EPA also conducted a separate analysis of the total benefits over
the model year lifetimes of the 2023 through 2026 model year vehicles.
In contrast to the calendar year analysis presented in Table 51 through
Table 56 the model year lifetime analysis below shows the impacts of
the proposed program on vehicles produced during each of the model
years 2023 through 2026 over the course of their expected lifetimes.
The net societal benefits over the full lifetimes of vehicles produced
during each of the four model years are shown in Table 57 and Table 58
at both 3 percent and 7 percent discount rates, respectively. Similar
to the calendar year analysis, the net benefits would exceed the costs
of the program.

     Table 57--Monetized Vehicle Program Costs, Fuel Savings, Benefits, and Net Benefits Associated With the
                              Lifetimes of 2023-2026 Model Year Light-Duty Vehicles
                                    [Billions, 2018$; 3% discount rate] a b c
----------------------------------------------------------------------------------------------------------------
                                                                   Fuel savings                    Net benefits
                       MY                            Costs ($)          ($)        Benefits ($)         ($)
----------------------------------------------------------------------------------------------------------------
                                                 Present-Values
----------------------------------------------------------------------------------------------------------------
2023............................................             4.8             3.6     0.89 to 4.5    -0.29 to 3.3
2024............................................             5.9               7      1.8 to 8.8      2.8 to 9.8
2025............................................             6.7             8.6         2 to 11       3.9 to 13
2026............................................             8.1              13       3.6 to 17       8.8 to 22
                                                 ---------------------------------------------------------------
    Sum.........................................              26              33       8.2 to 41        15 to 48
----------------------------------------------------------------------------------------------------------------
                                                Annualized-Values
----------------------------------------------------------------------------------------------------------------
2023............................................            0.21            0.16   0.044 to 0.19      -0.0072 to
                                                                                0.14
2024............................................            0.26             0.3   0.086 to 0.38    0.13 to 0.43
2025............................................            0.29            0.37     0.1 to 0.46    0.18 to 0.55
2026............................................            0.35            0.58    0.17 to 0.73     0.4 to 0.96
                                                 ---------------------------------------------------------------
    Sum.........................................             1.1             1.4      0.4 to 1.8     0.71 to 2.1
----------------------------------------------------------------------------------------------------------------
Notes:

\a\ Model year values are discounted to 2021; the ``Sum'' represents those discounted values summed across model
  years.
\b\ The range of benefits and net benefits reflects the low to high range of SC-GHG values. The same discount
  rate used to discount the value of damages from future GHG emissions is used to calculate net present value of
  SC-GHGs for internal consistency, while all other costs and benefits are discounted at 3 percent in this
  table.
\c\ Note that the non-GHG impacts associated with the standards presented here do not include the full
  complement of health and environmental effects that, if quantified and monetized, would increase the total
  monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human
  health impacts associated with reductions in PM2.5 exposure.

 Table 58--Monetized Costs, Fuel Savings, Benefits, and Net Benefits Associated With the Lifetimes of 2023-2026
                                         Model Year Light-Duty Vehicles
                                    [Billions, 2018$; 7% discount rate] a b c
----------------------------------------------------------------------------------------------------------------
                                                                   Fuel savings                    Net benefits
                       MY                            Costs ($)          ($)        Benefits ($)         ($)
----------------------------------------------------------------------------------------------------------------
                                                 Present-Values
----------------------------------------------------------------------------------------------------------------
2023............................................             4.4             2.6     0.72 to 4.3     -1.1 to 2.5
2024............................................             5.5             4.7      1.4 to 8.4     0.54 to 7.6
2025............................................             6.1             5.5       1.6 to 10        1 to 9.7
2026............................................             7.3             8.2       2.6 to 16       3.6 to 17
                                                 ---------------------------------------------------------------
    Sum.........................................              23              21       6.3 to 39         4 to 37
----------------------------------------------------------------------------------------------------------------
                                                Annualized-Values
----------------------------------------------------------------------------------------------------------------
2023............................................            0.33            0.19    0.048 to 0.2       -0.089 to
                                                                                0.061
2024............................................            0.41            0.35   0.092 to 0.39   0.029 to 0.32
2025............................................            0.45            0.41     0.1 to 0.47   0.064 to 0.43
2026............................................            0.55            0.62    0.18 to 0.74    0.25 to 0.81
                                                 ---------------------------------------------------------------
    Sum.........................................             1.7             1.6     0.42 to 1.8     0.25 to 1.6
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Model year values are discounted to 2021; the ``Sum'' represents those discounted values summed across model
  years.
\b\ The range of benefits and net benefits reflects the low to high range of SC-GHG values. The same discount
  rate used to discount the value of damages from future GHG emissions is used to calculate net present value of
  SC-GHGs for internal consistency, while all other costs and benefits are discounted at 7 percent in this
  table.
\c\ Note that the non-GHG impacts associated with the standards presented here do not include the full
  complement of health and environmental effects that, if quantified and monetized, would increase the total
  monetized benefits. Instead, the non-GHG benefits are based on benefit-per-ton values that reflect only human
  health impacts associated with reductions in PM2.5 exposure.

J. Impacts on Consumers of Vehicle Costs and Fuel Savings

    Although the primary purpose of this regulatory action is to reduce
GHG emissions, the impact of the proposed EPA standards on consumers is
an important consideration for EPA. This chapter discusses the impact
of the proposed standards on consumer net costs for purchasing and
fueling vehicles. For further discussion of impacts on vehicle sales,
see Section VII.B; for impacts on affordability, see Section VII.M.
    EPA estimates that the average cost of a new MY 2026 vehicle will
increase by $1,044 due to the proposed standards, while we estimate
that the average per-mile fuel cost in the first year will decrease by
0.59 cents.\182\ Over time, reductions in fuel consumption will offset
the increase in upfront costs. For instance, EPA estimates that, over
the lifetime of a MY 2026 vehicle,\183\ the reduction in fuel costs
will exceed the increase in vehicle costs by $883, using a 3 percent
discount rate.\184\
---------------------------------------------------------------------------

    \182\ See U.S. Environmental Protection Agency, ``Fuel Savings
Offset to Vehicle Costs_20210610.xlsx,'' in the docket for this and
the other calculations in this section. Fuel prices are based on
AEO2021 and change over time; for the Reference Case, the average
retail fuel price for years 2026-2036 ranged from $2.53 to $2.98/
gallon (2020$) for gasoline and $0.118 to $0.119/kWh of electricity
(2020$). U.S. Energy Information Administration (EIA), U.S.
Department of Energy (DOE), Annual Energy Outlook, 2021. For the
analysis involving 5-year ownership periods, we use the fuel costs
associated with the initial year of purchase for each owner, i.e.,
2026, 2031, 2036. The analysis includes the program flexibilities of
credit banking, fleet averaging, advanced technology multipliers,
and air conditioning and off-cycle credits.
    \183\ The CCEMS models vehicles over a 40 year lifetime;
however, it includes scrappage rates such that fewer and fewer
vehicles of any vintage remain on the road year after year, and
those vehicles that remain are driven fewer and fewer miles year
after year.
    \184\ The EPA Guidelines for Preparing Economic Analysis,
Chapter 6.4, suggests that a 3 percent discount rate is appropriate
for calculations involving consumption, instead of the opportunity
cost of capital. Here, the discount rate is applied, beginning in
2026 when the vehicle is purchased new, to the stream of fuel costs
over the vehicle lifetime. U.S. Environmental Protection Agency
(2010). ``Guidelines for Preparing Economic Analysis,'' Chapter 6.
https://www.epa.gov/sites/production/files/2017-09/documents/ee-0568-06.pdf, accessed 6/14/2021.
---------------------------------------------------------------------------

    Another way to look at the effects on vehicle buyers is to examine
how the costs are distributed among new and used vehicle owners.
Because depreciation occurs over the lifetime of the vehicle, the net
purchase cost to an owner will depend on the vehicle age when it was
bought, and, if sold, the length of time that the vehicle was owned. A
study from Argonne National Laboratory provides estimates for the
depreciation of light-duty vehicles by age, as summarized in Table
59.\185\ If the additional cost of fuel-saving technology depreciates
at the same rates, then a person who buys a new vehicle and sells it
after 5 years would incur 60 percent of the upfront costs (100 percent
of the original value, less 40 percent paid back). Analogously, the
person who buys the vehicle at age 5 would incur 20 percent of those
costs (40 percent, less 20 percent paid back), and the purchaser of the
10-year-old vehicle would face a net 10 percent of the cost of the
technology after it is sold five

years later at vehicle age 15. A person purchasing a new vehicle,
driving the average fleetwide VMT for the given age and facing the fuel
prices used in this analysis, would face an estimated net cost of $204,
shown in Table 60, which reflects fuel savings that offset 70 percent
of the depreciation cost. The buyer of that 5-year-old used vehicle
would see an estimated reduction in net cost--that is, a net saving--of
$230, while the buyer of that same 10-year-old used vehicle would see
an estimated reduction of net cost of $314. In general, the purchasers
of older vehicles will see a greater portion of their depreciation
costs offset by fuel savings.
---------------------------------------------------------------------------

    \185\ Argonne National Laboratory (2021). ``Comprehensive Total
Cost of Ownership Quantification for Vehicles with Different Size
Classes and Powertrains.'' ANL/ESD-21/4, Figure ES-2. https://publications.anl.gov/anlpubs/2021/05/167399.pdf, accessed 6/8/2021.

                                                Table 59--Depreciation Estimates for Light Duty Vehicles
--------------------------------------------------------------------------------------------------------------------------------------------------------
           Vehicle age                    1                2                3                4                5                10               15
--------------------------------------------------------------------------------------------------------------------------------------------------------
Fraction of original value                   0.70             0.61             0.53            0.475             0.40             0.20             0.10
 retained........................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Estimated by Argonne National Laboratory using Edmunds data for MY2013-2019 vehicles (see figure ES-2).\185\

  Table 60--Impact of Proposed Standards on Depreciation and Fuel Costs
              for MY 2026 Vehicle Over 5 Years of Ownership
------------------------------------------------------------------------
                                                            Portion of
                                              Vehicle      depreciation
                                           depreciation    costs offset
                                             plus fuel        by fuel
                                             costs ($)      savings (%)
------------------------------------------------------------------------
Vehicle Purchased New...................             204              70
Vehicle Purchased at Age 5..............           (230)             197
Vehicle Purchased at Age 10.............           (314)             365
------------------------------------------------------------------------
Calculated using analysis VMT assumptions for proposed standards, using
  a 3% discount rate from year of purchase.

    Because the use of vehicles varies widely across vehicle owners,
another way to estimate the effects of the standards is to examine the
``break even'' number of miles--that is, the number of miles driven
that would result in fuel savings matching the increase in up-front
costs. For example, if operating costs of a MY 2026 vehicle decrease by
0.59 cents per mile due to reduced fuel consumption, the upfront costs
(when purchased new) would be recovered after 177,000 miles of driving,
excluding discounting.\186\ As this measure makes clear, the financial
effect on a new vehicle owner depends on the amount that the vehicle is
driven. Mobility service providers, such as taxis or ride-sharing
services, are likely to accumulate miles more quickly than most people
who use their vehicles for personal use. As discussed in Section VII.M,
the lower per-mile cost for these vehicles may reduce the importance of
up-front costs in the charge for mobility as a service, and thus
further enable use of that service.
---------------------------------------------------------------------------

    \186\ This estimate is calculated as the increase in cost,
$1044, divided by the reduced per-mile cost, $0.0059, to get miles
until cost is recovered.
---------------------------------------------------------------------------

    Table 61 shows, for purchasers of different-age MY 2026 vehicles,
how the degree to which fuel savings offset depreciation costs will
depend on vehicle use levels.\187\ Cost recovery is again higher for
older vehicles, and faster for vehicles that accumulate VMT more
quickly. For example, a consumer who purchases a 5-year old used MY2026
vehicle would recover their vehicle costs through fuel savings after
only 31,000 miles of driving.
---------------------------------------------------------------------------

    \187\ The up-front costs for each purchaser are based on the
cost to the owner based on the depreciated price for the vehicle's
age, with recovery of some further depreciated cost after 5 years of
ownership. Cost recovery per mile is $0.0059, and is multiplied by
the number of miles in the second column. The remaining columns are
cost recovery divided by the relevant cost. Discounting is not used
to abstract from the VMT occurring during a specified timeframe.

  Table 61--Proportion of Depreciation Costs Offset by Fuel Savings, for New and Used Vehicle Purchasers, for a
                                                 MY2026 Vehicle
----------------------------------------------------------------------------------------------------------------
                                                                                When vehicle
                                                                   When vehicle    When vehicle    purchased at
                                                                   purchased new  purchased at 5   10 years old
                                                                        (%)        years old (%)        (%)
----------------------------------------------------------------------------------------------------------------
Portion of vehicle depreciation cost    At 10,000 miles.........               9              32              69
 offset by fuel savings (own vehicle    At 50,000 miles.........              47             161             347
 for 5 years).                          At 100,000 miles........              94             322             693
Miles where fuel savings fully offset   Owned vehicle for 5              106,000          31,000          14,000
 the vehicle owner's depreciation cost.  years.
                                        Owned vehicle for full           177,000          62,000          28,000
                                         remaining lifetime.
----------------------------------------------------------------------------------------------------------------

    Thus, the financial effects on a vehicle buyer depend on how much
that person drives, as well as whether the vehicle is bought new or
used. Importantly, all people receive the

benefits of reduced GHG emissions, the primary focus of this rule.

K. Employment Impacts

    If the U.S. economy is at full employment, even a large-scale
environmental regulation is unlikely to have a noticeable impact on
aggregate net employment.\188\ Instead, labor would primarily be
reallocated from one productive use to another, and net national
employment effects from environmental regulation would be small and
transitory (e.g., as workers move from one job to another).\189\
Affected sectors may nevertheless experience transitory effects as
workers change jobs. Some workers may retrain or relocate in
anticipation of new requirements or require time to search for new
jobs, while shortages in some sectors or regions could bid up wages to
attract workers. These adjustment costs can lead to local labor
disruptions. Even if the net change in the national workforce is small,
localized reductions in employment may adversely impact individuals and
communities just as localized increases may have positive impacts.
---------------------------------------------------------------------------

    \188\ Full employment is a conceptual target for the economy
where everyone who wants to work and is available to do so at
prevailing wages is actively employed. The unemployment rate at full
employment is not zero.
    \189\ Arrow et al. (1996). ``Benefit-Cost Analysis in
Environmental, Health, and Safety Regulation: A Statement of
Principles.'' American Enterprise Institute, The Annapolis Center,
and Resources for the Future. See discussion on bottom of p. 6. In
practice, distributional impacts on individual workers can be
important, as discussed later in this section.
---------------------------------------------------------------------------

    If the economy is operating at less than full employment, economic
theory does not clearly indicate the direction or magnitude of the net
impact of environmental regulation on employment; it could cause either
a short-run net increase or short-run net decrease.\190\ At the level
of individual companies, employers affected by environmental regulation
may increase their demand for some types of labor, decrease demand for
other types of labor, or for still other types, not change it at all.
The uncertain direction of labor impacts is due to the different
channels by which regulations affect labor demand.
---------------------------------------------------------------------------

    \190\ Schmalensee, Richard, and Stavins, Robert N. ``A Guide to
Economic and Policy Analysis of EPA's Transport Rule.'' White paper
commissioned by Excelon Corporation, March 2011.
---------------------------------------------------------------------------

    Morgenstern et al. (2002) \191\ decompose the labor consequences in
a regulated industry facing increased abatement costs into three
separate components. First, there is a demand effect caused by higher
production costs raising market prices. Higher prices reduce
consumption (and production), reducing demand for labor within the
regulated industry. Second, there is a cost effect where, as production
costs increase, plants use more of all inputs, including labor, to
produce the same level of output. Third, there is a factor-shift effect
where post-regulation production technologies may have different labor
intensities. Other researchers use different frameworks along a similar
vein.\192\
---------------------------------------------------------------------------

    \191\ Morgenstern, R.D.; Pizer, W.A.; and Shih, J.-S. (2002).
``Jobs Versus the Environment: An Industry-Level Perspective.''
Journal of Environmental Economics and Management 43: 412-436. 2002.
    \192\ Berman, E. and Bui, L. T. M. (2001). ``Environmental
Regulation and Labor Demand: Evidence from the South Coast Air
Basin.'' Journal of Public Economics 79(2): 265-295;
Desch[ecirc]nes, O. (2018). ``Balancing the Benefits of
Environmental Regulations for Everyone and the Costs to Workers and
Firms.'' IZA World of Labor 22v2. https://wol.iza.org/uploads/articles/458/pdfs/environmental-regulations-and-labor-markets.pdf,
accessed 4/19/2021.
---------------------------------------------------------------------------

    DRIA Chapter 8.2 discusses the calculation of employment impacts in
the model used for this analysis. The estimates include effects on
three sectors: Automotive dealers, final assembly labor and parts
production, and fuel economy technology labor. The first two of these
are examples of Morgenstern et al.'s (2002) demand-effect employment,
while the third reflects cost-effect employment. For automotive
dealers, the model estimates the hours involved in each new vehicle
sale. To estimate the labor involved in final assembly, the model used
average labor hours per vehicle at a sample of U.S. assembly plants,
adjusted by the ratio of vehicle assembly manufacturing employment to
employment for total vehicle and equipment manufacturing for new
vehicles. Finally, for fuel economy technology labor, DOT calculated
the average revenue per job-year for automakers.
    EPA's assessment of employment impacts, in DRIA Chapter 8.2.3,
using the sales assumptions of both automakers and consumers using 2.5
years of fuel consumption in vehicle decisions and a demand elasticity
of -1, shows initial very small decreases in employment of 0.1 percent,
followed by small positive gains (less than 1 percent) in employment
due to the labor involved in producing the technologies needed to meet
the proposed standards. If, instead, we use the sensitivity analysis
with a demand elasticity of -0.4, employment is higher for both the no-
action alternative and the proposed standards. Between the no-action
alternative and the proposal, with an elasticity of -0.4, the
employment impacts are positive, rising to about a 2 percent increase.
If automakers underestimate consumers' valuation of fuel economy, as
noted in Section VII.B, then demand-effect employment is likely to be
higher, and employment impacts are likely to be more positive.
    Note that these are employment impacts in the directly regulated
sector, plus the impacts for automotive dealers. These do not include
economy-wide labor impacts. As discussed earlier, economy-wide impacts
on employment are generally driven by broad macroeconomic effects. It
also does not reflect employment effects due to reduced spending on
fuel consumption. Those changes may lead to some reductions in
employment in gas stations, and some increases in other sectors to
which people reallocate those expenditures.
    Electrification of the vehicle fleet is likely to affect both the
number and the nature of employment in the auto and parts sectors and
related sectors, such as providers of charging infrastructure. Because
this proposal projects relatively minor increases in penetration of
plug-in electric vehicles, from 4.6 percent in MY 2023 to 8.4 percent
in MY 2026 (see Table 42), we do not predict major changes in the
composition of employment in these sectors for MYs 2023-2026. EPA will
continue to assess changes in employment as electrification of the auto
industry proceeds.

L. Environmental Justice

    Executive Order 12898 (59 FR 7629, February 16, 1994) establishes
federal executive policy on environmental justice. It directs federal
agencies, to the greatest extent practicable and permitted by law, to
make achieving environmental justice part of their mission by
identifying and addressing, as appropriate, disproportionately high and
adverse human health or environmental effects of their programs,
policies, and activities on minority populations and low-income
populations in the United States. EPA defines environmental justice as
the fair treatment and meaningful involvement of all people regardless
of race, color, national origin, or income with respect to the
development, implementation, and enforcement of environmental laws,
regulations, and policies.\193\
---------------------------------------------------------------------------

    \193\ Fair treatment means that ``no group of people should bear
a disproportionate burden of environmental harms and risks,
including those resulting from the negative environmental
consequences of industrial, governmental and commercial operations
or programs and policies.'' Meaningful involvement occurs when ``(1)
potentially affected populations have an appropriate opportunity to
participate in decisions about a proposed activity [e.g.,
rulemaking] that will affect their environment and/or health; (2)
the public's contribution can influence [the EPA's rulemaking]
decision; (3) the concerns of all participants involved will be
considered in the decision-making process; and (4) [the EPA will]
seek out and facilitate the involvement of those potentially
affected'' A potential EJ concern is defined as ``the actual or
potential lack of fair treatment or meaningful involvement of
minority populations, low-income populations, tribes, and indigenous
peoples in the development, implementation and enforcement of
environmental laws, regulations and policies.'' See ``Guidance on
Considering Environmental Justice During the Development of an
Action.'' Environmental Protection Agency, www.epa.gov/environmentaljustice/guidanceconsidering-environmental-justice-duringdevelopment-action. See also https://www.epa.gov/environmentaljustice.

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

    Executive Order 14008 (86 FR 7619, February 1, 2021) also calls on
Agencies to make achieving environmental justice part of their missions
``by developing programs, policies, and activities to address the
disproportionately high and adverse human health, environmental,
climate-related and other cumulative impacts on disadvantaged
communities, as well as the accompanying economic challenges of such
impacts.'' It also declares a policy ``to secure environmental justice
and spur economic opportunity for disadvantaged communities that have
been historically marginalized and overburdened by pollution and under-
investment in housing, transportation, water and wastewater
infrastructure and health care.'' Under Executive Order 13563 (76 FR
3821), federal agencies may consider equity, human dignity, fairness,
and distributional considerations, where appropriate and permitted by
law.
    EPA's 2016 ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis'' provides recommendations on conducting the
highest quality analysis feasible, recognizing that data limitations,
time and resource constraints, and analytic challenges will vary by
media and regulatory context.\194\
---------------------------------------------------------------------------

    \194\ ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis.'' Epa.gov, Environmental Protection Agency,
https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf.
---------------------------------------------------------------------------

    When assessing the potential for disproportionately high and
adverse health or environmental impacts of regulatory actions on
minority populations, low-income populations, tribes, and/or indigenous
peoples, EPA strives to answer three broad questions: (1) Is there
evidence of potential EJ concerns in the baseline (the state of the
world absent the regulatory action)? Assessing the baseline will allow
EPA to determine whether pre-existing disparities are associated with
the pollutant(s) under consideration (e.g., if the effects of the
pollutant(s) are more concentrated in some population groups). (2) Is
there evidence of potential EJ concerns for the regulatory option(s)
under consideration? Specifically, how are the pollutant(s) and its
effects distributed for the regulatory options under consideration?
And, (3) Do the regulatory option(s) under consideration exacerbate or
mitigate EJ concerns relative to the baseline? It is not always
possible to quantitatively assess these questions.
    EPA's 2016 Technical Guidance does not prescribe or recommend a
specific approach or methodology for conducting an environmental
justice analysis, though a key consideration is consistency with the
assumptions underlying other parts of the regulatory analysis when
evaluating the baseline and regulatory options. Where applicable and
practicable, the Agency endeavors to conduct such an analysis. Going
forward, EPA is committed to conducting environmental justice analysis
for rulemakings based on a framework similar to what is outlined in
EPA's Technical Guidance, in addition to investigating ways to further
weave environmental justice into the fabric of the rulemaking process.
EPA greatly values input from EJ stakeholders and communities and looks
forward to engagement as we consider the impacts of light-duty vehicle
emissions.
1. GHG Impacts
    In 2009, under the Endangerment and Cause or Contribute Findings
for Greenhouse Gases Under Section 202(a) of the Clean Air Act
(``Endangerment Finding''), the Administrator considered how climate
change threatens the health and welfare of the U.S. population. As part
of that consideration, she also considered risks to minority and low-
income individuals and communities, finding that certain parts of the
U.S. population may be especially vulnerable based on their
characteristics or circumstances. These groups include economically and
socially disadvantaged communities; individuals at vulnerable
lifestages, such as the elderly, the very young, and pregnant or
nursing women; those already in poor health or with comorbidities; the
disabled; those experiencing homelessness, mental illness, or substance
abuse; and/or Indigenous or minority populations dependent on one or
limited resources for subsistence due to factors including but not
limited to geography, access, and mobility.
    Scientific assessment reports produced over the past decade by the
U.S. Global Change Research Program (USGCRP),195 196 the
Intergovernmental Panel on Climate Change
(IPCC),197 198 199 200 and the National Academies of
Science, Engineering, and Medicine 201 202 add more evidence
that

the impacts of climate change raise potential environmental justice
concerns. These reports conclude that poorer or predominantly non-White
communities can be especially vulnerable to climate change impacts
because they tend to have limited adaptive capacities and are more
dependent on climate-sensitive resources such as local water and food
supplies, or have less access to social and information resources. Some
communities of color, specifically populations defined jointly by
ethnic/racial characteristics and geographic location, may be uniquely
vulnerable to climate change health impacts in the United States. In
particular, the 2016 scientific assessment on the Impacts of Climate
Change on Human Health \203\ found with high confidence that
vulnerabilities are place- and time-specific, lifestages and ages are
linked to immediate and future health impacts, and social determinants
of health are linked to greater extent and severity of climate change-
related health impacts.
---------------------------------------------------------------------------

    \195\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
    \196\ USGCRP, 2016: The Impacts of Climate Change on Human
Health in the United States: A Scientific Assessment. Crimmins, A.,
J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J.
Eisen, N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M.
Mills, S. Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S.
Global Change Research Program, Washington, DC, 312 pp. http://dx.doi.org/10.7930/J0R49NQX.
    \197\ Oppenheimer, M., M. Campos, R. Warren, J. Birkmann, G.
Luber, B. O'Neill, and K. Takahashi, 2014: Emergent risks and key
vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and
Vulnerability. Part A: Global and Sectoral Aspects. Contribution of
Working Group II to the Fifth Assessment Report of the
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros,
D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee,
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N.
Levy, S. MacCracken, P.R. Mastrandrea, and L.L. White (eds.)].
Cambridge University Press, Cambridge, United Kingdom and New York,
NY, USA, pp. 1039-1099.
    \198\ Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M.
Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso, 2014: Food
security and food production systems. In: Climate Change 2014:
Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral
Aspects. Contribution of Working Group II to the Fifth Assessment
Report of the Intergovernmental Panel on Climate Change [Field,
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E.
Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma,
E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L.
White (eds.)]. Cambridge University Press, Cambridge, United Kingdom
and New York, NY, USA, pp. 485-533.
    \199\ Smith, K.R., A. Woodward, D. Campbell-Lendrum, D.D.
Chadee, Y. Honda, Q. Liu, J.M. Olwoch, B. Revich, and R. Sauerborn,
2014: Human health: Impacts, adaptation, and co-benefits. In:
Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A:
Global and Sectoral Aspects. Contribution of Working Group II to the
Fifth Assessment Report of the Intergovernmental Panel on Climate
Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D.
Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C.
Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R.
Mastrandrea, and L.L. White (eds.)]. Cambridge University Press,
Cambridge, United Kingdom and New York, NY, USA, pp. 709-754.
    \200\ IPCC, 2018: Global Warming of 1.5[deg]C. An IPCC Special
Report on the impacts of global warming of 1.5[deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner,
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press.
    \201\ National Research Council. 2011. America's Climate
Choices. Washington, DC: The National Academies Press. https://doi.org/10.17226/12781.
    \202\ National Academies of Sciences, Engineering, and Medicine.
2017. Communities in Action: Pathways to Health Equity. Washington,
DC: The National Academies Press. https://doi.org/10.17226/24624.
    \203\ USGCRP, 2016: The Impacts of Climate Change on Human
Health in the United States: A Scientific Assessment.
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i. Effects on Specific Populations of Concern
    Individuals living in socially and economically disadvantaged
communities, such as those living at or below the poverty line or who
are experiencing homelessness or social isolation, are at greater risk
of health effects from climate change. This is also true with respect
to people at vulnerable lifestages, specifically women who are pre- and
perinatal, or are nursing; in utero fetuses; children at all stages of
development; and the elderly. Per the Fourth National Climate
Assessment, ``Climate change affects human health by altering exposures
to heat waves, floods, droughts, and other extreme events; vector-,
food- and waterborne infectious diseases; changes in the quality and
safety of air, food, and water; and stresses to mental health and well-
being.'' \204\ Many health conditions such as cardiopulmonary or
respiratory illness and other health impacts are associated with and
exacerbated by an increase in GHGs and climate change outcomes, which
is problematic as these diseases occur at higher rates within
vulnerable communities. Importantly, negative public health outcomes
include those that are physical in nature, as well as mental,
emotional, social, and economic.
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    \204\ Ebi, K.L., J.M. Balbus, G. Luber, A. Bole, A. Crimmins, G.
Glass, S. Saha, M.M. Shimamoto, J. Trtanj, and J.L. White-Newsome,
2018: Human Health. In Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, pp. 539-571. doi: 10.7930/
NCA4.2018.CH14.
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    To this end, the scientific assessment literature, including the
aforementioned reports, demonstrates that there are myriad ways in
which these populations may be affected at the individual and community
levels. Individuals face differential exposure to criteria pollutants,
in part due to the proximities of highways, trains, factories, and
other major sources of pollutant-emitting sources to less-affluent
residential areas. Outdoor workers, such as construction or utility
crews and agricultural laborers, who frequently are comprised of
already at-risk groups, are exposed to poor air quality and extreme
temperatures without relief. Furthermore, individuals within EJ
populations of concern face greater housing and clean water insecurity
and bear disproportionate economic impacts and health burdens
associated with climate change effects. They have less or limited
access to healthcare and affordable, adequate health or homeowner
insurance. Finally, resiliency and adaptation are more difficult for
economically disadvantaged communities: They have less liquidity,
individually and collectively, to move or to make the types of
infrastructure or policy changes to limit or reduce the hazards they
face. They frequently are less able to self-advocate for resources that
would otherwise aid in resiliency and hazard reduction and mitigation.
    The assessment literature cited in EPA's 2009 and 2016 Endangerment
Findings, as well as Impacts of Climate Change on Human Health, also
concluded that certain populations and life stages, including children,
are most vulnerable to climate-related health effects. The assessment
literature produced from 2016 to the present strengthens these
conclusions by providing more detailed findings regarding related
vulnerabilities and the projected impacts youth may experience. These
assessments--including the Fourth National Climate Assessment (2018)
and The Impacts of Climate Change on Human Health in the United States
(2016)--describe how children's unique physiological and developmental
factors contribute to making them particularly vulnerable to climate
change. Impacts to children are expected from heat waves, air
pollution, infectious and waterborne illnesses, and mental health
effects resulting from extreme weather events. In addition, children
are among those especially susceptible to allergens, as well as health
effects associated with heat waves, storms, and floods. Additional
health concerns may arise in low-income households, especially those
with children, if climate change reduces food availability and
increases prices, leading to food insecurity within households.
    The Impacts of Climate Change on Human Health \203\ also found that
some communities of color, low-income groups, people with limited
English proficiency, and certain immigrant groups (especially those who
are undocumented) live with many of the factors that contribute to
their vulnerability to the health impacts of climate change. While
difficult to isolate from related socioeconomic factors, race appears
to be an important factor in vulnerability to climate-related stress,
with elevated risks for mortality from high temperatures reported for
Black or African American individuals compared to White individuals
after controlling for factors such as air conditioning use. Moreover,
people of color are disproportionately exposed to air pollution based
on where they live, and disproportionately vulnerable due to higher
baseline prevalence of underlying diseases such as asthma, so climate
exacerbations of air pollution are expected to have disproportionate
effects on these communities.
    Native American Tribal communities possess unique vulnerabilities
to climate change, particularly those impacted by degradation of
natural and cultural resources within established reservation
boundaries and threats to traditional subsistence lifestyles. Tribal
communities whose health, economic well-being, and cultural traditions
depend upon the natural environment will likely be affected by the
degradation of ecosystem goods and services associated with climate
change. The IPCC indicates that losses of customs and historical
knowledge may cause communities to be less resilient or adaptable.\205\
The Fourth National Climate Assessment (2018) noted that while
Indigenous peoples are diverse and will be impacted by the climate
changes universal to all Americans, there are several ways in which
climate change uniquely threatens Indigenous peoples' livelihoods and
economies.\206\

In addition, there can institutional barriers to their management of
water, land, and other natural resources that could impede adaptive
measures.
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    \205\ Porter et al., 2014: Food security and food production
systems.
    \206\ Jantarasami, L.C., R. Novak, R. Delgado, E. Marino, S.
McNeeley, C. Narducci, J. Raymond-Yakoubian, L. Singletary, and K.
Powys Whyte, 2018: Tribes and Indigenous Peoples. In Impacts, Risks,
and Adaptation in the United States: Fourth National Climate
Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R.
Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C.
Stewart (eds.)]. U.S. Global Change Research Program, Washington,
DC, USA, pp. 572-603. doi: 10.7930/NCA4.2018.CH15.
---------------------------------------------------------------------------

    For example, Indigenous agriculture in the Southwest is already
being adversely affected by changing patterns of flooding, drought,
dust storms, and rising temperatures leading to increased soil erosion,
irrigation water demand, and decreased crop quality and herd sizes. The
Confederated Tribes of the Umatilla Indian Reservation in the Northwest
have identified climate risks to salmon, elk, deer, roots, and
huckleberry habitat. Housing and sanitary water supply infrastructure
are vulnerable to disruption from extreme precipitation events.
    NCA4 noted that Indigenous peoples often have disproportionately
higher rates of asthma, cardiovascular disease, Alzheimer's, diabetes,
and obesity, which can all contribute to increased vulnerability to
climate-driven extreme heat and air pollution events. These factors
also may be exacerbated by stressful situations, such as extreme
weather events, wildfires, and other circumstances.
    NCA4 and IPCC AR5 \207\ also highlighted several impacts specific
to Alaskan Indigenous Peoples. Coastal erosion and permafrost thaw will
lead to more coastal erosion, exacerbated risks of winter travel, and
damage to buildings, roads, and other infrastructure--these impacts on
archaeological sites, structures, and objects that will lead to a loss
of cultural heritage for Alaska's Indigenous people. In terms of food
security, the NCA discussed reductions in suitable ice conditions for
hunting, warmer temperatures impairing the use of traditional ice
cellars for food storage, and declining shellfish populations due to
warming and acidification. While the NCA also noted that climate change
provided more opportunity to hunt from boats later in the fall season
or earlier in the spring, the assessment found that the net impact was
an overall decrease in food security.
---------------------------------------------------------------------------

    \207\ Porter et al., 2014: Food security and food production
systems.
---------------------------------------------------------------------------

2. Non-GHG Impacts
    In addition to significant climate change benefits, the proposed
standards would also impact non-GHG emissions. In general, we expect
small non-GHG emissions reductions from the combination of ``upstream''
emissions sources related to extracting, refining, transporting, and
storing petroleum fuels. We also expect small increases in emissions
from upstream electricity generating units (EGUs). A possible increase
in emissions from coal- and NG-fired electricity generation to meet
increased EV electricity demand could result in adverse EJ impacts. For
on-road light duty vehicles, the proposed standards would reduce total
non-GHG emissions, though we expect small increases in some non-GHG
emissions in the years immediately following implementation of the
proposal, followed by growing decreases in emissions in later years.
This is due to our assumptions about increased ``rebound'' driving. See
Table 44 for more detail on the estimated non-GHG emissions impacts of
the proposal.208 As discussed in Section I.A.3 of the
Executive Summary, future EPA regulatory actions that would result in
increased zero-emission vehicles and cleaner energy generation would
more significantly change the non-GHG impacts of transportation and
electricity generation, and those impacts will be analyzed in more
detail in those future actions.
    There is evidence that communities with EJ concerns are
disproportionately impacted by the non-GHG emissions associated with
this proposal.\209\ Numerous studies have found that environmental
hazards such as air pollution are more prevalent in areas where
minority populations and low-income populations represent a higher
fraction of the population compared with the general
population.210 211 212 Consistent with this evidence, a
recent study found that most anthropogenic sources of PM2.5,
including industrial sources, and light- and heavy-duty vehicle
sources, disproportionately affect people of color.\213\
---------------------------------------------------------------------------

    \209\ Mohai, P.; Pellow, D.; Roberts Timmons, J. (2009)
Environmental justice. Annual Reviews 34: 405-430. https://doi.org/10.1146/annurev-environ-082508-094348.
    \210\ Rowangould, G.M. (2013) A census of the near-roadway
population: public health and environmental justice considerations.
Trans Res D 25: 59-67. http://dx.doi.org/10.1016/j.trd.2013.08.003.
    \211\ Marshall, J.D., Swor, K.R.; Nguyen, N.P (2014)
Prioritizing environmental justice and equality: diesel emissions in
Southern California. Environ Sci Technol 48: 4063-4068. https://doi.org/10.1021/es405167f.
    \212\ Marshall, J.D. (2000) Environmental inequality: air
pollution exposures in California's South Coast Air Basin. Atmos
Environ 21: 5499-5503. https://doi.org/10.1016/j.atmosenv.2008.02.005.
    \213\ C.W. Tessum, D.A. Paolella, S.E. Chambliss, J.S. Apte,
J.D. Hill, J.D. Marshall, PM2.5 polluters
disproportionately and systemically affect people of color in the
United States. Sci. Adv. 7, eabf4491 (2021).
---------------------------------------------------------------------------

    Analyses of communities in close proximity to upstream sources,
such as EGUs, have found that a higher percentage of communities of
color and low-income communities live near these sources when compared
to national averages.\214\ Vulnerable populations near upstream
refineries may experience potential disparities in pollution-related
health risk from that source.\215\ We expect that small increases in
non-GHG emissions from EGUs and small reductions in petroleum-sector
emissions would lead to small changes in exposure to these non-GHG
pollutants for people living in the communities near these facilities.
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    \214\ See 80 FR 64662, 64915-64916 (October 23, 2015).
    \215\ U.S. EPA (2014). Risk and Technology Review--Analysis of
Socio-Economic Factors for Populations Living Near Petroleum
Refineries. Office of Air Quality Planning and Standards, Research
Triangle Park, North Carolina. January.
---------------------------------------------------------------------------

    There is also substantial evidence that people who live or attend
school near major roadways are more likely to be of a racial minority,
Hispanic ethnicity, and/or low socioeconomic status.216 217
We would expect that communities near roads will benefit from
reductions of non-GHG pollutants as fuel efficiency improves and the
use of zero-emission vehicles (such as full battery electric vehicles)
increases, though increased rebound driving may offset some of these
emission reductions, especially in the years immediately after
finalization of the proposed standards.
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    \216\ Tian, N.; Xue, J.; Barzyk. T.M. (2013) Evaluating
socioeconomic and racial differences in traffic-related metrics in
the United States using a GIS approach. J Exposure Sci Environ
Epidemiol 23: 215-222.
    \217\ Boehmer, T.K.; Foster, S.L.; Henry, J.R.; Woghiren-
Akinnifesi, E.L.; Yip, F.Y. (2013) Residential proximity to major
highways--United States, 2010. Morbidity and Mortality Weekly Report
62(3): 46-50.
---------------------------------------------------------------------------

    Although proximity to an emissions source is a useful indicator of
potential exposure, it is important to note that the impacts of
emissions from both upstream and tailpipe sources are not limited to
communities in close proximity to these sources. The effects of
potential increases and decreases in emissions from the sources
affected by this proposal might also be felt many miles away, including
in communities with EJ concerns. The spatial extent of these impacts
from upstream and tailpipe sources depend on a range of interacting and
complex factors including the amount of pollutant emitted, atmospheric
chemistry and meteorology.

    In summary, we expect this proposed rule would result in both small
reductions and small increases of non-GHG emissions. These effects
could potentially impact communities with EJ concerns, though not
necessarily immediately and not equally in all locations. For this
proposal, the air quality information needed to perform a quantified
analysis of the distribution of such impacts was not available. We
therefore recommend caution when interpreting these broad, qualitative
observations. We note that EPA intends to develop a future rule to
control emissions of GHGs as well as criteria and air toxic pollutants
from light-duty vehicles for model years beyond 2026. We are
considering how to project air quality impacts from the changes in non-
GHG emissions for that future rulemaking (see Section V.C). EPA is also
seeking comment on how to conduct an EJ analysis of the non-GHG impacts
associated with mobile source rulemakings, including how EV penetration
in the future fleet would affect these impacts.

M. Affordability and Equity Impacts

    The impacts of the proposed standards on social equity depend in
part on their effects on the affordability of vehicles and
transportation services, especially for lower-income households. Access
to transportation improves the ability of people, including those with
low income, to pursue jobs, education, health care, and necessities of
daily life such as food and housing. This section discusses how these
standards might affect affordability of vehicles. We acknowledge that
vehicles, especially household ownership of vehicles, are only a
portion of the larger issues concerning access to transportation and
mobility services, which also takes into consideration public
transportation and land use design. Though these issues are
inextricably linked, the following discussion focuses on effects
related to private vehicle ownership and use. We also acknowledge that
the emissions of vehicles, both local pollutants and GHGs, can have
disproportionate impacts on lower-income and minority communities; see
Preamble Section I.E for further discussion of these topics. Finally,
we note that social equity involves issues beyond income and
affordability, including race, ethnicity, gender, gender
identification, and residential location; EPA will continue to examine
such impacts and seeks comment on the impact of this proposal on
additional dimensions of equity.
    Affordability is not a well-defined concept in academic literature.
As discussed in Cassidy et al. (2016),\218\ researchers have generally
applied the term to necessities such as food, housing, or energy, and
have identified some themes related to:
---------------------------------------------------------------------------

    \218\ Cassidy, A., G. Burmeister, and G. Helfand. ``Impacts of
the Model Year 2017-2025 Light-Duty Vehicle Greenhouse Gas Emission
Standards on Vehicle Affordability.'' Working paper.

    Instead of focusing on the traditional economic concept of
willingness to pay, any consideration of affordability must also
consider the ability to pay for a socially defined minimum level of
a good, especially of a necessity.
    Although the ability to pay is often based on the proportion of
income devoted to expenditures on a particular good, this ratio
approach is widely criticized for not considering expenditures on
other possibly necessary goods, quality differences in the good, and
heterogeneity of consumer preferences for the good.
    Assessing affordability should take into account both the short-
term costs and long-term costs associated with consumption of a
particular good.

    As noted in Cassidy et al. (2016), there is very little literature
applying the concept of affordability to transportation, much less to
vehicle ownership. It is not clear how to identify a socially
acceptable minimum level of transportation service. However, it seems
reasonable that some minimum level of transportation services is
necessary to enable households access to employment, education, and
basic services such as buying food. It also seems reasonable to assume
that transportation requirements vary substantially across populations
and geographic locations, and it is not clear when consumption of
transportation moves from being a necessity to optional. Normatively
defining the minimum adequate level of transportation consumption is
difficult given the heterogeneity of consumer preferences and living
situations. As a result, it is challenging to define how much residual
income should remain with each household after transportation
expenditures. It is therefore not surprising that academic and policy
literature have largely avoided attempting to define transportation
affordability.
    We are following the approach in the 2016 EPA Proposed
Determination for the Midterm Evaluation \219\ of considering four
questions that relate to the effects of the LDV GHG standards on new
vehicle affordability: How the standards affect lower-income
households; how the standards affect the used vehicle market; how the
standards affect access to credit; and how the standards affect the
low-priced vehicle segment. See DRIA Chapter 8.3 for further detail.
---------------------------------------------------------------------------

    \219\ U.S. Environmental Protection Agency (2016). Proposed
Determination on the Appropriateness of the Model Year 2022-2025
Light-Duty Vehicle Greenhouse Gas Emissions Standards under the
Midterm Evaluation, Chapter 4.3.3. EPA-420-R-16-020. https://nepis.epa.gov/Exe/ZyPDF.cgi? Dockey=P100Q3DO.pdf, accessed 4/26/
2021.
---------------------------------------------------------------------------

    The effects of the standards on lower-income households depend on
the responses not just to up-front costs but also to the reduction in
fuel and operating costs associated with the standards. These responses
will affect not only the sales of new vehicles, as discussed in
Sections 0 and VII.B, but also the prices of used vehicles as well as
the costs associated with ride-hailing and ride-sharing services. A
recent study notes that lower-income households spend more on gasoline
as a proportion of their income than higher-income households.\220\ In
addition, the Proposed Determination, Appendix B.1.6, observed that
lower-income households spend more on gasoline than on either new or
used vehicles, and more on used vehicles than new ones, suggesting the
importance of operating costs for these households. If the per-mile
costs of services such as ride hailing and ride sharing decrease to
reflect lower operating costs, those who do not own vehicles may
benefit.
---------------------------------------------------------------------------

    \220 \ Vaidyanathan, S., P. Huether, and B. Jennings (2021).
``Understanding Transportation Energy Burdens.'' Washington, DC:
American Council for an Energy-Efficient White Paper. https://www.aceee.org/white-paper/2021-05/understanding-transportation-energy-burdens, accessed 5/24/2021.
---------------------------------------------------------------------------

    If sales of new vehicles decrease, then prices of used vehicles,
which are disproportionately purchased by lower-income households,
would be expected to increase; the reverse would happen if new vehicle
sales increase. These effects in the used vehicle market also affect
how long people hold onto their used vehicles. This effect, sometimes
termed the ``Gruenspecht effect'' after Gruenspecht (1982),\221\ would
lead to both slower adoption of vehicles subject to the new standards,
and more use of older vehicles not subject to the new standards, with
associated higher emissions, if new vehicle sales decrease. The
Gruenspecht effect, therefore, may have the additional consequence of
increased concentrations of older vehicles in some communities in the
short term, and may delay benefits associated with advanced vehicle
technologies for those communities. As discussed in Section VII.B, new
vehicle

sales are projected to show a roughly 2 percent decrease from sales
under the SAFE rule; that value depends on the uncertain assumption
that vehicle buyers consider just a small share of future fuel
consumption in the purchase decision. EPA is working with RTI
International to understand better the connections between the new and
the used vehicle market. Changes in the new vehicle market are expected
not only to have immediate effects on the prices of used vehicles, but
also to affect the market over time, as the supply of used vehicles in
the future depends on how many new vehicles are sold.
---------------------------------------------------------------------------

    \221\ Gruenspecht, H. (1982). ``Differentiated Regulation: The
Case of Auto Emissions Standards.'' American Economic Review 72:
328-331.
---------------------------------------------------------------------------

    Access to credit is a potential barrier to purchase of vehicles
whose up-front costs have increased; access may also be affected by
race, ethnicity, gender, gender identity, residential location,
religion, or other factors. If lenders are not willing to provide
financing for buyers who face higher prices, perhaps because the
potential buyers are hitting a maximum on the debt-to-income ratio
(DTI) that lenders are willing to accept, then those buyers may not be
able to purchase new vehicles. On the other hand, some lenders give
discounts on loans to purchase more fuel-efficient vehicles.\222\
Subsidies exist from the federal government, and some state
governments, for plug-in electric vehicles.\223\ In addition, as
documented in the Midterm Evaluation,\224\ the DTI does not appear to
be a fixed obstacle for access to finance; from 2007 to 2015, 28
percent of lower-income households and 7 percent of higher-income
households who both had a DTI of over 36 percent and purchased at least
one new vehicle financed their vehicle purchases.
---------------------------------------------------------------------------

    \222\ Helfand, Gloria (2021). ``Memorandum: Lending Institutions
that Provide Discounts for more Fuel Efficient Vehicles.'' U.S. EPA
Office of Transportation and Air Quality, Memorandum to the Docket.
    \223\ U.S. Department of Energy and U.S. Environmental
Protection Agency. ``Federal Tax Credits for New All-Electric and
Plug-in Hybrid Vehicles.'' https://www.fueleconomy.gov/feg/taxevb.shtml, accessed 4/28/2021.
    \224\ See Note 219, Chapter <IP_ADDRESS>.
---------------------------------------------------------------------------

    Low-priced vehicles may be considered an entry point for people
into buying new vehicles instead of used ones; automakers may seek to
entice people to buy new vehicles through a low price point. It is
possible that higher costs associated with proposed standards could
affect the ability of automakers to maintain vehicles in this value
segment. At the same time, this segment historically tended to include
more fuel-efficient vehicles that assisted automakers in achieving CAFE
standards.\225\ The footprint-based standards, by encouraging
improvements in GHG emissions and fuel economy across the vehicle
fleet, reduce the need for low-priced vehicles to be a primary means of
compliance with the standards. This change in incentives for the
marketing of this segment may contribute to the increases in the prices
of vehicles previously in this category. Low-priced vehicles still
exist; the Chevrolet Spark, for example, is listed as starting at
$13,400.\226\ At the same time, this segment is gaining more content,
such as improved entertainment systems and electric windows; they may
be developing an identity as a desirable market segment without regard
to their previous purpose in enabling the sales of less efficient
vehicles and compliance with CAFE standards.\227\ Whether this segment
continues to exist, and in what form, may depend on the marketing plans
of manufacturers: Whether benefits are greater from offering basic new
vehicles to first-time new-vehicle buyers, or from making small
vehicles more attractive by adding more desirable features to them.
---------------------------------------------------------------------------

    \225\ Austin, D., and T. Dinan (2005). ``Clearing the Air: The
Costs and Consequences of Higher CAFE Standards and Increased
Gasoline.'' Journal of Environmental Economics and Management 50(3):
562-82; Kleit, A. (2004). ``Impacts of Long-Range Increases in the
Fuel Economy (CAFE) Standard.'' Economic Inquiry 42(2): 279-294.
    \226\ Motortrend (2021). ``These Are the 10 Cheapest Cars You
Can Buy in 2021.'' https://www.motortrend.com/features-collections/top-10-cheapest-new-cars/, accessed 4/28/2021; Chevrolet Spark,
https://www.chevrolet.com/cars/spark, accessed 5/27/2021.
    \227\ See Note 218.
---------------------------------------------------------------------------

    New electric vehicles currently have higher up-front costs and
lower operating costs than gasoline vehicles and require access to
charging infrastructure that may not be readily available to many. This
proposal does not project major penetration of electric vehicles in
response to the proposed standards, from 3.6 percent in MY 2023 to 7.8
percent in MY 2026 (see Table 42). EPA will monitor and study
affordability issues related to electric vehicles as their prevalence
in the vehicle fleet increases.
    In sum, as with the effects of the proposed standards on vehicle
sales discussed in Section VII.B, the effects of the standards on
affordability depend on two countervailing effects: The increase in the
up-front costs of the vehicles, and the decrease in operating costs.
The increase in up-front costs has the potential to increase the prices
of used vehicles, to make credit more difficult to obtain, and to make
the least expensive new vehicles less desirable compared to used
vehicles. The reduction in operating costs has the potential to
mitigate or reverse all these effects. Lower operating costs on their
own increase mobility (see DRIA Chapter 3.1 for a discussion of rebound
driving). It is possible that lower-income households may benefit more
from the reduction in operating costs than the increase in up-front
costs, because they own fewer vehicles per household, spend more on
fuel than on vehicles on an annual basis, and those fuel expenditures
represent a higher fraction of their household income.
    See DRIA Chapter 8.3 for more detailed discussion of these issues.

VIII. Statutory and Executive Order Reviews

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

    This action is an economically significant regulatory action that
was submitted to the Office of Management and Budget (OMB) for review.
Any changes made in response to OMB recommendations have been
documented in the docket. EPA prepared an analysis of the potential
costs and benefits associated with this action. This analysis is in the
Draft Regulatory Impact Analysis, which can be found in the docket for
this rule, and is briefly summarized in Section VII of this preamble.

B. Paperwork Reduction Act

    This action does not impose any new information collection burden
under the PRA. OMB has previously approved the information collection
activities contained in the existing regulations and has assigned OMB
control number 2127-0019. This proposed rule changes the level of the
existing emission standards and revises several existing credit
provisions, but imposes no new information collection requirements.

C. Regulatory Flexibility Act

    I certify that this action will not have a significant economic
impact on a substantial number of small entities under the RFA. This
action will not impose any requirements on small entities. EPA's
existing regulations exempt from the GHG standards any manufacturer,
domestic or foreign, meeting Small Business Administration's size
definitions of small business in 13 CFR 121.201. EPA is not proposing
any changes to the provisions for small businesses under this proposal,
and thus they would

remain exempt. For additional discussion see chapter 9 of the DRIA.

D. Unfunded Mandates Reform Act

    This proposed rule contains no federal mandates under UMRA, 2
U.S.C. 1531-1538, for State, local, or tribal governments. The proposed
rule would impose no enforceable duty on any State, local or tribal
government. This proposed rule would contain a federal mandate under
UMRA that may result in expenditures of $100 million or more for the
private sector in any one year. Accordingly, the costs and benefits
associated with the proposed rule are discussed in Section VII and in
the DRIA, which are in the docket for this rule.
    This action is not subject to the requirements of section 203 of
UMRA because it contains no regulatory requirements that might
significantly or uniquely affect small governments.

E. Executive Order 13132: ``Federalism''

    This action does not have federalism implications. It will not have
substantial direct effects on the states, on the relationship between
the national government and the states, or on the distribution of power
and responsibilities among the various levels of government.

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

    This action does not have tribal implications as specified in
Executive Order 13175. Thus, Executive Order 13175 does not apply to
this action. However, EPA plans to continue engaging with our tribal
stakeholders in the development of this rulemaking by offering a tribal
workshop and offering government-to-government consultation upon
request.

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

    With respect to GHG emissions, EPA has determined that this rule
will not have disproportionate impacts on children (62 FR 19885, April
23, 1997). This rule will reduce emissions of potent GHGs, which as
noted earlier in Section I.E of this preamble, will reduce the effects
of climate change, including the public health and welfare effects on
children.
    GHGs contribute to climate change and the GHG emissions reductions
resulting from implementation of this proposal would further improve
children's health. The assessment literature cited in EPA's 2009 and
2016 Endangerment Findings concluded that certain populations and life
stages, including children, the elderly, and the poor, are most
vulnerable to climate-related health effects. The assessment literature
since 2016 strengthens these conclusions by providing more detailed
findings regarding these groups' vulnerabilities and the projected
impacts they may experience. These assessments describe how children's
unique physiological and developmental factors contribute to making
them particularly vulnerable to climate change. Impacts to children are
expected from heat waves, air pollution, infectious and waterborne
illnesses, and mental health effects resulting from extreme weather
events. In addition, children are among those especially susceptible to
most allergic diseases, as well as health effects associated with heat
waves, storms, and floods. Additional health concerns may arise in low-
income households, especially those with children, if climate change
reduces food availability and increases prices, leading to food
insecurity within households. More detailed information on the impacts
of climate change to human health and welfare is provided in Section
IV.B of this preamble.
    We expect this proposed rule would, on net, result in both small
reductions and small increases in non-GHG emissions that could impact
children, though not necessarily immediately and not equally in all
locations. However, with respect to non-GHG emissions, EPA has
concluded that it is not practicable to determine whether there would
be disproportionate impacts on children. EPA intends to develop another
rule to further reduce emissions of GHGs from light-duty vehicles for
model years beyond 2026. We are considering how to project air quality
and health impacts from the changes in non-GHG emissions for that
future rulemaking (see Section V.C).

H. Executive Order 13211: ``Energy Effects''

    This action is not a ``significant energy action'' because it is
not likely to have a significant adverse effect on the supply,
distribution, or use of energy. EPA has outlined the energy effects in
Table 5-7 of the Regulatory Impact Analysis (RIA), which is available
in the docket for this action and is briefly summarized here.
    This action proposes to reduce CO2 for passenger cars and light
trucks under revised GHG standards, which will result in significant
reductions of the consumption of petroleum, will achieve energy
security benefits, and have no adverse energy effects. Because the GHG
emission standards result in significant fuel savings, this rule
encourages more efficient use of fuels. Table 5-7 in the RIA shows 291
million barrels of gasoline per year will be saved in 2050, which can
be summarized as a net reduction of 797,260 barrels of gasoline per day
in 2050.

I. National Technology Transfer and Advancement Act

    Section 12(d) of the NTTAA, 15 U.S.C. 272 note, directs federal
agencies to use voluntary consensus standards (VCSs) in their
regulatory activities unless to do so would be ``inconsistent with
applicable law or otherwise impractical.'' VCSs are technical
standards, which include materials specifications, test methods,
sampling protocols, business practices and management systems developed
or adopted by voluntary consensus standards bodies (VCSBs), both
domestic and international. These bodies plan, develop, establish or
coordinate voluntary consensus standards using agreed-upon procedures.
    In addition, the statute encourages agencies to consult with VCSBs
and participate in the development of such standards when compatible
with agency missions, authorities, priorities and budget resources. The
use of VCSs, whenever practicable and appropriate, is intended to
achieve the following goals:
     To eliminate the cost to the government of developing its
own standards and decrease the cost of goods procured and the burden of
complying with agency regulation;
     To provide incentives and opportunities to establish
standards that serve national needs;
     To encourage long-term growth for U.S. enterprises and
promote efficiency and economic competition through harmonization of
standards; and
     To further the policy of reliance upon the private sector
to supply government needs for goods and services.
    The requirements apply to the use of VCSs in ``regulatory and
procurement activities.'' Regulations that do not establish or involve
technical standards do not trigger the NTTAA requirements, but it is
recommended that agencies provide a brief explanation for why the NTTAA
does not apply.
    Note that agencies retain broad discretion in deciding when to use
VCSs; however, agencies are required to justify the use of government-
unique standards when potentially applicable VCSs are available. The
NTTAA also does not affect the agency's authority to determine
substantive standards as

opposed to technical standards (see guidance from the Office of
Management and Budget (OMB) at http://www.whitehouse.gov/omb/circulars_a119.
    This rulemaking involves technical standards. The Agency conducted
a search to identify potentially applicable voluntary consensus
standards. For CO2, emissions, we identified no such
standards. For CO2 emissions, EPA is therefore collecting
data over the same tests that are used for the current CO2
standards and for the CAFE program. This will minimize the amount of
testing done by manufacturers, since manufacturers are already required
to run these tests. For A/C credits, EPA is using the test specified in
40 CFR 1066.845. EPA knows of no voluntary consensus standard for the
A/C test.
    We are proposing to amend 40 CFR 86.1 to reference SAE J1711,
Recommended Practice for Measuring the Exhaust Emissions and Fuel
Economy of Hybrid-Electric Vehicles, Including Plug-in Hybrid Vehicles,
Revised June 2010. The regulation already has rulemaking provisions at
40 CFR 86.1866-12(b) that include references to SAE J1711. We rely on
the published procedure to describe test methods related to measuring
exhaust emissions from hybrid-electric vehicles. The proposed amendment
would complete the administrative steps needed to properly accomplish
this incorporation by reference. The referenced recommended practice
may be obtained from SAE International on the internet at www.sae.org,
by email at<EMAIL_ADDRESS>or by calling<PHONE_NUMBER> or 724-
776-4970.

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

    For this proposed action, EPA is only able to qualitatively
evaluate the extent to which this action may result in
disproportionately high and adverse human health or environmental
effects on minority populations, low income populations, and/or
indigenous peoples, as specified in Executive Order 12898 (59 FR 7629,
February 16, 1994). With respect to GHG emissions, EPA has determined
that this rule will benefit all U.S. populations, including minority
populations, low-income populations and/or indigenous peoples. While
this proposed rule would substantially reduce GHG emissions, future
impacts of climate change are still expected in the baseline and will
likely be unevenly distributed in ways that uniquely impact these
communities. EPA has not quantitatively assessed these effects.
    For non-GHG pollutants EPA has concluded that it is not practicable
given the timing of this proposed action to determine the extent to
which effects on minority populations, low-income populations and/or
indigenous peoples are differentially distributed. We expect this
proposed rule would result in both small reductions and small increases
of non-GHG emissions that could impact communities with EJ concerns,
though not necessarily immediately and not equally in all locations. It
was not practicable to develop the air quality information needed to
perform a quantified analysis of the distribution of such non-GHG
impacts. EPA intends to develop a future rule to further reduce
emissions of GHGs from light-duty vehicles for model years beyond 2026.
We are considering how to project air quality impacts from the changes
in non-GHG emissions for that future rulemaking (see Section V.C). EPA
is taking comment on the types of effects that are important to
consider from an EJ perspective as well as ways in which such effects
could be quantitatively evaluated for future rulemakings. Section VII.L
describes how we considered environmental justice in this action.

IX. Statutory Provisions and Legal Authority

    Statutory authority for this proposed rule is found in section
202(a) (which authorizes standards for emissions of pollutants from new
motor vehicles which emissions cause or contribute to air pollution
which may reasonably be anticipated to endanger public health or
welfare), 202(d), 203-209, 216, and 301 of the Clean Air Act, 42 U.S.C.
7521(a), 7521(d), 7522-7525, 7541-7543, 7550, and 7601.

List of Subjects

40 CFR Part 86

    Environmental protection, Administrative practice and procedure,
Confidential business information, Incorporation by reference,
Labeling, Motor vehicle pollution, Reporting and recordkeeping
requirements.

40 CFR Part 600

    Environmental protection, Administrative practice and procedure,
Electric power, Fuel economy, Labeling, Reporting and recordkeeping
requirements.

Michael S. Regan,
Administrator.

    For the reasons set out in the preamble, we propose to amend title
40, chapter I of the Code of Federal Regulations as set forth below.

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES
AND ENGINES

0
1. The authority citation for part 86 continues to read as follows:

    Authority: 42 U.S.C. 7401-7671q.

0
2. Amend Sec.  86.1 by redesignating paragraphs (g)(3) through (27) as
(g)(4) through (28) and adding new paragraph (g)(3) to read as follows:

Sec.  86.1  Incorporation by reference.

* * * * *
    (g) * * *
    (3) SAE J1711, Recommended Practice for Measuring the Exhaust
Emissions and Fuel Economy of Hybrid-Electric Vehicles, Including Plug-
in Hybrid Vehicles, Revised June 2010, IBR approved for Sec.  86.1866-
12(b).
* * * * *
0
3. Amend Sec.  86.1806-17 by revising paragraph (a) introductory text
to read as follows:

Sec.  86.1806-17  Onboard diagnostics.

* * * * *
    (a) Vehicles must comply with the 2013 OBD requirements adopted for
California as described in this paragraph (a). California's 2013 OBD-II
requirements are part of Title 13, Sec.  1968.2 of the California Code
of Regulations, approved on July 31, 2013 (incorporated by reference in
Sec.  86.1). We may approve your request to certify an OBD system
meeting a later version of California's OBD requirements if you
demonstrate that it complies with the intent of this section. The
following clarifications and exceptions apply for vehicles certified
under this subpart:
* * * * *
0
4. Amend Sec.  86.1818-12 by revising paragraph (c)(2)(i) and (3)(i) to
read as follows:

Sec.  86.1818-12  Greenhouse gas emission standards for light-duty
vehicles, light-duty trucks, and medium-duty passenger vehicles.

* * * * *
    (c) * * *
    (2) * * *
    (i) Calculation of CO2 target values for passenger automobiles. A
CO2 target value shall be determined for each passenger
automobile as follows:
    (A) For passenger automobiles with a footprint of less than or
equal to 41 square feet, the gram/mile CO2 target value
shall be selected for the appropriate model year from the following
table:

                Table 1 to Sec.   86.1818-12(c)(2)(i)(A)
------------------------------------------------------------------------
                                                            CO2 target
                       Model year                          value (grams/
                                                               mile)
------------------------------------------------------------------------
2012....................................................           244.0
2013....................................................           237.0
2014....................................................           228.0
2015....................................................           217.0
2016....................................................           206.0
2017....................................................           195.0
2018....................................................           185.0
2019....................................................           175.0
2020....................................................           166.0
2021....................................................           161.8
2022....................................................           159.0
2023....................................................           145.6
2024....................................................           138.6
2025....................................................           131.9
2026 and later..........................................           125.6
------------------------------------------------------------------------

    (B) For passenger automobiles with a footprint of greater than 56
square feet, the gram/mile CO2 target value shall be
selected for the appropriate model year from the following table:

                Table 2 to Sec.   86.1818-12(c)(2)(i)(B)
------------------------------------------------------------------------
                                                            CO2 target
                       Model year                          value (grams/
                                                               mile)
------------------------------------------------------------------------
2012....................................................           315.0
2013....................................................           307.0
2014....................................................           299.0
2015....................................................           288.0
2016....................................................           277.0
2017....................................................           263.0
2018....................................................           250.0
2019....................................................           238.0
2020....................................................           226.0
2021....................................................           220.9
2022....................................................           217.3
2023....................................................           199.1
2024....................................................           189.5
2025....................................................           180.3
2026 and later..........................................           171.6
------------------------------------------------------------------------

    (C) For passenger automobiles with a footprint that is greater than
41 square feet and less than or equal to 56 square feet, the gram/mile
CO2 target value shall be calculated using the following
equation and rounded to the nearest 0.1 grams/mile, except that for any
vehicle footprint the maximum CO2 target value shall be the
value specified for the same model year in paragraph (c)(2)(i)(B) of
this section:

Target CO2 = [a x f] + b

Where:

f is the vehicle footprint, as defined in Sec.  86.1803; and a and b
are selected from the following table for the appropriate model
year:

                Table 3 to Sec.   86.1818-12(c)(2)(i)(C)
------------------------------------------------------------------------
                   Model year                          a           b
------------------------------------------------------------------------
2012............................................        4.72        50.5
2013............................................        4.72        43.3
2014............................................        4.72        34.8
2015............................................        4.72        23.4
2016............................................        4.72        12.7
2017............................................        4.53         8.9
2018............................................        4.35         6.5
2019............................................        4.17         4.2
2020............................................        4.01         1.9
2021............................................        3.94         0.2
2022............................................        3.88        -0.1
2023............................................        3.56        -0.4
2024............................................        3.39        -0.4
2025............................................        3.23        -0.3
2026 and later..................................        3.07        -0.3
------------------------------------------------------------------------

* * * * *
    (3) * * *
    (i) Calculation of CO2 target values for light trucks. A
CO2 target value shall be determined for each light truck as
follows:
    (A) For light trucks with a footprint of less than or equal to 41
square feet, the gram/mile CO2 target value shall be
selected for the appropriate model year from the following table:

                Table 4 to Sec.   86.1818-12(c)(3)(i)(A)
------------------------------------------------------------------------
                                                            CO2 target
                       Model year                          value (grams/
                                                               mile)
------------------------------------------------------------------------
2012....................................................           294.0
2013....................................................           284.0
2014....................................................           275.0
2015....................................................           261.0
2016....................................................           247.0
2017....................................................           238.0
2018....................................................           227.0
2019....................................................           220.0
2020....................................................           212.0
2021....................................................           206.5
2022....................................................           203.0
2023....................................................           181.1
2024....................................................           172.1
2025....................................................           163.5
2026 and later..........................................           155.4
------------------------------------------------------------------------

    (B) For light trucks with a footprint that is greater than 41
square feet and less than or equal to the maximum footprint value
specified in the table below for each model year, the gram/mile
CO2 target value shall be calculated using the following
equation and rounded to the nearest 0.1 grams/mile, except that for any
vehicle footprint the maximum CO2 target value shall be the
value specified for the same model year in paragraph (c)(3)(i)(D) of
this section:

Target CO2 = (a x f) + b

Where:

f is the footprint, as defined in Sec.  86.1803; and a and b are
selected from the following table for the appropriate model year:

                                    Table 5 to Sec.   86.1818-12(c)(3)(i)(B)
----------------------------------------------------------------------------------------------------------------
                                                                      Maximum
                           Model year                                footprint           a               b
----------------------------------------------------------------------------------------------------------------
2012............................................................            66.0            4.04           128.6
2013............................................................            66.0            4.04           118.7
2014............................................................            66.0            4.04           109.4
2015............................................................            66.0            4.04            95.1
2016............................................................            66.0            4.04            81.1
2017............................................................            50.7            4.87            38.3
2018............................................................            60.2            4.76            31.6
2019............................................................            66.4            4.68            27.7
2020............................................................            68.3            4.57            24.6
2021............................................................            68.3            4.51            21.5
2022............................................................            68.3            4.44            20.6
2023............................................................            74.0            3.97            18.4
2024............................................................            74.0            3.77            17.4
2025............................................................            74.0            3.58            16.6
2026 and later..................................................            74.0            3.41            15.8
----------------------------------------------------------------------------------------------------------------

    (C) For light trucks with a footprint that is greater than the
minimum footprint value specified in the table below and less than or
equal to the maximum footprint value specified in the table below for
each model year, the

gram/mile CO2 target value shall be calculated using the
following equation and rounded to the nearest 0.1 grams/mile, except
that for any vehicle footprint the maximum CO2 target value
shall be the value specified for the same model year in paragraph
(c)(3)(i)(D) of this section:

Target CO2 = (a x f) + b

Where:

f is the footprint, as defined in Sec.  86.1803; and a and b are
selected from the following table for the appropriate model year:

                                    Table 6 to Sec.   86.1818-12(c)(3)(i)(C)
----------------------------------------------------------------------------------------------------------------
                                                      Minimum         Maximum
                   Model year                        footprint       footprint           a               b
----------------------------------------------------------------------------------------------------------------
2017............................................            50.7            66.0            4.04            80.5
2018............................................            60.2            66.0            4.04            75.0
----------------------------------------------------------------------------------------------------------------

    (D) For light trucks with a footprint greater than the minimum
value specified in the table below for each model year, the gram/mile
CO2 target value shall be selected for the appropriate model
year from the following table:

                Table 7 to Sec.   86.1818-12(c)(3)(i)(D)
------------------------------------------------------------------------
                                                                CO2
               Model year                     Minimum       targetvalue
                                             footprint     (grams/mile)
------------------------------------------------------------------------
2012....................................            66.0           395.0
2013....................................            66.0           385.0
2014....................................            66.0           376.0
2015....................................            66.0           362.0
2016....................................            66.0           348.0
2017....................................            66.0           347.0
2018....................................            66.0           342.0
2019....................................            66.4           339.0
2020....................................            68.3           337.0
2021....................................            68.3           329.4
2022....................................            68.3           324.1
2023....................................            74.0           312.1
2024....................................            74.0           296.5
2025....................................            74.0           281.8
2026 and later..........................            74.0           267.8
------------------------------------------------------------------------

* * * * *
0
5. Amend Sec.  86.1865-12 by revising paragraphs (k)(2), (3), and (6)
to read as follows:

Sec.  86.1865-12  How to comply with the fleet average CO2 standards.

* * * * *
    (k) * * *
    (2) There are no property rights associated with CO2
credits generated under this subpart. Credits are a limited
authorization to emit the designated amount of emissions. Nothing in
this part or any other provision of law shall be construed to limit
EPA's authority to terminate or limit this authorization through a
rulemaking.
    (3) Each manufacturer must comply with the reporting and
recordkeeping requirements of paragraph (l) of this section for
CO2 credits, including early credits. The averaging, banking
and trading program is enforceable as provided in paragraphs
(k)(7)(ii), (k)(9)(iii), and (l)(1)(vi) of this section through the
certificate of conformity that allows the manufacturer to introduce any
regulated vehicles into U.S. commerce.
* * * * *
    (6) Unused CO2 credits generally retain their full value
through five model years after the model year in which they were
generated. Credits remaining at the end of the fifth model year after
the model year in which they were generated may not be used to
demonstrate compliance for later model years. The following particular
provisions apply for passenger cars and light trucks:
    (i) Unused CO2 credits from the 2016 model year shall
retain their full value through the 2023 model year. Credits from the
2016 model year that remain at the end of the 2023 model year may not
be used to demonstrate compliance for later model years.
    (ii) Unused CO2 credits from the 2017 through 2020 model
years shall retain their full value through six model years after the
model year in which they were generated. Credits remaining from these
model years after six model years may not be used to demonstrate
compliance for later model years.
* * * * *
0
6. Amend Sec.  86.1866-12 by--
0
a. Revising paragraphs (b) introductory text and (b)(1).
0
b. Removing paragraph (b)(2)(i).
0
c. Redesignating paragraph (b)(2)(ii) as paragraph (b)(2).
0
d. Adding paragraph (c)(3).
    The addition reads as follows:

Sec.  86.1866-12  CO2 credits for advanced technology vehicles.

* * * * *
    (b) For electric vehicles, plug-in hybrid electric vehicles, fuel
cell vehicles, dedicated natural gas vehicles, and dual-fuel natural
gas vehicles as those terms are defined in Sec.  86.1803-01, that are
certified and produced for U.S. sale in the specified model years and
that meet the additional specifications in this section, the
manufacturer may use the production multipliers in this paragraph (b)
when determining additional credits for advanced technology vehicles.
Full size pickup trucks eligible for and using a

production multiplier are not eligible for the strong hybrid-based
credits described in Sec.  86.1870-12(a)(2) or the performance-based
credits described in Sec.  86.1870-12(b).
    (1) The following production multipliers apply for model year 2017
through 2025 vehicles:

                                       Table 1 to Sec.   86.1866-12(b)(1)
----------------------------------------------------------------------------------------------------------------
                                                         Electric vehicles   Plug-in  hybrid     Dedicated and
                       Model year                          and fuel cell         electric      dual-fuel natural
                                                              vehicles           vehicles         gas vehicles
----------------------------------------------------------------------------------------------------------------
2017...................................................                2.0                1.6                1.6
2018...................................................                2.0                1.6                1.6
2019...................................................                2.0                1.6                1.6
2020...................................................               1.75               1.45               1.45
2021...................................................                1.5                1.3                1.3
2022...................................................                2.0                1.6                2.0
2023-2024..............................................                2.0                1.6                1.0
2025...................................................               1.75               1.45                1.0
----------------------------------------------------------------------------------------------------------------
* (No multiplier credits)

* * * * *
    (c) * * *
    (3) Multiplier-based credits for model years 2022 through 2025 may
not exceed credit caps, as follows:
    (i) Calculate a nominal annual credit cap in Mg using the following
equation, rounded to the nearest whole number:
[GRAPHIC] [TIFF OMITTED] TP10AU21.026

Where:
Pauto = total number of certified passenger automobiles the
manufacturer produced in a given model year for sale in any state or
territory of the United States.
    Ptruck = total number of certified light trucks (including MDPV)
the manufacturer produced in a given model year for sale in any
state or territory of the United States.
    (ii) Calculate an annual g/mile equivalent value for the
multiplier-based credits using the following equation, rounded to
the nearest 0.1 g/mile:

[GRAPHIC] [TIFF OMITTED] TP10AU21.027

Where:
annual credits = a manufacturer's total multiplier-based credits in
a given model year from all passenger automobiles and light trucks
as calculated under this paragraph (c).

    (iii) Calculate a cumulative g/mile equivalent value for the
multiplier-based credits in 2022 through 2025 by adding the annual g/
mile equivalent values calculated under paragraph (c)(3)(ii) of this
section.
    (iv) The cumulative g/mile equivalent value may not exceed 10.0 in
any year.
    (v) The annual credit report must include for every model year from
2022 through 2025, as applicable, the calculated values for the nominal
annual credit cap in Mg and the cumulative g/mile equivalent value.
0
7. Revise the section heading for Sec.  86.1868-12 to read as follows:

Sec.  86.1868-12  CO2 credits for improving the efficiency of air
conditioning systems.

* * * * *
0
8. Amend Sec.  86.1869-12 by revising the section heading and
paragraphs (b)(2), (4)(v), (vi), and (x), and (d)(2)(ii)(A) to read as
follows:

Sec.  86.1869-12   CO2 credits for off-cycle CO2 reducing technologies.

* * * * *
    (b) * * *
    (2) The maximum allowable decrease in the manufacturer's combined
passenger automobile and light truck fleet average CO2
emissions attributable to use of the default credit values in paragraph
(b)(1) of this section is 10 g/mi through model year 2022, and 15 g/mi
for model years 2023 and later, except that manufacturers may use 15 g/
mi in model years 2020 through 2022 if they meet the definitions in
paragraphs (b)(4)(v)(B), (vi)(B), and (x)(B) of this section. If the
total of the CO2 g/mi credit values from paragraph (b)(1) of
this section does not exceed 10 or 15 g/mi (as applicable) for any
passenger automobile or light truck in a manufacturer's fleet, then the
total off-cycle credits may be calculated according to paragraph (f) of
this section. If the total of the CO2 g/mi credit values
from paragraph (b)(1) of this section exceeds 10 or 15 g/mi (as
applicable) for any passenger automobile or light truck in a
manufacturer's fleet, then the gram per mile decrease for the combined
passenger automobile and light truck fleet must be determined according
to paragraph (b)(2)(ii) of this section to determine whether the
applicable limitation has been exceeded.
    (i) Determine the gram per mile decrease for the combined passenger
automobile and light truck fleet using the following formula:
[GRAPHIC] [TIFF OMITTED] TP10AU21.008

Where:

Credits = The total of passenger automobile and light truck credits,
in Megagrams, determined according to paragraph (f) of this section
and limited to those credits accrued by using the default gram per
mile values in paragraph (b)(1) of this section.
ProdC = The number of passenger automobiles produced by
the manufacturer and delivered for sale in the U.S.
ProdT = The number of light trucks produced by the
manufacturer and delivered for sale in the U.S.

    (ii) If the value determined in paragraph (b)(2)(i) of this section
is greater than 10 or 15 grams per mile (as applicable), the total
credits, in Megagrams, that may be accrued by a manufacturer using the
default gram per mile values in paragraph (b)(1) of this section shall
be determined using the following formula:
[GRAPHIC] [TIFF OMITTED] TP10AU21.009

Where:

ProdC = The number of passenger automobiles produced by
the manufacturer and delivered for sale in the U.S.
ProdT = The number of light trucks produced by the
manufacturer and delivered for sale in the U.S.

    (iii) If the value determined in paragraph (b)(2)(i) of this
section is not greater than 10 or 15 grams per mile (as applicable),
then the credits that may be accrued by a manufacturer using the
default gram per mile values in paragraph (b)(1) of this section do not
exceed the allowable limit, and total credits may be determined for
each category of vehicles according to paragraph (f) of this section.
    (iv) If the value determined in paragraph (b)(2)(i) of this section
is greater than 10 or 15 grams per mile (as applicable), then the
combined passenger automobile and light truck credits, in Megagrams,
that may be accrued using the calculations in paragraph (f) of this
section must not exceed the value determined in paragraph (b)(2)(ii) of
this section. This limitation should generally be done by reducing the
amount of credits attributable to the vehicle category that caused the
limit to be exceeded such that the total value does not exceed the
value determined in paragraph (b)(2)(ii) of this section.
* * * * *
    (4) * * *
    (v) Active transmission warm-up means one of the following:
    (A) Through model year 2019, and optionally for model years 2020-
2022, active transmission warm-up means a system that uses waste heat
from the vehicle to quickly warm the transmission fluid to an operating
temperature range using a heat exchanger, increasing the overall
transmission efficiency by reducing parasitic losses associated with
the transmission fluid, such as losses related to friction and fluid
viscosity.
    (B) Starting in model year 2023, and optionally for model years
2020-2022, active transmission warm-up means a system that uses waste
heat from the vehicle's exhaust to warm the transmission fluid to an
operating temperature range using a dedicated heat exchanger. Active
transmission warm-up may also include coolant systems that capture heat
from a liquid-cooled exhaust manifold if the system is segregated from
the coolant loop in the engine block.
    (vi) Active engine warm-up means one of the following:
    (A) Through model year 2019, and optionally for model years 2020-
2022, active engine warm-up means a system that uses waste heat from
the vehicle to warm up targeted parts of the engine so that it reduces
engine friction losses and enables closed-loop fuel control more
quickly.
    (B) Starting in model year 2023, and optionally for model years
2020-2022, active engine warm-up means a system that uses waste heat
from the vehicle's exhaust to warm up targeted parts of the engine so
that it reduces engine friction losses and enables closed-loop fuel
control more quickly. Active engine warm-up may also include coolant
systems that capture heat from a liquid-cooled exhaust manifold if the
system is segregated from the coolant loop in the engine block.
* * * * *
    (x) Passive cabin ventilation means one of the following:
    (A) Through model year 2019, and optionally for model years 2020-
2022, passive cabin ventilation means ducts, devices, or methods that
utilize convective airflow to move heated air from the cabin interior
to the exterior of the vehicle.
    (B) Starting in model year 2023, and optionally for model years
2020-2022, passive cabin ventilation means methods that create and
maintain convective airflow through the body's cabin by opening windows
or sunroof when the vehicle is parked outside in direct sunlight.
* * * * *
    (d) * * *
    (2) * * *
    (ii) * * *
    (A) A citation to the appropriate previously approved methodology,
including the appropriate Federal Register Notice and any subsequent
EPA documentation of the Administrator's decision;
* * * * *
0
9. Amend Sec.  86.1870-12 by revising the section heading and
paragraphs (a)(2) and (b)(2) to read as follows:

Sec.  86.1870-12  CO2 credits for qualifying full-size light pickup
trucks.

* * * * *
    (a) * * *
    (2) Full size pickup trucks that are strong hybrid electric
vehicles and that are produced in the 2017 through 2025 model years are
eligible for a credit of 20 grams/mile. To receive this credit in a
model year, the manufacturer must produce a quantity of strong hybrid
electric full size pickup trucks such that the proportion of production
of such vehicles, when compared to the manufacturer's total production
of full size pickup trucks, is not less than 10 percent in that model
year. Full size pickup trucks earning credits under this paragraph
(a)(2) may not earn credits based on the production multipliers
described in Sec.  86.1866-12(b).
* * * * *
    (b) * * *
    (2) Full size pickup trucks that are produced in the 2017 through
2025 model years and that achieve carbon-related exhaust emissions less
than or equal to the applicable target value determined in Sec.
86.1818-12(c)(3) multiplied by 0.80 (rounded to the nearest gram/mile)
in a model year are eligible for a credit of 20 grams/mile. A pickup
truck that qualifies for this credit in a model year may claim this
credit for a maximum of four subsequent model years (a total of five
consecutive model years) if the carbon-related exhaust emissions of
that pickup truck do not increase relative to the emissions in the
model year in which the pickup truck

first qualified for the credit. This credit may not be claimed in any
model year after 2025. To qualify for this credit in a model year, the
manufacturer must produce a quantity of full size pickup trucks that
meet the emission requirements of this paragraph (b)(2) such that the
proportion of production of such vehicles, when compared to the
manufacturer's total production of full size pickup trucks, is not less
than 10 percent in that model year. A pickup truck that qualifies for
this credit in a model year and is subject to a major redesign in a
subsequent model year such that it qualifies for the credit in the
model year of the redesign may be allowed to qualify for an additional
five years (not to go beyond the 2025 model year) with EPA approval.
Use good engineering judgment to determine whether a pickup truck has
been subject to a major redesign.
* * * * *
0
10. Revise the section heading of Sec.  86.1871-12 to read as follows:

Sec.  86.1871-12   Optional early CO2 credit programs.

* * * * *

PART 600--FUEL ECONOMY AND GREENHOUSE GAS EXHAUST EMISSIONS OF
MOTOR VEHICLES

0
11. The authority citation for part 600 continues to read as follows:

    Authority:  49 U.S.C. 32901-23919q, Pub. L. 109-58.

0
12. Amend Sec.  600.510-12 by revising paragraphs (j)(2)(v)
introductory text and (vii)(A) introductory text to read as follows:

Sec.  600.510-12   Calculation of average fuel economy and average
carbon-related exhaust emissions.

* * * * *
    (j) * * *
    (2) * * *
    (v) For natural gas dual fuel model types, for model years 2012
through 2015, the arithmetic average of the following two terms; the
result rounded to the nearest gram per mile:
* * * * *
    (vii)(A) This paragraph (j)(2)(vii) applies to model year 2016 and
later natural gas dual fuel model types. Model year 2021 and later
natural gas dual fuel model types may use a utility factor of 0.5 or
the utility factor prescribed in this paragraph (j)(2)(vii).
* * * * *
[FR Doc. 2021-16582 Filed 8-9-21; 8:45 am]
 BILLING CODE 6560-50-P