level of CO2 emissions reductions. The proposed changes to
the CO2 standards are targeted and apply only to certain MY
2027 standards; the HD GHG Phase 2 program overall remains largely
unchanged.
---------------------------------------------------------------------------

    \793\ 86 FR 43583, August 5, 2021. Executive Order 14037.
Strengthening American Leadership in Clean Cars and Trucks.
---------------------------------------------------------------------------

    As discussed in the Executive Summary, a number of stakeholders
have urged EPA to put in place policies that rapidly advance ZEVs in
this current rulemaking in order to prioritize environmental justice in
communities that are impacted by freight transportation and already
overburdened by pollution.\794\ One policy stakeholders have asked EPA
to consider is the establishment of a ZEV sales mandate (i.e., a
nationwide requirement for manufacturers to produce a portion of their
new vehicle fleet as ZEVs), which would culminate in standards
requiring 100 percent of all new heavy-duty vehicles be zero-emission
no later than 2035. In this current rulemaking EPA is not proposing to
establish a heavy-duty ZEV sales mandate; rather, in this rulemaking we
are considering how the development and deployment of ZEVs can further
the goals of environmental protection and best be reflected in the
establishment of EPA's standards and regulatory program for MY 2027 and
later heavy-duty vehicles. As discussed earlier in this section EPA
will also be considering the important role of ZEV technologies in the
upcoming light-duty and medium-duty vehicle proposal for MY 2027 and
later and in the heavy-duty vehicle proposal for MY 2030 and later. EPA
requests comment under this proposal on how we can best consider the
potential for ZEV technology to significantly reduce air pollution from
the heavy-duty vehicle sector (including but not limited to whether and
how to consider including specific sales requirements for HD ZEVs).
---------------------------------------------------------------------------

    \794\ Letter to EPA Administrator Michael Regan from the Moving
Forward Network. October 26, 2021.
---------------------------------------------------------------------------

    In Sections XI.A through XI.F, we provide background on the
existing EPA heavy-duty GHG standards and the details of our proposed
updates to the Model Year 2027 GHG standards. EPA requests comment on
all aspects of these proposed updates.

A. Background on Heavy-Duty Greenhouse Gas Emission Standards

    EPA sets HD GHG emission standards under its authority in CAA
section 202(a). Section 202(a)(1) states that ``the Administrator shall
by regulation prescribe (and from time to time revise) . . . standards
applicable to the emission of any air pollutant from any class or
classes of new motor vehicles or new motor vehicle engines . . ., which
in his judgment cause, or contribute to, air pollution which may
reasonably be anticipated to endanger public health or welfare.''
Section 202(a)(2) provides that standards under section 202(a) apply to
such vehicles and engines ``after such period as the Administrator
finds necessary to permit the development and application of the
requisite technology, giving appropriate consideration to the cost of
compliance within such period'' and ``for their useful life.'' EPA also
may consider other factors and in previous heavy-duty vehicle GHG
standards rulemakings has considered the impacts of potential GHG
standards on the industry, fuel savings, oil conservation, energy
security and other energy impacts, as well as other relevant
considerations such as safety.
    EPA finalized the Heavy-Duty Greenhouse Gas Emissions Phase 2
program in 2016.\795\ This comprehensive program included GHG emission
standards tailored to highway heavy-duty engines and each of four
regulatory vehicle categories, including tractors and vocational
vehicles. In Phase 2, EPA set CO2 emission standards, in
addition to other GHG emission standards, for HD engines and vehicles
that phase in starting in MY 2021 through MY 2027. The HD GHG Phase 2
standards built upon the Phase 1 program promulgated in 2011, which
established the first set of GHG emission standards for heavy-duty
engines and trucks.\796\
---------------------------------------------------------------------------

    \795\ Id. The U.S. Department of Transportation through the
National Highway Traffic Safety Administration (NHTSA) also
established coordinated Phase 2 fuel efficiency standards in this
same action as part of a joint EPA--NHTSA final rulemaking.
    \796\ 76 FR 57106 (September 15, 2011).
---------------------------------------------------------------------------

1. Background on the CO2 Emission Standards in the HD GHG
Phase 2 Program
    In the Phase 1 and Phase 2 Heavy-Duty GHG rules, we finalized GHG
emission standards tailored for each of the three regulatory
categories--heavy-duty pickups and vans; vocational vehicles, and
combination tractors. In addition, we set separate standards for the
engines that power combination tractors and vocational vehicles. The
heavy-duty vehicle CO2 emission standards are measured in
grams per ton-mile, which represents the grams of CO2
emitted to move one ton of payload one mile. In this section we provide
background information on the two Phase 2 program categories for which
we are proposing to make targeted changes: vocational vehicles and
tractors.
i. Vocational Vehicles
    Class 2b-8 vocational vehicles include a wide variety of vehicle
types and serve a wide range of functions. We define Class 2b-8
vocational vehicles as all heavy-duty vehicles that are not included in
the Heavy-duty Pickup Truck and Van or the Class 7 and 8 Tractor
categories. 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.
The HD GHG Phase 2 program also includes a special regulatory category
called vocational tractors, which covers vehicles that are technically
tractors but generally operate more like vocational vehicles than line-
haul tractors. These vocational tractors include those designed to
operate off-road and in certain intra-city delivery routes.\797\
---------------------------------------------------------------------------

    \797\ 40 CFR 1037.630.
---------------------------------------------------------------------------

    The HD GHG Phase 2 vocational vehicle CO2 standards are
based on the performance of a wide array of control technologies. In
particular, the Phase 2 vocational vehicle standards recognize detailed
characteristics of vehicle powertrains and drivelines. Driveline
improvements present a significant opportunity for reducing fuel
consumption and CO2 emissions from vocational vehicles.
However, there is no single package of driveline technologies that will
be equally suitable for all vocational vehicles, because there is an
extremely broad range of driveline configurations available in the
market. This is due in part to the variety of final vehicle build
configurations, ranging from a purpose-built custom chassis to a
commercial

chassis that may be intended as a multi-purpose stock vehicle.
Furthermore, the wide range of applications and driving patterns of
these vehicles leads manufacturers to offer a variety of drivelines, as
each performs differently in use.
    The final HD GHG Phase 2 rule has a structure for vocational
standards that allows the technologies that perform best at highway
speeds and those that perform best in urban driving to each be properly
recognized over appropriate drive cycles, while avoiding potential
unintended results of forcing vocational vehicles that are designed to
serve in different applications to be measured against a single drive
cycle. The final HD GHG Phase 2 rule includes three drive cycles with
the intent of balancing the competing pressures to recognize the
varying performance of technologies, serve the wide range of customer
needs, and maintain reasonable regulatory simplicity. The HD GHG Phase
2 primary vocational standards therefore have subcategories for
Regional, Multi-purpose, and Urban drive cycles in each of the three
weight classes (Light Heavy-Duty, Medium Heavy-Duty and Heavy-Heavy
Duty), which results in nine unique subcategories. These nine
subcategories apply for diesel (CI) vehicles. We separately, but
similarly, established six subcategories of gasoline (SI) vehicles. In
other words, there are 15 separate numerical performance-based emission
standards for each model year. In addition, we established optional
custom chassis CO2 emission standards for Motorhomes, Refuse
Haulers, Coach Buses, School Buses, Transit Buses, Concrete Mixers,
Mixed Use Vehicles, and Emergency Vehicles. In total, EPA set
CO2 emission standards for 15 subcategories of vocational
vehicles and eight subcategories of specialty vehicle types for a total
of 23 vocational vehicle subcategories.
    The HD GHG Phase 2 standards phase in over a period of seven years,
beginning in the 2021 model year. The HD GHG Phase 2 program progresses
in three-year stages with an intermediate set of standards in MY 2024
and final standards in MY 2027 and beyond. In the 2016 final rule we
identified a potential technology path for complying with each of the
three increasingly stringent stages of the HD GHG Phase 2 program
standards. These standards were based on the performance of more
efficient engines, workday idle reduction technologies, improved
transmissions including mild hybrid powertrains, axle technologies,
weight reduction, electrified accessories, tire pressure systems, and
tire rolling resistance improvements. The Phase 2 vocational vehicle
CO2 standards were not premised on electric vehicles or fuel
cell vehicles. Details regarding the standards can be found in the
Phase 2 final rulemaking preamble and in 40 CFR part 1037.\798\
---------------------------------------------------------------------------

    \798\ 81 FR 73682-73729 (October 25, 2016).
---------------------------------------------------------------------------

ii. Tractors
    EPA promulgated HD GHG Phase 2 CO2 emission standards
for combination tractors that reflect reductions that can be achieved
through improvements in the tractor's powertrain, aerodynamics, tires,
idle reduction, and other vehicle systems. EPA did not premise the HD
Phase 2 tractor standards on hybrid powertrains, fuel cells, or
electric vehicles, though we foresaw some limited use of these
technologies in 2021 and beyond.\799\ In the HD GHG Phase 2 final rule,
EPA analyzed the feasibility of achieving the CO2 standards
and identified means of achieving these standards.\800\ The tractor
regulatory structure is attribute-based in terms of dividing the
tractor category into ten subcategories based on the tractor's gross
vehicle weight rating (GVWR), cab configuration, and roof height. The
tractor cab configuration is either day cab or sleeper cab. Day cab
tractors are typically used for shorter haul operations, whereas
sleeper cabs are often used in long haul operations. EPA set
CO2 emission standards for 10 tractor subcategories. Similar
to the vocational program, the HD GHG Phase 2 tractor standards begin
implementation in MY 2021 and fully phase-in in MY 2027. More details
can be found in the HD GHG Phase 2 final rulemaking preamble and in 40
CFR part 1037.\801\
---------------------------------------------------------------------------

    \799\ 81 FR 73639 (October 25, 2016).
    \800\ 81 FR 73573-73639 (October 25, 2016).
    \801\ Id.
---------------------------------------------------------------------------

2. Background on the Advanced Technology Credit Multipliers in the HD
GHG Phase 1 and 2 Program
    EPA provided advanced technology credits in HD GHG Phase 1 for
hybrid powertrains, Rankine cycle waste heat recovery systems on
engines, all-electric vehicles, and fuel cell vehicles to promote the
implementation of advanced technologies that were not included in our
technical basis of the feasibility of the Phase 1 standards (see 40 CFR
86.1819-14(k)(7), 1036.150(h), and 1037.150(p)). The HD GHG Phase 2
CO2 emission standards that followed Phase 1 were premised
on the use of mild hybrid powertrains in vocational vehicles and waste
heat recovery systems in a subset of the engines and tractors, making
them equivalent to other fuel-saving technologies in this context. At
the time of the HD GHG Phase 2 final rule, we believed the HD GHG Phase
2 standards themselves provided sufficient incentive to develop those
specific technologies. However, none of the HD GHG Phase 2 standards
were based on projected utilization of the other even more-advanced
Phase 1 advanced credit technologies (e.g., plug-in hybrid vehicles,
all-electric vehicles, and fuel cell vehicles). Overall, the comments
on the HD GHG Phase 2 proposal in 2016 indicated that there was support
for such advanced technology credit incentives among operators,
suppliers, and states. For HD GHG Phase 2, EPA promulgated the
following advanced credit multipliers through MY 2027, as shown in
Table XI-1 (see also 40 CFR 1037.150(p)).

 Table XI-1--Advanced Technology Multipliers in Existing HD GHG Phase 2
------------------------------------------------------------------------
                         Technology                           Multiplier
------------------------------------------------------------------------
Plug-in hybrid electric vehicles............................         3.5
All-electric vehicles.......................................         4.5
Fuel cell vehicles..........................................         5.5
------------------------------------------------------------------------

    As stated in the HD GHG Phase 2 rulemaking, our intention with
these multipliers was to create a meaningful incentive to those
considering adopting these qualifying advanced technologies into their
vehicles. The multipliers are consistent with values recommended by
California Air Resources Board (CARB) in their supplemental HD GHG
Phase 2 comments.\802\ CARB's values were based on a cost analysis that
compared the costs of these technologies to costs of other conventional
GHG-reducing technologies. Their cost analysis showed that multipliers
in the range we ultimately promulgated would make these technologies
more competitive with the conventional technologies and could allow
manufacturers to more easily generate a viable business case to develop
these technologies for heavy-duty vehicles and bring them to market at
a competitive price.
---------------------------------------------------------------------------

    \802\ Letter from Michael Carter, CARB, to Gina McCarthy,
Administrator, EPA and Mark Rosekind, Administrator, NHTSA, June 16,
2016. EPA Docket ID EPA-HQ-OAR-2014-0827_attachment 2.
---------------------------------------------------------------------------

    In establishing the multipliers in the final HD GHG Phase 2 rule,
we also considered the tendency of the heavy-duty sector to lag the
light-duty sector in the adoption of a number of advanced technologies.
There are many possible reasons for this, such as:
     Heavy-duty vehicles are more expensive than light-duty
vehicles,

which makes it a greater monetary risk for purchasers to invest in
unproven technologies.
     These vehicles are primarily work vehicles, which makes
predictable reliability and versatility important.
     Sales volumes are much lower for heavy-duty vehicles,
especially for specialized vehicles.
    At the time of the HD GHG Phase 2 rulemaking, we concluded that as
a result of factors such as these, and the fact that adoption rates for
these advanced technologies in heavy-duty vehicles were essentially
non-existent in 2016, it seemed unlikely that market adoption would
grow significantly within the next decade without additional
incentives.
    As we stated in the 2016 HD GHG Phase 2 final rule preamble, we
determined that it was appropriate to provide such large multipliers
for these advanced technologies at least in the short term, because
they have the potential to provide very large reductions in GHG
emissions and fuel consumption and advance technology development
substantially in the long term. However, because the credit multipliers
are so large, we also stated that we should not necessarily allow them
to continue indefinitely. Therefore, they were included in the HD GHG
Phase 2 final rule as an interim program continuing only through MY
2027.

B. What has changed since we finalized the HD GHG Phase 2 rule?

    When the HD GHG Phase 2 rule was promulgated in 2016, we
established CO2 standards and advanced technology incentives
on the premise that electrification of the heavy-duty market was
unlikely to occur in the timeframe of the program. Several factors have
changed our outlook for heavy-duty electric vehicles since 2016. First,
the heavy-duty market has evolved such that in 2021, there are a number
of manufacturers producing fully electric heavy-duty vehicles in
several applications. Second, the State of California has adopted an
Advanced Clean Trucks (ACT) program that includes a manufacturer sales
requirement for zero-emission truck sales, specifically that
``manufacturers who certify Class 2b-8 chassis or complete vehicles
with combustion engines would be required to sell zero-emission trucks
as an increasing percentage of their annual California sales from 2024
to 2035.'' 803 804 Finally, other states have signed a
Memorandum of Understanding establishing goals to increase the heavy-
duty electric vehicle market.\805\ These developments have demonstrated
that further CO2 emission reductions in the MY 2027
timeframe are feasible considering cost, lead time, and other factors.
We discuss the impacts of these factors on the heavy-duty market in
more detail in the following subsections.
---------------------------------------------------------------------------

    \803\ CARB (2021) Advanced Clean Truck Regulation, available
online at: https://ww2.arb.ca.gov/rulemaking/2019/advancedcleantrucks.
    \804\ EPA is reviewing a waiver request under CAA section 209(b)
from California for the ACT rule; we may consider including the ACT
in some of our analyses for the final rule.
    \805\ Multi-State Zero Emission Medium and Heavy-Duty Vehicle
Initiative--Memorandum of Understanding (2020), available online at:
https://www.nescaum.org/documents/multistate-truck-zev-governors-mou-20200714.pdf.
---------------------------------------------------------------------------

1. The HD Battery Electric Vehicle Market
    Since 2012, manufacturers have developed a number of prototype and
demonstration heavy-duty BEV projects, particularly in the state of
California, establishing feasibility and durability of the technology
for specific applications used for specific services, as well as
building out necessary infrastructure.\806\ In 2019, approximately 60
makes and models of BEVs were available for purchase, with additional
product lines in prototype or other early development
stages.807 808 809 Current production volumes of BEVs are
small, with the North American Council for Freight Efficiency (NACFE)
estimating fewer than 100 BEV Class 7/8 trucks in production in the
U.S. in 2019.\810\ In 2020, approximately 900 heavy-duty BEVs were sold
in the U.S. and Canada combined, consisting primarily of transit buses
(54 percent), school buses (33 percent), and straight trucks (13
percent).\811\ M.J. Bradley's analysis of the heavy-duty BEV market in
2021 found 30 manufacturers that have at least one BEV model for sale
and an additional nine companies that have made announcements to begin
BEV production by 2025.\812\ BEV technology is increasingly used in the
transit bus market, with electric bus sales growing from 300 to 650 in
the U.S. between 2018 to 2019.813 814 Draft RIA Chapter
1.4.2 provides a snapshot of BEVs in the heavy-duty truck and bus
markets as of 2019, according to one source; however, given the dynamic
nature of the BEV market, the number and types of vehicles available
are changing fairly rapidly.\815\
---------------------------------------------------------------------------

    \806\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \807\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \808\ The composition of all-electric truck models was: 36
buses, 10 vocational trucks, 9 step vans, 3 tractors, 2 street
sweepers, and 1 refuse truck (Nadel and Jung (2020) citing AFDC
(Alternative Fuels Data Center). 2018. ``Average Annual Vehicle
Miles Traveled by Major Vehicle Categories.'' www.afdc.energy.gov/data/widgets/10309.
    \809\ Note that there are varying estimates of BEV and FCEV
models in the market; NACFE (2019) ``Guidance Report: Viable Class
7/8 Electric, Hybrid and Alternative Fuel Tractors``, available
online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/ (NACFE 2019) provided slightly lower estimates than those
included here from Nadel and Jung 2020. A recent NREL study suggests
that there may be more models available, but it is unclear how many
are no longer on the market since the inventory includes vehicles
introduced and used in commerce starting in 2012 (Smith et al.
2019).
    \810\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \811\ International Council on Clean Transportation. ``Fact
Sheet: Zero-Emission Bus and Truck Market in the United States and
Canada: A 2020 Update.'' Pages 3-4. May 2021.
    \812\ M.J. Bradley and Associates (2021) ``Medium- and Heavy-
Duty Vehicles: Market Structure, Environmental Impact, and EV
Readiness.'' Page 21. July 2021.
    \813\ Tigue, K. (2019) ``U.S. Electric Bus Demand Outpaces
Production as Cities Add to Their Fleets'' Inside Climate News,
November 14. https://insideclimatenews.org/news/14112019/electric-bus-cost-savings-health-fuel-charging.
    \814\ Note that ICCT (2020) estimates 440 electric buses were
sold in the U.S. and Canada in 2019, with 10 of those products being
FCEV pilots. The difference in estimates of number of electric buses
available in the U.S. may lie in different sources looking at
production vs. sales of units.
    \815\ Union of Concerned Scientists (2019) ``Ready for Work: Now
Is the Time for Heavy-Duty Electric Vehicles''; www.ucsusa.org/resources/ready-work.
---------------------------------------------------------------------------

    EPA conducted an analysis for this proposal of manufacturer-
supplied end-of-year production reports provided to us as a requirement
of the certification process for heavy-duty vehicles to our GHG
emission standards.\816\ Based on the end-of-year production reports
for MY 2019, manufacturers produced approximately 350 certified heavy-
duty BEVs. This is out of nearly 615,000 heavy-duty diesel vehicles
produced in MY 2019, which represents approximately 0.06 percent of the
market. In MY 2020, 380 BEVs were certified. The BEVs were certified in
a variety of the Phase 1 vehicle subcategories, including light,
medium, and heavy heavy-duty vocational vehicles and vocational
tractors. Out of the 380 vehicles certified in MY 2020, a total of 177
unique makes and models were available for purchase by 52 producers in
regulatory weight classes 3-8.
---------------------------------------------------------------------------

    \816\ Memo to Docket. HD 2027 Proposed Changes to Heavy-Duty
Greenhouse Gas Emissions. November 2021.

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

    Based on current trends, manufacturer announcements, and state-
level actions, electrification of the heavy-duty market is expected to
substantially increase from current levels. However, the rate of growth
varies widely across models. For instance, the 2021 Annual Energy
Outlook projects heavy-duty BEVs making up 0.12 percent of new truck
sales in 2027.\817\ A National Renewable Energy Laboratory (NREL) study
evaluated three electrification scenarios to assess the power sector
requirements where HD electric vehicle sales in 2050 ranged between
less than one percent in the Reference scenario and up to 41 percent in
the High scenario.\818\ Though these projections should not be viewed
as a market driven projection, they do illustrate a wide range of
future possibilities. A variety of factors will influence the extent to
which BEVs are available for purchase and enter the market. NACFE
looked at 22 factors by which to compare BEVs with heavy-duty diesel
vehicles; they found that for the Class 7/8 market, a current lack of
availability of production-level vehicles resulted in BEVs being ranked
lower than diesels in 2019, but being ranked equal to or better than
diesel on most factors by 2030.\819\ Manufacturers also are announcing
their projections for zero emission heavy-duty vehicles, but they vary
across the industry. For example, Volvo recently issued a press release
that stated, ``Volvo Trucks believes the time is right for a rapid
upswing in electrification of heavy road transport.'' \820\ Similarly,
Daimler Trucks stated that it ``has the ambition to offer only new
vehicles that are CO2-neutral in driving operation ('from
tank to wheel') in Europe, North America and Japan by 2039.'' \821\
Cummins targets net-zero carbon emissions by 2050.\822\ We request
comment on these and other estimates and projections for the heavy-duty
EV market.
---------------------------------------------------------------------------

    \817\ U.S. Energy Information Administration. ``Annual Energy
Outlook 2021.'' Table 49. Can be accessed at https://www.eia.gov/outlooks/aeo/tables_ref.php.
    \818\ Mai, et al. ``Electrification Futures Study: Scenarios of
Electric Technology Adoption and Power Consumption for the United
States.'' National Renewable Energy Laboratory. Pages 25-30. https://www.nrel.gov/docs/fy18osti/71500.pdf.
    \819\ Factors that NACFE considered fell into the following
categories: Weight, cost, maintenance effort, vehicle life, range,
``fuel'' availability, and general; for additional information on
the factors and how they compare in 2019 and 2030, see NACFE (2019)
``Guidance Report: Viable Class 7/8 Electric, Hybrid and Alternative
Fuel Tractors'', available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \820\ AB Volvo. ``Volvo Trucks ready to electrify a large part
of goods transports (volvogroup.com).'' April 20, 2021. Last
accessed on September 10, 2021 at https://www.volvogroup.com/en/news-and-media/news/2021/apr/news-3948719.html.
    \821\ Daimler Trucks. ``CO2-Neutral Commercial
Vehicle Fleet by 2039.'' October 25, 2019. Last accessed on
September 10, 2021 at https://www.daimler.com/sustainability/co2-neutral-commercial-vehicle-fleet-until-2039.html.
    \822\ Cummins, Inc. ``Cummins Unveils New Environmental
Sustainability Strategy to Address Climate Change, Conserve Natural
Resources.'' November 14, 2019. Last accessed on September 10, 2021
at https://www.cummins.com/news/releases/2019/11/14/cummins-unveils-new-environmental-sustainability-strategy-address-climate.
---------------------------------------------------------------------------

    The lifetime total cost of ownership (TCO), which includes
maintenance and fuel costs, is likely a primary factor for heavy-duty
fleets considering BEV purchases. In fact, a 2018 survey of fleet
owners showed ``lower cost of ownership'' as the second most important
motivator for electrifying their fleet.\823\ An International Council
for Clean Transportation (ICCT) analysis suggests that TCO for light-
and medium heavy-duty battery-electric vehicles could reach cost parity
with diesel in the early 2020s, while heavy heavy-duty battery-electric
or hydrogen vehicles are likely to reach cost parity with diesel closer
to the 2030 timeframe.\824\ Recent findings from Phadke et al. suggest
that BEV TCO could be 13 percent less than that of a diesel truck if
electricity pricing is optimized.\825\
---------------------------------------------------------------------------

    \823\ The primary motivator for fleet managers was
``Sustainability and environmental goals''; the survey was conducted
by UPS and GreenBiz.
    \824\ ICCT (2019) ``Estimating the infrastructure needs and
costs for the launch of zero-emissions trucks''; available online
at: https://theicct.org/publications/zero-emission-truck-infrastructure.
    \825\ Phadke, A., et al. (2021) ``Why Regional and Long-Haul
Trucks are Primed for Electrification Now''; available online at:
https://eta-publications.lbl.gov/sites/default/files/updated_5_final_ehdv_report_033121.pdf.
---------------------------------------------------------------------------

    As both the ICCT and Phadke et al. studies suggest, fuel costs are
an important part of TCO. While assumptions about vehicle weight and
size can make direct comparisons between heavy-duty BEVs and ICEs
challenging, data show greater energy efficiency of battery-electric
technology relative to an ICE.826 827 Better energy
efficiency leads lower electricity costs for BEVs relative to ICE fuel
costs.828 829 Maintenance and service costs are also an
important component within TCO; although there is limited data
available on actual maintenance costs for heavy-duty BEVs, early
experience with BEV medium heavy-duty vehicles and transit buses
suggests the potential for lower maintenance costs after an initial
period of learning to refine both component durability and maintenance
procedures.\830\ To facilitate heavy-duty fleets transitioning to BEVs,
some manufacturers are currently including maintenance in leasing
agreements with fleets; it is unclear the extent to which a full
service leasing model will persist or will be transitioned to a more
traditional purchase after an initial period of
learning.831 832
---------------------------------------------------------------------------

    \826\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors,'' available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \827\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers.'' American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \828\ NACFE (2019) ``Guidance Report: Viable Class 7/8 Electric,
Hybrid and Alternative Fuel Tractors'', available online at: https://nacfe.org/downloads/viable-class-7-8-alternative-vehicles/.
    \829\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers''. American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \830\ U.S. Department of Energy Alternative Fuels Data Center
(AFDC), ``Developing Infrastructure to Charge Plug-In Electric
Vehicles'', https://afdc.energy.gov/fuels/electricity_infrastructure.html (accessed 2-27-20).
    \831\ Fisher, J. (2019) ``Volvo's First Electric VNR Ready for
the Road.'' Fleet Owner, September 17. www.fleetowner.com/blue-fleets/volvo-s-first-electric-vnr-ready-road.
    \832\ Gnaticov, C. (2018). ``Nikola One Hydrogen Electric Semi
Hits the Road in Official Film.'' Carscoops, Jan. 26.
www.carscoops.com/2018/01/nikola-one-hydrogen-electric-semi-hits-road-official-film/.
---------------------------------------------------------------------------

    The potential for lower fuel and maintenance costs to outweigh a
higher upfront cost for heavy-duty BEVs is reflected in ICCT and
others' projections of BEVs reaching cost parity with diesels within
the next several years; however, the current upfront cost can exceed
that of a diesel vehicle by 60 percent or more.\833\ Upfront purchase
price was listed as the primary barrier to heavy-duty fleet
electrification in a 2017 survey of fleet managers, which suggests that
state or local incentive programs to offset BEV purchase costs will
play an important role in the near term, with improvements in battery
costs playing a role in reducing costs in the longer-
term.834 835
---------------------------------------------------------------------------

    \833\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers.'' American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
    \834\ Other barriers that fleet managers prioritized for fleet
electrification included: Inadequate charging infrastructure--our
facilities, inadequate product availability, inadequate charging
infrastructure--public; for the full list of top barriers see Nadel
and Junga (2020), citing UPS and GreenBiz 2018.
    \835\ Nadel, S. and Junga, E. (2020) ``Electrifying Trucks: From
Delivery Vans to Buses to 18-Wheelers.'' American Council for an
Energy-Efficient Economy White Paper, available online at: https://aceee.org/white-paper/electrifying-trucks-delivery-vans-buses-18.
---------------------------------------------------------------------------

    The BEV market for transit and school buses continues to grow. Los
Angeles Department of Transportation (LADOT) is one of the first
transit organizations

in the country to develop a program committed to transition to zero-
emission vehicles (ZEV). Started in 2017, this program stipulates that
all LADOT transit fleets will transition to entirely electric by 2030
or sooner--a target that is 10 years sooner than CARB's Innovative
Clean Transportation (ICT) regulation for all public transit to be
electric by 2040.\836\ Since these announcements, LADOT has purchased
27 EV transit and school buses from BYD and Proterra; by 2030, the
number of EV buses in the LADOT fleet is expected to grow to 492 buses.
Outside of California, major metropolitan areas including Chicago,
Seattle, New York City, and Washington DC have zero-emissions transit
programs with 100 percent ZEV target dates ranging from 2040-2045.\837\
---------------------------------------------------------------------------

    \836\ LADOT, (2020). ``LADOT Transit Zero-Emission Bus Rollout
Plan'' https://ww2.arb.ca.gov/sites/default/files/2020-12/LADOT_ROP_Reso_ADA12172020.pdf.
    \837\ https://www.sustainable-bus.com/electric-bus/cta-chicago-electric-buses/, https://dcist.com/story/21/06/10/metro-goal-entirely-electric-bus-fleet-2045/, https://kingcounty.gov/depts/transportation/metro/programs-projects/innovation-technology/zero-emission-fleet.aspx, and https://www.amny.com/transit/mta-says-45-to-60-more-buses-in-recent-procurement-will-be-zero-emissions/.
---------------------------------------------------------------------------

    EV school bus programs, frequently in partnership with local
utilities, are also being piloted across the country. These programs
include school districts in, but not limited to, California, Virginia,
Massachusetts, Michigan, Maryland, Illinois, New York, and
Pennsylvania.\838\ While these school districts may not have an EV
school bus target, the EV school bus program is a part of a broader
initiative for regional carbon neutrality.
---------------------------------------------------------------------------

    \838\ https://www.mass.gov/info-details/ev-programs-incentives,
https://chargedevs.com/newswire/nycs-new-school-bus-contract-includes-electric-bus-pilot/, https://olivineinc.com/wp-content/uploads/2020/10/Pittsburg-USD-Electric-School-Bus-Final-Project-Report-Final.pdf, https://cleantechnica.com/2020/01/12/largest-electric-school-bus-program-in-united-states-launching-in-virginia/,
https://www.greentechmedia.com/articles/read/on-heels-of-253m-raise-highland-electric-lands-biggest-electric-school-bus-contract-in-the-u.s, and https://richmond.com/news/state-and-regional/govt-and-politics/va-house-slows-down-bill-that-would-allow-dominion-to-profit-off-electric-school-bus/article_edc69a16-5c2c-51c9-9733-8618d768106b.html.
---------------------------------------------------------------------------

    In a parallel path, large private heavy-duty fleet owners are also
committed to increasing their electric fleet.\839\ A report by
international agency International Energy Agency (IEA) provides a
comprehensive accounting of recent announcements made by UPS, Fedex,
DHL, Walmart, Anheuser-Busch, Amazon and PepsiCo for fleet
electrification.\840\ Amazon and UPS, for example, placed orders in
2020 for 10,000 BEV delivery vans from EV start-up Rivian, and Amazon
has plans to scale up to 100,000 BEV vans by 2030. Likewise, by the end
of 2021, PepsiCo will add 15 Tesla Semis, out of the 100 planned, to
its fleet. These announcements include not only orders for electric
delivery vans and semi-trucks, but more specific targets and dates to
full electrification or net-zero emissions. Amazon, Fedex, DHL, and
Walmart have set a commitment to fleet electrification, net-zero
emissions or carbon neutrality by 2040. We recognize that certain
delivery trucks and vans will likely fall into the Class 2b and 3
regulatory category, which are not covered in this rule's proposed
updates, but rather intend to address in a future light and medium-duty
vehicle rulemaking.
---------------------------------------------------------------------------

    \839\ Environmental Defense Fund (2021) Zero-Emission Truck
Deployments and Pledges in the U.S., available online at: https://blogs.edf.org/energyexchange/2021/07/28/edf-analysis-finds-american-fleets-are-embracing-electric-trucks/and https://docs.google.com/spreadsheets/d/1l0m2Do1mjSemrb_DT40YNGou4o2m2Ee-KLSvHC-5vAc/edit#gid=2049738669.
    \840\ Global EV Outlook 2021. https://iea.blob.core.windows.net/assets/ed5f4484-f556-4110-8c5c-4ede8bcba637/GlobalEVOutlook2021.pdf.
---------------------------------------------------------------------------

    In summary, the heavy-duty BEV market seems to be growing fastest
in the areas of school buses, transit buses, delivery trucks, and short
haul tractors. As the industry is dynamic and rapidly changing, the
policy and vehicle examples presented here represent only a sampling of
the BEV HDV policies and markets; outside of the US, Europe and Asia
will also contribute to the greater zero-emissions vehicle market. We
request comment on our assessment of the HD ZEV market and any
additional data sources we should consider.
2. California's Advanced Clean Trucks Rule
    Heavy-duty vehicle sales and populations are significant in the
state of California. Approximately ten percent of U.S. heavy-duty
conventional vehicles (those powered by internal combustion engines) in
2016 were registered in California.\841\ California adopted an Advanced
Clean Trucks (ACT) rule in 2020, which could also influence the market
trajectory for battery-electric and fuel cell technologies.\842\ The
ACT requires manufacturers to sell a certain percentage of zero
emission heavy-duty vehicles (BEVs or fuel cell vehicles) for each
model year, starting in MY 2024. The sales requirements vary by vehicle
class, as shown in Table XI-2, starting at 5 to 9 percent of total MY
2024 heavy-duty vehicle sales in California and increasing to 40 to 75
percent of MY 2035 and later sales.\843\
---------------------------------------------------------------------------

    \841\ FHWA. U.S. Highway Statistics. Available online at:
https://www.fhwa.dot.gov/policyinformation/statistics.cfm.
    \842\ CARB. ``Notice of Decision: Advanced Clean Truck
Regulation.'' June 2020. Available online at: https://ww3.arb.ca.gov/regact/2019/act2019/nod.pdf. For more information on
this proposed rulemaking in California see: https://ww2.arb.ca.gov/rulemaking/2019/advancedcleantrucks.
    \843\ CARB. ``Appendix A Proposed Regulation Order'' Advanced
Clean Truck Regulation. May 2020. Available online at: https://ww3.arb.ca.gov/regact/2019/act2019/30dayatta.pdf (accessed July 24,
2020).

                           Table XI-2--CARB's ACT ZEV Sales Requirements by Model Year
----------------------------------------------------------------------------------------------------------------
                                                                                Class 7-8
                         Model year (MY)                            Class 2b-3       Class 4-8       tractors
                                                                     (percent)       (percent)       (percent)
----------------------------------------------------------------------------------------------------------------
2024............................................................               5               9               5
2025............................................................               7              11               7
2026............................................................              10              13              10
2027............................................................              15              20              15
2028............................................................              20              30              20
2029............................................................              25              40              25
2030............................................................              30              50              30
2031............................................................              35              55              35
2032............................................................              40              60              40
2033............................................................              45              65              40
2034............................................................              50              70              40

2035+...........................................................              55              75              40
----------------------------------------------------------------------------------------------------------------

3. States' Interest in Shifting to Zero Emissions HD Vehicles
    Outside of California, several states have signaled interest in
shifting to heavy-duty ZEV technologies and/or establishing specific
goals to increase the heavy-duty electric vehicle market. As one
example, a 2020 memorandum of understanding (MOU) entitled ``Multi-
State Medium- and Heavy-Duty Zero Emission Vehicle,'' organized by
Northeast States for Coordinated Air Use Management (NESCAUM), sets
targets ``to make all sales of new medium and heavy-duty vehicles [in
the jurisdictions of the signatory states] zero emission vehicles by no
later than 2050'' with an interim goal of 30 percent of all sales of
new MD and HD vehicles being zero emission vehicles no later than
2030.\844\ The NESCAUM MOU was signed by governors and mayor of 15
states and districts including California, Colorado, Connecticut,
Hawaii, Maine, Maryland, Massachusetts, New Jersey, New York, North
Carolina, Oregon, Pennsylvania, Rhode Island, Vermont, Washington, and
the District of Columbia. The MOU outlines more specific commitments of
the states to move toward zero-emissions vehicles through the Multi-
State ZEV Task Force and provides an action plan for zero-emissions
MHDVs with measurable sales targets and a focus on overburdened and
underserved communities. Several states that signed the MOU have since
issued proposals to adopt California's ACT under CAA section 177, and
we anticipate more states to follow with similar
proposals.845 846 847 848
---------------------------------------------------------------------------

    \844\ 15 states and one district sign Multi-State MOU. https://www.nescaum.org/documents/multistate-truck-zev-governors-mou-20200714.pdf.
    \845\ EPA has not yet received a waiver request under CAA
section 209(b) from California for the ACT rule; if we were to
receive and grant a waiver request(s) for the ACT rule, then we may
consider including this rule in our analyses for the final rule.
    \846\ Medium- and Heavy-Duty (MHD) Zero Emission Truck Annual
Sales Requirements and Large Entity Reporting. New York State
Register. September 8, 2021. Volume XLIII, Issue 36. Available
online at: https://dos.ny.gov/system/files/documents/2021/09/090821.pdf.
    \847\ Advanced Clean Trucks Program and Fleet Reporting
Requirements. New Jersey State Register. April 19, 2021. Available
online at: https://www.nj.gov/dep/rules/proposals/20210419a.pdf.
    \848\ Amending Chapter 173-423 WAC Low Emission Vehicles. State
of Washington Department of Ecology. June 22, 2021. Available online
at: https://ecology.wa.gov/DOE/files/29/291ec96d-5aca-4c40-a249-4ef82bca6026.pdf.
---------------------------------------------------------------------------

C. Proposed Changes to HD GHG Phase 2 CO2 Standards for Targeted
Subcategories

    EPA is proposing under its authority in CAA section 202(a) to
revise CO2 emissions standards for a subset of MY 2027
heavy-duty vehicles. As discussed in Section XI.B, major trucking
fleets, manufacturers and U.S. states have announced plans to shift the
heavy-duty fleet toward zero-emissions technology beyond levels we
accounted for in setting the existing HD GHG Phase 2 standards in 2016.
We developed a proposed approach to make targeted updates that reflect
this growing HD electric vehicle market without fundamentally changing
the HD GHG Phase 2 program. Specifically, we propose to adjust HD GHG
Phase 2 vehicle CO2 emission standards by sales-weighting
the projected EV production levels of school buses, transit buses,
delivery trucks, and short-haul tractors and by lowering the applicable
CO2 emission standards for these vehicle types in MY 2027
accordingly. We are proposing to target these four vehicle types
because they will likely have the highest EV sales of all heavy-duty
vehicle types between now and 2030. These four EV vehicle types do not
correspond directly with specific HD GHG Phase 2 standards
subcategories (subcategories differentiated by vehicle weight, use,
fuel type, etc.), so we have used EPA certification data to determine
which subcategories of standards would be affected by EV production in
MY 2027. By sales-weighing the projected production levels of the four
EV vehicle types in 2027, our proposed approach would adjust 17 of the
33 MY 2027 HD GHG Phase 2 vocational vehicle and tractor standards. EPA
is not proposing to change any MY 2021 or MY 2024 vocational vehicle or
tractor CO2 emission standards, any Class 2b/3
CO2 emission standards, or any heavy-duty engine
CO2 emission standards.
    To update the MY 2027 vehicle CO2 standards from the HD
GHG Phase 2 rulemaking to reflect the recent and projected trends in
the electrification of the HD market, we considered the impact these
trends would have on the emissions reductions from conventional
vehicles we had intended to achieve in setting the existing HD GHG
Phase 2 standards. As described in this section's technology cost
discussion, we derived the existing HD GHG Phase 2 standards by
evaluating combinations of emission-reducing technologies and adoption
rates in ``technology packages'' developed for each vehicle
subcategory, e.g., advanced aerodynamics, more efficient engines, etc.
We set the existing HD GHG Phase 2 standards at levels that would
require all conventional vehicles to install varying combinations of
emission-reducing technologies (the degree and types of technology can
differ, with some vehicles that have less being offset by others with
more), leading to CO2 emissions reductions.\849\ As
discussed in this section and quantified in more detail in a memo to
the docket, recent and projected developments in the electrification of
the heavy-duty vehicle market over the next several years have
demonstrated that further CO2 emission reductions in the MY
2027 timeframe are feasible considering lead time, cost, and other
factors.\850\ While we did anticipate some growth in electrification,
we did not expect the level of innovation observed that California
would adopt a requirement for such a large number of heavy-duty
electric vehicles to be sold in the timeframe of the
program.851 852 We are proposing adjustments to the MY 2027
HD GHG Phase 2 standards to reflect this innovation and facilitate the
transition to more stringent longer-term standards such that all
conventional vehicles would need some level and

combination of GHG emissions-reducing technology, as intended in the
original HD GHG Phase 2 rulemaking. Based on our evaluation of the
heavy-duty EV market in the MY 2027 timeframe, we expect school buses,
transit buses, delivery trucks, and short haul tractors to have the
highest EV sales of all heavy-duty vehicle types between now and 2030.
Therefore, we propose to make targeted changes to the MY 2027 standards
that are projected to be affected by these four types of electric
vehicles. As we describe in the next section, EPA has considered the
technological feasibility and cost of the proposed standards and the
available lead time for manufacturers to comply with the proposed
standards in MY 2027. We request comment on all aspects of these
proposed targeted updates to the MY 2027 HD GHG Phase 2 program,
including our projections that these four vehicle categories are the
appropriate heavy-duty vehicles EPA should focus on for our proposed
revisions, and if there are additional vehicle categories we should be
considering. We are also considering whether it would be appropriate in
the final rule to increase the stringency of the standards more than
what we have proposed. Therefore, we request information on heavy-duty
electric vehicle sales projections, including projections based on
future product plans, to help inform our HD electric vehicle sales
projections in the MY 2024 through MY 2029 timeframe. Furthermore, we
also request comment on potential impacts on small business vehicle
manufacturers if we finalize standards that are more stringent than the
proposal. We also request comment on whether to finalize the proposed
standards for small business vehicle manufacturers even if we finalize
more stringent standards for other manufacturers and whether to allow
small business vehicle manufacturers to voluntarily comply with more
stringent standards, if finalized, than those required for small
manufacturers (either under the existing Phase 2 standards or as
updated, if finalized).
---------------------------------------------------------------------------

    \849\ Considering technological feasibility, compliance cost,
lead time, and other factors.
    \850\ Memo to Docket. HD 2027 Proposed Changes to Heavy-Duty
Greenhouse Gas Emissions. November 2021.
    \851\ EPA has not yet received a waiver request under CAA
section 209(b) from California for the ACT rule.
    \852\ ACT requires manufacturers to sell a certain percentage of
zero emission heavy-duty vehicles (BEVs or fuel cell vehicles) for
each model year, starting in MY 2024. The sales requirements vary by
vehicle class, starting at 5 to 9 percent of total MY 2024 heavy-
duty vehicle sales in California and increasing to 15 to 20 percent
of MY 2027 sales. Several states have followed suit and issued
proposals to adopt California's ACT under CAA section 177, and we
anticipate more states to follow with similar proposals.
---------------------------------------------------------------------------

    We also are considering whether to establish more stringent
standards beyond MY 2027, specifically in MY 2028 and MY 2029, using
the methodology discussed in Section XI.C.1 but adjusted by MY based on
projected penetration rates of ZEV technology for those years both
inside and outside of California. We request comment on the appropriate
stringency and supporting data for each of those model years, and
whether to finalize such an increase in stringency for those model
years' standards in a one-step (single MY) or multi-step (multiple MY)
approach. EPA requests comment and supporting data that could support
higher penetrations of HD ZEVs in the MY 2027 to 2029 timeframe which
could serve as the basis for the increase in the stringency
CO2 standards for specific Phase 2 vehicle subcategories.
For example, what information and data are available that would support
HD ZEV penetration rates of 5 percent or 10 percent (or higher) in this
timeframe, and in what HD vehicle applications and categories. We also
request comment on whether EPA should adjust our proposed approach to
allow HD ZEV manufacturers to generate NOX emission credits
if we were to increase the stringency of the CO2 standards
for specific Phase 2 vehicle subcategories based on higher projected
penetrations of HD ZEVs in the MY 2027 to 2029 timeframe (see Section
IV.I for our proposal to allow HD ZEV manufacturers to generate
NOX emission credits).
1. Determining the Proposed Standards
    In Section XI.A we described how the HD GHG Phase 2 vehicle
CO2 standards are differentiated by vehicle weight, use,
fuel type, etc. to recognize the diverse nature of the industry,
resulting in 15 subcategories for vocational vehicle standards, with an
additional eight subcategories for specialty vehicle types, and 10
subcategories for tractor standards. These HD GHG Phase 2 standard
subcategories for vocational vehicles and tractors do not correspond
directly with our projections for the four high-sales EV vehicle
types--school buses, transit buses, delivery trucks, and short-haul
tractors. For example, there is no subcategory with a specific standard
for a ``delivery truck''; rather, a vocational vehicle used for
deliveries may fall into any one of several different subcategories
depending on its weight and use pattern. In fact, based on our review
of the applications for certification of MY 2020 and MY 2021 vehicles,
HD electric vehicle manufacturers of these four vehicle types are
certifying them into several of the EPA regulatory vocational vehicle
CI subcategories, the school bus and transit bus custom chassis
subcategories, and into all three of the Class 8 day cab tractor
subcategories.\853\
---------------------------------------------------------------------------

    \853\ Note that the Class 7 Tractor CO2 emission
standards in 40 CFR 1037.106 apply to ``All Cab Styles'', but nearly
all tractors that are subject to these standards are day cabs.
Therefore, we refer to these as day cab tractor standards throughout
this section.
---------------------------------------------------------------------------

    The changes we are proposing apply only to a subset of the MY 2027
heavy-duty CO2 vehicle emission standards. We are not
proposing any changes to the heavy-duty engine CO2 emission
standards. The current HD GHG Phase 2 engine standards only apply to
engines that are ``internal combustion engines.'' \854\ Electric
vehicles are not powered by internal combustion engines. Furthermore,
the CO2 emission credits generated from electric vehicles
are not allowed to be brought into the engine averaging sets.\855\
Therefore, electric vehicles have no effect on manufacturers'
strategies for meeting the HD engine GHG standards, and EPA is not
proposing to modify the HD engines GHG standards.
---------------------------------------------------------------------------

    \854\ 40 CFR 1036.5(d).
    \855\ 40 CFR 1036.740.
---------------------------------------------------------------------------

    After careful consideration of an approach that would achieve
appropriate emission reductions and account for the emerging HD EV
market without changing the HD GHG Phase 2 program as a whole, we are
proposing to adjust the HD GHG Phase 2 vehicle CO2 emission
standards based on sales-weighting the projected EV production levels
of the four types of EVs and using that information to lower the
emission standards only for the vocational vehicle and six tractor
subcategories that are applicable to these four types of EVs (depending
on weight and use pattern) in MY 2027.
    Our proposed approach involves three steps. First, we projected the
number of sales of electric school buses, transit buses, delivery
trucks, and short-haul tractors in MY 2027 based on sales data and
projections outlined in the next paragraph. Second, we determined the
percentage EVs relative to the total number of vehicles produced in the
nine CI vocational vehicle and day cab tractor subcategories, plus the
optional school bus and transit bus subcategories.\856\ Third, we
reduced the numeric level of the standards for the vocational vehicle
subcategories and the applicable tractor subcategories by the projected
percentage of electric vehicles. Under the resulting revised standards
that we are proposing and our projections of EVs, manufacturers would
need to either incorporate additional emissions reductions or not
generate as many emissions credits,

compared to our estimates at the time of the HD GHG Phase 2 rule. This
approach would adjust 17 of the 33 MY 2027 HD GHG Phase 2 standards. We
believe that it is not appropriate to propose updates to the sleeper
cab tractor standards in this action because the typical usage and
daily miles travelled by these vehicles is beyond the range available
in current electric tractors under development. We request comment on
this approach and the proposed revisions to MY 2027 CO2
emission standards.
---------------------------------------------------------------------------

    \856\ We propose that vocational EVs could certify to any of the
CI subcategory standards, but would not be allowed to certify to any
SI subcategory standard. This is consistent with the approach
finalized for heavy-duty vehicles under 14,000 pounds (see 40 CFR
86.1819(a)(2)(ii)). The GHG credit averaging sets for vehicles are
based on GVWR and are not differentiated by SI or CI. Therefore,
credits generated from EVs would be used within an averaging set
that includes both SI and CI vehicles. We are not proposing any
changes to the SI vehicle standards.
---------------------------------------------------------------------------

    Projecting the production levels of conventional and electric HD
vehicles in MY 2027 and beyond is challenging. For this proposal, we
used information such as the projected number of zero emission vehicles
in the MY 2027 and beyond timeframe from CARB's ACT rulemaking
documents, the current level of national EV sales data from the
International Council on Clean Transportation, the number of
conventional vehicles and electric vehicles sold based on EPA's heavy-
duty vehicle GHG certification programs, product announcements, and
engineering judgment to inform our projection of EV production in the
national market for MY 2027, described in the next paragraph. We
request comment on this information, and on identification and
description of other available information sources including, more
specifically, data and product plans, to help inform these projections.
If additional data is submitted by commenters related to the approach
described in this section, we would consider it for the final rule,
including the potential for a more stringent adjustment to the MY 2027
standards.
    As a starting point for our national projections, CARB's ACT
rulemaking includes (1) projections for the total number of heavy-duty
vehicles sold in California in MY 2024 through MY 2030 and (2) a
mandate requiring manufacturers to sell a specific percentage of zero-
emission vehicles each model year.\857\ As shown in Table XI-2, 20
percent of vocational vehicles and 15 percent of tractor vehicles sold
in California in MY 2027 are required by the mandate to be zero-
emission vehicles. Combining these two sets of information, we
estimated the number of electric vehicles that would be sold in
California in MY 2027, shown in Table XI-3.
---------------------------------------------------------------------------

    \857\ CARB. Advanced Clean Trucks Regulation. Standardized
Regulatory Impact Analysis. Page 25. August 8, 2019.

 Table XI-3--Projected Number of HD Electric Vehicles Sold in California
                in MY 2027 Based on the CARB ACT Program
------------------------------------------------------------------------
                                             Projected
                                             number of       Projected
                                           conventional      number of
                                           and electric      electric
                                          vehicles in CA  vehicles in CA
------------------------------------------------------------------------
Class 4-8 Vocational Vehicles...........          15,945           3,189
Tractors................................           4,993             749
------------------------------------------------------------------------

    We analyzed the information provided in a recent report by the
International Council on Clean Transportation to extrapolate the number
of new heavy-duty electric vehicles that we would expect to be sold in
the entire U.S. in MY 2027.\858\ The report includes the number of
heavy-duty electric vehicles registered by state and province in the
U.S. and Canada as of 2020. Based on these values, we estimate that
approximately 42 percent of the heavy-duty electric vehicle sales in
the U.S. are in California. Using this figure, we estimated the total
number of electric vehicles in the other 49 states in MY 2027, shown in
Table XI-4.
---------------------------------------------------------------------------

    \858\ ICCT. ``Zero-emission bus and truck market in the United
States and Canada: A 2020 Update.'' May 2021. Pages 5-6. Can be
accessed online at https://theicct.org/publications/canada-race-to-zero-FS-may2021.

                 Table XI-4--Projected Number of HD Electric Vehicles Sold Nationally in MY 2027
----------------------------------------------------------------------------------------------------------------
                                                                                Projected
                                                                     Projected       number of       Projected
                                                                     number of       electric     total electric
                                                                     electric      vehicles sold   vehicles sold
                                                                   vehicles sold    in other 49     nationally
                                                                   in California      states
----------------------------------------------------------------------------------------------------------------
Class 4-8 Vocational Vehicles...................................           3,189           4,404           7,593
Tractors........................................................             749           1,034           1,783
                                                                 -----------------------------------------------
    Total.......................................................           3,938           5,538           9,376
----------------------------------------------------------------------------------------------------------------

    Next, we project the total number of U.S. heavy-duty vocational
vehicle and tractor sales in MY 2027. Our projections come from the
sales split by vehicle category used in the HD GHG Phase 2
rulemaking.\859\ Furthermore, we assumed the fraction of short-haul
tractors relative to the overall tractor sales at 37 percent based on
the split used in MOVES3 for heavy-duty vehicles in 2027.\860\ The
total number of projected HD vocational vehicle and day cab tractor
sales in MY 2027 are shown in Table XI-5.
---------------------------------------------------------------------------

    \859\ U.S. EPA. ``Regulatory Impact Analysis: Greenhouse Gas
Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty
Engines and Vehicles--Phase 2.'' Table 7-55. Page 7-49. April 2016.
    \860\ U.S. EPA. ``Population and Activity of Onroad Vehicles in
MOVES3.'' Table 4-44. Page 30. April 2021. Can be accessed at
https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1011TF8.pdf.

                     Table XI-5--Projected Number of HD Vehicles Sold Nationally in MY 2027
----------------------------------------------------------------------------------------------------------------
                                                                                Total day cab
             Total Class 4-8 vocational vehicles                Total tractors   Total day cab    and vocational
                                                                                tractors         vehicles
----------------------------------------------------------------------------------------------------------------
523,805......................................................         155,682           57,602          581,407
----------------------------------------------------------------------------------------------------------------

    We are proposing an approach of aggregating the total number of
heavy-duty electric vehicles and total number of day cab tractors and
vocational vehicles to calculate the proposed value to account for the
fact that many of the EV tractors will likely be certified as
``vocational'' tractors and certified to a vocational subcategory. We
estimate the overall percentage of heavy-duty electric vehicles in MY
2027 based on the values shown in Table XI-4 and Table XI-5 at
approximately 1.5 percent. EPA requests comment on this percent
projection, including if this value should be lower or higher, and the
data and rational for alternative projections which EPA should
consider.
    At this projected level of EVs in MY 2027, we estimate that
approximately five percent of conventional heavy-duty vehicles would be
able to meet the current HD GHG Phase 2 standards without installing
emission-reducing technologies because the standards apply as a fleet-
average.\861\ As an example for the Class 8 high roof day cab tractor
subcategory, a manufacturer could produce 1.5 percent electric tractors
that emit 0 gram/ton-mile; 93.5 percent of conventional vehicles with
technology packages that emit on average at the MY 2027 standard of
75.7 g/ton-mile; and 5 percent vehicles that emit at the baseline level
of 98.2 g/ton-mile (i.e., no additional CO2 emission-
reducing technologies beyond Phase 1).\862\ On average, this example
fleet would meet the current HD GHG Phase 2 MY 2027 standard of 75.7 g/
ton-mile.
---------------------------------------------------------------------------

    \861\ Memo to Docket. HD 2027 Proposed Changes to Heavy-Duty
Greenhouse Gas Emissions. November 2021.
    \862\ For the baseline value, see 81 FR 73588.
---------------------------------------------------------------------------

    EPA's heavy-duty vehicle GHG certification data shows that EV
products are being certified in most of the compression-ignition
vocational vehicle subcategories, including the school buses and
transit buses optional custom chassis subcategories, and the day cab
tractor subcategories (about half of the total tractor subcategories).
Therefore, we propose to revise the existing CO2 emission
standards in these 17 subcategories. The existing vocational vehicle
and tractor standards that would be affected are shown in Table XI-6
and Table XI-8.
    With this proposed stringency increase, we intend for the five
percent fraction of conventional vehicles that theoretically would not
need additional technology to meet current HD GHG Phase 2 standards to
need to install some combination of emissions-reducing technologies
that on average would meet the current HD GHG Phase 2 standards.
Applying the proposed revisions to the MY 2027 standards to the Class 8
high roof day cab tractor subcategory example, in this hypothetical
fleet a manufacturer would produce 1.5 percent electric tractors and
all of the remaining conventional vehicles would themselves on average
have CO2 emission-reducing technologies that meet the
current HD GHG Phase 2 MY 2027 standard of 75.7 g/ton-mile standard. We
propose the revised MY 2027 standards for the vocational vehicle and
tractors standards, as shown in Table XI-7 and Table XI-9.\863\ In
addition, we propose that electric vocational vehicles beginning in MY
2027 be required to certify in one of the nine standards for
compression-ignition vehicles or the optional custom chassis
standards.\864\ This is consistent with the approach finalized for
heavy-duty vehicles under 14,000 pounds GVWR (see 40 CFR
86.1819(a)(2)(ii)). The GHG credit averaging sets for vehicles are
based on GVWR and are not differentiated by SI or CI. Therefore,
credits generated from EVs would be used within an averaging set that
includes both SI and CI vehicles. We are not proposing any changes to
the SI vehicle standards. We request comment on this approach.
---------------------------------------------------------------------------

    \863\ See proposed 40 CFR 1037.105 and 1037.106.
    \864\ See proposed 40 CFR 1037.101(c)(3).

                     Table XI-6--Existing MY 2027 Vocational Vehicle CO2 Emission Standards
                                                  [g/ton-mile]
----------------------------------------------------------------------------------------------------------------
                                                                                CI medium
                                                                  CI light heavy       heavy      CI heavy heavy
----------------------------------------------------------------------------------------------------------------
Urban...........................................................             367             258             269
Multi-Purpose...................................................             330             235             230
Regional........................................................             291             218             189
Optional Custom Chassis: School Bus.............................             271
Optional Custom Chassis: Transit Bus............................             286
----------------------------------------------------------------------------------------------------------------

                     Table XI-7--Proposed MY 2027 Vocational Vehicle CO2 Emission Standards
                                                  [g/ton-mile]
----------------------------------------------------------------------------------------------------------------
                                                                                CI medium
                                                                  CI light heavy       heavy      CI heavy heavy
----------------------------------------------------------------------------------------------------------------
Urban...........................................................             361             254             265
Multi-Purpose...................................................             325             231             226
Regional........................................................             286             215             186
Optional Custom Chassis: School Bus.............................             267
Optional Custom Chassis: Transit Bus............................             282
----------------------------------------------------------------------------------------------------------------

       Table XI-8--Existing MY 2027 Tractor CO2 Emission Standards
                              [g/ton-mile]
------------------------------------------------------------------------
                                                     Class 7
                                                     (all cab   Class 8
                                                     styles)   (day cab)
------------------------------------------------------------------------
Low Roof Day Cab..................................       96.2       73.4
Mid Roof Day Cab..................................      103.4       78.0
High Roof Day Cab.................................      100.0       75.7
------------------------------------------------------------------------

       Table XI-9--Proposed MY 2027 Tractor CO2 Emission Standards
                              [g/ton-mile]
------------------------------------------------------------------------
                                                     Class 7
                                                     (all cab   Class 8
                                                     styles)   (day cab)
------------------------------------------------------------------------
Low Roof..........................................       94.8       72.3
Mid Roof..........................................      101.8       76.8
High Roof.........................................       98.5       74.6
------------------------------------------------------------------------

2. Technology Costs for the Proposed Changes
    In HD GHG Phase 2, EPA projected that the CO2 emissions
reductions can be feasibly, and cost effectively, met through
technological improvements in several areas of the heavy-duty engine
and vehicle.\865\ The combination of improvements in the HD GHG Phase 2
analysis included advanced aerodynamics, more efficient engines, idle
reduction technologies, transmission and driveline improvements, and
lower rolling resistance tires and automatic inflation systems. In
establishing the HD GHG Phase 2 standards and determining the
associated technology costs, we evaluated each technology and its
effectiveness and estimated the most appropriate adoption rate of the
technology in each vehicle subcategory. A technology package that
combined the technologies and adoption rate was developed for each
vehicle subcategory and used to derive the current HD GHG Phase 2
standards. In proposing revised standards, we apply the same technology
packages and cost estimates developed for the existing HD GHG Phase 2
program in 2016 to the conventional vehicles that would not otherwise
need to apply technology due to the increase in electric vehicles
projected for MY 2027 and beyond, absent the changes we are proposing
in this document.
---------------------------------------------------------------------------

    \865\ 81 FR 73585 through 73613 (October 25, 2016); 81 FR 73693
through 73719 (October 25, 2016).
---------------------------------------------------------------------------

    The fleet-average incremental per-vehicle technology package costs
for each subcategory are summarized in the 2016 HD GHG Phase 2 preamble
with additional details provided in the HD GHG Phase 2 RIA Chapter
2.12. The technology cost analyses reflected both the direct costs and
indirect costs, which included items such as warranty. Table XI-10 and
Table XI-11 provide the per-vehicle costs of the technology packages to
meet the HD GHG Phase 2 MY 2027 CO2 emission standards for
tractors and vocational vehicles, respectively.866 867 As
discussed in the HD GHG Phase 2 preamble, the per vehicle costs
represent approximately a 12 percent increase in typical vehicle price
for tractors and 3 percent for vocational vehicles.\868\ However, the
benefits of the technology greatly exceed the costs and the payback
periods are short meaning that the purchaser will see substantial new
savings over the vehicle lifetime primarily due to reduced fuel
costs.\869\ These same per-vehicle technology costs would apply to the
subset of conventional vehicles that would require the technology
package to meet the proposed revised standards, as was originally
intended under the HD GHG Phase 2 program. We believe the technology
costs developed during HD GHG Phase 2 are still appropriate, but we
welcome comments on revising the technology costs.
---------------------------------------------------------------------------

    \866\ 81 FR 73621, Table III-27 (October 25, 2016).
    \867\ 81 FR 73718, Table V-30 (October 25, 2016).
    \868\ 81 FR 73482 (October 25, 2016).
    \869\ 81 FR 73481 (October 25, 2016).

                      Table XI-10--Tractor Technology Incremental Average Costs for MY 2027
                                                     [2013$]
----------------------------------------------------------------------------------------------------------------
                                                                 Class 7 high   Class 8 low/mid    Class 8 high
                 Class 7 low/mid roof day cab                    roof day cab     roof day cab     roof day cab
----------------------------------------------------------------------------------------------------------------
$10,235......................................................         $10,298          $10,439          $10,483
----------------------------------------------------------------------------------------------------------------

                                    Table XI-11--Vocational Vehicle Technology Incremental Average Costs for MY 2027
                                                                         [2013$]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                              Light HD                                                Medium HD                                 Heavy HD
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Multi-                                    Multi-                                    Multi-
                  Urban                      purpose      Regional        Urban        purpose      Regional        Urban        purpose      Regional
--------------------------------------------------------------------------------------------------------------------------------------------------------
$2,533..................................       $2,571        $1,486        $2,727        $2,771        $1,500        $4,151        $5,025        $5,670
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In HD GHG Phase 2, we calculated the payback period, or time it
would take for the increase in technology package and associated costs
to be offset by the savings in operating costs, most notably fuel
costs. This analysis included the hardware costs of the new
technologies and their associated fixed costs, insurance, taxes, and
maintenance. In HD GHG Phase 2, we found that the fuel savings
significantly exceed the costs associated with the technologies over
the lifetime of the vehicles, with payback occurring in the fourth year
of operation for vocational vehicle and in the second year for tractor-
trailers.\870\ This same payback analysis would apply to the proposed
revised standards, again as we are applying the same technology
packages with the same costs and fuel saving to conventional vehicles
that were originally intended to have these packages under the existing
HD GHG Phase 2 program but would not with the current rise in
electrification, absent these changes we are proposing in this action.
---------------------------------------------------------------------------

    \870\ 81 FR 73904 (October 25, 2016).
---------------------------------------------------------------------------

3. Consistency of the Revised Standards With the Agency's Legal
Authority
    The intent of the existing HD GHG Phase 2 program was to set the
stringency of the standards at a level

that all conventional vehicles would need to install some level and
combination of emission-reducing technologies or offset another
conventional vehicle not installing such technology, since at that time
we predicted very little market penetration of EVs. The proposed
revised standards are based on the same technology packages used to
derive the current HD GHG Phase 2 standards. To calculate the proposed
standards, we applied these same technology packages to the subset of
the vehicles that would otherwise not require CO2 emission-
reducing technologies due to the higher projection of HD electric
vehicles in MY 2027 and beyond. The HD GHG Phase 2 standards were based
on adoption rates for technologies in technology packages that EPA
regards as appropriate under CAA section 202(a) for the reasons given
in the HD GHG Phase 2 rulemaking in Section III.D.1 for tractors and
Section V.C.1 for vocational vehicles.\871\ We continue to believe
these technologies can be adopted at the estimated technology adoption
rates for these proposed revised standards within the lead time
provided. The fleet-wide average cost per tractor projected to meet the
proposed revised MY 2027 standards is approximately $10,200 to $10,500.
The fleet-wide average cost per vocational vehicle to meet the proposed
revised MY 2027 standards ranges between $1,500 and $5,700. These
increased costs would be recovered in the form of fuel savings during
the first two years of ownership for tractors and first four years for
vocational vehicles, which we still consider to be reasonable.\872\ In
addition, manufacturers retain leeway to develop alternative compliance
paths, increasing the likelihood of the standards' successful
implementation. In this proposal we have considered feasibility, cost,
lead time, emissions impact, and other relevant factors, and therefore
these revised proposed MY 2027 standards are appropriate under CAA
section 202(a).\873\
---------------------------------------------------------------------------

    \871\ 81 FR 73585 through 73613 (October 25, 2016); 81 FR 73693
through 73719 (October 25, 2016).
    \872\ 81 FR 73904 (October 25, 2016).
    \873\ See Phase 2 Safety Impacts at 81 FR 73905 through 73909
(October 25, 2016).
---------------------------------------------------------------------------

D. HD GHG Phase 2 Advanced Technology Credits for CO2 Emissions

    EPA continues to believe there is a need to incentivize the
development of EVs in the heavy-duty sector in the near term as a path
towards zero-emissions in the long term. Early state action and
industry innovation related to EVs will achieve more GHG reductions in
the near term and help set the stage for longer-term actions. However,
the advanced technology credit multipliers for CO2 emissions
in HD GHG Phase 2 may no longer be appropriate based on our current
understanding of the heavy-duty market. The existing large advanced
technology credit multipliers could result in potential reductions in
the effective stringency of the existing MY 2024 through 2027
standards, particularly in combination with the rise in EVs including,
but not limited to, those built to satisfy the California ACT
requirement. In addition, an increase in production volumes of EVs
would likely reduce the cost differential between EVs and conventional
vehicles, correspondingly reducing the need for large, advanced
technology multipliers. Given these factors, we are requesting comment
on three approaches that would reduce the number of incentive credits
produced by electric vehicles in the MY 2024 through MY 2027 timeframe
(i.e., credit multiplier approach for EVs certified to meet
California's ACT Rule, advance technology credit cap approach, and
transitional credit cap approach). We are not proposing any one of
these approaches and request comment on all aspects of all three
approaches.
    The HD GHG Phase 2 program currently includes advanced technology
credit multipliers for CO2 emissions for all-electric
vehicles, plug-in hybrid electric vehicles, and fuel cell
vehicles.\874\ The HD GHG Phase 2 credit multipliers begin in MY 2021
and end after MY 2027.
---------------------------------------------------------------------------

    \874\ 40 CFR 1037.150(p).
---------------------------------------------------------------------------

    The CO2 emission credits for heavy-duty vehicles are
calculated using Equation XI-1. The CO2 emission credits for
heavy-duty electric vehicles built between MY 2021 and MY 2027 are then
multiplied by 4.5 and, for discussion purposes, can be visualized as
split into two shares.\875\ The first share of credits comes from the
reduction in CO2 emissions realized by the environment from
an electric vehicle that is not emitting from the tailpipe, represented
by the first 1.0 portion of the multiplier. For all-electric vehicles,
the family emission level (FEL) value is deemed to be 0 grams/ton-
mile.\876\ Therefore, each electric vehicle produced receives emission
credits equivalent to the level of the standard, even before taking
into account the effect of a multiplier. The second share of credits
does not represent CO2 emission reductions realized in the
real world, but was established by EPA to help incentivize a nascent
market: The emission credits for electric vehicles built between MY
2021 and 2027 receive an advanced technology credit multiplier of 4.5,
i.e., an additional 3.5 multiple of the standard.
---------------------------------------------------------------------------

    \875\ 40 CFR 1037.705.
    \876\ 40 CFR 1037.150(f).
---------------------------------------------------------------------------

Equation XI-1: CO2 Emission Credit Calculation for Heavy-Duty Vehicles

Emission credits (Mg) = (Std-FEL) [middot] (PL) [middot] (Volume)
[middot] (UL) [middot] (10-6)

Where:

Std = the emission standard associated with the specific regulatory
subcategory (g/ton-mile)
FEL = the family emission limit for the vehicle subfamily (g/ton-
mile)
PL = standard payload, in tons
Volume = U.S.-directed production volume of the vehicle subfamily
UL = useful life of the vehicle, in miles, as described in 40 CFR
1037.105 and 1037.106

    The HD GHG Phase 2 advanced technology credit multipliers represent
a tradeoff between encouraging a new technology that could have
significant benefits well beyond what is required under the standards
and providing credits that do not reflect real world reductions in
emissions which in effect allow for emissions increases by other
engines and vehicles. At the time we finalized the HD GHG Phase 2
program in 2016, we balanced these factors based on our estimate that
there would be very little market penetration of EVs in the heavy-duty
market in the MY 2021 to MY 2027 timeframe, during which the advanced
technology credit multipliers would be in effect. In fact, the primary
technology packages used to determine the HD GHG Phase 2 standards did
not include any EVs. For MY 2019, EPA's heavy-duty vehicle GHG
certification data show that approximately 0.06 percent of heavy-duty
vehicles certified were electric vehicles. At low adoption levels, we
believe the balance between the benefits of encouraging additional
electrification as compared to any negative emissions impacts of
multipliers would be appropriate and would justify maintaining the
current advanced technology multipliers. This is consistent with our
assessment conducted during the development of HD GHG Phase 2 where we
found only one all-electric HD vehicle manufacturer had certified
through 2016, and we projected ``limited adoption of all-electric
vehicles into the market.'' \877\ However, as discussed in Section
XI.B, we are now in a transitional period where manufacturers are
actively increasing their zero-emission HD vehicle offerings, and we
expect this

growth to continue through the timeframe of the HD GHG Phase 2 program.
---------------------------------------------------------------------------

    \877\ 81 FR 75300 (October 25, 2016).
---------------------------------------------------------------------------

    While we did anticipate some growth in electrification would occur
due to the credit incentives in the HD GHG Phase 2 rule, we did not
expect the level of innovation observed or that California would adopt
a requirement for such a large number of heavy-duty electric vehicles
to be sold at the same time these advanced technology multipliers were
in effect. 878 879 Based on this new information, we believe
that the existing advanced technology multiplier credit levels may no
longer be appropriate for maintaining the balance between encouraging
manufactures to continue to invest in new technologies over the long
term and potential emissions increases in the short term. We believe
that if left as is, the multiplier credits could allow for backsliding
of emission reductions expected from internal combustion engine
vehicles for some manufacturers in the near term, as sales of advanced
technology vehicles continue to increase. We show an example of this in
Figure XI-1 using the heavy heavy-duty vehicle averaging set. At
approximately 8.5 percent EV adoption rate into this averaging set,
approximately 100 percent of the projected reductions from HD GHG Phase
2 would be lost.
---------------------------------------------------------------------------

    \878\ EPA has not yet received a waiver request under CAA
section 209(b) from California for the ACT rule.
    \879\ ACT requires manufacturers to sell a certain percentage of
zero emission heavy-duty vehicles (BEVs or fuel cell vehicles) for
each model year, starting in MY 2024. The sales requirements vary by
vehicle class, starting at 5 to 9 percent of total MY 2024 heavy-
duty vehicle sales in California and increasing to 15 to 20 percent
of MY 2027 sales. Several states have followed suit and issued
proposals to adopt California's ACT under CAA section 177, and we
anticipate more states to follow with similar proposals.
[GRAPHIC] [TIFF OMITTED] TP28MR22.008

    Therefore, EPA is seeking comment on the potential need to update
the HD GHG Phase 2 advanced technology incentive program. In this
proposal, we seek comment on three potential approaches that would be
in addition to the proposed revised MY 2027 CO2 emission
standards. Each of these approaches is distinct and we would only
consider finalizing a single approach.
    California's ACT rule was adopted in 2020 and is expected to cause
a shift in heavy-duty electric vehicle production in the U.S. The ACT
requires manufacturers to sell a certain percentage of zero emission
heavy-duty vehicles (BEVs or fuel cell vehicles) for each model year,
starting in MY 2024. The sales requirements vary by vehicle class,
starting at 5 to 9 percent of total MY 2024 heavy-duty vehicle sales in
California and increasing to 15 to 20 percent of MY 2027 sales. EPA has
received a waiver request under CAA section 209(b) from California for
the ACT rule and is reviewing that request. The first approach outlined
in this section is predicated on one potential outcome from the review
process, which is granting a waiver request for the ACT rule. Given the
timing of this proposed rulemaking, we have considered the

potential impacts of the California ACT rule on the HD GHG Phase 2
program and we solicit comment on how we could address such potential
impacts.
    In all three approaches, the changes would begin in MY 2024 to
align with California's ACT program. If we finalize changes to the
advanced technology credit program in a final rule in 2022, then we
would be providing one year of lead time for the manufacturers' product
planning and two years to adjust the calculations in the ABT reports
for the MY 2024 changes.\880\ We request comment on the lead time
needed for each of these approaches. We are also seeking comment on
whether there are better, alternative methods that EPA should consider
and whether we should consider changes to the advanced technology
incentive program for fuel cell vehicles and/or plug-in hybrid
vehicles.
---------------------------------------------------------------------------

    \880\ 40 CFR 1037.730.
---------------------------------------------------------------------------

1. Credit Multiplier Approach for EVs Certified to Meet California's
ACT Rule
    When EPA finalized the HD GHG Phase 2 program, including the
advanced technology credit program, we did not envision a large number
of EVs such as required in the California ACT rule. All multipliers
reduce the overall stringency of the standards as a trade-off for
encouraging early innovation and adoption of new technologies, and a
large number of vehicles that qualify for the credits can allow for
emissions increases by other engines and vehicles at the national
level. However, our view is that EVs built to satisfy California's ACT
requirement would not need an additional advanced technology credit
incentive from the HD GHG Phase 2 program. The technology feasibility
of the proposed revised standards, as we explain in Section XI.C, and
the flexibilities that would still be included in meeting those
standards with the 1.0 multiplier for the EVs, show that manufacturers
would still be able to meet the existing HD GHG Phase 2 standards in
the MY 2024 through MY 2026 timeframe and the proposed revised MY 2027
standards without the credits from the multipliers. Therefore, we are
requesting comment on an approach that would treat all EVs certified in
California in the MY 2024 through MY 2027 timeframe differently than
the vehicles certified outside of California. Under this approach, the
MY 2024 through MY 2027 EVs certified in California would not receive
the advanced technology credit multiplier that currently exists. We
note that these EVs would still continue to be deemed to have zero
grams CO2 per ton-mile emissions and receive significant
credits reflective of the difference between the applicable
CO2 emission standard and zero grams. The approach to EVs
certified to the EPA program for new vehicles sold outside of
California and not subject to California standards in other states
under Section 177 would remain unchanged and receive the advanced
credit multiplier. We request comment on this approach in general, and
we request specific comment on whether maintaining this multiplier for
EVs sold outside of California could impact manufacturer production
plans.
2. Advanced Technology Credit Cap Approach
    In Phase 1, EPA included a provision that capped the amount of
advanced technology credits that could be brought into any averaging
set in any model year at 60,000 Mg of CO2 emissions to
prevent market distortions.\881\ The second approach we are requesting
comment on is similar to the Phase 1 advanced technology credit cap
approach. We did not finalize such a cap in HD GHG Phase 2 because, as
described at the beginning of this section, we believe we appropriately
balanced encouraging new technologies and potential emissions increases
under the assumption that there would be very limited adoption of EVs
during the HD GHG Phase 2 timeframe. However, the option for unlimited
advanced technology credit multipliers for CO2 emissions in
HD GHG Phase 2 may no longer be appropriate considering the observed
and projected rise in electrification.
---------------------------------------------------------------------------

    \881\ 76 FR 57246 (September 15, 2011). Regulations can be found
in 40 CFR 1036.740(c)(1).
---------------------------------------------------------------------------

    Under this credit cap approach, advanced technology credits
generated due to the production of EVs on an annual basis that are
under the cap would remain unchanged. Above the cap, the multiplier
would effectively be a value of 1.0; in other words, after a
manufacturer reaches their cap in any model year, the multiplier would
no longer be available and would have no additional effect on credit
calculations. Each electric vehicle produced would still receive
emission credits equivalent to the level of the standard (the real-
world emission reduction), but this effect would not be multiplied to
generate additional credits for that manufacturer.
    The first step in developing this approach would be to determine
the appropriate level of EV adoption rate above which to apply the cap.
The cap could be set at a lower level to be more protective of the
environment or at a higher level to continue to provide strong
incentives to the development of heavy-duty EVs. In setting the value
EPA would consider how the selected cap level limits losses of the HD
GHG Phase 2 program's emission reduction efficacy.
    We seek comment on an approach that would set a cap at a level that
would restrict the credit multipliers for EVs produced above a
threshold of one percent of the total projected vehicle production
volumes. We first projected the number of total vehicles certified in
each averaging set.\882\ In MY 2019, the most recent year for which we
have data, approximately 167,000 HD vehicles were certified into light
heavy-duty; approximately 177,000 into medium heavy-duty; and
approximately 267,000 into heavy heavy-duty averaging sets. Next, we
determined the number of EV manufacturers. In MY 2019, there were a
total of 26 manufacturers that had either certified electric vehicles
or notified EPA that they were a small manufacturer that produced
vehicles that were excluded from the regulations due to the small
business provision in 40 CFR 1037.150(c)(3). The potential cap values
represent approximately 65 vehicles per manufacturer per year in each
of the light and medium heavy-duty averaging sets and approximately 100
vehicles per manufacturer per year for the heavy heavy-duty averaging
sets. This advanced technology credit cap approach would limit the
credits generated by a manufacturer's use of the advanced technology
credit multipliers for battery electric vehicles to the following
levels of CO2 per manufacturer per model year beginning in
MY 2024 and extending through MY 2027:
---------------------------------------------------------------------------

    \882\ Memo to Docket. HD 2027 Approaches to Change the Heavy-
Duty GHG Phase 2 Advanced Technology Credit Incentive Program.
September 2021.

 Light Heavy-Duty Vehicle Averaging Set: 42,000 Mg
CO2
 Medium Heavy-Duty Vehicle Averaging Set: 75,000 Mg
CO2
 Heavy Heavy-Duty Vehicle Averaging Set: 325,000 Mg
CO2

    We request comment on applying this general approach to a different
EV threshold based on a sales percentage or absolute emissions cap, the
structure of the credit cap, the assumptions that would be used in
developing the numerical value of the caps, and whether these credit
caps also should apply to plug-in hybrids and fuel cell vehicles.

3. Transitional Credit Multipliers Approach
    A third option to limit the credit multiplier impact would be to
reduce and phase-out the magnitude of the credit multipliers over a
period of model years. EPA has always intended the credit multipliers
to serve as a temporary incentive for manufacturers to develop and use
zero-emission technologies. The HD GHG Phase 2 advanced technology
credit multipliers currently end after MY 2027. The credit multipliers
were not considered in determining the feasibility of the HD GHG Phase
2 CO2 emission standards. The feasibility was determined
through the evaluation of conventional technologies, as described in
Section XI.C.
    As noted in Section XI.A.2, the HD GHG Phase 2 advanced technology
credit multipliers were derived based on CARB's cost analysis that
compared the costs of BEVs in the 2015/2016 timeframe to costs of other
conventional CO2-reducing technologies. CARB's cost analysis
showed that multipliers in the range we finalized for HD GHG Phase 2
would make these technologies closer to cost-competitive with the
conventional technologies. Since 2016, the electric vehicle market has
grown and is now projected to continue growing in ways we did not
anticipate in HD GHG Phase 2: Namely that we did anticipate small
growth in electrification due to the credit incentives, but we did not
predict the large numbers of heavy-duty EVs associated with
California's ACT requirement, as described in Section XI.B.2.
Therefore, the projected costs of electric vehicles in the future
continue to decrease to reflect the increase in learning and production
levels. For this proposal, EPA recreated the BEV technology cost
analysis to determine new values under consideration for the advanced
technology credits. The analysis was updated using new information on
the cost of EVs in the form of CARB's incremental BEV costs developed
in 2019.\883\ We maintained the conventional vehicle technology costs
and associated final HD GHG Phase 2 CO2 emission standards
in this analysis as we believe the cost of the conventional technology
packages developed under HD GHG Phase 2 is still appropriate. The
analysis for MY 2024 is shown in Table XI-12 and for MY 2027 in Table
XI-13.
---------------------------------------------------------------------------

    \883\ California Air Resources Board. Advanced Clean Trucks
Regulation. Standardized Regulatory Impact Analysis. Table G8, Page
31. August 8, 2019.
[GRAPHIC] [TIFF OMITTED] TP28MR22.009

[GRAPHIC] [TIFF OMITTED] TP28MR22.010

    Under this approach, based on the values calculated in Table XI-12
and Table XI-13, EPA is taking comment on revising the advanced
technology multipliers for BEVs to transition by model year as shown in
Table XI-14. We request comment on this approach, the values used in
the credit multiplier calculations, and the impact of decrementing the
credit multipliers on the timeframe shown in Table XI-14. We request
comment on all aspects of this approach.

                                                   Table XI-14--Advanced Technology Credit Multipliers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2023            2024            2025            2026            2027            2028
--------------------------------------------------------------------------------------------------------------------------------------------------------
Existing Advanced Credit Multipliers for Electric                    4.5             4.5             4.5             4.5             4.5             1.0
 Vehicles...............................................
Advanced Credit Multipliers for Electric Vehicles under              4.5             3.5             3.0             2.0             1.5             1.0
 Consideration..........................................
--------------------------------------------------------------------------------------------------------------------------------------------------------

E. Emissions and Cost Impacts of Proposed Revised MY 2027 CO2 Emission
Standards

    As discussed throughout this section, we established the HD GHG
Phase 2 program in 2016 based in part on projections that
electrification of the heavy-duty market was unlikely to occur in the
timeframe of the program. The recent rise in EV product offerings,
which are projected to grow through MY 2027 and beyond, could affect
the amount of technology required to be installed on conventional
vehicles to meet the standards. As noted in Section XI.C, we derived
the HD GHG Phase 2 standards based on a ``technology package'' that
combined emission-reducing technologies with adoption rates developed
for each vehicle subcategory. We set the current HD GHG Phase 2
standards at levels that would require conventional vehicles to install
some combination of these technologies, leading to CO2
emissions reductions.\884\ We estimate that the increase in electric
vehicles in the timeframe of the HD GHG Phase 2 program would now allow
approximately five percent of conventional vehicles to meet the
standards without installing emission-reducing technologies.\885\ The
increase in the stringency we propose adjusts the standard levels such
that this five percent fraction of conventional vehicles would on
average need to install some combination of emissions-reducing
technology. As shown in Section XI.C, we estimate the overall
percentage of electric vehicles in the vocational and day cab tractor
subcategories in MY 2027 to be 1.5 percent, deriving the increase in
stringency from this value. The existing HD GHG Phase 2 program was
estimated to reduce CO2 emissions by approximately 1 billion
metric tons over the life of vehicles and engines sold during the
program and provide over $200 billion in net societal benefits at an
aggregate technology cost to HD vehicle buyers and operators of roughly
$25 billion (using a 3 percent discount rate).\886\ The small
adjustment to the select standards we are proposing would generally
maintain the anticipated costs and benefits of the HD GHG Phase 2
program, with a less than one percent decrease in CO2
emissions and less than two percent increase in technology costs
projected for the 2027 MY vehicles in the HD GHG Phase 2 rulemaking.
---------------------------------------------------------------------------

    \884\ Considering technological feasibility, compliance cost,
lead time and other factors noted in Section I.C.
    \885\ Memo to Docket. HD 2027 Proposed Changes to Heavy-Duty
Greenhouse Gas Emissions. November 2021.
    \886\ 81 FR 73482, and 73894-73905 (October 25, 2016).
---------------------------------------------------------------------------

    The proposed revised MY 2027 CO2 emission standards
would result in

modest additional changes in CO2 emission reductions. With
the existing HD GHG Phase 2 emission standards and our projected
increase in electric vehicles in the MY 2027, the MY 2027 vocational
vehicles and tractors are projected to emit 29 million metric tons of
CO2 emissions in calendar year 2027, as shown in the
Reference Case column of Table XI-15.\887\ Also as shown in Table XI-
15, the proposed increase in stringency of the MY 2027 vocational
vehicle and day cab tractor standards would lead to a 1.5 percent
reduction in the CO2 emissions only from the subcategories
of vehicles with the proposed revised standards. Overall, the proposed
standards would lead to a reduction of approximately 222,000 metric
tons in 2027 beyond the current HD GHG Phase 2 program. This represents
a 0.7 percent reduction in CO2 emissions from the overall
heavy-duty vocational vehicle and tractor sector (that includes sleeper
cab tractors that remain unchanged) in 2027 compared to the emissions
from these sectors with the existing HD GHG Phase 2 standards if they
were to remain unchanged. Similar levels of annual reductions in
CO2 emissions would be expected in the years beyond 2027 for
these MY 2027 vehicles, though those future-year impacts have not been
quantified.
---------------------------------------------------------------------------

    \887\ Memo to Docket. HD 2027 Proposed Changes to Heavy-Duty
Greenhouse Gas Emissions. November 2021.
---------------------------------------------------------------------------

    There would be climate-related benefits associated with the
CO2 emission reductions achieved by the targeted revisions,
but we are not monetizing them in this proposal.\888\ We request
comment on how to address the climate benefits and other categories of
non-monetized benefits of the proposed rule. We intend to conduct
additional analysis for the final rule after reviewing public comments
related to the proposed revised standards and considering any changes
to the proposed advanced technology credit program.
---------------------------------------------------------------------------

    \888\ The U.S. District Court for the Western District of
Louisiana has issued an injunction concerning the monetization of
the benefits of greenhouse gas emission reductions by EPA and other
defendants. See Louisiana v. Biden, No. 21-cv-01074-JDC-KK (W.D. La.
Feb. 11, 2022).

    Table XI-15--CO2 Emissions Impact of Proposed Standards for 2027
                              Calendar Year
------------------------------------------------------------------------
                                          Reference case
                                           CO2 emissions   CO2 emission
                                           from MY 2027     reductions
                                             vehicles      (metric tons)
                                           (metric tons)

------------------------------------------------------------------------
Light Heavy Vocational..................       2,419,884          36,298
Medium Heavy Vocational.................       3,433,171          51,498
Heavy Heavy Vocational..................         955,382          14,331
Medium Heavy Day Cab Tractors...........       4,068,458          61,027
Heavy Heavy Day Cab Tractors............       3,921,448          58,822
Heavy Heavy Sleeper Cab Tractors........      14,290,255  ..............
                                         -------------------------------
    Total...............................      29,088,598         221,975
------------------------------------------------------------------------

    The aggregate technology costs resulting from the proposed changes
in the MY 2027 standards are shown in Table XI-16. The average costs
per vehicle represent the technology package costs developed for
conventional vehicles to meet the HD GHG Phase 2 standards. The
projected sales in MY 2027 were generated from MOVES3. The percentage
of conventional vehicles needed to improve to meet the proposed revised
standards are approximately five percent, as discussed in Section XI.C.
The aggregated technology cost in MY 2027 of the proposed revised
standards is approximately $98 million. This compares to the MY 2027
technology costs of the HD GHG Phase 2 rule of $5.2 billion
(2013$).\889\ We request comment on this cost analysis.
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    \889\ U.S. EPA and NHTSA. ``Regulatory Impact Analysis:
Greenhouse Gas Emission and Fuel Efficiency Standards for Medium-
and Heavy-Duty Vehicles--Phase 2.'' EPA-420-R-16-900. August 2016.
Page 7-21.

              Table XI-16--Technology Cost Due to Proposed Increase in Emission Standard Stringency
----------------------------------------------------------------------------------------------------------------
                                                                                Phase 2
                                     Projected     Percentage of     Number of      technology      Total cost
                                    sales in MY    conventional    conventional      cost  per        (2013$
                                       2027          vehicles        vehicles         vehicle        millions)
                                                   affected (%)      affected       (2013$) \a\
----------------------------------------------------------------------------------------------------------------
Light Heavy Vocational..........         141,716               5           7,086          $2,533           $17.9
Medium Heavy Vocational.........         180,432               5           9,021           2,727            24.6
Heavy Heavy Vocational..........         138,453               5           6,923           4,151            28.7
Medium Heavy Day Cab Tractors...          10,558               5             528          10,235             5.4
Heavy Heavy Day Cab Tractors....          41,334               5           2,067          10,439            21.6
                                 -------------------------------------------------------------------------------
    Total.......................  ..............  ..............  ..............  ..............              98
----------------------------------------------------------------------------------------------------------------
\a\ 81 FR 73620 and 73716 (October 25, 2016) noting the Urban subcategory costs.

F. Summary of Proposed Changes to HD GHG Phase 2

    In summary, we are proposing some updates to the existing HD GHG
Phase 2 and seeking comment on other potential changes. First, we
propose to reduce the MY 2027 CO2 emission standards for the
compression-ignition vocational vehicles subcategories, the optional
school bus and other bus subcategories, and the day cab tractor
subcategories. We are also considering whether it would be appropriate
in the final rule to increase the stringency of the standards even more
than what we propose, specifically for MYs 2027, 2028, and/or 2029.
Second, we seek comment on three different approaches to potentially
revise the credits generated by a manufacturer's use of the advanced
technology credit multipliers for battery electric vehicles in MY 2024
through MY 2027. We request comments about all aspects of these
proposed updates to the CO2 emission standards and revisions
under consideration for the advanced technology incentive program.

XII. Other Amendments

    This section describes several amendments to correct, clarify, and
streamline a wide range of regulatory provisions for many different
types of engines, vehicles, and equipment.\890\ Section XII.A includes
technical amendments to compliance provisions that apply broadly across
EPA's emission control programs to multiple industry sectors, including
light-duty vehicles, light-duty trucks, marine diesel engines,
locomotives, and various types of nonroad engines, vehicles, and
equipment. Some of those amendments are for broadly applicable testing
and compliance provisions in 40 CFR parts 1065, 1066, and 1068. Other
cross-sector issues involve making the same or similar changes in
multiple standard-setting parts for individual industry sectors.
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    \890\ A docket memo includes redline text to highlight all the
changes to the regulations in the proposed rule. See ``Redline
Document Showing Proposed Changes to Regulatory Text in the Heavy-
Duty 2027 Rule'', EPA memorandum from Alan Stout to Docket EPA-HQ-
OAR-2019-0055.
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    We are proposing amendments in two areas of note for the general
compliance provisions in 40 CFR part 1068. First, we are proposing to
take a comprehensive approach for making confidentiality determinations
related to compliance information that companies submit to EPA. We are
proposing to apply these provisions for all highway, nonroad, and
stationary engine, vehicle, and equipment programs, as well as aircraft
and portable fuel containers. Second, we are proposing provisions that
include clarifying text to establish what qualifies as an adjustable
parameter and to identify the practically adjustable range for those
adjustable parameters. The adjustable parameters proposal also includes
specific provisions related to electronic controls that aim to deter
tampering.
    The rest of Section XII describes proposed amendments that apply
uniquely for individual industry sectors. These proposed amendments
would apply to heavy-duty highway engines and vehicles, light-duty
motor vehicles, large nonroad SI engines, small nonroad SI engines,
recreational vehicles and nonroad equipment, marine diesel engines,
locomotives, and stationary emergency CI engines.

A. General Compliance Provisions (40 CFR Part 1068) and Other Cross-
Sector Issues

    The regulations in 40 CFR part 1068 include compliance provisions
that apply broadly across EPA's emission control programs for engines,
vehicles, and equipment. This section describes several proposed
amendments to these regulations. This section also includes amendments
that make the same or similar changes in multiple standard-setting
parts for individual industry sectors. The following sections describe
these cross-sector issues.
1. Proposed Confidentiality Determinations
    EPA adopts emission standards and corresponding certification
requirements and compliance provisions that apply to on-highway CI and
SI engines (such as those proposed in this action for on-highway heavy-
duty engines) and vehicles, and to stationary and nonroad CI and SI
engines, vehicles, and equipment. Nonroad applications include marine
engines, locomotives, and a wide range of other land-based vehicles and
equipment. Standards and certification requirements also apply for
portable fuel containers and for fuel tanks and fuel lines used with
some types of nonroad equipment. Standards and certification
requirements also apply for stationary engines and equipment, such as
generators and pumps. EPA also has emission standards for aircraft and
aircraft engines. Hereinafter, these are all ``sources.'' Under this
proposal, certain information the manufacturers must submit under the
standard-setting parts \891\ for certification, compliance oversight,
and in response to certain enforcement activities \892\ would be
subject to disclosure to the public without further notice.
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    \891\ 40 CFR parts 2, 59, 60, 85, 86, 87, 1068, 1030, 1033,
1036, 1037, 1039, 1042, 1043, 1045, 1048, 1051, 1054, and 1060.
These parts are hereinafter collectively referred to as ``the
standard-setting parts.''
    \892\ We also receive numerous FOIAs for information once
enforcement actions have concluded. In responding to those requests,
to the extent the information corresponds to a category of
certification or compliance information that we are proposing a
determination for in this rulemaking, if finalized we would
similarly consider such information emissions data or otherwise not
entitled to confidential treatment, or CBI.
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    The CAA states that ``[a]ny records, reports or information
obtained under [section 114 and parts B and C of Subchapter II] shall
be available to the public. . . .'' \893\ Thus, the CAA begins with a
presumption that the information submitted to EPA will be available to
be disclosed to the public.\894\ It then provides a narrow exception to
that presumption for information that ``would divulge methods or
processes entitled to protection as trade secrets. . . .'' \895\ The
CAA then narrows this exception further by excluding ``emission data''
from the category of information eligible for confidential treatment.
While the CAA does not define ``emission data,'' EPA has done so by
regulation at 40 CFR 2.301(a)(2)(i). EPA releases, on occasion, some of
the information submitted under CAA sections 114 and 208 to parties
outside of the Agency of its own volition, through responses to
requests submitted under the Freedom of Information Act
(``FOIA''),\896\ or through civil litigation. Typically, manufacturers
may claim some of the information is entitled to confidential treatment
as confidential business information (``CBI''), which is exempt from
disclosure under Exemption 4 of the FOIA.\897\ Generally, when we have
information that we intend to disclose publicly that is covered by a
claim of confidentiality under FOIA Exemption 4, EPA has a process to
make case-by-case or class determinations under 40 CFR part 2 to
evaluate whether such information qualifies for confidential treatment
under the exemption.\898\
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    \893\ CAA section 114(c) and 208(c); 42 U.S.C. 7414(c) and
7542(c).
    \894\ CAA section 114(c) and 208(c); 42 U.S.C. 7414(c) and
7542(c).
    \895\ CAA section 114(c) and 208(c); 42 U.S.C. 7414(c) and
7542(c).
    \896\ 5 U.S.C. 552.
    \897\ 5 U.S.C. 552(b)(4).
    \898\ 40 CFR 2.205.
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    This rulemaking proposes provisions regarding the confidentiality
of information that is submitted for a wide range of engines, vehicles,
and equipment that are subject to emission

standards and other requirements under the CAA. This includes motor
vehicles and motor vehicle engines, nonroad engines and nonroad
equipment, aircraft and aircraft engines, and stationary engines. It
also includes portable fuel containers regulated under 40 CFR part 59,
subpart F, and fuel tanks, fuel lines, and related fuel system
components regulated under 40 CFR part 1060. The proposed regulatory
provisions regarding confidentiality determinations for these products
would be codified broadly in 40 CFR part 1068, with additional detailed
provisions for specific sectors in the regulatory parts referenced in
40 CFR 1068.1. With this rulemaking, EPA is proposing to make
categorical emission data and CBI determinations in advance through
this notice and comment rulemaking for some information collected by
EPA for engine, vehicle, and equipment certification and compliance,
including information collected during certain enforcement
actions.\899\ At this time, we are not proposing to determine that any
information is CBI or entitled to confidential treatment. We are
proposing to maintain the 40 CFR part 2 process for the information we
are not determining to be emission data or otherwise not entitled to
confidential treatment in this rulemaking. As explained further below,
the emission data and CBI determinations proposed in this action are
intended to increase the efficiency with which the Agency responds to
FOIA requests and to provide consistency in the treatment of the same
or similar information collected under the standard-setting parts. We
believe doing these determinations through this rulemaking will provide
predictability for both information requesters and submitters. We also
believe that the proposed emission data and CBI determinations will
lead to greater transparency in the certification programs.
---------------------------------------------------------------------------

    \899\ Throughout this preamble, we refer to certification and
compliance information. Hereinafter, the enforcement information
covered by this proposed confidentiality determination is included
when we refer to certification and compliance information.
---------------------------------------------------------------------------

    In 2013 EPA published CBI class determinations for information
related to certification of engines and vehicles under the standard-
setting parts.\900\ These determinations established whether those
particular classes of information were releasable or entitled to
treatment as CBI and could be instructive when making case-by-case
determinations for other similar information within the framework of
the CAA and the regulations. However, the determinations did not
resolve all confidentiality questions regarding information submitted
to the Agency for the standard-setting parts, and EPA receives numerous
requests each year to disclose information that is not within the scope
of these 2013 CBI class determinations.
---------------------------------------------------------------------------

    \900\ EPA, Class Determination 1-13, Confidentiality of Business
Information Submitted in Certification Applications for 2013 and
subsequent model year Vehicles, Engines and Equipment, March 28,
2013, available at https://www.epa.gov/sites/default/files/2020-02/documents/1-2013_class_determination.pdf.
---------------------------------------------------------------------------

    Prior to this rulemaking, the Agency has followed the existing
process in 40 CFR part 2 when making case-by-case or class
confidentiality determinations. The part 2 CBI determination process is
time consuming for information requesters, information submitters, and
EPA. The determinations proposed in this rulemaking would allow EPA to
process requests for information more quickly, as the Agency would not
need to go through the part 2 process to make case-by-case
determinations. Additionally, the proposed determinations would also
provide predictability and consistency to information submitters on how
EPA will treat their information. Finally, the part 2 CBI determination
process is very resource-intensive for EPA, as it requires personnel in
the program office to draft letters to the manufacturers (of which
there may be many) requesting that they substantiate their claims of
confidentiality, review each manufacturer's substantiation response,
and provide a recommendation, and for the Office of General Counsel to
review all of the materials and make a final determination on the
entitlement of the information to confidential treatment. For these
reasons, we are proposing to amend our regulations in 40 CFR parts 2
and 1068 to establish a broadly applicable set of CBI determinations by
categories of information, through rulemaking. With this action, we
propose to supersede the class determinations made in 2013, though we
intend this rulemaking to be consistent with the 2013 class
determinations for Tables 1 and 2. Specifically, the CBI class
determinations reflected in Table 1 and Table 2 of the 2013
determination are consistent with the proposed determinations described
in Section XII.A.1.i. and Section XII.A.1.iii, respectively. However,
for the reasons described in Section XII.A.1.iv, we propose that the
information in Table 3 of the 2013 determination will be subject to the
existing part 2 process, such that EPA would continue to make case-by-
case CBI determinations as described below in Section XII.A.1.iv.
    In this action, EPA is proposing regulations to establish
categories for the information submitted under the standard-setting