were all expressed in 2008 dollars using a ratio of gross domestic
product (GDP) values for the associated calendar years,\154\ and
indirect costs were accounted for using the new approach developed by
EPA and used in the 2012-2016 light-duty rule. NHTSA and EPA also
reconsidered how costs should be adjusted by modifying or scaling
content assumptions to account for differences across the range of
vehicle sizes and functional requirements, and adjusted the associated
material cost impacts to account for the revised content, although some
of these adjustments may be different for each agency due to the
different vehicle subclasses used in their respective models.
---------------------------------------------------------------------------

    \154\ NHTSA examined the use of the CPI multiplier instead of
GDP for adjusting these dollar values, but found the difference to
be exceedingly small--only $0.14 over $100.
---------------------------------------------------------------------------

    Regarding estimates for technology effectiveness, NHTSA and EPA
used the estimates from the 2012-2016 light-duty rule as a baseline but
adjusted them as appropriate, taking into account the unique
requirement of the heavy-duty test cycles to test at curb weight plus
half payload versus the light-duty requirement of curb plus 300 lb. The
adjustments were made on an individual technology basis by assessing
the specific impact of the added load on each technology when compared
to the use of the technology on a light-duty vehicle. The agencies also
considered other sources such as the 2010 NAS Report, recent CAFE
compliance data, and confidential manufacturer estimates of technology
effectiveness. NHTSA and EPA engineers reviewed effectiveness
information from the multiple sources for each technology and ensured
that such effectiveness estimates were based on technology hardware
consistent with the BOM components used to estimate costs. Together,
the agencies compared the multiple estimates and assessed their
validity, taking care to ensure that common BOM definitions and other
vehicle attributes such as performance and drivability were taken into
account.
    The agencies note that the effectiveness values estimated for the
technologies may represent average values applied to the baseline fleet
described earlier, and do not reflect the potentially-limitless
spectrum of possible values that could result from adding the
technology to different vehicles. For example, while the agencies have
estimated an effectiveness of 0.5 percent for low friction lubricants,
each vehicle could have a unique effectiveness estimate depending on
the baseline vehicle's oil viscosity rating. Similarly, the reduction
in rolling resistance (and thus the improvement in fuel efficiency and
the reduction in CO2 emissions) due to the application of
LRR tires depends not only on the unique characteristics of the tires
originally on the vehicle, but on the unique characteristics of the
tires being applied, characteristics which must be balanced between
fuel efficiency, safety, and performance. Aerodynamic drag reduction is
much the same--it can improve fuel efficiency and reduce CO2
emissions, but it is also highly dependent on vehicle-specific
functional objectives. For purposes of this NPRM, NHTSA and EPA believe
that employing average values for technology effectiveness estimates is
an appropriate way of recognizing the potential variation in the
specific benefits that individual manufacturers

(and individual vehicles) might obtain from adding a fuel-saving
technology. However, the agencies seek comment on whether additional
levels of specificity beyond that already provided would improve the
analysis for the final rules, and if so, how those levels of
specificity should be analyzed.
    The following section contains a detailed description of our
assessment of vehicle technology cost and effectiveness estimates. The
agencies note that the technology costs included in this NPRM take into
account only those associated with the initial build of the vehicle.
The agencies seek comment on the additional lifetime costs, if any,
associated with the implementation of advanced technologies including
maintenance and replacement costs. Based on comments, the agencies may
decide to conduct additional analysis for the final rules regarding
operating, maintenance and replacement costs.
(a) Engine Technologies
    NHTSA and EPA have reviewed the engine technology estimates used in
the 2012-2016 light-duty rule. In doing so NHTSA and EPA reconsidered
all available sources and updated the estimates as appropriate. The
section below describes both diesel and gasoline engine technologies
considered for this proposal.
(i) Low Friction Lubricants
    One of the most basic methods of reducing fuel consumption in both
gasoline and diesel engines is the use of lower viscosity engine
lubricants. More advanced multi-viscosity engine oils are available
today with improved performance in a wider temperature band and with
better lubricating properties. This can be accomplished by changes to
the oil base stock (e.g., switching engine lubricants from a Group I
base oils to lower-friction, lower viscosity Group III synthetic) and
through changes to lubricant additive packages (e.g., friction
modifiers and viscosity improvers). The use of 5W-30 motor oil is now
widespread and auto manufacturers are introducing the use of even lower
viscosity oils, such as 5W-20 and 0W-20, to improve cold-flow
properties and reduce cold start friction. However, in some cases,
changes to the crankshaft, rod and main bearings and changes to the
mechanical tolerances of engine components may be required. In all
cases, durability testing would be required to ensure that durability
is not compromised. The shift to lower viscosity and lower friction
lubricants will also improve the effectiveness of valvetrain
technologies such as cylinder deactivation, which rely on a minimum oil
temperature (viscosity) for operation.
    Based on the 2012-2016 MY light-duty vehicle rule, and previously-
received confidential manufacturer data, NHTSA and EPA estimated the
effectiveness of low friction lubricants to be between 0 to 1 percent.
    In the light-duty rule, the agencies estimated the cost of moving
to low friction lubricants at $3 per vehicle (2007$). That estimate
included a markup of 1.11 for a low complexity technology. For HD
pickups and vans, we are using the same base estimate but have marked
it up to 2008 dollars using the GDP price deflator and have used a
markup of 1.17 for a low complexity technology to arrive at a value of
$4 per vehicle. As in the light-duty rule, learning effects are not
applied to costs for this technology and, as such, this estimate
applies to all model years.155 156
---------------------------------------------------------------------------

    \155\ Note that throughout the cost estimates for this HD
analysis, the agencies have used slightly higher markups than those
used in the 2012-2016 MY light-duty vehicle rule. The new, slightly
higher ICMs include return on capital of roughly 6%, a factor that
was not included in the light-duty analysis.
    \156\ Note that the costs developed for low friction lubes for
this analysis reflect the costs associated with any engine changes
that would be required as well as any durability testing that may be
required.
---------------------------------------------------------------------------

(ii) Engine Friction Reduction
    In addition to low friction lubricants, manufacturers can also
reduce friction and improve fuel consumption by improving the design of
both diesel and gasoline engine components and subsystems.
Approximately 10 percent of the energy consumed by a vehicle is lost to
friction, and just over half is due to frictional losses within the
engine.\157\ Examples include improvements in low-tension piston rings,
piston skirt design, roller cam followers, improved crankshaft design
and bearings, material coatings, material substitution, more optimal
thermal management, and piston and cylinder surface treatments.
Additionally, as computer-aided modeling software continues to improve,
more opportunities for evolutionary friction reductions may become
available.
---------------------------------------------------------------------------

    \157\ ``Impact of Friction Reduction Technologies on Fuel
Economy,'' Fenske, G. Presented at the March 2009 Chicago Chapter
Meeting of the `Society of Tribologists and Lubricated Engineers'
Meeting, March 18th, 2009. Available at: http://www.chicagostle.org/
program/2008-2009/
Impact%20of%20Friction%20Reduction%20Technologies%20on%20Fuel%20Econo
my%20-%20with%20VGs%20removed.pdf (last accessed July 9, 2009).
---------------------------------------------------------------------------

    All reciprocating and rotating components in the engine are
potential candidates for friction reduction, and minute improvements in
several components can add up to a measurable fuel efficiency
improvement. The 2012-2016 light-duty final rule, the 2010 NAS Report,
and NESCCAF and Energy and Environmental Analysis reports, as well as
confidential manufacturer data, indicate a range of effectiveness for
engine friction reduction to be between 1 to 3 percent. NHTSA and EPA
continue to believe that this range is accurate.
    Consistent with the 2012-2016 MY light-duty vehicle rule, the
agencies estimate the cost of this technology at $14 per cylinder
compliance cost (2008$), including the low complexity ICM markup value
of 1.17. Learning impacts are not applied to the costs of this
technology and, as such, this estimate applies to all model years. This
cost is multiplied by the number of engine cylinders.
(iii) Coupled Cam Phasing
    Valvetrains with coupled (or coordinated) cam phasing can modify
the timing of both the inlet valves and the exhaust valves an equal
amount by phasing the camshaft of an overhead valve engine.\158\ For
overhead valve engines, which have only one camshaft to actuate both
inlet and exhaust valves, couple cam phasing is the only variable valve
timing implementation option available and requires only one cam
phaser.\159\
---------------------------------------------------------------------------

    \158\ Although couple cam phasing appears only in the single
overhead cam and overhead valve branches of the decision tree, it is
noted that a single phaser with a secondary chain drive would allow
couple cam phasing to be applied to direct overhead cam engines.
Since this would potentially be adopted on a limited number of
direct overhead cam engines NHTSA did not include it in that branch
of the decision tree.
    \159\ It is also noted that coaxial camshaft developments would
allow other variable valve timing options to be applied to overhead
valve engines. However, since they would potentially be adopted on a
limited number of overhead valve engines, NHTSA did not include them
in the decision tree.
---------------------------------------------------------------------------

    Based on the 2012-2016 light-duty final rule, previously-received
confidential manufacturer data, and the NESCCAF report, NHTSA and EPA
estimated the effectiveness of couple cam phasing to be between 1 and 4
percent. NHTSA and EPA reviewed this estimate for purposes of the NPRM,
and continue to find it accurate.
    In the 2012-2016 light-duty final rule, the agencies estimated a
$41 cost per cam phaser not including any markup (2007$). NHTSA and EPA
believe that this estimate remains accurate. Using the new indirect
cost multiplier of 1.17, for a low complexity technology, the
compliance cost per cam phaser would be $46 (2008$) in the 2014 model
year. Time-based learning is applied to this

technology. This technology was considered for gasoline engines only.
(iv) Cylinder Deactivation
    In conventional spark-ignited engines throttling the airflow
controls engine torque output. At partial loads, efficiency can be
improved by using cylinder deactivation instead of throttling. Cylinder
deactivation can improve engine efficiency by disabling or deactivating
(usually) half of the cylinders when the load is less than half of the
engine's total torque capability--the valves are kept closed, and no
fuel is injected--as a result, the trapped air within the deactivated
cylinders is simply compressed and expanded as an air spring, with
reduced friction and heat losses. The active cylinders combust at
almost double the load required if all of the cylinders were operating.
Pumping losses are significantly reduced as long as the engine is
operated in this ``part-cylinder'' mode.
    Cylinder deactivation control strategy relies on setting maximum
manifold absolute pressures or predicted torque within which it can
deactivate the cylinders. Noise and vibration issues reduce the
operating range to which cylinder deactivation is allowed, although
manufacturers are exploring vehicle changes that enable increasing the
amount of time that cylinder deactivation might be suitable. Some
manufacturers may choose to adopt active engine mounts and/or active
noise cancellations systems to address Noise Vibration and Harshness
(NVH) concerns and to allow a greater operating range of activation.
Cylinder deactivation is a technology keyed to more lightly loaded
operation, and so may be a less likely technology choice for
manufacturers designing for effectiveness in the loaded condition
required for testing, and in the real world that involves frequent
operation with heavy loads.
    Cylinder deactivation has seen a recent resurgence thanks to better
valvetrain designs and engine controls. General Motors and Chrysler
Group have incorporated cylinder deactivation across a substantial
portion of their V8-powered lineups.
    Effectiveness improvements scale roughly with engine displacement-
to-vehicle weight ratio: the higher displacement-to-weight vehicles,
operating at lower relative loads for normal driving, have the
potential to operate in part-cylinder mode more frequently.
    NHTSA and EPA adjusted the 2012-2016 light-duty final rule
estimates using updated power to weight ratings of heavy-duty trucks
and confidential business information and confirmed a range of 3 to 4
percent for these vehicles, though as mentioned above there is
uncertainty over how often this technology would be exercised on the
test cycles, and a lower range may be warranted for HD vehicles.
    NHTSA and EPA consider the costs for this technology to be
identical to that for V8 engines on light-duty trucks. As such, the
agencies have used the cost used in the 2012-2016 light-duty final
rule. Using the new markup of 1.17 for a low complexity technology
results in an estimate of $193 (2008$) in the 2014 model year. Time
based learning is applied to this technology. This technology was
considered for gasoline engines only.
(v) Stoichiometric Gasoline Direct Injection
    SGDI engines inject fuel at high pressure directly into the
combustion chamber (rather than the intake port in port fuel
injection). SGDI requires changes to the injector design, an additional
high pressure fuel pump, new fuel rails to handle the higher fuel
pressures and changes to the cylinder head and piston crown design.
Direct injection of the fuel into the cylinder improves cooling of the
air/fuel charge within the cylinder, which allows for higher
compression ratios and increased thermodynamic efficiency without the
onset of combustion knock. Recent injector design advances, improved
electronic engine management systems and the introduction of multiple
injection events per cylinder firing cycle promote better mixing of the
air and fuel, enhance combustion rates, increase residual exhaust gas
tolerance and improve cold start emissions. SGDI engines achieve higher
power density and match well with other technologies, such as boosting
and variable valvetrain designs.
    Several manufacturers have recently introduced vehicles with SGDI
engines, including GM and Ford and have announced their plans to
increase dramatically the number of SGDI engines in their portfolios.
    The 2012-2016 light-duty final rule estimated the range of 1 to 2
percent for SGDI. NHTSA and EPA reviewed this estimate for purposes of
the NPRM, and continue to find it accurate.
    Consistent with the 2012-2016 light-duty final rule, NHTSA and EPA
cost estimates for SGDI take into account the changes required to the
engine hardware, engine electronic controls, ancillary and NVH
mitigation systems. Through contacts with industry NVH suppliers, and
manufacturer press releases, the agencies believe that the NVH
treatments will be limited to the mitigation of fuel system noise,
specifically from the injectors and the fuel lines. For this analysis,
the agencies have estimated the costs at $395 (2008$) in the 2014 model
year. Time based learning is applied to this technology. This
technology was considered for gasoline engines only, as diesel engines
already employ direct injection.
(b) Diesel Engine Technologies
    Diesel engines have several characteristics that give them superior
fuel efficiency compared to conventional gasoline, spark-ignited
engines. Pumping losses are much lower due to lack of (or greatly
reduced) throttling. The diesel combustion cycle operates at a higher
compression ratio, with a very lean air/fuel mixture, and turbocharged
light-duty diesels typically achieve much higher torque levels at lower
engine speeds than equivalent-displacement naturally-aspirated gasoline
engines. Additionally, diesel fuel has a higher energy content per
gallon.\160\ However, diesel fuel also has a higher carbon to hydrogen
ratio, which increases the amount of CO2 emitted per gallon
of fuel used by approximately 15 percent over a gallon of gasoline.
---------------------------------------------------------------------------

    \160\ Burning one gallon of diesel fuel produces about 15
percent more carbon dioxide than gasoline due to the higher density
and carbon to hydrogen ratio.
---------------------------------------------------------------------------

    Based on confidential business information and the 2010 NAS Report,
two major areas of diesel engine design will be improved during the
2014-2018 timeframe. These areas include aftertreatment improvements
and a broad range of engine improvements.
(i) Aftertreatment Improvements
    The HD diesel pickup and van segment has largely adopted the SCR
type of aftertreatment system to comply with criteria pollutant
emission standards. As the experience base for SCR expands over the
next few years, many improvements in this aftertreatment system such as
construction of the catalyst, thermal management, and reductant
optimization will result in a significant reduction in the amount of
fuel used in the process. This technology was not considered in the
2012-2016 light-duty final rule. Based on confidential business
information, EPA and NHTSA estimate the reduction in CO2 as
a result of these improvements at 3 to 5 percent.
    The agencies have estimated the cost of this technology at $25 for
each percentage improvement in fuel consumption. This estimate is based
on

the agencies' belief that this technology is, in fact, a very cost
effective approach to improving fuel consumption. As such, $25 per
percent improvement is considered a reasonable cost. This cost would
cover the engineering and test cell related costs necessary to develop
and implement the improved control strategies that would allow for the
improvements in fuel consumption. Importantly, the engineering work
involved would be expected to result in cost savings to the
aftertreatment and control hardware (lower platinum group metal
loadings, lower reductant dosing rates, etc.). Those savings are
considered to be included in the $25 per percent estimate described
here. Given the 4 percent average expected improvement in fuel
consumption results in an estimated cost of $110 (2008$) for a 2014
model year truck or van. This estimate includes a low complexity ICM of
1.17 and time based learning from 2012 forward.
(ii) Engine Improvements
    Diesel engines in the HD pickup and van segment are expected to
have several improvements in their base design in the 2014-2018
timeframe. These improvements include items such as improved combustion
management, optimal turbocharger design, and improved thermal
management. This technology was not considered in the 2012-2016 light-
duty final rule. Based on confidential business information, EPA and
NHTSA estimate the reduction in CO2 as a result of these
improvements at 4 to 6 percent.
    The cost for this technology includes costs associated with low
temperature exhaust gas recirculation, improved turbochargers and
improvements to other systems and components. These costs are
considered collectively in our costing analysis and termed ``diesel
engine improvements.'' The agencies have estimated the cost of diesel
engine improvements at $147 based on the cost estimates for several
individual technologies. Specifically, the direct manufacturing costs
we have estimated are: improved cylinder head, $9; turbo efficiency
improvements, $16; EGR cooler improvements, $3; higher pressure fuel
rail, $10; improved fuel injectors, $13; improved pistons, $2; and
reduced valve train friction, $94. All values are in 2008 dollars and
are applicable in the 2014MY. Applying a low complexity ICM of 1.17
results in a cost of $172 (2008$) applicable in the 2014MY. We consider
time based learning to be appropriate for these technologies.
(c) Transmission Technologies
    NHTSA and EPA have also reviewed the transmission technology
estimates used in the 2012-2016 light-duty final rule. In doing so,
NHTSA and EPA considered or reconsidered all available sources and
updated the estimates as appropriate. The section below describes each
of the transmission technologies considered for this proposal.
(i) Improved Automatic Transmission Control (Aggressive Shift Logic and
Early Torque Converter Lockup)
    Calibrating the transmission shift schedule to upshift earlier and
quicker, and to lock-up or partially lock-up the torque converter under
a broader range of operating conditions can reduce fuel consumption and
CO2 emissions. However, this operation can result in a
perceptible degradation in NVH. The degree to which NVH can be degraded
before it becomes noticeable to the driver is strongly influenced by
characteristics of the vehicle, and although it is somewhat subjective,
it always places a limit on how much fuel consumption can be improved
by transmission control changes. Given that the Aggressive Shift Logic
and Early Torque Converter Lockup are best optimized simultaneously due
to the fact that adding both of them primarily requires only minor
modifications to the transmission or calibration software, these two
technologies are combined in the modeling. We consider these
technologies to be present in the baseline, since 6-speed automatic
transmissions are installed in the majority of Class 2b and 3 trucks in
the 2010 model year timeframe.
(ii) Automatic 6- and 8-Speed Transmissions
    Manufacturers can also choose to replace 4- 5- and 6-speed
automatic transmissions with 8-speed automatic transmissions.
Additional ratios allow for further optimization of engine operation
over a wider range of conditions, but this is subject to diminishing
returns as the number of speeds increases. As additional planetary gear
sets are added (which may be necessary in some cases to achieve the
higher number of ratios), additional weight and friction are
introduced. Also, the additional shifting of such a transmission can be
perceived as bothersome to some consumers, so manufacturers need to
develop strategies for smooth shifts. Some manufacturers are replacing
4- and 5-speed automatics with 6-speed automatics already, and 7- and
8-speed automatics have entered production in light-duty vehicles,
albeit in lower-volume applications in luxury and performance oriented
cars.
    As discussed in the light-duty final GHG rule, confidential
manufacturer data projected that 6-speed transmissions could
incrementally reduce fuel consumption by 0 to 5 percent from a 4-speed
automatic transmission, while an 8-speed transmission could
incrementally reduce fuel consumption by up to 6 percent from a 4-speed
automatic transmission. GM has publicly claimed a fuel economy
improvement of up to 4 percent for its new 6-speed automatic
transmissions.\161\
---------------------------------------------------------------------------

    \161\ General Motors, news release, ``From Hybrids to Six-
Speeds, Direct Injection And More, GM's 2008 Global Powertrain
Lineup Provides More Miles with Less Fuel'' (released Mar. 6, 2007).
Available at http://www.gm.com/experience/fuel_economy/news/2007/
adv_engines/2008-powertrain-lineup-082707.jsp (last accessed Sept.
18, 2008).
---------------------------------------------------------------------------

    NHTSA and EPA reviewed and revised these effectiveness estimates
based on actual usage statistics and testing methods for these vehicles
along with confidential business information. When combined with
improved automatic transmission control, the agencies estimate the
effectiveness for a conversion from a 4 to a 6-speed transmission to be
5.3% and a conversion from a 6 to 8-speed transmission to be 1.7%.
While 8-speed transmissions were not considered in the 2012-2016 light-
duty final rule, they are considered as a technology of choice for this
analysis in that manufacturers are expected to upgrade the 6-speed
automatic transmissions being implemented today with 8-speed automatic
transmissions in the 2014-2018 timeframe. For this proposal, we are
estimating the cost of an 8-speed automatic transmission at $231
(2008$) relative to a 6-speed automatic transmission in the 2014 model
year. This estimate is based from the 2010 NAS Report and we have
applied a low complexity ICM of 1.17 and time based learning. This
technology applies to both gasoline and diesel trucks and vans.
(d) Electrification/Accessory Technologies
(i) Electrical Power Steering or Electrohydraulic Power Steering
    Electric power steering (EPS) or Electrohydraulic power steering
(EHPS) provides a potential reduction in CO2 emissions and
fuel consumption over hydraulic power steering because of reduced
overall accessory loads. This eliminates the parasitic losses

associated with belt-driven power steering pumps which consistently
draw load from the engine to pump hydraulic fluid through the steering
actuation systems even when the wheels are not being turned. EPS is an
enabler for all vehicle hybridization technologies since it provides
power steering when the engine is off. EPS may be implemented on most
vehicles with a standard 12V system. Some heavier vehicles may require
a higher voltage system which may add cost and complexity.
    The 2012-2016 light-duty final rule estimated a 1 to 2 percent
effectiveness based on the 2002 NAS report for light-duty vehicle
technologies, a Sierra Research report, and confidential manufacturer
data. NHTSA and EPA reviewed these effectiveness estimates and found
them to be accurate, thus they have been retained for purposes of this
NPRM.
    NHTSA and EPA adjusted the EPS cost for the current rulemaking
based on a review of the specification of the system. Adjustments were
made to include potentially higher voltage or heavier duty system
operation for HD pickups and vans. Accordingly, higher costs were
estimated for systems with higher capability. After accounting for the
differences in system capability and applying the ICM markup of low
complexity technology of 1.17, the estimated costs for this proposal
are $108 for a MY 2014 truck or van (2008$). As EPS systems are in
widespread usage today, time-based learning is deemed applicable. EHPS
systems are considered to be of equal cost and both are considered
applicable to gasoline and diesel engines.
(ii) Improved Accessories
    The accessories on an engine, including the alternator, coolant and
oil pumps are traditionally mechanically-driven. A reduction in
CO2 emissions and fuel consumption can be realized by
driving them electrically, and only when needed (``on-demand'').
    Electric water pumps and electric fans can provide better control
of engine cooling. For example, coolant flow from an electric water
pump can be reduced and the radiator fan can be shut off during engine
warm-up or cold ambient temperature conditions which will reduce warm-
up time, reduce warm-up fuel enrichment, and reduce parasitic losses.
    Indirect benefit may be obtained by reducing the flow from the
water pump electrically during the engine warm-up period, allowing the
engine to heat more rapidly and thereby reducing the fuel enrichment
needed during cold starting of the engine. Further benefit may be
obtained when electrification is combined with an improved, higher
efficiency engine alternator. Intelligent cooling can more easily be
applied to vehicles that do not typically carry heavy payloads, so
larger vehicles with towing capacity present a challenge, as these
vehicles have high cooling fan loads.\162\
---------------------------------------------------------------------------

    \162\ In the CAFE model, improved accessories refers solely to
improved engine cooling. However, EPA has included a high efficiency
alternator in this category, as well as improvements to the cooling
system.
---------------------------------------------------------------------------

    The agencies considered whether to include electric oil pump
technology for the rulemaking. Because it is necessary to operate the
oil pump any time the engine is running, electric oil pump technology
has insignificant effect on efficiency. Therefore, the agencies decided
to not include electric oil pump technology for this proposal.
    NHTSA and EPA jointly reviewed the estimates of 1 to 2 percent
effectiveness estimates used in the 2012-2016 light-duty final rule and
found them to be accurate for Improved Electrical Accessories.
Consistent with the 2012-2016 light-duty final rule, the agencies have
estimated the cost of this technology at $88 (2008$) including a low
complexity ICM of 1.17. This cost is applicable in the 2014 model year.
Improved accessory systems are in production currently and thus time-
based learning is applied. This technology was considered for diesel
trucks and vans only.
(e) Vehicle Technologies
(i) Mass Reduction
    Reducing a vehicle's mass, or down-weighting the vehicle, decreases
fuel consumption by reducing the energy demand needed to overcome
forces resisting motion, and rolling resistance. Manufacturers employ a
systematic approach to mass reduction, where the net mass reduction is
the addition of a direct component or system mass reduction plus the
additional mass reduction taken from indirect ancillary systems and
components, as a result of full vehicle optimization, effectively
compounding or obtaining a secondary mass reduction from a primary mass
reduction. For example, use of a smaller, lighter engine with lower
torque-output subsequently allows the use of a smaller, lighter-weight
transmission and drive line components. Likewise, the compounded weight
reductions of the body, engine and drivetrain reduce stresses on the
suspension components, steering components, wheels, tires and brakes,
allowing further reductions in the mass of these subsystems. The
reductions in unsprung masses such as brakes, control arms, wheels and
tires further reduce stresses in the suspension mounting points. This
produces a compounding effect of mass reductions.
    Estimates of the synergistic effects of mass reduction and the
compounding effect that occurs along with it can vary significantly
from one report to another. For example, in discussing its estimate, an
Auto-Steel Partnership report states that ``These secondary mass
changes can be considerable--estimated at an additional 0.7 to 1.8
times the initial mass change.''Sec. \163\ This means for each one
pound reduction in a primary component, up to 1.8 pounds can be reduced
from other structures in the vehicle (i.e., a 180 percent factor). The
report also discusses that a primary variable in the realized secondary
weight reduction is whether or not the powertrain components can be
included in the mass reduction effort, with the lower end estimates
being applicable when powertrain elements are unavailable for mass
reduction. However, another report by the Aluminum Association, which
primarily focuses on the use of aluminum as an alternative material for
steel, estimated a factor of 64 percent for secondary mass reduction
even though some powertrain elements were considered in the
analysis.\164\ That report also notes that typical values for this
factor vary from 50 to 100 percent. Although there is a wide variation
in stated estimates, synergistic mass reductions do exist, and the
effects result in tangible mass reductions. Mass reductions in a single
vehicle component, for example a door side impact/intrusion system, may
actually result in a significantly higher weight savings in the total
vehicle, depending on how well the manufacturer integrates the
modification into the overall vehicle design. Accordingly, care must be
taken when reviewing reports on weight reduction methods and practices
to ascertain if compounding effects have been considered or not.
---------------------------------------------------------------------------

    \163\ ``Preliminary Vehicle Mass Estimation Using Empirical
Subsystem Influence Coefficients,'' Malen, D.E., Reddy, K. Auto-
Steel Partnership Report, May 2007, Docket EPA-HQ-OAR-2009-0472-
0169. Accessed on the Internet on May 30, 2009 at: http://www.a-
sp.org/database/custom/Mass%20Compounding%20-%20Final%20Report.pdf.
    \164\ ``Benefit Analysis: Use of Aluminum Structures in
Conjunction with Alternative Powertrain Technologies in
Automobiles,'' Bull, M. Chavali, R., Mascarin, A., Aluminum
Association Research Report, May 2008, Docket EPA-HQ-OAR-2009-0472-
0168. Accessed on the Internet on April 30, 2009 at: http://
www.autoaluminum.org/downloads/IBIS-Powertrain-Study.pdf.

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

    Mass reduction is broadly applicable across all vehicle subsystems
including the engine, exhaust system, transmission, chassis,
suspension, brakes, body, closure panels, glazing, seats and other
interior components, engine cooling systems and HVAC systems. It is
estimated that up to 1.25 kilograms of secondary weight savings can be
achieved for every kilogram of weight saved on a vehicle when all
subsystems are redesigned to take into account the initial primary
weight savings.165 166
---------------------------------------------------------------------------

    \165\ ``Future Generation Passenger Compartment-Validation (ASP
241)'' Villano, P.J., Shaw, J.R., Polewarczyk, J., Morgans, S.,
Carpenter, J.A., Yocum, A.D., in ``Lightweighting Materials--FY 2008
Progress Report,'' U.S. Department of Energy, Office of Energy
Efficiency and Renewable Energy, Vehicle Technologies Program, May
2009, Docket EPA-HQ-OAR-2009-0472-0190.
    \166\ ``Preliminary Vehicle Mass Estimation Using Empirical
Subsystem Influence Coefficients,'' Malen, D.E., Reddy, K. Auto-
Steel Partnership Report, May 2007, Docket EPA-HQ-OAR-2009-0472-
0169. Accessed on the Internet on May 30, 2009 at: http://www.a-
sp.org/database/custom/Mass%20Compounding%20-%20Final%20Report.pdf.
---------------------------------------------------------------------------

    Mass reduction can be accomplished by proven methods such as:
     Smart Design: Computer aided engineering (CAE) tools can
be used to better optimize load paths within structures by reducing
stresses and bending moments applied to structures. This allows better
optimization of the sectional thicknesses of structural components to
reduce mass while maintaining or improving the function of the
component. Smart designs also integrate separate parts in a manner that
reduces mass by combining functions or the reduced use of separate
fasteners. In addition, some ``body on frame'' vehicles are redesigned
with a lighter ``unibody'' construction.
     Material Substitution: Substitution of lower density and/
or higher strength materials into a design in a manner that preserves
or improves the function of the component. This includes substitution
of high-strength steels, aluminum, magnesium or composite materials for
components currently fabricated from mild steel.
     Reduced Powertrain Requirements: Reducing vehicle weight
sufficiently allows for the use of a smaller, lighter and more
efficient engine while maintaining or increasing performance.
Approximately half of the reduction is due to these reduced powertrain
output requirements from reduced engine power output and/or
displacement, changes to transmission and final drive gear ratios. The
subsequent reduced rotating mass (e.g., transmission, driveshafts/
halfshafts, wheels and tires) via weight and/or size reduction of
components are made possible by reduced torque output requirements.
     Automotive companies have largely used weight savings in
some vehicle subsystems to offset or mitigate weight gains in other
subsystems from increased feature content (sound insulation,
entertainment systems, improved climate control, panoramic roof, etc.).
     Lightweight designs have also been used to improve vehicle
performance parameters by increased acceleration performance or
superior vehicle handling and braking.
    Many manufacturers have already announced proposed future products
plans reducing the weight of a vehicle body through the use of high
strength steel body-in-white, composite body panels, magnesium alloy
front and rear energy absorbing structures reducing vehicle weight
sufficiently to allow a smaller, lighter and more efficient engine.
Nissan will be reducing average vehicle curb weight by 15% by
2015.\167\ Ford has identified weight reductions of 250 to 750 lb per
vehicle as part of its implementation of known technology within its
sustainability strategy between 2011 and 2020.\168\ Mazda plans to
reduce vehicle weight by 220 pounds per vehicle or more as models are
redesigned. 169, 170 Ducker International estimates that the
average curb weight of light-duty vehicle fleet will decrease
approximately 2.8% from 2009 to 2015 and approximately 6.5% from 2009
to 2020 via changes in automotive materials and increased change-over
from previously used body-on-frame automobile and light-truck designs
to newer unibody designs.167 While the opportunity for mass reductions
available to the light-duty fleet may not in all cases be applied
directly to the heavy-duty fleet due to the different designs for the
expected duty cycles of a ``work'' vehicle, mass reductions are still
available particularly to areas unrelated to the components necessary
for the work vehicle aspects.
---------------------------------------------------------------------------

    \167\ ``Lighten Up!,'' Brooke, L., Evans, H. Automotive
Engineering International, Vol. 117, No. 3, March 2009.
    \168\ ``2008/9 Blueprint for Sustainability,'' Ford Motor
Company. Available at: http://www.ford.com/go/sustainability (last
accessed February 8, 2010).
    \169\ ``Mazda to cut vehicle fuel consumption 30 percent by
2015,'' Mazda press release, June 23, 2009. Available at: http://
www.mazda.com/publicity/release/2008/200806/080623.html(last
accessed February 8, 2010).
    \170\ ``Mazda: Don't believe hot air being emitted by hybrid
hype,'' Greimel, H. Automotive News, March 30, 2009.
---------------------------------------------------------------------------

    Due to the payload and towing requirements of these heavy-duty
vehicles, engine downsizing was not considered in the estimates for
CO2 reduction in the area of mass reduction/material
substitution. NHTSA and EPA estimate that a 3 percent mass reduction
with no engine downsizing results in a 1 percent reduction in fuel
consumption. In addition, a 5 and 10 percent mass reduction with no
engine downsizing result in an estimated CO2 reduction of
1.6 and 3.2 percent respectively. These effectiveness values are 50% of
the 2012-2016 light-duty final rule values due to the elimination of
engine downsizing for this class of vehicle.
    Consistent with the 2012-2016 light-duty final rule, the agencies
have estimated the cost of mass reduction at $1.32 per pound (2008$).
For this analysis, the agencies are estimating a 5% mass reduction or,
given the baseline weight of current trucks and vans, are estimating
costs of $462, $544, $513, and $576 for Class 2b gasoline, 2b diesel, 3
gasoline, 3 diesel trucks and vans, respectively. All values are in
2008 dollars, are applicable in the 2014 model year and include a low
complexity ICM of 1.17. Time based learning is considered applicable to
mass reduction technologies.
    The agencies have recently completed work on an Interim Joint
Technical Assessment Report that considers light-duty GHG and fuel
economy standards for the years 2017 through 2025.\171\ In that report,
the agencies have used updated cost estimates for mass reduction which
were not available in time for use in this analysis but could be used
in the final analysis. The agencies request comment on which mass
reduction costs--those used in this draft analysis or those used in the
Joint Technical Assessment Report--would be most appropriate for Class
2b & 3 trucks and vans along with supporting information.
---------------------------------------------------------------------------

    \171\ ``Interim Joint Technical Assessment Report: Light-Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel
Economy Standards for Model Years 2017-2025;'' September 2010;
available at http://epa.gov/otaq/climate/regulations/ldv-ghg-tar.pdf
and in the docket for this rule.
---------------------------------------------------------------------------

(ii) Low Rolling Resistance Tires
    Tire rolling resistance is the frictional loss associated mainly
with the energy dissipated in the deformation of the tires under load
and thus influences fuel efficiency and CO2 emissions. Other
tire design characteristics (e.g., materials, construction, and tread
design) influence durability, traction (both wet and dry grip), vehicle
handling, and ride comfort in addition to rolling resistance. A typical
LRR tire's attributes would include: increased tire inflation

pressure, material changes, and tire construction with less hysteresis,
geometry changes (e.g., reduced aspect ratios), and reduction in
sidewall and tread deflection. These changes would generally be
accompanied with additional changes to suspension tuning and/or
suspension design.
    EPA and NHTSA estimated a 1 to 2 percent increase in effectiveness
with a 10 percent reduction in rolling resistance, which was based on
the 2010 NAS Report findings and consistent with the 2012-2016 light-
duty final rule.
    Based on the 2012-2016 light-duty final rule and the 2010 NAS
Report, the agencies have estimated the cost for LRR tires to be $6 per
Class 2b truck or van, and $9 per Class 3 truck or van.\172\ The higher
cost for the Class 3 trucks and vans is due to the predominant use of
dual rear tires and, thus, 6 tires per truck. Due to the commodity-
based nature of this technology, cost learning is not applied. This
technology is considered applicable to both gasoline and diesel.
---------------------------------------------------------------------------

    \172\ ``Tires and Passenger Vehicle Fuel Economy,''
Transportation Research Board Special Report 286, National Research
Council of the National Academies, 2006, Docket EPA-HQ-OAR-2009-
0472-0146.
---------------------------------------------------------------------------

(iii) Aerodynamic Drag Reduction
    Many factors affect a vehicle's aerodynamic drag and the resulting
power required to move it through the air. While these factors change
with air density and the square and cube of vehicle speed,
respectively, the overall drag effect is determined by the product of
its frontal area and drag coefficient, Cd. Reductions in these
quantities can therefore reduce fuel consumption and CO2
emissions. Although frontal areas tend to be relatively similar within
a vehicle class (mostly due to market-competitive size requirements),
significant variations in drag coefficient can be observed. Significant
changes to a vehicle's aerodynamic performance may need to be
implemented during a redesign (e.g., changes in vehicle shape).
However, shorter-term aerodynamic reductions, with a somewhat lower
effectiveness, may be achieved through the use of revised exterior
components (typically at a model refresh in mid-cycle) and add-on
devices that currently being applied. The latter list would include
revised front and rear fascias, modified front air dams and rear
valances, addition of rear deck lips and underbody panels, and lower
aerodynamic drag exterior mirrors.
    The 2012-2016 light-duty final rule estimated that a fleet average
of 10 to 20 percent total aerodynamic drag reduction is attainable
which equates to incremental reductions in fuel consumption and
CO2 emissions of 2 to 3 percent for both cars and trucks.
These numbers are generally supported by confidential manufacturer data
and public technical literature. For the heavy-duty truck category, a 5
to 10 percent total aerodynamic drag reduction was considered due to
the different structure and use of these vehicles equating to
incremental reductions in fuel consumption and CO2 emissions
of 1 to 2 percent.
    Consistent with the 2012-2016 light-duty final rule, the agencies
have estimated the cost for this technology at $54 (2008$) including a
low complexity ICM of 1.17. This cost is applicable in the 2014 model
year to both gasoline and diesel trucks and vans.
(3) What are the projected technology packages' effectiveness and cost?
    The assessment of the proposed technology effectiveness was
developed through the use of the EPA Lumped Parameter model developed
for the light-duty rule. Many of the technologies were common with the
light-duty assessment but the effectiveness of individual technologies
was appropriately adjusted to match the expected effectiveness when
implemented in a heavy-duty application. The model then uses the
individual technology effectiveness levels but then takes into account
technology synergies. The model is also designed to prevent double
counting from technologies that may directly or indirectly impact the
same physical attribute (e.g., pumping loss reductions).
    To achieve the levels of the proposed standards for gasoline and
diesel powered heavy-duty vehicles, the technology packages were
determined to generally require the technologies previously discussed
respective to unique gasoline and diesel technologies. Although some of
the technologies may already be implemented in a portion of heavy-duty
vehicles, none of the technologies discussed are considered ubiquitous
in the heavy-duty fleet. Also, as would be expected, the available test
data shows that some vehicle models will not need the full complement
of available technologies to achieve the proposed standards.
Furthermore, many technologies can be further improved (e.g.,
aerodynamic improvements) from today's best levels, and so allow for
compliance without needing to apply a technology that a manufacturer
might deem less desirable.
    Technology costs for HD pickup trucks and vans are shown in Table
III-11.

[GRAPHIC] [TIFF OMITTED] TP30NO10.037

(4) Reasonableness of the Proposed Standards
    The proposed standards are based on the application of the control
technologies described in this section. These technologies are
available within the lead time provided, as discussed in draft RIA
Chapter 2.3. These controls are estimated to add costs of approximately
$1,249 to $1,592 for MY 2018 heavy-duty pickups and vans. Reductions
associated with these costs and technologies are considerable,
estimated at a 12 percent reduction of CO2eq emissions from
the MY 2010 baseline for gasoline engine-equipped vehicles and 17
percent for diesel engine equipped vehicles, estimated to result in
reductions of 21 MMT of CO2eq emissions over the lifetimes
of 2014 through 2018 MY vehicles.\173\ The reductions are cost
effective, estimated at $100 per ton of CO2eq removed in
2030.\174\ This cost is consistent with the light-duty rule which was
estimated at $100 per ton of CO2eq removed in 2020 excluding
fuel savings. Moreover, taking into account the fuel savings associated
with the program, the cost becomes -$200 per ton of CO2eq in
2030. The cost of controls is fully recovered due to the associated
fuel savings, with a payback period within the fifth and sixth year of
ownership, as shown in Table VIII-6 below. Given the large, cost
effective emission reductions based on use of feasible technologies
which are available in the lead time provided, plus the lack of adverse
impacts on vehicle safety or utility, EPA and NHTSA regard these
proposed standards as appropriate and consistent with our respective
statutory authorities under CAA section 202(a) and NHTSA's EISA
authority under 49 U.S.C. 32902(k)(2).
---------------------------------------------------------------------------

    \166\ See Table VI-4.
    \167\ See Table VIII-3.
---------------------------------------------------------------------------

C. Class 2b-8 Vocational Vehicles

    Vocational vehicles cover a wide variety of applications which
influence both the body style and usage patterns. They also are built
using a complex process, which includes additional parties such as body
builders. These factors have led the agencies to propose a vehicle
standard for vocational vehicles for the first phase of the program
that relies on less extensive addition of technology as well as
focusing on the chassis manufacturer as the manufacturer subject to the
standard. We believe that future rulemakings will consider increased
stringency and possibly more application-specific standards. The
agencies are proposing standards for the diesel and gasoline engines
used in vocational vehicles, similar to those discussed above for Class
7 and 8 tractors.
(1) What technologies did the agencies consider to reduce the
CO2 emissions and fuel consumption of vocational vehicles?
    Similar to the approach taken with tractors, the agencies evaluated
aerodynamic, tire, idle reduction, weight reduction, hybrid powertrain,
and engine technologies and their impact on reducing fuel consumption
and GHG emissions. The engines used in vocational vehicles include both
gasoline and diesel engines, thus, each type is discussed separately
below. As explained in Section II.D.1.b, the proposed regulatory
structure for heavy-duty engines separates the compression ignition (or
``diesel'') engines into three regulatory subcategories--light heavy,
medium heavy, and heavy heavy diesel

engines--while spark ignition (or ``gasoline'') engines are a single
regulatory subcategory. Therefore, the subsequent discussion will
assess each type of engine separately.
(a) Vehicle Technologies
    Vocational vehicles typically travel fewer miles than combination
tractors. They also tend to be used in more urban locations (with
consequent stop and start drive cycles). Therefore the average speed of
vocational vehicles is significantly lower than tractors. This has a
significant effect on the types of technologies that are appropriate to
consider for reducing CO2 emissions and fuel consumption.
    The agencies considered the type of technologies for vocational
vehicles based on the energy losses of a typical vocational vehicle.
The technologies are similar to the ones considered for tractors.
Argonne National Lab conducted an energy audit using simulation tools
to evaluate the energy losses of vocational vehicles, such as a Class 6
pickup and delivery truck. Argonne found that 74 percent of the energy
losses are attributed to the engine, 13 percent to tires, 9 percent to
aerodynamics, two percent to transmission losses, and the remaining
four percent of losses to axles and accessories for a medium-duty truck
traveling at 30 mph.\175\
---------------------------------------------------------------------------

    \175\ Argonne National Lab. Evaluation of Fuel Consumption
Potential of Medium and Heavy-duty Vehicles through Modeling and
Simulation. October 2009. Page 89.
---------------------------------------------------------------------------

    Low Rolling Resistance Tires: Tires are the second largest
contributor to energy losses of vocational vehicles, as found in the
energy audit conducted by Argonne National Lab (as just mentioned). The
range of rolling resistance of tires used on vocational vehicles today
is large. This is in part due to the fact that the competitive pressure
to improve rolling resistance of vocational vehicle tires has been less
than that found in the line haul tire market. In addition, the drive
cycles typical for these applications often lead truck buyers to value
tire traction and durability more heavily than rolling resistance.
Therefore, the agencies concluded that a regulatory program that seeks
to optimize tire rolling resistance in addition to traction and
durability can bring about fuel consumption and CO2 emission
reductions from this segment. The 2010 NAS report states that rolling
resistance impact on fuel consumption reduces with mass of the vehicle
and with drive cycles with more frequent starts and stops. The report
found that the fuel consumption reduction opportunity for reduced
rolling resistance ranged between one and three percent in the 2010
through 2020 timeframe.\176\ The agencies estimate that average rolling
resistance from tires in 2010 model year can be reduced by 10 percent
by 2014 model year based on the tire development achievements over the
last several years in the line haul truck market which would lead to a
2 percent reduction in fuel consumption based on GEM.
---------------------------------------------------------------------------

    \176\ See 2010 NAS Report, Note 111, page 146.
---------------------------------------------------------------------------

    Aerodynamics: The Argonne National lab work shows that aerodynamics
have less of an impact on vocational vehicle energy losses than do
engines or tires. In addition, the aerodynamic performance of a
complete vehicle is significantly influenced by the body of the truck.
The agencies are not proposing to regulate body builders in this phase
of regulations for the reasons discussed in Section II. Therefore, we
are not basing any of the proposed standards for vocational vehicles on
aerodynamic improvements. Nor would aerodynamic performance be input
into GEM to demonstrate compliance.
    Weight Reduction: NHTSA and EPA are also not basing any of the
proposed standards on use of vehicle weight reduction. Thus, vehicle
mass reductions would not be input into GEM. The vocational vehicle
models are not designed to be application-specific. Therefore weight
reductions are difficult to quantify.
    Drivetrain: Optimization of vehicle gearing to engine performance
through selection of transmission gear ratios, final drive gear ratios
and tire size can play a significant role in reducing fuel consumption
and GHGs. Optimization of gear selection versus vehicle and engine
speed accomplished through driver training or automated transmission
gear selection can provide additional reductions. The 2010 NAS report
found that the opportunities to reduce fuel consumption in heavy-duty
vehicles due to transmission and driveline technologies in the 2015
timeframe ranged between 2 and 8 percent.\177\ Initially, the agencies
considered reflecting transmission choices and technology in our
standard setting process for both tractors and vocational vehicles (see
previous discussion above on automated transmissions for tractors). We
have however decided not to do so for the following reasons.
---------------------------------------------------------------------------

    \177\ See 2010 NAS Report, Note 111, pp 134 and 137.
---------------------------------------------------------------------------

    The primary factors that determine optimum gear selection are
vehicle weight, vehicle aerodynamics, vehicle speed, and engine
performance typically considered on a two dimensional map of engine
speed and torque. For a given power demand (determined by speed,
aerodynamics and vehicle mass) an optimum transmission and gearing
setup will keep the engine power delivery operating at the best speed
and torque points for highest engine efficiency. Since power delivery
from the engine is the product of speed and torque a wide range of
torque and speed points can be found that deliver adequate power, but
only a smaller subset will provide power with peak efficiency. Said
more generally, the design goal is for the transmission to deliver the
needed power to the vehicle while maintaining engine operation within
the engine's ``sweet spot'' for most efficient operation. Absent
information about vehicle mass and aerodynamics (which determines road
load at highway speeds) it is not possible to optimize the selection of
gear ratios for lowest fuel consumption. Truck and chassis
manufacturers today offer a wide range of tire sizes, final gear ratios
and transmission choices so that final bodybuilders can select an
optimal combination given the finished vehicle weight, general
aerodynamic characteristics and expected average speed. In order to set
fuel efficiency and GHG standards that would reflect these
optimizations, the agencies would need to regulate a wide range of
small entities that are final bodybuilders, would need to set a large
number of uniquely different standards to reflect the specific weight
and aerodynamic differences and finally would need test procedures to
evaluate these differences that would not themselves be excessively
burdensome. Finally, the agencies would need the underlying data
regarding effectively all of the vocational trucks produced today in
order to determine the appropriate standards. Because the market is
already motivated to reach these optimizations themselves today,
because we have insufficient data to determine appropriate standards,
and finally, because we believe the testing burden would be
unjustifiably high, we are not proposing to reflect transmission and
gear ratio optimization in our GEM model or in our standard setting.
    We are broadly seeking comment on our reasons for not reflecting
these technology choices including recommendations for ways that the
agencies could effectively reflect transmission related improvements.
The agencies welcome comment on transmission and driveline technologies

specific to the vocational vehicle market that can achieve fuel
consumption and GHG emissions reductions.
    Idle Reduction: Episodic idling by vocational vehicles occurs
during the workday, unlike the overnight idling of combination
tractors. Vocational vehicle idling can be divided into two typical
types. The first type is idling while waiting--such as during a pickup
or delivery. This type of idling can be reduced through automatic
engine shut-offs. The second type of idling is to accomplish PTO
operation, such as compacting garbage or operating a bucket. The
agencies have found only one study that quantifies the emissions due to
idling conducted by Argonne National Lab based on 2002 VIUS data.\178\
EPA conducted a work assignment to assist in characterizing PTO
operations. The study of a utility truck used in two different
environments (rural and urban) and a refuse hauler found that the PTO
operated on average 28 percent of time relative to the total time spent
driving and idling. The use of hybrid powertrains to reduce idling is
discussed below.
---------------------------------------------------------------------------

    \178\ Gaines, Linda, A. Vyas, J. Anderson (Argonne National
Laboratory). Estimation of Fuel Use by Idling Commercial Trucks.
January 2006.
---------------------------------------------------------------------------

    Hybrid Powertrains: Several types of vocational vehicles are well
suited for hybrid powertrains. Vehicles such as utility or bucket
trucks, delivery vehicles, refuse haulers, and buses have operational
usage patterns with either a significant amount of stop-and-go activity
or spend a large portion of their operating hours idling the main
engine to operate a PTO unit. The industry is currently developing
three types of hybrid powertrain systems--hydraulic, electric, and
plug-in electric. The hybrids developed to date have seen fuel
consumption and CO2 emissions reductions between 20 and 50
percent in the field. However, there are still some key issues that are
restricting the penetration of hybrids, including overall system cost,
battery technology, and lack of cost-effective electrified accessories.
The agencies are proposing to include hybrid powertrains as a
technology to meet the vocational vehicle standard, as described in
Section IV. However, the agencies are not proposing a vocational
vehicle standard predicated on using a specific penetration of hybrids.
We have not predicated the standards based on the use of hybrids
reflecting the still nascent level of technology development and the
very small fraction of vehicle sales they would be expected to account
for in this timeframe--on the order of only a percent or two. Were we
to overestimate the number of hybrids that could be produced, we would
set a standard that is not feasible. We believe that it is more
appropriate given the status of technology development and our high
hopes for future advancements in hybrid technologies to encourage their
production through incentives. The agencies welcome comments on this
approach.
(b) Gasoline Engine Technologies
    The gasoline (or spark ignited) engines certified and sold as loose
engines into the heavy-duty truck market are typically large V8 and V10
engines produced by General Motors and Ford. The basic engine
architecture of these engines is the same as the versions used in the
heavy-duty pickup trucks and vans. Therefore, the technologies analyzed
by the agencies mirror the gasoline engine technologies used in the
heavy-duty pickup truck analysis in Section III.B above.
    Building on the technical analysis underlying the 2012-2016 MY
light-duty vehicle rule, the agencies took a fresh look at technology
effectiveness values for purposes of this proposal using a starting
point the estimates from that rule. The agencies then considered the
impact of test procedures (such as higher test weight of HD pickup
trucks and vans) on the effectiveness estimates. The agencies also
considered other sources such as the 2010 NAS Report, recent CAFE
compliance data, and confidential manufacturer estimates of technology
effectiveness. NHTSA and EPA engineers reviewed effectiveness
information from the multiple sources for each technology and ensured
that such effectiveness estimates were based on technology hardware
consistent with the BOM components used to estimate costs.
    The agencies note that the effectiveness values estimated for the
technologies may represent average values, and do not reflect the
potentially-limitless spectrum of possible values that could result
from adding the technology to different vehicles. For example, while
the agencies have estimated an effectiveness of 0.5 percent for low
friction lubricants, each vehicle could have a unique effectiveness
estimate depending on the baseline vehicle's oil viscosity rating. For
purposes of this NPRM, NHTSA and EPA believe that employing average
values for technology effectiveness estimates is an appropriate way of
recognizing the potential variation in the specific benefits that
individual manufacturers (and individual engines) might obtain from
adding a fuel-saving technology. However, the agencies seek comment on
whether additional levels of specificity beyond that already provided
would improve the analysis for the final rules, and if so, how those
levels of specificity should be analyzed.
    Baseline Engine: Similar to the gasoline engine used as the
baseline in the light-duty GHG rule, the agencies assumed the baseline
engine in this segment to be a naturally aspirated, overhead valve V8
engine. The following discussion of effectiveness is generally in
comparison to 2010 baseline engine performance.
    The technologies the agencies considered include the following:
    Engine Friction Reduction: In addition to low friction lubricants,
manufacturers can also reduce friction and improve fuel consumption by
improving the design of engine components and subsystems. Examples
include improvements in low-tension piston rings, piston skirt design,
roller cam followers, improved crankshaft design and bearings, material
coatings, material substitution, more optimal thermal management, and
piston and cylinder surface treatments. The 2010 NAS, NESCCAF \179\ and
EEA \180\ reports as well as confidential manufacturer data used in the
light-duty vehicle rulemaking suggested a range of effectiveness for
engine friction reduction to be between 1 to 3 percent. NHTSA and EPA
continue to believe that this range is accurate.
---------------------------------------------------------------------------

    \179\ Northeast States Center for a Clean Air Future. ``Reducing
Greenhouse Gas Emissions from Light-Duty Motor Vehicles.'' September
2004.
    \180\ Energy and Environmental Analysis, Inc. ``Technology to
Improve the Fuel Economy of Light Duty Trucks to 2015.'' May 2006.
---------------------------------------------------------------------------

    Coupled Cam Phasing: Valvetrains with coupled (or coordinated) cam
phasing can modify the timing of both the inlet valves and the exhaust
valves an equal amount by phasing the camshaft of a single overhead cam
engine or an overhead valve engine. Based on the 2012-2016 MY light-
duty vehicle rule, previously-received confidential manufacturer data,
and the NESCCAF report, NHTSA and EPA estimated the effectiveness of
couple cam phasing CCP to be between 1 and 4 percent. NHTSA and EPA
reviewed this estimate for purposes of the NPRM, and continue to find
it accurate.
    Cylinder Deactivation: In conventional spark-ignited engines
throttling the airflow controls engine torque output. At partial loads,
efficiency can be improved by using cylinder deactivation instead of
throttling. Cylinder deactivation can improve engine efficiency by
disabling or deactivating (usually) half of the

cylinders when the load is less than half of the engine's total torque
capability--the valves are kept closed, and no fuel is injected--as a
result, the trapped air within the deactivated cylinders is simply
compressed and expanded as an air spring, with reduced friction and
heat losses. The active cylinders combust at almost double the load
required if all of the cylinders were operating. Pumping losses are
significantly reduced as long as the engine is operated in this ``part
cylinder'' mode. Effectiveness improvements scale roughly with engine
displacement-to-vehicle weight ratio--the higher displacement-to-weight
vehicles, operating at lower relative loads for normal driving, have
the potential to operate in part-cylinder mode more frequently.
Therefore, the agencies reduced the effectiveness assumed from this
technology for trucks because of the lower displacement-to-weight ratio
relative to light-duty vehicles. NHTSA and EPA adjusted the 2010 light-
duty vehicle final rule estimates using updated power to weight ratings
of heavy-duty trucks and confidential business information and
confirmed a range of 3 to 4 percent for these vehicles.
    Stoichiometric gasoline direct injection: SGDI (also known as
spark-ignition direct injection engines) inject fuel at high pressure
directly into the combustion chamber (rather than the intake port in
port fuel injection). Direct injection of the fuel into the cylinder
improves cooling of the air/fuel charge within the cylinder, which
allows for higher compression ratios and increased thermodynamic
efficiency without the onset of combustion knock. Recent injector
design advances, improved electronic engine management systems and the
introduction of multiple injection events per cylinder firing cycle
promote better mixing of the air and fuel, enhance combustion rates,
increase residual exhaust gas tolerance and improve cold start
emissions. SGDI engines achieve higher power density and match well
with other technologies, such as boosting and variable valvetrain
designs. The 2012-2016 MY light-duty vehicle final rule estimated the
effectiveness of SGDI to be between 2 and 3 percent. NHTSA and EPA
revised these estimated accounting for the use and testing methods for
these vehicles along with confidential business information estimates
received from manufacturers while developing the proposal. Based on
these revisions, NHTSA and EPA estimate the range of 1 to 2 percent for
SGDI.
(c) Diesel Engine Technologies
    Different types of diesel engines are used in vocational vehicles,
depending on the application. They fall into the categories of Light,
Medium, and Heavy Heavy-duty Diesel engines. The Light Heavy-duty
Diesel engines typically range between 4.7 and 6.7 liters displacement.
The Medium Heavy-duty Diesel engines typically have some overlap in
displacement with the Light Heavy-duty Diesel engines and range between
6.7 and 9.3 liters. The Heavy Heavy-duty Diesel engines typically are
represented by engines between 10.8 and 16 liters.
    Baseline Engine: There are three baseline diesel engines, a Light,
Medium, and a Heavy Heavy-duty Diesel engine. The agencies developed
the baseline diesel engine as a 2010 model year engine with an
aftertreatment system which meets EPA's 0.2 grams of NOX/
bhp-hr standard with an SCR system along with EGR and meets the PM
emissions standard with a diesel particulate filter with active
regeneration. The engine is turbocharged with a variable geometry
turbocharger. The following discussion of technologies describes
improvements over the 2010 model year baseline engine performance,
unless otherwise noted. Further discussion of the baseline engine and
its performance can be found in Section III.C.2.(c)(i) below. The
following discussion of effectiveness is generally in comparison to
2010 baseline engine performance, and is in reference to performance in
terms of the Heavy-duty FTP that would be used for compliance for these
engine standards. This is in comparison to the steady state SET
procedure that would be used for compliance purposes for the engines
used in Class 7 and 8 tractors. See Section II.B.2.(i) above.
    Turbochargers: Improved efficiency of a turbocharger compressor or
turbine could reduce fuel consumption by approximately 1 to 2 percent
over today's variable geometry turbochargers in the market today. The
2010 NAS report identified technologies such as higher pressure ratio
radial compressors, axial compressors, and dual stage turbochargers as
design paths to improve turbocharger efficiency.
    Low Temperature Exhaust Gas Recirculation: Most LHDD, MHDD, and
HHDD engines sold in the U.S. market today use cooled EGR, in which
part of the exhaust gas is routed through a cooler (rejecting energy to
the engine coolant) before being returned to the engine intake
manifold. EGR is a technology employed to reduce peak combustion
temperatures and thus NOX. Low-temperature EGR uses a larger
or secondary EGR cooler to achieve lower intake charge temperatures,
which tend to further reduce NOX formation. If the
NOX requirement is unchanged, low-temperature EGR can allow
changes such as more advanced injection timing that will increase
engine efficiency slightly more than one percent. Because low-
temperature EGR reduces the engine's exhaust temperature, it may not be
compatible with exhaust energy recovery systems such as turbocompound
or a bottoming cycle.
    Engine Friction Reduction: Reduced friction in bearings, valve
trains, and the piston-to-liner interface will improve efficiency. Any
friction reduction must be carefully developed to avoid issues with
durability or performance capability. Estimates of fuel consumption
improvements due to reduced friction range from 0.5 to 1.5
percent.\181\
---------------------------------------------------------------------------

    \181\ TIAX, Assessment of Fuel Economy Technologies for Medium-
and Heavy-duty Vehicles, Final Report, Nov. 19, 2009, pg. 4-15.
---------------------------------------------------------------------------

    Selective catalytic reduction: This technology is common on 2010
heavy-duty diesel engines. Because SCR is a highly effective
NOX aftertreatment approach, it enables engines to be
optimized to maximize fuel efficiency, rather than minimize engine-out
NOX. 2010 SCR systems are estimated to result in improved
engine efficiency of approximately 4 to 5 percent compared to a 2007
in-cylinder EGR-based emissions system and by an even greater
percentage compared to 2010 in-cylinder approaches.\182\ As more
effective low-temperature catalysts are developed, the NOX
conversion efficiency of the SCR system will increase. Next-generation
SCR systems could then enable still further efficiency improvements;
alternatively, these advances could be used to maintain efficiency
while down-sizing the aftertreatment. We estimate that continued
optimization of the catalyst could offer 1 to 2 percent reduction in
fuel use over 2010 model year systems in the 2014 model year.\183\ The
agencies also estimate that continued refinement and optimization of
the SCR systems could provide an additional 2 percent reduction in the
2017 model year.
---------------------------------------------------------------------------

    \182\ Stanton, D. ``Advanced Diesel Engine Technology
Development for High Efficiency, Clean Combustion.'' Cummins, Inc.
Annual Progress Report 2008 Vehicle Technologies Program: Advanced
Combustion Engine Technologies, U.S. Department of Energy. Pp. 113-
116. December 2008.
    \183\ TIAX Assessment of Fuel Economy Technologies for Medium
and Heavy-duty Vehicles, Report to National Academy of Sciences, Nov
19, 2009, pg. 4-9.

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

    Improved Combustion Process: Fuel consumption reductions in the
range of 1 to 4 percent are identified in the 2010 NAS report through
improved combustion chamber design, higher fuel injection pressure,
improved injection shaping and timing, and higher peak cylinder
pressures.\184\
---------------------------------------------------------------------------

    \184\ See 2010 NAS Report, Note 111, page 56.
---------------------------------------------------------------------------

    Reduced Parasitic Loads: Accessories that are traditionally gear or
belt driven by a vehicle's engine can be optimized and/or converted to
electric power. Examples include the engine water pump, oil pump, fuel
injection pump, air compressor, power-steering pump, cooling fans, and
the vehicle's air-conditioning system. Optimization and improved
pressure regulation may significantly reduce the parasitic load of the
water, air and fuel pumps. Electrification may result in a reduction in
power demand, because electrically powered accessories (such as the air
compressor or power steering) operate only when needed if they are
electrically powered, but they impose a parasitic demand all the time
if they are engine driven. In other cases, such as cooling fans or an
engine's water pump, electric power allows the accessory to run at
speeds independent of engine speed, which can reduce power consumption.
The TIAX study used 2 to 4 percent fuel consumption improvement for
accessory electrification, with the understanding that electrification
of accessories will have more effect in short-haul/urban applications
and less benefit in line-haul applications.\185\
---------------------------------------------------------------------------

    \185\ TIAX. 2009. Pages 3-5.
---------------------------------------------------------------------------

(2) What is the projected technology package's effectiveness and cost?
(a) Vocational Vehicles
(i) Baseline Vocational Vehicle Performance
    The baseline vocational vehicle model is defined in GEM, as
described in draft RIA Chapter 4.4.6. The agencies used a baseline
rolling resistance coefficient for today's vocational vehicle fleet of
9 kg/metric ton.\186\ Further vehicle technology is not included in
this baseline, as discussed below in the discussion of the baseline
vocational vehicle. The baseline engine fuel consumption represents a
2010 model year diesel engine, as described in draft RIA Chapter 4.
Using these values, the baseline performance of these vehicles is
included in Table III-12.
---------------------------------------------------------------------------

    \186\ The baseline tire rolling resistance for this segment of
vehicles was derived for the proposal based on the current baseline
tractor and passenger car tires. The baseline tractor drive tire has
a rolling resistance of 8.2 kg/metric ton based on SmartWay testing.
The average passenger car has a tire rolling resistance of 9.75 kg/
metric ton based on a presentation made to CARB by the Rubber
Manufacturer's Association. Additional details are available in the
draft RIA Chapter 2.
[GRAPHIC] [TIFF OMITTED] TP30NO10.038

(ii) Vocational Vehicle Technology Package
    The proposed program for vocational vehicles for this phase of
regulatory standards is limited to performance of tire and engine
technologies. Aerodynamics technology, weight reduction, drive train
improvement, and hybrid power trains are not included for the reasons
discussed above in Section III.C(1). The agencies are seeking comment
on the appropriateness of this approach.
    The assessment of the proposed technology effectiveness was
developed through the use of the GEM. To account for the two proposed
engine standards, EPA is proposing the use of a 2014 model year fuel
consumption map in GEM to derive the 2014 model year truck standard and
a 2017 model year fuel consumption map to derive the 2017 model year
truck standard. (These fuel consumption maps reflect the main standards
proposed for HD diesel engines, not the alternative standards.) EPA
estimates that the rolling resistance of tires can be reduced by 10
percent in the 2014 model year. The vocational vehicle standards for
all three regulatory categories were determined using a tire rolling
resistance coefficient of 8.1 kg/metric ton with a 100 percent
application rate by the 2014 model year. The set of input parameters
which are modeled in GEM are shown in Table III-13.
[GRAPHIC] [TIFF OMITTED] TP30NO10.039

    The agencies developed the proposed standards by using the engine
and tire rolling resistance inputs in the GEM, as shown in Table III-
13. The percent reductions shown in Table III-14 reflect improvements
over the 2010 model year baseline vehicle with a 2010 model year
baseline engine.
[GRAPHIC] [TIFF OMITTED] TP30NO10.040

(iii) Technology Package Cost
    EPA and NHTSA developed the costs of LRR tires based on the ICF
report. The estimated cost per truck is $155 (2008$) for LHD and MHD
trucks and $186 (2008$) for HHD trucks. These costs include a low
complexity ICM of 1.14 and are applicable in the 2014 model year.
(iv) Reasonableness of the Proposed Standards
    The proposed standards would not only add only a small amount to
the vehicle cost, but are highly cost effective, an estimated $20 ton
of CO2eq per vehicle in 2030.\187\ This is even less than
the estimated cost effectiveness for CO2eq removal under the
light-duty vehicle rule, already considered by the agencies to be a
highly cost effective reduction.\188\ Moreover, the modest cost of
controls is recovered almost immediately due to the associated fuel
savings, as shown in the payback analysis included in Table VIII-7.
Given that the standards are technically feasible within the lead time
afforded by the 2014 model year, are inexpensive and highly cost
effective, and do not have other adverse potential impacts (e.g., there
are no projected negative impacts on safety or vehicle utility), the
proposed standards represent a reasonable choice under section 202(a)
of the CAA and NHTSA's EISA authority under 49 U.S.C. 32902(k)(2), and
the agencies believe that the standards are consistent with their
respective authorities.
---------------------------------------------------------------------------

    \187\ See Section VIII.D.
    \188\ The light-duty rule had an estimated cost per ton of $50
when considering the vehicle program costs only and a cost of -$210
per ton considering the vehicle program costs along with fuel
savings in 2030. See 75 FR 25515, Table III.H.3-1.
---------------------------------------------------------------------------

(v) Alternative Vehicle Standards Considered
    The agencies are not proposing vehicle standards less stringent
than the proposed standards because the agencies believe these
standards are highly cost effective, as just explained.
    The agencies considered proposing truck standards which are more
stringent reflecting the inclusion of hybrid powertrains in those
vocational vehicles where use of hybrid powertrains is appropriate. The
agencies estimate that a 25 percent utilization rate of hybrid
powertrains in MY 2017 vocational vehicles would add, on average,
$30,000 to the cost of each vehicle and more than double the cost of
the rule for this sector. See the draft RIA at Chapter 6.1.8. The
emission reductions associated with these very high costs appear to be
modest. See the draft RIA Table 6-14. In addition, the agencies are
proposing flexibilities in the form of generally applicable credit
opportunities for advanced technologies, to encourage use of hybrid
powertrains. See Section IV.C.2 below. The agencies welcome comments on
whether hybrid powertrain technologies are appropriate to consider for
the 2017 model year standard, or if not, then when would they be
appropriate.
(b) Gasoline Engines
(i) Baseline Gasoline Engine Performance
    EPA and NHTSA developed the reference heavy-duty gasoline engines
to represent a 2010 model year engine compliant with the 0.2 g/bhp-hr
NOX standard for on-highway heavy-duty engines.
    NHTSA and EPA developed the baseline fuel consumption and
CO2 emissions for the gasoline engines from manufacturer
reported CO2 values used in the certification of non-GHG
pollutants. The baseline engine for the analysis was developed to
represent a 2011 model year engine, because this is the most current
information available. The average CO2 performance of the
heavy-duty gasoline engines was 660 g/bhp-hour, which will be used as a
baseline. The baseline gasoline engines are all stoichiometric port
fuel injected V-8 engines without cam phasers or other variable valve
timing technologies. While they may reflect some degree of static valve
timing optimization for fuel efficiency they do not reflect the
potential to adjust timing with engine speed.
(ii) Gasoline Engine Technology Package Effectiveness
    The gasoline engine technology package includes engine friction
reduction, coupled cam phasing, and SGDI to produce an overall five
percent reduction from the reference engine based on the Heavy-duty
Lumped Parameter model. The agencies are projecting a 100% application
rate of

this technology package to the heavy-duty gasoline engines, which
results in a CO2 standard of 627 g/bhp-hr and a fuel
consumption standard of 7.05 gallon/100 bhp-hr. As discussed in Section
II.D.b.ii, the agencies propose that the gasoline engine standards
begin in the 2016 model year based on the agencies' projection of the
engine redesign schedules of the small number of engines in this
category.
(iii) Gasoline Engine Technology Package Cost
    For costs, the agencies reconsidered both the direct or ``piece''
costs and indirect costs of individual components of technologies. For
the direct costs, the agencies followed a BOM approach employed by
NHTSA and EPA in the 2012-2016 LD rule. NHTSA and EPA are proposing to
use the marked up gasoline engine technology costs developed for the HD
Pickup Truck and Van segment because they are made by the same
manufacturers (primarily by Ford and GM) and, the same products simply
sold as loose engines rather than complete vehicles. Hence the engine
cost estimates are fundamentally the same. The costs are summarized in
Table III-15. The costs shown in Table III-15 include a low complexity
ICM of 1.17 and are applicable in the 2016 model year. No learning
effects are applied to engine friction reduction costs, while time
based learning is considered applicable to both coupled cam phasing and
SGDI.
[GRAPHIC] [TIFF OMITTED] TP30NO10.041

(iv) Reasonableness of the Proposed Standard
    The proposed engine standards appear to be reasonable and
consistent with the agencies' respective authorities. With respect to
the 2016 MY standard, all of the technologies on which the standards
are predicated have been demonstrated and their effectiveness is well
documented. The proposal reflects a 100 percent application rate for
these technologies. The costs of adding these technologies remain
modest across the various engine classes as shown in Table III-15. Use
of these technologies would add only a small amount to the cost of the
vehicle,\189\ and the associated reductions are highly cost effective,
an estimated $30 per ton of CO2eq per vehicle.\190\ This is
even more cost effective than the estimated cost effectiveness for
CO2eq removal and fuel economy improvement under the light-
duty vehicle rule, already considered by the agencies to be a highly
cost effective reduction.\191\ Accordingly, EPA and NHTSA view these
standards as reflecting an appropriate balance of the various statutory
factors under section 202(a) of the CAA and under NHTSA's EISA
authority at 49 U.S.C. 32902(k)(2).
---------------------------------------------------------------------------

    \189\ Sample 2010 MY vocational vehicles range in price between
$40,000 for a Class 4 work truck to approximately $200,000 for a
Class 8 refuse hauler. See pages 16-17 of ICF's ``Investigation of
Costs for Strategies to Reduce Greenhouse Gas Emissions for Heavy-
Duty On-Road Vehicles.'' July 2010.
    \190\ See Vocational Vehicle CO2 savings and
technology costs for Alternative 2 in Section IX.B.
    \191\ The light-duty rule had an estimated cost per ton of $50
when considering the vehicle program costs only and a cost of -$210
per ton considering the vehicle program costs along with fuel
savings in 2030. See 75 FR 25515, Table III.H.3-1.
---------------------------------------------------------------------------

(v) Alternative Gasoline Engine Standards Considered
    The agencies are not proposing gasoline standards less stringent
than the proposed standards because the agencies believe these
standards are feasible in the lead time provided, inexpensive, and
highly cost effective. We welcome comments supplemented with data on
each aspect of this determination most importantly on individual
gasoline engine technology efficacy to reduce fuel consumption and GHGs
as well was our estimates of individual technology cost and lead-time.
    The proposed rule reflects 100 percent penetration of the
technology package on whose performance the standard is based, so some
additional technology would need to be added to obtain further
improvements. The agencies considered proposing gasoline engine
standards which are more stringent reflecting the inclusion of cylinder
deactivation and other advanced technologies. However, the agencies are
not proposing this level of stringency because our assessment is that
these technologies would not be available for production by the 2017
model year. The agencies welcome comments on whether other gasoline
technologies are appropriate to consider for the 2017 model year
standard, or if not, then when would they be appropriate.
(c) Diesel Engines
(i) Baseline Diesel Engine Performance
    EPA and NHTSA developed the baseline heavy-duty diesel engines to
represent a 2010 model year engine compliant with the 0.2 g/bhp-hr
NOX standard for on-highway heavy-duty engines.
    The agencies utilized 2007 through 2011 model year CO2
certification levels from the Heavy-duty FTP cycle as the basis for the
baseline engine CO2 performance. The pre-2010 data are
subsequently adjusted to represent 2010 model year engine maps by using
predefined technologies including SCR and other systems that are being
used in current 2010 production. The engine CO2 results were
then sales weighted within each regulatory subcategory to develop an
industry average 2010 model year reference engine, as shown in Table
III-16. The level of CO2 emissions and fuel consumption of
these engines varies significantly, where the engine with the highest
CO2 emissions is estimated to be 20 percent greater than the
sales weighted average. Details of this analysis are included in draft
RIA Chapter 2.

[GRAPHIC] [TIFF OMITTED] TP30NO10.042

(ii) Diesel Engine Packages
    The diesel engine technology packages for the 2014 model year
include engine friction reduction, improved aftertreatment
effectiveness, improved combustion processes, and low temperature EGR
system optimization. The improvements in parasitic and friction losses
come through piston designs to reduce friction, improved lubrication,
and improved water pump and oil pump designs to reduce parasitic
losses. The aftertreatment improvements are available through lower
backpressure of the systems and optimization of the engine-out
NOX levels. Improvements to the EGR system and air flow
through the intake and exhaust systems, along with turbochargers can
also produce engine efficiency improvements. It should be pointed out
that individual technology improvements are not additive to each other
due to the interaction of technologies. The agencies assessed the
impact of each technology over the Heavy-duty FTP and project an
overall cycle improvement in the 2014 model year of 3 percent for HHD
diesel engines and 5 percent for LHD and MHD diesel engines, as
detailed in draft RIA Chapter <IP_ADDRESS> and <IP_ADDRESS>. EPA used a 100
percent application rate of this technology package to determine the
level of the proposed 2014 MY standards
    Recently, EPA's heavy-duty highway engine program for criteria
pollutants provided new emissions standards for the industry in three
year increments. The heavy-duty engine manufacturer product plans have
fallen into three year cycles to reflect this environment. EPA is
proposing set CO2 emission standards recognizing the
opportunity for technology improvements over this timeframe while
reflecting the typical heavy-duty engine manufacturer product plan
cycles. Thus, the agencies are proposing to establish initial standards
for the 2014 model year and a more stringent standard for heavy-duty
engines beginning in the 2017 model year.
    The 2017 model year technology package for LHD and MHD diesel
engine includes continued development and refinement of the 2014 model
year technology package, in particular the additional improvement to
aftertreatment systems. This package leads to a projected 9 percent
reduction for LHD and MHD diesel engines in the 2017 model year. The
HHD diesel engine technology packages for the 2017 model year include
the continued development of the 2014 model year technology package
plus turbocompounding. A similar approach to evaluating the impact of
individual technologies as taken to develop the overall reduction of
the 2014 model year package was taken with the 2017 model year package.
The Heavy-duty FTP cycle improvements lead to a 5 percent reduction on
the cycle for HHDD, as detailed in draft RIA Chapter <IP_ADDRESS>. The
agencies used a 100 percent application rate of the technology package
to determine the proposed 2017 MY standards. The agencies believe that
bottom cycling technologies are still in the development phase and will
not be ready for production by the 2017 model year.\192\ Therefore,
these technologies were not included in determining the stringency of
the proposed standards. However, we do believe the bottoming cycle
approach represents a significant opportunity to reduce fuel
consumption and GHG emissions in the future. EPA and NHTSA are
therefore both proposing provisions described in Section IV to create
incentives for manufacturers to continue to invest to develop this
technology.
---------------------------------------------------------------------------

    \192\ TIAX noted in their report to the NAS panel that the
engine improvements beyond 2015 model year included in their report
are highly uncertain, though they include waste heat recovery in the
engine package for 2016 through 2020 (page 4-29).
---------------------------------------------------------------------------

    The overall projected improvements in CO2 emissions and
fuel consumption over the baseline are included in Table III-17.
[GRAPHIC] [TIFF OMITTED] TP30NO10.043

(iii) Technology Package Costs
    NHTSA and EPA jointly developed costs associated with the engine
technologies to assess an overall package cost for each regulatory
category. Our engine cost estimates for diesel engines used in
vocational vehicles include a separate analysis of the incremental part
costs, research and development activities, and additional equipment,
such as emissions equipment to measure N2O emissions. Our
general approach used elsewhere in this proposal (for HD pickup trucks,
gasoline engines, Class 7 and 8 tractors, and Class 2b-8 vocational
vehicles) estimates a direct manufacturing cost for a part and marks it
up based on a factor to account for indirect costs. See also 75 FR
25376. We believe that approach is

appropriate when compliance with proposed standards is achieved
generally by installing new parts and systems purchased from a
supplier. In such a case, the supplier is conducting the bulk of the
research and development on the new parts and systems and including
those costs in the purchase price paid by the original equipment
manufacturer. The indirect costs incurred by the original equipment
manufacturer need not include much cost to cover research and
development since the bulk of that effort is already done. For the MHD
and HHD diesel engine segment, however, the agencies believe we can
make a more accurate estimate of technology cost using this alternate
approach because the primary cost is not expected to be the purchase of
parts or systems from suppliers or even the production of the parts and
systems, but rather the development of the new technology by the
original equipment manufacturer itself. Therefore, the agencies believe
it more accurate to directly estimate the indirect costs. EPA commonly
uses this approach in cases where significant investments in research
and development can lead to an emission control approach that requires
no new hardware. For example, combustion optimization may significantly
reduce emissions and cost a manufacturer millions of dollars to develop
but will lead to an engine that is no more expensive to produce. Using
a bill of materials approach would suggest that the cost of the
emissions control was zero reflecting no new hardware and ignoring the
millions of dollars spent to develop the improved combustion system.
Details of the cost analysis are included in the draft RIA Chapter 2.
To reiterate, we have used this different approach because the MHD and
HHD diesel engines are expected to comply in large part via technology
changes that are not reflected in new hardware but rather knowledge
gained through laboratory and real world testing that allows for
improvements in control system calibrations--changes that are more
difficult to reflect through direct costs with indirect cost
multipliers.
    The agencies developed the engineering costs for the research and
development of diesel engines with lower fuel consumption and
CO2 emissions. The aggregate costs for engineering hours,
technician support, dynamometer cell time, and fabrication of prototype
parts are estimated at $6,750,000 per manufacturer per year over the
five years covering 2012 through 2016. In aggregate, this averages out
to $280 per engine during 2012 through 2016 using a very rough annual
sales value of 600,000 LHD, MHD and HHD diesel engines. The agencies
also are estimating costs of $100,000 per engine manufacturer per
engine class (LHD, MHD and HHD diesel) to cover the cost of purchasing
photo-acoustic measurement equipment for two engine test cells. This
would be a one-time cost incurred in the year prior to implementation
of the standard (i.e., the cost would be incurred in 2013). In
aggregate, this averages out to $4 per engine in 2013 using a very
rough annual sales value of 600,000 LHD, MHD and HHD diesel engines.
    EPA also developed the incremental piece cost for the components to
meet each of the 2014 and 2017 standards. These costs shown in Table
III-18 which include a low complexity ICM of 1.11; time based learning
is considered applicable to each technology.

[GRAPHIC] [TIFF OMITTED] TP30NO10.044

    The overall costs for each diesel engine regulatory subcategory are
included in Table III-19.
[GRAPHIC] [TIFF OMITTED] TP30NO10.045

(iv) Reasonableness of the Proposed Standards
    The proposed engine standards appear to be reasonable and
consistent with the agencies' respective authorities. With respect to
the 2014 and 2017 MY standards, all of the technologies on which the
standards have already been demonstrated and their effectiveness is
well documented. The proposal reflects a 100 percent application rate
for these technologies. The costs of adding these technologies remain
modest across the various engine classes as shown in Table III-19. Use
of these technologies would add only a small amount to the cost of the
vehicle,\193\ and the associated reductions are highly cost effective,
an estimated $30 per ton of CO2eq per vehicle.\194\ This is
even more cost effective than the estimated cost effectiveness for
CO2eq removal and fuel economy improvement under the light-
duty vehicle rule, already considered by

the agencies to be a highly cost effective reduction.\195\ Accordingly,
EPA and NHTSA view these standards as reflecting an appropriate balance
of the various statutory factors under section 202(a) of the CAA and
under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
---------------------------------------------------------------------------

    \193\ Sample 2010 MY vocational vehicles range in price between
$40,000 for a Class 4 work truck to approximately $200,000 for a
Class 8 refuse hauler. See pages 16-17 of ICF's ``Investigation of
Costs for Strategies to Reduce Greenhouse Gas Emissions for Heavy-
Duty On-Road Vehicles.'' July 2010.
    \194\ See Vocational Vehicle CO2 savings and
technology costs for Alternative 2 in Section IX.B.
    \195\ The light-duty rule had a cost per ton of $50 when
considering the vehicle program costs only and a cost of -$210 per
ton considering the vehicle program costs along with fuel savings in
2030. See 75 FR 25515, Table III.H.3-1.
---------------------------------------------------------------------------

(v) Alternative Diesel Engine Standards Considered
    Other than the specific proposal related to legacy engine products,
the agencies are not proposing diesel engine standards less stringent
than the proposed standards because the agencies believe these
standards are highly cost effective. We welcome comments supplemented
with data on each aspect of this determination most importantly on
individual engine technology efficacy to reduce fuel consumption and
GHGs as well as our estimates of individual technology cost and lead-
time.
    The agencies considered proposing diesel engine standards which are
more stringent reflecting the inclusion of other advanced technologies.
However, the agencies are not proposing this level of stringency
because our assessment is that these technologies would not be
available for production by the 2017 model year. The agencies welcome
comments on whether other diesel engine technologies are appropriate to
consider for the 2017 model year standard, or if not, then when would
they be appropriate.

IV. Proposed Regulatory Flexibility Provisions

    This section discusses proposed flexibility provisions intended to
achieve the goals of the overall program while providing alternate
pathways to achieve those goals. The primary flexibility provisions the
agencies are proposing for combination tractors and vocational vehicles
relate to a program of Averaging, Banking, and Trading of credits that
EPA and NHTSA are proposing in association with each agency's
respective CO2 and fuel consumption standards (see Section
II above). For HD pickups and vans, the primary flexibility provision
is the fleet averaging program patterned after the LD GHG and CAFE
rule. EPA is not proposing an emission credit program associated with
the proposed N2O, CH4, or HFC standards. This
section also describes proposed flexibility provisions that would apply
in specific circumstances.

A. Averaging, Banking, and Trading Program

    Averaging, Banking, and Trading (ABT) of emissions credits have
been an important part of many EPA mobile source programs under CAA
Title II, including engine and vehicle programs. ABT programs can be
important because they can help to address many issues of technological
feasibility and lead-time, as well as considerations of cost. ABT
programs are not just add-on provisions included to help reduce costs,
but are usually an integral part of the standard setting itself. An ABT
program is important because it provides manufacturers flexibilities
that assist the development and implementation of new technologies
efficiently and therefore enables new technologies to be implemented at
a more progressive pace than without ABT. A well-designed ABT program
can provide important environmental benefits and at the same time
increase flexibility for and reduce costs to the regulated industry.
    Section II above describes EPA's proposed GHG emission standards
and NHTSA's proposed fuel consumption standards. For each of these
respective sets of standards, the agencies are also proposing ABT
provisions consistent with each agency's statutory authority. The
agencies have worked closely together to design these proposed
provisions to be essentially identical to each other in form and
function. Because of this fundamental similarity, the remainder of this
section refers to these provisions collectively as ``the ABT program''
except where agency-specific distinctions are required.
    As discussed in detail below, the structure of this proposed GHG
ABT program for HD engines is based closely on earlier ABT programs for
HD engines; the proposed program for HD pickups and vans is built on
the existing light-duty GHG program flexibility provisions; and we
propose first-time ABT provisions for combination tractors and
vocational vehicles that are as consistent as possible with our other
HD vehicle regulations. The flexibility provisions associated with this
new regulatory category are intended to systematically build upon the
structure of the existing programs.
    As an overview, ``averaging'' means the exchange of emission
credits between engine families or truck families within a given
manufacturer's regulatory subcategory. For example within each
regulatory subcategory, engine manufacturers divide their product line
into ``engine families'' that are comprised of engines expected to have
similar emission characteristics throughout their useful life.
Averaging allows a manufacturer to certify one or more engine families
within the same regulatory subcategory at levels above the applicable
emission standard. The increased emissions over the standard would need
to be offset by one or more engine families within that manufacturer's
regulatory subcategory that are certified below the same emission
standard, such that the average emissions from all the manufacturer's
engine families, weighted by engine power, regulatory useful life, and
production volume, are at or below the level of the emission standard.
(The inclusion of engine power, useful life, and production volume in
the averaging calculations allows the emissions credits or debits to be
expressed in total emissions over the useful life of the credit-using
or generating engine sales.) Total credits for each regulatory
subcategory within each model year are determined by summing together
the credits calculated for every engine family within that specific
regulatory subcategory.
    ``Banking'' means the retention of emission credits by the
manufacturer for use in future model year averaging or trading.
``Trading'' means the exchange of emission credits between
manufacturers, which can then be used for averaging purposes, banked
for future use, or traded to another manufacturer.
    In the current HD program for criteria pollutants, manufacturers
are restricted to only averaging, banking and trading credits generated
within a regulatory subcategory, and we are proposing to continue this
restriction in the GHG and fuel consumption program. However, the
agencies are evaluating--and therefore request comment on--potential
alternative approaches in which fewer restrictions are placed on the
use of credits for averaging, banking, and trading. Particularly, the
agencies request comment on removing prohibitions on averaging and
trading between some or all regulatory categories in this proposal, and
on removing restrictions between some or all regulatory subcategories
that are within the same regulatory category (e.g., allowing trading of
credits between class 7 day cabs and class 8 sleeper cabs).
    In the past, we have followed the practice of allowing averaging
and trading between like products because we have recognized that the
estimation of emissions credits is not an absolutely precise process,
and actual emissions reductions or increases ``in use'' would vary due
to differences in vehicle duty cycles, maintenance practices and any

number of other factors. By restricting credit averaging and trading to
only allow averaging and trading between like products, the agencies
gain some degree of assurance that the operation and use of the
vehicles generating credits and consuming credits would be similar. The
agencies also note that some industry participants have expressed
concern that allowing credit averaging, banking and trading across
different products may create an unlevel playing field for the
regulated industry. Specifically, engine and truck manufacturers have
commonly expressed to us a concern that some manufacturers with a wide
range of product offerings spanning a number of regulatory categories
would be able to use the ABT program provisions to generate credits in
regulatory class markets where they face less competition and then use
those credits to compete unfairly in other regulatory categories where
they face greater competition. Finally, in the context of regulating
criteria pollutants that can have localized and regional impacts, we
have been concerned about the unintended consequence of unrestricted
credit averaging or trading on local or regional concentrations of
pollutants, whereby emissions reductions might become concentrated in
some localities or regions to the detriment of other areas needing the
reductions.
    The agencies are evaluating the possibility of placing fewer
restrictions on averaging and trading because increasing the
flexibility offered to manufacturers to average, bank, and trade
credits across regulatory subcategories and categories could
potentially significantly reduce the overall cost of the program.
Specifically, we request comment on the extent to which a difference--
or unexpected difference--in the marginal costs of compliance per
gallon of fuel saved or ton of GHG reduced across categories or
subcategories, combined with provision for averaging and trading across
categories and subcategories, can allow manufacturers to achieve the
same overall reduction in fuel use and emissions at lower cost.
    While trading restrictions in the context of past EPA rulemakings
have been motivated in part by the local or regional nature of the
pollutant being regulated, in this instance, opportunities for greater
flexibility may exist in light of the fact that greenhouse gases are a
global pollutant for which local consequences are related to global,
not local or regional atmospheric concentrations. However, trading
ratios may need to be established for averaging and trading across
categories, and potentially across subcategories, to ensure that
averaging and trading across categories and subcategories does not lead
to a net increase in emissions or fuel use in light of differences in
vehicle use patterns across categories and subcategories. Further, it
is possible to design trading ratios that ensure a net reduction in
emissions and fuel use as a result of averaging and trading. The
agencies also request comment on the potential additional savings in
costs (beyond those already calculated in this proposal) due to
increased flexibility in averaging and trading provisions, on how such
averaging and trading flexibilities could be designed to ensure
environmental neutrality, on whether trading ratios should be designed
to achieve a net reduction in emissions and fuel use as a result of
trading, on the concerns that have been raised by some regarding
impacts on intra-industry competition, and on how to address the above
identified concerns about dissimilarities in operation and use of
vehicles.
(1) Heavy-duty Engines
    For the heavy-duty engine ABT program, EPA and NHTSA are proposing
to use EPA's existing regulatory engine classifications as the
subcategory designations under this engine ABT program. The proposed
regulations use the term ``averaging set'' which aligns with the
regulatory subcategories or regulatory class in the context that they
define the same set of products. The existing diesel engine
subcategories are light-heavy-duty (LHD), medium-heavy-duty (MHD), and
heavy-heavy-duty (HHD). LHD diesel engines are primarily used in
vehicles with a GVWR below 19,500 lb. Vehicle body types in this group
might include any heavy-duty vehicle built for a light-duty truck
chassis, van trucks, multi-stop vans, recreational vehicles, and some
single axle straight trucks. Vehicles containing these engines would
normally include personal transportation, light-load commercial hauling
and delivery, passenger service, agriculture, and construction
applications.
    MHD diesel engines are normally used in vehicles whose GVWR varies
from 19,501-33,000 lb. Vehicles containing these engines typically
include school buses, tandem axle straight trucks, city tractors, and a
variety of special purpose vehicles such as small dump trucks, and
trash compactor trucks. Normally the applications for these vehicles
would include commercial short haul and intra-city delivery and pickup.
    HHD diesel engines are intended for use in vehicles which exceed
33,000 lb GVWR. Vehicles containing engines of this type are normally
tractors, trucks, and buses used in inter-city, long-haul applications.
HHD engines are generally regarded as designed for rebuild and have a
long useful life period. LHD and MHD engines are typically not intended
for rebuild, though some MHD engines are designed for rebuild, and have
a shorter useful life.
    Gasoline or spark ignited engines for heavy-duty vehicles fall into
one separate regulatory subcategory. These engines are typically
installed in trucks with a GVWR ranging from 8,500 pounds to 19,500
pounds although they can be installed into trucks of any size.
    The compliance program we are proposing would adopt a slightly
different method for generating a manufacturer's CO2
emission and fuel consumption credit or deficit. The manufacturer's
certification test result would serve as the basis for the generation
of the manufacturer's Family Certification Level (FCL). The FCL is a
new term we propose for this program to differentiate the purpose of
this credit generation technique from the Family Emission Limit (FEL)
previously used in a similar context in other EPA rules. A manufacturer
could define its FCL at any level at or above the certification test
result. Credits for the ABT program would be generated when the FCL is
compared to its CO2 and fuel consumption standard, as
discussed in Section II. The credits earned in this section would be
restricted to the engine subcategory and not tradable with other engine
subcategories consistent with EPA's past practice for ABT programs as
described previously. Credit calculation for the proposed Engine ABT
and program would be generated, either positive or negative, according
to Equation IV-1 and Equation IV-2:

Equation IV-1: Proposed HD Engine CO2 credit (deficit)

HD Engine CO2 credit (deficit) (metric tons) = (Std-FCL) x
(CF) x (Volume) x (UL) x (10-6)

Where:

Std = the standard associated with the specific engine regulatory
subcategory (g/bhp-hr)
FCL = Family Certification Level for the engine family
CF = a transient cycle conversion factor in bhp-hr/mile which is the
integrated total cycle brake horsepower-hour divided by the
equivalent mileage of the Heavy-duty FTP cycle. For gasoline heavy-
duty engines, the equivalent mileage is 6.3 miles. For diesel heavy-
duty engines, the equivalent mileage is 6.5 miles. The agencies are
proposing that the CF

determined by the Heavy-duty FTP cycle be used for engines
certifying to the SET standard.
Volume = (projected or actual) production volume of the engine
family
UL = useful life of the engine (miles)
10-6 converts the grams of CO2 to metric tons

Equation IV-2: Proposed HD Engine Fuel Consumption credit (deficit) in
gallons

HD Engine Fuel Consumption credit (deficit) (gallons) = (Std - FCL) x
(CF) x (Volume) x (UL) x 102

Where:

Std = the standard associated with the specific engine regulatory
subcategory (gallon/100 bhp-hr)
FCL = Family Certification Level for the engine family (gallon/100
bhp-hr)
CF = a transient cycle conversion factor in bhp-hr/mile which is the
integrated total cycle brake horsepower-hour divided by the
equivalent mileage of the Heavy-duty FTP cycle. For gasoline heavy-
duty engines, the equivalent mileage is 6.3 miles. For diesel heavy-
duty engines, the equivalent mileage is 6.5 miles. The agencies are
proposing that the CF determined by the Heavy-duty FTP cycle be used
for engines certifying to the SET standard.
Volume = (projected or actual) production volume of the engine
family
UL = useful life of the engine (miles)
102 = conversion to gallons

    To calculate credits or deficits, manufacturers would determine an
FCL for each engine family they have designated for the ABT program. We
have defined engine families in 40 CFR 1036.230 and manufacturers may
designate how to group their engines for certification and compliance
purposes. The FCL may be above (negative) or below (positive) its
standard and would be used to establish the CO2 credits
earned (or used) in Equation IV-1. The proposed CO2 and fuel
consumption standards are associated with specific regulatory
subcategories as described in Sections II.B and II.D (gasoline, light
heavy-duty diesel, medium heavy-duty diesel, and heavy heavy-duty
diesel). In the ABT program, engines certified with an FCL below the
standard generate positive credits (g/bhp-hr and gal/100 bhp-hr). As
discussed in Section II.B and II.D, engine families for which a
manufacturer elects to use the alternative standard of a percent
reduction from the engine family's 2011 MY baseline would be ineligible
to either generate or use credits.
    The volume used in Equations IV-1 and IV-2 refers to the total
number of eligible engines sold per family participating in the ABT
program during that model year. The useful life values in Equation IV-1
are proposed to be the same as the regulatory classifications
previously used for the engine subcategories. Thus, the agencies
propose that for LHD diesel engines and gasoline engines, the useful
life values would be 110,000 miles; for MHD diesel engines, 185,000
miles; and for HHD diesel engines, 435,000 miles.
    As noted above, credits generated by engine manufacturers under
this ABT program would be restricted for use only within their engine
subcategory based on performance against the standard as defined in
Section II.B and II.D. Thus, LHD diesel engine manufacturers could only
use their LHD diesel engine credits for averaging, banking and trading
with LHD diesel engines, not with MHD diesel or HHD diesel engines.
This limitation is consistent with ABT provisions in EPA's existing
criteria pollutant program for engines and would help assure that
credits earned to reduce GHG emissions and fuel consumption would be
used to limit their growth and not circumvent the intent of the
regulations. EPA and NHTSA are concerned that extending the use of
credits beyond these designated subcategories could also create an
advantage for large or integrated manufacturers that currently does not
exist in the market. A manufacturer that produces both engines and
heavy-duty highway vehicles could mix credits across engine and vehicle
categories, shifting the burden between the sectors, not equally shared
in either sector, to gain an advantage over competitors that are not
integrated. Similarly, large volume manufacturers of engines can shift
credits between heavy heavy-duty diesel engines and light heavy-duty
diesel engines to gain an advantage in one subcategory over other
manufacturers that may not have multiple engine offerings over several
regulatory engine subcategories. Finally, relating credits between
subcategories of engines could be problematic because of the
differences in regulatory useful lives. The agencies want to avoid
having credits from longer useful life categories flooding shorter
useful life categories, adversely impacting compliance with the
proposed CO2 and fuel consumption standards in the shorter
useful life category. The agencies would like to ensure that this
regulation reduces CO2 emissions and improves fuel
consumption in each engine subcategory while not interfering with the
ability of manufacturers to engage in free trade and competition.
Limiting credit ABT to the regulatory subcategory and not between
engines and vehicles would help prevent a competitive advantage due
solely to the regulatory structure. Although the reasons for
restricting engine credits to the same engine subcategory seem
persuasive to us, the agencies welcome comments on the extension of
credits beyond the limitations we are proposing.\196\
---------------------------------------------------------------------------

    \196\ These concerns were not present in the 2012-2016 MY light-
duty vehicle rule, where most manufacturers offer diverse product
lines and there is not as much disparity among useful lives. That
rule consequently does not restrict CO2 credit trading
opportunities between light-duty vehicle sectors.
---------------------------------------------------------------------------

    Under previous ABT programs for other rulemakings, EPA has allowed
manufacturers to carry forward deficits from engines for a set period
of time. The agencies are proposing to allow manufacturers of engines
to carry forward deficits for up to three years before reconciling the
short-fall. However, manufacturers would need to use credits, once
credits are generated, to offset a shortfall before credits may be
banked or traded for additional model years. This restriction reduces
the chance of manufacturers passing forward deficits before reconciling
shortfalls and exhausting those credits before reconciling past
deficits. We will accept comments on alternative approaches for
reconciling deficit shortfalls in the engine category.
    As described in Section II above, EPA is proposing that a
manufacturer may choose to comply with the N2O or
CH4 cap standards using CO2 credits. A
manufacturer choosing this option would convert its N2O or
CH4 test results into CO2eq to determine the
amount of CO2 credits required. This approach recognizes the
inter-correlation of these elements in impacting global warming. This
option does not apply to the NHTSA fuel consumption program. To account
for the different global warming potential of these GHGs, EPA proposes
that manufacturers determine the amount of CO2 credits
required by multiplying the shortfall by the GWP. For example, a
manufacturer would use 25 kg of positive CO2 credits to
offset 1 kg of negative CH4 credits. Or a manufacturer would
use 298 kg of positive CO2 credits to offset 1 kg of
negative N2O credits. In general we do not expect
manufacturers to use this provision. However, we are providing this
alternative as a flexibility in the event an engine manufacturer has
trouble meeting the CH4 and/or N2O emission caps.
There are not ABT credits for performance that falls below the
CH4 or N2O caps.
    Additional flexibilities for engines are discussed later in Section
IV(B).

(2) Class 7 and 8 Combination Tractors
    In addition to the engine ABT program described above, the agencies
are also proposing a vehicle ABT program to facilitate reductions in
GHG emissions and fuel consumption based on combination tractor design
changes and improvements. For this category, the structure of the
proposed ABT program should create incentives for tractor manufacturers
to advance new, clean technologies, or existing technologies earlier
than they would otherwise.
    As explained in Sections II and III above, combination tractor
manufacturers are divided into nine regulatory subcategories under
these proposed rules, as shown in the following table:
[GRAPHIC] [TIFF OMITTED] TP30NO10.046

    The proposed regulations use the term ``averaging set'' which
aligns with the regulatory subcategories or regulatory class in the
context that they define the same set of products. Vehicle credits for
tractors in these classifications would be earned on a g/ton-mile or
gallon/1,000 ton-mile basis for tractors which are below the standard.
Credits generated within regulatory subcategories would be tradable
between truck manufacturers in that specific regulatory subcategory
only. Credits would not be fungible between engine and vehicle
regulatory categories. This is similar to the restrictions we have
described above for engine manufacturers.
    This limitation would help ensure that credits earned to reduce GHG
emissions and fuel consumption would be used to limit their growth and
not circumvent the intent of our regulation. As with engine credits, we
are concerned that extending the use of credits to be transferred or
traded to other classes may create an advantage for large or integrated
manufacturers that currently does not exist in the market. We would
like to ensure that this regulation reduces the emission of
CO2 and fuel consumption but does not effectively penalize
non-integrated manufacturers and those with limited participation in
the market. ABT provides manufacturers the flexilibility to deal with
unforeseen shifts in the marketplace that affect sales volumes. This
structure allows for a straightforward compliance program for each
sector independently with aspects that are also independently
quantifiable and verifiable. Credit calculation for the proposed Class
7 and 8 tractor CO2 and fuel consumption credits would be
generated, either positive or negative, according to Equation IV-3 and
Equation IV-4:

Equation IV-3: The Proposed Class 7 and 8 Tractor CO2 Credit
(Deficit)

Class 7 and 8 Tractor CO2 credit (deficit)(metric tons) =
(Std-FEL) x (Payload Tons) x (Volume) x (UL) x (10-6)

Where:

Std = the standard associated with the specific tractor regulatory
class (g/ton-mile)
Payload tons = the prescribed payload for each class in tons (12.5
tons for Class 7 and 19 tons for Class 8)
FEL = Family Emission Limit for the tractor family which is equal to
the output from GEM (g/ton-mile)
Volume = (projected or actual) production volume of the tractor
family
UL = useful life of the tractor (435,000 miles for Class 8 and
185,000 miles for Class 7)
10-6 converts the grams of CO2 to metric tons

Equation IV-4: Proposed Class 7 and 8 Tractor Fuel Consumption credit
(deficit) in gallons:

Class 7 and 8 Tractor Fuel Consumption credit (deficit)(gallons) =
(Std-FEL) x (Payload Tons) x (Volume) x (UL) x 103

Where:

Std = the standard associated with the specific tractor regulatory
subcategory (gallons/1,000 ton-mile)
Payload tons = the prescribed payload for each class in tons (12.5
tons for Class 7 and 19 tons for Class 8)
FEL = Family Emission Limit for the tractor family (gallons/1,000
ton-mile)
Volume = (projected or actual) production volume of the tractor
family
UL = useful life of the tractor (435,000 miles for Class 8 and
185,000 miles for Class 7)
103 = conversion to gallons

    Similar to the proposed Heavy-duty Engine ABT program described in
the previous section, we are proposing that tractor manufacturers would
be able to carry forward credit deficits from their regulatory
subcategories for three years before reconciling the shortfall.
However, just as in the engine category, manufacturers would need to
use credits once those credits have been generated to offset a
shortfall before those credits can be banked or traded for additional
model years. This restriction reduces the chance of tractor