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

    \76\ Based on estimated standards presented in Tables III.B.1-1
and III.B.1-2.
---------------------------------------------------------------------------

    The concept of a ratchet mechanism recognizes this problem, and
would impose the new more stringent standard only when the problem
arises across the industry as a whole. While the new more stringent
standards would enter into force automatically, any such standards
would still need to provide adequate lead time for the manufacturers.
Given the limited number of model years covered by this rulemaking and
the short lead-time already before the 2012 model year, a ratchet
mechanism in this rulemaking that would automatically tighten the
standards at some point after model year 2012 is finished and apply the
new more stringent standards for model

years 2016 or earlier, would fail to provide adequate lead time for any
new, more stringent standards
    Additionally, we do not believe that the risk of vehicle upsizing
or changing vehicle offerings to ``game'' the passenger car and light
truck definitions is as great as commenters imply for the model years
in question.\77\ The changes that commenters suggest manufacturers
might make are neither so simple nor so likely to be accepted by
consumers. For example, 4WD versions of vehicles tend to be more
expensive and, other things being equal, have inherently lower fuel
economy than their 2WD equivalent models. Therefore, although there is
a market for 4WD vehicles, and some consumers might shift from 2WD
vehicles to 4WD vehicles if 4WD becomes available at little or no extra
cost, many consumers still may not desire to purchase 4WD vehicles
because of concerns about cost premium and additional maintenance
requirements; conversely, many manufacturers often require the 2WD
option to satisfy demand for base vehicle models. Additionally,
increasing the footprint of vehicles requires platform changes, which
usually requires a product redesign phase (the agencies estimate that
this occurs on average once every 5 years for most models).
Alternatively, turning many 2WD SUVs into 2WD light trucks would
require manufacturers to squeeze a third row of seats in or
significantly increase their GVWR, which also requires a significant
change in the vehicle.\78\ The agencies are confident that the
anticipated increases in average fuel economy and reductions in average
CO2 emission rates can be achieved without backstops under
EISA or the CAA. As noted above, the agencies plan to conduct
retrospective analysis to monitor progress. Both agencies have the
authority to revise standards if warranted, as long as sufficient lead
time is provided.
---------------------------------------------------------------------------

    \77\ We note that NHTSA's recent clarification of the light
truck definitions has significantly reduced the potential for
gaming, and resulted in the reclassification of over a million
vehicles from the light truck to the passenger car fleet.
    \78\ Increasing the GVWR of a light truck (assuming this was the
only goal) can be accomplished in a number of ways, and must include
consideration of: (1) Redesign of wheel axles; (2) improving the
vehicle suspension; (3) changes in tire specification (which will
likely affect ride quality); (4) vehicle dynamics development
(especially with vehicles equipped with electronic stability
control); and (5) brake redesign. Depending on the vehicle, some of
these changes may be easier or more difficult than others.
---------------------------------------------------------------------------

    The agencies acknowledge that the MY 2016 fleet emissions and fuel
economy goals of 250 g/mi and 34.1 mpg for EPA and NHTSA respectively
are estimates and not standards (the MY 2012-2016 curves are the
standards). Changes in fuel prices, consumer preferences, and/or
vehicle survival and mileage accumulation rates could result in either
smaller or larger oil and GHG savings. As explained above and elsewhere
in the rule, the agencies believe that the possibility of not meeting
(or, alternatively, exceeding) fuel economy and emissions goals exists,
but is not likely. Given this, and given the potential complexities in
designing an appropriate backstop, the agencies believe the balance
here points to not adopting additional backstops at this time for the
MYs 2012-2016 standards other than NHTSA's finalizing of the ones
required by EPCA/EISA for domestic passenger cars. Nevertheless, the
agencies recognize there are many factors that are inherently uncertain
which can affect projections in the future, including fuel price and
other factors which are unrelated to the standards contained in this
final rule. Such factors can affect consumer preferences and are
difficult to predict. At this time and based on the available
information, the agencies have not included a backstop for model years
2012-2016. However, if circumstances change in the future in
unanticipated ways, the agencies may revisit the issue of a backstop in
the context of a future rulemaking either for model years 2012-2016 or
as needed for standards for model years beyond 2016. This issue will be
discussed further in Sections III and IV.

D. Relative Car-Truck Stringency

    The agencies proposed fleetwide standards with the projected levels
of stringency of 34.1 mpg or 250 g/mi in MY 2016 (as well as the
corresponding intermediate year fleetwide standards) for NHTSA and EPA
respectively. To determine the relative stringency of passenger car and
light truck standards for those model years, the agencies were
concerned that increasing the difference between the car and truck
standards (either by raising the car standards or lowering the truck
standards) could encourage manufacturers to build fewer cars and more
trucks, likely to the detriment of fuel economy and CO2
reductions.\79\ In order to maintain consistent car/truck standards,
the agencies applied a constant ratio between the estimated average
required performance under the passenger car and light truck standards,
in order to maintain a stable set of incentives regarding vehicle
classification.
---------------------------------------------------------------------------

    \79\ For example, since many 2WD SUVs are classified as
passenger cars, manufacturers have already warned that high car
standards relative to truck standards could create an incentive for
them to drop the 2WD version and sell only the 4WD version.
---------------------------------------------------------------------------

    To calculate relative car-truck stringency for the proposal, the
agencies explored a number of possible alternatives, and for the
reasons described in the proposal used the Volpe model in order to
estimate stringencies at which net benefits would be maximized. The
agencies have followed the same approach in calculating the relative
car-truck stringency for the final standards promulgated today. Further
details of the development of this approach can be found in Section IV
of this preamble as well as in NHTSA's RIA and EIS. NHTSA examined
passenger car and light truck standards that would produce the proposed
combined average fuel economy levels from Table I.B.2-2 above. NHTSA
did so by shifting downward the curves that maximize net benefits,
holding the relative stringency of passenger car and light truck
standards constant at the level determined by maximizing net benefits,
such that the average fuel economy required of passenger cars remained
31 percent higher than the average fuel economy required of light
trucks. This methodology resulted in the average fuel economy levels
for passenger cars and light trucks during MYs 2012-2016 as shown in
Table I.B.1-1. The following chart illustrates this methodology of
shifting the standards from the levels maximizing net benefits to the
levels consistent with the combined fuel economy standards in this
final rule.
BILLING CODE 6560-50-P

[GRAPHIC] [TIFF OMITTED] TR07MY10.013

BILLING CODE 6560-50-C
    The final car and truck standards for EPA (Table I.B.1-4 above)
were subsequently determined by first converting the average required
fuel economy levels to average required CO2 emission rates,
and then applying the expected air conditioning credits for 2012-2016.
These A/C credits are shown in the following table. Further details of
the derivation of these factors can be found in Section III of this
preamble or in the EPA RIA.
---------------------------------------------------------------------------

    \80\ We assume slightly higher A/C penetration in 2012 than was
assumed in the proposal only to correct for rounding that occurred
in the curve setting process.

                 Table II.D-1 Expected Fleet A/C Credits (in CO2 Equivalent g/mi) From 2012-2016
----------------------------------------------------------------------------------------------------------------
                                                      Average
                                                    technology    Average credit  Average credit  Average credit
                                                    penetration      for cars       for trucks     for combined
                                                        (%)                                            fleet
----------------------------------------------------------------------------------------------------------------
2012............................................         \80\ 28             3.4             3.8             3.5
2013............................................              40             4.8             5.4             5.0
2014............................................              60             7.2             8.1             7.5
2015............................................              80             9.6            10.8            10.0
2016............................................              85            10.2            11.5            10.6
----------------------------------------------------------------------------------------------------------------

    The agencies sought comment on the use of this methodology for
apportioning the fleet stringencies to relative car and truck standards
for 2012-2016. General Motors commented that, compared to the passenger
car standard, the light truck standard is too stringent because ``the
most fuel efficient cars and small trucks already meet the 2016 MY
requirements'' but ``the most fuel efficient large trucks must increase
fuel economy by 20 percent to meet the 2016 MY requirements.'' GM
recommended that the agencies relax stringency specifically for large
pickups, such as the Silverado.
    The agencies disagree with the premise of the comment that the
standard is too stringent under the applicable statutory provisions
because some existing large trucks are not already meeting a later
model year standard. Our analysis shows that the standards are not too
stringent for manufacturers selling these vehicles. The agencies'
analyses demonstrate a means by which manufacturers could apply cost-
effective technologies in order to achieve the standards, and we have
provided adequate lead time for the technology to be applied. More
important, the agencies' analysis demonstrate that the fleetwide
emission standards for MY 2016 are technically feasible, for example by
implementing technologies such as engine downsizing, turbocharging,
direct injection, improving accessories and tire rolling resistance,
etc.
    GM did not comment on the use of the methodology applied by the
agencies to develop the gap between the passenger car and light truck
standards--only on the outcome of the methodology. For the reasons
discussed below, the agencies maintain that the methodology applied
above provides an appropriate basis to determine the gap between the
passenger car and light truck standards, and disagree with GM's
arguments that the outcome is unfair.
    First, GM's argument incorrectly suggests that every individual
vehicle model must achieve its fuel economy and emissions targets. CAFE
standards and new GHG emissions standards apply to fleetwide average
performance, not model-specific performance, even though average
required levels are based on average model-specific targets, and the
agencies' analysis demonstrates that GM and other manufacturers of
large trucks can cost-effectively comply with the new standards.
    Second, GM implies that every manufacturer must be challenged
equally with respect to fuel economy and emissions. Although NHTSA and
EPA maintain that attribute-based CAFE and GHG emissions standards can
more evenly balance compliance challenges, attribute-based standards
are not intended to and cannot make these challenges equal, and while
the agencies are mindful of the potential impacts of the standards on
the relative competitiveness of different vehicle manufacturers, there
is nothing in EPCA or the CAA \81\ requiring that these challenges be
equal.
---------------------------------------------------------------------------

    \81\ As NHTSA explained in the NPRM, the Conference Report for
EPCA, as enacted in 1975, makes clear, and the case law affirms, ``a
determination of maximum feasible average fuel economy should not be
keyed to the single manufacturer which might have the most
difficulty achieving a given level of average fuel economy.'' CEI-I,
793 F.2d 1322, 1352 (D.C. Cir. 1986). Instead, NHTSA is compelled
``to weigh the benefits to the nation of a higher fuel economy
standard against the difficulties of individual automobile
manufacturers.'' Id. The law permits CAFE standards exceeding the
projected capability of any particular manufacturer as long as the
standard is economically practicable for the industry as a whole.
Similarly, EPA is afforded great discretion under section 202(a) of
the CAA to balance issues of technical feasibility, cost, adequacy
of lead time, and safety, and certainly is not required to do so in
a manner that imposes regulatory obligations uniformly on each
manufacturer. See NRDC v. EPA, 655 F. 2d 318, 322, 328 (D.C. Cir.
1981) (wide discretion afforded by the statutory factors, and EPA
predictions of technical feasibility afforded considerable
discretion subject to constraints of reasonableness EPA predictions
of technical feasibility afforded considerable discretion subject to
constraints of reasonableness); and cf. International Harvester Co.
v. Ruckelshaus, 479 F. 2d 615, 640 (D.C. Cir. 1973) (``as long as
feasible technology permits the demand for new passenger automobiles
to be generally met, the basic requirements of the Act would be
satisfied, even though this might occasion fewer models and a more
limited choice of engine types'').
---------------------------------------------------------------------------

    We have also already addressed and rejected GM's suggestion of
shifting the ``cut off'' point for light trucks from 66 square feet to
72 square feet, thereby ``dropping the floor'' of the target function
for light trucks. As discussed in the preceding section, this is so as
not to forego the rules' energy and environmental benefits, and because
there is little or no safety basis to discourage downsizing of the
largest light trucks.
    Finally, NHTSA and EPA disagree with GM's claim that the outcome of
the agencies' approach is unfairly burdensome for light trucks as
compared to passenger cars. Based on the agencies' market forecast,
NHTSA's analysis indicates that incremental technology outlays could,
on average, be comparable for passenger cars and light trucks under the
final CAFE standards, and further indicates that the ratio of total
benefits to total costs could be greater under the final light truck
standards than under the final passenger car standards.

E. Joint Vehicle Technology Assumptions

    Vehicle technology assumptions, i.e., assumptions about
technologies' cost, effectiveness, and the rate at which they can be
incorporated into new vehicles, are often controversial as they have a
significant impact on the levels of the standards. The agencies must,
therefore, take great care in developing and justifying these
estimates. In developing technology inputs for the analysis of the MY
2012-2016 standards, the agencies reviewed the technology assumptions
that NHTSA used in setting the MY 2011 standards, the comments that
NHTSA received in response to its May 2008 Notice of Proposed
Rulemaking (NPRM), and the comments received in response to the NPRM
for this rule. This review is consistent with the request by President
Obama in his January 26 memorandum to DOT. In addition, the agencies
reviewed the technology input

estimates identified in EPA's July 2008 Advance Notice of Proposed
Rulemaking. The review of these documents was supplemented with updated
information from more current literature, new product plans from
manufacturers, and from EPA certification testing.
    As a general matter, EPA and NHTSA believe that the best way to
derive technology cost estimates is to conduct real-world tear down
studies. Most of the commenters on this issue agreed. The advantages
not only lie in the rigor of the approach, but also in its
transparency. These studies break down each technology into its
respective components, evaluate the costs of each component, and build
up the costs of the entire technology based on the contribution of each
component and the processes required to integrate them. As such, tear
down studies require a significant amount of time and are very costly.
EPA has been conducting tear down studies to assess the costs of
vehicle technologies under a contract with FEV. Further details for
this methodology is described below and in the TSD.
    Due to the complexity and time incurred in a tear down study, only
a few technologies evaluated in this rulemaking have been costed in
this manner thus far. The agencies prioritized the technologies to be
costed first based on how prevalent the agencies believed they might be
likely to be during the rulemaking time frame, and based on their
anticipated cost-effectiveness. The agencies believe that the focus on
these important technologies (listed below) is sufficient for the
analysis in this rule, but EPA is continuing to analyze more
technologies beyond this rule as part of studies both already underway
and in the future. For most of the other technologies, because tear
down studies were not yet available, the agencies decided to pursue, to
the extent possible, the Bill of Materials (BOM) approach as outlined
in NHTSA's MY 2011 final rule. A similar approach was used by EPA in
the EPA 2008 Staff Technical Report. This approach was recommended to
NHTSA by Ricardo, an international engineering consulting firm retained
by NHTSA to aid in the analysis of public comments on its proposed
standards for MYs 2011-2015 because of its expertise in the area of
fuel economy technologies. A BOM approach is one element of the process
used in tear down studies. The difference is that under a BOM approach,
the build up of cost estimates is conducted based on a review of cost
and effectiveness estimates for each component from available
literature, while under a tear down study, the cost estimates which go
into the BOM come from the tear down study itself. To the extent that
the agencies departed from the MY 2011 CAFE final rule estimates, the
agencies explained the reasons and provided supporting analyses in the
Technical Support Document.
    Similarly, the agencies followed a BOM approach for developing the
technology effectiveness estimates, insofar as the BOM developed for
the cost estimates helped to inform the appropriate effectiveness
values derived from the literature review. The agencies supplemented
the information with results from available simulation work and real
world EPA certification testing.
    The agencies would also like to note that per the Energy
Independence and Security Act (EISA), the National Academies of
Sciences has been conducting a study for NHTSA to update Chapter 3 of
their 2002 NAS Report, which presents technology effectiveness
estimates for light-duty vehicles. The update takes a fresh look at
that list of technologies and their associated cost and effectiveness
values. The updated NAS report was expected to be available on
September 30, 2009, but has not been completed and released to the
public. The results from this study thus are unavailable for this
rulemaking. The agencies look forward to considering the results from
this study as part of the next round of rulemaking for CAFE/GHG
standards.
1. What technologies did the agencies consider?
    The agencies considered over 35 vehicle technologies that
manufacturers could use to improve the fuel economy and reduce
CO2 emissions of their vehicles during MYs 2012-2016. The
majority of the technologies described in this section are readily
available, well known, and could be incorporated into vehicles once
production decisions are made. Other technologies considered may not
currently be in production, but are beyond the research phase and under
development, and are expected to be in production in the next few
years. These are technologies which can, for the most part, be applied
both to cars and trucks, and which are capable of achieving significant
improvements in fuel economy and reductions in CO2
emissions, at reasonable costs. The agencies did not consider
technologies in the research stage because the lead time available for
this rule is not sufficient to move most of these technologies from
research to production.
    The technologies considered in the agencies' analysis are briefly
described below. They fall into five broad categories: Engine
technologies, transmission technologies, vehicle technologies,
electrification/accessory technologies, and hybrid technologies. For a
more detailed description of each technology and their costs and
effectiveness, we refer the reader to Chapter 3 of the Joint TSD,
Chapter III of NHTSA's FRIA, and Chapter 1 of EPA's final RIA.
Technologies to reduce CO2 and HFC emissions from air
conditioning systems are discussed in Section III of this preamble and
in EPA's final RIA.
    Types of engine technologies that improve fuel economy and reduce
CO2 emissions include the following:
     Low-friction lubricants--low viscosity and advanced low
friction lubricants oils are now available with improved performance
and better lubrication. If manufacturers choose to make use of these
lubricants, they would need to make engine changes and possibly conduct
durability testing to accommodate the low-friction lubricants.
     Reduction of engine friction losses--can be achieved
through low-tension piston rings, roller cam followers, improved
material coatings, more optimal thermal management, piston surface
treatments, and other improvements in the design of engine components
and subsystems that improve engine operation.
     Conversion to dual overhead cam with dual cam phasing--as
applied to overhead valves designed to increase the air flow with more
than two valves per cylinder and reduce pumping losses.
     Cylinder deactivation--deactivates the intake and exhaust
valves and prevents fuel injection into some cylinders during light-
load operation. The engine runs temporarily as though it were a smaller
engine which substantially reduces pumping losses.
     Variable valve timing--alters the timing of the intake
valve, exhaust valve, or both, primarily to reduce pumping losses,
increase specific power, and control residual gases.
     Discrete variable valve lift--increases efficiency by
optimizing air flow over a broader range of engine operation which
reduces pumping losses. Accomplished by controlled switching between
two or more cam profile lobe heights.
     Continuous variable valve lift--is an electromechanically
controlled system in which valve timing is changed as lift height is
controlled. This yields a wide range of performance

optimization and volumetric efficiency, including enabling the engine
to be valve throttled.
     Stoichiometric gasoline direct-injection technology--
injects fuel at high pressure directly into the combustion chamber to
improve cooling of the air/fuel charge within the cylinder, which
allows for higher compression ratios and increased thermodynamic
efficiency.
     Combustion restart--can be used in conjunction with
gasoline direct-injection systems to enable idle-off or start-stop
functionality. Similar to other start-stop technologies, additional
enablers, such as electric power steering, accessory drive components,
and auxiliary oil pump, might be required.
     Turbocharging and downsizing--increases the available
airflow and specific power level, allowing a reduced engine size while
maintaining performance. This reduces pumping losses at lighter loads
in comparison to a larger engine.
     Exhaust-gas recirculation boost--increases the exhaust-gas
recirculation used in the combustion process to increase thermal
efficiency and reduce pumping losses.
     Diesel engines--have several characteristics that give
superior fuel efficiency, including reduced pumping losses due to lack
of (or greatly reduced) throttling, and a combustion cycle that
operates at a higher compression ratio, with a very lean air/fuel
mixture, relative to an equivalent-performance gasoline engine. This
technology requires additional enablers, such as NOX trap
catalyst after-treatment or selective catalytic reduction
NOX after-treatment. The cost and effectiveness estimates
for the diesel engine and aftertreatment system utilized in this final
rule have been revised from the NHTSA MY 2011 CAFE final rule.
Additionally, the diesel technology option has been made available to
small cars in the Volpe and OMEGA models. Though this is not expected
to make a significant difference in the modeling results, the agencies
agreed with the commenters that supported such a revision.
    Types of transmission technologies considered include:
     Improved automatic transmission controls-- optimizes shift
schedule to maximize fuel efficiency under wide ranging conditions, and
minimizes losses associated with torque converter slip through lock-up
or modulation.
     Six-, seven-, and eight-speed automatic transmissions--the
gear ratio spacing and transmission ratio are optimized to enable the
engine to operate in a more efficient operating range over a broader
range of vehicle operating conditions.
     Dual clutch or automated shift manual transmissions--are
similar to manual transmissions, but the vehicle controls shifting and
launch functions. A dual-clutch automated shift manual transmission
uses separate clutches for even-numbered and odd-numbered gears, so the
next expected gear is pre-selected, which allows for faster and
smoother shifting.
     Continuously variable transmission--commonly uses V-shaped
pulleys connected by a metal belt rather than gears to provide ratios
for operation. Unlike manual and automatic transmissions with fixed
transmission ratios, continuously variable transmissions can provide
fully variable and an infinite number of transmission ratios that
enable the engine to operate in a more efficient operating range over a
broader range of vehicle operating conditions.
     Manual 6-speed transmission--offers an additional gear
ratio, often with a higher overdrive gear ratio, than a 5-speed manual
transmission.
    Types of vehicle technologies considered include:
     Low-rolling-resistance tires--have characteristics that
reduce frictional losses associated with the energy dissipated in the
deformation of the tires under load, thereby improving fuel economy and
reducing CO2 emissions.
     Low-drag brakes--reduce the sliding friction of disc brake
pads on rotors when the brakes are not engaged because the brake pads
are pulled away from the rotors.
     Front or secondary axle disconnect for four-wheel drive
systems--provides a torque distribution disconnect between front and
rear axles when torque is not required for the non-driving axle. This
results in the reduction of associated parasitic energy losses.
     Aerodynamic drag reduction--is achieved by changing
vehicle shape or reducing frontal area, including skirts, air dams,
underbody covers, and more aerodynamic side view mirrors.
     Mass reduction and material substitution--Mass reduction
encompasses a variety of techniques ranging from improved design and
better component integration to application of lighter and higher-
strength materials. Mass reduction is further compounded by reductions
in engine power and ancillary systems (transmission, steering, brakes,
suspension, etc.). The agencies recognize there is a range of diversity
and complexity for mass reduction and material substitution
technologies and there are many techniques that automotive suppliers
and manufacturers are using to achieve the levels of this technology
that the agencies have modeled in our analysis for the final standards.
    Types of electrification/accessory and hybrid technologies
considered include:
     Electric power steering (EPS)--is an electrically-assisted
steering system that has advantages over traditional hydraulic power
steering because it replaces a continuously operated hydraulic pump,
thereby reducing parasitic losses from the accessory drive.
     Improved accessories (IACC)--may include high efficiency
alternators, electrically driven (i.e., on-demand) water pumps and
cooling fans. This excludes other electrical accessories such as
electric oil pumps and electrically driven air conditioner compressors.
The latter is covered explicitly within the A/C credit program.
     Air Conditioner Systems--These technologies include
improved hoses, connectors and seals for leakage control. They also
include improved compressors, expansion valves, heat exchangers and the
control of these components for the purposes of improving tailpipe
CO2 emissions as a result of A/C use. These technologies are
discussed later in this preamble and covered separately in the EPA RIA.
     12-volt micro-hybrid (MHEV)--also known as idle-stop or
start-stop and commonly implemented as a 12-volt belt-driven integrated
starter-generator, this is the most basic hybrid system that
facilitates idle-stop capability. Along with other enablers, this
system replaces a common alternator with a belt-driven enhanced power
starter-alternator, and a revised accessory drive system.
     Higher Voltage Stop-Start/Belt Integrated Starter
Generator (BISG)--provides idle-stop capability and uses a higher
voltage battery with increased energy capacity over typical automotive
batteries. The higher system voltage allows the use of a smaller, more
powerful electric motor. This system replaces a standard alternator
with an enhanced power, higher voltage, higher efficiency starter-
alternator, that is belt driven and that can recover braking energy
while the vehicle slows down (regenerative braking).
     Integrated Motor Assist (IMA)/Crank integrated starter
generator (CISG)--provides idle-stop capability and uses a high voltage
battery with increased energy capacity over typical automotive
batteries. The higher system voltage allows the use of a smaller, more

powerful electric motor and reduces the weight of the wiring harness.
This system replaces a standard alternator with an enhanced power,
higher voltage, higher efficiency starter-alternator that is crankshaft
mounted and can recover braking energy while the vehicle slows down
(regenerative braking).
     2-mode hybrid (2MHEV)--is a hybrid electric drive system
that uses an adaptation of a conventional stepped-ratio automatic
transmission by replacing some of the transmission clutches with two
electric motors that control the ratio of engine speed to vehicle
speed, while clutches allow the motors to be bypassed. This improves
both the transmission torque capacity for heavy-duty applications and
reduces fuel consumption and CO2 emissions at highway speeds
relative to other types of hybrid electric drive systems.
     Power-split hybrid (PSHEV)--a hybrid electric drive system
that replaces the traditional transmission with a single planetary
gearset and a motor/generator. This motor/generator uses the engine to
either charge the battery or supply additional power to the drive
motor. A second, more powerful motor/generator is permanently connected
to the vehicle's final drive and always turns with the wheels. The
planetary gear splits engine power between the first motor/generator
and the drive motor to either charge the battery or supply power to the
wheels.
     Plug-in hybrid electric vehicles (PHEV)--are hybrid
electric vehicles with the means to charge their battery packs from an
outside source of electricity (usually the electric grid). These
vehicles have larger battery packs with more energy storage and a
greater capability to be discharged than other hybrids. They also use a
control system that allows the battery pack to be substantially
depleted under electric-only or blended mechanical/electric operation.
     Electric vehicles (EV)--are vehicles with all-electric
drive and with vehicle systems powered by energy-optimized batteries
charged primarily from grid electricity.
    The cost estimates for the various hybrid systems have been revised
from the estimates used in the MY 2011 CAFE final rule, in particular
with respect to estimated battery costs.
2. How did the agencies determine the costs and effectiveness of each
of these technologies?
    As mentioned above, EPA and NHTSA believe that the best way to
derive technology cost estimates is to conduct real-world tear down
studies. To date, the costs of the following five technologies have
been evaluated with respect to their baseline (or replaced)
technologies. For these technologies noted below, the agencies relied
on the tear down data available and scaling methodologies used in EPA's
ongoing study with FEV. Only the cost estimate for the first technology
on the list below was used in the NPRM. The others were completed
subsequent to the publication of the NPRM.
    1. Stoichiometric gasoline direct injection and turbo charging with
engine downsizing (T-DS) for a large DOHC 4 cylinder engine to a small
DOHC (dual overhead cam) 4 cylinder engine.
    2. Stoichiometric gasoline direct injection and turbo charging with
engine downsizing for a SOHC single overhead cam) 3 valve/cylinder V8
engine to a SOHC V6 engine.
    3. Stoichiometric gasoline direct injection and turbo charging with
engine downsizing for a DOHC V6 engine to a DOHC 4 cylinder engine.
    4. 6-speed automatic transmission replacing a 5-speed automatic
transmission.
    5. 6-speed wet dual clutch transmission (DCT) replacing a 6-speed
automatic transmission.
    This costing methodology has been published and gone through a peer
review.\82\ Using this tear down costing methodology, FEV has developed
costs for each of the above technologies. In addition, FEV and EPA
extrapolated the engine downsizing costs for the following scenarios
that were outside of the noted study cases:\83\
---------------------------------------------------------------------------

    \82\ EPA-420-R-09-020; EPA docket number EPA-HQ-OAR-2009-0472-
11282 and 11285.
    \83\ ``Binning of FEV Costs to GDI, Turbo-charging, and Engine
Downsizing,'' memorandum to Docket EPA-HQ-OAR-2009-0472, from
Michael Olechiw, U.S. EPA, dated March 25, 2010.
---------------------------------------------------------------------------

    1. Downsizing a SOHC 2 valve/cylinder V8 engine to a DOHC V6.
    2. Downsizing a DOHC V8 to a DOHC V6.
    3. Downsizing a SOHC V6 engine to a DOHC 4 cylinder engine.
    4. Downsizing a DOHC 4 cylinder engine to a DOHC 3 cylinder engine.
    The agencies relied on the findings of FEV in part for estimating
the cost of these technologies in this rulemaking. However, for some of
the technologies, NHTSA and EPA modified FEV's estimated costs. FEV
made the assumption that these technologies would be mature when
produced in large volumes (450,000 units or more). The agencies believe
that there is some uncertainty regarding each manufacturer's near-term
ability to employ the technology at the volumes assumed in the FEV
analysis. There is also the potential for near term (earlier than 2016)
supplier-level Engineering, Design and Testing (ED&T) costs to be in
excess of those considered in the FEV analysis as existing equipment
and facilities are converted to production of new technologies. The
agencies have therefore decided to average the FEV results with the
NPRM values in an effort to account for these near-term factors. This
methodology was done for the following technologies:
    1. Converting a port-fuel injected (PFI) DOHC I4 to a turbocharged-
downsized-stoichiometric GDI DOHC I3.
    2. Converting a PFI DOHC V6 engine to a T-DS-stoichiometric GDI
DOHC I4.
    3. Converting a PFI SOHC V6 engine to a T-DS-stoichiometric GDI
DOHC I4.
    4. Converting a PFI DOHC V8 engine to a T-DS-stoichiometric GDI
DOHC V6.
    5. Converting a PFI SOHC 3V V8 engine to a T-DS-stoichiometric GDI
DOHC V6.
    6. Converting a PFI SOHC 2V V8 engine to a T-DS-stoichiometric GDI
DOHC V6.
    7. Replacing a 4-speed automatic transmission with a 6-speed
automatic transmission.
    8. Replacing a 5-speed automatic transmission with a 6-speed
automatic transmission.
    9. Replacing a 6-speed automatic transmission with a 6-speed wet
dual clutch transmission.
    For the I4 to Turbo GDI I4 study applied in the NPRM, the agencies
requested from FEV an adjusted cost estimate which accounted for these
uncertainties as an adjustment to the base technology burden rate.\84\
These new costs are used in the final rules. These details are also
further described in the memo to the docket.\85\ The confidential
information provided by manufacturers as part of their product plan
submissions to the agencies or discussed in meetings between the
agencies and the manufacturers and

suppliers served largely as a check on publicly-available data.
---------------------------------------------------------------------------

    \84\ Burden costs include the following fixed and variable
costs: Rented and leased equipment; manufacturing equipment
depreciation; plant office equipment depreciation; utilities
expense; insurance (fire and general); municipal taxes; plant floor
space (equipment and plant offices); maintenance of manufacturing
equipment--non-labor; maintenance of manufacturing building--
general, internal and external, parts, and labor; operating
supplies; perishable and supplier-owned tooling; all other plant
wages (excluding direct, indirect and MRO labor); returnable dunnage
maintenance; and intra-company shipping costs (see EPA-HQ-OAR-2009-
0472-0149).
    \85\ ``Binning of FEV Costs to GDI, Turbo-charging, and Engine
Downsizing,'' memorandum to Docket EPA-HQ-OAR-2009-0472, from
Michael Olechiw, U.S. EPA, dated March 25, 2010.
---------------------------------------------------------------------------

    For the other technologies, considering all sources of information
(including public comments) and using the BOM approach, the agencies
worked together intensively to determine component costs for each of
the technologies and build up the costs accordingly. Where estimates
differ between sources, we have used our engineering judgment to arrive
at what we believe to be the best available cost estimate, and
explained the basis for that exercise of judgment in the TSD. Building
on NHTSA's estimates developed for the MY 2011 CAFE final rule and
EPA's Advance Notice of Proposed Rulemaking, which relied on the EPA
2008 Staff Technical Report,\86\ the agencies took a fresh look at
technology cost and effectiveness values for purposes of the joint
rulemaking under the National Program. For costs, the agencies
reconsidered both the direct or ``piece'' costs and indirect costs of
individual components of technologies. For the direct costs, the
agencies followed a bill of materials (BOM) approach employed in
NHTSA's MY 2011 final rule based on recommendation from Ricardo, Inc.,
as described above. EPA used a similar approach in the EPA 2008 Staff
Technical Report. A bill of materials, in a general sense, is a list of
components or sub-systems that make up a system--in this case, an item
of fuel economy-improving technology. In order to determine what a
system costs, one of the first steps is to determine its components and
what they cost.
---------------------------------------------------------------------------

    \86\ EPA Staff Technical Report: Cost and Effectiveness
Estimates of Technologies Used to Reduce Light-Duty Vehicle Carbon
Dioxide Emissions. EPA420-R-08-008, March 2008.
---------------------------------------------------------------------------

    NHTSA and EPA estimated these components and their costs based on a
number of sources for cost-related information. The objective was to
use those sources of information considered to be most credible for
projecting the costs of individual vehicle technologies. For example,
while NHTSA and Ricardo engineers had relied considerably in the MY
2011 final rule on the 2008 Martec Report for costing contents of some
technologies, upon further joint review and for purposes of the MY
2012-2016 standards, the agencies decided that some of the costing
information in that report was no longer accurate due to downward
trends in commodity prices since the publication of that report. The
agencies reviewed, then revalidated or updated cost estimates for
individual components based on new information. Thus, while NHTSA and
EPA found that much of the cost information used in NHTSA's MY 2011
final rule and EPA's staff report was consistent to a great extent, the
agencies, in reconsidering information from many
sources,87 88 89 90 91 92 93 revised several component costs
of several major technologies: turbocharging with engine downsizing (as
described above), mild and strong hybrids, diesels, stoichiometric
gasoline direct injection fuel systems, and valve train lift
technologies. These are discussed at length in the Joint TSD and in
NHTSA's final RIA.
---------------------------------------------------------------------------

    \87\ National Research Council, ``Effectiveness and Impact of
Corporate Average Fuel Economy (CAFE) Standards,'' National Academy
Press, Washington, DC (2002) (the ``2002 NAS Report''), available at
http://www.nap.edu/openbook.php?isbn=0309076013 (last accessed
August 7, 2009--update).
    \88\ Northeast States Center for a Clean Air Future (NESCCAF),
``Reducing Greenhouse Gas Emissions from Light-Duty Motor
Vehicles,'' 2004 (the ``2004 NESCCAF Report''), available at http://
www.nesccaf.org/documents/rpt040923ghglightduty.pdf (last accessed
August 7, 2009--update).
    \89\ ``Staff Report: Initial Statement of Reasons for Proposed
Rulemaking, Public Hearing to Consider Adoption of Regulations to
Control Greenhouse Gas Emissions from Motor Vehicles,'' California
Environmental Protection Agency, Air Resources Board, August 6,
2004.
    \90\ Energy and Environmental Analysis, Inc., ``Technology to
Improve the Fuel Economy of Light Duty Trucks to 2015,'' 2006 (the
``2006 EEA Report''), Docket EPA-HQ-OAR-2009-0472.
    \91\ Martec, ``Variable Costs of Fuel Economy Technologies,''
June 1, 2008, (the ``2008 Martec Report'') available at Docket No.
NHTSA-2008-0089-0169.1.
    \92\ Vehicle fuel economy certification data.
    \93\ Confidential data submitted by manufacturers in response to
the March 2009 and other requests for product plans.
---------------------------------------------------------------------------

    Once costs were determined, they were adjusted to ensure that they
were all expressed in 2007 dollars using a ratio of GDP values for the
associated calendar years,\94\ and indirect costs were accounted for
using the ICM (indirect cost multiplier) approach explained in Chapter
3 of the Joint TSD, rather than using the traditional Retail Price
Equivalent (RPE) multiplier approach. A report explaining how EPA
developed the ICM approach can be found in the docket for this rule.
The comments addressing the ICM approach were generally positive and
encouraging. However, one commenter suggested that we had
mischaracterized the complexity of a few of our technologies, which
would result in higher or lower markups than presented in the NPRM.
That commenter also suggested that we had used the ICMs as a means of
placing a higher level of manufacturer learning on the cost estimates.
The latter comment is not true and the methodology behind the ICM
approach is explained in detail in the reports that are available in
the docket for this rule.\95\ The former is open to debate given the
subjective nature of the engineering analysis behind it, but upon
further thought both agencies believe that the complexities used in the
NPRM were appropriate and have, therefore, carried those forward into
the final rule. We discuss this in greater detail in the Response to
Comments document.
---------------------------------------------------------------------------

    \94\ NHTSA examined the use of the CPI multiplier instead of GDP
for adjusting these dollar values, but found the difference to be
exceedingly small--only $0.14 over $100.
    \95\ Rogozhin, Alex, Michael Gallaher, and Walter McManus,
``Automobile Industry Retail Price Equivalent and Indirect Cost
Multipliers,'' EPA 420-R-09-003, Docket EPA Docket EPA-HQ-OAR-2009-
0472-0142, February 2009, http://epa.gov/otaq/ld-hwy/420r09003.pdf;
A. Rogozhin et al., International Journal of Production Economics
124 (2010) 360-368, Volume 124, Issue 2, April 2010.
---------------------------------------------------------------------------

    Regarding estimates for technology effectiveness, NHTSA and EPA
also reexamined the estimates from NHTSA's MY 2011 final rule and EPA's
ANPRM and 2008 Staff Technical Report, which were largely consistent
with NHTSA's 2008 NPRM estimates. The agencies also reconsidered other
sources such as the 2002 NAS Report, the 2004 NESCCAF report, recent
CAFE compliance data (by comparing similar vehicles with different
technologies against each other in fuel economy testing, such as a
Honda Civic Hybrid versus a directly comparable Honda Civic
conventional drive), and confidential manufacturer estimates of
technology effectiveness. NHTSA and EPA engineers reviewed
effectiveness information from the multiple sources for each technology
and ensured that such effectiveness estimates were based on technology
hardware consistent with the BOM components used to estimate costs. The
agencies also carefully examined the pertinent public comments.
Together, they compared the multiple estimates and assessed their
validity, taking care to ensure that common BOM definitions and other
vehicle attributes such as performance, refinement, and drivability
were taken into account. However, because the agencies' respective
models employ different numbers of vehicle subclasses and use different
modeling techniques to arrive at the standards, direct comparison of
BOMs was somewhat more complicated. To address this and to confirm that
the outputs from the different modeling techniques produced the same
result, NHTSA and EPA developed mapping techniques, devising technology
packages and mapping them to corresponding incremental technology
estimates. This approach helped compare the outputs

from the incremental modeling technique to those produced by the
technology packaging approach to ensure results that are consistent and
could be translated into the respective models of the agencies.
    In general, most effectiveness estimates used in both the MY 2011
final rule and the 2008 EPA staff report were determined to be accurate
and were carried forward without significant change first into the
NPRM, and now into these final rules. When NHTSA and EPA's estimates
for effectiveness diverged slightly due to differences in how the
agencies apply technologies to vehicles in their respective models, we
report the ranges for the effectiveness values used in each model.
There were only a few comments on the technology effectiveness
estimates used in the NPRM. Most of the technologies that were
mentioned in the comments were the more advanced technologies that are
not assumed to have large penetrations in the market within the
timeframe of this rule, notably hybrid technologies. Even if the
effectiveness figures for hybrid vehicles were adjusted, it would have
made little difference in the NHTSA and EPA analysis of the impacts and
costs of the rule. The response to comments document has more specific
responses to these comments.
    The agencies note that the effectiveness values estimated for the
technologies considered in the modeling analyses may represent average
values, and do not reflect the enormous spectrum of possible values
that could result from adding the technology to different vehicles. For
example, while the agencies have estimated an effectiveness of 0.5
percent for low friction lubricants, each vehicle could have a unique
effectiveness estimate depending on the baseline vehicle's oil
viscosity rating. Similarly, the reduction in rolling resistance (and
thus the improvement in fuel economy and the reduction in
CO2 emissions) due to the application of low rolling
resistance tires depends not only on the unique characteristics of the
tires originally on the vehicle, but on the unique characteristics of
the tires being applied, characteristics which must be balanced between
fuel efficiency, safety, and performance. Aerodynamic drag reduction is
much the same--it can improve fuel economy and reduce CO2
emissions, but it is also highly dependent on vehicle-specific
functional objectives. For purposes of the final standards, NHTSA and
EPA believe that employing average values for technology effectiveness
estimates, as adjusted depending on vehicle subclass, is an appropriate
way of recognizing the potential variation in the specific benefits
that individual manufacturers (and individual vehicles) might obtain
from adding a fuel-saving technology.
    Chapter 3 of the Joint Technical Support Document contains a
detailed description of our assessment of vehicle technology cost and
effectiveness estimates. The agencies note that the technology costs
included in this final rule take into account only those associated
with the initial build of the vehicle. Although comments were received
to the NPRM that suggested there could be additional maintenance
required with some new technologies (e.g., turbocharging, hybrids,
etc.), and that additional maintenance costs could occur as a result,
the agencies do not believe that the amount of additional cost will be
significant in the timeframe of this rulemaking, based on the
relatively low application rates for these technologies. The agencies
will undertake a more detailed review of these potential costs in
preparation for the next round of CAFE/GHG standards.

F. Joint Economic Assumptions

    The agencies' final analysis of alternative CAFE and GHG standards
for the model years covered by this final rulemaking rely on a range of
forecast information, economic estimates, and input parameters. This
section briefly describes the agencies' choices of specific parameter
values. These economic values play a significant role in determining
the benefits of both CAFE and GHG standards.
    In reviewing these variables and the agency's estimates of their
values for purposes of this final rule, NHTSA and EPA reconsidered
previous comments that NHTSA had received, reviewed newly available
literature, and reviewed comments received in response to the proposed
rule. For this final rule, we made three major changes to the economic
assumptions. First, we revised the technology costs to reflect more
recently available data. Second, we updated fuel price and
transportation demand assumptions to reflect the Annual Energy Outlook
(AEO) 2010 Early Release. Third, we have updated our estimates of the
social cost of carbon (SCC) based on a recent interagency process. The
key economic assumptions are summarized below, and are discussed in
greater detail in Section III (EPA) and Section IV (NHTSA), as well as
in Chapter 4 of the Joint TSD, Chapter VIII of NHTSA's RIA and Chapter
8 of EPA's RIA.
     Costs of fuel economy-improving technologies--These
estimates are presented in summary form above and in more detail in the
agencies' respective sections of this preamble, in Chapter 3 of the
Joint TSD, and in the agencies' respective RIAs. The technology cost
estimates used in this analysis are intended to represent
manufacturers' direct costs for high-volume production of vehicles with
these technologies and sufficient experience with their application so
that all cost reductions due to ``learning curve'' effects have been
fully realized. Costs are then modified by applying near-term indirect
cost multipliers ranging from 1.11 to 1.64 to the estimates of vehicle
manufacturers' direct costs for producing or acquiring each technology
to improve fuel economy, depending on the complexity of the technology
and the time frame over which costs are estimated. This accounts for
both the direct and indirect costs associated with implementing new
technologies in response to this final rule. The technology cost
estimates for a select group of technologies have changed since the
NPRM. These changes, as summarized in Section II.E and in Chapter 3 of
the Joint TSD, were made in response to updated cost estimates
available to the agencies shortly after publication of the NPRM, not in
response to comments. In general, commenters were supportive of the
cost estimates used in the NPRM and the transparency of the methodology
used to generate them.
     Potential opportunity costs of improved fuel economy--This
estimate addresses the possibility that achieving the fuel economy
improvements required by alternative CAFE or GHG standards would
require manufacturers to compromise the performance, carrying capacity,
safety, or comfort of their vehicle models. If it did so, the resulting
sacrifice in the value of these attributes to consumers would represent
an additional cost of achieving the required improvements, and thus of
manufacturers' compliance with stricter standards. Currently the
agencies assume that these vehicle attributes do not change, and
include the cost of maintaining these attributes as part of the cost
estimates for technologies. However, it is possible that the technology
cost estimates do not include adequate allowance for the necessary
efforts by manufacturers to maintain vehicle performance, carrying
capacity, and utility while improving fuel economy and reducing GHG
emissions. While, in principle, consumer vehicle demand models can
measure these effects, these models do not appear to be robust across
specifications, since authors derive a

wide range of willingness-to-pay values for fuel economy from these
models, and there is not clear guidance from the literature on whether
one specification is clearly preferred over another. This issue is
discussed in EPA's RIA, Section 8.1.2 and NHTSA's RIA Section VIII.H.
The agencies requested comment on how to estimate explicitly the
changes in vehicle buyers' welfare from the combination of higher
prices for new vehicle models, increases in their fuel economy, and any
accompanying changes in vehicle attributes such as performance,
passenger- and cargo-carrying capacity, or other dimensions of utility.
Commenters did not provide recommendations for how to evaluate the
quality of different models or identify a model appropriate for the
agencies' purposes. Some commenters expressed various concerns about
the use of existing consumer vehicle choice models. While EPA and NHTSA
are not using a consumer vehicle choice model to analyze the effects of
this rule, we continue to investigate these models.
     The on-road fuel economy ``gap''--Actual fuel economy
levels achieved by light-duty vehicles in on-road driving fall somewhat
short of their levels measured under the laboratory-like test
conditions used by NHTSA and EPA to establish compliance with the final
CAFE and GHG standards. The agencies use an on-road fuel economy gap
for light-duty vehicles of 20 percent lower than published fuel economy
levels. For example, if the measured CAFE fuel economy value of a light
truck is 20 mpg, the on-road fuel economy actually achieved by a
typical driver of that vehicle is expected to be 16 mpg (20*.80).\96\
NHTSA previously used this estimate in its MY 2011 final rule, and the
agencies confirmed it based on independent analysis for use in this
FRM. No substantive comments were received on this input.
---------------------------------------------------------------------------

    \96\ U.S. Environmental Protection Agency, Final Technical
Support Document, Fuel Economy Labeling of Motor Vehicle Revisions
to Improve Calculation of Fuel Economy Estimates, EPA420-R-06-017,
December 2006.
---------------------------------------------------------------------------

     Fuel prices and the value of saving fuel--Projected future
fuel prices are a critical input into the preliminary economic analysis
of alternative standards, because they determine the value of fuel
savings both to new vehicle buyers and to society. For the proposed
rule, the agencies had relied on the then most recent fuel price
projections from the U.S. Energy Information Administration's (EIA)
Annual Energy Outlook (AEO) 2009 (Revised Updated). However, for this
final rule, the agencies have updated the analyses based on AEO 2010
(December 2009 Early Release) Reference Case forecasts of inflation-
adjusted (constant-dollar) retail gasoline and diesel fuel prices,
which represent the EIA's most up-to-date estimate of the most likely
course of future prices for petroleum products.\97\ AEO 2010 includes
slightly lower petroleum prices compared to AEO 2009.
---------------------------------------------------------------------------

    \97\ Energy Information Administration, Annual Energy Outlook
2010, Early Release Reference Case (December 2009), Table 12.
Available at http://www.eia.doe.gov/oiaf/aeo/aeoref_tab.html (last
accessed February 02, 2010).
---------------------------------------------------------------------------

    The forecasts of fuel prices reported in EIA's AEO 2010 Early
Release Reference Case extends through 2035, compared to the AEO 2009
which only went through 2030. As in the proposal, fuel prices beyond
the time frame of AEO's forecast were estimated using an average growth
rate.
    While EIA revised AEO 2010, the vehicle MPG standards are similar
to those that were published in AEO 2009. No substantive comments were
received on the use of AEO as a source of fuel prices.\98\
---------------------------------------------------------------------------

    \98\ Kahan, A. and Pickrell, D. Memo to Docket EPA-HQ-OAR-2009-
0472 and Docket NHTSA-2009-0059. ``Energy Information
Administration's Annual Energy Outlook 2009 and 2010.'' March 24,
2010.
---------------------------------------------------------------------------

     Consumer valuation of fuel economy and payback period--In
estimating the impacts on vehicle sales, the agencies assume that
potential buyers value the resulting fuel savings improvements that
would result from alternative CAFE and GHG standards over only part of
the expected lifetime of the vehicles they purchase. Specifically, we
assume that buyers value fuel savings over the first five years of a
new vehicle's lifetime, and that buyers discount the value of these
future fuel savings using rates of 3% and 7%. The five-year figure
represents the current average term of consumer loans to finance the
purchase of new vehicles. One commenter argued that higher-fuel-economy
vehicles should have higher resale prices than vehicles with lower fuel
economy, but did not provide supporting data. This revision, if made,
would increase the net benefits of the rule. Another commenter
supported the use of a five-year payback period for this analysis. In
the absence of data to support changes, EPA and NHTSA have kept the
same assumptions. In the analysis of net benefits, EPA and NHTSA assume
that vehicle buyers benefit from the full fuel savings over the
vehicle's lifetime, discounted for present value calculations at 3 and
7 percent.
     Vehicle sales assumptions--The first step in estimating
lifetime fuel consumption by vehicles produced during a model year is
to calculate the number of vehicles expected to be produced and
sold.\99\ The agencies relied on the AEO 2010 Early Release for
forecasts of total vehicle sales, while the baseline market forecast
developed by the agencies (see Section II.B) divided total projected
sales into sales of cars and light trucks.
---------------------------------------------------------------------------

    \99\ Vehicles are defined to be of age 1 during the calendar
year corresponding to the model year in which they are produced;
thus for example, model year 2000 vehicles are considered to be of
age 1 during calendar year 2000, age 2 during calendar year 2001,
and to reach their maximum age of 26 years during calendar year
2025. NHTSA considers the maximum lifetime of vehicles to be the age
after which less than 2 percent of the vehicles originally produced
during a model year remain in service. Applying these conventions to
vehicle registration data indicates that passenger cars have a
maximum age of 26 years, while light trucks have a maximum lifetime
of 36 years. See Lu, S., NHTSA, Regulatory Analysis and Evaluation
Division, ``Vehicle Survivability and Travel Mileage Schedules,''
DOT HS 809 952, 8-11 (January 2006). Available at http://www-
nrd.nhtsa.dot.gov/Pubs/809952.pdf (last accessed Feb. 15, 2010).
---------------------------------------------------------------------------

     Vehicle survival assumptions--We then applied updated
values of age-specific survival rates for cars and light trucks to
these adjusted forecasts of passenger car and light truck sales to
determine the number of these vehicles remaining in use during each
year of their expected lifetimes. No substantive comments were received
on vehicle survival assumptions.
     Total vehicle use--We then calculated the total number of
miles that cars and light trucks produced in each model year will be
driven during each year of their lifetimes using estimates of annual
vehicle use by age tabulated from the Federal Highway Administration's
2001 National Household Transportation Survey (NHTS),\100\ adjusted to
account for the effect on vehicle use of subsequent increases in fuel
prices. Due to the lower fuel prices projected in AEO 2010, the average
vehicle is estimated to be used slightly more (~3 percent) over its
lifetime than assumed in the proposal. In order to insure that the
resulting mileage schedules imply reasonable estimates of future growth
in total car and light truck use, we calculated the rate of growth in
annual car and light truck mileage at each age that is necessary for
total car and light truck travel to increase at the rates forecast in
the AEO 2010 Early Release Reference Case. The growth rate in average
annual car and light truck use produced by this calculation is

approximately 1.1 percent per year.\101\ This rate was applied to the
mileage figures derived from the 2001 NHTS to estimate annual mileage
during each year of the expected lifetimes of MY 2012-2016 cars and
light trucks.\102\ While commenters requested further detail on the
assumptions regarding total vehicle use, no specific issues were
raised.
---------------------------------------------------------------------------

    \100\ For a description of the Survey, see http://nhts.ornl.gov/
quickStart.shtml (last accessed July 27, 2009).
    \101\ It was not possible to estimate separate growth rates in
average annual use for cars and light trucks, because of the
significant reclassification of light truck models as passenger cars
discussed previously.
    \102\ While the adjustment for future fuel prices reduces
average mileage at each age from the values derived from the 2001
NHTS, the adjustment for expected future growth in average vehicle
use increases it. The net effect of these two adjustments is to
increase expected lifetime mileage by about 18 percent for passenger
cars and about 16 percent for light trucks.
---------------------------------------------------------------------------

     Accounting for the rebound effect of higher fuel economy--
The rebound effect refers to the fraction of fuel savings expected to
result from an increase in vehicle fuel economy--particularly an
increase required by the adoption of more stringent CAFE and GHG
standards--that is offset by additional vehicle use. The increase in
vehicle use occurs because higher fuel economy reduces the fuel cost of
driving, typically the largest single component of the monetary cost of
operating a vehicle, and vehicle owners respond to this reduction in
operating costs by driving slightly more. We received comments
supporting our proposed value of 10 percent, although we also received
comments recommending higher and lower values. However, we did not
receive any new data or comments that justify revising the 10 percent
value for the rebound effect at this time.
     Benefits from increased vehicle use--The increase in
vehicle use from the rebound effect provides additional benefits to
their owners, who may make more frequent trips or travel farther to
reach more desirable destinations. This additional travel provides
benefits to drivers and their passengers by improving their access to
social and economic opportunities away from home. These benefits are
measured by the net ``consumer surplus'' resulting from increased
vehicle use, over and above the fuel expenses associated with this
additional travel. We estimate the economic value of the consumer
surplus provided by added driving using the conventional approximation,
which is one half of the product of the decline in vehicle operating
costs per vehicle-mile and the resulting increase in the annual number
of miles driven. Because it depends on the extent of improvement in
fuel economy, the value of benefits from increased vehicle use changes
by model year and varies among alternative standards.
     The value of increased driving range--By reducing the
frequency with which drivers typically refuel their vehicles, and by
extending the upper limit of the range they can travel before requiring
refueling, improving fuel economy and reducing GHG emissions thus
provides some additional benefits to their owners. No direct estimates
of the value of extended vehicle range are readily available, so the
agencies' analysis calculates the reduction in the annual number of
required refueling cycles that results from improved fuel economy, and
applies DOT-recommended values of travel time savings to convert the
resulting time savings to their economic value.\103\ Please see the
Chapter 4 of the Joint TSD for details.
---------------------------------------------------------------------------

    \103\ Department of Transportation, Guidance Memorandum, ``The
Value of Saving Travel Time: Departmental Guidance for Conducting
Economic Evaluations,'' Apr. 9, 1997. http://ostpxweb.dot.gov/
policy/Data/VOT97guid.pdf (last accessed Feb. 15, 2010); update
available at http://ostpxweb.dot.gov/policy/Data/VOTrevision1_2-11-
03.pdf (last accessed Feb. 15, 2010).
---------------------------------------------------------------------------

     Added costs from congestion, crashes and noise--Although
it provides some benefits to drivers, increased vehicle use associated
with the rebound effect also contributes to increased traffic
congestion, motor vehicle accidents, and highway noise. Depending on
how the additional travel is distributed over the day and on where it
takes place, additional vehicle use can contribute to traffic
congestion and delays by increasing traffic volumes on facilities that
are already heavily traveled during peak periods. These added delays
impose higher costs on drivers and other vehicle occupants in the form
of increased travel time and operating expenses, increased costs
associated with traffic accidents, and increased traffic noise. The
agencies rely on estimates of congestion, accident, and noise costs
caused by automobiles and light trucks developed by the Federal Highway
Administration to estimate the increased external costs caused by added
driving due to the rebound effect.\104\
---------------------------------------------------------------------------

    \104\ These estimates were developed by FHWA for use in its 1997
Federal Highway Cost Allocation Study; http://www.fhwa.dot.gov/
policy/hcas/final/index.htm (last accessed Feb. 15, 2010).
---------------------------------------------------------------------------

     Petroleum consumption and import externalities--U.S.
consumption and imports of petroleum products also impose costs on the
domestic economy that are not reflected in the market price for crude
petroleum, or in the prices paid by consumers of petroleum products
such as gasoline. In economics literature on this subject, these costs
include (1) higher prices for petroleum products resulting from the
effect of U.S. oil import demand on the world oil price (``monopsony
costs''); (2) the expected costs from the risk of disruptions to the
U.S. economy caused by sudden reductions in the supply of imported oil
to the U.S.; and (3) expenses for maintaining a U.S. military presence
to secure imported oil supplies from unstable regions, and for
maintaining the strategic petroleum reserve (SPR) to cushion against
resulting price increases.\105\ Reducing U.S. imports of crude
petroleum or refined fuels can reduce the magnitude of these external
costs. Any reduction in their total value that results from lower fuel
consumption and petroleum imports represents an economic benefit of
setting more stringent standards over and above the dollar value of
fuel savings itself. Since the agencies are taking a global perspective
with respect to the estimate of the social cost of carbon for this
rulemaking, the agencies do not include the value of any reduction in
monopsony payments as a benefit from lower fuel consumption, because
those payments from a global perspective represent a transfer of income
from consumers of petroleum products to oil suppliers rather than a
savings in real economic resources. Similarly, the agencies do not
include any savings in budgetary outlays to support U.S. military
activities among the benefits of higher fuel economy and the resulting
fuel savings. Based on a recently-updated ORNL study, we estimate that
each gallon of fuel saved that results in a reduction in U.S. petroleum
imports (either crude petroleum or refined fuel) will reduce the
expected costs of oil supply disruptions to the U.S. economy by $0.169
(2007$). Each gallon of fuel saved as a consequence of higher standards
is anticipated to reduce total U.S. imports of crude petroleum or
refined fuel by 0.95 gallons.\106\
---------------------------------------------------------------------------

    \105\ See, e.g., Bohi, Douglas R. and W. David Montgomery
(1982). Oil Prices, Energy Security, and Import Policy Washington,
DC: Resources for the Future, Johns Hopkins University Press; Bohi,
D. R., and M. A. Toman (1993). ``Energy and Security: Externalities
and Policies,'' Energy Policy 21:1093-1109; and Toman, M. A. (1993).
``The Economics of Energy Security: Theory, Evidence, Policy,'' in
A. V. Kneese and J. L. Sweeney, eds. (1993). Handbook of Natural
Resource and Energy Economics, Vol. III. Amsterdam: North-Holland,
pp. 1167-1218.
    \106\ Each gallon of fuel saved is assumed to reduce imports of
refined fuel by 0.5 gallons, and the volume of fuel refined
domestically by 0.5 gallons. Domestic fuel refining is assumed to
utilize 90 percent imported crude petroleum and 10 percent
domestically-produced crude petroleum as feedstocks. Together, these
assumptions imply that each gallon of fuel saved will reduce imports
of refined fuel and crude petroleum by 0.50 gallons + 0.50
gallons*90 percent = 0.50 gallons + 0.45 gallons = 0.95 gallons.

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

    The energy security analysis conducted for this rule estimates that
the world price of oil will fall modestly in response to lower U.S.
demand for refined fuel. One potential result of this decline in the
world price of oil would be an increase in the consumption of petroleum
products outside the U.S., which would in turn lead to a modest
increase in emissions of greenhouse gases, criteria air pollutants, and
airborne toxics from their refining and use. While additional
information would be needed to analyze this ``leakage effect'' in
detail, NHTSA provides a sample estimate of its potential magnitude in
its Final EIS.\107\ This analysis indicates that the leakage effect is
likely to offset only a modest fraction of the reductions in emissions
projected to result from the rule.
---------------------------------------------------------------------------

    \107\ NHTSA Final Environmental Impact Statement: Corporate
Average Fuel Economy Standards, Passenger Cars and Light Trucks,
Model Years 2012-2016, February 2010, page 3-14.
---------------------------------------------------------------------------

    EPA and NHTSA received comments about the treatment of the
monopsony effect, macroeconomic disruption effect, and the military
costs associated with the energy security benefits of this rule. The
agencies did not receive any comments that justify changing the energy
security analysis. As a result, the agencies continue to only use the
macroeconomic disruption component of the energy security analysis
under a global context when estimating the total energy security
benefits associated with this rule. Further, the Agencies did not
receive any information that they could use to quantity that component
of military costs directly related to energy security, and thus did not
modify that part of its analysis. A more complete discussion of the
energy security analysis can be found in Chapter 4 of the Joint TSD,
and Sections III and IV of this preamble.
     Air pollutant emissions
    [cir] Impacts on criteria air pollutant emissions--While reductions
in domestic fuel refining and distribution that result from lower fuel
consumption will reduce U.S. emissions of criteria pollutants,
additional vehicle use associated with the rebound effect will increase
emissions of these pollutants. Thus the net effect of stricter
standards on emissions of each criteria pollutant depends on the
relative magnitudes of reduced emissions from fuel refining and
distribution, and increases in emissions resulting from added vehicle
use. Criteria air pollutants emitted by vehicles and during fuel
production include carbon monoxide (CO), hydrocarbon compounds (usually
referred to as ``volatile organic compounds,'' or VOC), nitrogen oxides
(NOX), fine particulate matter (PM2.5), and
sulfur oxides (SOX). It is assumed that the emission rates
(per mile) stay constant for future year vehicles.
    [cir] Economic value of reductions in criteria air pollutants--For
the purpose of the joint technical analysis, EPA and NHTSA estimate the
economic value of the human health benefits associated with reducing
exposure to PM2.5 using a ``benefit-per-ton'' method. These
PM2.5-related benefit-per-ton estimates provide the total
monetized benefits to human health (the sum of reductions in premature
mortality and premature morbidity) that result from eliminating one ton
of directly emitted PM2.5, or one ton of a pollutant that
contributes to secondarily-formed PM2.5 (such as
NOX, SOX, and VOCs), from a specified source.
Chapter 4.2.9 of the Technical Support Document that accompanies this
rule includes a description of these values. Separately, EPA also
conducted air quality modeling to estimate the change in ambient
concentrations of criteria pollutants and used this as a basis for
estimating the human health benefits and their economic value. Section
III.H.7 presents these benefits estimates.
    [cir] Reductions in GHG emissions--Emissions of carbon dioxide and
other GHGs occur throughout the process of producing and distributing
transportation fuels, as well as from fuel combustion itself. By
reducing the volume of fuel consumed by passenger cars and light
trucks, higher standards will thus reduce GHG emissions generated by
fuel use, as well as throughout the fuel supply cycle. The agencies
estimated the increases of GHGs other than CO2, including
methane and nitrous oxide, from additional vehicle use by multiplying
the increase in total miles driven by cars and light trucks of each
model year and age by emission rates per vehicle-mile for these GHGs.
These emission rates, which differ between cars and light trucks as
well as between gasoline and diesel vehicles, were estimated by EPA
using its recently-developed Motor Vehicle Emission Simulator (Draft
MOVES 2010).\108\ Increases in emissions of non-CO2 GHGs are
converted to equivalent increases in CO2 emissions using
estimates of the Global Warming Potential (GWP) of methane and nitrous
oxide.
---------------------------------------------------------------------------

    \108\ The MOVES model assumes that the per-mile rates at which
cars and light trucks emit these GHGs are determined by the
efficiency of fuel combustion during engine operation and chemical
reactions that occur during catalytic after-treatment of engine
exhaust, and are thus independent of vehicles' fuel consumption
rates. Thus MOVES' emission factors for these GHGs, which are
expressed per mile of vehicle travel, are assumed to be unaffected
by changes in fuel economy.
---------------------------------------------------------------------------

    [cir] Economic value of reductions in CO2 emissions --
EPA and NHTSA assigned a dollar value to reductions in CO2
emissions using the marginal dollar value (i.e., cost) of climate-
related damages resulting from carbon emissions, also referred to as
``social cost of carbon'' (SCC). The SCC is intended to measure the
monetary value society places on impacts resulting from increased GHGs,
such as property damage from sea level rise, forced migration due to
dry land loss, and mortality changes associated with vector-borne
diseases. Published estimates of the SCC vary widely as a result of
uncertainties about future economic growth, climate sensitivity to GHG
emissions, procedures used to model the economic impacts of climate
change, and the choice of discount rates.
    EPA and NHTSA received extensive comments about how to improve the
characterization of the SCC and have since developed new estimates
through an interagency modeling exercise. The comments addressed
various issues, such as discount rate selection, treatment of
uncertainty, and emissions and socioeconomic trajectories, and
justified the revision of SCC for the final rule. The modeling exercise
involved running three integrated assessment models using inputs agreed
upon by the interagency group for climate sensitivity, socioeconomic
and emissions trajectories, and discount rates. A more complete
discussion of SCC can be found in the Technical Support Document,
Social Cost of Carbon for Regulatory Impact Analysis Under Executive
Order 12866 (hereafter, ``SCC TSD''); revised SCC estimates
corresponding to assumed values of the discount rate are shown in Table
II.F-1.\109\
---------------------------------------------------------------------------

    \109\ Interagency Working Group on Social Cost of Carbon, U.S.
Government, with participation by Council of Economic Advisers,
Council on Environmental Quality, Department of Agriculture,
Department of Commerce, Department of Energy, Department of
Transportation, Environmental Protection Agency, National Economic
Council, Office of Energy and Climate Change, Office of Management
and Budget, Office of Science and Technology Policy, and Department
of Treasury, ``Social Cost of Carbon for Regulatory Impact Analysis
Under Executive Order 12866,'' February 2010, available in docket
EPA-HQ-OAR-2009-0472.

                                                         Table II.F-1--Social Cost of CO2, 2010
                                                                    [In 2007 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Discount Rate                         5%                3%               2.5%                                3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Source of Estimate............................                Mean of Estimates Values                95th percentile estimate.
--------------------------------------------------------------------------------------------------------------------------------------------------------
2010 Estimate.................................                $5               $21               $35  $65.
--------------------------------------------------------------------------------------------------------------------------------------------------------

     Discounting future benefits and costs--Discounting future
fuel savings and other benefits is intended to account for the
reduction in their value to society when they are deferred until some
future date, rather than received immediately. The discount rate
expresses the percent decline in the value of these benefits--as viewed
from today's perspective--for each year they are deferred into the
future. In evaluating the non-climate related benefits of the final
standards, the agencies have employed discount rates of both 3 percent
and 7 percent. We received some comments on the discount rates used in
the proposal, most of which were directed at the discount rates used to
value future fuel savings and the rates used to value of the social
cost of carbon. In general, commenters were supporting one of the
discount rates over the other, although some suggested that our rates
were too high or too low. We have revised the discounting used when
calculating the net present value of social cost of carbon as explained
in Sections III.H. and VI but have not revised our discounting
procedures for other costs or benefits.
    For the reader's reference, Table II.F-2 below summarizes the
values used to calculate the impacts of each final standard. The values
presented in this table are summaries of the inputs used for the
models; specific values used in the agencies' respective analyses may
be aggregated, expanded, or have other relevant adjustments. See the
respective RIAs for details.
    The agencies recognize that each of these values has some degree of
uncertainty, which the agencies further discuss in the Joint TSD. The
agencies have conducted a range of sensitivities and present them in
their respective RIAs. For example, NHTSA has conducted a sensitivity
analysis on several assumptions including (1) forecasts of future fuel
prices, (2) the discount rate applied to future benefits and costs, (3)
the magnitude of the rebound effect, (4) the value to the U.S. economy
of reducing carbon dioxide emissions, (5) inclusion of the monopsony
effect, and (6) the reduction in external economic costs resulting from
lower U.S. oil imports. This information is provided in NHTSA's RIA.

         Table II.F-2--Economic Values for Benefits Computations
                                 [2007$]
------------------------------------------------------------------------

------------------------------------------------------------------------
Fuel Economy Rebound Effect...............  10%.
``Gap'' between test and on-road MPG......  20%.
Value of refueling time per ($ per vehicle- $24.64.
 hour).
Average tank volume refilled during         55%.
 refueling stop.
Annual growth in average vehicle use......  1.15%.
Fuel Prices (2012-50 average, $/gallon):    ............................
    Retail gasoline price.................  $3.66.
    Pre-tax gasoline price................  $3.29.
------------------------------------------------------------------------
         Economic Benefits From Reducing Oil Imports ($/gallon)
------------------------------------------------------------------------
``Monopsony'' Component...................  $0.00.
Price Shock Component.....................  $0.17.
Military Security Component...............  $0.00.
Total Economic Costs ($/gallon)...........  $0.17.
------------------------------------------------------------------------
           Emission Damage Costs (2020, $/ton or $/metric ton)
------------------------------------------------------------------------
Carbon monoxide...........................  $0.
Volatile organic compounds (VOC)..........  $1,300.
Nitrogen oxides (NOX)--vehicle use........  $5,100.
Nitrogen oxides (NOX)--fuel production and  $ 5,300.
 distribution.
Particulate matter (PM2.5)--vehicle use...  $ 240,000.
Particulate matter (PM2.5)--fuel            $ 290,000.
 production and distribution.
Sulfur dioxide (SO2)......................  $ 31,000.
Carbon dioxide (CO2) emissions in 2010....  $5.
                                            $21.
                                            $35.
                                            $65.
Annual Increase in CO2 Damage Cost........  variable, depending on
                                             estimate.
------------------------------------------------------------------------
     External Costs From Additional Automobile Use ($/vehicle-mile)
------------------------------------------------------------------------
Congestion................................  $ 0.054.
Accidents.................................  $ 0.023.
Noise.....................................  $ 0.001.
                                           -----------------------------

    Total External Costs..................  $ 0.078.
------------------------------------------------------------------------
     External Costs From Additional Light Truck Use ($/vehicle-mile)
------------------------------------------------------------------------
Congestion................................  $0.048.
Accidents.................................  $0.026.
Noise.....................................  $0.001.
Total External Costs......................  $0.075.
Discount Rates Applied to Future Benefits.  3%, 7%.
------------------------------------------------------------------------

G. What are the estimated safety effects of the final MYs 2012-2016
CAFE and GHG standards?

    The primary goals of the final CAFE and GHG standards are to reduce
fuel consumption and GHG emissions, but in addition to these intended
effects, the agencies must consider the potential of the standards to
affect vehicle safety,\110\ which the agencies have assessed in
evaluating the appropriate levels at which to set the final standards.
Safety trade-offs associated with fuel economy increases have occurred
in the past, and the agencies must be mindful of the possibility of
future ones. These past safety trade-offs occurred because
manufacturers chose, at the time, to build smaller and lighter
vehicles--partly in response to CAFE standards--rather than adding more
expensive fuel-saving technologies (and maintaining vehicle size and
safety), and the smaller and lighter vehicles did not fare as well in
crashes as larger and heavier vehicles. Historically, as shown in FARS
data analyzed by NHTSA, the safest vehicles have been heavy and large,
while the vehicles with the highest fatal-crash rates have been light
and small, both because the crash rate is higher for small/light
vehicles and because the fatality rate per crash is higher for small/
light vehicle crashes.
---------------------------------------------------------------------------

    \110\ In this rulemaking document, vehicle safety is defined as
societal fatality rates which include fatalities to occupants of all
the vehicles involved in the collisions, plus any pedestrians.
---------------------------------------------------------------------------

    Changes in relative safety are related to shifts in the
distribution of vehicles on the road. A policy that induces a widening
in the size distribution of vehicles on the road, could result in
negative impacts on safety, The primary mechanism in this rulemaking
for mitigating the potential negative effects on safety is the
application of footprint-based standards, which create a disincentive
for manufacturers to produce smaller-footprint vehicles. This is
because as footprint decreases, the corresponding fuel economy/GHG
emission target becomes more stringent.\111\ The shape of the footprint
curves themselves have also been designed to be approximately
``footprint neutral'' within the sloped portion of the functions--that
is, to neither encourage manufacturers to increase the footprint of
their fleets, nor to decrease it. Upsizing also is discouraged through
a ``cut-off'' at larger footprints. For both cars and light trucks
there is a ``cut-off'' that affects vehicles smaller than 41 square
feet. The agencies recognize that for manufacturers who make small
vehicles in this size range, this cut off creates some incentive to
downsize (i.e. further reduce the size and/or increase the production
of models currently smaller than 41 square feet) to make it easier to
meet the target. The cut off may also create some incentive for
manufacturers who do not currently offer such models to do so in the
future. However, at the same time, the agencies believe that there is a
limit to the market for cars smaller than 41 square feet--most
consumers likely have some minimum expectation about interior volume,
among other things. In addition, vehicles in this market segment are
the lowest price point for the light-duty automotive market, with a
number of models in the $10,000 to $15,000 range. In order to justify
selling more vehicles in this market in order to generate fuel economy
or CO2 credits (that is, for this final rule to be the
incentive for selling more vehicles in this small car segment), a
manufacturer would need to add additional technology to the lowest
price segment vehicles, which could be challenging. Therefore, due to
these two reasons (a likely limit in the market place for the smallest
sized cars and the potential consumer acceptance difficulty in adding
the necessary technologies in order to generate fuel economy and
CO2 credits), the agencies believe that the incentive for
manufacturers to increase the sale of vehicles smaller than 41 square
feet due to this rulemaking, if present, is small. For further
discussion on these aspects of the standards, please see Section II.C
above and Chapter 2 of the Joint TSD.
---------------------------------------------------------------------------

    \111\ We note, however, that vehicle footprint is not synonymous
with vehicle size. Since the footprint is only that portion of the
vehicle between the front and rear axles, footprint-based standards
do not discourage downsizing the portions of a vehicle in front of
the front axle and to the rear of the rear axle, or to other
portions of the vehicle outside the wheels. The crush space provided
by those portions of a vehicle can make important contributions to
managing crash energy. At least one manufacturer has confidentially
indicated plans to reduce overhang as a way of reducing mass on some
vehicles during the rulemaking time frame. Additionally, simply
because footprint-based standards create no incentive to downsize
vehicles, does not mean that manufacturers may not choose to do so
if doing so makes it easier to meet the overall standard (as, for
example, if the smaller vehicles are so much lighter that they
exceed their targets by much greater amounts).
---------------------------------------------------------------------------

    Manufacturers have stated, however, that they will reduce vehicle
weight as one of the cost-effective means of increasing fuel economy
and reducing CO2 emissions, and the agencies have
incorporated this expectation into our modeling analysis supporting
today's final standards. NHTSA's previous analyses examining the
relationship between vehicle mass and fatalities found fatality
increases as vehicle weight and size were reduced, but these previous
analyses did not differentiate between weight reductions and size
(i.e., weight and footprint) reductions.
    The question of the effect of changes in vehicle mass on safety in
the context of fuel economy is a complex question that poses serious
analytic challenges and has been a contentious issue for many years, as
discussed by a number of commenters to the NPRM. This contentiousness
arises, at least in part, from the difficulty of isolating vehicle mass
from other confounding factors (e.g., driver behavior, or vehicle
factors such as engine size and wheelbase). In addition, several
vehicle factors have been closely related historically, such as vehicle
mass, wheelbase, and track width. The issue has been reviewed and
analyzed in the literature for more than two decades. For the reader's
reference, much more information about safety in the CAFE context is
available in Chapter IX of NHTSA's FRIA. Chapter 7.6 of EPA's final RIA
also contained

additional discussion on mass and safety.
    Over the past several years, as also discussed by a number of
commenters to the NPRM, contention has arisen with regard to the
applicability of analysis of historical crash data to future safety
effects due to mass reduction. The agencies recognize that there are a
host of factors that may make future mass reduction different than what
is reflected in the historical data. For one, the footprint-based
standards have been carefully developed by the agencies so that they do
not encourage vehicle footprint reductions as a way of meeting the
standards, but so that they do encourage application of fuel-saving
technologies, including mass reduction. This in turn encourages
manufacturers to find ways to separate mass reduction from footprint
reduction, which will very likely result in a future relationship
between mass and fatalities that is safer than the historical
relationship. However, as manufacturers pursue these methods of mass
reduction, the fleet moves further away from the historical trends,
which the agencies recognize.
    NHTSA's NPRM analysis of the safety effects of the proposed CAFE
standards was based on NHTSA's 2003 report concerning mass and size
reduction in MYs 1991-1999 vehicles, and evaluated a ``worst-case
scenario'' in which the safety effects of the combined reductions of
both mass and size for those vehicles were determined for the future
passenger car and light truck fleets.\112\ In the NPRM analysis, mass
and size could not be separated from one another, resulting in what
NHTSA recognized was a larger safety disbenefit than was likely under
the MYs 2012-2016 footprint-based CAFE standards. NHTSA emphasized,
however, that actual fatalities would likely be less than these
``worst-case'' estimates, and possibly significantly less, based on the
various factors discussed in the NPRM that could reduce the estimates,
such as careful mass reduction through material substitution, etc.
---------------------------------------------------------------------------

    \112\ The analysis excluded 2-door cars.
---------------------------------------------------------------------------

    For the final rule, as discussed in the NPRM and in recognition of
the importance of conducting analysis that better reflects, within the
limits of our current knowledge, the potential safety effects of future
mass reduction in response to the final CAFE and GHG standards that is
highly unlikely to involve concurrent reductions in footprint, NHTSA
has revised its analysis in consultation with EPA. Perhaps the most
important change has been that NHTSA agreed with commenters that it was
both possible and appropriate to separate the effect of mass reductions
from the effect of footprint reductions. NHTSA thus performed a new
statistical analysis, hereafter referred to as the 2010 Kahane
analysis, of the MYs 1991-99 vehicle database from its 2003 report (now
including rather than excluding 2-door cars in the passenger car
fleet), assessing relationships between fatality risk, mass, and
footprint for both passenger cars and LTVs (light trucks and
vans).\113\ As part of its results, the new report presents an ``upper-
estimate scenario,'' a ``lower-estimate scenario,'' as well as an
``actual regression result scenario'' representing potential safety
effects of future mass reductions without corresponding vehicle size
reductions, that assume, by virtue of being a cross-sectional analysis
of historical data, that historical relationships between vehicle mass
and fatalities are maintained. The ``upper-estimate scenario'' and
``lower-estimate scenario'' are based on NHTSA's judgment as a vehicle
safety agency, and are not meant to convey any more or less likelihood
in the results, but more to convey a sense of bounding for potential
safety effects of reducing mass while holding footprint constant. The
upper-estimate scenario reflects potential safety effects given the
report's finding that, using the one-step regression method of the 2003
Kahane report, the regression coefficients show that mass and footprint
each accounted for about half the fatality increase associated with
downsizing in a cross-sectional analysis of MYs 1991-1999 cars. A
similar effect was found for lighter LTVs. Applying the same regression
method to heavier LTVs, however, the coefficients indicated a
significant societal fatality reduction when mass, but not footprint,
is reduced in the heavier LTVs.\114\ Fatalities are reduced primarily
because mass reduction in the heavier LTVs will reduce risk to
occupants of the other cars and lighter LTVs involved in collisions
with these heavier LTVs.\115\ Thus, even in the ``upper-estimate
scenario,'' the potential fatality increases associated with mass
reduction in the passenger cars would be to a large extent offset by
the benefits of mass reduction in the heavier LTVs.
---------------------------------------------------------------------------

    \113\ ``Relationships Between Fatality Risk, Mass, and Footprint
in Model Year 1991-1999 and Other Passenger Cars and LTVs,'' Charles
J. Kahane, NCSA, NHTSA, March 2010. The text of the report may be
found in Chapter IX of NHTSA's FRIA, where it constitutes a section
of that chapter. We note that this report has not yet been
externally peer-reviewed, and therefore may be changed or refined
after it has been subjected to peer review. The results of the
report have not been included in the tables summarizing the costs
and benefits of this rulemaking and did not affect the stringency of
the standards. NHTSA has begun the process for obtaining peer review
in accordance with OMB guidance. The agency will ensure that
concerns raised during the peer review process are addressed before
relying on the report for future rulemakings. The results of the
peer review and any subsequent revisions to the report will be made
available in a public docket and on NHTSA's Web site as they are
completed.
    \114\ Conversely, the coefficients indicate a significant
increase if footprint is reduced.
    \115\ We note that there may be some (currently non-
quantifiable) welfare losses for purchasers of these heavier LTVs,
the mass of which is reduced in response to these final standards.
This is due to the fact that in certain crashes, as discussed below
and in greater detail in Chapter IX of the NHTSA FRIA, more mass
will always be helpful (although certainly in other crashes, the
amount of mass reduction modeled by the agency will not be enough to
have any significant effect on driver/occupant safety). However, we
believe the effects of this will likely be minor. Consumer welfare
impacts of the final rule are discussed in more detail in Chapter
VIII of the NHTSA FRIA.
---------------------------------------------------------------------------

    The lower-estimate scenario, in turn, reflects NHTSA's estimate of
potential safety effects if future mass reduction is accomplished
entirely by material substitution, smart design,\116\ and component
integration, among other things, that can reduce mass without
perceptibly changing a vehicle's shape, functionality, or safety
performance, maintaining structural strength without compromising other
aspects of safety. If future mass reduction follows this path, it could
limit the added risk close to only the effects of mass per se (the
ability to transfer momentum to other vehicles or objects in a
collision), resulting in estimated effects in passenger cars that are
substantially smaller than in the upper-estimate scenario based
directly on the regression results. The lower-estimate scenario also
covers both passenger cars and LTVs.
---------------------------------------------------------------------------

    \116\ Manufacturers may reduce mass through smart design using
computer aided engineering (CAE) tools that can be used to better
optimize load paths within structures by reducing stresses and
bending moments applied to structures. This allows better
optimization of the sectional thicknesses of structural components
to reduce mass while maintaining or improving the function of the
component. Smart designs also integrate separate parts in a manner
that reduces mass by combining functions or the reduced use of
separate fasteners. In addition, some ``body on frame'' vehicles are
redesigned with a lighter ``unibody'' construction.
---------------------------------------------------------------------------

    Overall, based on the new analyses, NHTSA estimated that fatality
effects could be markedly less than those estimated in the ``worst-case
scenario'' presented in the NPRM. The agencies believe that the overall
effect of mass reduction in cars and LTVs may be close to zero, and may
possibly be beneficial in terms of the fleet as a whole if mass
reduction is carefully applied in the future (as with careful material
substitution and other methods of mass reduction that can reduce mass
without perceptibly changing a car's shape, functionality, or safety
performance,

and maintain its structural strength without making it excessively
rigid). This is especially important if the mass reduction in the
heavier LTVs is greater (in absolute terms) than in passenger cars, as
discussed further below and in the 2010 Kahane report.
    The following sections will address how the agencies addressed
potential safety effects in the NPRM for the proposed standards, how
commenters responded, and the work that NHTSA has done since the NPRM
to revise its estimates of potential safety effects for the final rule.
The final section discusses some of the agencies' plans for the future
with respect to potential analysis and studies to further enhance our
understanding of this important and complex issue.
1. What did the agencies say in the NPRM with regard to potential
safety effects?
    In the NPRM preceding these final standards, NHTSA's safety
assessment derived from the agency's belief that some of these vehicle
factors, namely vehicle mass and footprint, could not be accurately
separated. NHTSA relied on the 2003 study by Dr. Charles Kahane, which
estimates the effect of 100-pound reductions in MYs 1991-1999 heavy
light trucks and vans (LTVs), light LTVs, heavy passenger cars, and
light passenger cars.\117\ The study compares the fatality rates of
LTVs and cars to quantify differences between vehicle types, given
drivers of the same age/gender, etc. In that analysis, the effect of
``weight reduction'' is not limited to the effect of mass per se, but
includes all the factors, such as length, width, structural strength,
safety features, and size of the occupant compartment, that were
naturally or historically confounded with mass in MYs 1991-1999
vehicles. The rationale was that adding length, width, or strength to a
vehicle historically also made it heavier.
---------------------------------------------------------------------------

    \117\ Kahane, Charles J., PhD, ``Vehicle Weight, Fatality Risk
and Crash Compatibility of Model Year 1991-99 Passenger Cars and
Light Trucks,'' DOT HS 809 662, October 2003, Executive Summary.
Available at http://www.nhtsa.dot.gov/cars/rules/regrev/evaluate/
809662.html (last accessed March 10, 2010).
---------------------------------------------------------------------------

    NHTSA utilized the relationships between mass and safety from
Kahane (2003), expressed as percentage increases in fatalities per 100-
pound mass reduction, and examined the mass effects assumed in the NPRM
modeling analysis. While previous CAFE rulemakings had limited mass
reduction as a ``technology option'' to vehicles over 5,000 pounds
GVWR, both NHTSA's and EPA's modeling analyses in the NPRM included
mass reduction of up to 5-10 percent of baseline curb weight, depending
on vehicle subclass, in response to recently-submitted manufacturer
product plans as well as public statements indicating that these levels
were possible and likely. 5-10 percent represented a maximum bound;
EPA's modeling, for example, included average vehicle weight reductions
of 4 percent between MYs 2011 and 2016, although the average per-
vehicle mass reduction was greater in absolute terms for light trucks
than for passenger cars. NHTSA's assumptions for mass reduction were
also limited by lead time such that mass reductions of 1.5 percent were
included for redesigns occurring prior to MY 2014, and mass reductions
of 5-10 percent were only ``achievable'' in redesigns occurring in MY
2014 or later. NHTSA further assumed that mass reductions would be
limited to 5 percent for small vehicles (e.g., subcompact passenger
cars), and that reductions of 10 percent would only be applied to the
larger vehicle types (e.g., large light trucks).
    Based on these assumptions of how manufacturers might comply with
the standards, NHTSA examined the effects of the identifiable safety
trends over the lifetime of the vehicles produced in each model year.
The effects were estimated on a year-by-year basis, assuming that
certain known safety trends would result in a reduction in the target
population of fatalities from which the mass effects are derived.\118\
Using this method, NHTSA found a 12.6 percent reduction in fatality
levels between 2007 and 2020. The estimates derived from applying
Kahane's 2003 percentages to a baseline of 2007 fatalities were then
multiplied by 0.874 to account for changes that the agency believed
would take place in passenger car and light truck safety between the
2007 baseline on-road fleet used for that particular analysis and year
2020.\119\
---------------------------------------------------------------------------

    \118\ NHTSA explained that there are several identifiable safety
trends that are already in place or expected to occur in the
foreseeable future and that were not accounted for in the study. For
example, two important new safety standards that have already been
issued and will be phasing in during the rulemaking time frame.
Federal Motor Vehicle Safety Standard No. 126 (49 CFR 571.126) will
require electronic stability control in all new vehicles by MY 2012,
and the upgrade to Federal Motor Vehicle Safety Standard No. 214
(Side Impact Protection, 49 CFR 571.214) will likely result in all
new vehicles being equipped with head-curtain air bags by MY 2014.
Additionally, the agency stated that it anticipates continued
improvements in driver (and passenger) behavior, such as higher
safety belt use rates. All of these will tend to reduce the absolute
number of fatalities resulting from mass reductions. Thus, while the
percentage increases in Kahane (2003) was applied, the reduced base
resulted in smaller absolute increases than those that were
predicted in the 2003 report.
    \119\ Blincoe, L. and Shankar, U, ``The Impact of Safety
Standards and Behavioral Trends on Motor Vehicle Fatality Rates,''
DOT HS 810 777, January 2007. See Table 4 comparing 2020 to 2007
(37,906/43,363 = 12.6% reduction (1-.126 = .874)
---------------------------------------------------------------------------

    NHTSA and EPA both emphasized that the safety effect estimates in
the NPRM needed to be understood in the context of the 2003 Kahane
report, which is based upon a cross-sectional analysis of the actual
on-road safety experience of 1991-1999 vehicles. For those vehicles,
heavier usually also meant larger-footprint. Hence, the numbers in
those analyses were used to predict the safety-related fatalities that
could occur in the unlikely event that weight reduction for MYs 2012-
2016 is accomplished entirely by reducing mass and reducing footprint.
Any estimates derived from those analyses represented a ``worst-case''
estimate of safety effects, for several reasons.
    First, manufacturers are far less likely to reduce mass by
``downsizing'' (making vehicles smaller overall) under the current
attribute-based standards, because the standards are based on vehicle
footprint. The selection of footprint as the attribute in setting CAFE
and GHG standards helps to reduce the incentive to alter a vehicle's
physical dimensions. This is because as footprint decreases, the
corresponding fuel economy/GHG emission target becomes more
stringent.\120\ The shape of the footprint curves themselves have also
been designed to be approximately ``footprint neutral'' within the
sloped portion of the functions--that is, to neither encourage
manufacturers to increase the footprint of their fleets, nor to
decrease it. For further discussion on these aspects of the standards,
please see Section II.C above and Chapter 2 of the Joint TSD. However,
as discussed in Sections III.H.1 and IV.G.6 below, the agencies
acknowledge some uncertainty regarding how consumer purchases will
change in response to the vehicles

designed to meet the MYs 2012-2016 standards. This could potentially
affect the mix of vehicles sold in the future, including the mass and
footprint distribution.
---------------------------------------------------------------------------

    \120\ We note, however, that vehicle footprint is not synonymous
with vehicle size. Since the footprint is only that portion of the
vehicle between the front and rear axles, footprint-based standards
do not discourage downsizing the portions of a vehicle in front of
the front axle and to the rear of the rear axle, or to other
portions of the vehicle outside the wheels. The crush space provided
by those portions of a vehicle can make important contributions to
managing crash energy. NHTSA noted in the NPRM that at least one
manufacturer has confidentially indicated plans to reduce overhang
as a way of reducing mass on some vehicles during the rulemaking
time frame. Additionally, simply because footprint-based standards
create no incentive to downsize vehicles, does not mean that
manufacturers may not choose to do so if doing so makes it easier to
meet the overall standard (as, for example, if the smaller vehicles
are so much lighter that they exceed their targets by much greater
amounts).
---------------------------------------------------------------------------

    As a result, the agencies found it likely that a significant
portion of the mass reduction in the MY 2012-2016 vehicles would be
accomplished by strategies, such as material substitution, smart
design, reduced powertrain requirements,\121\ and mass compounding,
that have a lesser safety effect than the prevalent 1980s strategy of
simply making the vehicles smaller. The agencies noted that to the
extent that future mass reductions could be achieved by these methods--
without any accompanying reduction in the size or structural strength
of the vehicle--then the fatality increases associated with the mass
reductions anticipated by the model as a result of the proposed
standards could be significantly smaller than those in the worst-case
scenario.
---------------------------------------------------------------------------

    \121\ Reduced powertrain requirements do not include a reduction
in performance. When vehicle mass is reduced, engine torque and
transmission gearing can be altered so that acceleration performance
is held constant instead of improving. A detailed discussion is
included in Chapter 3 of the Technical Support Document.
---------------------------------------------------------------------------

    However, even though the agencies recognized that these methods of
mass reduction could be technologically feasible in the rulemaking time
frame, and included them as such in our modeling analyses, the agencies
diverged as to how potential safety effects accompanying such methods
of mass reduction could be evaluated, particularly in relation to the
worst-case scenario presented by NHTSA. NHTSA stated that it could not
predict how much smaller those increases would be for any given mixture
of mass reduction methods, since the data on the safety effects of mass
reduction alone (without size reduction) was not available due to the
low numbers of vehicles in the current on-road fleet that have utilized
these technologies extensively. Further, to the extent that mass
reductions were accomplished through use of light, high-strength
materials, NHTSA emphasized that there would be significant additional
costs that would need to be determined and accounted for than were
reflected in the agency's proposal.
    Additionally, NHTSA emphasized that while it thought material
substitution and other methods of mass reduction could considerably
lessen the potential safety effects compared to the historical trend,
NHTSA also stated that it did not believe the effects in passenger cars
would be smaller than zero. EPA disagreed with this, and stated in the
NPRM that the safety effects could very well be smaller than zero. Even
though footprint-based standards discourage downsizing as a way of
``balancing out'' sales of larger/heavier vehicles, they do not
discourage manufacturers from reducing crush space in overhang areas or
from reducing structural support as a way of taking out mass.\122\
Moreover, NHTSA's analysis had also found that lighter cars have a
higher involvement rate in fatal crashes, even after controlling for
the driver's age, gender, urbanization, and region of the country.
Being unable to explain this clear trend in the crash data, NHTSA
stated that it must assume that mass reduction is likely to be
associated with higher fatal-crash rates, no matter how the weight
reduction is achieved.
---------------------------------------------------------------------------

    \122\ However, we recognize that FMVSS and NCAP ratings may
limit the manufacturer's ability to reduce crush space or structural
support.
---------------------------------------------------------------------------

    NHTSA also noted in the NPRM that several studies by Dynamic
Research, Inc. (DRI) had been repeatedly cited to the agency in support
of the proposition that reducing vehicle mass while maintaining track
width and wheelbase would lead to significant safety benefits. In its
2005 studies, one of which was published and peer-reviewed through the
Society of Automotive Engineers as a technical paper, DRI attempted to
assess the independent effects of vehicle weight and size (in terms of
wheelbase and track width) on safety, and presented results indicating
that reducing vehicle weight tends to reduce fatalities, but that
reducing vehicle wheelbase and track width tends to increase
fatalities. DRI's analysis was based on FARS data for MYs 1985-1998
passenger cars and 1985-1997 light trucks, similar to the MYs 1991-1999
car and truck data used in the 2003 Kahane report. However, DRI
included 2-door passenger cars, while the 2003 Kahane report excluded
those vehicles out of concern that their inclusion could bias the
results of the regression analysis, because a significant proportion of
MYs 1991-1999 2-door cars were sports and ``muscle'' cars, which have
particularly high fatal crash rates for their relatively short
wheelbases compared to the rest of the fleet. While in the NPRM NHTSA
rejected the results of the DRI studies based in part on this concern,
the agencies note that upon further consideration, NHTSA has agreed for
this final rule that the inclusion of 2-door cars in regression
analysis of historical data is appropriate, and indeed has no overly-
biasing effects.
    The 2005 DRI studies also differed from the 2003 Kahane report in
terms of their estimates of the effect of vehicle weight on rollover
fatalities. The 2003 Kahane report analyzed a single variable, curb
weight, as a surrogate for both vehicle size and weight, and found that
curb weight reductions would increase rollover fatalities. The DRI
study, in contrast, attempted to analyze curb weight, wheelbase, and
track width separately, and found that curb weight reduction would
decrease rollover fatalities, while wheelbase reduction and track width
reduction would increase them. DRI suggested that heavier vehicles may
have higher rollover fatalities for two reasons: first, because taller
vehicles tend to be heavier, so the correlation between vehicle height
and weight and vehicle center-of-gravity height may make heavier
vehicles more rollover-prone; and second, because heavier vehicles may
have been less rollover-crashworthy due to FMVSS No. 216's constant (as
opposed to proportional) requirements for MYs 1995-1999 vehicles
weighing more than 3,333 lbs unloaded.
    Overall, DRI's 2005 studies found a reduction in fatalities for
cars (580 in the first study, and 836 in the second study) and for
trucks (219 in the first study, 682 in the second study) for a 100
pound reduction in curb weight without accompanying wheelbase or track
width reductions. In the NPRM, NHTSA disagreed with the results of the
DRI studies, out of concern that DRI's inclusion of 2-door cars in its
analysis biased the results, and because NHTSA was unable to reproduce
DRI's results despite repeated attempts. NHTSA stated that it agreed
intuitively with DRI's conclusion that vehicle mass reductions without
accompanying size reductions (as through substitution of a heavier
material for a lighter one) would be less harmful than downsizing, but
without supporting real-world data and unable to verify DRI's results,
NHTSA stated that it could not conclude that mass reductions would
result in safety benefits. EPA, in contrast, believed that DRI's
results contained some merit, in particular because the study separated
the effects of mass and size and EPA stated that applying them using
the curb weight reductions in EPA's modeling analysis would show an
overall reduction of fatalities for the proposed standards.
    On balance, both agencies recognized that mass reduction could be
an important tool for achieving higher levels of fuel economy and
reducing CO2 emissions, and emphasized that NHTSA's fatality
estimates represented a worst-case scenario for the potential effects
of the proposed standards, and

that actual fatalities will be less than these estimates, possibly
significantly less, based on the various factors discussed in the NPRM
that could reduce the estimates. The agencies sought comment on the
safety analysis and discussions presented in the NPRM.
2. What public comments did the agencies receive on the safety analysis
and discussions in the NPRM?
    Several dozen commenters addressed the safety issue. Claims and
arguments made by commenters in response to the safety effects analysis
and discussion in the NPRM tended to follow several general themes, as
follows:
     NHTSA's safety effects estimates are inaccurate because
they do not account for:
    [cir] While NHTSA's study only considers vehicles from MYs 1991-
1999, more recently-built vehicles are safer than those, and future
vehicles will be safer still;
    [cir] Lighter vehicles are safer than heavier cars in terms of
crash-avoidance, because they handle and brake better;
    [cir] Fatalities are linked more to other factors than mass;
    [cir] The structure of the standards reduces/contributes to
potential safety effects from mass reduction;
    [cir] NHTSA could mitigate additional safety effects from mass
reduction, if there are any, by simply regulating safety more;
    [cir] Casualty risks range widely for vehicles of the same weight
or footprint, which skews regression analysis and makes computer
simulation a better predictor of the safety effects of mass reduction;
     DRI's analysis shows that lighter vehicles will save
lives, and NHTSA reaches the opposite conclusion without disproving
DRI's analysis;
    [cir] Possible reasons that NHTSA and DRI have reached different
conclusions:
    [dec222] NHTSA's study should distinguish between reductions in
size and reductions in weight like DRI's;
    [dec222] NHTSA's study should include two-door cars;
    [dec222] NHTSA's study should have used different assumptions;
    [dec222] NHTSA's study should include confidence intervals;
     NHTSA should include a ``best-case'' estimate in its
study;
     NHTSA should not include a ``worst-case'' estimate in its
study;
    The agencies recognize that the issue of the potential safety
effects of mass reduction, which was one of the many factors considered
in the balancing that led to the agencies' conclusion as to appropriate
stringency levels for the MYs 2012-2016 standards, is of great interest
to the public and could possibly be a more significant factor in
regulators' and manufacturers' decisions with regard to future
standards beyond MY 2016. The agencies are committed to analyzing this
issue thoroughly and holistically going forward, based on the best
available science, in order to further their closely related missions
of safety, energy conservation, and environmental protection. We
respond to the issues and claims raised by commenters in turn below.

NHTSA's estimates are inaccurate because NHTSA's study only considers
vehicles from MYs 1991-1999, but more recently-built vehicles are safer
than those, and future vehicles will be safer still

    A number of commenters (CAS, Adcock, NACAA, NJ DEP, NY DEC, UCS,
and Wenzel) argued that the 2003 Kahane report, on which the ``worst-
case scenario'' in the NPRM was based, is outdated because it considers
the relationship between vehicle weight and safety in MYs 1991-1999
passenger cars. These commenters generally stated that data from MYs
1991-1999 vehicles provide an inaccurate basis for assessing the
relationship between vehicle weight and safety in current or future
vehicles, because the fleets of vehicles now and in the future are
increasingly different from that 1990s fleet (more crossovers, fewer
trucks, lighter trucks, etc.), with different vehicle shapes and
characteristics, different materials, and more safety features. Several
of these commenters argued that NHTSA should conduct an updated
analysis for the final rule using more recent data--Wenzel, for
example, stated that an updated regression analysis that accounted for
the recent introduction of crossover SUVs would likely find reduced
casualty risk, similar to DRI's previous finding using fatality data.
CEI, in contrast, argued that the ``safety trade-off'' would not be
eliminated by new technologies and attribute-based standards, because
additional weight inherently makes a vehicle safer to its own
occupants, citing the 2003 Kahane report, while AISI argued that
Desapriya had found that passenger car drivers and occupants are two
times more likely to be injured than drivers and occupants in larger
pickup trucks and SUVs.
    Several commenters (Adcock, CARB, Daimler, NESCAUM, NRDC, Public
Citizen, UCS, Wenzel) suggested that NHTSA's analysis was based on
overly pessimistic assumptions about how manufacturers would choose to
reduce mass in their vehicles, because manufacturers have a strong
incentive in the market to build vehicles safely. Many of these
commenters stated that several manufacturers have already committed
publicly to fairly ambitious mass reduction goals in the mid-term, but
several stated further that NHTSA should not assume that manufacturers
will reduce the same amount of mass in all vehicles, because it is
likely that they will concentrate mass reduction in the heaviest
vehicles, which will improve compatibility and decrease aggressivity in
the heaviest vehicles. Daimler emphasized that all vehicles will have
to comply with the Federal Motor Vehicle Safety Standards, and will
likely be designed to test well in NHTSA's NCAP tests.
    Other commenters (Aluminum Association, CARB, CAS, ICCT, MEMA,
NRDC, U.S. Steel) also emphasized the need for NHTSA to account for the
safety benefits to be expected in the future from use of advanced
materials for lightweighting purposes and other engineering advances.
The Aluminum Association stated that advanced vehicle design and
construction techniques using aluminum can improve energy management
and minimize adverse safety effects of their use,\123\ but that NHTSA's
safety analysis could not account for those benefits if it were based
on MYs 1991-1999 vehicles. CAS, ICCT, and U.S. Steel discussed similar
benefits for more recent and future vehicles built with high strength
steel (HSS), although U.S. Steel cautioned that given the stringency of
the proposed standards, manufacturers would likely be encouraged to