----------------------------------------------------------------------------------------------------------------
                                                     2022     2030     2031     2032     2033     2034     2035
----------------------------------------------------------------------------------------------------------------
No Action........................................        0    1,760    1,797    1,604    2,459    2,222    1,999
HDPUV4...........................................        0        3        3        3        4        4        4
HDPUV10..........................................        0        8       14       14      148      148      142
HDPUV14..........................................        0       33      352      334      563      540      697
----------------------------------------------------------------------------------------------------------------

    The relatively similar responses across action alternatives carry
over to the analysis of the sales and labor market as well. The
increase in sales in the No Action Alternative carries over to each of
the action alternatives as well. The vehicle-level price increases
noted above produces very small declines in overall sales.
[GRAPHIC] [TIFF OMITTED] TP17AU23.071

    These sales declines and limited additional technology application
produce small decreases in labor utilization, as the sales effect
ultimately outweighs job gains due to development and application of
advanced technology. In aggregate, the alternatives represent less than
half of a percentage point deviation from the No-Action Alternative.

[GRAPHIC] [TIFF OMITTED] TP17AU23.072

    The accompanying Draft TSD Chapter 6.2.5 discusses NHTSA's approach
to estimating automobile industry employment, and the accompanying PRIA
Chapter 8.3 (and its Appendix III) and CAFE Model output files provide
more detailed results of NHTSA's HDPUV analysis.
B. Effects on Society
    NHTSA accounts for the effects on society of the standards by using
a benefit/cost categories framework. These categories include private
costs borne by manufacturers and consumers, SCs to society, which
include external and Government costs, pertaining to emissions,
congestion, noise, energy security, and safety, and all the benefits
resulting from related categories in the form of savings, however they
may occur across the presented alternatives. In this accounting
framework, the CAFE Model records costs and benefits for particular MYs
in the LD fleet but also reports these measures over the lifetime of
the vehicle and allows for the accounting of costs and benefits across
calendar years. Examining program effects through this lens illustrates
the temporal differences in major cost and benefit components. In the
HDPUV FE analysis, where the proposed standard would continue until
otherwise amended, we report only the costs and benefits across
calendar years.
1. Passenger Cars and Light Trucks
    We split effects on society into private costs, SCs, private
benefits, and external benefits. Table IV-20 describes the costs and
benefits of increasing CAFE standards in each alternative, as well as
the party to which they accrue. Manufacturers are directly regulated
under the program and incur additional production costs when they apply
technology to their vehicle offerings in order to improve their fuel
economy. We assume that those costs are fully passed through to new car
and truck buyers in the form of higher prices. We also assume that any
civil penalties paid by manufacturers for failing to comply with their
CAFE standards are passed through to new car and truck buyers and are
included in the sales price. However, those civil penalties are paid to
the U.S. Treasury, where they currently fund the general business of
government. As such, they are a transfer from new vehicle buyers to all
U.S. citizens, who then benefit from the additional Federal revenue.
While they are calculated in the analysis, and do influence consumer
decisions in the marketplace, they do not directly contribute to the
calculation of net benefits (and are omitted from the tables below).
    While incremental maintenance and repair costs and benefits would
accrue to buyers of new cars and trucks affected by more stringent CAFE
standards, we do not carry these impacts in the analysis. They are
difficult to estimate but represent real costs (and potential benefits
in the case of AFVs that require less frequent maintenance events).
They may be included in future analyses as data become available to
evaluate lifetime maintenance impacts. This analysis assumes that
drivers of new vehicles internalize 90 percent of the risk associated
with increased exposure to crashes when they engage in additional
travel (as a consequence of the rebound effect).
    Private benefits are dominated by the value of fuel savings, which
accrue to new car and truck buyers at retail fuel prices (inclusive of
Federal and state taxes). In addition to saving money on fuel
purchases, new vehicle buyers also benefit from the increased mobility
that results from a lower cost of driving their vehicle (higher fuel
economy reduces the per-mile cost of travel) and fewer refueling
events. The additional travel occurs as drivers take advantage of lower
operating costs to increase mobility, and this generates benefits to
those drivers--equivalent to the cost of operating their vehicles to
travel those miles, the consumer surplus, and the offsetting benefit
that represents 90 percent of the additional safety risk from travel.

    In addition to private benefits and costs--those borne by
manufacturers, buyers, and owners of cars and light trucks--there are
other benefits and costs from increasing CAFE standards that are borne
more broadly throughout the economy or society, which NHTSA refers to
as SCs.\489\ The additional driving that occurs as new vehicle buyers
take advantage of lower per-mile fuel costs is a benefit to those
drivers, but the congestion (and road noise) created by the additional
travel also imposes a small additional SC to all road users. We also
include transfers from one party to another other than those directly
incurred by manufacturers or new vehicle buyers, the largest of which
is the loss in fuel tax revenue that occurs as a result of falling fuel
consumption.\490\ Buyers of new cars and light trucks produced in MYs
subject to increasing CAFE standards save on fuel purchases that
include Federal, state, and sometimes local taxes, so revenues from
these taxes decline; because that revenue funds maintenance of roads
and bridges as well as other government activities, the loss in fuel
tax revenue represents a SC, but is offset by the benefits gained by
drivers who spend less at the pump.\491\
---------------------------------------------------------------------------

    \489\ Some of these external benefits and costs result from
changes in economic and environmental externalities from supplying
or consuming fuel, while others do not involve changes in such
externalities but are similar in that they are borne by parties
other than those whose actions impose them.
    \490\ Changes in tax revenues are a transfer and not an economic
externality as traditionally defined, but we group these with social
costs instead of private costs since that loss in revenue affects
society as a whole as opposed to impacting only consumers or
manufacturers.
    \491\ It may subsequently be replaced by another source of
revenue, but that is beyond the scope of this proposal to examine.
---------------------------------------------------------------------------

    Among the purely external benefits created when CAFE standards are
increased, the largest is the reduction in damages resulting from GHG
emissions. Table IV-20 shows the different SC results that correspond
to each GHG DR. The associated benefits related to reduced health
damages from criteria pollutants and the benefit of improved energy
security are both significantly smaller than the associated change in
GHG damages across alternatives. As the tables also illustrate, the
majority of both costs and benefits are private costs and benefits that
accrue to buyers of new cars and trucks, rather than external welfare
changes that affect society more generally (with the exception of the
95th percentile SC-GHG case). This has been consistently true in CAFE
rulemakings.
    Table IV-20 shows that the social and SCC-GHG DRs have a
significant impact on the estimated costs and benefits. With the
exception of the highest SCC-GHG DR, net social benefits are positive
for all alternatives at both the 3 percent and 7 percent social DRs.
Net benefits are higher when assessed at a 3 percent social DR since
the largest benefit--fuel savings--are accrued over a prolonged period,
while the largest cost--technology costs--are accrued predominantly in
earlier years. In the cases with the highest SCC-GHG DR (5%), net
benefits are still positive in the lower stringent alternatives (PC1LT3
and PC2LT4) at a 3 percent social DR. Totals in the following table may
not sum perfectly due to rounding.

         Table IV-20--Incremental Benefits and Costs Over the Lifetimes of Total Fleet Produced Through MY 2032 (2021$ Billions), by Alternative
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                               3% Discount rate                            7% Discount rate
                                                                 ---------------------------------------------------------------------------------------
                                                                    PC1LT3     PC2LT4     PC3LT5     PC6LT8     PC1LT3     PC2LT4     PC3LT5     PC6LT8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Private Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technology Costs to Increase Fuel Economy.......................       29.9       37.8       50.7       68.8       21.5       27.1       36.1       48.5
Increased Maintenance and Repair Costs..........................        0.0        0.0        0.0        0.0        0.0        0.0        0.0        0.0
Sacrifice in Other Vehicle Attributes...........................        0.0        0.0        0.0        0.0        0.0        0.0        0.0        0.0
Consumer Surplus Loss from Reduced New Vehicle Sales............        0.0        0.1        0.2        1.1        0.0        0.1        0.2        0.8
Safety Costs Internalized by Drivers............................        4.3        5.3        6.6        8.7        2.3        2.9        3.6        4.7
                                                                 ---------------------------------------------------------------------------------------
    Subtotal--Private Costs.....................................       34.2       43.3       57.5       78.6       23.8       30.0       39.8       54.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Social Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Congestion and Noise Costs from Rebound-Effect Driving..........        3.0        3.6        5.3        5.3        1.7        2.1        3.1        3.4
Safety Costs Not Internalized by Drivers........................        1.7        1.7        4.6        5.0        1.2        1.4        3.1        4.3
Loss in Fuel Tax Revenue........................................        7.9       10.0       11.3       15.6        4.4        5.6        6.2        8.5
                                                                 ---------------------------------------------------------------------------------------
    Subtotal--Social Costs......................................       12.6       15.4       21.2       26.0        7.4        9.1       12.4       16.3
        Total Societal Costs (incl. Private)....................       46.8       58.6       78.7      104.5       31.2       39.1       52.2       70.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Private Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduced Fuel Costs..............................................       37.6       47.7       55.1       75.9       20.6       26.0       30.0       40.7
Benefits from Additional Driving................................        7.3        9.0       11.0       14.1        4.0        4.9        6.0        7.6
Less Frequent Refueling.........................................        2.0        2.7        3.1        4.6        1.1        1.5        1.7        2.5
                                                                 ---------------------------------------------------------------------------------------
    Subtotal--Private Benefits..................................       46.9       59.4       69.1       94.6       25.6       32.4       37.6       50.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    External Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduction in Petroleum Market Externality.......................        1.5        1.9        2.1        2.9        0.8        1.0        1.1        1.6
Reduced Health Damages..........................................        0.2        0.3        0.2        0.4        0.1        0.1        0.1        0.1
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                 Reduced Climate Damages
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-GHG @5% DR...................................................        2.7        3.5        4.0        5.5        2.7        3.5        4.0        5.5
SC-GHG @3% DR...................................................       11.0       14.0       16.0       22.2       11.0       14.0       16.0       22.2
SC-GHG @2.5% DR.................................................       16.8       21.4       24.6       34.1       16.8       21.4       24.6       34.1
SC-GHG @95th pctile at 3% DR....................................       33.3       42.4       48.7       67.5       33.3       42.4       48.7       67.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Total Societal Benefits (incl. Private)
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-GHG @5% DR...................................................       51.2       65.0       75.5      103.4       29.2       37.0       42.8       58.1
SC-GHG @3% DR...................................................       59.5       75.5       87.5      120.1       37.5       47.5       54.9       74.8
SC-GHG @2.5% DR.................................................       65.3       82.9       96.1      132.0       43.3       54.9       63.5       86.7
SC-GHG @95th pctile at 3% DR....................................       81.8      103.9      120.2      165.4       59.8       75.9       87.6      120.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Net Societal Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-GHG @5% DR...................................................        4.4        6.3       -3.2       -1.2       -2.0       -2.1       -9.4      -12.2
SC-GHG @3% DR...................................................       12.7       16.8        8.8       15.6        6.3        8.4        2.7        4.5
SC-GHG @2.5% DR.................................................       18.5       24.3       17.4       27.5       12.1       15.8       11.3       16.4
SC-GHG @95th pctile at 3% DR....................................       35.0       45.2       41.5       60.9       28.7       36.8       35.4       49.8
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Heavy-Duty Pickups and Vans
    Our categorizations of benefits and costs in the HDPUV space
mirrors the approach taken above for the LD passenger trucks and vans.
Table IV-21 describes the costs and benefits of increasing CAFE
standards in each alternative, as well as the party to which they
accrue. Manufacturers are directly regulated under the program and
incur additional production costs when they apply technology to their
vehicle offerings in order to improve their fuel efficiency. We assume
that those costs are fully passed through to new HDPUV buyers, in the
form of higher prices.
    The choice of GHG DR also affects the resulting benefits and costs.
As the tables show, net social benefits are positive for all
alternatives, and are greatest when SC-GHG DRs of 2.5 or 3 percent are
used. Totals in the following table may not sum perfectly due to
rounding.

                                        Table IV-21--Incremental Benefits and Costs From Calendar Years 2022-2050
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         3% Discount rate                                7% Discount Rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
                       Alternative                            HDPUV4          HDPUV10         HDPUV14         HDPUV4          HDPUV10         HDPUV14
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Private Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Technology Costs to Increase Fuel Economy...............            0.05            1.28            5.81            0.02            0.64            3.02
Increased Maintenance and Repair Costs..................               0               0               0               0               0               0
Sacrifice in Other Vehicle Attributes...................               0               0               0               0               0               0
Consumer Surplus Loss from Reduced New Vehicle Sales....               0               0               0               0               0               0
Safety Costs Internalized by Drivers....................               0            0.12            0.64               0            0.05            0.28
    Subtotal--Private Costs.............................            0.05            1.41            6.45            0.03            0.69            3.30
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Social Costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
Congestion and Noise Costs from Rebound-Effect Driving..               0            0.01            0.07               0            0.01            0.04
Safety Costs Not Internalized by Drivers................               0           -0.10           -0.50               0           -0.04           -0.21
Loss in Fuel Tax Revenue................................            0.03            0.75            3.41            0.01            0.33            1.54
    Subtotal--Social Costs..............................            0.04            0.67            2.98            0.02             0.3            1.37
        Total Social Costs..............................            0.09            2.07            9.43            0.04            0.99            4.67
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                    Private Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduced Fuel Costs......................................            0.12            2.98           13.79            0.05             1.3            6.15
Benefits from Additional Driving........................            0.01            0.26            1.36               0            0.11            0.60
Less Frequent Refueling.................................           -0.06           -0.09           -3.06           -0.03           -0.04           -1.45
    Subtotal--Private Benefits..........................            0.07            3.15           12.09            0.03            1.38            5.30
--------------------------------------------------------------------------------------------------------------------------------------------------------

                                                                    External Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
Reduction in Petroleum Market Externality...............            0.01            0.15            0.67               0            0.07            0.30
Reduced Health Damages..................................               0            0.05            0.22               0            0.02            0.08
Reduced Climate Damages.................................
SC-GHG @5% DR...........................................            0.01            0.23            1.05            0.01            0.23            1.05
SC-GHG @3% DR...........................................            0.04            0.97            4.45            0.04            0.97            4.45
SC-GHG @2.5% DR.........................................            0.06            1.51            6.89            0.06            1.51            6.89
SC-GHG @95th pctile at 3% DR............................            0.12            2.96           13.55            0.12            2.96           13.55
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Total Social Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-GHG @5% DR...........................................            0.08            3.58           14.03            0.04            1.69            6.73
SC-GHG @3% DR...........................................            0.11            4.32           17.43            0.07            2.43           10.12
SC-GHG @2.5% DR.........................................            0.14            4.85           19.87            0.09            2.97           12.56
SC-GHG @95th pctile at 3% DR............................            0.19            6.31           26.53            0.15            4.42           19.23
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Net Social Benefits
--------------------------------------------------------------------------------------------------------------------------------------------------------
SC-GHG @5% DR...........................................          -0.005            1.50            4.61          -0.001            0.69            2.05
SC-GHG @3% DR...........................................            0.03            2.25            8.00            0.03            1.44            5.45
SC-GHG @2.5% DR.........................................            0.05            2.78           10.44            0.05            1.97            7.89
SC-GHG @95th pctile at 3% DR............................            0.11            4.24           17.10            0.11            3.43           14.55
--------------------------------------------------------------------------------------------------------------------------------------------------------

C. Physical and Environmental Effects

1. Passenger Cars and Light Trucks
    NHTSA estimates various physical and environmental effects
associated with the proposed standards. These include quantities of
fuel and electricity consumed, GHGs and criteria pollutants reduced,
and health and safety impacts. Table IV-22 shows the cumulative impacts
grouped by decade, including the on-road fleet sizes, VMT, fuel
consumption, and CO2 emissions, across alternatives. The
size of the on-road fleet increases in later decades regardless of
alternative, but the greatest on-road fleet size projection is seen in
the baseline, with fleet sizes declining as the alternatives become
increasingly more stringent.
    VMT increases occur in the two later decades, with the highest
miles occurring from 2041-2050. Fuel consumption (measured in gallons
or gasoline gallon equivalents) declines across both decades and
alternatives as the alternatives become more stringent, as do GHG
emissions.
---------------------------------------------------------------------------

    \492\ These rows report total vehicle units observed during the
period. For example, 2,393 million units are modeled in the on-road
fleet for CYs 2022-2030. On average, this represents approximately
266 million vehicles in the on-road fleet for each calendar year in
this CY cohort.
    \493\ These rows report total miles traveled during the period.
For example, 28,057 billion miles traveled in CYs 2022-2030. On
average, this represents approximately 3,117 billion annual miles
traveled in this CY cohort.

                  Table IV-22--Cumulative Effects for All Alternatives by Calendar Year Cohort
----------------------------------------------------------------------------------------------------------------
                                     No action        PC1LT3          PC2LT4          PC3LT5          PC6LT8
----------------------------------------------------------------------------------------------------------------
                                        On-Road Fleet (Million Units) 492
----------------------------------------------------------------------------------------------------------------
2022-2030.......................           2,393           2,394           2,394           2,394           2,394
2031-2040.......................           2,606           2,603           2,602           2,600           2,594
2041-2050.......................           2,645           2,640           2,638           2,631           2,619
----------------------------------------------------------------------------------------------------------------
                                   Vehicle Miles Traveled (Billion Miles) 493
----------------------------------------------------------------------------------------------------------------
2022-2030.......................          28,057          28,061          28,061          28,062          28,063
2031-2040.......................          33,745          33,795          33,811          33,829          33,869
2041-2050.......................          34,490          34,556          34,578          34,607          34,670
----------------------------------------------------------------------------------------------------------------
                                     Fuel Consumption (Billion Gallons/GGE)
----------------------------------------------------------------------------------------------------------------
2022-2030.......................           1,115           1,114           1,113           1,113           1,113
2031-2040.......................             997             974             966             959             935
2041-2050.......................             709             675             663             646             596
----------------------------------------------------------------------------------------------------------------
                                               CO2 Emissions (mmT)
----------------------------------------------------------------------------------------------------------------
2022-2030.......................          12,362          12,342          12,338          12,335          12,330
2031-2040.......................          10,988          10,735          10,644          10,562          10,290

2041-2050.......................           7,633           7,252           7,116           6,931           6,352
----------------------------------------------------------------------------------------------------------------

    From a calendar year perspective, NHTSA's analysis estimates total
annual consumption of fuel by the entire on-road fleet from calendar
year 2022 through calendar year 2050. On this basis, gasoline and
electricity consumption by the U.S. LDV fleet evolves as shown in
Figure IV-5 and Figure IV-6, each of which shows projections for the
No-Action Alternative (Alternative 0, i.e., the baseline), Alternative
PC1LT3, Alternative PC2LT4, Alternative PC3LT5, and Alternative PC6LT8.
Gasoline consumption decreases over time, with the largest decreases
occurring in more stringent alternatives. Electricity consumption
increases over time, with the same pattern of Alternative PC6LT8
experiencing the highest magnitude of change.
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    NHTSA estimates the GHGs attributable to the LD on-road fleet, from
both vehicles and upstream energy sector processes (e.g., petroleum
refining, fuel transportation and distribution, electricity
generation). Figure IV-7, Figure IV-8, and Figure IV-9 present NHTSA's
estimate of how emissions from these three GHGs across all fuel types
could evolve over the years. Note that these graphs include emissions
from both downstream (powertrain and BTW) and upstream processes. All
three GHG emissions follow similar trends of decline in the years
between 2022-2050. Note that CO2 emissions are expressed in
units of million metric tons (mmt) while emissions from other
pollutants are expressed in metric tons.

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[GRAPHIC] [TIFF OMITTED] TP17AU23.077

BILLING CODE 4910-59-C
    The figures presented here are not the only estimates NHTSA
calculates regarding projected GHG emissions in future years. The
accompanying Draft EIS uses an ``unconstrained'' analysis as opposed to
the ``standard setting'' analysis presented in this proposal. For more
information regarding projected GHG emissions, as well as model-based
estimates of corresponding impacts on several measures of global
climate change, see the Draft EIS.
    NHTSA also estimates criteria pollutant emissions resulting from
downstream (powertrain and BTW) and upstream processes attributable to
the LD on-road fleet. Under each regulatory alternative, NHTSA projects
a dramatic decline in annual emissions of NOX, and
PM2.5 attributable to the LD on-road fleet between 2022 and
2050. As exemplified in Figure IV-10, NOX emissions in any
given year could be very nearly the same under each regulatory
alternative.
    On the other hand, as discussed in the PRIA Chapter 8.2 and Chapter
4 of the Draft EIS accompanying this document, NHTSA projects that
annual SO2 emissions attributable to the LD on-road fleet
could increase by 2050 in all of the alternatives, including the
baseline, due to greater use of electricity for PHEVs and BEVs (See
Figure IV-6). Differences between the action alternatives are modest.
However, we also note that the adoption of actions that result in a
cleaner electricity grid that reduces electricity generation emission
rates below the projected levels underlying NHTSA's analysis (discussed
in the Draft TSD) could dramatically reduce SO2 emissions
under all regulatory alternatives considered here.\494\ We note that
recent projections available since NHTSA finished modeling for this
proposal show notable decreases in power sector emissions that would
likely affect the CAFE Model emissions results. NHTSA intends to
analyze these projections and update them for the final rule. Moreover,
NHTSA notes that the projected increase in SO2 emissions is
not observed in analyses using more up-to-date data.
---------------------------------------------------------------------------

    \494\ Other actions, such as President Biden's E.O.s regarding
Federal clean electricity, vehicle procurement, and sustainability,
may significantly alter the emissions pattern of the electrical
grid. See, e.g. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/. See also, https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability/. AEO 2023 forecasts show that
America's grid is likely to get cleaner in the forthcoming years,
significantly reducing anticipated emissions as compared to today.
---------------------------------------------------------------------------

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BILLING CODE 4910-59-C
    Health impacts quantified by the CAFE Model include various
instances of hospital visits due to respiratory problems, minor
restricted activity days, non-fatal heart attacks, acute bronchitis,
premature mortality, and other effects of criteria pollutant emissions
on health. Table IV-23 shows the split in select health impacts
relative to the No-Action Alternative, across all action alternatives.
The magnitude of the differences relates directly to the changes in
tons of criteria pollutants emitted. The magnitudes differ across
health impact types because of variation in the baseline totals; for
example, the total Minor Restricted Activity Days are much higher than
the Respiratory Hospital Admissions. See Chapter 5.4 of the Draft TSD
for information regarding how the CAFE Model calculates these health
impacts.

         Table IV-23--Emission Health Impacts Across Alternatives Relative to the No-Action Alternative
                                                 [CY 2022-2050]
----------------------------------------------------------------------------------------------------------------
               Measure (Incidents)                    PC1LT3          PC2LT4          PC3LT5          PC6LT8
----------------------------------------------------------------------------------------------------------------
Premature Deaths................................            -279            -367            -499          -1,037
Respiratory Emergency Room Visits...............            -184            -245            -330            -697
Acute Bronchitis................................            -458            -609            -823          -1,771
Lower Respiratory Symptoms......................          -5,806          -7,729         -10,444         -22,464
Upper Respiratory Symptoms......................          -8,307         -11,068         -14,949         -32,232
Minor Restricted Activity Days..................        -265,774        -355,489        -478,650      -1,038,111
Work Loss Days..................................         -45,040         -60,215         -81,093        -175,702
Asthma Exacerbation.............................          -9,804         -13,064         -17,644         -38,030
Cardiovascular Hospital Admissions..............             -73             -96            -130            -271
Respiratory Hospital Admissions.................             -69             -91            -124            -257
Non-Fatal Heart Attacks (Peters)................            -291            -383            -520          -1,083
Non-Fatal Heart Attacks (All Others)............             -31             -41             -55            -115
----------------------------------------------------------------------------------------------------------------

    Lastly, NHTSA also quantifies safety impacts in its analysis. These
include estimated counts of fatalities, non-fatal injuries, and
property damage crashes occurring over the lifetimes of the LD on-road
vehicles considered in the analysis. The following table shows the
changes in these counts projected in action alternatives relative to
the baseline.

        Table IV-24--Change in Safety Outcomes Across Alternatives Relative to the No-Action Alternative
                                                 [CY 2022-2050]
----------------------------------------------------------------------------------------------------------------
                   Alternative                        PC1LT3          PC2LT4          PC3LT5          PC6LT8
----------------------------------------------------------------------------------------------------------------
                                                   Fatalities
----------------------------------------------------------------------------------------------------------------
Fatalities from Mass Changes....................             -53             -46              -8              27
Fatalities from Rebound Effect..................             516             673             879           1,317
Fatalities from Sales/Scrappage.................              43              63             118             202
                                                 ---------------------------------------------------------------
    Total.......................................             506             690             989           1,546
----------------------------------------------------------------------------------------------------------------
                                                Non-Fatal Crashes
----------------------------------------------------------------------------------------------------------------
Non-Fatal Crash from Mass Changes...............          -8,223          -7,387          -1,464           4,849
Non-Fatal Crash from Rebound Effect.............          81,814         107,786         139,933         210,233
Non-Fatal Crash from Sales/Scrappage............           3,086           4,658           9,302          14,419
                                                 ---------------------------------------------------------------
    Total.......................................          76,677         105,057         147,771         229,501
----------------------------------------------------------------------------------------------------------------
                                            Property Damaged Vehicles
----------------------------------------------------------------------------------------------------------------
Property Damage Vehicles from Mass Changes......         -28,533         -24,894          -4,321          18,241
Property Damage Vehicles from Rebound Effect....         274,761         362,513         471,861         712,423
Property Damage Vehicles from Sales/Scrappage...         -16,149         -22,096         -47,046         -82,251
                                                 ---------------------------------------------------------------
    Total.......................................         230,079         315,523         420,494         648,413
----------------------------------------------------------------------------------------------------------------

    Chapter 7.1.5 of the PRIA accompanying this document contains an
in-depth discussion on the effects of the various alternatives on these
safety measures, and Chapter 7 of the Draft TSD contains information
regarding the construction of the safety estimates.
2. Heavy-Duty Pickups and Vans
    NHTSA estimates the same physical and environmental effects for
HDPUVs as it does for LDVs, including: quantities of fuel and
electricity consumption; tons of GHG emissions and criteria pollutants
reduced; and health and safety impacts. Table IV-22 shows the
cumulative impacts grouped by decade, including the on-road fleet
sizes, VMT, fuel consumption, and CO2 emissions, across
alternatives. The size of the on-road fleet increases in later decades
regardless of the alternative, but the greatest on-road fleet size
projection is seen in the baseline, with fleet sizes declining in the
most stringent scenario, Alternative HDPUV14. The other differences
between the alternatives are not visible in the Table IV-25 due to
rounding.
    VMT increases occur in the two later decades, with the highest
numbers occurring from 2041-2050. Across alternatives, the VMT
increases remain around approximately the same magnitude. Fuel
consumption (measured in gallons or gasoline gallon equivalents)
declines across decades, as do GHG emissions. Differences between the
alternatives are minor but fuel consumption and GHG emissions also
decrease as alternatives become more stringent.
---------------------------------------------------------------------------

    \495\ These rows report total vehicle units observed during the
period. For example, 152 million units are modeled in the on-road
fleet for CYs 2022-2030. On average, this represents approximately
17 million vehicles in the on-road fleet for each calendar year in
this CY cohort.
    \496\ These rows report total miles traveled during the period.
For example, 2,040 billion miles traveled in CYs 2022-2030. On
average, this represents approximately 227 billion annual miles
traveled in this CY cohort.

                  Table IV-25--Cumulative Impacts for All Alternatives by Calendar Year Cohort
----------------------------------------------------------------------------------------------------------------
                                                     No action        HDPUV4          HDPUV10         HDPUV14
----------------------------------------------------------------------------------------------------------------
                                        On-Road Fleet (Million Units) 495
----------------------------------------------------------------------------------------------------------------
2022-2030.......................................             152             152             152             152
2031-2040.......................................             187             187             187             187
2041-2050.......................................             208             208             208             207
----------------------------------------------------------------------------------------------------------------
                                   Vehicle Miles Traveled (Billion Miles) 496
----------------------------------------------------------------------------------------------------------------
2022-2030.......................................           2,040           2,040           2,040           2,040
2031-2040.......................................           2,629           2,629           2,630           2,630
2041-2050.......................................           2,922           2,922           2,922           2,922
----------------------------------------------------------------------------------------------------------------
                                     Fuel Consumption (Billion Gallons/GGE)
----------------------------------------------------------------------------------------------------------------
2022-2030.......................................             146             146             146             146
2031-2040.......................................             143             143             143             141

2041-2050.......................................             123             123             122             117
----------------------------------------------------------------------------------------------------------------
                                              CO2  Emissions (mmT)
----------------------------------------------------------------------------------------------------------------
2022-2030.......................................           1,652           1,652           1,652           1,652
2031-2040.......................................           1,599           1,598           1,593           1,569
2041-2050.......................................           1,335           1,335           1,319           1,264
----------------------------------------------------------------------------------------------------------------

    Figure IV-13 and Figure IV-14 show the estimates of gasoline and
electricity consumption of the on-road HDPUV fleet for all fuel types
over time on a calendar year basis, from 2022-2050. The three action
alternatives, HDPUV4, HDPUV10, and HDPUV14, are compared to the
baseline changes over time.
    Gasoline consumption decreases over time, with the largest
decreases occurring in more stringent alternatives. Electricity
consumption increases over time, with the same pattern of Alternative
HDPUV14 experiencing the highest magnitude of change. In both charts,
the differences in magnitudes across alternatives do not vary
drastically.
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    NHTSA estimates the GHGs attributable to the HD on-road fleet, from
both downstream and upstream energy sector processes (e.g., petroleum
refining, fuel transportation and distribution, electricity
generation). These estimates mirror those discussed in the LD section
above. Figure IV-15, Figure IV-16, and Figure IV-17 present NHTSA's
estimate of how emissions from these three GHGs could evolve over the
years (CY 2022-2050). Emissions from all three GHG types tracked follow
similar trends of decline in the years between 2022-2050. Note that
these graphs include emissions from both vehicle and upstream processes
and scales vary by figure (CO2 emissions are expressed in
units of million metric tons (mmt) while emissions from other
pollutants are expressed in metric tons).
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    For more information regarding projected GHG emissions, as well as
model-based estimates of corresponding impacts on several measures of
global climate change, see the Draft EIS.
    NHTSA also estimates criteria pollutant emissions resulting from
vehicle and upstream processes attributable to the HDPUV on-road fleet.
Under each regulatory alternative, NHTSA projects a significant decline
in annual emissions of NOX, and PM2.5
attributable to the HDPUV on-road fleet between 2022 and 2050. As
exemplified in Figure IV-18, the magnitude of emissions in any given
year could be very similar under each regulatory alternative.
    On the other hand, as discussed in the PRIA Chapter 8.3 and the
Draft EIS, NHTSA projects that annual SO2 emissions
attributable to the HDPUV on-road fleet could increase modestly under
the action alternatives, because, as discussed above, NHTSA projects
that each of the action alternatives could lead to greater use of
electricity (for PHEVs and BEVs) in later calendar years. However, as
for the LD analysis, we note that the adoption of actions that result
in a cleaner electricity grid that reduces electricity generation
emission rates below the projected levels underlying NHTSA's analysis
(discussed in the TSD) could dramatically reduce SO2
emissions under all regulatory alternatives considered here.\497\
---------------------------------------------------------------------------

    \497\ Other actions, such as President Biden's E.O.s regarding
Federal clean electricity, vehicle procurement, and sustainability,
may significantly alter the emissions pattern of the electrical
grid. See, e.g. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/. See also https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability/. AEO 2023 forecasts show that
America's grid is likely to get cleaner in the forthcoming years
significantly reducing anticipaited emissions as compared to today.

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

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    Health impacts quantified by the CAFE Model include various
instances of hospital visits due to respiratory problems, minor
restricted activity days, non-fatal heart attacks, acute bronchitis,
premature mortality, and other effects of criteria pollutant emissions
on health. Table IV-26 shows select health impacts relative to the
baseline, across all action alternatives. The magnitude of the
differences relates directly to the changes in tons of criteria
pollutants emitted. The magnitudes differ across health impact types
because of variation in the totals; for example, the total Minor
Restricted Activity Days are much higher than the Respiratory Hospital
Admissions. See Chapter 5.4 of the Draft TSD for information regarding
how the CAFE Model calculates these health impacts.

         Table IV-26--Emission Health Impacts Across Alternatives Relative to the No-Action Alternative
                                                 [CY 2022-2050]
----------------------------------------------------------------------------------------------------------------
                      Measures (incidents)                            HDPUV4          HDPUV10         HDPUV14
----------------------------------------------------------------------------------------------------------------
Premature Deaths................................................            -0.4           -10.8           -40.2
Respiratory Emergency Room Visits...............................            -0.4            -8.6           -31.1
Acute Bronchitis................................................            -0.9           -21.9           -79.0
Lower Respiratory Symptoms......................................           -11.9          -277.0          -998.9
Upper Respiratory Symptoms......................................           -17.3          -401.8        -1,446.3
Minor Restricted Activity Days..................................          -623.4       -14,190.9       -50,583.5
Work Loss Days..................................................           -99.9        -2,286.6        -8,182.8
Asthma Exacerbation.............................................           -20.5          -474.9        -1,709.1
Cardiovascular Hospital Admissions..............................            -0.1            -2.7           -10.2
Respiratory Hospital Admissions.................................            -0.1            -2.6            -9.6
Non-Fatal Heart Attacks (Peters)................................            -0.5           -11.2           -41.8
Non-Fatal Heart Attacks (All Others)............................             0.0            -1.2            -4.3
----------------------------------------------------------------------------------------------------------------

    Lastly, NHTSA also quantifies safety impacts in its analysis. These
include estimated counts of fatalities, non-fatal injuries, and
property damage crashes occurring over the lifetimes of the HD on-road
vehicles considered in the analysis. The following table shows
projections of these counts in action alternatives relative to the
baseline.

 Table IV-27--Change in Safety Outcomes Across Alternatives Relative to
                        the No-Action Alternative
                             [CY 2022-2050]
------------------------------------------------------------------------
           Alternative                HDPUV4      HDPUV10      HDPUV14
------------------------------------------------------------------------
                               Fatalities
------------------------------------------------------------------------
Fatalities from Mass Changes.....            0            0            0
Fatalities from Rebound Effect...            0            6           33
Fatalities from Sales/Scrappage..            0           -5          -27
                                  --------------------------------------
    Total........................            0            1            6
------------------------------------------------------------------------

                            Non-Fatal Crashes
------------------------------------------------------------------------
Non-Fatal Crash from Mass Changes            0            0            0
Non-Fatal Crash from Rebound                42        1,033        5,360
 Effect..........................
Non-Fatal Crash from Sales/                 10         -878       -4,493
 Scrappage.......................
                                  --------------------------------------
    Total........................           52          155          867
------------------------------------------------------------------------
                        Property Damaged Vehicles
------------------------------------------------------------------------
Property Damage Vehicles from                0            0            0
 Mass Changes....................
Property Damage Vehicles from              147        3,609       18,609
 Rebound Effect..................
Property Damage Vehicles from               28       -3,155      -15,845
 Sales/Scrappage.................
                                  --------------------------------------
    Total........................          175          454        2,764
------------------------------------------------------------------------

    Chapter 7.1.5 of the PRIA accompanying this document contains an
in-depth discussion on the effects of the various alternatives on these
safety measures, and Draft TSD Chapter 7 contains information regarding
the construction of the safety estimates.

D. Sensitivity Analysis

    The analysis conducted to support this rulemaking consists of data,
estimates, and assumptions, all applied within an analytical framework,
the CAFE Model. Just as with all past CAFE and HDPUV FE rulemakings,
NHTSA recognizes that many analytical inputs are uncertain, and some
inputs are very uncertain. Of those uncertain inputs, some are likely
to exert considerable influence over specific types of estimated
impacts, and some are likely to do so for the bulk of the analysis. Yet
making assumptions in the face of that uncertainty is necessary when
analyzing possible future events (e.g., consumer and industry responses
to fuel economy/efficiency regulation). In other cases, we made
assumptions in how we modeled the effects of other existing regulations
that affected the costs and benefits of the action alternatives (e.g.,
state ZEV mandates were included in the No-Action Alternative). To
better understand the effect that these assumptions have on the
analytical findings, we conducted additional model runs with
alternative assumptions. These additional runs were specified in an
effort to explore a range of potential inputs and the sensitivity of
estimated impacts to changes in these model inputs. Sensitivity cases
in this analysis span assumptions related to technology applicability
and cost, economic conditions, consumer preferences, externality
values, and safety assumptions, among others.\498\ A sensitivity
analysis can identify two critical pieces of information: how big of an
influence does each parameter exert on the analysis, and how sensitive
are the model results to that assumption?
---------------------------------------------------------------------------

    \498\ In contrast to an uncertainty analysis, where many
assumptions are varied simultaneously, the sensitivity analyses
included here vary a single assumption and provide information about
the influence of each individual factor, rather than suggesting that
an alternative assumption would have justified a different Preferred
Alternative.
---------------------------------------------------------------------------

    That said, influence is different from likelihood. NHTSA does not
mean to suggest that any one of the sensitivity cases presented here is
inherently more likely than the collection of assumptions that
represent the reference case (RC) in the figures and tables that
follow. Nor is this sensitivity analysis intended to suggest that only
one of the many assumptions made is likely to prove off-base with the
passage of time or new observations. It is more likely that, when
assumptions are eventually contradicted by future observation (e.g.,
deviations in observed and predicted fuel prices are nearly a given),
there will be collections of assumptions, rather than individual
parameters, that simultaneously require updating. For this reason, we
do not interpret the sensitivity analysis as necessarily providing
justification for alternative regulatory scenarios to be preferred.
Rather, the analysis simply provides an indication of which assumptions
are most critical, and the extent to which future deviations from
central analysis assumptions could affect costs and benefits of the
rule. For a full discussion of how this information relates to NHTSA's
tentative determination of which regulatory alternatives would be
maximum feasible, please see Section V.D.
    Table IV-28 lists and briefly describes the cases that we examined
in the sensitivity analysis. Note that some cases only apply to the LD
fleet (e.g., scenarios altering assumptions about fleet share modeling)
and others only affect the HDPUV FE analysis (e.g., initial PHEV
availability).

         Table IV-28--Cases Included in the Sensitivity Analysis
------------------------------------------------------------------------
            Sensitivity case                       Description
------------------------------------------------------------------------
RC.....................................  Reference case.
EIS-RC.................................  Reference case for
                                          Environmental Impact Statement
                                          (EIS).
Battery DMC +20%.......................  Battery direct manufacturing
                                          cost (DMC) increased by 20
                                          percent.
Battery DMC -20%.......................  Battery direct manufacturing
                                          cost (DMC) decreased by 20
                                          percent.
Battery learning rate + 20%............  Year-over-year percentage rate
                                          of learning increased by 20
                                          percent.
Battery learning rate - 20%............  Year-over-year percentage rate
                                          of learning decreased by 20
                                          percent.
BatPaC 90% cell yield..................  BatPaC model runs assume 90
                                          percent cell yield.

Annual vehicle redesigns...............  Vehicles redesigned every model
                                          year.
Limited HCR skips......................  Removes all HCR skips.
PHEV available MY 2025.................  Shifts initial HDPUV PHEV
                                          availability to MY 2025.
PHEV available MY 2030.................  Shifts initial HDPUV PHEV
                                          availability to MY 2030.
Oil price (AEO high)...................  Fuel prices from AEO 2022 High
                                          Oil Price case.
Oil price (AEO low)....................  Fuel prices from AEO 2022 Low
                                          Oil Price case.
Oil price (GI reference)...............  Fuel prices from Global
                                          Insights (GI) May 2022
                                          Reference Case.
High GDP + fuel (GI optimistic)........  GDP and fuel prices from GI
                                          optimistic case.
Low GDP + fuel (GI pessimistic)........  GDP and fuel prices from GI
                                          pessimistic case.
High GDP + fuel (AEO high).............  GDP and fuel prices from AEO
                                          2022 High Economic Growth
                                          case.
Low GDP + fuel (AEO low)...............  GDP and fuel prices from AEO
                                          2022 Low Economic Growth case.
High GDP (GI optimistic)...............  GDP from GI optimistic case.
Low GDP (GI pessimistic)...............  GDP from GI pessimistic case.
Oil market externalities (low).........  Price shock component set to
                                          10th percentile of estimates.
Oil market externalities (high)........  Price shock component set to
                                          90th percentile of estimates.
No payback period......................  Payback period set to 0 months.
24-month payback period................  Payback period set to 24
                                          months.
30-month/70k miles payback.............  Valuation of fuel savings at 30
                                          months for technology
                                          application, 70,000 miles for
                                          sales and scrappage models.
36-month payback period................  Payback period set to 36
                                          months.
60-month payback period................  Payback period set to 60
                                          months.
Implicit opportunity cost..............  Includes a measure that
                                          estimates possible opportunity
                                          cost of forgone vehicle
                                          attribute improvements that
                                          exceed the central case 30-
                                          month payback period.
Rebound (5%)...........................  Rebound effect set at 5
                                          percent.
Rebound (15%)..........................  Rebound effect set at 15
                                          percent.
Sales-scrappage response (-0.1)........  Sales-scrappage model with
                                          price elasticity multiplier of
                                          -0.1.
Sales-scrappage response (-0.5)........  Sales-scrappage model with
                                          price elasticity multiplier of
                                          -0.5.
LDV sales (unadjusted).................  No LD sales multiplier.
LDV sales (2022 FR)....................  LD sales model coefficients
                                          equal to those used in the
                                          2022 CAFE Final Rule.
LDV sales (AEO 2022)...................  LD sales rate of change
                                          consistent with AEO 2022
                                          Reference case.
No fleet share price response..........  Fleet share elasticity estimate
                                          set to 0 (i.e., no fleet share
                                          response across alternatives).
Fixed fleet share, no price response...  Fixed fleet share at AEO 2022
                                          levels, fleet share elasticity
                                          set to zero.
Fixed fleet share......................  Fleet share level fixed at 2022
                                          value.
HDPUV sales (AEO reference)............  HDPUV sales based on AEO 2022
                                          Reference Case (i.e., no
                                          initial sales ramp).
HDPUV sales (AEO low economic growth)..  HDPUV sales based on AEO 2022
                                          Low Economic Growth Case
                                          without initial sales ramp.
HDPUV sales (AEO high economic growth).  HDPUV sales based on AEO 2022
                                          High Economic Growth Case with
                                          initial sales ramp.
Commercial operator sales share 100%...  Assume all HDPUV vehicles are
                                          purchased by commercial
                                          operators. Applies commercial
                                          operator private net benefit
                                          offset.
Commercial operator sales share 50%....  Assume half of all HDPUV
                                          vehicles are purchased by
                                          commercial operators. Applies
                                          commercial operator private
                                          net benefit offset.
Mass-size-safety (low).................  The lower bound of the 95
                                          percent confidence interval
                                          for all mass-size-safety model
                                          coefficients.
Mass-size-safety (high)................  The upper bound of the 95
                                          percent confidence interval
                                          for all mass-size-safety model
                                          coefficients.
Crash avoidance (low)..................  Lower-bound estimate of
                                          effectiveness of six current
                                          crash avoidance technologies
                                          at avoiding fatalities,
                                          injuries, and property damage.
Crash avoidance (high).................  Upper-bound estimate of
                                          effectiveness of six current
                                          crash avoidance technologies
                                          at avoiding fatalities,
                                          injuries, and property damage.
2022 FR fatality rates.................  Fatality rates at 2022 CAFE
                                          Final Rule levels.
Clean grid (low).......................  Upstream emissions factors
                                          based on AEO 2022 Low
                                          Renewables Costs projection of
                                          grid composition.
Clean grid (high)......................  Upstream emissions factors
                                          based on NREL 95%
                                          Electrification by 2050-2021
                                          Standard Scenario projection
                                          of grid composition.
Adjusted MDPCS.........................  Adjusted Minimum Domestic
                                          Passenger Car Standard (MDPCS)
                                          based on historical trends.
2023 revised civil penalty rate........  Civil penalty set to values
                                          prescribed in 2023 Adjustment
                                          to Civil Penalties rule, 88 FR
                                          6971(Feb. 2, 2023).
Standard-setting conditions to 2035....  Applies standard-setting
                                          conditions to MY 2027-2035.
Standard-setting conditions to 2050....  Applies standard-setting
                                          conditions to MY 2027-2050.
Standard-setting conditions all years..  Applies standard-setting
                                          conditions to MY 2022-2050.
No augural.............................  No augural standards for MY
                                          2032.
No ZEV.................................  Excludes modeling of ZEV
                                          program.
EPA AC/OC approach.....................  AC Leakage set to 0 for all
                                          vehicles for MY2027-MY2050; AC
                                          Efficiency Credits for BEVs
                                          set to 0 in MY2027-MY2050; AC/
                                          OC Credits for BEVs set to 0
                                          in MY2027-2050; All Non-BEV
                                          vehicles have AC/OC credits
                                          gradually decline to 0 by MY
                                          2031.

AC efficiency/OC BEV zero..............  Off-Cycle Credits and AC
                                          Efficiency Credits for BEVs
                                          set to 0 in MY2027-MY2050; AC
                                          Leakage is unchanged for all
                                          manufacturers.
Original PEF value.....................  PEF value used in prior CAFE
                                          rulemakings (82,049 Wh/gal).
No EV tax credits......................  All IRA EV tax credits removed.
No AMPC................................  IRA Advanced Manufacturing
                                          Production tax credit (AMPC)
                                          removed.
Consumer tax credit share 75%..........  Consumer tax credit share set
                                          to 75 percent (25 percent
                                          captured by manufacturers).
Consumer tax credit share 25%..........  Consumer tax credit share set
                                          to 25 percent (75 percent
                                          captured by manufacturers).
Maximum vehicle tax credit.............  Maximum value of IRA vehicle
                                          tax credit.
Oil price (AEO 2023 high)..............  Fuel prices from the AEO 2023
                                          High Oil Price Case.
Oil price (AEO 2023 low)...............  Fuel prices from the AEO 2023
                                          Low Oil Price Case.
Oil price (AEO 2023 ref)...............  Fuel prices from the AEO 2023
                                          Reference Case.
High GDP (AEO 2023)....................  GDP from the AEO 2023 High
                                          Economic Growth case.
Low GDP (AEO 2023).....................  GDP from the AEO 2023 Low
                                          Economic Growth case.
Reference GDP (AEO 2023)...............  GDP from the AEO 2023 Reference
                                          case.
Reference GDP (AEO 2022)...............  GDP from the AEO 2022 Reference
                                          case.
High GDP + fuel (AEO 2023).............  GDP and fuel prices from the
                                          AEO 2023 High Economic Growth
                                          case.
Low GDP + fuel (AEO 2023)..............  GDP and fuel prices from the
                                          AEO 2023 Low Economic Growth
                                          case.
Reference GDP + fuel (AEO 2023)........  GDP and fuel prices from the
                                          AEO 2023 Reference case.
Oil Market Externalities (AEO 2023)....  Price shock component estimated
                                          using AEO 2023 oil market
                                          projections.
LD Fleet Share (AEO 2023)..............  Fleet share based on AEO 2023
                                          light-duty sales projection.
Fixed fleet share (AEO 2023), no price   Fleet share based on AEO 2023
 response.                                light-duty sales projection,
                                          fleet share elasticity set to
                                          0.
HDPUV sales (AEO 2023).................  HDPUV sales based on AEO 2023
                                          Reference case projection
                                          (including sales ramp).
HDPUV sales (AEO 2023 reference).......  HDPUV sales based on AEO 2023
                                          Reference case projection (not
                                          including sales ramp).
HDPUV sales (AEO 2023 low economic       HDPUV sales based on AEO 2023
 growth).                                 Low Economic Growth case
                                          (including sales ramp).
HDPUV sales (AEO 2023 high economic      HDPUV sales based on AEO 2023
 growth).                                 High Economic Growth case
                                          (including sales ramp).
------------------------------------------------------------------------

    Complete results for the sensitivity cases are summarized in
Chapter 9 of the accompanying PRIA, and detailed model inputs and
outputs for curious readers are available on NHTSA's website.\499\ For
purposes of this preamble, the figures in Section IV.D.1 illustrate the
relative change of the sensitivity effect of selected inputs on the
costs and benefits estimated for this proposed rule for LDVs, while the
figures in Section IV.D.2 present the same data for the HDPUV analysis.
Each collection of figures groups sensitivity cases by the category of
input assumption (e.g., macroeconomic assumptions, technology
assumptions, and so on).
---------------------------------------------------------------------------

    \499\ National Highway Traffic Association. 2023. Corporate
Average Fuel Economy. Available at: https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy. (Accessed: May 31,
2023).
---------------------------------------------------------------------------

    While the figures in this section do not show precise values, they
give us a sense of which inputs are ones for which a different
assumption would have a much different effect on analytical findings,
and which ones would not have much effect. For example, assuming a
different oil price trajectory would have a relatively large effect, as
would doubling, or eliminating the assumed ``payback period.'' The
relative magnitude of the effect varies by fleet. Making alternative
assumptions about the future costs of battery technology has a
relatively large effect on the HDPUV results. Adjusting assumptions
related to the tax credits included in the IRA has a significant impact
on results for both LDVs and HDPUVs. On the other hand, assumptions
about which there has been significant disagreement in the past, like
the rebound effect or the sales-scrappage response to changes in
vehicle price, appear to cause only relatively small changes in net
benefits across the range of analyzed input values. Chapter 9 of the
PRIA provides an extended discussion of these findings, and presents
net benefits estimated under each of the cases included in the
sensitivity analysis.
    The results presented in the earlier subsections of Section IV and
discussed in Section V reflect NHTSA's best judgments regarding many
different factors, and the sensitivity analysis discussed here is
simply to illustrate the obvious, that differences in assumptions can
lead to differences in analytical outcomes, some of which can be large
and some of which may be smaller than expected. Policymaking in the
face of future uncertainty is inherently complex. Section V explains
how NHTSA balances the statutory factors in light of the analytical
findings, the uncertainty that we know exists, and our nation's policy
goals, to propose CAFE standards for MYs 2027-2032, and HDPUV fuel
efficiency standards for MY 2030 and beyond that NHTSA concludes are
maximum feasible.
    1. Passenger Cars and Light Trucks
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    2. Heavy-Duty Pickups and Vans
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V. Basis for NHTSA's Tentative Conclusion That the Proposed Standards
Are Maximum Feasible

A. EPCA, as Amended by EISA

    EPCA, as amended by EISA, contains provisions establishing how
NHTSA must set CAFE standards and fuel efficiency standards for HDPUVs.
DOT (by delegation, NHTSA) \500\ must establish separate CAFE standards
for passenger cars and light trucks \501\ for each MY,\502\ and each
standard must be the maximum feasible that the Secretary (again, by
delegation, NHTSA) determines manufacturers can achieve in that
MY.\503\ In determining the maximum feasible levels of CAFE standards,
EPCA requires that NHTSA consider four statutory factors: technological
feasibility, economic practicability, the effect of other motor vehicle
standards of the Government on fuel economy, and the need of the United
States to conserve energy.\504\ NHTSA must also set separate standards
for HDPUVs, and while those standards must also ``achieve the maximum
feasible improvement,'' they must be ``appropriate, cost-effective, and
technologically feasible'' \505\--factors slightly different from those
required to be considered for passenger car and light truck standards.
NHTSA has broad discretion to balance the statutory factors in
developing fuel consumption standards to achieve the maximum feasible
improvement.
---------------------------------------------------------------------------

    \500\ EPCA and EISA direct the Secretary of Transportation to
develop, implement, and enforce fuel economy standards (see 49
U.S.C. 32901 et seq.), which authority the Secretary has delegated
to NHTSA at 49 FR 1.95(a).
    \501\ 49 U.S.C. 32902(b)(1) (2007).
    \502\ 49 U.S.C. 32902(a) (2007).
    \503\ Id.
    \504\ 49 U.S.C. 32902(f).
    \505\ 49 U.S.C. 32902(k)(2).
---------------------------------------------------------------------------

    In addition, NHTSA has the authority to consider (and typically
does consider) other relevant factors, such as the effect of CAFE
standards on motor vehicle safety. The ultimate determination of what
standards can be considered maximum feasible involves a weighing and
balancing of factors, and the balance may shift depending on the
information NHTSA has available about the expected circumstances in the
MYs covered by the rulemaking. NHTSA's decision must also be guided by
the overarching purpose of EPCA, energy conservation, while balancing
these factors.\506\
---------------------------------------------------------------------------

    \506\ Center for Biological Diversity v. NHTSA, 538 F.3d 1172,
1197 (9th Cir. 2008) (``Whatever method it uses, NHTSA cannot set
fuel economy standards that are contrary to Congress's purpose in
enacting the EPCA--energy conservation.''). While this decision
applied only to standards for passenger cars and light trucks, NHTSA
interprets the admonition as broadly applicable to its actions under
section 32902.
---------------------------------------------------------------------------

    EPCA/EISA also contain several other requirements, as follow.
1. Lead Time
a. Passenger Cars and Light Trucks
    EPCA requires that NHTSA prescribe new CAFE standards at least 18
months before the beginning of each MY.\507\ Thus, if the first year
for which NHTSA is proposing to set CAFE standards is MY 2027, NHTSA
interprets this provision as requiring us to issue a final rule
covering MY 2027 standards no later than April 2025. Given the aim in
E.O. 14037 to issue a final rule by July 2024, NHTSA expects the lead
time requirement to be met.
---------------------------------------------------------------------------

    \507\ 49 U.S.C. 32902(a) (2007).
---------------------------------------------------------------------------

b. Heavy-Duty Pickups and Vans
    EISA requires that standards for commercial medium- and HD on-
highway vehicles and work trucks (of which HDPUVs are part) provide not
less than four full MYs of regulatory lead time.\508\ Thus, if the
first year for which NHTSA is proposing to set fuel efficiency
standards for HDPUVs is MY 2030, NHTSA interprets this provision as
requiring us to issue a final rule covering MY 2030 standards no later
than October 2025.\509\ NHTSA expects this lead time requirement to be
met.
---------------------------------------------------------------------------

    \508\ 49 U.S.C. 32902(k)(3)(A) (2007).
    \509\ As with passenger cars and light trucks, NHTSA interprets
the MY for HDPUVs as beginning with October of the calendar year
prior. Therefore, HDPUV MY 2029 would begin in October 2028;
therefore, four full MYs prior to October 2028 would be October
2024.
---------------------------------------------------------------------------

    EISA contains a related requirement for HDPUVs that the standards
provide not only four full MYs of regulatory lead time, but also three
full MYs of regulatory stability.\510\ As discussed in the Phase 2
final rule, Congress has not spoken directly to the meaning of the
words ``regulatory stability.'' NHTSA interprets the ``regulatory
stability'' requirement as ensuring that manufacturers will not be
subject to new standards in repeated rulemakings too rapidly, given
that Congress did not include a minimum duration period for the MD/HD
standards.\511\ NHTSA further interprets the statutory meaning as
reasonably encompassing standards which provide for increasing
stringency during the rulemaking time frame to be the maximum feasible.
In this statutory context, NHTSA thus interprets the phrase
``regulatory stability'' in section 32902(k)(3)(B) as requiring that
the standards remain in effect for three years before they may be
increased by amendment. It does not prohibit standards that contain
predetermined stringency increases.
---------------------------------------------------------------------------

    \510\ 49 U.S.C. 32902(k)(3)(B) (2007).
    \511\ In contrast, as discussed below, passenger car and
standards must remain in place for ``at least 1, but not more than
5, MYs.'' 49 U.S.C. 32902(b)(3)(B).
---------------------------------------------------------------------------

2. Separate Standards for Passenger Cars, Light Trucks, and Heavy-Duty
Pickups and Vans, and Minimum Standards for Domestic Passenger Cars
    EPCA requires NHTSA to set separate standards for passenger cars
and light trucks for each MY.\512\ Based on the plain language of the
statute, NHTSA has long interpreted this requirement as preventing
NHTSA from setting a single combined CAFE standard for cars and trucks
together. Congress originally required separate CAFE standards for cars
and trucks to reflect the different fuel economy capabilities of those
different types of vehicles, and over the history of the CAFE program,
has never revised this requirement. Even as many cars and trucks have
come to resemble each other more closely over time--many crossover and
sport-utility models, for example, come in versions today that may be
subject to either the car standards or the truck standards depending on
their characteristics--it is still accurate to say that vehicles with
truck-like characteristics such as 4-wheel drive, cargo-carrying
capability, etc., currently consume more fuel per mile than vehicles
without these components. While there have been instances in recent
rulemakings where NHTSA raised passenger car and light truck standard
stringency at the same numerical rate year over year, NHTSA also has
precedent for setting passenger car and light truck standards that
increase at different numerical rates year over year, as in the 2012
final rule. This underscores that NHTSA's obligation is to set maximum
feasible standards separately for each fleet, based on our assessment
of each fleet's circumstances as seen through the lens of the four
statutory factors that NHTSA must consider.
---------------------------------------------------------------------------

    \512\ 49 U.S.C. 32902(b)(1) (2007).
---------------------------------------------------------------------------

    EPCA, as amended by EISA, also requires another separate standard
to be set for domestically manufactured \513\ passenger cars. Unlike
the generally applicable standards for passenger cars

and light trucks described above, the compliance obligation of the
MDPCS is identical for all manufacturers. The statute clearly states
that any manufacturer's domestically manufactured passenger car fleet
must meet the greater of either 27.5 mpg on average, or ``92 percent of
the average fuel economy projected by the Secretary for the combined
domestic and non-domestic passenger automobile fleets manufactured for
sale in the United States by all manufacturers in the MY, which
projection shall be published in the Federal Register when the standard
for that MY is promulgated in accordance with [49 U.S.C. 32902(b)].''
\514\ Since that statutory requirement was established, the ``92
percent'' has always been greater than 27.5 mpg, and foreseeably will
continue to be so in the future. As in the 2020 and 2022 final rules,
NHTSA continues to recognize industry concerns that actual total
passenger car fleet standards have differed significantly from past
projections, perhaps more so when NHTSA has projected significantly
into the future. In the 2020 final rule, the compliance data showed
that standards projected in 2012 were consistently more stringent than
the actual standards, by an average of 1.9 percent. NHTSA has stated
that this difference indicates that in rulemakings conducted in 2009
through 2012, NHTSA's and EPA's projections of passenger car vehicle
footprints and production volumes, in retrospect, underestimated the
production of larger passenger cars over the MYs 2011 to 2018
period.\515\
---------------------------------------------------------------------------

    \513\ In the CAFE program, ``domestically manufactured'' is
defined by Congress in 49 U.S.C. 32904(b). The definition roughly
provides that a passenger car is ``domestically manufactured'' as
long as at least 75 percent of the cost to the manufacturer is
attributable to value added in thie United States, Canada, or
Mexico, unless the assembly of the vehicle is completed in Canada or
Mexico and the vehicle is imported into the United States more than
30 days after the end of the MY.
    \514\ 49 U.S.C. 32902(b)(4) (2007).
    \515\ See 85 FR 25127 (Apr. 30, 2020).
---------------------------------------------------------------------------

    Unlike the passenger car standards and light truck standards which
are vehicle-attribute-based and automatically adjust with changes in
consumer demand, the MDPCS are not attribute-based, and therefore do
not adjust with changes in consumer demand and production. They are,
instead, fixed standards that are established at the time of the
rulemaking. As a result, by assuming a smaller-footprint fleet, on
average, than what ended up being produced, the MY 2011-2018 MDPCS
ended up being more stringent and placing a greater burden on
manufacturers of domestic passenger cars than was projected and
expected at the time of the rulemakings that established those
standards. In the 2020 final rule, therefore, NHTSA agreed with
industry concerns over the impact of changes in consumer demand (as
compared to what was assumed in 2012 about future consumer demand for
greater fuel economy) on manufacturers' ability to comply with the
MDPCS and in particular, manufacturers that produce larger passenger
cars domestically. Some of the largest civil penalties for
noncompliance in the history of the CAFE program have been paid for
noncompliance with the MDPCS. NHTSA also expressed concern at that time
that consumer demand may shift even more in the direction of larger
passenger cars if fuel prices continue to remain low. Sustained low oil
prices can be expected to have real effects on consumer demand for
additional fuel economy, and if that occurs, consumers may foreseeably
be even more interested in 2WD crossovers and passenger-car-fleet SUVs
(and less interested in smaller passenger cars) than they are at
present.
    Therefore, in the 2020 final rule, to help avoid similar outcomes
in the 2021 to 2026 time frame to what had happened with the MDPCS over
the preceding MYs, NHTSA determined that it was reasonable and
appropriate to consider the recent projection errors as part of
estimating the total passenger car fleet fuel economy for MYs 2021-
2026. NHTSA therefore projected the total passenger car fleet fuel
economy using the central analysis value in each MY, and applied an
offset based on the historical 1.9 percent difference identified for
MYs 2011-2018.
    For the 2022 final rule, NHTSA retained the 1.9 percent offset,
concluding that it is difficult to predict passenger car footprint
trends in advance, which means that, as various stakeholders have
consistently noted, the MDPCS may turn out quite different from 92
percent of the ultimate average passenger car standard once a MY is
complete. NHTSA also expressed concern, as suggested by the United
Automobile, Aerospace, and Agricultural Implement Workers of America
(UAW), that automakers struggling to meet the unadjusted MDPCS may
choose to import their passenger cars rather than producing them
domestically.
    NHTSA is proposing to continue employing the 1.9 percent offset for
MYs 2027-2032, because NHTSA continues to believe that the reasons
presented previously for the offset still apply, and that therefore the
offset is appropriate, reasonable, and consistent with Congress'
intent. We seek comment on this aspect of the proposal.
    For HDPUVs, Congress gave DOT (by delegation, NHTSA) broad
discretion to ``prescribe separate standards for different classes of
vehicles'' under 49 U.S.C. 32902(k). HDPUVs are defined by regulation
as ``pickup trucks and vans with a gross vehicle weight rating between
8,501 pounds and 14,000 pounds (Class 2b through 3 vehicles)
manufactured as complete vehicles by a single or final stage
manufacturer or manufactured as incomplete vehicles as designated by a
manufacturer.'' \516\ NHTSA also allows HD vehicles above 14,000 pounds
GVWR to be optionally certified as HDPUVs and comply with HDPUV
standards ``if properly included in a test group with similar vehicles
at or below 14,000 pounds GVWR,'' and ``The work factor for these
vehicles may not be greater than the largest work factor that applies
for vehicles in the test group that are at or below 14,000 pounds
GVWR.'' \517\ Incomplete HD vehicles at or below 14,000 pounds GVWR may
also be optionally certified as HDPUVs and comply with the HDPUV
standards.\518\ NHTSA is proposing to set separate standards for
``spark ignition'' (SI, or, gasoline-fueled) and ``compression
ignition'' (CI, or, diesel-fueled) HDPUVs, consistent with the existing
Phase 2 standards. Each class of vehicles has its own work-factor based
target curve; alternative fueled vehicles are subject to the standard
for CI vehicles and HEVs and PHEVs are subject to the standard for SI
vehicles. We understand that EPA has proposed a single curve for all
HDPUVs regardless of fuel type; NHTSA is not proposing to take this
approach, for several reasons. First, EPA is proposing to modify the MY
2027 standards set in the 2016 ``Phase 2'' rulemaking, and NHTSA cannot
follow suit due to statutory lead time requirements. Second, the
stability of the curve designs should allow manufacturers enough lead
time to develop technologies not yet fully implemented in the market
for this segment that we expect will be needed to meet the standards.
And finally, NHTSA is more confident that, given the lead time concerns
and the technologies anticipated to be required, retaining separate CI
and SI curves will better balance NHTSA's statutory factors for HDPUVs
of cost-effectiveness and technological feasibility. We seek comment on
this aspect of the proposal.
---------------------------------------------------------------------------

    \516\ 49 CFR 523.7(a).
    \517\ 49 CFR 523.7(b).
    \518\ 49 CFR 523.7(c).
---------------------------------------------------------------------------

3. Attribute-Based and Defined by a Mathematical Function
    For passenger cars and light trucks, EISA requires NHTSA to set
CAFE standards that are ``based on 1 or more attributes related to fuel
economy and express[ed] . . . in the form of a mathematical function.''
\519\ Historically, NHTSA has based standards on vehicle

footprint, and proposes to continue to do so for MYs 2027-2032. As in
previous rulemakings, NHTSA proposes to define the standards in the
form of a constrained linear function that generally sets higher (more
stringent) targets for smaller-footprint vehicles and lower (less
stringent) targets for larger-footprint vehicles. As discussed above in
Section II.B, NHTSA seeks comment on these aspects of the proposal.
---------------------------------------------------------------------------

    \519\ 49 U.S.C. 32902(b)(3)(A) (2007).
---------------------------------------------------------------------------

    In the 2022 final rule, NHTSA discussed the concept of ``backstop''
standards in response to broad industry-wide growth in vehicle size and
mix shifts from cars to trucks and SUVs over time. A number of
commenters requested that NHTSA set additional backstop standards to
ensure that those vehicles achieve certain minimum fuel economy levels.
While NHTSA continues to believe that we do have authority to set such
standards, we propose to address the concerns by setting light truck
standards that increase at a more rapid rate, 4 percent year over year,
than the 2-percent-per-year passenger car standards over the same
timeframe. We believe that this will minimize regulatory complexity, as
compared to creating entire new standards with which manufacturers
would have to comply simultaneously, and it should achieve a similar
aim of requiring the fleet that consumes more fuel--light trucks--to
continue improving rather than backsliding. We seek comment on this
approach.
    For HDPUVs, NHTSA also sets attribute-based standards defined by a
mathematical function. HDPUV standards have historically been set in
units of gallons per 100 miles, rather than in mpg,\520\ and the
attribute for HDPUVs has historically been ``work factor,'' which is a
function of a vehicle's payload capacity and towing capacity.\521\
While NHTSA does not interpret EISA as requiring NHTSA to set
attribute-based standards defined by a mathematical function for
HDPUVs, given that 49 U.S.C. 32902(b)(3)(A) refers specifically to fuel
economy standards for passenger and non-passenger automobiles, NHTSA
has still previously concluded that following that approach for HDPUVs
is reasonable and appropriate, as long as the work performed by HDPUVs
is accounted for. NHTSA proposes to continue to set work-factor based
gallons-per-100-miles standards for HDPUVs for MYs 2027-2032.
---------------------------------------------------------------------------

    \520\ NHTSA has long interpreted ``fuel economy standards'' in
the context of 49 U.S.C. 32902(k) as referring not specifically to
mpg, as in the LDV context, but instead more broadly to account as
accurately as possible for MD/HD fuel efficiency. NHTSA considered
setting standards for HDPUVs (and other MD/HD vehicles) in mpg, but
concluded that that would not be an appropriate metric given the
work that MD/HD vehicles are manufactured to do. See 76 FR 57106,
57112, fn. 19 (Sep. 15, 2011).
    \521\ See 49 CFR 535.5(a)(2).
---------------------------------------------------------------------------

4. Number of Model Years for Which Standards May Be Set at a Time
    For passenger cars and light trucks, EISA also states that NHTSA
shall ``issue regulations under this title prescribing average fuel
economy standards for at least 1, but not more than 5, MYs.'' \522\ For
this proposal, NHTSA is proposing CAFE standards for passenger cars and
light trucks for MYs 2027-2031, and to facilitate longer-term product
planning by industry and in the interest of harmonization, NHTSA is
also presenting proposed augural standards for MY 2032 as
representative of what levels of stringency NHTSA currently believes
could be appropriate in that MY, based on the information before us
today. We emphasize that the augural standards are informational, and
we recognize that they cannot be finalized as part of an action to
finalize standards for MYs 2027-2031, and that a future rulemaking
consistent with all applicable law will be necessary in order for NHTSA
to establish final CAFE standards for MY 2032 passenger cars and light
trucks. Nevertheless, for brevity, information about the impacts of the
standards will be provided throughout the documents without
distinguishing between the proposed standards and the augural
standards. We seek comment on the value of presenting augural standards
for MY 2032 as part of this action and including their presentation in
the final rule. NHTSA notes that it also conducted a sensitivity
analysis removing the augural year, MY 2032. The results of that
sensitivity analysis showed slightly lower costs, benefits, and net
benefits for each regulatory alternative, and no change in the relative
ordering of net benefits amongst the alternatives.\523\ NHTSA
tentatively concludes that the presentation of MY 2032 throughout these
documents would not change our decision as to which alternative is
maximum feasible.
---------------------------------------------------------------------------

    \522\ 49 U.S.C. 32902(b)(3)(B) (2007).
    \523\ See Chapter 9 of the PRIA for more information.
---------------------------------------------------------------------------

    The five-year statutory limit on average fuel economy standards
that applies to passenger cars and light trucks does not apply to the
HD pickup and van standards. NHTSA has previously stated that ``it is
reasonable to assume that if Congress intended for the [MD/HD]
regulatory program to be limited by the timeline prescribed in [49
U.S.C. 32902(b)(3)(B)], it would have either mentioned [MD/HD] vehicles
in that subsection or included the same timeline in [49 U.S.C.
32902(k)].'' 524 525 Additionally, ``in order for [49 U.S.C.
32902(b)(3)(B) to be interpreted to apply to [49 U.S.C. 32902(k)], the
agency would need to give less than full weight to the . . . phrase in
[49 U.S.C. 32902(b)(1)(C)] directing the Secretary to prescribe
standards for `work trucks and commercial MD or HD on-highway vehicles
in accordance with Subsection (k).' Instead, this direction would need
to be read to mean `in accordance with Subsection (k) and the remainder
of Subsection (b).' NHTSA believes this interpretation would be
inappropriate. Interpreting `in accordance with Subsection (k)' to mean
something indistinct from `in accordance of this Subsection' goes
against the canon that statutes should not be interpreted in a way that
`render[s] language superfluous.' Dobrova v. Holder, 607 F.3d 297, 302
(2d Cir. 2010), quoting Mendez v. Holder, 566 F.3d 316, 321-22 (2d Cir.
2009).'' \526\ As a result, the standards previously set remain in
effect indefinitely at the levels required in the last MY, until
amended by a future rulemaking action.
---------------------------------------------------------------------------

    \524\ ``[W]here Congress includes particular language in one
section of a statute but omits it in another section of the same
Act, it is generally presumed that Congress acts intentionally and
purposely in the disparate inclusion or exclusion.'' Russello v.
United States, 464 U.S. 16, 23 (1983), quoting U.S. v. Wong Kim Bo,
472 F.2d 720, 722 (5th Cir. 1972). See also Mayo v. Questech, Inc.,
727 F.Supp. 1007, 1014 (E.D. Va. 1989) (conspicuous absence of
provision from section where inclusion would be most logical signals
Congress did not intend for it to be implied).
    \525\ 76 FR 57106, 57131 (Sep. 15, 2011).
    \526\ Id.
---------------------------------------------------------------------------

5. Maximum Feasible Standards
    As discussed above, EPCA requires NHTSA to consider four factors in
determining what levels of CAFE standards (for passenger cars and light
trucks) would be maximum feasible--technological feasibility, economic
practicability, the effect of other motor vehicle standards of the
Government on fuel economy, and the need of the United States to
conserve energy. For determining what levels of fuel efficiency
standards (for HDPUVs) would be maximum feasible, EISA requires NHTSA
to consider three factors--whether a given fuel efficiency standard
would be appropriate, cost-effective, and technologically feasible.
NHTSA presents in the sections below its understanding of the meanings
of all those factors in their respective decision-making contexts.

a. Passenger Cars and Light Trucks
(1) Technological Feasibility
    ``Technological feasibility'' refers to whether a particular method
of improving fuel economy is available for deployment in commercial
application in the MY for which a standard is being established. Thus,
NHTSA is not limited in determining the level of new standards to
technology that is already being applied commercially at the time of
the rulemaking. For this proposal, NHTSA has considered a wide range of
technologies that improve fuel economy, while considering the need to
account for which technologies have already been applied to which
vehicle mode/configuration, as well as the need to estimate,
realistically, the cost and fuel economy impacts of each technology as
applied to different vehicle models/configurations. NHTSA believes that
the range of technologies considered, as well as how the technologies
are defined for purposes of the analysis, is reasonable, based on our
technical expertise, our independent research, and our interactions
with stakeholders. NHTSA has not, however, attempted to account for
every technology that might conceivably be applied to improve fuel
economy, nor does NHTSA believe it is necessary to do so, given that
many technologies address fuel economy in similar ways.\527\
---------------------------------------------------------------------------

    \527\ For example, NHTSA has not considered high-speed flywheels
as potential energy storage devices for hybrid vehicles; while such
flywheels have been demonstrated in the laboratory and even tested
in concept vehicles, commercially available hybrid vehicles
currently known to NHTSA use chemical batteries as energy storage
devices, and the agency has considered a range of hybrid vehicle
technologies that do so.
---------------------------------------------------------------------------

    NHTSA notes that the technological feasibility factor allows NHTSA
to set standards that force the development and application of new
fuel-efficient technologies, but this factor does not require NHTSA to
do so.\528\ In the 2012 final rule, NHTSA stated that ``[i]t is
important to remember that technological feasibility must also be
balanced with the other of the four statutory factors. Thus, while
`technology feasibility' can drive standards higher by assuming the use
of technologies that are not yet commercial, `maximum feasible' is also
defined in terms of economic practicability, for example, which might
caution the agency against basing standards (even fairly distant
standards) entirely on such technologies.'' \529\ NHTSA further stated
that ``as the `maximum feasible' balancing may vary depending on the
circumstances at hand for the MY in which the standards are set, the
extent to which technological feasibility is simply met or plays a more
dynamic role may also shift.'' \530\
---------------------------------------------------------------------------

    \528\ See 77 FR 63015 (Oct. 12, 2012).
    \529\ Id.
    \530\ Id.
---------------------------------------------------------------------------

    For purposes of MYs 2027-2032, NHTSA tentatively concludes that
sufficient technology exists to meet the proposed standards. NHTSA has
grappled with whether the ``available for deployment in commercial
application'' language of our historical interpretation of
technological feasibility is appropriately read as ``available for
deployment in the world'' or ``available for deployment given the
restrictions of 32902(h).'' In the overall balancing of factors for
determining maximum feasible, the above interpretive question may not
matter, because it is clear that the very high cost of the most
stringent alternatives likely puts them out of range of economic
practicability, especially if manufacturers appear to be resorting to
payment of civil penalties rather than complying through technology
application. Effectively, given the statutory constraints under which
NHTSA must operate, NHTSA does not see a technology path to reach the
higher fuel economy levels that would be required by the more stringent
alternatives. Moreover, even if technological feasibility were not a
barrier, that does not mean that requiring that technology to be added
would be economically practicable.
(2) Economic Practicability
    ``Economic practicability'' has consistently referred to whether a
standard is one ``within the financial capability of the industry, but
not so stringent as to'' lead to ``adverse economic consequences, such
as a significant loss of jobs or unreasonable elimination of consumer
choice.'' \531\ In evaluating economic practicability, NHTSA considers
the uncertainty surrounding future market conditions and consumer
demand for fuel economy alongside consumer demand for other vehicle
attributes. There is not necessarily a bright-line test for whether a
regulatory alternative is economically practicable, but there are
several metrics that we discuss below that we find can be useful for
making this assessment. In determining whether standards may or may not
be economically practicable, NHTSA considers:
---------------------------------------------------------------------------

    \531\ 67 FR 77015, 77021 (Dec. 16, 2002).
---------------------------------------------------------------------------

    Application rate of technologies--whether it appears that a
regulatory alternative would impose undue burden on manufacturers in
either or both the near and long term in terms of how much and which
technologies might be required. This metric connects to the next two
metrics, as well.
    Other technology-related considerations--related to the application
rate of technologies, whether it appears that the burden on several or
more manufacturers might cause them to respond to the standards in ways
that compromise, for example, vehicle safety, or other aspects of
performance that may be important to consumer acceptance of new
products.
    Cost of meeting the standards--even if the technology exists and it
appears that manufacturers can apply it consistent with their product
cadence, if meeting the standards is estimated to raise per-vehicle
cost more than we believe consumers are likely to accept, which could
negatively impact sales and employment in the automotive sector, the
standards may not be economically practicable. While consumer
acceptance of additional new vehicle cost associated with more
stringent CAFE standards is uncertain, NHTSA still finds this metric
useful for evaluating economic practicability.
    Sales and employment responses--as discussed above, sales and
employment responses have historically been key to NHTSA's
understanding of economic practicability.
    Uncertainty and consumer acceptance \532\ of technologies--
considerations not accounted for expressly in our modeling analysis,
but important to an assessment of economic practicability given the
timeframe of this rulemaking. Consumer acceptance can involve
consideration of anticipated consumer response not just to increased
vehicle cost and consumer valuation of fuel economy, but also the way
manufacturers may change vehicle models and vehicle sales mix in
response to CAFE standards.
---------------------------------------------------------------------------

    \532\ See, e.g., Center for Auto Safety v. NHTSA (CAS), 793 F.2d
1322 (D.C. Cir. 1986) (Administrator's consideration of market
demand as component of economic practicability found to be
reasonable).
---------------------------------------------------------------------------

    Over time, NHTSA has tried different methods to account for
economic practicability. NHTSA has long abandoned the ``least capable
manufacturer'' approach to ensuring economic practicability, of setting
standards at or near the level of the manufacturer whose fleet mix was,
on average, the largest and heaviest, generally having the highest
capacity (for passengers and/or cargo) and capability (in terms of
ability to perform their intended function(s)) so as not to limit the
availability of those types of

vehicles to consumers.\533\ NHTSA does not believe that such an
approach would be consistent with our root interpretation of economic
practicability. Economic practicability focuses on the capability of
the industry and seeks to avoid adverse consequences such as (inter
alia) a significant loss of jobs or unreasonable elimination of
consumer choice. If the overarching purpose of EPCA is energy
conservation, NHTSA believes that it is reasonable to expect that
maximum feasible standards may be harder for some automakers than for
others, and that they need not be keyed to the capabilities of the
least capable manufacturer. Indeed, keying standards to the least
capable manufacturer may disincentivize innovation by rewarding laggard
performance, and it will very foreseeably result in less energy
conservation than an approach that looks at the abilities of the
industry as a whole.
---------------------------------------------------------------------------

    \533\ NHTSA has not used the ``least capable manufacturer''
approach since prior to the MY 2005-2007 rulemaking (68 FR 16868,
Apr. 7, 2003) under the non-attribute-based (fixed) CAFE standards.
---------------------------------------------------------------------------

    NHTSA has also sought to account for economic practicability by
applying marginal cost-benefit analysis since the first rulemakings
establishing attribute-based standards, considering both overall
societal impacts and overall consumer impacts. Whether the standards
maximize net benefits has thus been a relevant, albeit not dispositive,
factor in the past for NHTSA's consideration of economic
practicability. E.O. 12866 states that agencies should ``select, in
choosing among alternative regulatory approaches, those approaches that
maximize net benefits . . .'' As the E.O. further recognizes, agencies,
including NHTSA, must acknowledge that the modeling of net benefits
does not capture all considerations relevant to economic
practicability, and moreover that the uncertainty of input assumptions
makes perfect foresight impossible. As in past rulemakings, NHTSA is
considering our estimates of net societal impacts, net consumer
impacts, and other related elements in the consideration of economic
practicability. We emphasize, however, that it is well within our
discretion to deviate from the level at which modeled net benefits
appear to be maximized if we conclude that the level would not
represent the maximum feasible level for future CAFE standards, given
all relevant and statutorily-directed considerations, as well as
unquantifiable benefits.\534\ Economic practicability is complex, and
like the other factors must be considered in the context of the overall
balancing and EPCA's overarching purpose of energy conservation.
---------------------------------------------------------------------------

    \534\ Even E.O. 12866 acknowledges that ``Nothing in this order
shall be construed as displacing the agencies' authorities or
responsibilities, as authorized by law.'' E.O. 12866, Sec. 9.
---------------------------------------------------------------------------

(3) The Effect of Other Motor Vehicle Standards of the Government on
Fuel Economy
    ``The effect of other motor vehicle standards of the Government on
fuel economy'' involves analysis of the effects of compliance with
emission, safety, noise, or damageability standards on fuel economy
capability, and thus on the industry's ability to meet a given level of
CAFE standards. In many past CAFE rulemakings, NHTSA has said that it
considers the adverse effects of other motor vehicle standards on fuel
economy. It said so because, from the CAFE program's earliest years
\535\ until recently, compliance with these other types of standards
has had a negative effect on fuel economy. For example, safety
standards that have the effect of increasing vehicle weight thereby
lowers fuel economy capability (because a heavier vehicle must work
harder to travel the same distance, and in working harder, consumes
more energy), thus decreasing the level of average fuel economy that
NHTSA can determine to be feasible. NHTSA has also accounted for
Federal Tier 3 and California LEV III criteria pollutant standards
within its estimates of technology effectiveness in this proposal.\536\
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    \535\ 43 FR 63184, 63188 (Dec. 15, 1977). See also 42 FR 33534,
33537 (Jun. 30, 1977).
    \536\ For most ICE vehicles on the road today, the majority of
vehicle-based NOX, NMOG, and CO emissions occur during
``cold-start,'' before the three-way catalyst has reached higher
exhaust temperatures (e.g., approximately 300 [deg]C), at which
point it is able to convert (through oxidation and reduction
reactions) those emissions into less harmful derivatives. By
limiting the amount of those emissions, vehicle-level smog standards
require the catalyst to be brought to temperature rapidly, so modern
vehicles employ cold-start strategies that intentionally release
fuel energy into the engine exhaust to heat the catalyst to the
right temperature as quickly as possible. The additional fuel that
must be used to heat the catalyst is typically referred to as a
``cold-start penalty,'' meaning that the vehicle's fuel economy
(over a test cycle) is reduced because the fuel consumed to heat the
catalyst did not go toward the goal of moving the vehicle forward.
The Autonomie work employed to develop technology effectiveness
estimates for this proposal accounts for cold-start penalties, as
discussed in the Chapter ``Cold-start Penalty'' of the ``CAFE
Analysis Autonomie Documentation''.
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    In other cases, the effect of other motor vehicle standards of the
Government on fuel economy may be neutral, or positive. Since the Obama
Administration, NHTSA has considered the GHG standards set by EPA as
``other motor vehicle standards of the Government.'' In the 2012 final
rule, NHTSA stated that ``[t]o the extent the GHG standards result in
increases in fuel economy, they would do so almost exclusively as a
result of inducing manufacturers to install the same types of
technologies used by manufacturers in complying with the CAFE
standards.'' \537\ NHTSA concluded in 2012 that ``no further action was
needed'' because ``the agency had already considered EPA's [action] and
the harmonization benefits of the National Program in developing its
own [action].'' \538\ In the 2020 final rule, NHTSA reinforced that
conclusion by explaining that a textual analysis of the statutory
language made it clear that EPA's GHG standards are literally ``other
motor vehicle standards of the Government'' because they are standards
set by a Federal agency that apply to motor vehicles. NHTSA and EPA are
obligated by Congress to exercise their own independent judgment in
fulfilling their statutory missions, even though both agencies'
regulations affect both fuel economy and CO2 emissions.
There are differences between the two agencies' programs that make
NHTSA's CAFE standards and EPA's GHG standards not perfectly one-to-one
(even besides the fact that EPA regulates other GHGs besides
CO2, EPA's CO2 standards also differ from NHTSA's
in a variety of ways, often because NHTSA is bound by statute to a
certain aspect of CAFE regulation). NHTSA creates standards that meet
our statutory obligations, including through considering EPA's
standards as other motor vehicle standards of the Government.\539\
Specifically, NHTSA has considered EPA's standards for this proposal by
including the baseline (i.e., the MYs 2024-2026) GHG standards in our
analytical baseline for the main analysis. Because the EPA and NHTSA
programs were developed in coordination, and stringency decisions were
made in coordination, NHTSA has not incorporated EPA's proposed
CO2 standards for MYs 2027-2032 as part of the analytical
baseline for this proposal's main analysis. NHTSA recognizes that the
proposed CAFE standards thus sit alongside EPA's light-duty vehicle
multipollutant emission

standards that were proposed in April. NHTSA's intention is to finalize
regulations that achieve energy conservation per its statutory mandate
and consistent with its statutory constraints, that work in harmony
with EPA's regulations addressing air pollution. NHTSA believes that
these statutory mandates can be met while ensuring that manufacturers
have the flexibility they need to achieve cost-effective compliance.
Between proposed and final rules, NHTSA will continue to coordinate
with EPA to optimize the effectiveness of NHTSA's standards while
minimizing compliance costs, informed by public comments from all
stakeholders and consistent with the statutory factors. NHTSA seeks
input to help inform these objectives.
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    \537\ 77 FR 62624, 62669 (Oct. 15, 2012).
    \538\ Id.
    \539\ Massachusetts v. EPA, 549 U.S. 497, 532 (2007) (``[T]here
is no reason to think that the two agencies cannot both administer
their obligations and yet avoid inconsistency.'').
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    With regard to state standards, NHTSA has also considered and
accounted for the impacts of anticipated manufacturer compliance with
California's ZEV mandate (and its adoption by the Section 177 states),
incorporating them into the baseline No-Action Alternative as other
regulatory requirements foreseeably applicable to automakers during the
rulemaking time frame. In so doing, we are not taking a position on
whether or not these programs are preempted under EPCA, nor does NHTSA
even have authority to make such determinations with the force of law.
NHTSA is also not taking a position on whether these regulatory
requirements are or are not other motor vehicle standards of the
Government; in either event, it is still appropriate to include these
requirements in the regulatory baseline because they are foreseeable
legal obligations applying to the automakers during the rulemaking time
frame and are therefore relevant to understanding the state of the
world absent any further regulatory action by NHTSA. NHTSA continues
not to model state-level GHG standards, as discussed in the 2022 final
rule.\540\
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    \540\ See 87 FR at 25982 (May 2, 2022).
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(4) The Need of the U.S. To Conserve Energy
    NHTSA has consistently interpreted ``the need of the United States
to conserve energy'' to mean ``the consumer cost, national balance of
payments, environmental, and foreign policy implications of our need
for large quantities of petroleum, especially imported petroleum.''
\541\ The following sections discuss each of these elements in more
detail.
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    \541\ See, e.g., 42 FR 63184, 63188 (Dec. 15, 1977); 77 FR
62624, 62669 (Oct. 15, 2012).
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(c) Consumer Costs and Fuel Prices
    Fuel for vehicles costs money for vehicle owners and operators, so
all else equal, consumers benefit from vehicles that need less fuel to
perform the same amount of work. Future fuel prices are a critical
input into the economic analysis of potential CAFE standards because
they determine the value of fuel savings both to new vehicle buyers and
to society; the amount of fuel economy that the new vehicle market is
likely to demand in the absence of regulatory action; and they inform
NHTSA about the ``consumer cost . . . of our need for large quantities
of petroleum.'' For this proposal, NHTSA relied on fuel price
projections from the EIA AEO for 2022. Federal Government agencies
generally use EIA's price projections in their assessment of future
energy-related policies.
    Raising fuel economy standards can reduce consumer costs on fuel--
this has long been a major focus of the CAFE program and was one of the
driving considerations for Congress in establishing the CAFE program
originally. Over time, as average VMT has increased and more and more
Americans have come to live farther and farther from their workplaces
and activities, fuel costs have become even more important. Even when
gasoline prices, for example, are relatively low, they can still add up
quickly for consumers whose daily commute measures in hours, like many
Americans in economically disadvantaged and historically underserved
communities. When vehicles can go farther on a gallon of gasoline,
consumers save money, and for lower-income consumers the savings may
represent a larger percentage of their income and overall expenditures
than for more-advantaged consumers. Of course, when fuel prices spike,
lower-income consumers suffer disproportionately. Thus, clearly, the
need of the United States to conserve energy is well-served by helping
consumers save money at the gas pump.
    NHTSA and the DOT are committed to improving equity in
transportation. Helping economically disadvantaged and historically
underserved Americans save money on fuel and get where they need to go
is an important piece of this puzzle, and it also improves energy
conservation, thus implementing Congress' intent in EPCA. All of the
action alternatives considered in this proposal improve fuel economy as
compared to the baseline standards, with the most stringent
alternatives saving consumers the most on fuel costs.
    That said, in many previous CAFE rulemakings, discussions of fuel
prices have always been intended to reflect the price of motor
gasoline. However, a growing set of vehicle offerings that rely in
part, or entirely, on electricity suggests that gasoline prices are no
longer the only fuel prices relevant to evaluations of the effects of
different possible CAFE standards. In the analysis supporting this
proposal, NHTSA considers the energy consumption from the entire on-
road fleet, which already contains a number of plug-in hybrid and fully
electric vehicles that are part of the fleet independent of proposed
CAFE standards.\542\ While the current national average electricity
price is significantly higher than that of gasoline, on an energy
equivalent basis ($/MMBtu),\543\ electric motors convert energy into
propulsion much more efficiently than ICEs. This means that, even
though the energy-equivalent prices of electricity are higher, electric
vehicles still produce fuel savings for their owners. EIA's AEO 2022
also projects some amount of rise in real gasoline prices over the next
three decades,\544\ while projecting real electricity prices to
decrease slightly.\545\ As the reliance on electricity grows in the LD
fleet, NHTSA will continue to monitor the trends in electricity prices
and their implications, if any, for CAFE standards.
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    \542\ Higher CAFE standards encourage manufacturers to improve