\438\ 76 FR 57106; 81 FR 73478.
    \439\ Heavy Duty Truck Retail Price Equivalent and Indirect Cost
Multipliers, Draft Report, July 2010.
    \440\ Rogozhin, A., et al., Using indirect cost multipliers to
estimate the total cost of adding new technology in the automobile
industry. International Journal of Production Economics (2009),
doi:10.1016/j.ijpe.2009.11.031.

 Table V-5--Retail Price Equivalent Factors in the Heavy-Duty and Light-
                             Duty Industries
------------------------------------------------------------------------
                                             HD truck       LD vehicle
            Cost contributor                 industry        industry
------------------------------------------------------------------------
Direct manufacturing cost...............            1.00            1.00
Warranty................................            0.03            0.03
R&D.....................................            0.05            0.05
Other (admin, retirement, health, etc.).            0.29            0.36
Profit (cost of capital)................            0.05            0.06
RPE.....................................            1.42            1.50
------------------------------------------------------------------------

    For this analysis, EPA based indirect cost estimates for diesel and
CNG regulatory classes on the HD Truck Industry RPE values shown in
Table V-5.\441\ For gasoline regulatory classes, we used the LD Vehicle
Industry values shown in Table V-5 since they more closely represent
the cost structure of manufacturers in that industry--Ford, General
Motors, and Stellantis.
---------------------------------------------------------------------------

    \441\ Note that the report used the term ``HD Truck'' while EPA
generally uses the term ``HD vehicle;'' they are equivalent when
referring to this report.
---------------------------------------------------------------------------

    Of the cost contributors listed in Table V-5, Warranty and R&D are
the elements of indirect costs that the final rule requirements are
expected to impact. As discussed in Section IV of this preamble, EPA is
lengthening the required warranty period, which we expect to increase
the contribution of warranty costs to indirect costs. EPA is also
tightening the numeric standards and extending the regulatory useful
life,

which we expect to result in increased R&D expenses as compliant
systems are developed. All other indirect cost elements--those
encapsulated by the ``Other'' category, including General and
Administrative Costs, Retirement Costs, Healthcare Costs, and other
overhead costs--as well as Profits, are expected to scale according to
their historical levels of contribution.
    As mentioned, Warranty and R&D are the elements of indirect costs
that are expected to be impacted. Warranty expenses are the costs that
a business expects to or has already incurred for the repair or
replacement of goods that it has sold. The total amount of warranty
expense is limited by the warranty period that a business typically
allows. After the warranty period for a product has expired, a business
no longer incurs a warranty liability; thus, a longer warranty period
results in a longer period of liability for a product. At the time of
sale, a warranty liability account is adjusted to reflect the expected
costs of any potential future warranty claims. If and when warranty
claims are made by customers, the warranty liability account is debited
and a warranty claims account is credited to cover warranty claim
expenses.\442\
---------------------------------------------------------------------------

    \442\ Warranty expense is recognized in the same period as the
sales for the products that were sold, if it is probable that an
expense will be incurred and the company can estimate the amount of
the expense. For more discussion of this topic, see the supporting
material in this docket, AccountingTools.com, December 24, 2020,
accessed January 28, 2021.
---------------------------------------------------------------------------

    In the proposed analysis, to address the expected increased
indirect cost contributions associated with warranty (increased funding
of the warranty liability account) due to the proposed longer warranty
requirements, we applied scaling factors commensurate with the changes
in proposed Option 1 or Option 2 to the number of miles included in the
warranty period (i.e., VMT-based scaling factors). Industry commenters
took exception to this approach, arguing that it resulted in
underestimated costs associated with warranty. To support their
comments, one commenter submitted data that showed costs associated
with actual warranty claims for roughly 250,000 heavy heavy-duty
vehicles. The following figure includes the chart from their comments,
which are also in the public docket for this rule.
[GRAPHIC] [TIFF OMITTED] TR24JA23.002

Figure V-1 Warranty Costs Submitted as Part of the Comments From An
Industry Association; See EPA-HQ-OAR-2019-0055-1203-A1, Page 151

    EPA considers this comment and supporting information to be
persuasive, not only because it represents data, but also because it
represents data from three manufacturers and over 250,000 vehicles;
thus, we switched from a VMT-based scaling approach to a years-based
approach to better take into account this information. However, the
data are for heavy HDE, so it is not possible to determine an
appropriate cost per year for light or medium HDE from the data
directly. Also, the data represent actual warranty claims without any
mention of the warranty claims rate (i.e., the share of engines sold
that are making the warranty claims represented in the data). This
latter issue makes it difficult to determine the costs that might be
imposed on all new engines sold to cover the future warranty claims for
the relatively smaller fraction of engines that incur warranty repair.
In other words, if all heavy HDE purchases are helping to fund a
warranty liability account, it is unclear if the $1,000 per year per
engine is the right amount or if $1,000 per year is needed on only that
percent of engines that will incur warranty repair. In the end,
warranty costs imposed on new engine sales should be largely recouped
by purchasers of those engines in the form of reduced emission repair
expenses. EPA believes it is unlikely that a manufacturer would use
their warranty program as a profit generator under the $1,000 per
engine approach, especially in a market as competitive as the HD engine
and vehicle industry. The possibility exists that the costs associated
with the longer warranty

coverage required by this rule will (1) converge towards those of the
better performing OEMs; and (2) drop over time via something analogous
to the learning by doing phenomenon described earlier. If true, we have
probably overestimated the costs estimated here as attributable to this
rule.
    Thus, after careful consideration of these comments regarding
warranty, and the engineering judgement of EPA subject matter experts,
we revised our approach to estimating warranty costs, and for the final
rule we have estimated warranty costs assuming a cost of $1,000 (2018
dollars or $977 in 2017 dollars) per estimated number of years of
warranty coverage for a heavy heavy-duty diesel engine or heavy-duty
vehicle equipped with such an engine. For other regulatory (engine)
classes, we have scaled that value by the ratio of their estimated
baseline emission-control system direct cost to the estimated emission-
control system direct cost of the baseline heavy heavy-duty diesel
engine. We use the baseline heavy heavy-duty diesel engine direct cost
here because it should be consistent with the data behind the $1,000
per year value. The resulting emission-related warranty costs per year
for a MY 2027 HD engine are as shown in Table V-6.

                                       Table V-6--Warranty Costs per Year
                                               [2017 Dollars] \a\
----------------------------------------------------------------------------------------------------------------
         MOVES regulatory class                   Scaling approach            Diesel      Gasoline       CNG
----------------------------------------------------------------------------------------------------------------
Light HDE...............................  Base Light HDE DMC/Base Diesel           621          450  ...........
                                           Heavy HDE DMC.
Medium HDE..............................  Base Medium HDE DMC/Base Diesel          639          449  ...........
                                           Heavy HDE DMC.
Heavy HDE...............................  Base Heavy HDE DMC/Base Diesel           977          448        1,442
                                           Heavy HDE DMC.
Urban bus...............................  Base Urban bus DMC/Base Diesel           652  ...........        1,081
                                           Heavy HDE DMC.
----------------------------------------------------------------------------------------------------------------
\a\ The Base Diesel HDE DMC would be the $5,816 value shown in Table V-2.

    As noted, we have used the estimated number of years of warranty
coverage, not the regulated number of years. In other words, a long-
haul tractor accumulating over 100,000 miles per year will reach any
regulated warranty mileage prior to a refuse truck accumulating under
40,000 miles per year, assuming both are in the same regulatory class
and, therefore, have the same warranty provisions. In all cases, we
estimate the number of years of warranty coverage by determining the
minimum number of years to reach either the number of years, the number
of miles, or the number of hours of operation covered by the EPA
emissions-related warranty. We provide more detail on this in Chapter 7
of the final RIA.
    Lastly, with respect to warranty, we have estimated that many of
the regulated products are sold today with a warranty period longer
than the EPA required emissions-related warranty period. In the
proposal, we calculated baseline warranty costs only for the required
warranty periods. In the final analysis, we calculate baseline warranty
costs based on the warranty periods for which engines are actually
sold. For diesel and CNG heavy HDE, we assume all are sold with
warranties covering 250,000 miles, and for diesel and CNG medium HDE,
we assume half are sold with warranties covering 150,000 miles. For all
other engines and associated fuel types, we have not estimated any use
of extended warranties in the baseline.
    We use these annual warranty costs for both the baseline and the
final standards despite the addition of new technology associated with
this final rule. We believe this is reasonable for two reasons: (1) The
source data included several years of data during which there must have
been new technology introductions, yet annual costs appear to have
remained generally steady; and, (2) the R&D we expect to be done,
discussed next, is expected to improve overall durability, which should
serve to help maintain historical annual costs.
    For R&D, we have maintained the approach used in the proposal,
although it is applied using the final useful life provisions. For
example, for R&D on a Class 8 truck, the final standards would extend
regulatory useful life from 10 years, 22,000 hours, or 435,000 miles,
to 11 years, 32,000 hours, or 650,000 miles. We have applied a scaling
factor of 1.49 (650/435) to the 0.05 R&D contribution factor for MYs
2027 and later. We apply this same methodology to estimating R&D for
other vehicle categories. We estimate that once the development efforts
into longer useful life are complete, increased expenditures will
return to their normal levels of contribution. Therefore, we have
implemented R&D scalars for three years (2027 through 2029). In MY 2030
and later, the R&D scaling factors are no longer applied.
    The VMT-based scaling factors applied to R&D cost contributors used
in our cost analysis of final standards are shown in Table V-7 for
diesel and CNG regulatory classes and in Table V-8 for gasoline
regulatory classes.

Table V-7--Scaling Factors Applied to RPE Contribution Factors To Reflect Changes in Their Contributions, Diesel
                                            & CNG Regulatory Classes
----------------------------------------------------------------------------------------------------------------
                                                                                R&D scalars
                    Scenario                           MOVES regulatory class       ----------------------------
                                                                                MY2027-2029     MY2030+
----------------------------------------------------------------------------------------------------------------
Baseline.......................................  Light HDE.........................            1.00         1.00
                                                 Medium HDE........................            1.00         1.00
                                                 Heavy HDE.........................            1.00         1.00
                                                 Urban Bus.........................            1.00         1.00
Final Program..................................  Light HDE.........................            2.45         1.00
                                                 Medium HDE........................            1.89         1.00
                                                 Heavy HDE.........................            1.49         1.00
                                                 Urban Bus.........................            1.49         1.00
----------------------------------------------------------------------------------------------------------------

    Table V-8--Scaling Factors Applied to RPE Contribution Factors To Reflect Changes in Their Contributions,
                                           Gasoline Regulatory Classes
----------------------------------------------------------------------------------------------------------------
                                                                                R&D scalars
                    Scenario                           MOVES regulatory class       ----------------------------
                                                                                MY2027-2029     MY2030+
----------------------------------------------------------------------------------------------------------------
Baseline.......................................  Light HDE.........................            1.00         1.00
                                                 Medium HDE........................            1.00         1.00
                                                 Heavy HDE.........................            1.00         1.00
Final Program..................................  Light HDE.........................            1.82         1.00
                                                 Medium HDE........................            1.82         1.00
                                                 Heavy HDE.........................            1.82         1.00
----------------------------------------------------------------------------------------------------------------

    Lastly, as mentioned in Section V.A.1, the markups for estimating
indirect costs are applied to our estimates of the absolute direct
manufacturing costs for emission-control technology shown in Table V-2,
Table V-3 and Table V-4, not just the incremental costs associated with
the final program (i.e., the Baseline + Final costs). Table V-9
provides an illustrative example using a baseline technology cost of
$5000, a final incremental cost of $1000, and an indirect cost R&D
contribution of 0.05 with a simple scalar of 1.5 associated with a
longer useful life period. In this case, the costs could be calculated
according to two approaches, as shown in Table V-9. By including the
baseline costs, we are estimating new R&D costs in the final standards,
as illustrated by the example where including baseline costs results in
R&D costs of $450 while excluding baseline costs results in R&D costs
of $75.

    Table V-9--Simplified Hypothetical Example of Indirect R&D Costs
    Calculated on An Incremental vs. Absolute Technology Package Cost
    [Values are not from the analysis and are for presentation only]
------------------------------------------------------------------------
                                Using incremental
                                   costs only       Using absolute costs
------------------------------------------------------------------------
Baseline direct               $5,000..............  $5,000.
 manufacturing cost (DMC).
Direct Manufacturing Cost     $1,000..............  $5,000 + $1,000 =
 (DMC).                                              $6,000.
Indirect R&D Costs..........  $1,000 x 0.05 x 1.5   $6,000 x 0.05 x 1.5
                               = $75.                = $450.
Incremental DMC + R&D.......  $1,000 + $75 =        $6,000 + $450-$5,000
                               $1,075.               = $1,450.
------------------------------------------------------------------------

3. Technology Costs per Vehicle
    The following tables present the technology costs estimated for the
final program on a per-vehicle basis for MY 2027. Reflected in these
tables are learning effects on direct manufacturing costs and scaling
effects associated with final program requirements. The sum is also
shown and reflects the direct plus indirect cost per vehicle in the
specific model year. Note that the indirect costs shown include
warranty, R&D, ``other,'' and profit, the latter two which scale with
direct costs via the indirect cost contribution factor. While direct
costs do not change across the different vehicle types (i.e., long-haul
versus short-haul combination), the indirect costs do vary because
differing miles driven and operating hours between types of vehicles
result in different warranty and useful life estimates in actual use.
These differences impact the estimated warranty and R&D costs.
    We show costs per vehicle here, but it is important to note that
these are costs and not prices. We are not estimating how manufacturers
might price their products. Manufacturers may pass costs along to
purchasers via price increases in a manner consistent with what we show
here. However, manufacturers may also price certain products higher
than what we show while pricing others lower--the higher-priced
products thereby subsidizing the lower-priced products. This is true in
any market, not just the heavy-duty highway industry. This may be
especially true with respect to the indirect costs we have estimated
because, for example, R&D done to improve emission durability can
readily transfer across different engines whereas hardware added to an
engine is uniquely tied to that engine.
    Importantly, we present costs here for MY2027 vehicles, but these
costs continue for every model year going forward from there.
Consistent with the learning impacts described in section V.A.2, the
costs per vehicle decrease slightly over time, but only the increased
R&D costs are expected to decrease significantly. Increased R&D is
estimated to occur for three years following and including MY2027
(i.e., MY2027-29), after which time its contribution to indirect costs
returns to lower values as shown in Table V.4.

Table V-10--MY2027 Diesel Light HDE Technology Costs per Vehicle Associated With the Final Program, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           3,699             2,332                6,031
Other Buses..............................................           3,699             2,263                5,962
School Buses.............................................           3,699             3,829                7,528
Short-Haul Single Unit Trucks............................           3,699             2,851                6,550
Transit Buses............................................           3,699             2,263                5,962
----------------------------------------------------------------------------------------------------------------

                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           5,656             6,353               12,009
Other Buses..............................................           5,656             6,064               11,720
School Buses.............................................           5,656             8,830               14,485
Short-Haul Single Unit Trucks............................           5,656             8,530               14,186
Transit Buses............................................           5,656             6,064               11,720
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           1,957             4,021                5,978
Other Buses..............................................           1,957             3,800                5,757
School Buses.............................................           1,957             5,001                6,957
Short-Haul Single Unit Trucks............................           1,957             5,680                7,636
Transit Buses............................................           1,957             3,800                5,757
----------------------------------------------------------------------------------------------------------------

    Table V-11--MY2027 Diesel Medium HDE Technology Costs per Vehicle Associated With the Final Program, 2017
                                                     Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           3,808             3,774                7,582
Motor Homes..............................................           3,808             4,682                8,490
Other Buses..............................................           3,808             3,597                7,404
Refuse Trucks............................................           3,808             4,217                8,025
School Buses.............................................           3,808             4,682                8,490
Short-Haul Combination Trucks............................           3,808             2,595                6,402
Short-Haul Single Unit Trucks............................           3,808             4,682                8,490
Transit Buses............................................           3,808             3,597                7,404
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           5,625             7,572               13,197
Motor Homes..............................................           5,625             8,839               14,464
Other Buses..............................................           5,625             7,175               12,799
Refuse Trucks............................................           5,625             8,564               14,189
School Buses.............................................           5,625             8,839               14,464
Short-Haul Combination Trucks............................           5,625             4,930               10,555
Short-Haul Single Unit Trucks............................           5,625             8,839               14,464
Transit Buses............................................           5,625             7,175               12,799
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           1,817             3,798                5,615
Motor Homes..............................................           1,817             4,157                5,974
Other Buses..............................................           1,817             3,578                5,395
Refuse Trucks............................................           1,817             4,347                6,164
School Buses.............................................           1,817             4,157                5,974
Short-Haul Combination Trucks............................           1,817             2,335                4,153
Short-Haul Single Unit Trucks............................           1,817             4,157                5,974
Transit Buses............................................           1,817             3,578                5,395
----------------------------------------------------------------------------------------------------------------

Table V-12--MY2027 Diesel Heavy HDE Technology Costs per Vehicle Associated With the Final Program, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks.............................           5,816             4,025                9,841
Long-Haul Single Unit Trucks.............................           5,816             7,151               12,967
Motor Homes..............................................           5,816             7,151               12,967
Other Buses..............................................           5,816             7,151               12,967
Refuse Trucks............................................           5,816             7,151               12,967
School Buses.............................................           5,816             7,151               12,967
Short-Haul Combination Trucks............................           5,816             5,658               11,473

Short-Haul Single Unit Trucks............................           5,816             7,151               12,967
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks.............................           8,132             6,535               14,667
Long-Haul Single Unit Trucks.............................           8,132            13,139               21,271
Motor Homes..............................................           8,132            13,139               21,271
Other Buses..............................................           8,132            13,139               21,271
Refuse Trucks............................................           8,132            13,139               21,271
School Buses.............................................           8,132            13,139               21,271
Short-Haul Combination Trucks............................           8,132             9,474               17,606
Short-Haul Single Unit Trucks............................           8,132            13,139               21,271
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks.............................           2,316             2,510                4,827
Long-Haul Single Unit Trucks.............................           2,316             5,988                8,304
Motor Homes..............................................           2,316             5,988                8,304
Other Buses..............................................           2,316             5,988                8,304
Refuse Trucks............................................           2,316             5,988                8,304
School Buses.............................................           2,316             5,988                8,304
Short-Haul Combination Trucks............................           2,316             3,816                6,132
Short-Haul Single Unit Trucks............................           2,316             5,988                8,304
----------------------------------------------------------------------------------------------------------------

Table V-13--MY2027 Diesel Urban Bus Technology Costs per Vehicle Associated With the Final Program, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
FRM Baseline.............................................           3,884             3,238                7,122
FRM Baseline + Final Program.............................           5,734             8,901               14,635
Increased Cost of the Final Program......................           1,850             5,663                7,512
----------------------------------------------------------------------------------------------------------------

  Table V-14--MY2027 Gasoline HDE Technology Costs per Vehicle Associated With the Final Program, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           2,681             1,905                4,585
Motor Homes..............................................           2,681             3,511                6,192
Other Buses..............................................           2,681             1,855                4,535
School Buses.............................................           2,681             2,989                5,670
Short-Haul Single Unit Trucks............................           2,681             2,280                4,961
Transit Buses............................................           2,681             1,855                4,535
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           3,369             3,784                7,153
Motor Homes..............................................           3,369             6,223                9,592
Other Buses..............................................           3,369             3,624                6,993
School Buses.............................................           3,369             6,223                9,592
Short-Haul Single Unit Trucks............................           3,369             4,986                8,355
Transit Buses............................................           3,369             3,624                6,993
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................             688             1,880                2,568
Motor Homes..............................................             688             2,712                3,401
Other Buses..............................................             688             1,770                2,458
School Buses.............................................             688             3,234                3,923
Short-Haul Single Unit Trucks............................             688             2,706                3,394
Transit Buses............................................             688             1,770                2,458
----------------------------------------------------------------------------------------------------------------

  Table V-15--MY2027 CNG Heavy HDE Technology Costs per Vehicle Associated With the Final Program, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           8,585            10,556               19,141
Other Buses..............................................           8,585            10,556               19,141
Refuse Trucks............................................           8,585            10,556               19,141
School Buses.............................................           8,585            10,556               19,141
Short-Haul Combination Trucks............................           8,585             8,351               16,936
Short-Haul Single Unit Trucks............................           8,585            10,556               19,141
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................           8,610            17,988               26,598
Other Buses..............................................           8,610            17,988               26,598
Refuse Trucks............................................           8,610            17,988               26,598
School Buses.............................................           8,610            17,988               26,598
Short-Haul Combination Trucks............................           8,610            12,577               21,187
Short-Haul Single Unit Trucks............................           8,610            17,988               26,598
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks.............................              25             7,431                7,457
Other Buses..............................................              25             7,431                7,457
Refuse Trucks............................................              25             7,431                7,457
School Buses.............................................              25             7,431                7,457
Short-Haul Combination Trucks............................              25             4,225                4,251
Short-Haul Single Unit Trucks............................              25             7,431                7,457
----------------------------------------------------------------------------------------------------------------

  Table V-16--MY2027 CNG Urban Bus Technology Costs per Vehicle Associated With the Final Program, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                            Direct costs    Indirect costs    Costs per vehicle
----------------------------------------------------------------------------------------------------------------
FRM Baseline.............................................           6,438             5,367               11,806
FRM Baseline + Final Program.............................           6,457            13,490               19,948
Increased Cost of the Final Program......................              19             8,123                8,142
----------------------------------------------------------------------------------------------------------------

B. Operating Costs

    We have estimated three impacts on operating costs expected to be
incurred by users of new MY 2027 and later heavy-duty vehicles:
Increased diesel exhaust fluid (DEF) consumption by diesel vehicles due
to increased DEF dose rates to enable compliance with more stringent
NOX standards; decreased fuel costs for gasoline vehicles
due to new onboard refueling vapor recovery systems that allow burning
(in engine) of otherwise evaporated hydrocarbon emissions; emission
repair impacts brought about by longer warranty and useful life
provisions; and the potential higher emission-related repair costs for
vehicles equipped with the new technology. For the repair impacts, we
expect that the longer duration warranty period will result in lower
owner/operator-incurred repair costs due to fewer repairs being paid
for by owners/operators since more costs will be borne by the
manufacturer, and that the longer duration useful life periods will
result in increased emission control system durability. We have
estimated the net effect on repair costs and describe our approach,
along with increased DEF consumption and reduced gasoline consumption,
in this section. Additional details on our methodology and estimates of
operating costs are included in RIA Chapter 7.2.
1. Costs Associated With Increased Diesel Exhaust Fluid (DEF)
Consumption in Diesel Engines
    Consistent with the approach used to estimate technology costs, we
have estimated both baseline case DEF consumption and DEF consumption
under the final program. For the baseline case, we estimated DEF
consumption using the relationship between DEF dose rate and the
reduction in NOX over the SCR catalyst. The relationship
between DEF dose rate and NOX reduction across the SCR
catalyst is based on methodology presented in the Technical Support
Document to the 2012 Nonconformance Penalty rule (the NCP Technical
Support Document, or NCP TSD).\443\ The relationship of DEF dose rate
to NOX reduction used in that methodology considered FTP
emissions and, as such, the DEF dose rate increased as FTP tailpipe
emissions decreased. The DEF dose rate used in this analysis is 5.18
percent of fuel consumed.
---------------------------------------------------------------------------

    \443\ Nonconformance Penalties for On-highway Heavy-duty Diesel
Engines: Technical Support Document; EPA-420-R-12-014, August 2012.
---------------------------------------------------------------------------

    To estimate DEF consumption impacts under the final program, which
involves not only the new FTP emission standards but also the new SET
and LLC standards along with new off-cycle standards, we developed a
new approach to estimate DEF consumption for the proposal, which we
also applied in this final rule. For this analysis, we scaled DEF
consumption with the NOX reductions achieved under the final
emission standards. This was done by considering the molar mass of
NOX, the molar mass of urea, the mass concentration of urea
in DEF, along with the density of DEF, to estimate the

theoretical gallons of DEF consumed per ton of NOX reduced.
We estimated theoretical DEF consumption per ton of NOX
reduced at 442 gallons/ton, which we then adjusted based on testing to
527 gallons/ton, the value used in this analysis. We describe this in
more detail in Section 7.2.1 of the RIA.
    These two DEF consumption metrics--dose rate per gallon for an
engine meeting the baseline emission standards and any additional DEF
consumption per ton of NOX reduced to achieve the final
emission standards over the final useful lives--were used to estimate
total DEF consumption. These DEF consumption rates were then multiplied
by DEF price per gallon, adjusted to 2017 dollars from the DEF prices
presented in the NCP TSD, to arrive at the impacts on DEF costs for
diesel engines. These are shown for MY2027 diesel vehicles in Table V-
17. Because these are operating costs which occur over time, we present
them at both 3 and 7 percent discount rates.

                       Table V-17--MY2027 Lifetime DEF Costs per Diesel Vehicle Associated With Final NOX Standards, 2017 Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         3% Discount rate                                7% Discount rate
                                                         -----------------------------------------------------------------------------------------------
                                                           Light HDE  Medium HDE   Heavy HDE   Urban bus   Light HDE  Medium HDE   Heavy HDE   Urban bus
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      FRM Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks............................  ..........  ..........      34,009  ..........  ..........  ..........      25,768  ..........
Long-Haul Single Unit Trucks............................       3,759       5,686       6,823  ..........       2,937       4,443       5,331  ..........
Motor Homes.............................................  ..........       1,489       1,764  ..........  ..........       1,068       1,265  ..........
Other Buses.............................................       9,118      11,285      11,688  ..........       6,695       8,286       8,582  ..........
Refuse Trucks...........................................  ..........       8,435       8,787  ..........  ..........       6,317       6,581  ..........
School Buses............................................       2,331       3,030       3,187  ..........       1,712       2,225       2,340  ..........
Short-Haul Combination Trucks...........................  ..........      16,323      17,154  ..........  ..........      12,735      13,384  ..........
Short-Haul Single Unit Trucks...........................       2,733       4,144       4,975  ..........       2,100       3,184       3,823  ..........
Transit Buses...........................................       9,192      11,254  ..........      11,742       6,750       8,263  ..........       8,622
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              FRM Baseline + Final Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks............................  ..........  ..........      37,621  ..........  ..........  ..........      28,580  ..........
Long-Haul Single Unit Trucks............................       4,011       6,215       7,916  ..........       3,136       4,865       6,200  ..........
Motor Homes.............................................  ..........       1,617       2,016  ..........  ..........       1,162       1,450  ..........
Other Buses.............................................       9,805      12,277      13,594  ..........       7,209       9,040      10,011  ..........
Refuse Trucks...........................................  ..........       9,182      10,246  ..........  ..........       6,895       7,696  ..........
School Buses............................................       2,501       3,293       3,671  ..........       1,839       2,424       2,702  ..........
Short-Haul Combination Trucks...........................  ..........      17,575      19,378  ..........  ..........      13,727      15,154  ..........
Short-Haul Single Unit Trucks...........................       2,949       4,573       5,864  ..........       2,268       3,522       4,517  ..........
Transit Buses...........................................       9,867      12,149  ..........      13,410       7,253       8,945  ..........       9,863
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Increased Cost of the Final Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks............................  ..........  ..........       3,612  ..........  ..........  ..........       2,812  ..........
Long-Haul Single Unit Trucks............................         252         529       1,094  ..........         199         422         869  ..........
Motor Homes.............................................  ..........         128         253  ..........  ..........          94         185  ..........
Other Buses.............................................         687         992       1,906  ..........         514         754       1,428  ..........
Refuse Trucks...........................................  ..........         747       1,459  ..........  ..........         579       1,115  ..........
School Buses............................................         170         263         484  ..........         127         199         362  ..........
Short-Haul Combination Trucks...........................  ..........       1,251       2,224  ..........  ..........         992       1,771  ..........
Short-Haul Single Unit Trucks...........................         216         429         889  ..........         168         337         694  ..........
Transit Buses...........................................         675         896  ..........       1,669         504         681  ..........       1,241
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Costs Associated With Changes in Fuel Consumption on Gasoline
Engines
    We have estimated a decrease in fuel costs, i.e., fuel savings,
associated with the final ORVR requirements on gasoline engines. Due to
the ORVR systems, evaporative emissions that would otherwise be emitted
into the atmosphere will be trapped and subsequently burned in the
engine. We describe the approach taken to estimate these impacts in
Chapter 7.2.2 of the RIA. These newly captured evaporative emissions
are converted to gallons and then multiplied by AEO 2019 reference case
gasoline prices (converted to 2017 dollars) to arrive at the monetized
impacts. These impacts are shown in Table V-18. In the aggregate, we
estimate that the ORVR requirements in the final program will result in
an annual reduction of approximately 0.3 million (calendar year 2027)
to 4.9 million (calendar year 2045) gallons of gasoline, representing
roughly 0.1 percent of gasoline consumption from impacted vehicles.

   Table V-18--MY2027 Lifetime Fuel Costs per Gasoline Vehicle Associated With ORVR Requirements, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                   3% Discount rate                    7% Discount rate
                                         -----------------------------------------------------------------------
                                           Light HDE  Medium HDE   Heavy HDE   Light HDE  Medium HDE   Heavy HDE
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks............     120,876     150,530     192,727      94,841     118,108     151,216
Motor Homes.............................      30,329      38,339      48,887      21,905      27,691      35,309
Other Buses.............................     273,223  ..........  ..........     201,982  ..........  ..........
School Buses............................      69,242  ..........  ..........      51,188  ..........  ..........
Short-Haul Single Unit Trucks...........      86,494     109,427     139,754      66,791      84,501     107,918
Transit Buses...........................     269,797  ..........  ..........     199,449  ..........  ..........
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks............     120,744     150,349     192,470      94,739     117,969     151,019
Motor Homes.............................      30,271      38,260      48,781      21,864      27,635      35,233
Other Buses.............................     272,656  ..........  ..........     201,570  ..........  ..........
School Buses............................      69,110  ..........  ..........      51,092  ..........  ..........
Short-Haul Single Unit Trucks...........      86,397     109,292     139,566      66,717      84,399     107,777
Transit Buses...........................     269,245  ..........  ..........     199,047  ..........  ..........
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks............        -132        -181        -257        -102        -139        -197
Motor Homes.............................         -58         -79        -106         -41         -56         -75
Other Buses.............................        -567  ..........  ..........        -412  ..........  ..........
School Buses............................        -132  ..........  ..........         -96  ..........  ..........
Short-Haul Single Unit Trucks...........         -97        -135        -187         -74        -102        -141
Transit Buses...........................        -552  ..........  ..........        -402  ..........  ..........
----------------------------------------------------------------------------------------------------------------

3. Emission-Related Repair Cost Impacts Associated With the Final
Program
    The final extended warranty and useful life requirements will have
an impact on emission-related repair costs incurred by truck owners.
Researchers have noted the relationships among quality, reliability,
and warranty for a variety of goods.\444\ Wu,\445\ for instance,
examines how analyzing warranty data can provide ``early warnings'' on
product problems that can then be used for design modifications.
Guajardo et al. describe one of the motives for warranties to be
``incentives for the seller to improve product quality''; specifically
for light-duty vehicles, they find that buyers consider warranties to
substitute for product quality, and to complement service quality.\446\
Murthy and Jack, for new products, and Saidi-Mehrabad et al. for
second-hand products, consider the role of warranties in improving a
buyer's confidence in quality of the good.447 448
---------------------------------------------------------------------------

    \444\ Thomas, M., and S. Rao (1999). ``Warranty Economic
Decision Models: A Summary and Some Suggested Directions for Future
Research.'' Operations Research 47(6):807-820.
    \445\ Wu, S (2012). Warranty Data Analysis: A Review. Quality
and Reliability Engineering International 28: 795-805.
    \446\ Guajardo, J., M Cohen, and S. Netessine (2016). ``Service
Competition and Product Quality in the U.S. Automobile Industry.''
Management Science 62(7):1860-1877. The other rationales are
protection for consumers against failures, provision of product
quality information to consumers, and a means to distinguish
consumers according to their risk preferences.
    \447\ Murthy, D., and N. Jack (2009). ``Warranty and
Maintenance,'' Chapter 18 in Handbook of Maintenance Management and
Engineering, Mohamed Ben-Daya et al., editors. London: Springer.
    \448\ Saidi-Mehrabad, M., R. Noorossana, and M. Shafiee (2010).
``Modeling and analysis of effective ways for improving the
reliability of second-hand products sold with warranty.''
International Journal of Advanced Manufacturing Technology 46: 253-
265.
---------------------------------------------------------------------------

    On the one hand, we expect owner-incurred emission repair costs to
decrease due to the final program because the longer emission warranty
requirements will result in more repair costs covered by the OEMs.
Further, we expect improved serviceability in an effort by OEMs to
decrease the repair costs that they will incur. We also expect that the
longer useful life periods in the final standards will result in more
durable parts to ensure regulatory compliance over the longer
timeframe. On the other hand, we also expect that the more costly
emission control systems required by the final program may result in
higher repair costs which might increase owner-incurred costs outside
the warranty and/or useful life periods.
    As discussed in Section V.A.2, we have estimated increased OEM
costs associated with increased warranty liability (i.e., longer
warranty periods), and for more durable parts resulting from the longer
useful life periods. These costs are accounted for via increased
warranty costs and increased research and development (R&D) costs. We
also included additional aftertreatment costs in the direct
manufacturing costs to address the increased useful life requirements
(e.g., larger catalyst volume; see Chapters 2 and 3 of the RIA for
detailed discussions). We estimate that the new useful life and
warranty provisions will help to reduce emission repair costs during
the emission warranty and regulatory useful life periods, and possibly
beyond.
    In the proposal, to estimate impacts on emission repair costs, we
began with an emission repair cost curve derived from an industry white
paper.\449\ Some commenters took exception to the approach we took,
preferring instead that we use what they consider to be a more
established repair and maintenance cost estimate from the American
Transportation Research

Institute.\450\ After careful consideration of the ATRI data, we
derived a cost per mile value for repair and maintenance based on the
10 years of data gathered and presented. We chose to use the ATRI data
in place of the data used in the proposal because it constituted 10
years of data from an annually prepared study compared to the one year
of data behind the study used in the proposal.
---------------------------------------------------------------------------

    \449\ See ``Mitigating Rising Maintenance & Repair Costs for
Class-8 Truck Fleets, Effective Data & Strategies to Leverage Newer
Trucks to Reduce M&R Costs,'' Fleet Advantage Whitepaper Series,
2018.
    \450\ ``An Analysis of the Operational Costs of Trucking: 2021
Update,'' American Transportation Research Institute, November 2021.
---------------------------------------------------------------------------

    Because the ATRI data represent heavy HD combination vehicles it
was necessary for us to scale the ATRI values for applicability to HD
vehicles with different sized engines having different emission-control
system costs. We have done this in the same way as was discussed
earlier for scaling of warranty cost (see Table V-6). Given that future
engines and vehicles will be equipped with new, more costly technology,
it is possible that the repair costs for vehicles under the final
program will be higher than the repair costs in the baseline. We have
included such an increase for the period beyond useful life. This is
perhaps conservative because it seems reasonable to assume that the R&D
used to improve durability during the useful life period would also
improve durability beyond it. Nonetheless, we also think it is
reasonable to include an increase in repair costs, relative to the
baseline case, because the period beyond useful life is of marginally
less concern to manufacturers.\451\ Lastly, since our warranty and
useful life provisions pertain to emissions-related systems and their
repair, we adjusted the ATRI values by 10.8 percent to arrive at an
emission-related repair cost. The 10.8 percent value was similarly used
in the proposal and was derived by EPA using data in the Fleet
Advantage Whitepaper. Table V-19 shows how we have scaled the repair
and maintenance costs derived from the ATRI study.
---------------------------------------------------------------------------

    \451\ This is not meant to suggest that manufacturers no longer
care about their products beyond their regulatory useful life, but
rather to reflect the expectation that regulatory pressures--i.e.,
regulatory compliance during the useful life--tend to focus
manufacturer resources.
---------------------------------------------------------------------------

    Importantly, during the warranty period, there are no emission-
related repair costs incurred by owner/operators since those will be
covered under warranty.

                      Table V-19--Scaling Approach Used in Estimating Baseline Emission-Related Repair Costs per Mile, 2017 Cents *
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                Repair & maintenance         Emission-related repair
                                                                                ------------------------------      (10.8% of repair &
           MOVES  regulatory class                           Scaling approach                                                       maintenance)
                                                                                Diesel   Gasoline     CNG   -----------------------------
                                                                                Diesel   Gasoline     CNG
--------------------------------------------------------------------------------------------------------------------------------------------------------
Light HDE...................................  Base Light HDE DMC/Base Diesel Heavy HDE DMC..      10.1      7.28  ........      1.09      0.79  ........
Medium HDE..................................  Base Medium HDE DMC/Base Diesel Heavy HDE DMC.      10.3      7.28  ........      1.12      0.79  ........
Heavy HDE...................................  Base Heavy HDE DMC/Base Diesel Heavy HDE DMC..      15.8      7.28      23.2      1.71      0.79      2.52
Urban bus...................................  Base Urban bus DMC/Base Diesel Heavy HDE DMC..      9.80  ........      16.2      1.06  ........      1.75
--------------------------------------------------------------------------------------------------------------------------------------------------------
* The Base Diesel Heavy HDE DMC would be the $5,816 value shown in Table V-2; shown is scaling of baseline emission-repair costs per mile although we
  also scaled emission-repair cost per hour and applied those values for most vocational vehicles; this is detailed in Chapter 7.2.3 of the final RIA.

    We present more details in Chapter 7 of the RIA behind the
emission-repair cost values we are using, the scaling used and the 10.8
percent emission-related repair adjustment factor and how it was
derived. As done for warranty costs, we have used estimated ages for
when warranty and useful life are reached, using the required miles,
ages and hours along with the estimated miles driven and hours of
operation for each specific type of vehicle. This means that warranty
and useful life ages are reached in different years for different
vehicles, even if they belong to the same service class and have the
same regulatory warranty and useful life periods. For example, we
expect warranty and useful life ages to be attained at different points
in time by a long-haul combination truck driving over 100,000 miles per
year or over 2,000 hours per year and a refuse truck driven around
40,000 miles per year or operating less than 1,000 hours per year. The
resultant MY2027 lifetime emission-related repair costs are shown in
Table V-20 for diesel HD vehicles, in Table V-21 for gasoline HD
vehicles, and in Table V-22 for CNG HD vehicles. Since these costs
occur over time, we present them using both a 3 percent and a 7 percent
discount rate. Note that these costs assume that all emission-related
repair costs are paid by manufacturers during the warranty period, and
beyond the warranty period the emission-related repair costs are
incurred by owners/operators.

                               Table V-20--MY2027 Lifetime Emission-Related Repair Costs per Diesel Vehicle, 2017 Dollars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         3% Discount rate                                7% Discount rate
                                                         -----------------------------------------------------------------------------------------------
                                                           Light HDE  Medium HDE   Heavy HDE   Urban bus   Light HDE  Medium HDE   Heavy HDE   Urban bus
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      FRM Baseline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks............................  ..........  ..........      22,041  ..........  ..........  ..........      16,138  ..........
Long-Haul Single Unit Trucks............................       3,208       2,493       3,060  ..........       2,440       1,790       2,109  ..........
Motor Homes.............................................  ..........         613         936  ..........  ..........         394         602  ..........
Other Buses.............................................       4,292       3,668       4,719  ..........       3,083       2,499       3,074  ..........
Refuse Trucks...........................................  ..........       2,222       3,110  ..........  ..........       1,506       2,065  ..........
School Buses............................................       1,148       1,050       1,604  ..........         771         684       1,045  ..........
Short-Haul Combination Trucks...........................  ..........       6,635       8,088  ..........  ..........       5,003       5,823  ..........
Short-Haul Single Unit Trucks...........................       1,799       1,292       1,973  ..........       1,318         876       1,338  ..........

Transit Buses...........................................       4,242       3,625  ..........       3,941       3,047       2,469  ..........       2,732
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              FRM Baseline + Final Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks............................  ..........  ..........      25,070  ..........  ..........  ..........      17,497  ..........
Long-Haul Single Unit Trucks............................       2,284       1,531       1,524  ..........       1,509         956         906  ..........
Motor Homes.............................................  ..........         480         728  ..........  ..........         272         415  ..........
Other Buses.............................................       4,090       3,261       3,454  ..........       2,598       1,978       1,979  ..........
Refuse Trucks...........................................  ..........       1,408       2,038  ..........  ..........         819       1,180  ..........
School Buses............................................         667         772       1,174  ..........         378         439         673  ..........
Short-Haul Combination Trucks...........................  ..........       7,029       6,436  ..........  ..........       4,960       4,225  ..........
Short-Haul Single Unit Trucks...........................         764         721       1,115  ..........         451         421         655  ..........
Transit Buses...........................................       4,042       3,224  ..........       2,394       2,567       1,955  ..........       1,370
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Increased Cost of the Final Program
--------------------------------------------------------------------------------------------------------------------------------------------------------
Long-Haul Combination Trucks............................  ..........  ..........       3,028  ..........  ..........  ..........       1,359  ..........
Long-Haul Single Unit Trucks............................        -924        -962      -1,536  ..........        -931        -834      -1,203  ..........
Motor Homes.............................................  ..........        -132        -207  ..........  ..........        -122        -187  ..........
Other Buses.............................................        -203        -406      -1,265  ..........        -486        -520      -1,095  ..........
Refuse Trucks...........................................  ..........        -814      -1,072  ..........  ..........        -687        -885  ..........
School Buses............................................        -481        -278        -430  ..........        -393        -245        -372  ..........
Short-Haul Combination Trucks...........................  ..........         394      -1,651  ..........  ..........         -43      -1,598  ..........
Short-Haul Single Unit Trucks...........................      -1,035        -570        -857  ..........        -867        -455        -684  ..........
Transit Buses...........................................        -200        -402  ..........      -1,547        -480        -514  ..........      -1,362
--------------------------------------------------------------------------------------------------------------------------------------------------------

          Table V-21--MY2027 Lifetime Emission-Related Repair Costs per Gasoline Vehicle, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                   3% Discount rate                    7% Discount rate
                                         -----------------------------------------------------------------------
                                           Light HDE  Medium HDE   Heavy HDE   Light HDE  Medium HDE   Heavy HDE
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks............       2,324       2,324       2,324       1,768       1,768       1,768
Motor Homes.............................         431         431         431         278         278         278
Other Buses.............................       3,111  ..........  ..........       2,234  ..........  ..........
School Buses............................         832  ..........  ..........         559  ..........  ..........
Short-Haul Single Unit Trucks...........       1,304       1,304       1,304         955         955         955
Transit Buses...........................       3,074  ..........  ..........       2,208  ..........  ..........
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks............       1,831       1,831       1,831       1,271       1,271       1,271
Motor Homes.............................         275         275         275         156         156         156
Other Buses.............................       2,898  ..........  ..........       1,917  ..........  ..........
School Buses............................         442  ..........  ..........         252  ..........  ..........
Short-Haul Single Unit Trucks...........         764         764         764         483         483         483
Transit Buses...........................       2,865  ..........  ..........       1,895  ..........  ..........
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks............        -493        -493        -493        -497        -497        -497
Motor Homes.............................        -156        -156        -156        -122        -122        -122
Other Buses.............................        -212  ..........  ..........        -317  ..........  ..........
School Buses............................        -390  ..........  ..........        -306  ..........  ..........
Short-Haul Single Unit Trucks...........        -540        -540        -540        -471        -471        -471
Transit Buses...........................        -210  ..........  ..........        -313  ..........  ..........
----------------------------------------------------------------------------------------------------------------

             Table V-22--MY2027 Lifetime Emission-Related Repair Costs per CNG Vehicle, 2017 Dollars
----------------------------------------------------------------------------------------------------------------
                                                                     3% Discount rate        7% Discount rate
                                                                 -----------------------------------------------
                                                                   Heavy HDE   Urban bus   Heavy HDE   Urban bus
----------------------------------------------------------------------------------------------------------------
                                                  FRM Baseline
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks....................................       4,517  ..........       3,113  ..........
Other Buses.....................................................       6,966  ..........       4,537  ..........
Refuse Trucks...................................................       4,590  ..........       3,048  ..........
School Buses....................................................       2,368  ..........       1,542  ..........
Short-Haul Combination Trucks...................................      11,938  ..........       8,595  ..........
Short-Haul Single Unit Trucks...................................       2,912  ..........       1,975  ..........
Transit Buses...................................................  ..........       6,532  ..........       4,529
----------------------------------------------------------------------------------------------------------------
                                          FRM Baseline + Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks....................................       1,720  ..........       1,029  ..........
Other Buses.....................................................       3,807  ..........       2,194  ..........
Refuse Trucks...................................................       2,260  ..........       1,317  ..........
School Buses....................................................       1,294  ..........         746  ..........
Short-Haul Combination Trucks...................................       7,723  ..........       5,143  ..........
Short-Haul Single Unit Trucks...................................       1,248  ..........         737  ..........
Transit Buses...................................................  ..........       2,822  ..........       1,626
----------------------------------------------------------------------------------------------------------------
                                       Increased Cost of the Final Program
----------------------------------------------------------------------------------------------------------------
Long-Haul Single Unit Trucks....................................      -2,797  ..........      -2,084  ..........
Other Buses.....................................................      -3,158  ..........      -2,344  ..........
Refuse Trucks...................................................      -2,330  ..........      -1,732  ..........
School Buses....................................................      -1,074  ..........        -797  ..........
Short-Haul Combination Trucks...................................      -4,215  ..........      -3,452  ..........
Short-Haul Single Unit Trucks...................................      -1,664  ..........      -1,238  ..........
Transit Buses...................................................  ..........      -3,710  ..........      -2,903
----------------------------------------------------------------------------------------------------------------

C. Program Costs

    Using the cost elements outlined in Sections V.A and V.B, we have
estimated the costs associated with the final program. Costs are
presented in more detail in Chapter 7 of the RIA. As noted earlier,
costs are presented in 2017 dollars in undiscounted annual values along
with present values (PV) and equivalent annualized values (EAV) at both
3 and 7 percent discount rates with values discounted to the 2027
calendar year.

Table V-23--Total Technology & Operating Cost Impacts of the Final Program Relative to the Baseline Case, All Regulatory Classes and All Fuels, Billions
                                                                   of 2017 Dollars \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                       Direct   Indirect               Other                Total    Emission                          Total
            Calendar year               tech    warranty   Indirect   indirect   Indirect    tech     repair     Urea    Fuel cost   operating   Program
                                        cost      cost     R&D cost     cost      profit     cost      cost      cost                  cost       cost
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027................................      1.1        2.1       0.21       0.34      0.058      3.8       0.00     0.06     -0.0004       0.057       3.9
2028................................      1.1        2.1       0.20       0.32      0.055      3.7      -0.05     0.12     -0.0008        0.07       3.8
2029................................      1.0        2.1       0.19       0.31      0.053      3.7      -0.30     0.18     -0.0013       -0.12       3.6
2030................................      1.0        2.1      0.051       0.30      0.052      3.5      -0.43     0.25     -0.0017       -0.19       3.4
2031................................      1.0        2.2      0.050       0.30      0.051      3.6      -0.50     0.33     -0.0022       -0.17       3.4
2032................................     0.99        2.2      0.049       0.29      0.050      3.6      -0.57     0.41     -0.0027       -0.16       3.4
2033................................     0.98        2.2      0.049       0.29      0.050      3.6      -0.61     0.47     -0.0034       -0.14       3.5
2034................................     0.98        2.3      0.049       0.29      0.049      3.6      -0.64     0.53     -0.0041       -0.11       3.5
2035................................     0.96        2.3      0.048       0.28      0.049      3.7      -0.66     0.58     -0.0048       -0.08       3.6
2036................................     0.95        2.3      0.048       0.28      0.048      3.7      -0.66     0.63     -0.0054       -0.04       3.6
2037................................     0.95        2.4      0.048       0.28      0.048      3.7      -0.60     0.68     -0.0060        0.07       3.8
2038................................     0.95        2.4      0.048       0.28      0.048      3.7      -0.54     0.72     -0.0066        0.17       3.9
2039................................     0.95        2.5      0.047       0.28      0.048      3.8      -0.49     0.76     -0.0072        0.27       4.0
2040................................     0.95        2.5      0.047       0.28      0.048      3.8      -0.45     0.80     -0.0078        0.34       4.2
2041................................     0.95        2.5      0.047       0.28      0.048      3.9      -0.41     0.84     -0.0083        0.41       4.3
2042................................     0.95        2.6      0.047       0.28      0.048      3.9      -0.39     0.87     -0.0088        0.47       4.4
2043................................     0.95        2.6      0.047       0.28      0.048      3.9      -0.37     0.91     -0.0093        0.53       4.5
2044................................     0.95        2.7      0.048       0.28      0.048      4.0      -0.35     0.94     -0.0097        0.57       4.6
2045................................     0.95        2.7      0.048       0.28      0.048      4.1      -0.34     0.97      -0.010        0.62       4.7
PV, 3%..............................       14         33        1.1        4.2       0.72       53       -6.2      7.7      -0.069         1.4        55
PV, 7%..............................       10         24       0.90        3.0       0.52       38       -4.3      4.9      -0.043        0.60        39
EAV, 3%.............................      1.0        2.3      0.078       0.29      0.050      3.7      -0.43     0.54     -0.0048       0.099       3.8

EAV, 7%.............................      1.0        2.3      0.087       0.29      0.051      3.7      -0.42     0.48     -0.0042       0.058       3.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Values show 2 significant digits; negative cost values denote savings; calendar year values are undiscounted, present values are discounted to 2027;
  Program Cost is the sum of Total Tech Cost and Total Operating Cost. Note also that the Information Collection Request costs addressed in Section XII
  would fall within the ``Other'' indirect costs shown here.

VI. Estimated Emissions Reductions From the Final Program

    The final program, which is described in detail in Sections III and
IV, is expected to reduce emissions from highway heavy-duty engines in
several ways. We project the final emission standards for heavy-duty CI
engines will reduce tailpipe emissions of NOX; the
combination of the final low-load test cycle and off-cycle test
procedure for CI engines will help to ensure that the reductions in
tailpipe emissions are achieved in-use, not only under high-speed, on-
highway conditions, but also under low-load and idle conditions. We
also project reduced tailpipe emissions of NOX, CO, PM,
VOCs, and associated air toxics from the final emission standards for
heavy-duty SI engines, particularly under cold-start and high-load
operating conditions. The longer emission warranty and regulatory
useful life requirements for heavy-duty CI and SI engines in the final
rule will help maintain the expected emission reductions for all
pollutants, including primary exhaust PM2.5, throughout the
useful life of the engine. The onboard refueling vapor recovery
requirements for heavy-duty SI engines in the final rule will reduce
VOCs and associated air toxics. See RIA Chapter 5.3 for details on
projected emission reductions of each pollutant.
    Section VI.A provides an overview of the methods used to estimate
emission reductions from our final program. All the projected emission
reductions from the final program are outlined in Section VI.B, with
more details provided in the RIA Chapter 5. Section VI.C presents
projected emission reductions from the final program by engine
operations and processes (e.g., medium-to-high load or low-load engine
operations).

A. Emission Inventory Methodology

    To estimate the emission reductions from the final program, we used
the current public version of EPA's Motor Vehicle Emission Simulator
(MOVES) model, MOVES3. MOVES3 includes all the model updates previously
made for the version of the MOVES model used for the NPRM analysis
(``MOVES CTI NPRM''), as well as other more recent updates. Detailed
descriptions of the underlying data and analyses that informed the
model updates are discussed in Chapter 5.2 of the RIA and documented in
peer-reviewed technical reports referenced in the RIA. Inputs developed
to model the national emission inventories for the final program are
also discussed in Chapter 5.2.2 of the RIA.

B. Estimated Emission Reductions From the Final Program

    As discussed in Sections III and IV, the final program includes
new, more stringent numeric emission standards, as well as longer
regulatory useful life and emissions warranty periods compared to
today's standards. Our estimates of the emission impacts of the final
program in calendar years 2030, 2040, and 2045 are presented in Table
VI-1. As shown in Table VI-1, we estimate that the final program will
reduce NOX emissions from highway heavy-duty vehicles by 48
percent nationwide in 2045. We also estimate an eight percent reduction
in primary exhaust PM2.5 from highway heavy-duty vehicles.
VOC emissions from heavy-duty vehicles will be 23 percent lower.
Emissions of CO from heavy-duty vehicles are estimated to decrease by
18 percent. Reductions in heavy-duty vehicle emissions of other
pollutants, including air toxics, range from an estimated reduction of
about 28 percent for benzene to about seven percent change in
acetaldehyde. RIA Chapter 5.5.2 includes additional details on the
emission reductions by vehicle fuel type; Chapter 5.5.4 provides our
estimates of criteria pollutant emissions reductions for calendar years
2027 through 2045.
    As the final program is implemented, emission reductions are
expected to increase over time as the fleet turns over to new,
compliant engines. We estimate no change in CO2 emissions
from the final program, based on data in our feasibility and cost
analyses of the final program (see Section III for more
discussion).\452\
---------------------------------------------------------------------------

    \452\ This estimate includes the assumption that vehicle sales
will not change in response to the final rule. See Section X for
further discussion on vehicle sales impacts of this final rule.

  Table VI-1--Annual Emission Reductions From Heavy-Duty Vehicles in Calendar Years (CY) 2030, 2040, and 2045--
           Emissions With Final Program in Place Relative to the Heavy-Duty Vehicle Emissions Baseline
----------------------------------------------------------------------------------------------------------------
                                             CY2030                    CY2040                    CY2045
                                   -----------------------------------------------------------------------------
             Pollutant                US short                  US short                  US short
                                        tons     % reduction      tons     % reduction      tons     % reduction
----------------------------------------------------------------------------------------------------------------
NOX...............................      139,677           14      398,864           44      453,239           48
VOC...............................        5,018            5       17,139           20       20,758           23
Primary Exhaust PM2.5.............          115            1          491            7          566            8
CO................................       43,978            3      208,935           16      260,750           18
Acetaldehyde......................           36            2          124            6          145            7
Benzene...........................           40            4          177           23          221           28
Formaldehyde......................           29            1          112            7          134            8

Naphthalene.......................            2            1            7           13            9           16
----------------------------------------------------------------------------------------------------------------

C. Estimated Emission Reductions by Engine Operations and Processes

    Looking more closely at the NOX emission inventory from
highway heavy-duty vehicles, our analysis shows that the final
standards will reduce emissions across several engine operations and
processes, with the greatest reductions attributable to medium-to-high
load engine operations, low-load engine operations, and age effects
(Table VI-2). Emission reductions attributable to medium-to-high load
engine operations are based on changes in the new numeric emissions
standards compared to existing standards and corresponding test
procedures, as described in preamble Section III. Emission reductions
attributable to the age effects category are based on longer useful
life and warranty periods in the final rule, which are described in
preamble Section IV.
    Table 5-13 in Chapter 5.2.2 of the RIA shows that tampering and
mal-maintenance significantly increases emissions from current heavy
heavy-duty engines (e.g., we estimate a 500 percent increase in
NOX emissions for heavy heavy-duty vehicles due to
NOX aftertreatment malfunction). Absent the final rule,
these substantial increases in emissions from tampering and mal-
maintenance could potentially have large impact on the HD
NOX inventory. However, the longer regulatory useful life
and emission-related warranty requirements in the final rule will
ensure that more stringent standards are met for a longer period of
time while the engines are in use. Specifically, we estimate 18 percent
fewer NOX emissions in 2045 due to the longer useful life
and warranty periods reducing the likelihood of tampering and mal-
maintenance after the current useful life periods of heavy-duty CI
engines.453 454 We note that these estimates of emissions
impacts from tampering and mal-maintenance of heavy-duty engines
reflect currently available data and may not fully reflect the extent
of emissions impacts from tampering or mal-maintenance; thus,
additional data on the emissions impacts of heavy-duty tampering and
mal-maintenance may show that there would be additional emissions
reductions from the final rule.
---------------------------------------------------------------------------

    \453\ See Chapter 5.2.2 of the RIA for a discussion of how we
calculate the emission rates due to the final useful life and
warranty periods for Light, Medium, and Heavy heavy-duty engines.
    \454\ Although we anticipate emission benefits from the
lengthened warranty and useful life periods from gasoline and NG-
fueled vehicles, they were not included in the analysis done for the
final rule (see RIA Chapter 5.2 for details).
---------------------------------------------------------------------------

    Further, due to insufficient data, we are currently unable to
quantify the impacts of other provisions to improve maintenance and
serviceability of emission controls systems (e.g., updated maintenance
intervals, requiring manufacturers to provide more information on how
to diagnose and repair emission control systems, as described in
preamble Section IV). We expect the final provisions to improve
maintenance and serviceability will reduce incentives to tamper with
the emission control systems on MY 2027 and later engines, which would
avoid large increases in emissions that would impact the reductions
projected from the final rule. For example, we estimate a greater than
3000 percent increase in NOX emissions for heavy heavy-duty
vehicles due to malfunction of the NOX emissions
aftertreatment on a MY 2027 and later heavy heavy-duty vehicle. As
such, the maintenance and serviceability provisions combined with the
longer useful life and warranty periods will provide a comprehensive
approach to ensure that the new, much more stringent emissions
standards are met during in use operations.
    Table VI-2 compares NOX emissions in 2045 from different
engine operations and processes with and without the final standards. A
graphical comparison of NOX emissions by process is included
in RIA Chapter 5.5.3.

                       Table VI-2--Heavy-Duty NOX Emission Reductions by Process in CY2045
                                                    [US tons]
----------------------------------------------------------------------------------------------------------------
                                        Emission inventory                     Percent       Emission inventory
     Engine operation or process       contribution without      Tons      reduction from     contribution with
                                         final program (%)     reduced        baseline        final program (%)
----------------------------------------------------------------------------------------------------------------
Medium- to High-Load.................                    36      217,708                64                    24
Low-Load.............................                    30      177,967                63                    21
Aging................................                    22       35,750                18                    34
Extended Idle & APU..................                     2       11,692                63                     1
Starts...............................                     5       10,122                23                     7
Historical Fleet (MY 2010 to 2026)...                     6            0                 0                    12
----------------------------------------------------------------------------------------------------------------

VII. Air Quality Impacts of the Final Rule

    As discussed in Section VI, we project the standards in the final
rule will result in meaningful reductions in emissions of
NOX, VOC, CO and PM2.5. When feasible, we conduct
full-scale photochemical air quality modeling to accurately project
levels of criteria and air toxic pollutants, because the atmospheric
chemistry related to ambient concentrations of PM2.5, ozone,

and air toxics is very complex. Air quality modeling was performed for
the proposed rule and demonstrated improvements in concentrations of
air pollutants. Given the similar structure of the proposed and final
programs, the geographic distribution of emissions reductions and
modeled improvements in air quality are consistent and demonstrate that
the final rule will lead to substantial improvements in air
quality.\455\
---------------------------------------------------------------------------

    \455\ Additional detail on the air quality modeling inventory
used in the proposed rule, along with the final rule emission
reductions, can be found in Chapter 5 of the RIA.
---------------------------------------------------------------------------

    Specifically, we expect this rule will decrease ambient
concentrations of air pollutants, including significant improvements in
ozone concentrations in 2045 as demonstrated in the air quality
modeling analysis. We also expect reductions in ambient
PM2.5, NO2 and CO due to this rule. Although the
spatial resolution of the air quality modeling is not sufficient to
quantify it, this rule's emission reductions will also reduce air
pollution in close proximity to major roadways, where concentrations of
many air pollutants are elevated and where people of color and people
with low income are disproportionately exposed.
    The emission reductions provided by the final standards will be
important in helping areas attain the NAAQS and prevent future
nonattainment. In addition, the final standards are expected to result
in improvements in nitrogen deposition and visibility. Additional
information and maps showing expected changes in ambient concentrations
of air pollutants in 2045 are included in the proposal, Chapter 6 of
the RIA and in the Air Quality Modeling Technical Support Document from
the proposed rule.456 457
---------------------------------------------------------------------------

    \456\ USEPA (2021) Technical Support Document: Air Quality
Modeling for the HD 2027 Proposal. EPA-HQ-OAR-2019-0055. October
2021.
    \457\ Section VII of the proposed rule preamble, 87 FR 17414
(March 28, 2022).
---------------------------------------------------------------------------

    The proposed rule air quality modeling analysis consisted of a base
case, reference scenario, and control scenario. The ``base'' case
represents 2016 air quality. The ``reference'' scenario represents
projected 2045 air quality without the proposed rule and the
``control'' scenario represents projected 2045 emissions with the
proposed rule. Air quality modeling was done for the future year 2045
when the program will be fully implemented and when most of the
regulated fleet will have turned over.

A. Ozone

    The scenario modeled for the proposed rule reduced 8-hour ozone
design values significantly in 2045. Ozone design values decreased by
more than 2 ppb in over 150 counties, and over 200 additional modeled
counties are projected to have decreases in ozone design values of
between 1 and 2 ppb in 2045. Our modeling projections indicate that
some counties will have design values above the level of the 2015 NAAQS
in 2045, and the rule will help those counties, as well as other
counties, in reducing ozone concentrations. Table VII-1 shows the
average projected change in 2045 8-hour ozone design values due to the
modeled scenario. Counties within 10 percent of the level of the NAAQS
are intended to reflect counties that, although not violating the
standard, would also be affected by changes in ambient levels of ozone
as they work to ensure long-term attainment or maintenance of the ozone
NAAQS. The projected changes in design values, summarized in Table VII-
1, indicate in different ways the overall improvement in ozone air
quality due to emission reductions from the modeled scenario.

           Table VII-1--Average Change in Projected 8-Hour Ozone Design Values in 2045 Due to the Rule
----------------------------------------------------------------------------------------------------------------
                                                                                Population-
                                                 Number of        2045        Average change    weighted average
        Projected design value category           counties   Population \a\   in 2045 design    change in design
                                                                                value (ppb)       value (ppb)
----------------------------------------------------------------------------------------------------------------
all modeled counties..........................          457     246,949,949             -1.87              -2.23
counties with 2016 base year design values              118     125,319,158             -2.12              -2.43
 above the level of the 2015 8-hour ozone
 standard.....................................
counties with 2016 base year design values              245      93,417,097             -1.83              -2.10
 within 10% of the 2015 8-hour ozone standard.
counties with 2045 reference design values               15      37,758,488             -2.26              -3.03
 above the level of the 2015 8-hour ozone
 standard.....................................
counties with 2045 reference design values               56      39,302,665             -1.78              -2.02
 within 10% of the 2015 8-hour ozone standard.
counties with 2045 control design values above           10      27,930,138             -2.36              -3.34
 the level of the 2015 8-hour ozone standard..
counties with 2045 control design values                 42      31,395,617             -1.69              -1.77
 within 10% of the 2015 8-hour ozone standard.
----------------------------------------------------------------------------------------------------------------
\a\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. (2015). Complete Demographic
  Database. Washington, DC. http://www.woodsandpoole.com/index.php.

B. Particulate Matter

    The scenario modeled for the proposed rule reduced 24-hour and
annual PM2.5 design values in 2045. Annual PM2.5
design values in the majority of modeled counties decreased by between
0.01 and 0.05 [mu]g/m\3\ and by greater than 0.05 [mu]g/m\3\ in over 75
additional counties. 24-hour PM2.5 design values decreased
by between 0.15 and 0.5 [mu]g/m\3\ in over 150 counties and by greater
than 0.5 [mu]g/m\3\ in 5 additional counties. Our modeling projections
indicate that some counties will have design values above the level of
the 2012 PM2.5 NAAQS in 2045 and the rule will help those
counties, as well as other counties, in reducing PM2.5
concentrations. Table VII-2 and Table VII-3 present the average
projected changes in 2045 annual and 24-hour PM2.5 design
values. Counties within 10 percent of the level of the NAAQS are
intended to reflect counties that, although not violating the
standards, would also be affected by changes in ambient levels of
PM2.5 as they work to ensure long-term attainment or
maintenance of the annual and/or 24-hour PM2.5 NAAQS. The
projected changes in PM2.5 design values, summarized in
Table VII-2 and Table VII-3, indicate in different ways the overall
improvement in PM2.5 air quality due to the emission
reductions resulting from the modeled scenario. We expect this rule's
reductions in directly emitted PM2.5 will also contribute to
reductions in PM2.5 concentrations near roadways, although
our air quality modeling is not of sufficient resolution to capture
that impact.

           Table VII-2--Average Change in Projected Annual PM2.5 Design Values in 2045 Due to the Rule
----------------------------------------------------------------------------------------------------------------
                                                                                Population-
                                                 Number of        2045        Average change    weighted average
        Projected design value category           counties   Population \a\   in 2045 design    change in design
                                                                               value (ug/m3)     value (ug/m3)
----------------------------------------------------------------------------------------------------------------
all modeled counties..........................          568     273,604,437             -0.04              -0.04
counties with 2016 base year design values               17      26,726,354             -0.09              -0.05
 above the level of the 2012 annual PM2.5
 standard.....................................
counties with 2016 base year design values                5       4,009,527             -0.06              -0.06
 within 10% of the 2012 annual PM2.5 standard.
counties with 2045 reference design values               12      25,015,974             -0.10              -0.05
 above the level of the 2012 annual PM2.5
 standard.....................................
counties with 2045 reference design values                6       1,721,445             -0.06              -0.06
 within 10% of the 2012 annual PM2.5 standard.
counties with 2045 control design values above           10      23,320,070             -0.10              -0.05
 the level of the 2012 annual PM2.5 standard..
counties with 2045 control design values                  8       3,417,349             -0.08              -0.09
 within 10% of the 2012 annual PM2.5 standard.
----------------------------------------------------------------------------------------------------------------
\a\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. (2015). Complete Demographic
  Database. Washington, DC. http://www.woodsandpoole.com/index.php.

          Table VII-3--Average Change in Projected 24-Hour PM2.5 Design Values in 2045 Due to the Rule
----------------------------------------------------------------------------------------------------------------
                                                                                Population-
                                                 Number of        2045        Average change    weighted average
        Projected design value category           counties   Population \a\   in 2045 design    change in design
                                                                               value (ug/m3)     value (ug/m3)
----------------------------------------------------------------------------------------------------------------
all modeled counties..........................          568     272,852,777             -0.12              -0.17
counties with 2016 base year design values               33      28,394,253             -0.40              -0.67
 above the level of the 2006 daily PM2.5
 standard.....................................
counties with 2016 base year design values               15      13,937,416             -0.18              -0.27
 within 10% of the 2006 daily PM2.5 standard..
counties with 2045 reference design values               29      14,447,443             -0.38              -0.55
 above the level of the 2006 daily PM2.5
 standard.....................................
counties with 2045 reference design values               12      22,900,297             -0.30              -0.59
 within 10% of the 2006 daily PM2.5 standard..
counties with 2045 control design values above           29      14,447,443             -0.38              -0.55
 the level of the 2006 daily PM2.5 standard...
counties with 2045 control design values                 10      19,766,216             -0.26              -0.60
 within 10% of the 2006 daily PM2.5 standard..
----------------------------------------------------------------------------------------------------------------
\a\ Population numbers based on Woods & Poole data. Woods & Poole Economics, Inc. (2015). Complete Demographic
  Database. Washington, DC. http://www.woodsandpoole.com/index.php.

C. Nitrogen Dioxide

    The scenario modeled for the proposed rule decreased annual
NO2 concentrations in most urban areas and along major
roadways by more than 0.3 ppb and decreased annual NO2
concentrations by between 0.01 and 0.1 ppb across much of the rest of
the country in 2045. The emissions reductions in the modeled scenario
will also likely decrease 1-hour NO2 concentrations and help
any potential nonattainment areas attain and maintenance areas maintain
the NO2 standard.\458\ We expect this rule will also
contribute to reductions in NO2 concentrations near
roadways, although our air quality modeling is not of sufficient
resolution to capture that impact. Section 6.4.4 of the RIA contains
more detail on the impacts of the rule on NO2
concentrations.
---------------------------------------------------------------------------

    \458\ As noted in Section II, there are currently no
nonattainment areas for the NO2 NAAQS.
---------------------------------------------------------------------------

D. Carbon Monoxide

    The scenario modeled for the proposed rule decreased annual CO
concentrations by more than 0.5 ppb in many urban areas and decreased
annual CO concentrations by between 0.02 and 0.5 ppb across much of the
rest of the country in 2045. The emissions reductions in the modeled
scenario will also likely decrease 1-hour and 8-hour CO concentrations
and help any potential nonattainment areas attain and maintenance areas
maintain the CO standard.\459\ Section 6.4.5 of the RIA contains more
detail on the impacts of the rule on CO concentrations.
---------------------------------------------------------------------------

    \459\ As noted in Section II, there are currently no
nonattainment areas for the CO NAAQS.
---------------------------------------------------------------------------

E. Air Toxics

    In general, the scenario modeled for the proposed rule had
relatively little impact on national average ambient concentrations of
the modeled air toxics in 2045. The modeled scenario had smaller
impacts on air toxic pollutants dominated by primary emissions (or a
decay product of a directly emitted pollutant), and relatively larger
impacts on air toxics that primarily result from photochemical
transformation, in this case due to the projected large reductions in
NOX emissions. Specifically, in 2045, our modeling projects
that ambient benzene and naphthalene concentrations will decrease by
less than 0.001 ug/m3 across the country. Acetaldehyde
concentrations will increase slightly across most of the country, while
formaldehyde will generally have small decreases in most areas and some
small increases in urban areas. Section 6.4.6 of the RIA contains more
detail on the impacts of the modeled scenario on air toxics
concentrations.

F. Visibility

    Air quality modeling was used to project visibility conditions in
145 Mandatory Class I Federal areas across the United States. The
results show that the modeled scenario improved visibility in these
areas.\460\ The average visibility at all modeled Mandatory Class I
Federal areas on the 20 percent most impaired days is projected to
improve by 0.04 deciviews, or 0.37 percent, in 2045 due to the rule.
Section 6.4.7 of the RIA contains more detail on the visibility portion
of the air quality modeling.
---------------------------------------------------------------------------

    \460\ The level of visibility impairment in an area is based on
the light-extinction coefficient and a unitless visibility index,
called a ``deciview'', which is used in the valuation of visibility.
The deciview metric provides a scale for perceived visual changes
over the entire range of conditions, from clear to hazy. Under many
scenic conditions, the average person can generally perceive a
change of one deciview. The higher the deciview value, the worse the
visibility. Thus, an improvement in visibility is a decrease in
deciview value.
---------------------------------------------------------------------------

G. Nitrogen Deposition

    The scenario modeled for the proposed rule projected substantial
decreases in nitrogen deposition in 2045. The modeled scenario resulted
in annual decreases of greater than 4 percent in some areas and greater
than

1 percent over much of the rest of the country. For maps of deposition
impacts, and additional information on these impacts, see Section 6.4.8
of the RIA.

H. Environmental Justice

    EPA's 2016 ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis'' provides recommendations on conducting the
highest quality analysis feasible, recognizing that data limitations,
time and resource constraints, and analytic challenges will vary by
media and regulatory context.\461\ When assessing the potential for
disproportionately high and adverse health or environmental impacts of
regulatory actions on people of color, low-income populations, Tribes,
and/or indigenous peoples, the EPA strives to answer three broad
questions: (1) Is there evidence of potential environmental justice
(EJ) concerns in the baseline (the state of the world absent the
regulatory action)? Assessing the baseline will allow the EPA to
determine whether pre-existing disparities are associated with the
pollutant(s) under consideration (e.g., if the effects of the
pollutant(s) are more concentrated in some population groups). (2) Is
there evidence of potential EJ concerns for the regulatory option(s)
under consideration? Specifically, how are the pollutant(s) and its
effects distributed for the regulatory options under consideration?
And, (3) do the regulatory option(s) under consideration exacerbate or
mitigate EJ concerns relative to the baseline? It is not always
possible to quantitatively assess these questions.
---------------------------------------------------------------------------

    \461\ ``Technical Guidance for Assessing Environmental Justice
in Regulatory Analysis.'' Epa.gov, Environmental Protection Agency,
https://www.epa.gov/sites/production/files/2016-06/documents/ejtg_5_6_16_v5.1.pdf. (June 2016).
---------------------------------------------------------------------------

    EPA's 2016 Technical Guidance does not prescribe or recommend a
specific approach or methodology for conducting an environmental
justice analysis, though a key consideration is consistency with the
assumptions underlying other parts of the regulatory analysis when
evaluating the baseline and regulatory options. Where applicable and
practicable, the Agency endeavors to conduct such an analysis.\462\ EPA
is committed to conducting environmental justice analysis for
rulemakings based on a framework similar to what is outlined in EPA's
Technical Guidance, in addition to investigating ways to further weave
environmental justice into the fabric of the rulemaking process.
---------------------------------------------------------------------------

    \462\ As described in this section, EPA evaluated environmental
justice for this rule as recommended by the EPA 2016 Technical
Guidance. However, it is EPA's assessment of the relevant statutory
factors in CAA section 202(a)(3)(A) that justify the final emission
standards. See section I.D. for further discussion of the statutory
authority for this rule.
---------------------------------------------------------------------------

    There is evidence that communities with EJ concerns are
disproportionately impacted by the emissions sources controlled in this
final rule.\463\ Numerous studies have found that environmental hazards
such as air pollution are more prevalent in areas where people of color
and low-income populations represent a higher fraction of the
population compared with the general population.464 465 466
Consistent with this evidence, a recent study found that most
anthropogenic sources of PM2.5, including industrial sources
and light- and heavy-duty vehicle sources, disproportionately affect
people of color.\467\ In addition, compared to non-Hispanic Whites,
some other racial groups experience greater levels of health problems
during some life stages. For example, in 2018-2020, about 12 percent of
non-Hispanic Black; 9 percent of non-Hispanic American Indian/Alaska
Native; and 7 percent of Hispanic children were estimated to currently
have asthma, compared with 6 percent of non-Hispanic White
children.\468\ Nationally, on average, non-Hispanic Black and Non-
Hispanic American Indian or Alaska Native people also have lower than
average life expectancy based on 2019 data, the latest year for which
CDC estimates are available.\469\
---------------------------------------------------------------------------

    \463\ Mohai, P.; Pellow, D.; Roberts Timmons, J. (2009)
Environmental justice. Annual Reviews 34: 405-430. https://doi.org/10.1146/annurev-environ-082508-094348.
    \464\ Rowangould, G.M. (2013) A census of the near-roadway
population: public health and environmental justice considerations.
Trans Res D 25: 59-67. http://dx.doi.org/10.1016/j.trd.2013.08.003.
    \465\ Marshall, J.D., Swor, K.R.; Nguyen, N.P. (2014)
Prioritizing environmental justice and equality: diesel emissions in
Southern California. Environ Sci Technol 48: 4063-4068. https://doi.org/10.1021/es405167f.
    \466\ Marshall, J.D. (2008) Environmental inequality: air
pollution exposures in California's South Coast Air Basin. Atmos
Environ 21: 5499-5503. https://doi.org/10.1016/j.atmosenv.2008.02.005.
    \467\ C.W. Tessum, D.A. Paolella, S.E. Chambliss, J.S. Apte,
J.D. Hill, J.D. Marshall, PM2.5 polluters
disproportionately and systemically affect people of color in the
United States. Sci. Adv. 7, eabf4491 (2021).
    \468\ http://www.cdc.gov/asthma/most_recent_data.htm.
    \469\ Arias, E. Xu, J. (2022) United States Life Tables, 2019.
National Vital Statistics Report, Volume 70, Number 19. [Online at
https://www.cdc.gov/nchs/data/nvsr/nvsr70/nvsr70-19.pdf].
---------------------------------------------------------------------------

    In addition, as discussed in Section II.B.7 of this document,
concentrations of many air pollutants are elevated near high-traffic
roadways, and populations who live, work, or go to school near high-
traffic roadways experience higher rates of numerous adverse health
effects, compared to populations far away from major roads.
    EPA's analysis of environmental justice includes an examination of
the populations living in close proximity to truck routes and to major
roads more generally. This analysis, described in Section VII.H.1 of
this document, finds that there is substantial evidence that people who
live or attend school near major roadways are more likely to be people
of color, Hispanic ethnicity, and/or low socioeconomic status. This
final rule will reduce emissions that contribute to NO2 and
other near-roadway pollution, improving air quality for the 72 million
people who live near major truck routes and are already overburdened by
air pollution from diesel emissions.
    Heavy-duty vehicles also contribute to regional concentrations of
ozone and PM2.5. As described in Section VII.H.2 of this
document, EPA used the air quality modeling data described in this
Section VII to conduct a demographic analysis of human exposure to
future air quality in scenarios with and without the rule in place.
Although the spatial resolution of the air quality modeling is not
sufficient to capture very local heterogeneity of human exposures,
particularly the pollution concentration gradients near roads, the
analysis does allow estimates of demographic trends at a national
scale. The analysis indicates that the largest predicted improvements
in both ozone and PM2.5 are estimated to occur in areas with
the worst baseline air quality, and that a larger number of people of
color are projected to reside in these areas.
1. Demographic Analysis of the Near-Road Population
    We conducted an analysis of the populations living in close
proximity to truck freight routes as identified in USDOT's FAF4.\470\
FAF4 is a model from the USDOT's Bureau of Transportation Statistics
(BTS) and Federal Highway Administration (FHWA), which provides data
associated with freight movement in the United States.\471\ Relative to
the rest of

the population, people living near FAF4 truck routes are more likely to
be people of color and have lower incomes than the general population.
People living near FAF4 truck routes are also more likely to live in
metropolitan areas. Even controlling for region of the country, county
characteristics, population density, and household structure, race,
ethnicity, and income are significant determinants of whether someone
lives near a FAF4 truck route. We note that we did not analyze the
population living near warehousing, distribution centers,
transshipment, ot intermodal freight facilities.
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    \470\ U.S. EPA (2021). Estimation of Population Size and
Demographic Characteristics among People Living Near Truck Routes in
the Conterminous United States. Memorandum to the Docket.
    \471\ FAF4 includes data from the 2012 Commodity Flow Survey
(CFS), the Census Bureau on international trade, as well as data
associated with construction, agriculture, utilities, warehouses,
and other industries. FAF4 estimates the modal choices for moving
goods by trucks, trains, boats, and other types of freight modes. It
includes traffic assignments, including truck flows on a network of
truck routes. https://ops.fhwa.dot.gov/freight/freight_analysis/faf/
.
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    We additionally analyzed national databases that allowed us to
evaluate whether homes and schools were located near a major road and
whether disparities in exposure may be occurring in these environments.
Until 2009, the U.S. Census Bureau's American Housing Survey (AHS)
included descriptive statistics of over 70,000 housing units across the
nation and asked about transportation infrastructure near respondents'
homes every two years.472 473 We also analyzed the U.S.
Department of Education's Common Core of Data (CCD), which includes
enrollment and location information for schools across the United
States.\474\
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    \472\ U.S. Department of Housing and Urban Development, & U.S.
Census Bureau. (n.d.). Age of other residential buildings within 300
feet. In American Housing Survey for the United States: 2009 (pp. A-
1). Retrieved from https://www.census.gov/programs-surveys/ahs/data/2009/ahs-2009-summary-tables0/h150-09.html.
    \473\ The 2013 AHS again included the ``etrans'' question about
highways, airports, and railroads within half a block of the housing
unit but has not maintained the question since then.
    \474\ http://nces.ed.gov/ccd/.
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    In analyzing the 2009 AHS, we focused on whether a housing unit was
located within 300 feet of a ``4-or-more lane highway, railroad, or
airport'' (this distance was used in the AHS analysis).\475\ We
analyzed whether there were differences between households in such
locations compared with those in locations farther from these
transportation facilities.\476\ We included other variables, such as
land use category, region of country, and housing type. We found that
homes with a non-White householder were 22-34 percent more likely to be
located within 300 feet of these large transportation facilities than
homes with White householders. Homes with a Hispanic householder were
17-33 percent more likely to be located within 300 feet of these large
transportation facilities than homes with non-Hispanic householders.
Households near large transportation facilities were, on average, lower
in income and educational attainment and more likely to be a rental
property and located in an urban area compared with households more
distant from transportation facilities.
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    \475\ This variable primarily represents roadway proximity.
According to the Central Intelligence Agency's World Factbook, in
2010, the United States had 6,506,204 km of roadways, 224,792 km of
railways, and 15,079 airports. Highways thus represent the
overwhelming majority of transportation facilities described by this
factor in the AHS.
    \476\ Bailey, C. (2011) Demographic and Social Patterns in
Housing Units Near Large Highways and other Transportation Sources.
Memorandum to docket.
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    In examining schools near major roadways, we used the CCD from the
U.S. Department of Education, which includes information on all public
elementary and secondary schools and school districts nationwide.\477\
To determine school proximities to major roadways, we used a geographic
information system (GIS) to map each school and roadways based on the
U.S. Census's TIGER roadway file.\478\ We estimated that about 10
million students attend schools within 200 meters of major roads, about
20 percent of the total number of public school students in the United
States.\479\ About 800,000 students attend public schools within 200
meters of primary roads, or about 2 percent of the total. We found that
students of color were overrepresented at schools within 200 meters of
primary roadways, and schools within 200 meters of primary roadways had
a disproportionate population of students eligible for free or reduced-
price lunches.\480\ Black students represent 22 percent of students at
schools located within 200 meters of a primary road, compared to 17
percent of students in all U.S. schools. Hispanic students represent 30
percent of students at schools located within 200 meters of a primary
road, compared to 22 percent of students in all U.S. schools.
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    \477\ http://nces.ed.gov/ccd/.
    \478\ Pedde, M.; Bailey, C. (2011) Identification of Schools
within 200 Meters of U.S. Primary and Secondary Roads. Memorandum to
the docket.
    \479\ Here, ``major roads'' refer to those TIGER classifies as
either ``Primary'' or ``Secondary.'' The Census Bureau describes
primary roads as ``generally divided limited-access highways within
the Federal interstate system or under state management.'' Secondary
roads are ``main arteries, usually in the U.S. highway, state
highway, or county highway system.''
    \480\ For this analysis we analyzed a 200-meter distance based
on the understanding that roadways generally influence air quality
within a few hundred meters from the vicinity of heavily traveled