required by EISA. EISA also prohibits credits earned before MY 2011
from being transferred, so NHTSA has developed several regulatory
restrictions on trading and transferring to facilitate Congress' intent
in this regard. As discussed above, EISA establishes a ``cap'' for the
maximum increase in any compliance category attributable to transferred
credits: for MYs 2011-2013, transferred credits can only be used to
increase a manufacturer's CAFE level in a given compliance category by
1.0 mpg; for MYs 2014-2017, by 1.5 mpg; and for MYs 2018 and beyond, by
2.0 mpg.
---------------------------------------------------------------------------

    \1385\ Congress required that DOT establish a credit
``transferring'' regulation, to allow individual manufacturers to
move credits from one of their fleets to another (e.g., using a
credit earned for exceeding the light truck standard for compliance
with the domestic passenger car standard). Congress allowed DOT to
establish a credit ``trading'' regulation, so that credits may be
bought and sold between manufacturers and other parties.
---------------------------------------------------------------------------

    In the NPRM, NHTSA proposed that the VMT estimates used in the
credit adjustment factor should be 195,264 miles for passenger car
credits and 225,865 miles for light truck credits for all over-
compliance credits earned in MYs 2017-2025. NHTSA did not propose to
change the VMT estimates used for these purposes for MYs 2012-2016.
NHTSA proposed these values in the interest of harmonizing with EPA's
GHG program, and sought comment on this approach as compared to the
prior approach of adjustment factors with VMT estimates that vary by
year. Additionally, NHTSA proposed to include VMT estimates for MY
2011, which the agency had not included in Part 536 as part of the MYs
2012-2016 rulemaking. The proposed MY 2011 VMT value for passenger cars
was 152,922 miles, and for light trucks was 172,552 miles. The Alliance
supported the fixed value VMT approach for MYs 2017-2025, and requested
that NHTSA also revise the VMT values for MYs 2012-2016 to harmonize
with EPA. NHTSA is finalizing the VMT value approach as proposed. With
respect to the Alliance's comment regarding the VMT values for credits
earned in MYs 2012-2016, the agency expressly did not propose to make
this change, and we do not believe that the benefits of harmonization
in this particular aspect for these model years outweigh the potential
fuel savings losses that may occur if a change is made at this time.
c. Payment of Civil Penalties
    If a manufacturer's average miles per gallon for a given compliance
category (domestic passenger car, imported passenger car, light truck)
falls below the applicable standard, and the manufacturer cannot make
up the difference by using credits earned or acquired, the manufacturer
is subject to penalties. The penalty, as mentioned, is $5.50 for each
tenth of a mpg that a manufacturer's average fuel economy falls short
of the standard for a given model year, multiplied by the total volume
of those vehicles in the affected fleet, manufactured for that model
year. NHTSA has collected $818,724,551.00 to date in CAFE penalties,
the largest ever being paid by DaimlerChrysler for its MY 2006 import
passenger car fleet, $30,257,920.00. For their MY 2010 fleets, five
manufacturers paid CAFE fines for not meeting an applicable standard--
Fiat, which included Ferrari and Maserati; Daimler (Mercedes-Benz);
Porsche; Tata (Jaguar Land Rover) and Volvo--for a total of
$23,803,411.50. As mentioned above, civil penalties paid for CAFE non-
compliance go to the U.S. Treasury, and not to DOT or NHTSA.
    NHTSA recognizes that some manufacturers may use the option to pay
civil penalties as a CAFE compliance flexibility--presumably, when
paying civil penalties is deemed more cost-effective than applying
additional fuel economy-improving technology, or when adding fuel
economy-improving technology would fundamentally change the
characteristics of the vehicle in ways that the manufacturer believes
its target consumers would not accept. NHTSA has no authority under
EPCA/EISA to prevent manufacturers from turning to payment of civil
penalties if they choose

to do so. This is another important difference from EPA's authority
under the CAA, which allows EPA to revoke a manufacturer's certificate
of conformity that permits it to sell vehicles if EPA determines that
the manufacturer is in non-compliance, and does not permit
manufacturers to pay fines in lieu of compliance with applicable
standards.
    NHTSA has grappled repeatedly with the issue of whether civil
penalties are motivational for manufacturers, and whether raising them
would increase manufacturers' compliance with the standards. EPCA
authorizes increasing the civil penalty very slightly up to $10.00,
exclusive of inflationary adjustments, if NHTSA decides that the
increase in the penalty ``will result in, or substantially further,
substantial energy conservation for automobiles in the model years in
which the increased penalty may be imposed; and will not have a
substantial deleterious impact on the economy of the United States, a
State, or a region of a State.'' 49 U.S.C. 32912(c).
    To support a decision that increasing the penalty would result in
``substantial energy conservation'' without having ``a substantial
deleterious impact on the economy,'' NHTSA would likely need to provide
some reasonably certain quantitative estimates of the fuel that would
be saved, and the impact on the economy, if the penalty were raised.
Comments received on this issue in the past have not explained in clear
quantitative terms what the benefits and drawbacks to raising the
penalty might be. Additionally, it may be that the range of possible
increase that the statute provides, i.e., up to $10 per tenth of a mpg,
is insufficient to result in substantial energy conservation, although
changing this would require an amendment to the statute by Congress.
NHTSA continues to seek to gain information on this issue and requested
that commenters wishing to address this issue please provide, as
specifically as possible, estimates of how raising or not raising the
penalty amount will or will not substantially raise energy conservation
and impact the economy. No comments specific to this issue were
received, so the agency will continue to attempt to evaluate this issue
on its own.
4. What new incentives are being added to the CAFE program for MYs
2017-2025?
    All of the CAFE compliance incentives discussed below are being
finalized by EPA under its EPCA authority to calculate fuel economy
levels for individual vehicles and for fleets. We refer the reader to
Section III for more details, as well as Chapter 5 of the Joint TSD for
more information on the precise mechanics of the incentives, but we
present them here in summary form so that the reader may understand
more comprehensively what compliance options will be available for
manufacturers meeting MYs 2017-2025 CAFE standards.
    As mentioned above with regard to EPA's finalized changes for the
calculation of dual-fueled automobile fuel economy for MYs 2020 and
beyond, NHTSA is modifying its own regulations to reflect the fact that
these incentives may be used as part of the determination of a
manufacturer's CAFE level. The requirements for determining the vehicle
and fleet average performance for passenger cars and light trucks
inclusive of the proposed incentives are defined in 49 CFR 531 and 49
CFR 533, respectively. Part 531.6(a) specifies that the average fuel
economy of all passenger automobiles that are manufactured by a
manufacturer in a model year shall be determined in accordance with
procedures established by the Administrator of the Environmental
Protection Agency under 49 U.S.C. 32904 of the Act and set forth in 40
CFR part 600. Part 533.6(b) specifies that the average fuel economy of
all non-passenger automobiles is required to be determined in
accordance with the procedures established by the Administrator of the
Environmental Protection Agency under 49 U.S.C. 32904 and set forth in
40 CFR Part 600. The final changes to these sections simply clarify
that in model years 2017 to 2025, manufacturers may adjust their
vehicle fuel economy performance values in accordance with 40 CFR Part
600 for improvements due to the new incentives.
a. ``Game Changing'' Technologies for Full Size Pick-Up Trucks
    EPA is adopting two new types of incentives for improving the fuel
economy performance of full size pickup trucks. The first incentive
provides a credit to manufacturers that employ significant quantities
of hybridized full size pickup trucks. The second incentive is a
performance-based incentive for full size pickup trucks that achieve a
significant reduction in fuel consumption as compared to the applicable
fuel economy target for the vehicle in question. These incentives are
designed to promote technologies improving fuel economy and GHG
performance for addressing the significant difficulty full size pickup
trucks have in meeting CAFE standards while still maintaining the
levels of utility to which consumers have become accustomed, which
require higher payload and towing capabilities and greater cargo
volumes than other light-duty vehicles. Technologies that provide
substantial fuel economy benefits are often not attractive to
manufacturers of full size pickups and other large trucks due to these
tradeoffs in utility purposes, and therefore have not been utilized to
the same extent as they have in other vehicle classes. The goal of
these incentives is to facilitate the application of these ``game
changing'' technologies for large pickups, both to save more fuel and
to help provide a bridge for industry to future more stringent light
truck standards. As manufacturers gain experience with applying more
fuel-saving technology for these vehicles and consumers become more
accustomed to certain advanced technologies in pickup trucks, the
agencies anticipate that higher CAFE levels will be more feasible for
the fleet as a whole.\1386\ In the context of the CAFE program, these
incentives would be used as an adjustment to a full size pickup truck's
fuel economy performance. The same vehicle would not be allowed to
receive an adjustment to its calculated fuel economy for both the
hybridization incentive and the performance-based incentive, to avoid
double-counting.
---------------------------------------------------------------------------

    \1386\ NHTSA is not prohibited from considering this
availability of this incentive in determining the maximum feasible
levels of stringency for the light truck standards, because it is
not one of the statutory flexibilities enumerated in 49 U.S.C.
32902(h).
---------------------------------------------------------------------------

    EPA and NHTSA proposed adopting the eligibility criteria for the
incentives by adding definitions with the characteristics for: (1) Full
size pickup trucks; (2) mild hybrid electric pickup trucks, and; (3)
strong hybrid electric pickup trucks. NHTSA is finalizing these
definitions by reference to 40 CFR 86.1803-01 in its regulation 49 CFR
523, ``Vehicle Classification.'' The agencies proposed that trucks
meeting an overall bed width and length as well as a minimum towing or
payload capacity could be qualified as full size pickup trucks. Part
523 was established by NHTSA to include its regulatory definitions for
passenger automobiles and trucks and to guide the agency and
manufacturers in classifying vehicles. NHTSA believes these references
are necessary to help explain to readers that the characteristics of
full size pickup trucks make them eligible to gain fuel economy
improvement values after a manufacturer meets either a minimum
penetration of hybridized technologies or has other technologies that

significantly reduce fuel consumption. The improvement will be
available on a per-vehicle basis for mild and strong HEVs, as well as
for other technologies that significantly improve the efficiency of
full sized pickup trucks.
i. Pickup Truck Hybridization
    EPA proposed criteria that would provide an adjustment to the fuel
economy of a manufacturer's full size pickup trucks if the manufacturer
employs certain defined hybrid technologies for a significant quantity
of its full size pickup trucks. After meeting minimum production
percentages, manufacturers would gain an adjustment to the fuel economy
performance for each ``mild'' or ``strong'' hybrid full size pickup
truck it produces. EPA is finalizing that manufacturers producing mild
hybrid pickup trucks would gain a 0.0011 gal/mi (10 g/mi CO2
equivalent) incentive by applying mild hybrid technology to at least 20
percent of the company's full sized pickups produced in MY 2017, which
increases each year up to at least 80 percent of the company's full
size pickups produced in MY 2021 (20-30-55-70-80% in model years 2017-
2018-2019-2020-2021, respectively), after which point the adjustment
would no longer be applicable. The mild hybrid penetration rates
represent a change from the proposed rates, in response to comments
received from industry that penetration levels proposed for mild hybrid
credits are too ambitious in the initial model years and may be
counter-productive, as launching a complex new technology on almost a
third of first-year sales could be a risky business strategy in this
highly competitive large truck market segment. As a result, EPA has
changed this requirement to 20 and 30% in model years 2017 and 2018,
respectively (compared to the proposed levels of 30% and 40% in MY 2017
and 2018, respectively), to help facilitate the smooth introduction of
mild hybrid technology. NHTSA is incorporating reference to EPA's
requirements in 40 CFR 600.512, which contains the final provisions.
For strong hybrids, EPA is adopting provisions for strong hybrid
technology to be applied to at least 10 percent of a company's full
sized pickup production in each year for model years 2017-2025 to gain
a 0.0023 gal/mi (20 g/mi CO2 equivalent) incentive.
    The fuel economy adjustment for each mild and strong hybrid full
size pickup would be a decrease in measured fuel consumption. These
adjustments are consistent with the GHG credits under EPA's program for
mild and strong hybrid pickups. A manufacturer would then be allowed to
adjust the fuel economy performance of its light truck fleet by
converting the benefit gained from those improvements in accordance
with the procedures specified in 40 CFR Part 600.
    A number of comments were received in response to the proposed
definitions for mild and strong hybrids. EPA had proposed that a 75
percent brake energy recovery criteria would be needed to qualify as a
strong hybrid and a 15 percent recovery for a mild hybrid; the
Alliance, Ford, Chrysler, Toyota, and MEMA recommended changing the
criteria for determining whether a hybrid pickup truck is categorized
as strong or mild by the percentage of energy recovery achieved during
braking. GM also provided late oral comments to the agencies suggesting
revisions to those percentage definitions, meeting with the agencies
and providing a hybrid pickup truck for EPA's use in testing. Other
industry commenters objected to EPA's characterization of the credit
provisions as applying to only hybrid ``gasoline-electric'' vehicles,
and requested that hybrids be defined more broadly. EPA and NHTSA agree
that the provisions should not be applicable only to ``gasoline-
electric'' vehicles and are clarifying in this final rule that the
provisions also apply to non-gasoline (including diesel-, ethanol-, and
CNG-fueled) hybrids. EPA also agreed with manufacturers that defining
strong hybrids based upon the proposed percent efficiency in recovering
braking energy is inappropriate. As identified through recent testing
by EPA, the only large hybrid truck currently marketed would not
satisfy the proposed 75 percent metric. Therefore, EPA is finalizing
changes to the criteria, as discussed in Sections II and III above,
such that now a 65 percent threshold instead of 75 percent is required
for a pickup truck to qualify as a strong hybrid. NHTSA is finalizing
the same definitions as EPA by referencing EPA's definitions in Part
523.
ii. Performance-Based Incentive for Full-Size Pickups
    Another proposed incentive that is being finalized for full size
pickup trucks will provide an adjustment to the fuel economy of a
manufacturer's full sized pickup truck if it achieves a fuel economy
performance level significantly above the CAFE target for its
footprint. This incentive recognizes that not all manufacturers may
wish to pursue hybridization for their pickup trucks, but still rewards
them for applying fuel-saving technologies above and beyond what they
might otherwise do. The incentive will allow a performance-based credit
without the need for a specific technology or design requirements. A
manufacturer can use any technology or set of technologies as long as
the vehicle's CO2 performance is at least 15 or 20% below
the vehicle's footprint-based target. The fuel economy adjustment for
each full size pickup that exceeds its applicable footprint curve
target by 15 percent will decrease the vehicle's measured fuel
consumption by a value of 0.0011gal/mi. Likewise, for each full size
pickup that exceeds its applicable footprint curve target by 20
percent, the decrease in measured fuel consumption will be 0.0023 gal/
mi. These adjustments are consistent with the GHG credits under EPA's
program of 10 g/mi CO2 and 20 g/mi CO2,
respectively, for beating the applicable CO2 targets by 15
and 20 percent, respectively.
    The 0.0011 gal/mi performance-based adjustment would be available
for MYs 2017 to 2021, and a vehicle model meeting the requirement in a
given model year would continue to receive the credit until MY 2021--
that is, the credit remains applicable to that vehicle model if the
target is exceeded in only one model year--unless its fuel consumption
increases from one year to the next or its sales drop below the
penetration threshold. The 0.0023 gal/mi adjustment would be available
for a maximum of 5 consecutive years within model years 2017-2025,
provided the vehicle model's fuel consumption does not increase. As
explained above for the hybrid incentive, a manufacturer would then be
allowed to adjust the fuel economy performance of its light truck fleet
by converting the benefit gained from those improvements in accordance
with the procedures specified in 40 CFR Part 600.
    Comments received to the NPRM primarily concerned the minimum
penetration thresholds for full size pickup truck incentives requesting
to reduce or eliminate the thresholds. Manufacturers cited multiple
reasons for lower thresholds based upon prevailing production needs,
unfamiliarity with new technology, and customer acceptance rates. EPA
discusses in section III.C.3 that the goal of the ``game changing''
credits is to incentivize the widespread adoption of advanced
technologies. Therefore, EPA has decided to finalize the penetration
requirements as proposed, citing that eliminating or greatly reducing
the minimum penetration requirements might retain the incentive for
niche applications but would lose any assurance of widespread ``game-
changing'' technology introduction and substantial penetration.

b. A/C Efficiency-Improving Technologies
    Air conditioning (A/C) use places excess load on an engine, which
results in additional fuel consumption. A number of methods related to
the A/C system components and their controls can be used to improve A/C
system efficiencies. EPA proposed to allow manufacturers, starting in
MY 2017, to include fuel consumption reductions resulting from the use
of improved A/C systems in their CAFE calculations. This will more
accurately account for achieved real-world fuel economy improvements
due to improved A/C technologies, and better fulfill EPCA's overarching
purpose of energy conservation. Manufacturers would not be allowed to
claim CAFE-related benefits for reducing A/C leakage or switching to an
A/C refrigerant with a lower global warming potential, because while
these improvements reduce GHGs consistent with the purpose of the CAA,
they generally do not relate to fuel economy and thus are not relevant
to the CAFE program. This proposal to allow manufacturers to consider
A/C efficiency improvement technologies for determining CAFE
performance values is being finalized in this final rule.
    Based upon comments received to the proposal, EPA is making several
technical and programmatic changes to the proposed ``AC17'' test. The
A/C 17 test is a more extensive test than the ``idle test'' used for
MYs 2012-2016 and has four elements, including two drive cycles, US03
and the highway fuel economy cycle, which capture steady state and
transient operating conditions. It also includes a solar soak period to
measure the energy required to cool down a car that has been sitting in
the sun, as well as a pre-conditioning cycle. The A/C 17 test cycle
will be able to capture improvements in all areas related to efficient
operation of a vehicle's A/C system. The A/C 17 test cycle measures
CO2 emissions in grams per mile (g/mi), and--beginning in
2020--the agencies will require that baseline emissions be measured in
addition to emissions from vehicles with improved A/C systems.
    Industry and industry representatives--including the Alliance, BMW,
Ford, Toyota, Honda, Hyundai, Honeywell, and others--asked that an AC17
baseline configuration test in addition to an AC17 test of a vehicle
with an improved A/C system not be required in 2017 since few or no
baseline vehicles will be available in that time period. In response,
EPA is finalizing that from 2017 to 2019 manufacturers will be eligible
to receive GHG credits and fuel consumption improvement values from the
menu simply by reporting the results of the AC17 test. In addition, a
number of commenters, including the Alliance, Volvo, BMW, Ford, and
others, asked the agencies to change the required AC17 test
conditions--such as temperature, humidity, and solar soak period--to
improve repeatability and reduce test burden. In response, EPA has
altered some of the test condition requirements. A number of
manufacturers commented that the definition of vehicle platform would
require many vehicles to be tested, and asked for clarification on
which vehicles are required to be tested, and on aspects of the test
procedure, such as which instrumentation can be used during the test.
In response, EPA has defined vehicle platform more clearly to minimize
the testing burden. More detail on the technical and programmatic
changes along with the comments received are provided in section II.F.
    The details of the A/C efficiency performance provision are
discussed as follows and in greater detail in Sections II.F, III.C, and
Chapter 5 of the joint TSD.
    For MYs 2017-2019, eligibility for A/C efficiency fuel consumption
improvement values will be determined solely by completion of the AC17
testing on vehicles with more efficient A/C systems. Manufacturers can
earn the A/C efficiency GHG credit and fuel consumption improvement
values between 2017 and 2019 by running the A/C 17 test procedure on
the highest sales volume vehicle in a platform that incorporates the
new technologies, with the A/C system off and then on, and then report
these test results to the EPA. In addition to reporting the test
results, EPA will require that manufacturers provide detailed vehicle
and A/C system information for each vehicle tested (e.g. vehicle class,
model type, curb weight, engine size, transmission type, interior
volume, climate control type, refrigerant type, compressor type, and
evaporator/condenser characteristics). The amount of the fuel
consumption improvement value that can be included in the
manufacturer's CAFE calculations is equal to the value(s) on the menu
for the particular technolog(ies) installed on the vehicle--up to a
maximum amount, which is described in more detail below.
    Starting in MY 2020, however, AC17 test results will be used not
only to determine eligibility for AC efficiency fuel consumption
improvement values, but will also play a part in calculating the amount
of the value that can be claimed. From 2020 to 2025, the AC17 test
would be run on the highest sales volume vehicle in a platform to
validate that the performance and efficiency of a vehicle's A/C
technology is commensurate with the level of improvement value that is
being earned. To determine whether the efficiency improvements of these
technologies are being realized, the results of an AC17 test performed
on a new vehicle model will be compared to a ``baseline'' vehicle which
does not incorporate the efficiency-improving technologies. The
baseline vehicle is defined as one with characteristics which are
similar to the new vehicle, only it is not equipped with efficiency-
improving technologies (or they are de-activated). The difference
between the test of the baseline vehicle and the vehicle with new A/C
technologies will determine the fuel consumption improvement value that
can be included in the CAFE calculations. The manufacturer will be
eligible for GHG credits and fuel consumption improvement values if the
test results show an improvement over the baseline vehicle. If the test
result comparisons indicate an emission and fuel consumption reduction
greater than or equal to the maximum menu-based credit/fuel consumption
improvement value, then the manufacturer will generate the appropriate
maximum value based on the menu. However, if the test result does not
demonstrate the full menu-based potential of the technology, then only
partial GHG credit and fuel consumption improvement value can be
earned.
    Manufacturers take the results of the AC17 test(s) and access a
credit menu (shown in the table below) to determine A/C related fuel
consumption improvement values. The maximum value possible is limited
to 0.000563 gal/mi for cars and 0.000810 gal/mi for trucks. As an
example, a manufacturer uses two technologies listed in the table, for
which the combined improvement value equals 0.000282 gal/mi. For model
years 2020 and later, if the results of the AC17 tests for the baseline
and vehicle with improved A/C system demonstrates a 0.000282 gal/mi or
greater improvement, then the full fuel consumption improvement value
provided in the table for those two technologies can be taken. If the
AC17 test result falls short of the improvement value for the two
technologies, then a fraction of the improvement value may be counted
in CAFE calculations. The improvement value fraction is calculated in
the following way: the AC17 test result for both the baseline vehicle
and the vehicle with an

improved A/C system are measured. The difference in the test result of
the baseline and the improved vehicle is divided by the test result of
the baseline vehicle. This fraction is multiplied by the fuel
consumption improvement value for the specific technologies. Thus, if
the AC17 test yielded an improvement equal to \2/3\ of the summed
values listed in the table, then \2/3\ of the summed fuel consumption
improvement values can be counted. Table IV-151 below shows the fuel
consumption improvement values associated with different A/C efficiency
improving technologies.

                Table IV-151--NHTSA Efficiency Improving A/C Technologies and Improvement Values
----------------------------------------------------------------------------------------------------------------
                                                                     Estimated
                                                                   reduction in       Car A/C        Truck A/C
                                                                      A/C CO2       efficiency      efficiency
                     Technology description                       emissions  and       fuel            fuel
                                                                       fuel         consumption     consumption
                                                                    consumption     improvement     improvement
                                                                     (percent)      (gallon/mi)     (gallon/mi)
----------------------------------------------------------------------------------------------------------------
Reduced reheat, with externally-controlled, variable-                         30        0.000169        0.000248
 displacement compressor........................................
Reduced reheat, with externally-controlled, fixed-displacement                20        0.000113        0.000158
 or pneumatic variable displacement compressor..................
Default to recirculated air with closed-loop control of the air               30        0.000169        0.000248
 supply (sensor feedback to control interior air quality)
 whenever the outside ambient temperature is 75 [deg]F or higher
 (although deviations from this temperature are allowed based on
 additional analysis)...........................................
Default to recirculated air with open-loop control of the air                 20        0.000113        0.000158
 supply (no sensor feedback) whenever the outside ambient
 temperature is 75 [deg]F or higher (although deviations from
 this temperature are allowed if accompanied by an engineering
 analysis)......................................................
Blower motor controls that limit wasted electrical energy (e.g.               15        0.000090        0.000124
 pulsewidth modulated power controller).........................
Internal heat exchanger (or suction line heat exchanger)........              20        0.000113        0.000158
Improved evaporators and condensers (with engineering analysis                20        0.000113        0.000158
 on each component indicating a COP improvement greater than
 10%, when compared to previous design).........................
Oil Separator (internal or external to compressor)..............              10        0.000090        0.000079
----------------------------------------------------------------------------------------------------------------

    As stated above, if more than one technology is utilized by a
manufacturer for a given vehicle model, the A/C fuel consumption
improvement values can be added, but the maximum value possible is
limited to 0.000563 gal/mi for cars and 0.000810 gal/mi for trucks.
More A/C related fuel consumption improvement values are discussed in
the off-cycle credits section of this chapter. The approach for
determining the manufacturers adjusted fleet fuel economy performance
due to improvements in A/C efficiency is described in 40 CFR Part 600.
    For model years 2020 and later if a vehicle with new A/C
technologies is tested and the result is not commensurate with the
expected level of fuel consumption reduction for technologies included
on the vehicle, an engineering analysis can be submitted by the
manufacturer to justify a claim for the fuel consumption improvement
values.
c. Off-Cycle Technologies and Adjustments
    For MYs 2012-2016, EPA provided an optional credit for new and
innovative ``off-cycle'' technologies that reduce vehicle
CO2 emissions, but for which the CO2 reduction
benefits are not recognized under the 2-cycle test procedure used to
determine compliance with the fleet average standards. The off-cycle
credit option was intended to encourage the introduction of off-cycle
technologies that achieve real-world benefits. The off-cycle credits
were to be determined using the 5-cycle methodology currently used to
determine fuel economy label values, which EPA established to better
represent real-world factors impacting fuel economy, including higher
speeds and more aggressive driving, colder temperature operation, and
the use of air conditioning. A manufacturer must determine whether the
benefit of the technology could be captured using the 5-cycle test; if
this determination is affirmative, the manufacture must follow the 5-
cycle procedures to determine the CO2 reductions. If the
manufacturer finds that the technology is such that the benefit is not
adequately captured using the 5-cycle approach, then the manufacturer
would have to develop a robust methodology, subject to EPA approval, to
demonstrate the benefit and determine the appropriate CO2
gram per mile credit. The demonstration program must be robust,
verifiable, and capable of demonstrating the real-world emissions
benefit of the technology with strong statistical significance. The
non-5-cycle approach includes an opportunity for public comment as part
of the approval process.
    EPA has been encouraged by automakers' interest in off-cycle
credits since the program was finalized for the MYs 2012-2016 GHG
program and concluded that extending the program to MY 2017 and beyond
may continue to encourage automakers to invest in off-cycle
technologies that could have the benefit of realizing additional
reductions in the light-duty fleet over the longer-term. Therefore, EPA
proposed to extend the off-cycle credits program to 2017 and later
model years. EPA also proposed, under its EPCA authority, to make
available a comparable off-cycle technology incentive under the CAFE
program beginning in MY 2017. However, instead of manufacturers gaining
credits as done under the GHG program, a direct adjustment would be
made to the manufacturer's fuel economy fleet performance value. The
proposed off-cycle incentive for the CAFE program is being finalized
for MYs 2017 and later as discussed below.
    Starting with MY 2017, manufacturers will be able to generate fuel
economy improvements by applying technologies listed on a pre-defined
and pre-approved technology list. These credits would be verified and
approved as part of certification, with no prior approval process
needed. The ``pick list'' option will significantly simplify the
program for manufacturers and provide certainty that improvement values
may be generated through the use of pre-approved technologies. For
improvements from technologies not on

the pre-defined list, the agencies have clarified the step-by-step
application and approval process for demonstration of fuel consumption
reductions and approval.
    EPA and NHTSA are finalizing the off-cycle program as proposed with
the exception of two differences made in response to comments received.
The first change applies to EPA only and allows the pre-defined list to
be used starting in MY 2014, rather than the proposed starting point of
MY 2017. This change does not apply to CAFE, where the off-cycle
credits program does not begin until MY 2017. Second, the agencies are
deleting the minimum sales thresholds for technologies on the pre-
defined list. For further explanation of the changes for the GHG
program, see Section III.C.5.a and Section III.C.5.b, and for the CAFE
program, see Section III.C.5.c. The agencies are also finalizing the
step-by-step process and timeline for reviewing credit applications and
providing a decision to manufacturers. The agencies plan to coordinate
approvals whereas EPA will consult with NHTSA on the application and
the data received in cases where the manufacturer intends to generate
fuel consumption improvement values for CAFE in MY 2017 and later. The
details of the testing protocols used for determining off-cycle
technology benefits and the step-by-step EPA review and approval
process are detailed more thoroughly in Section III.C.5.b.iii and
Section III.C.5.b.v. The agencies are also clarifying, for purposes of
the off-cycle program for CAFE, how consultation and coordination as
required by 49 U.S.C. 32904(e) will occur. NHTSA has added regulatory
text in 49 CFR 531.6 and 533.6 explaining that NHTSA will consult with
EPA on manufacturer applications under 40 CFR 86.1869-12 and provide
its views on the specific off-cycle technology under consideration to
ensure its impact on fuel economy and the suitability of using the off-
cycle technology to adjust the fuel economy performance. NHTSA's
evaluation and review will consider whether the technology has a direct
impact upon improving fuel economy performance; whether the technology
is related to crash-avoidance technologies, safety critical systems or
systems affecting safety-critical functions, or technologies designed
for the purpose of reducing the frequency of vehicle crashes;
information from any assessments conducted by EPA related to the
application, the technology and/or related technologies; and other
relevant factors. NHTSA also notes that since the off-cycle program for
CAFE does not begin until MY 2017, but manufacturers may obtain
approval for off-cycle credits in the GHG program prior to that model
year which they wish to carry into the CAFE program, clarification is
needed to explain what manufacturers should do in those circumstances.
In those cases, manufacturers must concurrently submit a copy to NHTSA
of the application that is being submitted to EPA if manufacturers
anticipate seeking fuel consumption improvements for CAFE beginning in
MY 2017 to ensure the smooth functioning of the program.
    The changes finalized today by the agencies respond to issues
raised by commenters. The agencies received several comments supporting
the proposal to establish a pre-defined and pre-approved technology
list for the CAFE program. Manufacturers who supported the list stated
that it is a necessary element to streamline and simplify the off-cycle
program for EPA and NHTSA. There were no comments received objecting to
the pre-defined list, but comments were received on various aspects of
the list, as discussed in detail in Section II.F. EPA has made changes
to some of the technologies and credit values on the list as a result
of these comments. Based on received information and meetings with
manufacturers, the agencies are also clarifying the proposed credit
values and calculation procedures for active transmission warmup, solar
panels and solar control glazing in the final rule. These clarified
values are presented in Table III-19 and the calculation methods
described in detail in the Joint TSD Chapter 5.
    Section II.F of the preamble provides an overview of the
technologies, credit values, and comments the agencies received on the
proposed technology list. Table IV-152 provides the list of the
technologies and per vehicle credit levels for the CAFE program that
are being adopted for the final rule.

   Table IV-152--NHTSA Off-cycle Technologies and Final Improvement Values for Passenger Cars and Light Trucks
----------------------------------------------------------------------------------------------------------------
                                                       Adjustments for cars           Adjustments for trucks
                   Technology                    ---------------------------------------------------------------
                                                       g/mi         gallons/mi         g/mi         gallons/mi
----------------------------------------------------------------------------------------------------------------
\+\High Efficiency Exterior Lights* (at 100 watt             1.0        0.000113             1.0        0.000113
 savings).......................................
\+\Waste Heat Recovery (at 100W)................             0.7        0.000079             0.7        0.000079
----------------------------------------------------------------------------------------------------------------

\+\Solar Panels (based on a 75 watt solar        Battery Charging Only..................             3.3        0.000371             3.3        0.000371
 panel)**.
                                                 Active Cabin Ventilation and Battery                2.5        0.000281             2.5        0.000281
                                                  Charging.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\+\Active Aerodynamic Improvements (for a 3% aerodynamic drag or Cd reduction)..........             0.6        0.000068             1.0        0.000113
--------------------------------------------------------------------------------------------------------------------------------------------------------

Engine Idle Start-Stop.........................  w/heater circulation system #..........             2.5        0.000281             4.4        0.000495
                                                 w/o heater circulation system..........             1.5        0.000169             2.9        0.000326
--------------------------------------------------------------------------------------------------------------------------------------------------------
Active Transmission Warm-Up.............................................................             1.5        0.000169             3.2        0.000360
--------------------------------------------------------------------------------------------------------------------------------------------------------
Active Engine Warm-up...................................................................             1.5        0.000169             3.2        0.000360
--------------------------------------------------------------------------------------------------------------------------------------------------------
Solar/Thermal Control...................................................................       Up to 3.0        0.000338       Up to 4.3        0.000484
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Since one purpose of the off-cycle improvement incentive is to
encourage market penetration of the technologies (see 75 FR 25438), EPA
proposed to require minimum penetration rates for non-hybrid based
listed technologies as a condition for generating improvements from the
list as a way to further encourage their widespread adoption by MY 2017
and later. At the end of the model year for which the off-cycle
improvement is claimed, manufacturers would need to demonstrate that
production of vehicles equipped with the technologies for that model
year exceeded the percentage thresholds in order to receive the listed
improvement. EPA proposed to set the threshold at 10 percent of a
manufacturer's overall combined car and light truck production for all
technologies not specific to HEVs. Ten percent seemed to be an
appropriate threshold as it would encourage manufacturers to develop
technologies for use on larger volume models and bring the technologies
into the mainstream. For solar roof panels and electric heat
circulation pumps, which are specific to HEVs, PHEVs, and EVs, EPA is
not proposing a minimum penetration rate threshold for credit
generation. Hybrids may be a small subset of a manufacturer's fleet,
less than 10 percent in some cases, and EPA does not believe that
establishing a threshold for hybrid-based technologies would be useful
and could unnecessarily complicate the introduction of these
technologies. The agencies requested comments on applying this type of
threshold, the appropriateness of 10 percent as the threshold for
listed technologies that are not P/H/EV-specific, and the proposed
treatment of hybrid-based technologies.
    The agencies received comments from several manufacturers and
suppliers recommending not to adopt the proposed sales thresholds.
Commenters argued, for example, that a sales threshold would impede the
development of these early stage technologies because manufacturers
typically introduce new, expensive technologies on high-end, low-volume
models, and requiring a technology across a certain percentage of the
fleet in order to allow access to credits would create incentives for
the manufacturer simply to forego the technology, if no credit is
available, and focus instead on other ways to improve fuel economy. The
agencies believe these issues have merit and consequently for the final
rule have decided not to adopt sales thresholds as a condition. The
agencies believe that several points raised by the commenters are
persuasive in demonstrating that a sales threshold could have the
opposite effect, dissuading manufacturers from introducing
technologies.
    The agencies also proposed in the NPRM to impose a cap on the
amount of improvement a manufacturer could generate to 0.001125 gal/
mile per year on a combined car and truck fleet-wide average basis for
the CAFE program. As proposed, the cap would not have applied on a
vehicle model basis, allowing manufacturers the flexibility to focus
off-cycle technologies on certain vehicle models and generate
improvements for that vehicle model in excess of 0.001125 gal/mile.
Additionally, if manufacturers wished to generate improvements in
excess of the 0.001125 gal/mile limit using listed technologies, they
could do so by generating necessary data and going through the approval
process.
    The agencies are finalizing the proposed technology cap as
specified in the NPRM. Some commenters had argued that the cap is too
conservative or, conversely, that it may discourage the maximum
adoption of the pre-defined off-cycle technologies, but the agencies
believe that the cap is sufficient enough and appropriately structured.
The cap is appropriate because the default credit values are based on
limited data, and also because the agencies recognize that some
uncertainty is introduced when credits are provided based on a general
assessment of off-cycle performance as opposed to testing on the
individual vehicle models. Furthermore, the agencies are finalizing the
approach discussed above by which manufacturers may generate credits
beyond the cap limitation through the agency approval process. Comments
were also received requesting to change the approach for adding
technologies in meeting the cap limitation. The agencies view these
issues as beyond the scope of this rulemaking, and expect to review
these issues further and address them as a part of the future NHTSA
rulemaking to develop final standards for MYs 2022-2025 and concurrent
mid-term evaluation.
    As proposed, EPA is finalizing that a CAFE improvement value for
off-cycle improvements be determined at the fleet level by converting
the CO2 credits determined under the EPA program (in metric
tons of CO2) for each fleet (car and truck) to a fleet fuel
consumption improvement value. This improvement value would then be
used to adjust the fleet's CAFE level upward. See the regulations at 40
CFR 600.510-12. Note that although the table above presents fuel
consumption values equivalent to a given CO2 credit value,
these consumption values are presented for informational purposes and
are not meant to imply that these values will be used to determine the
fuel economy for individual vehicles.
5. Other CAFE Enforcement Issues
a. Electronic Reporting
    NHTSA proposed in the NPRM to modify 49 CFR Part 537 to eliminate
the current option for manufacturers to mail hardcopy submissions of
CAFE reports to NHTSA and proposed to receive all reports
electronically. 49 CFR Part 537 requires light vehicle manufacturers to
submit pre-model year (PMY), mid-model year (MMY), and supplemental
reports to NHTSA containing projected estimates of how manufacturers
plan to comply with NHTSA standards. Manufacturers are required to
submit pre-model year reports by December prior to each year, mid-model
reports by July of the model year and a supplemental report whenever
changes are needed to a previously submitted CAFE report. After the end
of the model year, EPA verifies manufacturers' end-of-the-year data and
sends the final verified values to NHTSA. In general, manufacturers'
pre and mid model reports contain projected estimates of the
manufacturers' CAFE standards, the average fuel economy for each fleet,
and, primarily in the PMY report, more specific information about the
vehicles in each manufacture's fleet, such as loaded vehicle weight,
engine displacement, horsepower and other defining characteristics of
the vehicle. Manufacturers currently may provide reports either by
hardcopy or CD-ROM including 5 copies of reports mailed to the NHTSA
Administrator or electronically sending reports to a secure email
address<EMAIL_ADDRESS>an option that was added in the MYs 2012-2016
final rule. NHTSA proposed in the NPRM to modify Sec.  537.5(c)(4) to
require manufacturers to submit all reports electronically by CD-ROM or
by email. The agency proposed that electronic data be submitted in a
Microsoft Excel spreadsheet format for all of the manufacturer's data,
with the exception of any supporting documentation such as cover
letters or any requests for confidentiality which had to be provided in
a pdf format. The agency explained that its long range goal was to use
the data as part of a step approach it discussed in the NPRM to
eventually develop a new CAFE database allowing manufacturers to submit
electronic CAFE reports through the NHTSA Web site using an XML schema.

    Having examined the issue more closely, NHTSA has discovered that
there are complications with the amendment to Part 537 in the MYs 2012-
2016 final rule allowing confidential pre- and mid-model year reports
to be submitted via email. The regulation governing NHTSA's
determinations of confidentiality, 49 CFR Part 512, currently states
that if a manufacturer wishes to submit information that it claims to
be confidential to the agency electronically, the only acceptable
electronic format is a ``physical medium such as a CD-ROM.'' \1387\
Email submissions of confidential material would not conform with this
requirement. The only exception to this requirement under the current
Part 512 is early warning reporting data submitted to NHTSA under 49
CFR part 579.
---------------------------------------------------------------------------

    \1387\ See 49 CFR 512.6(c).
---------------------------------------------------------------------------

    Thus, unless and until the agency undertakes rulemaking to include
submission of confidential CAFE data by email within Part 512, NHTSA
will have to continue to accept such data in electronic format by CD-
ROM only. Because manufacturers are required under Part 537 to submit
both confidential and non-confidential (i.e., redacted) versions of the
pre- and mid-model year reports to NHTSA, we will continue to accept
the non-confidential versions by email to<EMAIL_ADDRESS>but the
confidential versions will need to come in by CD-ROM. As discussed in
the NPRM, we will also be eliminating the option of providing pre- and
mid-model year reports in hard copy, in the interest of maximizing
efficiency and reducing paperwork burden. No comments were received
disagreeing with this proposal.
    The only comments that were received on the question of electronic
CAFE reporting were from Ford, who supported the concept of electronic
reporting and NHTSA's move to all electronic reporting in an Excel
format. However, Ford argued that when the agency eventually made that
transition, it should continue to allow manufacturers to submit data in
formats to which they are already accustomed, such as the current
(totally unrestricted) formats allowed for hardcopy submissions under
Part 537, or the same format as required by EPA's ``VERIFY'' database.
Ford argued that manufacturers have spent significant time and
resources updating their databases to conform to EPA's new VERIFY
requirements commencing in model year 2009,\1388\ and that Canada also
uses the VERIFY database system to access CAFE information, so it would
be easiest for manufacturers if NHTSA employed an identical format for
CAFE reporting under Part 537.
---------------------------------------------------------------------------

    \1388\ See 76 FR 75340
---------------------------------------------------------------------------

    In response, we reiterate that NHTSA's intent in the NPRM proposal
was not to impact the format of the existing reports but simply to
require manufacturers to submit CD-ROMs rather than paper. No changes
are being made at this time to the format of the Part 537 submissions.
However, as discussed in the NPRM and as supported by comments, the
agency does intend to continue investigating the possibility of
reducing industry's reporting burdens even further through a long term
goal of developing a means to receive electronic submissions through
the NHTSA Web site using an XML schema. NHTSA will consider the
existing formats of the EPA VERIFY system as it moves forward towards
this goal. We note, however, that while NHTSA is currently aware of a
number of data requirements that NHTSA and EPA already share in common
where the EPA VERIFY system format could be used for receiving data, at
the same time, NHTSA has unique data requirements not collected by EPA
that may require additional information to be independently reported to
NHTSA. For example, only NHTSA requires manufacturers to report
information on the criteria used to classify an automobile as a non-
passenger vehicle or a light truck. Any future changes to the Part 537
reporting requirements would, of course, occur through rulemaking, and
we continue to invite manufacturer feedback as the agency develops its
ideas for modernizing this data collection system.
b. Reporting of How a Vehicle Is Classified as a Light Truck
    In the NPRM, NHTSA proposed to restructure and clarify how
manufacturers report information used to make the determination that an
automobile can be classified as a light truck for CAFE purposes, and
sought comments on the proposed change. The agency felt that this
proposed change was necessary because the previous requirements in 49
CFR Part 537 specified that manufacturers must provide information on
some, but not all, of the functions and features used to classify an
automobile as a light truck, and it is important for compliance reasons
to understand and be able to readily verify the methods used to ensure
manufacturers are classifying vehicles correctly. In addition, the
regulation required that the information be distributed in different
locations throughout a manufacturer's report, making it difficult for
the agency to clearly determine exactly what functions or features a
manufacturer is using to classify a vehicle as a light truck. For the
NPRM, NHTSA proposed to relocate the language requesting manufacturers
to provide their vehicle classification determination information in
Sections 537.7(c)(4)(xvi)(B)(1) and(2), (xvii) and (xviii) into a
revised Section 537.7(c)(5) consolidating all the required information.
NHTSA believed that by incorporating all the requirements into one
section, the classification determination process would be
significantly more accurate and easily identifiable.
    In response, Ford commented in support of the proposed
consolidation of all truck classification determination data into one
location, but argued that the proposed regulatory text had duplicative
requirements for reporting light truck cargo-carrying volumes in
sections 537.7(c)(4)(xix)(B)(2) and (5)(i)(D). Ford requested that
NHTSA allow manufacturers to streamline their reporting, as long as all
the data required for NHTSA to confirm CAFE calculations, fleet
classification, and NHTSA's fleet analyses are present and easily
identified.
    Upon further review of the proposed regulatory text, we believe
that our intentions were not clearly articulated. In the proposal,
NHTSA intended for sections 537.7(c)(4)(xix)(B)(1) and (2) to require
manufacturers to provide the passenger-carrying volume and cargo-
carrying volume values, respectively, and for section 537.7(c)(5)(i)(D)
to require the difference between the two volumes and an indication
whether a vehicle's cargo volume is larger than its passenger volume.
However, after reviewing Ford's comment, we now understand how these
requirements could be interpreted as duplicative. Therefore, for the
final rule, NHTSA is revising section 537.7(c)(5)(i)(D) to clarify that
the manufacturer must indicate whether the cargo-carrying volume is
greater than the passenger-carrying volume; if so it must also provide
the difference between the two values. Finally, Ford requested that
NHTSA allow manufacturers to streamline their reporting, as long as all
the data required to confirm CAFE calculations, fleet classification,
and NHTSA's fleet analyses are present and easily identified. NHTSA
agrees that streamlining its reporting requirements is important, and
believes that the changes finalized in this rule to Part 537 will help
to accomplish that. With these changes, manufacturers can provide the
agency with all the necessary data in a

simpler format that allows the agency, and perhaps also the
manufacturer, to understand quickly and easily how light truck vehicle
classification determination decisions are made.
c. Base Tire Definition Revision
    The CAFE standards are attribute-based, and thus each manufacturer
has its own ``standard,'' or compliance obligation, defined by the
vehicles it produces for sale in each fleet in a given model year. A
manufacturer calculates its fleet standard from the attribute-based
target curve standards derived from the unique footprint values, which
are the products of the average front and rear vehicle track width and
wheelbase dimensions, of the vehicles in each model type. Vehicle track
width dimensions are determined with a vehicle equipped with ``base
tires,'' which NHTSA currently defines in 49 CFR Part 523 as the tire
specified as standard equipment by a manufacturer on each vehicle
configuration of a model type.\1389\
---------------------------------------------------------------------------

    \1389\ See 49 CFR 523.2.
---------------------------------------------------------------------------

    The calculation of footprint, and thus the definition of base tire,
is important in the CAFE program because they ultimately affect a
manufacturer's compliance obligation, and consistency in how
manufacturers' compliance obligations are determined is vital for
predictability and fairness of the program. In the NPRM (See 76 FR
75351), NHTSA proposed to modify the definition of base tire by
deleting the reference to ``standard equipment'' and adding a reference
to ``the tire installed by the vehicle manufacturer that has the
highest production sales volume on each vehicle configuration of a
model type.'' NHTSA believed that this modification would ensure that
the tires most frequently installed on each vehicle configuration would
become the basis for setting a manufacturer's fuel economy standard,
which the agency expected would help to reduce inconsistencies and
confusion that existed in identifying base tires for both the agency
and the manufacturers. NHTSA sought comment on this approach, and on
other approaches that could be used for selecting base tires.\1390\
---------------------------------------------------------------------------

    \1390\ For reference, EPA currently defines ``base tire'' as the
``tire specified as standard equipment by the manufacturer.'' 40 CFR
600.002. It further defines ``standard equipment'' as ``those
features or equipment which are marketed on a vehicle over which the
purchaser can exercise no choice.'' 40 CFR 86.1803-01. In the NPRM,
EPA noted that some manufacturers may be applying this base tire
definition in different ways, which could lead to differences across
manufacturers in how they are calculating footprint values, and thus
compliance obligations. EPA further noted NHTSA's proposal to change
its definition for base tire in 49 CFR 523.2, and sought comment on
whether EPA should change its definition for base tire as well. See
76 FR 75088-89.
---------------------------------------------------------------------------

    The agencies received several comments in response to the NPRM.
Global Automakers agreed with NHTSA that clarification would help avoid
different interpretations of ``base tire'' by different manufacturers,
but the Alliance, Toyota and GM requested that the agency defer the
decision on changing the base tire definition and discuss the issue
further with industry before making changes. The Alliance argued that
because the highest sales tire can change throughout the model year
based on many factors beyond a manufacturer's control or foresight,
NHTSA should therefore use a definition which allows all vehicles to be
included in the fleet average ``using a representative footprint based
on the physical vehicle, not a footprint based on a moving target of
sales.'' The Alliance, and Ford individually, stated that specifying
that base tire (and thus footprint measurement) could vary by vehicle
configuration was ``confusing'' because footprint is a physical
measurement and unrelated to vehicle configuration, which the
manufacturers implied was a defined term for purposes of fuel economy.
The Alliance and Ford requested that NHTSA adopt EPA's definition of
``base tire,'' Global Automakers requested that NHTSA and EPA simply
adopt the same definition of ``base tire,'' and Hyundai supported
NHTSA's proposed definition. Additionally, the Alliance warned that a
decision by NHTSA to adopt its proposed definition could impact
manufacturer acceptance of the final standards, since all manufacturers
had assessed their ability to comply with the standards in July 2011
based on their own interpretation and understanding of what base tire
means.
    In response, again, any changes to NHTSA's definition for base tire
are in the interest of ensuring consistency in how manufacturers'
compliance obligations are determined, to boost the predictability and
fairness of the program. With respect to the comments on determining a
base tire for each vehicle configuration, NHTSA agrees that the factors
defining a vehicle configuration (engine, transmission, fuel system,
axle ratio and inertial weight) may not necessarily define a unique
footprint. For example, it is possible for a single ``vehicle
configuration'' to contain all cab/bed/wheelbase variations of a pick-
up truck, from a standard cab with a short wheelbase to a crew cab with
a long bed and long wheelbase. In this example, one vehicle
configuration can have multiple unique wheelbases and associated
footprints. Thus, using ``vehicle configuration'' in the definition of
base tire does not clearly address the agency's interest in maximizing
consistency, because if a vehicle configuration includes multiple
footprints, it is not clear which footprint a manufacturer should use
for designating the base tire associated with that configuration, nor
is it clear how the other footprints would be incorporated into the
manufacturer's calculation of its compliance obligation. NHTSA will
therefore be removing the concept of vehicle configuration from its
definition for base tire.
    NHTSA also agrees with the commenters' theme that in order to be
most effective, a definition for base tire must be related to
footprint. If ``vehicle configuration'' in the CAFE context is not
particularly related to footprint, and thus to base tire, perhaps
another term is better related. Since the NPRM, NHTSA has analyzed base
tires and the related footprint dimensions submitted by manufacturers
in their pre-model year (PMY) reports \1391\ for model years 2011 and
2012. We have observed that some manufacturers provided wheelbase,
front and rear track width, and footprint values in these reports using
the calculation sheet provided to them by EPA in September 2010
(hereafter referenced as the EPA calculator). EPA, with input from
NHTSA, developed the EPA calculator for manufacturers' and agency use
in calculating the footprint-based fuel economy standard (required mpg
value) for manufacturers' CAFE fleets when submitting end-of-year data
to EPA.\1392\ The majority of manufacturers that did not submit PMY
information on the EPA calculator used a format substantially similar
to it, some for unique model types and others by unique vehicle
configurations. In either case, the information submitted by
manufacturers specified, at a minimum, the carline, basic engine, and
transmission class associated with each footprint. These parameters
match EPA's definition of ``model type,'' which means a unique
combination of car line, basic engine, and transmission class.\1393\
Thus, while ``vehicle configuration'' may not

necessarily define a unique footprint, it appears that manufacturers
understand and are capable of using ``model type'' as a way to define
groups of vehicles with unique footprints, and that ``model type'' can
be used for determining fleet-specific compliance obligations.
---------------------------------------------------------------------------

    \1391\ See 49 CFR 537.7.
    \1392\ EPA has also prepared a similar calculator for GHG
standards that are similarly based on all unique footprints of
vehicles in each fleet.
    \1393\ ``Transmission class,'' in turn, includes transmission
type, e.g., manual, automatic, or semi-automatic; number of forward
gears used in fuel economy testing; drive system, e.g., front wheel
drive, rear wheel drive, four wheel drive; torque converter type, if
applicable; etc. See 40 CFR 600.002.
---------------------------------------------------------------------------

    With respect to the comments objecting to NHTSA's proposal to tie
the ``base tire'' definition to the vehicle configuration of the
``highest production sales volume,'' the agency does not believe that
using the highest tire sales volume to select base tires creates any
more difficulty for manufacturers when the supply and volume of other
vehicle components, or vehicles themselves, can unexpectedly change
throughout the model year. As with any other model year, unexpected or
adjusted volume level changes could have an impact on reported base
tires and fleet average standard calculations which we would expect to
be revised accordingly in a manufacturer's final year-end report.
    However, in considering the issue further, NHTSA recognizes that
utilizing the highest production sales volume tire instead of ``the
tire used as standard equipment'' may lead to standards not derived
from each unique footprint within a manufacturer's fleet but rather
derived only from those footprints associated with the highest
production tire. The Alliance stated that all vehicles should be
included in the fleet average using a representative footprint based on
the physical vehicle, not a footprint based on a moving target of
sales. It appears that the Alliance is suggesting that the agency
remove the link between footprint and base tire but is not clear as to
its intent. The agency does not disagree with the concept of using
representative vehicles to calculate a manufacturer's fleet average
standard, as long as each unique footprint and base tire combination is
included when calculating each fleet average standard. Otherwise, the
agency does not see how to ensure consistency, and thus predictability
and fairness, in how footprint values are calculated, and thus in how
compliance obligations are calculated.
    As mentioned, the Alliance and GM suggested that the agency defer
the decision on changing the base tire definition until further
analysis and discussions with industry could take place. The Alliance
explained that various options exist and stated that each one had its
own risks, but did not provide any details or recommendations. The
Alliance argued that changing the definition now could create a rule
that would not be acceptable by some manufacturers because any change
could negatively impact fleet standard projections. GM also commented
that additional time be taken to make any decisions in order to
minimize the potential for any unnecessary complications and unintended
consequences resulting from revising the definition. Global, Ford and
Toyota stated that the agencies should harmonize any final definitions.
The agency agrees with manufacturers that it should move in the
direction of harmonization with EPA on the base tire definition. We
also agree with manufacturers that the agency should evaluate all the
potential risks on fleet standards associated with the available
options manufacturers have for selecting base tires. The agency
believes that a proper evaluation of the various options will require
additional time and effort beyond the scope of this rulemaking.
    For this final rule, the agency has decided to modify the NPRM base
tire definition by removing the terms ``highest production sales
volume'' and ``vehicle configuration'' in response to the concerns
raised by commenters. In addition, to align the definition more closely
with EPA's, we have added back the term ``standard equipment.'' For
clarification purposes, we are adding language to ensure that
manufacturers provide a base tire size for each combination of a
vehicle's footprint and model type.
    For the final rule, the definition for base tire will therefore be
as follows: ``the tire size specified as standard equipment by the
manufacturer on each unique combination of a vehicle's footprint and
model type.'' For purposes of harmonization, EPA is adopting this same
definition in its final rule (see preamble section III.E.10 and 40 CFR
600.002). Standard equipment would mean those features or equipment
which are marketed on a vehicle over which the purchaser can exercise
no choice, in accordance with the EPA definition in 40 CFR 86.1803-01.
NHTSA believes these changes will harmonize both agencies' definitions
and will allow manufacturers to use the same approach for calculating
attribute-based standards for NHTSA's Parts 531 and 533 and EPA's GHG
programs. In addition, each unique footprint and model type combination
must be used to calculate a manufacturer's target and fleet standards.
Therefore, NHTSA expects manufacturers to report these projected values
in their PMY reports. These revised reporting requirements for base
tire are a part of the provisions that are being finalized in the
following section. Allowing manufacturers to group and report vehicles
within a model type by similar footprints reduces the burden that would
otherwise exist by having to identify the multiple ``vehicle
configurations'' that exist within each model type. As such,
manufacturers can submit the EPA calculator, or similar formatted data
as specified in Part 537.7, with an additional column reporting the
base tire sizes for each table line entry.
    NHTSA does not believe that this definition represents any material
change in the reporting requirements already present in the CAFE
program. Manufacturers are already required to report base tires under
Part 537 beginning in MY 2010, and have been required to calculate
their footprint values since model year 2008 for light trucks,
optionally,\1394\ and then mandatory for both passenger cars and light
trucks in model year 2011.\1395\ Moreover, since EPA already uses
``model type'' as a basis for calculating footprint for the GHG
program, this change to the definition for base tire should enhance
harmonization between the programs and reduce manufacturer reporting
burden, insofar as the submissions to both agencies should better
encompass identical information. And finally, allowing manufacturers to
group and report vehicles within a model type by similar footprints
would reduce the burden that would otherwise exist by having to
identify the multiple ``vehicle configurations'' that exist within each
model type. As such, manufacturers can submit the EPA calculator, or
similar formatted data as specified in Part 537.7, with an additional
column reporting the base tire sizes for each table line entry. NHTSA
believes these changes provide a clear definition for footprint
calculations and, thus, fleet compliance projections, calculations,
finalizations and enforcement efforts.
---------------------------------------------------------------------------

    \1394\ The final rule was published on April 6, 2006. See 71 FR
17566.
    \1395\ The final rule was published on March 30, 2009. See 74 FR
14196, per 49 U.S.C. Sec.  32902(b)(3).
---------------------------------------------------------------------------

d. Confirming Target and Fleet Standards
    As discussed in the NPRM, because Part 537 as currently written
requires only a breakdown of footprint values by vehicle configurations
rather than by each unique model type and footprint combination, NHTSA
is currently unable to verify manufacturers' reported target standards.
To remedy that, the agency proposed to harmonize the NHTSA and EPA
reporting requirements relating to the derivation of a manufacturer's
fleet standards. The agency proposed to accomplish this by relocating
paragraphs

537.7(c)(4)(xvi)(A)(3) through (6) and (B)(3) through (6), to a revised
paragraph 537.7(b)(3). NHTSA sought comments on these proposed changes.
    Because no comments were received on this issue, and because NHTSA
continues to believe that the change will be beneficial, NHTSA is
finalizing the proposal as specified with one addition. To harmonize
further with EPA and standardize the data content and format that can
be submitted to both agencies, NHTSA is adding an optional requirement,
shown below in the regulatory text for paragraphs Sec.
537.7(b)(3)(i)(E) and (ii)(E), for manufacturers to provide the
calculated target standard along with each required unique model type
and footprint combination listing used to calculate the fleet standard.
This information would be beneficial to NHTSA for assisting in the
validation of the manufacturer's calculated fleet standards, and the
agency believes that optionally requesting this information in Part 537
does not constitute a material change to the existing reporting
requirements and should require no additional work on the part of
manufacturers, because this information will already be submitted to
EPA. If manufacturers choose not to provide this optional data to NHTSA
along with the related required data, NHTSA may consider changing this
to a mandatory requirement in a future rulemaking.
e. Public Reporting
    Several commenters in response to the NPRM requested that NHTSA
consider expanding the amount of CAFE information it provides to the
public each year. NACAA commented that once the program is in place, it
is critical that agencies closely track the progress of manufacturers
in meeting standards. NRDC stated that EPA and NHTSA should create
greater public transparency by annually publishing data on each
manufacturer's credit status and technology penetration rates to ensure
greater public confidence in the program's effectiveness. NRDC further
commented that the agencies should publish an annual public report that
includes at a minimum the following for each manufacturer's passenger
car and light truck fleets: the amount of cumulative credits or
deficits; the amount of transfers; the amount of traded credits and the
name of the receiving party; the amount of credits generated from A/C,
pickup credits, dedicated and dual fuel, and off-cycle.
    UCS commented that the agencies could further improve transparency
by having a clear public accounting of credits and program compliance
explaining that over the years it has been exceedingly difficult to
independently verify whether manufacturers are compliant with their
CAFE obligations. Given the numerous compliance flexibility mechanisms
being proposed by the agencies as well as a multitude of opportunities
for trading, transferring, banking, and borrowing of credits, USC
believes that it is critical that manufacturers' compliance ledgers be
documented, publicly available, and sufficiently granular to assess by
which measures companies are complying with the regulations. USC urged
the agencies to undertake an effort to provide clear public accounting
of credits and program compliance. UCS also stated that in order for it
and other public interest groups to effectively assess industry
compliance and behavior, the agencies should expand the public
availability and quality of disaggregated vehicle data. Because of the
new attribute-based standards, USC argued that it is critical that sub-
model level data be regularly published that includes not only fuel
economy and greenhouse gas emissions performance specifications, but at
a minimum, finalized sales, vehicle footprint, regulatory vehicle
classification, and other listed technical data. Additional comments
similar to USC were also received from the Sierra Club. Sierra Club
requested that public information for model years 2017 to 2025 be
expanded to include enough detail to sufficiently assess manufacturers'
credits balances and activities, compliance margins and vehicle model
type characteristics and performance.
    In response to the commenters' requests to increase the
transparency of CAFE compliance data, we are continuing to consider
this issue as we develop the new CAFE database discussed above. We also
note that as part of the MY 2011 CAFE final rule, NHTSA issued 49 CFR
part 536 to implement a new CAFE credit trading and transfer program as
authorized by EISA. In Paragraph 536.5(e) of the regulation, NHTSA
adopted new provisions for periodically publishing the names and credit
holdings of all credit holders. Credit holdings will include a
manufacturer's credit balance accounting for all transferred and traded
credit transactions which have occurred over a specified transaction
period. NHTSA plans to make manufacturer's credit balances available to
the public on the NHTSA Web site before the end of calendar year 2012.
    NHTSA also already publishes a report on its Web site titled, ``The
Summary of Fuel Economy Report,'' which provides a bi-annual status
report on CAFE fleet standards, performance values and production
volumes by manufacturer, and makes manufacturers' pre-model and mid-
model year CAFE reports publicly available at the end of each current
calendar year in dockets at http://www.regulations.gov. Starting in
model year 2017, and as detailed in the next section, manufacturers'
CAFE reports will also be required to contain most of the information
requested by NRDC such as the amount of the incentive gained by a
manufacturer in its fleet average performance as generated by A/C, full
size pickup trucks, dedicated and dual fuel, and off-cycle technology
improvements. Finally, manufacturers' CAFE reports also already address
USC's concerns for providing information sufficiently granular enough
to assess the measure by which companies will comply with regulations
and provides the information on a vehicle configuration level which
addresses USC's and Sierra Club's requests for model type information.
f. Additional Enforcement Issues
    The agency proposed in the NPRM to add requirements in 537.7(c)(4)
for manufacturers to report air conditioning efficiency, full-size
pickup truck and off-cycle technology improvements used to acquire the
incentives in 40 CFR 86.1866, and the amount of each incentive. As
proposed, the technology credits or incentives would need to be
reported for each vehicle configuration making up the model types used
to determine a manufacturer's fleet average performance.
    Ford argued that these particular types of vehicle
characteristics--those necessary to earn fuel economy adjustment values
for air conditioning efficiency, full-size pickup truck and off-cycle
technology improvements--will not vary by fuel economy configuration
and will likely only vary by vehicle line. Ford requested instead that
manufacturers be allowed to delineate the credit applicability
specifically, as needed, but for cases where credits apply across a
much broader section of vehicles, manufacturers should be allowed to
report on that level rather than being required to report at the
vehicle configuration level.
    Upon further consideration, NHTSA agrees that these technology
improvements likely need not be specified at the vehicle configuration
level because the fuel economy adjustment incentive is derived based
upon the technology and is not necessarily affected by being applied to

any particular vehicle based upon vehicle configuration or model type.
The important information that NHTSA seeks to receive is what air
conditioning, off-cycle and hybrid technologies are being used, what
the adjustment incentive is (gallons/mile) for each technology, and the
number of vehicles in the fleet using the respective technology. These
adjustment incentives form the inputs to adjust the manufacturer's
fleet CAFE values in accordance with the equations in 40 CFR 600.510-
12, and manufacturers must also submit this adjusted CAFE value to
NHTSA. Therefore, for the final rule, we plan to move the provisions
proposed in section (c)(4)(xvi), (xvii) and (xviii) into a new section
numbered (c)(7) and require manufacturers to report their technologies
by vehicle make and model types. Manufacturers will also be required to
report their adjusted fleet average performance values and other
required information used in the equation specified in 40 CFR 600.510-
12(c)(1).

J. Record of Decision

    This final rule constitutes the Record of Decision (ROD) for
NHTSA's final rule for CAFE standards for model years 2017 and beyond,
pursuant to the National Environmental Policy Act (NEPA) and the
Council on Environmental Quality's (CEQ) implementing
regulations.\1396\ See 40 CFR 1505.2.
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    \1396\ NEPA is codified at 42 U.S.C. 4321-47. CEQ NEPA
implementing regulations are codified at 40 Code of Federal
Regulations (CFR) Parts 1500-08.
---------------------------------------------------------------------------

    As required by CEQ regulations, this ROD sets forth the following:
(1) The agency's decision; (2) alternatives considered by NHTSA in
reaching its decision, including the environmentally preferable
alternative; (3) the factors balanced by NHTSA in making its decision,
including considerations of national policy; (4) how these factors and
considerations entered into its decision; and (5) the agency's
preferences among alternatives based on relevant factors, including
economic and technical considerations and agency statutory missions.
This ROD also briefly addresses mitigation.
1. The Agency's Decision
    In the Draft Environmental Impact Statement (Draft EIS) and the
Final Environmental Impact Statement (Final EIS), the agency identified
a Preferred Alternative, labeled as Alternative 3. As NHTSA noted in
the Final EIS, under the Preferred Alternative, on an mpg basis, the
estimated annual increases in the average required fuel economy levels
between MYs 2017 and 2021 average 3.8 to 3.9 percent for passenger cars
and 2.5 to 2.7 percent for light trucks. The estimated annual increases
in the average required fuel economy levels set forth for MYs 2022-
2025--also on an mpg basis--are assumed to average 4.7 percent for
passenger cars and 4.8 to 4.9 percent for light trucks.\1397\ After
carefully reviewing and analyzing all of the information in the public
record, the Final EIS, and public and agency comments submitted on the
EIS and the NPRM, NHTSA has decided to finalize the Preferred
Alternative.
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    \1397\ Because the standards are attribute-based, average
required fuel economy levels, and therefore rates of increase in
those averages, depend on the future composition of the fleet, which
is uncertain and subject to change. The target curves identified as
the Preferred Alternative and analyzed in the Final EIS are the same
as those that defined the Preferred Alternative in the Draft EIS and
outlined as the proposal in the NPRM. They are also the same as
those being finalized by NHTSA in this final rule.
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2. Alternatives NHTSA Considered in Reaching its Decision
    When preparing an EIS, NEPA requires an agency to compare the
potential environmental impacts of its proposed action and a reasonable
range of alternatives. In the Draft and Final EIS, NHTSA analyzed a No
Action Alternative and three action alternatives. The action
alternatives represent a range of potential actions the agency could
take. The environmental impacts of these alternatives, in turn,
represent a range of potential environmental impacts that could result
from NHTSA's chosen action in setting maximum feasible fuel economy
standards for light duty vehicles.
    The No Action Alternative in the Draft and Final EIS assumes that
NHTSA would not issue a rule regarding CAFE standards for MY 2017-2025
passenger cars and light trucks; rather, the No Action Alternative
assumes that NHTSA's latest CAFE standards (the MY 2016 fuel economy
standards, issued in conjunction with EPA's MY 2016 GHG standards)
would continue indefinitely. This alternative provides an analytical
baseline against which to compare the environmental impacts of the
other alternatives presented in the EIS.\1398\ NEPA expressly requires
agencies to consider a ``no action'' alternative in their NEPA analyses
and to compare the effects of not taking action with the effects of
action alternatives in order to demonstrate the environmental effects
of the action alternatives. The No Action Alternative assumes that
average fuel economy levels and GHG emissions performance in the
absence of the agencies' action would equal what manufacturers would
achieve without additional regulation.
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    \1398\ See 40 CFR 1502.2(e), 1502.14(d). CEQ has explained that
``[T]he regulations require the analysis of the no action
alternative even if the agency is under a court order or legislative
command to act. This analysis provides a benchmark, enabling
decision makers to compare the magnitude of environmental effects of
the action alternatives. [See 40 CFR 1502.14(c).] * * * Inclusion of
such an analysis in the EIS is necessary to inform Congress, the
public, and the President as intended by NEPA. [See 40 CFR
1500.1(a).]'' Forty Most Asked Questions Concerning CEQ's National
Environmental Policy Act Regulations, 46 FR 18026 (Mar. 23, 1981).
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    For the EIS, in addition to the No Action Alternative, NHTSA
analyzed a range of action alternatives with fuel economy stringencies
that increased on average 2 percent to 7 percent annually from the MY
2016 standards for passenger cars and for light trucks. As NHTSA noted
in the Final EIS, the agency believes that, based on the different ways
the agency could weigh EPCA's four statutory factors, the ``maximum
feasible'' level of CAFE stringency falls within this range.
    Throughout the Final EIS, estimated impacts were shown for three
action alternatives that illustrate this range of average annual
percentage increases in fuel economy: a 2 percent per year average
increase in stringency for both passenger cars and light trucks
(Alternative 2); the Preferred Alternative with annual percentage
increases in stringency for passenger cars and for light trucks that,
on average, fall between the 2 percent and 7 percent per year increases
(Alternative 3); and a 7 percent per year average increase in
stringency for both passenger cars and light trucks (Alternative 4).
    Alternatives 2 and 4 were intended to provide the lower and upper
bounds of a reasonable range of alternatives. In the EIS, the agency
provided environmental analyses of these points to enable the
decisionmaker and the public to determine the environmental impacts of
points that fall between Alternatives 2 and 4. The action alternatives
evaluated in the EIS therefore provided decisionmakers with the ability
to select from a wide variety of other potential alternatives with
stringencies that increase annually at average percentage rates between
2 and 7 percent. This includes, for example, alternatives with
stringencies that increase at different rates for passenger cars and
for light trucks and stringencies that increase by different rates in
different years. For a discussion of the environmental impacts
associated with the alternatives, see Chapters 3-7 of the Final EIS.

    The Final EIS recognizes the unique uncertainties inherent in
projecting the makeup of the U.S. vehicle fleet far into the future. In
order to take account of uncertainties regarding the future vehicle
fleet, and how manufacturers would respond to increased fuel economy
standards in the future, the Final EIS presents the potential
environmental impacts for each of the alternatives using two different
assumptions regarding market-driven fuel economy improvements and two
different sets of fleet-characteristic assumptions. See Sections 2.2.1
and 2.2.2 of the Final EIS for a detailed discussion of NHTSA's
assumptions.
3. NHTSA's Environmental Analysis, Including Consideration of the
Environmentally Preferable Alternative
    NHTSA's environmental analysis indicates that Alternative 4 is the
overall Environmentally Preferable Alternative because it would result
in the largest reductions in fuel use and GHG emissions among the
alternatives considered. Under each action alternative the agency
considered, the reduction in fuel consumption resulting from higher
fuel economy causes emissions that occur during fuel refining and
distribution to decline. For most of these pollutants, this decline is
more than sufficient to offset the increase in tailpipe emissions that
results from increased driving due to the fuel efficiency rebound
effect, leading to a net reduction in total emissions from fuel
production, distribution, and use. Because it leads to the largest
reductions in fuel refining, distribution, and consumption among the
alternatives considered, Alternative 4 would also lead to the lowest
total emissions of CO2 and other GHGs, as well as most
criteria air pollutants and mobile source air toxics (MSATs).
    Alternative 4 would lead to the greatest reduction of
CO2 and N2O emissions compared to the other
action alternatives, including the Preferred Alternative. Thus,
emissions of these GHGs would be lower under Alternative 4 than under
each of the other action alternatives throughout the analysis period,
regardless of the assumptions used (e.g. fleet characteristics and fuel
economy under the No Action Alternative). While the pattern of
CH4 emissions among the alternatives is more complicated and
changes over time, emissions of CH4 under Alternative 4
would rise compared to the No Action Alternative after about 2050,
depending on the assumptions used, due to increases in tailpipe
emissions resulting from the fuel efficiency rebound effect and from
increased use of diesel-fueled vehicles. However, this slight increase
in CH4 would be vastly outweighed by much larger decreases
in CO2 emissions on a global warming potential-weighted
basis. Alternative 4 would lead to a reduction of global atmospheric
CO2 concentrations in 2100 of up to 0.5 percent, a reduction
in global mean surface temperatures of up to 0.5 percent, and a
reduction in sea-level rise of up to 0.4 percent from their respective
levels under the No Action Alternative.
    For toxic air pollutants, results are mixed. Alternatives 3 and 4
are the Environmentally Preferable Alternatives depending on the
pollutant and assumptions used. The greatest reductions in emissions of
benzene and 1,3-butadiene occur under Alternative 4 in later analysis
years. The greatest reductions in diesel particulate matter (DPM) occur
under Alternative 3 (the Preferred Alternative) in later analysis
years. Under all action alternatives, emissions of acetaldehyde,
acrolein, and formaldehyde would generally increase in later years,
depending on the assumptions used. These emissions increases are mainly
due to the fuel efficiency rebound effect, which more than offsets
emission reductions from decreased fuel usage. Under different
assumptions, the fuel efficiency rebound effect would not fully offset
emissions reductions from decreased fuel usage, and emissions of these
pollutants would instead decrease.
    For criteria pollutants, the greatest relative reductions in
emissions compared to the No Action Alternative occur under Alternative
4 for CO, PM2.5, and VOCs, for which emissions related to
light duty vehicles decrease by as much as 26 percent by 2060.
Emissions of NOX and SO2 related to the use of
light duty vehicles are an exception in later analysis years. For those
criteria pollutants in later analysis years, NHTSA's analysis indicates
that Alternative 3 is generally the Environmentally Preferable
Alternative because it leads to the largest reductions in
NOX and SO2.
    At the time the analysis for the Final EIS was performed, EIA's
final version of AEO 2012 was not yet released. The AEO 2012 Early
Release Reference Case, used for the criteria air pollutant results
described above, did not account for new standards for power plants,
which are expected to result in substantial reductions of emissions of
some air pollutants discussed in the air quality chapter.
    As we stated in the Final EIS, NHTSA believes it is reasonable to
consider an additional analysis assuming steady improvements to the
electrical grid during the course of the next several decades--the
period during which any EV deployment associated with this program
would occur. In the Final EIS, NHTSA performed an additional air
quality analysis in order to take into account changes to the
efficiency of power plants and the mix of fuel sources used. Emissions
and other environmental impacts from electricity production depend on
the efficiency of the power plant and the mix of fuel sources used,
sometimes referred to as the ``grid mix.'' In the United States, the
current grid mix is composed of coal, nuclear, natural gas,
hydroelectric, oil, and renewable energy resources, with the largest
single source of electricity being from coal. As a result of EPA's Acid
Rain Program, the Clean Air Interstate Rule, the recent Mercury and Air
Toxics Standards, and general advances in technology, emissions from
the power-generation sector are expected to decline over time. Low
natural gas prices and higher coal prices, as well as slower growth in
electrical demand, are currently resulting in a shift away from coal-
based electricity generation. Together, these trends suggest a future
grid mix that is likely to produce lower upstream emissions per unit of
electricity used to charge EVs than the NEMS AEO 2012 Early Release-
based 2020 projection, especially in terms of reductions in criteria
pollutant emissions.
    Under the cleaner grid mix analyzed in the EIS,\1399\ the greatest
relative reductions in emissions of criteria pollutants related to the
use of light duty vehicles occur under Alternative 4 for CO,
PM2.5, and VOCs, for which emissions decrease by as much as
26 percent by 2060 compared to the No Action Alternative. For
SO2 and NOX, the greatest emissions reductions
generally occur under Alternative 3. Under Alternative 4, emissions of
SO2 and NOX either increase or decrease compared
to the No Action Alternative, depending upon assumptions used. Any
increase in emissions of these pollutants is smaller than increases
that occur under Alternative 4 for the analysis described above.
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    \1399\ NHTSA analyzed the ``GHG Price, Economy-wide'' case from
AEO 2011, which assumes future carbon trading. This scenario assumes
high levels of natural gas and renewables for electricity
generation, with generation from coal-fired power plants reduced to
21 percent from the EIA projected 2020 contribution of 40 percent
used in the main analysis.
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    EIA's final version of AEO 2012, which accounts for new EPA
standards for power plants such as the Mercury and Air Toxics
Standards, projects

nearly a 75 percent decrease in SO2 emissions and a 14
percent reduction in NOX from the electric power sector in
the 2010-2015 timeframe. EIA's Short-term Energy Outlook for July 2012
shows that coal was responsible for nearly 50 percent of U.S.
electrical generation in 2005, and is projected to fall to an average
of less than 37 percent for 2012, which will also contribute to a
reduction in these emissions. The full AEO 2012 projects coal
accounting for 38 percent of total U.S. electricity generation by 2035,
and natural gas accounting for 28 percent. As EIA notes in AEO 2012,
the decrease in coal's generation is mostly offset by growth in natural
gas and renewable energy. Like the cleaner grid mix analyzed in the
Final EIS, EIA's updated projections indicate a cleaner future grid
with lower upstream emissions per unit of electricity generated.
    For more detailed discussion of the environmental impacts
associated with the alternatives, see Chapters 3 through 7 of the Final
EIS. For detailed results of NHTSA's Alternate Grid Mix Case, see
Appendix H of the Final EIS.
4. Factors Balanced by NHTSA in Making Its Decision
    For discussion of the factors balanced by NHTSA in making Its
decision, see Sections IV.D and IV.F of this final rule.
5. How the Factors and Considerations Balanced by NHTSA Entered Into
Its Decision
    For discussion of how the factors and considerations balanced by
the agency entered into NHTSA's Decision, see Section IV.F of this
final rule.
6. The Agency's Preferences among Alternatives Based on Relevant
Factors, Including Economic and Technical Considerations and Agency
Statutory Missions
    For discussion of the agency's preferences among alternatives based
on relevant factors, including economic and technical considerations,
see Section IV.F of this final rule.
7. Mitigation
    The CEQ regulations specify that a ROD must ``state whether all
practicable means to avoid or minimize environmental harm from the
alternative selected have been adopted, and if not, why they were
not.'' 40 CFR 1505.2(c). The majority of the environmental effects of
NHTSA's action are positive, i.e., beneficial environmental impacts,
and would not raise issues of mitigation. Emissions of criteria and
toxic air pollutants are generally projected to decrease under the
final standards under all analysis years as compared to their levels
under the No Action Alternative. Analysis of the environmental trends
reported in the Final EIS for the Preferred Alternative indicates that
the only exceptions to this decline are emissions of CO, acetaldehyde,
acrolein, and 1,3-butadiene, and emissions of SO2 and
formaldehyde in some analyses and years. See Chapter 4 of the Final
EIS. The agency forecasts these emissions increases because, under all
the alternatives analyzed in the EIS, increase in vehicle use due to
improved fuel efficiency is projected to result in growth in total
miles traveled by light duty vehicles. The growth in VMT outpaces
emissions reductions for some pollutants, resulting in projected
increases for these pollutants. In addition, as described above,
NHTSA's NEPA analysis predicted increases in emissions of air toxic and
criteria pollutants under certain alternatives based on assumptions
about the type of technologies manufacturers will use to comply with
the standards and the resulting rate and type of emissions.
    NHTSA's authority to promulgate new fuel economy standards is
limited and does not allow regulation of criteria pollutant from
vehicles or of factors affecting those emissions, including driving
habits. Consequently, NHTSA must set CAFE standards but is unable to
take steps to mitigate the impacts of these standards. Chapter 8 of the
Final EIS outlines a number of other initiatives across the government
that could ameliorate the environmental impacts of motor vehicle use,
including the use of light duty vehicles.

K. Regulatory Notices and Analyses

1. Executive Order 12866, Executive Order 13563, and DOT Regulatory
Policies and Procedures
    Executive Order 12866, ``Regulatory Planning and Review'' (58 FR
51735, Oct. 4, 1993), as amended by Executive Order 13563, ``Improving
Regulation and Regulatory Review'' (76 FR 3821, Jan. 21, 2011),
provides for making determinations whether a regulatory action is
``significant'' and therefore subject to OMB review and to the
requirements of the Executive Order. The Order defines a ``significant
regulatory action'' as one that is likely to result in a rule that may:
    (1) Have an annual effect on the economy of $100 million or more or
adversely affect in a material way the economy, a sector of the
economy, productivity, competition, jobs, the environment, public
health or safety, or State, local, or Tribal governments or
communities;
    (2) Create a serious inconsistency or otherwise interfere with an
action taken or planned by another agency;
    (3) Materially alter the budgetary impact of entitlements, grants,
user fees, or loan programs or the rights and obligations of recipients
thereof; or
    (4) Raise novel legal or policy issues arising out of legal
mandates, the President's priorities, or the principles set forth in
the Executive Order.
    The CAFE standards promulgated in this final rule will be
economically significant if adopted. Accordingly, OMB reviewed the rule
under Executive Order 12866. The rule is also significant within the
meaning of the Department of Transportation's Regulatory Policies and
Procedures.
    The benefits and costs of this proposal are described above.
Because the rule is economically significant under both the Department
of Transportation's procedures and OMB guidelines, the agency has
prepared a Final Regulatory Impact Analysis (FRIA) and placed it in the
docket and on the agency's Web site. Further, pursuant to Circular A-4,
we have prepared a formal probabilistic uncertainty analysis for this
final rule. The circular requires such an analysis for complex rules
where there are large, multiple uncertainties whose analysis raises
technical challenges or where effects cascade and where the impacts of
the rule exceed $1 billion. This final rule meets these criteria on all
counts.
2. National Environmental Policy Act
    Under NEPA, a Federal agency must prepare an EIS on proposals for
major Federal actions that significantly affect the quality of the
human environment.\1400\ The purpose of an EIS is to inform
decisionmakers and the public of the potential environmental impacts of
a proposed action and reasonable alternative actions the agency could
take.\1401\ The EIS is used by the agency, in conjunction with other
relevant material, to plan actions and make decisions. To inform its
development of the final CAFE standards, NHTSA prepared a Draft and a
Final EIS, which analyze, disclose, and compare the potential
environmental impacts of a reasonable range of action alternatives,
including a Preferred Alternative,\1402\ pursuant to Council on
Environmental Quality (CEQ) NEPA implementing regulations,

DOT Order 5610.1C, and NHTSA regulations.\1403\ The Final EIS analyzes
direct, indirect, and cumulative impacts, and discusses impacts in
proportion to their significance. For more detailed discussion of the
environmental impacts analyzed, see the Final EIS and Final EIS
Summary, available at Docket No. NHTSA-2011-0056 and on the agency's
Web site at http://www.nhtsa.gov/fuel-economy.
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    \1400\ 40 CFR 1502.3.
    \1401\ 40 CFR 1502.1.
    \1402\ The Preferred Alternative in the Final EIS is equivalent
to the action the agency is adopting in this final rule.
    \1403\ NEPA is codified at 42 U.S.C. 4321-4347. CEQ NEPA
implementing regulations are codified at 40 CFR Parts 1500-1508, and
NHTSA's NEPA implementing regulations are codified at 49 CFR Part
520.
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    The Final EIS quantitatively and qualitatively analyzes the
potential environmental impacts of a range of alternative CAFE
standards on fuel and energy use, air quality, and global climate
change. The Final EIS also qualitatively describes potential
environmental impacts to a variety of other resources including land
use and development, hazardous materials and regulated wastes, historic
and cultural resources, noise, and environmental justice.
    CEQ regulations emphasize agency cooperation early in the NEPA
process and allow a lead agency (in this case, NHTSA) to request the
assistance of other agencies that either have jurisdiction by law or
have special expertise regarding issues considered in an EIS.\1404\
NHTSA invited EPA to be a cooperating agency in the preparation of the
EIS because of its special expertise in the areas of climate change and
air quality.
---------------------------------------------------------------------------

    \1404\ 40 CFR 1501.6.
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    In preparing the Final EIS, NHTSA took a number of steps to ensure
public involvement. On May 10, 2011, NHTSA published a notice of intent
to prepare an environmental impact statement for new CAFE standards,
requesting comment on the scope of the agency's analysis.\1405\ On
November 25, 2011, EPA published a Notice of Availability of the Draft
EIS for the new proposed CAFE standards.\1406\ NHTSA requested public
input on the agency's Draft EIS by January 31, 2012; publication of the
Notice of Availability triggered the Draft EIS public comment period.
NHTSA mailed (both electronically and through regular U.S. mail) over
1,000 copies of the Draft EIS to stakeholders and interested parties,
including Federal, State, and local officials and agencies; elected
officials, environmental and public interest groups; Native American
tribes; and other interested organizations and individuals. NHTSA and
EPA held joint public hearings on the Draft EIS and NPRM on January 17,
2012, in Detroit, Michigan; on January 19, 2012, in Philadelphia,
Pennsylvania; and on January 24, 2012, in San Francisco, California.
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    \1405\ Notice of Intent to Prepare an Environmental Impact
Statement for New Corporate Average Fuel Economy Standards, 76 FR
26996 (May 10, 2011).
    \1406\ Notice of Availability of the Draft Environmental Impact
Statement for New Corporate Average Fuel Economy Standards Model
Year 2017-2025, 76 FR 72702, 72703 (Nov. 25, 2011).
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    NHTSA received thousands of written and oral comments to the NPRM
and the Draft EIS. The transcripts from the public hearings and written
comments submitted to NHTSA are part of the administrative record and
are available on the Federal Docket, available online at http://www.regulations.gov, Reference Docket Nos. NHTSA-2011-0056 and NHTSA-
2010-0131. NHTSA reviewed and analyzed all relevant comments received
during the public comment period and revised the Final EIS in response
to comments where appropriate.\1407\ For a more detailed discussion of
the comments NHTSA received, see Section 1.5 of the Draft EIS and
Chapter 9 of the Final EIS.
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    \1407\ The agency also changed the Final EIS as a result of
updated information that became available after issuance of the
Draft EIS.
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    On July 9, 2012, NHTSA submitted the Final EIS to EPA, in
accordance with CEQ NEPA implementing regulations.\1408\ On that day,
NHTSA also posted the Final EIS on its Web site, http://www.nhtsa.gov/fuel-economy, and notified over 1,000 stakeholders and interested
parties about its availability (both electronically and through regular
U.S. mail). On July 13, 2012, EPA published a Notice of Availability of
the Final EIS in the Federal Register. See 77 FR 41403 (July 13, 2012).
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    \1408\ 40 CFR Sec.  1506.9.
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    In developing the CAFE standards adopted in this final rule, NHTSA
has been informed by the analyses contained in the Final Environmental
Impact Statement, Corporate Average Fuel Economy Standards, Passenger
Cars and Light Trucks, Model Years 2017-2025, Docket No. NHTSA-2011-
0056 (Final EIS). For purposes of this rulemaking, the agency referred
to an extensive compilation of technical and policy documents available
in NHTSA's EIS and rulemaking dockets and EPA's docket. NHTSA's EIS and
rulemaking dockets and EPA's rulemaking docket can be found online at
http://www.regulations.gov, Reference Docket Nos.: NHTSA-2011-0056
(EIS), NHTSA-2010-0131 (NHTSA rulemaking), and EPA-HQ-OAR-2010-0799
(EPA rulemaking).
    Based on the foregoing, NHTSA concludes that the environmental
analysis and public involvement process complies with NEPA implementing
regulations issued by CEQ, DOT Order 5610.1C, and NHTSA regulations.
3. Clean Air Act (CAA) as Applied to NHTSA's Action
    The CAA (42 U.S.C. Sec.  7401) is the primary Federal legislation
that addresses air quality. Under the authority of the CAA and
subsequent amendments, EPA has established National Ambient Air Quality
Standards (NAAQS) for six criteria pollutants, which are relatively
commonplace pollutants that can accumulate in the atmosphere as a
result of normal levels of human activity. EPA is required to review
each NAAQS every five years and to revise those standards as may be
appropriate considering new scientific information.
    The air quality of a geographic region is usually assessed by
comparing the levels of criteria air pollutants found in the ambient
air to the levels established by the NAAQS (taking into account, as
well, the other elements of a NAAQS: averaging time, form, and
indicator). Concentrations of criteria pollutants within the air mass
of a region are measured in parts of a pollutant per million parts of
air (ppm) or in micrograms of a pollutant per cubic meter ([mu]g/m\3\)
of air present in repeated air samples taken by monitors using
specified types of monitors. These ambient concentrations of each
criteria pollutant are compared to the levels, averaging time, and form
specified by the NAAQS in order to assess whether the region's air
quality is in attainment with the NAAQS.
    When the measured concentrations of a criteria pollutant within a
geographic region are below those permitted by the NAAQS, the region is
designated by the EPA as an attainment area for that pollutant, while
regions where concentrations of criteria pollutants exceed Federal
standards are called nonattainment areas (NAAs). Former NAAs that have
attained the NAAQS are designated as maintenance areas. Each NAA is
required to develop and implement a State Implementation Plan (SIP),
which documents how the region will reach attainment levels within time
periods specified in the CAA. In maintenance areas, the SIP documents
how the State intends to maintain attainment with the NAAQS. When EPA
revises a NAAQS, States must revise their SIPs to address how they will
attain the new standard.
    Section 176(c) of the CAA prohibits Federal agencies from taking
actions in nonattainment or maintenance areas

that do not ``conform'' to the SIP. The purpose of this conformity
requirement is to ensure that Federal activities do not interfere with
meeting the emissions targets in the SIPs, do not cause or contribute
to new violations of the NAAQS, and do not impede the ability to attain
or maintain the NAAQS. EPA has issued two sets of regulations to
implement CAA Section 176(c):
    (1) The Transportation Conformity Rules (40 CFR Part 93, Subpart
A), which apply to transportation plans, programs, and projects funded
or approved under U.S.C. Title 23 or the Federal Transit Laws (49
U.S.C. Chapter 53). Projects funded by the Federal Highway
Administration (FHWA) or the Federal Transit Administration (FTA)
usually are subject to transportation conformity. See 40 CFR 93.102.
    (2) The General Conformity Rules (40 CFR Part 93, Subpart B) apply
to all other federal actions not covered under transportation
conformity. The General Conformity Rule established emissions
thresholds, or de minimis levels, for use in evaluating the conformity
of a project. If the net emissions increases attributable to the
project are less than these thresholds, then the project is presumed to
conform and no further conformity evaluation is required. If the
emissions increases exceed any of these thresholds, then a conformity
determination is required. The conformity determination can entail air
quality modeling studies, consultation with EPA and state air quality
agencies, and commitments to revise the SIP or to implement measures to
mitigate air quality impacts.
    The final fuel economy standards are not funded or approved under
Title 23 or the Federal Transit Act. Further, NHTSA's CAFE program is
not a highway or transit project funded or approved by FHWA or FTA.
Accordingly, this final rule is not subject to transportation
conformity.
    Under the General Conformity Rule, a conformity determination is
required where a Federal action would result in total direct and
indirect emissions of a criteria pollutant or precursor equaling or
exceeding the rates specified in 40 CFR 93.153(b)(1) and (2) for
nonattainment and maintenance areas. As explained below, NHTSA's action
results in neither direct nor indirect emissions as defined in 40 CFR
93.152.
    The General Conformity Rule defines direct emissions as those of
``a criteria pollutant or its precursors that are caused or initiated
by the Federal action and originate in a nonattainment or maintenance
area and occur at the same time and place as the action and are
reasonably foreseeable.'' 40 CFR 93.152. Because NHTSA's action only
sets fuel economy standards for light duty vehicles, it causes no
direct emissions within the meaning of the General Conformity Rule.
    Indirect emissions under the General Conformity Rule include
emissions or precursors: (1) That are caused or initiated by the
Federal action and originate in the same nonattainment or maintenance
area but occur at a different time or place than the action; (2) that
are reasonably foreseeable; (3) that the agency can practically
control; and (4) for which the agency has continuing program
responsibility. 40 CFR 93.152. Each element of the definition must be
met to qualify as an indirect emission. NHTSA has determined that, for
the purposes of general conformity, emissions that occur as a result of
the fuel economy standards are not caused by NHTSA's action, but rather
occur due to subsequent activities that the agency cannot practically
control. ``[E]ven if a Federal licensing, rulemaking, or other
approving action is a required initial step for a subsequent activity
that causes emissions, such initial steps do not mean that a Federal
agency can practically control any resulting emissions'' (75 FR 17254,
17260; 40 CFR 93.152). NHTSA cannot control vehicle manufacturers'
production of vehicles and consumer purchasing and driving behavior.
For the purposes of analyzing the environmental impacts of this action
under NEPA, NHTSA has made assumptions regarding the technologies
manufacturers will install and how companies will react to increased
fuel economy standards. For example, NHTSA's NEPA analysis predicted
increases in air toxic and criteria pollutants to occur in some
nonattainment areas under certain alternatives based on assumptions
about the rebound effect. However, NHTSA's rule does not mandate
specific manufacturer decisions or driver behavior. NHTSA's NEPA
analysis assumes a rebound effect, wherein the standards could create
an incentive for additional vehicle use by reducing the cost of fuel
consumed per mile driven. This rebound effect is an estimate of how
NHTSA assumes some drivers will react to the rule and is useful for
estimating the costs and benefits of the rule, but the agency does not
have the statutory authority, or the program responsibility, to control
the actual vehicle miles traveled by drivers. Accordingly, changes in
air toxic and criteria pollutant emissions that result from NHTSA's
fuel economy standards are not changes that the agency can practically
control; therefore, this action causes no indirect emissions and a
general conformity determination is not required.
4. National Historic Preservation Act (NHPA)
    The NHPA (16 U.S.C. 470) sets forth government policy and
procedures regarding ``historic properties''--that is, districts,
sites, buildings, structures, and objects included in or eligible for
the National Register of Historic Places (NRHP). See also 36 CFR Part
800. Section 106 of the NHPA requires federal agencies to ``take into
account'' the effects of their actions on historic properties. The
agency concludes that the NHPA is not applicable to NHTSA's Decision
because it does not directly involve historic properties. The agency
has, however, conducted a qualitative review of the related impacts of
the alternatives on potentially affected resources, including historic
and cultural resources. See Section 7.3 of the Final EIS. Executive
Order 12898 (Environmental Justice)
    Under Executive Order 12898, Federal agencies are required to
identify and address any disproportionately high and adverse human
health or environmental effects of its programs, policies, and
activities on minority and low-income populations. Pursuant to this
order, the Final EIS includes a qualitative analysis of the potential
effects of the standards on minority and low-income populations. See
Section 7.6 of the Final EIS.
5. Fish and Wildlife Conservation Act (FWCA)
    The FWCA (16 U.S.C. 2900) provides financial and technical
assistance to States for the development, revision, and implementation
of conservation plans and programs for nongame fish and wildlife. In
addition, the Act encourages all Federal agencies and departments to
utilize their authorities to conserve and to promote conservation of
nongame fish and wildlife and their habitats. The agency concludes that
the FWCA is not applicable to NHTSA's Decision because it does not
directly involve fish and wildlife.
6. Coastal Zone Management Act (CZMA)
    The Coastal Zone Management Act (16 U.S.C. 1450) provides for the
preservation, protection, development, and (where possible) restoration
and enhancement of the nation's coastal zone resources. Under the
statute, States are provided with funds and technical assistance in
developing coastal zone management programs. Each

participating State must submit its program to the Secretary of
Commerce for approval. Once the program has been approved, any activity
of a Federal agency, either within or outside of the coastal zone, that
affects any land or water use or natural resource of the coastal zone
must be carried out in a manner that is consistent, to the maximum
extent practicable, with the enforceable policies of the State's
program.
    The agency concludes that the CZMA is not applicable to NHTSA's
Decision because it does not involve an activity within, or outside of,
the nation's coastal zones. The agency has, however, conducted a
qualitative review of the related direct, indirect, and cumulative
impacts, positive or negative, of the alternatives on potentially
affected resources, including coastal zones. See Section 5.5 of the
Final EIS.
7. Endangered Species Act (ESA)
    Under Section 7(a)(2) of the ESA federal agencies must ensure that
actions they authorize, fund, or carry out are ``not likely to
jeopardize'' federally listed threatened or endangered species or
result in the destruction or adverse modification of the designated
critical habitat of these species. 16 U.S.C. 1536(a)(2). If a federal
agency determines that an agency action may affect a listed species or
designated critical habitat, it must initiate consultation with the
appropriate Service--the U.S. Fish and Wildlife Service of the
Department of the Interior and/or the National Oceanic and Atmospheric
Administration's National Marine Fisheries Service of the Department of
Commerce, depending on the species involved--in order to ensure that
the action is not likely to jeopardize the species or destroy or
adversely modify designated critical habitat. See 50 CFR 402.14. Under
this standard, the federal agency taking action evaluates the possible
effects of its action and determines whether to initiate consultation.
See 51 FR 19926, 19949 (Jun. 3, 1986).
    NHTSA received one comment to the Draft EIS indicating that the
agency should engage in consultation under Section 7 of the ESA when
analyzing the overall impact of GHG emissions and other air pollutants.
Pursuant to Section 7(a)(2) of the ESA, NHTSA has considered the
effects of the proposed CAFE standards and has reviewed applicable ESA
regulations, case law, and guidance to determine what, if any, impact
there might be to listed species or designated critical habitat. NHTSA
has considered issues related to emissions of CO2 and other
GHGs, and issues related to non-GHG emissions. Based on this
assessment, NHTSA has determined that the agency's action of setting
CAFE standards, which will result in nationwide fuel savings and which,
consequently, will generally result in emissions reductions from what
would otherwise occur in the absence of the CAFE standards, does not
require consultation under Section 7(a)(2) of the ESA. For discussion
of the agency's rationale, see page 9-101 of the Final EIS.
Accordingly, NHTSA has concluded its review of this action under
Section 7 of the ESA.
8. Floodplain Management (Executive Order 11988 and DOT Order 5650.2)
    These Orders require Federal agencies to avoid the long- and short-
term adverse impacts associated with the occupancy and modification of
floodplains, and to restore and preserve the natural and beneficial
values served by floodplains. Executive Order 11988 also directs
agencies to minimize the impact of floods on human safety, health and
welfare, and to restore and preserve the natural and beneficial values
served by floodplains through evaluating the potential effects of any
actions the agency may take in a floodplain and ensuring that its
program planning and budget requests reflect consideration of flood
hazards and floodplain management. DOT Order 5650.2 sets forth DOT
policies and procedures for implementing Executive Order 11988. The DOT
Order requires that the agency determine if a proposed action is within
the limits of a base floodplain, meaning it is encroaching on the
floodplain, and whether this encroachment is significant. If
significant, the agency is required to conduct further analysis of the
proposed action and any practicable alternatives. If a practicable
alternative avoids floodplain encroachment, then the agency is required
to implement it.
    In this rulemaking, the agency is not occupying, modifying and/or
encroaching on floodplains. The agency, therefore, concludes that the
Orders are not applicable to NHTSA's Decision. The agency has, however,
conducted a review of the alternatives on potentially affected
resources, including floodplains. See Section 5.5 of the Final EIS.
9. Preservation of the Nation's Wetlands (Executive Order 11990 and DOT
Order 5660.1a)
    These Orders require Federal agencies to avoid, to the extent
possible, undertaking or providing assistance for new construction
located in wetlands unless the agency head finds that there is no
practicable alternative to such construction and that the proposed
action includes all practicable measures to minimize harms to wetlands
that may result from such use. Executive Order 11990 also directs
agencies to take action to minimize the destruction, loss or
degradation of wetlands in ``conducting Federal activities and programs
affecting land use, including but not limited to water and related land
resources planning, regulating, and licensing activities.'' DOT Order
5660.1a sets forth DOT policy for interpreting Executive Order 11990
and requires that transportation projects ``located in or having an
impact on wetlands'' should be conducted to assure protection of the
Nation's wetlands. If a project does have a significant impact on
wetlands, an EIS must be prepared.
    The agency is not undertaking or providing assistance for new
construction located in wetlands. The agency, therefore, concludes that
these Orders do not apply to NHTSA's Decision. The agency has, however,
conducted a review of the alternatives on potentially affected
resources, including wetlands. See Section 5.5 of the Final EIS.
10. Migratory Bird Treaty Act (MBTA), Bald and Golden Eagle Protection
Act (BGEPA), Executive Order 13186
    The MBTA provides for the protection of migratory birds that are
native to the United States by making it illegal for anyone to pursue,
hunt, take, attempt to take, kill, capture, collect, possess, buy,
sell, trade, ship, import, or export any migratory bird covered under
the statute. The statute prohibits both intentional and unintentional
acts. Therefore, the statute is violated if an agency acts in a manner
that harms a migratory bird, whether it was intended or not. See, e.g.,
United States v. FMC Corp., 572 F.2d 902 (2nd Cir. 1978).
    The BGEPA (16 U.S.C. 668) prohibits any form of possession or
taking of both bald and golden eagles. Under the BGEPA, violators are
subject to criminal and civil sanctions as well as an enhanced penalty
provision for subsequent offenses.
    Executive Order 13186, ``Responsibilities of Federal Agencies to