sharing of top operational management, including president, chief
executive officer (CEO), chief financial officer (CFO), and chief
operating officer (COO), and provided that no individual overlapping
director or combination of overlapping directors exercises exclusive
management control over either or both companies.

    7. Parts or components supply agreements between related companies
must be established through open market process and to the extent that
manufacturer sells parts/components to non-related auto manufacturers,
it does so through the open market at competitive pricing.
    Volkswagen commented in support of the operational independence
provision, but raised concerns that the above criteria are too
prescriptive and difficult to apply across all circumstances of
captured small volume brands. Volkswagen requested that EPA ``consider
the operational independence of each manufacturer on an individual
basis during the petition process. As such the degree of independence
could be part of the negotiation process for setting standards for a
particular SVM.'' In response, the criteria were not intended to apply
to ``all circumstances'' of captured brands. The criteria were written
narrowly to purposely exclude captured brands that are integrated or
managed by the parent company in any substantive way. EPA's intention,
as described in the proposal, is to include only companies that can be
demonstrated to be completely independent, held at arm's length by the
parent company without access to the resources of the parent company or
related manufacturers. Further, EPA is concerned that broadening the
criteria in ways suggested by the commenter would lead to gaming issues
EPA is seeking to avoid, as discussed above. EPA believes that it is
important to retain the above criteria in order to avoid having to make
determinations regarding ``degrees'' of independence.
    In addition to the criteria listed above, EPA is finalizing the
following programmatic elements and framework. EPA is requiring the
manufacturer applying for operational independence to provide an attest
engagement from an independent auditor verifying the accuracy of the
information provided in the application.\461\ EPA foresees possible
difficulty verifying the information in the application, especially if
the company is located overseas. The principal purpose of the attest
engagement would be to provide an independent review and verification
of the information provided. Ferrari submitted supportive comments on
using the EPA fuel programs as a template for the attest engagement
provisions. EPA is also requiring that the application be signed by the
company president or CEO.
---------------------------------------------------------------------------

    \461\ EPA has required attest engagements as part of its fuels
programs. See 40 CFR Sec.  80.125, 40 CFR Sec.  80.1164 and Sec.
80.1464.
---------------------------------------------------------------------------

    After EPA approval, the manufacturer will be required to report
within 60 days any material changes to the information provided in the
application. A manufacturer will lose eligibility automatically after
the material change occurs. However, EPA will confirm that the
manufacturer no longer meets one or more of the criteria and thus is no
longer considered operationally independent, and will notify the
manufacturer. In such cases, EPA will provide two full model years lead
time after the MY in which the manufacturer loses eligibility for the
manufacturer to transition to the primary program standards. For
example, if the manufacturer lost eligibility sometime during the
manufacturer's model year 2018 (based on when the material change
occurs), the manufacturer would need to meet primary program standards
in MY 2021. A manufacturer losing eligibility must subsequently meet
the criteria for three consecutive years before it would be allowed to
petition to re-establish operational independence.
6. Additional Lead Time for Intermediate Volume Manufacturers
    EPA is finalizing provisions to allow additional lead time for
intermediate volume manufacturers that sell less than 50,000 vehicles
per year, for the first four years of the program (MY 2017-2020). The
2012-2016 GHG vehicle standards include Temporary Lead Time Allowance
Alternative Standards (TLAAS) which provide alternative standards to
certain intermediate sized manufacturers (those with U.S. sales between
5,000 and 400,000 during model year 2009) to accommodate two
situations: manufacturers which traditionally paid civil penalties
instead of complying with CAFE standards, and limited line
manufacturers facing special compliance challenges due to less
flexibility afforded by averaging, banking and trading. The TLAAS
includes additional flexibility for manufacturers with MY 2009 sales of
less than 50,000 vehicles through MY 2016. For manufacturers with sales
of greater than 50,000 vehicles (but less than 400,000), the program
ends in MY 2015. See 75 FR 25414-416.
    EPA did not propose to continue the TLAAS program for MYs 2017-
2025. See 76 FR 74994. First, the allowance was premised on the need to
provide adequate lead time, given the (at the time the rule was
finalized) rapidly approaching MY 2012 deadline, and given that
manufacturers were transitioning from a CAFE regime that allows civil
penalties in lieu of compliance, to a Clean Air Act regime that does
not. That concern is no longer applicable, given that there is ample
lead time before the MY 2017 standards begin. More importantly, the
Temporary Lead Time Allowance was just as the name describes--
temporary--and EPA provided it to allow manufacturers to transition to
full compliance in later model years. See 75 FR 25416. EPA received one
comment, from Natural Resources Defense Council, generally supporting
EPA's decision not to propose an extension of the TLAAS program.
    EPA also requested comment on whether there is a need to provide
some type of additional lead time for intermediate volume, limited line
manufacturers. Prior to proposal, one company with U.S. sales on the
order of 25,000 vehicles per year presented confidential business
information indicating that it believes that the CO2
standards for MY2017-2025 would present significant technical
challenges for their company, due to the relatively small volume of
products it sells in the U.S., its limited ability to average across
their limited line fleet, and the performance-oriented nature of its
vehicles. This firm indicated that absent access, several years in
advance, to CO2 credits that it could purchase from other
firms, this firm would need to significantly change the types of
products they currently market in the U.S. (thus affecting their
``brand'') beginning in model year 2017, even if it adds substantial
CO2 reducing technology to its vehicles. EPA noted in its
request for comments that potential flexibilities could include an
extension of the TLAAS program for lower volume companies, or a one-to-
three year delay in the applicable model year standard (e.g., the
proposed MY 2017 standards could be delayed to begin in MY 2018, MY
2019, or MY 2020). See 76 FR 74995.
    Public comments supported the concept of providing additional
flexibility for limited line intermediate volume manufacturers. In
particular, EPA received comments from Jaguar Land Rover, Porsche, and
Suzuki supporting approaches that would provide intermediate volume
manufacturers with additional flexibility. These three manufacturers
are eligible under the MY 2012-2016 program for the expanded TLAAS
provisions through MY 2016, based on their MY 2009 sales of less than
50,000 vehicles.
    Jaguar Land Rover (JLR) commented that they will be achieving very
significant CO2 reductions well in excess of industry
averages. However,

JLR further commented that the required rates of reduction implied by
the proposed curves between MY2016 and MY2017 are very challenging for
lower volume, limited line manufacturers coming out of the expanded
TLAAS program. JLR further commented that companies participating in
the expanded TLAAS program in MY 2016 will start MY 2017 with either no
CO2 credits banked or CO2 debits carrying
forward. JLR provided confidential information regarding the companies'
projected situation in the early years of the MY 2017-2025 program. JLR
requested in their comments that EPA consider phasing in the MY 2017
and later program for lower volume, limited line niche manufacturers
when the expanded TLAAS program ends, starting in MY 2017 and ending
with MY 2021 production, with full compliance with the primary program
standards in MY 2022.
    Porsche commented that the transition from TLAAS to the base
standards is a disproportionate burden for niche carmakers, and that
the transition cannot be accomplished by gradual incremental
improvements. Porsche commented that their development costs for new
technology cannot be spread over a large fleet to take advantage of
natural economies of scale, and that there is a disproportionate
financial impact on small manufacturers, due to higher per unit cost.
Porsche further commented that larger competitors can support sports
car sales by fleet averaging over a broad range of products, and that
their smallest competitors (SVMs) can request alternate CO2
standards. Porsche commented that it cannot utilize either of these
options. Porsche noted that EPA projected in the NPRM far greater
penetration of electrification for them than for any other
manufacturer. For example, EPA projected in the proposal a 30 percent
HEV and 24 percent PHEV/EV penetration for Porsche in 2021. See 76 FR
75073. Porsche commented that, in the absence of relief, Porsche would
face a 25 percent reduction in the GHG standards at the expiration of
MY 2016, and that the proposed standards would create a hurdle that
would drive them from the marketplace.
    Porsche recommended three possible approaches to address their
concerns; a fixed alternative standard with a program like TLAAS, case-
by-case standards setting based on the performance of competitor
vehicles similar to the approach proposed for SVMs, or an alternative
phase-in that mitigates the potential 25 percent drop in standards in
MY 2017 after TLAAS expires.
    Suzuki similarly commented raising concerns that the proposed
standards did not adequately recognize the lead time concerns of low-
volume, limited line manufacturers like Suzuki. Suzuki commented that
``when small-volume manufacturers need to develop new technology and
develop a new model/new engine to make the significant improvements
necessary to comply with the proposed standards, the per-vehicle cost
for the special development that is needed specifically for the U.S.
market is much higher than for manufacturers with larger sales
volumes.'' Suzuki suggested that EPA provide three years additional
lead time to manufacturers with average U.S. sales of less than 50,000
vehicles. Under Suzuki's suggestion, such manufacturers would not be
required to meet the MY 2017 standards until MY 2020 and would be
required to meet MY 2018-2025 standards until MY 2021-2028. Suzuki did
not provide any data or information regarding their fleet or plans for
technology introduction in support of their comments.
    After reviewing the comments and the feasibility issues potentially
facing these manufacturers in the early years of the program, EPA is
finalizing additional lead time provisions for intermediate volume
manufacturers. The additional lead time will help manufacturers
transition from the expanded TLAAS program in MY 2016 to the primary
standards being adopted for MY 2017-2025, by helping to mitigate the
steep increase in standard stringency that would otherwise occur for
them in the MY 2016-2017 time frame. As discussed in the feasibility
section III.D, the standards will be especially challenging for them.
Also, intermediate volume manufacturers have limited ability to average
due to their limited product line and will not have credits available
from their own fleet due to the credit restrictions included in the
TLAAS program. It is possible that the manufacturers could purchase
credits from other manufacturers (and eligibility for the expanded
TLAAS provisions requires manufacturers to exhaust credit purchasing
opportunities), but the availability of credits is highly uncertain due
to the competitive nature of the auto industry and the one time carry
forward credit provision to 2021.
    Manufacturers participating in the expanded TLAAS program in MY
2016 will be eligible for the additional lead time shown in the table
below. Manufacturers not eligible for the expanded TLAAS program,
including new market entrants, will not be eligible for the additional
lead time.\462\ EPA is structuring eligibility in this way because
manufacturers meeting the primary program standards in MY 2016 will not
be facing such a steep change in stringency in the early years of the
program. As shown in the table below, in MY 2017-2018 intermediate
volume manufacturers must meet their MY 2016 base standards that would
have applied in MY 2016 under the primary program (i.e., in the absence
of TLAAS). In effect, this requires the manufacturers to meet the
standards that would have applied in MY 2017 absent the new standards
being set in this MY 2017-2025 rule. By MY 2021, the manufacturer must
be fully compliant with the primary MY 2021 standards.
---------------------------------------------------------------------------

    \462\ Expanded TLAAS is available only to manufacturers in the
market in MY 2009 with annual U.S. sales of less than 50,000
vehicles.

Table III-12--Additional Lead Time for Intermediate Volume Manufacturers
------------------------------------------------------------------------
            Model year              Primary program standards that apply
------------------------------------------------------------------------
2017.............................  MY 2016.
2018.............................  MY 2016.
2019.............................  MY 2018.
2020.............................  MY 2019.
2021.............................  MY 2021 (full compliance).
------------------------------------------------------------------------

    EPA recognizes that the additional lead time being finalized does
not provide the full level of relaxation recommended by the commenters
and that the standards remain very challenging for these intermediate
sized companies. However, EPA believes that the additional lead time
provided will be sufficient to ease the transition to more stringent
standards in the early years of the 2017-2025 program that could
otherwise present a difficult hurdle for them to overcome. In this
regard, we received comments, consistent with our assessment,
indicating that additional lead time should be sufficient to allow
manufacturers to meet the standards. The added lead time will allow
manufacturers to better plan the introduction of technologies to bring
them into compliance with the primary standards. Also, EPA is not
adopting any restrictions on credit banking such as those contained in
the MYs 2012-2016 TLAAS program, allowing intermediate volume
manufacturers to bank credits in these years to further help smooth the
transition from one model year to the next. EPA is, however,
prohibiting any intermediate volume manufacturer opting to use these
provisions from trading credits

generated under the alternative phase-in to another firm for the same
reasons credit trading cannot be used by small volume manufacturers.
Furthermore, because EPA believes it is reasonable, based on
intermediate volume manufacturer comments and on the analysis in
section III.D.6 below (documenting compliance paths for all
manufacturers), for these manufacturers to achieve the primary
standards by MY 2021, EPA does not believe that any further lead time
is warranted. Since it is important to limit as much as possible the
loss of emissions reductions associated with the additional flexibility
provided, EPA is not adopting permanent alternative standards, longer
phase-ins, or other flexibilities for intermediate volume
manufacturers.
    Porsche noted that the company submitted comments under the
assumption that they would remain independent from Volkswagen and that
if the status of their relationship changed such that a supplement to
their comments would be in order, Porsche reserved the possibility that
it may submit such comments. On August 1, 2012, VW completed its
acquisition of 100 percent of Porsche's automotive business.\463\ It is
EPA's expectation that Porsche will no longer be eligible for the lead
time provisions discussed above for MY 2017-2020. EPA expects that
Porsche's fleet will be absorbed into VW's fleet for purposes of
determining compliance with the GHG standards. Nevertheless, EPA has
considered Porsche's comments and recommendations with regard to
intermediate volume manufacturers.
---------------------------------------------------------------------------

    \463\ ``Volkswagen and Porsche finalize creation of Integrated
Automotive Group,'' Volkswagen news release, August 1, 2012.
---------------------------------------------------------------------------

7. Small Business Exemption
    EPA is finalizing, as proposed, a provision to exempt small
businesses from the MY2017-2025 standards, as well as establishing a
voluntary opt-in provision for those small business manufacturers that
wish to certify to the GHG standards in order to generate and sell
credits.\464\ In the MY 2012-2016 rule, EPA exempted entities from the
GHG emissions standard, if the entity met the Small Business
Administration (SBA) size criteria of a small business as described in
13 CFR 121.201. \465\ The small business size criterion for vehicle
manufacturers is less than 1000 employees. This includes both U.S.-
based and foreign small entities in three distinct categories of
businesses for light-duty vehicles: small manufacturers, independent
commercial importers (ICIs), and alternative fuel vehicle converters.
As proposed, EPA is continuing this exemption for the MY 2017-2025
standards. EPA did not receive any adverse comments regarding
continuing the exemption for small businesses, as defined.
---------------------------------------------------------------------------

    \464\ Note that `small businesses' are not the same as small
volume manufacturers. The potential overlap of these terms is
discussed later in this preamble sub-section.
    \465\ See final regulations at 40 CFR 86.1801-12(j).
---------------------------------------------------------------------------

    EPA has identified about 24 entities that fit the Small Business
Administration (SBA) size criterion of a small business. EPA estimates
there currently are approximately five small manufacturers including
three electric vehicle small business vehicle manufacturers that have
recently entered the market, eight ICIs, and eleven alternative fuel
vehicle converters in the light-duty vehicle market. EPA estimates that
these small entities comprise less than 0.1 percent of the total light-
duty vehicle sales in the U.S., and therefore the exemption will have a
negligible impact on the GHG emissions reductions from the standards.
Further detail regarding EPA's assessment of small businesses is
provided in Regulatory Flexibility Act Section III.I.3 of this
preamble, and in RIA Chapter 9.
    At least one small business manufacturer, Fisker Automotive, in
discussions with EPA prior to proposal, suggested that small businesses
should have the option of voluntarily opting-in to the GHG standards.
This manufacturer sells electric vehicles, and sees a potential market
for selling credits to other manufacturers. As discussed in the
proposal, EPA believes that there could be several benefits to this
approach, as it would allow small businesses an opportunity to generate
revenue to offset their technology investments and to encourage
commercialization of the innovative technology. There would likewise be
a benefit to any manufacturer seeking those credits to meet their
compliance obligations. EPA proposed and is finalizing allowing small
businesses to waive their small entity exemption and opt-in to the
primary GHG standards based on this same rationale. This will allow
small business manufacturers to earn CO2 credits under the
program, which may be an especially attractive option for the new
electric vehicle manufacturers entering the market. The small business
would have to meet the primary standard for its fleet (that is, the
small business would be allowed to opt-in to the primary program
standard, but not the small volume manufacturer standards, since SVMs
that receive approval of alternative standards are not eligible to
generate credits for trading as explained above). As proposed,
manufacturers waiving their small entity exemption must meet all
aspects of the GHG standards and program requirements across their
entire product line.
    EPA proposed to make the opt-in available starting in MY 2014, as
the MY 2012, and potentially the MY 2013, certification process will
have already occurred by the time this rulemaking is finalized. See 76
FR 74994. EPA proposed this timing to avoid retroactively certifying
vehicles that have already been produced. EPA proposed, however, that
manufacturers certifying to the GHG standards for MY 2014 would be
eligible to generate credits for vehicles sold in MY 2012 and MY 2013
based on the number of vehicles sold and the manufacturer's footprint-
based standard under the primary program that would have otherwise
applied to the manufacturer if it were a large manufacturer. This
approach would be similar to that used by EPA for early credits
generated in MYs 2009-2011, where manufacturers did not certify
vehicles to CO2 standards in those years but were able to
generate credits. See 75 FR 25441.
    EPA received comments from Fisker requesting that EPA reconsider
the timing of the opt-in provisions. Fisker commented that under EPA's
proposal, manufacturers would not be able to generate credits until the
end of MY 2014, even for vehicles that are produced in MYs 2012-2013.
Fisker commented that this would significantly diminish the revenue
generating benefit of these credits, particularly during the critical
early years of their company when potential credit revenues would be of
most benefit to the company. EPA is persuaded by this reasoning, and
the final rule therefore provides that the opt-in provisions begin with
MY 2013. See Sec.  86.1801-12(j)(2)(i). The timing of the final rule
will allow the GHG requirements to be integrated into the MY 2013
certification process for these small businesses. Once the small
business manufacturer opting into the GHG program completes
certification for MY 2013, the company will be eligible to generate GHG
credits for their MY 2012 production. Manufacturers will not have to
wait until the end of MY 2013 to generate MY 2012 credits. EPA believes
this provision is responsive to the concerns of the commenter while
still ensuring that the manufacturer is certified under the GHG program
prior to generating credits.
    EPA also received comments from Vehicle Production Group that small
business entities are discussed in terms of small volume manufacturers,

independent commercial importers, and alternative fuel converters, and
that limited line manufacturers should be added to the list of types of
small entities affected. EPA is clarifying that, as proposed,
manufacturers meeting the SBA definition of small business (1,000
employees) are exempt regardless of their production volume or number
of vehicle lines produced. Also, not all small volume manufacturers
qualify as small businesses, and EPA is adopting special provisions for
SVMs that are non-small business companies. See Section III.B.5. EPA
did not propose to change the use of the SBA definition for determining
whether a manufacturer is considered a small business. EPA does not
believe that using the number of vehicle lines is appropriate to
determine eligibility for the small business exemption. This approach
would create a loophole for large manufacturers producing a limited
product line for the U.S. market and such a manufacturer would
potentially be capable of selling a large volume of vehicles under such
an exemption.
8. Police and Emergency Vehicle Exemption From GHG Standards
    EPA is finalizing its proposal to exempt police and other emergency
vehicles from the GHG standards, starting in MY2012. Under EPCA,
manufacturers are allowed to exclude police and other emergency
vehicles from their CAFE fleet and all manufacturers that produce
emergency vehicles have historically done so. EPA is adopting an
exemption parallel to the EPCA exemption allowing manufacturers to
exempt police and emergency vehicles upon sending notification to EPA
(the same notification that is sent to NHTSA would suffice). EPA
received comments in the MY 2012-2016 rulemaking that these vehicles
should be exempt from the GHG emissions standards and EPA committed to
further consider the issue in a future rulemaking.466,467
EPA continues to believe it is appropriate to provide an exemption at
this time for these vehicles because of the unique features of vehicles
designed specifically for law enforcement and emergency response
purposes, which have the effect of raising their GHG emissions, as well
as for purposes of harmonization with the CAFE program. As proposed,
EPA is exempting vehicles that are excluded under EPCA and NHTSA
regulations which define emergency vehicle as ``a motor vehicle
manufactured primarily for use as an ambulance or combination
ambulance-hearse or for use by the United States Government or a State
or local government for law enforcement, or for other emergency uses as
prescribed by regulation by the Secretary of Transportation.'' \468\
---------------------------------------------------------------------------

    \466\ 75 FR 25409
    \467\ Manufacturers may exclude police and emergency vehicles
from fleet average calculations (both for determining fleet
compliance levels and fleet standards) starting in MY 2012. Because
this would have the effect of making the fleet standards easier to
meet for manufacturers, EPA does not believe there would be lead
time issues associated with the exemption, even though it would take
effect well into MY 2012.
    \468\ 49 U.S.C. 32902(e)
---------------------------------------------------------------------------

    EPA received comments from manufacturers supporting the proposed
emergency vehicle exemption and harmonization with the EPCA exemption.
Ford further commented that without the exemption, ``manufacturers may
be forced to choose between (1) deciding whether to degrade the
performance of the emergency vehicles, (2) deciding to restrict the
sales of its emergency vehicles, potentially even exiting the market
altogether, or (3) facing non-compliance with the federal GHG
standards.'' \469\ EPA also received comments from Pennsylvania
Department of Environmental Protection that the new technologies to
generate more horsepower can be used to downsize a vehicle's engine and
that ``No logical reason seems to exist as to why this new technology
cannot be used for police and emergency vehicles in order to gain fuel
efficiency without loss of power. Police and emergency vehicles
constitute a large fleet in the United States; not including them so
they can benefit from the same GHG-reducing technology would be
unfortunate.''
---------------------------------------------------------------------------

    \469\ Ford's comment was originally submitted for the MY 2012-
2016 rulemaking and is incorporated by reference into Ford's
comments in the MY 2017-2025 rulemaking. See Docket items EPA-HQ-
OAR-2009-0472-7082.1 and EPA-HQ-OAR-2010-0799-9463, respectively.
---------------------------------------------------------------------------

    As discussed in the proposal, the unique features of these vehicles
result in significant added weight including: heavy-duty suspensions,
stabilizer bars, heavy-duty/dual batteries, heavy-duty engine cooling
systems, heavier glass, bullet-proof side panels, and high strength
sub-frame. Police pursuit vehicles are often equipped with specialty
steel rims and increased rolling resistance tires designed for high
speeds, and unique engine and transmission calibrations to allow high-
power, high-speed chases. Police and emergency vehicles also have
features that tend to reduce aerodynamics, such as emergency lights,
increased ground clearance, and heavy-duty front suspensions.
    EPA remains concerned that manufacturers may not be able to
sufficiently reduce the emissions from these vehicles, and absent an
exemption would be faced with a difficult choice of compromising
necessary vehicle features or dropping vehicles from their fleets, as
they may not have credits under the fleet averaging provisions
necessary to cover the excess emissions from these vehicles as
standards become more stringent. EPA continues to believe that without
the exemption, there could be situations where a manufacturer is more
challenged in meeting the GHG standards simply due to the inclusion of
these higher emitting emergency vehicles. Technical feasibility issues
go beyond those of other high-performance vehicles, and vehicles with
these performance characteristics must continue to be made available in
the market. Therefore, EPA is finalizing the proposed exemption for
police and emergency vehicles and thus not including these vehicles in
the National Program at this time. MY 2012-2016 standards, as well as
MY 2017 and later standards would be fully harmonized with CAFE
regarding the treatment of these vehicles.
    EPA received comments from manufacturers that EPA should exempt
police and emergency vehicles from the CH4 and
N2O standards as well as the fleet-average CO2
standards in order to ensure full consistency with CAFE. EPA
understands that the NPRM was unclear on this point and EPA is
clarifying that the exemption applies to the overall GHG program
including the N2O and CH4 standards.
    EPA received comments from Vehicle Production Group that the police
and emergency vehicle exemption should be expanded to include vehicles
manufactured ``for the public good,'' which would include vehicles
manufactured for the specific purpose of transporting wheelchair users.
EPA is not expanding the police and emergency vehicle exemption to
include vehicles used ``for the public good'' as this term is not
defined in current regulations and is not included in the EPCA
exemption. EPA also does not believe that these other types of vehicles
are designed for the severe duty cycles that are experienced by police
and emergency vehicles, and therefore do not face the same potential
constraints in terms of vehicle design and the application of
technology.

9. Nitrous Oxide, Methane, and CO2-Equivalent Approaches
    EPA is not amending the standards for nitrous oxides
(N2O) or methane (CH4) adopted in the 2012-2016
light-duty vehicle GHG rules. These standards serve to cap emissions of
N2O and CH4, and generally ensure that emissions
of these GHGs will not increase above current levels. The issues
addressed in this rulemaking relate to means of demonstrating and
documenting compliance with these standards. As proposed, EPA is
extending to MY 2017 and later the provisions allowing manufacturers to
use CO2 credits on a CO2-equivanent basis to
comply with the standards for N2O and CH4. EPA is
also finalizing additional lead time for manufacturers to use
compliance statements in lieu of N2O testing through MY
2016, as proposed. In addition, in response to comments, EPA is
allowing the continued use of compliance statements in MYs 2017-2018 in
cases where manufacturers are not conducting new emissions testing for
a test group, but rather carrying over certification data from a
previous year. EPA is also clarifying that manufacturers will not be
required to conduct in-use testing for N2O in cases where a
compliance statement has been used for certification. All of these
provisions are discussed in detail below. The Response to Comments
document provides a full review of all comments received by EPA on
issues relating to the standards for N2O and CH4.
a. N2O and CH4 Standards and Flexibility
    For light-duty vehicles, as part of the MY 2012-2016 rulemaking,
EPA finalized standards for nitrous oxide (N2O) of 0.010 g/
mile and methane (CH4) of 0.030 g/mile for MY 2012 and later
vehicles. 75 FR 25421-24. The light-duty vehicle standards for
N2O and CH4 were established to cap emissions of
these GHGs, where current levels are generally significantly below the
cap. The cap were intended to prevent future emissions increases, and
these standards were generally not expected to result in the
application of new technologies or significant costs for manufacturers
using current vehicle designs. In the MY 2012-2016 rule, EPA also
finalized an alternative CO2 equivalent standard option,
which manufacturers may choose to use in lieu of complying with the
N2O and CH4 cap standards. The CO2-
equivalent standard option allows manufacturers to fold all 2-cycle
weighted N2O and CH4 emissions, on a
CO2-equivalent basis, along with CO2 into their
CO2 emissions fleet average compliance level.\470\ The
applicable CO2 fleet average standard is not adjusted to
account for the addition of N2O and CH4. For
flexible fueled vehicles, the N2O and CH4
standards must be met on both fuels (e.g., both gasoline and E-85).
---------------------------------------------------------------------------

    \470\ The global warming potentials (GWP) used in this rule are
consistent with the 100-year time frame values in the 2007
Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment
Report (AR4). At this time, the 100-year GWP values from the 1995
IPCC Second Assessment Report (SAR) are used in the official U.S.
GHG inventory submission to the United Nations Framework Convention
on Climate Change (UNFCCC) per the reporting requirements under that
international convention. The UNFCCC recently agreed on revisions to
the national GHG inventory reporting requirements, and will begin
using the 100-year GWP values from AR4 for inventory submissions in
the future. According to the AR4, N2O has a 100-year GWP
of 298 and CH4 has a 100-year GWP of 25.
---------------------------------------------------------------------------

    After the light-duty standards were finalized, manufacturers raised
concerns that for a few of the vehicle models in their existing fleet
they were having difficulty meeting the N2O and/or
CH4 standards, in the near-term. In such cases,
manufacturers would still have the option of complying using the
CO2 equivalent alternative. On a CO2 equivalent
basis, folding in all N2O and CH4 emissions could
add up to 3-4 g/mile to a manufacturer's overall fleet-average
CO2 emissions level because the alternative standard must be
used for the entire fleet, not just for the problem vehicles. The 3-4
g/mile assumes all emissions are actually at the level of the cap. See
75 FR 74211. As we noted at proposal, this could be especially
challenging in the early years of the MY 2012-2016 program for
manufacturers with little compliance margin because there is very
limited lead time to develop strategies to address these additional
emissions. Some manufacturers believe that the CO2-
equivalent fleet-wide option ``penalizes'' manufacturers that choose
this option, by requiring them to fold in both CH4 and
N2O emissions for their entire fleet, even if they have
difficulty meeting the cap on only one vehicle model.
    In response to these concerns, EPA has already amended the MY 2012-
2016 standards (as part of the heavy-duty GHG rulemaking) to allow
manufacturers to use CO2 credits, on a CO2-
equivalent basis, to meet the light-duty N2O and
CH4 standards in MYs 2012-2016.\471\ Manufacturers have the
option of using CO2 credits to meet either or both the
N2O standard and the CH4 standard on a test group
basis as needed. In their public comments to the proposal (in the
heavy-duty rulemaking) on this issue, manufacturers urged EPA to extend
this flexibility for model years after 2016, as they believed this
option was more advantageous than the CO2-equivalent fleet
wide option (discussed previously) already provided in the light-duty
MY 2012-2016 program, because it allowed manufacturers to address
N2O and CH4 separately and on a test group basis,
rather than across their whole fleet. Further, manufacturers believed
that since this option is allowed under the heavy-duty standards,
allowing it for post-2016 model years in the light-duty program would
make the light- and heavy-duty GHG programs more consistent. In the
final rule for heavy-duty vehicle GHG standards, EPA noted that it
intended to consider this issue further in the context of new standards
for MYs 2017-2025, in the then-planned future light-duty vehicle
rulemaking. 76 FR 57194.
---------------------------------------------------------------------------

    \471\ See 76 FR 57193-94.
---------------------------------------------------------------------------

    Acting on this intention, EPA proposed to extend the option of
using CO2 credits on a CO2-equivalent basis to
meet the light-duty vehicle N2O and CH4 standards
for MYs 2017 and later. EPA is adopting this provision as proposed. EPA
continues to believe that allowing use of CO2 credits to
meet CH4 and N2O standards on a CO2
equivalent basis is a reasonable approach to provide additional
flexibility without diminishing overall GHG emissions reductions. All
of the comments on this issue from automakers and others supported
extending this option beyond MY 2016.\472\
---------------------------------------------------------------------------

    \472\ There likewise was no opposition to EPA's earlier proposal
to amend the MYs 2012-2016 light-duty GHG standards to allow this
option.
---------------------------------------------------------------------------

    EPA also requested comment on establishing an adjustment to the
CO2-equivalent standard for manufacturers selecting the
CO2-equivalent option. See 76 FR 74993. Under the approach
described in the proposal, manufacturers would continue to be required
to fold in all of their CH4 and N2O emissions,
along with CO2, into their CO2-equivalent levels.
They would then apply an agency-established adjustment factor to the
CO2-equivalent standard which would slightly increase the
amount of allowed fleet average CO2 equivalent emissions for
the manufacturer's fleet. For example, if the adjustment for
CH4 and N2O combined was 1 to 2 g/mile CO2
equivalent (taking into account the GWP of N2O and
CH4), manufacturers would determine their CO2
fleet emissions standard and add the 1 to 2 g/mile adjustment factor to
it to determine their CO2-equivalent standard. The purpose
of this adjustment would be so manufacturers do not have to offset the
typical N2O

and CH4 vehicle emissions, while holding manufacturers
responsible for higher than average N2O and CH4
emissions levels reflected by the adjustment factor. EPA did not set
out in the proposal a specific adjustment value due to a current lack
of test data on estimated in-use N2O emissions on which to
base the adjustment value for N2O. EPA requested comment on
actual N2O data which could be used as the basis for such an
adjustment.\473\
---------------------------------------------------------------------------

    \473\ See 76 FR 74993.
---------------------------------------------------------------------------

    EPA received comments both in support of and against establishing
an adjustment factor for the fleet-wide CO2-equivalent
option. Volkswagen commented in support of an adjustment factor,
pledging to work with EPA to generate proper data such that an
appropriate adjustment factor could be established. General Motors (GM)
disagreed with establishing an adjustment factor, arguing that using an
average value for all passenger cars and light trucks to establish an
adjustment factor will inherently and unduly lessen the stringency of
some manufacturers' fleet average standard while increasing the
stringency for others. In light of the concerns voiced by GM and a lack
of data on which to base an adjustment factor for N2O, EPA
is not adopting such an approach. Thus, the CO2 equivalent
option as adopted in the MY2012 and later program, and described above,
remains in effect.
    GM commented that a second approach would be to modify the
CO2-equivalent equations instead of adjusting the
CO2 standard. GM commented that currently if a manufacturer
chooses the option to use the CO2-equivalent carbon related
exhaust emissions (CREE) equations, it has to include all
CH4 and N2O emissions which would result in an
increase of up to approximately 3 g/mile for vehicles that would have
otherwise been able to meet the N2O and CH4
emission standards. So, in order to make the CO2-equivalent
option more appealing, EPA would have to modify the CO2-
equivalent equations in such a fashion as to not penalize a
manufacturer for meeting the current CH4 and N2O
emission standards while still including a mechanism that would require
a manufacturer to account for exceedances of the standards (i.e., fold
in only CH4 and N2O emissions above their
respective standards). EPA has considered this suggestion and believes
it offers essentially the same flexibility that we are adopting in
today's final rule; allowing CO2 credits on a
CO2-equivalent basis to be used to offset exceedances of the
N2O and CH4 standards. Because the suggested
option is effectively the same as the flexibility already being
finalized for MYs 2017 and beyond, EPA is not including such an
approach in this final rule.
    EPA also received comments from Global Automakers regarding the
CO2-equivalent fleet option provisions which require that
manufacturers selecting the option use it for both their car and light
truck fleets, and for both N2O and CH4. Global
Automakers commented that they would like to see an allowance to use
different compliance options for CH4 and/or N2O
and also for passenger car and light truck fleets in the same model
year. Global Automakers further commented that the restrictions limit
manufacturers' compliance options without clear environmental benefit.
In response, EPA is concerned that opening the program to allow
manufacturers to mix their compliance options in this way would add to
the complexity of the program in terms of tracking compliance, without
providing meaningful additional flexibility to the manufacturer not
already provided by allowing CO2 credits to be used to
offset exceedances of either the CH4 or N2O
standards on a vehicle test group basis. Global Automakers did not
provide comments regarding why this type of flexibility would be useful
to manufacturers or examples of how it would be used in lieu of other
compliance options. Therefore, EPA is not adopting these requested
changes for the fleet-wide CO2-equivalent option.
b. N2O Measurement
    For the N2O standard, EPA finalized provisions in the MY
2012-2016 rule allowing manufacturers to support an application for a
certificate by supplying a compliance statement based on good
engineering judgment, in lieu of N2O test data, through MY
2014. EPA required N2O testing starting with MY 2015. See 75
FR 25423. This flexibility provided manufacturers with lead time needed
to make necessary facilities changes and install N2O
measurement equipment.
    In the MY 2017-2025 proposal, EPA proposed to extend the ability
for manufacturers to use compliance statements based on good
engineering judgment in lieu of test data through MY 2016. See 76 FR
74994. Prior to proposal, manufacturers raised concerns that the lead-
time provided to begin N2O measurement is not sufficient, as
their research and evaluation of N2O measurement
instrumentation had involved a greater level of effort than previously
expected. EPA evaluated new instruments for N2O measurement
and discussed in the proposal that newer instruments evaluated since
the time of the 2012-2016 rulemaking have the potential to provide more
precise emissions measurement. EPA believed that it would be prudent to
provide manufacturers with additional time to evaluate, procure, and
install the new equipment in their test cells.\474\ EPA proposed that
beginning in MY 2017, manufacturers would be required to measure
N2O emissions to verify compliance with the standard. This
approach would provide the manufacturers with two additional years of
lead-time to evaluate, procure, and install N2O measurement
systems throughout their certification laboratories.
---------------------------------------------------------------------------

    \474\ ``Data from the evaluation of instruments that measure
Nitrous Oxide (N2O),'' Memorandum from Chris Laroo to
Docket EPA-HQ-OAR-2010-0799, October 31, 2011.
---------------------------------------------------------------------------

    EPA is finalizing the additional lead-time for N2O
testing essentially as proposed. As discussed below, in response to
comments, EPA is temporarily (for MYs 2017 and 2018) allowing
manufacturers to continue to use compliance statements for test groups
certified using carry-over data. EPA is also clarifying, in response to
comments, that manufacturers will not be required to conduct in-use
testing for vehicle test groups certified using a compliance statement.
    EPA received several comments from manufacturers regarding
N2O testing. Manufacturers remain concerned that test
equipment will not be available in time to provide accurate measurement
for MY 2017 and some recommended that EPA re-evaluate N2O
testing as part of the mid-term review. The Alliance commented that
there is currently no accurate measurement technology available that is
suitable for high-volume testing and that laser based N2O
analysis is so new that most of the instruments are still in the
development stages and hence are prototypes. The Alliance commented
that it would take 4.5 years to install a new analyzer in a single test
site and therefore testing would not be ready until MY 2019. Global
Automakers commented that that the Non-Dispersive Infrared Analyzer
(NDIR) and Fourier Transform Infrared (FTIR) bag analysis methods
currently have repeatability, durability and/or practicality concerns.
Hyundai and Volvo expressed a preference for bag measurement methods to
minimize testing throughput and also noted that no new equipment is
available for this type of testing.
    In response, although EPA recognizes manufacturers' concerns about
the

challenges associated with the measurement of N2O, we are
confident that the improvements in N2O measurement
technology over the past few years, specifically with respect to the
development of laser source based instruments, has provided an avenue
for accurate low-level N2O measurement.
    At this time we are aware of four manufactures of laser source
instruments, and we have evaluated the instruments from three of these
manufacturers. Horiba's MEXA-1100QL and Sensors' LASAR systems have
performed very well and are suitable for measurement of N2O
from light-duty passenger vehicles. We also note that the gas
chromatograph-electron capture detector (GC-ECD) still remains a viable
option for low level measurement of N2O.\475\
---------------------------------------------------------------------------

    \475\ ``Data from the evaluation of instruments that measure
Nitrous Oxide (N2O),'' Memorandum from Chris Laroo to
Docket EPA-HQ-OAR-2010-0799, March 19, 2012.
---------------------------------------------------------------------------

    Our evaluations of these N2O measurement systems have
shown how measurement technologies have evolved over time. While we
have acknowledged the challenges associated with measurement using
photoacoustic spectroscopy (PAS), non-dispersive infrared spectroscopy
(NDIR), and Fourier transform infrared spectroscopy (FTIR); the laser
source systems have been shown to be a marked improvement.
    In an initial evaluation of existing N2O measurement
technologies, EPA found that interference from CO, CO2, and
H2O was contributing positive error (high bias) for PAS,
NDIR, and FTIR technologies. It was also thought that a small amount of
error could be attributed to bag blending error. EPA's subsequent
evaluations of laser source instruments have shown marked improvement
in measurement accuracy and elimination of interference, leaving just a
small amount of measurement error associated with EPA bag blend
measurements, which is primarily due to blending error.\5\ The Alliance
points out that our N2O measurements are slightly low, while
NDIR measurements of CO and CO2 are slightly high. The
Alliance points to interference as the culprit. We would like to point
out that our NDIR instruments have internal compensation detectors that
internally correct for the effects of CO, CO2, and
H2O interference on the measurement of CO and
CO2. Thus the error shown in these measurements is not due
to interference effects, but rather to bag blend errors. These blending
errors are also responsible for the slight underreporting of
N2O as measured by the laser instruments, keeping in mind
that any associated interference would have biased the N2O
measurements high, not low.
    With respect to timing, we do not see why it would take 4.5 years
to properly install a new N2O analyzer into a single test
site. While we understand that some time is needed for manufacturers to
determine which measurement technology to purchase, we would expect the
time to evaluate, procure, and install one of these instruments to be
more like one year, which is the timing EPA has experienced with
acquiring these instruments at our National Vehicle and Fuels Emissions
Laboratory.
    The Alliance also recommended that the requirement to measure
N2O only be applied to new emission certification programs
that are implemented after the establishment of proper N2O
measurement instrumentation and procedures. Manufacturers routinely use
``carryover'' emissions certification and durability data from a
previous model year in lieu of repeating the same emission tests. The
Alliance commented that assuming that N2O measurement
capabilities are not available until the MY 2017, manufacturers would
be forced to rerun all of their emission durability and certification
testing in one model year. This would be an unnecessary and unwarranted
certification burden for that particular model year. EPA believes that
this recommendation has merit, as it would allow for a more reasonable
testing workload as manufacturers transition to N2O
measurement. Therefore, for MYs 2017-2018, EPA is requiring
N2O testing only for new emission certification programs and
not in cases where the manufacturer is using carryover emissions data.
In cases where manufacturers are using carry-over data in MY 2017-2018,
the manufacturer may continue to provide a compliance statement in lieu
of measured N2O test data. Applying the new testing
requirements in this way will allow manufacturers to spread out the new
testing burden over a number of years. EPA believes this type of phase-
in is appropriate. EPA will no longer accept compliance statements for
any vehicle test groups starting with MY 2019.
    The Alliance commented that N2O testing should not be
required for manufacturer in-use testing (IUVP and IUCP) for all model
years and test groups that certify to the N2O standards via
a compliance statement. The Alliance commented that ``EPA should not
hold the manufacturers accountable for measuring N2O
utilizing a method that will have been established subsequent to
certification, nor should EPA hold a manufacturer responsible for
meeting a standard for which accurate measurement methods were not
available at the time of certification.'' EPA believes this
recommendation is reasonable and is not requiring manufacturers to
conduct in-use testing for the IUVP and IUCP programs for test groups
certified using an N2O compliance statement. This will
further ease the testing burden in the initial years of the measurement
program and allow manufacturers to focus on new certification testing.
EPA notes, however, that manufacturers remain responsible for meeting
the N2O standard in-use and EPA maintains the discretion to
conduct its own in-use N2O testing of test groups certified
using compliance statements.
    EPA also received comments from the Global Automakers that because
N2O is a small fraction of overall GHGs and should remain
small, and the testing equipment is expensive, EPA should allow the use
of compliance statements until such time as there is evidence that
N2O emissions may be an issue. In response, EPA believes
that it is important for manufacturers to demonstrate compliance with
the emissions standard for N2O through testing as soon as it
is reasonable to do so to ensure that N2O does not increase
with the introduction of new technologies.
10. Test Procedures
    In the proposal, EPA announced that it is considering revising the
procedures for measuring fuel economy and calculating average fuel
economy for the CAFE program, effective beginning in MY 2017, to
account for three impacts on fuel economy not currently included in
these procedures--increases in fuel economy because of increases in
efficiency of the air conditioner; increases in fuel economy because of
technology improvements that achieve ``off-cycle'' benefits; and
incentives for use of certain hybrid technologies in full size pickup
trucks, and for the use of other technologies that help those vehicles
exceed their targets, in the form of increased values assigned for fuel
economy. EPA is adopting the proposed changes. As discussed in section
IV of this Notice, NHTSA has taken these changes into account in
determining the maximum feasible fuel economy standard, to the extent
practicable. In this section, EPA discusses the legal framework for
these changes, and the mechanisms by which these changes will be
implemented. EPA is adopting this approach as appropriate after

consideration of all comments on these issues.
    These changes are the same as program elements that are part of
EPA's greenhouse gas performance standards, discussed in section
III.B.1 and 2, above. EPA is adopting these changes for A/C efficiency
and off-cycle technology because they are based on technology
improvements that affect real world fuel economy, and the incentives
for light-duty trucks will promote greater use of hybrid technology to
improve fuel economy in these vehicles. In addition, adoption of these
changes would lead to greater coordination between the greenhouse gas
program under the CAA and the fuel economy program under EPCA. As
discussed below, these three elements would be implemented in the same
manner as in the EPA's greenhouse gas program--a vehicle manufacturer
would have the option to generate these fuel economy values for vehicle
models that meet the criteria for these ``credits,'' and to use these
values in calculating their fleet average fuel economy.
a. Legal Framework
    EPCA provides that:
    (c) Testing and calculation procedures. The Administrator [of EPA]
shall measure fuel economy for each model and calculate average fuel
economy for a manufacturer under testing and calculation procedures
prescribed by the Administrator. However * * *, the Administrator shall
use the same procedures for passenger automobiles the Administrator
used for model year 1975 * * *, or procedures that give comparable
results. 49 U.S.C. 32904(c)
    Thus, EPA is charged with developing and adopting the procedures
used to measure fuel economy for vehicle models and for calculating
average fuel economy across a manufacturer's fleet. While this
provision provides broad discretion to EPA, it contains an important
limitation for the measurement and calculation procedures applicable to
passenger automobiles. For passenger automobiles, EPA has to use the
same procedures used for model year 1975 automobiles, or procedures
that give comparable results.\476\ This limitation does not apply to
vehicles that are not passenger automobiles. The legislative history
explains that:
---------------------------------------------------------------------------

    \476\ For purposes of this discussion, EPA need not determine
whether the changes relating to A/C efficiency, off-cycle, and
light-duty trucks involve changes to procedures that measure fuel
economy or procedures for calculating a manufacturer's average fuel
economy. The same provisions apply irrespective of which procedure
is at issue. This discussion generally refers to procedures for
measuring fuel economy for purposes of convenience, but the same
analysis applies whether a measurement or calculation procedure is
involved.
---------------------------------------------------------------------------

    Compliance by a manufacturer with applicable average fuel economy
standards is to be determined in accordance with test procedures
established by the EPA Administrator. Test procedures so established
would be the procedures utilized by the EPA Administrator for model
year 1975, or procedures which yield comparable results. The words ``or
procedures which yield comparable results'' are intended to give EPA
wide latitude in modifying the 1975 test procedures to achieve
procedures that are more accurate or easier to administer, so long as
the modified procedure does not have the effect of substantially
changing the average fuel economy standards. H. R. Rep. No. 94-340, at
91-92 (1975).\477\
---------------------------------------------------------------------------

    \477\ Unlike the House Bill, the Senate bill did not restrict
EPA's discretion to adopt or revise test procedures. Senate Bill
1883, section 503(6). However, the Senate Report noted that:
    The fuel economy improvement goals set in section 504 are based
upon the representative driving cycles used by the Environmental
Protection Agency to determine automobile fuel economies for model
year 1975. In the event that these driving cycles are changed in the
future, it is the intent of this legislation that the numerical
miles per gallon values of the fuel economy standards be revised to
reflect a stringency (in terms of percentage-improvement from the
baseline) that is the same as the bill requires in terms of the
present test procedures. S. Rep. No. 94-179, at 19 (1975).
    In Conference, the House version of the bill was adopted, which
contained the restriction on EPA's authority.
---------------------------------------------------------------------------

    EPA measures fuel economy for the CAFE program using two different
test procedures--the Federal Test Procedure (FTP) and the Highway Fuel
Economy Test (HFET). These procedures originated in the early 1970s,
and were intended to generally represent city and highway driving,
respectively. These two tests are commonly referred to as the ``2-
cycle'' test procedures for CAFE. The FTP is also used for measuring
compliance with CAA emissions standards for vehicle exhaust. EPA has
made various changes to the city and highway fuel economy tests over
the years. These have ranged from changes to dynamometers and other
mechanical elements of testing, changes in test fuel properties,
changes in testing conditions, to changes made in the 1990s when EPA
adopted additional test procedures for exhaust emissions testing,
called the Supplemental Federal Test Procedures (SFTP).
    When EPA has made changes to the FTP or HFET, we have evaluated
whether it is appropriate to provide for an adjustment to the measured
fuel economy results, to comply with the EPCA requirement for passenger
cars that the test procedures produce results comparable to the 1975
test procedures. These adjustments are typically referred to as a CAFE
or fuel economy test procedure adjustment or adjustment factor. In 1985
EPA evaluated various test procedure changes made since 1975, and
applied fuel economy adjustment factors to account for several of the
test procedure changes that reduced the measured fuel economy,
producing a significant CAFE impact for vehicle manufacturers. 50 FR
27172 (July 1, 1985). EPA defined this significant CAFE impact as any
change or group of changes that has at least a one-tenth of a mile per
gallon impact on CAFE results. Id. at 27173. EPA also concluded in this
proceeding that no adjustments would be provided for changes that
removed the manufacturer's ability to take advantage of flexibilities
in the test procedure and derive increases in measured fuel economy
values which were not the result of design improvements or marketing
shifts, and which would not result in any improvement in real world
fuel economy. EPA likewise concluded that test procedure changes that
provided manufacturers with an improved ability to achieve increases in
measured fuel economy based on real world fuel economy improvements
also would not warrant a CAFE adjustment. Id. at 27172, 27174, 27183.
EPA adopted retroactive adjustments that had the effect of increasing
measured fuel economy (to offset test procedure changes that reduced
the measured fuel economy level) but declined to apply retroactive
adjustments that reduced fuel economy.
    The D.C. Circuit reviewed two of EPA's decisions on CAFE test
procedure adjustments. Center for Auto Safety et al. v. Thomas, 806
F.2d 1071 (1986). First, the Court rejected EPA's decision to apply
only positive retroactive adjustments, as the appropriateness of an
adjustment did not depend on whether it increased or decreased measured
fuel economy results. Second, the Court upheld EPA's decision to not
apply any adjustment for the change in the test setting for road load
power. The 1975 test procedure provided a default setting for road load
power, as well as an optional, alternative method that allowed a
manufacturer to develop an alternative road load power setting. The
road load power setting affected the amount of work that the engine had
to perform during the test, hence it affected the amount of fuel
consumed during the test and the measured fuel

economy. EPA changed the test procedure by replacing the alternative
method in the 1975 procedure with a new alternative coast down
procedure. Both the original and the replacement alternative procedures
were designed to allow manufacturers to obtain the benefit of vehicle
changes, such as changes in aerodynamic design, that improved real
world fuel economy by reducing the amount of work that the engine
needed to perform to move the vehicle. The Center for Auto Safety (CAS)
argued that EPA was required to provide a test procedure adjustment for
the new alternative coast down procedure as it increased measured fuel
economy compared to the values measured for the 1975 fleet. In 1975,
almost no manufacturers made use of the then available alternative
method, while in later years many manufacturers made use of the option
once it was changed to the coast down procedure. CAS argued this
amounted to a change in test procedure that did not achieve comparable
results, and therefore required a test procedure adjustment. CAS did
not contest that the coast down method and the prior alternative method
achieved comparable results.
    The D.C. Circuit rejected CAS' arguments, stating that:
    The critical fact is that a procedure that credited reductions in a
vehicle's road load power requirements achieved through improved
aerodynamic design was available for MY1975 testing, and those
manufacturers, however few in number, that found it advantageous to do
so, employed that procedure. The manifold intake procedure subsequently
became obsolete for other reasons, but its basic function, to measure
real improvements in fuel economy through more aerodynamically
efficient designs, lived on in the form of the coast down technique for
measuring those aerodynamic improvements. We credit the EPA's finding
that increases in measured fuel economy because of the lower road load
settings obtainable under the coast down method, were increases
``likely to be observed on the road,'' and were not ``unrepresentative
artifact[s] of the dynamometer test procedure.'' Such real improvements
are exactly what Congress meant to measure when it afforded the EPA
flexibility to change testing and calculating procedures. We agree with
the EPA that no retroactive adjustment need be made on account of the
coast down technique. Center for Auto Safety et al. v. EPA, 806 F.2d
1071, 1077 (D.C. Cir. 1986)
    Some years later, in 1996, EPA adopted a variety of test procedure
changes as part of updating the emissions test procedures to better
reflect real world operation and conditions. 61 FR 54852 (October 22,
1996). EPA adopted new test procedures to supplement the FTP, as well
as modifications to the FTP itself. For example, EPA adopted a new
supplemental test procedure specifically to address the impact of air
conditioner use on exhaust emissions. Since this new test directly
addressed the impact of A/C use on emissions, EPA removed the specified
A/C horsepower adjustment that had been in the FTP since 1975. Id. at
54864, 54873. Later EPA determined that there was no need for CAFE
adjustments for the overall set of test procedures changes to the FTP,
as the net effect of the changes was no significant change in CAFE
results.
    As evidenced by this regulatory history, EPA's traditional approach
is to consider the impact of potential test procedure changes on CAFE
results for passenger automobiles and determine if a CAFE adjustment
factor is warranted to meet the requirement that the test procedure
produce results comparable to the 1975 test procedure. This involves
evaluating the magnitude of the impact on measured fuel economy
results. It also involves evaluating whether the change in measured
fuel economy reflects real word fuel economy impacts from changes in
technology or design, or whether it is an artifact of the test
procedure or test procedure flexibilities such that the change in
measured fuel economy does not reflect a real world fuel economy
impact.
    In this case, allowing credits for improvements in air conditioner
efficiency and off-cycle efficiency for passenger cars would lead to an
increase (i.e., improvement) in the fuel economy results for the
vehicle model. The impact on fuel economy and CAFE results clearly
could be greater than one-tenth of a mile per gallon (the level that
EPA has previously indicated as having a substantial impact). The
increase in fuel economy results would reflect real world improvements
in fuel economy and not changes that are just artifacts of the test
procedure or changes that come from closing a loophole or removing a
flexibility in the current test procedure. However, these changes in
procedure would not have the ``critical fact'' that the CAS Court
relied upon--the existence of a 1975 test provision that was designed
to account for the same kind of fuel economy improvements from changes
in A/C or off-cycle efficiency. Under EPA's traditional approach, these
changes would appear to have a significant impact on CAFE results,
would reflect real world changes in fuel economy, but would not have a
comparable precedent in the 1975 test procedure addressing the impact
of these technology changes on fuel economy. EPA's traditional approach
would be expected to lead to a CAFE adjustment factor for passenger
cars to account for the impact of these changes.
    However, EPA believes a change in approach is appropriate based on
the existence of similar EPA provisions for the greenhouse gas
emissions procedures and standards. In the past, EPA has determined
whether a CAFE adjustment factor for passenger cars would be
appropriate in a context where manufacturers are subject to a CAFE
standard under EPCA and there is no parallel greenhouse gas standard
under the CAA. That is not the case here, as MY2017-2025 passenger cars
will be subject to both CAFE and greenhouse gas standards. As such, EPA
believes it is appropriate to consider the impact of a CAFE procedure
change in this broader context.
    The term ``comparable results'' is not defined in section 32904(c),
and the legislative history indicates that it is intended to address
changes in procedure that result in a substantial change in the average
fuel economy standard. As explained above, EPA has considered a change
of one-tenth of a mile per gallon as having a substantial impact, based
in part on the one-tenth of a mile per gallon rounding convention in
the statute for CAFE calculations. 48 FR 56526, 56528 fn. 14 (December
21, 1983). A change in the procedure that changes fuel economy results
to this or a larger degree has the effect of changing the stringency of
the CAFE standard, either making it more or less stringent. A change in
stringency of the standard changes the burden on the manufacturers, as
well as the fuel savings and other benefits to society expected from
the standard. A CAFE adjustment factor is designed to account for these
impacts.
    Here, however, there is a companion EPA standard for greenhouse gas
emissions. In this case, the changes would have an impact on the fuel
economy results and therefore the stringency of the CAFE standard, but
would not appear to have a real world impact on the burden placed on
the manufacturers, as the provisions would be the same as provisions in
EPA's greenhouse gas standards. Similarly it would not appear to have a
real world impact on the fuel savings and other benefits of the
National Program which would remain identical. If that is the case,
then it would appear reasonable to interpret section 32904(c) in these
circumstances as not restricting these changes in procedure for
passenger

automobiles. EPA considers the fuel economy results to be ``comparable
results'' to the 1975 procedure as there would not be a substantial
impact on real world CAFE stringency and benefits, given the changes in
procedure are the same as provisions in EPA's companion greenhouse gas
procedures and standards.
    EPA received a limited number of comments on the proposed changes
to the CAFE procedures discussed above. One commenter noted that there
are various statutory limitations on the CAFE program as compared to
the GHG program, including the limitations discussed above on the CAFE
test procedure for passenger cars. The commenter noted that EPA's
proposal was a major change from the position EPA and NHTSA took in the
MY2012-2016 rulemaking. EPA recognizes that the interpretation and
approach discussed above are a major change from the prior
interpretation of the statutory limitations on testing and calculation
procedures for passenger cars. However there has been a significant
change in circumstances that justifies this change in interpretation.
As discussed above, EPA is changing its interpretation of when a
procedure produces results comparable to the 1975 test procedure based
on the effect of a coordinated and harmonized GHG and CAFE program.
Because of the National Program, the changes to the CAFE procedures
would not have a real world impact on the burden placed on the
manufacturers, as the provisions would be the same as provisions in
EPA's greenhouse gas standards. Similarly it would not have a real
world impact on the fuel savings and other benefits of the National
Program which would remain identical. Under these circumstances it is
reasonable to interpret section 32904(c) as not restricting adoption of
these changes in procedure for passenger automobiles.
    Other commenters, largely from the motor vehicle industry,
supported EPA's proposal to allow for fuel consumption improvements
credits for increases in efficiency of the air conditioner; increases
in fuel economy because of technology improvements that achieve ``off-
cycle'' benefits; and incentives for use of certain hybrid technologies
in full size pickup trucks, where these credits are comparable to the
GHG emissions credits for these technology improvements. The commenters
noted that the efficiency improvements are real, they will occur in the
real world, and the change will further coordinate and harmonize the
CAFE program and the GHG program. EPA agrees with these points, and
they support EPA's analysis discussed above.
    The discussion above focuses primarily on the procedures for
passenger cars, as section 32904(c) only limits changes to the CAFE
test and calculation procedures for these automobiles. There is no such
limitation on the procedures for light-trucks. The credit provisions
for improvements in air conditioner efficiency and off-cycle
performance would apply to light-trucks as well. In addition, the
limitation in section 32904(c) does not apply to the provisions for
credits for use of hybrids in light-trucks, if certain criteria are
met, as these provisions apply to light-trucks and not passenger
automobiles.
b. Implementation of This Approach
    As discussed in section IV, NHTSA has taken these changes in
procedure into account in setting the applicable CAFE standards for
passenger cars and light-trucks, to the extent practicable. As in EPA's
greenhouse gas program, the allowance of AC credits for cars and trucks
results in a more stringent CAFE standard than otherwise would apply
(although in the CAFE program the AC credits would only be for AC
efficiency improvements, since refrigerant improvements do not
generally impact fuel economy). The allowance of off-cycle credits and
hybrid credits for full size pickup trucks has been considered in
setting the CAFE standards for passenger car and light-trucks.
    EPA further discusses the criteria and test procedures for
determining AC credits, off-cycle technology credits, and hybrid/
performance-based credits for full size pickup trucks in Section III.C
below.

C. Additional Manufacturer Compliance Flexibilities

1. Air Conditioning Related Credits
    Air conditioning (A/C) is virtually standard equipment in new cars
and trucks today. Over 95% of the new cars and light trucks in the
United States are equipped with A/C systems. Given the large number of
vehicles with A/C in use in today's light duty vehicle fleet, their
impact on the amount of energy consumed and on the amount of
refrigerant leakage that occurs due to their use is significant.
    In this final rule, EPA is allowing manufacturers to comply with
their fleetwide average CO2 standards described above by
generating and using credits for improved A/C systems. Because such
improved A/C technologies tend to be relatively inexpensive compared to
other GHG-reducing technologies, EPA expects that most manufacturers
will choose to generate and use such A/C compliance credits as a part
of their compliance demonstrations. For this reason, EPA has
incorporated the projected costs of compliance with A/C related
emission reductions into the overall cost analysis for the program. As
discussed in section II.F.1, and III.B.10, EPA, in coordination with
NHTSA, is also allowing manufacturers to include fuel consumption
reductions resulting from the use of A/C efficiency improvements in
their CAFE compliance calculations. Manufacturers will be able to
generate ``fuel consumption improvement values'' essentially equivalent
to EPA CO2 credits, for improved fuel efficiency, for use in
the CAFE program. The changes to the CAFE program to incorporate A/C
efficiency improvements are discussed below in section III.C.1.b.
    As in the MY's 2012-2016 final rule, EPA is structuring the A/C
provisions as optional credits for achieving compliance, not as
separate standards. That is, unlike standards for N2O and
CH4, there are no separate GHG standards related to A/C-
related emissions. Instead, EPA provides manufacturers the option to
generate A/C GHG emission reductions that could be used as part of
their CO2 fleet average compliance demonstrations. As in the
MY's 2012-2016 final rule, EPA also included projections of A/C credit
generation in determining the appropriate level of the standards.\478\
---------------------------------------------------------------------------

    \478\ See Section II.F above and Section IV below for more
information on the use of such credits in the CAFE program.
---------------------------------------------------------------------------

    In the time since the analyses supporting the MY's 2012-2016 FRM
were completed, EPA has re-assessed its estimates of overall A/C
emissions and the fraction of those emissions that might be controlled
by technologies that are or will be available to manufacturers.\479\ As
discussed in more detail in Chapter 5 of the Joint TSD, the revised
estimates remain very similar to those of the earlier rule. This
includes the leakage of refrigerant during the vehicle's useful life,
as well as the subsequent leakage associated with maintenance and
servicing, and with disposal at the end of the vehicle's life (also
called ``direct emissions''). The refrigerant universally used today is
HFC-134a with a global warming potential (GWP) of 1,430.\480\ Together

these leakage emissions are equivalent to CO2 emissions of
13.8 g/mi for cars and 17.2 g/mi for trucks (see Section 5.1.2 of the
Joint TSD). (Due to the high GWP of HFC-134a, a small amount of leakage
of the refrigerant has a much greater global warming impact than a
similar amount of emissions of CO2 or other mobile source
GHGs). EPA also estimates that A/C efficiency-related emissions (also
called ``indirect'' A/C emissions), account for CO2-
equivalent emissions of 11.9 g/mi for cars and 17.1 g/mi for
trucks.\481\ Chapter 5 of the Joint TSD (see Section <IP_ADDRESS>) discusses
the derivation of these estimates.
---------------------------------------------------------------------------

    \479\ The A/C-related emission inventories presented in this
paragraph are discussed in Chapter 4 of the RIA.
    \480\ The global warming potentials (GWP) used in this rule are
consistent with the 100-year time frame values in the 2007
Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment
Report (AR4). At this time, the 100-year time frame values in the
1995 IPCC Second Assessment Report (SAR) are used in the official
U.S. GHG inventory submission to the United Nations Framework
Convention on Climate Change (UNFCCC) per the reporting requirements
under that international convention. The UNFCCC recently agreed on
revisions to the national GHG inventory reporting requirements, and
will begin using the 100-year GWP values from AR4 for inventory
submissions in the future.
    \481\ Indirect emissions are additional CO2 emitted
due to the load of the A/C system on the engine.
---------------------------------------------------------------------------

    Achieving GHG reductions in the most cost-effective ways is a
primary goal of the program, and EPA believes that allowing
manufacturers to comply with the standards by using credits generated
from incorporating A/C GHG-reducing technologies is a key factor in
meeting that goal.\482\ EPA accounts for projected reductions from A/C
related credits in developing the standards (curve targets), and
includes these emission reductions in estimating the achieved benefits
of the program. See Section II.C and III.F above.
---------------------------------------------------------------------------

    \482\ The recent GHG standards for medium and heavy duty
vehicles included separate standards for A/C leakage, rather than a
credit based approach. EPA did so because the quantity of these
leakage emissions is small relative to CO2 emissions from
driving and moving freight, so that a credit does not create
sufficient incentive to adopt leakage controls. 76 FR 57118; 75 FR
74211. EPA also did not adopt standards to control A/C leakage from
vocational vehicles, and did not adopt standards to control indirect
emissions from any medium or heavy duty vehicle for reasons
explained at 75 FR 74211 and 74212.
---------------------------------------------------------------------------

    Manufacturers can make very feasible improvements to their A/C
systems to reduce leakage and increase efficiency. Manufacturers can
reduce A/C leakage emissions by using components that tend to limit or
eliminate refrigerant leakage. Also, manufacturers can significantly
reduce the global warming impact of leakage emissions by adopting
systems that use an alternative, low-GWP refrigerant, acceptable under
EPA's Significant New Alternatives Policy (SNAP) program, as discussed
below, especially if systems are also designed to minimize leakage and
thus avoid opportunities for owners to recharge the system with less-
expensive--but higher GWP--refrigerant.\483\ Manufacturers can also
increase the overall efficiency of the A/C system and thus reduce A/C-
related CO2 emissions. This is because the A/C system
contributes to increased CO2 emissions through the
additional work required to operate the compressor, fans, and blowers.
This additional work typically is provided through the engine's
crankshaft, and delivered via belt drive to the alternator (which
provides electric energy for powering the fans and blowers) and the A/C
compressor (which pressurizes the refrigerant during A/C operation).
The additional fuel used to supply the power through the crankshaft
necessary to operate the A/C system is converted into CO2 by
the engine during combustion. This incremental CO2 produced
from A/C operation can thus be reduced by increasing the overall
efficiency of the vehicle's A/C system, which in turn will reduce the
additional load on the engine from A/C operation.
---------------------------------------------------------------------------

    \483\ Refrigerant emissions during service, maintenance, repair,
and disposal are also addressed by the CAA Title VI stratospheric
ozone program, as described below.
---------------------------------------------------------------------------

    As with the earlier GHG rule and in the proposal for this one, EPA
is finalizing two separate credit approaches to address leakage
reductions and efficiency improvements independently. A leakage
reduction credit would take into account the various technologies that
could be used to reduce the GHG impact of refrigerant leakage,
including the use of an alternative refrigerant with a lower GWP. An
efficiency improvement credit would account for the various types of
hardware and control of that hardware available to increase the A/C
system efficiency. To generate credits toward compliance with the fleet
average CO2 standard, manufacturers would be required to
attest to the durability of the leakage reduction and the efficiency
improvement technologies over the full useful life of the vehicle.
    EPA believes that both reducing A/C system leakage and increasing
A/C efficiency will be highly cost-effective and technologically
feasible for light-duty vehicles in the 2017-2025 timeframe. EPA is
maintaining most of the existing framework for quantifying, generating,
and using A/C Leakage Credits and Efficiency Credits. EPA expects that
most manufacturers will choose to use these A/C credit provisions,
although some may choose not to do so. Consistent with the 2012-2016
final rule, the standard reflects this projected widespread penetration
of A/C control technology.
    The following table summarizes the maximum credits that EPA is
making available in the overall A/C program.

       Table III-13--Summary of Maximum per-Vehicle Credit for A/C
                                [In g/mi]
------------------------------------------------------------------------
                                                    2012-2016  2017-2025
------------------------------------------------------------------------
Direct Max Credit Car Leakage.....................       6.3        6.3
Direct Max Credit Car Alt Refrigerant.............      13.8       13.8
Direct Max Credit Truck Leakage...................       7.8        7.8
Direct Max Credit Truck Alt Refrigerant...........      17.2       17.2
Indirect Max Credit Car...........................       5.7        5
Indirect Max Credit Truck.........................       5.7        7.2
------------------------------------------------------------------------

    The next table shows the credits on a model year basis that EPA
projects that manufacturers will generate on average (starting with the
ending values from the MY's 2012-2016 final rule). In the MY's 2012-
2016 rule, the total average car and total average truck credits
accounted for the difference between the GHG and CAFE standards.

                                                         Table III-14--Projected Average Credits
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Fleet avg
                                            Car credit      Car credit       Total car     Truck credit    Truck credit     Total truck    combined  car
                                            leakage avg     efficiency      credit avg      leakage avg     efficiency      credit avg       &  truck
                                                                avg                                             avg                           credit
--------------------------------------------------------------------------------------------------------------------------------------------------------
2016....................................             5.4             4.8            10.2             6.6             4.8            11.5            10.6
2017....................................             7.8             5.0            12.8             7.0             5.0            12.1            12.5
2018....................................             9.3             5.0            14.3            11.0             6.5            17.5            15.5
2019....................................            10.8             5.0            15.8            13.4             7.2            20.6            17.5

2020....................................            12.3             5.0            17.3            15.3             7.2            22.5            19.1
2021....................................            13.8             5.0            18.8            17.2             7.2            24.4            20.7
2022....................................            13.8             5.0            18.8            17.2             7.2            24.4            20.7
2023....................................            13.8             5.0            18.8            17.2             7.2            24.4            20.7
2024....................................            13.8             5.0            18.8            17.2             7.2            24.4            20.7
2025....................................            13.8             5.0            18.8            17.2             7.2            24.4            20.7
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The year-on-year progression of credits was determined as follows.
The credits are assumed to increase starting from their MY 2016 value
at a rate approximately commensurate with the increasing stringency of
the MY's 2017-2025 GHG standards, but not exceeding a 20% penetration
rate increase in any given year, until the maximum credits are achieved
by MY 2021. EPA expects that manufacturers would be changing over to
alternative refrigerants at the time of complete vehicle redesign,
which occurs about every 5 years. However, in confidential meetings,
some manufacturers/suppliers have informed EPA that a modification of
the hardware for some alternative refrigerant systems may be able to be
installed outside of the redesign cycle, as so could be done more
rapidly, between redesign periods. Given the significant number of
credits for using low GWP refrigerants, as well as the variety of
alternative refrigerants that appear to be available, EPA believes that
a total phase-in of alternative refrigerants is likely to begin in the
near future and be completed by no later than MY 2021 (as shown in
Table III-14 above).
    The progression of the average credits (relative to the maximum)
also defines the relative year-on-year costs as described in Chapter 5
of the Joint TSD. The costs are apportioned by the ratio of the average
credit in any given year to the maximum credit. This is nearly
equivalent to apportioning costs to technology penetration rates as is
done for all the other technologies. However, because the maximum
efficiency credits for cars and trucks have changed since the MY's
2012-2016 rule, apportioning to the credits provides a more realistic
and smoother year-on-year sequencing of costs.\484\
---------------------------------------------------------------------------

    \484\ In contrast, the technology penetration rates could have
anomalous (and unrealistic) discontinuities that would be reflected
in the cost progressions. This issue is only specific to A/C credits
and costs and not to any other technology analysis in this rule.
---------------------------------------------------------------------------

    In this section, we discuss the A/C leakage credit program. The A/C
efficiency credit program is discussed in Section II.F and in Chapter 5
of the Joint TSD. EPA sought comment on all aspects of the A/C credit
program, including changes from the current A/C credit program and the
details in the Joint TSD. We respond to comments received below, in
Section II.F, in the Joint TSD, and in the Response to Comments
document.
a. Air Conditioning Leakage (``Direct'') Emissions and Credits
i. Quantifying A/C Leakage Credits for Today's Refrigerant
    As previously discussed, EPA is finalizing the proposed leakage
credit program, with minor modifications. There was broad support among
commenters from the auto and refrigerant supply industries, as well as
from other commenters, for the proposed leakage credit program.
    Although in general EPA continues to prefer performance-based
standards whenever possible, A/C leakage is very difficult to
accurately measure in a laboratory test, due to the typical slowness of
such leaks and the tendency of leakage to develop unexpectedly as
vehicles age. At this time, no appropriate performance test for
refrigerant leakage is available. Thus, as in the existing MYs 2012-
2016 program, EPA associates each available leakage-reduction
technology with associated leakage credit value, which will be added
together to quantify the overall system credit, up to the maximum
available credit. EPA's Leakage Credit method is drawn from the SAE
J2727 method (HFC-134a Mobile Air Conditioning System Refrigerant
Emission Chart, February 2012 version), which in turn was based on
results from the cooperative ``IMAC'' study.\485\ EPA has incorporated
several minor modifications that SAE made to the J2727 method, but
these do not affect the credit values for the technologies. Chapter 5
of the joint TSD includes a full discussion of why EPA is continuing to
use the design-based ``menu'' approach to quantifying Leakage Credits,
including definitions of each of the technologies associated with the
values in the menu, and commenters supported continuation of the menu
approach as well.
---------------------------------------------------------------------------

    \485\ Society of Automotive Engineers, ``IMAC Team 1--
Refrigerant Leakage Reduction, Final Report to Sponsors,'' 2006.
This document is available in Docket EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

    In addition to the above ``menu'' for vehicles using the current
high-GWP refrigerant (HFC-134a), EPA also continues to provide the
leakage credit calculation for vehicles using an alternative, lower-GWP
refrigerant. This provision was also a part of the MYs 2012-2016 rule.
As with the earlier rule, the agency is including this provision
because shifting to lower-GWP alternative refrigerants will
significantly reduce the climate-change concern about HFC-134a
refrigerant leakage by reducing the direct climate impacts. Thus, the
credit a manufacturer can generate by using an alternative refrigerant
is a function of the degree to which the GWP of an alternative
refrigerant is less than that of the current refrigerant (HFC-134a).
    In recent years, the global automotive industry has given serious
attention primarily to three of the alternative refrigerants: HFO-
1234yf, HFC-152a, and carbon dioxide (R-744). Work on additional low
GWP alternatives continues. HFO1234yf has a GWP of 4, HFC-152a has a
GWP of 124 and CO2 has a GWP of 1.\486\ (In addition, two
new potential refrigerants, AC-5 and AC-6, are being researched and
have GWPs less than that of HFC-134a.) Both HFC-152a and CO2
are produced

commercially in large amounts and thus the supply of refrigerant is not
a significant factor preventing their use.\487\ HFC-152a has been shown
to be comparable to HFC-134a with respect to cooling performance and
fuel use in A/C systems.\488\
---------------------------------------------------------------------------

    \486\ The global warming potentials (GWP) used in this rule are
consistent with the 100-year time frame values in the 2007
Intergovernmental Panel on Climate Change (IPCC) Fourth Assessment
Report (AR4). At this time, the 100-year time frame values in the
1995 IPCC Second Assessment Report (SAR) are used in the official
U.S. GHG inventory submission to the United Nations Framework
Convention on Climate Change (UNFCCC) per the reporting requirements
under that international convention. The UNFCCC recently agreed on
revisions to the national GHG inventory reporting requirements, and
will begin using the 100-year GWP values from AR4 for inventory
submissions in the future.
    \487\ The U.S. has one of the largest industrial quality
CO2 production facilities in the world (Gale Group,
2011). HFC-152a is used widely as an aerosol propellant in many
commercial products and thus potentially available for refrigerant
use in motor vehicle A/C. Production volume for non-confidential
chemicals reported under the 2006 Inventory Update Rule. Chemical:
Ethane, 1,1-difluoro-. Aggregated National Production Volume: 50 to
<100 million pounds. [US EPA; Non-Confidential 2006 Inventory Update
Reporting. National Chemical Information. Ethane, 1,1-difluoro- (75-
37-6). Available from, as of September 21, 2009: http://cfpub.epa.gov/iursearch/index.cfm?s=chem&err=t.
    \488\ United Nations Environment Program, Technology and
Economic Assessment Panel, ``Assessment of HCFCs and Environmentally
Sound Alternatives,'' TEAP 2010 Progress Report, Volume 1, May 2010.
http://www.unep.ch/ozone/Assessment_Panels/TEAP/Reports/TEAP_Reports/teap-2010-progress-report-volume1-May2010.pdf. This document
is available in Docket EPA-HQ-OAR-2010-0799.
---------------------------------------------------------------------------

    In the MYs 2012-2016 GHG rule, a manufacturer using an alternative
refrigerant would receive no credit for leakage-reduction technologies.
At that time, EPA believed that from the perspective of primary climate
effect, leakage of a very low GWP refrigerant is largely irrelevant.
However, there is reason to believe that the need for repeated
recharging (top-off) of A/C systems with another, potentially costly
refrigerant could lead some consumers and/or repair facilities to
recharge a system designed for use with an alternative, low GWP
refrigerant with either HFC-134a or another high GWP refrigerant.
Depending on the refrigerant, it may still be feasible, although
inappropriate, for systems designed for a low GWP refrigerant to
operate on HFC-134a; in particular, the A/C system operating pressures
for HFO-1234yf and HFC-152a might allow this type of substitution.
Thus, the need for repeated recharging in use could slow the transition
away from the high-GWP refrigerant even though recharging with a
refrigerant different from that already in the A/C system is not
authorized under current Clean Air Act Title VI regulations.\489\
---------------------------------------------------------------------------

    \489\ See appendix D to 40 CFR part 82, subpart G.
---------------------------------------------------------------------------

    For alternative refrigerant systems, EPA is finalizing as proposed
a provision that adds to the existing credit calculation approach for
alternative-refrigerant systems a disincentive for manufacturers if
systems designed to operate with HFO-1234yf, HFC-152a, R744, or some
other low GWP refrigerant incorporated fewer leakage-reduction
technologies. This ``high leak disincentive'' provision will encourage
manufacturers to continue to use low-leak components that are in
typical use today even with low-GWP alternative refrigerants. We
believe that this will help ensure that refrigerant leakage will remain
low, avoiding opportunities for vehicle owners to recharge a depleted
system with HFC-134a or another refrigerant with a GWP higher than that
with which the vehicle was originally equipped (e.g., HFO-1234yf,
CO2, or HFC-152a). Some stakeholders have suggested that EPA
take precautions to address the potential for HFC-134a to replace HFO-
1234yf, for example, in vehicles designed for use with the new
refrigerant (see comment and response section of EPA's SNAP rule on
HFO-1234yf p. 660 of 1991, 76 FR 17509; March 29, 2011).\490\ In EPA's
disincentive provision, manufacturers can avoid some or all of a
deduction in their Leakage Credit of about 2 g/mi by maintaining the
use of low-leak components after a transition to an alternative
refrigerant. Specifically, the disincentive will be avoided when
leakage components in a new alternative refrigerant system, as
quantified in the leakage credit menu, maintain a target level of
leakage reduction typical of today's systems, accounting for the fact
that designing larger systems that are charged with larger volumes of
refrigerant for low leakage is relatively more challenging than for
smaller systems.
---------------------------------------------------------------------------

    \490\ Regulations in Appendix D to Subpart G of 40 CFR part 82
prohibit topping off the refrigerant in a motor vehicle A/C system
with a different refrigerant.
---------------------------------------------------------------------------

    EPA received a number of comments on this proposed provision. A
number of automobile manufacturers and a chemical manufacturer, in
particular, raised concerns that the high-leak disincentive was
potentially reducing the credits available under the MY's 2012-2016
rules. These commenters said that this would complicate their ability
to comply and would penalize early adopters of low GWP refrigerants.
Further, some automobile manufacturers stated that they were already
making efforts to prevent the replacement of a low GWP alternative
refrigerant, such as HFO-1234yf, with the less expensive, high GWP
refrigerant HFC-134a. Some commenters stated that there are fittings
unique to HFO-1234yf on the air conditioning system that would not
allow someone to add HFC-134a into a car designed to use HFO-1234yf.
Other commenters stated that it was not fair to penalize automobile
manufacturers for activities taken by others who would refill with HFC-
134a an A/C system containing HFO-1234yf. ICCT supported such an anti-
leak credit, but believed that full credit should be given only where
manufacturers demonstrate designs that cause the system to fail
operating when recharged with higher GWP refrigerants.
    In response to these comments, EPA has maintained as proposed the
general approach of a credit deduction to discourage high leak rates
for systems designed for use of an alternative, low GWP refrigerant.
However, the final rule allows greater flexibility so that the
disincentive would only occur if a manufacturer eliminates a
significant number of leakage-reduction technologies that are in broad
use today. Thus, if a manufacturer takes reasonable care to reduce
leaks and thus reduce the opportunity for the illegal top-off or
charging of refrigerants not designed for use with low-GWP A/C systems,
the manufacturer will be able to take full advantage of the credits for
using a low-GWP alternative refrigerant. EPA discusses the final
criteria for avoiding the disincentive in Chapter <IP_ADDRESS>.2.5 of the
Joint TSD.
ii. Issues Raised by a Potential Broad Transition to Alternative
Refrigerants
    As described previously, use of alternative, lower-GWP refrigerants
for mobile use reduces the climate effects of leakage or release of
refrigerant through the entire life-cycle of the A/C system. Because
the impact of direct emissions of such refrigerants on climate is
significantly less than that for the current refrigerant HFC-134a,
release of these refrigerants into the atmosphere through direct
leakage, as well as release due to maintenance or vehicle scrappage, is
predictably less of a concern than with the current refrigerant.
    For a number of years, the automotive industry has explored lower-
GWP refrigerants and the systems required for them to operate
effectively and efficiently, taking into account refrigerant costs,
toxicity, flammability, environmental impacts, and A/C system costs,
weight, complexity, and efficiency. European Union regulations require
a transition to alternative refrigerants with a GWP of 150 or less for
motor vehicle air conditioning. The European Union's Directive on
mobile air-conditioning systems (MAC Directive\491\) aims at reducing
emissions of specific fluorinated greenhouse gases in the air-
conditioning systems fitted to passenger cars (vehicles under EU

category M1) and light commercial vehicles (EU category N1, class 1).
---------------------------------------------------------------------------

    \491\ 2006/40/EC.
---------------------------------------------------------------------------

    The main objectives of the EU MAC Directive are: to control leakage
of fluorinated greenhouse gases with a GWP higher than 150 used in this
sector; and to prohibit by a specified date the use of higher GWP
refrigerants in MACs. The MAC Directive is part of the European Union's
overall objectives to meet commitments made under the UNFCCC's Kyoto
Protocol. This transition calls with new car models starting in 2011
and continues with a complete transition to manufacturing all new cars
with low GWP refrigerant by January 1, 2017.
    One alternative refrigerant has generated significant interest in
the automobile manufacturing industry and it appears likely to be used
broadly in the near future for this application. This refrigerant,
called HFO-1234yf, has a GWP of 4. The physical and thermodynamic
properties of this refrigerant are similar enough to HFC-134a that auto
manufacturers would need to make relatively minor technological changes
to their vehicle A/C systems in order to manufacture and market
vehicles capable of using HFO-1234yf. Although HFO-1234yf is flammable,
it requires a high amount of energy to ignite, and is expected to have
flammability risks that are not significantly different from those of
HFC-134a or other refrigerants found acceptable subject to use
conditions (see 76 FR 17494-17496, 17507; March 29, 2011).
    There are some drawbacks to the use of HFO-1234yf. Some vehicle
technological changes, such as the addition of an internal heat
exchanger in the A/C system and associated packaging issues, may be
necessary in order to transition to HFO-1234yf. Also, some vehicle
manufacturers may require changes to the refrigerant charging and
storage facilities at their vehicle assembly plants to accommodate the
use of HFO-1234yf. In addition, the anticipated cost of HFO-1234yf is
several times that of HFC-134a. At the time that EPA's Significant New
Alternatives Policy (SNAP) program issued its determination allowing
the use of HFO-1234yf in motor vehicle A/C systems, the agency cited
estimated costs of $40 to $60 per pound, and stated that this range was
confirmed by an automobile manufacturer (76 FR 17491; March 29, 2011)
and a component supplier.\492\ By comparison, recent reported costs for
HFC-134a range from about $4.50 to $10 per pound.\493\ The higher cost
of HFO-1234yf is largely because of limited global production
capability at this time. However, because it is more complicated to
produce the molecule for HFO-1234yf, it is unlikely that it will ever
be as inexpensive as HFC-134a is currently. In Chapter 5 of the TSD
(see Section 5.1.4), the EPA has accounted for this additional cost of
both the refrigerant as well as the hardware upgrades. (We do not
include potential costs for manufacturing facility changes to
accommodate a new refrigerant; some may incur such costs, some may not.
Commenters did not provide specific data relating to such costs).
---------------------------------------------------------------------------

    \492\ Automotive News, April 18, 2011.21.
    \493\ [generate docket memo from this site: www.r-134a.com.]
---------------------------------------------------------------------------

    Manufacturers have seriously considered other alternative
refrigerants in recent years. One of these, HFC-152a, has a GWP of
124.\494\ HFC-152a is produced commercially in large amounts.\495\ HFC-
152a has been shown to be comparable to HFC-134a with respect to
cooling performance and fuel use in A/C systems.\496\ HFC-152a is
flammable, listed as A2 by ASHRAE.\497\ Air conditioning systems using
this refrigerant would require engineering strategies or devices in
order to reduce flammability risks to acceptable levels (e.g., use of
release valves or secondary-loop systems). Alternatively,
CO2 can be used as a refrigerant. It has a GWP of 1, and is
widely available commercially.\498\ The SNAP program has listed R-744
as acceptable for motor vehicle A/C systems. (June 6, 2012; 77 FR
33315). Air conditioning systems using CO2 would require
different designs than other refrigerants, primarily due to the higher
operating pressures that are required. Research continues exploring the
potential for these alternative refrigerants for automotive
applications. Finally, EPA is aware that the chemical and automobile
manufacturing industries continue to consider additional refrigerants
with GWPs less than 150. For example, SAE International is currently
running a cooperative research program looking at two low GWP
refrigerant blends, with the program to complete in 2012.\499\ The
producers of these blends have not to date applied for SNAP approval.
However, we expect that there may well be additional alternative
refrigerants available to vehicle manufacturers in the next few years.
---------------------------------------------------------------------------

    \494\ IPCC 4th Assessment Report.
    \495\ HFC-152a is used widely as an aerosol propellant in many
commercial products and may potentially be available for refrigerant
use in motor vehicle A/C systems. Aggregated national production
volume is estimated to be between 50 and 100 million pounds. [US
EPA; Non-Confidential 2006 Inventory Update Reporting. National
Chemical Information.]
    \496\ May 2010 TEAP XXI/9 Task Force Report, http://www.unep.ch/ozone/Assessment_Panels/TEAP/Reports/TEAP_Reports/teap-2010-progress-report-volume1-May2010.pdf.
    \497\ A wide range of concentrations has been reported for HFC-
152a flammability where the gas poses a risk of ignition and fire
(3.7%-20% by volume in air) (Wilson, 2002). EPA finalized a rule in
2008 listing HFC-152a as acceptable subject to use conditions in
motor vehicle air-conditioning, one of these restricting refrigerant
concentrations in the passenger compartment resulting from leaks
above the lower flammability limit of 3.7% (see 71 FR 33304; June
12, 2008).
    \498\ The U.S. has one of the largest industrial quality
CO2 production facilities in the world (Gale Group,
2011).
    \499\ ``Recent Experiences in MAC System Development: `New
Alternative Refrigerant Assessment' Technical Update. Enrique Peral-
Antunez, Renault. Presentation at SAE Alternative Refrigerant and
System Efficiency Symposium. September, 2011. Available online at
http://www.sae.org/events/aars/presentations/2011/Enrique%20Peral%20Renault%20Recent%20Experiences%20in%20MAC%20System%20Dev.pdf.
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(1) Related EPA Actions to Date and Potential Actions Concerning
Alternative Refrigerants
    EPA is addressing potential environmental and human health concerns
of low-GWP alternative refrigerants through a number of actions. The
SNAP program has issued final rules regulating the use of HFC-152a and
HFO-1234yf in order to reduce their potential risks (June 12, 2008, 73
FR 33304; March 29, 2011, 76 FR 17488; and March 26, 2012, 77 FR
17344). The SNAP rule for HFC-152a allows its use in new motor vehicle
A/C systems where proper engineering strategies and/or safety devices
are incorporated into the system. EPA has also recently issued a final
rule allowing use of R-744 as a refrigerant in new motor vehicle A/C
systems subject to use conditions for motor vehicle A/C systems (June
6, 2012; 77 FR 33315). The SNAP rules for all three alternative
refrigerants HFC-152a and HFO-1234yf require meeting safety
requirements of the industry standard SAE J639. With HFO-1234yf and
HFC-152a, EPA expects that manufacturers conduct and keep on file
failure mode and effect analysis for the motor vehicle A/C system, as
stated in SAE J1739. Similarly, for CO2, EPA requires
manufacturers to keep records of the tests they perform to ensure that
MVAC systems are designed with devices to avoid concentrations in
excess of the limits in the final rule.
    Under Section 612(d) of the Clean Air Act, any person may petition
EPA to add alternatives to or remove them from the list of acceptable
substitutes for ozone depleting substances. The National Resource
Defense Council

(NRDC) submitted a petition on behalf of NRDC, the Institute for
Governance & Sustainable Development (IGSD), and the Environmental
Investigation Agency-US (EIA-US) to EPA under Clean Air Act Section
612(d), requesting that the Agency remove HFC-134a from the list of
acceptable substitutes and add it to the list of unacceptable
(prohibited) substitutes for motor vehicle A/C, among other uses.\500\
EPA has found this petition complete specifically for use of HFC-134a
in new motor vehicle A/C systems for use in passenger cars and light
duty vehicles. EPA intends to initiate a separate notice and comment
rulemaking in response to this petition in the future.\501\
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    \500\ NRDC et al. Re: Petition to Remove HFC-134a from the List
of Acceptable Substitutes under the Significant New Alternatives
Policy Program (November 16, 2010).
    \501\ EPA received a supplemental petition from the Institute
for Sustainable Governance, The Environmental Investigation Agency,
and the National Resources Defense Council to find unacceptable HFC-
134a for other uses in April, 2012.
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    EPA addresses potential toxicity issues with the use of
CO2 as a refrigerant in automotive A/C systems in the final
SNAP rule mentioned above. CO2 has a workplace exposure
limit of 5000 ppm on an 8-hour time-weighted average, a short-term
exposure limit (STEL) of 3% over a 15-minute time-weighted average, and
a ceiling limit of 4.0% CO2 at any time.\502\ EPA has also
addressed potential toxicity issues with HFO-1234yf through a
significant new use rule (SNUR) under the Toxic Substances Control Act
(TSCA) (October 27, 2010; 75 FR 65987). The SNUR for HFO-1234yf allows
its use as an A/C refrigerant for light-duty vehicles and light-duty
trucks, and found no significant toxicity issues with that use. As
mentioned in the NPRM for a VOC exemption for HFO-1234yf, ``The EPA
considered the results of developmental testing available at the time
of the final SNUR action to be of some concern, but not a sufficient
basis to find HFO-1234yf unacceptable under the SNUR determination. As
a result, the EPA requested additional toxicity testing and issued the
SNUR for HFO-1234yf. The EPA has received and is presently reviewing
the results of the additional toxicity testing. The EPA continues to
believe that HFO-1234yf, when used in new automobile air conditioning
systems in accordance with the use conditions under the SNAP rule, does
not result in significantly greater risks to human health than the use
of other available substitutes.'' (76 FR 64063, October 17, 2011). HFC-
152a is considered relatively low in toxicity and comparable to HFC-
134a, both of which have a workplace environmental exposure limit from
the American Industrial Hygiene Association of 1000 ppm on an 8-hour
time-weighted average (73 FR 33304; June 12, 2008).
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    \502\ The 8-hour time-weighted average worker exposure limit for
CO2 is consistent with OSHA's PEL-TWA, and ACGIH'S TLV-
TWA of 5,000 ppm (0.5%).
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    EPA has issued a proposed rule, proposing to exempt HFO-1234yf from
the definition of ``volatile organic compound'' (VOC) for purposes of
preparing State Implementation Plans (SIPs) to attain the national
ambient air quality standards for ozone under Title I of the Clean Air
Act (October 17, 2011; 76 FR 64059). VOCs are a class of compounds that
can contribute to ground level ozone, or smog, in the presence of
sunlight. Some organic compounds do not react enough with sunlight to
create significant amounts of smog. EPA has already determined that a
number of compounds, including the current automotive refrigerant, HFC-
134a as well as HFC-152a, are low enough in photochemical reactivity
that they do not need to be regulated under SIPs. CO2 also
is not considered a VOC for purposes of preparing SIPs.
(2) Vehicle Technology Requirements for Alternative Refrigerants
    As discussed above, significant hardware changes could be needed to
allow use of HFC-152a or CO2, because of the flammability of
HFC-152a and because of the high operating pressure required for
CO2. In the case of HFO-1234yf, manufacturers have said that
A/C systems for use with HFO-1234yf would need a limited amount of
additional hardware to maintain cooling efficiency compared to HFC-
134a. In particular, A/C systems may require an internal heat exchanger
to use HFO-1234yf, because HFO-1234yf would be less effective in A/C
systems not designed for its use. Because EPA's SNAP ruling allows for
use of all three low-GWP alternative refrigerants in new vehicles only,
we expect that manufacturers would introduce cars using alternative
refrigerants during complete vehicle redesigns or when introducing new
models.\503\ This need for complete vehicle redesign limits the
potential pace of a transition from HFC-134a to alternative
refrigerants. In meetings with EPA and in their public comments,
manufacturers have informed EPA that, in the case of HFO-1234yf, for
example, they would need to upgrade their refrigerant storage
facilities and charging stations on their assembly lines. During the
transition period between the refrigerants, some of these assembly
lines might need to have the infrastructure for both refrigerants
simultaneously since many lines produce multiple vehicle models.
Moreover, many of these plants might not immediately have the
facilities or space for two refrigerant infrastructures, thus likely
further increasing necessary lead time. EPA took these kinds of factors
into account in estimating the penetration of alternative refrigerants,
and the resulting estimated average credits over time shown in Table
III-14.
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    \503\ Some suppliers and manufacturers have informed us that
some vehicles may be able to upgrade A/C systems to use HFO-1234yf
during a refresh of an existing model (between redesign years).
However, this is highly dependent on the vehicle, space constraints
behind the dashboard, and the manufacturing plant, so an upgrade
between redesign years may be feasible for only a select few models.
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    Switching to alternative refrigerants in the U.S. market continues
to be an attractive option for automobile manufacturers because
vehicles with low GWP refrigerant could qualify for a significantly
larger leakage credit. Manufacturers have expressed to EPA that they
would plan to place a significant reliance on, or in some cases believe
that they would need, alternative refrigerant credits for compliance
with GHG fleet emission standards starting in MY 2017.
(3) Alternative Refrigerant Supply
    EPA is aware that another practical factor affecting the rate of
transition to alternative refrigerants is their supply. As mentioned
above, both HFC-152a and CO2 are being produced commercially
in large quantities and thus, although their supply chain does not at
this time include auto manufacturers, it may be easier to increase
production to meet additional demand that would occur if manufacturers
adopt either as a refrigerant. However, HFO-1234yf, supply is currently
limited. There are currently two major producers of HFO-1234yf, DuPont
and Honeywell that are licensed to produce this chemical for the U.S.
market. Both companies will likely provide most of their production for
the next few years from a single overseas facility, as well as some
production from small pilot plants. The initial emphasis for these
companies is to provide HFO-1234yf to the European market, where
regulatory requirements for low GWP refrigerants are already in effect.
The expected mass production of HFO-1234yf has been delayed until later
this year. As a result, the European Union has delayed the requirement
for newly approved types of vehicles to be filled with a refrigerant
with GWP less than 150 by one year until December 31,

2012.\504\ The producers of HFO-1234yf have indicated that they plan to
construct a new facility in the 2014 timeframe. This facility should be
designed to provide sufficient production volume for a worldwide market
in coming years. EPA expects that the speed of the transition to
alternative refrigerants in the U.S. may depend on how rapidly chemical
manufacturers are able to provide supply to automobile manufacturers
sufficient to allow most or all vehicles sold in the U.S. to be built
using the alternative refrigerant.
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    \504\ April 18, 2012 Note to the Attention of the Members of the
Technical Committee on Motor Vehicles, ``The supply shortage of an
essential component in mobile air conditioning systems and its
impact to the application of Directive 2006/40/EC in the automotive
industry''. Philippe Jean, Chairman of the Technical Committee--
Motor Vehicles, European Commission Enterprise and Industry
Directorate-General.
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    One manufacturer (GM) has announced its intention to begin
introducing vehicle models using HFO-1234yf as early as MY 2013.\505\
According to a commenter, some automobile manufacturers expect to begin
using HFO-1234yf on some models in 2013. As of spring of 2012, EPA is
aware of at least two manufacturers already producing vehicles using
HFO-1234yf--GM and Subaru. As described above, we expect that in most
cases a change-over to systems designed for alternative refrigerants
would be limited to vehicle product redesign cycles, typically about
every 5 years. Because of this, the pace of introduction is likely to
be limited to about 20% of a manufacturer's fleet per year. In
addition, the current uncertainty about the availability of supply of
the new refrigerant in the early years of introduction into vehicles in
the U.S. vehicles, also discussed above, means that the change-over may
not occur at every vehicle redesign point. Thus, even with the
announced intention of these manufacturers to begin early introduction
of an alternative refrigerant, EPA's analysis of the overall industry
trend will assume minimal penetration of the U.S. vehicle market before
MY 2017.
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    \505\ General Motors Press Release, July 23, 2010. ``GM First to
Market Greenhouse Gas-Friendly Air Conditioning Refrigerant in
U.S.''
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    Table III-14 shows that, starting from MY 2017, EPA projects that
virtually all of the expected increase in generated credits would be
due to a gradual increase in penetration of alternative refrigerants.
In earlier model years, EPA attributes the expected increase in Leakage
Credits to improvements in low-leak technologies. These projections are
for analytical purposes, and, as described above, this final rule does
not in any way require that the auto and refrigerant supply industries
transition to alternative refrigerants, or to do so according to any
specified timeline.
(4) Projected Potential Scenarios for Auto Industry Changeover to
Alternative Refrigerants
    As discussed above, EPA is planning on issuing a proposed SNAP
rulemaking in the future requesting comment on whether to move HFC-134a
from the list of acceptable substitutes to the list of unacceptable
(prohibited) substitutes. However, the agency has not determined the
specific content of that proposal, and the results of any final action
are unknowable at this time. EPA recognizes that a major element of
that proposal will be the evaluation of the time needed for a
transition for automobile manufacturers away from HFC-134a. Thus, there
could be multiple scenarios for the timing of a transition considered
in that future proposed rulemaking. Should EPA finalize a rule under
the SNAP program that prohibits the use of HFC-134a in new vehicles,
the agency plans to evaluate the impacts of such a SNAP rule to
determine whether it would be necessary to consider revisions to the
availability and use of the compliance credit for MY 2017-2025.
    EPA is basing this final rule on the current status of
refrigerants, where there are no U.S. regulatory requirements for
manufacturers to eliminate the use of HFC-134a for newly manufactured
vehicles. Thus, the agency expects that the market penetration of
alternatives will proceed based on supply and demand and the strong
incentives in this final rule. Given the combination of clear interest
from automobile manufacturers in switching to an alternative
refrigerant, the interest from the manufacturers of the alternative
refrigerant HFO-1234yf to expand their capacity to produce and market
the refrigerant, and current commercial availability of HFC-152a and
CO2, EPA believes it is reasonable to project that supply
will be adequate to support the orderly rate of transition to an
alternative refrigerant described above. As mentioned earlier, at least
one U.S. manufacturer already has plans to introduce models using the
alternative refrigerant HFO-1234yf beginning in MY 2013. However, it is
not certain how widespread the transition to alternative refrigerants
will be in the U.S., nor how quickly that transition will occur in the
absence of requirements or strong incentives. (Some commenters stated
that EPA should not require a phase-out of HFC-134a. This action is
beyond the scope of this final rule; such comments will be appropriate
for a future NPRM on that subject.
    There are other factors that could lead to an overall fleet
changeover from HFC-134a to alternative refrigerants. For example, the
governments of the U.S., Canada, and Mexico have proposed to the
Parties to the Montreal Protocol on Substances that Deplete the Ozone
Layer that production of HFCs be reduced over time. The North American
Proposal to amend the Montreal Protocol allows the global community to
make near-term progress on climate change by addressing this group of
potent greenhouse gases. The proposal would result in lower emissions
in developed and developing countries through the phase-down of the
production and consumption of HFCs. If an amendment were adopted by the
Parties, then switching from HFC-134a to alternative refrigerants would
likely become an attractive option for decreasing the overall use and
emissions of high-GWP HFCs, and the Parties would likely initiate or
expand policies to incentivize suppliers to ramp up the supply of
alternative refrigerants. Options for reductions would include
transition from HFCs, moving from high to lower GWP HFCs, and reducing
charge sizes.
    In February, the Secretary of State Hillary Rodham Clinton and
Administrator Lisa Jackson announced the Climate and Clean Air
Coalition to Reduce Short-Lived Climate Pollutants, a new initiative
seeking to realize benefits by addressing black carbon, HFCs, and
methane.
2. Incentives for Electric Vehicles, Plug-in Hybrid Electric Vehicles,
Fuel Cell Vehicles, and Dedicated and Dual Fuel Compressed Natural Gas
Vehicles
    EPA is finalizing temporary regulatory incentives for electric
vehicles (EVs), plug-in hybrid electric vehicles (PHEVs), fuel cell
vehicles (FCVs), and dedicated and dual fuel compressed natural gas
(CNG) vehicles. This section is divided into four subsections: (a)