[Federal Register Volume 80, Number 133 (Monday, July 13, 2015)]
[Proposed Rules]
[Pages 40137-40765]
[FR Doc No: 2015-15500]

Vol. 80

Monday,

No. 133

July 13, 2015

Part II

Environmental Protection Agency

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40 CFR Parts 9, 22, 85, et al.

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Parts 512, 523, 534, et al.

Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and
Heavy-Duty Engines and Vehicles--Phase 2; Proposed Rule

Federal Register / Vol. 80 , No. 133 / Monday, July 13, 2015 /
Proposed Rules

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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 22, 85, 86, 600, 1033, 1036, 1037, 1039, 1042,
1043, 1065, 1066, and 1068

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 512, 523, 534, 535, 537, and 538

[EPA-HQ-OAR-2014-0827; NHTSA-2014-0132; FRL-9927-21-OAR]
RIN 2060-AS16; RIN 2127-AL52

Greenhouse Gas Emissions and Fuel Efficiency Standards for
Medium- and Heavy-Duty Engines and Vehicles--Phase 2

AGENCY: Environmental Protection Agency (EPA) and Department of
Transportation (DOT) National Highway Traffic Safety Administration
(NHTSA)

ACTION: Proposed rule.

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SUMMARY: EPA and NHTSA, on behalf of the Department of Transportation,
are each proposing rules to establish a comprehensive Phase 2 Heavy-
Duty (HD) National Program that will reduce greenhouse gas (GHG)
emissions and fuel consumption for new on-road heavy-duty vehicles.
This technology-advancing program would phase in over the long-term,
beginning in the 2018 model year and culminating in standards for model
year 2027, responding to the President's directive on February 18,
2014, to develop new standards that will take us well into the next
decade. NHTSA's proposed fuel consumption standards and EPA's proposed
carbon dioxide (CO2) emission standards are tailored to each
of four regulatory categories of heavy-duty vehicles: Combination
tractors; trailers used in combination with those tractors; heavy-duty
pickup trucks and vans; and vocational vehicles. The proposal also
includes separate standards for the engines that power combination
tractors and vocational vehicles. Certain proposed requirements for
control of GHG emissions are exclusive to EPA programs. These include
EPA's proposed hydrofluorocarbon standards to control leakage from air
conditioning systems in vocational vehicles, and EPA's proposed nitrous
oxide (N2O) and methane (CH4) standards for
heavy-duty engines. Additionally, NHTSA is addressing misalignment in
the Phase 1 standards between EPA and NHTSA to ensure there are no
differences in compliance standards between the agencies. In an effort
to promote efficiency, the agencies are also proposing to amend their
rules to modify reporting requirements, such as the method by which
manufacturers submit pre-model, mid-model, and supplemental reports.
EPA's proposed HD Phase 2 GHG emission standards are authorized under
the Clean Air Act and NHTSA's proposed HD Phase 2 fuel consumption
standards authorized under the Energy Independence and Security Act of
2007. These standards would begin with model year 2018 for trailers
under EPA standards and 2021 for all of the other heavy-duty vehicle
and engine categories. The agencies estimate that the combined
standards would reduce CO2 emissions by approximately 1
billion metric tons and save 1.8 billion barrels of oil over the life
of vehicles and engines sold during the Phase 2 program, providing over
$200 billion in net societal benefits. As noted, the proposal also
includes certain EPA-specific provisions relating to control of
emissions of pollutants other than GHGs. EPA is seeking comment on non-
GHG emission standards relating to the use of auxiliary power units
installed in tractors. In addition, EPA is proposing to clarify the
classification of natural gas engines and other gaseous-fueled heavy-
duty engines, and is proposing closed crankcase standards for emissions
of all pollutants from natural gas heavy-duty engines. EPA is also
proposing technical amendments to EPA rules that apply to emissions of
non-GHG pollutants from light-duty motor vehicles, marine diesel
engines, and other nonroad engines and equipment. Finally, EPA is
proposing to require that rebuilt engines installed in new incomplete
vehicles meet the emission standards applicable in the year of
assembly, including all applicable standards for criteria pollutants.

DATES: Comments on all aspects of this proposal must be received on or
before September 11, 2015. Under the Paperwork Reduction Act (PRA),
comments on the information collection provisions are best assured of
consideration if the Office of Management and Budget (OMB) receives a
copy of your comments on or before August 12, 2015.
    EPA and NHTSA will announce the public hearing dates and locations
for this proposal in a supplemental Federal Register document.

ADDRESSES: Submit your comments, identified by Docket ID No. EPA-HQ-
OAR-2014-0827 (for EPA's docket) and NHTSA-2014-0132 (for NHTSA's
docket) by one of the following methods:
     Online: www.regulations.gov: Follow the on-line
instructions for submitting comments.
     Email<EMAIL_ADDRESS>     Mail:
    EPA: Air and Radiation Docket and Information Center, Environmental
Protection Agency, Mail code: 28221T, 1200 Pennsylvania Ave. NW.,
Washington, DC 20460.
    NHTSA: Docket Management Facility, M-30, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590.
     Hand Delivery:
    EPA: EPA Docket Center, EPA WJC West Building, Room 3334, 1301
Constitution Ave. NW., Washington, DC 20460. Such deliveries are only
accepted during the Docket's normal hours of operation, and special
arrangements should be made for deliveries of boxed information.
    NHTSA: West Building, Ground Floor, Rm. W12-140, 1200 New Jersey
Avenue SE., Washington, DC 20590, between 9 a.m. and 4 p.m. Eastern
Time, Monday through Friday, except Federal holidays.
    Instructions: EPA and NHTSA have established dockets for this
action under Direct your comments to Docket ID No. EPA-HQ-OAR-2014-0827
and/or NHTSA-2014-0132, respectively. See the SUPPLEMENTARY INFORMATION
section on ``Public Participation'' for more information about
submitting written comments.
    Docket: All documents in the docket are listed on the
www.regulations.gov Web site. Although listed in the index, some
information is not publicly available, e.g., confidential business
information or other information whose disclosure is restricted by
statute. Certain other material, such as copyrighted material, is not
placed on the Internet and will be publicly available only in hard copy
form. Publicly available docket materials are available either
electronically through www.regulations.gov or in hard copy at the
following locations:
    EPA: Air and Radiation Docket and Information Center, EPA Docket
Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW., Room
3334, Washington, DC. The Public Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the Air Docket is<PHONE_NUMBER>.
    NHTSA: Docket Management Facility, M-30, U.S. Department of

Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590. The telephone number for the
docket management facility is<PHONE_NUMBER>. The docket management
facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through
Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT: EPA: For hearing information or to
register, please contact: JoNell Iffland, Office of Transportation and
Air Quality, Assessment and Standards Division (ASD), Environmental
Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105;
Telephone number:<PHONE_NUMBER>; Fax number:<PHONE_NUMBER>; Email
address<EMAIL_ADDRESS>For all other information related to
the rule, please contact: Tad Wysor, Office of Transportation and Air
Quality, Assessment and Standards Division (ASD), Environmental
Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105;
telephone number:<PHONE_NUMBER>; email address<EMAIL_ADDRESS>    NHTSA: Ryan Hagen or Analiese Marchesseault, Office of Chief
Counsel, National Highway Traffic Safety Administration, 1200 New
Jersey Avenue SE., Washington, DC 20590. Telephone:<PHONE_NUMBER>;
<EMAIL_ADDRESS>or<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    This proposed action would affect companies that manufacture, sell,
or import into the United States new heavy-duty engines and new Class
2b through 8 trucks, including combination tractors, all types of
buses, vocational vehicles including municipal, commercial,
recreational vehicles, and commercial trailers as well as \3/4\-ton and
1-ton pickup trucks and vans. The heavy-duty category incorporates all
motor vehicles with a gross vehicle weight rating of 8,500 lbs or
greater, and the engines that power them, except for medium-duty
passenger vehicles already covered by the greenhouse gas standards and
corporate average fuel economy standards issued for light-duty model
year 2017-2025 vehicles. Proposed regulated categories and entities
include the following:

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                                                 Examples of potentially
            Category             NAICS code \a\     affected entities
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Industry.......................          336111  Motor Vehicle
                                                  Manufacturers, Engine
                                                  Manufacturers, Truck
                                                  Manufacturers, Truck
                                                  Trailer Manufacturers.
                                         336112
                                         333618
                                         336120
                                         336212
Industry.......................          541514  Commercial Importers of
                                                  Vehicles and Vehicle
                                                  Components.
                                         811112
                                         811198
Industry.......................          336111  Alternative Fuel
                                                  Vehicle Converters.
                                         336112
                                         422720
                                         454312
                                         541514
                                         541690
                                         811198
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Note:\a\ North American Industry Classification System (NAICS).

This table is not intended to be exhaustive, but rather provides a
guide for readers regarding entities likely covered by these rules.
This table lists the types of entities that the agencies are aware may
be regulated by this action. Other types of entities not listed in the
table could also be regulated. To determine whether your activities are
regulated by this action, you should carefully examine the
applicability criteria in the referenced regulations. You may direct
questions regarding the applicability of this action to the persons
listed in the preceding FOR FURTHER INFORMATION CONTACT section.

B. Public Participation

    EPA and NHTSA request comment on all aspects of this joint proposed
rule. This section describes how you can participate in this process.

(1) How do I prepare and submit comments?

    In this joint proposal, there are many issues common to both EPA's
and NHTSA's proposals. For the convenience of all parties, comments
submitted to the EPA docket will be considered comments submitted to
the NHTSA docket, and vice versa. An exception is that comments
submitted to the NHTSA docket on NHTSA's Draft Environmental Impact
Statement (EIS) will not be considered submitted to the EPA docket.
Therefore, the public only needs to submit comments to either one of
the two agency dockets, although they may submit comments to both if
they so choose. Comments that are submitted for consideration by one
agency should be identified as such, and comments that are submitted
for consideration by both agencies should be identified as such. Absent
such identification, each agency will exercise its best judgment to
determine whether a comment is submitted on its proposal.
    Further instructions for submitting comments to either EPA or NHTSA
docket are described below.
    EPA: Direct your comments to Docket ID No. EPA-HQ-OAR-2014-0827.
EPA's policy is that all comments received will be included in the
public docket without change and may be made available online at
www.regulations.gov, including any personal information provided,
unless the comment includes information claimed to be Confidential
Business Information (CBI) or other information whose disclosure is
restricted by statute. Do not submit information that you consider to
be CBI or otherwise protected through www.regulations.gov or email. The
www.regulations.gov Web site is an ``anonymous access'' system, which
means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an email comment
directly to EPA without going through www.regulations.gov your email
address will be automatically captured and included as part of the
comment that is placed in the public docket and made available on the
Internet. If you submit an electronic comment, EPA recommends that you
include your

name and other contact information in the body of your comment and with
any disk or CD-ROM you submit. If EPA cannot read your comment due to
technical difficulties and cannot contact you for clarification, EPA
may not be able to consider your comment. Electronic files should avoid
the use of special characters, any form of encryption, and be free of
any defects or viruses. For additional information about EPA's public
docket visit the EPA Docket Center homepage at http://www.epa.gov/epahome/dockets.htm.
    NHTSA: Your comments must be written and in English. To ensure that
your comments are correctly filed in the Docket, please include the
Docket number NHTSA-2014-0132 in your comments. Your comments must not
be more than 15 pages long.\1\ NHTSA established this limit to
encourage you to write your primary comments in a concise fashion.
However, you may attach necessary additional documents to your
comments, and there is no limit on the length of the attachments. If
you are submitting comments electronically as a PDF (Adobe) file, we
ask that the documents submitted be scanned using the Optical Character
Recognition (OCR) process, thus allowing the agencies to search and
copy certain portions of your submissions.\2\ Please note that pursuant
to the Data Quality Act, in order for the substantive data to be relied
upon and used by the agency, it must meet the information quality
standards set forth in the OMB and Department of Transportation (DOT)
Data Quality Act guidelines. Accordingly, we encourage you to consult
the guidelines in preparing your comments. OMB's guidelines may be
accessed at http://www.whitehouse.gov/omb/fedreg/reproducible.html.
DOT's guidelines may be accessed at http://www.dot.gov/dataquality.htm.
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    \1\ See 49 CFR 553.21.
    \2\ Optical character recognition (OCR) is the process of
converting an image of text, such as a scanned paper document or
electronic fax file, into computer-editable text.
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(2) Tips for Preparing Your Comments

    When submitting comments, please remember to:
     Identify the rulemaking by docket number and other
identifying information (subject heading, Federal Register date and
page number).
     Explain why you agree or disagree, suggest alternatives,
and substitute language for your requested changes.
     Describe any assumptions and provide any technical
information and/or data that you used.
     If you estimate potential costs or burdens, explain how
you arrived at your estimate in sufficient detail to allow for it to be
reproduced.
     Provide specific examples to illustrate your concerns, and
suggest alternatives.
     Explain your views as clearly as possible, avoiding the
use of profanity or personal threats.
     Make sure to submit your comments by the comment period
deadline identified in the DATES section above.

(3) How can I be sure that my comments were received?

    NHTSA: If you submit your comments by mail and wish Docket
Management to notify you upon its receipt of your comments, enclose a
self-addressed, stamped postcard in the envelope containing your
comments. Upon receiving your comments, Docket Management will return
the postcard by mail.

(4) How do I submit confidential business information?

    Any confidential business information (CBI) submitted to one of the
agencies will also be available to the other agency. However, as with
all public comments, any CBI information only needs to be submitted to
either one of the agencies' dockets and it will be available to the
other. Following are specific instructions for submitting CBI to either
agency. If you have any questions about CBI or the procedures for
claiming CBI, please consult the persons identified in the FOR FURTHER
INFORMATION CONTACT section.
    EPA: Do not submit CBI to EPA through www.regulations.gov or email.
Clearly mark the part or all of the information that you claim to be
CBI. For CBI information in a disk or CD ROM that you mail to EPA, mark
the outside of the disk or CD ROM as CBI and then identify
electronically within the disk or CD ROM the specific information that
is claimed as CBI. Information not marked as CBI will be included in
the public docket without prior notice. In addition to one complete
version of the comment that includes information claimed as CBI, a copy
of the comment that does not contain the information claimed as CBI
must be submitted for inclusion in the public docket. Information so
marked will not be disclosed except in accordance with procedures set
forth in 40 CFR part 2.
    NHTSA: If you wish to submit any information under a claim of
confidentiality, you should submit three copies of your complete
submission, including the information you claim to be confidential
business information, to the Chief Counsel, NHTSA, at the address given
above under FOR FURTHER INFORMATION CONTACT. When you send a comment
containing confidential business information, you should include a
cover letter setting forth the information specified in our
confidential business information regulation.\3\
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    \3\ See 49 CFR part 512.
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    In addition, you should submit a copy from which you have deleted
the claimed confidential business information to the Docket by one of
the methods set forth above.

(5) How can I read the comments submitted by other people?

    You may read the materials placed in the docket for this document
(e.g., the comments submitted in response to this document by other
interested persons) at any time by going to http://www.regulations.gov.
Follow the online instructions for accessing the dockets. You may also
read the materials at the EPA Docket Center or NHTSA Docket Management
Facility by going to the street addresses given above under ADDRESSES.

(6) How do I participate in the public hearings?

    EPA and NHTSA will announce the public hearing dates and locations
for this proposal in a supplemental Federal Register document. At all
hearings, both agencies will accept comments on the rulemaking, and
NHTSA will also accept comments on the EIS.
    If you would like to present testimony at the public hearings, we
ask that you notify EPA and NHTSA contact persons listed in the FOR
FURTHER INFORMATION CONTACT section at least ten days before the
hearing. Once EPA and NHTSA learn how many people have registered to
speak at the public hearing, we will allocate an appropriate amount of
time to each participant. For planning purposes, each speaker should
anticipate speaking for approximately ten minutes, although we may need
to adjust the time for each speaker if there is a large turnout. We
suggest that you bring copies of your statement or other material for
EPA and NHTSA panels. It would also be helpful if you send us a copy of
your statement or other materials before the hearing. To accommodate as
many speakers as possible, we prefer that speakers not use
technological aids (e.g., audio-visuals, computer slideshows). However,
if you plan to do so, you must notify the contact persons in the FOR
FURTHER INFORMATION CONTACT section above. You also must make
arrangements to provide your presentation or any other

aids to EPA and NHTSA in advance of the hearing in order to facilitate
set-up. In addition, we will reserve a block of time for anyone else in
the audience who wants to give testimony. The agencies will assume that
comments made at the hearings are directed to the proposed rule unless
commenters specifically reference NHTSA's EIS in oral or written
testimony.
    The hearing will be held at a site accessible to individuals with
disabilities. Individuals who require accommodations such as sign
language interpreters should contact the persons listed under FOR
FURTHER INFORMATION CONTACT section above no later than ten days before
the date of the hearing.
    EPA and NHTSA will conduct the hearing informally, and technical
rules of evidence will not apply. We will arrange for a written
transcript of the hearing and keep the official record of the hearing
open for 30 days to allow you to submit supplementary information. You
may make arrangements for copies of the transcript directly with the
court reporter.

C. Did EPA conduct a peer review before issuing this notice?

    This regulatory action is supported by influential scientific
information. Therefore, EPA conducted a peer review consistent with
OMB's Final Information Quality Bulletin for Peer Review. As described
in Section II.C.3, a peer review of updates to the vehicle simulation
model (GEM) for the proposed Phase 2 standards has been completed. This
version of GEM is based on the model used for the Phase 1 rule, which
was peer-reviewed by a panel of four independent subject matter experts
(from academia and a national laboratory). The peer review report and
the agency's response to the peer review comments are available in
Docket ID No. EPA-HQ-OAR-2014-0827.

D. Executive Summary

(1) Commitment to Greenhouse Gas Emission Reductions and Vehicle Fuel
Efficiency

    As part of the Climate Action Plan announced in June 2013,\4\ the
President directed the Environmental Protection Agency (EPA) and the
Department of Transportation's (DOT) National Highway Traffic Safety
Administration (NHTSA) to set the next round of standards to reduce
greenhouse gas (GHG) emissions and improve fuel efficiency for medium-
and heavy-duty vehicles. More than 70 percent of the oil used in the
United States and 28 percent of GHG emissions come from the
transportation sector, and since 2009 EPA and NHTSA have worked with
industry and states to develop ambitious, flexible standards for both
the fuel economy and GHG emissions of light-duty vehicles and the fuel
efficiency and GHG emissions of heavy-duty vehicles.5 6 The
standards proposed here (referred to as Phase 2) would build on the
light-duty vehicle standards spanning model years 2011 to 2025 and on
the initial phase of standards (referred to as Phase 1) for new medium
and heavy-duty vehicles (MDVs and HDVs) and engines in model years 2014
to 2018. Throughout every stage of development for these programs, EPA
and NHTSA (collectively, the agencies, or ``we'') have worked in close
partnership not only with one another, but with the vehicle
manufacturing industry, environmental community leaders, and the State
of California among other entities to create a single, effective set of
national standards.
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    \4\ The White House, The President's Climate Action Plan (June,
2013). http://www.whitehouse.gov/share/climate-action-plan.
    \5\ The White House, Improving the Fuel Efficiency of American
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving
Money and Supporting Manufacturing Innovation (Feb. 2014), 2.
    \6\ U.S. Environmental Protection Agency. 2014. Inventory of
U.S. Greenhouse Gas Emissions and Sinks: 1990-2012. EPA 430-R-14-
003. Mobile sources emitted 28 percent of all U.S. GHG emissions in
2012. Available at http://www.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2014-Main-Text.pdf.
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    Through two previous rulemakings, EPA and NHTSA have worked with
the auto industry to develop new fuel economy and GHG emission
standards for light-duty vehicles. Taken together, the light-duty
vehicle standards span model years 2011 to 2025 and are the first
significant improvement in fuel economy in approximately two decades.
Under the final program, average new car and light truck fuel economy
is expected to double by 2025.\7\ This is projected to save consumers
$1.7 trillion at the pump--roughly $8,200 per vehicle for a MY2025
vehicle--reducing oil consumption by 2.2 million barrels a day in 2025
and slashing GHG emissions by 6 billion metric tons over the lifetime
of the vehicles sold during this period.\8\ These fuel economy
standards are already delivering savings for American drivers. Between
model years 2008 and 2013, the unadjusted average test fuel economy of
new passenger cars and light trucks sold in the United States has
increased by about four miles per gallon. Altogether, light-duty
vehicle fuel economy standards finalized after 2008 have already saved
nearly one billion gallons of fuel and avoided more than 10 million
tons of carbon dioxide emissions.\9\
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    \7\ Id.
    \8\ Id.
    \9\ Id. at 3.
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    Similarly, EPA and NHTSA have previously developed joint GHG
emission and fuel efficiency standards for MDVs and HDVs. Prior to
these Phase 1 standards, heavy-duty trucks and buses--from delivery
vans to the largest tractor-trailers--were required to meet pollution
standards for soot and smog-causing air pollutants, but no requirements
existed for the fuel efficiency or carbon pollution from these
vehicles.\10\ By 2010, total fuel consumption and GHG emissions from
MDVs and HDVs had been growing, and these vehicles accounted for 23
percent of total U.S. transportation-related GHG emissions.\11\ In
August 2011, the agencies finalized the groundbreaking Phase 1
standards for new MDVs and HDVs in model years 2014 through 2018. This
program, developed with support from the trucking and engine
industries, the State of California, Environment Canada, and leaders
from the environmental community, set standards that are expected to
save a projected 530 million barrels of oil and reduce carbon emissions
by about 270 million metric tons, representing one of the most
significant programs available to reduce domestic emissions of
GHGs.\12\ The Phase 1 program, as well as the many additional actions
called for in the President's 2013 Climate Action Plan \13\ including
this Phase 2 rulemaking, not only result in meaningful decreases in GHG
emissions, but support--indeed are critical for--United States
leadership to encourage other countries to also achieve meaningful GHG
reductions.
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    \10\ Id.
    \11\ Id.
    \12\ Id. at 4.
    \13\ The President's Climate Action Plan calls for GHG-cutting
actions including, for example, reducing carbon emissions from power
plants and curbing hydrofluorocarbon and methane emissions.
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    This proposal builds on our commitment to robust collaboration with
stakeholders and the public. It follows an expansive and thorough
outreach effort in which the agencies gathered input, data and views
from many interested stakeholders, involving over 200 meetings with
heavy-duty vehicle and engine manufacturers, technology suppliers,
trucking fleets, truck drivers, dealerships, environmental
organizations, and state agencies. As with the previous light-duty
rules and the heavy-duty Phase 1 rule, the agencies have consulted

frequently with the California Air Resources Board staff during the
development of this Phase 2 proposal, given California's unique ability
among the states to adopt their own GHG standards for on-highway
engines and vehicles. The agencies look forward to feedback and ongoing
conversation following the release of this proposed rule from all
stakeholders--including through planned public hearings, written
comments, and other opportunities for input.

(2) Overview of Phase 1 Medium- and Heavy-Duty Vehicle Standards

    The President's direction to EPA and NHTSA to develop GHG emission
and fuel efficiency standards for MDVs and HDVs resulted in the
agencies' promulgation of the Phase 1 program in 2011, which covers new
trucks and heavy vehicles in model years 2014 to 2018. The Phase 1
program includes specific standards for combination tractors, heavy-
duty pickup trucks and vans, and vocational vehicles, and includes
separate standards for both vehicles and engines. The program offers
extensive flexibility, allowing manufacturers to reach standards
through average fleet calculations, a mix of technologies, and the use
of various credit and banking programs.
    The Phase 1 program was developed through close consultation with
industry and other stakeholders, resulting in standards tailored to the
specifics of each different class of vehicles and engines.
     Heavy-duty combination tractors. Combination tractors--
semi trucks that typically pull trailers--are regulated under nine
subcategories based on weight class, cab type, and roof height. These
vehicles represent approximately two-thirds of all fuel consumption and
GHG emissions from MDVs and HDVs.
     Heavy-duty pickup trucks and vans. Heavy-duty pickup and
van standards are based on a ``work factor'' attribute that combines a
vehicle's payload, towing capabilities, and the presence of 4-wheel
drive. These vehicles represent about 15 percent of the fuel
consumption and GHG emissions from MDVs and HDVs.
     Vocational vehicles. Specialized vocational vehicles,
which consist of a very wide variety of truck and bus types (e.g.,
delivery, refuse, utility, dump, cement, transit bus, shuttle bus,
school bus, emergency vehicles, and recreational vehicles) are
regulated in three subcategories based on engine classification. These
vehicles represent approximately 20 percent of the fuel consumption and
GHG emissions from MDVs and HDVs. The Phase 1 program includes EPA GHG
standards for recreational vehicles, but not NHTSA fuel efficiency
standards.\14\
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    \14\ The proposed Phase 2 program would also include NHTSA
recreational vehicle fuel efficiency standards.
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     Heavy-duty engines. In addition to vehicle types, the
Phase 1 rule has separate standards for heavy-duty engines, to assure
they contribute to the overall vehicle reductions in fuel consumption
and GHG emissions.
    The Phase 1 standards are premised on utilization of immediately
available technologies. The Phase 1 program provides flexibilities that
facilitate compliance. These flexibilities help provide sufficient lead
time for manufacturers to make necessary technological improvements and
reduce the overall cost of the program, without compromising overall
environmental and fuel consumption objectives. The primary flexibility
provisions are an engine averaging, banking, and trading (ABT) program
and a vehicle ABT program. These ABT programs allow for emission and/or
fuel consumption credits to be averaged, banked, or traded within each
of the regulatory subcategories. However, credits are not allowed to be
transferred across subcategories.
    The Phase 1 program is projected to save 530 million barrels of oil
and avoid 270 million metric tons of GHG emissions.\15\ At the same
time, the program is projected to produce $50 billion in fuel savings,
and net societal benefits of $49 billion. Today, the Phase 1 fuel
efficiency and GHG reduction standards are already reducing GHG
emissions and U.S. oil consumption, and producing fuel savings for
America's trucking industry. The market appears to be very accepting of
the new technology, and the agencies have seen no evidence of ``pre-
buy'' effects in response to the standards.
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    \15\ The White House, Improving the Fuel Efficiency of American
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving
Money and Supporting Manufacturing Innovation (Feb. 2014), 4.
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(3) Overview of Proposed Phase 2 Medium- and Heavy-Duty Vehicle
Standards

    The Phase 2 GHG and fuel efficiency standards for MDVs and HDVs are
a critical next step in improving fuel efficiency and reducing GHG. The
proposed Phase 2 standards carry forward our commitment to meaningful
collaboration with stakeholders and the public, as they build on more
than 200 meetings with manufacturers, suppliers, trucking fleets,
dealerships, state air quality agencies, non-governmental organizations
(NGOs), and other stakeholders to identify and understand the
opportunities and challenges involved with this next level of fuel
saving technology. These meetings have been invaluable to the agencies,
enabling the development of a proposal that appropriately balances all
potential impacts and effectively minimizes the possibility of
unintended consequences.
    Phase 2 would include technology-advancing standards that would
phase in over the long-term (through model year 2027) to result in an
ambitious, yet achievable program that would allow manufacturers to
meet standards through a mix of different technologies at reasonable
cost. The Phase 2 standards would maintain the underlying regulatory
structure developed in the Phase 1 program, such as the general
categorization of MDVs and HDVs and the separate standards for vehicles
and engines. However, the Phase 2 program would build on and advance
Phase 1 in a number of important ways including: Basing standards not
only on currently available technologies but also on utilization of
technologies now under development or not yet widely deployed while
providing significant lead time to assure adequate time to develop,
test, and phase in these controls; developing standards for trailers;
further encouraging innovation and providing flexibility; including
vehicles produced by small business manufacturers; incorporating
enhanced test procedures that (among other things) allow individual
drivetrain and powertrain performance to be reflected in the vehicle
certification process; and using an expanded and improved compliance
simulation model.
     Strengthening standards to account for ongoing
technological advancements. Relative to the baseline as of the end of
Phase 1, the proposed standards (labeled Alternative 3 or the
``preferred alternative'' throughout this proposal) would achieve
vehicle fuel savings of up to 8 percent and 24 percent, depending on
the vehicle category. While costs are higher than for Phase 1, benefits
greatly exceed costs, and payback periods are short, meaning that
consumers will see substantial net savings over the vehicle lifetime.
Payback is estimated at about two years for tractors and trailers,
about five years for vocational vehicles, and about three years for
heavy-duty pickups and vans. The agencies are further proposing to
phase in these MY 2027 standards with interim standards for model years
2021 and 2024 (and for certain types of trailers, EPA is proposing
model year 2018 phase-in standards as well).

    In addition to the proposed standards, the agencies are considering
another alternative (Alternative 4), which would achieve the same
performance as the proposed standards 2-3 years earlier, leading to
overall reductions in fuel use and greenhouse gas emissions. The
agencies believe Alternative 4 has the potential to be the maximum
feasible and appropriate alternative; however, based on the evidence
currently before us, EPA and NHTSA have outstanding questions regarding
relative risks and benefits of Alternative 4 due to the timeframe
envisioned by that alternative. The agencies are proposing Alternative
3 based on their analyses and projections, and taking into account the
agencies' respective statutory considerations. The comments that the
agencies receive on this proposal will be instrumental in helping us
determine standards that are appropriate (for EPA) and maximum feasible
(for NHTSA), given the discretion that both agencies have under our
respective statutes. Therefore, the agencies have presented different
options and raised specific questions throughout the proposed rule,
focusing in particular on better understanding the perspectives on the
feasible adoption rates of different technologies, considering
associated costs and necessary lead time.
     Setting standards for trailers for the first time. In
addition to retaining the vehicle and engine categories covered in the
Phase 1 program, which include semi tractors, heavy-duty pickup trucks
and work vans, vocational vehicles, and separate standards for heavy-
duty engines, the Phase 2 standards propose fuel efficiency and GHG
emission standards for trailers used in combination with tractors.
Although the agencies are not proposing standards for all trailer
types, the majority of new trailers would be covered.
     Encouraging technological innovation while providing
flexibility and options for manufacturers. For each category of HDVs,
the standards would set performance targets that allow manufacturers to
achieve reductions through a mix of different technologies and leave
manufacturers free to choose any means of compliance. For tractors and
vocational vehicles, enhanced test procedures and an expanded and
improved compliance simulation model enable the proposed vehicle
standards to encompass more of the complete vehicle and to account for
engine, transmission and driveline improvements than the Phase 1
program. With the addition of the powertrain and driveline to the
compliance model, representative drive cycles and vehicle baseline
configurations become critically important to assure the standards
promote technologies that improve real world fuel efficiency and GHG
emissions. This proposal updates drive cycles and vehicle
configurations to better reflect real world operation. For tractor
standards, for example, different combinations of improvements like
advanced aerodynamics, engine improvements and waste-heat recovery,
automated transmission, and lower rolling resistance tires and
automatic tire inflation can be used to meet standards. Additionally,
the agencies' analyses indicate that this proposal should have no
adverse impact on vehicle or engine safety.
     Providing flexibilities to help minimize effect on small
businesses. All small businesses are exempt from the Phase 1 standards.
The agencies are proposing to regulate small business entities under
Phase 2 (notably certain trailer manufacturers), but have conducted
extensive proceedings pursuant to Section 609 of the Regulatory
Flexibility Act, and otherwise have engaged in extensive consultation
with stakeholders, and developed a proposed approach to provide
targeted flexibilities geared toward helping small businesses comply
with the Phase 2 standards. Specifically, the agencies are proposing to
delay all new requirements by one year and simplify certification
requirements for small businesses, and are further proposing additional
specific flexibilities adapted to particular types of trailers.

   Summary of the Proposed Phase 2 Medium- and Heavy-Duty Vehicle Rule
 Impacts to Fuel Consumption, GHG Emissions, Benefits and Costs Over the
  Lifetime of Model Years 2018-2029, Based on Analysis Method A \a\ \b\
                                   \c\
------------------------------------------------------------------------
                                                3%              7%
------------------------------------------------------------------------
Fuel Reductions (billion gallons).......               72-77
GHG Reductions (MMT, CO2eq).............             974-1034
------------------------------------------------------------------------
Pre-Tax Fuel Savings ($billion).........         165-175           89-94
Discounted Technology Costs ($billion)..         25-25.4      16.8 -17.1
Value of reduced emissions ($billion)...       70.1-73.7       52.9-55.6
Total Costs ($billion)..................       30.5-31.1       20.0-20.5
Total Benefits ($billion)...............         261-276         156-165
Net Benefits ($billion).................         231-245         136-144
------------------------------------------------------------------------
Notes:
\a\ For an explanation of analytical Methods A and B, please see Section
  I.D; for an explanation of the less dynamic baseline, 1a, and more
  dynamic baseline, 1b, please see Section X.A.1.
\b\ Range reflects two reference case assumptions, one that projects
  very little improvement in new vehicle fuel efficiency absent new
  standards, and the second that projects more significant improvements
  in vehicle fuel efficiency absent new standards.
\c\ Benefits and net benefits (including those in the 7% discount rate
  column) use the 3 percent average SCC-CO2 value applied only to CO2
  emissions; GHG reductions include CO2, CH4, N2O and HFC reductions.

  Summary of the Proposed Phase 2 Medium- and Heavy-Duty Vehicle Annual
  Fuel and GHG Reductions, Program Costs, Benefits and Net Benefits in
      Calendar Years 2035 and 2050, Based on Analysis Method B \a\
------------------------------------------------------------------------
                                               2035            2050
------------------------------------------------------------------------
Fuel Reductions (Billion Gallons).......             9.3            13.4
GHG Reduction (MMT, CO2eq)..............           127.1           183.4
Vehicle Program Costs (including                   -$6.0           -$7.1
 Maintenance; Billions of 2012$)........
Fuel Savings (Pre-Tax; Billions of                 $37.2           $57.5
 2012$).................................
Benefits (Billions of 2012$)............           $20.5           $32.9

Net Benefits (Billions of 2012$)........           $51.7           $83.2
------------------------------------------------------------------------
Note:
\a\ Benefits and net benefits use the 3 percent average SCC-CO2 value
  applied only to CO2 emissions; GHG reductions include CO2, CH4, N2O
  and HFC reductions; values reflect the preferred alternative relative
  to the less dynamic baseline (a reference case that projects very
  little improvement in new vehicle fuel economy absent new standards.

  Summary of the Proposed Phase 2 Medium- and Heavy-Duty Vehicle Program Expected Per-Vehicle Fuel Savings, GHG
            Emission Reductions, and Cost for Key Vehicle Categories, Based on Analysis Method B \a\
----------------------------------------------------------------------------------------------------------------
                                            MY 2021                    MY 2024                   MY 2027
----------------------------------------------------------------------------------------------------------------
Maximum Vehicle Fuel Savings and
 Tailpipe GHG Reduction (%)
    Tractors.....................  13                         20                        24
    Trailers \b\.................  4                          6                         8
    Vocational Vehicles..........  7                          11                        16
    Pickups/Vans.................  2.5                        10                        16
Per Vehicle Cost ($) \c\ (%
 Increase in Typical Vehicle
 Price) \d\
    Tractors.....................  $6,710 (7%)                $9,940 (10%)              $11,680 (12%)
    Trailers.....................  $900 (4%)                  $1,010 (4%)               $1,170 (5%)
    Vocational Vehicles..........  $1,150 (2%)                $1,770 (3%)               $3,380 (5%)
    Pickups/Vans.................  $520 (1%)                  $950 (2%)                 $1,340 (3%)
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Note that the proposed EPA standards for some categories of box trailers begin in model year 2018; values
  reflect the preferred alternative relative to the less dynamic baseline (a reference case that projects very
  little improvement in new vehicle fuel economy absent new standards.
\b\ All engine costs are included.
\c\ For this table, we use a minimum vehicle price today of $100,000 for tractors, $25,000 for trailers, $70,000
  for vocational vehicles and $40,000 for HD pickups/vans.

 Payback Periods for MY2027 Vehicles Under the Proposed Standards, Based
                          on Analysis Method B
        [Payback occurs in the year shown; using 7% discounting]
------------------------------------------------------------------------
                                                             Proposed
                                                             standards
------------------------------------------------------------------------
Tractors/Trailers.......................................             2nd
Vocational Vehicles.....................................             6th
Pickups/Vans............................................             3rd
------------------------------------------------------------------------

(4) Issues Addressed in This Proposed Rule

    This proposed rule contains extensive discussion of the background,
elements, and implications of the proposed Phase 2 program. Section I
includes information on the MDV and HDV industry, related regulatory
and non-regulatory programs, summaries of Phase 1 and Phase 2 programs,
costs and benefits of the proposed standards, and relevant statutory
authority for EPA and NHTSA. Section II discusses vehicle simulation,
engine standards, and test procedures. Sections III, IV, V, and VI
detail the proposed standards for combination tractors, trailers,
vocational vehicles, and heavy-duty pickup trucks and vans. Sections
VII and VIII discuss aggregate GHG impacts, fuel consumption impacts,
climate impacts, and impacts on non-GHG emissions. Section IX evaluates
the economic impacts of the proposed standards. Sections X, XI, and XII
present the alternatives analyses, consideration of natural gas
vehicles, and the agencies' initial response to recommendations from
the Academy of Sciences. Finally, Sections XIII and XIV discuss the
changes that the proposed Phase 2 rules would have on Phase 1 standards
and other regulatory provisions. In addition to this preamble, the
agencies have also prepared a joint Draft Regulatory Impact Analysis
(DRIA) which is available on our respective Web sites and in the public
docket for this rulemaking which provides additional data, analysis and
discussion of the proposed standards and the alternatives analyzed by
the agencies. We request comment on all aspects of this proposed
rulemaking, including the DRIA.

Table of Contents

    A. Does this action apply to me?
    B. Public Participation
    C. Did EPA conduct a peer review before issuing this notice?
    D. Executive Summary
I. Overview
    A. Background
    B. Summary of Phase 1 Program
    C. Summary of the Proposed Phase 2 Standards and Requirements
    D. Summary of the Costs and Benefits of the Proposed Rule
    E. EPA and NHTSA Statutory Authorities
    F. Other Issues
II. Vehicle Simulation, Engine Standards and Test Procedures
    A. Introduction and Summary of Phase 1 and Phase 2 Regulatory
Structures
    B. Phase 2 Proposed Regulatory Structure
    C. Proposed Vehicle Simulation Model--Phase 2 GEM
    D. Proposed Engine Test Procedures and Engine Standards
III. Class 7 and 8 Combination Tractors
    A. Summary of the Phase 1 Tractor Program
    B. Overview of the Proposed Phase 2 Tractor Program
    C. Proposed Phase 2 Tractor Standards
    D. Feasibility of the Proposed Tractor Standards
    E. Proposed Compliance Provisions for Tractors
    F. Flexibility Provisions
IV. Trailers
    A. Summary of Trailer Consideration in Phase 1
    B. The Trailer Industry
    C. Proposed Phase 2 Trailer Standards
    D. Feasibility of the Proposed Trailer Standards
    E. Alternative Standards and Feasibility Considered
    F. Trailer Standards: Compliance and Flexibilities
V. Class 2b-8 Vocational Vehicles
    A. Summary of Phase 1 Vocational Vehicle Standards

    B. Proposed Phase 2 Standards for Vocational Vehicles
    C. Feasibility of the Proposed Vocational Vehicle Standards
    D. Alternative Vocational Vehicle Standards Considered
    E. Compliance Provisions for Vocational Vehicles
VI. Heavy-Duty Pickups and Vans
    A. Introduction and Summary of Phase 1 HD Pickup and Van
Standards
    B. Proposed HD Pickup and Van Standards
    C. Feasibility of Pickup and Van Standards
    D. DOT CAFE Model Analysis of the Regulatory Alternatives for HD
Pickups and Vans
    E. Compliance and Flexibility for HD Pickup and Van Standards
VII. Aggregate GHG, Fuel Consumption, and Climate Impacts
    A. What methodologies did the agencies use to project GHG
emissions and fuel consumption impacts?
    B. Analysis of Fuel Consumption and GHG Emissions Impacts
Resulting From Proposed Standards and Alternative 4
    C. What are the projected reductions in fuel consumption and GHG
emissions?
VIII. How will this proposed action impact non-GHG emissions and
their associated effects?
    A. Emissions Inventory Impacts
    B. Health Effects of Non-GHG Pollutants
    C. Environmental Effects of Non-GHG Pollutants
    D. Air Quality Impacts of Non-GHG Pollutants
IX. Economic and Other Impacts
    A. Conceptual Framework
    B. Vehicle-Related Costs Associated With the Program
    C. Changes in Fuel Consumption and Expenditures
    D. Maintenance Expenditures
    E. Analysis of the Rebound Effect
    F. Impact on Class Shifting, Fleet Turnover, and Sales
    G. Monetized GHG Impacts
    H. Monetized Non-GHG Health Impacts
    I. Energy Security Impacts
    J. Other Impacts
    K. Summary of Benefits and Costs
    L. Employment Impacts
    M. Cost of Ownership and Payback Analysis
    N. Safety Impacts
X. Analysis of the Alternatives
    A. What are the alternatives that the agencies considered?
    B. How do these alternatives compare in overall fuel consumption
and GHG emissions reductions and in benefits and costs?
XI. Natural Gas Vehicles and Engines
    A. Natural Gas Engine and Vehicle Technology
    B. GHG Lifecycle Analysis for Natural Gas Vehicles
    C. Projected Use of LNG and CNG
    D. Natural Gas Emission Control Measures
    E. Dimethyl Ether
XII. Agencies' Response to Recommendations From the National Academy
of Sciences
    A. Overview
    B. Major Findings and Recommendations of the NAS Phase 2 First
Report
XIII. Amendments to Phase 1 Standards
    A. EPA Amendments
    B. Other Compliance Provisions for NHTSA
XIV. Other Proposed Regulatory Provisions
    A. Proposed Amendments Related to Heavy-Duty Highway Engines and
Vehicles
    B. Amendments Affecting Gliders and Glider Kits
    C. Applying the General Compliance Provisions of 40 CFR Part
1068 to Light-Duty Vehicles, Light-Duty Trucks, Chassis-Certified
Class 2B and 3 Heavy-Duty Vehicles and Highway Motorcycles
    D. Amendments to General Compliance Provisions in 40 CFR Part
1068
    E. Amendments to Light-Duty Greenhouse Gas Program Requirements
    F. Amendments to Highway and Nonroad Test Procedures and
Certification Requirements
    G. Amendments Related to Nonroad Diesel Engines in 40 CFR Part
1039
    H. Amendments Related to Marine Diesel Engines in 40 CFR Parts
1042 and 1043
    I. Amendments Related to Locomotives in 40 CFR Part 1033
    J. Miscellaneous EPA Amendments
    K. Amending 49 CFR Parts 512 and 537 To Allow Electronic
Submissions and Defining Data Formats for Light-Duty Vehicle
Corporate Average Fuel Economy (CAFE) Reports
XV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive Order 13563: Improving Regulation and Regulatory Review
    B. National Environmental Policy Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility Act
    E. Unfunded Mandates Reform Act
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    I. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act and 1 CFR
Part 51
    K. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    L. Endangered Species Act
XVI. EPA and NHTSA Statutory Authorities
    A. EPA
    B. NHTSA
    C. List of Subjects

I. Overview

A. Background

    This background and summary of the proposed Phase 2 GHG emissions
and fuel efficiency standards includes an overview of the heavy-duty
truck industry and related regulatory and non-regulatory programs, a
summary of the Phase 1 GHG emissions and fuel efficiency program, a
summary of the proposed Phase 2 standards and requirements, a summary
of the costs and benefits of the proposed Phase 2 standards, discussion
of EPA and NHTSA statutory authorities, and other issues.
    For purposes of this preamble, the terms ``heavy-duty'' or ``HD''
are used to apply to all highway vehicles and engines that are not
within the range of light-duty passenger cars, light-duty trucks, and
medium-duty passenger vehicles (MDPV) covered by separate GHG and
Corporate Average Fuel Economy (CAFE) standards.\16\ They do not
include motorcycles. Thus, in this rulemaking, unless specified
otherwise, the heavy-duty category incorporates all vehicles with a
gross vehicle weight rating above 8,500 lbs, and the engines that power
them, except for MDPVs.17 18
---------------------------------------------------------------------------

    \16\ 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas
Emissions and Corporate Average Fuel Economy Standards; Final Rule,
77 FR 62623, October 15, 2012.
    \17\ The CAA defines heavy-duty as a truck, bus or other motor
vehicles with a gross vehicle weight rating exceeding 6,000 lbs (CAA
section 202(b)(3)). The term HD as used in this action refers to a
subset of these vehicles and engines.
    \18\ The Energy Independence and Security Act of 2007 requires
NHTSA to set standards for commercial medium- and heavy-duty on-
highway vehicles, defined as on-highway vehicles with a GVWR of
10,000 lbs or more, and work trucks, defined as vehicles with a GVWR
between 8,500 and 10,000 lbs and excluding medium duty passenger
vehicles.
---------------------------------------------------------------------------

    Consistent with the President's direction, over the past two years
as we have developed this proposal, the agencies have met on an on-
going basis with a very large number of diverse stakeholders. This
includes meetings, and in many cases site visits, with truck, trailer,
and engine manufacturers; technology supplier companies and their trade
associations (e.g., transmissions, drive lines, fuel systems,
turbochargers, tires, catalysts, and many others); line haul and
vocational trucking firms and trucking associations; the trucking
industries owner-operator association; truck dealerships and dealers
associations; trailer manufacturers and their trade association; non-
governmental organizations (NGOs, including environmental NGOs,
national security NGOs, and consumer advocacy NGOs); state air quality
agencies; manufacturing labor unions; and many other stakeholders. In
particular, NHTSA and EPA have consulted on an on-going basis with the
California Air Resources Board (CARB) over the past two years as we
have developed the Phase 2 proposal. In addition, CARB staff and
managers have also participated with EPA and NHTSA in meetings with

many external stakeholders, in particular with vehicle OEMs and
technology suppliers.\19\
---------------------------------------------------------------------------

    \19\ Vehicle chassis manufacturers are known in this industry as
original equipment manufacturers or OEMs.
---------------------------------------------------------------------------

    NHTSA and EPA staff also participated in a large number of
technical and policy conferences over the past two years related to the
technological, economic, and environmental aspects of the heavy-duty
trucking industry. The agencies also met with regulatory counterparts
from several other nations who either have already or are considering
establishing fuel consumption or GHG requirements, including outreach
with representatives from the governments of Canada, the European
Commission, Japan, and China.
    These comprehensive outreach actions by the agencies provided us
with information to assist in our identification of potential
technologies that can be used to reduce heavy-duty GHG emissions and
improve fuel efficiency. The outreach has also helped the agencies to
identify and understand the opportunities and challenges involved with
the proposed standards for the heavy-duty trucks, trailers, and engines
detailed in this preamble, including time needed for implementation of
various technologies and potential costs and fuel savings. The scope of
this outreach effort to gather input for the proposal included well
over 200 meetings with stakeholders. These meetings and conferences
have been invaluable to the agencies. We believe they have enabled us
to develop this proposal in such a way as to appropriately balance all
of the potential impacts, to minimize the possibility of unintended
consequences, and to ensure that we are requesting comment on a wide
range of issues that can inform the final rule.
(1) Brief Overview of the Heavy-Duty Truck Industry
    The heavy-duty sector is diverse in several respects, including the
types of manufacturing companies involved, the range of sizes of trucks
and engines they produce, the types of work for which the trucks are
designed, and the regulatory history of different subcategories of
vehicles and engines. The current heavy-duty fleet encompasses vehicles
from the ``18-wheeler'' combination tractors one sees on the highway to
the largest pickup trucks and vans, as well as vocational vehicles
covering a range between these extremes. Together, the HD sector spans
a wide range of vehicles with often specialized form and function. A
primary indicator of the diversity among heavy-duty trucks is the range
of load-carrying capability across the industry. The heavy-duty truck
sector is often subdivided by vehicle weight classifications, as
defined by the vehicle's gross vehicle weight rating (GVWR), which is a
measure of the combined curb (empty) weight and cargo carrying capacity
of the truck.\20\ Table I-1 below outlines the vehicle weight
classifications commonly used for many years for a variety of purposes
by businesses and by several Federal agencies, including the Department
of Transportation, the Environmental Protection Agency, the Department
of Commerce, and the Internal Revenue Service.
---------------------------------------------------------------------------

    \20\ GVWR describes the maximum load that can be carried by a
vehicle, including the weight of the vehicle itself. Heavy-duty
vehicles (including those designed for primary purposes other than
towing) also have a gross combined weight rating (GCWR), which
describes the maximum load that the vehicle can haul, including the
weight of a loaded trailer and the vehicle itself.

                                                        Table I-1--Vehicle Weight Classification
--------------------------------------------------------------------------------------------------------------------------------------------------------
                  Class                         2b               3               4               5               6               7               8
--------------------------------------------------------------------------------------------------------------------------------------------------------
GVWR (lb)...............................    8,501-10,000   10,001-14,000   14,001-16,000   16,001-19,500   19,501-26,000   26,001-33,000         >33,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

In the framework of these vehicle weight classifications, the heavy-
duty truck sector refers to ``Class 2b'' through ``Class 8'' vehicles
and the engines that power those vehicles.\21\
---------------------------------------------------------------------------

    \21\ Class 2b vehicles manufactured as passenger vehicles
(Medium Duty Passenger Vehicles, MDPVs) are covered by the light-
duty GHG and fuel economy standards and therefore are not addressed
in this rulemaking.
---------------------------------------------------------------------------

    Unlike light-duty vehicles, which are primarily used for
transporting passengers for personal travel, heavy-duty vehicles fill
much more diverse operator needs. Heavy-duty pickup trucks and vans
(Classes 2b and 3) are used chiefly as work trucks and vans, and as
shuttle vans, as well as for personal transportation, with an average
annual mileage in the range of 15,000 miles. The rest of the heavy-duty
sector is used for carrying cargo and/or performing specialized tasks.
``Vocational'' vehicles, which may span Classes 2b through 8, vary
widely in size, including smaller and larger van trucks, utility
``bucket'' trucks, tank trucks, refuse trucks, urban and over-the-road
buses, fire trucks, flat-bed trucks, and dump trucks, among others. The
annual mileage of these vehicles is as varied as their uses, but for
the most part tends to fall in between heavy-duty pickups/vans and the
large combination tractors, typically from 15,000 to 150,000 miles per
year.
    Class 7 and 8 combination tractor-trailers--some equipped with
sleeper cabs and some not--are primarily used for freight
transportation. They are sold as tractors and operate with one or more
trailers that can carry up to 50,000 lbs or more of payload, consuming
significant quantities of fuel and producing significant amounts of GHG
emissions. Together, Class 7 and 8 tractors and trailers account for
approximately two-thirds of the heavy-duty sector's total
CO2 emissions and fuel consumption. Trailer designs vary
significantly, reflecting the wide variety of cargo types. However, the
most common types of trailers are box vans (dry and refrigerated),
which are a focus of this Phase 2 rulemaking. The tractor-trailers used
in combination applications can and frequently do travel more than
150,000 miles per year and can operate for 20-30 years.
    EPA and NHTSA have designed our respective proposed standards in
careful consideration of the diversity and complexity of the heavy-duty
truck industry, as discussed in Section I.B.
(2) Related Regulatory and Non-Regulatory Programs
(a) History of EPA's Heavy-Duty Regulatory Program and Impacts of
Greenhouse Gases on Climate Change
    This subsection provides an overview of the history of EPA's heavy-
duty regulatory program and impacts of greenhouse gases on climate
change.
(i) History of EPA's Heavy-Duty Regulatory Program
    Since the 1980s, EPA has acted several times to address tailpipe
emissions of criteria pollutants and air toxics from heavy-duty
vehicles and engines. During the last two decades these programs have
primarily

addressed emissions of particulate matter (PM) and the primary ozone
precursors, hydrocarbons (HC) and oxides of nitrogen (NOX).
These programs, which have successfully achieved significant and cost-
effective reductions in emissions and associated health and welfare
benefits to the nation, were an important basis of the Phase 1 program.
See e.g. 66 FR 5002, 5008, and 5011-5012 (January 18, 2001) (detailing
substantial public health benefits of controls of criteria pollutants
from heavy-duty diesel engines, including bringing areas into
attainment with primary (public health) PM NAAQS, or contributing
substantially to such attainment); National Petrochemical Refiners
Association v. EPA, 287 F.3d 1130, 1134 (D.C. Cir. 2002) (referring to
the ``dramatic reductions'' in criteria pollutant emissions resulting
from those on-highway heavy-duty engine standards, and upholding all of
the standards).
    As required by the Clean Air Act (CAA), the emission standards
implemented by these programs include standards that apply at the time
that the vehicle or engine is sold and continue to apply in actual use.
EPA's overall program goal has always been to achieve emissions
reductions from the complete vehicles that operate on our roads. The
agency has often accomplished this goal for many heavy-duty truck
categories by regulating heavy-duty engine emissions. A key part of
this success has been the development over many years of a well-
established, representative, and robust set of engine test procedures
that industry and EPA now use routinely to measure emissions and
determine compliance with emission standards. These test procedures in
turn serve the overall compliance program that EPA implements to help
ensure that emissions reductions are being achieved. By isolating the
engine from the many variables involved when the engine is installed
and operated in a HD vehicle, EPA has been able to accurately address
the contribution of the engine alone to overall emissions.
(ii) Impacts of Greenhouse Gases on Climate Change
    In 2009, the EPA Administrator issued the document known as the
Endangerment Finding under CAA Section 202(a)(1).\22\ In the
Endangerment Finding, which focused on public health and public welfare
impacts within the United States, the Administrator found that elevated
concentrations of GHG emissions in the atmosphere may reasonably be
anticipated to endanger public health and welfare of current and future
generations. See also Coalition for Responsible Regulation v. EPA, 684
F.3d 102, 117-123 (D.C. Cir. 2012) (upholding the endangerment finding
in all respects). The following sections summarize the key information
included in the Endangerment Finding.
---------------------------------------------------------------------------

    \22\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under Section 202(a) of the Clean Air Act,'' 74 FR
66496 (December 15, 2009) (``Endangerment Finding'').
---------------------------------------------------------------------------

    Climate change caused by human emissions of GHGs threatens public
health in multiple ways. By raising average temperatures, climate
change increases the likelihood of heat waves, which are associated
with increased deaths and illnesses. While climate change also
increases the likelihood of reductions in cold-related mortality,
evidence indicates that the increases in heat mortality will be larger
than the decreases in cold mortality in the United States. Compared to
a future without climate change, climate change is expected to increase
ozone pollution over broad areas of the U.S., including in the largest
metropolitan areas with the worst ozone problems, and thereby increase
the risk of morbidity and mortality. Other public health threats also
stem from projected increases in intensity or frequency of extreme
weather associated with climate change, such as increased hurricane
intensity, increased frequency of intense storms and heavy
precipitation. Increased coastal storms and storm surges due to rising
sea levels are expected to cause increased drownings and other adverse
health impacts. Children, the elderly, and the poor are among the most
vulnerable to these climate-related health effects. See also 79 FR
75242 (December 17, 2014) (climate change, and temperature increases in
particular, likely to increase O3 (Ozone) pollution ``over broad areas
of the U.S., including the largest metropolitan areas with the worst O3
problems, increas[ing] the risk of morbidity and mortality'').
    Climate change caused by human emissions of GHGs also threatens
public welfare in multiple ways. Climate changes are expected to place
large areas of the country at serious risk of reduced water supplies,
increased water pollution, and increased occurrence of extreme events
such as floods and droughts. Coastal areas are expected to face
increased risks from storm and flooding damage to property, as well as
adverse impacts from rising sea level, such as land loss due to
inundation, erosion, wetland submergence and habitat loss. Climate
change is expected to result in an increase in peak electricity demand,
and extreme weather from climate change threatens energy,
transportation, and water resource infrastructure. Climate change may
exacerbate ongoing environmental pressures in certain settlements,
particularly in Alaskan indigenous communities. Climate change also is
very likely to fundamentally rearrange U.S. ecosystems over the 21st
century. Though some benefits may balance adverse effects on
agriculture and forestry in the next few decades, the body of evidence
points towards increasing risks of net adverse impacts on U.S. food
production, agriculture and forest productivity as temperature
continues to rise. These impacts are global and may exacerbate problems
outside the U.S. that raise humanitarian, trade, and national security
issues for the U.S. See also 79 FR 75382 (December 17, 2014) (welfare
effects of O3 increases due to climate change, with emphasis on
increased wildfires).
    As outlined in Section VIII.A. of the 2009 Endangerment Finding,
EPA's approach to providing the technical and scientific information to
inform the Administrator's judgment regarding the question of whether
GHGs endanger public health and welfare was to rely primarily upon the
recent, major assessments by the U.S. Global Change Research Program
(USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the
National Research Council (NRC) of the National Academies. These
assessments addressed the scientific issues that EPA was required to
examine, were comprehensive in their coverage of the GHG and climate
change issues, and underwent rigorous and exacting peer review by the
expert community, as well as rigorous levels of U.S. government review.
Since the administrative record concerning the Endangerment Finding
closed following EPA's 2010 Reconsideration Denial, a number of such
assessments have been released. These assessments include the IPCC's
2012 ``Special Report on Managing the Risks of Extreme Events and
Disasters to Advance Climate Change Adaptation'' (SREX) and the 2013-
2014 Fifth Assessment Report (AR5), the USGCRP's 2014 ``Climate Change
Impacts in the United States'' (Climate Change Impacts), and the NRC's
2010 ``Ocean Acidification: A National Strategy to Meet the Challenges
of a Changing Ocean'' (Ocean Acidification), 2011 ``Report on Climate
Stabilization Targets: Emissions, Concentrations, and Impacts over
Decades to Millennia'' (Climate Stabilization Targets), 2011 ``National
Security Implications for U.S. Naval

Forces'' (National Security Implications), 2011 ``Understanding Earth's
Deep Past: Lessons for Our Climate Future'' (Understanding Earth's Deep
Past), 2012 ``Sea Level Rise for the Coasts of California, Oregon, and
Washington: Past, Present, and Future'', 2012 ``Climate and Social
Stress: Implications for Security Analysis'' (Climate and Social
Stress), and 2013 ``Abrupt Impacts of Climate Change'' (Abrupt Impacts)
assessments.
    EPA has reviewed these new assessments and finds that the improved
understanding of the climate system they present strengthens the case
that GHG emissions endanger public health and welfare.
    In addition, these assessments highlight the urgency of the
situation as the concentration of CO2 in the atmosphere
continues to rise. Absent a reduction in emissions, a recent National
Research Council of the National Academies assessment projected that
concentrations by the end of the century would increase to levels that
the Earth has not experienced for millions of years.\23\ In fact, that
assessment stated that ``the magnitude and rate of the present
greenhouse gas increase place the climate system in what could be one
of the most severe increases in radiative forcing of the global climate
system in Earth history.'' \24\ What this means, as stated in another
NRC assessment, is that:
---------------------------------------------------------------------------

    \23\ National Research Council, Understanding Earth's Deep Past,
p. 1
    \24\ Id., p.138.

    Emissions of carbon dioxide from the burning of fossil fuels
have ushered in a new epoch where human activities will largely
determine the evolution of Earth's climate. Because carbon dioxide
in the atmosphere is long lived, it can effectively lock Earth and
future generations into a range of impacts, some of which could
become very severe. Therefore, emission reductions choices made
today matter in determining impacts experienced not just over the
next few decades, but in the coming centuries and millennia.\25\
---------------------------------------------------------------------------

    \25\ National Research Council, Climate Stabilization Targets,
p. 3.

    Moreover, due to the time-lags inherent in the Earth's climate, the
Climate Stabilization Targets assessment notes that the full warming
from any given concentration of CO2 reached will not be
realized for several centuries.
    The recently released USGCRP ``National Climate Assessment'' \26\
emphasizes that climate change is already happening now and it is
happening in the United States. The assessment documents the increases
in some extreme weather and climate events in recent decades, the
damage and disruption to infrastructure and agriculture, and projects
continued increases in impacts across a wide range of peoples, sectors,
and ecosystems.
---------------------------------------------------------------------------

    \26\ U.S. Global Change Research Program, Climate Change Impacts
in the United States: The Third National Climate Assessment, May
2014 Available at http://nca2014.globalchange.gov/.
---------------------------------------------------------------------------

    These assessments underscore the urgency of reducing emissions now:
Today's emissions will otherwise lead to raised atmospheric
concentrations for thousands of years, and raised Earth system
temperatures for even longer. Emission reductions today will benefit
the public health and public welfare of current and future generations.
    Finally, it should be noted that the concentration of carbon
dioxide in the atmosphere continues to rise dramatically. In 2009, the
year of the Endangerment Finding, the average concentration of carbon
dioxide as measured on top of Mauna Loa was 387 parts per million.\27\
The average concentration in 2013 was 396 parts per million. And the
monthly concentration in April of 2014 was 401 parts per million, the
first time a monthly average has exceeded 400 parts per million since
record keeping began at Mauna Loa in 1958, and for at least the past
800,000 years according to ice core records.\28\
---------------------------------------------------------------------------

    \27\ ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt.
    \28\ http://www.esrl.noaa.gov/gmd/ccgg/trends/.
---------------------------------------------------------------------------

(b) The NHTSA and EPA Light-Duty National GHG and Fuel Economy Program
    On May 7, 2010, EPA and NHTSA finalized the first-ever National
Program for light-duty cars and trucks, which set GHG emissions and
fuel economy standards for model years 2012-2016 (see 75 FR 25324).
More recently, the agencies adopted even stricter standards for model
years 2017 and later (77 FR 62624, October 15, 2012). The agencies have
used the light-duty National Program as a model for the HD National
Program in several respects. This is most apparent in the case of
heavy-duty pickups and vans, which are similar to the light-duty trucks
addressed in the light-duty National Program both technologically as
well as in terms of how they are manufactured (i.e., the same company
often makes both the vehicle and the engine, and several light-duty
manufacturers also manufacture HD pickups and vans).\29\ For HD pickups
and vans, there are close parallels to the light-duty program in how
the agencies have developed our respective heavy-duty standards and
compliance structures. However, HD pickups and vans are true work
vehicles that are designed for much higher towing and payload
capabilities than are light-duty pickups and vans. The technologies
applied to light-duty trucks are not all applicable to heavy-duty
pickups and vans at the same adoption rates, and the technologies often
produce a lower percent reduction in CO2 emissions and fuel
consumption when used in heavy-duty vehicles. Another difference
between the light-duty and the heavy-duty standards is that each agency
adopts heavy-duty standards based on attributes other than vehicle
footprint, as discussed below.
---------------------------------------------------------------------------

    \29\ This is more broadly true for heavy-duty pickup trucks than
vans because every manufacturer of heavy-duty pickup trucks also
makes light-duty pickup trucks, while only some heavy-duty van
manufacturers also make light-duty vans.
---------------------------------------------------------------------------

    Due to the diversity of the remaining HD vehicles, there are fewer
parallels with the structure of the light-duty program. However, the
agencies have maintained the same collaboration and coordination that
characterized the development of the light-duty program throughout the
Phase 1 rulemaking and the continued efforts for Phase 2. Most notably,
as with the light-duty program, manufacturers would continue to be able
to design and build vehicles to meet a closely coordinated, harmonized
national program, and to avoid unnecessarily duplicative testing and
compliance burdens. In addition, the averaging, banking, and trading
provisions in the HD program, although structurally different from
those of the light-duty program, serve the same purpose, which is to
allow manufacturers to achieve large reductions in fuel consumption and
emissions while providing a broad mix of products to their customers.
The agencies have also worked closely with CARB to provide harmonized
national standards.
(c) EPA's SmartWay Program
    EPA's voluntary SmartWay Transport Partnership program encourages
businesses to take actions that reduce fuel consumption and
CO2 emissions while cutting costs by working with the
shipping, logistics, and carrier communities to identify low carbon
strategies and technologies across their transportation supply chains.
SmartWay provides technical information, benchmarking and tracking
tools, market incentives, and partner recognition to facilitate and
accelerate the adoption of these strategies. Through the SmartWay
program and its related technology assessment center, EPA has worked
closely with truck and trailer manufacturers and truck fleets over the
last ten years to develop test

procedures to evaluate vehicle and component performance in reducing
fuel consumption and has conducted testing and has established test
programs to verify technologies that can achieve these reductions.
SmartWay partners have demonstrated these new and emerging technologies
in their business operations, adding to the body of technical data and
information that EPA can disseminate to industry, researchers and other
stakeholders. Over the last several years, EPA has developed hands-on
experience testing the largest heavy-duty trucks and trailers and
evaluating improvements in tire and vehicle aerodynamic performance. In
developing the Phase 1 program, the agencies drew from this testing and
from the SmartWay experience. In the same way, the agencies benefitted
from SmartWay in developing the proposed Phase 2 trailer program.
(d) The State of California
    California has established ambitious goals for reducing GHG
emissions from heavy-duty vehicles and engines as part of an overall
plan to reduce GHG emissions from the transportation sector in
California.\30\ Heavy-duty vehicles are responsible for one-fifth of
the total GHG emissions from transportation sources in California. In
the past several years the California Air Resources Board (CARB) has
taken a number of actions to reduce GHG emissions from heavy-duty
vehicles and engines. For example, in 2008, the CARB adopted
regulations to reduce GHG emissions from heavy-duty tractors that pull
box-type trailers through improvements in tractor and trailer
aerodynamics and the use of low rolling resistance tires.\31\ The
tractors and trailers subject to the CARB regulation are required to
use SmartWay certified tractors and trailers, or retrofit their
existing fleet with SmartWay verified technologies, consistent with
California's state authority to regulate both new and in-use vehicles.
Recently, in December 2013, CARB adopted regulations that establish its
own parallel Phase 1 program with standards consistent with EPA Phase 1
standards. On December 5, 2014, California's Office of Administrative
Law approved CARB's adoption of the Phase 1 standards, with an
effective date of December 5, 2014.\32\ Complementary to its regulatory
efforts, CARB and other California agencies are investing significant
public capital through various incentive programs to accelerate fleet
turnover and stimulate technology innovation within the heavy-duty
vehicle market (e.g., Air Quality Improvement, Carl Moyer, Loan
Incentives, Lower-Emission School Bus and Goods Movement Emission
Reduction Programs).\33\ And, recently, California Governor Jerry Brown
established a target of up to 50 percent petroleum reduction by 2030.
---------------------------------------------------------------------------

    \30\ See http://www.arb.ca.gov/cc/cc.htm for details on the
California Air Resources Board climate change actions, including a
discussion of Assembly Bill 32, and the Climate Change Scoping Plan
developed by CARB, which includes details regarding CARB's future
goals for reducing GHG emissions from heavy-duty vehicles.
    \31\ See http://www.arb.ca.gov/msprog/truckstop/trailers/trailers.htm for a summary of CARB's ``Tractor-Trailer Greenhouse
Gas Regulation''.
    \32\ See http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm for details regarding CARB's adoption of the Phase 1
standards.
    \33\ See http://www.arb.ca.gov/ba/fininfo.htm for detailed
descriptions of CARB's mobile source incentive programs. Note that
EPA works to support CARB's heavy-duty incentive programs through
the West Coast Collaborative (http://westcoastcollaborative.org/)
and the Clean Air Technology Initiative (http://www.epa.gov/region09/cleantech/).
---------------------------------------------------------------------------

    In addition to California's efforts to reduce GHG emissions that
contribute to climate change, California also faces unique air quality
challenges as compared to many other regions of the United States. Many
areas of the state are classified as non-attainment for both the ozone
and particulate matter National Ambient Air Quality Standards (NAAQS)
with California having the nation's only two ``Extreme'' ozone non-
attainment airsheds (the San Joaquin Valley and South Coast Air
Basins).\34\ By 2016, California must submit to EPA its Clean Air Act
State Implementation Plans (SIPs) that demonstrate how the 2008 ozone
and 2006 PM2.5 NAAQS will be met by Clean Air Act deadlines.
Extreme ozone areas must attain the 2008 ozone NAAQS by no later than
2032 and PM2.5 moderate areas must attain the 2006
PM2.5 standard by 2021 or, if reclassified to serious, by
2025.
---------------------------------------------------------------------------

    \34\ See http://www.epa.gov/airquality/greenbk/index.html for
more information on EPA's nonattainment designations.
---------------------------------------------------------------------------

    Heavy-duty vehicles are responsible today for one-third of the
state's oxides of nitrogen (NOX) emissions. California has
estimated that the state's South Coast Air Basin will need nearly a 90
percent reduction in heavy-duty vehicle NOX emissions by
2032 from 2010 levels to attain the 2008 NAAQS for ozone. Additionally,
on November 25, 2014, EPA issued a proposal to strengthen the ozone
NAAQS. If a change to the ozone NAAQS is finalized, California and
other areas of the country will need to identify and implement measures
to reduce NOX as needed to complement Federal emission
reduction measures. While this section is focused on California's
regulatory programs and air quality needs, EPA recognizes that other
states and local areas are concerned about the challenges of reducing
NOX and attaining, as well as maintaining, the ozone NAAQS
(further discussed in Section VIII.D.1 below).
    In order to encourage the use of lower NOX emitting new
heavy-duty vehicles in California, in 2013 CARB adopted a voluntary low
NOX emission standard for heavy-duty engines.\35\ In
addition, in 2013 CARB awarded a major new research contract to
Southwest Research Institute to investigate advanced technologies that
could reduce heavy-duty vehicle NOX emissions well below the
current EPA and CARB standards.
---------------------------------------------------------------------------

    \35\ See http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm for a description of the CARB optional reduced
NOX emission standards for on-road heavy-duty engines.
---------------------------------------------------------------------------

    California has long had the unique ability among states to adopt
its own separate new motor vehicle standards per Section 209 of the
Clean Air Act (CAA). Although section 209(a) of the CAA expressly
preempts states from adopting and enforcing standards relating to the
control of emissions from new motor vehicles or new motor vehicle
engines (such as state controls for new heavy-duty engines and
vehicles) CAA section 209(b) directs EPA to waive this preemption under
certain conditions. Under the waiver process set out in CAA Section
209(b), EPA has granted CARB a waiver for its initial heavy-duty
vehicle GHG regulation.\36\ Even with California's ability under the
CAA to establish its own emission standards, EPA and CARB have worked
closely together over the past several decades to largely harmonize new
vehicle criteria pollutant standard programs for heavy-duty engines and
heavy-duty vehicles. In the past several years EPA and NHTSA also
consulted with CARB in the development of the Federal light-duty
vehicle GHG and CAFE rulemakings for the 2012-2016 and 2017-2025 model
years.
---------------------------------------------------------------------------

    \36\ See EPA's waiver of CARB's heavy-duty tractor-trailer
greenhouse gas regulation applicable to new 2011 through 2013 model
year Class 8 tractors equipped with integrated sleeper berths
(sleeper-cab tractors) and 2011 and subsequent model year dry-can
and refrigerated-van trailers that are pulled by such tractors on
California highways at 79 FR 46256 (August 7, 2014).
---------------------------------------------------------------------------

    As discussed above, California operates under state authority to
establish its own new heavy-duty vehicle and engine emission standards,
including standards for CO2, methane, N2O, and
hydrofluorocarbons. EPA recognizes this independent authority, and we
also recognize the potential

benefits for the regulated industry if the Federal Phase 2 standards
could result in a single, National Program that would meet the NHTSA
and EPA's statutory requirements to set appropriate and maximum
feasible standards, and also be equivalent to potential future new
heavy-duty vehicle and engine GHG standards established by CARB
(addressing the same model years as addressed by the final Federal
Phase 2 program and requiring the same technologies).
    Similarly, CARB has expressed support in the past for a Federal
heavy-duty Phase 2 program that would produce significant GHG
reductions both at the Federal level and in California that could
enable CARB to adopt the same standards at the state level. This is
similar to CARB's approach for the Federal heavy-duty Phase 1 program,
and with past EPA criteria pollutant standards for heavy-duty vehicles
and engines. In order to further the opportunity for maintaining
coordinated Federal and California standards in the Phase 2 timeframe
(as well as to benefit from different technical expertise and
perspective), NHTSA and EPA have consulted on an on-going basis with
CARB over the past two years as we have developed the Phase 2 proposal.
The agencies' technical staff have shared information on technology
cost, technology effectiveness, and feasibility with the CARB staff. We
have also received information from CARB on these same topics. EPA and
NHTSA have also shared preliminary results from several of our modeling
exercises with CARB as we examined different potential levels of
stringency for the Phase 2 program. In addition, CARB staff and
managers have also participated with EPA and NHTSA in meetings with
many external stakeholders, in particular with vehicle OEMs and
technology suppliers.
    In addition to information on GHG emissions, CARB has also kept EPA
and NHTSA informed of the state's need to consider opportunities for
additional NOX emission reductions from heavy-duty vehicles.
CARB has asked the agencies to consider opportunities in the Heavy-Duty
Phase 2 rulemaking to encourage or incentivize further NOX
emission reductions, in addition to the petroleum and GHG reductions
which would come from the Phase 2 standards. When combined with the
Phase 1 standards, the technologies the agencies are projecting to be
used to meet the proposed GHG emission and fuel efficiency standards
would be expected to reduce NOX emissions by over 450,000
tons in 2050 (see Section VIII).
    EPA and NHTSA believe that through this information sharing and
dialog we will enhance the potential for the Phase 2 program to result
in a National Program that can be adopted not only by the Federal
agencies, but also by the State of California, given the strong
interest from the regulated industry for a harmonized State and Federal
program.
    The agencies will continue to seek input from CARB, and from all
stakeholders, throughout this rulemaking.
(e) Environment Canada
    On March 13, 2013, Environment Canada (EPA's Canadian counterpart)
published its own regulations to control GHG emissions from heavy-duty
vehicles and engines, beginning with MY 2014. These regulations are
closely aligned with EPA's Phase 1 program to achieve a common set of
North American standards. Environment Canada has expressed its
intention to amend these regulations to further limit emissions of
greenhouse gases from new on-road heavy-duty vehicles and their engines
for post-2018 MYs. As with the development of the current regulations,
Environment Canada is committed to continuing to work closely with EPA
to maintain a common Canada-United States approach to regulating GHG
emissions for post-2018 MY vehicles and engines. This approach will
build on the long history of regulatory alignment between the two
countries on vehicle emissions pursuant to the Canada-United States Air
Quality Agreement.\37\ Environment Canada has also been of great
assistance during the development of this Phase 2 proposal. In
particular, Environment Canada supported aerodynamic testing, and
conducted chassis dynamometer emissions testing.
---------------------------------------------------------------------------

    \37\ http://www.ijc.org/en_/Air_Quality__Agreement.
---------------------------------------------------------------------------

(f) Recommendations of the National Academy of Sciences
    In April 2010 as mandated by Congress in the Energy Independence
and Security Act of 2007 (EISA), the National Research Council (NRC)
under the National Academy of Sciences (NAS) issued a report to NHTSA
and to Congress evaluating medium- and heavy-duty truck fuel efficiency
improvement opportunities, titled ``Technologies and Approaches to
Reducing the Fuel Consumption of Medium- and Heavy-duty Vehicles.''
That NAS report was far reaching in its review of the technologies that
were available and that might become available in the future to reduce
fuel consumption from medium- and heavy-duty vehicles. In presenting
the full range of technical opportunities, the report included
technologies that may not be available until 2020 or even further into
the future. The report provided not only a valuable list of off the
shelf technologies from which the agencies drew in developing the Phase
1 program, but also provided useful information the agencies have
considered when developing this second phase of regulations.
    In April 2014, the NAS issued another report: ``Reducing the Fuel
Consumption and Greenhouse Gas Emissions of Medium and Heavy-Duty
Vehicles, Phase Two, First Report.'' This study outlines a number of
recommendations to the U.S. Department of Transportation and NHTSA on
technical and policy matters to consider when addressing the fuel
efficiency of our nation's medium- and heavy-duty vehicles. In
particular, this report provided recommendations with respect to:

 The Greenhouse Gas Emission Model (GEM) simulation tool used
by the agencies to assess compliance with vehicle standards
 Regulation of trailers
 Natural gas-fueled engines and vehicles
 Data collection on in-use operation

    As described in Sections II, IV, and XII, the agencies are
proposing to incorporate many of these recommendations into this
proposed Phase 2 program, especially those recommendations relating to
the GEM simulation tool and to trailers.

B. Summary of Phase 1 Program

(1) EPA Phase 1 GHG Emission Standards and NHTSA Phase 1 Fuel
Consumption Standards
    The EPA Phase 1 GHG mandatory standards commenced in MY 2014 and
include increased stringency for standards applicable to MY 2017 and
later MY vehicles and engines. NHTSA's fuel consumption standards are
voluntary for MYs 2014 and 2015, due to lead time requirements in EISA,
and apply on a mandatory basis thereafter. They also increase in
stringency for MY 2017. Both agencies have allowed voluntary early
compliance starting in MY 2013 and encouraged manufacturers'
participation through credit incentives.
    Given the complexity of the heavy-duty industry, the agencies
divided the industry into three discrete categories for purposes of
setting our respective Phase 1 standards--combination

tractors, heavy-duty pickups and vans, and vocational vehicles--based
on the relative degree of homogeneity among trucks within each
category. The Phase 1 rule also include separate standards for the
engines that power combination tractors and vocational vehicles. For
each regulatory category, the agencies adopted related but distinct
program approaches reflecting the specific challenges in these
segments. In the following paragraphs, we summarize briefly EPA's final
GHG emission standards and NHTSA's final fuel consumption standards for
the three regulatory categories of heavy-duty vehicles and for the
engines powering vocational vehicles and tractors. See Sections III, V,
and VI for additional details on the Phase 1 standards. To respect
differences in design and typical uses that drive different technology
solutions, the agencies segmented each regulatory class into
subcategories. The category-specific structure enabled the agencies to
set standards that appropriately reflect the technology available for
each regulatory subcategory of vehicles and the engines for use in each
type of vehicle. The Phase 1 program also provided several
flexibilities, as summarized in Section I.B(3).
    The agencies are proposing to base the Phase 2 standards on test
procedures that differ from those used for Phase 1, including the
revised GEM simulation tool. Significant revisions to GEM are discussed
in Section II and the draft RIA Chapter 4, and other test procedures
are discussed further in the draft RIA Chapter 3. It is important to
note that due to these test procedure changes, the Phase 1 standards
and the proposed Phase 2 standards are not directly comparable in an
absolute sense. In particular, the proposed revisions to the 55 mph and
65 mph highway cruise cycles for tractors and vocational vehicles have
the effect of making the cycles more challenging (albeit more
representative of actual driving conditions). We are not proposing to
apply these revisions to the Phase 1 program because doing so would
significantly change the stringency of the Phase 1 standards, for which
manufacturers have already developed engineering plans and are now
producing products to meet. Moreover, the agencies intend such changes
to address a broader range of technologies not part of the projected
compliance path for use in Phase 1.
(a) Class 7 and 8 Combination Tractors
    Class 7 and 8 combination tractors and their engines contribute the
largest portion of the total GHG emissions and fuel consumption of the
heavy-duty sector, approximately two-thirds, due to their large
payloads, their high annual miles traveled, and their major role in
national freight transport. These vehicles consist of a cab and engine
(tractor or combination tractor) and a detachable trailer. The primary
manufacturers of combination tractors in the United States are Daimler
Trucks North America, Navistar, Volvo/Mack, and PACCAR. Each of the
tractor manufacturers and Cummins (an independent engine manufacturer)
also produce heavy-duty engines used in tractors. The Phase 1 standards
require manufacturers to reduce GHG emissions and fuel consumption for
these vehicles and engines, which we expect them to do through
improvements in aerodynamics and tires, reductions in tractor weight,
reduction in idle operation, as well as engine-based efficiency
improvements.\38\
---------------------------------------------------------------------------

    \38\ We note although the standards' stringency is predicated on
use of certain technologies, and the agencies' assessed the cost of
the rule based on the cost of use of those technologies, the
standards can be met by any means. Put another way, the rules create
a performance standard, and do not mandate any particular means of
achieving that level of performance.
---------------------------------------------------------------------------

    The Phase 1 tractor standards differ depending on gross vehicle
weight rating (GVWR) (i.e., whether the truck is Class 7 or Class 8),
the height of the roof of the cab, and whether it is a ``day cab'' or a
``sleeper cab.'' The agencies created nine subcategories within the
Class 7 and 8 combination tractor category reflecting combinations of
these attributes. The agencies set Phase 1 standards for each of these
subcategories beginning in MY 2014, with more stringent standards
following in MY 2017. The standards represent an overall fuel
consumption and CO2 emissions reduction up to 23 percent
from the tractors and the engines installed in them when compared to a
baseline MY 2010 tractor and engine.
    For Phase 1, manufacturers demonstrate compliance with the tractor
CO2 and fuel consumption standards using a vehicle
simulation tool described in Section II. The tractor inputs to the
simulation tool in Phase 1 are the aerodynamic performance, tire
rolling resistance, vehicle speed limiter, automatic engine shutdown,
and weight reduction. The agencies have verified, through our own
confirmatory testing, that the values inputs into the model by
manufacturers are generally correct. Prior to and after adopting the
Phase 1 standards, the agencies worked with manufacturers to minimize
impacts of this process on their normal business practices.
    In addition to the final Phase 1 tractor-based standards for
CO2, EPA adopted a separate standard to reduce leakage of
hydrofluorocarbon (HFC) refrigerant from cabin air conditioning (A/C)
systems from combination tractors, to apply to the tractor
manufacturer. This HFC leakage standard is independent of the
CO2 tractor standard. Manufacturers can choose technologies
from a menu of leak-reducing technologies sufficient to comply with the
standard, as opposed to using a test to measure performance. Given that
HFC leakage does not relate to fuel efficiency, NHTSA did not adopt
corresponding HFC standards.
(b) Heavy-Duty Pickup Trucks and Vans (Class 2b and 3)
    Heavy-duty vehicles with a GVWR between 8,501 and 10,000 lb are
classified as Class 2b motor vehicles. Heavy-duty vehicles with a GVWR
between 10,001 and 14,000 lb are classified as Class 3 motor vehicles.
Class 2b and Class 3 heavy-duty vehicles (referred to in these rules as
``HD pickups and vans'') together emit about 15 percent of today's GHG
emissions from the heavy-duty vehicle sector.\39\
---------------------------------------------------------------------------

    \39\ EPA MOVES Model, http://www.epa.gov/otaq/models/moves/index.htm.
---------------------------------------------------------------------------

    The majority of HD pickups and vans are \3/4\-ton and 1-ton pickup
trucks, 12- and 15-passenger vans,\40\ and large work vans that are
sold by vehicle manufacturers as complete vehicles, with no secondary
manufacturer making substantial modifications prior to registration and
use. These vehicles can also be sold as cab-complete vehicles (i.e.,
incomplete vehicles that include complete or nearly complete cabs that
are sold to secondary manufacturers). The majority of heavy-duty
pickups and vans are produced by companies with major light-duty
markets in the United States. Furthermore, the technologies available
to reduce fuel consumption and GHG emissions from this segment are
similar to the technologies used on light-duty pickup trucks, including
both engine efficiency improvements (for gasoline and diesel engines)
and vehicle efficiency improvements. For these reasons, EPA and NHTSA
concluded that it was appropriate to adopt GHG standards, expressed as
grams per mile, and fuel consumption standards, expressed as gallons
per 100 miles, for HD pickups and vans based on the whole vehicle
(including the engine), consistent with the way these vehicles

have been regulated by EPA for criteria pollutants and also consistent
with the way their light-duty counterpart vehicles are regulated by
NHTSA and EPA. This complete vehicle approach adopted by both agencies
for HD pickups and vans was consistent with the recommendations of the
NAS Committee in its 2010 Report.
---------------------------------------------------------------------------

    \40\ Note that 12-passenger vans are subject to the light-duty
standards as medium-duty passenger vehicles (MDPVs) and are not
subject to this proposal.
---------------------------------------------------------------------------

    For the light-duty GHG and fuel economy standards, the agencies
based the emissions and fuel economy targets on vehicle footprint (the
wheelbase times the average track width). For those standards,
passenger cars and light trucks with larger footprints are assigned
higher GHG and lower fuel economy target levels reflecting their
inherent tendency to consume more fuel and emit more GHGs per mile. For
HD pickups and vans, the agencies believe that setting standards based
on vehicle attributes is appropriate, but have found that a work-based
metric would be a more appropriate attribute than the footprint
attribute utilized in the light-duty vehicle rulemaking, given that
work-based measures such as towing and payload capacities are critical
elements of these vehicles' functionality. EPA and NHTSA therefore
adopted standards for HD pickups and vans based on a ``work factor''
attribute that combines their payload and towing capabilities, with an
added adjustment for 4-wheel drive vehicles.
    Each manufacturer's fleet average Phase 1 standard is based on
production volume-weighting of target standards for all vehicles, which
in turn are based on each vehicle's work factor. These target standards
are taken from a set of curves (mathematical functions), with separate
curves for gasoline and diesel.\41\ However, both gasoline and diesel
vehicles in this category are included in a single averaging set. EPA
phased in the CO2 standards gradually starting in the 2014
MY, at 15-20-40-60-100 percent of the MY 2018 standards stringency
level in MYs 2014-2015-2016-2017-2018, respectively. The phase-in takes
the form of a set of target curves, with increasing stringency in each
MY.
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    \41\ As explained in Section XII, EPA is proposing to recodify
the Phase 1 requirements for pickups and vans from 40 CFR 1037.104
into 40 CFR part 86, which is also the regulatory part that applies
for light-duty vehicles.
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    NHTSA allowed manufacturers to select one of two fuel consumption
standard alternatives for MYs 2016 and later. The first alternative
defined individual gasoline vehicle and diesel vehicle fuel consumption
target curves that will not change for MYs 2016-2018, and are
equivalent to EPA's 67-67-67-100 percent target curves in MYs 2016-
2017-2018-2019, respectively. The second alternative defined target
curves that are equivalent to EPA's 40-60-100 percent target curves in
MYs 2016-2017-2018, respectively. NHTSA allowed manufacturers to opt
voluntarily into the NHTSA HD pickup and van program in MYs 2014 or
2015 at target curves equivalent to EPA's target curves. If a
manufacturer chose to opt in for one category, they would be required
to opt in for all categories. In other words a manufacturer would be
unable to opt in for Class 2b vehicles, but opt out for Class 3
vehicles.
    EPA also adopted an alternative phase-in schedule for manufacturers
wanting to have stable standards for model years 2016-2018. The
standards for heavy-duty pickups and vans, like those for light-duty
vehicles, are expressed as set of target standard curves, with
increasing stringency in each model year. The final EPA standards for
2018 (including a separate standard to control air conditioning system
leakage) represent an average per-vehicle reduction in GHG emissions of
17 percent for diesel vehicles and 12 percent for gasoline vehicles
(relative to pre-control baseline vehicles). The NHTSA standard will
require these vehicles to achieve up to about 15 percent reduction in
fuel consumption and greenhouse gas emissions by MY 2018 (relative to
pre-control baseline vehicles). Manufacturers demonstrate compliance
based on entire vehicle chassis certification using the same duty
cycles used to demonstrate compliance with criteria pollutant
standards.
(c) Class 2b-8 Vocational Vehicles
    Class 2b-8 vocational vehicles include a wide variety of vehicle
types, and serve a vast range of functions. Some examples include
service for urban delivery, refuse hauling, utility service, dump,
concrete mixing, transit service, shuttle service, school bus,
emergency, motor homes, and tow trucks. In Phase 1, we defined Class
2b-8 vocational vehicles as all heavy-duty vehicles that are not
included in either the heavy-duty pickup and van category or the Class
7 and 8 tractor category. EPA's and NHTSA's Phase 1 standards for this
vocational vehicle category generally apply at the chassis manufacturer
level. Class 2b-8 vocational vehicles and their engines emit
approximately 20 percent of the GHG emissions and burn approximately 21
percent of the fuel consumed by today's heavy-duty truck sector.\42\
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    \42\ EPA MOVES model, http://www.epa.gov/otaq/models/moves/index.htm.
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    The Phase 1 program for vocational vehicles has vehicle standards
and separate engine standards, both of which differ based on the weight
class of the vehicle into which the engine will be installed. The
vehicle weight class groups mirror those used for the engine
standards--Classes 2b-5 (light heavy-duty or LHD in EPA regulations),
Classes 6 & 7 (medium heavy-duty or MHD in EPA regulations) and Class 8
(heavy heavy-duty or HHD in EPA regulations). Manufacturers demonstrate
compliance with the Phase 1 vocational vehicle CO2 and fuel
consumption standards using a vehicle simulation tool described in
Section II. The Phase 1 program for vocational vehicles limited the
simulation tool inputs to tire rolling resistance. The model assumes
the use of a typical representative, compliant engine in the
simulation, resulting in one overall value for CO2 emissions
and one for fuel consumption.
    Engines used in vocational vehicles are subject to separate Phase 1
engine-based standards. Optional certification paths, for EPA and
NHTSA, are also provided to enhance the flexibilities for vocational
vehicles. Manufacturers producing spark-ignition (or gasoline) cab-
complete or incomplete vehicles weighing over 14,000 lbs GVWR and below
26,001 lbs GVWR have the option to certify to the complete vehicle
standards for heavy-duty pickup trucks and vans rather than using the
separate engine and chassis standards for vocational vehicles.
(d) Engine Standards
    The agencies established separate Phase 1 performance standards for
the engines manufactured for use in vocational vehicles and Class 7 and
8 tractors.\43\ These engine standards vary depending on engine size
linked to intended vehicle service class. EPA's engine-based
CO2 standards and NHTSA's engine-based fuel consumption
standards are being implemented using EPA's existing test procedures
and regulatory structure for criteria pollutant emissions from heavy-
duty engines.
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    \43\ See 76 FR 57114 explaining why NHTSA's authority under the
Energy Independence and Safety Act includes authority to establish
separate engine standards.
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    The agencies also finalized a regulatory alternative whereby a
manufacturer, for an interim period of the 2014-2016 MYs, would have
the option to comply with a unique standard based on a three percent
reduction from an individual engine model's own 2011 MY baseline
level.\44\
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    \44\ See 76 FR 57144.

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(e) Manufacturers Excluded From the Phase 1 Standards
    Phase 1 temporarily deferred greenhouse gas emissions and fuel
consumption standards for any manufacturers of heavy-duty engines,
manufacturers of combination tractors, and chassis manufacturers for
vocational vehicles that meet the ``small business'' size criteria set
by the Small Business Administration (SBA). 13 CFR 121.201 defines a
small business by the maximum number of employees; for example, this is
currently 1,000 for heavy-duty vehicle manufacturing and 750 for engine
manufacturing. In order to utilize this exemption, qualifying small
businesses must submit a declaration to the agencies. See Section
I.F.(1)(b) for a summary of how Phase 2 would apply for small
businesses.
    The agencies stated that they would consider appropriate GHG and
fuel consumption standards for these entities as part of a future
regulatory action. This includes both U.S.-based and foreign small-
volume heavy-duty manufacturers.
(2) Costs and Benefits of the Phase 1 Program
    Overall, EPA and NHTSA estimated that the Phase 1 HD National
Program will cost the affected industry about $8 billion, while saving
vehicle owners fuel costs of nearly $50 billion over the lifetimes of
MY 2014-2018 vehicles. The agencies also estimated that the combined
standards will reduce CO2 emissions by about 270 million
metric tons and save about 530 million barrels of oil over the life of
MY 2014 to 2018 vehicles. The agencies estimated additional monetized
benefits from CO2 reductions, improved energy security,
reduced time spent refueling, as well as possible disbenefits from
increased driving accidents, traffic congestion, and noise. When
considering all these factors, we estimated that Phase 1 of the HD
National Program will yield $49 billion in net benefits to society over
the lifetimes of MY 2014-2018 vehicles.
    EPA estimated the benefits of reduced ambient concentrations of
particulate matter and ozone resulting from the Phase 1 program to
range from $1.3 to $4.2 billion in 2030.\45\
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    \45\ Note: These calendar year benefits do not represent the
same time frame as the model year lifetime benefits described above,
so they are not additive.
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    In total, we estimated the combined Phase 1 standards will reduce
GHG emissions from the U.S. heavy-duty fleet by approximately 76
million metric tons of CO2-equivalent annually by 2030. In
its Environmental Impact Statement for the Phase 1 rule, NHTSA also
quantified and/or discussed other potential impacts of the program,
such as the health and environmental impacts associated with changes in
ambient exposures to toxic air pollutants and the benefits associated
with avoided non-CO2 GHGs (methane, nitrous oxide, and
HFCs).
(3) Phase 1 Program Flexibilities
    As noted above, the agencies adopted numerous provisions designed
to give manufacturers a degree of flexibility in complying with the
Phase 1 standards. These provisions, which are essentially identical in
structure and function in NHTSA's and EPA's regulations, enabled the
agencies to consider overall standards that are more stringent and that
will become effective sooner than we could consider with a more rigid
program, one in which all of a manufacturer's similar vehicles or
engines would be required to achieve the same emissions or fuel
consumption levels, and at the same time.\46\
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    \46\ NHTSA explained that it has greater flexibility in the HD
program to include consideration of credits and other flexibilities
in determining appropriate and feasible levels of stringency than it
does in the light-duty CAFE program. Cf. 49 U.S.C. 32902(h), which
applies to light-duty CAFE but not heavy-duty fuel efficiency under
49 U.S.C. 32902(k).
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    Phase 1 included four primary types of flexibility: Averaging,
banking, and trading (ABT) provisions; early credits; advanced
technology credits (including hybrid powertrains); and innovative
technology credit provisions. The ABT provisions were patterned on
existing EPA and NHTSA ABT programs (including the light-duty GHG and
fuel economy standards) and will allow a vehicle manufacturer to reduce
CO2 emission and fuel consumption levels further than the
level of the standard for one or more vehicles to generate ABT credits.
The manufacturer can use those credits to offset higher emission or
fuel consumption levels in the same averaging set, ``bank'' the credits
for later use, or ``trade'' the credits to another manufacturer. As
also noted above, for HD pickups and vans, we adopted a fleet averaging
system very similar to the light-duty GHG and CAFE fleet averaging
system. In both programs, manufacturers are allowed to carry-forward
deficits for up to three years without penalty.
    The agencies provided in the ABT programs flexibility for
situations in which a manufacturer is unable to avoid a negative credit
balance at the end of the year. In such cases, manufacturers are not
considered to be out of compliance unless they are unable to make up
the difference in credits by the end of the third subsequent model
year.
    In total, the Phase 1 program divides the heavy-duty sector into 19
subcategories of vehicles. These subcategories are grouped into 9
averaging sets to provide greater opportunities in leveraging
compliance. For tractors and vocational vehicles, the fleet averaging
sets are Classes 2b through 5, Classes 6 and 7, and Class 8 weight
classes. For engines, the fleet averaging sets are gasoline engines,
light heavy-duty diesel engines, medium heavy-duty diesel engines, and
heavy heavy-duty diesel engines. Complete HD pickups and vans (both
spark-ignition and compression-ignition) are the final fleet averaging
set.
    As noted above, the agencies included a restriction on averaging,
banking, and trading of credits between the various regulatory
subcategories by defining three HD vehicle averaging sets: Light heavy-
duty (Classes 2b-5); medium heavy-duty (Class 6-7); and heavy heavy-
duty (Class 8). This allows the use of credits between vehicles within
the same weight class. This means that a Class 8 day cab tractor can
exchange credits with a Class 8 high roof sleeper tractor but not with
a smaller Class 7 tractor. Also, a Class 8 vocational vehicle can
exchange credits with a Class 8 tractor. However, we did not allow
trading between engines and chassis. We similarly allowed for trading
among engine categories only within an averaging set, of which there
are four: Spark-ignition engines, compression-ignition light heavy-duty
engines, compression-ignition medium heavy-duty engines, and
compression-ignition heavy heavy-duty engines.
    In addition to ABT, the other primary flexibility provisions in the
Phase 1 program involve opportunities to generate early credits,
advanced technology credits (including for use of hybrid powertrains),
and innovative technology credits.\47\ For the early credits and
advanced technology credits, the agencies adopted a 1.5 x multiplier,
meaning that manufacturers would get 1.5 credits for each early credit
and each advanced technology credit. In addition, advanced technology
credits for Phase 1 can be used anywhere within the heavy-duty sector
(including both vehicles and engines). Put another way, as a means of
promoting this promising technology,

the Phase 1 rule does not restrict averaging or trading by averaging
set in this instance.
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    \47\ Early credits are for engines and vehicles certified before
EPA standards became mandatory, advanced technology credits are for
hybrids and/or Rankine cycle engines, and innovative technology
credits are for other technologies not in the 2010 fleet whose
benefits are not reflected using the Phase 1 test procedures.
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    For other vehicle or engine technologies that can reduce
CO2 and fuel consumption, but for which there do not yet
exist established methods for quantifying reductions, the agencies
wanted to encourage the development of such innovative technologies,
and therefore adopted special ``innovative technology'' credits. These
innovative technology credits apply to technologies that are shown to
produce emission and fuel consumption reductions that are not
adequately recognized on the Phase 1 test procedures and that were not
yet in widespread use in the heavy-duty sector before MY 2010.
Manufacturers need to quantify the reductions in fuel consumption and
CO2 emissions that the technology is expected to achieve,
above and beyond those achieved on the existing test procedures. As
with ABT, the use of innovative technology credits is allowed only
among vehicles and engines of the same defined averaging set generating
the credit, as described above. The credit multiplier likewise does not
apply for innovative technology credits.
(4) Implementation of Phase 1
    Manufacturers have already begun complying with the Phase 1
standards. In some cases manufacturers voluntarily chose to comply
early, before compliance was mandatory. The Phase 1 rule allows
manufacturers to generate credits for such early compliance. The market
appears to be very accepting of the new technology, and the agencies
have seen no evidence of ``pre-buy'' effects in response to the
standards. In fact sales have been higher in recent years than they
were before Phase 1 began. Moreover, manufacturers' compliance plans
are taking advantage of the Phase 1 flexibilities, and we have yet to
see significant non-compliance with the standards.
(5) Litigation on Phase 1 Rule
    The D.C. Circuit recently rejected all challenges to the agencies'
Phase 1 regulations. The court did not reach the merits of the
challenges, holding that none of the petitioners had standing to bring
their actions, and that a challenge to NHTSA's denial of a rulemaking
petition could only be brought in District Court. See Delta
Construction Co. v. EPA, 783 F. 3d 1291 (D.C. Cir. 2015), U.S. App.
LEXIS 6780, F.3d (D.C. Cir. April 24, 2015).

C. Summary of the Proposed Phase 2 Standards and Requirements

    The agencies are proposing new standards that build on and enhance
existing Phase 1 standards, as well as proposing the first ever
standards for certain trailers used in combination with heavy-duty
tractors. Taken together, the proposed Phase 2 program would comprise a
set of largely technology-advancing standards that would achieve
greater GHG and fuel consumption savings than the Phase 1 program. As
described in more detail in the following sections, the agencies are
proposing these standards because, based on the information available
at this time, we believe they would best match our respective statutory
authorities when considered in the context of available technology,
feasible reductions of emissions and fuel consumption, costs, lead
time, safety, and other relevant factors. The agencies request comment
on all aspects of our feasibility analysis including projections of
feasible market adoption rates and technological effectiveness for each
technology.
    The proposed Phase 2 standards would represent a more technology-
forcing \48\ approach than the Phase 1 approach, predicated on use of
both off-the-shelf technologies and emerging technologies that are not
yet in widespread use. The agencies are proposing standards for MY 2027
that would likely require manufacturers to make extensive use of these
technologies. For existing technologies and technologies in the final
stages of development, we project that manufacturers would likely apply
them to nearly all vehicles, excluding those specific vehicles with
applications or uses that would prevent the technology from functioning
properly. We also project as one possible compliance pathway that
manufacturers could apply other more advanced technologies such as
hybrids and waste engine heat recovery systems, although at lower
application rates.
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    \48\ In this context, the term ``technology-forcing'' is used to
distinguish standards that will effectively require manufacturers to
develop new technologies (or to significantly improve technologies)
from standards that can be met using off-the-shelf technology alone.
Technology-forcing standards do not require manufacturers to use any
specific technologies.
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    Under Alternative 3, the preferred alternative, the agencies
propose to provide ten years of lead time for manufacturers to meet
these 2027 standards, which the agencies believe is adequate to
implement the technologies industry could use to meet the proposed
standards. For some of the more advanced technologies production
prototype parts are not yet available, though they are in the research
stage with some demonstrations in actual vehicles.\49\ Additionally,