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    As the cost of components has come down, manufacturers have
increasingly announced their projections for zero-emission HD vehicles,
and these projections signify a rapid increase in BEVs and FCEVs over
the next decade. For example, Volvo Trucks and Scania announced a
global electrification target of 50 percent of trucks sold being
electric by 2030.\114\ Daimler Trucks North America has committed to
offering only what they refer to as ``carbon-neutral'' trucks in the
United States. by 2039 and expects that by 2030 as much as 60 percent
of its sales will be ZEVs.115 116 Navistar has a goal of
having 50 percent of its sales volume be ZEVs by 2030, and it has
committed to achieve 100 percent zero emissions by 2040.\117\ Cummins
targets net-zero carbon emissions by 2050.118 119
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    \114\ Scania, `Scania's Electrification Roadmap,' Scania Group,
November 24, 2021, https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html; AB Volvo, `Volvo
Trucks Launches Electric Truck with Longer Range,' Volvo Group,
January 14, 2022, https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html.
    \115\ David Cullen, `Daimler to Offer Carbon Neutral Trucks by
2039,' (October 25, 2019). https://www.truckinginfo.com/343243/daimler-aims-to-offer-only-co2-neutral-trucks-by-2039-in-key-markets.
    \116\ Deborah Lockridge, `What Does Daimler Truck Spin-off Mean
for North America?,' Trucking Info (November 11, 2021). https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america.
    \117\ Navistar presentation at the Advanced Clean Transportation
(ACT) Expo, Long Beach, CA (May 9-11, 2022).
    \118\ Cummins, Inc. ``Cummins Unveils New Environmental
Sustainability Strategy to Address Climate Change, Conserve Natural
Resources.'' November 14, 2019. Last accessed on September 10, 2021
at https://www.cummins.com/news/releases/2019/11/14/cummins-unveils-new-environmental-sustainability-strategy-address-climate.
    \119\ Environmental Defense Fund (2022) September 2022 Electric
Vehicle Market Update: Manufacturer Commitments and Public Policy
Initiatives Supporting Electric Mobility in the U.S. and Worldwide,
available online at: https://blogs.edf.org/climate411/files/2022/09/ERM-EDF-Electric-Vehicle-Market-Report_September2022.pdf.
---------------------------------------------------------------------------

    On a parallel path, large private HD fleet owners are also
increasingly committing to expanding their electric fleets.\120\ A
report by the International Energy Agency (IEA) provides a
comprehensive accounting of recent announcements made by UPS, FedEx,
DHL, Walmart, Anheuser-Busch, Amazon, and PepsiCo for fleet
electrification.\121\ Amazon and UPS, for example, placed orders in
2020 for 10,000 BEV delivery vans from EV start-ups Rivian and Arrival,
respectively, and Amazon has plans to scale up to 100,000 BEV vans by
2030.122 123

Likewise, in December 2022, PepsiCo added the first of 100 planned
Tesla Semis to its fleet.\124\ These announcements include not only
orders for electric delivery vans and semi-trucks, but more specific
targets and dates to full electrification or net-zero emissions.
Amazon, FedEx, DHL, and Walmart have set a commitment to fleet
electrification and/or achieving net-zero emissions by
2040.125 126 127 128 We recognize that certain delivery vans
will likely fall into the Class 2b and 3 regulatory category, the vast
majority of which are not covered in this rule's proposed updates; we
intend to address this category in a separate light and medium-duty
vehicle rulemaking.\129\
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    \120\ Environmental Defense Fund (2021) EDF analysis finds
American fleets are embracing electric trucks. July 28, 2021.
Available online at: https://blogs.edf.org/energyexchange/2021/07/28/edf-analysis-finds-american-fleets-are-embracing-electric-trucks/
.
    \121\ International Energy Association. Global EV Outlook 2021.
April 2021. Available online at: https://iea.blob.core.windows.net/assets/ed5f4484-f556-4110-8c5c-4ede8bcba637/GlobalEVOutlook2021.pdf.
    \122\ Amazon, Inc. ``Introducing Amazon's first custom electric
delivery vehicle.'' October 8, 2020. Last accessed on October 18,
2022 at https://www.aboutamazon.com/news/transportation/introducing-amazons-first-custom-electric-delivery-vehicle.
    \123\ Arrival Ltd. ``UPS invests in Arrival and orders 10,000
Generation 2 Electric Vehicles.'' April 24, 2020. Last accessed on
October 18, 2022 at https://arrival.com/us/en/news/ups-invests-in-arrival-and-orders-10000-generation-2-electric-vehicles.
    \124\ Akash Sriram. ``Musk delivers first Tesla truck, but no
update on output, pricing.'' Reuters. December 2, 2022. Last
accessed on January 4, 2023 at https://www.reuters.com/business/autos-transportation/musk-delivers-first-tesla-semi-trucks-2022-12-02/.
    \125\ Robo, Ellen and Dave Seamonds. Technical Memo to
Environmental Defense Fund: Investment Reduction Act Supplemental
Assessment: Analysis of Alternative Medium- and Heavy-Duty Zero-
Emission Vehicle Business-As-Usual Scenarios. ERM. August 19, 2022.
Available online: https://www.erm.com/contentassets/154d08e0d0674752925cd82c66b3e2b1/edf-zev-baseline-technical-memo-addendum.pdf.
    \126\ FedEx Corp. ``FedEx Commits to Carbon-Neutral Operations
by 2040.'' March 3, 2021. Last accessed on October 18, 2022 at
https://newsroom.fedex.com/newsroom/asia-english/sustainability2021.
    \127\ Deutsche Post DHL Group. ``Zero emissions by 2050: DHL
announces ambitious new environmental protection target.'' March
2017. Last accessed on October 18, 2022 at https://www.dhl.com/global-en/delivered/sustainability/zero-emissions-by-2050.html.
    \128\ Walmart Inc. ``Walmart Sets Goal to Become a Regenerative
Company.'' September 21, 2020. Last accessed on October 18, 2022 at
https://corporate.walmart.com/newsroom/2020/09/21/walmart-sets-goal-to-become-a-regenerative-company.
    \129\ Complete heavy-duty vehicles at or below 14,000 pounds.
GVWR are chassis-certified under 40 CFR part 86, while incomplete
vehicles at or below 14,000 pounds. GVWR may be certified to either
40 CFR part 86 (meeting standards under subpart S) or 40 CFR part
1037 (installed engines would then need to be certified under 40 CFR
part 1036). Class 2b and 3 vehicles are primarily chassis-certified
complete commercial pickup trucks and vans. We intend to pursue a
combined light-duty and medium-duty rulemaking to set more stringent
standards for complete and incomplete vehicles at or below 14,000
pounds. GVWR that are certified under 40 CFR part 86, subpart S. The
standards proposed in this rule would apply for all heavy-duty
vehicles above 14,000 pounds. GVWR, except as noted in 40 CFR
1037.150(l). The proposed standards in this rule would also apply
for incomplete heavy-duty vehicles at or below 14,000 pounds. GVWR
if vehicle manufacturers opt to certify those vehicles under 40 CFR
part 1037 instead of certifying under 40 CFR part 86, subpart S.
---------------------------------------------------------------------------

    Amazon and Walmart are among fleets owners and operators that are
also considering hydrogen. Amazon signed an agreement with Plug
Power,\130\ a company building an end-to-end hydrogen ecosystem, to
supply hydrogen for up to 800 HD long-haul trucks or 30,000 forklifts
(which are commonly powered using hydrogen) starting in 2025 through
2040.\131\ Walmart is purchasing hydrogen from Plug Power \132\ and
plans to expand pilots of fuel cell forklifts, yard trucks, and
possibly HD long-haul trucks by 2040.\133\ Plug Power has agreed to
purchase up to 75 Nikola Class 8 fuel cell trucks over the next three
years in exchange for supplying the company with hydrogen fuel.\134\
---------------------------------------------------------------------------

    \130\ Plug Power. ``Plug and Amazon Sign Green Hydrogen
Agreement''. Available online: https://www.ir.plugpower.com/press-releases/news-details/2022/Plug-and-Amazon-Sign-Green-Hydrogen-Agreement/default.aspx.
    \131\ Amazon. ``Amazon adopts green hydrogen to help decarbonize
its operations''. August 25, 2022. Available online: https://www.aboutamazon.com/news/sustainability/amazon-adopts-green-hydrogen-to-help-decarbonize-its-operations.
    \132\ Plug Power. ``Plug Supplies Walmart with Green Hydrogen to
Fuel Retailer's Fleet of Material Handling Lift Trucks''. April 19,
2022. Available online: https://www.ir.plugpower.com/press-releases/news-details/2022/Plug-Supplies-Walmart-with-Green-Hydrogen-to-Fuel-Retailers-Fleet-of-Material-Handling-Lift-Trucks/default.aspx.
    \133\ Proactive. ``WalMart eyes benefits of hydrogen delivery
vehicles in wider trials''. Proactive 13:17. June 8, 2022. Available
online: https://www.proactiveinvestors.co.uk/companies/news/984360/walmart-eyes-benefits-of-hydrogen-delivery-vehicles-in-wider-trials-984360.html.
    \134\ Adler, Alan. ``Plug Power will buy up to 75 Nikola fuel
cell trucks''. Freightwaves. December 15, 2022. Available online:
https://www.freightwaves.com/news/plug-power-will-buy-up-to-75-nikola-fuel-cell-trucks.
---------------------------------------------------------------------------

    The lifetime total cost of ownership (TCO), which includes
maintenance and fuel costs, is likely a primary factor for HD vehicle
and fleet owners considering BEV and FCEV purchases. In fact, a 2018
survey of fleet owners showed ``lower cost of ownership'' as the second
most important motivator for electrifying their fleet.\135\ An ICCT
analysis from 2019 suggests that TCO for light and medium heavy-duty
BEVs could reach cost parity with comparable diesel ICE vehicles in the
early 2020s, while heavy HD BEVs and FCEVs are likely to reach cost
parity with comparable diesel ICE vehicles closer to the 2030
timeframe.\136\ Recent findings from Phadke et al. suggest that BEV TCO
could be 13 percent less than that of a comparable diesel ICE vehicle
if electricity pricing is optimized.\137\ These studies do not consider
the IRA. The Rocky Mountain Institute found that because of the IRA,
the TCO of electric trucks will be lower than the TCO of comparable
diesel trucks about five years faster than without the IRA. They expect
cost parity as soon as 2023 for urban and regional duty cycles that
travel up to 250 miles and 2027 for long-hauls that travel over 250
miles.\138\
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    \135\ The primary motivator for fleet managers was
``Sustainability and environmental goals''; the survey was conducted
by UPS and GreenBiz.
    \136\ ICCT (2019) ``Estimating the infrastructure needs and
costs for the launch of zero-emissions trucks''; available online
at: https://theicct.org/publications/zero-emission-truck-infrastructure.
    \137\ Phadke, A., et. al. (2021) ``Why Regional and Long-Haul
Trucks are Primed for Electrification Now''; available online at:
https://eta-publications.lbl.gov/sites/default/files/updated_5_final_ehdv_report_033121.pdf.
    \138\ Kahn, Ari, et. al. ``The Inflation Reduction Act Will Help
Electrify Heavy-Duty Trucking''. Rocky Mountain Institute. August
25, 2022. Available online: https://rmi.org/inflation-reduction-act-will-help-electrify-heavy-duty-trucking/.
---------------------------------------------------------------------------

    As the ICCT and Phadke et al. studies suggest, fuel costs are an
important part of TCO. While assumptions about vehicle weight and size
can make direct comparisons between HD ZEVs and ICE vehicles
challenging, data show greater energy efficiency of battery-electric
and fuel cell technology relative to ICE
technologies.139 140 Better energy efficiency leads to lower
electricity or hydrogen fuel costs for ZEVs relative to ICE fuel
costs.141 142 Maintenance and service costs are also an
important component within TCO; although there is limited data
available on actual maintenance costs for HD ZEVs, early experience
with BEV medium HD vehicles and transit buses suggests the potential
for lower maintenance costs after an initial period of learning to
refine both component durability and maintenance procedures.\143\ We
expect similar trends for FCEVs, as discussed in Chapter 2 of the DRIA.
To facilitate HD fleets transitioning to ZEVs, some manufacturers are
currently including maintenance in leasing agreements with fleets; it
is unclear the extent to which a full-service leasing model will
persist or will be transitioned to a more

traditional purchase model after an initial period of
learning.144 145
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    \139\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \140\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \141\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \142\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \143\ U.S. Department of Energy Alternative Fuels Data Center
(AFDC), ``Developing Infrastructure to Charge Plug-In Electric
Vehicles'', https://afdc.energy.gov/fuels/electricity_infrastructure.html (accessed 2-27-20).
    \144\ Fisher, J. (2019) ``Volvo's First Electric VNR Ready for
the Road.'' Fleet Owner, September 17. www.fleetowner.com/blue-fleets/volvo-s-first-electric-vnr-ready-road.
    \145\ Gnaticov, C. (2018). ``Nikola One Hydrogen Electric Semi
Hits the Road in Official Film.'' Carscoops, Jan. 26.
www.carscoops.com/2018/01/nikola-one-hydrogen-electric-semi-hits-road-official-film/.
---------------------------------------------------------------------------

    The growth in incentive programs will continue to play an important
role in the HD ZEV market. For example, as discussed in more detail in
this section, FHWA-approved plans providing $1.5 billion in funding for
expanding charging on over 75,000 miles of highway encourages states to
consider station designs and power levels that could support heavy-duty
vehicles. In a 2017 survey of fleet managers, upfront purchase price
was listed as the primary barrier to HD fleet electrification. This
suggests that federal incentive programs like those in the BIL and IRA
(discussed in Section I.C.2) to offset ZEV purchase costs, as well as
state and local incentives and investments, can be influential in the
near term, with improvements in BEV and FCEV component costs playing an
increasing role in reducing costs in the longer term.146 147
For example, BEV incentive programs for transit and school buses have
experienced growth and are projected to continue to influence BEV
markets. The Los Angeles Department of Transportation (LADOT) is one of
the first transit organizations in the country to develop a program
committed to transitioning its transit fleets to ZEVs by 2030--a target
that is 10 years sooner than CARB's Innovative Clean Transportation
(ICT) regulation requiring all public transit to be electric by
2040.\148\ Since these announcements, LADOT has purchased 27 BEV
transit and school buses from BYD and Proterra; by 2030, the number of
BEV buses in the LADOT fleet is expected to grow to 492 buses. Outside
of California, major metropolitan areas including Chicago, Seattle, New
York City, and Washington, DC, have zero-emissions transit programs
with 100 percent ZEV target dates ranging from 2040 to
2045.149 150 151 152 EV school bus programs, frequently in
partnership with local utilities, are also being piloted across the
country and are expanding under EPA's Clean School Bus Program
(CSB).\153\ These programs initially included school districts in, but
not limited to, California, Virginia, Massachusetts, Michigan,
Maryland, Illinois, New York, and
Pennsylvania.154 155 156 157 158 Going forward, they will
continue to expand with BIL funding of over $5 billion over the next
five years (FY 2022-2026) to replace existing school buses with zero-
emission and low-emission models, as discussed more in Section I.C.2.
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    \146\ Other barriers that fleet managers prioritized for fleet
electrification included: Inadequate charging infrastructure--our
facilities, inadequate product availability, inadequate charging
infrastructure--public; for the full list of top barriers see Nadel
and Junga (2020), citing UPS and GreenBiz 2018.
    \147\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \148\ LADOT, (2020). ``LADOT Transit Zero-Emission Bus Rollout
Plan'' https://ww2.arb.ca.gov/sites/default/files/2020-12/LADOT_ROP_Reso_ADA12172020.pdf.
    \149\ Sustainable Bus. ``CTA Chicago tests electric buses and
pursues 100% e-fleet by 2040''. April 29, 2021. Available online:
https://www.sustainable-bus.com/electric-bus/cta-chicago-electric-buses/.
    \150\ Pascale, Jordan. ``Metro Approves Plans For Fully Electric
Bus Fleet By 2045''. DCist. June 10, 2021. Available online: https://dcist.com/story/21/06/10/metro-goal-entirely-electric-bus-fleet-2045/.
    \151\ King County Metro. ``Transitioning to a zero-emissions
fleet''. Available online: https://kingcounty.gov/depts/transportation/metro/programs-projects/innovation-technology/zero-emission-fleet.aspx.
    \152\ Hallum, Mark. ``MTA's recent purchase of zero emissions
buses will be 33% bigger than expected''. AMNY. May 25, 2021.
Available online: https://www.amny.com/transit/mta-says-45-to-60-more-buses-in-recent-procurement-will-be-zero-emissions/.
    \153\ U.S. Environmental Protection Agency. ``Clean School Bus
Program''. Available online: https://www.epa.gov/cleanschoolbus.
    \154\ Commonwealth of Massachusetts. ``EV Programs &
Incentives''. Available online: https://www.mass.gov/info-details/ev-programs-incentives.
    \155\ Morris, Charles. ``NYC's new school bus contract includes
electric bus pilot''. Charged--Electric Vehicles Magazine. July 7,
2021. Available online: https://chargedevs.com/newswire/nycs-new-school-bus-contract-includes-electric-bus-pilot/.
    \156\ Soneji, Hitesh, et. al. ``Pittsburg USD Electric School
Bus Final Project Report''. Olivine, Inc. September 23, 2020.
Available online: https://olivineinc.com/wp-content/uploads/2020/10/Pittsburg-USD-Electric-School-Bus-Final-Project-Report-Final.pdf.
    \157\ Shahan, Cynthia. ``Largest Electric School Bus Program in
United States Launching in Virginia''. CleanTechnica. January 12,
2020. Available online: https://cleantechnica.com/2020/01/12/largest-electric-school-bus-program-in-united-states-launching-in-virginia/.
    \158\ St. John, Jeff. ``Highland Electric Raises $235M, Lands
Biggest Electric School Bus Contract in the US''. gtm. February 25,
2021. Available online: https://www.greentechmedia.com/articles/read/on-heels-of-253m-raise-highland-electric-lands-biggest-electric-school-bus-contract-in-the-u.s.
---------------------------------------------------------------------------

    In summary, the HD ZEV market is growing rapidly, and ZEV
technologies are expected to expand to many applications across the HD
sector. As the industry is dynamic and changing rapidly, the examples
presented here represent only a sampling of the ZEV HD investment
policies and markets. DRIA Chapter 1 provides a more detailed
characterization of the HD ZEV technologies in the current and
projected ZEV market. We request comment on our assessment of the HD
ZEV market and any additional data sources we should consider.
2. Bipartisan Infrastructure Law and Inflation Reduction Act
i. BIL
    The BIL \159\ was enacted on November 15, 2021, and contains
provisions to support the deployment of low- and zero-emission transit
buses, school buses, and trucks that service ports, as well as electric
vehicle charging infrastructure and hydrogen. These provisions include
Section 71101 funding for EPA's Clean School Bus Program,\160\ with $5
billion to fund the replacement of ICE school buses with clean and
zero-emission buses over the next five years. In its first phase of
funding for the Clean School Bus Program, EPA is issuing nearly $1
billion in rebates (up to a maximum of $375,000 per bus, depending on
the bus fuel type, bus size, and school district prioritization status)
\161\ for replacement clean and zero-emission buses and associated
infrastructure costs.162 163 The BIL also includes funding
for DOT's Federal Transit Administration (FTA) Low- or No-Emission
Grant Program,\164\ with over $5.6 billion over the next five years to
support the purchase of zero- or low-emission transit buses and
associated infrastructure.\165\
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    \159\ United States, Congress. Public Law 117-58. Infrastructure
Investment and Jobs Act of 2021. Congress.gov, www.congress.gov/bill/117th-congress/house-bill/3684/text. 117th Congress, House
Resolution 3684, passed 15 Nov. 2021.
    \160\ U.S. Environmental Protection Agency. ``Clean School Bus
Program''. Available online: https://www.epa.gov/cleanschoolbus.
    \161\ U.S. Environmental Protection Agency. ``2022 Clean School
Bus (CSB) Rebates Program Guide''. May 2022. Available online:
https://nepis.epa.gov/Exe/ZyPDF.cgi/P1014WNH.PDF?Dockey=P1014WNH.PDF.
    \162\ Some recipients are able to claim up to $20,000 per bus
for charging infrastructure.
    \163\ U.S. Environmental Protection Agency, ``EPA Clean School
Bus Program Second Report to Congress Fiscal Year 2022,'' EPA-420-R-
23-002, February 2023. Available online: https://www.epa.gov/system/files/documents/2023-02/420r23002.pdf (last accessed February 9,
2023).
    \164\ U.S. Department of Transportation, Federal Transit
Administration. ``Low or No Emission Vehicle Program--5339(c)''.
Available online: https://www.transit.dot.gov/lowno (last accessed
February 10, 2023).
    \165\ U.S. Department of Transportation, Federal Transit
Administration. ``Bipartisan Infrastructure Law Fact Sheet: Grants
for Buses and Bus Facilities''. Available online: https://www.transit.dot.gov/funding/grants/fact-sheet-buses-and-bus-facilities-program (last accessed February 10, 2023).
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    The BIL includes up to $7.5 billion to help build out a national
network of EV

charging and hydrogen fueling through DOT's Federal Highway
Administration (FHWA). This includes $2.5 billion in discretionary
grant programs for charging and fueling infrastructure \166\ along
designated alternative fuel corridors and in communities (Section
11401) \167\ and $5 billion for the National Electric Vehicle
Infrastructure (NEVI) Formula Program (under Division J, Title
VIII).\168\ In September 2022, the FHWA approved the first set of plans
for the NEVI program covering all 50 states, Washington, DC, and Puerto
Rico. The approved plans provide $1.5 billion in funding for fiscal
years (FY) 2022 and 2023 to expand charging on over 75,000 miles of
highway.\169\ While jurisdictions are not required to build stations
specifically for heavy-duty vehicles, FHWA's guidance encourages states
to consider station designs and power levels that could support heavy-
duty vehicles.\170\
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    \166\ Fueling infrastructure includes hydrogen, propane, and
natural gas.
    \167\ U.S. Department of Transportation, Federal Highway
Administration, ``The National Electric Vehicle Infrastructure
(NEVI) Formula Program Guidance,'' February 10, 2022. Available
online: https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf (last accessed February 10,
2023).
    \168\ U.S. Department of Transportation, Federal Highway
Administration. ``Bipartisan Infrastructure Law, Fact Sheets:
National Electric Vehicle Infrastructure Formula Program''. February
10, 2022. Available online: https://www.fhwa.dot.gov/bipartisan-infrastructure-law/nevi_formula_program.cfm.
    \169\ U.S. Department of Transportation. ``Historic Step: All
Fifty States Plus DC and Puerto Rico Grenlit to Move EV Charging
Networks Forward, Covering 75,000 miles of Highway''. Available
online: https://www.transportation.gov/briefing-room/historic-step-all-fifty-states-plus-dc-and-puerto-rico-greenlit-move-ev-charging.
    \170\ U.S. Department of Transportation, Federal Highway
Administration. ``National Electric Vehicle Infrastructure Formula
Program: Bipartisan Infrastructure Law--Program Guidance''. February
10, 2022. Available online: https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf.
---------------------------------------------------------------------------

    The BIL funds other programs that could support HD vehicle
electrification. For example, there is continued funding of the
Congestion Mitigation and Air Quality (CMAQ) Improvement Program, with
more than $2.5 billion authorized for FY 2022 through FY 2026. The BIL
(Section 11115) amended the CMAQ Improvement Program to add, among
other things, ``the purchase of medium- or heavy-duty zero emission
vehicles and related charging equipment'' to the list of activities
eligible for funding. The BIL establishes a program under Section 11402
``Reduction of Truck Emissions at Port Facilities'' that includes
grants to be administered through FHWA aimed at reducing port
emissions, including through electrification. In addition, the BIL
includes funding for DOT's Maritime Administration (MARAD) Port
Infrastructure Development Program; \171\ and DOT's Federal Highway
Administration (FHWA) Carbon Reduction Program.\172\
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    \171\ U.S. Department of Transportation, Maritime
Administration. ``Bipartisan Infrastructure Law: Maritime
Administration''. Available online: https://www.maritime.dot.gov/about-us/bipartisan-infrastructure-law-maritime-administration.
    \172\ U.S. Department of Transportation, Federal Highway
Administration. ``Bipartisan Infrastructure Law, Fact Sheets: Carbon
Reduction Program (CRP)''. April 20, 2022. Available online: https://www.fhwa.dot.gov/bipartisan-infrastructure-law/crp_fact_sheet.cfm.
---------------------------------------------------------------------------

    The BIL also targets batteries used for electric vehicles. It funds
DOE's Battery Materials Processing and Battery Manufacturing
program,\173\ which grants funds to promote U.S. processing and
manufacturing of batteries for automotive and electric grid use through
demonstration projects, the construction of new facilities, and the
retooling, retrofitting, and expansion of existing facilities. This
includes a total of $3 billion for battery material processing and $3
billion for battery manufacturing and recycling, with additional
funding for a lithium-ion battery recycling prize competition, research
and development activities in battery recycling, state and local
programs, and the development of a collection system for used
batteries. In addition, the BIL includes $200 million for the Electric
Drive Vehicle Battery Recycling and Second-Life Application Program for
research, development, and demonstration of battery recycling and
second-life applications.
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    \173\ U.S. Department of Energy. ``Biden Administration
Announces $3.16 Billion From Bipartisan Infrastructure Law to Boost
Domestic Battery Manufacturing and Supply Chains. May 2, 2022.
Available online: https://www.energy.gov/articles/biden-administration-announces-316-billion-bipartisan-infrastructure-law-boost-domestic.
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    Hydrogen provisions of the BIL include funding for several programs
to accelerate progress towards the Hydrogen Shot goal, launched on June
7, 2021, to reduce the cost of clean hydrogen \174\ production by 80
percent to $1 for 1 kg in 1 decade \175\ and jumpstart the hydrogen
market in the United States. This includes $8 billion for the
Department of Energy's Regional Clean Hydrogen Hubs Program to
establish networks of clean hydrogen producers, potential consumers,
and connective infrastructure in close proximity; $1 billion for a
Clean Hydrogen Electrolysis Program; and $500 million for Clean
Hydrogen Manufacturing and Recycling Initiatives.\176\ The BIL also
called for development of a Clean Hydrogen Production Standard to guide
DOE hub and Research, Development, Deployment, and Diffusion (RDD&D)
actions; and a National Clean Hydrogen Strategy and Roadmap to
facilitate widescale production, processing, delivery, storage, and use
of clean hydrogen. These BIL programs are currently under development,
and further details are expected over the course of calendar year (CY)
2023.
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    \174\ The BIL defines ``clean hydrogen'' as hydrogen produced in
compliance with the GHG emissions standard established under 42 U.S.
Code section 16166(a), including production from any fuel source,
where the standard developed shall define the term to mean hydrogen
produced with a carbon intensity equal to or less than 2 kilograms
of carbon dioxide-equivalent produced at the site of production per
kilogram of hydrogen produced.
    \175\ Satyapal, Sunita. ``2022 AMR Plenary Session''. U.S.
Department of Energy, Hydrogen and Fuel Cell Technologies Office.
June 6, 2022. Available online: https://www.energy.gov/sites/default/files/2022-06/hfto-amr-plenary-satyapal-2022-1.pdf.
    \176\ U.S. Department of Energy. ``DOE Establishes Bipartisan
Infrastructure Law's $9.5 Billion Clean Hydrogen Initiatives''.
February 15, 2022. Available online: https://www.energy.gov/articles/doe-establishes-bipartisan-infrastructure-laws-95-billion-clean-hydrogen-initiatives.
---------------------------------------------------------------------------

ii. IRA Sections 13502 and 13403
    The IRA,\177\ which was enacted on August 16, 2022, contains
several provisions relevant to vehicle electrification and the
associated infrastructure via tax credits, grants, rebates, and loans
through CY 2032, including two key provisions that provide a tax credit
to reduce the cost of producing qualified batteries (battery tax
credit) and to reduce the cost of purchasing qualified ZEVs (vehicle
tax credit). The battery tax credit in ``Advanced Manufacturing
Production Credit'' in IRA section 13502 and the ``Qualified Commercial
Clean Vehicles'' vehicle tax credit in IRA section 13403 are included
quantitatively in our analysis.
---------------------------------------------------------------------------

    \177\ Inflation Reduction Act of 2022, Public Law 117-169, 136
Stat. 1818 (2022) (``Inflation Reduction Act'' or ``IRA''),
available at https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf.
---------------------------------------------------------------------------

    IRA section 13502, ``Advanced Manufacturing Production Credit,''
provides tax credits for the production and sale of battery cells and
modules of up to $45 per kilowatt-hour (kWh), and for 10 percent of the
cost of producing applicable critical minerals (including those found
in batteries and fuel cells, provided that the minerals meet certain
specifications), when such components or minerals are produced in the
United States. These credits begin in CY 2023 and phase down starting
in CY 2030, ending after CY 2032. With projected direct manufacturing
costs for heavy-

duty vehicle batteries on the order of $65 to $275/kWh in the 2025-2030
timeframe,\178\ this tax credit has the potential to noticeably reduce
the cost of qualifying batteries and, by extension, the cost of BEVs
and FCEVs with qualifying batteries. We did not include a detailed cost
breakdown of fuel cells quantitatively in our analysis, but the
potential impact on fuel cells may also be significant because platinum
(an applicable critical mineral commonly used in fuel cells) is a major
contributor to the cost of fuel cells.\179\
---------------------------------------------------------------------------

    \178\ Sharpe, B., Basma, H. ``A meta-study of purchase costs for
zero-emission trucks''. International Council on Clean
Transportation. February 17, 2022. Available online: https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf.
    \179\ Leader, Alexandra & Gaustad, Gabrielle & Babbitt, Callie.
(2019). The effect of critical material prices on the
competitiveness of clean energy technologies. Materials for
Renewable and Sustainable Energy. 8. 10.1007/s40243-019-0146-z.
---------------------------------------------------------------------------

    We limited our assessment of this tax credit in our DRIA Chapter 2
analysis to the tax credits for battery cells and modules. Pursuant to
the IRA, qualifying battery cells must have an energy density of not
less than 100 watt-hours per liter, and we expect that batteries for
heavy-duty BEVs and FCEVs will exceed this requirement as described in
DRIA Chapter <IP_ADDRESS>. Qualifying battery cells must be capable of
storing at least 12 watt-hours of energy and qualifying battery modules
must have an aggregate capacity of not less than 7 kWh (or, for FCEVs,
not less than 1 kWh); typical battery cells and modules for motor
vehicles also exceed these requirements.\180\ Additionally, the ratio
of the capacity of qualifying cells and modules to their maximum
discharge amount shall not exceed 100:1. We expect that battery cells
and modules in heavy-duty BEVs and FCEVs will also meet this
requirement because the high costs and weight of the batteries and the
competitiveness of the heavy-duty industry will pressure manufacturers
to allow as much of their batteries to be useable as possible. We did
not consider the tax credits for critical minerals quantitatively in
our analysis. However, we note that any applicability of the critical
mineral tax credit may further reduce the costs of batteries.
---------------------------------------------------------------------------

    \180\ Islam, Ehsan Sabri, Ram Vijayagopal, Aymeric Rousseau. ``A
Comprehensive Simulation Study to Evaluate Future Vehicle Energy and
Cost Reduction Potential'', Report to the U.S. Department of Energy,
Contract ANL/ESD-22/6, October 2022. See Medium- and heavy-duty
vehicles (techno-economic analysis with BEAN). Available online:
https://vms.taps.anl.gov/research-highlights/u-s-doe-vto-hfto-r-d-benefits/.
---------------------------------------------------------------------------

    We included this battery tax credit by reducing the direct
manufacturing costs of batteries in BEVs and FCEVs, but not the
associated indirect costs. At present, there are few manufacturing
plants for HD vehicle batteries in the United States, which means that
few batteries would qualify for the tax credit now. We expect that the
industry will respond to this tax credit incentive by building more
domestic battery manufacturing capacity in the coming years, but this
will take several years to come to fruition. Thus, we have chosen to
model this tax credit by assuming that HD BEV and FCEV manufacturers
fully utilize the module tax credit (which provides $10 per kWh) and
gradually increase their utilization of the cell tax credit (which
provides $35 per kWh) for MY 2027-2029 until MY 2030 and beyond, when
they earn 100 percent of the available cell and module tax credits.
Further discussion of this battery tax credit and our battery costs can
be found in DRIA Chapter <IP_ADDRESS>.
    IRA section 13403, ``Qualified Commercial Clean Vehicles,'' creates
a tax credit of up to $40,000 per Class 4 through 8 HD vehicle (up to
$7,500 per Class 2b or 3 vehicle) for the purchase or lease of a
qualified commercial clean vehicle. This tax credit is available from
CY 2023 through CY 2032 and is based on the lesser of the incremental
cost of the clean vehicle over a comparable ICE vehicle or the
specified percentage of the basis of the clean vehicle, up to the
maximum applicable limitation. By effectively reducing the price a
vehicle owner must pay for a HD ZEV and the incremental difference in
cost between it and a comparable ICE vehicle--by $40,000 in many
cases--more vehicle purchasers will be poised to take advantage of the
cost savings anticipated from total cost of ownership, including
operational cost savings from fuel and maintenance and repair compared
with ICE vehicles. Among other specifications, these vehicles must be
on-road vehicles (or mobile machinery) that are propelled to a
significant extent by a battery-powered electric motor or are qualified
fuel cell motor vehicles (also known as fuel cell electric vehicles,
FCEVs). For the former, the battery must have a capacity of at least 15
kWh (or 7 kWh if it has a gross vehicle weight rating of less than
14,000 pounds (Class 3 or below)) and must be rechargeable from an
external source of electricity. This limits the qualified vehicles to
BEVs and plug-in hybrid electric vehicles (PHEVs), in addition to
FCEVs. Since this tax credit overlaps with the model years for which we
are proposing standards (MYs 2027 through 2032), we included it in our
calculations for each of those years in our feasibility analysis for
our proposed standards (see DRIA Chapter 2).
    For BEVs and FCEVs, the per-vehicle tax credit is equal to the
lesser of the following, up to the cap limitation: (A) 30 percent of
the BEV or FCEV cost, or (B) the incremental cost of the BEV or FCEV
when compared to a comparable (in size and use) ICE vehicle. The
limitation on this tax credit is $40,000 for vehicles with a gross
vehicle weight rating of equal to or greater than 14,000 pounds (Class
4-8 commercial vehicles) and $7,500 for vehicles with a gross vehicle
weight rating of less than 14,000 pounds (commercial vehicles Class 3
and below). For example, if a BEV with a gross vehicle weight rating of
equal to or greater than 14,000 pounds costs $350,000 and a comparable
ICE vehicle costs $150,000,\181\ the tax credit would be the lesser of
the following, subject to the limitation: (A) 30 percent x $350,000 =
$105,000 or (B) $350,000-$150,000 = $200,000. (A) is less than (B), but
(A) exceeds the limit of $40,000, so the tax credit would be $40,000.
For PHEVs, the per-vehicle tax credit follows the same calculation and
cap limitation as for BEVs and FCEVs except that (A) is 15 percent of
the PHEV cost.
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    \181\ Sharpe, B., Basma, H. ``A meta-study of purchase costs for
zero-emission trucks''. International Council on Clean
Transportation. February 17, 2022. Available online: https://theicct.org/wp-content/uploads/2022/02/purchase-cost-ze-trucks-feb22-1.pdf.
---------------------------------------------------------------------------

    In order to estimate the impact of this tax credit in our
feasibility analysis for BEVs and FCEVs, we first applied a retail
price equivalent to our direct manufacturing costs for BEVs, FCEVs, and
ICE vehicles. Note that the direct manufacturing costs of BEVs and
FCEVs were reduced by the amount of the battery tax credit in IRA
section 13502, as described in DRIA Chapter <IP_ADDRESS>. We calculated the
purchaser's incremental cost of BEVs and FCEVs compared to ICE vehicles
and not the full cost of vehicles in our analysis. We based our
calculation of the tax credit on this incremental cost. When the
incremental cost exceeded the tax credit limitation (determined by
gross vehicle weight rating as described in the previous paragraph), we
decreased the incremental cost by the tax credit limitation. When the
incremental cost was between $0 and the tax credit limitation, we
reduced the incremental cost to $0 (i.e., the tax credit received by
the purchaser was equal to the incremental cost). When the incremental
cost was negative (i.e., the BEV or FCEV was cheaper to purchase than
the ICE vehicle), no tax credit was given. In order for this
calculation to be appropriate, we determined that all

Class 4-8 BEVs and FCEVs must cost more than $133,333 such that 30
percent of the cost is at least $40,000 (or $25,000 and $7,500,
respectively, for BEVs and FCEVs Class 3 and below), which is
reasonable based on our review of the literature on the costs of BEVs
and FCEVs.\182\ The tax credit amounts for each vehicle type included
in our analysis in MYs 2027 and 2032 are shown in DRIA Chapter 2.8.2.
---------------------------------------------------------------------------

    \182\ Burnham, A., Gohlke, D., Rush, L., Stephens, T., Zhou, Y.,
Delucchi, M. A., Birky, A., Hunter, C., Lin, Z., Ou, S., Xie, F.,
Proctor, C., Wiryadinata, S., Liu, N., Boloor, M. ``Comprehensive
Total Cost of Ownership Quantification for Vehicles with Different
Size Classes and Powertrains''. Argonne National Laboratory. April
1, 2021. Available at https://publications.anl.gov/anlpubs/2021/05/167399.pdf.
---------------------------------------------------------------------------

    We project that the impact of the IRA vehicle tax credit will be
significant, as shown in DRIA Chapter 2.8.2. In many cases, the
incremental cost (with the tax credit) of a BEV compared to an ICE
vehicle is eliminated, leaving only the cost of the electric vehicle
supply equipment (EVSE) as an added upfront cost to the BEV owner.
Similarly, in some cases, the tax credit eliminates the upfront cost of
a FCEV compared to an ICE vehicle.
iii. Other IRA Provisions
    There are many other provisions of the IRA that we expect will
support electrification of the heavy-duty fleet. Importantly, these
other provisions do not serve to reduce ZEV adoption rates from our
current projections. Due to the complexity of analyzing the combined
potential impact of these provisions, we did not quantify their
potential impact in our assessment of costs and feasibility, but we
note that they may help to reduce many obstacles to electrification of
HDVs and may further support or even increase ZEV adoption rates beyond
the levels we currently project. Our assessment of the impacts of these
provisions of the IRA on ZEV adoption rates are, therefore, somewhat
conservative.
    Section 13404, ``Alternative Fuel Refueling Property Credit,''
modifies an existing tax credit that applies to alternative fuel
refueling property (e.g., electric vehicle chargers and hydrogen
fueling stations) and extends the tax credit through CY 2032. The
credit also applies to refueling property that stores or dispenses
specified clean-burning fuels, including at least 85 percent hydrogen,
into the fuel tank of a motor vehicle. Starting in CY 2023, this
provision provides a tax credit of up to 30 percent of the cost of the
qualified alternative fuel refueling property (e.g., HD BEV charger),
and up to $100,000 when located in low-income or non-urban area census
tracts and certain other requirements are met. We expect that many HD
BEV owners will need chargers installed in their depots for overnight
charging, and this tax credit will effectively reduce the costs of
installing charging infrastructure and, in turn, further effectively
reduce the total costs associated with owning a BEV for many HD vehicle
owners. Additionally, this tax credit may offset some of the costs of
installing very high-powered public and private chargers that are
necessary to recharge HD BEVs with minimal downtime during the day.
Similarly, we expect that this tax credit will reduce the costs
associated with refueling heavy-duty FCEVs, whose owners may rely on
public hydrogen refueling stations or those installed in their depots.
We expect that this tax credit will help incentivize the build out of
the charging and hydrogen refueling infrastructure necessary for high
BEV and FCEV adoption, which may further support increased BEV and FCEV
uptake.
    Section 60101, ``Clean Heavy-duty Vehicles,'' amends the CAA to add
new section 132 (42 U.S.C. 7432) and appropriates $1 billion to the
Administrator, including $600 million generally for carrying out CAA
section 132 (3 percent of which must be reserved for administrative
costs necessary to carry out the section's provisions) and $400 million
to make awards under CAA section 132 to eligible recipients/contractors
that propose to replace eligible vehicles to serve one or more
communities located in an air quality area designated pursuant to CAA
section 107 as nonattainment for any air pollutant, in FY 2022 and
available through FY 2031. CAA section 132 requires the Administrator
to implement a program to make awards of grants and rebates to eligible
recipients (defined as States, municipalities, Indian tribes, and
nonprofit school transportation associations), and to make awards of
contracts to eligible contractors for providing rebates, for up to 100
percent of costs for: (1) the incremental costs of replacing a Class 6
or Class 7 heavy-duty vehicle that is not a zero-emission vehicle with
a zero-emission vehicle (as determined by the Administrator based on
the market value of the vehicles); (2) purchasing, installing,
operating, and maintaining infrastructure needed to charge, fuel, or
maintain zero-emission vehicles; (3) workforce development and training
to support the maintenance, charging, fueling, and operation of zero-
emission vehicles; and (4) planning and technical activities to support
the adoption and deployment of zero-emission vehicles.
    Section 60102, ``Grants to Reduce Air Pollution at Ports,'' amends
the CAA to add a new section 133 (42 U.S.C. 7433) and appropriates $3
billion (2 percent of which must be reserved for administrative costs
necessary to carry out the section's provisions), $750 million of which
is for projects located in areas of nonattainment for any air
pollutant, in FY 2022 and available through FY 2027, to reduce air
pollution at ports. Competitive rebates or grants are to be awarded for
the purchase or installation of zero-emission port equipment or
technology for use at, or to directly serve, one or more ports; to
conduct any relevant planning or permitting in connection with the
purchase or permitting of zero-emission port equipment or technology;
and to develop qualified climate action plans. The zero-emission
equipment or technology either (1) produces zero emissions of GHGs,
listed criteria pollutants, and hazardous air pollutants or (2) it
captures 100 percent of the emissions produced by an ocean-going vessel
at berth.
    Section 60103, ``Greenhouse Gas Reduction Fund,'' amends the CAA to
add a new section 134 (42 U.S.C. 7434) and appropriates $27 billion,
$15 billion of which is for low-income and disadvantaged communities,
in FY 2022 and available through FY 2024, for a GHG reduction grant
program. The program supports direct investments in qualified projects
at the national, regional, State, and local levels, and indirect
investments to establish new or support existing public, quasi-public,
not-for-profit, or nonprofit entities that provide financial assistance
to qualified projects. The program focuses on the rapid deployment of
low- and zero-emission products, technologies, and services to reduce
or avoid GHG emissions and other forms of air pollution.
    Section 60104, ``Diesel Emissions Reductions,'' appropriates $60
million (2 percent of which must be reserved for administrative costs
necessary to carry out the section's provisions), in FY 2022 and
available through FY 2031, for grants, rebates, and loans under section
792 of the Energy Policy Act of 2005 (42 U.S.C. 16132) to identify and
reduce diesel emissions resulting from goods movement facilities and
vehicles servicing goods movement facilities in low-income and
disadvantaged communities to address the health impacts of such
emissions on such communities.

    Section 70002 appropriates $3 billion in FY 2022 and available
through FY 2031 for the U.S. Postal Service to purchase ZEVs ($1.29
billion) and to purchase, design, and install infrastructure to support
zero-emission delivery vehicles at facilities that the U.S. Postal
Service owns or leases from non-Federal entities ($1.71 billion).
    Section 13501, ``Extension of the Advanced Energy Project Credit,''
allocates $10 billion in tax credits for facilities to domestically
manufacture advanced energy technologies, subject to certain
application and other requirements and limitations. Qualifying
properties now include light-, medium-, or heavy-duty electric or fuel
cell vehicles along with the technologies, components, or materials for
such vehicles and the associated charging or refueling infrastructure.
They also include hybrid vehicles with a gross vehicle weight rating of
not less than 14,000 pounds along with the technologies, components, or
materials for them.
    Sections 50142, 50143, 50144, 50145, 50151, 50152, and 50153
collectively appropriate nearly $13 billion to support low- and zero-
emission vehicle manufacturing and energy infrastructure. These
provisions are intended to help accelerate the ability for industry to
meet the demands spurred by the previously mentioned IRA sections, both
for manufacturing vehicles, including BEVs and FCEVs, and for energy
infrastructure.
    Section 13204, ``Clean Hydrogen,'' amends section 45V of the
Internal Revenue Code (i.e., Title 26) to offer a tax credit to produce
hydrogen for qualified clean production facilities that use a process
that results in a lifecycle GHG emissions rate of not greater than 4 kg
of CO2e per kg of hydrogen. This credit is eligible for
qualified clean hydrogen production facilities whose construction
begins before January 1, 2033, and is available during the 10-year
period beginning on the date such facility was originally placed in
service. The credit increases to a maximum of $3 per kilogram produced
as the lifecycle GHG emissions rate is reduced to less than 0.45 kg of
CO2e per kg of hydrogen. Facilities that received credit for
the construction of carbon capture and direct air capture equipment or
facilities (i.e., under 45Q) do not qualify, and prevailing wage and
apprenticeship requirements apply. Section 60113, ``Methane Emissions
Reduction Program,'' amends the CAA by adding Section 136 and
appropriates $850 million to EPA to support methane mitigation and
monitoring, plus authorizes a new fee of $900 per ton on ``waste''
methane emissions that escalates after two years to $1,500 per ton.
These combined incentives promote the production of hydrogen in a
manner that minimizes its potential greenhouse gas impact.
    While there are challenges facing greater adoption of heavy-duty
ZEV technologies, the IRA provides many financial incentives to
overcome these challenges and thus would also support our proposed
rulemaking. We expect IRA sections 13502 and 13403 to support the
adoption of HD ZEV technologies in the market, as detailed in our
assessment of the appropriate GHG standards we are proposing.
Additionally, we expect IRA sections 13404, 60101-60104, 70002, 13501,
50142-50145, 50151-50153, and 13204 to further accelerate ZEV adoption,
but we are not including them quantitatively in our analyses.
    As described in Section II of the proposed rule, EPA has considered
the potential impacts of the BIL and the IRA in our assessment of the
appropriate proposed GHG standards both quantitatively and
qualitatively, and we request comment on our approach.

3. States' Efforts To Increase Adoption of HD ZEVs

    HD vehicle sales and on-road vehicle populations are significant in
the state of California. Approximately ten percent of U.S. HD ICE
vehicles in 2016 were registered in California.\183\ California adopted
the ACT program in 2020, which will also influence the market
trajectory for BEV and FCEV technologies.184 185 186 The ACT
program requires manufacturers who certify HD vehicles for sale in
California to sell a certain percentage of zero-emission HD vehicles
(BEVs or FCEVs) in California for each model year, beginning with MY
2024.\187\ As shown in Table I-1, the sales requirements vary by
vehicle class, starting at 5 to 9 percent of total MY 2024 HD vehicle
sales in California and increasing to 40 to 75 percent of a total MY's
HD vehicle sales in California in MYs 2035 and later.\188\
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    \183\ FHWA. U.S. Highway Statistics. Available online at:
https://www.fhwa.dot.gov/policyinformation/statistics.cfm.
    \184\ CAA section 209(a) generally preempts states from adopting
emission control standards for new motor vehicles. But Congress
created an important exception from preemption. Under CAA section
209(b), the State of California may seek a waiver of preemption, and
EPA must grant it unless the Agency makes one of three statutory
findings. California's waiver of preemption for its motor vehicle
emissions standards allows other States to adopt and enforce
identical standards pursuant to CAA section 177. Since the CAA was
enacted, EPA has granted California dozens of waivers of preemption,
permitting California to enforce its own motor vehicle emission
standards.
    \185\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf.
    \186\ EPA granted the ACT rule waiver requested by California
under CAA section 209(b) on March 30, 2023.
    \187\ California Air Resources Board, Final Regulation Order--
Advanced Clean Trucks Regulation. Filed March 15, 2021. Available
at: https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fro2.pdf at Sec.  1963.1, tbl. A-1, ``ZEV Sales Percentage
Schedule''.
    \188\ Ibid.

  Table I-1--CARB's ACT ZEV Sales Requirements for Class 4-8 Heavy-Duty
                       Vehicles by Model Year \1\
------------------------------------------------------------------------
                                                             Class 7-8
             Model year (MY)               Class 4-8 (%)   tractors (%)
------------------------------------------------------------------------
2024....................................               9               5
2025....................................              11               7
2026....................................              13              10
2027 \2\................................              20              15
2028 \2\................................              30              20
2029 \2\................................              40              25
2030 \2\................................              50              30
2031 \2\................................              55              35
2032 \2\................................              60              40
2033....................................              65              40
2034....................................              70              40
2035+...................................              75              40
------------------------------------------------------------------------
Notes:
\1\ The CARB ACT program also includes ZEV sales requirements for Class
  2b and 3 vehicles with GVWR between 8,500 and 14,000 pounds. These
  vehicles are primarily commercial pickup trucks and vans and are
  sometimes referred to as ``medium-duty vehicles.'' The majority of
  Class 2b and 3 vehicles are chassis-certified vehicles and EPA is
  addressing these vehicles in a separate regulatory action, along with
  light-duty vehicles, consistent with E.O. 14037, Section 2a.
\2\ We are proposing GHG emission standards for these MYs in this
  action.

    Outside of California, a number of states have signaled interest in
greater adoption of HD ZEV technologies and/or establishing specific
goals to increase the HD electric vehicle market. As one example, the
Memorandum of Understanding (MOU), ``Multi-State Medium- and Heavy-Duty
Zero Emission Vehicle,'' (Multi-State MOU) organized by Northeast
States for Coordinated Air Use Management (NESCAUM), sets targets ``to
make all sales of new medium- and heavy-duty vehicles [in the
jurisdictions of the signatory states and the District of Columbia]
zero emission vehicles by no later than 2050'' with an interim goal of
30 percent of all sales of new medium- and heavy-duty vehicles being
zero emission vehicles no later than 2030.\189\

The Multi-State MOU was signed by the governors of 17 states including
California, Colorado, Connecticut, Hawaii, Maine, Maryland,
Massachusetts, New Jersey, New York, North Carolina, Nevada, Oregon,
Pennsylvania, Rhode Island, Vermont, Virginia, and Washington, as well
as the mayor of the District of Columbia. The Multi-State MOU outlines
these jurisdictions' more specific commitments to move toward ZEVs
through the Multi-State ZEV Task Force and provides an action plan for
zero-emission medium- and heavy-duty vehicles with measurable sales
targets and a focus on overburdened and underserved communities.
Several states that signed the Multi-State MOU have since adopted
California's ACT program, pursuant to CAA section 177, and we
anticipate more jurisdictions will follow with similar proposals.\190\
---------------------------------------------------------------------------

    \189\ Northeast States for Coordinated Air Use Management
(NESCAUM), Multi-state Medium- and Heavy-duty Zero Emission Vehicle
Memorandum of Understanding, available at https://www.nescaum.org/documents/mhdv-zev-mou-20220329.pdf/ (hereinafter ``Multi-State
MOU'').
    \190\ See, e.g., Final Advanced Clean Truck Amendments, 1461
Mass. Reg. 29 (Jan. 21, 2022) (Massachusetts). Medium- and Heavy-
Duty (MHD) Zero Emission Truck Annual Sales Requirements and Large
Entity Reporting, 44 N.Y. Reg. 8 (Jan. 19, 2022) (New York),
available at https://dos.ny.gov/system/files/documents/2022/01/011922.pdf. Advanced Clean Trucks Program and Fleet Reporting
Requirements, 53 N.J.R. 2148(a) (Dec. 20, 2021) (New Jersey),
available at https://www.nj.gov/dep/rules/adoptions/adopt_20211220a.pdf (pre-publication version). Clean Trucks Rule
2021, DEQ-17-2021 (Nov. 17, 2021), available at http://records.sos.state.or.us/ORSOSWebDrawer/Recordhtml/8581405 (Oregon).
Low emission vehicles, Wash. Admin. Code. Sec.  173-423-070 (2021),
available at https://app.leg.wa.gov/wac/default.aspx?cite=173-423-070; 2021 Wash. Reg. 587356 (Dec. 15, 2021); Wash. Reg. 21-24-059
(Nov. 29, 2021) (amending Wash. Admin. Code. Sec. Sec.  173-423 and
173-400), available at https://lawfilesext.leg.wa.gov/law/wsrpdf/2021/24/21-24-059.pdf. (Washington).
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D. EPA Statutory Authority for the Proposal

    This section briefly summarizes the statutory authority for the
proposed rule. Statutory authority for the GHG standards EPA is
proposing is found in CAA section 202(a)(1) (2), 42 U.S.C. 7521(a)(1)-
(2), which requires EPA to establish standards applicable to emissions
of air pollutants from new motor vehicles and engines which cause or
contribute to air pollution which may reasonably be anticipated to
endanger public health or welfare. Additional statutory authority for
the proposed action is found in CAA sections 202-209, 216, and 301, 42
U.S.C. 7521-7543, 7550, and 7601. We discuss some key aspects of these
sections in relation to this proposed action immediately below.
    Title II of the Clean Air Act provides for comprehensive regulation
of mobile sources, authorizing EPA to regulate emissions of air
pollutants from all mobile source categories, including motor vehicles
under CAA section 202(a). In turn, CAA section 216(2) defines ``motor
vehicle'' as ``any self-propelled vehicle designed for transporting
persons or property on a street or highway.'' Congress has
intentionally and consistently used the broad term ``any self-propelled
vehicle'' since the Motor Vehicle Air Pollution Control Act of 1965 so
as not to limit standards adopted under CAA section 202 to vehicles
running on a particular fuel, power source, or system of propulsion.
Congress's focus was on emissions from classes of motor vehicles and
the ``requisite technologies'' that could feasibly reduce those
emissions giving appropriate consideration to cost of compliance and
lead time, as opposed to being limited to any particular type of
vehicle.
    Section 202(a)(1) of the CAA states that ``the Administrator shall
by regulation prescribe (and from time to time revise) . . . standards
applicable to the emission of any air pollutant from any class or
classes of new motor vehicles . . . which in his judgment cause, or
contribute to, air pollution which may reasonably be anticipated to
endanger public health or welfare.'' CAA section 202(a)(1) also
requires that any standards promulgated thereunder ``shall be
applicable to such vehicles and engines for their useful life (as
determined under [CAA section 202(d)], relating to useful life of
vehicles for purposes of certification), whether such vehicle and
engines are designed as complete systems or incorporate devices to
prevent or control such pollution.'' CAA section 202(d) directs EPA to
prescribe regulations under which the ``useful life'' of vehicles and
engines shall be determined for the purpose of setting standards under
CAA section 202(a)(1). For HD highway vehicles and engines, CAA section
202(d) establishes ``useful life'' minimum values of 10 years or
100,000 miles, whichever occurs first, unless EPA determines that
greater values are appropriate.\191\
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    \191\ In 1983, EPA adopted useful life periods to apply for HD
engines criteria pollutant standards (48 FR 52170, November 16,
1983). The useful life mileage for heavy HD engines criteria
pollutant standards was subsequently increased for 2004 and later
model years (62 FR 54694, October 21, 1997). In the GHG Phase 2 rule
(81 FR 73496, October 25, 2016), EPA set the same useful life
periods to apply for HD engines and vehicles greenhouse gas emission
standards, except that the spark-ignition HD engine standards and
the standards for model year 2021 and later light HD engines apply
over a useful life of 15 years or 150,000 miles, whichever comes
first. In the HD2027 rule (88 FR 4359, January 24, 2023), EPA
lengthened useful life periods for all 2027 and later model year HD
engines criteria pollutant standards. See also 40 CFR 1036.104(e),
1036.108(d), 1037.105(e), and 1037.106(e).
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    While emission standards set by the EPA under CAA section 202(a)(1)
generally do not mandate use of particular technologies, they are
technology-based, as the levels chosen must be premised on a finding of
technological feasibility. Thus, standards promulgated under CAA
section 202(a) are to take effect only ``after such period as the
Administrator finds necessary to permit the development and application
of the requisite technology, giving appropriate consideration to the
cost of compliance within such period.'' CAA section 202(a)(2); see
also NRDC v. EPA, 655 F. 2d 318, 322 (D.C. Cir. 1981). EPA must
consider costs to those entities which are directly subject to the
standards. Motor & Equipment Mfrs. Ass'n Inc. v. EPA, 627 F. 2d 1095,
1118 (D.C. Cir. 1979). Thus, ``the [s]ection 202(a)(2) reference to
compliance costs encompasses only the cost to the motor-vehicle
industry to come into compliance with the new emission standards, and
does not mandate consideration of costs to other entities not directly
subject to the proposed standards.'' Coalition for Responsible
Regulation v. EPA, 684 F.3d 120, 128 (D.C. Cir. 2012). EPA is afforded
considerable discretion under section 202(a) when assessing issues of
technical feasibility and availability of lead time to implement new
technology. Such determinations are ``subject to the restraints of
reasonableness,'' which ``does not open the door to `crystal ball'
inquiry.'' NRDC, 655 F. 2d at 328, quoting International Harvester Co.
v. Ruckelshaus, 478 F. 2d 615, 629 (D.C. Cir. 1973); see also Growth
Energy v. EPA, 5 F.4th 1, 15 (D.C. Cir. 2021) (``The court is
`particularly deferential' to agencies' predictive judgments, requiring
only that `the agency acknowledge factual uncertainties and identify
the considerations it found persuasive.' EPA cleared that modest
bar.'') (internal citations omitted). Moreover, ``EPA is not obliged to
provide detailed solutions to every engineering problem posed in the
perfection of [a particular device]. In the absence of theoretical
objections to the technology, the agency need only identify the major
steps necessary for development of the device, and give plausible
reasons for its belief that the industry will be able to solve those
problems in the time remaining. The EPA is not required to rebut all

speculation that unspecified factors may hinder `real world' emission
control.'' NRDC, 655 F. 2d at 333-34. In developing such technology-
based standards, EPA has the discretion to consider different standards
for appropriate groupings of vehicles (``class or classes of new motor
vehicles''), or a single standard for a larger grouping of motor
vehicles. NRDC, 655 F.2d at 338.\192\
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    \192\ Additionally, with respect to regulation of vehicular GHG
emissions, EPA is not ``required to treat NHTSA's . . . regulations
as establishing the baseline for the [section 202(a) standards].''
Coalition for Responsible Regulation, 684 F.3d at 127 (noting that
the section 202(a) standards provide ``benefits above and beyond
those resulting from NHTSA's fuel-economy standards'').
---------------------------------------------------------------------------

    Although standards under CAA section 202(a)(1) are technology-
based, they are not based exclusively on technological capability.
Pursuant to the broad grant of authority in section 202, when setting
GHG emission standards for HD vehicles, EPA must consider certain
factors and may also consider other factors and has done so previously
when setting such standards. For instance, in HD GHG Phase 1 and Phase
2, EPA explained that when acting under this authority EPA has
considered such issues as technology effectiveness, its cost (including
per vehicle, per manufacturer, and per purchaser), the lead time
necessary to implement the technology, and based on this the
feasibility and practicability of potential standards; the impacts of
potential standards on emissions reductions; the impacts of standards
on oil conservation and energy security; the impacts of standards on
fuel savings by vehicle operators; the impacts of standards on the
heavy-duty vehicle industry; as well as other relevant factors such as
impacts on safety.193 194
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    \193\ 76 FR 57129, September 15, 2011.
    \194\ 81 FR 73478, 73512, October 25, 2016.
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    In addition, EPA has clear authority to set standards under CAA
section 202(a)(1)-(2) that are technology forcing when EPA considers
that to be appropriate, but is not required to do so (as compared to
standards under provisions such as section 202(a)(3), which require the
greatest degree of emissions reduction achievable, giving appropriate
consideration to cost, energy and safety factors). CAA section 202(a)
does not specify the degree of weight to apply to each factor, and EPA
accordingly has discretion in choosing an appropriate balance among
factors. See Sierra Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003)
(even where a provision is technology-forcing, the provision ``does not
resolve how the Administrator should weigh all [the statutory] factors
in the process of finding the 'greatest emission reduction
achievable'''); National Petrochemical and Refiners Ass'n v. EPA, 287
F.3d 1130, 1135 (D.C. Cir. 2002) (EPA decisions, under CAA provision
authorizing technology-forcing standards, based on complex scientific
or technical analysis are accorded particularly great deference); see
also Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir. 2001) (great
discretion to balance statutory factors in considering level of
technology-based standard, and statutory requirement ``to [give
appropriate] consideration to the cost of applying . . . technology''
does not mandate a specific method of cost analysis); Hercules Inc. v.
EPA, 598 F. 2d 91, 106 (D.C. Cir. 1978) (``In reviewing a numerical
standard we must ask whether the agency's numbers are within a zone of
reasonableness, not whether its numbers are precisely right.'').\195\
---------------------------------------------------------------------------

    \195\ See also; Permian Basin Area Rate Cases, 390 U.S. 747, 797
(1968) (same); Federal Power Commission v. Conway Corp., 426 U.S.
271, 278 (1976) (same); Exxon Mobil Gas Marketing Co. v. Federal
Energy Regulatory Comm'n, 297 F. 3d 1071, 1084 (D.C. Cir. 2002)
(same).
---------------------------------------------------------------------------

    As noted previously in this section, there are also other
provisions of the CAA that provide authority for EPA's proposed action,
including CAA sections 203, 206, and 207. Under section 203 of the CAA,
sales of vehicles are prohibited unless the vehicle is covered by a
certificate of conformity, and EPA issues certificates of conformity
pursuant to section 206 of the CAA. Certificates of conformity are
based on (necessarily) pre-sale testing conducted either by EPA or by
the manufacturer. Compliance with standards is required not only at
certification but throughout a vehicle's useful life, so that testing
requirements may continue post-certification. To assure each engine and
vehicle complies during its useful life, EPA may apply an adjustment
factor to account for vehicle emission control deterioration or
variability in use (section 206(a)). EPA establishes the test
procedures under which compliance with the CAA emissions standards is
measured. EPA's testing authority under the CAA is broad and flexible.
    Under CAA section 207, manufacturers are required to provide
emission-related warranties. The emission-related warranty period for
HD engines and vehicles under CAA section 207(i) is ``the period
established by the Administrator by regulation (promulgated prior to
November 15, 1990) for such purposes unless the Administrator
subsequently modifies such regulation.'' For HD vehicles, part 1037
currently specifies that the emission-related warranty for Light HD
vehicles is 5 years or 50,000 miles and for Medium HD and Heavy HD
vehicles is 5 years or 100,000 miles, and specifies the components
covered for such vehicles.\196\ Section 207 of the CAA also grants EPA
broad authority to require manufacturers to remedy nonconformity if EPA
determines there are a substantial number of noncomplying vehicles.
Additional aspects of EPA's legal authority are more fully discussed in
the HD GHG Phase 1 final rule.\197\ Further discussion of EPA's
authority under CAA section 202(a)(1)-(2) may also be found in the HD
GHG Phase 1 final rule.
---------------------------------------------------------------------------

    \196\ See 40 CFR 1037.120.
    \197\ 76 FR 57129-57130, September 15, 2011.
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    With regard to the specific technologies that could be used to meet
the emission standards promulgated under the statutory authorities
discussed in this Section I.D, EPA's rules have historically not
required the use of any particular technology, but rather have allowed
manufacturers to use any technology that demonstrates the engine or
vehicle meets the standards over the applicable test procedures.
Similarly, in determining the standards, EPA appropriately considers
updated data and analysis on pollution control technologies, without a
priori limiting its consideration to a particular set of technologies.
Given the continuous development of pollution control technologies
since the early days of the CAA, this approach means that EPA routinely
considers novel and projected technologies developed or refined since
the time of the CAA's enactment, including for instance, electric
vehicle technologies. In requiring EPA to consider lead time that takes
into consideration development and application of technology when
setting standards before such standards may take effect, Congress
directed EPA to consider future technological advancements and
innovation rather than limiting the Agency to setting standards that
reflect only technologies in place at the time the standards are
developed. This forward-looking regulatory approach keeps pace with
real-world technological developments that have the potential to reduce
emissions and comports with Congressional intent.
    Section 202 does not specify or expect any particular type of motor
vehicle propulsion system to remain prevalent, and it was clear as
early as the 1960s that ICE vehicles might be inadequate to achieve the
country's air quality goals.

In 1967, the Senate Committees on Commerce and Public Works held five
days of hearings on ``electric vehicles and other alternatives to the
internal combustion engine,'' which Chairman Magnuson opened by saying
``The electric will help alleviate air pollution. . . . The electric
car does not mean a new way of life, but rather it is a new technology
to help solve the new problems of our age.'' \198\ In a 1970 message to
Congress seeking a stronger CAA, President Nixon stated he was
initiating a program to develop ``an unconventionally powered,
virtually pollution free automobile'' because of the possibility that
``the sheer number of cars in densely populated areas will begin
outrunning the technological limits of our capacity to reduce pollution
from the internal combustion engine.'' \199\
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    \198\ Electric Vehicles and Other Alternatives to the Internal
Combustion Engine: Joint Hearings before the Comm. On Commerce and
the Subcomm. On Air and Water Pollution of the Comm. On Pub. Works,
90th Cong. (1967).
    \199\ Richard Nixon, Special Message to the Congress on
Environmental Quality (Feb. 10, 1970), https://www.presidency.ucsb.edu/documents/special-message-the-congress-environmental-quality.
---------------------------------------------------------------------------

    Since the earliest days of the CAA, Congress has emphasized that
the goal of section 202 is to address air quality hazards from motor
vehicles, not to simply reduce emissions from internal combustion
engines to the extent feasible. In the Senate Report accompanying the
1970 CAA Amendments, Congress made clear the EPA ``is expected to press
for the development and application of improved technology rather than
be limited by that which exists'' and identified several
``unconventional'' technologies that could successfully meet air
quality-based emissions targets for motor vehicles.\200\ In the 1970
amendments Congress further demonstrated its recognition that
developing new technology to ensure that pollution control keeps pace
with economic development is not merely a matter of refining the ICE,
but requires considering new types of motor vehicle propulsion.
Congress provided EPA with authority to fund the development of ``low
emission alternatives to the present internal combustion engine'' as
well as a program to encourage Federal purchases of ``low-emission
vehicles.'' See CAA section 104(a)(2) (previously codified as CAA
section 212). Congress also adopted section 202(e) expressly to grant
the Administrator discretion regarding the certification of vehicles
and engines based on ``new power sources or propulsion system[s],''
that is to say, power sources and propulsion systems beyond the
existing internal combustion engine and fuels available at the time of
the statute's enactment, if those vehicles emitted pollutants which the
Administrator judged contributed to dangerous air pollution but had not
yet established standards for under section 202(a). As the D.C. Circuit
stated in 1975, ``We may also note that it is the belief of many
experts--both in and out of the automobile industry--that air pollution
cannot be effectively checked until the industry finds a substitute for
the conventional automotive power plant-the reciprocating internal
combustion (i.e., ``piston'') engine. . . . It is clear from the
legislative history that Congress expected the Clean Air Amendments to
force the industry to broaden the scope of its research--to study new
types of engines and new control systems.'' International Harvester Co.
v. Ruckelshaus, 478 F.2d 615, 634-35 (D.C. Cir. 1975).
---------------------------------------------------------------------------

    \200\ S. Rep. No. 91-1196, at 24-27 (1970).
---------------------------------------------------------------------------

    Since that time, Congress has continued to emphasize the importance
of technology development to achieving the goals of the CAA. In the
1990 amendments, Congress instituted a clean fuel vehicles program to
promote further progress in emissions reductions, which also applied to
motor vehicles as defined under section 216, see CAA section 241(1),
and explicitly defined motor vehicles qualifying under the program as
including vehicles running on an alternative fuel or ``power source
(including electricity),'' CAA section 241(2). Congress also directed
EPA to phase-in certain section 202(a) standards, see CAA section
202(g)-(j),\201\ which confirms EPA's authority to promulgate
standards, such as fleet averages, phase-ins, and averaging, banking,
and trading programs, that are fulfilled through compliance over an
entire fleet, or a portion thereof, rather than through compliance by
individual vehicles. As previously noted in the Executive Summary of
this preamble, EPA has long included averaging provisions for complying
with emission standards in the HD program and in upholding the first HD
final rule that included such a provision the D.C. Circuit rejected
petitioner's challenge in the absence of any clear evidence that
Congress meant to prohibit averaging. NRDC v. Thomas, 805 F.2d 410, 425
(D.C. Cir. 1986). In the subsequent 1990 amendments, Congress, noting
NRDC v. Thomas, opted to let the existing law ``remain in effect,''
reflecting that ``[t]he intention was to retain the status quo,'' i.e.,
EPA's existing authority to allow averaging.\202\ Averaging, banking,
and trading is discussed further in Sections II and III of this
preamble; additional history of ABT is discussed in EPA's Answering
Brief in Texas v. EPA (D.C. Cir., 22-1031, at Sec.  IV.A-B).
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    \201\ See, e.g., CAA section 202(h), which requires that the
regulations EPA promulgates under CAA section 202(a) for light-duty
trucks over 6,000 pounds. GVWR must contain standards that provide
that the specified numeric emission standards will be met by
specified percentages of each manufacturer's sales volume of such
trucks, depending on the MY (e.g., 50% for MY 1996).
    \202\ 136 Cong. Rec. 36,713, 1990 WL 1222468 at *1136 Cong. Rec.
35,367, 1990 WL 1222469 at *1.
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    The recently-enacted IRA \203\ ``reinforces the longstanding
authority and responsibility of [EPA] to regulate GHGs as air
pollutants under the Clean Air Act,'' \204\ and ``the IRA clearly and
deliberately instructs EPA to use'' this authority by ``combin[ing]
economic incentives to reduce climate pollution with regulatory drivers
to spur greater reductions under EPA's CAA authorities.'' \205\ To
assist with this, as described in Section I.C.2, the IRA provided a
number of economic incentives for HD ZEVs and the infrastructure
necessary to support them, and specifically affirms Congress's
previously articulated statements that non-ICE technologies will be a
key component of achieving emissions reductions from the mobile source
sector, including the HD industry sector.\206\ The Congressional Record
reflects that ``Congress recognizes EPA's longstanding authority under
CAA Section 202 to adopt standards that rely on zero emission
technologies, and Congress expects that future EPA regulations will
increasingly rely on and incentivize zero-emission vehicles as
appropriate.'' \207\
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    \203\ Inflation Reduction Act, Public Law 117-169, 136 Stat.
1818, (2022), available at https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf.
    \204\ 168 Cong. Rec. E868-02 (daily ed. Aug. 12, 2022)
(statement of Rep. Pallone).
    \205\ 168 Cong. Rec. E879-02, at 880 (daily ed. Aug. 26, 2022)
(statement of Rep. Pallone).
    \206\ See Inflation Reduction Act, Public Law 117-169, at
Sec. Sec.  13204, 13403, 13404, 13501, 13502, 50142-50145, 50151-
50153, 60101-60104, 70002 136 Stat. 1818, (2022), available at
https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf.
    \207\ 168 Cong. Rec. E879-02, at 880 (daily ed. Aug. 26, 2022)
(statement of Rep. Pallone).
---------------------------------------------------------------------------

    Consistent with Congress's intent, EPA's CAA Title II emission
standards have been based on and stimulated the development of a broad
set of advanced technologies, such as electronic fuel injection
systems, gasoline catalytic convertors, diesel particulate filters,
diesel NOX reduction catalysts, gasoline direct injection
fuel systems, active aerodynamic grill shutters, and advanced
transmission technologies, which have been the building blocks of

heavy-duty vehicle designs and have yielded not only lower pollutant
emissions, but improved vehicle performance, reliability, and
durability. As previously discussed, beginning in 2011, EPA has set HD
vehicle and engine standards under section 202(a)(1)-(2) for GHGs.\208\
Manufacturers have responded to standards over the past decade by
continuing to develop and deploy a wide range of technologies,
including more efficient engine designs, transmissions, aerodynamics,
and tires, air conditioning systems that contribute to lower GHG
emissions, as well as vehicles based on methods of propulsion beyond
diesel- and gasoline-fueled ICE vehicles, including ICE running on
alternative fuels (such as natural gas, biodiesel, renewable diesel,
methanol, and other fuels), as well as various levels of electrified
vehicle technologies from mild hybrids, to strong hybrids, and up
through battery electric vehicles and fuel cell electric vehicles. In
addition, the continued application of performance-based standards take
into consideration averaging provisions that provide an opportunity for
all technology improvements and innovation to be reflected in a vehicle
manufacturers' compliance results.
---------------------------------------------------------------------------

    \208\ 76 FR 57106, September 15, 2011.
---------------------------------------------------------------------------

    With regard to EPA's proposed revised preemption regulations
regarding locomotives described in Section X of the preamble, statutory
authority is found in CAA section 209. CAA section 209(e)(1)(B), 42
U.S.C. 7543(e)(1)(B), prohibits states and political subdivisions
thereof from adopting or attempting to enforce any standard or other
requirement relating to the control of emissions from new locomotives
or new engines used in locomotives. However, CAA section 209(e)(2)(A)-
(B), 42 U.S.C. 7543(e)(2)(A)-(B), requires EPA to authorize, after
notice and an opportunity for public hearing, California to adopt and
enforce standards and other requirements relating to control of
emissions from other nonroad vehicles or engines provided certain
criteria are met, and allows states other than California to adopt and
enforce, after notice to EPA, such standards provided they are
equivalent to California's authorized standards. CAA section
209(e)(2)(B) then requires EPA to issue regulations to implement
subsection 209(e).

E. Coordination With Federal and State Partners

    Executive Order 14037 directs EPA and DOT to coordinate, as
appropriate and consistent with applicable law, during consideration of
this rulemaking. EPA has coordinated and consulted with DOT/NHTSA, both
on a bilateral level during the development of the proposed program as
well as through the interagency review of the EPA proposal led by the
Office of Management and Budget. EPA has set some previous heavy-duty
vehicle GHG emission standards in joint rulemakings where NHTSA also
established heavy-duty fuel efficiency standards. In the light-duty GHG
emission rulemaking establishing standards for model years 2023 through
2026, EPA and NHTSA concluded that it was appropriate to coordinate and
consult but not to engage in joint rulemaking. EPA has similarly
concluded that it is not necessary for this EPA proposal to be issued
in a joint action with NHTSA. In reaching this conclusion, EPA notes
there is no statutory requirement for joint rulemaking and that the
agencies have different statutory mandates and their respective
programs have always reflected those differences. As the Supreme Court
has noted, ``EPA has been charged with protecting the public's 'health'
and 'welfare,' a statutory obligation wholly independent of DOT's
mandate to promote energy efficiency.'' \209\ Although there is no
statutory requirement for EPA to consult with NHTSA, EPA has consulted
with NHTSA in the development of this proposal. For example, staff of
the two agencies met frequently to discuss various technical issues and
to share technical information.
---------------------------------------------------------------------------

    \209\ Massachusetts v. EPA, 549 U.S. at 532.
---------------------------------------------------------------------------

    EPA also has consulted with other federal agencies in developing
this proposal, including the Federal Energy Regulatory Commission, the
Department of Energy and several national labs. EPA collaborates with
DOE and Argonne National Laboratory on battery cost analyses and
critical materials forecasting. EPA also coordinates with the Joint
Office of Energy and Transportation on charging infrastructure. EPA and
the Oak Ridge National Laboratory collaborate on energy security
issues. EPA also participates in the Federal Consortium for Advanced
Batteries led by DOE and the Joint Office of Energy and Transportation.
EPA and DOE also have entered into a Joint Memorandum of Understanding
to provide a framework for interagency cooperation and consultation on
electric sector resource adequacy and operational reliability.\210\
---------------------------------------------------------------------------

    \210\ Joint Memorandum on Interagency Communication and
Consultation on Electric Reliability, U.S. Department of Energy and
U.S. Environmental Protection Agency, March 8, 2023.
---------------------------------------------------------------------------

    E.O. 14037 also directs EPA to coordinate with California and other
states that are leading the way in reducing vehicle emissions, as
appropriate and consistent with applicable law, during consideration of
this rulemaking. EPA has engaged with the California Air Resources
Board on technical issues in developing this proposal. EPA has
considered certain aspects of the CARB Advanced Clean Trucks Rule, as
discussed elsewhere in this document. We also have engaged with other
states, including members of the National Association of Clean Air
Agencies, the Association of Air Pollution Control Agencies, the
Northeast States for Coordinated Air Use Management, and the Ozone
Transport Commission.

F. Stakeholder Engagement

    EPA has conducted extensive engagement with a diverse range of
interested stakeholders in developing this proposal. We have engaged
with those groups with whom E.O. 14037 specifically directs EPA to
engage, including labor unions, states, industry, environmental justice
organizations and public health experts. In addition, we have engaged
with environmental NGOs, vehicle manufacturers, technology suppliers,
dealers, utilities, charging providers, Tribal governments, and other
organizations. For example, in April-May 2022, EPA held a series of
engagement sessions with organizations representing all of these
stakeholder groups so that EPA could hear early input in developing its
proposal. EPA has continued engagement with many of these stakeholders
throughout the development of this proposal. EPA looks forward to
hearing from all stakeholders through comments on this proposal and
during the public hearing.

II. Proposed CO2 Emission Standards

    Under our CAA section 202(a)(1)-(2) authority, and consistent with
E.O. 14037, we are proposing new GHG standards for MYs 2027 through
2032 and later HD vehicles. We are retaining and not reopening the
nitrous oxide (N2O), methane (CH4), and
CO2 emission standards that apply to heavy-duty engines, the
HFC emission standards that apply to heavy-duty vehicles, and the
general compliance structure of existing 40 CFR part 1037 except for
some proposed revisions described in

Section III.\211\ In this Section II, we describe our assessment that
these stringent standards are appropriate and feasible considering lead
time, costs, and other factors. These proposed Phase 3 standards
include (1) revised GHG standards for many MY 2027 HD vehicles, and (2)
new GHG standards starting in MYs 2028 through 2032. The proposed
standards do not mandate the use of a specific technology, and EPA
anticipates that a compliant fleet under the proposed standards would
include a diverse range of technologies, including ZEV and ICE vehicle
technologies. In developing the proposed standards, EPA has considered
the key issues associated with growth in penetration of zero-emission
vehicles, including charging infrastructure and hydrogen production. In
this section, we describe our assessment of the appropriateness and
feasibility of these proposed standards and present a technology
pathway for achieving each of those standards through increased ZEV
adoption. In this section, we also present and request comment on an
alternative that would provide a more gradual phase-in of the
standards. As described in Section II.H., EPA also requests comment on
setting GHG standards starting in MYs 2027 through 2032 that would
reflect: values less stringent than the lower stringency alternative
for certain market segments, values in between the proposed standards
and the alternative standards, values in between the proposed standards
and those that would reflect ZEV adoption levels (i.e., percent of ZEVs
in production volumes) used in California's ACT, values that would
reflect the level of ZEV adoption in the ACT program, and values beyond
those that would reflect ZEV adoption levels in ACT such as the 50- to
60-percent ZEV adoption range.
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    \211\ See the HD GHG Phase 2 rule (81 FR 73478, October 25,
2016), the Heavy-Duty Engine and Vehicle Technical Amendment rule
(86 FR 34308, June 29, 2021), and the HD2027 rule (88 FR 4296,
January 24, 2023). In this rulemaking, EPA is not reopening any
portion of our heavy-duty compliance provisions, flexibilities, and
testing procedures, including those in 40 CFR parts 1037, 1036, and
1065, other than those specifically identified in this document as
the subject of our proposal or a solicitation for comment. For
example, while EPA is proposing to revise discrete elements of the
HD ABT program, EPA is not reopening the general availability of
ABT.
---------------------------------------------------------------------------

    In the beginning of this section, we first describe the public
health and welfare need for GHG emission reductions (Section II.A). In
Section II.B, we provide an overview of the comments the Agency
received in response to the GHG standards previously proposed as part
of the HD2027 NPRM. In Section II.C, we provide a brief overview of the
existing CO2 emission standards that we promulgated in HD
GHG Phase 2. Section II.D contains our technology assessment and
Section II.E includes our assessment of technology costs, EVSE costs,
operating costs, and payback. Section II.F includes the proposed
standards and the analysis demonstrating the feasibility and Section
II.G discusses the feasibility and appropriateness of the proposed
emission standards under the Clean Air Act. Section II.H presents
potential alternatives to the proposed standards, including requests
for comment on standards other than those proposed. Finally, Section
II.I summarizes our consideration of small businesses.

A. Public Health and Welfare Need for GHG Emission Reductions

    The transportation sector is the largest U.S. source of GHG
emissions, representing 27 percent of total GHG emissions.\212\ Within
the transportation sector, heavy-duty vehicles are the second largest
contributor, at 25 percent.\213\ GHG emissions have significant impacts
on public health and welfare as set forth in EPA's 2009 Endangerment
and Cause or Contribute Findings under CAA section 202(a) and as
evidenced by the well-documented scientific record.\214\
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    \212\ Inventory of U.S. Greenhouse Gas Emissions and Sinks:
1990-2020 (EPA-430-R-22-003), published April 2022.
    \213\ Ibid.
    \214\ See 74 FR 66496, December 15, 2009; see also EPA's Denial
of Petitions Relating to the Endangerment and Cause or Contribute
Findings for Greenhouse Gases Under Section 202(a) of the Clean Air
Act, available at https://www.epa.gov/system/files/documents/2022-04/decision_document.pdf.
---------------------------------------------------------------------------

    Elevated concentrations of GHGs have been warming the planet,
leading to changes in the Earth's climate including changes in the
frequency and intensity of heat waves, precipitation, and extreme
weather events; rising seas; and retreating snow and ice. The changes
taking place in the atmosphere as a result of the well-documented
buildup of GHGs due to human activities are altering the climate at a
pace and in a way that threatens human health, society, and the natural
environment. While EPA is not making any new scientific or factual
findings with regard to the well-documented impact of GHG emissions on
public health and welfare in support of this rule, EPA is providing
some scientific background on climate change to offer additional
context for this rulemaking and to increase the public's understanding
of the environmental impacts of GHGs.
    Extensive additional information on climate change is available in
the scientific assessments and the EPA documents that are briefly
described in this section, as well as in the technical and scientific
information supporting them. One of those documents is EPA's 2009
Endangerment and Cause or Contribute Findings for Greenhouse Gases
Under section 202(a) of the CAA (74 FR 66496, December 15, 2009). In
the 2009 Endangerment Finding, the Administrator found under section
202(a) of the CAA that elevated atmospheric concentrations of six key
well-mixed GHGs--CO2, methane (CH4), nitrous
oxide (N2O), hydrofluorocarbons (HFCs), perfluorocarbons
(PFCs), and sulfur hexafluoride (SF6)--``may reasonably be
anticipated to endanger the public health and welfare of current and
future generations'' (74 FR 66523). The 2009 Endangerment Finding,
together with the extensive scientific and technical evidence in the
supporting record, documented that climate change caused by human
emissions of GHGs (including HFCs) threatens the public health of the
U.S. population. It explained that by raising average temperatures,
climate change increases the likelihood of heat waves, which are
associated with increased deaths and illnesses (74 FR 66497). While
climate change also increases the likelihood of reductions in cold-
related mortality, evidence indicates that the increases in heat
mortality will be larger than the decreases in cold mortality in the
United States (74 FR 66525). The 2009 Endangerment Finding further
explained that compared with a future without climate change, climate
change is expected to increase tropospheric ozone pollution over broad
areas of the United States., including in the largest metropolitan
areas with the worst tropospheric ozone problems, and thereby increase
the risk of adverse effects on public health (74 FR 66525). Climate
change is also expected to cause more intense hurricanes and more
frequent and intense storms of other types and heavy precipitation,
with impacts on other areas of public health, such as the potential for
increased deaths, injuries, infectious and waterborne diseases, and
stress-related disorders (74 FR 66525). Children, the elderly, and the
poor are among the most vulnerable to these climate-related health
effects (74 FR 66498).

    The 2009 Endangerment Finding also documented, together with the
extensive scientific and technical evidence in the supporting record,
that climate change touches nearly every aspect of public welfare \215\
in the United States., including: changes in water supply and quality
due to changes in drought and extreme rainfall events; increased risk
of storm surge and flooding in coastal areas and land loss due to
inundation; increases in peak electricity demand and risks to
electricity infrastructure; and the potential for significant
agricultural disruptions and crop failures (though offset to a lesser
extent by carbon fertilization). These impacts are also global and may
exacerbate problems outside the United States. that raise humanitarian,
trade, and national security issues for the U.S. (74 FR 66530).
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    \215\ The CAA states in section 302(h) that ``[a]ll language
referring to effects on welfare includes, but is not limited to,
effects on soils, water, crops, vegetation, manmade materials,
animals, wildlife, weather, visibility, and climate, damage to and
deterioration of property, and hazards to transportation, as well as
effects on economic values and on personal comfort and well-being,
whether caused by transformation, conversion, or combination with
other air pollutants.'' 42 U.S.C. 7602(h).
---------------------------------------------------------------------------

    The most recent information demonstrates that the climate is
continuing to change in response to the human-induced buildup of GHGs
in the atmosphere. Recent scientific assessments show that atmospheric
concentrations of GHGs have risen to a level that has no precedent in
human history and that they continue to climb, primarily because of
both historic and current anthropogenic emissions, and that these
elevated concentrations endanger our health by affecting our food and
water sources, the air we breathe, the weather we experience, and our
interactions with the natural and built environments.
    Global average temperature has increased by about 1.1 degrees
Celsius ([deg]C) (2.0 degrees Fahrenheit ([deg]F)) in the 2011-2020
decade relative to 1850-1900. The IPCC determined with medium
confidence that this past decade was warmer than any multi-century
period in at least the past 100,000 years. Global average sea level has
risen by about 8 inches (about 21 centimeters (cm)) from 1901 to 2018,
with the rate from 2006 to 2018 (0.15 inches/year or 3.7 millimeters
(mm)/year) almost twice the rate over the 1971 to 2006 period, and
three times the rate of the 1901 to 2018 period. The rate of sea level
rise during the 20th Century was higher than in any other century in at
least the last 2,800 years. The CO2 being absorbed by the
ocean has resulted in changes in ocean chemistry due to acidification
of a magnitude not seen in 65 million years \216\ putting many marine
species--particularly calcifying species--at risk. Human-induced
climate change has led to heatwaves and heavy precipitation becoming
more frequent and more intense, along with increases in agricultural
and ecological droughts \217\ in many regions.\218\ The NCA4 found that
it is very likely (greater than 90 percent likelihood) that by mid-
century, the Arctic Ocean will be almost entirely free of sea ice by
late summer for the first time in about 2 million years.\219\ Coral
reefs will be at risk for almost complete (99 percent) losses with 1
[deg]C (1.8 [deg]F) of additional warming from today (2 [deg]C or 3.6
[deg]F since preindustrial). At this temperature, between 8 and 18
percent of animal, plant, and insect species could lose over half of
the geographic area with suitable climate for their survival, and 7 to
10 percent of rangeland livestock would be projected to be lost. The
IPCC similarly found that climate change has caused substantial damages
and increasingly irreversible losses in terrestrial, freshwater, and
coastal and open ocean marine ecosystems.\220\
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    \216\ IPCC (2018): Global Warming of 1.5 [deg]C. An IPCC Special
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. Portner, D.
Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
Pe[acute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)].
    \217\ These are drought measures based on soil moisture.
    \218\ IPCC (2021): Summary for Policymakers. In: Climate Change
2021: The Physical Science Basis. Contribution of Working Group I to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L.
Connors, C. Pe[acute]an, S. Berger, N. Caud, Y. Chen, L. Goldfarb,
M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K.
Maycock, T. Waterfield, O. Yelek[ccedil]i, R. Yu and B. Zhou
(eds.)]. Cambridge University Press.
    \219\ USGCRP (2018): Impacts, Risks, and Adaptation in the
United States: Fourth National Climate Assessment, Volume II
[Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M.
Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change
Research Program, Washington, DC, USA, 1515 pp. doi: 10.7930/
NCA4.2018.
    \220\ IPCC (2022): Summary for Policymakers [H.-O. P[ouml]rtner,
D.C. Roberts, E.S. Poloczanska, K. Mintenbeck, M. Tignor, A.
Alegr[iacute]a, M. Craig, S. Langsdorf, S. L[ouml]schke, V.
M[ouml]ller, A. Okem (eds.)]. In: Climate Change 2022: Impacts,
Adaptation and Vulnerability. Contribution of Working Group II to
the Sixth Assessment Report of the Intergovernmental Panel on
Climate Change [H.-O. P[ouml]rtner, D.C. Roberts, M. Tignor, E.S.
Poloczanska, K. Mintenbeck, A. Alegr[iacute]a, M. Craig, S.
Langsdorf, S. L[ouml]schke, V. M[ouml]ller, A. Okem, B. Rama
(eds.)]. Cambridge University Press, Cambridge, UK and New York, NY,
USA, pp. 3-33, doi:10.1017/9781009325844.001.
---------------------------------------------------------------------------

    In 2016, the Administrator issued a similar finding for GHG
emissions from aircraft under section 231(a)(2)(A) of the CAA.\221\ In
the 2016 Endangerment Finding, the Administrator found that the body of
scientific evidence amassed in the record for the 2009 Endangerment
Finding compellingly supported a similar endangerment finding under CAA
section 231(a)(2)(A), and also found that the science assessments
released between the 2009 and the 2016 Findings ``strengthen and
further support the judgment that GHGs in the atmosphere may reasonably
be anticipated to endanger the public health and welfare of current and
future generations'' (81 FR 54424). Pursuant to the 2009 Endangerment
and Cause or Contribute Findings, CAA section 202(a) requires EPA to
issue standards applicable to emissions of those pollutants from new
motor vehicles. See Coalition for Responsible Regulation, 684 F.3d at
116-125, 126-27; Massachusetts, 549 U.S. at 533. See also Coalition for
Responsible Regulation, 684 F.3d at 127-29 (upholding EPA's light-duty
GHG emission standards for MYs 2012-2016 in their entirety).\222\ Since
the 2016 Endangerment Finding, the climate has continued to change,
with new observational records being set for several climate indicators
such as global average surface temperatures, GHG concentrations, and
sea level rise. Additionally, major scientific assessments continue to
be released that further advance our understanding of the climate
system and the impacts that GHGs have on public health and welfare both
for current and future generations. These updated observations and
projections document the rapid rate of current and future climate
change both globally and in the United
States.223 224 225 226
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    \221\ ``Finding that Greenhouse Gas Emissions from Aircraft
Cause or Contribute to Air Pollution That May Reasonably Be
Anticipated To Endanger Public Health and Welfare.'' 81 FR 54422,
August 15, 2016. (``2016 Endangerment Finding'').
    \222\ See also EPA's Denial of Petitions Relating to the
Endangerment and Cause or Contribute Findings for Greenhouse Gases
Under Section 202(a) of the Clean Air Act (Apr. 2022), available at
https://www.epa.gov/system/files/documents/2022-04/decision_document.pdf.
    \223\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United
States: Fourth National Climate Assessment, Volume II [Reidmiller,
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K.
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research
Program, Washington, DC, USA, 1515 pp. doi: 10.7930/NCA4.2018.
https://nca2018.globalchange.gov.
    \224\ Roy, J., P. Tschakert, H. Waisman, S. Abdul Halim, P.
Antwi-Agyei, P. Dasgupta, B. Hayward, M. Kanninen, D. Liverman, C.
Okereke, P.F. Pinho, K. Riahi, and A.G. Suarez Rodriguez, 2018:
Sustainable Development, Poverty Eradication and Reducing
Inequalities. In: Global Warming of 1.5 [deg]C. An IPCC Special
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission
pathways, in the context of strengthening the global response to the
threat of climate change, sustainable development, and efforts to
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner,
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C.
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X.
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T.
Waterfield (eds.)]. In Press. https://www.ipcc.ch/sr15/chapter/chapter-5.
    \225\ National Academies of Sciences, Engineering, and Medicine.
2019. Climate Change and Ecosystems. Washington, DC: The National
Academies Press. https://doi.org/10.17226/25504.
    \226\ NOAA National Centers for Environmental Information, State
of the Climate: Global Climate Report for Annual 2020, published
online January 2021, retrieved on February 10, 2021, from https://www.ncdc.noaa.gov/sotc/global/202013.

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B. Summary of Comments Received From HD2027 NPRM

    We received a significant number of comments to the proposed
updates to the HD GHG emission standards proposed as part of the HD2027
NPRM.\227\ A number of commenters provided support and reasoning for
revising the HD CO2 standards while a number of other
commenters expressed concerns about reopening the HD GHG Phase 2
program. This Section II.B includes a summary of the comments received.
Commenters who would like EPA to further consider in this rulemaking
any relevant comments that they provided on the HD2027 NPRM regarding
proposed HD vehicle GHG standards for the MYs at issue in this proposal
must resubmit those comments to EPA during this proposal's comment
period. EPA considered the comments received in response to the HD2027
NPRM when developing this Phase 3 proposal. The proposed standards were
developed based on a more in-depth analysis of the potential for
electrification of the heavy-duty sector and attendant emissions
reductions than was used in the HD2027 NPRM analysis and is described
in Sections II.D through II.F. This analysis addresses many of the
concerns raised in comments summarized in the following subsections,
such as the need to consider a wide range of HD applications,
technology and operating costs of BEVs, the impact of heating and
cooling on the energy demands of electric vehicles, infrastructure
concerns, and the potential impact of weight and space for packaging of
batteries. This analysis also includes consideration of the IRA
provisions that provide significant financial incentives for the heavy-
duty ZEV market and reduce or eliminate the cost difference between ICE
vehicles and ZEVs. In consideration of some commenters' concerns about
the time needed for research plans, product development, manufacturing
investment, and charging infrastructure, we discuss these topics in our
technical analysis supporting this NPRM. As described in Section II.H.,
EPA also requests comment on setting GHG standards starting in MYs 2027
through 2032 that would reflect: values less stringent than the lower
stringency alternative for certain market segments, values in between
the proposed standards and the alternative standards, values in between
the proposed standards and those that would reflect ZEV adoption levels
(i.e., percent of ZEVs in production volumes) used in California's ACT,
values that would reflect the level of ZEV adoption in the ACT program,
and values beyond those that would reflect ZEV adoption levels in ACT
such as the 50- to 60-percent ZEV adoption range.
---------------------------------------------------------------------------

    \227\ For the complete set of comments, please see U.S. EPA,
``Control of Air Pollution from New Motor Vehicles: Heavy-Duty
Engine and Vehicle Standards--Response to Comments.'' (RTC) Section
28. Docket EPA-HQ-OAR-201 9-0055.
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1. Summary of Comments in Support of Revising the Phase 2 GHG Emission
Standards for MY 2027
    Many commenters, including non-governmental organizations, states,
and mass comment campaigns, provided support for revising the targeted
HD vehicle MY 2027 CO2 emission standards to reflect the
increase in electrification of the HD market and attendant potential
for additional emission reductions. Additionally, many commenters
suggested that EPA should further reduce the emission standards in MYs
2027 through 2029 beyond the levels proposed because of the
accelerating adoption of HD ZEVs. Many commenters also highlighted that
five additional states besides California adopted the California ACT
program in late 2021 and noted that this would also drive additional
electrification in the HD segment of the transportation sector.\228\
Finally, some commenters pointed to the ``Multi-State Medium and Heavy-
Duty Zero Emission Vehicle Memorandum of Understanding'' (Multi-State
MOU) signed by 17 states and the District of Columbia establishing
goals to increase HD electric vehicle sales in those jurisdictions to
30 percent by 2030 and 100 percent by 2050. Commenters also provided a
number of reports that evaluate the potential of electrification of the
HD sector in terms of adoption rates, costs, and other factors.
---------------------------------------------------------------------------

    \228\ Ibid. Many commenters in HD2027 RTC Section 28.1.1 pointed
to ACT.
---------------------------------------------------------------------------

    Some of the commenters provided specific recommendations for HD ZEV
adoption rates in the MYs 2027 through 2029 timeframe. For example, the
American Council for an Energy-Efficient Economy (ACEEE) suggested
that, based on a recent NREL study, EPA could set standards that
reflect 20 percent electrification in MY 2027 and up to 40 percent in
MY 2029.\229\ The Environmental Defense Fund (EDF) suggested standards
to achieve 80 percent sales of ZEVs for new school and transit buses
and 40 percent of new Class 4-7 vehicles and Class 8 short-haul
vehicles by MY 2029.\230\ EDF also referenced an analysis from
Environmental Resources Management (ERM) that included a range of
scenarios, with midpoint scenarios projecting HD ZEV deployment in
excess of 20 percent in MY 2029 and more optimistic scenarios
projecting HD ZEV sales of over 33 percent of all Class 4-8 single unit
trucks, short-haul tractors, and school and transit buses in MY
2029.\231\ The ICCT suggested HD ZEV ranges of 15 to 40 percent
depending on the vehicle segment in MY 2027, increasing up to 40 to 80
percent in MY 2029.\232\ Moving Forward Network suggested that ZEVs
could comprise 20 percent of new sales in MY 2027 and increase 10
percent each year, with a goal of 100 percent by MY 2035.\233\ Tesla
referenced a NREL study, a forecast from Americas Commercial
Transportation Research Co. (ACT Research) that projected a 26 percent
sales share of HD ZEVs nationwide in 2030, and another study that
projected 25 percent of the global HD fleet will be electric by
2030.\234\ Other commenters,

such as AMPLY Power (rebranded to bp plus), suggest that the federal
CO2 emission standards should achieve ZEV deployments on par
with California's ACT program.\235\
---------------------------------------------------------------------------

    \229\ ACEEE comments on the HD2027 NPRM. See Docket Entry EPA-
HQ-OAR-2019-0055-2852-A1. Referencing Catherine Ledna et al.,
`Decarbonizing Medium-& Heavy-Duty On-Road Vehicles: Zero-Emission
Vehicles Cost Analysis' (NREL, March 2022), available at https://www.nrel.gov/docs/fy22osti/82081.pdf.
    \230\ EDF comments on the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1265-A1, pp.16-17.
    \231\ EDF comments on the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1265-A1 (citing Rachel MacIntosh, Sophie Tolomiczenko,
Grace Van Horn. April 2022. Electric Vehicle Market Update:
Manufacturer Commitments and Public Policy Initiatives Supporting
Electric Mobility in the U.S. and Worldwide, ERM for EDF, Version 6
(April 2022), available at http://blogs.edf.org/climate411/files/2022/04/electric_vehicle_market_report_v6_april2022.pdf.
    \232\ ICCT Comments on the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1211-A1, p. 6.
    \233\ Moving Forward Network Comments on the HD2027 NPRM. See
Docket Entry EPA-HQ-OAR-2019-0055-1277-A1, pp. 19-20.
    \234\ Tesla Comments on the HD2027 NPRM. See Docket Entry EPA-
HQ-OAR-2019-0055-1219-A1, p.9 (citing HDT Truckinginfo, ACT: Third
of Class 4-8 Vehicles to be Battery-Electric in 10 Year (June 4,
2021); Fleet Owner, Disruption in trucking technology (Jan. 13,
2020); and MJ Bradley, Medium- & Heavy-Duty Vehicles: Market
Structure, Environmental Impact, and EV Readiness (Aug. 11, 2022)).
    \235\ AMPLY Comments on the HD2027 NPRM. See Docket Entry EPA-
HQ-OAR-2019-0055-1236-A1, p. 1.
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    Some commenters also referred to manufacturer statements regarding
such manufacturers' projections for HD electrification. For example,
ACEEE pointed to Volvo's and Scania's announcements for global
electrification targets of 50 percent by 2030.\236\ EDF pointed to
several manufacturer's statements.\237\ First, EDF noted Daimler Trucks
North America has committed to offering only carbon-neutral trucks in
the United States by 2039 and expects that by 2030, as much as 60
percent of its sales will be ZEVs.\238\ Second, EDF noted Navistar has
a goal of having 50 percent of its sales volume be ZEVs by 2030, and
its commitment to achieve 100 percent zero emissions by 2040 across all
operations and carbon-neutrality by 2050.\239\
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    \236\ ACEEE Comments on the HD2027 NPRM. See Docket Entry EPA-
HQ-OAR-2019-0055-0055-2852-A1. Citing Scania, `Scania's
Electrification Roadmap,' Scania Group, November 24, 2021, https://www.scania.com/group/en/home/newsroom/news/2021/Scanias-electrification-roadmap.html; AB Volvo, `Volvo Trucks Launches
Electric Truck with Longer Range,' Volvo Group, January 14, 2022,
https://www.volvogroup.com/en/news-and-media/news/2022/jan/news-4158927.html.
    \237\ EDF comments on the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1265-A1.
    \238\ EDF comments on the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1265-A1 (citing David Cullen, ``Daimler to Offer
Carbon Neutral Trucks by 2039,'' (October 25, 2019), https://www.truckinginfo.com/343243/daimler-aims-to-offer-only-co2-neutral-trucks-by-2039-in-key-markets (last accessed October 2022) and
Deborah Lockridge, ``What Does Daimler Truck Spin-off Mean for North
America?,'' Trucking Info (November 11, 2021), https://www.truckinginfo.com/10155922/what-does-daimler-truck-spin-off-mean-for-north-america (last accessed October 2022)).
    \239\ EDF comments on the HD2027 NPRM. See Docket Entry EPA-HQ-
OAR-2019-0055-1265-A1 (citing Navistar presentation at the Advanced
Clean Transportation Expo, Long Beach, CA (May 9-11, 2022)).
---------------------------------------------------------------------------

    Finally, some commenters discussed hydrogen-powered ICEs and
asserted that there are benefits associated with that technology as a
potential CO2-reducing technology for the HD segment of the
transportation sector.\240\
---------------------------------------------------------------------------

    \240\ BorgWarner comments on the HD2027 NPRM. See Docket Entry
EPA-HQ-OAR-2019-0055-1234-A1, p. 3; Westport Fuel Systems comments
on the HD2027 NPRM. See Docket Entry EPA-HQ-OAR-2019-0055-1278-A1,
p. 5.
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2. Summary of Comments Expressing Concern With Revising the Phase 2 GHG
Emission Standards for MY 2027
    Some commenters raised concerns with the HD2027 NPRM proposed
changes to certain HD GHG Phase 2 CO2 emission standards.
Some highlighted the significant investment and lead time required for
development and verification of durability of ZEVs and stated EPA
should not adopt standards that project broad adoption of heavy-duty
ZEVs.
    Some commenters stated that EPA should not reopen the HD GHG Phase
2 emission standards.\241\ Several manufacturers and suppliers pointed
to the need for regulatory certainty and stability, stating that
reopening the Phase 2 standards would threaten their long-term
investments and production planning. Some commenters went further and
stated that certain technologies that EPA projected for use to meet the
existing Phase 2 emission standards are seeing lower-than-expected
penetration rates in MY 2021; these commenters suggested that EPA relax
the Phase 2 standards.\242\ The technologies highlighted by the
commenters suggesting that EPA relax Phase 2 standards include tamper-
resistant automatic shutdown systems, neutral idle, low rolling
resistance tires, stop-start, and advanced transmission shift
strategies.
---------------------------------------------------------------------------

    \241\ Daimler Trucks comments on the HD2027 NPRM. See Docket
Entry EPA-HQ-OAR-2019-0055-1168-A1, p.112; Navistar Comments on the
HD2027 NPRM. See Docket Entry EPA-HQ-OAR-2019-0055-1318-A1, p. 6;
PACCAR Comments on the HD2027 NPRM. See Docket Entry EPA-HQ-OAR-
2019-0055-1346-A1, p. 3; Truck and Engine Manufacturer's Association
Comments on the HD2027 NPRM. See Docket Entry EPA-HQ-OAR-2019-0055-
1203-A1, pp. 7-8; Volvo Group Comments on the HD2027 NPRM. See
Docket Entry EPA-HQ-OAR-2019-0055-1324-A1, p. 7.
    \242\ Truck and Engine Manufacturer's Association Comments on
the HD2027 NPRM. See Docket Entry EPA-HQ-OAR-2019-0055-1203-A1, p.
108.
---------------------------------------------------------------------------

    Commenters also stated that it takes time to develop ZEV
technologies for the wide range of HD applications. They also raised
concerns regarding asserted high costs and long lead times associated
with the necessary charging infrastructure, the weight impact of
batteries, the impact of battery degradation and ambient temperatures
on the range of electric vehicles, and the impact on operations due to
the time required to charge. Commenters also raised issues regarding
the upstream and lifecycle emissions impact of ZEVs, including minerals
and battery manufacturing, battery disposal and recycling, potential
higher tire and brake wear from electric vehicles, and the availability
of minerals and other supply chain issues.
    Some commenters raised concerns about the approach used in the
HD2027 NPRM to project ZEV sales in MY 2027. Concerns raised by
commenters include the uncertainty of the actual production levels
needed to meet California ACT program requirements; that EPA has not
approved a waiver for the California ACT program and, therefore, should
not consider full implementation of that program; and that the current
HD ZEVs are expensive.
    One commenter raised concerns related to small businesses. The
commenter stated that its less diverse product mix and low sales volume
present challenges in meeting the proposed GHG standards in the HD2027
NPRM.

C. Background on the CO2 Emission Standards in the HD GHG Phase 2
Program

    In the Phase 2 Heavy-Duty GHG rule, we finalized GHG emission
standards tailored to three regulatory categories of HD vehicles--
heavy-duty pickups and vans, vocational vehicles, and combination
tractors.\243\ In addition, we set separate standards for the engines
that power combination tractors and for the engines that power
vocational vehicles. The heavy-duty vehicle CO2 emission
standards are in grams per ton-mile, which represents the grams of
CO2 emitted to move one ton of payload a distance of one
mile. In promulgating the Phase 2 standards, we explained that the
stringency of the Phase 2 standards were derived on a fleet average
technology mix basis and that the emission averaging provisions of ABT
meant that the regulations did not require all vehicles to meet the
standards (contrasted with the banking and trading provisions of the HD
GHG Phase 2 ABT program which were not relied upon in selecting the
stringency the HD GHG Phase 2 standards). For example, we projected
that diversified manufacturers would continue to use the averaging
provisions in the ABT program to meet the standards on average for each
of their vehicle families. In addition, the Phase 2 program established
subcategories of vehicles (i.e., custom chassis vocational

vehicles and heavy-haul tractors) that were specifically designed to
recognize the limitations of certain vehicle applications to adopt some
technologies due to specialized operating characteristics or generally
low sales volumes with prohibitively long payback periods. The vehicles
certified to the custom chassis vocational vehicle standards are not
permitted to bank or trade credits and some have limited averaging
provisions under the HD GHG Phase 2 ABT program.\244\
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    \243\ We also set standards for certain types of trailers used
in combination with tractors (see 81 FR 73639, October 25, 2016). As
described in Section III of this preamble, we are proposing to
remove the regulatory provisions related to trailers in 40 CFR part
1037 to carry out a decision by the U.S. Court of Appeals for the
D.C. Circuit, which vacated the portions of the HD GHG Phase 2 final
rule that apply to trailers. Truck Trailer Manufacturers Association
v. EPA, 17 F.4th 1198 (D.C. Cir. 2021).
    \244\ See 40 CFR 1037.105(h)(2).
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    In this proposal, we continue to expect averaging would play an
important role in manufacturer strategies to meet the proposed
standards. In Section II.F, we are proposing new standards for
vocational vehicles and combination tractors, which we project are
feasible to meet through a technology pathway where vehicle
manufacturers would adopt ZEV technologies for a portion of their
product lines. This Section II.C includes additional background
information on these two vehicle categories. At this time, we are not
proposing to update engine standards in 40 CFR 1036.108. Additionally,
we intend to separately pursue a combined light-duty and medium-duty
rulemaking to propose more stringent standards for complete and