This
input file also specifies a payback period used to estimate the
potential that each manufacturer might apply technology to improve fuel
economy beyond levels required by standards.
    A second input file to the model contains a variety of contextual
estimates and assumptions. Some of these inputs, such as future fuel
prices and vehicle survival and mileage accumulation (versus vehicle
age), are relevant to estimating manufacturers' potential application
of fuel-saving technologies. Some others, such as fuel density and
carbon content, vehicular and upstream emission factors, the social
cost of carbon dioxide emissions, and the discount rate, are relevant
to calculating physical and economic impacts of manufacturers'
application of fuel-saving technologies.
    A third input file contains estimates and assumptions regarding the
future applicability, availability, efficacy, and cost of various fuel-
saving technologies. Efficacy is expressed in terms of the percentage
reduction in fuel consumption, cost is expressed in dollars, and both
efficacy and cost are expressed on an incremental basis (i.e.,
estimates for more advanced technologies are specified as increments
beyond less advanced technologies). The input file also includes
``synergy factors'' used to make adjustments accounting for the
potential that some combinations of technologies may result fuel
savings or costs different from those indicated by incremental values.
Thus, the model itself does not evaluate which technologies will be
available, nor does it evaluate how effective or reliable they

will be. The technological availability and effectiveness are rather
predefined inputs to the model based on the agencies' judgements and
not outputs from the model, which is simply a tool for calculating the
effects of combining input assumptions.
    Finally, a fourth model input file specifies standards to be
evaluated. Standards are defined on a year-by-year basis separately for
each regulatory class (passenger cars, light trucks, and heavy-duty
pickups and vans). Regulatory alternatives are specified as discrete
scenarios, with one scenario defining the no-action alternative or
``baseline,'' all other scenarios defining regulatory alternatives to
be evaluated relative to that no-action alternative.
    Given these inputs, the model estimates each manufacturer's
potential year-by-year application of fuel-saving technologies to each
engine, transmission, and vehicle. Subject to a range of engineering
and planning-related constraints (e.g., secondary axle disconnect can't
be applied to 2-wheel drive vehicles, many major technologies can only
be applied practicably as part of a vehicle redesign, and applied
technologies carry forward between model years), the model attempts to
apply technology to each manufacturer's fleet in a manner that
minimizes ``effective costs'' (accounting, in particular, for
technology costs and avoided fuel outlays), continuing to add
improvements as long as doing so will help toward compliance with
specified standards or will produce fuel savings that ``pay back'' at
least as quickly as specified in the input file mentioned above.
    After estimating the extent to which each manufacturer might add
fuel-saving technologies under each specified regulatory alternative,
the model calculates a range of physical impacts, such as changes in
highway travel (i.e., VMT), changes in fleetwide fuel consumption,
changes in highway fatalities, and changes in vehicular and upstream
greenhouse gas and criteria pollutant emissions. The model also applies
a variety of input estimates and assumptions to calculate economic
costs and benefits to vehicle owners and society, based on these
physical impacts. These are considered Method A results.
    Since the manufacturers of HD pickups and vans generally only have
one basic pickup truck and van with different versions ((i.e.,
different wheelbases, cab sizes, two-wheel drive, four-wheel drive,
etc.) there exists less flexibility than in the light-duty fleet to
coordinate model improvements over several years. As such, the CAFE
model allows changes to the HD pickups and vans to meet new standards
according to estimated redesign cycles included as a model input. As
noted above, the opportunities for large-scale changes (e.g., new
engines, transmission, vehicle body and mass) thus occur less
frequently than in the light-duty fleet, typically at spans of eight or
more years for this analysis. However, opportunities for gradual
improvements not necessarily linked to large scale changes can occur
between the redesign cycles (i.e., model refresh). Examples of such
improvements are upgrades to an existing vehicle model's engine,
transmission and aftertreatment systems.
(2) How did the agencies develop the analysis fleet for the NPRM?
    As discussed above, both agencies used a version of NHTSA's CAFE
modeling system to estimate technology costs and application rates
under each regulatory alternative considered. The modeling system
relies on many inputs, including an analysis fleet. In order to
estimate the impacts of potential standards, it is necessary to
estimate the composition of the future vehicle fleet. Doing so enables
estimation of the extent to which each manufacturer may need to add
technology in response to a given series of attribute-based standards,
accounting for the mix and fuel consumption of vehicles in each
manufacturer's regulated fleet. The agencies create an analysis fleet
in order to track the volumes and types of fuel economy-improving and
CO2-reducing technologies that are already present in the
existing vehicle fleet. This aspect of the analysis fleet helps to keep
the CAFE model from adding technologies to vehicles that already have
these technologies, which will result in ``double counting'' of
technologies' costs and benefits. An additional step involved
projecting the fleet sales into MYs 2019-2030. This represents the
fleet volumes that the agencies believe will exist in MYs 2019-2030.
The following presents an overview of the information and methods
applied to develop the analysis fleet, and some basic characteristics
of that fleet.
    Most of the information about the vehicles that make up the 2014
analysis fleet (used in the NPRM and Method B of this FRM) and the 2015
analysis fleet (used in Method A of this FRM) was gathered from the
2014 and 2015 Pre-Model Year Reports submitted to EPA by the
manufacturers under Phase 1 of Fuel Efficiency and GHG Emission Program
for Medium- and Heavy-Duty Trucks, MYs 2014-2018. The major
manufacturers of class 2b and class 3 trucks (Chrysler, Ford and GM)
were asked to voluntarily submit updates to their Pre-Model Year
Reports. The agencies used these updated data in constructing the
analysis fleet for these manufacturers. The agencies agreed to treat
this information as Confidential Business Information (CBI) until the
publication of the proposed rule. This information can be made public
at this time because by now all MY 2014 and MY 2015 vehicle models have
been produced, which makes data about them essentially public
information.
    In addition to information about each vehicle, the agencies need
additional information about the fuel economy-improving/CO2-
reducing technologies already on those vehicles in order to assess how
much and which technologies to apply to determine a path toward future
compliance. To correctly account for the cost and effectiveness of
adding technologies, it is necessary to know the technology penetration
in the existing vehicle fleet. Otherwise, ``double-counting'' of
technology could occur. Thus, in their respective analysis fleets, the
agencies augmented this information with data from public and
commercial sources \470\ that include more complete technology
descriptions, e.g. for specific engines and transmissions.
---------------------------------------------------------------------------

    \470\ e.g., manufacturers' Web sites, Wards Automotive.
---------------------------------------------------------------------------

    The resultant analysis fleets are provided in detail at NHTSA's Web
site, along with all other inputs to and outputs from both the NPRM and
the current analysis. The agencies invited but did not receive comment
on this analysis.
(a) Vehicle Redesign Schedules and Platforms
    Product cadence in the Class 2b and 3 pickup market has
historically ranged from 7-9 years between major redesigns. However,
due to increasing competitive pressures and consumer demands the agency
anticipates that manufacturers will generally shift to shorter design
cycles resembling those of the light duty market. Pickup truck
manufacturers in the Class 2b and 3 segments are shown to adopt
redesign cycles of six years, allowing two redesigns prior to the end
of the regulatory period in 2025.
    The Class 2b and 3 van market has changed markedly from five years
ago. Ford, Nissan, Ram and Daimler have adopted vans of ``Euro Van''
appearance, and in many cases now use smaller turbocharged gasoline or
diesel engines in the place of larger, naturally-aspirated V8s. The
2014 and 2015 model years used in this analysis

represent a period where most manufacturers, with the exception of
General Motors, have recently introduced a completely redesigned
product after many years. The van segment has historically been one of
the slowest to be redesigned of any product segment, with some products
going two decades or more between redesigns.
    Due to new entrants in the field and increased competition, the
agencies anticipate that most manufacturers will increase the pace of
product redesigns in the van segment, but that they will continue to
trail other segments. The cycle time used in this analysis is
approximately ten years between major redesigns, allowing
manufacturers' only one major redesign during the regulatory period.
The agencies did not receive comment on this anticipated product design
cycle.
    Additional detail on product cadence assumptions for specific
manufacturers is located in Chapter 10 of the RIA.
(b) Sales Volume Forecast
    Since each manufacturer's required average fuel consumption and GHG
levels are sales-weighted averages of the fuel economy/GHG targets
across all model offerings, sales volumes play a critical role in
estimating that burden. The CAFE model requires a forecast of sales
volumes, at the vehicle model-variant level, in order to simulate the
technology application necessary for a manufacturer to achieve
compliance in each model year for which outcomes are simulated.
    As stated above, the agencies relied on the pre-model-year
compliance submissions from manufacturers to provide sales volumes at
the model level based on the level of disaggregation in which the
models appear in the compliance data. However, the agencies only use
these reported volumes without adjustment for the reference fleet model
year (MY 2014 or MY 2015). For all future model years, we combine the
manufacturer submissions with sales projections from the 2014 (for the
NPRM and Method B of the FRM) or 2015 (for Method A of the FRM) Annual
Energy Outlook Reference Case and IHS Automotive to determine model
variant level sales volumes in future years.\471\ The projected sales
volumes by class that appear in the Annual Energy Outlook as a result
of a collection of assumptions about economic conditions, demand for
commercial miles traveled, and technology migration from light-duty
pickup trucks in response to the concurrent light-duty CAFE/GHG
standards. These are shown in Chapter 2 of the RIA.
---------------------------------------------------------------------------

    \471\ Tables from AEO's forecast are available at http://www.eia.gov/oiaf/aeo/tablebrowser/. The agencies also made use of
the IHS Automotive Light Vehicle Production Forecast (August 2014).
---------------------------------------------------------------------------

    The projection of total sales volumes for the Class 2b and 3 market
segment was based on the total volumes in the 2014 AEO Reference Case
in the NPRM and for Method B of this FRM. For the purposes of this
analysis, the AEO2014 calendar year volumes have been used to represent
the corresponding model-year volumes. While AEO2014 provides enough
resolution in its projections to separate the volumes for the Class 2b
and 3 segments, the agencies deferred to the vehicle manufacturers and
chose to rely on the relative shares present in the pre-model-year
compliance data. This methodology remains the same for the Method A FRM
analysis, but we have replaced the 2014 AEO reference case with the
2015 AEO reference case.
    The relative sales share by vehicle type (van or pickup truck, in
this case) was derived from a sales forecast that the agencies
purchased from IHS Automotive, and applied to the total volumes in the
AEO2014 projection. Table VI-3 shows the implied shares of the total
new 2b/3 vehicle market broken down by manufacturer and vehicle type.
The same methodology was applied using 2015 IHS/Polk projections, and
the total volumes from the AEO2015 projection for Method A of the FRM.
The results of the 2015-based projections are presented in the
following section about changes made to the model since the NPRM.

                                           Table VI-3--IHS Automotive Market Share Forecast for 2b/3 Vehicles
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Model year market share
              Manufacturer                           Style           -----------------------------------------------------------------------------------
                                                                       2015 (%)    2016 (%)    2017 (%)    2018 (%)    2019 (%)    2020 (%)    2021 (%)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Daimler.................................  Van.......................           3           3           3           3           3           3           3
Fiat Chrysler...........................  Van.......................           2           2           2           2           2           2           3
Ford....................................  Van.......................          16          17          17          17          18          18          18
General Motors..........................  Van.......................          12          12          11          12          13          13          13
Nissan..................................  Van.......................           2           2           2           2           2           2           2
Daimler.................................  Pickup....................           0           0           0           0           0           0           0
Fiat Chrysler...........................  Pickup....................          14          14          14          14          11          12          12
Ford....................................  Pickup....................          28          27          30          30          30          27          26
General Motors..........................  Pickup....................          23          23          21          21          21          22          23
Nissan..................................  Pickup....................           0           0           0           0           0           0           0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Within those broadly defined market shares, volumes at the
manufacturer/model-variant level were constructed by applying the
model-variant's share of manufacturer sales in the pre-model-year
compliance data for the relevant vehicle style, and multiplied by the
total volume estimated for that manufacturer and that style.
    After building out a set of initial future sales volumes based on
the sources described above, the agencies attempted to incorporate new
information about changes in sales mix that are not captured by either
the existing sales forecasts or the simulated technology changes in
vehicle platforms. In particular, Ford has announced intentions to
phase out their existing Econoline vans, gradually shifting volumes to
the new Transit platform for some model variants (notably chassis cabs
and cutaways variants) and eliminating offerings outright for complete
Econoline vans as early as model year 2015. In the case of complete
Econoline vans, the volumes for those vehicles were allocated to MY
2015 Transit vehicles based on assumptions about likely production
splits for the powertrains of the new Transit platform. The volumes for
complete Econoline vans were shifted at ratios of 50 percent, 35
percent, and 15

percent for 3.7 L, 3.5 L Eco-boost, and 3.2 L diesel, respectively.
Within each powertrain, sales were allocated based on the percentage
shares present in the pre-model-year compliance data. The chassis cab
and cutaway variants of the Econolines were phased out linearly between
MY 2015 and MY 2020, at which time the Econolines cease to exist in any
form and all corresponding volume resides with the Transits.
(3) Other Analysis Inputs
    In addition to the inputs summarized above, the analysis of
potential standards for HD pickups and vans makes use of a range of
other estimates and assumptions specified as inputs to the CAFE
modeling system. Some significant inputs (e.g., estimates of future
fuel prices) also applicable to other MDHD segments are discussed below
in Section IX. Others more specific to the analysis of HD pickups and
vans are as follows:
(a) Vehicle Survival and Mileage Accumulation
    The analysis estimates the travel, fuel consumption, and emissions
over the useful lives of vehicles produced during model years 2014-
2030. Doing so requires initial estimates of these vehicles' survival
rates (i.e., shares expected to remain in service) and mileage
accumulation rates (i.e., anticipated annual travel by vehicles
remaining in service), both as a function of vehicle vintage (i.e.,
age). These estimates are based on an empirical analysis of changes in
the fleet of registered vehicles over time from HIS/Polk data, in the
case of survival rates. The NPRM and Method A of the FRM use data
collected as part of the last Vehicle In Use Survey (the 2002 VIUS) for
the mileage accumulation schedule. Method A of the FRM uses mileage
accumulation schedules from 2014 Polk/IHS odometer reading data. The
changes to the VMT schedules for Method A of the current analysis are
further described below in the Method A FRM specific changes.
(b) Rebound Effect
    Expressed as an elasticity of mileage accumulation with respect to
the fuel cost per mile of operation, the agencies have applied a
rebound effect of 10 percent for today's analysis. Other rebound
effects are considered in sensitivity analyses in Sections D.
(c) On-Road ``Gap''
    The model was run with a 20 percent adjustment to reflect
differences between on-road and laboratory performance.
(d) Fleet Population Profile
    Though not reported here, cumulative fuel consumption and
CO2 emissions are presented in the accompanying EIS, and
these calculations utilize estimates of the numbers of vehicles
produced in each model year remaining in service in calendar year 2014.
The initial age distribution of the registered vehicle population in
2014 is based on vehicle registration data acquired by NHTSA from R.L.
Polk Company. For Method A, these values were updated to reflect newer
data acquired by NHTSA from Polk.
(e) Past Fuel Consumption Levels
    Though not reported here, cumulative fuel consumption and
CO2 emissions are presented in the accompanying EIS, and
these calculations require estimates of the performance of vehicles
produced prior to model year 2014. Consistent with AEO 2014, the model
was run with the assumption that gasoline and diesel HD pickups and
vans averaged 14.9 mpg and 18.6 mpg, respectively, with gasoline
versions averaging about 48 percent of production. For Method A, these
values were updated to reflect AEO2015, such that gasoline and diesel
versions were projected to average 16.0 mpg and 20.0 mpg, respectively.
(f) Long-Term Fuel Consumption Levels
    Though not reported here, longer-term estimates of fuel consumption
and emissions are presented in the accompanying EIS. These estimates
include calculations involving vehicle produced after MY 2030 and,
consistent with AEO 2014, the model was run with the assumption that
fuel consumption and CO2 emission levels will continue to
decline at 0.05 percent annually (compounded) after MY 2030.
(g) Payback Period
    To estimate in what sequence and to what degree manufacturers might
add fuel-saving technologies to their respective fleets, the CAFE model
iteratively ranks remaining opportunities (i.e., applications of
specific technologies to specific vehicles) in terms of effective cost,
primary components of which are the technology cost and the avoided
fuel outlays, attempting to minimize effective costs incurred.\472\
Depending on inputs, the model also assumes manufacturers may improve
fuel consumption beyond requirements insofar as doing so will involve
applications of technology at negative effective cost--i.e., technology
application for which buyers' up-front costs are quickly paid back
through avoided fuel outlays. This calculation includes only fuel
outlays occurring within a specified payback period. For both Method A
and Method B, a payback period of 6 months was applied for the dynamic
baseline case, or Alternative 1b. Thus, for example, a manufacturer
already in compliance with standards is projected to apply a fuel
consumption improvement projected to cost $250 (i.e., as a cost that
could be charged to the buyer at normal profit to the manufacturer) and
reduce fuel costs by $500 in the first year of vehicle operation. The
agencies have conducted the same analysis applying a payback period of
0 months for the flat baseline case, or Alternative 1a. For Method A,
Alternative 1b is the primary analysis, and Alternative 1a is one of a
range of cases included in the sensitivity analysis.
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    \472\ Volpe CAFE Model, available at http://www.nhtsa.gov/fuel-economy.
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(h) Civil Penalties in the NHTSA Analysis
    EPCA and EISA require that a manufacturer pay civil penalties if it
does not have enough credits to cover a shortfall with one or both of
the light-duty CAFE standards in a model year. While these provisions
do not apply to HD pickups and vans, at this time, the CAFE model will
show civil penalties owed in cases where available technologies and
credits are estimated to be insufficient for a manufacturer to achieve
compliance with a standard. These model-reported estimates have been
excluded from this analysis. For Method A, this aspect of the model has
been modified to also exclude from the calculation of ``effective
cost'' used to select among available options to add specific
technologies to specific vehicles.
(i) Coefficients for Fatality Calculations
    Both the NPRM and the current analysis consider the potential
effects on crash safety of the technologies manufacturers may apply to
their vehicles to meet each of the regulatory alternatives. NHTSA
research has shown that vehicle mass reduction affects overall societal
fatalities associated with crashes \473\ and, most relevant to this
rule, mass reduction in heavier light- and medium-duty vehicles has an
overall beneficial effect on societal fatalities. Reducing the mass of
a heavier vehicle involved in a crash with another vehicle(s) makes it
less

likely there will be fatalities among the occupants of the other
vehicles. In addition to the effects of mass reduction, the analysis
anticipates that these standards, by reducing the cost of driving HD
pickups and vans, will lead to increased travel by these vehicles and,
therefore, more crashes involving these vehicles. The Method B analysis
considers overall impacts considering both of these factors, using a
methodology similar to NHTSA's analyses for the MYs 2017-2025 CAFE and
GHG emission standards.
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    \473\ U.S. DOT/NHTSA, Relationships Between Fatality Risk Mass
and Footprint in MY 2000-2007 PC and LTVs, ID: NHTSA-2010-0131-0336,
Posted August 21, 2012.
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    The Method B analysis includes estimates of the extent to which HD
pickups and vans produced during MYs 2014-2030 may be involved in fatal
crashes, considering the mass, survival, and mileage accumulation of
these vehicles, taking into account changes in mass and mileage
accumulation under each regulatory alternative. These calculations make
use of the same coefficients applied to light trucks in the MYs 2017-
2025 CAFE rulemaking analysis. Baseline rates of involvement in fatal
crashes are 13.03 and 13.24 fatalities per billion miles for vehicles
with initial curb weights above and below 4,594 lbs, respectively.
Considering that the data underlying the corresponding statistical
analysis included observations through calendar year 2010, these rates
are reduced by 9.6 percent to account for subsequent impacts of recent
Federal Motor Vehicle Safety Standards (FMVSS) and anticipated
behavioral changes (e.g., continued increases in seat belt use). For
vehicles above 4,594 lbs--i.e., the majority of the HD pickup and van
fleet--mass reduction is estimated to reduce the net incidence of
highway fatalities by 0.34 percent per 100 lbs. of removed curb weight.
For the few HD pickups and vans below 4,594 lbs, mass reduction is
estimated to increase the net incidence of highway fatalities by 0.52
percent per 100 lbs. Consistent with DOT guidance, the social cost of
highway fatalities is estimated using a value of statistical life (VSL)
of $9.36m in 2014, increasing thereafter at 1.18 percent annually.
    The Method A analysis uses the same methodology as described above,
but applies coefficients that have been updated to reflect more current
data, updated statistical analysis by NHTSA staff, and updated DOT
guidance regarding the VSL. Baseline rates of involvement in fatal
crashes are 16.06 and 14.35 fatalities per billion miles for pickups
and vans with initial curb weights above and below 4,947 lbs,
respectively. Considering that the data underlying the corresponding
statistical analysis included observations through calendar year 2012,
these rates are reduced by 9.6 percent to account for subsequent
impacts of recent Federal Motor Vehicle Safety Standards (FMVSS) and
anticipated behavioral changes (e.g., continued increases in seat belt
use). For vehicles above 4,947 lbs--i.e., the majority of the HD pickup
and van fleet--mass reduction is estimated to reduce the net incidence
of highway fatalities by 0.72 percent per 100 lbs. of removed curb
weight. For HD pickups and vans below 4,947 lbs (accounting for any
applied mass reduction), mass reduction is estimated to reduce the net
incidence of highway fatalities by 0.10 percent per 100 lbs. Consistent
with DOT guidance, the social cost of highway fatalities is estimated
using a value of statistical life (VSL) of $9.4m from 2015 forward.
(j) Compliance Credit Provisions
    Today's analysis accounts for the potential to over comply with
standards and thereby earn compliance credits, applying these credits
to ensuring compliance requirements. In doing so, the agencies treat
any unused carried-forward credits as expiring after five model years,
consistent with current and standards. For today's analysis, the
agencies are not estimating the potential to ``borrow''--i.e., to carry
credits back to past model years.
(k) Emission Factors
    While CAFE model calculates vehicular CO2 emissions
directly on a per-gallon basis using fuel consumption and fuel
properties (density and carbon content), the model calculates emissions
of other pollutants (methane, nitrogen oxides, ozone precursors, carbon
monoxide, sulfur dioxide, particulate matter, and air toxics) on a per-
mile basis. In doing so, the Method A analysis used corresponding
emission factors estimated using EPA's MOVES model.\474\ To estimate
emissions (including CO2) from upstream processes involved
in producing, distributing, and delivering fuel, NHTSA has applied
emission factors--all specified on a gram per gallon basis--derived
from Argonne National Laboratory's GREET model.\475\
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    \474\ EPA MOVES model available at http://www3.epa.gov/otaq/models/moves/index.htm (last accessed Feb 23, 2015).
    \475\ GREET (Greenhouse Gases, Regulated Emissions, and Energy
Use in Transportation) Model, Argonne National Laboratory, https://greet.es.anl.gov/.
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(l) Refueling Time Benefits
    To estimate the value of time savings associated with vehicle
refueling, the Method A analysis used estimates that an average
refueling event involves refilling 60 percent of the tank's capacity
over the course of 3.5 minutes, at an hourly cost of $27.22.
(m) External Costs of Travel
    Changes in vehicle travel will entail economic externalities. To
estimate these costs, the Method A analysis used estimates that
congestion-, crash-, and noise-related externalities will total
5.1[cent]/mi., 2.8[cent]/mi., and 0.1[cent]/mi., respectively.
(n) Ownership and Operating Costs
    Method A results predict that the total cost of vehicle ownership
and operation will change not just due to changes in vehicle price and
fuel outlays, but also due to some other costs likely to vary with
vehicle price. To estimate these costs, NHTSA has applied factors of
5.5 percent (of price) for taxes and fees, 15.3 percent for financing,
19.2 percent for insurance, 1.9 percent for relative value loss. The
Method A analysis also estimates that average vehicle resale value will
increase by 25 percent of any increase in new vehicle price.
(4) What Technologies Did the Agencies Consider
    The agencies considered over 35 vehicle technologies that
manufacturers could use to improve the fuel consumption and reduce
CO2 emissions of their vehicles during MYs 2021-2027. The
majority of the technologies described in this section are readily
available, well known and proven in other vehicle sectors, and could be
incorporated into vehicles once production decisions are made. Other
technologies considered may not currently be in production, but are
beyond the research phase and under development, and are expected to be
in production in highway vehicles over the next few years. These are
technologies that are capable of achieving significant improvements in
fuel economy and reductions in CO2 emissions, at reasonable
costs. The agencies did not consider technologies in the research stage
because there is insufficient time for such technologies to move from
research to production during the model years covered by this final
action.
    The technologies considered in the agencies' analysis are briefly
described below. They fall into five broad categories: Engine
technologies, transmission technologies, vehicle technologies,
electrification/accessory technologies, and hybrid technologies.
    In this class of trucks and vans, diesel engines are installed in
about half of all vehicles. The buyer's decision to purchase a diesel
versus gasoline engine

depends on several factors including initial purchase price, fuel
operating costs, durability, towing capability and payload capacity
amongst other reasons. As discussed in VI.B. above, the agencies
generally prefer to set standards that do not distinguish between fuel
types where technological or market-based reasons do not strongly argue
otherwise. However, as with Phase 1, we continue to believe that
fundamental differences between spark ignition and compression ignition
engines warrant unique fuel standards, which is also important in
ensuring that our program maintains product choices available to
vehicle buyers. Therefore, as discussed in Section B.1, we are
maintaining separate standards for gasoline and diesel vehicles. In the
context of our technology discussion for heavy-duty pickups and vans,
we are treating gasoline and diesel engines separately so each has a
set of baseline technologies. We discuss performance improvements in
terms of changes to those baseline engines. Our cost and inventory
estimates contained elsewhere reflect the current fleet baseline with
an appropriate mix of gasoline and diesel engines. Note that we are not
basing these standards on a targeted switch in the mix of diesel and
gasoline vehicles. We believe our standards require similar levels of
technology development and cost for both diesel and gasoline vehicles.
Hence the program is not intended to force, nor discourage, changes in
a manufacturer's fleet mix between gasoline and diesel vehicles.
    The following contains a description of technologies the agencies
considered as potentially available in the rule timeframe, and hence,
having potential to be part of a compliance pathway for these vehicles.
Additionally, the agencies did not receive any comments indicating that
the technology effectiveness estimates used in the determination of
potential reductions in GHGs and fuel consumption are not
representative of the expected ranges for expected duty cycles.
(a) Engine Technologies
    The agencies reviewed the engine technology estimates used in the
2017-2025 light-duty rule, the 2014-2018 heavy-duty rule, and the 2015
NHTSA Technology Study. In doing so the agencies reconsidered all
available sources and updated the estimates as appropriate. The section
below describes both diesel and gasoline engine technologies considered
for this program.
(i) Low Friction Lubricants
    One of the most basic methods of reducing fuel consumption in both
gasoline and diesel engines is the use of lower viscosity engine
lubricants. More advanced multi-viscosity engine oils are available
today with improved performance in a wider temperature band and with
better lubricating properties. This can be accomplished by changes to
the oil base stock (e.g., switching engine lubricants from a Group I
base oils to lower-friction, lower viscosity Group III synthetic) and
through changes to lubricant additive packages (e.g., friction
modifiers and viscosity improvers). The use of 5W-30 motor oil is now
widespread and auto manufacturers are introducing the use of even lower
viscosity oils, such as 5W-20 and 0W-20, to improve cold-flow
properties and reduce cold start friction. However, in some cases,
changes to the crankshaft, rod and main bearings and changes to the
mechanical tolerances of engine components may be required. In all
cases, durability testing will be required to ensure that durability is
not compromised. The shift to lower viscosity and lower friction
lubricants will also improve the effectiveness of valvetrain
technologies such as cylinder deactivation, which rely on a minimum oil
temperature (viscosity) for operation.
(ii) Engine Friction Reduction
    In addition to low friction lubricants, manufacturers can also
reduce friction and improve fuel consumption by improving the design of
both diesel and gasoline engine components and subsystems.
Approximately 10 percent of the energy consumed by a vehicle is lost to
friction, and just over half is due to frictional losses within the
engine.\476\ Examples include improvements in low-tension piston rings,
piston skirt design, roller cam followers, improved crankshaft design
and bearings, material coatings, material substitution, more optimal
thermal management, and piston and cylinder surface treatments.
Additionally, as computer-aided modeling software continues to improve,
more opportunities for evolutionary friction reductions may become
available. All reciprocating and rotating components in the engine are
potential candidates for friction reduction, and minute improvements in