changing that distribution will change the total number of on-road
fatalities under each regulatory alternative. Similarly, the dynamic
fleet share model captures the changes in the fleet's composition of
cars and trucks. As cars and trucks have different fatality rates,
differences in fleet composition across the alternatives will affect
fatalities.
    At the highest level, the agency calculates the impact of the sales
and scrappage effects by multiplying the VMT of a vehicle by the
fatality risk of that vehicle. For this analysis, calculating VMT is
rather simple: The agency uses the distribution of miles calculated in
TSD Chapter 4.3. The trickier aspect of the analysis is creating
fatality rate coefficients. The fatality risk measures the likelihood
that a vehicle will be involved in a fatal accident per mile driven.
The agency calculates the fatality risk of a vehicle based on the
vehicle's model year, age, and style, while controlling for factors
which are

independent of the intrinsic nature of the vehicle, such as behavioral
characteristics. Using this same approach, the agency designed separate
models for fatalities, non-fatal injuries, and property damaged
vehicles.
    The fatality risk projections described above capture the
historical evolution of safety. Given that modern technologies are
proliferating faster than ever and offer greater safety benefits than
traditional safety improvements, the agency augmented the fatality risk
projections with knowledge about forthcoming safety improvements. The
agency applied detailed empirical estimates of the market uptake and
improving effectiveness of crash avoidance technologies to estimate
their effect on the fleet-wide fatality rate, including explicitly
incorporating both the direct effect of those technologies on the crash
involvement rates of new vehicles equipped with them, as well as the
``spillover'' effect of those technologies on improving the safety of
occupants of vehicles that are not equipped with these
technologies.\742\
---------------------------------------------------------------------------

    \742\ These technologies included Forward Collision Warning
(FCW), Crash Imminent Braking (CIB), Dynamic Brake Support (DBS),
Pedestrian AEB (PAEB), Rear Automatic Braking, Semi-automatic
Headlamp Beam Switching, Lane Departure Warning (LDW), Lane Keep
Assist (LKA), and Blind Spot Detection (BSD). While Autonomous
vehicles offer the possibility of significantly reducing or
eventually even eliminating the effect of human error in crash
causation, a contributing factor in roughly 94 percent of all
crashes, there is insufficient information and certainty regarding
autonomous vehicles eventual impact to include them in this
analysis.
---------------------------------------------------------------------------

    The agency's approach to measuring these impacts is to derive
effectiveness rates for these advanced crash-avoidance technologies
from safety technology literature. The agency then applies these
effectiveness rates to specific crash target populations for which the
crash avoidance technology is designed to mitigate and adjusted to
reflect the current pace of adoption of the technology, including the
public commitment by manufactures to install these technologies. The
products of these factors, combined across all 6 advanced technologies,
produce a fatality rate reduction percentage that is applied to the
fatality rate trend model discussed above, which projects both vehicle
and non-vehicle safety trends. The combined model produces a projection
of impacts of changes in vehicle safety technology as well as
behavioral and infrastructural trends. A much more detailed discussion
of the methods and inputs used to make these projections of safety
impacts from advanced technologies is included in Chapter 7 of the
accompanying TSD.
    Securing America's Future Energy commented that our analysis should
account for improvements in safety over time as crash-avoidance
technologies become more prevalent in the vehicle fleet.\743\ We agree
with this approach, and have accounted for this expected effect in this
and the previous rulemaking by projecting baseline fatality and injury
rates to decrease as a function of the adoption of crash-avoidance
technologies.
---------------------------------------------------------------------------

    \743\ Securing America's Future Energy, Docket No. NHTSA-2021-
0053-1513-A1, at 14-15.
---------------------------------------------------------------------------

4. Rebound Effect Impacts
    The additional VMT resulting from the rebound effect is accompanied
by more exposure to risk, though rebound miles are not imposed on
consumers by regulation. They are a freely chosen activity resulting
from reduced vehicle operational costs and reflect the perceived
benefit of additional travel. Consumers who choose to drive more have
concluded that the utility of additional driving exceeds the additional
costs for doing so, including the crash risk that they perceive
additional driving involves. As such, we believe a large portion of the
safety risks associated with additional driving are offset by the
benefits drivers gain from added driving. The level of risk
internalized by drivers is uncertain. This analysis assumes that
consumers internalize 90 percent of this risk, which mostly offsets the
societal impact of any added fatalities from this voluntary consumer
choice. A more detailed discussion of the rebound effect is contained
in TSD Chapter 7.4.
5. Value of Safety Impacts
    Fatalities, nonfatal injuries, and property damage crashes are
valued as a societal cost within the CAFE Model's cost and benefit
accounting. Their value is based on the comprehensive value of a
fatality, which includes lost quality of life and is quantified in the
value of a statistical life (VSL) as well as economic consequences such
as medical and emergency care, insurance administrative costs, legal
costs, and other economic impacts not captured in the VSL alone. These
values were derived from data in Blincoe et al. (2015), adjusted to
2018 dollars, and updated to reflect the official DOT guidance on the
value of a statistical life. Nonfatal injury costs, which differ by
severity, were weighted according to the relative incidence of injuries
across the Abbreviated Injury Scale (AIS). To determine this incidence,
the agency applied a KABCO/MAIS translator to GES KABCO based injury
counts from 2010 through 2015. This produced the MAIS based injury
profile. This profile was used to weight nonfatal injury unit costs
derived from Blincoe et al., adjusted to 2018 economics and updated to
reflect the official DOT guidance on the value of a statistical life.
Property-damaged vehicle costs were also taken from Blincoe et al. and
adjusted to 2018 economics. VSL does not affect property damage. This
gives societal values of $10.8 million for each fatality, $132,000 for
each nonfatal injury, and $7,100 for each property damaged vehicle.
    Multiple commenters proposed that we should focus on how the policy
alternatives affect fatality rates rather than total fatalities,
reflecting concerns that fatalities occurring in incremental travel due
to improved fuel economy (i.e., the rebound effect) should not be
represented as a safety impact associated with a given change in fuel
economy standards.\744\ As discussed above, we agree that consumers who
choose to drive more are doing so because they value the benefit of
increased driving more than the associated costs. We also agree that
effects on the fatality rate is a useful method for assessing a policy
change. However, the numerical projection of changes to fatalities is
needed for the purpose of conducting a cost-benefit analysis and
Circular A-4. As summarized above, we have already acknowledged the
differential roles of direct changes in safety (i.e., changes in
fatality rates that are independent of the volume of incremental VMT)
and changes in safety outcomes (i.e., changes in fatalities influenced
by incremental VMT) by offsetting 90 percent of the safety costs
associated with rebound VMT.
---------------------------------------------------------------------------

    \744\ Office of the California Attorney General, et al., Docket
No. NHTSA-2021-0053-1499, at 2-3; CBD et al., Docket No. NHTSA-2021-
0053-1572, at 3.
    \745\ Walter Kreucher, Docket No. NHTSA-2021-0053-0015, at 9.
---------------------------------------------------------------------------

    Walter Kreucher commented broadly on EV battery safety, mentioning
vehicle recalls due to battery fire risks and Tesla's BEV fire
mitigation guidelines.\745\ Mr. Kreucher did not address whether he
felt this was an issue that warranted inclusion in our analysis, nor
did he offer any empirical research concerning the potential fire risk
of BEVs. Conversely, Tesla commented that BEVs are safer than their ICE
counterparts and will improve safety because of ``[t]he basic
characteristics of EV design, including small or no motors in front,
large crush space for energy absorption, lack of combustible fuel, and
low centered

batteries that result in extremely low center of gravity and nearly
perfect weight distribution.'' \746\ Tesla did not provide any
empirical or engineering research to support its claim.
---------------------------------------------------------------------------

    \746\ Tesla, Docket No. NHTSA-2021-0053-1480-A1, at 10.
---------------------------------------------------------------------------

    While it may be true that the safety risks associated with BEVs and
ICE vehicles are different, at this point we lack empirical evidence in
the record that one technology is safer. Furthermore, there is an
insufficient sample size of crashes involving BEVs in our database to
identify differences in safety effects. As such, we treat the different
powertrain technologies equally for the purposes of CAFE. We recognize
that commenters' concerns are relevant and note that NHTSA is
establishing a Battery Safety Initiative.\747\ This effort will
continue to collect and analyze data, perform research, develop
standards and guidelines, and work with other Federal partners to
investigate and understand causes of fire due to safety defect. NHTSA
is conducting research on high-voltage battery safety, including
expanded research into battery prognostics and diagnostics systems that
can detect issues before fires begin. At the same time, NHTSA is
working closely with industry, EMS groups, and other government
agencies to enhance battery safety during a crash and develop best
practices for emergency responders.
---------------------------------------------------------------------------

    \747\ https://www.nhtsa.gov/battery-safety-initiative#research.
---------------------------------------------------------------------------

6. Impacts of the Final Standards on Safety
    Table III-40 through Table III-42 summarize the projected impacts
of the standards on safety broken down by factor. These impacts are
summarized over the lifetimes of MY 1981 through 2029 vehicles for all
light passenger vehicles (including passenger cars and light trucks).
Economic impacts are shown separately under both 3 and 7 percent
discount rates. Model years 1981 through 2029 were examined because
they represent the model years that might be affected by shifts in
fleet composition due to the impact of higher new vehicle prices on
sales of new vehicles and retention of older vehicles. Earlier years
will be affected by slower scrappage rates and we expect the impacts of
these standards will be fully realized in vehicle designs by MY 2029.
We note again that the results described below for mass changes are
based on a statistical analysis of the relationship between changes in
mass and safety that could not be estimated with sufficient precision
to distinguish it from zero at standard confidence levels used in the
scientific literature. As such, the fatality numbers presented below
could in reality be zero, or negative.
BILLING CODE 4910-59-P

[GRAPHIC] [TIFF OMITTED] TR02MY22.108

[GRAPHIC] [TIFF OMITTED] TR02MY22.109

[GRAPHIC] [TIFF OMITTED] TR02MY22.110

    As seen in the tables, all three safety factors--changes in mass,
fleet turnover, and rebound--increase as the standards become more
stringent. As expected, rebound fatalities grow at a constant rate as
vehicles become more fuel efficient and are used more frequently. Mass
reduction has a relatively minimal impact on safety. This may point to
the fleet becoming more homogeneous and hence less mass disparate in
crashes, or the use of new materials in vehicle construction.
Alternatively, the model may be capturing that there is little room for
more mass reductions in particular models. The slowing of fleet
turnover due to higher vehicle prices has the largest impact of the
three factors on fatalities.
    FRIA Chapter 5.6 discusses the results of the analysis in more
detail and FRIA Chapter 5.7 provides an overview of sensitivity
analyses performed to isolate the uncertainty parameters of each of the
three safety impacts.

IV. Regulatory Alternatives Considered in This Final Rule

A. Basis for Alternatives Considered

    Agencies typically consider regulatory alternatives as a way of
evaluating the comparative effects of different potential ways of
accomplishing their desired goal. NEPA requires agencies to compare the
potential environmental impacts of their actions to those of a
reasonable range of alternatives. Executive Orders 12866 and 13563, as
well as OMB Circular A-4, also request that agencies to evaluate
regulatory alternatives in their rulemaking analyses.
    Alternatives analysis begins with a ``No-Action'' Alternative,
typically described as what would occur in the absence of any
regulatory action. This notice includes a No-Action Alternative,
described below, and four ``action alternatives.'' The new standards
may, in places, be referred to as the ``Preferred Alternative,'' which
is NEPA parlance, but NHTSA intends ``new standards,'' ``final
standards,'' and ``Preferred Alternative'' to be used interchangeably
for purposes of this rulemaking.
    Regulations regarding implementation of NEPA require agencies to
``rigorously explore and objectively evaluate all reasonable
alternatives, and for alternatives which were eliminated from detailed
study, briefly discuss the reasons for their having been eliminated.''
This does not amount to a requirement that agencies evaluate the widest
conceivable spectrum of alternatives. Rather, the range of alternatives
must be reasonable and consistent with the purpose and need of the
action.
    The different regulatory alternatives are defined in terms of
percent-increases in CAFE stringency from year to year. Readers should
recognize that those year-over-year changes in stringency are not
measured in terms of mile per gallon differences (as in, 1 percent more
stringent than 30 miles per gallon in one year equals 30.3 miles per
gallon in the following year), but rather in terms of shifts in the
footprint functions that form the basis for the actual CAFE standards
(as in, on a gallon per mile basis, the CAFE standards change by a
given percentage from one model year to the next). The rate of change
can be the same or different from year to year, and the rate of change
can be different for cars and for trucks. For this final rule, NHTSA
believes that the alternatives considered here represent a reasonable
range of possible final agency actions.

B. Regulatory Alternatives and Final CAFE Standards for MYs 2024-2026

    The regulatory alternatives considered by the agency are presented
here as the percent-increases-per-year that they represent. The
sections that follow will present the alternatives as the literal
coefficients which define standards curves increasing at the given
percentage rates and will also further explain the basis for the
alternatives selected.
[GRAPHIC] [TIFF OMITTED] TR02MY22.111

    As for past rulemaking analyses, NHTSA has analyzed each of the
regulatory alternatives in a manner that estimates manufacturers'
potential application of technology in response to the corresponding
CAFE requirements and the estimated market demand for fuel economy,
considering estimated fuel prices, estimated product development
cadence, and the estimated availability, applicability, cost, and
effectiveness of fuel-saving technologies. The analysis sometimes shows
that specific manufacturers could increase CAFE levels beyond
requirements in ways estimated to ``pay buyers back'' very quickly
(i.e., within 30 months) for the corresponding additional costs to
purchase new vehicles through avoided fuel outlays. Consistent with the
analysis published with the 2020 final rule, this analysis shows that
if battery costs decline as projected while fuel prices increase as
projected, BEVs should become increasingly attractive on this basis,
such that the modeled application of BEVs (and some other technologies)
clearly outstrips regulatory requirements after the mid-2030s.
    The analysis accompanying the 2020 final rule presented such
results for CAFE standards as well as--

separately--CO2 standards. New in this rulemaking, DOT has
modified the CAFE Model to account for the combined effect of both CAFE
and CO2 standards, simulating technology application
decisions each manufacturer could possibly make when faced with both
CAFE standards and CO2 standards (and also estimated market
demand for fuel economy). This capacity was exercised in order to
account for CO2 standards applicable under the baseline
National Program (i.e., the CO2 standards in place when the current
rulemaking was initiated). Also, for this final rule, DOT has further
modified the CAFE Model to account for the ``Framework'' agreements
California has reached with BMW, Ford, Honda, Volkswagen, and Volvo,
and for the ZEV mandate that California and the ``Section 177'' states
have adopted. The TSD elaborates on these model capabilities. Generally
speaking, the model treats each manufacturer as applying the following
logic when making technology decisions:
    What do I need to carry over from last year?
    What should I apply more widely in order to continue sharing (of,
e.g., engines) across different vehicle models?
    What new PHEVs or BEVs do I need to build in order to satisfy the
ZEV mandates?
    What further technology, if any, could I apply that would enable
buyers to recoup additional costs within 30 months after buying new
vehicles?
    What additional technology, if any, should I apply in order to
respond to CAFE and CO2 standards?
    All of the regulatory alternatives considered here include, for
passenger cars, the following coefficients defining the combination of
baseline Federal CO2 standards and the California Framework
Agreements.
[GRAPHIC] [TIFF OMITTED] TR02MY22.112

    Coefficients a, b, c, d, e, and f define the baseline Federal
CO2 standards for passenger cars. Analogous to coefficients
defining CAFE standards, coefficients a and b specify minimum and
maximum passenger car CO2 targets in each model year.
Coefficients c and d specify the slope and intercept of the linear
portion of the CO2 target function, and coefficients e and f
bound the region within which CO2 targets are defined by
this linear form. Coefficients g, h, i, and j define the CO2
targets applicable to BMW, Ford, Honda, Volkswagen, and Volvo, pursuant
to the agreements these manufacturers have reached with California.
Beyond 2026, the MY 2026 Federal standards apply to all manufacturers,
including these five manufacturers. The coefficients shown in Table IV-
3 define the corresponding CO2 standards for light trucks.
[GRAPHIC] [TIFF OMITTED] TR02MY22.113

    All of the regulatory alternatives considered here also include
NHTSA's estimates of ways each manufacturer could introduce new PHEVs
and BEVs in response to ZEV mandates. As discussed in greater detail
below, these estimates force the model to convert specific vehicle
model/configurations to either a BEV200, BEV300, or BEV400 at the
earliest estimated redesign. These ``ZEV Candidates'' define an
incremental response to ZEV mandates (i.e., beyond PHEV and BEV
production through MY 2020) comprise the following shares of
manufacturers' MY 2020 production for the U.S. market as shown in Table
IV-4.
[GRAPHIC] [TIFF OMITTED] TR02MY22.114

BILLING CODE 4910-59-C
    For example, while Tesla obviously need not introduce additional
BEVs to comply with ZEV mandates, our analysis indicates Nissan could
need to increase BEV offerings modestly to do so, and Mazda and some
other manufacturers may need to do considerably more than Nissan to
introduce new BEV offerings.
    This representation of CO2 standards and ZEV mandates
applies equally to all regulatory alternatives, and NHTSA's analysis
applies the CAFE Model to examine each alternative treating each
manufacturer as responding jointly to the entire set of requirements.
This is distinct from model application of BEVs for compliance purposes
under the compliance simulations of the different action alternatives
which inform decision-makers regarding potential effects of the
standards.
    Chapter 1 of the TSD contains extensive discussion of the
development of the No-Action Alternative and explains the reasons for
and effect of apparent ``over-compliance'' with the No-Action
Alternative, which reduces costs and benefits attributable to the new
CAFE standards and other action alternatives. In the proposal preceding
this document, NHTSA sought comment broadly on its approach to
developing the No-Action Alternative for the final rule, and also
specifically sought comment on whether and how to add to the No-Action
Alternative for the final rule an estimation of GHG standards that
California and the Section 177 states might separately enforce if
California's waiver of CAA preemption was re-established.
    Comments were mixed regarding whether commenters agreed that it was
appropriate for NHTSA to account for State ZEV standards as part of the
No-Action Alternative, with state and local government commenters,\748\
electric vehicle manufacturers,\749\ and alternative-fueled vehicle
organizations \750\ supporting their inclusion, and other automaker
commenters,\751\ NADA,\752\ AVE,\753\ and Mr. Kreucher \754\ opposing
their inclusion. NCAT, for example, stated that ``[i]t would be an
absurd interpretation of EPCA to find that the agency should create a
fictional baseline that does not reflect the alternative fuel vehicles
that are already being sold and those that will be required to be sold
under ZEV mandates and GHG emissions standards in the future, in
particular as alternative fuel vehicles are an increasingly substantial
part of the U.S. market.'' \755\ NCAT argued that

there was no conflict between the statutory prohibition in 49 U.S.C.
32902(h) on considering the fuel economy of dedicated alternative
fueled vehicles and the statutory requirement in 49 U.S.C. 32902(f) to
consider ``other motor vehicle standards of the Government,'' because
``ZEV mandates or vehicle GHG emissions standards . . . do not involve
consideration of `fuel economy . . .' '' \756\ NCAT went so far as to
argue that NHTSA had overstated costs for all of the regulatory
alternatives by not including more ZEV penetration in its
baseline.\757\ CARB, California Attorney General et al., and South
Coast Air Quality Management District (South Coast (South Coast AQMD)
all agreed that if EPA reinstated the waiver for California's programs
prior to NHTSA finalizing these standards, then including those
standards in the baseline would be reasonable. As California Attorney
General et al. put it, ``It is plainly reasonable for an agency to
include the preexisting legal obligations of regulated parties in No
Action baselines, since these baselines aim to capture, as accurately
as possible, how regulated parties would behave but for the regulatory
changes under consideration.'' \758\ Rivian urged NHTSA to expand its
analysis by including Minnesota, Nevada, and Virginia as additional
``Section 177'' states.\759\ Commenters opposing NHTSA's inclusion of
the ZEV program in the baseline generally argued that it was contrary
to the prohibition in 49 U.S.C. 32902(h) against considering the fuel
economy of dedicated alternative fueled vehicles in determining maximum
feasible standards.
---------------------------------------------------------------------------

    \748\ California Attorney General et al., Docket No. NHTSA-2021-
0053-1499, at 3; CARB, Docket No. NHTSA-2021-0053-1521, at 9; South
Coast AQMD, Docket No. NHTSA-2021-0053-1477, at 2.
    \749\ Lucid, Docket No. NHTSA-2021-0053-1584, at 5; Rivian,
Docket No. NHTSA-2021-0053-1562, at 2; Tesla, Docket No. NHTSA-2021-
0053-1480-A1, at 8.
    \750\ NCAT, Docket No. NHTSA-2021-0053-1508, at 2, 6-7.
    \751\ Auto Innovators, Docket No. NHTSA-2021-0053-1492, at 45-
46; Stellantis, Docket No. NHTSA-2021-0053-1527, at 12; Kia, Docket
No. NHTSA-2021-0053-1525, at 2.
    \752\ NADA, Docket No. NHTSA-2021-0053-1471, at 4-5.
    \753\ AVE, Docket No. NHTSA-2021-0053-1488-A1, at 5.
    \754\ Walt Kreucher, Docket No. NHTSA-2021-0053-0013, at 3.
    \755\ NCAT, at 2.
    \756\ Id.
    \757\ Id., at 8.
    \758\ California State Attorney General et al., at 3.
    \759\ Rivian, at 2.
---------------------------------------------------------------------------

    NHTSA has kept the ZEV program in the No-Action Alternative for the
analysis supporting this final rule. We disagree with comments from
Auto Innovators and others that 32902(h) prohibits inclusion of ZEVs in
the analytical baseline. Section 32902(h) states that in setting
standards, including ``[w]hen deciding maximum feasible fuel economy,''
NHTSA ``may not consider the fuel economy of dedicated automobiles.''
The baseline is supposed to reflect the world in the absence of further
CAFE standards. The baseline is not itself the decision on what
standards are maximum feasible. Auto Innovators also commented that if
NHTSA relied on the ``other motor vehicle standards of the Government''
factor as a basis for accounting for ZEV programs in its analytical
baseline, that would violate the statutory construction rule of
generalia specialibus non derogant (generally, a specific statutory
provision prevails over a more general one, if in conflict). NHTSA is
not relying on the ``other motor vehicle standards of the Government''
factor as a basis for accounting for ZEV programs in the baseline.
Rather, NHTSA is including other relevant legal requirements that
automakers will meet during the regulatory timeframe in order to
reflect the state of the world without the CAFE standards. Unless the
baseline accurately reflects the world without the CAFE standards, the
regulatory analysis will not identify the effects of the CAFE
standards. It is perfectly possible to give meaningful effect \760\ to
the 49 U.S.C. 32902(h) prohibition by not allowing the CAFE Model to
rely on ZEV (or other dedicated alternative fuel) technology during the
rulemaking time frame, while still acknowledging the clear reality that
the state ZEV programs exist, and manufacturers are complying with
them, just like the agency acknowledges that electric vehicles exist in
the fleet independent of the ZEV program. EPA issued a notice to
reconsider its SAFE 1 (SAFE 1 rule; 84 FR 51310, Sept. 27, 2019)
actions that included the waiver withdrawal of California's ZEV sales
mandate and greenhouse gas emission standards in April 2021.\761\ EPA
has since published its final decision regarding the reconsideration of
its SAFE 1 actions with the result that the waiver issued in 2013 for
the ZEV sales mandate and greenhouse gas emission standards is back in
force.\762\ NHTSA withdrew its SAFE 1 rule on December 29, 2021.\763\
California, and the Section 177 states (subject to the criteria in
Section 177), are free to enforce the ZEV mandate, and manufacturers
are building ZEVs in response to it. These standards are real and would
be in force whether or not NHTSA increased the stringency of the CAFE
standards. By accounting for them in the baseline, NHTSA acknowledges
this reality; by withholding ZEV technology as a model option during
the rulemaking timeframe, NHTSA respects the 49 U.S.C. 32902(h)
prohibition. This is how we give effect to Section 32902(h). NHTSA
agrees with NCAT that it would be an absurd result to build a fictional
baseline that pretended as though these standards, and the vehicles
produced in response to them, were not real. Agency decision-makers
would not be well-informed as to the consequences of different
regulatory actions with a baseline that ignored these non-NHTSA
standards.
---------------------------------------------------------------------------

    \760\ The reason that NHTSA knows this effect is meaningful is
because compliance with all regulatory alternatives is more cost-
effective under the ``unconstrained'' or ``EIS'' model runs, in
which NHTSA allows the model to build BEVs, than under the
``standard-setting'' runs, in which NHTSA implements the 32902(h)
restrictions.
    \761\ 86 FR 22421 (Apr. 28, 2021).
    \762\ 87 FR 14332 (Mar. 14, 2022).
    \763\ 86 FR 74236 (Dec. 29, 2021).
---------------------------------------------------------------------------

    Nor does NHTSA agree that reflecting ZEV mandates in the baseline
somehow ``thwarts Congress' intent'' in providing compliance boosts for
dedicated and dual-fueled alternative fuel vehicles. ZEVs produced in
response to ZEV mandates are not produced to comply with CAFE
standards, even if they improve manufacturers' compliance with CAFE
standards, because those vehicles are going to be produced anyway to
comply with the ZEV mandates. Manufacturers get the full compliance
benefit of these vehicles in the CAFE program.
    It thus seems both reasonable and preferable to try to give
meaningful effect to Section 32902(h), while meaningfully informing
decision-makers about the effects of their decision. We also note that
in the sensitivity analyses for this final rule, NHTSA ran a case in
which ZEV compliance was not reflected in the baseline. As documented
in the FRIA, not accounting for ZEV mandates would have increased
estimated incremental benefits and costs attributable to new CAFE
standards by about 3 percent.\764\ Chapter 7 of the FRIA discusses this
finding in more detail. These small differences were not dispositive
for NHTSA in choosing the Preferred Alternative; nor would removing ZEV
from the baseline in the main analysis have led NHTSA to reach a
different conclusion regarding maximum feasible CAFE standards.
---------------------------------------------------------------------------

    \764\ While Rivian encouraged NHTSA to add Minnesota, Nevada,
and Virginia to the list of ZEV states, NHTSA believes that
accounting for these States' recent adoption of ZEV mandates would
only have slightly impacted the 3 percent difference, and also would
not have impacted NHTSA's conclusions.
---------------------------------------------------------------------------

    Some commenters also addressed NHTSA's question of whether to
include state GHG standards in the baseline. Arguments for and against
including state GHG standards in the baseline were fairly similar to
those regarding ZEV mandates. Tesla, however, argued that because
``California and the Section 177 states have written the GHG standards
into their EPA approved SIPs,'' . . .``these more stringent standards
have remained in place and [are] enforceable while the waiver gets
reinstated because EPA never compelled any of these SIPs to be

amended or revised to remove the purportedly preempted standards.''
\765\
---------------------------------------------------------------------------

    \765\ Tesla, at 8.
---------------------------------------------------------------------------

    As explained in the NPRM, NHTSA does not currently have the
capability to model a sub-national fleet concurrently with a national
fleet and remains concerned about potentially important differences
between the Section 177 states that would complicate finding a workable
approach to doing so. NHTSA thus has not reflected the state GHG
standards in this final rule analysis, despite Tesla's recommendation.
That said, noting that all of the vehicles that manufacturers
ultimately sell in these States will be among those vehicles that
manufacturers produce for sale in the United States, NHTSA anticipates
that if California and other States enforce requirements regarding the
average CO2 performance of vehicles sold in these States,
and NHTSA concurrently enforces requirements regarding the average fuel
economy levels of vehicles produced for sales nationwide, manufacturers
will be able to meet the State-level requirements by selling different
proportions of vehicles in states with GHG requirements than in states
that lack them. Manufacturers could sell a higher proportion of
vehicles (such as the BEVs and PHEVs some of these States also
encourage through ZEV mandates) with CO2 levels well below
corresponding CO2 targets in these States than in the rest
of the country, and by selling a smaller proportion of vehicles (such
as some performance and luxury models, and some sport-utility vehicles)
that perform especially poorly relative to CO2 targets.\766\
---------------------------------------------------------------------------

    \766\ Examples of such vehicles can be identified in the
published vehicle-level model results (in the archive posted at
https://www.nhtsa.gov/corporate-average-fuel-economy/cafe-
compliance-and-effects-modeling-system'') (accessed: March 15, 2022)
by comparing ``CO2 Rated'' and ``CO2 Target'' values for specific
vehicle model/configurations.
---------------------------------------------------------------------------

    A few commenters addressed NHTSA's inclusion in the baseline of the
California Framework Agreements with BMW, Ford, Honda, Volkswagen, and
Volvo, binding those companies to more stringent GHG standards than the
2020 final rule would have required. Rivian \767\ and NCAT agreed that
including the Framework Agreements was appropriate. For example, NCAT
commented that it was reasonable to consider the Framework Agreements,
because the five manufacturers involved represent a significant portion
of the market, and the agreements are contractual.\768\ NADA argued, in
contrast, that ``The OEMs that entered those agreements represent only
about a third of U.S. vehicle sales,'' and that ``their actions should
not be incorporated into the baseline for any revised CAFE standards
with which all OEMs must comply,'' because ``That OEMs representing the
other two-thirds of U.S. vehicle sales did not enter similar agreements
is telling and raises significant questions as to whether the
`framework' standards are reasonable and appropriate.'' \769\
---------------------------------------------------------------------------

    \767\ Rivian, at 2.
    \768\ NCAT, at 7-8.
    \769\ NADA, at 4-5.
---------------------------------------------------------------------------

    In response, NHTSA reiterates that the purpose of a baseline is to
reflect the world in the absence of further regulatory action by NHTSA,
so that NHTSA can then attempt to evaluate the effects of taking
different regulatory actions. Only the Framework-Agreement
manufacturers were reflected in the baseline, not the fleet as a whole.
Because those agreements were contractual, NHTSA found it reasonable to
assume that automakers would meet their terms and that this approach
would best reflect the state of the world in the absence of further
regulatory action by NHTSA, and therefore included them in the baseline
for this analysis. NADA's comment more likely pertains to the
feasibility of standards that would require similar (or higher) levels
of fuel economy improvement from all manufacturers. The feasibility of
different alternatives will be discussed in Section VI of this
preamble.
    Other commenters indicated that NHTSA should, in effect, assume
that manufacturers would never increase CAFE beyond levels required by
CAFE standards, i.e., that there is no real-world market-driven
increase in fuel economy (regardless of fuel price) that could or
should be reflected in NHTSA's analysis.\770\ NHTSA has carefully
considered these comments, and finds that the comments conflict with
the historical record showing manufacturers sometimes achieving CAFE
levels beyond those required by CAFE standards. Historical record
aside, NHTSA recognizes that future fuel prices cannot be predicted
with certainty yet will almost certainly impact manufacturers' and
buyers' future decisions. The aforementioned comments imply an approach
that would not respond at all to fuel prices, such that manufacturers'
estimated application of technology would be the same if gasoline costs
more than $7 per gallon as if gasoline costs less than $2 per gallon.
Under NHTSA's analytical approach, fuel economy increases beyond
requirements grow as fuel prices increase, and the sensitivity analysis
documented in the FRIA accompanying this document suggests that to
ignore this response would have led NHTSA to overstate significantly
the incremental benefits and costs of new CAFE standards. Commenters
have provided no basis for predicting with confidence how manufacturers
and buyers will act in the future, or any logical basis to assume that
fuel prices will not impact their decisions. NHTSA maintains that fuel
prices are almost certain to play a role, and that it remains
reasonable to NHTSA to assume that having met fuel economy
requirements, manufacturers may apply additional fuel-saving
technologies that pay back within the first 30 months of vehicle
ownership.
---------------------------------------------------------------------------

    \770\ See, e.g., UCS, Docket No. NHTSA-2021-0053-1567, at 25-29.
---------------------------------------------------------------------------

1. No-Action Alternative
    The No-Action Alternative (also referred to as ``Alternative 0'')
applies the CAFE target curves set in 2020 for MYs 2024-2026, which
raised stringency by 1.5 percent per year for both passenger cars and
light trucks.
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    These equations are presented graphically in Figure IV-1 and Figure
IV-2, where the x-axis represents vehicle footprint and the y-axis
represents fuel economy, showing that in ``CAFE space,'' targets are
higher in fuel economy for smaller footprint vehicles and lower for
larger footprint vehicles.

[GRAPHIC] [TIFF OMITTED] TR02MY22.117

[GRAPHIC] [TIFF OMITTED] TR02MY22.118

    NHTSA must also set a minimum standard for domestically
manufactured passenger cars, which is often referred to as the
``MDPCS.'' Any time NHTSA establishes or changes a passenger car
standard for a model year, the MDPCS must also be evaluated or re-
evaluated and established accordingly, but for purposes of the No-
Action Alternative, the MDPCS is as it was established in the 2020
final rule, as shown in Table IV-7.
[GRAPHIC] [TIFF OMITTED] TR02MY22.119

    As the baseline against which the Action Alternatives are measured,
the No-Action Alternative includes several policies and agreements
already in effect as well as manufacturer choices that NHTSA believes
will occur absent the revised CAFE standards. First, as discussed
extensively above, NHTSA has included California's ZEV mandate as part
of the No-Action Alternative. Second, NHTSA has included the agreements
made between California and BMW, Ford, Honda, VWA, and Volvo, because
these agreements by their terms are contracts, even though they were
entered into voluntarily.\771\ NHTSA did so by including EPA's baseline
(i.e., 2020) GHG standards in its analysis, and then introducing more
stringent GHG target functions during MYs 2022-2026 consistent with
those agreements, but treating only these five manufacturers as subject
to these more stringent target functions. As in past analyses, NHTSA's
analysis further assumes that, beyond any technology applied in
response to CAFE standards, EPA GHG standards, California/OEM
agreements, and ZEV mandates applicable in California and the Section
177 states, manufacturers will also make any additional fuel economy
improvements estimated to reduce

owners' estimated average fuel outlays during the first 30 months of
vehicle operation by more than the estimated increase in new vehicle
price.
---------------------------------------------------------------------------

    \771\ See https://ww2.arb.ca.gov/news/framework-agreements-clean-cars.
---------------------------------------------------------------------------

    NHTSA accomplished much of this through expansion of the CAFE Model
after the prior rulemaking. The previous version of the model had been
extended to apply to GHG standards as well as CAFE standards but had
not been published in a form that simulated simultaneous compliance
with both sets of standards. As discussed at greater length in the
current CAFE Model documentation, the updated version of the model
simulates all the following simultaneously:

Compliance with CAFE standards
Compliance with GHG standards applicable to all manufacturers
Compliance with alternative GHG standards applicable to a subset of
manufacturers
Compliance with ZEV mandates
Further fuel economy improvements applied if sufficiently cost-
effective for buyers

    As explained in the NPRM, the impacts of all the alternatives
evaluated here are against the backdrop of these other obligations
applicable to and voluntary actions taken by automakers. This is
important to remember, because it means that automakers will be taking
actions to comply with these other obligations or voluntarily that will
at times affect fuel economy even in the absence of new CAFE standards,
and that costs and benefits attributable to those actions are therefore
not attributable to CAFE standards.
2. Alternative 1
    Alternative 1 would increase CAFE stringency for MY 2024 by 9.14
percent for passenger cars and 11.02 percent for light trucks and
increase stringency in MYs 2025 and 2026 by 3.26 percent per year for
both passenger cars and light trucks.\772\
---------------------------------------------------------------------------

    \772\ Increases of MY 2024 stringencies as compared to MY 2023
are based on computed averages of manufacturers' required CAFE
levels. Increases of MYs 2025 and 2026 stringencies are based on
mathematical progression of coefficients defining applicable fuel
economy targets.
[GRAPHIC] [TIFF OMITTED] TR02MY22.120

[GRAPHIC] [TIFF OMITTED] TR02MY22.121

    These equations are represented graphically in Figure IV-3 and
Figure IV-4.
---------------------------------------------------------------------------

    \773\ For this and other action alternatives, readers may note
that the cutpoint for large trucks is further to the right than in
the 2020 final rule. The 2020 final rule (and its preceding NPRM)
did not contain an adjustment to the right cutpoint that had been
finalized in 2012. Because comments were not received to the NPRM,
the lack of adjustment was finalized. Considering the question again
for this action, NHTSA believes that moving the cutpoint to the
right for large trucks (consistent with the intent and requirements
in 2012) is reasonable, given the rate of increase in stringency for
this action. NHTSA did not receive any comments addressing this
change.

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

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[GRAPHIC] [TIFF OMITTED] TR02MY22.123

    Under this alternative, the MDPCS is as shown in Table IV-10.
    [GRAPHIC] [TIFF OMITTED] TR02MY22.124

3. Alternative 2
    Alternative 2 would increase CAFE stringency at 8 percent per
year.\774\
---------------------------------------------------------------------------

    \774\ Increases of MY 2024-2026 stringencies are based on
mathematical progression of coefficients defining applicable fuel
economy targets.

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

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[GRAPHIC] [TIFF OMITTED] TR02MY22.126

    Under this alternative, the MDPCS is as shown in Table IV-13.
    [GRAPHIC] [TIFF OMITTED] TR02MY22.127

4. Alternative 2.5
    In the proposal preceding this final rule, NHTSA sought comment on
a possible modification to Alternative 2, which would have increased
the stringency of CAFE standards by 10 percent between MYs 2025 and
2026, rather than by 8 percent. Shown graphically, this possibility
appeared as shown in Figure IV-5.

[GRAPHIC] [TIFF OMITTED] TR02MY22.128

    The coefficients associated with this alternative have been
determined as follows:
[GRAPHIC] [TIFF OMITTED] TR02MY22.129

[GRAPHIC] [TIFF OMITTED] TR02MY22.130

    These equations are represented graphically in Figure IV-6 and
Figure IV-7.
[GRAPHIC] [TIFF OMITTED] TR02MY22.131

[GRAPHIC] [TIFF OMITTED] TR02MY22.132

    Under the alternative, the MDPCS is as follows in Table IV-16.
    [GRAPHIC] [TIFF OMITTED] TR02MY22.133

    NHTSA considered this alternative as a way to evaluate the effects
of CAFE standards that could be considered a middle ground between
Alternative 2 and Alternative 3 allowing for a slower ramp in
stringency than Alternative 3 but providing additional lead time to
return to a fuel consumption trajectory similar to the standards
announced in 2012.
5. Alternative 3
    Alternative 3 would increase CAFE stringency at 10 percent per
year.\775\ In the NPRM preceding this document, NHTSA calculated that
Alternative 3 would result in total lifetime fuel savings from vehicles
produced during MYs 2021-2029 similar to total lifetime fuel savings
that would have occurred if NHTSA had promulgated final CAFE standards
for MYs 2021-2025 at the augural levels announced in 2012. In addition,
Alternative 3 contemplated capturing fuel savings as if NHTSA had

also promulgated MY 2026 standards that reflected a continuation of
that average rate of stringency increase (4.48 percent for passenger
cars and 4.54 percent for light trucks).
---------------------------------------------------------------------------

    \775\ Increases of MY 2024-2026 stringencies are based on
mathematical progression of coefficients defining applicable fuel
economy targets.
[GRAPHIC] [TIFF OMITTED] TR02MY22.134

[GRAPHIC] [TIFF OMITTED] TR02MY22.135

    These equations are represented graphically in Figure IV-8 and
Figure IV-9. For this final rule, NHTSA retained this definition of
Alternative 3.

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[GRAPHIC] [TIFF OMITTED] TR02MY22.137

    Under this alternative, the MDPCS is as follows in Table IV-19.
    [GRAPHIC] [TIFF OMITTED] TR02MY22.138

    NHTSA considered this alternative as a way to evaluate the effects
of CAFE standards that would return to a fuel consumption trajectory
similar to the standards announced in 2012.
    Besides the aforementioned alternatives, some commenters indicated
that NHTSA should also consider action alternatives less stringent than
the No-Action Alternative, while others indicated that NHTSA should
also consider action alternatives more stringent than Alternative 3.
CEI, for example, argued that less stringent alternatives would result
in better safety outcomes, and that not including such alternatives was
arbitrary and capricious, such that NHTSA must commence a new
rulemaking.\776\ Noting the considerable overcompliance estimated to
potentially occur given reference case fuel price projections, NHTSA
concludes that alternatives less stringent than the No-Action
Alternative would clearly have fallen short of the maximum feasible, as
cost-effective technology to address even modest energy-related
economic externalities would have been forgone. Considering such
alternatives would not have been a fruitful use of agency resources in
this rulemaking. Moreover, NHTSA has accounted for safety

considerations as part of its determination of which standards would be
maximum feasible, as discussed in Section VI.
---------------------------------------------------------------------------

    \776\ CEI, Docket No. NHTSA-2021-0053-1546, at 2, 8.
---------------------------------------------------------------------------

    On the other hand, Securing America's Future Energy commented that
NHTSA should explore more stringent alternatives ``if the analysis
indicates that it will achieve greater fuel economy and there is no
obvious obstacle to automakers meeting the more stringent standard.''
\777\ Our Children's Trust and Elders Climate Action both asked NHTSA
to consider alternatives that led to greater ZEV penetration. Our
Children's Trust asked specifically for ``at least one alternative
tiered to a fully electric fleet by 2030'' and also ``at least one
alternative that is aligned with putting the United States
transportation system vehicle fleet on an emission reductions pathway
consistent with <350 ppm CO2 by 2100.'' \778\ Elders Climate
Action asked that the rulemaking be reopened for MY 2026 in order to
consider an alternative that would impose a zero emission vehicle
standard that would be fully phased in by 2030, beginning with 30
percent ZEV in MY 2026.\779\
---------------------------------------------------------------------------

    \777\ Securing America's Future Energy, Docket No. NHTSA-2021-
0053-1513, at 8.
    \778\ Our Children's Trust, Docket No. NHTSA-2021-0053-1587, at
4.
    \779\ Elders Climate Action, Docket No. NHTSA-2021-0053-1589, at
2-3.
---------------------------------------------------------------------------

    In response, while NHTSA appreciates these comments, NHTSA notes
that under Alternative 3, average CAFE requirements would increase by
nearly 30 percent over a three-year period. While developing
circumstances may warrant consideration of even more aggressive
regulatory alternatives in future CAFE rulemakings, NHTSA cannot ignore
that manufacturers will begin producing MY 2024 vehicles in less than
two years, and that designs and contractual arrangements (e.g., with
suppliers) for many MY 2026 vehicles are likely already somewhat firmly
established, such that alternatives more aggressive than Alternative 3
would likely not be economically practicable. NHTSA also does not
believe it likely has authority to establish a specific ZEV-mandate-
type standard as requested by Elders Climate Action, given the
restrictions in 49 U.S.C. 32902(h). With regard to the request that
NHTSA create and consider an alternative ``that is aligned with putting
the United States transportation system vehicle fleet on an emission
reductions pathway consistent with <350 ppm CO2 by 2100,''
in this action, NHTSA is regulating only the fuel economy of new light-
duty vehicles. NHTSA does not have an integrated model of global
emissions with which we could assess precisely what emissions reduction
pathway for the entire U.S. transportation system (and then, the new
light-duty fleet in particular) would need to be on in order to achieve
this goal. NHTSA will discuss this question further with relevant
interagency partners and consider whether it can be better answered as
part of a subsequent rulemaking.

V. Effects of the Regulatory Alternatives

A. Effects on Vehicle Manufacturers

    Each of the regulatory alternatives NHTSA considered for this final
action would increase the stringency of both passenger car and light
truck CAFE standards in each of MYs 2024-2026 as compared to the
standards set in 2020. To estimate the potential impacts of each of
these alternatives, NHTSA has, as for all recent rulemakings, assumed
that standards would continue unchanged after the last model year (in
this case, 2026) to be covered by newly issued standards. NHTSA
recognizes that it is possible that the size and composition of the
fleet (i.e., in terms of distribution across the range of vehicle
footprints) could change over time, affecting the average fuel economy
requirements under both the passenger car and light truck standards,
and for the overall fleet. If fleet changes ultimately differ from
NHTSA's projections, average requirements could, therefore, also differ
from NHTSA's projections.
    Following are both the proposed and final estimated required
average fuel economy values for the passenger car, light truck, and
total fleets for each regulatory alternative that the agency
considered. Overall, the estimated required fuel economy values are
generally the same as the proposal, although for some years the values
have changed minimally. These minimal changes result from the final
rule modeling input revisions, where technology assumptions and costs
influence the estimated capabilities of the fleet to attain the
required values. We note that in the case of every fleet, the final MY
2029 values did not change from the proposal to the final estimated
values.
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    Manufacturers do not always comply exactly with each CAFE standard
in each model year. To date, some manufacturers have tended to
regularly exceed one or both requirements. Many manufacturers make use
of EPCA's provisions allowing CAFE compliance credits to be applied
when a fleet's CAFE level falls short of the corresponding requirement
in a given model year. Some manufacturers have paid civil penalties
(i.e., fines) required under EPCA when a fleet falls short of a
standard in a given model year and the manufacturer lacks compliance
credits sufficient to address the compliance shortfall. As discussed in
the accompanying FRIA and TSD, NHTSA simulates manufacturers' responses
to each alternative given a wide range of input estimates (e.g.,
technology cost and efficacy, fuel prices), and, per EPCA requirements,
setting aside the potential that any manufacturer would respond to CAFE
standards in MYs 2024-2026 by applying CAFE compliance credits or
introducing new models of alternative fuel vehicles. Many of these
inputs are subject to uncertainty and, in any event, as in all CAFE
rulemakings, NHTSA's analysis merely illustrates one set of ways
manufacturers could potentially respond to each regulatory alternative.
For this final rule, NHTSA estimates that manufacturers' responses to
standards defining each alternative could lead average fuel economy
levels to increase through MY 2029 as shown in the following tables.
Changes are shown to occur in MY 2023 even though NHTSA is not
explicitly proposing to regulate that model year because NHTSA
anticipates that manufacturers could potentially make changes as early
as that model year to affect future compliance positions (i.e., multi-
year planning) for the model years being regulated.
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    While these increases in average fuel economy reflect currently
estimated changes in the composition of the fleet (i.e., the relative
shares of passenger cars and light trucks), they result almost wholly
from the projected application of fuel-saving technology. As mentioned
above, NHTSA's analysis merely illustrates one set of ways
manufacturers could potentially respond to each regulatory alternative.
Manufacturers' actual responses will almost assuredly differ from
NHTSA's current estimates.
    At the time of the proposal, NHTSA estimated that manufacturers'
application of advanced gasoline engines (i.e., gasoline engines with
cylinder deactivation, turbocharging, high or variable compression
ratios) could increase through MY 2029 under the No-Action Alternative
and through at least MY 2024 under each of the action alternatives.
However, NHTSA also estimated that in MY 2024, reliance on advanced
gasoline engines could begin to decline under the more stringent action
alternatives, as manufacturers shift toward electrification (which
includes hybridization). Based on the updated analysis used for the
final rule, these trends continue to mirror the trends identified in
the proposal, but at more aggressive rates. Overall, advanced gasoline
engine penetration rates increase. Under Alternatives 2, 2.5, and 3,
the shift to electrification appears to continue, notably for both
passenger cars and light trucks under Alternative 3.
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    As in the NPRM, the aforementioned estimated shift to
electrification under the more stringent regulatory alternatives is the
most pronounced for hybrid-electric vehicles (i.e., ``mild'' ISG HEVs
and ``strong'' P2 and Power-Split HEVs) for the total fleet under the
final rule analysis, which may be a result of the reduction in strong
hybrid costs. Passenger cars adopt hybridization at a slightly higher
rate than light trucks; this is most likely a result of the adjustments
to off-cycle credit caps analyzed for the final rule.

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    As in the NPRM, under the more stringent action alternatives, NHTSA
estimates that manufacturers could increase production of plug-in
hybrid electric vehicles (PHEVs) well over current rates. The PHEV
rates decrease for the final rule resulting from the increase in SHEVs,
which in turn result from the previously mentioned cost reductions for
that technology.
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    For this notice and accompanying FRIA, NHTSA's analysis excludes
the introduction of new dedicated alternative fuel vehicle (AFV) models
during MYs 2024-2026 as a response to CAFE standards.\780\ However,
NHTSA's analysis does consider the potential that manufacturers might
respond to CAFE standards by introducing new BEV models outside of MYs
2024-2026, and NHTSA's analysis does account for the potential that ZEV
mandates could lead manufacturers to introduce new BEV models even
during MYs 2024-2026. Also accounting for shifts in fleet mix, NHTSA
projects increased production of BEVs through MY 2029. As shown in the
following tables, there is a slight

reduction in estimated BEV penetration rates, which, again, is
attributable to an increase in SHEV rates resulting from estimated cost
reductions for those technologies.
---------------------------------------------------------------------------

    \780\ The Final SEIS does not make this analytical exclusion.
    [GRAPHIC] [TIFF OMITTED] TR02MY22.169

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    The FRIA provides a wider-ranging summary of NHTSA's estimates of
manufacturers' potential application of fuel-saving technologies
(including other types of technologies, such as advanced transmissions,
aerodynamic improvements, and reduced vehicle mass) in response to each
regulatory alternative. Appendices I and II of the accompanying FRIA
provide much more detailed and comprehensive results, and the
underlying CAFE Model output files provide all information, including
the specific combination of technologies estimated to be applied to
every specific vehicle model/configuration in each of MYs 2020-2050.
    As with the NPRM, NHTSA's analysis shows manufacturers' regulatory
costs for CAFE standards, CO2 standards, and ZEV mandates
increasing through MY 2029, and (logically) increasing more under the
more stringent alternatives. NHTSA estimates that relative to the
continued application of MY 2020 technologies, manufacturers'
cumulative costs during MYs 2023-2029 could total $137b under the No-
Action Alternative, and $179b, $224b, $237b, and $268b under
alternatives 1, 2, 2.5 and 3, respectively, when accounting for fuel-
saving technologies estimated to be added under each regulatory
alternative (including air conditioning improvements and other off-
cycle technologies), and also accounting for CAFE civil penalties that
NHTSA estimates some manufacturers could elect to pay rather than
achieving full compliance with CAFE standards in some model years. The
table below shows how these costs are estimated to vary among
manufacturers, accounting for differences in the quantities of vehicles
produced for sale in the U.S. Appendices I and II of the accompanying
FRIA present results separately for each manufacturer's passenger car
and light truck fleets in each model year under each regulatory
alternative, and the underlying CAFE Model output files also show
results specific to manufacturers' domestic and imported car fleets.
For the final rule analysis, in nearly all cases, the total costs are
lower than those estimated in the NPRM.

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    As discussed in the TSD, these estimates reflect technology cost
inputs that, in turn, reflect a ``markup'' factor that includes
manufacturers' profits. In other words, if costs to manufacturers are
reflected in vehicle price increases as in the past, NHTSA estimates
that the average costs to new vehicle purchasers could increase through
MY 2029 as summarized in Table V-39 through Table V-44.
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    Table V-45 shows how these costs could vary among manufacturers,
suggesting that disparities could decrease as the stringency of
standards increases.
[GRAPHIC] [TIFF OMITTED] TR02MY22.183

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    NHTSA estimates that although projected fuel savings under the more
stringent regulatory alternatives could tend to increase new vehicle
sales, this tendency could be outweighed by the opposing response to
higher prices, such that new vehicle sales could decline slightly under
the more stringent alternatives. The magnitude of these fuel savings
and vehicle price increases depends on manufacturer compliance
decisions, especially technology application. In the event that
manufacturers select technologies with lower prices and/or higher fuel
economy improvements, vehicle sales effects could differ. For example,
in the case of the ``unconstrained'' Final SEIS results, manufacturer
costs across alternatives are lower. As the graphs indicate, the
difference between the regulatory alternatives in terms of sales
effects decreased between the NPRM and final rule.

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    The TSD discusses NHTSA's approach to estimating new vehicle sales,
including NHTSA's estimate that new vehicle sales could recover from
2020's aberrantly low levels.
    While these slight reductions in new vehicle sales tend to slightly
reduce projected automobile industry labor, NHTSA estimates that the
cost increases could reflect an underlying increase in employment to
produce additional fuel-saving technology, such that automobile
industry labor could about the same under each of the four regulatory
alternatives. As the graphs indicate, the difference between the
regulatory alternatives in terms of employment effects increased
slightly between the NPRM and final rule.

[GRAPHIC] [TIFF OMITTED] TR02MY22.187

[GRAPHIC] [TIFF OMITTED] TR02MY22.188

    The accompanying TSD discusses NHTSA's approach to estimating
automobile industry employment, and the accompanying FRIA (and its
Appendices I and II) and CAFE Model output files provide more detailed
results of NHTSA's analysis.

B. Effects on New Car and Truck Buyers

    As discussed above, NHTSA estimates that the average fuel economy
and purchase cost of new vehicles could increase between MYs 2020 and
2029 and increase more quickly under each of the action alternatives
than under the No-Action Alternative. On one hand, buyers could realize
the benefits of increased fuel economy: Spending less on fuel. On the
other, buyers could pay more for new vehicles, and for some costs tied
directly to vehicle value (e.g., sales taxes and collision insurance).
The tables that follow present metrics for new car and truck buyers for
both the proposed and final rule. Table V-47 and Table V-48 report
sales-weighted MSRP values for the No-Action Alternative and relative
increases in MSRP for the three regulatory alternatives. The estimates
for the final action suggest slightly larger MSRP increases for light
trucks and smaller increases for passenger cars in the final rule
compared to the proposal (comparing Alt. 2 in MY 2029). Alternative 2.5
raises MSRP increases to just over $1,000 by MY 2029.

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    Table V-49 through Table V-54 present projected consumer costs and
benefits along with net benefits for MYs 2029 and 2039 \781\ vehicles
for each alternative in both the proposal and final rule. Results are
shown in 2018 dollars, without discounting and with benefits and costs
discounted at annual rates of 3 and 7 percent. The TSD and FRIA
accompanying this rule discuss underlying methods, inputs, and results
in greater detail, and more detailed tables and underlying results are
contained in Appendix I and the CAFE Model output files. Comparisons of
per-vehicle consumer effects between proposal and final rule are best
done at the row level, as the final rule includes an additional
category accounting for reallocated vehicle miles and excludes
financing costs.\782\ For all of the action alternatives, avoided
outlays for fuel purchases \783\ account for most of the projected
incremental benefits to consumers, and increases in the cost to
purchase new vehicles account for most of the projected incremental
costs. For MY 2029, consumer costs increase slightly between the
proposal's Alternative 2 and final rule's Alternative 2.5. Consumer
benefits, especially the estimates of retail fuel outlay, also
increase.
---------------------------------------------------------------------------

    \781\ By 2039, technology costs have been learned down, and fuel
prices better reflect longer-term levels.
    \782\ The rationale for adjusting this calculation is discussed
in TSD Chapter 6.1.5, Benefits of Additional Mobility.
    \783\ Negative ``retail fuel outlay'' values in the table denote
decreases in consumer fuel expenditure relative to the No-Action
Alternative. These decreases in expenditure are considered a benefit
and are hence included as a positive value in the calculation of
total consumer benefits.

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C. Effects on Society

    Table V-55 describes the costs and benefits of increasing CAFE
standards in each alternative, as well as the party to which they
accrue. Manufacturers are directly regulated under the program and
incur additional production costs when they apply technology to their
vehicle offerings in order to improve their fuel economy. In this
analysis, we assume that those costs are fully passed through to new
car and truck buyers, in the form of higher prices. Other assumptions
are possible, but we do not currently have data to support attempting
to model cross-subsidization. We also assume that any civil penalties--
paid by manufacturers for failing to comply with their CAFE standards--
are passed through to new car and truck buyers and are included in the
sales price. However, those civil penalties are paid to the U.S.
Treasury, where they currently fund the general business of government.
As such, they are a transfer from new vehicle buyers to all U.S.
citizens, who then benefit from the additional Federal revenue. While
they are calculated in the analysis, and do influence consumer
decisions in the marketplace, they do not contribute to the calculation
of net benefits (and are omitted from the tables below).
    While incremental maintenance and repair costs would accrue to
buyers of new cars and trucks affected by more stringent CAFE
standards, we do not carry these costs in the analysis. They are
difficult to estimate for emerging technologies but represent real
costs (and benefits in the case of alternative fuel vehicles that may
require less frequent maintenance events). They may be included in
future analyses as data become available to evaluate lifetime
maintenance costs. This analysis assumes that drivers of new vehicles
internalize 90 percent of the risk associated with increased exposure
to crashes when they engage in additional travel (as a consequence of
the rebound effect).
    Private benefits are dominated by the value of fuel savings, which
accrue to new car and truck buyers at retail fuel prices (inclusive of
Federal and state taxes). In addition to saving money on fuel
purchases, new vehicle buyers also benefit from the increased mobility
that results from the lower cost of driving their vehicle (higher fuel
economy reduces the per-mile cost of travel) and fewer refueling
events. The additional travel occurs as drivers take advantage of lower
operating costs to increase mobility, and this generates benefits to
those drivers--equivalent to the cost of operating their vehicles to
travel those miles, the consumer surplus, and the offsetting benefit
that represents 90 percent of the additional safety risk from travel.
    In addition to private benefits and costs, there are purely
external benefits and costs that can be attributed to increases in CAFE
standards. These are benefits and costs that accrue to society more
generally, rather than to the specific individuals who purchase a new
vehicle that was produced under more stringent CAFE standards. Of the
external costs, the largest is the loss in fuel tax revenue that occurs
as a result of falling fuel consumption. While drivers of new vehicles
(purchased in years where CAFE stringency is increasing) save fuel
costs at retail prices, the rest of U.S. road users experience a
welfare loss, in two ways. First, the revenue generated by fuel

taxes helps to maintain roads and bridges, and improve infrastructure
more generally, and that loss in fuel tax revenue is a social cost. And
second, the additional driving that occurs as new vehicle buyers take
advantage of lower per-mile fuel costs is a benefit to those drivers,
but the congestion (and road noise) created by the additional travel
impose a social cost to all road users.
    Among the purely external benefits created when CAFE standards are
increased, the largest is the reduction in damages resulting from
greenhouse gas emissions. Table V-55 shows these reduced climate
damages, assuming different SC-GHG discount rates. The associated
benefits related to reduced health damages from conventional pollutants
and the benefit of improved energy security are both significantly
smaller than the associated change in GHG damages across alternatives.
Benefits from improved energy security are, however, very difficult to
quantify and are likely understated. As the table also illustrates, the
overwhelming majority of both costs and benefits are private costs and
benefits that accrue to buyers of new cars and trucks, rather than
external welfare changes that affect society more generally. This has
been consistently true in CAFE rulemakings.
    The choice of discount rate affects the magnitude of the resulting
benefits and costs, as shown in Table V-55. Many benefits of the
regulatory alternatives, but especially Alternative 3, are concentrated
in later years where a higher discount rate has a greater contracting
effect.

[GRAPHIC] [TIFF OMITTED] TR02MY22.197

BILLING CODE 4910-59-C

    The following tables show the costs and benefits associated with
external effects to society. As seen in Table V-55, the external
benefits are composed of reduced climate damages (Table V-56 through
Table V-59), reduced health damages (Table V-60 and Table V-61), and
reduced petroleum market externalities (Table V-64). The external costs
to society include congestion and noise costs (Table V-62 and Table V-
63) and safety costs (Table V-65). We show the costs and benefits by
model year (1981-2029), in contrast to the tables above, which present
incremental and net costs and benefits over the lifetimes of the entire
fleet produced through 2029, beginning with MY 1981.
[GRAPHIC] [TIFF OMITTED] TR02MY22.198

    Table V-56 through Table V-59 present the total costs of GHGs in
Alternative 0 and the incremental costs relative to Alternative 0 in
the other three alternatives. Each table presents GHG costs using
different SC-GHG values (discounted at 2.5 percent, 3 percent, 5
percent, and the 95th percentile values at 3 percent). See Chapter
6.2.1 of the TSD accompanying this notice for discussion of the SC-GHG
discount rates. Negative incremental values indicate a decrease in
social costs of GHGs, while positive incremental values indicate an
increase in costs relative to the baseline for the given model year.
The GHG costs follow a similar pattern in all three alternatives,
decreasing across all model years, with the largest reductions
associated with 2026-2029 model years. The magnitude of CO2
emissions is much higher than the magnitudes of CH4 and
N2O emissions, which is why the total costs are so much
larger for CO2.

[GRAPHIC] [TIFF OMITTED] TR02MY22.199

[GRAPHIC] [TIFF OMITTED] TR02MY22.200

[GRAPHIC] [TIFF OMITTED] TR02MY22.201

    The CAFE Model calculates health costs attributed to criteria
pollutant emissions of NOX, SOX, and
PM2.5, shown in Table V-60 and Table V-61. These costs are
directly related to the tons of each pollutant emitted from various
upstream and downstream sources, including on-road vehicles,
electricity generation, fuel refining, and fuel transportation and
distribution. See Chapter 4 of the Final SEIS and Chapter 5.4 of the
TSD for further information regarding the calculations used to estimate
health impacts, and more details about the types of health effects. The
following section of the preamble, Section V.D, discusses the changes
in tons of emissions themselves across rulemaking alternatives, while
the current section focuses on the changes in social costs associated
with those emissions.
    Criteria pollutant health costs (presented in Table V-60 and Table
V-61) increase slightly in earlier model years (1981-2023), but those
cost increases are offset by the decrease in health costs in later
model years. In Table V-60 and Table V-61, the costs in Alternatives 1
through 3 are shown in incremental terms relative to Alternative 0. The
changes across alternatives relative to the baseline are relatively
minor, although some impacts in later model years are more significant
(e.g., the decreases in PM2.5 in 2028 under Alternative 3).
Since the health cost value per ton of emissions differs by pollutant,
the pollutants that incur the highest costs are not necessarily those
with the largest amount of emissions (see Section V.D for discussion of
physical effects).

[GRAPHIC] [TIFF OMITTED] TR02MY22.202

[GRAPHIC] [TIFF OMITTED] TR02MY22.203

    NHTSA estimates social costs of congestion and noise across
regulatory alternatives, throughout the lifetimes of MYs 1981-2029.
Congestion and noise are functions of VMT and fleet mix, and the
differences between alternatives are due mainly to differences in VMT
(see Section V.D). Overall, congestion and noise costs increase
relative to the baseline across all alternatives, but viewed from a
model year perspective, the congestion and noise costs in some model
years, particularly in Alternatives 2.5 and 3, are negative relative to
Alternative 0. It is important to note that the overall increases in
congestion and noise costs are relatively small when compared to the
total congestion and noise costs in Alternative 0. For further details
regarding congestion and noise costs, see Chapter 6.2.3 of the TSD and
Chapter 6.5 of the FRIA.
---------------------------------------------------------------------------

    \784\ The values in the following tables have been rounded to
two significant figures.
[GRAPHIC] [TIFF OMITTED] TR02MY22.204

[GRAPHIC] [TIFF OMITTED] TR02MY22.205

    The CAFE Model accounts for benefits of increased energy security
by computing changes in social costs of petroleum market externalities.
These social costs represent the risk to the U.S. economy incurred by
exposure to price shocks in the global petroleum market that are not
accounted for by oil prices and are a direct function of gallons of
fuel consumed. The computation does not include other potential
benefits, including the reduction in impact to consumers of large
swings in gasoline prices that can occur as a result of global unrest
and other shocks to the petroleum market. These swings can be very
difficult for consumers, especially low-income consumers, to bear.
Reducing reliance on energy through more stringent fuel economy
standards provides a direct benefit to consumers. Chapter 6.2.4 of the
accompanying TSD describes the inputs involved in calculating these
petroleum market externality costs. Petroleum market externality costs
decrease relative to the baseline under all alternatives, regardless of
the discount rate used. This pattern occurs due to the decrease in
gallons of fuel consumed (see Section V.D) as the stringency of
alternatives increases. Only the earlier model year cohorts (1981-2023)
contribute to slight increases in petroleum market externality costs,
but these are offset by the decreases from later model years.
[GRAPHIC] [TIFF OMITTED] TR02MY22.206

    NHTSA estimates various monetized safety impacts across regulatory
alternatives, including costs of fatalities, non-fatal crash costs, and
property damage costs. Table V-65 presents the changes in these social
costs across alternatives and discount rates. Safety effects are
discussed at length in the FRIA accompanying this notice (see Chapter 5
of the FRIA).
[GRAPHIC] [TIFF OMITTED] TR02MY22.207

D. Physical and Environmental Effects

    NHTSA calculates estimates for the various physical and
environmental effects associated with the new standards. These include
quantities of fuel and electricity consumption, tons of greenhouse gas
(GHG) emissions and criteria pollutants reduced, and health and safety
impacts.
    In terms of fuel and electricity usage, NHTSA estimates that the
new standards could save about 60 billion gallons of gasoline and
increase electricity consumption by about 180

TWh over the lives of vehicles produced prior to MY 2030, relative to
the baseline standards (i.e., the No-Action Alternative). From a
calendar year perspective, NHTSA's analysis also estimates total annual
consumption of fuel by the entire on-road fleet from calendar year 2020
through calendar year 2050. On this basis, gasoline and electricity
consumption by the U.S. light-duty vehicle fleet evolves as shown in
the following two graphs, each of which shows projections for the No-
Action Alternative (Alternative 0, i.e., the baseline), Alternative 1,
Alternative 2, Alternative 2.5 (the final standards), and Alternative
3.
[GRAPHIC] [TIFF OMITTED] TR02MY22.208

[GRAPHIC] [TIFF OMITTED] TR02MY22.209

    NHTSA estimates the greenhouse gas emissions (GHGs) attributable to
the light-duty on-road fleet, from both vehicles and upstream energy
sector processes (e.g., petroleum refining, fuel transportation and
distribution, electricity generation). Overall, NHTSA estimates that
the revised standards could reduce greenhouse gases by about 605
million metric tons of carbon dioxide (CO2), about 730
thousand metric tons of methane (CH4), and about 17 thousand
metric tons of N2O. The following three graphs (Figure V-7,
Figure V-8, and Figure V-9) present NHTSA's estimate of how emissions
from these three GHGs could evolve over the years. Note that these
graphs include emissions from both vehicle and upstream processes. All
three GHG emissions follow similar trends in the years between 2020-
2050.

[GRAPHIC] [TIFF OMITTED] TR02MY22.210

[GRAPHIC] [TIFF OMITTED] TR02MY22.211

[GRAPHIC] [TIFF OMITTED] TR02MY22.212

    The figures presented here are not the only estimates NHTSA has
calculated regarding projected GHG emissions in future years. As
discussed in Section II, the accompanying Final SEIS uses an
``unconstrained'' analysis as opposed to the ``standard setting''
analysis presented in this final rule and FRIA. For more information
regarding projected GHG emissions, as well as model-based estimates of
corresponding impacts on several measures of global climate change, see
the Final SEIS.
    NHTSA also estimates criteria pollutant emissions resulting from
vehicle and upstream processes attributable to the light-duty on-road
fleet. NHTSA includes estimates for all of the criteria pollutants for
which EPA has issued National Ambient Air Quality Standards. Under each
regulatory alternative, NHTSA projects a dramatic decline in annual
emissions of carbon monoxide (CO), volatile organic compounds (VOC),
nitrogen oxide (NOX), and fine particulate matter
(PM2.5) attributable to the light-duty on-road fleet between
2020 and 2050. As exemplified in Figure V-10, emissions in any given
year could be very nearly the same under each regulatory alternative.
    On the other hand, as discussed in the FRIA and Final SEIS
accompanying this notice, NHTSA projects that annual SO2
emissions attributable to the light-duty on-road fleet could increase
modestly under the action alternatives, because, as discussed above,
NHTSA projects that each of the action alternatives could lead to
greater use of electricity (for PHEVs and BEVs). The adoption of
actions--such as actions prompted by President Biden's Executive orders
regarding Federal clean electricity, vehicle procurement, and
sustainability--to reduce electricity generation emission rates beyond
projections underlying NHTSA's analysis (discussed in the TSD) could
dramatically reduce SO2 emissions under all regulatory
alternatives considered here.\785\
---------------------------------------------------------------------------

    \785\ See https://www.whitehouse.gov/briefing-room/presidential-actions/2021/01/27/executive-order-on-tackling-the-climate-crisis-at-home-and-abroad/, accessed June 17, 2021. See also https://www.whitehouse.gov/briefing-room/presidential-actions/2021/12/08/executive-order-on-catalyzing-clean-energy-industries-and-jobs-through-federal-sustainability/, accessed January 18, 2022.

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

[GRAPHIC] [TIFF OMITTED] TR02MY22.213

    The following two figures show NHTSA's estimates of the projected
decreases in PM2.5 emissions and slight increases in
SO2 emissions, for all alternatives and between years 2020-
2050. The differences in SO2 emissions across alternatives
are due mainly to the various projections of electricity usage shown in
Figure V-6. See Chapter 6.6 of the FRIA for a detailed discussion of
changes in criteria pollutant emissions in the different alternatives.

[GRAPHIC] [TIFF OMITTED] TR02MY22.214

[GRAPHIC] [TIFF OMITTED] TR02MY22.215

    Health impacts quantified by the CAFE Model include various
instances of hospital visits due to respiratory problems, minor
restricted activity days, non-fatal heart attacks, acute bronchitis,
premature mortality, and other effects of criteria pollutant emissions
on health. Figure V-13 shows the differences in select health impacts
relative to the baseline, across Alternatives 1 through 3. These
changes are split between calendar year decades, with the largest
differences between the baseline and alternatives occurring between
2041-2050. The magnitude of the differences relates directly to the
changes in tons of criteria pollutants emitted. See Chapter 5.4 of the
TSD for information regarding how the CAFE Model calculates these
health impacts.

[GRAPHIC] [TIFF OMITTED] TR02MY22.216

    Lastly, NHTSA also quantifies safety impacts in its analysis. These
include estimated counts of fatalities, non-fatal injuries, and
property damage crashes occurring over the lifetimes of the light-duty
on-road vehicles considered in the analysis. Chapter 5 of the FRIA
accompanying this notice contains an in-depth discussion on the effects
of the various alternatives on these safety measures, and TSD Chapter 7
contains information regarding the construction of the safety
estimates.

E. Sensitivity Analysis

    The analysis conducted to support this rule consists of data,
estimates, and assumptions, all applied within an analytical framework,
the CAFE Model. Just like in all past CAFE rulemakings, NHTSA
recognizes that many analytical inputs are uncertain, and some inputs
are very uncertain. Of those uncertain inputs, some are likely to exert
considerable influence over specific types of estimated impacts, and
some are likely to do so for the bulk of the analysis. Yet making
assumptions in the face of that uncertainty is necessary when analyzing
possible future events (e.g., consumer and industry responses to fuel
efficiency regulation). To better understand the effect that these
assumptions have on the analytical findings, we conducted additional
model runs with alternative assumptions. These additional runs were
specified in an effort to explore a range of potential inputs and the
sensitivity of estimated impacts to changes in model inputs.
Sensitivity cases in this analysis span assumptions related to
technology applicability and cost, economic conditions, consumer
preferences, externality values, and safety assumptions, among
others.\786\ A sensitivity analysis can identify two critical pieces of
information: How big an influence does each parameter exert on the
analysis, and how sensitive are the model results to that assumption?
---------------------------------------------------------------------------

    \786\ In contrast to an uncertainty analysis, where many
assumptions are varied simultaneously, the sensitivity analyses
included here vary a single assumption and provide information about
the influence of each individual factor, rather than suggesting that
an alternative assumption would have justified a different Preferred
Alternative.
---------------------------------------------------------------------------

    That said, influence is different from likelihood. NHTSA does not
mean to suggest that any one of the sensitivity cases presented here is
inherently more likely than the collection of

assumptions that represent the reference case in the figures and tables
that follow. Nor is this sensitivity analysis intended to suggest that
only one of the many assumptions made is likely to prove off-base with
the passage of time or new observations. It is more likely that, when
assumptions are eventually contradicted by future observation (e.g.,
deviations in observed and predicted fuel prices are nearly a given),
there will be collections of assumptions, rather than individual
parameters, that simultaneously require updating. For this reason, we
do not interpret the sensitivity analysis as necessarily providing
justification for alternative regulatory scenarios to be preferred.
Rather, the analysis simply provides an indication of which assumptions
are most critical, and the extent to which future deviations from
central analysis assumptions could affect costs and benefits of the
rule.
    Table V-66 lists and briefly describes the cases that we examined
in the sensitivity analysis.
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[GRAPHIC] [TIFF OMITTED] TR02MY22.218

[GRAPHIC] [TIFF OMITTED] TR02MY22.219

    Complete results for the sensitivity cases are summarized in
Chapter 7 of the accompanying FRIA, and detailed model inputs and
outputs for curious readers are available on NHTSA's website.\787\ For
purposes of this preamble, Figure V-14 below illustrates the relative
change of the sensitivity effect of selected inputs on the costs and
benefits estimated for this final rule.
---------------------------------------------------------------------------

    \787\ https://www.nhtsa.gov/laws-regulations/corporate-average-fuel-economy.

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

[GRAPHIC] [TIFF OMITTED] TR02MY22.220

    While Figure V-14 does not show precise values, it gives us a sense
of which inputs are ones for which a different assumption would have a
much different effect on analytical findings, and which ones would not
have much effect. Assuming a different oil price trajectory would have
a relatively large effect, as would doubling the assumed ``payback
period.'' Making very high levels of mass reduction available to all
vehicles in the modeling appears to have a (relatively) very large
effect on costs, but this is to some extent an artifact of the
``standard setting'' runs used for the preamble and FRIA analysis,
where electrification is limited due to statutory restrictions (i.e.,
high levels of mass reduction are being applied more widely in
instances when electrification limits are reached). On the other hand,
assumptions about which there has been significant disagreement in the
past, like the rebound effect or the sales-scrappage response, appear
to cause only relatively small changes in net benefits across the range
of analyzed input values. Chapter 7 of the FRIA provides a much fuller
discussion of these findings, and presents net benefits estimated under
each of the cases included in the sensitivity analysis, including the
subset for which impacts are summarized in Figure V-15.

[GRAPHIC] [TIFF OMITTED] TR02MY22.221

    The results presented in the earlier subsections of Section V and
discussed in Section VI reflect the agency's best judgments regarding
many different factors, and the sensitivity analysis discussed here is
simply to illustrate the obvious, that differences in assumptions can
lead to differences in analytical outcomes, some of which can be large
and some of which may be smaller than expected. Policymaking in the
face of future uncertainty is inherently complex. Section VI explains
how NHTSA balances the statutory factors in light of the analytical
findings, the uncertainty that we know exists, and our Nation's policy
goals, to determine the CAFE standards that NHTSA concludes are maximum
feasible for MYs 2024-2026.

VI. Basis for NHTSA's Conclusion That the Final Standards are Maximum
Feasible

    In this section, NHTSA discusses the factors, data, and analysis
that the agency has considered in the selection of the final CAFE
standards for MYs 2024-2026. The primary purpose of EPCA, as amended by
EISA, and codified at 49 U.S.C. chapter 329, is energy conservation,
and fuel economy standards help to conserve energy by requiring
automakers to make new vehicles travel a certain distance on a gallon
of fuel.\788\ The goal of the CAFE standards is to conserve energy,
while taking into account the statutory factors set forth at 49 U.S.C.
32902(f), as discussed below.
---------------------------------------------------------------------------

    \788\ While individual vehicles need not meet any particular mpg
level, as discussed elsewhere in this preamble, fuel economy
standards do require vehicle manufacturers' fleets to meet certain
compliance obligations based on fuel economy levels target curves
set forth by NHTSA in regulation.
---------------------------------------------------------------------------

    Section 32902(f) of 49 U.S.C. states that when setting maximum
feasible CAFE standards for new passenger cars and light trucks, the
Secretary of Transportation \789\ ``shall consider technological
feasibility, economic practicability, the effect of other motor vehicle
standards of the Government on fuel economy, and the need of the United
States to conserve energy.'' In previous rulemakings, including both
the 2012 final rule and the recent 2020 final rule, NHTSA considered
technological feasibility, including the availability of various fuel-
economy-improving technologies to be applied to new vehicles in the
timeframe of the standards depending on the ultimate stringency levels,
and also considered economic practicability, including the differences
between a range of regulatory alternatives in terms of effects on per-
vehicle costs, the ability of both the industry and individual
manufacturers to comply with standards at various levels, as well as
effects on vehicle sales, industry employment, and consumer demand.
NHTSA also considered how compliance with other motor vehicle standards
of the Government might affect manufacturers' ability to meet CAFE
standards represented by a range of regulatory alternatives, and how
the need of the U.S. to conserve energy could be more or less addressed
under a range of regulatory alternatives, in terms of considerations
like costs to consumers, the national balance of payments,
environmental implications like climate and smog effects, and foreign
policy effects such as the likelihood that U.S. military and other
expenditures could change as a result of more or less oil consumed by
the U.S. vehicle fleet. Besides the factors specified in 32902(f),
NHTSA has also historically considered the safety effects of potential
CAFE standards, and additionally considers relevant case law. These
elements are discussed in detail throughout this analysis.
---------------------------------------------------------------------------

    \789\ By delegation, the NHTSA Administrator.
---------------------------------------------------------------------------

    As will be explained in greater detail below, NHTSA continues to
consider all of the same factors in establishing revised CAFE standards
for MYs 2024-2026 that it considered in previous rulemakings.
Importantly, however, the agency's balancing of those factors has
shifted, and NHTSA is therefore choosing to set CAFE standards at a
different level from what both the 2012 final rule and the 2020 final
rule set forth. Consideration of public comments and further analysis
by the agency has also indicated that the proposed standards were not
maximum feasible, and that the selected (more stringent) standards are,
in fact, maximum feasible for MYs 2024-2026, as discussed further
below.
    NHTSA and EPA have coordinated in setting our respective final
standards, and many of the factors that NHTSA considers to set maximum
feasible standards complement factors that EPA considers under the
Clean Air Act. The balancing of different factors by both EPA and NHTSA
are consistent with each agency's statutory authority and

recognize the statutory obligations the Supreme Court pointed to in
Massachusetts v. EPA. NHTSA also considers the Ninth Circuit's decision
in Center for Biological Diversity v. NHTSA, which remanded NHTSA's
2006 final rule (71 FR 17566, April 6, 2006) establishing standards for
MY 2008-2011 light trucks and underscored that ``the overarching
purpose of EPCA is energy conservation.'' \790\
---------------------------------------------------------------------------

    \790\ 538 F.3d 1172 (9th Cir. 2008).
---------------------------------------------------------------------------

    This final rule contains a range of regulatory alternatives for MYs
2024-2026, from retaining the 1.5 percent annual increases set in 2020,
up to a stringency increase of 10 percent annually. The agency
evaluated this range of alternatives based on factors relevant to
NHTSA's exercise of its 32902(f) authority, such as fuel saved and
emissions reduced, the technologies available to meet the standards,
the costs of compliance for automakers and their abilities to comply by
applying technologies, the impact on consumers with respect to cost,
fuel savings, and vehicle choice, and effects on safety, among other
things. Several commenters suggested that the agency consider analyzing
either more stringent or less stringent alternatives as part of this
final rule; those comments are addressed in Section IV.
    After consideration of the factors described below and information
in the administrative record for this action, including public
comments, NHTSA has concluded that standards that increase at a rate of
8 percent, 8 percent, and 10 percent in stringency for MYs 2024, 2025,
and 2026, respectively (Alternative 2.5 of this analysis) are maximum
feasible. NHTSA has determined that the need of the United States to
conserve energy compels more stringent standards if they appear
consistent with the other factors that NHTSA must consider,
particularly in light of introduction by industry of many new vehicles
with significant fuel economy improvements independent of this or any
other agency action. NHTSA has determined that Alternative 2.5 is
technologically feasible, economically practicable (based on manageable
average per-vehicle cost increases, significant consumer benefits,
minimal effects on sales, and estimated increases in employment, among
other things), and complementary to other motor vehicle standards of
the Government that are simultaneously applicable, as described below.
Despite only two years having passed since the 2020 final rule, enough
has changed in the U.S. and the world that revisiting the CAFE
standards for MYs 2024-2026, and raising their stringency considerably,
is both appropriate and reasonable.
    The following sections discuss in more detail the statutory
requirements and considerations involved in NHTSA's determination of
maximum feasible CAFE standards, and NHTSA's explanation of its
balancing of factors for this determination.

A. EPCA, as Amended by EISA

    EPCA, as amended by EISA, contains a number of provisions regarding
how NHTSA must set CAFE standards. DOT (by delegation, NHTSA) \791\
must establish separate CAFE standards for passenger cars and light
trucks \792\ for each model year,\793\ and each standard must be the
maximum feasible that the Secretary (again, by delegation, NHTSA)
believes the manufacturers can achieve in that model year.\794\ In
determining the maximum feasible levels of CAFE standards, EPCA
requires that NHTSA consider four statutory factors: Technological
feasibility, economic practicability, the effect of other motor vehicle
standards of the Government on fuel economy, and the need of the United
States to conserve energy.\795\ In addition, NHTSA has the authority to
consider (and typically does consider) other relevant factors, such as
the effect of CAFE standards on motor vehicle safety and consumer
preferences. The ultimate determination of what standards can be
considered maximum feasible involves a weighing and balancing of
factors, and the balance may shift depending on the information before
NHTSA about the expected circumstances in the model years covered by
the rulemaking. The agency's decision must also be guided by the
overarching purpose of EPCA, energy conservation, while balancing these
factors.\796\
---------------------------------------------------------------------------

    \791\ EPCA and EISA direct the Secretary of Transportation to
develop, implement, and enforce fuel economy standards (see 49
U.S.C. 32901 et seq.), which authority the Secretary has delegated
to NHTSA at 49 CFR 1.95(a).
    \792\ 49 U.S.C. 32902(b)(1) (2007).
    \793\ 49 U.S.C. 32902(a) (2007).
    \794\ Id.
    \795\ 49 U.S.C. 32902(f) (2007).
    \796\ Center for Biological Diversity v. NHTSA, 538 F.3d 1172,
1197 (9th Cir. 2008) (``Whatever method it uses, NHTSA cannot set
fuel economy standards that are contrary to Congress's purpose in
enacting the EPCA--energy conservation.'').
---------------------------------------------------------------------------

    Besides the requirement that the standards be maximum feasible for
the fleet in question and the model year in question, EPCA/EISA also
contain several other requirements, as follow.
1. Lead Time
    EPCA requires that NHTSA prescribe new CAFE standards at least 18
months before the beginning of each model year.\797\ For amendments to
existing standards (as this rule establishes), EPCA requires that if
the amendments make an average fuel economy standard more stringent, at
least 18 months of lead time must be provided.\798\ Thus, if the first
year for which NHTSA is amending standards in this rule is MY 2024,
NHTSA interprets this provision as requiring the agency to issue a
final rule covering MY 2024 standards no later than April 2022.
Commenters who raised the issue of lead time nearly universally did so
in the context of economic practicability; those comments have been
summarized and addressed in that section below.
---------------------------------------------------------------------------

    \797\ 49 U.S.C. 32902(a) (2007).
    \798\ 49 U.S.C. 32902(g)(2) (2007).
---------------------------------------------------------------------------

2. Separate Standards for Cars and Trucks, and Minimum Standards for
Domestic Passenger Cars
    As mentioned above, EPCA requires NHTSA to set separate standards
for passenger cars and light trucks for each model year.\799\ Based on
the plain language of the statute, NHTSA has long interpreted this
requirement as preventing the agency from setting a single combined
CAFE standard for cars and trucks together. Congress originally
required separate CAFE standards for cars and trucks to reflect the
different fuel economy capabilities of those different types of
vehicles, and over the history of the CAFE program, has never revised
this requirement. Even as many cars and trucks have come to resemble
each other more closely over time--many crossover and sport-utility
models, for example, come in versions today that may be subject to
either the car standards or the truck standards depending on their
characteristics--it is still accurate to say that vehicles with truck-
like characteristics such as 4-wheel drive, cargo-carrying capability,
etc., currently consume more fuel per mile than vehicles without these
characteristics.
---------------------------------------------------------------------------

    \799\ 49 U.S.C. 32902(b)(1) (2007).
    \800\ In the CAFE program, ``domestically manufactured'' is
defined by Congress in 49 U.S.C. 32904(b). The definition roughly
provides that a passenger car is ``domestically manufactured'' as
long as at least 75 percent of the cost to the manufacturer is
attributable to value added in the United States, Canada, or Mexico,
unless the assembly of the vehicle is completed in Canada or Mexico
and the vehicle is imported into the United States more than 30 days
after the end of the model year.
---------------------------------------------------------------------------

    EPCA, as amended by EISA, also requires another separate standard
to be set for domestically manufactured \800\ passenger cars. Unlike
the generally applicable standards for passenger cars and light trucks
described above, the

compliance obligation of the minimum domestic passenger car standard
(MDPCS for brevity) is identical for all manufacturers. The statute
clearly states that any manufacturer's domestically manufactured
passenger car fleet must meet the greater of either 27.5 mpg on
average, or ``92 percent of the average fuel economy projected by the
Secretary for the combined domestic and non-domestic passenger
automobile fleets manufactured for sale in the United States by all
manufacturers in the model year, which projection shall be published in
the Federal Register when the standard for that model year is
promulgated in accordance with [49 U.S.C. 32902(b)].'' \801\
---------------------------------------------------------------------------

    \801\ 49 U.S.C. 32902(b)(4) (2007).
---------------------------------------------------------------------------

    The organization Securing America's Future Energy commented that
the structure of the CAFE program is overly complex, with separate
standards for passenger cars and light trucks, and the MDPCS. Securing
America's Future Energy stated that while credit mechanisms implemented
with the passage of EISA ``allow automakers to achieve the same level
of fuel consumption at a lower cost,'' the ``mechanisms . . . remain
cumbersome.'' \802\ NHTSA agrees that the CAFE program has these
attributes, but notes that the aspects of the program identified by the
commenter are statutory, and thus beyond the agency's power to address.
---------------------------------------------------------------------------

    \802\ Securing America's Future Energy, Docket No. NHTSA-2021-
0053-1513, at 18.
---------------------------------------------------------------------------

    With regard to the MDPCS in particular, since that requirement was
promulgated, the ``92 percent'' has always been greater than 27.5 mpg,
and foreseeably will continue to be so in the future. While NHTSA
published MDPCSs for MYs 2024-2026 at 49 CFR 531.5(d) as part of the
2020 final rule, the statutory language is clear that the MDPCS must be
determined at the time that an overall passenger car standard is
promulgated and published in the Federal Register. Thus, any time NHTSA
establishes or changes a passenger car standard for a model year, the
MDPCS must also be evaluated or re-evaluated and established
accordingly.
    As in the 2020 final rule, NHTSA recognizes industry concerns that
actual total passenger car fleet standards have differed significantly
from past projections, perhaps more so when the agency has projected
significantly into the future. In that final rule, because the
compliance data showed that the standards projected in 2012 were
consistently more stringent than the actual standards, by an average of
1.9 percent. NHTSA stated that this difference indicated that in
rulemakings conducted in 2009 through 2012, NHTSA's and EPA's
projections of passenger car vehicle footprints and production volumes,
in retrospect, underestimated the production of larger passenger cars
over the MYs 2011 to 2018 period.\803\
---------------------------------------------------------------------------

    \803\ See 85 FR 25127 (Apr. 30, 2020).
---------------------------------------------------------------------------

    Unlike the passenger car standards and light truck standards which
are vehicle-attribute-based and automatically adjust with changes in
consumer demand, the MDPCS are not attribute-based, and therefore do
not adjust with changes in consumer demand and production. They are
instead fixed standards that are established at the time of the
rulemaking. As a result, by assuming a smaller-footprint fleet, on
average, than what ended up being produced, the MY 2011-2018 MDPCS
ended up being more stringent and placing a greater burden on
manufacturers of domestic passenger cars than was projected and
expected at the time of the rulemakings that established those
standards. In the 2020 final rule, therefore, NHTSA agreed with
industry concerns over the impact of changes in consumer demand (as
compared to what was assumed in 2012 about future consumer demand for
greater fuel economy) on manufacturers' ability to comply with the
MDPCS and in particular, manufacturers that produce larger passenger
cars domestically. Some of the largest civil penalties for
noncompliance in the history of the CAFE program have been paid for
noncompliance with the MDPCS. NHTSA also expressed concern at that time
that consumer demand may shift even more in the direction of larger
passenger cars if fuel prices continue to remain low. Sustained low oil
prices can be expected to have real effects on consumer demand for
additional fuel economy, and if that occurs, consumers may foreseeably
be even more interested in 2WD crossovers and passenger-car-fleet SUVs
(and less interested in smaller passenger cars) than they are at
present.
    Therefore, in the 2020 final rule, to help avoid similar outcomes
in the 2021-2026 timeframe to what had happened with the MDPCS over the
preceding model years, NHTSA determined that it was reasonable and
appropriate to consider the recent projection errors as part of
estimating the total passenger car fleet fuel economy for MYs 2021-
2026. NHTSA therefore projected the total passenger car fleet fuel
economy using the central analysis value in each model year, and
applied an offset based on the historical 1.9 percent difference
identified for MYs 2011-2018.
    In the proposal, NHTSA proposed to retain the 1.9 percent offset
for the MDPCS for MYs 2024-2026, on the basis that the proposal would
increase stringency considerably over the baseline standards and that
civil penalties have also recently increased, so that the MDPCS may
continue to pose a significant challenge to certain manufacturers.
Table VI-1 shows the calculation values used to determine the total
passenger car fleet fuel economy value for each model year for the
proposal.

[GRAPHIC] [TIFF OMITTED] TR02MY22.222

    Using this approach, the MDPCS under each regulatory alternative
considered in the proposal was thus as shown in Table VI-2.
[GRAPHIC] [TIFF OMITTED] TR02MY22.223

    NHTSA sought comment on another approach to offsetting the MDPCS,
which attempted to project explicitly how passenger car footprints
might change in the future. NHTSA stated that examination of the
average footprints of passenger cars sold in the U.S. from 2008, when
EPA began reporting footprint data, to 2020 indicated a clear and
statistically significant trend of gradually increasing average
footprint (Figure VI-1). The average annual increase in passenger car
footprint, estimated by ordinary least squares, indicated that the
passenger car footprints increased by an average of 0.1206 square feet
annually over the 2008-2020 period. The estimated average increase was
statistically significant at the 0.000001 level, with a 95 percent
confidence interval of (0.0929, 0.1483).

[GRAPHIC] [TIFF OMITTED] TR02MY22.224

    The alternate method for calculating an offset to the MDPCS was
described as consisting of three steps, as follows:
     Starting from the average footprint of passenger cars in
2020 as reported by EPA, add 0.1206 square feet per year through 2026.
     Calculate the estimated fuel economy of passenger cars
using the average projected footprint numbers calculated in step 1 and
the footprint functions that are the passenger car standards for the
corresponding model year, which then become ``the Secretary's projected
passenger car fuel economy numbers.''
     Apply the 92 percent factor to calculate the MDPCS for
2024, 2025, and 2026.
    The results of this approach are shown in Table VI-3.
    [GRAPHIC] [TIFF OMITTED] TR02MY22.225

    Comparing all of these, Table VI-4 shows (1) the unadjusted 92
percent MDPCS for MYs 2024-2026, (2) the proposed 1.9 percent-offset
MDPCS for MYs 2024-2026, and (3) the alternate approach offset MDPCS
for MYs 2024-2026.

[GRAPHIC] [TIFF OMITTED] TR02MY22.226

BILLING CODE 4910-59-C
    While the CAFE Model analysis underlying the proposal, the PRIA,
and the Draft SEIS did not reflect an offset to the unadjusted 92
percent MDPCS, separate analysis that did reflect the change
demonstrated that doing so did not change estimated impacts of any of
the regulatory alternatives under consideration, despite the mpg values
being slightly different as shown in Table VI-4.
    NHTSA sought comment on the discussion above, and also on whether
to apply the MDPCS without any modifier.
    Comments on the MDPCS were mixed. Industry commenters generally
supported the proposal to continue to adjust the MDPCS downward.\804\
Other commenters disagreed with the proposal to continue to adjust the
MDPCS. The UAW expressed concern that automakers' strategies for
complying with the MDPCS might involve ``gaming the system,'' and
stated that ``. . . regulations and laws should be structured to
incentivize the production of a diverse domestic fleet and not weaken
the intended purpose of the [MDPCS].'' \805\ A coalition of
environmental group commenters stated that the adjustment was
unlawful,\806\ and UCS provided additional separate comments arguing
that ``NHTSA must base the MDPCS on NHTSA's passenger car footprint
projections in the central analysis of the rule, as is legally
required.'' \807\ UCS commented that ``[i]t is patently arbitrary to
conduct the analysis for CAFE standards using a certain set of
projections, and then, when setting other standards in the same
rulemaking, state that the projections in the main analysis are wrong.
The agency either has confidence in the projections in the central
analysis or they do not; and if they do not, they should change them.''
\808\ Regarding the alternative approach to offsetting the MDPCS on
which NHTSA sought comment, UCS stated that it was fundamentally
similar to the proposed approach to offsetting, and ``[t]he agency
shows no substantial benefit to this alternative approach, and instead
finds quite clearly just how drastically either offset differs from the
values found in its central analysis underpinning the rule.'' \809\ UCS
further argued that it was unreasonable to assume that the adjustment
could only go in one direction, because it was entirely possible that
passenger car footprints could shift smaller depending on future fuel
prices.\810\
---------------------------------------------------------------------------

    \804\ See, e.g., Auto Innovators, Docket No. NHTSA-2021-0053-
1492, at 15, 55-56; Ford, Docket No. NHTSA-2021-0053-1545, at 2.
    \805\ UAW, Docket No. NHTSA-2021-0053-0931, at 4.
    \806\ CBD et al., Docket No. NHTSA-2021-0053-1572, at 9.
    \807\ UCS, Docket No. NHTSA-2021-0053-1567, at 23-24.
    \808\ Id. at 21.
    \809\ Id.
    \810\ Id. at 24.
---------------------------------------------------------------------------

    For the final rule, NHTSA is continuing to employ the 1.9 percent
offset for the MDPCS. NHTSA disagrees that EISA requires the agency to
base the MDPCS specifically on the passenger car footprint projections
for the central analysis, because 49 U.S.C. 32902 simply states ``92
percent of the average fuel economy projected by the Secretary''
(emphasis added) for the combined passenger car fleet for the model
year(s) in question. NHTSA agrees with both industry commenters and UCS
that it is difficult to predict passenger car footprint trends in
advance, which means that, as various commenters have consistently
noted, the MDPCS may turn out quite different from 92 percent of the
ultimate average passenger car standard once a model year is complete.
Nevertheless, NHTSA is setting the MDPCS as part of this rulemaking,
consistent with the statute,

recognizing that it will not adjust in response to those footprint
trends unless and until NHTSA conducts a new rulemaking. NHTSA is also
concerned, as the UAW commenters suggested, that automakers struggling
to meet the unadjusted MDPCS may choose to import their passenger cars
rather than producing them domestically. Given the stringency of the
overall standards and the increase in the civil penalty rate, NHTSA
continues to believe that this adjustment is appropriate, reasonable,
and consistent with Congress' intent.
3. Attribute-Based and Defined by a Mathematical Function
    EISA requires NHTSA to set CAFE standards that are ``based on 1 or
more attributes related to fuel economy and express[ed] . . . in the
form of a mathematical function.'' \811\ Historically, NHTSA has based
standards on vehicle footprint, and proposed to continue to do so for
MYs 2024-2026. As in previous rulemakings, NHTSA proposed to define the
standards in the form of a constrained linear function that generally
sets higher (more stringent) targets for smaller-footprint vehicles and
lower (less stringent) targets for larger-footprint vehicles. NHTSA
sought comment both on the continued use of footprint as the relevant
attribute and on the continued use of the constrained linear curve
shapes. Comments received on those topics are addressed and responded
to in Section III.B of the preamble.
---------------------------------------------------------------------------

    \811\ 49 U.S.C. 32902(b)(3)(A) (2007).
---------------------------------------------------------------------------

    A coalition of environmental group commenters urged NHTSA to set a
``backstop,'' or ``minimum standard below which the actual performance
of the fleet may not fall.'' \812\ The commenters stated that, ``[f]or
example, in MY 2019, the most recent year for which information is
available, the fleet mix of sedans and station wagons had shifted to
only 33 percent of the fleet, compared to 80 percent in MY 1975. As a
result of mix shift changes like this, real-world fuel economy has been
lower than NHTSA has previously projected.'' \813\ The commenters
argued that ``NHTSA should explain why it failed to propose a backstop
in this rulemaking and should commit to doing so in its next
rulemaking.'' \814\
---------------------------------------------------------------------------

    \812\ CBD, et al., at 9-10.
    \813\ Id.
    \814\ Id.
---------------------------------------------------------------------------

    In response, finalizing a backstop as part of this rulemaking is
not within scope, because (as commenters note) NHTSA did not propose a
backstop nor discuss one in the NPRM. However, as NHTSA explained in
the 2012 final rule in response to similar comments, the MDPCS ``was
intended to act as a `backstop,' ensuring that domestically-
manufactured passenger cars reached a given mpg level even if the
market shifted in ways likely to reduce overall fleet mpg. Congress was
silent as to whether the agency could or should develop similar
backstop standards for imported passenger cars and light trucks. NHTSA
has struggled with this question since EISA was enacted.'' \815\ Even
in the 2010 final rule (75 FR 25324, May 7, 2010), NHTSA considered
this question and declined to enact additional minimum standards for
imported passenger cars and light trucks, out of concern about the
possibility of such standards imposing inequitable regulatory burdens
of the kind that attribute-based standards sought to avoid. NHTSA
stated that:
---------------------------------------------------------------------------

    \815\ 77 FR 63020 (Oct. 15, 2012).

Unless the backstop was at a very weak level, above the high end of
this range, then some percentage of manufacturers would be above the
backstop even if the performance of the entire industry remains
fully consistent with the emissions and fuel economy levels
projected for the final standards. For these manufacturers and any
other manufacturers who were above the backstop, the objectives of
an attribute-based standard would be compromised and unnecessary
costs would be imposed. This could directionally impose increased
costs for some manufacturers. It would be difficult if not
impossible to establish the level of a backstop standard such that
costs are likely to be imposed on manufacturers only when there is a
failure to achieve the projected reductions across the industry as a
whole. An example of this kind of industry-wide situation could be
when there is a significant shift to larger vehicles across the
industry as a whole, or if there is a general market shift from cars
to trucks. The problem the agenc[y is] concerned about in those
circumstances is not with respect to any single manufacturer, but
rather is based on concerns over shifts across the fleet as a whole,
as compared to shifts in one manufacturer's fleet that may be more
than offset by shifts the other way in another manufacturer's fleet.
However, in this respect, a traditional backstop acts as a
manufacturer-specific standard.\816\
---------------------------------------------------------------------------

    \816\ 75 FR 25324, 25369 (May 7, 2010).

---------------------------------------------------------------------------
    In the 2012 final rule, NHTSA stated that:

We continue to agree with the environmental and consumer group
commenters that we have authority to adopt additional backstop
standards if we deem it appropriate to do so. However, we also
continue to conclude that insufficient time has passed in which
manufacturers have been subject to the attribute-based standards to
assess whether or not backstops would in fact help ensure that fuel
savings anticipated by the agency at the time of the final rule are
met, and even if they did, whether the benefits of that insurance
outweigh potential impacts [on] consumer choice that could occur by
heading down the road that Congress rejected when it required CAFE
standards to be attribute-based. If we determined that backstops for
imported passenger cars and light trucks were necessary, it would be
because consumers are choosing different (likely larger) vehicles in
the future than the agencies assumed in this rulemaking analysis.
Imposing additional backstop standards for those fleets would
require manufacturers to build vehicles which the majority of
consumers (under this scenario) would presumably not want. Vehicles
that cannot be sold are the essence of economic impracticability,
and vehicles that do not sell cannot save fuel or reduce emissions,
because they are not on the roads, and thus do not meet the need of
the nation to conserve fuel.

On the other hand, based on the assumptions underlying the analysis
for this rulemaking, consumers will experience significant benefits
as a result of buying the vehicles manufactured to meet these
standards. We have no reason to expect that consumers will turn a
blind eye to these benefits, and recent trends indicate that fuel
economy is rising in importance as a factor in vehicle purchasing
decisions. We thus conclude, for purposes of this final rule, that
imposing additional backstop standards for imported passenger cars
and light trucks would be premature. As stated in the NPRM, NHTSA
will continue to monitor vehicle sales trends and manufacturers'
response to the standards, and we will revisit this issue as part of
the future rulemaking to develop final standards for MYs 2022-
2025.\817\
---------------------------------------------------------------------------

    \817\ 77 FR 63022 (Oct. 15, 2012).

    It appears that this question has ripened. Looking at the EPA
Automotive Trends Report for 2021, there has been growth in vehicle
---------------------------------------------------------------------------
size and mix shifts from cars to trucks and SUVs over time:

Between MY 2008 and 2020, fuel economy and footprint increased
within each of the five vehicle types, and horsepower increased in
four. Weight decreased within each of the vehicle types. These
trends within vehicle types are largely attributable to design and
technology changes over that time span. In addition to technology
changes, the market shifted towards car and truck SUVs, which are
often larger, heavier, more powerful, and less fuel efficient than
sedan/wagons they replaced. These market changes increased the
overall horsepower and footprint of the average new vehicle,
compared to technology-driven changes alone. The trend towards
larger, heavier, and more powerful vehicles has also offset some of
the fleetwide fuel economy and CO2 emission benefits that
otherwise would have been achieved through improving technology.
Market trends led to an increase in the weight of a new average
vehicle, even as weight fell within each vehicle type.\818\
---------------------------------------------------------------------------

    \818\ EPA Automotive Trends Report, 2021, Highlights. Available
at https://www.epa.gov/automotive-trends/highlights-automotive-trends-report. (Accessed: March 15, 2022)

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

    EPA goes on to note, however, that most manufacturers have improved
fuel economy and reduced CO2 emissions over the MY 2015-2020
time frame, explaining that most increases in emissions/reductions in
fuel economy at a manufacturer level occur because (as commenters
suggested) the manufacturers are producing more SUV/trucks and fewer
sedan/wagons.\819\ Fleetwide, emissions and fuel economy are still the
best they have ever been, and continue to improve.
---------------------------------------------------------------------------

    \819\ Id.
---------------------------------------------------------------------------

    At the industry-wide and individual-manufacturer level, then, to
the extent that ``backsliding'' is occurring, it appears to be the
result of trucks and SUVs increasing their share of the market, and
sedans and station wagons decreasing theirs. It is not clear to NHTSA
at this time that setting minimum standards for imported passenger cars
and light trucks comparable to the MDPCS would meaningfully change this