bear them and the economic practicability of them diminish. It is much
more expensive, and saves much less fuel, for a vehicle to improve from
40 to 50 mpg, than for a vehicle to improve from 15 to 20 mpg.\468\ If
obtaining the marginal benefits of new cars and their fuel economy
technologies becomes too expensive for consumers, some consumers will
choose to drive less efficient used vehicles longer.
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    \468\ As the base level of fuel economy improves, there are
fewer gallons to be saved from improving further. A typical
assumption is that vehicles are driven 15,000 miles per year. A
vehicle that improves from 30 mpg to 40 mpg reduces its annual fuel
consumption from 500 gallons/year to 375 gallons/year at 15,000
miles/year or by 125 gallons. A vehicle that improves from 15 mpg to
20 mpg, on the other hand, reduces its annual fuel consumption from
1,000 gallons/year to 750 gallons/year--twice as much as the first
example, even though the mpg improvement is only half as large.
Going from 40 to 50 mpg would save only 75 gallons/year at 15,000
miles/year. If fuel prices are high, the value of those gallons may
be sufficient to offset the cost of improving further, but (1) EIA
does not currently anticipate particularly high fuel prices in the
foreseeable future, and (2) as the baseline level of fuel economy
continues to increase, the marginal cost of the next gallon saved
similarly increases with the cost of the technologies required to
meet the savings.
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    NHTSA recognizes that the Ninth Circuit has previously held that
NHTSA must consider whether a ``backstop'' is necessary for the CAFE
standards based on the EPCA factors in 49 U.S.C. 32902(f), given that
the overarching purpose of EPCA is energy conservation.\469\ NHTSA and
EPA discussed the concept of backstops in the context of the modern
CAFE program (as opposed to the CAFE program at issue in the Ninth
Circuit decision) in the 2010 final rule establishing CAFE and GHG
standards for MYs 2012-2016. In that document, the agencies explained
that even if the statute did not preclude a backstop beyond what was
already provided for in the minimum domestic passenger car CAFE
standard and in the ``flat'' portions of the footprint curves at the
larger-footprint end, designing an appropriate backstop was likely to
be fairly complex and likely to undermine Congress' objective in
requiring attribute-based standards. See, particularly, 75 FR at 25369-
70 (May 7, 2010).
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    \469\ CBD v. NHTSA, 508 F.3d 508, 537 (9th Cir. 2007), opinion
vacated and superseded on denial of reh'g, 538 F.3d 1172 (9th Cir.
2008).
---------------------------------------------------------------------------

    As in 2010, NHTSA believes that additional backstop standards are
not necessary. The current proposal is based on the agency's best
current understanding of the need of the U.S. to conserve energy now
and going forward, in light of changed circumstances and balanced
against the other EPCA factors. We seek comment on how an additional
backstop standard might be constructed that addresses the concerns
raised in the 2010 final rule and that also does not obviate the
agency's assessment of what CAFE levels would be maximum feasible.
    We seek comment on all aspects of the above discussion.

B. EPA's Statutory Obligations and Why the Proposed Standards Appear To
Be Appropriate and Reasonable

1. Basis for the CO2 Standards Under Section 202(a) of the
Clean Air Act
    Title II of the Clean Air Act (CAA) provides for comprehensive
regulation of mobile sources, authorizing EPA to regulate emissions of
air pollutants from all mobile source categories. Under Section 202(a)
\470\ and relevant case law, as discussed below, EPA considers such
issues as technology effectiveness, its cost (both per vehicle, per
manufacturer, and per consumer), the lead time necessary to implement
the technology, and based on this the feasibility and practicability of
potential standards; the impacts of potential standards on emissions
reductions of both GHGs and non-GHGs; the impacts of standards on oil
conservation and energy security; the impacts of standards on fuel
savings by consumers; the impacts of standards on the auto industry;
other energy impacts; as well as other relevant factors such as impacts
on safety.
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    \470\ 42 U.S.C. 7521(a).
---------------------------------------------------------------------------

    This proposed rule would implement a specific provision from Title
II, section 202(a).\471\ Section 202(a)(1) of the Clean Air Act (CAA)
states that ``the Administrator shall by regulation prescribe (and from
time to time revise) . . . standards applicable to the emission of any
air pollutant from any class or classes of new motor vehicles . . . ,
which in his judgment cause, or contribute to, air pollution which may
reasonably be anticipated to endanger public health or welfare.'' If
EPA makes the appropriate endangerment and cause or contribute
findings, then section 202(a) authorizes EPA to issue standards
applicable to emissions of those pollutants. Indeed, EPA's obligation
to do so is mandatory: Coalition for Responsible Regulation, 684 F.3d
at 114; Massachusetts v. EPA, 549 U.S. at 533. Moreover, EPA's
mandatory legal duty to promulgate these emission standards derives
from ``a statutory obligation wholly independent of DOT's mandate to
promote energy efficiency.'' Massachusetts, 549 U.S. at 532.
Consequently, EPA has no discretion to decline to issue greenhouse
standards under section 202(a) or to defer issuing such standards due
to NHTSA's regulatory authority to establish fuel economy standards.
Rather, ``[j]ust as EPA lacks authority to refuse to regulate on the
grounds of NHTSA's regulatory authority, EPA cannot defer regulation on
that basis.'' Coalition for Responsible Regulation, 684 F.3d at 127.
---------------------------------------------------------------------------

    \471\ 42 U.S.C. 7521(a).
---------------------------------------------------------------------------

    Any standards under CAA section 202(a)(1) ``shall be applicable to
such vehicles . . . for their useful life.'' Emission standards set by
the EPA under CAA section 202(a)(1) are technology-based, as the levels
chosen must be premised on a finding of technological feasibility.
Thus, standards promulgated under CAA section 202(a) are to take effect
only after providing ``such period as the Administrator finds necessary
to permit the development and application of the requisite technology,
giving appropriate consideration to the cost of compliance within such
period'' (CAA section 202 (a)(2); see also NRDC v. EPA, 655 F. 2d 318,
322 (D.C. Cir. 1981)). EPA must consider costs to those entities which
are directly subject to the standards. Motor & Equipment Mfrs. Ass'n
Inc. v. EPA, 627 F. 2d 1095, 1118 (D.C. Cir. 1979). Thus, ``the
[s]ection 202(a)(2) reference to compliance costs encompasses only the
cost to the motor-vehicle industry to come into compliance with the new
emission standards.'' Coalition for Responsible Regulation, 684 F.3d at
128; see also id. at 126-27 (rejecting arguments that EPA was required
to consider or should have considered costs to other entities, such as
stationary sources, which are not directly subject to the emission
standards). EPA is afforded considerable discretion under section
202(a) when assessing issues of technical feasibility and availability
of lead time to implement new technology. Such determinations are
``subject to the

restraints of reasonableness,'' which ``does not open the door to
`crystal ball' inquiry.'' NRDC, 655 F. 2d at 328 (quoting International
Harvester Co. v. Ruckelshaus, 478 F. 2d 615, 629 (D.C. Cir. 1973)). In
developing such technology-based standards, EPA has the discretion to
consider different standards for appropriate groupings of vehicles
(``class or classes of new motor vehicles''), or a single standard for
a larger grouping of motor vehicles (NRDC, 655 F. 2d at 338). Finally,
with respect to regulation of vehicular greenhouse gas emissions, EPA
is not ``required to treat NHTSA's . . . regulations as establishing
the baseline for the [section 202(a) standards].'' Coalition for
Responsible Regulation, 684 F.3d at 127 (noting further that ``the
[section 202 (a)standards] provid[e] benefits above and beyond those
resulting from NHTSA's fuel-economy standards'').
    Although standards under CAA section 202(a)(1) are technology-
based, they are not based exclusively on technological capability. EPA
has the discretion to consider and weigh various factors along with
technological feasibility, such as the cost of compliance (see section
202(a)(2)), lead time necessary for compliance (section 202(a)(2)),
safety (see NRDC, 655 F.2d at 336 n. 31) and other impacts on
consumers,\472\ and energy impacts associated with use of the
technology (see George E. Warren Corp. v. EPA, 159 F.3d 616, 623-624
(D.C. Cir. 1998) (ordinarily permissible for EPA to consider factors
not specifically enumerated in the Act)).
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    \472\ Since its earliest Title II regulations, EPA has
considered the safety of pollution control technologies. See 45 FR
14496, 14503 (March 5, 1980). (``EPA would not require a particulate
control technology that was known to involve serious safety
problems. If during the development of the trap-oxidizer safety
problems are discovered, EPA would reconsider the control
requirements implemented by this rulemaking.'')
---------------------------------------------------------------------------

    In addition, EPA has clear authority to set standards under CAA
section 202(a) that are technology forcing when EPA considers that to
be appropriate but is not required to do so (as compared to standards
set under provisions such as section 202(a)(3) and section 213(a)(3)).
EPA has interpreted a similar statutory provision, CAA section 231, as
follows:

    While the statutory language of section 231 is not identical to
other provisions in title II of the CAA that direct EPA to establish
technology-based standards for various types of engines, EPA
interprets its authority under section 231 to be somewhat similar to
those provisions that require us to identify a reasonable balance of
specified emissions reduction, cost, safety, noise, and other
factors. See, e.g., Husqvarna AB v. EPA, 254 F.3d 195 (D.C. Cir.
2001) (upholding EPA's promulgation of technology-based standards
for small non-road engines under section 213(a)(3) of the CAA).
However, EPA is not compelled under section 231 to obtain the
``greatest degree of emission reduction achievable'' as per sections
213 and 202 of the CAA, and so EPA does not interpret the Act as
requiring the agency to give subordinate status to factors such as
cost, safety, and noise in determining what standards are reasonable
for aircraft engines. Rather, EPA has greater flexibility under
section 231 in determining what standard is most reasonable for
aircraft engines, and is not required to achieve a ``technology
forcing'' result.\473\
---------------------------------------------------------------------------

    \473\ 70 FR 69664, 69676 (Nov. 17, 2005).

    This interpretation was upheld as reasonable in NACAA v. EPA (489
F.3d 1221, 1230 (D.C. Cir. 2007)). CAA section 202(a) does not specify
the degree of weight to apply to each factor, and EPA accordingly has
discretion in choosing an appropriate balance among factors. See Sierra
Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003) (even where a provision
is technology-forcing, the provision ``does not resolve how the
Administrator should weigh all [the statutory] factors in the process
of finding the `greatest emission reduction achievable' ''); see also
Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. Cir. 2001) (great
discretion to balance statutory factors in considering level of
technology-based standard, and statutory requirement ``[to give]
appropriate consideration to the cost of applying . . . technology''
does not mandate a specific method of cost analysis); Hercules Inc. v.
EPA, 598 F. 2d 91, 106-07 (D.C. Cir. 1978) (``In reviewing a numerical
standard, we must ask whether the agency's numbers are within a `zone
of reasonableness,' not whether its numbers are precisely right'');
Permian Basin Area Rate Cases, 390 U.S. 747, 797 (1968) (same); Federal
Power Commission v. Conway Corp., 426 U.S. 271, 278 (1976) (same);
Exxon Mobil Gas Marketing Co. v. FERC, 297 F. 3d 1071, 1084 (D.C. Cir.
2002) (same).
    As noted above, EPA has found that the elevated concentrations of
greenhouse gases in the atmosphere may reasonably be anticipated to
endanger public health and welfare.\474\ EPA defined the ``air
pollution'' referred to in CAA section 202(a) to be the combined mix of
six long-lived and directly emitted GHGs: Carbon dioxide
(CO2), methane (CH4), nitrous oxide
(N2O), hydrofluorocarbons (HFCs), perfluorocarbons (PFCs),
and sulfur hexafluoride (SF6). The EPA further found under
CAA section 202(a) that emissions of the single air pollutant defined
as the aggregate group of these same six greenhouse gases from new
motor vehicles and new motor vehicle engines contribute to air
pollution. As a result of these findings, section 202(a) requires EPA
to issue standards applicable to emissions of that air pollutant. New
motor vehicles and engines emit CO2, CH4,
N2O, and HFC. EPA has established standards and other
provisions that control emissions of CO2, HFCs,
N2O, and CH4. EPA has not set any standards for
PFCs or SF6 as they are not emitted by motor vehicles.
---------------------------------------------------------------------------

    \474\ 74 FR 66496 (Dec. 15, 2009).
---------------------------------------------------------------------------

2. EPA's Tentative Conclusion That the Proposed CO2
Standards Are Appropriate and Reasonable
    In this section, EPA discusses the factors, data and analysis the
Administrator has considered in the selection of the EPA's proposed
revised GHG emission standards for MYs 2021 and later. EPA requests
comment on all aspects of the proposed revised standards, including all
Alternatives discussed in this section and section IV of this preamble.
    As discussed in Sections I and V.B of this preamble, the primary
purpose of Title II of the Clean Air Act is the protection of public
health and welfare. EPA's light-duty vehicle GHG standards serve this
purpose, as the GHG emissions from light-duty vehicles have been found
by EPA to endanger public health and welfare (see EPA's 2009
Endangerment Finding for on-highway motor vehicles), and the goal of
these standards is to reduce these emissions that contribute to climate
change.
    CAA section 202(a)(2) states when setting emission standards for
new motor vehicles, the standards ``shall take effect after such period
as the Administrator finds necessary to permit the development and
application of the requisite technology, giving appropriate
consideration to the cost of compliance within such period.'' 42 U.S.C.
7521(a)(2). That is, when establishing emissions standards, the
Administrator must consider both the lead time necessary for the
development of technology which can be used to achieve the emissions
standards and the resulting costs of compliance on those entities that
are directly subject to the standards.
    The Administrator is not limited to consideration of the factors
specified in CAA section 202(a)(2) when establishing standards for
light-duty vehicles. In addition to feasibility and cost of compliance,
the Administrator may (and historically has) considered such factors as
safety, energy use and security, degree of reduction of both GHG and
non-GHG pollutants,

technology cost-effectiveness, and costs and other impacts on
consumers. As discussed in prior rulemakings setting GHG
standards,\475\ EPA may establish technology-forcing standards under
section 202(a), but when it does so it must provide sufficient basis
for its belief that the industry can develop the needed technology in
the available time. However, EPA is not required to set technology-
forcing standards under section 202(a). Rather, because section 202(a),
unlike the text of section 202(a)(3) and section 213(a)(3),\476\ does
not specify that standards shall obtain ``the greatest degree of
emission reduction achievable,'' EPA retains considerable discretion
under section 202(a) in deciding how to weigh the various factors,
consistent with the language and purpose of the Clean Air Act, to
determine what standards are appropriate.
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    \475\ See, e.g., 77 FR 62624, 62673 (Oct. 15, 2012).
    \476\ Section 202(a)(3) provides that regulations applicable to
emissions of certain specified pollutants from heavy-duty vehicles
or engines ``shall contain standards which reflect the greatest
degree of emission reduction achievable through the application of
technology which the Administrator determines will be available . .
. giving appropriate consideration to cost, energy, and safety
factors associated with the application of such technology.'' 42
U.S.C. 7521(a)(3). Section 213(a)(3) contains a similar provision
for new nonroad engines and new nonroad vehicles (other than
locomotives or engines used in locomotives). 42 U.S.C. 7547(a)(3).
---------------------------------------------------------------------------

    The analysis of alternatives supports the Administrator's
consideration of a range of alternative standards, from the existing
standards to several alternatives that are less stringent.
Specifically, the analysis supports the consideration of this range of
alternative standards due to factors relevant under the EPA's authority
pursuant to section 202(a), such as GHG emissions reductions, the
necessary technology and associated lead-time, the costs of compliance
on automakers, the impact on consumers with respect to cost and vehicle
choice, and effects on safety. These factors, and the Administrator's
proposed conclusion, after consideration of these factors, indicate
that Alternative 1 represents the most appropriate standards for model
years 2021 and beyond are discussed further below.
(a) Consideration of the Development and Application of Technology To
Reduce CO2 Emissions
    When EPA establishes emissions standards under section 202, it
considers both what technologies are currently available and what
technologies under development may become available. For today's
proposal, EPA takes note of the analysis of the potential penetration
into the future vehicle fleet of a wide range of technologies that both
reduce CO2 and improve fuel economy (see PRIA Chapter 6).
The majority of these technologies have already been developed, have
been commercialized, and are in-use on vehicles today. These
technologies include, but are not limited to, engine and transmission
technologies, vehicle mass reduction technologies, technologies to
reduce the vehicles' aerodynamic drag, and a range of electrification
technologies. The electrification technologies include 12-Volt stop-
start systems, 48-Volt mild hybrids, strong hybrid systems, plug-in
hybrid electric vehicles, and dedicated electric vehicles.
    If the Administrator's consideration of the appropriateness of the
standards were based solely on an assessment of technology availability
and development, the Administrator might consider a wide range of
standards to be appropriate. As shown in Sections VII.B.2 and
VIII.B.1.b), and in PRIA Chapter 6.3.2, the projected penetration of
technologies varies across the Alternatives presented in today's
proposal. In general, the existing EPA standards are projected to
result in the highest penetration of advanced technologies, in
particular mild hybrid and strong hybrid technologies. Lower stringency
Alternatives in general are projected to result in lower penetration of
technologies, in particular for the mild hybrid and strong hybrid
technologies, with the Preferred Alternative projected to result in the
lowest level of electrification technology penetration. For example,
the existing CO2 standards are projected to require a
combined passenger car and truck fleet penetration of mild hybrids plus
strong hybrids of 58% of new vehicle sales in MY 2030, while
Alternative 8 projects a 34% penetration, Alternative 6 projects a 22%
penetration, Alternative 4 projects an 8% penetration, and the Proposed
Alternative (Alternative 1) projects a 4% penetration. These
technologies are available and in production today, and MY 2020 through
MY 2025 standards are still a number of years away. In light of the
wide range of existing technologies that have already been developed,
have been commercialized, and are in-use on vehicles today, including
those developed since the 2012 rule, technology availability,
development and application, if it were considered in isolation, is not
necessarily a limiting factor in the Administrator's selection of which
standards are appropriate within the range of the Alternatives
presented in this proposal. However, as described below, the
Administrator weighs technology availability along with several other
factors, including costs, emissions impacts, safety, and consumer
impacts in determining the appropriate standards under the Clean Air
Act.
(b) Consideration of the Cost of Compliance
    EPA is required to consider costs in compliance before setting
standards under section 202(a). Compared to the proposed standards, the
EPA MY 2020-2025 standards announced in 2012 would cost the automotive
industry an estimated total of $260 billion for the vehicles produced
from MY 2016 through MY 2029, as shown in Table VIII-9. The additional
per-vehicle technology costs for these previously-issued standards
would be an estimated $2,260 in MY 2030, relative to the proposed
standards, as shown in Table VIII-31 and Table VIII-32. Especially
considering the change in reference point, these costs are considerably
larger than EPA projected in 2012. Less stringent standards would be
less burdensome. For example, compared to the proposed standards,
Alternative 8 is projected to increase the per-vehicle cost by $1,510
(also in MY 2030), Alternative 6 increases the per-vehicle costs by
$1,120, and Alternative 4 increases the per-vehicle costs by $490.
(c) Consideration of Costs to Consumers
    In addition to the costs to the automotive industry described
above, which could be passed on to consumers, the analysis estimates
increased costs for the consumer for changes in maintenance, financing,
insurance, taxes, and other fees, as shown in Table VIII-31 and Table
VIII-32. Considering these additional costs, EPA's previously-issued
standards for MYs 2020-2025 would increase the projected per-vehicle
costs in MY 2030 to an estimated $2,810 relative to the proposed
standards, at a seven percent discount rate. The lower the increased
stringency of the Alternative, the lower the total per-vehicle costs
increase for the consumer. For example, Alternative 8 increases the
total costs for the consumer on a per-vehicle basis by $2,270 (in MY
2030 compared to the costs of the proposed standards), Alternative 6
increases the costs to the consumer by $1,400 per-vehicle, and
Alternative 4 increases the costs by $610 per-vehicle, all at a seven
percent discount rate.
    The analysis also projects the fuel savings for the vehicle owner
over the life of the vehicles that come with lower levels of
CO2 emissions. For example, as

shown in Table VIII-32 (at a seven percent discount rate), for the
previously-announced EPA standards for MYs 2021-2025 (in MY 2030
compared to the costs of the proposed standards), the analysis projects
a per-vehicle life-time fuel savings, including retail taxes, of $1,510
per vehicle, as well as an additional savings to the consumer from
rebound driving and time saved refueling the vehicle of $610 per
vehicle, for a total savings of $2,120. However, these savings to the
consumer are not enough to offset the accompanying projected $2,810
increase in consumer costs. Compared to the proposed standards, the
previously-issued EPA standards for MYs 2021-2025 would increase net
costs to consumers by $690 over the lifetime of the MY 2030 vehicles.
This imbalance between costs and fuel savings contrasts sharply with
what EPA projected in 2012 when setting those standards then, and the
fuel savings is considerably smaller (this is due in large part to
lower current and projected fuel prices). Also, relative to the
proposed standards, and over the lifetime of MY 2030 vehicles, the
projected net cost increase to consumers from adopting Alternative 8 is
$300, Alternative 6 projects a net cost increase to consumers of $100,
Alternative 4 projects a net savings to consumers of $60, and
Alternative 2 projects a net savings to consumers of $10.
(d) Consideration of GHG Emissions
    As discussed above, the purpose of CO2 standards
established under CAA Section 202 is to reduce GHG emissions, which
contribute to climate change. As shown in Table VIII-34, the analysis
projects that, compared to the baseline standards, the proposed
CO2 standards for MYs 2021-2026 would increase vehicle
CO2 emissions by 713 million metric tons (MMT) over the
lifetime of the vehicles produced from MY 1979 through MY 2029, with an
additional 159 MMT in CO2 reduction from upstream sources
for a total increase of 872 MMT. The modeling of proposed revised and
alternative standards projects that more stringent standards will
result in smaller increases in GHG emissions (also compared to the
baseline standards. Compared to the baseline standards, Alternative 8
is projected to increase CO2 emissions by 264 MMT from
combined vehicle tailpipe and upstream reductions over the lifetime of
the vehicles produced through MY 2029. Alternative 6 is projected to
increase CO2 emissions by 422 MMT, Alternative 4 by 649 MMT
of CO2, and Alternative 2 by 825 MMT of CO2.\477\
As noted above, the purpose of Title II emissions standards is to
protect the public health and welfare, and in establishing emissions
standards the Administrator is cognizant of the importance of this
goal. At the same time, as discussed above, unlike other provisions in
Title II, Section 202(a) does not require the Administrator to set
standards which result in the greatest degree of emissions control
achievable, though the Administrator has the discretion to do so. Thus,
in setting these standards, the Administrator takes into consideration
other factors discussed above and below, including not only
technological feasibility, lead-time, and the cost of compliance but
also potential impacts of vehicle emission standards on safety and
other impacts on consumers. Notwithstanding the fact that GHG emissions
reductions would be lower under today's proposal than for the existing
EPA standards, in light of the new assessment indicating higher vehicle
costs and associated impacts on consumers, and safety impacts, the
Administrator believes from a cost/benefit perspective that the
foregone GHG emission reduction benefits from the proposed standards
are warranted.
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    \477\ This preamble and the PRIA document estimates annual GHG
emissions from light-duty vehicles under the baseline CO2
standards, the proposed standards, and the standards defined by each
of the other regulatory alternatives under consideration. For the
final rule issued in 2012, EPA estimated changes in atmospheric
CO2, global temperature, and sea level rise using GCAM
and MAGICC with outputs from its OMEGA model. Because the agencies
are now using the same model and inputs, outputs from NHTSA's DEIS
(that also used GCAM and MAGICC) were analyzed. Today's analysis
estimates that annual GHG emissions from light-duty vehicles under
the CO2 standards defined by each regulatory alternative
would be within about one percent of emissions under the
corresponding CAFE standards. Especially considering the
uncertainties involved in estimating future climate impacts, the
very similar estimates of future GHG emissions under CO2
standards and corresponding CAFE standards means that climate
impacts presented in NHTSA's draft EIS represent well the potential
climate impacts of the proposed and alternative CO2
standards.
---------------------------------------------------------------------------

(e) Consideration of Consumer Choice
    As discussed previously, the EPA CO2 standards are based
on vehicle footprint, and in general smaller footprint vehicles have
individual CO2 targets that are lower (more stringent) than
larger footprint vehicles. The passenger car fleet has footprint curves
that are distinct from the light-truck fleet. One of the goals EPA had
in designing the program with footprint-based standards, in considering
the shape, slope, and stringency of the footprint standard curves, and
in adopting many compliance flexibilities (e.g., the emissions
averaging, banking, and trading program; air-conditioning program
credits; flexibility in how to comply with the N2O and
methane standard; off-cycle credit program, etc.) was to maintain
consumer choice. The EPA standards are designed to require reductions
of CO2 emissions over time from the vehicle fleet as a whole
but also to provide sufficient flexibility to the automotive
manufacturers so that firms can produce vehicles which serve the needs
of their customers. EPA believes the past several model years in the
market place show the benefits of this approach. Automotive companies
have been able to reduce their fleet-wide CO2 emissions
while continuing to produce and sell the many diverse products that
serve the needs of consumers in the market, e.g., full-size pick-up
trucks with high towing capabilities, minivans, cross-over vehicles,
SUVs, and passenger cars; vehicles with off-road capabilities; luxury/
premium vehicles, supercars, performance vehicles, entry level
vehicles, etc.
    At the same, the Administrator recognizes that automotive customers
are a diverse group, that automotive companies do not all compete for
the same segments of the market, and that increasing stringency in the
standards can be expected to have different effects not just on certain
vehicle segments but on certain manufacturers who have developed market
strategies around those vehicle segments. The Administrator further
recognizes that the diversity of the automotive customer base, combined
with the analysis, raises concerns that the existing standards, if they
are not adjusted, may not continue to fulfill the agency's goal of
providing sufficient manufacturer flexibility to meet consumer needs
and consumer choice preferences. The analysis projects that high
penetrations of hybridized vehicles would be required to achieve the
previously-issued EPA MYs 2021-2025 standards, specifically 37% mild
hybrid penetration and 21% strong hybrids for the new vehicle fleet in
MY 2030 (See Table VIII-24). For the passenger car fleet, the
projection is 20% mild hybrid and 24% strong hybrid, and for the light-
truck fleet 56% mild hybrid and 17% strong hybrid (See Table VIII-26
and Table VIII-28).
    The Administrator is concerned that this projected level of
hybridization, and the associated vehicle costs, arising from the
existing standards may be too high from a consumer-choice perspective.
While consumers have benefited from improvements over several decades
in traditional vehicle technologies, such as advancements in

transmissions and internal combustion engines, advanced electrification
technologies are a departure from what consumers have traditionally
purchased. Strong hybrid and other advanced electrification
technologies have been available for many years (20 years for strong
hybrids and eight years for plug-in and all electric vehicles), and
sales levels have been relatively low, on the order of two to three
precent per year for strong hybrids.\478\ As discussed above, the
analysis projects that the 2012 EPA standards are projected to require
a significant increase in hybridization over the next 7 to 12 model
years. This large increase may require automotive companies to change
the choice of vehicle types and the utility of the vehicles available
to customers from what the companies would otherwise offer in the
absence of the existing standards.
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    \478\ Light-Duty Automotive Technology, Carbon Dioxide
Emissions, and Fuel Economy Trends: 1975 Through 2017, U.S. EPA
Table 5.1 (Jan. 2018), available at https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100TGDW.pdf.
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    EPA notes that in the EPA's annual Manufacturer Performance Report
on the compliance status of the automotive companies for the EPA GHG
standards, EPA has reported that emissions trading has occurred a
number of times in the past several years.\479\ Through MY 2016, these
trades have included 12 firms, with five firms trading CO2
credits to seven firms, and thus far in the EPA GHG program credits
generated in MY 2010 through MY 2016 have been traded. This represents
about one-half of the automotive companies selling vehicles in the U.S.
market, but since several of these firms are small players, it is less
than half of the volume. In total, approximately 30 million Megagrams
of CO2 have been traded between firms, which is
approximately 10% of the MY 2016 industry-wide bank of credits. Credit
trading between firms can lower the costs of compliance for firms, both
for those selling and those purchasing credits, and this program
compliance flexibility is another tool by which auto firms can provide
the types of vehicle offerings that customers want. However, long-term
planning is an important consideration for automakers, and an OEM who
may want to purchase credits as part of a future compliance strategy
cannot be guaranteed they will be able to find credits.
---------------------------------------------------------------------------

    \479\ See Greenhouse Gas Emission Standards for Light-Duty
Vehicles: Manufacturer Performance Report for the 2016 Model Year
(EPA Report 420-R18-002), U.S. EPA (Jan. 2018), available at https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P100TGIA.pdf.
---------------------------------------------------------------------------

    The automotive industry is highly competitive, and firms may be
reluctant to base their future product strategy on an uncertain future
credit availability. As can be seen in Table VIII-24, the analysis
projects that lower levels of stringency (Alternatives 1-8) will
require lower penetrations of mild hybrids and strong hybrids as
compared to the 2012 EPA standards. For example, Alternative 8 projects
a 34% penetration of mild and strong hybrid new vehicle sales in MY
2030, Alternative 6 projects a 22% penetration of these technologies,
Alternative 4 projects an eight percent penetration, and Alternative 2
projects a four percent penetration of mild and strong hybrids in MY
2030. The EPA proposal, Alternative 1, projects a two percent
penetration of mild hybrids and a two percent penetration of strong
hybrids. These are levels similar to what auto manufacturers are
selling today, suggesting that auto companies will be able to produce
vehicles in the future that meet the full range of needs from
consumers, thus preserving consumer choice.
(f) Consideration of Safety
    EPA has long considered the effects on safety of its emission
standards. See 45 FR 14496, 14503 (1980) (``EPA would not require a
particulate control technology that was known to involve serious safety
problems.''). More recently, EPA has considered the potential impacts
of emissions standards on safety in past rulemakings on GHG standards,
including the 2010 rule which established the 2012-2016 light-duty
vehicle GHG standards, and the 2012 rule which previously established
the 2017-2025 light-duty vehicle GHG standards. Indeed, section
202(a)(4)(A) specifically prohibits the use of an emission control
device, system or element of design that will cause or contribute to an
unreasonable risk to public health, welfare, or safety. 42 U.S.C.
7521(a)(4)(A).
    The proposal's safety analysis projects that the 2012 EPA GHG
standards for MYs 2021 and later would increase vehicle fatalities due
to several reasons, namely increased vehicle prices resulting in
delayed turnover of the vehicle fleet to newer, safer vehicles,
increased fatalities and accidents due the rebound effect, and
passenger car mass reduction. The assessment is discussed in Section 0
of this preamble and is detailed in Chapter 11 of the PRIA. The
assessment projects that Alternative 1, which includes no change in the
GHG emissions standards for MY 2021 and later, would yield the lowest
number of vehicle fatalities. The analysis projects that, compared to
the proposed standards, the previously-issued EPA standards would
increase highway fatalities by 15,680 over the lifetime of vehicles
produced through MY 2029 (See Table VII-89).
    EPA views the potential impacts of emission standards on safety as
an important consideration in determining the appropriate standards
under section 202. The analysis projects adverse impacts on safety that
are significantly different from the analysis included and considered
in the 2012 rule which established the MY 2021-25 GHG standards and the
2016 Draft Technical Assessment Report. As discussed previously in this
document, previous analyses limited the amount of mass reduction
assumed for certain vehicles, while acknowledging that manufacturers
would not necessarily choose to avoid mass reductions in the ways that
the agencies assumed. The current analysis eliminates this constraint.
The Administrator considers this difference to be a significant factor
indicating that it is appropriate to consider a range of alternative
revised standards, including Alternative 1, the preferred alternative.
(g) Balancing of Factors and EPA's Proposed Revised Standards for MY
2021 and Later
    As discussed in this section, the Administrator is required to
consider a number of factors when establishing emission standards under
Section 202(a)(2) of the Clean Air Act: The standards ``shall take
effect after such period as the Administrator finds necessary to permit
the development and application of the requisite technology, giving
appropriate consideration to the cost of compliance within such
period.'' 42 U.S.C. 7521(a)(2). For this proposal, the Administrator
has considered a wide range of potential emission standards
(Alternatives 1 through 9), ranging from the existing EPA MY 2021 to MY
2025 standards, through a number of less stringent alternatives,
including Alternative 1, the preferred Alternative. In addition to
technological feasibility, lead-time, and the costs of compliance, the
Administrator has also considered the impact of various standards on
projected emissions reductions, consumer choice, and vehicle safety.
The Administrator believes the existing EPA standards for MY 2021 and
later, considered as a whole, are too stringent. The Administrator
gives particular consideration to the high projected costs of the
standards and the impact of the standards on vehicle safety. The
analysis projects that, compared to the proposed standards, the
previously-

issued EPA standards for MYs 2021-2025 would increase MY 2030
compliance costs by nearly $1,900 per vehicle. Although EPA projected a
similar cost \480\ increase in the 2012 rule announcing standards
through 2025, this prior estimate was relative to an indefinite
continuation of standards for MY 2016, and assuming that absent
regulation, manufacturers would not increase fuel economy at all. In
addition, as mentioned above, the analysis projects that, compared to
the proposed standards, the previously-issued EPA standards would
increase highway fatalities by 12,903 over the lifetime of vehicles
produced through MY 2029. In evaluating the other Alternatives under
consideration, the Administrator notes that Alternative 1 has the
lowest cost of compliance and the lowest number of fatalities. He also
notes that Alternative 1 will preserve consumer choice in the vehicle
market and will provide a relatively high net savings to consumers,
when assessing the increased costs of vehicles against fuel savings
over the lifetime of the vehicle.
---------------------------------------------------------------------------

    \480\ 77 FR 62624, 62665 (Oct. 15, 2012).
---------------------------------------------------------------------------

    The Administrator recognizes that Alternative 1 is projected to
result in less CO2 reductions compared to the existing EPA
standards and is not projected to achieve additional GHG reductions
beyond the MY 2020 standards. However, the Administrator notes that,
unlike other provisions in Title II referenced above, section 202(a)
does not require the Administrator to set standards which result in the
``greatest degree of emissions control achievable.'' In light of this
statutory discretion and the range of factors that the statute
authorizes and permits the Administrator to consider, and his
consideration of the factors discussed above, the EPA proposes to
conclude that maintaining the MY 2020 standards going forward is an
appropriate approach under section 202(a). Therefore, based on the data
and analysis detailed in this proposal, the Administrator is proposing
that the existing MY 2021 and later GHG standards are too stringent and
is proposing to revise the MY 2021 and later standards to maintain the
MY 2020 levels in subsequent model years. EPA requests comment on all
aspects of this proposal and supporting assessments, including the
Administrator's consideration of the relevant factors under section
202(a) of the Clean Air Act, the proposed Alternative 1, the
previously-established EPA GHG standards, and all of the Alternatives
discussed in section IV of this preamble.

VI. Preemption of State and Local Laws

    Accomplishing the goals of EPCA requires a set of uniform national
fuel economy standards. Achieving this national standard requires the
agencies to clearly discuss the extent to which state and local
standards are expressly or impliedly preempted. As described herein,
doing so is fundamental to the effectiveness of the new proposed set of
fuel economy standards and to the critical importance of ensuring that
the proposed Federal standards will constitute uniform national
requirements, as Congress intended. This is also a fundamental reason
that EPA is proposing the withdrawal of CAA preemption waivers granted
to California relating to its GHG standards and Zero Emissions Vehicle
(ZEV) mandate.

A. Preemption Under the Energy Policy and Conservation Act

1. History of EPCA Preemption Discussions in Rulemakings
    NHTSA has asserted the preemption of certain State emissions
standards under EPCA a number of times in CAFE rulemakings dating back
to 2002.\481\ The initial rulemaking discussion was prompted by a court
filing by the State of California claiming that NHTSA did not treat
California's Greenhouse Gas Emissions regulation as preempted.\482\
This continuous dialogue involves a variety of parties (i.e., the
states, the Federal government--especially EPA--and the general public)
and occurs through a variety of means, including several rulemaking
proceedings. After NHTSA first raised the issue of preemption in 2002
when proposing standards for MYs 2005-2007 light trucks, the agency
explored preemption at great length in response to extensive public
comment in its August 2005 NPRM and its April 2006 final rule for MYs
2008-2011 light trucks.
---------------------------------------------------------------------------

    \481\ 67 FR 77025 (December 16, 2002).
    \482\ See Appellants Opening Brief filed on behalf Michael P.
Kenny in Central Valley Chrysler-Plymouth, Inc. et al. v. Michael P.
Kenny, No. 02-16395, at p. 33 (9th Cir. 2002).
---------------------------------------------------------------------------

    During the period between the NPRM and the final rule for MYs 2008-
2011 light trucks, California separately requested that the EPA grant a
waiver of CAA preemption, pursuant to Section 209 of that act, for its
Greenhouse Gas Emissions regulation. If EPA granted the waiver, the CAA
would under certain circumstances allow other states to adopt the same
regulation pursuant to CAA Section 177, without being preempted by the
CAA.
    In 2007, the Supreme Court ruled in Massachusetts v. EPA that
carbon dioxide is an ``air pollutant'' within the meaning of the CAA
and thus potentially subject to regulation under that statute. The
Supreme Court did not consider the issue of preemption under EPCA of
state laws or regulations regulating CO2 tailpipe emissions
from automobiles, but it did address the relationship between EPA and
NHTSA rulemaking obligations.\483\ Later that year, two Federal
district courts in Vermont and California ruled that the GHG motor
vehicle emission standards adopted by those states were not preempted
under EPCA.\484\ Still later that year, Congress enacted EISA, amending
EPCA by mandating annual increases in passenger car and light truck
CAFE standards through MY 2020 and maximum feasible fuel economy
standards subsequently.\485\
---------------------------------------------------------------------------

    \483\ The Court reasoned that the fact that NHTSA ``sets mileage
standards in no way licenses EPA to shirk its environmental
responsibilities. EPA has been charged with protecting the public's
`health' and `welfare,' . . . a statutory obligation wholly
independent of DOT's mandate to promote energy efficiency. . . . The
two obligations may overlap, but there is no reason to think the two
agencies cannot both administer their obligations and yet avoid
inconsistency.'' Massachusetts v. EPA, 549 U.S. 497, 532 (2007).
    \484\ Green Mountain Chrysler v. Crombie, 508 F.Supp.2d 295 (D.
Vt. 2007); Central Valley Chrysler-Jeep, Inc. v. Goldstene, 529
F.Supp.2d 1151 (E.D. Cal. 2007), as corrected (Mar. 26, 2008).
    \485\ Public Law 110-140 (2007).
---------------------------------------------------------------------------

    In March 2008, EPA denied California's request for a waiver of CAA
preemption.\486\ In May 2008, NHTSA issued a proposal for MYs 2011-2015
standards, which included a significant discussion of EPCA preemption
and a proposed regulatory statement to provide that state vehicle
tailpipe CO2 standards are related to fuel economy and
therefore expressly preempted under EPCA, and that they conflict with
the goals and objectives of EPCA and therefore also impliedly
preempted.\487\ The Bush Administration did not issue a final rule for
MYs 2011-2015.
---------------------------------------------------------------------------

    \486\ 73 FR 12156 (Mar. 6, 2008).
    \487\ 73 FR 24352 (May 2, 2008).
---------------------------------------------------------------------------

    A number of significant actions happened in quick succession at the
beginning of the prior Administration. The first day post-inauguration,
CARB petitioned for reconsideration of EPA's denial of a waiver of CAA
preemption for California's GHG emissions standards for 2009 and later
model year vehicles.\488\ Several days later, on January 26, 2009,
President Obama issued a memorandum requesting, among other things
(including

consideration of EPCA preemption in light of Massachusetts v. EPA and
other laws), that NHTSA's rulemaking be divided into two parts--one
regulation establishing standards for model year 2011 only, and another
for subsequent years. Less than two months after that memorandum, on
March 6, 2009, NHTSA issued its final rule for MY 2011 vehicles and
announced that it would consider EPCA preemption in subsequent
rulemakings.\489\ Then, on May 19, 2009, the White House announced a
coordinated program addressing motor vehicle fuel economy and
greenhouse gas emissions, to be known as the ``National Program,''
whereby NHTSA and EPA would jointly establish rules to harmonize
compliance requirements for manufacturers. As part of the National
Program, several manufacturers and their trade associations announced
their commitment to take several actions, including agreeing not to
contest forthcoming CAFE and GHG standards for MYs 2012-2016; not to
challenge any grant of a CAA preemption waiver for California's GHG
standards for certain model years; and to stay and then dismiss all
pending litigation challenging California's regulation of GHG
emissions, including litigation concerning EPCA preemption of state GHG
standards.\490\
---------------------------------------------------------------------------

    \488\ For background on CARB's petition, see EPA's Notice of
Decision Granting a Waiver of Clean Air Act Preemption for
California's 2009 and Subsequent Model Year Greenhouse Gas Emission
Standards for New Motor Vehicles, 74 FR 32744 (Jul. 8, 2009).
    \489\ 74 FR 14196 (Mar. 6, 2009).
    \490\ 75 FR 25324, 25328 (May 7, 2010).
---------------------------------------------------------------------------

    Less than two months later, in July 2009, EPA granted California's
January 2009 request for reconsideration of the CAA preemption waiver
denial, allowing California to establish its own GHG standards under
the CAA.\491\ In granting the preemption waiver, EPA acknowledged that
its analysis was based solely on CAA considerations and did not
``attempt to interpret or apply EPCA,'' concluding that ``EPA takes no
position regarding whether or not California's GHG standards are
preempted under EPCA.'' \492\
---------------------------------------------------------------------------

    \491\ 74 FR 32744 (Jul. 8, 2009).
    \492\ 74 FR at 32783 (Jul. 8, 2009).
---------------------------------------------------------------------------

    In the subsequent MYs 2012-2016 CAFE rulemaking, NHTSA elected to
defer consideration of EPCA preemption concerns because of the
``consistent and coordinated Federal standards that apply nationally
under the National Program.'' \493\ Later, in establishing MYs 2017-
2021 CAFE standards, NHTSA pointed out that after finalization of the
MYs 2012-2016 CAFE standards, California amended its GHG regulations to
provide that manufacturers could elect to comply with the EPA GHG
requirements and be deemed to comply with California's standards, and
that this amendment facilitated the National Program by allowing a
manufacturer to ``meet all standards with a single national fleet.''
\494\ NHTSA, at the time, erroneously saw this as obviating
consideration of EPCA preemption. At the same time, the agency did not
address whether California's ZEV program would be preempted since it
has never been part of the National Program.
---------------------------------------------------------------------------

    \493\ 75 FR 25324, 25546 (May 7, 2010); see also 74 FR 49454,
49635 (Sep. 28, 2009).
    \494\ 76 FR 74854, 74863 (Dec. 1, 2011).
---------------------------------------------------------------------------

2. Preemption Analysis
    Present circumstances require NHTSA to address the issue of
preemption. Despite past attempts by NHTSA and EPA to harmonize their
respective and related regulations, the automotive industry and U.S.
consumers now face regulatory uncertainty and increased costs, in no
small part as a result of California's separate GHG emissions and ZEV
program. NHTSA and EPA now seek to address these concerns with this
rulemaking proposal, in the interest of regulatory certainty and the
clear prospect for disharmony with conflicting state requirements.\495\
NHTSA is also guided by a desire to obtain comments from state and
local officials and other members of the public to inform fully the
agency's position on this important issue.\496\
---------------------------------------------------------------------------

    \495\ While California's ``deem to comply'' provision provided
some temporary relief from three different sets of standards, its
regulations still mandate that some manufacturers comply with
burdensome filing requirements and California may act to revoke the
provision. In fact, California is already seeking comment on
potentially changing the regulation to provide that manufacturers
would only be deemed to comply with CARB requirements if meeting the
currently-final EPA standards. See https://www.arb.ca.gov/msprog/levprog/leviii/leviii_dtc_notice05072018.pdf (last accessed May 17,
2018). Moreover, the ``deem to comply'' provision applies only to
tailpipe CO2 emissions requirements--not to the ZEV
program.
    \496\ See also E.O. 13132 (Federalism); E.O. 12988 sec.
3(b)(1)(B) (Civil Justice Reform); 54 FR 11765 (Mar. 22, 1989); 58
FR 68274 (Dec. 23, 1993); and 70 FR 21844 (Apr. 27, 2005).
---------------------------------------------------------------------------

(a) EPCA Preemption
    EPCA's express preemption language is broad and clear:

    When an average fuel economy standard prescribed under this
chapter is in effect, a State or a political subdivision of a State
may not adopt or enforce a law or regulation related to fuel economy
standards or average fuel economy standards for automobiles covered
by an average fuel economy standard under this chapter.\497\
---------------------------------------------------------------------------

    \497\ 49 U.S.C. 32919.

    Unlike the CAA, EPCA does not allow for a waiver of preemption. Nor
does EPCA allow for states to establish or enforce an identical or
equivalent regulation. In a further indication of Congress' intent to
ensure that state regulatory schemes do not impinge upon EPCA's goals,
the statute preempts state laws merely related to fuel economy
standards or average fuel economy standards. Here, NHTSA intends to
assert preemption only over state requirements that directly affect
corporate average fuel economy.
    The Supreme Court has interpreted similar statutory preemption
language on several occasions, concluding that a state law ``relates
to'' a Federal law if it ``has a connection with or refers to'' the
subject of the Federal law.\498\ The Court, citing similar Federal
statutory language, extended the application of the ``related to''
standard to the Airline Deregulation Act in Morales v. Trans World
Airlines, Inc.,\499\ concluding that,'' [f]or purposes of the present
case, the key phrase, obviously, is `relating to.' The ordinary meaning
of these words is a broad one--`to stand in some relation; to have
bearing or concern; to pertain; refer; to bring into association with
or connection with,' . . .--and the words thus express a broad pre-
emptive purpose.'' \500\ Courts look ``both to the objectives of the .
. . statute as a guide to the scope of the state law that Congress
understood would survive, [and] to the nature of the effect of the
state law on [the Federal standards].'' \501\
---------------------------------------------------------------------------

    \498\ Shaw v. Delta Airlines, Inc., 463 U.S. 85, 97 (1983)
(ERISA case).
    \499\ 504 U.S. 374, 383-84 (1992).
    \500\ Id. at 383.
    \501\ California Div. of Labor Standards Enforcement v.
Dillingham Constr., N.A., Inc., 519 U.S. 316, 325 (1997), (quoting
N.Y Conference of Blue Cross & Blue Shield Plans v. Travelers Ins.
Co., 514 U.S. 645, 656 (1995)).
---------------------------------------------------------------------------

    One of Congress' objectives in EPCA was to create a national fuel
economy standard, as clearly expressed in 49 U.S.C. 32919(a). In
addition to the statute's plain language, which controls, the
legislative history of that provision further confirms that Congress
intended the provision to be broadly preemptive. As Congress debated
proposals that would eventually become EPCA, the Senate bill \502\
sought to preempt State laws only if they were ``inconsistent'' with
Federal fuel economy standards, labeling, or advertising, while the
House bill \503\ sought to preempt State laws only if they were not
``identical to'' a Federal requirement. The express preemption
provision, as enacted, preempts all State laws that relate to fuel
economy standards. No exception is made for State laws on the ground
that

they are consistent with or identical to Federal requirements.\504\
---------------------------------------------------------------------------

    \502\ S. 1883, 94th Cong., 1st Sess., Section 509.
    \503\ H.R. 7014, 94th Cong., 1st Sess., Section 507 as
introduced, Section 509 as reported.
    \504\ See 71 FR 17566, 17657 (April 6, 2006).
---------------------------------------------------------------------------

    In enacting EISA, Congress did not repeal or amend EPCA's express
preemption provision. Congress did, however, adopt a savings provision
regarding the effect of EISA, and the amendments made by it:

Nothing in this Act or an amendment made by this Act supersedes,
limits the authority provided or responsibility conferred by, or
authorizes any violation of any provision of law (including a
regulation), including any energy or environmental law or
regulation.

    We understand this statutory language to prevent EISA from limiting
pre-existing authority or responsibility conferred by any law or from
authorizing violation of any law. By the same token, the savings
provision does not purport to expand pre-existing authority or
responsibility. Thus, to the extent that EPCA's express preemption
provision limited State authority and responsibility prior to the
enactment of EISA, it continues to limit such authority and
responsibility to the same extent after the enactment of EISA. We
recognize that the Congressional Record contains statements regarding
the savings provision indicating that certain members of Congress may
have considered this language as allowing California to set tailpipe
GHG emissions standards in contravention of EPCA's express preemption
provision. Note, however, that statements made on the floor of the
Senate or House before the votes on EISA cannot expand the scope of the
savings provision or even be used to ``clarify'' it, given the
unambiguous plain meaning of both the savings provision and EPCA's
express preemption provision. If Congress had wanted to narrow the
express preemption provision, it could have chosen to include such an
amendment in EISA. It did not.
(b) Tailpipe CO2 Emissions Regulations or Prohibitions are
Related to Fuel Economy Standards
    This broad statutory preemption provision also necessarily governs
state regulations over greenhouse gas emissions. GHG emissions, and
particularly CO2 emissions, are mathematically linked to
fuel economy; therefore, regulations limiting tailpipe CO2
emissions are directly related to fuel economy.\505\ To summarize, most
light vehicles are powered by gasoline internal combustion engines. The
combustion of gasoline produces CO2 in amounts that can be
readily calculated. CO2 emissions are always and directly
linked to fuel consumption because CO2 is a necessary and
inevitable byproduct of burning gasoline. The more fuel a vehicle burns
or consumes, the more CO2 it emits. To the extent that light
vehicles are not powered by internal combustion engines, their use
generally involves some release of CO2 or other GHG
emissions, even if indirectly, associated with the vehicle performing
its work of traveling down the road. CNG and LPG vehicles release
CO2 during combustion. Even for battery-electric vehicles,
fossil fuels are used in at least some part of production of
electricity in virtually all parts of the country, and that electricity
is used to move the vehicles. And with hydrogen vehicles, methane
remains a major part of the generation of hydrogen fuel, which is also
used to move those vehicles. Carbon dioxide is thus a byproduct of
moving virtually if not literally all light-duty vehicles, and the
amount of CO2 released directly correlates to the amount of
fossil fuels used to power the vehicle so it can move.
---------------------------------------------------------------------------

    \505\ 71 FR at 17659, et seq.
---------------------------------------------------------------------------

    EPCA has specified since its inception that compliance with CAFE
standards is to be determined in accordance with test and calculation
procedures established by EPA.\506\ More specifically, the tests are to
be performed using ``the same procedures for passenger automobiles the
Administrator used for model year 1975 . . . procedures that give
comparable results.'' Under these procedures, compliance with the CAFE
standards is and has always been based on the rates of emission of
CO2, CO, and hydrocarbons from covered vehicles, but
primarily on the emission rates of CO2. In the measurement
and calculation of a given vehicle model's fuel economy for purposes of
determining a manufacturer's compliance with Federal fuel economy
standards, the role of CO2 is approximately 100 times
greater than the combined role of the other two relevant carbon exhaust
gases. Given that the amount of CO2, CO, and hydrocarbons
emitted from a vehicle's tailpipe relates directly to the amount of
fuel it consumes, EPA can reliably and accurately convert the amount of
those gases emitted by that vehicle into the miles per gallon achieved
by that vehicle. In recognizing that 1975 test procedures were
sufficient to measure fuel economy performance, Congress recognized the
direct relationship between CO2 emissions and fuel economy
standards, while in the same piece of legislation expressly preempting
state standards that are related to fuel economy standards, when
Federal fuel economy standards are in place.
---------------------------------------------------------------------------

    \506\ 49 U.S.C. 32904(c).
---------------------------------------------------------------------------

    In mandating Federal fuel economy standards under EPCA, Congress
has expressly preempted any state laws or regulations relating to fuel
economy standards. A state requirement limiting tailpipe CO2
emissions is such a law or regulation because it has the direct effect
of regulating fuel consumption.
    Given that substantially reducing CO2 tailpipe emissions
from automobiles is unavoidably and overwhelmingly dependent upon
substantially increasing fuel economy through installation of engine
technologies, transmission technologies, accessory technologies,
vehicle technologies, and hybrid technologies, increases in fuel
economy inevitably produce commensurate reductions in CO2
tailpipe emissions. Since there is but one pool of technologies \507\
for reducing tailpipe CO2 emissions and increasing fuel
economy available now and for the foreseeable future, regulation of
CO2 emissions and fuel consumption are inextricably linked.
Such state regulations are therefore unquestionably ``related'' and
expressly preempted under 49 U.S.C. 32919.
---------------------------------------------------------------------------

    \507\ With the minor exception of regulating the carbon
intensity of fuels--an activity not preempted by EPCA.
---------------------------------------------------------------------------

    Moreover, state standards that have the effect of regulating
tailpipe CO2 emissions or fuel economy are likewise related
to fuel economy standards and likewise preempted. For instance, if a
state were to regulate all tailpipe GHG emissions from a vehicle, and
not just CO2, the state would nonetheless regulate tailpipe
CO2 emissions, since CO2 emissions comprise the
overwhelming majority of tailpipe carbon emissions. EPCA preempts such
a standard.
    Likewise, a state law prohibiting all tailpipe emissions, carbon or
otherwise, from some or all vehicles sold in the state, would relate to
fuel economy standards and be preempted by EPCA, since the majority of
tailpipe emissions consist of CO2. We recognize that this
preempts state programs, such as California's ZEV mandate, that
establish requirements that a portion of a vehicle's fleet sold or
purchased consist of vehicles that produce no tailpipe emissions.
(c) Other GHG Emissions Requirements May Not Be Preempted by EPCA
    While EPCA expressly preempts state tailpipe CO2
emission limits, some GHG emissions from vehicles have no

relation to fuel economy and are therefore outside the scope of EPCA
preemption. For instance, vehicle air conditioning units can cause GHG
emissions by leaking refrigerants when the system is recharged or when
it is crushed at the end of the vehicle's life. Since such emissions
have no bearing on a vehicle's fuel economy performance or tailpipe
CO2 emissions, states can pass laws specifically regulating
or even prohibiting such vehicular refrigerant leakage without relating
to fuel economy if doing so would be otherwise consistent with Federal
law. Therefore, EPCA would not preempt such laws, if narrowly drafted
so as not to include tailpipe CO2 emissions. If, however, a
state law sought to limit the combined GHG emissions from a motor
vehicle, in a manner that would include tailpipe CO2
emissions, EPCA would preempt that portion of the law limiting tailpipe
CO2 emissions.
    Similarly, state safety requirements may have a merely incidental
impact on fuel economy and not relate to fuel economy. For instance, a
state may mandate that children traveling in motor vehicles sit in
child safety seats. Child safety seats add weight, and added weight has
an impact on fuel economy. This impact is merely incidental, however,
and does not directly relate to fuel economy standards.
    Likewise, EPA has recognized that California may apply for a waiver
of CAA preemption for vehicle emissions, which must be granted in
certain circumstances. That said, EPCA does preempt any regulation
limiting or prohibiting CO2 emissions or all tailpipe
emissions, as such regulations have the effect of regulating
CO2 emissions and relate to fuel economy standards.\508\
---------------------------------------------------------------------------

    \508\ NHTSA notes that over the last decade CARB has complicated
its regulation of smog-forming emissions (the original purpose of
the Section 209 CAA waiver) by combining it with regulation of GHG
and, principally, CO2 emissions as well as the ZEV
mandate. Since EPCA prohibits state regulation of CO2
emissions, a state program that combines regulation of the two
groups of pollutants is preempted to the extent that the program
relates to fuel economy. A regulatory regime in which smog-forming
pollutants are addressed without also directly or indirectly
regulating fuel economy is not preempted under EPCA.
    Additionally, NHTSA notes that some suggest that insofar as
carbon dioxide emissions cause global climate change, they
indirectly worsen air quality by (1) increasing formation of smog,
because the chemical process that forms ground-level ozone occurs
faster at higher temperatures, and (2) increasing ragweed pollen,
which can cause asthma attacks in allergy sufferers. Comment is
sought on the extent to which the zero-tailpipe-emissions vehicles
compelled to be sold by California's ZEV program reduce temperatures
in the parts of California which are in non-attainment for ozone and
which contain dense populations of allergy sufferers.
---------------------------------------------------------------------------

    NHTSA invites comments on the extent to which a state standard can
have some incidental impact on fuel economy or CO2 emissions
without being ``related to'' fuel economy standards.
(d) A Waiver of CAA Preemption Does Not Affect, in Any Way, EPCA
Preemption
    When a state establishes a standard related to fuel economy, it
does so in violation of EPCA's preemption statute and the standard is
therefore void ab initio.
    Federal preemption is rooted in the Supremacy Clause of the U.S.
Constitution.\509\ Courts have long recognized that the Supremacy
Clause of the Constitution gives Congress the power to specifically
preempt State law.\510\ Broadly speaking, the United States Supreme
Court has long held that ``an act done in violation of a statutory
prohibition is void,'' \511\ and has specifically noted that such acts
are not merely ``voidable at the instance of the government'' but void
from the outset.\512\ The Ninth Circuit stated it more plainly: ``Under
Federal law, an act occurring in violation of a statutory mandate is
void ab initio.'' \513\ Discussing the Supremacy Clause, the Supreme
Court explicitly explained that, ``[i]t is basic to this constitutional
command that all conflicting state provisions be without effect.''
\514\ And at least one Federal Court of Appeals explicitly stated that
the Supremacy Clause means ``state laws that `interfere with, or are
contrary to the laws of Congress' are void ab initio.'' \515\
---------------------------------------------------------------------------

    \509\ U.S. Const. art VI, cl. 2.
    \510\ See Gibbons v. Ogden, 22 U.S. 1 (1824).
    \511\ Ewert v. Bluejacket, 259 U.S. 129, 138 (1922), quoting
Waskey v. Hammer, 223 U.S. 85, 94 (1912).
    \512\ Waskey, 223 U.S. at 92.
    \513\ Cabazon Band of Mission Indians v. City of Indio, Cal.,
694 F.2d 634, 637 (9th Cir. 1982).
    \514\ Maryland v. Louisiana, 451 U.S. 725, 746 (1981) (citing
McCulloch v. Maryland, 4 Wheat. 316, 427 (1819)). Other courts have
used similar language to describe the impact of preemption. See,
e.g., Nathan Kimmel, Inc. v. DowElanco, 275 F.3d 1199, 1203 (9th
Cir. 2002) (explaining preempted state laws are ``without effect'');
Sweat v. Hull, 200 F.Supp.2d 1162, 1172 (D. Ariz. 2001) (explaining
preempted state laws are ``ineffective.'').
    \515\ Antilles Cement Corp. v. Fortuno, 670 F.3d 310, 323 (1st
Cir. 2012) (quoting Gibbons v. Ogden, 22 U.S. (9 Wheat.) 1 (1824)).
---------------------------------------------------------------------------

    While both the CAA and EPCA may preempt state laws limiting GHG
emissions from motor vehicles, avoiding preemption (by waiver or
otherwise) under one Federal law has no bearing on the other Federal
law's preemptive effect. Section 209 of the CAA, which provides for the
possible waiver of CAA preemption, makes clear that waiver of
preemption under that statute operates only to relieve ``application of
this section''--the preemption provision of the CAA--and not
application of other statutes.\516\ EPA and NHTSA tentatively agree
that a waiver under the CAA does not also waive EPCA preemption.
---------------------------------------------------------------------------

    \516\ 42 U.S.C. 7543(b)(1) (emphasis added); see also 42 U.S.C.
7543(b)(3) (``compliance with such State standards shall be treated
as compliance with applicable Federal standards for purposes of this
subchapter'') (emphasis added).
---------------------------------------------------------------------------

    The Vermont and California Federal district court decisions
mentioned above involved challenges to a California Air Resources Board
regulation establishing vehicle tailpipe GHG emission standards. The
courts concluded that EPCA did not preempt such standards. In both
decisions, the courts placed much weight upon the fact that California
had petitioned EPA for a waiver of CAA preemption pursuant to 42 U.S.C.
7543(b).
    NHTSA and EPA do not agree with the district courts' express
preemption analyses. EPCA preempts state laws and regulations ``related
to fuel economy standards or average fuel economy standards for
automobiles covered by an average fuel economy standard.'' \517\ The
courts in Green Mountain Chrysler and Central Valley Chrysler-Jeep
recognized the relationship between CO2 emissions and fuel
economy. Nonetheless, they erroneously concluded that the ``related
to'' language in EPCA's preemption clause should be construed ``very
narrowly'' and adopted a novel interpretation of ``related to.'' \518\
The courts failed to recognize precedent providing broad effect to
other preemption statutes using terms similar to ``related to,'' as
discussed above.
---------------------------------------------------------------------------

    \517\ 49 U.S.C. 32919(a) (emphasis added).
    \518\ E.g., 529 F.Supp.2d at 1176.
---------------------------------------------------------------------------

(e) A Clean Air Act Waiver Does Not ``Federalize'' EPCA-Preempted State
Standards
    The district court in Green Mountain Chrysler concluded that it
could resolve the challenge to Vermont's regulations without directly
considering the application of EPCA's preemption provision. The court
said that the dispute did not concern preemption but concerned
reconciling two different Federal statutes (EPCA and the CAA). In this
regard, the district court stated that if EPA approved California's
waiver petition (which had not yet occurred), then Vermont's GHG
regulations become ``other motor vehicle standards'' that NHTSA must
consider in setting

CAFE standards.\519\ In the court's view, once EPA grants a waiver,
compliance with California's standards is deemed to satisfy all Federal
standards--not just those of the CAA. In states that adopt California's
standards, compliance with that standard would be deemed to satisfy all
Federal standards as well. With this Federal accommodation of state
standards, the court concluded, Vermont's regulations would stand.
---------------------------------------------------------------------------

    \519\ Green Mountain Chrysler, 508 F.Supp.2d at 398.
---------------------------------------------------------------------------

    The court's premise that preemption provisions and principles do
not apply is not based on precedent and is not supported by applicable
law. In fact, the district court in Central Valley Chrysler-Jeep
recognized that ``[t]he Green Mountain court never actually offers a
legal foundation for the conclusion that a state regulation granted
waiver under [CAA] section 209 [42 U.S.C. 7543] is essentially a
federal regulation such that any conflict between the state regulation
and EPCA is a conflict between federal regulations.'' \520\ NHTSA and
EPA disagree with the conclusion of these decisions and reaffirm the
longstanding position that state standards regulating tailpipe GHG
emissions, such as the standards challenged in the California and
Vermont district court cases, are preempted by EPCA because they
``relate to'' fuel economy standards. We also note that those courts
failed to consider, much less give any weight to, NHTSA's views of
preemption, as the expert agency with authority over the Federal fuel
economy program.\521\ The United States opposed, as amicus curiae, the
Green Mountain Chrysler decision on appeal to the Second Circuit, but
the Second Circuit did not issue a decision on appeal \522\ due to the
automotive industry's withdrawal of appeals. As explained above, the
withdrawal of those appeals was a pre-condition to the 2010 issuance of
the final rule establishing the ``National Program'' of fuel economy
standards and GHG emission standards for MYs 2012-2016.
---------------------------------------------------------------------------

    \520\ Central Valley Chrysler-Jeep, 529 F.Supp.2d at 1165.
Congress must state its intention clearly to accord a state law the
status of Federal law, which it did not do in either in Section
209(b) of the CAA or in EPCA. See, e.g., Indep. Cmty. Bankers Ass'n
v. Bd. of Governors, 820 F.2d 428, 436-37 (D.C. Cir. 1987)
(recognizing that, although Congress ``has the power to assimilate
state law,'' ``[s]uch decisions require an unequivocal congressional
expression'' because ``some [state] restrictions would in all
likelihood conflict with [other] existing Federal laws'').
    \521\ See Geier v. American Honda Motor Co., 529 U.S. 861, 883
(2000) (``Congress has delegated to DOT authority to implement the
statute; the subject matter is technical; and the relevant history
and background are complex and extensive. The agency is likely to
have a thorough understanding of its own regulation and its
objectives and is `uniquely qualified' to comprehend the likely
impact of state requirements.''); Medtronic, Inc. v. Lohr, 518 U.S.
470, 496 (1996) (``agency is uniquely qualified to determine whether
a particular form of state law stands as an obstacle to the
accomplishment and execution of the full purposes and objectives of
Congress'') (internal quotation marks omitted).
    \522\ See Proof Brief for the United States as Amicus Curiae,
07-4342-cv (2d Cir. filed Apr. 16, 2008).
---------------------------------------------------------------------------

    In their appeals of the Green Mountain Chrysler decision, the
vehicle manufacturer associations argued that the operation of EPCA's
express preemption provision does not require that a conflict be shown
between the Federal and state standards, that the Federal and state
standards be identical, or that the Federal and state standards serve
the same purpose. We agree. The conflict principles of implied
preemption do not apply in fields where Congress has enacted an express
preemption provision prohibiting even the existence of state standards.
The statutory test, whether the state standards are ``related to'' the
Federal standards, is met by showing that the state GHG emission
standards are not simply related to, but actually the functional
equivalent of, the Federal fuel economy standards. The district court
itself recognized that ``there is a near-perfect correlation between
fuel consumed and carbon dioxide released.'' Neither the inclusion in
the state standard of emissions for which that relationship does not
exist, nor the assigning to the state standard of a purpose other than
energy conservation, diminishes the statutory implications of the state
standard's meeting the relatedness test. Those unrelated types of
emissions constitute a very low percentage of the overall tailpipe
emissions. Finally, while there are means of compliance with the state
standard other than improving fuel economy, their contributions to
compliance are minor. Improving fuel economy is the only feasible
method of achieving full compliance. Again, NHTSA and EPA agree.
    The Central Valley Chrysler-Jeep court went further, noting that
while NHTSA is required to give consideration to ``other standards,''
including those ``promulgated by EPA,'' ``[t]here is no corresponding
duty by EPA to give consideration to EPCA's regulatory scheme. This
asymmetrical allocation by Congress of the duty to consider other
governmental regulations indicates that Congress intended that DOT,
through NHTSA, is to have the burden to conform its CAFE program under
EPCA to EPA's determination of what level of regulation is necessary to
secure public health and welfare.'' \523\
---------------------------------------------------------------------------

    \523\ Central Valley Chrysler-Jeep, 529 F.Supp.2d at 1168.
---------------------------------------------------------------------------

    In support of its position, the Central Valley Chrysler-Jeep found
persuasive the Green Mountain Chrysler court's view that California
emissions regulations under CAA Section 209 have always been considered
``other standards'' on fuel economy. As mentioned previously in the
discussion of the ``other standards'' to be considered as factors in
establishing maximum feasible fuel economy standards, EPCA, as
originally enacted, contained a specific self-contained provision that
provided that any manufacturer could apply to DOT for modification of
an average fuel economy standard for model years 1978 through 1980 if
it could show the likely existence of a ``Federal standards fuel
economy reduction,'' defined to include EPA-approved California
emissions standards that reduce fuel economy. The court reasoned that
``in 1975 when EPCA was passed, Congress unequivocally stated that
federal standards included EPA-approved California emissions
standards.'' \524\ However, when EPCA was recodified in 1994, ``all
reference to the modification process applicable for model years 1978
through 1980, including the categories of federal standards, was
omitted as executed.'' \525\ The court noted that the legislative
intent of the 1994 recodification was not intended to make a
substantive change to the law.\526\ Thus, the court concluded that
``[i]f the recodification worked no substantive change in the law, then
the term `other motor vehicle standards of the Government' continues to
include both emission standards issued by EPA and emission standards
for which EPA has issued a waiver under Section 209(b) of the CAA, as
it did when enacted in 1975.'' \527\
---------------------------------------------------------------------------

    \524\ Central Valley Chrysler-Jeep, 529 F.Supp.2d at 1173
(quoting Green Mountain Chrysler, 508 F.Supp.2d at 345). EPCA
Section 502(d)(3)(D)(i) provided: ``Each of the following is a
category of Federal standards: . . . Emissions standards under
Section 202 of the Clean Air Act, and emissions standards applicable
by reason of Section 209(b) of such Act.''
    \525\ Id.
    \526\ Id.
    \527\ Id.
---------------------------------------------------------------------------

    NHTSA believes that the district court misread EPCA to the point of
turning it on its head. As discussed previously in this document, the
``federal standards'' definition discussed by the court existed in a
self-contained scheme allowing manufacturers to petition NHTSA for
modification of the fuel economy requirements only between 1978 and

1980, and thus has no application either at the time of the decision or
today. And even if that definition of ``federal standards'' were
applied to EPCA generally, NHTSA would balance that against other
factors enumerated in EPCA that it ``shall'' consider in setting
maximum feasible fuel economy standards. However, the district courts'
view is that this factor instead creates an ``obligation'' to
``harmonize'' CAFE standards with state emissions regulations under a
CAA Section 209 waiver.\528\ In other words, under the district courts'
opinions, a state standard controls what NHTSA does, and the agency
therefore has no further discretion to consider the other factors
Congress directed it to consider. Consistent with the legislative
history and NHTSA's long-standing interpretations, NHTSA interprets
EPCA, a statute which it administers in implementing the national fuel
economy program, as providing that the requirement to ``consider'' the
four EPCA statutory factors set forth in 49 U.S.C. 32902(f) does not
mean the agency is obligated to harmonize CAFE standards with state
tailpipe CO2 emissions standards. EPA concurs that a CAA
waiver does not also waive the effect of any other Federal law,
including EPCA.
---------------------------------------------------------------------------

    \528\ Id. at 1170.
---------------------------------------------------------------------------

    As discussed above in the ``other standards'' section of this
rulemaking, NHTSA further believes that the district courts in Green
Mountain Chrysler and Central Valley Chrysler-Jeep misconstrued the
provision in EPCA as enacted in 1975 that allowed manufacturers to
petition NHTSA to reduce CAFE standards that Congress had set for model
years 1978, 1979, and 1980 if there was a ``Federal standards fuel
economy reduction.'' \529\ This provision did not involve a factor to
be balanced in determining fuel economy standards. It provided for a
reduction in fuel economy standards for cars at a time when only
conventional pollutants were regulated. The provision was specifically
designed to address California's then-existing smog regulations,
particularly with regard to the additional weight (which other things
being equal reduces fuel economy) associated with catalytic converters.
In so doing, Congress recognized the potential interplay for three
model years between California's smog regulations and the possibility
that it could reduce Federal fuel economy standards for those model
years.\530\ Thus, EPCA went on to include ``Emissions standards under
Section 202 of the CAA, and emissions standards applicable by reason of
Section 209(b) of such Act'' in its list of ``categor[ies] of Federal
standards.'' \531\
---------------------------------------------------------------------------

    \529\ Public Law 94-163 sec. 502(d), 89 Stat. 904-05.
    \530\ See H.R. No. 94-340, at 87.
    \531\ Id. Sec.  502(d)(3)(D).
---------------------------------------------------------------------------

    Because California standards to combat smog (not GHG regulations)
``by reason of section 209(b)'' could be considered to reduce federal
fuel economy standards for three years, the district courts erroneously
believed that state CO2 regulations are somehow now
``federal'' standards under 49 U.S.C. 32902(f). On its face, this
language applied only to three long past model years and only to
reducing standards, not setting them. ``For purposes of this
subsection'' referred to section 502(d) of EPCA--not EPCA section
502(e) [now 49 U.S.C. 32902(f)] which sets forth the EPCA factor of
``the effect of other Federal motor vehicle standards on fuel
economy.'' After MY 1980, section 502(d) became obsolete. When EPCA was
recodified in 1994, section 502(d) was dropped as executed and
therefore surplusage. As the listing of Federal standards in 502(d)
never had any application outside that subsection and ceased to have
significance when that subsection became obsolete, it had and has no
bearing on the recodified version of EPCA. The recodification to
rescind this subsection, which had no substantive significance for 14
years, was entirely non-substantive.\532\
---------------------------------------------------------------------------

    \532\ The recodification was ``[t]o revise, codify, and enact
without substantive change'' laws related to transportation. Public
Law 103-272 (emphasis added).
---------------------------------------------------------------------------

    NHTSA believes that the district courts in Green Mountain Chrysler
and Central Valley Chrysler-Jeep sought to give a CAA waiver for the
California GHG regulation an effect far beyond the terms of the CAA
provision authorizing such a waiver. As discussed previously, the
courts overlooked the fact that the CAA itself makes clear that waiver
of preemption under that statute operates only to relieve application
of the CAA preemption statute.\533\ State GHG regulations, even if
subject to an EPA waiver, would remain regulations ``adopt[ed] or
enforc[ed]'' by ``a State or political subdivision of a State'' and
therefore would be subject to preemption by EPCA.\534\
---------------------------------------------------------------------------

    \533\ 42 U.S.C. 7543(b)(1) (emphasis added); see also 42 U.S.C.
7543(b)(3) (``compliance with such State standards shall be treated
as compliance with applicable Federal standards for purposes of this
subchapter'') (emphasis added).
    \534\ 49 U.S.C. 32919(a).
---------------------------------------------------------------------------

    The courts' view suggests an apparent misunderstanding of the
underlying concerns and purposes of the requirement to consider other
standards. There is no hint in the histories of either EPCA or EISA of
an intent to give other standards special, much less superior, status
under EPCA. The limited concerns and purpose were to ensure that any
adverse effects of other standards on fuel economy considered in
connection with the fuel economy standards. Those concerns are evident
in a 1974 report, entitled ``Potential for Motor Vehicle Fuel Economy
Improvement,'' submitted to Congress by the Department of
Transportation and EPA.\535\ That report noted that the weight added by
safety standards would and one set of emissions standards might
temporarily reduce the level of achievable fuel economy.\536\ These
concerns can also be found in the congressional reports on EPCA.\537\
---------------------------------------------------------------------------

    \535\ This report was prepared in compliance with Section 10 of
the Energy Supply and Environmental Coordination Act of 1974, Public
Law 93-319.
    \536\ See id. at 6-8 and 91-93.
    \537\ See page 22 of Senate Report 94-179, pages 88 and 90 of
House Report 94-340, and pages 155-7 of the Conference Report,
Senate Report 94-516.
---------------------------------------------------------------------------

(f) State Tailpipe GHG Emissions Standards Conflict With EPCA and are
Therefore Preempted Impliedly
    Notwithstanding that state standards limiting or prohibiting
tailpipe CO2 emissions are expressly preempted by EPCA, they
also clearly conflict with the objectives of EPCA and would therefore
also be impliedly preempted.
    State regulation of CO2 emissions would frustrate
Congress' objectives in establishing the CAFE program and conflict with
NHTSA's efforts to implement the program in a manner consistent with
EPCA. While the overarching purpose of EPCA may be energy conservation,
Congress directed NHTSA to consider four factors in establishing
maximum feasible fuel economy standards. NHTSA balances these factors
to determine, through the CAFE program, the amount of energy the light-
duty vehicle fleet should conserve. Allowing a state to make a state-
specific determination for how much energy should be conserved (in the
same way that the CAFE program conserves energy) necessarily frustrates
NHTSA's efforts to make that determination for the country as a whole
because it sends the industry in different directions in order to try
to meet multiple standards at once rather than allowing the industry to
focus its resources and efforts on the path laid out at the Federal
level. This is particularly true when considering that when California
sets standards, other states can choose to adopt those

standards and thereby further increase the compliance complexity.
    A critical objective of EPCA was to establish a single national
program to regulate vehicle fuel economy. Congress, in passing EPCA,
accomplished this objective by providing broad preemptive power
established in the language codified at 49 U.S.C. 32919(a). Other
congressional objectives underlying EPCA include avoiding serious
adverse economic effects on manufacturers and maintaining a reasonable
amount of consumer choice among a broad variety of vehicles. To guide
the agency toward the selection of standards meeting these competing
objectives, Congress specified four factors that NHTSA must consider in
determining the maximum feasible level of average fuel economy and thus
the level at which each standard must be set. As discussed above, since
the only practical way to reduce tailpipe CO2 emissions is
to improve fuel economy, it would be impossible for a state tailpipe
CO2 emissions standard to be adopted without interfering
with CAFE standards. If a state were to establish standards that have
the effect of requiring a lower level of fuel economy than CAFE
standards, those standards would be meaningless since they would not
reduce CO2 emissions. Instead, a State could only establish
a standard that has the effect of requiring a higher level of average
fuel economy. Setting standards that are more stringent than the fuel
economy standards promulgated under EPCA would upset the efforts of
NHTSA to balance and achieve Congress's competing goals. Setting a
standard above the level judged by NHTSA to be consistent with the
statutory consideration after careful consideration of these issues in
a rulemaking proceeding would negate the agency's careful analysis and
decision-making.
    For the same reasons, a state regulation having the effect of
regulating tailpipe carbon dioxide emissions or fuel economy is
likewise impliedly preempted under 49 U.S.C. Chapter 329.
    The Vermont and California district court decisions discussed above
addressed conflict preemption. The Green Mountain Chrysler court
concluded that the Vermont GHG standards presented no conflict
preemption concerns and rejected the contention that Vermont's GHG
regulations would conflict with Congress' intent that there be a
single, nationwide fuel economy standard and that those regulations
upset NHTSA's careful balancing of the EPCA statutory factors in its
rulemaking proceedings. In rejecting the manufacturers' arguments, the
court held that the Vermont standards do not create an obstacle to
achieving EPCA's goals because the Vermont standards are, in the
court's judgment, consistent with EPCA's standard setting criteria. In
reaching that conclusion, the court did not consider the impact of the
Vermont standards on the balancing done by NHTSA in setting CAFE
standards. For its part, the court in Central Valley Chrysler-Jeep
concluded that there was no conflict preemption, since if California's
standards were granted a waiver under CAA section 209 by EPA, they
would satisfy CAA objectives and be consistent with EPCA.\538\ The
court simply assumed consistency. If this assumption proved incorrect,
to the extent of any incompatibility between the two regimes, ``NHTSA
is empowered to revise its standards'' to take into account
California's regulations, according to that court.
---------------------------------------------------------------------------

    \538\ 529 F.Supp.2d at 1179.
---------------------------------------------------------------------------

    NHTSA disagreed with the two district court rulings at the time and
continues to do so now. We note that the Vermont decision was appealed
and briefed (including an Amicus Brief filed by the United States)
prior to the stay and withdrawal of the litigation pursuant to the
National Program arrangement described previously. NHTSA was not a
party to those cases and is not bound by these decisions. Those
erroneous decisions further support the need for NHTSA, as the agency
with expert authority to interpret EPCA, to reaffirm its longstanding
view of the preemption provision. Moreover, EPA, as the agency charged
with administering the CAA, further determines that CAA waivers do not
``federalize'' state standards; therefore, state standards directly
affecting fuel economy are subject to EPCA preemption even if there is
a CAA waiver in place.
(g) ZEV Mandates
    Another form of EPCA-preempted state regulation is a zero-emission
vehicle (ZEV) mandate. Such laws require that a certain number or
percentage of vehicles sold or delivered for sale within a state must
be ZEVs, vehicles that produce neither smog-forming nor CO2
tailpipe emissions. ZEV mandates may require either that actual ZEVs be
sold or delivered for sale or provide for generation and application of
ZEV credits, which may or may not be traded. While NHTSA has not
previously commented on the relationship between the ZEV mandates and
the CAFE program because the only feasible means to eliminate tailpipe
CO2 emissions is by eliminating the use of petroleum fuel
(i.e., electric or fuel cell propulsion), and because the purpose of
the ZEV program is to affect fuel economy,\539\ ZEV mandates directly
relate to fuel economy and are thereby expressly preempted. ZEV
mandates are also intended to force the development and commercial
deployment of ZEVs--regardless of the technological feasibility or
economic practicability of doing so--putting the program entirely at
odds with critical factors that Congress required NHTSA to consider in
establishing fuel economy standards. Therefore, ZEV mandates also
interfere with achieving the goals of EPCA and are therefore impliedly
preempted.
---------------------------------------------------------------------------

    \539\ See, e.g., Fact Sheet: 2003 Zero Emission Vehicle Program,
California Air Resources Board (March 18, 2004), available at
https://www.arb.ca.gov/msprog/zevprog/factsheets/2003zevchanges.pdf
(stating that one of the ``significant features of the April 2003
changes to the ZEV regulation'' included removal of ``all references
to fuel economy or efficiency,'' after a 2002 lawsuit asserting that
AT PZEV provisions pertaining to the fuel economy of hybrid electric
vehicles were preempted by EPCA).
---------------------------------------------------------------------------

    California's ZEV mandate represents the most prominent example.
California initially launched its ZEV mandate in 1990 to force the
development and deployment of ZEVs to reduce smog-forming emissions. As
California's Low Emission Vehicle and EPA's Tier 3 standards for
criteria pollutant emissions have become increasingly stringent, the
greater impact of California's ZEV mandate is the reduction of tailpipe
GHG emissions. In its latest iteration the ZEV mandate no longer
focuses on tailpipe smog forming emissions, a fact that CARB
acknowledged in 2012 when applying for a waiver for its Advanced Clean
Car Program, in stating ``[t]here is no criteria emissions benefit from
including the ZEV proposal in terms of vehicle (tank-to-wheel or TTW)
emissions. The LEV III criteria pollutant fleet standard is responsible
for those emission reductions in the fleet; the fleet would become
cleaner regardless of the ZEV regulation because manufacturers would
adjust their compliance response to the standard by making less
polluting conventional vehicles.'' \540\
---------------------------------------------------------------------------

    \540\ Docket No. EPA-HQ-OAR-2012-0562, Pp. 15-16.
---------------------------------------------------------------------------

    In its current configuration, the ZEV mandate requires
manufacturers to generate credits based upon the number of vehicles
delivered for retail sale. Vehicles earn varying amounts of ZEV credits
depending upon technology and range, with some vehicles earning several
credits. Manufacturers delivering for sale certain plug-in hybrid

vehicles earn some limited ZEV credits, even though they are not truly
ZEVs, but such credits can only satisfy a portion of a manufacturer's
ZEV credit requirements. The credit requirements increase annually,
with the number of required credits equaling 4.5% of a manufacturer's
light duty vehicle sales in 2018, rising to 22% in 2025.\541\ To hit
this 22% credit requirement, a manufacturer would need to deliver for
sale ZEVs totaling somewhere between less than eight percent and 15.4%
of their light duty sales in California, per various projections.\542\
With advance notice, manufacturers may elect to use credits earned from
over-complying with vehicle tailpipe GHG emission requirements toward
partial satisfaction of the ZEV mandate.
---------------------------------------------------------------------------

    \541\ Cal. Code Regs. tit.13, sec. 1962.2(b).
    \542\ The Air Resources Board initially projected that 15.4% of
new vehicles delivered for sale would consist of ZEVs. See., e.g.,
Staff Report: Initial Statement of Reasons 2012 Proposed Amendments
to the California Zero Emission Vehicle Program Regulations,
California Air Resources Board at 48 (Dec. 7, 2011), available at
https://www.arb.ca.gov/regact/2012/zev2012/zevisor.pdf (stating
``[b]y model year 2025, staff expects 15.4 percent of new sales will
be ZEVs and [Plug-In Hybrids].'') However, an increased supply of
credits and projected increases in battery electric range has
resulted in others projecting reduced required ZEV fleet
penetration. See, e.g., What is ZEV?, Union of Concerned Scientists
(Oct. 31, 2016), https://www.ucsusa.org/clean-vehicles/california-and-western-states/what-is-zev (projecting ``about 8 percent of
sales to be ZEVs'' in 2025).
---------------------------------------------------------------------------

    The EPA has granted a waiver of CAA preemption under Section 209 of
the CAA for California's Advanced Clean Car program, which includes
California's ZEV mandate in addition to California's GHG regulation and
LEV program. Nine other states have elected to adopt the ZEV mandate
pursuant to Section 177 of the CAA \543\--which, combined with
California, represent approximately 30% of United States light duty
vehicle sales annually.\544\ Manufacturers must satisfy the ZEV mandate
for each state. While, traditionally, manufacturers could apply credits
earned in one state to satisfy the requirements of another state, this
``travel'' provision is limited only to fuel cell electric vehicles
beginning with MY 2018.
---------------------------------------------------------------------------

    \543\ These states are Connecticut, Maine, Maryland,
Massachusetts, New Jersey, New York, Oregon, Rhode Island, and
Vermont.
    \544\ See Automotive Retailing: State by State, National
Automobile Dealers Association, https://www.nada.org/statedata/
(last visited June 25, 2018) (estimating that these states
represented 28.6% of new motor vehicle registrations in 2016).
---------------------------------------------------------------------------

    Accordingly, manufacturers must endeavor to design, produce, and
deliver for sale significant numbers of vehicles that produce zero
tailpipe CO2 emissions within each state that has adopted
the California ZEV mandate. This involves implementation of some of the
most expensive and advanced technologies in the automotive industry,
regardless of consumer demand (which tends to be lower during periods
of sustained relatively-low gasoline prices). The California Air
Resources Board's own midterm review report for their Advanced Clean
Car program cites estimates from the 2016 Draft Technical Assessment
Report relating to the incremental vehicle costs of ZEVs over 2016
vehicles with internal combustion engines.\545\ While stating marginal
increased costs have fallen when compared to previous estimates, CARB
nevertheless still shows battery electric subcompact vehicles with 75
miles of range, for which consumer demand remains very low, as costing
$7,505 more than ones with an internal combustion engine, with large
cars costing $11,355 more. Battery electric subcompacts with a 200-mile
range, for which consumer demand is slightly higher than a 75-mile
range, were estimated to cost $12,001 more than comparable vehicles
with internal combustion engines, and large cars $16,746 more. Even
subcompact plug-in hybrids with 40 miles of electric range cost $9,260
more than internal combustion engine equivalents, and $13,991 more for
large cars. And as discussed above, consumers have not been willing to
pay the full cost of this technology--meaning manufacturers are likely
to spread the costs of the ZEV mandate to non-ZEV vehicles (and to
vehicles sold in other states). This expensive and market-distorting
mandate for manufacturers to eliminate vehicle tailpipe CO2
emissions (and thus petroleum fuel use) for part of their fleets has
always interfered with NHTSA's balancing of statutory factors in
establishing maximum feasible fuel economy standards, and increasing
ZEV credit requirements through 2025 make it all-the-more of an
obstacle to accomplishing EPCA's goal of establishing a coherent
national fuel economy program. Unlike NHTSA's CAFE program, the ZEV
mandate forces investment in specific technology (electric and fuel
cell technology) rather than allowing manufacturers to improve fuel
economy through more cost-effective technologies that better reflect
consumer demand.\546\ This appears to conflict directly with Congress'
intent that CAFE standards be performance-based rather than design
mandates. Moreover, by forcing manufacturers to design, produce, and
deliver for sale vehicles that produce no tailpipe CO2
emissions, the ZEV mandate forces further expensive investments in
fuel-saving technology than NHTSA has determined appropriate to require
in setting fuel economy standards.\547\ We seek comment on the extent
to which compliance with the ZEV mandate frustrates manufacturers'
efforts to comply with CAFE standards.
---------------------------------------------------------------------------

    \545\ California Air Resources Board, California's Advanced
Clean Cars Midterm Review, Appendix C, Zero Emission Vehicle and
Plug-in Hybrid Electric Vehicle Technology Assessment, Table 8, at
C-64 (Jan. 18, 2017), available at https://www.arb.ca.gov/msprog/acc/mtr/appendix_c.pdf.
    \546\ 13 Cal. Code of Regulations 1962.2.
    \547\ See, e.g., Alan, J., Hardman, S. & Carley, S. Cost
implications for automakers' compliance with emission standards from
Zero Emissions Vehicle mandate, TRB 2018 Annual Meeting paper
submittal, https://trid.trb.org/view/1495714 (last accessed June 28,
2018) (finding based on independent research that in 2025, costs
reach approximately $1,500 per vehicle on average to comply with
CAFE alone and increase to around $2,100 per vehicle on average to
comply with both CAFE and ZEV).
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    For the reasons outlined above, the California ZEV mandate is
expressly and impliedly preempted by EPCA. While EPA had previously
granted a waiver of CAA preemption for California's Advanced Clean Car
Program, which includes the California ZEV mandate, this waiver has no
effect on EPCA preemption of the ZEV mandate, as described above.
3. Conclusion and Severability
    Given the importance of an effective, smooth functioning national
program to regulate fuel economy and in light of the failure of two
Federal district courts to consider NHTSA's analysis and carefully
crafted position on preemption, NHTSA is considering taking the further
step of summarizing that position in an appendix to be added to the
parts in the Code of Federal Regulations setting forth the passenger
car and light truck CAFE standards. That proposed regulatory text may
be found at the end of this preamble.
    NHTSA considers its proposed decision on the maximum feasible CAFE
standards for MY 2021-2026 to be severable from its decision on EPCA
preemption. Our proposed interpretation of 49 U.S.C. 32919 does not
depend on our decision to finalize and a court's decision to uphold,
the CAFE standards being proposed today under 49 U.S.C. 32902. NHTSA
solicits comment on the severability of these actions.

B. Preemption Under the Clean Air Act

1. Background
(a) Statutory Background: Clean Air Act Section 209(a) Preemption,
Section 209(b)(1) California Waiver, and Section 209(b)(1)(A)-(C)
Prohibitions on Waiver
    EPA's regulation of new motor vehicles under Title II generally
preempts state standards in the same subject area. Section 209(a) of
the Act provides that:

    ``No State or any political subdivision thereof shall adopt or
attempt to enforce any standard relating to the control of emissions
from new motor vehicles or new motor vehicle engines subject to this
part. No State shall require certification, inspection or any other
approval relating to the control of emissions from any new motor
vehicle or new motor vehicle engine as condition precedent to the
initial retail sale, titling (if any), or registration of such motor
vehicle, motor vehicle engine, or equipment.'' \548\
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    \548\ Clean Air Act (CAA) section 209(a), 42 U.S.C. 7543(a).

    However, Title II affords special treatment to California: Subject
to certain conditions, it may obtain from EPA a waiver of section
209(a) preemption. Specifically, section 209(b)(1) of the Act requires
the Administrator, after an opportunity for public hearing, to waive
application of the prohibitions of section 209(a) to California, if
California determines that its State standards will be, in the
aggregate, at least as protective of public health and welfare as
applicable Federal standards.\549\ A waiver under section 209(b)(1)
allows California to ``adopt [and] enforce a[] standard relating to the
control of emissions from new motor vehicles or new motor vehicle
engines.'' CAA section 209(a), 42 U.S.C. 7543(a).
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    \549\ CAA section 209(b), 42 U.S.C. 7543(b). The provision does
not identify California by name. Rather, it applies on its face to
``any State which has adopted standards (other than crankcase
emission standards) for the control of emissions from new motor
vehicles or new motor vehicle engines prior to March 30, 1966.''
California is the only State that meets this requirement. See S.
Rep. No. 90-403 at 632 (1967). This proposal refers interchangeably
to ``California'' and ``CARB'' (the California Air Resources Board).
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    But California's ability to obtain a waiver is not unlimited. The
statute provides that ``no such waiver will be granted'' if the
Administrator finds any of the following: ``(A) [California's]
determination [that its standards in the aggregate will be at least as
protective] is arbitrary and capricious, (B) [California] does not need
such State standards to meet compelling and extraordinary conditions,
or (C) such State standards and accompanying enforcement procedures are
not consistent with section [202(a)].'' Section 209(b)(1)(A)-(C), 42
U.S.C. 7543(b)(1)(A-(C) (Emphasis added).\550\ Any one of these three
findings operates to forbid a waiver.
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    \550\ As presented in the United States Code, the cross-
reference in prong (C) is to ``section 7521(a) of this title,''
i.e., CAA section 201(a), 42 U.S.C. 7521(a), which governs EPA's
administration of ``Emission standards for new motor vehicles or new
motor vehicle engines administration of ``Emissions standards for
new motor vehicles or new motor vehicle engines.''
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(1) EPA's Proposed Action
    EPA is proposing to withdraw the January 9, 2013 waiver of
preemption for California's Advanced Clean Car (ACC) program, Zero
Emissions Vehicle (ZEV) mandate, and Greenhouse Gas (GHG) standards
that are applicable to new model year (MY) 2021 through 2025. 78 FR
2145 (January 9, 2013.) 551 552 EPA proposes to do so on
multiple grounds.
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    \551\ This proposed action does not address whether the
statutory interpretations and their policy consequences laid out in
the proposal may have implications for past waivers granted to
California for other standards besides its GHG and ZEV standards.
EPA proposes to take this action in the context of this joint
rulemaking with NHTSA, and the California standards identified
herein are the focus of EPA's proposal. As circumstances require and
resources permit, EPA may in future actions consider whether this
proposal, if finalized, makes it appropriate or necessary to revisit
past grants of other waivers beyond those granted with respect to
California's GHG and ZEV program.
    \552\ EPA proposes to withdraw the waiver for these model years
because these are the model years at issue in NHTSA's proposal. EPA
solicits comment on whether one or more of the grounds supporting
the proposed withdrawal of this waiver would also support
withdrawing other waivers that it has previously granted.
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    First, EPA notes that elsewhere in this notice NHTSA has proposed
to find that California's GHG and ZEV standards are preempted under
EPCA. Although EPA has historically declined to consider as part of the
waiver process whether California standards are constitutional or
otherwise legal under other Federal statutes apart from the Clean Air
Act, EPA believes that this notice presents a unique situation and that
it is appropriate to consider the implications of NHTSA's proposed
conclusion as part of EPA's reconsideration of the waiver. In this
regard, EPA is proposing to conclude that state standards preempted
under EPCA cannot be afforded a valid waiver of preemption under CAA
209(b). Accordingly, EPA is proposing to conclude that if NHTSA
finalizes a determination that California's GHG and ZEV standards are
preempted, then it would be necessary to withdraw the waiver separate
and apart from the analysis under section 209(b)(1)(B), (C) that
follows.
    Second, under section 209(b)(1)(B) (compelling and extraordinary
conditions), EPA proposes to find that California does not need its GHG
and ZEV standards to meet compelling and extraordinary conditions
because those standards address environmental problems that are not
particular or unique to California, that are not caused by emissions or
other factors particular or unique to California, and for which the
standards will not provide any remedy particular or unique to
California.
    Third, under section 209(b)(1)(C) (consistency with section
202(a)), EPA proposes to find that California's GHG and ZEV standards
are inconsistent with section 202(a) because they are technologically
infeasible in that they provide sufficient lead time to permit the
development of necessary technology, giving appropriate consideration
to compliance costs.\553\
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    \553\ Under section 209(b)(1)(C) of the CAA, EPA must deny
California's waiver request if EPA finds that California's standards
and accompanying enforcement procedures are not consistent with
section 202(a). Section 202(a) provides that an emission standard
shall take effect after such period of time as the Administrator
finds necessary to permit development and application of the
requisite technology, giving appropriate consideration to compliance
costs.
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    EPA therefore proposes to make findings under sections 209(b)(1)(B)
and (C), either of which, as discussed above, independently triggers
the statutory prohibition that ``no such waiver will be granted.''
    In addition, EPA proposes to conclude that States may not adopt
California's GHG standards pursuant to section 177 because the text,
context, and purpose of section 177 support the conclusion that this
provision is limited to providing States the ability, under certain
circumstances and with certain conditions, to adopt and enforce
standards designed to control criteria pollutants to address NAAQS
nonattainment.
(2) History of Waiver for California GHG and ZEV Standards, and
Associated Issues of Statutory Interpretation
    In December 2005, California for the first time applied to EPA for
a preemption waiver for GHG standards for MY 2009 and following. EPA
denied this request in March 2008, relying on the second prong under
section 209(b)(1)(B) and finding that California did not need those
standards to meet compelling and extraordinary conditions. In doing so,
it noted that GHG standards, unlike prior standards for which
California had requested and received waivers, are designed to address
global air pollution problems--not air pollution problems specific to
California. 73 FR 12156, March 6, 2008.

Due to this new circumstance, EPA reconsidered its historic
interpretation and application of section 209(b)(1)(B). Although
today's proposal contains proposed findings under each prong of
209(b)(1), prong (B) was the only one at issue in the 2008 waiver
denial (and EPA's subsequent reversal), and it merits extended
discussion at the outset due to its central significance in the policy
and legal context and the history underlying today's proposal.
    As a general matter, EPA had historically interpreted section
209(b)(1)(B) to require EPA to consider whether, to meet compelling and
extraordinary conditions in California, the state needs to have its own
separate new motor vehicle program in the aggregate.\554\ Under this
historical approach, EPA considered California's need for a separate
program as a whole, rather than California's need for the particular
aspect of the program for which California sought a waiver in any
particular instance. (Typically, prior to its ACC program waiver
request, California would seek a waiver for only particular aspects of
its new motor vehicle program.) In the 2008 GHG waiver denial, EPA
determined that this interpretation was inappropriate under the
circumstances.
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    \554\ See, e.g., 49 FR 18887 (May 3, 1984).
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    In its 2008 waiver denial, EPA proceeded under two alternative
constructions of the statute. Under both of these constructions, EPA
determined that it was a reasonable interpretation of section
209(b)(1)(B) to require a separate review of California's need for
standards designed to address a global air pollution problem and its
effects, as distinct from other portions of California's new motor
vehicle program, which up until then had been designed to address local
or regional air pollution problems.\555\ Under the first construction,
EPA found it relevant that elevated GHG concentrations in California
were similar to concentrations found elsewhere in the world, and that
local conditions in California, such as the local topography, the local
climate, and the significant number of motor vehicles in California,
were not the determining factors causing the elevated GHG
concentrations found in California and elsewhere. In sum, EPA found
that California did not need its GHG standards to meet ``compelling and
extraordinary conditions''--interpreting ``compelling and extraordinary
conditions'' to mean environmental problems with causes that were
specific to California--given that those standards were designed to
address global air pollution problems as compared to local or regional
air pollution problems caused specifically by certain conditions in
California.
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    \555\ Criteria pollutants generally present public health and
environmental concern in proportion to their ambient local
concentration and California has long had unusually severe problems
in this regard.
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    EPA in the 2008 waiver denial also applied a second, alternative
construction of section 209(b)(1)(B). Under this alternative
construction, EPA considered whether the impacts of climate change in
California were sufficiently different enough from the impacts felt in
the rest of the country such that California could be considered to
need its GHG standards to meet compelling and extraordinary
conditions--interpreting ``compelling and extraordinary conditions'' to
mean environmental effects specific to California.
    The next year, following a presidential election and change in
administration, EPA reconsidered the 2008 denial at California's
request. On reconsideration, EPA reversed course and granted a waiver
for California's GHG standards. 74 FR 32744 (July 9, 2009). In granting
the waiver, EPA reverted to its historical interpretation of section
209(b)(1)(B), under which it had construed ``compelling and
extraordinary conditions'' to mean environmental problems caused by
conditions specific to California and/or effects experienced to a
unique degree or in a unique manner in California, and under which it
had evaluated California's need for its own, separate new motor vehicle
program as a whole, rather than California's need for the specific
aspects of its separate program for which it was seeking a waiver. In
reverting to this determination, the EPA necessarily determined that it
makes no difference whether California seeks a waiver to implement
separate standards in response to its own specific, local air pollution
problems, or whether California seeks a waiver to implement separate
standards designed to address a global air pollution problem.
    Since 2009, EPA has continued to adhere to this interpretation and
application of section 209(b)(1)(B) when reviewing CARB's waiver
requests, regardless of whether the waiver was requested with regard to
standards designed to address traditional, local environmental
problems, or global climate issues. In this proposal, the EPA proposes
to determine that this reversion to the pre-2008 interpretation was not
appropriate.
    On January 9, 2013, EPA granted CARB's request for a waiver of
preemption to enforce its ACC program regulations pursuant to CAA
section 209(b). 78 FR 2112. The ACC program is a single coordinated
package comprising regulations for ZEV and low-emission vehicles (LEV)
regulations,\556\ for new passenger cars, light-duty trucks, medium-
duty passenger vehicles, and certain heavy-duty vehicles, for MY 2015
through 2025. Thus, in terms of proportion, the ACC program is
comparable to the combined Federal Tier 3 Motor Vehicle Emissions
Standards and the 2017 and later MY Light-duty Vehicle GHG
Standards.\557\ According to CARB, the ACC program was intended to
address California's near and long-term smog issues as well as certain
specific GHG emission reduction goals.\558\ 78 FR 2114. See also 78 FR
2122, 2130-31.
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    \556\ The LEV regulations in question include standards for both
GHG and criteria pollutants (including ozone and PM). Amendments for
the LEV III program included replacement of separate nonmethane
organic gas (NMOG) and oxides of nitrogen (NOX) standards
with combined NMOG plus NOX standards, which provides
automobile manufacturers with additional flexibility in meeting the
new stringent standards; an increase of full useful life durability
requirements from 120,000 miles to 150,000 miles, which guarantees
vehicles sustain these extremely low emission levels longer; a
backstop to assure continued production of super-ultra-low-emission
vehicles after partial-zero-emission vehicles (PZEVs) as a category
are moved from the ZEV regulations to the LEV regulations in 2018;
more stringent particulate matter (PM) standards for light- and
medium-duty vehicles, which will reduce the health effects and
premature deaths associated with these emissions; zero fuel
evaporative emission standards for PCs and LDTs, and more stringent
standards for medium- and heavy-duty vehicles (MDVs); and, more
stringent supplemental federal test procedure (SFTP) standards for
PC and LDTs, which reflect more aggressive real world driving and,
for the first time, require MDVs to meet SFTP standards. 78 FR 2114.
    \557\ 78 FR 23641, April 22, 2016; 77 FR 62624, October 15,
2012.
    \558\ ``The Advanced Clean Cars program . . . will reduce
criteria pollutants . . . and . . . help achieve attainment of air
quality standards; The Advanced Clean Cars Program will also reduce
greenhouse gases emissions as follows: by 2025, CO2
equivalent emissions will be reduced by 13 million metric tons (MMT)
per year, which is 12 percent from base line levels; the reduction
increases in 2035 to 31 MMT/year, a 27 percent reduction from
baseline levels; by 2050, the proposed regulation would reduce
emissions by more than 40 MMT/year, a reduction of 33 percent from
baseline levels; and viewed cumulatively over the life of the
regulation (2017-2050), the proposed Advanced Clean Cars regulation
will reduce by more than 850 MMT CO2-equivalent, which
will help achieve the State's climate change goals to reduce the
threat that climate change poses to California's public health,
water resources, agriculture industry, ecology and economy.'' 78 FR
2114. CARB Resolution 12-11, at 19, (January 26, 2012), available in
the docket for the January 2013 waiver action, Document No. EPA-HQ-
OAR-2012-0562, the docket for the ACC program waiver.
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    The ACC program regulations impose multiple and varying complex
compliance obligations that have simultaneous, and sometimes
overlapping, deadlines with each

standard. These deadlines began in 2015 and are scheduled to be phased
in through 2025. For example, compliance with the GHG requirements
began in 2017 and will be phased-in through 2025. The implementation
schedule and the interrelationship of regulatory provisions with each
of the three standards together demonstrates that CARB intended that at
least the GHG and ZEV standards, if not also the LEV standards, would
be implemented as a cohesive program. For example, in its ACC waiver
request, CARB stated that the ``ZEV regulation must be considered in
conjunction with the proposed LEV III amendments. Vehicles produced as
a result of the ZEV regulation are part of a manufacturer's light-duty
fleet and are therefore included when calculating fleet averages for
compliance with the LEV III GHG amendments.'' CARB's Initial Statement
of Reasons at 62-63.\559\ CARB also noted ``[b]ecause the ZEVs have
ultra-low GHG emission levels that are far lower than non-ZEV
technology, they are a critical component of automakers' LEV III GHG
standard compliance strategies.'' Id. CARB further explained that ``the
ultra-low GHG ZEV technology is a major component of compliance with
the LEV III GHG fleet standards for the overall light duty fleet.'' Id.
CARB's request also repeatedly touted the GHG emissions benefits of the
ACC program.
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    \559\ Available in the docket for the January 2013 waiver
decision, Docket No. EPA-HQ-OAR-2012-0562.
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