[Federal Register Volume 81, Number 206 (Tuesday, October 25, 2016)]
[Rules and Regulations]
[Pages 73478-74274]
[FR Doc No: 2016-21203]

Vol. 81

Tuesday,

No. 206

October 25, 2016

Part II

Environmental Protection Agency

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

Department of Transportation

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National Highway Traffic Safety Administration

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49 CFR Parts 523, 534, 535, et al.

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

Federal Register / Vol. 81 , No. 206 / Tuesday, October 25, 2016 /
Rules and Regulations

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ENVIRONMENTAL PROTECTION AGENCY

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

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 523, 534, 535, and 538

[EPA-HQ-OAR-2014-0827; NHTSA-2014-0132; FRL-9950-25-OAR]
RIN 2060-AS16; RIN 2127-AL52

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

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

ACTION: Final rule.

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SUMMARY: EPA and NHTSA, on behalf of the Department of Transportation,
are establishing rules for a comprehensive Phase 2 Heavy-Duty (HD)
National Program that will reduce greenhouse gas (GHG) emissions and
fuel consumption from new on-road medium- and heavy-duty vehicles and
engines. NHTSA's fuel consumption standards and EPA's carbon dioxide
(CO2) emission standards are tailored to each of four
regulatory categories of heavy-duty vehicles: Combination tractors;
trailers used in combination with those tractors; heavy-duty pickup
trucks and vans; and vocational vehicles. The rule also includes
separate standards for the engines that power combination tractors and
vocational vehicles. Certain requirements for control of GHG emissions
are exclusive to the EPA program. These include EPA's hydrofluorocarbon
standards to control leakage from air conditioning systems in
vocational vehicles and EPA's nitrous oxide (N2O) and
methane (CH4) standards for heavy-duty engines.
Additionally, NHTSA is addressing misalignment between the Phase 1 EPA
GHG standards and the NHTSA fuel efficiency standards to virtually
eliminate the differences. This action also includes certain EPA-
specific provisions relating to control of emissions of pollutants
other than GHGs. EPA is finalizing non-GHG emission standards relating
to the use of diesel auxiliary power units installed in new tractors.
In addition, EPA is clarifying the classification of natural gas
engines and other gaseous-fueled heavy-duty engines. EPA is also
finalizing technical amendments to EPA rules that apply to emissions of
non-GHG pollutants from light-duty motor vehicles, marine diesel
engines, and other nonroad engines and equipment. Finally, EPA is
requiring that engines from donor vehicles installed in new glider
vehicles meet the emission standards applicable in the year of assembly
of the new glider vehicle, including all applicable standards for
criteria pollutants, with limited exceptions for small businesses and
for other special circumstances.

DATES: This final rule is effective on December 27, 2016. The
incorporation by reference of certain publications listed in this
regulation is approved by the Director of the Federal Register as of
December 27, 2016.

ADDRESSES: EPA and NHTSA have established dockets for this action under
Docket ID No. EPA-HQ-OAR-2014-0827 (for EPA's docket) and NHTSA-2014-
0132 (for NHTSA's docket). All documents in the docket are listed on
the https://www.regulations.gov Web site. Although listed in the index,
some information is not publicly available, e.g., CBI or other
information whose disclosure is restricted by statute. Certain other
material, such as copyrighted material, is not placed on the Internet
and will be publicly available only in hard copy form. Publicly
available docket materials are available either electronically in
https://www.regulations.gov or in hard copy at the following locations:
    EPA: Air and Radiation Docket and Information Center, EPA Docket
Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW., Room
3334, Washington, DC. The Public Reading Room is open from 8:30 a.m. to
4:30 p.m., Monday through Friday, excluding legal holidays. The
telephone number for the Public Reading Room is<PHONE_NUMBER>, and the
telephone number for the Air Docket is<PHONE_NUMBER>.
    NHTSA: Docket Management Facility, M-30, U.S. Department of
Transportation, West Building, Ground Floor, Rm. W12-140, 1200 New
Jersey Avenue SE., Washington, DC 20590. The telephone number for the
docket management facility is<PHONE_NUMBER>. The docket management
facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through
Friday, except Federal Holidays.

FOR FURTHER INFORMATION CONTACT:
    EPA: Tad Wysor, Office of Transportation and Air Quality,
Assessment and Standards Division (ASD), Environmental Protection
Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number:
(734) 214-4332; email address<EMAIL_ADDRESS>    NHTSA: Ryan Hagen, Office of Chief Counsel, National Highway
Traffic Safety Administration, 1200 New Jersey Avenue SE., Washington,
DC 20590. Telephone:<PHONE_NUMBER><EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    This action will affect companies that manufacture, sell, or import
into the United States new heavy-duty engines and new Class 2b through
8 trucks, including combination tractors, all types of buses,
vocational vehicles including municipal, commercial, recreational
vehicles, and commercial trailers as well as \3/4\-ton and 1-ton pickup
trucks and vans. The heavy-duty category incorporates all motor
vehicles with a gross vehicle weight rating of 8,500 lbs. or greater,
and the engines that power them, except for medium-duty passenger
vehicles already covered by the greenhouse gas standards and corporate
average fuel economy standards issued for light-duty model year 2017-
2025 vehicles.\1\ Regulated categories and entities include the
following:
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    \1\ As discussed in Section I.A, the term heavy-duty is
generally used in this rulemaking to refer to all vehicles with a
gross vehicle weight rating above 8,500 lbs, including vehicles that
are sometimes otherwise known as medium-duty vehicles.

------------------------------------------------------------------------
                                               Examples of potentially
          Category           NAICS code \a\       affected entities
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Industry...................          336111  Motor Vehicle
                                              Manufacturers, Engine
                                              Manufacturers, Truck
                                              Manufacturers, Truck
                                              Trailer Manufacturers.
                                     336112
                                     333618
                                     336120
                                     336212
Industry...................          541514  Commercial Importers of
                                              Vehicles and Vehicle
                                              Components.
                                     811112

                                     811198
Industry...................          336111  Alternative Fuel Vehicle
                                              Converters.
                                     336112
                                     422720
                                     454312
                                     541514
                                     541690
                                     811198
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Note:
\a\ North American Industry Classification System (NAICS).

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

B. Did EPA conduct a peer review before issuing this document?

    This regulatory action is supported by influential scientific
information. Therefore, EPA conducted a peer review consistent with
OMB's Final Information Quality Bulletin for Peer Review. As described
in Section II.C, a peer review of updates to the vehicle simulation
model (GEM) for the Phase 2 standards has been completed. This version
of GEM is based on the model used for the Phase 1 rule, which was peer
reviewed by a panel of four independent subject matter experts. The
peer review report and EPA's response to the peer review comments are
available in Docket ID No. EPA-HQ-OAR-2014-0827. We note that this
rulemaking is based on a vast body of existing peer-reviewed work,
i.e., work that was peer-reviewed outside of this action, as noted in
the references throughout this Preamble, the Regulatory Impacts
Analysis, and the rulemaking docket. EPA also notified the SAB of its
plans for this rulemaking and on June 11, 2014, the chartered SAB
discussed the recommendations of its work group on the planned action
and agreed that no further SAB consideration of the supporting science
was merited.

C. Executive Summary

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

    In June 2013, the President announced a comprehensive Climate
Action Plan for the United States to reduce carbon pollution, prepare
for the impacts of climate change, and lead international efforts to
address global climate change.\2\ In this plan, President Obama
reaffirmed his commitment to reduce U.S. greenhouse gas emissions in
the range of 17 percent below 2005 levels by 2020. More recently, in
December 2015, the U.S. was one of over 190 signatories to the Paris
Climate Agreement, widely regarded as the most ambitious climate change
agreement in history. The Paris agreement reaffirms the goal of
limiting global temperature increase to well below 2 degrees Celsius,
and for the first time urged efforts to limit the temperature increase
to 1.5 degrees Celsius. The U.S. submitted a non-binding intended
nationally determined contribution (NDC) target of reducing economy-
wide GHG emissions by 26-28 percent below its 2005 level in 2025 and to
make best efforts to reduce emissions by 28 percent.\3\ This pace would
keep the U.S. on a trajectory to achieve deep economy-wide reductions
on the order of 80 percent by 2050.
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    \2\ The White House, The President's Climate Action Plan (June,
2013). http://www.whitehouse.gov/share/climate-action-plan.
    \3\ United States of America, Intended Nationally Determined
Contribution, March 31, 2015, http://www4.unfccc.int/submissions/INDC/Published%20Documents/United%20States%20of%20America/1/U.S.%20Cover%20Note%20INDC%20and%20Accompanying%20Information.pdf.
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    As part of his Climate Action plan, the President specifically
directed the Environmental Protection Agency (EPA) and the Department
of Transportation's (DOT) National Highway Traffic Safety
Administration (NHTSA) to set the next round of standards to reduce
greenhouse gas (GHG) emissions and improve fuel efficiency for heavy-
duty vehicles pursuant to and consistent with the agencies' existing
statutory authorities.\4\ More than 70 percent of the oil used in the
United States and 26 percent of GHG emissions come from the
transportation sector, and since 2009 EPA and NHTSA have worked with
industry, states, and other stakeholders to develop ambitious, flexible
standards for both the fuel economy and GHG emissions of light-duty
vehicles and the fuel efficiency and GHG emissions of heavy-duty
vehicles.5 6 The standards here (referred to as Phase 2)
will build on the light-duty vehicle standards spanning model years
2012 to 2025 and on the initial phase of standards (referred to as
Phase 1) for new medium and heavy-duty vehicles (MDVs and HDVs) and
engines in model years 2014 to 2018. Throughout every stage of
development for these programs, EPA and NHTSA (collectively, the
agencies, or ``we'') have worked in close partnership not only with one
another, but also with the vehicle manufacturing industry,
environmental community leaders, and the State of California among
other entities to create a single, effective set of national standards.
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    \4\ EPA's HD Phase 2 GHG emission standards are authorized under
the Clean Air Act, and NHTSA's HD Phase 2 fuel consumption standards
are authorized under the Energy Independence and Security Act of
2007.
    \5\ The White House, Improving the Fuel Efficiency of American
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving
Money and Supporting Manufacturing Innovation (Feb. 2014), 2.
    \6\ U.S. Environmental Protection Agency. April 2016. Inventory
of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012. EPA 430-R-16-
002. Mobile sources emitted 28 percent of all U.S. GHG emissions in
2012. Available at  https://www3.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2016-Main-Text.pdf.
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    Through two previous rulemakings, EPA and NHTSA have worked with
the auto industry to develop new fuel economy and GHG emission
standards for light-duty vehicles. Taken together with NHTSA's 2011
CAFE standards, the light-duty vehicle standards span model years 2011
to 2025 and are the first significant improvement in fuel economy in
approximately two decades. Under the final program, average new car and
light truck fuel economy is expected to nearly double by 2025

compared to 2010 vehicles.\7\ In the 2012 rule, the agencies projected
the standards would save consumers $1.7 trillion at the pump--roughly
$8,200 per vehicle for a MY 2025 vehicle--reducing oil consumption by
2.2 million barrels a day in 2025 and slashing GHG emissions by 6
billion metric tons over the lifetime of the vehicles sold during this
period.\8\ These fuel economy standards are already delivering savings
for American drivers. Between model years 2008 and 2013, the unadjusted
average test fuel economy of new passenger cars and light trucks sold
in the United States has increased by about four miles per gallon.
Altogether, light-duty vehicle fuel economy standards finalized after
2008 have already saved nearly one billion gallons of fuel and avoided
more than 10 million tons of carbon dioxide emissions.\9\
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    \7\ The White House, Improving the Fuel Efficiency of American
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving
Money and Supporting Manufacturing Innovation (Feb. 2014), 2.
    \8\ Id.
    \9\ Id. at 3.
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    Similarly, EPA and NHTSA have previously developed joint GHG
emission and fuel efficiency standards for MDVs and HDVs. Prior to
these Phase 1 standards, heavy-duty trucks and buses--from delivery
vans to the largest tractor-trailers--were required to meet pollution
standards for soot and smog-causing air pollutants, but no requirements
existed for the fuel efficiency or carbon pollution from these
vehicles.\10\ By 2010, total fuel consumption and GHG emissions from
MDVs and HDVs had been growing, and these vehicles accounted for 23
percent of total U.S. transportation-related GHG emissions \11\ and
about 20 percent of U.S. transportation-related energy use. In August
2011, the agencies finalized the groundbreaking Phase 1 standards for
new MDVs and HDVs in model years 2014 through 2018. This program,
developed with support from the trucking and engine industries, the
State of California, Environment and Climate Change Canada, and leaders
from the environmental community, set standards based on the use of
off-the-shelf technologies. These standards are expected to save a
projected 530 million barrels of oil and reduce carbon emissions by
about 270 million metric tons, representing one of the most significant
programs available to reduce domestic fuel consumption and emissions of
GHGs.\12\ The Phase 1 program, as well as the many additional actions
called for in the President's 2013 Climate Action Plan \13\ including
this Phase 2 rulemaking, not only result in meaningful decreases in GHG
emissions and fuel consumption, but also support--indeed are critical
for--United States leadership to encourage other countries to also
achieve meaningful GHG reductions and fuel conservation.
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    \10\ Id.
    \11\ Id.
    \12\ Id. at 4.
    \13\ The President's Climate Action Plan calls for GHG-cutting
actions including, for example, reducing carbon emissions from power
plants and curbing hydrofluorocarbon and methane emissions.
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    This rule builds on our commitment to robust collaboration with
stakeholders and the public. It follows an expansive and thorough
outreach effort in which the agencies gathered input, data and views
from many interested stakeholders, involving over 400 meetings with
heavy-duty vehicle and engine manufacturers, technology suppliers,
trucking fleets, truck drivers, dealerships, environmental
organizations, and state agencies.\14\ As with the previous light-duty
rules and the heavy-duty Phase 1 rule, the agencies have consulted
frequently with the California Air Resources Board (CARB) staff during
the development of this rule, given California's unique ability among
the states to adopt their own GHG standards for on-highway engines and
vehicles. Through this close coordination, the agencies are finalizing
a Phase 2 program that will be fully aligned between EPA and NHTSA,
while providing CARB with the opportunity to adopt a Phase 2 program
that will allow manufacturers to continue to build a single fleet of
vehicles and engines.
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    \14\ ``Heavy-Duty Phase 2 Stakeholder Meeting Log'', August
2016.
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(2) Overview of Phase 1 Medium- and Heavy-Duty Vehicle Standards

    The Phase 1 program covers new trucks and heavy vehicles in model
years 2014 and later. That program includes specific standards for
combination tractors, heavy-duty pickup trucks and vans, and vocational
vehicles and includes separate standards for both vehicles and engines.
The program offers extensive flexibility, allowing manufacturers to
reach standards through average fleet calculations, a mix of
technologies, and the use of various credit and banking programs.
    The Phase 1 program was developed by the agencies through close
consultation with industry and other stakeholders, resulting in
standards tailored to the specifics of each different class of vehicles
and engines.
     Heavy-duty combination tractors. Combination tractors--
semi trucks that typically pull trailers--are regulated under nine
subcategories based on weight class, cab type, and roof height. These
vehicles represent approximately 60 percent of the fuel consumption and
GHG emissions from MDVs and HDVs.
     Heavy-duty pickup trucks and vans. Heavy-duty pickup and
van standards are based on a ``work factor'' attribute that combines a
vehicle's payload, towing capabilities, and the presence of 4-wheel
drive. These vehicles represent about 23 percent of the fuel
consumption and GHG emissions from MDVs and HDVs.
     Vocational vehicles. Specialized vocational vehicles,
which consist of a very wide variety of truck and bus types (e.g.,
delivery, refuse, utility, dump, cement, transit bus, shuttle bus,
school bus, emergency vehicles, and recreational vehicles) are
regulated in three subcategories based on engine classification. These
vehicles represent approximately 17 percent of the fuel consumption and
GHG emissions from MDVs and HDVs. The Phase 1 program includes EPA GHG
standards for recreational vehicles, but not NHTSA fuel efficiency
standards.\15\
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    \15\ The Phase 2 program will also include NHTSA recreational
vehicle fuel efficiency standards.
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     Heavy-duty engines. The Phase 1 rule has independent
standards for heavy-duty engines to assure they contribute to reducing
GHG emissions and fuel consumption because the Phase 1 tractor and
vocational vehicle standards do not account for the contributions of
engine improvements to reducing fuel consumption and GHG emissions.
    The Phase 1 standards were premised on utilization of technologies
that were already in production on some vehicles at the time of the
Phase 1 FRM and are adaptable to the broader fleet. The Phase 1 program
provides flexibilities that facilitate compliance. These flexibilities
help provide sufficient lead time for manufacturers to make necessary
technological improvements and reduce the overall cost of the program,
without compromising overall environmental and fuel consumption
objectives. The primary flexibility provisions are an engine averaging,
banking, and trading (ABT) program and a vehicle ABT program. These ABT
programs allow for emission and/or fuel consumption credits to be
averaged, banked, or traded within each of the averaging sets.
    The Phase 1 program was projected to save 530 million barrels of
oil and avoid 270 million metric tons of GHG emissions.\16\ At the same
time, the

program was projected to produce $50 billion in fuel savings and $49
billion of net societal benefits. Today, the Phase 1 fuel efficiency
and GHG reduction standards are already reducing GHG emissions and U.S.
oil consumption, and producing fuel savings for America's trucking
industry. The market appears to be very accepting of the Phase 1
technologies.
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    \16\ The White House, Improving the Fuel Efficiency of American
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving
Money and Supporting Manufacturing Innovation (Feb. 2014), 4.
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(3) Overview of Phase 2 Medium- and Heavy-Duty Vehicle Standards

    The Phase 2 GHG and fuel efficiency standards for MDVs and HDVs are
a critical next step in improving fuel efficiency and reducing GHG
emissions. The Phase 2 national program carries forward our commitment
to meaningful collaboration with stakeholders and the public, as they
build on more than 400 meetings with manufacturers, suppliers, trucking
fleets, dealerships, state air quality agencies, non-governmental
organizations (NGOs), and other stakeholders; over 200,000 public
comments; and two public hearings to identify and understand the
opportunities and challenges involved with this next level of fuel-
saving technology. These meetings and public feedback, in addition to
close coordination with CARB, have been invaluable to the agencies,
enabling the development of a program that appropriately balances all
potential impacts, effectively minimizes the possibility of unintended
consequences, and allows manufacturers to continue to build a single
fleet of vehicles and engines.
    Phase 2 will include technology-advancing standards that will phase
in over the long-term (through model year 2027) to result in an
ambitious, yet achievable program that will allow manufacturers to meet
standards through a mix of different technologies at reasonable cost.
The terminal requirements go into effect in 2027, and would apply to MY
2027 and subsequent model year vehicles, unless modified by future
rulemaking. The Phase 2 standards will maintain the underlying
regulatory structure developed in the Phase 1 program, such as the
general categorization of MDVs and HDVs and the separate standards for
vehicles and engines. However, the Phase 2 program will build on and
advance Phase 1 in a number of important ways including the following:
basing standards not only on currently available technologies but also
on utilization of technologies now under development or not yet widely
deployed while providing significant lead time to assure adequate time
to develop, test, and phase in these controls; developing first-time
GHG and fuel efficiency standards for trailers; further encouraging
innovation and providing flexibility; including vehicles produced by
small business manufacturers with appropriate flexibilities for these
companies; incorporating enhanced test procedures that (among other
things) allow individual drivetrain and powertrain performance to be
reflected in the vehicle certification process; and using an expanded
and improved compliance simulation model.
    The Phase 2 program will provide significant GHG reductions and
save fuel by:
     Strengthening standards to account for ongoing
technological advancements. Relative to the baseline as of the end of
Phase 1, these final standards are projected to achieve vehicle fuel
savings as high as 25 percent, depending on the vehicle category. While
costs are higher than for Phase 1, benefits greatly exceed costs, and
payback periods are short, meaning that consumers will see substantial
net savings over the vehicle lifetime. Payback is estimated at about
two years for tractors and trailers, about four years for vocational
vehicles, and about three years for heavy-duty pickups and vans. The
agencies are finalizing a program that phases in the MY 2027 standards
with interim standards for model years 2021 and 2024 (and for certain
types of trailers, EPA is finalizing model year 2018 phase-in standards
as well). The final program includes both significant strengthening of
certain standards from the NPRM as well as adjustments to better align
other standards with new data, analysis, and stakeholder and public
feedback received since the time of the proposal.
     Setting standards for trailers for the first time. In
addition to retaining the vehicle and engine categories covered in the
Phase 1 program, the Phase 2 standards include fuel efficiency and GHG
emission standards for trailers used in combination with tractors.
Although the agencies are not finalizing standards for all trailer
types, the majority of new trailers will be covered.
     Encouraging technological innovation while providing
flexibility and options for manufacturers. For each category of HDVs,
the standards will set performance targets that allow manufacturers to
achieve reductions through a mix of different technologies and
generally leave manufacturers free to choose any means of compliance.
For tractor standards, for example, different combinations of
improvements like advanced aerodynamics, engine improvements and waste-
heat recovery, automated transmission, lower rolling resistance tires,
and automatic tire inflation can be used to meet standards. For
tractors and vocational vehicles, enhanced test procedures and an
expanded and improved compliance simulation model enable the vehicle
standards to encompass more of the complete vehicle than the Phase 1
program and to account for engine, transmission and driveline
improvements. With the addition of the powertrain and driveline to the
compliance model, representative drive cycles and vehicle baseline
configurations become critically important to assure the standards
promote technologies that improve real world fuel efficiency and GHG
emissions. This rule updates drive cycles and vehicle configurations to
better reflect real world operation. The final program includes
adjustments to technical elements of the proposed compliance program,
e.g., test procedures, reflecting the significant amount of stakeholder
and public comment the agencies received on the program. Additionally,
the agencies' analyses indicate that this rule should have no adverse
impact on vehicle or engine safety.
     Providing flexibilities to help minimize effect on small
businesses. All small businesses are exempt from the Phase 1 standards.
The agencies are regulating small business entities under Phase 2
(notably certain trailer manufacturers), but we have conducted
extensive proceedings pursuant to section 609 of the Regulatory
Flexibility Act, and engaged in extensive consultation with
stakeholders, and developed an approach to provide targeted
flexibilities geared toward helping small businesses comply with the
Phase 2 standards. Specifically, the agencies are delaying the initial
implementation of the Phase 2 standards by one year and simplifying
certification requirements for small businesses. We are also adopting
additional flexibilities and exemptions adapted to particular vehicle
categories.
    The following tables summarize the impacts of the Heavy-Duty Phase
2 rule.

  Summary of the Phase 2 Medium- and Heavy-Duty Vehicle Rule Impacts to
Fuel Consumption, GHG Emissions, Benefits and Costs Over the Lifetime of
                      Model Years 2018-2029 \a\ \b\
------------------------------------------------------------------------
                                                3%              7%
------------------------------------------------------------------------
Fuel Reductions (billion gallons).......               71-82
                                         -------------------------------
GHG Reductions (MMT, CO[ihel2]eq).......             959-1098
                                         -------------------------------
Pre-Tax Fuel Savings ($billion).........         149-169           80-87
Discounted Technology Costs ($billion)..           24-27           16-18
Value of reduced emissions ($billion)...           60-69           48-52
Total Costs ($billion)..................           29-31           19-20
Total Benefits ($billion)...............         225-260         136-151
Net Benefits ($billion).................         197-229         117-131
------------------------------------------------------------------------
Notes:
\a\ Ranges reflect two analysis methods: Method A with the 1b baseline
  and Method B with the la baseline. For an explanation of analytical
  Methods A and B, please see Section I.D; for an explanation of the
  ``flat'' baseline, 1a, and the ``dynamic'' baseline, 1b, please see
  Section X.A.1.
\b\ Benefits and net benefits (including those in the 7% discount rate
  column) use the 3 percent average Social Cost of CO[ihel2], the Social
  Cost of CH[ihel4], and the Social Cost of N[ihel2]O.

  Summary of the Phase 2 Medium- and Heavy-Duty Vehicle Annual Fuel and
  GHG Reductions, Program Costs, Benefits and Net Benefits in Calendar
                         Years 2040 and 2050 \a\
------------------------------------------------------------------------
                                               2040            2050
------------------------------------------------------------------------
Fuel Reductions (Billion Gallons).......            10.8            13.0
GHG Reduction (MMT, CO[ihel2]eq)........           166.8           199.3
Vehicle Program Costs (including                   -$6.5           -$7.5
 Maintenance; Billions of 2013$)........
Fuel Savings (Pre-Tax; Billions of                 $53.1           $63.4
 2013$).................................
Benefits (Billions of 2013$)............           $24.8           $31.7
Net Benefits (Billions of 2013$)........           $71.4           $87.6
------------------------------------------------------------------------
Note:
\a\ Benefits and net benefits (including those in the 7% discount rate
  column) use the 3 percent average Social Cost of CO[ihel2], the Social
  Cost of CH[ihel4], and the Social Cost of N[ihel2]O. Values reflect
  the final program using Method B relative to the flat baseline (a
  reference case that projects very little improvement in new vehicle
  fuel economy absent new standards).

  Summary of the Phase 2 Medium- and Heavy-Duty Vehicle Program Expected Per-Vehicle Fuel Savings, GHG Emission
                                 Reductions, and Cost for Key Vehicle Categories
----------------------------------------------------------------------------------------------------------------
                                                              MY 2021            MY 2024            MY 2027
----------------------------------------------------------------------------------------------------------------
Maximum Vehicle Fuel Savings and Tailpipe GHG Reduction
 (%):
    Tractors \b\.......................................                 13                 20                 25
    Trailers \a\.......................................                  5                  7                  9
    Vocational Vehicles \b\............................                 12                 20                 24
    Pickups/Vans.......................................                2.5                 10                 16
Per Vehicle Cost ($)\c\ \d\ (% Increase in Typical
 Vehicle Price):
    Tractors...........................................      $6,400-$6,480     $9,920-$10,100    $12,160-$12,440
                                                                      (6%)              (10%)              (12%)
    Trailers...........................................          $850-$870      $1,000-$1,030      $1,070-$1,110
                                                                      (3%)               (4%)               (4%)
    Vocational Vehicles................................      $1,110-$1,160      $1,980-$2,020      $2,660-$2,700
                                                                      (1%)               (2%)               (3%)
    Pickups/Vans.......................................          $520-$750          $760-$960      $1,340-$1,360
                                                                      (1%)               (2%)               (3%)
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Note that the EPA standards for trailers begin in model year 2018
\b\ All engine costs are included
\c\ Please refer to Preamble Chapters 6 and 10 for additional information on the reference fleet used to analyze
  costs and benefits of the rule. Please also refer to these chapters for impacts of the rule under more dynamic
  baseline assumptions for pickups and vans.
\d\ Ranges reflect two analysis methods: Method A with the 1b baseline and Method B with the la baseline. For an
  explanation of analytical Methods A and B, please see Section I.D; for an explanation of the ``flat''
  baseline, 1a, and the ``dynamic'' baseline, 1b, please see Section X.A.1.
\e\ For this table, we use an approximate minimum vehicle price today of $100,000 for tractors, $25,000 for
  trailers, $100,000 for vocational vehicles and $40,000 for HD pickups/vans.

Payback Periods for MY 2027 Vehicles Under the Final Standards, Based on
                      both Analysis Methods A and B
        [Payback occurs in the year shown; using 7% discounting]
------------------------------------------------------------------------
                                                   Final standards
------------------------------------------------------------------------
Tractors/Trailers..........................  2nd.
Vocational Vehicles........................  4th.
Pickups/Vans \a\...........................  3rd.
------------------------------------------------------------------------
Note:
\a\ Please refer to Preamble Chapters 6 and 10 for additional
  information on the reference fleet used to analyze costs and benefits
  of the rule. Please also refer to these chapters for impacts of the
  rule under more dynamic baseline assumptions for pickups and vans.

(4) Issues Addressed in This Final Rule

    This Preamble contains extensive discussion of the background,
elements, and implications of the Phase 2 program, as well as updates
made to the final program from the proposal based on new data,
analysis, stakeholder feedback and public comments. Section I includes
information on the MDV and HDV industry, related regulatory and non-
regulatory programs, summaries of Phase 1 and Phase 2 programs, costs
and benefits of the final standards, and relevant statutory authority
for EPA and NHTSA. Section II discusses vehicle simulation, engine
standards, and test procedures. Sections III, IV, V, and VI detail the
final standards for combination tractors, trailers, vocational
vehicles, and heavy-duty pickup trucks and vans. Sections VII and VIII
discuss aggregate GHG impacts, fuel consumption impacts, climate
impacts, and impacts on non-GHG emissions. Section IX evaluates the
economic impacts of the final program. Sections X and XI present the
alternatives analyses and consideration of natural gas vehicles.
Finally, Sections XII and XIII discuss the changes that the Phase 2
rules will have on Phase 1 standards and other regulatory provisions.
In addition to this Preamble, the Regulatory Impact Analysis (RIA),\17\
provides additional data, analysis and discussion of the standards, and
the Response to Comments Document for Joint Rulemaking (RTC) provides
responses to comments received on the Phase 2 rulemaking through the
public comment process.\18\
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    \17\ Available on EPA and NHTSA's Web sites and in the public
docket for this rulemaking.
    \18\ Available on EPA's Web site and in the public docket for
this rulemaking.
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Table of Contents

    A. Does this action apply to me?
    B. Did EPA conduct a peer review before issuing this document?
    C. Executive Summary
I. Overview
    A. Background
    B. Summary of Phase 1 Program
    C. Summary of the Phase 2 Standards and Requirements
    D. Summary of the Costs and Benefits of the Final Rules
    E. EPA and NHTSA Statutory Authorities
    F. Other Issues
II. Vehicle Simulation and Separate Engine Standards for Tractors
and Vocational Chassis
    A. Introduction
    B. Phase 2 Regulatory Structure
    C. Phase 2 GEM and Vehicle Component Test Procedures
    D. Engine Test Procedures and Engine Standards
III. Class 7 and 8 Combination Tractors
    A. Summary of the Phase 1 Tractor Program
    B. Overview of the Phase 2 Tractor Program and Key Changes From
the Proposal
    C. Phase 2 Tractor Standards
    D. Feasibility of the Final Phase 2 Tractor Standards
    E. Phase 2 Compliance Provisions for Tractors
    F. Flexibility Provisions
IV. Trailers
    A. The Trailer Industry
    B. Overview of the Phase 2 Trailer Program and Key Changes From
the Proposal
    C. Phase 2 Trailer Standards
    D. Feasibility of the Trailer Standards
    E. Trailer Standards: Compliance and Flexibilities
V. Class 2b-8 Vocational Vehicles
    A. Summary of Phase 1 Vocational Vehicle Standards
    B. Phase 2 Standards for Vocational Vehicles
    C. Feasibility of the Vocational Vehicle Standards
    D. Compliance Provisions for Vocational Vehicles
VI. Heavy-Duty Pickups and Vans
    A. Summary of Phase 1 HD Pickup and Van Standards
    B. HD Pickup and Van Final Phase 2 Standards
    C. Use of the CAFE Model in Heavy-Duty Rulemaking
    D. NHTSA CAFE Model Analysis of the Regulatory Alternatives for
HD Pickups and Vans: Method A
    E. Analysis of the Regulatory Alternatives for HD Pickups and
Vans: Method B
    F. Compliance and Flexibility for HD Pickup and Van Standards
VII. Aggregate GHG, Fuel Consumption, and Climate Impacts
    A. What methodologies did the agencies use to project GHG
emissions and fuel consumption impacts?
    B. Analysis of Fuel Consumption and GHG Emissions Impacts
Resulting From Final Standards
    C. What are the projected reductions in fuel consumption and GHG
emissions?
    D. Climate Impacts and Indicators
VIII. How will these rules impact non-GHG emissions and their
associated effects?
    A. Health Effects of Non-GHG Pollutants
    B. Environmental Effects of Non-GHG Pollutants
    C. Emissions Inventory Impacts
    D. Air Quality Impacts of Non-GHG Pollutants
IX. Economic and Other Impacts
    A. Conceptual Framework
    B. Vehicle-Related Costs Associated With the Program
    C. Changes in Fuel Consumption and Expenditures
    D. Maintenance Expenditures
    E. Analysis of the Rebound Effect
    F. Impact on Class Shifting, Fleet Turnover, and Sales
    G. Monetized GHG Impacts
    H. Monetized Non-GHG Health Impacts
    I. Energy Security Impacts
    J. Other Impacts
    K. Summary of Benefits and Costs
    L. Employment Impacts
    M. Cost of Ownership and Payback Analysis
    N. Safety Impacts
X. Analysis of the Alternatives
    A. What are the alternatives that the agencies considered?
    B. How do these alternatives compare in overall fuel consumption
and GHG emissions reductions?
XI. Natural Gas Vehicles and Engines
    A. Natural Gas Engine and Vehicle Technology
    B. GHG Lifecycle Analysis for Natural Gas Vehicles
    C. Projected Use of LNG and CNG
    D. Natural Gas Emission Control Measures
    E. Dimethyl Ether
XII. Amendments to Phase 1 Standards
    A. EPA Amendments
    B. Other Compliance Provisions for NHTSA
XIII. Other Regulatory Provisions
    A. Amendments Related to Heavy-Duty Highway Engines and Vehicles
    B. Amendments Affecting Glider Vehicles and Glider Kits
    C. Applying the General Compliance Provisions of 40 CFR Part
1068 to Light-Duty Vehicles, Light-Duty Trucks, Chassis-Certified
Class 2b and 3 Heavy-Duty Vehicles and Highway Motorcycles
    D. Amendments to General Compliance Provisions in 40 CFR Part
1068
    E. Amendments to Light-Duty Greenhouse Gas Program Requirements
    F. Amendments to Highway and Nonroad Test Procedures and
Certification Requirements
    G. Amendments Related to Locomotives in 40 CFR Part 1033
    H. Amendments Related to Nonroad Diesel Engines in 40 CFR Part
1039
    I. Amendments Related to Marine Diesel Engines in 40 CFR Parts
1042 and 1043
    J. Miscellaneous EPA Amendments
    K. Competition Vehicles
    L. Amending 49 CFR Parts 512 and 537 To Allow Electronic
Submissions and Defining Data Formats for Light-Duty Vehicle
Corporate Average Fuel Economy (CAFE) Reports
XIV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and
Executive

Order 13563: Improving Regulation and Regulatory Review
    B. National Environmental Policy Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility Act
    E. Unfunded Mandates Reform Act
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From
Environmental Health Risks and Safety Risks
    I. Executive Order 13211: Actions Concerning Regulations That
Significantly Affect Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act and 1 CFR
Part 51
    K. Executive Order 12898: Federal Actions To Address
Environmental Justice in Minority Populations and Low-Income
Populations
    L. Endangered Species Act (ESA)
    M. Congressional Review Act (CRA)
XV. EPA and NHTSA Statutory Authorities
    A. EPA
    B. NHTSA
List of Subjects

I. Overview

    The agencies issued a Notice of Proposed Rulemaking (NPRM) on July
13, 2015, that proposed Phase 2 GHG and fuel efficiency standards for
heavy-duty engines and vehicles.\19\ The agencies also issued a Notice
of Data Availability (NODA) on March 2, 2016, to solicit comment on new
material not available at the time of the NPRM.\20\ The agencies have
revised the proposed standards and related requirements to address
issues raised in public comments. Nevertheless, the final rules being
adopted today remain fundamentally similar to the proposed rules.
---------------------------------------------------------------------------

    \19\ 80 FR 40137.
    \20\ 81 FR 10824.
---------------------------------------------------------------------------

    Although the agencies describe the final requirements in this
document, readers are encouraged to also read supporting materials that
have been place into the public dockets for these rules. In particular,
the agencies note:

 The Final Regulatory Impact Analysis (RIA), provides
additional technical information and analysis
 The Response to Comments Document for Joint Rulemaking (RTC),
provides a detailed summary and analysis of public comments, including
comments received in response to the NODA
 The NHTSA Final Environmental Impact Statement (FEIS)

    This overview of the final Phase 2 GHG emissions and fuel
efficiency standards includes a description of the heavy-duty truck
industry and related regulatory and non-regulatory programs, a summary
of the Phase 1 GHG emissions and fuel efficiency program, a summary of
the Phase 2 standards and requirements being finalized, a summary of
the costs and benefits of the Phase 2 standards, discussion of EPA and
NHTSA statutory authorities, and other issues.

A. Background

    For purposes of this Preamble (and consistent with all terminology
used at proposal), the terms ``heavy-duty'' or ``HD'' are used to apply
to all highway vehicles and engines that are not within the range of
light-duty passenger cars, light-duty trucks, and medium-duty passenger
vehicles (MDPV) covered by separate GHG and Corporate Average Fuel
Economy (CAFE) standards.\21\ (The terms also do not include
motorcycles). Thus, in this rulemaking, unless specified otherwise, the
heavy-duty category incorporates all vehicles with a gross vehicle
weight rating above 8,500 lbs, and the engines that power them, except
for MDPVs.22 23 24 Note also that the terms heavy-duty truck
and heavy-duty vehicle are sometimes used interchangeably, even though
commercially the term heavy-duty truck can have a narrower meaning.
---------------------------------------------------------------------------

    \21\ 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas
Emissions and Corporate Average Fuel Economy Standards; Final Rule,
77 FR 62623, October 15, 2012.
    \22\ The CAA defines heavy-duty as a truck, bus or other motor
vehicles with a gross vehicle weight rating exceeding 6,000 lbs (CAA
section 202(b)(3)). The term HD as used in this action refers to a
subset of these vehicles and engines.
    \23\ The Energy Independence and Security Act of 2007 requires
NHTSA to set standards for commercial medium- and heavy-duty on-
highway vehicles, defined as on-highway vehicles with a GVWR of
10,000 lbs or more, and work trucks, defined as vehicles with a GVWR
between 8,500 and 10,000 lbs and excluding medium duty passenger
vehicles.
    \24\ The term ``medium-duty'' is sometimes used to refer to the
lighter end of this range of vehicles. This is typically in the
context of statutes or reports that use the term ``medium-duty.''
For example, because the term medium-duty is used in EISA, the term
is also used in much of the discussion of NHTSA's statutory
authority.
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    Consistent with the President's direction, over the past three
years as we have developed this rulemaking, the agencies have met on an
on-going basis with a very large number of diverse stakeholders. This
includes meetings, and in many cases site visits, with truck, trailer,
and engine manufacturers; technology supplier companies and their trade
associations (e.g., transmissions, drivelines, fuel systems,
turbochargers, tires, catalysts, and many others); line haul and
vocational trucking firms and trucking associations; the trucking
industries owner-operator association; truck dealerships and dealers
associations; trailer manufacturers and their trade association; non-
governmental organizations (NGOs, including environmental NGOs,
national security NGOs, and consumer advocacy NGOs); state air quality
agencies; manufacturing labor unions; and many other stakeholders. In
addition, EPA and NHTSA have consulted on an on-going basis with the
California Air Resources Board (CARB) over the past three years as we
developed the Phase 2 rule. CARB staff and managers have also
participated with EPA and NHTSA in meetings with many external
stakeholders, including those with vehicle OEMs and technology
suppliers.\25\
---------------------------------------------------------------------------

    \25\ Vehicle chassis manufacturers are known in this industry as
original equipment manufacturers or OEMs.
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    EPA and NHTSA staff also participated in a large number of
technical and policy conferences over the past three years related to
the technological, economic, and environmental aspects of the heavy-
duty trucking industry. The agencies also met with regulatory
counterparts from several other nations who either have already or are
considering establishing fuel consumption or GHG requirements,
including outreach with representatives from the governments of Canada,
the European Commission, Japan, and China.
    These comprehensive outreach actions by the agencies provided us
with information to assist in our identification of potential
technologies that can be used to reduce heavy-duty GHG emissions and
improve fuel efficiency. The outreach has also helped the agencies to
identify and understand the opportunities and challenges involved with
these standards for the heavy-duty trucks, trailers, and engines
detailed in this Preamble, including time needed for implementation of
various technologies and potential costs and fuel savings. The scope of
this outreach effort to gather input for the proposal and final
rulemaking included well over 400 meetings with stakeholders. These
meetings and conferences have been invaluable to the agencies. We
believe they enabled us to refine the proposal in such a way as to
appropriately consider all of the potential impacts and to minimize the
possibility of unintended consequences in the final rules.

(1) Brief Overview of the Heavy-Duty Truck Industry
    The heavy-duty sector is diverse in several respects, including the
types of manufacturing companies involved, the range of sizes of trucks
and engines they produce, the types of work for which the trucks are
designed, and the regulatory history of different subcategories of
vehicles and engines. The current heavy-duty fleet encompasses vehicles
from the ``18-wheeler'' combination tractor-trailers one sees on the
highway to the largest pickup trucks and vans, as well as vocational
vehicles covering the range between these extremes. Together, the HD
sector spans a wide range of vehicles with often specialized form and
function. A primary indicator of the diversity among heavy-duty trucks
is the range of load-carrying capability across the industry. The
heavy-duty truck sector is often subdivided by vehicle weight
classifications, as defined by the vehicle's gross vehicle weight
rating (GVWR), which is a measure of the combined curb (empty) weight
and cargo carrying capacity of the truck.\26\ Table I-1 below outlines
the vehicle weight classifications commonly used for many years for a
variety of purposes by businesses and by several Federal agencies,
including the Department of Transportation, the Environmental
Protection Agency, the Department of Commerce, and the Internal Revenue
Service.
---------------------------------------------------------------------------

    \26\ GVWR describes the maximum load that can be carried by a
vehicle, including the weight of the vehicle itself. Heavy-duty
vehicles (including those designed for primary purposes other than
towing) also have a gross combined weight rating (GCWR), which
describes the maximum load that the vehicle can haul, including the
weight of a loaded trailer and the vehicle itself.

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

In the framework of these vehicle weight classifications, the heavy-
duty truck sector refers to ``Class 2b'' through ``Class 8'' vehicles
and the engines that power those vehicles.\27\
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    \27\ Class 2b vehicles manufactured as passenger vehicles
(Medium Duty Passenger Vehicles, MDPVs) are covered by the light-
duty GHG and fuel economy standards and therefore are not addressed
in this rulemaking.
---------------------------------------------------------------------------

    Unlike light-duty vehicles, which are primarily used for
transporting passengers for personal travel, heavy-duty vehicles fill
much more diverse operator needs. Heavy-duty pickup trucks and vans
(Classes 2b and 3) are used chiefly as work trucks and vans, and as
shuttle vans, as well as for personal transportation, with an average
annual mileage in the range of 15,000 miles. The rest of the heavy-duty
sector is used for carrying cargo and/or performing specialized tasks.
``Vocational'' vehicles, which span Classes 2b through 8, vary widely
in size, including smaller and larger van trucks, utility ``bucket''
trucks, tank trucks, refuse trucks, urban and over-the-road buses, fire
trucks, flat-bed trucks, and dump trucks, among others. The annual
mileage of these vehicles is as varied as their uses, but for the most
part tends to fall in between heavy-duty pickups/vans and the large
combination tractors, typically from 15,000 to 150,000 miles per year.
    Class 7 and 8 combination tractor-trailers--some equipped with
sleeper cabs and some not--are primarily used for freight
transportation. They are sold as tractors and operate with one or more
trailers that can carry up to 50,000 lbs or more of payload, consuming
significant quantities of fuel and producing significant amounts of GHG
emissions. Together, Class 7 and 8 tractors and trailers account for
approximately 60 percent of the heavy-duty sector's total
CO2 emissions and fuel consumption. Trailer designs vary
significantly, reflecting the wide variety of cargo types. However, the
most common types of trailers are box vans (dry and refrigerated),
which are a focus of this Phase 2 rulemaking. The tractor-trailers used
in combination applications can and frequently do travel more than
150,000 miles per year and can operate for 20-30 years.
    Heavy-duty vehicles differ significantly from light-duty vehicles
in other ways. In particular, we note that heavy-duty engines are much
more likely to be rebuilt. In fact, it is common for Class 8 engines to
be rebuilt multiple times. Commercial heavy-duty vehicles are often
resold after a few years and may be repurposed by the second or third
owner. Thus issues of resale value and adaptability have historically
been key concerns for purchasers.
    EPA and NHTSA have designed our respective standards in careful
consideration of the diversity and complexity of the heavy-duty truck
industry, as discussed in Section I.C.
(2) Related Regulatory and Non-Regulatory Programs
(a) History of EPA's Heavy-Duty Regulatory Program and Assessments of
the Impacts of Greenhouse Gases on Climate Change
    To provide a context for EPA's program to reduce greenhouse gas
emissions from motor vehicles, this subsection provides an overview of
two important related areas. First, we summarize the history of EPA's
heavy-duty regulatory program, which provides a basis for the
compliance structure of this rulemaking. Next we summarize EPA prior
assessments of the impacts of greenhouse gases on climate change, which
provides a basis for much of the analysis of the environmental benefits
of this rulemaking.
(i) History of EPA's Heavy-Duty Regulatory Program
    Since the 1980s, EPA has acted several times to address tailpipe
emissions of criteria pollutants and air toxics from heavy-duty
vehicles and engines. During the last two decades these programs have
primarily addressed emissions of particulate matter (PM) and the
primary ozone precursors, hydrocarbons (HC) and oxides of nitrogen
(NOX). These programs, which have successfully achieved
significant and cost-effective reductions in emissions and associated
health and welfare benefits to the nation, were an important basis of
the Phase 1 program. See e.g. 66 FR 5002, 5008, and 5011-5012 (January
18, 2001) (detailing substantial public health benefits of controls of
criteria pollutants from heavy-duty diesel engines, including bringing
areas into attainment with primary (public health) PM NAAQS, or
contributing substantially to such attainment); National Petrochemical
Refiners Association v. EPA, 287 F. 3d 1130, 1134 (D.C. Cir. 2002)
(referring to the ``dramatic reductions'' in criteria pollutant
emissions resulting from the EPA on-

highway heavy-duty engine standards, and upholding all of the
standards).
    As required by the Clean Air Act (CAA), the emission standards
implemented by these programs include standards that apply at the time
that the vehicle or engine is sold and continue to apply in actual use.
EPA's overall program goal has always been to achieve emissions
reductions from the complete vehicles that operate on our roads. The
agency has often accomplished this goal for many heavy-duty truck
categories by regulating heavy-duty engine emissions. A key part of
this success has been the development over many years of a well-
established, representative, and robust set of engine test procedures
that industry and EPA now use routinely to measure emissions and
determine compliance with emission standards. These test procedures in
turn serve the overall compliance program that EPA implements to help
ensure that emissions reductions are being achieved. By isolating the
engine from the many variables involved when the engine is installed
and operated in a HD vehicle, EPA has been able to accurately address
the contribution of the engine alone to overall emissions.
(ii) EPA Assessment of the Impacts of Greenhouse Gases on Climate
Change
    In 2009, the EPA Administrator issued the document known as the
Endangerment Finding under CAA section 202(a)(1).\28\ In the
Endangerment Finding, which focused on public health and public welfare
impacts within the United States, the Administrator found that elevated
concentrations of GHG emissions in the atmosphere may reasonably be
anticipated to endanger public health and welfare of current and future
generations. See also Coalition for Responsible Regulation v. EPA, 684
F. 3d 102, 117-123 (D.C. Cir. 2012) (upholding the endangerment finding
in all respects). The following sections summarize the key information
included in the Endangerment Finding.
---------------------------------------------------------------------------

    \28\ ``Endangerment and Cause or Contribute Findings for
Greenhouse Gases Under section 202(a) of the Clean Air Act,'' 74 FR
66496 (December 15, 2009) (``Endangerment Finding'').
---------------------------------------------------------------------------

    Climate change caused by human emissions of GHGs threatens public
health in multiple ways. By raising average temperatures, climate
change increases the likelihood of heat waves, which are associated
with increased deaths and illnesses. While climate change also
decreases the likelihood of cold-related mortality, evidence indicates
that the increases in heat mortality will be larger than the decreases
in cold mortality in the United States. Compared to a future without
climate change, climate change is expected to increase ozone pollution
over broad areas of the U.S., including in the largest metropolitan
areas with the worst ozone problems, and thereby increase the risk of
morbidity and mortality. Other public health threats also stem from
projected increases in intensity or frequency of extreme weather
associated with climate change, such as increased hurricane intensity,
increased frequency of intense storms and heavy precipitation.
Increased coastal storms and storm surges due to rising sea levels are
expected to cause increased drownings and other adverse health impacts.
Children, the elderly, and the poor are among the most vulnerable to
these climate-related health effects. See also 79 FR 75242 (December
17, 2014) (climate change, and temperature increases in particular,
likely to increase O3 (ozone) pollution ``over broad areas
of the U.S., including the largest metropolitan areas with the worst
O3 problems, increas[ing] the risk of morbidity and
mortality'').
    Climate change caused by human emissions of GHGs also threatens
public welfare in multiple ways. Climate changes are expected to place
large areas of the country at serious risk of reduced water supplies,
increased water pollution, and increased occurrence of extreme events
such as floods and droughts. Coastal areas are expected to face
increased risks from storm and flooding damage to property, as well as
adverse impacts from rising sea level, such as land loss due to
inundation, erosion, wetland submergence and habitat loss. Climate
change is expected to result in an increase in peak electricity demand,
and extreme weather from climate change threatens energy,
transportation, and water resource infrastructure. Climate change may
exacerbate ongoing environmental pressures in certain settlements,
particularly in Alaskan indigenous communities. Climate change also is
very likely to fundamentally rearrange U.S. ecosystems over the 21st
century. Though some benefits may balance adverse effects on
agriculture and forestry in the next few decades, the body of evidence
points towards increasing risks of net adverse impacts on U.S. food
production, agriculture and forest productivity as temperature
continues to rise. These impacts are global and may exacerbate problems
outside the U.S. that raise humanitarian, trade, and national security
issues for the U.S. See also 79 FR 75382 (December 17, 2014) (welfare
effects of O3 increases due to climate change, with emphasis
on increased wildfires).
    As outlined in Section VIII.A of the 2009 Endangerment Finding,
EPA's approach to providing the technical and scientific information to
inform the Administrator's judgment regarding the question of whether
GHGs endanger public health and welfare was to rely primarily upon the
recent, major assessments by the U.S. Global Change Research Program
(USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the
National Research Council (NRC) of the National Academies. These
assessments addressed the scientific issues that EPA was required to
examine, were comprehensive in their coverage of the GHG and climate
change issues, and underwent rigorous and exacting peer review by the
expert community, as well as rigorous levels of U.S. government review.
Since the administrative record concerning the Endangerment Finding
closed following EPA's 2010 Reconsideration Denial, a number of new
major, peer-reviewed scientific assessments have been released. These
include the IPCC's 2012 ``Special Report on Managing the Risks of
Extreme Events and Disasters to Advance Climate Change Adaptation''
(SREX) and the 2013-2014 Fifth Assessment Report (AR5), the USGCRP's
2014 ``Climate Change Impacts in the United States'' (Climate Change
Impacts), and the NRC's 2010 ``Ocean Acidification: A National Strategy
to Meet the Challenges of a Changing Ocean'' (Ocean Acidification),
2011 ``Report on Climate Stabilization Targets: Emissions,
Concentrations, and Impacts over Decades to Millennia'' (Climate
Stabilization Targets), 2011 ``National Security Implications for U.S.
Naval Forces'' (National Security Implications), 2011 ``Understanding
Earth's Deep Past: Lessons for Our Climate Future'' (Understanding
Earth's Deep Past), 2012 ``Sea Level Rise for the Coasts of California,
Oregon, and Washington: Past, Present, and Future,'' 2012 ``Climate and
Social Stress: Implications for Security Analysis'' (Climate and Social
Stress), and 2013 ``Abrupt Impacts of Climate Change'' (Abrupt Impacts)
assessments.
    EPA has reviewed these new assessments and finds that the improved
understanding of the climate system they present further strengthens
the case that GHG emissions endanger public health and welfare.
    In addition, these assessments highlight the urgency of the
situation as the concentration of CO2 in the atmosphere
continues to rise. Absent a reduction in emissions, a recent

National Research Council assessment projected that concentrations by
the end of the century would increase to levels that the Earth has not
experienced for millions of years.\29\ In fact, that assessment stated
that ``the magnitude and rate of the present greenhouse gas increase
place the climate system in what could be one of the most severe
increases in radiative forcing of the global climate system in Earth
history.'' \30\ What this means, as stated in another NRC assessment,
is that:
---------------------------------------------------------------------------

    \29\ National Research Council, Understanding Earth's Deep Past,
p. 1.
    \30\ Id., p.138.

    Emissions of carbon dioxide from the burning of fossil fuels
have ushered in a new epoch where human activities will largely
determine the evolution of Earth's climate. Because carbon dioxide
in the atmosphere is long lived, it can effectively lock Earth and
future generations into a range of impacts, some of which could
become very severe. Therefore, emission reductions choices made
today matter in determining impacts experienced not just over the
next few decades, but in the coming centuries and millennia.\31\
---------------------------------------------------------------------------

    \31\ National Research Council, Climate Stabilization Targets,
p. 3.

    Moreover, due to the time-lags inherent in the Earth's climate, the
Climate Stabilization Targets assessment notes that the full warming
from any given concentration of CO2 reached will not be
realized for several centuries.
    The most recent USGCRP ``National Climate Assessment'' \32\
emphasizes that climate change is already happening now and is
happening in the United States. The assessment documents the increases
in some extreme weather and climate events in recent decades, as well
as the resulting damage and disruption to infrastructure and
agriculture, and projects continued increases in impacts across a wide
range of peoples, sectors, and ecosystems.
---------------------------------------------------------------------------

    \32\ U.S. Global Change Research Program, Climate Change Impacts
in the United States: The Third National Climate Assessment, May
2014 Available at http://nca2014.globalchange.gov/.
---------------------------------------------------------------------------

    These assessments underscore the urgency of reducing emissions now.
Today's emissions will otherwise lead to raised atmospheric
concentrations for thousands of years, and raised Earth system
temperatures for even longer. Emission reductions today will benefit
the public health and public welfare of current and future generations.
    Finally, it should be noted that the concentration of carbon
dioxide in the atmosphere continues to rise dramatically. In 2009, the
year of the Endangerment Finding, the average concentration of carbon
dioxide as measured on top of Mauna Loa was 387 parts per million.\33\
The average concentration in 2015 was 401 parts per million, the first
time an annual average has exceeded 400 parts per million since record
keeping began at Mauna Loa in 1958, and for at least the past 800,000
years according to ice core records.\34\ Moreover, 2015 was the warmest
year globally in the modern global surface temperature record, going
back to 1880, breaking the record previously held by 2014; this now
means that the last 15 years have been 15 of the 16 warmest years on
record.\35\
---------------------------------------------------------------------------

    \33\ ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt.
    \34\ http://www.esrl.noaa.gov/gmd/ccgg/trends/.
    \35\ http://www.ncdc.noaa.gov/sotc/global/201513.
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(b) The EPA and NHTSA Light-Duty National GHG and Fuel Economy Program
    On May 7, 2010, EPA and NHTSA finalized the first-ever National
Program for light-duty cars and trucks, which set GHG emissions and
fuel economy standards for model years 2012-2016 (see 75 FR 25324).
More recently, the agencies adopted even stricter standards for model
years 2017 and later (77 FR 62624, October 15, 2012). The agencies have
used the light-duty National Program as a model for the HD National
Program in several respects. This is most apparent in the case of
heavy-duty pickups and vans, which are similar to the light-duty trucks
addressed in the light-duty National Program both technologically as
well as in terms of how they are manufactured (i.e., the same company
often makes both the vehicle and the engine, and several light-duty
manufacturers also manufacture HD pickups and vans).\36\ For HD pickups
and vans, there are close parallels to the light-duty program in how
the agencies have developed our respective heavy-duty standards and
compliance structures. However, HD pickups and vans are true work
vehicles that are designed for much higher towing and payload
capabilities than are light-duty pickups and vans. The technologies
applied to light-duty trucks are not all applicable to heavy-duty
pickups and vans at the same adoption rates, and the technologies often
produce a lower percent reduction in CO2 emissions and fuel
consumption when used in heavy-duty vehicles. Another difference
between the light-duty and the heavy-duty standards is that each agency
adopts heavy-duty standards based on attributes other than vehicle
footprint, as discussed below.
---------------------------------------------------------------------------

    \36\ This is more broadly true for heavy-duty pickup trucks than
vans because every manufacturer of heavy-duty pickup trucks also
makes light-duty pickup trucks, while only some heavy-duty van
manufacturers also make light-duty vans.
---------------------------------------------------------------------------

    Due to the diversity of the remaining HD vehicles, there are fewer
parallels with the structure of the light-duty program. However, the
agencies have maintained the same collaboration and coordination that
characterized the development of the light-duty program throughout the
Phase 1 rulemaking and the continued efforts for Phase 2. Most notably,
as with the light-duty program, manufacturers will continue to be able
to design and build vehicles to meet a closely coordinated, harmonized
national program, and to avoid unnecessarily duplicative testing and
compliance burdens. In addition, the averaging, banking, and trading
provisions in the HD program, although structurally different from
those of the light-duty program, serve the same purpose, which is to
allow manufacturers to achieve large reductions in fuel consumption and
emissions while providing a broad mix of products to their customers.
The agencies have also worked closely with CARB to provide harmonized
national standards.
(c) EPA's SmartWay Program
    EPA's voluntary SmartWay Transport Partnership program encourages
businesses to take actions that reduce fuel consumption and
CO2 emissions while cutting costs by working with the
shipping, logistics, and carrier communities to identify low carbon
strategies and technologies across their transportation supply chains.
SmartWay provides technical information, benchmarking and tracking
tools, market incentives, and partner recognition to facilitate and
accelerate the adoption of these strategies. Through the SmartWay
program and its related technology assessment center, EPA has worked
closely with truck and trailer manufacturers and truck fleets over the
past 12 years to develop test procedures to evaluate vehicle and
component performance in reducing fuel consumption and has conducted
testing and has established test programs to verify technologies that
can achieve these reductions. SmartWay partners have demonstrated these
new and emerging technologies in their business operations, adding to
the body of technical data and information that EPA can disseminate to
industry, researchers and other stakeholders. Over the last several
years, EPA has developed hands-on experience testing the largest heavy-
duty trucks and trailers and evaluating improvements in tire and
vehicle aerodynamic performance. In developing the Phase 1

program, the agencies drew from this testing and from the SmartWay
experience. In the same way, the agencies benefitted from SmartWay in
developing the Phase 2 trailer program.
(d) DOE's SuperTruck Initiative
    The U.S. Department of Energy launched its SuperTruck I initiative
in 2009. SuperTruck I was a DOE partnership with four industry teams,
who at this point have either met the SuperTruck I 50 percent fuel
efficiency improvement goal (relative to a 2009 best-in-class truck) or
have laid the groundwork to succeed. Teams from Cummins/Peterbilt,
Daimler, and Volvo exceeded the 50 percent efficiency improvement goal,
with Navistar on track to exceed this target later this year. Research
vehicles developed under SuperTruck I are Class 8 combination tractor-
trailers that have dramatically increased fuel and freight efficiency
through the use of advanced technologies. These technologies include
tractor and trailer aerodynamic devices, engine waste heat recovery
systems, hybrids, automated transmissions and lightweight materials. In
March 2016 DOE announced SuperTruck II, which is an $80M follow-on to
SuperTruck I, where DOE will continue to partner with industry teams to
collaboratively fund new projects to research, develop, and demonstrate
technologies to further improve heavy-truck freight efficiency--by more
than 100 percent, relative to a manufacturer's best-in-class 2009
truck. Achieving these kinds of Class 8 truck efficiency increases will
require an integrated systems approach to ensure that the various
components of the vehicle work well together. SuperTruck II projects
will utilize a wide variety of truck and trailer technology approaches
to achieve performance targets, such as further improvements in engine
efficiency, drivetrain efficiency, aerodynamic drag, tire rolling
resistance, and vehicle weight.
    The agencies leveraged the outcomes of SuperTruck I by projecting
how these tractor and trailer technologies could continue to advance
from this early developmental stage toward the prototype and production
stages. For a number of the SuperTruck technologies, the agencies are
projecting advancement into production, given appropriate lead time.
For example, a number of the aerodynamic and transmission technologies
are projected to be in widespread production by 2021, and the agencies
are finalizing 2021 standards based in part on performance of these
SuperTruck technologies. For other more advanced SuperTruck
technologies, such as organic Rankine cycle waste heat recovery
systems, the agencies are projecting that additional lead time is
needed to ensure that these technologies will be effective and reliable
in production. For these technologies, the agencies are finalizing 2027
standards whose stringency reflects a significant market adoption rate
of advanced technologies, including waste heat recovery systems.
Furthermore, the agencies are encouraged by DOE's announcement of
SuperTruck II. We believe that the combination of HD Phase 2 and
SuperTruck II will provide both a strong motivation and a proven means
for manufacturers to fully develop these technologies within the lead
times we have projected.
(e) The State of California
    California has established ambitious goals for reducing GHG
emissions from heavy-duty vehicles and engines as part of an overall
plan to reduce GHG emissions from the transportation sector in
California.\37\ Heavy-duty vehicles are responsible for one-fifth of
the total GHG emissions from transportation sources in California. In
the past several years, the California Air Resources Board (CARB) has
taken a number of actions to reduce GHG emissions from heavy-duty
vehicles and engines. For example, in 2008, CARB adopted regulations to
reduce GHG emissions from heavy-duty tractors that pull box-type
trailers through improvements in tractor and trailer aerodynamics and
the use of low rolling resistance tires.\38\ The tractor-trailer
operators subject to the CARB regulation are required to use SmartWay-
certified tractors and trailers, or retrofit their existing fleet with
SmartWay-verified technologies, consistent with California's state
authority to regulate both new and in-use vehicles. In December 2013,
CARB adopted regulations that establish its own parallel Phase 1
program with standards consistent with EPA Phase 1 standards. On
December 5, 2014, California's Office of Administrative Law approved
CARB's adoption of the Phase 1 standards, with an effective date of
December 5, 2014.\39\ Complementary to its regulatory efforts, CARB and
other California agencies are investing significant public capital
through various incentive programs to accelerate fleet turnover and
stimulate technology innovation within the heavy-duty vehicle market
(e.g., Air Quality Improvement, Carl Moyer, Loan Incentives, Lower-
Emission School Bus and Goods Movement Emission Reduction
Programs).\40\ Recently, California Governor Jerry Brown established a
target of up to 50 percent petroleum reduction by 2030.
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    \37\ See http://www.arb.ca.gov/cc/cc.htm for details on the
California Air Resources Board climate change actions, including a
discussion of Assembly Bill 32, and the Climate Change Scoping Plan
developed by CARB, which includes details regarding CARB's future
goals for reducing GHG emissions from heavy-duty vehicles.
    \38\ See http://www.arb.ca.gov/msprog/truckstop/trailers/trailers.htm for a summary of CARB's ``Tractor-Trailer Greenhouse
Gas Regulation.''
    \39\ See http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm for details regarding CARB's adoption of the Phase 1
standards.
    \40\ See http://www.arb.ca.gov/ba/fininfo.htm for detailed
descriptions of CARB's mobile source incentive programs. Note that
EPA works to support CARB's heavy-duty incentive programs through
the West Coast Collaborative (http://westcoastcollaborative.org/)
and the Clean Air Technology Initiative (https://www.epa.gov/cati).
---------------------------------------------------------------------------

    California has long had the unique ability among states to adopt
its own separate new motor vehicle standards per section 209 of the
Clean Air Act (CAA). Although section 209(a) of the CAA expressly
preempts states from adopting and enforcing standards relating to the
control of emissions from new motor vehicles or new motor vehicle
engines (such as state controls for new heavy-duty engines and
vehicles), CAA section 209(b) directs EPA to waive this preemption
under certain conditions. Under the waiver process set out in CAA
section 209(b), EPA has granted CARB a waiver for its initial heavy-
duty vehicle GHG regulation.\41\ Even with California's ability under
the CAA to establish its own emission standards, EPA and CARB have
worked closely together over the past several decades to largely
harmonize new vehicle criteria pollutant standard programs for heavy-
duty engines and heavy-duty vehicles. In the past several years EPA and
NHTSA also consulted with CARB in the development of the Federal light-
duty vehicle GHG and CAFE rulemakings for the 2012-2016 and 2017-2025
model years.
---------------------------------------------------------------------------

    \41\ See EPA's waiver of CARB's heavy-duty tractor-trailer
greenhouse gas regulation applicable to new 2011 through 2013 model
year Class 8 tractors equipped with integrated sleeper berths
(sleeper-cab tractors) and 2011 and subsequent model year dry-can
and refrigerated-van trailers that are pulled by such tractors on
California highways at 79 FR 46256 (August 7, 2014).
---------------------------------------------------------------------------

    As discussed above, California operates under state authority to
establish its own new heavy-duty vehicle and engine emission standards,
including standards for CO2, methane, N2O, and
hydrofluorocarbons. EPA recognizes this independent authority, and we
also recognize the potential benefits for the regulated industry if the
Federal Phase 2 standards could result

in a single, National Program that would meet the EPA and NHTSA's
statutory requirements to set appropriate and maximum feasible
standards, and also be equivalent to potential future new heavy-duty
vehicle and engine GHG standards established by CARB (addressing the
same model years as addressed by the final Federal Phase 2 program and
requiring the same technologies). In order to further the opportunity
for maintaining coordinated Federal and California standards in the
Phase 2 timeframe (as well as to benefit from different technical
expertise and perspective), EPA and NHTSA consulted frequently with
CARB while developing the Phase 2 rule. Prior to the proposal, the
agencies' technical staff shared information on technology cost,
technology effectiveness, and feasibility with the CARB staff. We also
received information from CARB on these same topics. In addition, CARB
staff and managers participated with EPA and NHTSA in meetings with
many external stakeholders, in particular with vehicle OEMs and
technology suppliers. The agencies continued significant consultation
during the development of the final rules.
    EPA and NHTSA believe that through this information sharing and
dialog we have enhanced the potential for the Phase 2 program to result
in a National Program that can be adopted not only by the Federal
agencies, but also by the State of California, given the strong
interest from the regulated industry for a harmonized State and Federal
program. In its public comments, California reiterated its support for
a harmonized State and Federal program, although it identified several
areas in which it believed the proposed program needed to be
strengthened.
(f) Environment and Climate Change Canada
    On March 13, 2013, Environment and Climate Change Canada (ECCC),
which is EPA's Canadian counterpart, published its own regulations to
control GHG emissions from heavy-duty vehicles and engines, beginning
with MY 2014. These regulations are closely aligned with EPA's Phase 1
program to achieve a common set of North American standards. ECCC has
expressed its intention to amend these regulations to further limit
emissions of greenhouse gases from new on-road heavy-duty vehicles and
their engines for post-2018 MYs. As with the development of the current
regulations, ECCC is committed to continuing to work closely with EPA
to maintain a common Canada-United States approach to regulating GHG
emissions for post-2018 MY vehicles and engines. This approach will
build on the long history of regulatory alignment between the two
countries on vehicle emissions pursuant to the Canada-United States Air
Quality Agreement.\42\ In furtherance of this coordination, EPA
participated in a workshop hosted by ECCC on March 3, 2016 to discuss
Canada's Phase 2 program.\43\
---------------------------------------------------------------------------

    \42\ http://www.ijc.org/en_/Air_Quality__Agreement.
    \43\ ``Phase 2 of the Heavy-duty Vehicle and Engine Greenhouse
Gas Emission Regulations; Pre-Consultation Session,'' March 3, 2016.
---------------------------------------------------------------------------

    The Government of Canada, including ECCC and Transport Canada, has
also been of great assistance during the development of this Phase 2
rule. In particular, the Government of Canada supported aerodynamic
testing, and conducted chassis dynamometer emissions testing.
(g) Recommendations of the National Academy of Sciences
    In April 2010, as mandated by Congress in the EISA, the National
Research Council (NRC) under the National Academy of Sciences (NAS)
issued a report to NHTSA and to Congress evaluating medium- and heavy-
duty truck fuel efficiency improvement opportunities, titled
``Technologies and Approaches to Reducing the Fuel Consumption of
Medium- and Heavy-duty Vehicles.'' That NAS report was far reaching in
its review of the technologies that were available and that might
become available in the future to reduce fuel consumption from medium-
and heavy-duty vehicles. In presenting the full range of technical
opportunities, the report included technologies that may not be
available until 2020 or even further into the future. The report
provided not only a valuable list of off-the-shelf technologies from
which the agencies drew in developing the Phase 1 program, but also
provided useful information the agencies have considered when
developing this second phase of regulations.
    In April 2014, the NAS issued another report: ``Reducing the Fuel
Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty
Vehicles, Phase Two, First Report.'' \44\ This study outlines a number
of recommendations to the U.S. Department of Transportation and NHTSA
on technical and policy matters to consider when addressing the fuel
efficiency of our nation's medium- and heavy-duty vehicles. In
particular, this report provided recommendations with respect to:
---------------------------------------------------------------------------

    \44\ National Research Council ``Reducing the Fuel Consumption
and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles,
Phase Two.'' Washington, DC, The National Academies Press.
Cooperative Agreement DTNH22-12-00389. Available electronically from
the National Academy Press Web site at http://www.nap.edu/catalog/18736/reducing-the-fuel-consumption-and-greenhouse-gas-emissions-of-medium-and-heavy-duty-vehicles-phase-two (last accessed May 18,
2016). On September 24, 2016, NAS will release an update report,
consistent with Congress' quinquennial update requirement.

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

    The agencies are adopting many of these recommendations into the
Phase 2 program, including recommendations relating to the GEM
simulation tool and to trailers.

B. Summary of Phase 1 Program

(1) EPA Phase 1 GHG Emission Standards and NHTSA Phase 1 Fuel
Consumption Standards
    The EPA Phase 1 mandatory GHG emission standards commenced in MY
2014 and include increased stringency for standards applicable to MY
2017 and later MY vehicles and engines. NHTSA's fuel consumption
standards were voluntary for MYs 2014 and 2015, due to lead time
requirements in EISA, and apply on a mandatory basis thereafter. They
also increase in stringency for MY 2017. Both agencies allowed
voluntary early compliance starting in MY 2013 and encouraged
manufacturers' participation through credit incentives.
    Given the complexity of the heavy-duty industry, the agencies
divided the industry into three discrete categories for purposes of
setting our respective Phase 1 standards--combination tractors, heavy-
duty pickups and vans, and vocational vehicles--based on the relative
degree of homogeneity among trucks within each category. The Phase 1
rules also include separate standards for the engines that power
combination tractors and vocational vehicles. For each regulatory
category, the agencies adopted related but distinct program approaches
reflecting the specific challenges in these segments. In the following
paragraphs, we briefly summarize EPA's Phase 1 GHG emission standards
and NHTSA's Phase 1 fuel consumption standards for the three regulatory
categories of heavy-duty vehicles and for the engines powering
vocational vehicles and

tractors. See Sections II, III, V, and VI for additional details on the
Phase 1 standards. To respect differences in design and typical uses
that drive different technology solutions, the agencies segmented each
regulatory class into subcategories. The category-specific structure
enabled the agencies to set standards that appropriately reflect the
technology available for each regulatory subcategory of vehicles and
the engines for use in each type of vehicle. The Phase 1 program also
provided several flexibilities, as summarized in Section I.B.(3).
    The agencies proposed and are adopting Phase 2 standards based on
test procedures that differ from those used for Phase 1, including the
revised GEM simulation tool. Significant revisions to GEM are discussed
in Section II and in the RIA Chapter 4, and other test procedures are
discussed further in the RIA Chapter 3. The pre-proposal revisions from
Phase 1 GEM reflected input from both the NAS and from industry.\45\
Changes since the proposal generally reflect comments received from
industry and other key stakeholders. It is important to note that due
to these test procedure changes, the Phase 1 and Phase 2 standards are
not directly comparable in an absolute sense. In particular, the
revisions being made to the 55 mph and 65 mph highway cruise cycles for
tractors and vocational vehicles have the effect of making the cycles
more challenging (albeit more representative of actual driving
conditions). We are not applying these revisions to the Phase 1 program
because doing so would significantly change the stringency of the Phase
1 standards, for which manufacturers have already developed engineering
plans and are now producing products to meet. Moreover, the changes to
GEM address a broader range of technologies not part of the projected
compliance path for use in Phase 1.
---------------------------------------------------------------------------

    \45\ For further discussion of the input the agencies received
from NAS, see Section XII of the Phase 2 NPRM at 80 FR 40512, July
13, 2015.
---------------------------------------------------------------------------

    Because the numeric values of the Phase 2 tractor and vocational
standards are not directly comparable to their respective Phase 1
standards, the Phase 1 numeric standards were not appropriate baseline
values to use to determine Phase 2's improvements. To address this
situation, the agencies applied all of the new Phase 2 test procedures
and GEM software to tractors and vocational vehicles equipped with
Phase 1 compliant levels of technology. The agencies used the results
of this approach to establish appropriate Phase 1 baseline values,
which are directly comparable to the Phase 2 standards. For example, in
this rulemaking we present Phase 2 per vehicle percent reductions
versus Phase 1, and for tractors and vocational vehicles these percent
reductions were all calculated versus Phase 1 compliant vehicles, where
we applied the Phase 2 test procedures and GEM software to determine
these Phase 1 vehicles' results.
(a) Class 7 and 8 Combination Tractors
    Class 7 and 8 combination tractors and their engines contribute the
largest portion of the total GHG emissions and fuel consumption of the
heavy-duty sector, approximately 60 percent, due to their large
payloads, their high annual miles traveled, and their major role in
national freight transport. These vehicles consist of a cab and engine
(tractor or combination tractor) and a detachable trailer. The primary
manufacturers of combination tractors in the United States are Daimler
Trucks North America, Navistar, Volvo/Mack, and PACCAR. Each of the
tractor manufacturers and Cummins (an independent engine manufacturer)
also produce heavy-duty engines used in tractors. The Phase 1 standards
require manufacturers to reduce GHG emissions and fuel consumption for
these tractors and engines, which we expect them to do through
improvements in aerodynamics and tires, reductions in tractor weight,
reduction in idle operation, as well as engine-based efficiency
improvements.\46\
---------------------------------------------------------------------------

    \46\ We note although the standards' stringency is predicated on
use of certain technologies, and the agencies' assessed the cost of
the rule based on the cost of use of those technologies, the
standards can be met by any means. Put another way, the rules create
a performance standard, and do not mandate any particular means of
achieving that level of performance.
---------------------------------------------------------------------------

    The Phase 1 tractor standards differ depending on gross vehicle
weight rating (GVWR) (i.e., whether the truck is Class 7 or Class 8),
the height of the roof of the cab, and whether it is a ``day cab'' or a
``sleeper cab.'' The agencies created nine subcategories within the
Class 7 and 8 combination tractor category reflecting combinations of
these attributes. The agencies set Phase 1 standards for each of these
subcategories beginning in MY 2014, with more stringent standards
following in MY 2017. The standards represent an overall fuel
consumption and CO2 emissions reduction up to 23 percent
from the tractors and the engines installed in them when compared to a
baseline MY 2010 tractor and engine.
    For Phase 1, tractor manufacturers demonstrate compliance with the
tractor CO2 and fuel consumption standards using a vehicle
simulation tool described in Section II. The tractor inputs to the
simulation tool in Phase 1 are the aerodynamic performance, tire
rolling resistance, vehicle speed limiter, automatic engine shutdown,
and weight reduction.
    In addition to the Phase 1 tractor-based standards for
CO2, EPA adopted a separate standard to reduce leakage of
hydrofluorocarbon (HFC) refrigerant from cabin air conditioning (A/C)
systems from combination tractors, to apply to the tractor
manufacturer. This HFC leakage standard is independent of the
CO2 tractor standard. Manufacturers can choose technologies
from a menu of leak-reducing technologies sufficient to comply with the
standard, as opposed to using a test to measure performance. Given that
HFC leakage does not relate to fuel efficiency, NHTSA did not adopt
corresponding HFC standards.
(b) Heavy-Duty Pickup Trucks and Vans (Class 2b and 3)
    Heavy-duty vehicles with a GVWR between 8,501 and 10,000 lb. are
classified as Class 2b motor vehicles. Heavy-duty vehicles with a GVWR
between 10,001 and 14,000 lb. are classified as Class 3 motor vehicles.
Class 2b and Class 3 heavy-duty vehicles (referred to in these rules as
``HD pickups and vans'') together emit about 23 percent of today's GHG
emissions from the heavy-duty vehicle sector.\47\
---------------------------------------------------------------------------

    \47\ EPA MOVES Model, http://www3.epa.gov/otaq/models/moves/index.htm.
---------------------------------------------------------------------------

    The majority of HD pickups and vans are \3/4\-ton and 1-ton pickup
trucks, 12- and 15-passenger vans,\48\ and large work vans that are
sold by vehicle manufacturers as complete vehicles, with no secondary
manufacturer making substantial modifications prior to registration and
use. These vehicles can also be sold as cab-complete vehicles (i.e.,
incomplete vehicles that include complete or nearly complete cabs that
are sold to secondary manufacturers). The majority of heavy-duty
pickups and vans are produced by companies with major light-duty
markets in the United States. Furthermore, the technologies available
to reduce fuel consumption and GHG emissions from this segment are
similar to the technologies used on light-duty pickup trucks, including
both engine efficiency improvements (for gasoline and diesel engines)
and vehicle efficiency improvements. For these reasons, EPA and NHTSA
concluded

that it was appropriate to adopt GHG standards, expressed as grams per
mile, and fuel consumption standards, expressed as gallons per 100
miles, for HD pickups and vans based on the whole vehicle (including
the engine), consistent with the way these vehicles have been regulated
by EPA for criteria pollutants and also consistent with the way their
light-duty counterpart vehicles are regulated by EPA and NHTSA. This
complete vehicle approach adopted by both agencies for HD pickups and
vans was consistent with the recommendations of the NAS Committee in
its 2010 Report.
---------------------------------------------------------------------------

    \48\ Note that 12-passenger vans are subject to the light-duty
standards as medium-duty passenger vehicles (MDPVs) and are not
subject to this proposal.
---------------------------------------------------------------------------

    For the light-duty GHG and fuel economy standards, the agencies
based the emissions and fuel economy targets on vehicle footprint (the
wheelbase times the average track width). For those standards,
passenger cars and light trucks with larger footprints are assigned
higher GHG and lower fuel economy target levels reflecting their
inherent tendency to consume more fuel and emit more GHGs per mile. For
HD pickups and vans, the agencies believe that setting standards based
on vehicle attributes is appropriate, but have found that a work-based
metric is a more appropriate attribute than the footprint attribute
utilized in the light-duty vehicle rulemaking, given that work-based
measures such as towing and payload capacities are critical elements of
these vehicles' functionality. EPA and NHTSA therefore adopted
standards for HD pickups and vans based on a ``work factor'' attribute
that combines their payload and towing capabilities, with an added
adjustment for 4-wheel drive vehicles.
    Each manufacturer's fleet average Phase 1 standard is based on
production volume-weighting of target standards for all vehicles, which
in turn are based on each vehicle's work factor. These target standards
are taken from a set of curves (mathematical functions), with separate
curves for gasoline and diesel vehicles.\49\ However, both gasoline and
diesel vehicles in this category are included in a single averaging
set. EPA phased in the CO2 standards gradually starting in
the 2014 MY, at 15-20-40-60-100 percent of the MY 2018 standards
stringency level in MYs 2014-2015-2016-2017-2018, respectively (i.e.,
the 2014 standards requires only 15 percent of the reduction required
in 2018, etc.). The phase-in takes the form of a set of target curves,
with increasing stringency in each MY.
---------------------------------------------------------------------------

    \49\ As explained in Section XI, as part of this rulemaking, EPA
moved the Phase 1 requirements for pickups and vans from 40 CFR
1037.104 into 40 CFR part 86, which is also the regulatory part that
applies for light-duty vehicles.
---------------------------------------------------------------------------

    NHTSA allowed manufacturers to select one of two fuel consumption
standard alternatives for MYs 2016 and later. The first alternative
defined individual gasoline vehicle and diesel vehicle fuel consumption
target curves that will not change for MYs 2016-2018, and are
equivalent to EPA's 67-67-67-100 percent target curves in MYs 2016-
2017-2018-2019, respectively. The second alternative defined target
curves that are equivalent to EPA's 40-60-100 percent target curves in
MYs 2016-2017-2018, respectively. NHTSA allowed manufacturers to opt
voluntarily into the NHTSA HD pickup and van program in MYs 2014 or
2015 at target curves equivalent to EPA's target curves. If a
manufacturer chose to opt in for one category, they would be required
to opt in for all categories. In other words, a manufacturer would be
unable to opt in for Class 2b vehicles, but opt out for Class 3
vehicles.
    EPA also adopted an alternative phase-in schedule for manufacturers
wanting to have stable standards for model years 2016-2018. The
standards for heavy-duty pickups and vans, like those for light-duty
vehicles, are expressed as set of target standard curves, with
increasing stringency in each model year. The Phase 1 EPA standards for
2018 (including a separate standard to control air conditioning system
leakage) are estimated to represent an average per-vehicle reduction in
GHG emissions of 17 percent for diesel vehicles and 12 percent for
gasoline vehicles (relative to pre-control baseline vehicles). The
NHTSA standard will require these vehicles to achieve up to about 15
percent reduction in fuel consumption by MY 2018 (relative to pre-
control baseline vehicles). Manufacturers demonstrate compliance based
on entire vehicle chassis certification using the same duty cycles used
to demonstrate compliance with criteria pollutant standards.
(c) Class 2b-8 Vocational Vehicles
    Class 2b-8 vocational vehicles include a wide variety of vehicle
types, and serve a vast range of functions. Some examples include
service for parcel delivery, refuse hauling, utility service, dump,
concrete mixing, transit service, shuttle service, school bus,
emergency, motor homes, and tow trucks. In Phase 1, we defined Class
2b-8 vocational vehicles as all heavy-duty vehicles that are not
included in either the heavy-duty pickup and van category or the Class
7 and 8 tractor category. EPA's and NHTSA's Phase 1 standards for this
vocational vehicle category generally apply at the chassis manufacturer
level. Class 2b-8 vocational vehicles and their engines emit
approximately 17 percent of the GHG emissions and burn approximately 17
percent of the fuel consumed by today's heavy-duty truck sector.\50\
---------------------------------------------------------------------------

    \50\ EPA MOVES model, http://www3.epa.gov/otaq/models/moves/index.htm.
---------------------------------------------------------------------------

    The Phase 1 program for vocational vehicles has vehicle standards
and separate engine standards, both of which differ based on the weight
class of the vehicle into which the engine will be installed. The
vehicle weight class groups mirror those used for the engine
standards--Classes 2b-5 (light heavy-duty or LHD in EPA regulations),
Classes 6 and 7 (medium heavy-duty or MHD in EPA regulations) and Class
8 (heavy heavy-duty or HHD in EPA regulations). Manufacturers
demonstrate compliance with the Phase 1 vocational vehicle
CO2 and fuel consumption standards using a vehicle
simulation tool described in Section II. The Phase 1 program for
vocational vehicles limited the simulation tool inputs to tire rolling
resistance. The model assumes the use of a typical representative,
compliant engine in the simulation, resulting in one overall value for
CO2 emissions and one for fuel consumption.
(d) Engine Standards
    The agencies established separate Phase 1 performance standards for
the engines manufactured for use in vocational vehicles and Class 7 and
8 tractors.\51\ These engine standards vary depending on engine size
linked to intended vehicle service class. EPA's engine-based
CO2 standards and NHTSA's engine-based fuel consumption
standards are being implemented using EPA's existing test procedures
and regulatory structure for criteria pollutant emissions from heavy-
duty engines. EPA also established engine-based N2O and
CH4 emission standards in Phase 1.
---------------------------------------------------------------------------

    \51\ See 76 FR 57114 explaining why NHTSA's authority under the
Energy Independence and Safety Act includes authority to establish
separate engine standards.
---------------------------------------------------------------------------

(e) Manufacturers Excluded From the Phase 1 Standards
    Phase 1 deferred greenhouse gas emissions and fuel consumption
standards for any manufacturers of heavy-duty engines, manufacturers of
combination tractors, and chassis manufacturers for vocational vehicles
that meet the ``small business'' size criteria set by the Small
Business Administration (SBA). 13 CFR 121.201

defines a small business by the maximum number of employees; for
example, this is currently 1,500 for heavy-duty truck manufacturing and
1,000 for engine manufacturing.\52\ In order to utilize this exemption,
qualifying small businesses must submit a declaration to the agencies.
See Section I.F.(1)(b) for a summary of how Phase 2 applies for small
businesses.
---------------------------------------------------------------------------

    \52\ These thresholds were revised in early 2016. See http://www.regulations.gov/#!documentDetail;D=SBA-2014-0011-0031.
---------------------------------------------------------------------------

    The agencies stated that they would consider appropriate GHG and
fuel consumption standards for these entities as part of a future
regulatory action. This includes both U.S.-based and foreign small-
volume heavy-duty manufacturers that introduce new products into the
U.S.
(2) Costs and Benefits of the Phase 1 Program
    Overall, EPA and NHTSA estimated that the Phase 1 HD National
Program will cost the affected industry about $8 billion, while saving
vehicle owners fuel costs of nearly $50 billion over the lifetimes of
MY 2014-2018 vehicles. The agencies also estimated that the combined
standards will reduce CO2 emissions by about 270 million
metric tons and save about 530 million barrels of oil over the life of
MY 2014 to 2018 vehicles. The agencies estimated additional monetized
benefits from CO2 reductions, improved energy security,
reduced time spent refueling, as well as possible dis-benefits from
increased driving crashes, traffic congestion, and noise. When
considering all these factors, we estimated that Phase 1 of the HD
National Program will yield $49 billion in net benefits to society over
the lifetimes of MY 2014-2018 vehicles.
    EPA estimated the benefits of reduced ambient concentrations of
particulate matter and ozone resulting from the Phase 1 program to
range from $1.3 to $4.2 billion in 2030.\53\
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    \53\ Note: These calendar year benefits do not represent the
same time frame as the model year lifetime benefits described above,
so they are not additive.
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    In total, we estimated the combined Phase 1 standards will reduce
GHG emissions from the U.S. heavy-duty fleet by approximately 76
million metric tons of CO2-equivalent annually by 2030. In
its Environmental Impact Statement for the Phase 1 rule, NHTSA also
quantified and/or discussed other potential impacts of the program,
such as the health and environmental impacts associated with changes in
ambient exposures to toxic air pollutants and the benefits associated
with avoided non-CO2 GHGs (methane, nitrous oxide, and
HFCs).
(3) Phase 1 Program Flexibilities
    As noted above, the agencies adopted numerous provisions designed
to give manufacturers a degree of flexibility in complying with the
Phase 1 standards. These provisions, which are essentially identical in
structure and function in EPA's and NHTSA's regulations, enabled the
agencies to consider overall standards that are more stringent and that
will become effective sooner than we could consider with a more rigid
program, one in which all of a manufacturer's similar vehicles or
engines would be required to achieve the same emissions or fuel
consumption levels, and at the same time.\54\
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    \54\ NHTSA explained that it has greater flexibility in the HD
program to include consideration of credits and other flexibilities
in determining appropriate and feasible levels of stringency than it
does in the light-duty CAFE program. Cf. 49 U.S.C. 32902(h), which
applies to light-duty CAFE but not heavy-duty fuel efficiency under
49 U.S.C. 32902(k).
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    Phase 1 included four primary types of flexibility: Averaging,
banking, and trading (ABT) provisions; early credits; advanced
technology credits (including hybrid powertrains); and innovative
technology credit provisions. The ABT provisions were patterned on
existing EPA and NHTSA ABT programs (including the light-duty GHG and
fuel economy standards) and will allow a vehicle manufacturer to reduce
CO2 emission and fuel consumption levels further than the
level of the standard for one or more vehicles to generate ABT credits.
The manufacturer can use those credits to offset higher emission or
fuel consumption levels in the same averaging set, ``bank'' the credits
for later use, or ``trade'' the credits to another manufacturer. As
also noted above, for HD pickups and vans, we adopted a fleet averaging
system very similar to the light-duty GHG and CAFE fleet averaging
system. In both programs, manufacturers are allowed to carry-forward
deficits for up to three years without penalty. The agencies provided
in the ABT programs flexibility for situations in which a manufacturer
is unable to avoid a negative credit balance at the end of the year. In
such cases, manufacturers are not considered to be out of compliance
unless they are unable to make up the difference in credits by the end
of the third subsequent model year.
    In total, the Phase 1 program divides the heavy-duty sector into 14
subcategories of vehicles and 4 subcategories of engines. These
subcategories are grouped into 4 vehicle averaging sets and 4 engine
averaging sets in the ABT program. For tractors and vocational
vehicles, the fleet averaging sets are: Light heavy-duty (Classes 2b-
5); medium heavy-duty (Class 6-7); and heavy heavy-duty (Class 8).
Complete HD pickups and vans (both spark-ignition and compression-
ignition) are the final vehicle averaging set. For engines, the fleet
averaging sets are spark-ignition engines, compression-ignition light
heavy-duty engines, compression-ignition medium heavy-duty engines, and
compression-ignition heavy heavy-duty engines. ABT allows the exchange
of credits within an averaging set. This means that a Class 8 day cab
tractor can exchange credits with a Class 8 sleeper tractor but not
with a smaller Class 7 tractor. Also, a Class 8 vocational vehicle can
exchange credits with a Class 8 tractor. However, we did not allow
trading between engines and chassis (i.e. vehicles).
    In addition to ABT, the other primary flexibility provisions in the
Phase 1 program involve opportunities to generate early credits,
advanced technology credits (including for use of hybrid powertrains),
and innovative technology credits.\55\ For the early credits and
advanced technology credits, the agencies adopted a 1.5x multiplier,
meaning that manufacturers would get 1.5 credits for each early credit
and each advanced technology credit. In addition, advanced technology
credits for Phase 1 can be used anywhere within the heavy-duty sector
(including both vehicles and engines). Put another way, as a means of
promoting these promising technologies, the Phase 1 rule does not
restrict averaging or trading by averaging set in this instance.
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    \55\ Early credits are for engines and vehicles certified before
EPA standards became mandatory, advanced technology credits are for
hybrids and/or Rankine cycle engines, and innovative technology
credits are for other technologies not in the 2010 fleet whose
benefits are not reflected using the Phase 1 test procedures.
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    For other vehicle or engine technologies that can reduce
CO2 and fuel consumption, but whose benefits are not
reflected if measured using the Phase 1 test procedures, the agencies
wanted to encourage the development of such innovative technologies,
and therefore adopted special ``innovative technology'' credits. These
innovative technology credits apply to technologies that are shown to
produce emission and fuel consumption reductions that are not
adequately recognized on the Phase 1 test procedures and that were not
yet in widespread use in the heavy-duty sector before MY 2010.
Manufacturers

need to quantify the reductions in fuel consumption and CO2
emissions that the technology is expected to achieve, above and beyond
those achieved on the Phase 1 test procedures. As with ABT, the use of
innovative technology credits is allowed only among vehicles and
engines of the same defined averaging set generating the credit, as
described above. The credit multiplier likewise does not apply for
innovative technology credits.
(4) Implementation of Phase 1
    Manufacturers have already begun complying with the Phase 1
standards. In some cases manufacturers voluntarily chose to comply
early, before compliance was mandatory. The Phase 1 rule allowed
manufacturers to generate credits for such early compliance. The market
appears to be very accepting of the new technologies, and the agencies
have seen no evidence of ``pre-buy'' effects in response to the
standards. In fact sales have been higher in recent years than they
were before Phase 1. Moreover, manufacturers' compliance plans indicate
intention to utilize the Phase 1 flexibilities, and we have yet to see
significant non-compliance with the standards.
(5) Litigation on Phase 1 Rule
    The D.C. Circuit rejected all challenges to the agencies' Phase 1
regulations. The court did not reach the merits of the challenges,
holding that none of the petitioners had standing to bring their
actions, and that a challenge to NHTSA's denial of a rulemaking
petition could only be brought in District Court. See Delta
Construction v. EPA, 783 F. 3d 1291 (D.C. Cir. 2015).

C. Summary of the Phase 2 Standards and Requirements

    The agencies are adopting new standards that build on and enhance
existing Phase 1 standards, and are adopting as well the first-ever
standards for certain trailers used in combination with heavy-duty
tractors. Taken together, the Phase 2 program comprises a set of
largely technology-advancing standards that will achieve greater GHG
and fuel consumption savings than the Phase 1 program. As described in
more detail in the following sections, the agencies are adopting these
standards because, based on the information available at this time and
careful consideration of all comments, we believe they best fulfill our
respective statutory authorities when considered in the context of
available technology, feasible reductions of emissions and fuel
consumption, costs, lead time, safety, and other relevant factors.
    The Phase 2 standards represent a more technology-forcing \56\
approach than the Phase 1 approach, predicated on use of both off-the-
shelf technologies and emerging technologies that are not yet in
widespread use. The agencies are adopting standards for MY 2027 that we
project will require manufacturers to make extensive use of these
technologies. The standards increase in stringency incrementally
beginning in MY 2018 for trailers and in MY 2021 for other segments,
ensuring steady improvement to the MY 2027 stringency levels. For
existing technologies and technologies in the final stages of
development, we project that manufacturers will likely apply them to
nearly all vehicles, excluding those specific vehicles with
applications or uses that prevent the technology from functioning
properly. We also project as one possible compliance pathway that
manufacturers could apply other more advanced technologies such as
hybrids and waste engine heat recovery systems, although at lower
application rates than the more conventional technologies. Comments on
the overall stringency of the proposed Phase 2 program were mixed. Many
commenters, including most non-governmental organizations, supported
more stringent standards with less lead time. Many technology and
component suppliers supported more stringent standards but with the
proposed lead time. Vehicle manufacturers did not support more
stringent standards and emphasized the importance of lead time. To the
extent these commenters provided technical information to support their
comments on stringency and lead time, it is discussed in Sections II
through VI.
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    \56\ In this context, the term ``technology-forcing'' has a
specific legal meaning and is used to distinguish standards that
will effectively require manufacturers to develop new technologies
(or to significantly improve technologies) from standards that can
be met using off-the-shelf technology alone. See, e.g., NRDC v. EPA,
655 F. 2d 318, 328 (D.C. Cir. 1981). Technology-forcing standards do
not require manufacturers to use any specific technologies. See also
76 FR 57130 (explaing that section 202(a)(2) allows EPA to adopt
such technology-forcing standards, although it does not compell such
standards).
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    The standards being adopted provide approximately ten years of lead
time for manufacturers to meet these 2027 standards, which the agencies
believe is appropriate to implement the technologies industry could use
to meet these standards. For some of the more advanced technologies
production prototype parts are not yet available, though they are in
the research stage with some demonstrations in actual vehicles.\57\ In
the respective sections of Chapter 2 of the RIA, the agencies explain
what further steps are needed to successfully and reliably
commercialize these prototypes in the lead time afforded by the Phase 2
standards. Additionally, even for the more developed technologies,
phasing in more stringent standards over a longer timeframe will help
manufacturers to ensure better reliability of the technology and to
develop packages to work in a wide range of applications.
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    \57\ ``Prototype'' as it is used here refers to technologies
that have a potentially production-feasible design that is expected
to meet all performance, functional, reliability, safety,
manufacturing, cost and other requirements and objectives that is
being tested in laboratories and on highways under a full range of
operating conditions, but is not yet available in production
vehicles already for sale in the market.
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    As discussed later, the agencies are also adopting new standards in
MYs 2018 (trailers only), 2021, and 2024 to ensure that manufacturers
make steady progress toward the 2027 standards, thereby achieving
steady and feasible reductions in GHG emissions and fuel consumption in
the years leading up to the MY 2027 standards.
    Providing additional lead time can often enable manufacturers to
resolve technological challenges or to find lower cost means of meeting
new regulatory standards, effectively making them more feasible in
either case. See generally NRDC v. EPA, 655 F. 2d 318, 329 (D.C. Cir.
1981). On the other hand, manufacturers and/or operators may incur
additional costs if regulations require them to make changes to their
products with less lead time than manufacturers would normally have
when bringing a new technology to the market or expanding the
application of existing technologies. After developing a new
technology, manufacturers typically conduct extensive field tests to
ensure its durability and reliability in actual use. Standards that
accelerate technology deployment can lead to manufacturers incurring
additional costs to accelerate this development work, or can lead to
manufacturers beginning production before such testing can be
completed. Some industry stakeholders have informed EPA that when
manufacturers introduced new emission control technologies (primarily
diesel particulate filters) in response to the 2007 heavy-duty engine
standards they did not perform sufficient product development
validation, which led to additional costs for operators when the
technologies required repairs or resulted in other operational issues
in use. Thus, the issues of costs, lead time, and reliability are
intertwined for the

agencies' determination of whether standards are reasonable and maximum
feasible, respectively.
    Another important consideration was the possibility of disrupting
the market, which would be a risk if compliance required application of
new technologies too suddenly. Several of the heavy-duty vehicle
manufacturers, fleets, and commercial truck dealerships informed the
agencies that for fleet purchases that are planned more than a year in
advance, expectations of reduced reliability, increased operating
costs, reduced residual value, or of large increases in purchase prices
can lead the fleets to pull-ahead by several months planned future
vehicle purchases by pre-buying vehicles without the newer technology.
In the context of the Class 8 tractor market, where a relatively small
number of large fleets typically purchase very large volumes of
tractors, such actions by a small number of firms can result in large
swings in sales volumes. Such market impacts would be followed by some
period of reduced purchases that can lead to temporary layoffs at the
factories producing the engines and vehicles, as well as at supplier
factories, and disruptions at dealerships. Such market impacts also can
reduce the overall environmental and fuel consumption benefits of the
standards by delaying the rate at which the fleet turns over. See
International Harvester v. EPA, 478 F. 2d 615, 634 (D.C. Cir. 1973). A
number of commenters stated that the 2007 EPA heavy-duty engine
criteria pollutant standard precipitated pre-buy for the Class 8
tractor market.\58\ The agencies understand the potential impact that
fleets pulling ahead purchases can have on American manufacturing and
labor, dealerships, truck purchasers, and on the program's
environmental and fuel savings goals, and have taken steps in the
design of the program to avoid such disruption (see also our discussion
in RTC Section 11.7). These steps include the following:
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    \58\ For example, see the public comments of The International
Union, Volvo Trucks North America, United Automobile, Aerospace and
Agricultural Implement Workers of America (UAW).

 Providing considerable lead time
 Adopting standards that will result in significantly lower
operating costs for vehicle owners (unlike the 2007 standard, which
increased operating costs)
 Phasing in the standards
 Structuring the program so the industry will have a
significant range of technology choices to be considered for
compliance, rather than the one or two new technologies the OEMs
pursued to comply with EPA's 2007 criteria pollutant standard
 Allowing manufacturers to use emissions averaging, banking and
trading to phase in the technology even further

As discussed in the Phase 1 final rule, NHTSA has certain statutory
considerations to take into account when determining feasibility of the
preferred alternative.\59\ EISA states that NHTSA (in consultation with
EPA and the Secretary of Energy) will develop a commercial medium- and
heavy-duty fuel efficiency program designed ``to achieve the maximum
feasible improvement.'' \60\ Although there is no definition of maximum
feasible standards in EISA, NHTSA is directed to consider three factors
when determining what the maximum feasible standards are. Those factors
are, appropriateness, cost-effectiveness, and technological
feasibility,\61\ which modify ``feasible'' beyond its plain meaning.
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    \59\ 75 FR 57198.
    \60\ 49 U.S.C. 32902(k).
    \61\ Id.
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