[Federal Register Volume 76, Number 231 (Thursday, December 1, 2011)]
[Proposed Rules]
[Pages 74854-75420]
[FR Doc No: 2011-30358]

Vol. 76

Thursday,

No. 231

December 1, 2011

Part II

Environmental Protection Agency

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40 CFR Parts 85, 86, and 600

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Parts 523, 531, 533 et al.

2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas Emissions
and Corporate Average Fuel Economy Standards; Proposed Rule

Federal Register / Vol. 76 , No. 231 / Thursday, December 1, 2011 /
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, and 600

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DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 523, 531, 533, 536, and 537

[EPA-HQ-OAR-2010-0799; FRL-9495-2; NHTSA-2010-0131]
RIN 2060-AQ54; RIN 2127-AK79

2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas
Emissions and Corporate Average Fuel Economy Standards

AGENCY: Environmental Protection Agency (EPA) and National Highway
Traffic Safety Administration (NHTSA).

ACTION: Proposed rule.

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SUMMARY: EPA and NHTSA, on behalf of the Department of Transportation,
are issuing this joint proposal to further reduce greenhouse gas
emissions and improve fuel economy for light-duty vehicles for model
years 2017-2025. This proposal extends the National Program beyond the
greenhouse gas and corporate average fuel economy standards set for
model years 2012-2016. On May 21, 2010, President Obama issued a
Presidential Memorandum requesting that NHTSA and EPA develop through
notice and comment rulemaking a coordinated National Program to reduce
greenhouse gas emissions of light-duty vehicles for model years 2017-
2025. This proposal, consistent with the President's request, responds
to the country's critical need to address global climate change and to
reduce oil consumption. NHTSA is proposing Corporate Average Fuel
Economy standards under the Energy Policy and Conservation Act, as
amended by the Energy Independence and Security Act, and EPA is
proposing greenhouse gas emissions standards under the Clean Air Act.
These standards apply to passenger cars, light-duty trucks, and medium-
duty passenger vehicles, and represent a continued harmonized and
consistent National Program. Under the National Program for model years
2017-2025, automobile manufacturers would be able to continue building
a single light-duty national fleet that satisfies all requirements
under both programs while ensuring that consumers still have a full
range of vehicle choices. EPA is also proposing a minor change to the
regulations applicable to MY 2012-2016, with respect to air conditioner
performance and measurement of nitrous oxides.

DATES: Comments: Comments must be received on or before January 30,
2012. Under the Paperwork Reduction Act, comments on the information
collection provisions must be received by the Office of Management and
Budget (OMB) on or before January 3, 2012. See the SUPPLEMENTARY
INFORMATION section on ``Public Participation'' for more information
about written comments.
    Public Hearings: NHTSA and EPA will jointly hold three public
hearings on the following dates: January 17, 2012, in Detroit,
Michigan; January 19, 2012 in Philadelphia, Pennsylvania; and January
24, 2012, in San Francisco, California. EPA and NHTSA will announce the
addresses for each hearing location in a supplemental Federal Register
Notice. The agencies will accept comments to the rulemaking documents,
and NHTSA will also accept comments to the Draft Environmental Impact
Statement (EIS) at these hearings and to Docket No. NHTSA-2011-0056.
The hearings will start at 10 a.m. local time and continue until
everyone has had a chance to speak. See the SUPPLEMENTARY INFORMATION
section on ``Public Participation.'' for more information about the
public hearings.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2010-0799 and/or NHTSA-2010-0131, by one of the following methods:
     Online: www.regulations.gov: Follow the on-line
instructions for submitting comments.
     Email<EMAIL_ADDRESS>     Fax: EPA:<PHONE_NUMBER>; NHTSA:<PHONE_NUMBER>.
     Mail:
     EPA: Environmental Protection Agency, EPA Docket Center
(EPA/DC), Air and Radiation Docket, Mail Code 28221T, 1200 Pennsylvania
Avenue NW., Washington, DC 20460, Attention Docket ID No. EPA-HQ-OAR-
2010-0799. In addition, please mail a copy of your comments on the
information collection provisions to the Office of Information and
Regulatory Affairs, Office of Management and Budget (OMB), Attn: Desk
Officer for EPA, 725 17th St., NW., Washington, DC 20503.
     NHTSA: Docket Management Facility, M-30, U.S. Department
of Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590.
     Hand Delivery:
     EPA: Docket Center, (EPA/DC) EPA West, Room B102, 1301
Constitution Ave. NW., Washington, DC, Attention Docket ID No. EPA-HQ-
OAR-2010-0799. Such deliveries are only accepted during the Docket's
normal hours of operation, and special arrangements should be made for
deliveries of boxed information.
     NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE, Washington, DC 20590, between 9 a.m. and 4 p.m.
Eastern Time, Monday through Friday, except Federal Holidays.
    Instructions: Direct your comments to Docket ID No. EPA-HQ-OAR-
2010-0799 and/or NHTSA-2010-0131. See the SUPPLEMENTARY INFORMATION
section on ``Public Participation'' for more information about
submitting written comments.
    Docket: All documents in the dockets are listed in the http://www.regulations.gov index. Although listed in the index, some
information is not publicly available, e.g., confidential business
information (CBI) or other information whose disclosure is restricted
by statute. Certain other material, such as copyrighted material, will
be publicly available in hard copy in EPA's docket, and electronically
in NHTSA's online docket. Publicly available docket materials are
available either electronically in www.regulations.gov or in hard copy
at the following locations: EPA: EPA Docket Center, EPA/DC, EPA West,
Room 3334, 1301 Constitution Ave. NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is<PHONE_NUMBER>. NHTSA: Docket Management Facility, M-
30, U.S. Department of Transportation, West Building, Ground Floor, Rm.
W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590. The Docket
Management Facility is open between 9 a.m. and 5 p.m. Eastern Time,
Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: EPA: Christopher Lieske, Office of
Transportation and Air Quality, Assessment and Standards Division,
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI
48105; telephone number:<PHONE_NUMBER>; fax number:<PHONE_NUMBER>;
email address<EMAIL_ADDRESS>or contact the Assessment
and Standards Division; email address<EMAIL_ADDRESS>NHTSA:
Rebecca Yoon, Office of the Chief Counsel, National Highway Traffic
Safety Administration, 1200 New Jersey

Avenue SE., Washington, DC 20590. Telephone:<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    This action affects companies that manufacture or sell new light-
duty vehicles, light-duty trucks, and medium-duty passenger vehicles,
as defined under EPA's CAA regulations,\1\ and passenger automobiles
(passenger cars) and non-passenger automobiles (light trucks) as
defined under NHTSA's CAFE regulations.\2\ Regulated categories and
entities include:
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    \1\ ``Light-duty vehicle,'' ``light-duty truck,'' and ``medium-
duty passenger vehicle'' are defined in 40 CFR 86.1803-01.
Generally, the term ``light-duty vehicle'' means a passenger car,
the term ``light-duty truck'' means a pick-up truck, sport-utility
vehicle, or minivan of up to 8,500 lbs gross vehicle weight rating,
and ``medium-duty passenger vehicle'' means a sport-utility vehicle
or passenger van from 8,500 to 10,000 lbs gross vehicle weight
rating. Medium-duty passenger vehicles do not include pick-up
trucks.
    \2\ ``Passenger car'' and ``light truck'' are defined in 49 CFR
part 523.
[GRAPHIC] [TIFF OMITTED] TP01DE11.000

    This list is not intended to be exhaustive, but rather provides a
guide regarding entities likely to be regulated by this action. To
determine whether particular activities may be regulated by this
action, you should carefully examine the regulations. You may direct
questions regarding the applicability of this action to the person
listed in FOR FURTHER INFORMATION CONTACT.

B. Public Participation

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

How do I prepare and submit comments?

    In this joint proposal, there are many issues common to both EPA's
and NHTSA's proposals. For the convenience of all parties, comments
submitted to the EPA docket will be considered comments submitted to
the NHTSA docket, and vice versa. An exception is that comments
submitted to the NHTSA docket on NHTSA's Draft Environmental Impact
Statement (EIS) will not be considered submitted to the EPA docket.
Therefore, the public only needs to submit comments to either one of
the two agency dockets, although they may submit comments to both if
they so choose. Comments that are submitted for consideration by one
agency should be identified as such, and comments that are submitted
for consideration by both agencies should be identified as such. Absent
such identification, each agency will exercise its best judgment to
determine whether a comment is submitted on its proposal.
    Further instructions for submitting comments to either the EPA or
NHTSA docket are described below.
    EPA: Direct your comments to Docket ID No EPA-HQ-OAR-2010-0799.
EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at http://www.regulations.gov, including any personal information provided,
unless

the comment includes information claimed to be Confidential Business
Information (CBI) or other information whose disclosure is restricted
by statute. Do not submit information that you consider to be CBI or
otherwise protected through http://www.regulations.gov or email. The
http://www.regulations.gov Web site is an ``anonymous access'' system,
which means EPA will not know your identity or contact information
unless you provide it in the body of your comment. If you send an email
comment directly to EPA without going through http://www.regulations.gov your email address will be automatically captured
and included as part of the comment that is placed in the public docket
and made available on the Internet. If you submit an electronic
comment, EPA recommends that you include your name and other contact
information in the body of your comment and with any disk or CD-ROM you
submit. If EPA cannot read your comment due to technical difficulties
and cannot contact you for clarification, EPA may not be able to
consider your comment. Electronic files should avoid the use of special
characters, any form of encryption, and be free of any defects or
viruses. For additional information about EPA's public docket visit the
EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    NHTSA: Your comments must be written and in English. To ensure that
your comments are correctly filed in the Docket, please include the
Docket number NHTSA-2010-0131 in your comments. Your comments must not
be more than 15 pages long.\3\ NHTSA established this limit to
encourage you to write your primary comments in a concise fashion.
However, you may attach necessary additional documents to your
comments, and there is no limit on the length of the attachments. If
you are submitting comments electronically as a PDF (Adobe) file, we
ask that the documents submitted be scanned using the Optical Character
Recognition (OCR) process, thus allowing the agencies to search and
copy certain portions of your submissions.\4\ Please note that pursuant
to the Data Quality Act, in order for the substantive data to be relied
upon and used by the agency, it must meet the information quality
standards set forth in the OMB and Department of Transportation (DOT)
Data Quality Act guidelines. Accordingly, we encourage you to consult
the guidelines in preparing your comments. OMB's guidelines may be
accessed at http://www.whitehouse.gov/omb/fedreg/reproducible.html.
DOT's guidelines may be accessed at http://www.dot.gov/dataquality.htm.
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    \3\ See 49 CFR 553.21.
    \4\ Optical character recognition (OCR) is the process of
converting an image of text, such as a scanned paper document or
electronic fax file, into computer-editable text.
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Tips for Preparing Your Comments

    When submitting comments, please remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
     Explain why you agree or disagree, suggest alternatives,
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns, and
suggest alternatives.
     Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
     Make sure to submit your comments by the comment period
deadline identified in the DATES section above.

How can I be sure that my comments were received?

    NHTSA: If you submit your comments by mail and wish Docket
Management to notify you upon its receipt of your comments, enclose a
self-addressed, stamped postcard in the envelope containing your
comments. Upon receiving your comments, Docket Management will return
the postcard by mail.

How do I submit confidential business information?

    Any confidential business information (CBI) submitted to one of the
agencies will also be available to the other agency. However, as with
all public comments, any CBI information only needs to be submitted to
either one of the agencies' dockets and it will be available to the
other. Following are specific instructions for submitting CBI to either
agency.
    EPA: Do not submit CBI to EPA through http://www.regulations.gov or
email. Clearly mark the part or all of the information that you claim
to be CBI. For CBI information in a disk or CD ROM that you mail to
EPA, mark the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is claimed as CBI. In addition to one complete version of the comment
that includes information claimed as CBI, a copy of the comment that
does not contain the information claimed as CBI must be submitted for
inclusion in the public docket. Information so marked will not be
disclosed except in accordance with procedures set forth in 40 CFR Part
2.
    NHTSA: If you wish to submit any information under a claim of
confidentiality, you should submit three copies of your complete
submission, including the information you claim to be confidential
business information, to the Chief Counsel, NHTSA, at the address given
above under FOR FURTHER INFORMATION CONTACT. When you send a comment
containing confidential business information, you should include a
cover letter setting forth the information specified in our
confidential business information regulation.\5\
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    \5\ See 49 CFR part 512.
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    In addition, you should submit a copy from which you have deleted
the claimed confidential business information to the Docket by one of
the methods set forth above.

Will the agencies consider late comments?

    NHTSA and EPA will consider all comments received before the close
of business on the comment closing date indicated above under DATES. To
the extent practicable, we will also consider comments received after
that date. If interested persons believe that any information that the
agencies place in the docket after the issuance of the NPRM affects
their comments, they may submit comments after the closing date
concerning how the agencies should consider that information for the
final rule. However, the agencies' ability to consider any such late
comments in this rulemaking will be limited due to the time frame for
issuing a final rule.
    If a comment is received too late for us to practicably consider in
developing a final rule, we will consider that comment as an informal
suggestion for future rulemaking action.

How can I read the comments submitted by other people?

    You may read the materials placed in the docket for this document
(e.g., the comments submitted in response to this document by other
interested persons) at any time by going to http://www.regulations.gov.
Follow the online instructions for accessing the dockets. You may also
read the materials at the EPA Docket Center or NHTSA Docket

Management Facility by going to the street addresses given above under
ADDRESSES.

How do I participate in the public hearings?

    NHTSA and EPA will jointly host three public hearings on the dates
and locations described in the DATES section above. At all hearings,
both agencies will accept comments on the rulemaking, and NHTSA will
also accept comments on the EIS.
    If you would like to present testimony at the public hearings, we
ask that you notify the EPA and NHTSA contact persons listed under FOR
FURTHER INFORMATION CONTACT at least ten days before the hearing. Once
EPA and NHTSA learn how many people have registered to speak at the
public hearing, we will allocate an appropriate amount of time to each
participant, allowing time for lunch and necessary breaks throughout
the day. For planning purposes, each speaker should anticipate speaking
for approximately ten minutes, although we may need to adjust the time
for each speaker if there is a large turnout. We suggest that you bring
copies of your statement or other material for the EPA and NHTSA
panels. It would also be helpful if you send us a copy of your
statement or other materials before the hearing. To accommodate as many
speakers as possible, we prefer that speakers not use technological
aids (e.g., audio-visuals, computer slideshows). However, if you plan
to do so, you must notify the contact persons in the FOR FURTHER
INFORMATION CONTACT section above. You also must make arrangements to
provide your presentation or any other aids to NHTSA and EPA in advance
of the hearing in order to facilitate set-up. In addition, we will
reserve a block of time for anyone else in the audience who wants to
give testimony. The agencies will assume that comments made at the
hearings are directed to the NPRM unless commenters specifically
reference NHTSA's EIS in oral or written testimony.
    The hearing will be held at a site accessible to individuals with
disabilities. Individuals who require accommodations such as sign
language interpreters should contact the persons listed under FOR
FURTHER INFORMATION CONTACT section above no later than ten days before
the date of the hearing.
    NHTSA and EPA will conduct the hearing informally, and technical
rules of evidence will not apply. We will arrange for a written
transcript of the hearing and keep the official record of the hearing
open for 30 days to allow you to submit supplementary information. You
may make arrangements for copies of the transcript directly with the
court reporter.

Table of Contents

I. Overview of Joint EPA/NHTSA Proposed 2017-2025 National PROGRAM
    A. Introduction
    1. Continuation of the National Program
    2. Additional Background on the National Program
    3. California's Greenhouse Gas Program
    4. Stakeholder Engagement
    B. Summary of the Proposed 2017-2025 National Program
    1. Joint Analytical Approach
    2. Level of the Standards
    3. Form of the Standards
    4. Program Flexibilities for Achieving Compliance
    5. Mid-Term Evaluation
    6. Coordinated Compliance
    7. Additional Program Elements
    C. Summary of Costs and Benefits for the Proposed National
Program
    1. Summary of Costs and Benefits for the Proposed NHTSA CAFE
Standards
    2. Summary of Costs and Benefits for the Proposed EPA GHG
Standards
    D. Background and Comparison of NHTSA and EPA Statutory
Authority
    1. NHTSA Statutory Authority
    2. EPA Statutory Authority
    3. Comparing the Agencies' Authority
II. Joint Technical Work Completed for This Proposal
    A. Introduction
    B. Developing the Future Fleet for Assessing Costs, Benefits,
and Effects
    1. Why Did the Agencies Establish a Baseline and Reference
Vehicle Fleet?
    2. How Did the Agencies Develop the Baseline Vehicle Fleet?
    3. How Did the Agencies Develop the Projected MY 2017-2025
Vehicle Reference Fleet?
    C. Development of Attribute-Based Curve Shapes
    1. Why are standards attribute-based and defined by a
mathematical function?
    2. What attribute are the agencies proposing to use, and why?
    3. What mathematical functions have the agencies previously
used, and why?
    4. How have the agencies changed the mathematical functions for
the proposed MYs 2017-2025 standards, and why?
    5. What are the agencies proposing for the MYs 2017-2025 curves?
    6. Once the agencies determined the appropriate slope for the
sloped part, how did the agencies determine the rest of the
mathematical function?
    7. Once the agencies determined the complete mathematical
function shape, how did the agencies adjust the curves to develop
the proposed standards and regulatory alternatives?
    D. Joint Vehicle Technology Assumptions
    1. What Technologies did the Agencies Consider?
    2. How did the Agencies Determine the Costs of Each of these
Technologies?
    3. How Did the Agencies Determine the Effectiveness of Each of
these Technologies?
    E. Joint Economic and Other Assumptions
    F. Air Conditioning Efficiency CO2 Credits and Fuel
Consumption Improvement Values, Off-cycle Reductions, and Full-size
Pickup Trucks
    1. Proposed Air Conditioning CO2 Credits and Fuel
Consumption Improvement Values
    2. Off-Cycle CO2 Credits
    3. Advanced Technology Incentives for Full Sized Pickup Trucks
    G. Safety Considerations in Establishing CAFE/GHG Standards
    1. Why do the agencies consider safety?
    2. How do the agencies consider safety?
    3. What is the current state of the research on statistical
analysis of historical crash data?
    4. How do the agencies think technological solutions might
affect the safety estimates indicated by the statistical analysis?
    5. How have the agencies estimated safety effects for the
proposed standards?
III. EPA Proposal For MYS 2017-2025 Greenhouse Gas Vehicle Standards
    A. Overview of EPA Rule
    1. Introduction
    2. Why is EPA Proposing this Rule?
    3. What is EPA Proposing?
    4. Basis for the GHG Standards under Section 202(a)
    5. Other Related EPA Motor Vehicle Regulations
    B. Proposed Model Year 2017-2025 GHG Standards for Light-duty
Vehicles, Light-duty Trucks, and Medium duty Passenger Vehicles
    1. What Fleet-wide Emissions Levels Correspond to the
CO2 Standards?
    2. What Are the Proposed CO2 Attribute-based
Standards?
    3. Mid-Term Evaluation
    4. Averaging, Banking, and Trading Provisions for CO2
Standards
    5. Small Volume Manufacturer Standards
    6. Nitrous Oxide, Methane, and CO2-equivalent
Approaches
    7. Small Entity Exemption
    8. Additional Leadtime Issues
    9. Police and Emergency Vehicle Exemption From CO2
Standards
    10. Test Procedures
    C. Additional Manufacturer Compliance Flexibilities
    1. Air Conditioning Related Credits
    2. Incentive for Electric Vehicles, Plug-in Hybrid Electric
Vehicles, and Fuel Cell Vehicles
    3. Incentives for ``Game-Changing'' Technologies Including use
of Hybridization and Other Advanced Technologies for Full-Size
Pickup Trucks
    4. Treatment of Plug-in Hybrid Electric Vehicles, Dual Fuel
Compressed Natural Gas Vehicles, and Ethanol Flexible Fuel Vehicles
for GHG Emissions Compliance
    5. Off-cycle Technology Credits
    D. Technical Assessment of the Proposed CO2 Standards
    1. How did EPA develop a reference and control fleet for
evaluating standards?
    2. What are the Effectiveness and Costs of CO2-
reducing technologies?

    3. How were technologies combined into ``packages'' and what is
the cost and effectiveness of packages?
    4. How does EPA Project how a manufacturer would decide between
options to improve CO2 performance to meet a fleet
average standard?
    5. Projected Compliance Costs and Technology Penetrations
    6. How does the technical assessment support the proposed
CO2 standards as compared to the alternatives has EPA
considered?
    7. To what extent do any of today's vehicles meet or surpass the
proposed MY 2017-2025 CO2 footprint-based targets with
current powertrain designs?
    E. Certification, Compliance, and Enforcement
    1. Compliance Program Overview
    2. Compliance With Fleet-Average CO2 Standards
    3. Vehicle Certification
    4. Useful Life Compliance
    5. Credit Program Implementation
    6. Enforcement
    7. Other Certification Issues
    8. Warranty, Defect Reporting, and Other Emission-related
Components Provisions
    9. Miscellaneous Technical Amendments and Corrections
    10. Base Tire Definition
    11. Treatment of Driver-Selectable Modes and Conditions
    F. How Would This Proposal Reduce GHG Emissions and Their
Associated Effects?
    1. Impact on GHG Emissions
    2. Climate Change Impacts From GHG Emissions
    3. Changes in Global Climate Indicators Associated With the
Proposal's GHG Emissions Reductions
    G. How would the proposal impact non-GHG emissions and their
associated effects?
    1. Inventory
    2. Health Effects of Non-GHG Pollutants
    3. Environmental Effects of Non-GHG Pollutants
    4. Air Quality Impacts of Non-GHG Pollutants
    5. Other Unquantified Health and Environmental Effects
    H. What are the estimated cost, economic, and other impacts of
the proposal?
    1. Conceptual Framework for Evaluating Consumer Impacts
    2. Costs Associated With the Vehicle Standards
    3. Cost per ton of Emissions Reduced
    4. Reduction in Fuel Consumption and its Impacts
    5. CO2 Emission Reduction Benefits
    6. Non-Greenhouse Gas Health and Environmental Impacts
    7. Energy Security Impacts
    8. Additional Impacts
    9. Summary of Costs and Benefits
    10. U.S. Vehicle Sales Impacts and Payback Period
    11. Employment Impacts
    I. Statutory and Executive Order Reviews
    J. Statutory Provisions and Legal Authority
IV. NHTSA Proposed Rule for Passenger car and Light Truck Cafe
Standards for Model Years 2017-2025
    A. Executive Overview of NHTSA Proposed Rule
    1. Introduction
    2. Why does NHTSA set CAFE standards for passenger cars and
light trucks?
    3. Why is NHTSA proposing CAFE standards for MYs 2017-2025 now?
    B. Background
    1. Chronology of events since the MY 2012-2016 final rule was
issued
    2. How has NHTSA developed the proposed CAFE standards since the
President's announcement?
    C. Development and Feasibility of the Proposed Standards
    1. How was the baseline vehicle fleet developed?
    2. How were the technology inputs developed?
    3. How did NHTSA develop its economic assumptions?
    4. How does NHTSA use the assumptions in its modeling analysis?
    D. Statutory Requirements
    1. EPCA, as Amended by EISA
    2. Administrative Procedure Act
    3. National Environmental Policy Act
    E. What are the proposed CAFE standards?
    1. Form of the Standards
    2. Passenger Car Standards for MYs 2017-2025
    3. Minimum Domestic Passenger Car Standards
    4. Light Truck Standards
    F. How do the proposed standards fulfill NHTSA's statutory
obligations?
    1. What are NHTSA's statutory obligations?
    2. How did the agency balance the factors for this NPRM?
    G. Impacts of the Proposed CAFE Standards
    1. How will these standards improve fuel economy and reduce GHG
emissions for MY 2017-2025 vehicles?
    2. How will these standards improve fleet-wide fuel economy and
reduce GHG emissions beyond MY 2025?
    3. How will these proposed standards impact non-GHG emissions
and their associated effects?
    4. What are the estimated costs and benefits of these proposed
standards?
    5. How would these proposed standards impact vehicle sales?
    6. Social Benefits, Private Benefits, and Potential Unquantified
Consumer Welfare Impacts of the Proposed Standards
    7. What other impacts (quantitative and unquantifiable) will
these proposed standards have?
    H. Vehicle Classification
    I. Compliance and Enforcement
    1. Overview
    2. How does NHTSA determine compliance?
    3. What compliance flexibilities are available under the CAFE
program and how do manufacturers use them?
    4. What new incentives are being added to the CAFE program for
MYs 2017-2025?
    5. Other CAFE enforcement issues
    J. Regulatory notices and analyses
    1. Executive Order 12866, Executive Order 13563, and DOT
Regulatory Policies and Procedures
    2. National Environmental Policy Act
    3. Regulatory Flexibility Act
    4. Executive Order 13132 (Federalism)
    5. Executive Order 12988 (Civil Justice Reform)
    6. Unfunded Mandates Reform Act
    7. Regulation Identifier Number
    8. Executive Order 13045
    9. National Technology Transfer and Advancement Act
    10. Executive Order 13211
    11. Department of Energy Review
    12. Plain Language
    13. Privacy Act

I. Overview of Joint EPA/NHTSA Proposed 2017-2025 National Program

Executive Summary

    EPA and NHTSA are each announcing proposed rules that call for
strong and coordinated Federal greenhouse gas and fuel economy
standards for passenger cars, light-duty trucks, and medium-duty
passenger vehicles (hereafter light-duty vehicles or LDVs). Together,
these vehicle categories, which include passenger cars, sport utility
vehicles, crossover utility vehicles, minivans, and pickup trucks,
among others, are presently responsible for approximately 60 percent of
all U.S. transportation-related greenhouse gas (GHG) emissions and fuel
consumption. This proposal would extend the National Program of Federal
light-duty vehicle GHG emissions and corporate average fuel economy
(CAFE) standards to model years (MYs) 2017-2025. This proposed
coordinated program would achieve important reductions in GHG emissions
and fuel consumption from the light-duty vehicle part of the
transportation sector, based on technologies that either are
commercially available or that the agencies project will be
commercially available in the rulemaking timeframe and that can be
incorporated at a reasonable cost. Higher initial vehicle costs will be
more than offset by significant fuel savings for consumers over the
lives of the vehicles covered by this rulemaking.
    This proposal builds on the success of the first phase of the
National Program to regulate fuel economy and GHG emissions from U.S.
light-duty vehicles, which established strong and coordinated standards
for model years (MY) 2012-2016. As with the first phase of the National
Program, collaboration with California Air Resources Board (CARB) and
with automobile manufacturers and other stakeholders has been a key
element in developing the agencies' proposed rules. Continuing the
National Program would ensure that all manufacturers can build a single
fleet of U.S. vehicles that would satisfy all requirements under both
programs as well as under California's

program, helping to reduce costs and regulatory complexity while
providing significant energy security and environmental benefits.
    Combined with the standards already in effect for MYs 2012-2016, as
well as the MY 2011 CAFE standards, the proposed standards would result
in MY 2025 light-duty vehicles with nearly double the fuel economy, and
approximately one-half of the GHG emissions compared to MY 2010
vehicles--representing the most significant federal action ever taken
to reduce GHG emissions and improve fuel economy in the U.S. EPA is
proposing standards that are projected to require, on an average
industry fleet wide basis, 163 grams/mile of carbon dioxide
(CO2) in model year 2025, which is equivalent to 54.5 mpg if
this level were achieved solely through improvements in fuel
efficiency.\6\ Consistent with its statutory authority, NHTSA is
proposing passenger car and light truck standards for MYs 2017-2025 in
two phases. The first phase, from MYs 2017-2021, includes proposed
standards that are projected to require, on an average industry fleet
wide basis, 40.9 mpg in MY 2021. The second phase of the CAFE program,
from MYs 2022-2025, represents conditional \7\ proposed standards that
are projected to require, on an average industry fleet wide basis, 49.6
mpg in model year 2025. Both the EPA and NHTSA standards are projected
to be achieved through a range of technologies, including improvements
in air conditioning efficiency, which reduces both GHG emissions and
fuel consumption; the EPA standards also are projected to be achieved
with the use of air conditioning refrigerants with a lower global
warming potential (GWP), which reduce GHGs (i.e., hydrofluorocarbons)
but do not improve fuel economy. The agencies are proposing separate
standards for passenger cars and trucks, based on a vehicle's size or
``footprint.'' For the MYs 2022-2025 standards, EPA and NHTSA are
proposing a comprehensive mid-term evaluation and agency decision-
making process, given both the long time frame and NHTSA's obligation
to conduct a separate rulemaking in order to establish final standards
for vehicles for those model years.
---------------------------------------------------------------------------

    \6\ Real-world CO2 is typically 25 percent higher and
real-world fuel economy is typically 20 percent lower than the
CO2 and CAFE compliance values discussed here. The
reference to CO2 here refers to CO2 equivalent
reductions, as this included some degree of reductions in greenhouse
gases other than CO2, as one part of the air conditioning
related reductions.
    \7\ By ``conditional,'' NHTSA means to say that the proposed
standards for MYs 2022-2025 represent the agency's current best
estimate of what levels of stringency would be maximum feasible in
those model years, but in order for the standards for those model
years to be legally binding a subsequent rulemaking must be
undertaken by the agency at a later time. See Section IV for more
information.
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    From a societal standpoint, this second phase of the National
Program is projected to save approximately 4 billion barrels of oil and
2 billion metric tons of GHG emissions over the lifetimes of those
vehicles sold in MY 2017-2025. The agencies estimate that fuel savings
will far outweigh higher vehicle costs, and that the net benefits to
society of the MYs 2017-2025 National Program will be in the range of
$311 billion to $421 billion (7 and 3 percent discount rates,
respectively) over the lifetimes of those vehicles sold in MY 2017-
2025.
    These proposed standards would have significant savings for
consumers at the pump. Higher costs for new vehicle technology will
add, on average, about $2000 for consumers who buy a new vehicle in MY
2025. Those consumers who drive their MY 2025 vehicle for its entire
lifetime will save, on average, $5200 to $6600 (7 and 3 percent
discount rates, respectively) in fuel savings, for a net lifetime
savings of $3000 to $4400. For those consumers who purchase their new
MY 2025 vehicle with cash, the discounted fuel savings will offset the
higher vehicle cost in less than 4 years, and fuel savings will
continue for as long as the consumer owns the vehicle. Those consumers
that buy a new vehicle with a typical 5-year loan will benefit from an
average monthly cash flow savings of about $12 during the loan period,
or about $140 per year, on average. So the consumer would benefit
beginning at the time of purchase, since the increased monthly fuel
savings would more than offset the higher monthly payment due to the
higher incremental vehicle cost.
    The agencies have designed the proposed standards to preserve
consumer choice--that is, the proposed standards should not affect
consumers' opportunity to purchase the size of vehicle with the
performance, utility and safety features that meets their needs. The
standards are based on a vehicle's size, or footprint--that is,
consistent with their general performance and utility needs, larger
vehicles have numerically less stringent fuel economy/GHG emissions
targets and smaller vehicles have more stringent fuel economy/GHG
emissions targets, although since the standards are fleet average
standards, no specific vehicle must meet a target. Thus, consumers will
be able to continue to choose from the same mix of vehicles that are
currently in the marketplace.
    The agencies' believe there is a wide range of technologies
available for manufacturers to consider in reducing GHG emissions and
improving fuel economy. The proposals allow for long-term planning by
manufacturers and suppliers for the continued development and
deployment across their fleets of fuel saving and emissions-reducing
technologies. The agencies believe that advances in gasoline engines
and transmissions will continue for the foreseeable future, and that
there will be continual improvement in other technologies, including
vehicle weight reduction, lower tire rolling resistance, improvements
in vehicle aerodynamics, diesel engines, and more efficient vehicle
accessories. The agencies also expect to see increased electrification
of the fleet through the expanded production of stop/start, hybrid,
plug-in hybrid and electric vehicles. Finally, the agencies expect that
vehicle air conditioners will continue to improve by becoming more
efficient and by increasing the use of alternative refrigerants. Many
of these technologies are already available today, and manufacturers
will be able to meet the standards through significant efficiency
improvements in these technologies, as well as a significant
penetration of these and other technologies across the fleet. Auto
manufacturers may also introduce new technologies that we have not
considered for this rulemaking analysis, which could make possible
alternative, more cost-effective paths to compliance.

A. Introduction

1. Continuation of the National Program
    EPA and NHTSA are each announcing proposed rules that call for
strong and coordinated Federal greenhouse gas and fuel economy
standards for passenger cars, light-duty trucks, and medium-duty
passenger vehicles (hereafter light-duty vehicles or LDVs). Together,
these vehicle categories, which include passenger cars, sport utility
vehicles, crossover utility vehicles, minivans, and pickup trucks, are
presently responsible for approximately 60 percent of all U.S.
transportation-related greenhouse gas emissions and fuel consumption.
The proposal would extend the National Program of Federal light-duty
vehicle greenhouse gas (GHG) emissions and corporate average fuel
economy (CAFE) standards to model years (MYs) 2017-2025. The
coordinated program being proposed would achieve important reductions
of greenhouse gas (GHG) emissions and fuel consumption from the light-
duty vehicle part of the

transportation sector, based on technologies that either are
commercially available or that the agencies project will be
commercially available in the rulemaking timeframe and that can be
incorporated at a reasonable cost.
    In working together to develop the next round of standards for MYs
2017-2025, NHTSA and EPA are building on the success of the first phase
of the National Program to regulate fuel economy and GHG emissions from
U.S. light-duty vehicles, which established the strong and coordinated
standards for model years (MY) 2012-2016. As for the MYs 2012-2016
rulemaking, collaboration with California Air Resources Board (CARB)
and with industry and other stakeholders has been a key element in
developing the agencies' proposed rules. Continuing the National
Program would ensure that all manufacturers can build a single fleet of
U.S. vehicles that would satisfy all requirements under both programs
as well as under California's program, helping to reduce costs and
regulatory complexity while providing significant energy security and
environmental benefits.
    The agencies have been developing the basis for these joint
proposed standards almost since the conclusion of the rulemaking
establishing the first phase of the National Program. After much
research and deliberation by the agencies, along with CARB and other
stakeholders, President Obama announced plans for these proposed rules
on July 29, 2011 and NHTSA and EPA issued a Supplemental Notice of
Intent (NOI) outlining the agencies' plans for proposing the MY 2017-
2025 standards and program.\8\ This July NOI built upon the extensive
analysis conducted by the agencies over the past year, including an
initial technical assessment report and NOI issued in September 2010,
and a supplemental NOI issued in December 2010 (discussed further
below). The State of California and thirteen auto manufacturers
representing over 90 percent of U.S. vehicle sales provided letters of
support for the program concurrent with the Supplemental NOI.\9\ The
United Auto Workers (UAW) also supported the announcement,\10\ as well
as many consumer and environmental groups. As envisioned in the
Presidential announcement and Supplemental NOI, this proposal sets
forth proposed MYs 2017-2025 standards as well as detailed supporting
analysis for those standards and regulatory alternatives for public
review and comment. The program that the agencies are proposing will
spur the development of a new generation of clean cars and trucks
through innovative technologies and manufacturing that will, in turn,
spur economic growth and create high-quality domestic jobs, enhance our
energy security, and improve our environment. Consistent with Executive
Order 13563, this proposal was developed with early consultation with
stakeholders, employs flexible regulatory approaches to reduce burdens,
maintains freedom of choice for the public, and helps to harmonize
federal and state regulations.
---------------------------------------------------------------------------

    \8\ 76 FR 48758 (August 9, 2011).
    \9\ Commitment letters are available at http://www.epa.gov/otaq/climate/regulations.htm and at http://www.nhtsa.gov/fuel-economy
(last accessed Aug. 24, 2011).
    \10\ The UAW's support was expressed in a statement on July 29,
2011, which can be found at http://www.uaw.org/articles/uaw-supports-administration-proposal-light-duty-vehicle-cafe-and-greenhouse-gas-emissions-r (last accessed September 19, 2011).
---------------------------------------------------------------------------

    As described below, NHTSA and EPA are proposing a continuation of
the National Program that the agencies believe represents the
appropriate levels of fuel economy and GHG emissions standards for
model years 2017-2025, given the technologies that the agencies
anticipate will be available for use on these vehicles and the
agencies' understanding of the cost and manufacturers' ability to apply
these technologies during that time frame, and consideration of other
relevant factors. Under this joint rulemaking, EPA is proposing GHG
emissions standards under the Clean Air Act (CAA), and NHTSA is
proposing CAFE standards under EPCA, as amended by the Energy
Independence and Security Act of 2007 (EISA). This joint rulemaking
proposal reflects a carefully coordinated and harmonized approach to
implementing these two statutes, in accordance with all substantive and
procedural requirements imposed by law.\11\
---------------------------------------------------------------------------

    \11\ For NHTSA, this includes the requirements of the National
Environmental Policy Act (NEPA).
---------------------------------------------------------------------------

    The proposed approach allows for long-term planning by
manufacturers and suppliers for the continued development and
deployment across their fleets of fuel saving and emissions-reducing
technologies. NHTSA's and EPA's technology assessment indicates there
is a wide range of technologies available for manufacturers to consider
in reducing GHG emissions and improving fuel economy. The agencies
believe that advances in gasoline engines and transmissions will
continue for the foreseeable future, which is a view that is supported
in the literature and amongst the vehicle manufacturers and
suppliers.\12\ The agencies also believe that there will be continual
improvement in other technologies including reductions in vehicle
weight, lower tire rolling resistance, improvements in vehicle
aerodynamics, diesel engines, and more efficient vehicle accessories.
The agencies also expect to see increased electrification of the fleet
through the expanded production of stop/start, hybrid, plug-in hybrid
and electric vehicles.\13\ Finally, the agencies expect that vehicle
air conditioners will continue to improve by becoming more efficient
and by increasing the use of alternative refrigerants. Many of these
technologies are already available today, and EPA's and NHTSA's
assessments are that manufacturers will be able to meet the standards
through significant efficiency improvements in these technologies as
well as a significant penetration of these and other technologies
across the fleet. We project that these potential compliance pathways
for manufacturers will result in significant benefits to consumers and
to society, as quantified below. Manufacturers may also introduce new
technologies that we have not considered for this rulemaking analysis,
which could make possible alternative, more cost-effective paths to
compliance.
---------------------------------------------------------------------------

    \12\ There are a number of competing gasoline engine
technologies, with one in particular that the agencies project will
be common beyond 2016. This is the gasoline direct injection and
downsized engines equipped with turbochargers and cooled exhaust gas
recirculation, which has performance characteristics similar to that
of larger, less efficient engines. Paired with these engines, the
agencies project that advanced transmissions (such as automatic and
dual clutch transmissions with eight forward speeds) and higher
efficiency gearboxes will provide significant improvements.
Transmissions with eight or more speeds can be found in the fleet
today in very limited production, and while they are expected to
penetrate further by 2016, we anticipate that by 2025 these will be
the dominant transmissions in new vehicle sales.
    \13\ For example, while today less than three percent of annual
vehicle sales are strong hybrids, plug-in hybrids and all electric
vehicles, by 2025 we estimate these technologies could represent
nearly 15 percent of new sales.
---------------------------------------------------------------------------

    As discussed further below, as with the standards for MYs 2012-
2016, the agencies believe that the proposed standards would continue
to preserve consumer choice, that is, the proposed standards should not
affect consumers' opportunity to purchase the size of vehicle that
meets their needs. NHTSA and EPA are proposing to continue standards
based on vehicle footprint, where smaller vehicles have relatively more
stringent standards, and larger vehicles have less stringent standards,
so there should not be a significant effect on the relative
availability of different size vehicles in the fleet.

Additionally, as with the standards for MYs 2012-2016, the agencies
believe that the proposed standards should not have a negative effect
on vehicle safety, as it relates to vehicle footprint and mass as
described in Section II.C and II.G below, respectively.
    We note that as part of this rulemaking, given the long time frame
at issue in setting standards for MY 2022-2025 light-duty vehicles, the
agencies are discussing a comprehensive mid-term evaluation and agency
decision-making process. NHTSA has a statutory obligation to conduct a
separate de novo rulemaking in order to establish final standards for
vehicles for the 2022-2025 model years and would conduct the mid-term
evaluation as part of that rulemaking, and EPA is proposing regulations
that address the mid-term evaluation. The mid-term evaluation will
assess the appropriateness of the MY 2022-2025 standards considered in
this rulemaking, based on an updated assessment of all the factors
considered in setting the standards and the impacts of those factors on
the manufacturers' ability to comply. NHTSA and EPA fully expect to
conduct this mid-term evaluation in coordination with the California
Air Resources Board, given our interest in a maintaining a National
Program to address GHGs and fuel economy. Further discussion of the
mid-term evaluation is found later in this section, as well as in
Sections III and IV.
    Based on the agencies' analysis, the National Program standards
being proposed are currently projected to reduce GHGs by approximately
2 billion metric tons and save 4 billion barrels of oil over the
lifetime of MYs 2017-2025 vehicles relative to the MY 2016 standard
curves \14\ already in place. The average cost for a MY 2025 vehicle to
meet the standards is estimated to be about $2,000 compared to a
vehicle that would meet the level of the MY 2016 standards in MY 2025.
However, fuel savings for consumers are expected to more than offset
the higher vehicle costs. The typical driver would save a total of
$5,200 to $6,600 (7 percent and 3 percent discount rate, respectively)
in fuel costs over the lifetime of a MY 2025 vehicle and, even after
accounting for the higher vehicle cost, consumers would save a net
$3,000 to $4,400 (7 percent and 3 percent discount rate, respectively)
over the vehicle's lifetime. Further, consumers who buy new vehicles
with cash would save enough in lower fuel costs after less than 4 years
(at either 7 percent or 3 percent discount rate) of owning a MY 2025
vehicle to offset the higher upfront vehicle costs, while consumers who
buy with a 5-year loan would save more each month on fuel than the
increased amount they would spend on the higher monthly loan payment,
beginning in the first month of ownership.
---------------------------------------------------------------------------

    \14\ The calculation of GHG reductions and oil savings is
relative to a future in which the MY 2016 standards remain in place
for MYs 2017-2025 and manufacturers comply on average at those
levels.
---------------------------------------------------------------------------

    Continuing the National Program has both energy security and
climate change benefits. Climate change is widely viewed as a
significant long-term threat to the global environment. EPA has found
that elevated atmospheric concentrations of six greenhouse gases--
carbon dioxide, methane, nitrous oxide, hydrofluorocarbons,
perflurocarbons, and sulfur hexafluoride--taken in combination endanger
both the public health and the public welfare of current and future
generations. EPA further found that the combined emissions of these
greenhouse gases from new motor vehicles and new motor vehicle engines
contribute to the greenhouse gas air pollution that endangers public
health and welfare. 74 FR 66496 (Dec. 15, 2009). As summarized in EPA's
Endangerment and Cause or Contribute Findings under Section 202(a) of
the Clear Air Act, anthropogenic emissions of GHGs are very likely (90
to 99 percent probability) the cause of most of the observed global
warming over the last 50 years.\15\ Mobile sources emitted 31 percent
of all U.S. GHGs in 2007 (transportation sources, which do not include
certain off-highway sources, account for 28 percent) and have been the
fastest-growing source of U.S. GHGs since 1990.\16\ Mobile sources
addressed in the endangerment and contribution findings under CAA
section 202(a)--light-duty vehicles, heavy-duty trucks, buses, and
motorcycles--accounted for 23 percent of all U.S. GHG in 2007.\17\
Light-duty vehicles emit CO2, methane, nitrous oxide, and
hydrofluorocarbons and are responsible for nearly 60 percent of all
mobile source GHGs and over 70 percent of Section 202(a) mobile source
GHGs. For light-duty vehicles in 2007, CO2 emissions
represent about 94 percent of all greenhouse emissions (including
HFCs), and the CO2 emissions measured over the EPA tests
used for fuel economy compliance represent about 90 percent of total
light-duty vehicle GHG emissions.18 19
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    \15\ 74 FR 66,496,-66,518, December 18, 2009; ``Technical
Support Document for Endangerment and Cause or Contribute Findings
for Greenhouse Gases Under Section 202(a) of the Clean Air Act''
Docket: EPA-HQ-OAR-2009-0472-11292, http://epa.gov/climatechange/endangerment.html.
    \16\ U.S. Environmental Protection Agency. 2009. Inventory of
U.S. Greenhouse Gas Emissions and Sinks: 1990-2007. EPA 430-R-09-
004. Available at http://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf.
    \17\ U.S. EPA. 2009 Technical Support Document for Endangerment
and Cause or Contribute Findings for Greenhouse Gases under Section
202(a) of the Clean Air Act. Washington, DC. pp. 180-194. Available
at http://epa.gov/climatechange/endangerment/downloads/Endangerment%20TSD.pdf.
    \18\ U.S. Environmental Protection Agency. 2009. Inventory of
U.S. Greenhouse Gas Emissions and Sinks: 1990-2007. EPA 430-R-09-
004. Available at http://epa.gov/climatechange/emissions/downloads09/GHG2007entire_report-508.pdf.
    \19\ U.S. Environmental Protection Agency. RIA, Chapter 2.
---------------------------------------------------------------------------

    Improving our energy and national security by reducing our
dependence on foreign oil has been a national objective since the first
oil price shocks in the 1970s. Net petroleum imports accounted for
approximately 51 percent of U.S. petroleum consumption in 2009.\20\
World crude oil production is highly concentrated, exacerbating the
risks of supply disruptions and price shocks as the recent unrest in
North Africa and the Persian Gulf highlights. Recent tight global oil
markets led to prices over $100 per barrel, with gasoline reaching as
high as $4 per gallon in many parts of the U.S., causing financial
hardship for many families and businesses. The export of U.S. assets
for oil imports continues to be an important component of the
historically unprecedented U.S. trade deficits. Transportation
accounted for about 71 percent of U.S. petroleum consumption in
2009.\21\ Light-duty vehicles account for about 60 percent of
transportation oil use, which means that they alone account for about
40 percent of all U.S. oil consumption.
---------------------------------------------------------------------------

    \20\ Energy Information Administration, ``How dependent are we
on foreign oil?'' Available at http://www.eia.gov/energy_in_brief/foreign_oil_dependence.cfm (last accessed August 28, 2011).
    \21\ Energy Information Administration, Annual Energy Outlook
2011, ``Oil/Liquids.'' Available at http://www.eia.gov/forecasts/aeo/MT_liquidfuels.cfm (last accessed August 28, 2011).
---------------------------------------------------------------------------

    The automotive market is becoming increasingly global. The U.S.
auto companies and U.S. suppliers produce and sell automobiles and
automotive components around the world, and foreign auto companies
produce and sell in the U.S. As a result, the industry has become
increasingly competitive. Staying at the cutting edge of automotive
technology while maintaining profitability and consumer acceptance has
become increasingly important for the sustainability of auto companies.
The proposed standards cover model years 2017-2025 for passenger cars
and light-duty trucks sold in the United States. Many other countries
and regions around the world have in place fuel economy or
CO2

emission standards for light-duty vehicles. In addition, the European
Union is currently discussing more stringent CO2 standards
for 2020, and the Japanese government has recently issued a draft
proposal for new fuel efficiency standards for 2020. The overall trend
is clear--globally many of the major economic countries are increasing
the stringency of their fuel economy or CO2 emission
standards for light-duty vehicles. When considering this common trend,
the proposed CAFE and CO2 standards for MY 2017-2025 may
offer some advantages for U.S.-based automotive companies and
suppliers. In order to comply with the proposed standards, U.S. firms
will need to invest significant research and development dollars and
capital in order to develop and produce the technologies needed to
reduce CO2 emissions and improve fuel economy. Companies
have limited budgets for research and development programs. As
automakers seek greater commonality across the vehicles they produce
for the domestic and foreign markets, improving fuel economy and
reducing GHGs in U.S. vehicles should have spillovers to foreign
production, and vice versa, thus yielding the ability to amortize
investment in research and production over a broader product and
geographic spectrum. To the extent that the technologies needed to meet
the standards contained in this proposal can also be used to comply
with the fuel economy and CO2 standards in other countries,
this can help U.S. firms in the global automotive market, as the U.S.
firms will be able to focus their available research and development
funds on a common set of technologies that can be used both
domestically as well as internationally.
2. Additional Background on the National Program
    Following the successful adoption of a National Program of federal
standards for greenhouse gas emissions (GHG) and fuel economy standards
for model years (MY) 2012-2016 light duty vehicles, President Obama
issued a Memorandum on May 21, 2010 requesting that the National
Highway Traffic Safety Administration (NHTSA), on behalf of the
Department of Transportation, and the Environmental Protection Agency
(EPA) work together to develop a national program for model years 2017-
2025. Specifically, he requested that the agencies develop ``* * * a
coordinated national program under the CAA [Clean Air Act] and the EISA
[Energy Independence and Security Act of 2007] to improve fuel
efficiency and to reduce greenhouse gas emissions of passenger cars and
light-duty trucks of model years 2017-2025.'' \22\ The President
recognized that our country could take a leadership role in addressing
the global challenges of improving energy security and reducing
greenhouse gas pollution, stating that ``America has the opportunity to
lead the world in the development of a new generation of clean cars and
trucks through innovative technologies and manufacturing that will spur
economic growth and create high-quality domestic jobs, enhance our
energy security, and improve our environment.''
---------------------------------------------------------------------------

    \22\ The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-fuel-efficiency-standards. For the reader's reference, the
President also requested the Administrators of EPA and NHTSA to
issue joint rules under the CAA and EISA to establish fuel
efficiency and greenhouse gas emissions standards for commercial
medium-and heavy-duty on-highway vehicles and work trucks beginning
with the 2014 model year. The agencies recently promulgated final
GHG and fuel efficiency standards for heavy duty vehicles and
engines for MYs 2014-2018. 76 FR 57106 (September 15, 2011).
---------------------------------------------------------------------------

    The Presidential Memorandum stated ``The program should also seek
to achieve substantial annual progress in reducing transportation
sector greenhouse gas emissions and fossil fuel consumption, consistent
with my Administration's overall energy and climate security goals,
through the increased domestic production and use of existing,
advanced, and emerging technologies, and should strengthen the industry
and enhance job creation in the United States.'' Among other things,
the agencies were tasked with researching and then developing standards
for MYs 2017 through 2025 that would be appropriate and consistent with
EPA's and NHTSA's respective statutory authorities, in order to
continue to guide the automotive sector along the road to reducing its
fuel consumption and GHG emissions, thereby ensuring corresponding
energy security and environmental benefits. During the public comment
period for the MY 2012-2016 proposed rulemaking, many stakeholders,
including automakers, encouraged NHTSA and EPA to begin working toward
standards for MY 2017 and beyond in order to maintain a single
nationwide program. Several major automobile manufacturers and CARB
sent letters to EPA and NHTSA in support of a MYs 2017 to 2025
rulemaking initiative as outlined in the President's May 21, 2010
announcement.\23\
---------------------------------------------------------------------------

    \23\ These letters of support in response to the May 21, 2010
Presidential Memorandum are available at http://www.epa.gov/otaq/climate/regulations.htm#prez and http://www.nhtsa.gov/
Laws+&+Regulations/CAFE+-+Fuel+Economy/
Stakeholder+Commitment+Letters (last accessed August 28, 2011).
---------------------------------------------------------------------------

    The President's memo requested that the agencies, ``work with the
State of California to develop by September 1, 2010, a technical
assessment to inform the rulemaking process * * *.'' As a first step in
responding to the President's request, the agencies collaborated with
CARB to prepare an Interim Joint Technical Assessment Report (TAR) to
inform the rulemaking process and provide an initial technical
assessment for that work. NHTSA, EPA, and CARB issued the joint
Technical Assessment Report consistent with Section 2(a) of the
Presidential Memorandum.\24\ In developing the technical assessment,
EPA, NHTSA, and CARB held numerous meetings with a wide variety of
stakeholders including the automobile original equipment manufacturers
(OEMs), automotive suppliers, non-governmental organizations, states
and local governments, infrastructure providers, and labor unions. The
Interim Joint TAR provided an overview of key stakeholder input,
addressed other topics noted in the Presidential memorandum, and EPA's
and NHTSA's initial assessment of benefits and costs of a range of
stringencies of future standards.
---------------------------------------------------------------------------

    \24\ This Interim Joint Technical Assessment Report (TAR) is
available at http://www.epa.gov/otaq/climate/regulations/ldv-ghg-tar.pdf and http://www.nhtsa.gov/staticfiles/rulemaking/pdf/cafe/
2017+CAFE-GHG--Interim--TAR2.pdf.Section 2(a) of the Presidential
Memorandum requested that EPA and NHTSA ``Work with the State of
California to develop by September 1, 2010, a technical assessment
to inform the rulemaking process, reflecting input from an array of
stakeholders on relevant factors, including viable technologies,
costs, benefits, lead time to develop and deploy new and emerging
technologies, incentives and other flexibilities to encourage
development and deployment of new and emerging technologies, impacts
on jobs and the automotive manufacturing base in the United States,
and infrastructure for advanced vehicle technologies.''
---------------------------------------------------------------------------

    In accordance with the Presidential Memorandum, NHTSA and EPA also
issued a joint Notice of Intent to Issue a Proposed Rulemaking
(NOI).\25\ The September 2010 NOI highlighted the results of the
analyses contained in the Interim Joint TAR, provided an overview of
key program design elements, and announced plans for initiating the
joint rulemaking to improve the fuel efficiency and reduce the GHG
emissions of passenger cars and light-duty trucks built in MYs 2017-
2025. The agencies requested comments on the September NOI and
accompanying Interim Joint TAR.
---------------------------------------------------------------------------

    \25\ 75 FR 62739, October 13, 2010.
---------------------------------------------------------------------------

    The Interim Joint TAR contained an initial fleet-wide analysis of
improvements in overall average GHG emissions and equivalent fuel
economy

levels. For purposes of an initial assessment, this range was intended
to represent a reasonably broad range of stringency increases for
potential future GHG emissions standards, and was also consistent with
the increases suggested by CARB in its letter of commitment in response
to the President's memorandum.26 27 The TAR evaluated a
range of potential stringency scenarios through model year 2025,
representing a 3, 4, 5, and 6 percent per year estimated decrease in
GHG levels from a model year 2016 fleet-wide average of 250 gram/mile
(g/mi). Thus, the model year 2025 scenarios analyzed in the Interim
Joint TAR ranged from 190 g/mi on an estimated fleet-wide average
(calculated to be equivalent to 47 miles per gallon, mpg, if all
improvements were made with fuel economy-improving technologies) under
the 3 percent per year reduction scenario, to 143 g/mi on an estimated
fleet-wide average (calculated to be equivalent to 62 mpg, if all
improvements were made with fuel economy-improving technologies) under
the 6 percent per year scenario.\28\ For each of these scenarios, the
TAR also evaluated four pre-defined ``technological pathways'' by which
these levels could be attained. These pathways were meant to represent
ways that the industry as a whole could increase fuel economy and
reduce greenhouse gas emissions, and did not represent ways that
individual manufacturers would be required to or necessarily would
employ in responding to future standards. Each defined technology
pathway emphasized a different mix of advanced technologies, by
assuming various degrees of penetration of advanced gasoline
technologies, mass reduction, hybrid electric vehicles (HEVs), plug-in
hybrids (PHEVs), and electric vehicles (EVs).
---------------------------------------------------------------------------

    \26\ 75 FR at 62744-45.
    \27\ Statement of the California Air Resources Board Regarding
Future Passenger Vehicle Greenhouse Gas Emissions Standards,
California Air Resources Board, May 21, 2010. Available at: http://www.epa.gov/otaq/climate/regulations.htm.
    \28\ These levels correspond to on-road values of 37 to 50 mpg,
respectively, recognizing that on-road fuel economy tends to be
about 20 percent worse than calculated mpg values based on the CAFE
test cycle. We note, however, that because these mpg values are
translated from CO2e values that include reductions in
hydrofluorocarbon (HFC) leakage due to use of advanced refrigerants
and leakage improvements, therefore these numbers are not as
representative of either CAFE test cycle or real-world mpg.
---------------------------------------------------------------------------

    Manufacturers and others commented extensively on the NOI and
Interim Joint TAR on a variety of topics, including the stringency of
the standards, program design elements, the effect of potential
standards on vehicle safety, and the TAR's discussion of technology
costs, effectiveness, and feasibility. In response, the agencies and
CARB spent the next several months continuing to gather information
from the industry and others in response to the agencies' initial
analytical efforts. To aid the public's understanding of some of the
key issues facing the agencies in developing the proposed rule, EPA and
NHTSA also issued a follow-on Supplemental NOI in November 2010.\29\
The Supplemental NOI highlighted many of the key comments the agencies
received in response to the September NOI and Interim Joint TAR, and
summarized some of the key themes from the comments and the additional
stakeholder meetings. We note, as highlighted in the November
Supplemental NOI, that there continued to be widespread stakeholder
support for continuing the National Program for improved fuel economy
and greenhouse gas standards for model years 2017-2025. The November
Supplemental NOI also provided an overview of many of the key technical
analyses the agencies planned in support the proposed rule.
---------------------------------------------------------------------------

    \29\ 75 FR 76337, December 8, 2010.
---------------------------------------------------------------------------

    After issuing the November 2010 Supplemental NOI, EPA, NHTSA and
CARB continued studies on technology cost and effectiveness and more
in-depth and comprehensive analysis of the issues. In addition to this
work, the agencies continued meeting with stakeholders, including with
manufacturers, manufacturer organizations, automotive suppliers, a
labor union, environmental groups, consumer interest groups, and
investment organizations. As discussed above, on July 29, 2011
President Obama announced plans for these proposed rules and NHTSA and
EPA issued a Supplemental Notice of Intent (NOI) outlining the
agencies' plans for proposing the MY 2017-2025 standards and program.
3. California's Greenhouse Gas Program
    In 2004, the California Air Resources Board (CARB) approved
standards for new light-duty vehicles, regulating the emission of
CO2 and other GHGs. Thirteen states and the District of
Columbia, comprising approximately 40 percent of the light-duty vehicle
market, adopted California's standards. On June 30, 2009, EPA granted
California's request for a waiver of preemption under the CAA with
respect to these standards.\30\ The granting of the waiver permits
California and the other states to proceed with implementing the
California emission standards for MYs 2009-2016. After EPA and NHTSA
issued their MYs 2012-2016 standards, CARB revised its program such
that compliance with the EPA greenhouse gas standards will be deemed to
be compliance with California's GHG standards.\31\ This facilitates the
National Program by allowing manufacturers to meet all of the standards
with a single national fleet.
---------------------------------------------------------------------------

    \30\ 74 FR 32744 (July 8, 2009). See also Chamber of Commerce v.
EPA, 642 F.3d 192 (DC Cir. 2011) (dismissing petitions for review
challenging EPA's grant of the waiver).
    \31\ See ``California Exhaust Emission Standards and Test
Procedures for 2001 and Subsequent Model Passenger Cars, Light-Duty
Trucks, and Medium-Duty Vehicles as approved by OAL,'' March 29,
2010. Available at http://www.arb.ca.gov/regact/2010/ghgpv10/oaltp.pdf (last accessed August 28, 2011).
---------------------------------------------------------------------------

    As requested by the President and in the interest of maximizing
regulatory harmonization, NHTSA and EPA have worked closely with CARB
throughout the development of this proposal to develop a common
technical basis. CARB is releasing a proposal for MY 2017-2025 GHG
emissions standards which are consistent with the standards being
proposed by EPA and NHTSA. CARB recognizes the benefit for the country
of continuing the National Program and plans an approach similar to the
one taken for MYs 2012-2016. CARB has committed to propose to revise
its GHG emissions standards for MY 2017 and later such that compliance
with EPA GHG emissions standards shall be deemed compliance with the
California GHG emissions standards, as long as EPA's final GHG
standards are substantially as described in the July 2011 Supplemental
NOI.\32\
---------------------------------------------------------------------------

    \32\ See State of California July 28, 2011 letter available at:
http://www.epa.gov/otaq/climate/regulations.htm.
---------------------------------------------------------------------------

4. Stakeholder Engagement
    On July 29, 2010, President Obama announced the support of thirteen
major automakers to pursue the next phase in the Administration's
national vehicle program, increasing fuel economy and reducing GHG
emissions for passenger cars and light trucks built in MYs 2017-
2025.\33\ The President was joined by Ford, GM, Chrysler, BMW, Honda,
Hyundai, Jaguar/Land Rover, Kia, Mazda, Mitsubishi, Nissan, Toyota and
Volvo, which together account for over 90 percent of all vehicles sold
in the United States. The California Air Resources Board (CARB), the
United Auto Workers (UAW) and a number of

environmental and consumer groups, also announced their support.
---------------------------------------------------------------------------

    \33\ The President's remarks are available at http://www.whitehouse.gov/the-press-office/2011/07/29/remarks-president-fuel-efficiency-standards; see also http://www.nhtsa.gov/fuel-economy for more information from the agency about the announcement.
---------------------------------------------------------------------------

    On the same day as the President's announcement, the agencies
released a second SNOI (published in the Federal Register on August 9,
2011) generally describing the joint proposal that the EPA and NHTSA
expected to issue to establish the National Program for model years
2017-2025, and which is set forth in this NPRM. The agencies explained
that the proposal would be developed based on extensive technical
analyses, an examination of the factors required under their respective
statutes and discussions with and input from individual motor vehicle
manufacturers and other stakeholders. The input of stakeholders, which
is encouraged by Executive Order 13563, has been invaluable to the
agencies in developing today's NPRM.
    For background, as discussed above, after publishing the
Supplemental NOI on December 8, 2010 (the December 8 SNOI), NHTSA, EPA
and CARB continued studies and conducted more in-depth and
comprehensive rulemaking analyses related to technology cost and
effectiveness, technological feasibility, reasonable timing for
manufacturers to implement technologies, and economic factors, and
other relevant considerations. In addition to this ongoing and more in-
depth work, the agencies continued meeting with stakeholders and
received additional input and feedback to help inform the rulemaking.
Meetings were held with and relevant information was obtained from
manufacturers, manufacturer organizations, suppliers, a labor union,
environmental groups, consumer interest groups, and investment
organizations.
    This section summarizes NHTSA and EPA stakeholder engagement
between December 2010 and July 29, 2011, the date on which President
Obama announced the agencies' plans for proposing standards for MY2017-
2025, and the support of thirteen major automakers and other
stakeholders for these plans.\34\ Information that the agencies
presented to stakeholders is posted in the docket and referenced in
multiple places in this section.
---------------------------------------------------------------------------

    \34\ NHTSA has prepared a list of stakeholder meeting dates and
participants, found in a memorandum to the docket, titled ``2017-
2025 CAFE Stakeholders Meetings List,'' at NHTSA-2010-0131.
---------------------------------------------------------------------------

    The agencies' engagement with the large and diverse group of
stakeholders described above between December 2010 and July 29, 2011
shared the single aim of ensuring that the agencies possessed the most
complete and comprehensive set of information possible to inform the
proposed rulemaking.
    Throughout this period, the stakeholders repeated many of the broad
concerns and suggestions described in the TAR, NOI, and December 8
SNOI. For example, stakeholders uniformly expressed interest in
maintaining a harmonized and coordinated national program that would be
supported by CARB and allow auto makers to build one fleet and preserve
consumer choice. The stakeholders also raised concerns about potential
stringency levels, consumer acceptance of some advanced technologies
and the potential structure of compliance flexibilities available under
EPCA (as amended by EISA) and the CAA. In addition, most of the
stakeholders wanted to discuss issues concerning technology
availability, cost and effectiveness and economic practicability. The
auto manufacturers, in particular, sought to provide the agencies with
a better understanding of their respective strategies (and associated
costs) for improving fuel economy while satisfying consumer demand in
the coming years. Additionally, some stakeholders expressed concern
about potential safety impacts associated with the standards, consumer
costs and consumer acceptance, and potential disparate treatment of
cars and trucks. Some stakeholders also stressed the importance of
investing in infrastructure to support more widespread deployment of
alternative vehicles and fuels. Many stakeholders also asked the
agencies to acknowledge prevailing economic uncertainties in developing
proposed standards. In addition, many stakeholders discussed the number
of years to be covered by the program and what they considered to be
important features of a mid-term review of any standards set or
proposed for MY 2022-2025. In all of these meetings, NHTSA and EPA
sought additional data and information from the stakeholders that would
allow them to refine their initial analyses and determine proposed
standards that are consistent with the agencies' respective statutory
and regulatory requirements. The general issues raised by those
stakeholders are addressed in the sections of this NPRM discussing the
topics to which the issues pertain (e.g., the form of the standards,
technology cost and effectiveness, safety impacts, impact on U.S.
vehicle sales and other economic considerations, costs and benefits).
    The first stage of the meetings occurred between December 2010 and
June 20, 2011. These meetings covered topics that were generally
similar to the meetings that were held prior to the publication of the
December 8 Supplemental NOI and that were summarized in the
Supplemental NOI. The manufacturers provided the agencies with
additional information related to their product plans for vehicle
models and fuel efficiency improving technologies and associated cost
estimates. Detailed product plans generally extend only five or six
model years into the future. Manufacturers also provided estimates of
the amount of improvement in CAFE and CO2 emissions they
could reasonably achieve in model MYs 2017-2025; feedback on the shape
of MY 2012-2016 regulatory stringency curves and curve cut points,
regulatory program flexibilities; recommendations for and on the
structure of one or more mid-term reviews of the later model year
standards; estimates of the cost, effectiveness and availability of
some fuel efficiency improving technologies; and feedback on some of
the cost and effectiveness assumptions used in the TAR analysis. In
addition, manufacturers provided input on manufacturer experience with
consumer acceptance of some advanced technologies and raised concerns
over consumer acceptance if higher penetration of these technologies
were needed in the future, consumer's willingness to pay for improved
fuel economy, and ideas on enablers and incentives that would increase
consumer acceptance. Many manufacturers stated that technology is
available to significantly improve fuel economy and CO2
emissions; however, they maintained that the biggest challenges relate
to the cost of the technologies, consumer willingness to pay and
consumer acceptance.
    During this first phase NHTSA and EPA continued to meet with other
stakeholders, who provided their own perspectives on issues of
importance to them. They also provided data to the extent available to
them. Information obtained from stakeholders during this phase is
contained in the docket.
    The second stage of meetings occurred between June 21, 2011 and
July 14, 2011, during which time EPA, NHTSA, CARB and several White
House Offices kicked-off an intensive series of meetings, primarily
with manufacturers, to share tentative regulatory concepts developed by
EPA, NHTSA and CARB, which included concept stringency curves and
program flexibilities based on the analyses completed by the agencies
as of June 21,\35\ and requested

feedback.\36\ In particular, the agencies requested that the
manufacturers provide detailed and reliable information on how they
might comply with the concepts and, if they projected they could not
comply, information supporting their belief that they would be unable
to comply. Additionally, EPA and NHTSA sought detailed input from the
manufacturers regarding potential changes to the concept stringency
levels and program flexibilities available under EPA's and NHTSA's
respective authority that might facilitate compliance. In addition,
manufacturers provided input related to consumer acceptance and
adoption of some advanced technologies and program costs based on their
independent assessments or information previously submitted to the
agencies.
---------------------------------------------------------------------------

    \35\ The agencies consider a range of standards that may satisfy
applicable legal criteria, taking into account the complete record
before them . The initial concepts shared with stakeholders were
within the range the agencies were considering, based on the
information then available to the agencies.
    \36\ ``Agency Materials Provided to Manufacturers'' Memo to
docket NHTSA-2010-0131.
---------------------------------------------------------------------------

    In these second stage meetings, the agencies received considerable
input from the manufacturers. The agencies carefully considered the
manufacturer information along with information from the agencies'
independent analyses. The agencies used all available information to
refine their assessment of the range of program concept stringencies
and provisions that the agencies determined were consistent with their
statutory mandates.
    The third stage of meetings occurred between July 15, 2011 and July
28, 2011. During this time period the agencies continued to refine
concept stringencies and compliance flexibilities based on further
consideration of the information available to them. They also met with
approximately 13 manufacturers who expressed ongoing interest in
engaging with the agencies.\37\
---------------------------------------------------------------------------

    \37\ ``Agency Materials Provided to Manufacturers'' Memo to
docket NHTSA-2010-0131.
---------------------------------------------------------------------------

    Throughout all three stages, EPA and NHTSA continued to engage
other stakeholders to ensure that the agencies were obtaining the most
comprehensive and reliable information possible to guide the agencies
in developing proposed standards for MY 2017-2025. Many of these
stakeholders reiterated comments previously presented to the agencies.
For instance, environmental organizations consistently stated that
stringent standards are technically achievable and critical to
important national interests, such as improving energy independence,
reducing climate change, and enabling the domestic automobile industry
to remain competitive in the global market. Labor interests stressed
the need to carefully consider economic impacts and the opportunity to
create and support new jobs, and consumer advocates emphasized the
economic and practical benefits to consumers of improved fuel economy
and the need to preserve consumer choice. In addition, a number of
stakeholders stated that the standards under development should not
have an adverse impact on safety.
    On July 29, 2011, EPA and NHTSA the agencies issued a new SNOI with
concept stringency curves and program provisions based on refined
analyses and further consideration of the record before the agencies.
The agencies have received letters of support for the concepts laid out
in the SNOI from BMW, Chrysler, Ford, General Motors, Global
Automakers, Honda, Hyundai, Jaguar Land Rover, Kia, Mazda, Mitsubishi,
Nissan, Toyota, Volvo and CARB. Numerous other stakeholders, including
labor, environmental and consumer groups, have expressed their support
for the agencies' plans to move forward.
    The agencies have considered all of this stakeholder input in
developing this proposal, and look forward to continuing the productive
dialogue through the comment period following this proposal.

B. Summary of the Proposed 2017-2025 National Program

1. Joint Analytical Approach
    This proposed rulemaking continues the collaborative analytical
effort between NHTSA and EPA, which began with the MYs 2012-2016
rulemaking. NHTSA and EPA have worked together, and in close
coordination with CARB, on nearly every aspect of the technical
analysis supporting these joint proposed rules. The results of this
collaboration are reflected in the elements of the respective NHTSA and
EPA proposed rules, as well as in the analytical work contained in the
Draft Joint NHTSA and EPA Technical Support Document (Joint TSD). The
agencies have continued to develop and refine supporting analyses since
issuing the NOI and Interim Joint TAR last September. The Joint TSD, in
particular, describes important details of the analytical work that are
common, as well as highlighting any key differences in approach. The
joint analyses include the build-up of the baseline and reference
fleets, the derivation of the shape of the footprint-based attribute
curves that define the agencies' respective standards, a detailed
description of the estimated costs and effectiveness of the
technologies that are available to vehicle manufacturers, the economic
inputs used to calculate the costs and benefits of the proposed rules,
a description of air conditioner and other off-cycle technologies, and
the agencies' assessment of the effects of the proposed standards on
vehicle safety. This comprehensive joint analytical approach has
provided a sound and consistent technical basis for both agencies in
developing their proposed standards, which are summarized in the
sections below.
2. Level of the Standards
    EPA and NHTSA are each proposing two separate sets of standards,
each under its respective statutory authorities. Both the proposed
CO2 and CAFE standards for passenger cars and light trucks
would be footprint-based, similar to the standards currently in effect
through model year 2016, and would become more stringent on average in
each model year from 2017 through 2025. The basis for measuring
performance relative to standards would continue to be based
predominantly on the EPA city and highway test cycles (2-cycle test).
However, EPA is proposing optional air conditioning and off-cycle
credits for the GHG program and adjustments to calculated fuel economy
for the CAFE programs that would be based on test procedures other than
the 2-cycle tests.
    EPA is proposing standards that are projected to require, on an
average industry fleet wide basis, 163 grams/mile of CO2 in
model year 2025. This is projected to be achieved through improvements
in fuel efficiency with some additional reductions achieved through
reductions in non-CO2 GHG emissions from reduced AC system
leakage and the use of lower global warming potential (GWP)
refrigerants. The level of 163 grams/mile CO2 would be
equivalent on a mpg basis to 54.5 mpg, if this level was achieved
solely through improvements in fuel efficiency.\38\
---------------------------------------------------------------------------

    \38\ Real-world CO2 is typically 25 percent higher
and real-world fuel economy is typically 20 percent lower than the
CO2 and CAFE values discussed here. The reference to CO2
here refers to CO2 equivalent reductions, as this
included some degree of reductions in greenhouse gases other than
CO2, as one part of the AC related reductions.
---------------------------------------------------------------------------

    For passenger cars, the CO2 compliance values associated
with the footprint curves would be reduced on average by 5 percent per
year from the model year 2016 projected passenger car industry-wide
compliance level through model year 2025. In recognition of
manufacturers' unique challenges in improving the fuel economy and GHG
emissions of full-size pickup trucks as we transition from the MY 2016

standards to MY 2017 and later, while preserving the utility (e.g.,
towing and payload capabilities) of those vehicles, EPA is proposing a
lower annual rate of improvement for light-duty trucks in the early
years of the program. For light-duty trucks, the proposed average
annual rate of CO2 emissions reduction in model years 2017
through 2021 is 3.5 percent per year. EPA is also proposing to change
the slopes of the CO2-footprint curves for light-duty trucks
from those in the 2012-2016 rule, in a manner that effectively means
that the annual rate of improvement for smaller light-duty trucks in
model years 2017 through 2021 would be higher than 3.5 percent, and the
annual rate of improvement for larger light-duty trucks over the same
time period would be lower than 3.5 percent. For model years 2022
through 2025, EPA is proposing an average annual rate of CO2
emissions reduction for light-duty trucks of 5 percent per year.
    NHTSA is proposing two phases of passenger car and light truck
standards in this NPRM. The first phase runs from MYs 2017-2021, with
proposed standards that are projected to require, on an average
industry fleet wide basis, 40.9 mpg in MY 2021. For passenger cars, the
annual increase in the stringency of the target curves between model
years 2017 to 2021 is expected to average 4.1 percent. In recognition
of manufacturers' unique challenges in improving the fuel economy and
GHG emissions of full-size pickup trucks as we transition from the MY
2016 standards to MY 2017 and later, while preserving the utility
(e.g., towing and payload capabilities) of those vehicles, NHTSA is
also proposing a slower annual rate of improvement for light trucks in
the first phase of the program. For light trucks, the proposed annual
increase in the stringency of the target curves in model years 2017
through 2021 would be 2.9 percent per year on average. NHTSA is
proposing to change the slopes of the fuel economy footprint curves for
light trucks from those in the MYs 2012-2016 final rule, which would
effectively make the annual rate of improvement for smaller light
trucks in MYs 2017-2021 higher than 2.9 percent, and the annual rate of
improvement for larger light trucks over that time period lower than
2.9 percent.
    The second phase of the CAFE program runs from MYs 2022-2025 and
represents conditional \39\ proposed standards that are projected to
require, on an average industry fleet wide basis, 49.6 mpg in model
year 2025. For passenger cars, the annual increase in the stringency of
the target curves between model years 2022 and 2025 is expected to
average 4.3 percent, and for light trucks, the annual increase during
those model years is expected to average 4.7 percent. For the first
time, NHTSA is proposing to increase the stringency of standards by the
amount (in mpg terms) that industry is expected to improve air
conditioning system efficiency, and EPA is proposing, under EPCA, to
allow manufacturers to include air conditioning system efficiency
improvements in the calculation of fuel economy for CAFE compliance.
NHTSA notes that the proposed rates of increase in stringency for CAFE
standards are lower than EPA's proposed rates of increase in stringency
for GHG standards. As in the MYs 2012-2016 rulemaking, this is for
purposes of harmonization and in reflection of several statutory
constraints in EPCA/EISA. As a primary example, NHTSA's proposed
standards, unlike EPA's, do not reflect the inclusion of air
conditioning system refrigerant and leakage improvements, but EPA's
proposed standards would allow consideration of such A/C refrigerant
improvements which reduce GHGs but do not affect fuel economy.
---------------------------------------------------------------------------

    \39\ By ''conditional,'' NHTSA means to say that the proposed
standards for MYs 2022-2025 represent the agency's current best
estimate of what levels of stringency would be maximum feasible in
those model years, but in order for the standards for those model
years to be legally reviewable a subsequent rulemaking must be
undertaken by the agency at a later time. See Section IV for more
information.
---------------------------------------------------------------------------

    As with the MYs 2012-2016 standards, NHTSA and EPA's proposed MYs
2017-2025 passenger car and light truck standards are expressed as
mathematical functions depending on vehicle footprint.\40\ Footprint is
one measure of vehicle size, and is determined by multiplying the
vehicle's wheelbase by the vehicle's average track width. The standards
that must be met by each manufacturer's fleet would be determined by
computing the production-weighted average of the targets applicable to
each of the manufacturer's fleet of passenger cars and light
trucks.\41\ Under these footprint-based standards, the average levels
required of individual manufacturers will depend, as noted above, on
the mix and volume of vehicles the manufacturer produces. The values in
the tables below reflect the agencies' projection of the corresponding
average fleet levels that will result from these attribute-based curves
given the agencies' current assumptions about the mix of vehicles that
will be sold in the model years covered by the proposed standards.
---------------------------------------------------------------------------

    \40\ NHTSA is required to set attribute-based CAFE standards for
passenger cars and light trucks. 49 U.S.C. 32902(b)(3).
    \41\ For CAFE calculations, a harmonic average is used.
---------------------------------------------------------------------------

    As shown in Table I-1, NHTSA's fleet-wide required CAFE levels for
passenger cars under the proposed standards are estimated to increase
from 40.0 to 56.0 mpg between MY 2017 and MY 2025. Fleet-wide required
CAFE levels for light trucks, in turn, are estimated to increase from
29.4 to 40.3 mpg. For the reader's reference, Table I-1 also provides
the estimated average fleet-wide required levels for the combined car
and truck fleets, culminating in an estimated overall fleet average
required CAFE level of 49.6 mpg in MY 2025. Considering these combined
car and truck increases, the proposed standards together represent
approximately a 4.0 percent annual rate of increase,\42\ on average,
relative to the MY 2016 required CAFE levels.
---------------------------------------------------------------------------

    \42\ This estimated average percentage increase includes the
effect of changes in standard stringency and changes in the forecast
fleet sales mix.

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

[GRAPHIC] [TIFF OMITTED] TP01DE11.001

    The estimated average required mpg levels for cars and trucks under
the proposed standards shown in Table I-1 above include the use of A/C
efficiency improvements, as discussed above, but do not reflect a
number of proposed flexibilities and credits that manufacturers could
use for compliance that NHTSA cannot consider in establishing standards
based on EPCA/EISA constraints. These flexibilities would cause the
actual achieved fuel economy to be lower than the required levels in
the table above. The flexibilities and credits that NHTSA cannot
consider include the ability of manufacturers to pay civil penalties
rather than achieving required CAFE levels, the ability to use FFV
credits, the ability to count electric vehicles for compliance, the
operation of plug-in hybrid electric vehicles on electricity for
compliance prior to MY 2020, and the ability to transfer and carry-
forward credits. When accounting for these flexibilities and credits,
NHTSA estimates that the proposed CAFE standards would lead to the
following average achieved fuel economy levels, based on the
projections of what each manufacturer's fleet will comprise in each
year of the program: \43\
---------------------------------------------------------------------------

    \43\ The proposed CAFE program includes incentives for full size
pick-up trucks that have mild HEV or strong HEV systems, and for
full size pick-up trucks that have fuel economy performance that is
better than the target curve by more than proposed levels. To
receive these incentives, manufacturers must produce vehicles with
these technologies or performance levels at volumes that meet or
exceed proposed penetration levels (percentage of full size pick-up
truck volume). This incentive is described in detail in Section
IV.1. The NHTSA estimates in Table I-2 do not account for the
reduction in estimated average achieved fleet-wide CAFE fuel economy
that would occur if manufacturers use this incentive. NHTSA has
conducted a sensitivity study that estimates the effects for
manufacturers' potential use of this flexibility in Chapter X of the
PRIA.

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

[GRAPHIC] [TIFF OMITTED] TP01DE11.002

    NHTSA is also required by EISA to set a minimum fuel economy
standard for domestically manufactured passenger cars in addition to
the attribute-based passenger car standard. The minimum standard
``shall be the greater of (A) 27.5 miles per gallon; or (B) 92 percent
of the average fuel economy projected by the Secretary for the combined
domestic and non-domestic passenger automobile fleets manufactured for
sale in the United States by all manufacturers in the model year * *
*,'' and applies to each manufacturer's fleet of domestically
manufactured passenger cars (i.e., like the other CAFE standards, it
represents a fleet average requirement, not a requirement for each
individual vehicle within the fleet).
    Based on NHTSA's current market forecast, the agency's estimates of
these proposed minimum standards for domestic passenger cars for MYs
2017-2025 are presented below in Table I-3.
[GRAPHIC] [TIFF OMITTED] TP01DE11.003

    EPA is proposing GHG emissions standards, and Table I-4 provides
estimates of the projected overall fleet-wide CO2 emission
compliance target levels. The values reflected in Table I-4 are those
that correspond to the manufacturers' projected CO2
compliance target levels from the car and truck footprint curves, but
do not account for EPA's projection of how manufactures will implement
two of the proposed incentive programs (advanced technology vehicle
multipliers, and hybrid and performance-based incentives for full-size
pickup trucks). EPA's projection of fleet-wide emissions levels that do
reflect these incentives is shown in Table I-5 below.
---------------------------------------------------------------------------

    \44\ The projected fleet compliance levels for 2016 are
different for trucks and the fleet than were projected in the 2012-
2016 rule. Our assessment for this proposal is based on a predicted
2016 truck value of 297 and a projected combined car and truck value
of 252 g/mi. That is because the standards are footprint based and
the fleet projections, hence the footprint distributions, change
slightly with each update of our projections, as described below. In
addition, the actual fleet compliance levels for any model year will
not be known until the end of that model year based on actual
vehicle sales.

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

[GRAPHIC] [TIFF OMITTED] TP01DE11.004

    As shown in Table I-4, projected fleet-wide CO2 emission
compliance targets for cars increase in stringency from 213 to 144 g/mi
between MY 2017 and MY 2025. Similarly, projected fleet-wide
CO2 equivalent emission compliance targets for trucks
increase in stringency from 295 to 203 g/mi. As shown, the overall
fleet average CO2 level targets are projected to increase in
stringency from 243 g/mi in MY 2017 to 163 g/mi in MY 2025, which is
equivalent to 54.5 mpg if all reductions were made with fuel economy
improvements.
    EPA anticipates that manufacturers would take advantage of proposed
program credits and incentives, such as car/truck credit transfers, air
conditioning credits, off-cycle credits, advanced technology vehicle
multipliers, and hybrid and performance-based incentives for full size
pick-up trucks. Two of these flexibility provisions--advanced
technology vehicle multipliers and the full size pick-up hybrid/
performance incentives--are expected to have an impact on the fleet-
wide emissions levels that manufacturers will actually achieve.
Therefore, Table I-5 shows EPA's projection of the achieved emission
levels of the fleet for MY 2017 through 2025. The differences between
the emissions levels shown in Tables I-4 and I-5 reflect the impact on
stringency due to the advanced technology vehicle multipliers and the
full size pick-up hybrid/performance incentives, but do not reflect
car-truck trading, air conditioning credits, or off-cycle credits,
because, while those credit provisions should help reduce
manufacturers' costs of the program, EPA believes that they will result
in real-world emission reductions that will not affect the achieved
level of emission reductions. These estimates are more fully discussed
in III.B
BILLING CODE 4910-59-P

[GRAPHIC] [TIFF OMITTED] TP01DE11.005

    A more detailed description of how the agencies arrived at the year
by year progression of the stringency of the proposed standards can be
found in Sections III and IV of this preamble.
---------------------------------------------------------------------------

    \45\ Electric vehicles are assumed at 0 gram/mile in this
analysis.
    \46\ The projected fleet compliance levels for 2016 are
different for the fleet than were projected in the 2012-2016 rule.
Our assessment for this proposal is based on a predicted 2016 truck
value of 297 and a projected combined car and truck value of 252 g/
mi. That is because the standards are footprint based and the fleet
projections, hence the footprint distributions, change slightly with
each update of our projections, as described below. In addition, the
actual fleet compliance levels for any model year will not be known
until the end of that model year based on actual vehicle sales.
---------------------------------------------------------------------------

    Both agencies also considered other alternative standards as part
of their respective Regulatory Impact Analyses that span a reasonable
range of alternative stringencies both more and less stringent than the
standards being proposed. EPA's and NHTSA's analyses of these
regulatory alternatives (and explanation of why we are proposing the
standards proposed and not the regulatory alternatives) are contained
in Sections III and IV of this preamble, respectively, as well as in
EPA's DRIA and NHTSA's PRIA.
3. Form of the Standards
    As noted, NHTSA and EPA are proposing to continue attribute-based
standards for passenger cars and light trucks, as required by EISA and
as allowed by the CAA, and continue to use vehicle footprint as the
attribute. Footprint is defined as a vehicle's wheelbase multiplied by
its track width--in other words, the area enclosed by the points at
which the wheels meet the ground. NHTSA and EPA adopted an attribute-
based approach based on vehicle footprint for MYs 2012-2016 light-duty
vehicle standards.\47\ The agencies continue to believe that footprint
is the most appropriate attribute on which to base the proposed
standards, as discussed later in this notice and in Chapter 2 of the
Joint TSD.
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    \47\ NHTSA also uses the footprint attribute in its Reformed
CAFE program for light trucks for model years 2008-2011 and
passenger car CAFE standards for MY 2011.
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    Under the footprint-based standards, the curve defines a GHG or
fuel economy performance target for each separate car or truck
footprint. Using the curves, each manufacturer thus will have a GHG and
CAFE average standard that is unique to each of its fleets, depending
on the footprints and production volumes of the vehicle models produced
by that manufacturer. A manufacturer will have separate footprint-based
standards for cars and for trucks. The curves are mostly sloped, so
that generally, larger vehicles (i.e., vehicles with larger footprints)
will be subject to less stringent targets (i.e., higher CO2
grams/mile targets and lower CAFE mpg targets) than smaller vehicles.
This is because, generally speaking, smaller vehicles are more capable
of achieving lower levels of CO2 and higher levels of fuel
economy than larger vehicles. Although a manufacturer's fleet average
standards could be estimated throughout the model year based on
projected production volume of its vehicle fleet, the standards to
which the manufacturer must comply will be based on its final model
year production figures. A manufacturer's calculation of its fleet
average standards as well as its fleets' average performance at the end
of the model year will thus be based on the production-weighted average
target and performance of each model in its fleet.\48\
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    \48\ As in the MYs 2012-2016 rule, a manufacturer may have some
models that exceed their target, and some that are below their
target. Compliance with a fleet average standard is determined by
comparing the fleet average standard (based on the sales weighted
average of the target levels for each model) with fleet average
performance (based on the sales weighted average of the performance
for each model).
---------------------------------------------------------------------------

    While the concept is the same, the proposed curve shapes for MYs
2017-2025 are somewhat different from the MYs 2012-2016 footprint
curves. The passenger car curves are similar in shape to the car curves
for MYs 2012-2016. However, the agencies are proposing more significant
changes to the light trucks curves for MYs 2017-2025 compared to the
light truck curves for MYs 2012-2016. The agencies are proposing
changes to the light-truck curve to increase the slope and to

extend the large-footprint cutpoint over time to larger footprints,
which we believe represent an appropriate balance of both technical and
policy issues, as discussed in Section II.C below and Chapter 2 of the
draft Joint TSD.
    NHTSA is proposing the attribute curves below for assigning a fuel
economy target level to an individual car or truck's footprint value,
for model years 2017 through 2025. These mpg values will be production
weighted to determine each manufacturer's fleet average standard for
cars and trucks. Although the general model of the target curve
equation is the same for each vehicle category and each year, the
parameters of the curve equation differ for cars and trucks. Each
parameter also changes on a model year basis, resulting in the yearly
increases in stringency. Figure I-1 below illustrates the passenger car
CAFE standard curves for model years 2017 through 2025 while Figure I-2
below illustrates the light truck CAFE standard curves for model years
2017 through 2025.
    EPA is proposing the attribute curves shown in Figure I-3 and
Figure I-4 below for assigning a CO2 target level to an
individual vehicle's footprint value, for model years 2017 through
2025. These CO2 values would be production weighted to
determine each manufacturer's fleet average standard for cars and
trucks. As with the CAFE curves, the general form of the equation is
the same for each vehicle category and each year, but the parameters of
the equation differ for cars and trucks. Again, each parameter also
changes on a model year basis, resulting in the yearly increases in
stringency. Figure I-3 below illustrates the CO2 car
standard curves for model years 2017 through 2025 while Figure I-4
shows the CO2 truck standard curves for model years 2017-
2025.
[GRAPHIC] [TIFF OMITTED] TP01DE11.006

[GRAPHIC] [TIFF OMITTED] TP01DE11.007

[GRAPHIC] [TIFF OMITTED] TP01DE11.008

[GRAPHIC] [TIFF OMITTED] TP01DE11.009

BILLING CODE 4910-59-C
NHTSA and EPA are proposing to use the same vehicle category
definitions for determining which vehicles are subject to the car curve
standards versus the truck curve standards as were used for MYs 2012-
2016 standards. As in the MYs 2012-2016 rulemaking, a vehicle
classified as a car under the NHTSA CAFE program will also be
classified as a car under the EPA GHG program, and likewise for
trucks.\49\ This approach of using CAFE definitions allows the
CO2 standards and the CAFE standards to continue to be
harmonized across all vehicles for the National Program.
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    \49\ See 49 CFR 523 for NHTSA's definitions for passenger car
and light truck under the CAFE program.
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    As just explained, generally speaking, a smaller footprint vehicle
will tend to have higher fuel economy and lower CO2
emissions relative to a larger footprint vehicle when both have the
same level of fuel efficiency improvement technology. Since the

proposed standards apply to a manufacturer's overall fleet, not to an
individual vehicle, if a manufacturer's fleet is dominated by small
footprint vehicles, then that fleet will have a higher fuel economy
requirement and a lower CO2 requirement than a manufacturer
whose fleet is dominated by large footprint vehicles. Compared to the
non-attribute based CAFE standards in place prior to MY 2011, the
proposed standards more evenly distribute the compliance burdens of the
standards among different manufacturers, based on their respective
product offerings. With this footprint-based standard approach, EPA and
NHTSA continue to believe that the rules will not create significant
incentives to produce vehicles of particular sizes, and thus there
should be no significant effect on the relative availability of
different vehicle sizes in the fleet due to the proposed standards,
which will help to maintain consumer choice during the rulemaking
timeframe. Consumers should still be able to purchase the size of
vehicle that meets their needs. Table I-6 helps to illustrate the
varying CO2 emissions and fuel economy targets under the
proposed standards that different vehicle sizes will have, although we
emphasize again that these targets are not actual standards--the
proposed standards are manufacturer-specific, rather than vehicle-
specific.

[GRAPHIC] [TIFF OMITTED] TP01DE11.010

4. Program Flexibilities for Achieving Compliance
a. CO2/CAFE Credits Generated Based on Fleet Average Over-
Compliance
    The MYs 2012-2016 rules contain several provisions which provide
flexibility to manufacturers in meeting standards, many of which the
agencies are not proposing to change for MYs 2017 and later. For
example, the agencies are proposing to continue allowing manufacturers
to generate credits for over-compliance with the CO2 and
CAFE standards.\50\ Under the agencies' footprint-based approach to the
standards, a manufacturer's ultimate compliance obligations are
determined at the end of each model year, when production of the model
year is complete. Since the fleet average standards that apply to a
manufacturer's car and truck fleets are based on the applicable
footprint-based curves, a production volume-weighted fleet average
requirement will be calculated for each averaging set (cars and trucks)
based on the mix and volumes of the models manufactured for sale by the
manufacturer. If a manufacturer's car and/or truck fleet achieves a
fleet average CO2/CAFE level better than the car and/or
truck standards, then the manufacturer generates credits. Conversely,
if the fleet average CO2/CAFE level does not meet the
standard, the fleet would incur debits (also referred to as a
shortfall). As in the MY 2011 CAFE program under EPCA/EISA, and also in
MYs 2012-2016 for the light-duty vehicle GHG and CAFE program, a
manufacturer whose fleet generates credits in a given model year would
have several options for using those credits, including credit carry-
back, credit carry-forward, credit transfers, and credit trading.
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    \50\ This credit flexibility is required by EPCA/EISA, see 49
U.S.C. 32903, and allowed by the CAA.
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    Credit ``carry-back'' means that manufacturers are able to use
credits to offset a deficit that had accrued in a prior model year,
while credit ``carry-forward'' means that manufacturers can bank
credits and use them toward compliance in future model years. EPCA, as
amended by EISA, requires NHTSA to allow manufacturers to carry-back
credits for up to three model years, and to carry-forward credits for
up to five model years. EPA's MYs 2012-2016 light duty vehicle GHG
program includes the same limitations and EPA is proposing to continue
this limitation in the MY 2017-2025 program. To facilitate the
transition to the increasingly more stringent standards, EPA is
proposing under its CAA authority a one-time CO2 carry-
forward beyond 5 years, such that any credits generated from MY 2010
through 2016 will be able to be used any time through MY 2021. This
provision would not apply to early credits generated in MY 2009.
NHTSA's program will continue the 5-year carry-forward and 3-year
carry-back, as required by statute.
    Credit ``transfer'' means the ability of manufacturers to move
credits from their passenger car fleet to their light truck fleet, or
vice versa. EISA required NHTSA to establish by regulation a CAFE
credits transferring program, now codified at 49 CFR part 536, to allow
a manufacturer to transfer credits between its car and truck fleets to
achieve compliance with the standards. For example, credits earned by
over-compliance with a manufacturer's car fleet average standard could
be used to offset debits incurred due to that manufacturer's not
meeting the truck fleet average standard in a given year. However, EISA
imposed a cap on the amount by which a manufacturer could raise its
CAFE through transferred credits: 1 mpg for MYs 2011-2013; 1.5 mpg for
MYs 2014-2017; and 2 mpg for MYs 2018 and beyond.\51\ Under section
202(a) of the CAA, in contrast, there is no statutory limitation on
car-truck credit transfers, and EPA's GHG program allows unlimited
credit transfers across a manufacturer's car-truck fleet to meet the
GHG standard. This is based on the expectation that this flexibility
will facilitate setting appropriate GHG standards that manufacturers'
can comply with in the lead time provided, and will allow the required
GHG emissions reductions to be achieved in the most cost effective way.
Therefore, EPA did not constrain the magnitude of allowable car-truck
credit transfers,\52\ as doing so would reduce the flexibility for lead
time, and would increase costs with no corresponding environmental
benefit. EISA also prohibits the use of transferred credits to meet the
minimum domestic passenger car fleet CAFE standard.\53\ These statutory
limits will necessarily continue to apply to the determination of
compliance with the CAFE standards.
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    \51\ 49 U.S.C. 32903(g)(3).
    \52\ EPA's proposed program will continue to adjust car and
truck credits by vehicle miles traveled (VMT), as in the MY 2012-
2016 program.
    \53\ 49 U.S.C. 32903(g)(4).
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    Credit ``trading'' means the ability of manufacturers to sell
credits to, or purchase credits from, one another. EISA allowed NHTSA
to establish by regulation a CAFE credit trading program, also now
codified at 49 CFR Part 536, to allow credits to be traded between
vehicle manufacturers. EPA also allows credit trading in the light-duty
vehicle GHG program. These sorts of exchanges between averaging sets
are typically allowed under EPA's current mobile source emission credit
programs (as well as EPA's and NHTSA's recently promulgated GHG and
fuel efficiency standards for heavy-duty vehicles and engines). EISA
also prohibits manufacturers from using traded credits to meet the
minimum domestic passenger car CAFE standard.\54\
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    \54\ 49 U.S.C. 32903(f)(2).
---------------------------------------------------------------------------

b. Air Conditioning Improvement Credits/Fuel Economy Value Increases
    Air conditioning (A/C) systems contribute to GHG emissions in two
ways. Hydrofluorocarbon (HFC) refrigerants, which are powerful GHGs,
can leak from the A/C system (direct A/C emissions). In addition,
operation of the A/C system places an additional load on the engine
which increases fuel consumption and thus results in additional
CO2 tailpipe emissions (indirect A/C related emissions). In
the MYs 2012-2016 program, EPA allows manufacturers to generate credits
by reducing either or both types of GHG emissions related to A/C
systems. The expected generation of A/C credits is accounted for in
setting the level of the overall CO2 standard. For the
current proposal, as with the MYs 2012-2016 program, manufacturers will
be able to generate CO2-equivalent credits to use in
complying with the CO2 standards for improvements in air
conditioning (A/C) systems, both for efficiency improvements (reduces
tailpipe CO2 and improves fuel consumption) and for leakage
reduction or alternative, lower GWP (global warming potential)
refrigerant use (reduces hydrofluorocarbon (HFC) emissions). EPA is
proposing that the maximum A/C credit available for cars is 18.8 grams/
mile CO2 and for trucks is 24.4 grams/mile CO2.
The proposed test methods used to calculate these direct and indirect
A/C credits are very similar to those of the MYs 2012-2016 program,
though EPA is seeking comment on a revised idle test as well as a new
test procedure.
    For the first time in the current proposal, the agencies are
proposing provisions that would account for improvements in air
conditioner efficiency in the CAFE program. Improving A/C efficiency
leads to real-world fuel economy benefits, because as explained above,
A/C operation

represents an additional load on the engine, so more efficient A/C
operation imposes less of a load and allows the vehicle to go farther
on a gallon of gas. Under EPCA, EPA has authority to adopt procedures
to measure fuel economy and calculate CAFE. Under this authority EPA is
proposing that manufacturers could generate fuel consumption
improvement values for purposes of CAFE compliance based on air
conditioning system efficiency improvements for cars and trucks. This
increase in fuel economy would be allowed up to a maximum based on
0.000563 gallon/mile for cars and 0.000810 gallon/mile for trucks. This
is equivalent to the A/C efficiency CO2 credit allowed by
EPA under the GHG program. The same methods would be used in the CAFE
program to calculate the values for air conditioning efficiency
improvements for cars and trucks as are used in EPA's GHG program.
NHTSA is including in its proposed passenger car and light truck CAFE
standards an increase in stringency in each model year from 2017-2025
by the amount industry is expected to improve air conditioning system
efficiency in those years, in a manner consistent with EPA's GHG
standards. EPA is not proposing to allow generation of fuel consumption
improvement values for CAFE purposes, nor is NHTSA proposing to
increase stringency of the CAFE standard, for the use of A/C systems
that reduce leakage or employ alternative, lower GWP refrigerant,
because those changes do not improve fuel economy.
c. Off-cycle Credits/Fuel Economy Value Increases
    For MYs 2012-2016, EPA provided an option for manufacturers to
generate credits for employing new and innovative technologies that
achieve CO2 reductions that are not reflected on current
test procedures. EPA noted in the MYs 2012-2016 rulemaking that
examples of such ``off-cycle'' technologies might include solar panels
on hybrids, adaptive cruise control, and active aerodynamics, among
other technologies. See generally 75 FR at 25438-39. EPA's current
program allows off-cycle credits to be generated through MY 2016.
    EPA is proposing that manufacturers may continue to use off-cycle
credits for MY 2017 and later for the GHG program. As with A/C
efficiency, improving efficiency through the use of off-cycle
technologies leads to real-world fuel economy benefits and allows the
vehicle to go farther on a gallon of gas. Thus, under its EPCA
authority EPA is proposing to allow manufacturers to generate fuel
consumption improvement values for purposes of CAFE compliance based on
the use of off-cycle technologies. Increases in fuel economy under the
CAFE program based on off-cycle technology will be equivalent to the
off-cycle credit allowed by EPA under the GHG program, and these
amounts will be determined using the same procedures and test methods
as are used in EPA's GHG program. For the reasons discussed in sections
III and IV of this proposal, the ability to generate off-cycle credits
and increases in fuel economy for use in compliance will not affect or
change the level of the GHG or CAFE standards proposed by each agency.
    Many automakers indicated that they had a strong interest in
pursuing off-cycle technologies, and encouraged the agencies to refine
and simplify the evaluation process to provide more certainty as to the
types of technologies the agencies would approve for credit generation.
For 2017 and later, EPA is proposing to expand and streamline the MYs
2012-2016 off-cycle credit provisions, including an approach by which
the agencies would provide specified amounts of credit and fuel
consumption improvement values for a subset of off-cycle technologies
whose benefits are readily quantifiable. EPA is proposing a list of
technologies and credit values, where sufficient data is available,
that manufacturers could use without going through an advance approval
process that would otherwise be required to generate credits. EPA
believes that our assessment of off-cycle technologies and associated
credit values on this proposed list is conservative, and automakers may
apply for additional off-cycle credits beyond the minimum credit value
if they have sufficient supporting data. Further, manufacturers may
also apply for off-cycle technologies beyond those listed, again, if
they have sufficient data.
    In addition, EPA is providing additional detail on the process and
timing for the credit/fuel consumption improvement values application
and approval process. EPA is proposing a timeline for the approval
process, including a 60-day EPA decision process from the time a
manufacturer submits a complete application. EPA is also proposing a
detailed, common, step-by-step process, including a specification of
the data that manufacturers must submit. For off-cycle technologies
that are both not covered by the pre-approved off-cycle credit/fuel
consumption improvement values list and that are not quantifiable based
on the 5-cycle test cycle option provided in the 2012-2016 rulemaking,
EPA is proposing to retain the public comment process from the MYs
2012-2016 rule.
d. Incentives for Electric Vehicles, Plug-in Hybrid Electric Vehicles,
and Fuel Cell Vehicles
    To facilitate market penetration of the most advanced vehicle
technologies as rapidly as possible, EPA is proposing an incentive
multiplier for compliance purposes for all electric vehicles (EVs),
plug-in hybrid electric vehicles (PHEVs), and fuel cell vehicles (FCVs)
sold in MYs 2017 through 2021. This multiplier approach means that each
EV/PHEV/FCV would count as more than one vehicle in the manufacturer's
compliance calculation. EPA is proposing that EVs and FCVs start with a
multiplier value of 2.0 in MY 2017, phasing down to a value of 1.5 in
MY 2021. PHEVs would start at a multiplier value of 1.6 in MY 2017 and