2017 and Later Model Year Light-Duty Vehicle GHG Emissions and CAFE Standards: Supplemental Notice of Intent |
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Topics: National Highway Traffic Safety Administration
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Lisa P. Jackson
December 8, 2010
[Federal Register: December 8, 2010 (Volume 75, Number 235)]
[Proposed Rules]
[Page 76337-76345]
From the Federal Register Online via GPO Access [wais.access.gpo.gov]
[DOCID:fr08de10-33]
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Parts 85, 86, and 600
DEPARTMENT OF TRANSPORTATION
National Highway Traffic Safety Administration
49 CFR Parts 531 and 533
[EPA-HQ-OAR-2010-0799; FRL-9235-8; NHTSA-2010-0131]
RIN 2060-AQ54; RIN 2127-AK79
2017 and Later Model Year Light-Duty Vehicle GHG Emissions and
CAFE Standards: Supplemental Notice of Intent
AGENCIES: Environmental Protection Agency (EPA) and the National
Highway Traffic Safety Administration (NHTSA), Department of
Transportation (DOT).
ACTION: Supplemental Notice of Intent to conduct a joint rulemaking.
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SUMMARY: On May 21, 2010, President Obama issued a Presidential
Memorandum requesting that the Environmental Protection Agency (EPA)
and the National Highway Traffic Safety Administration (NHTSA), on
behalf of the Department of Transportation, develop, through notice and
comment rulemaking, a coordinated National Program under the Clean Air
Act (CAA) and the Energy Policy and Conservation Act (EPCA), as amended
by the Energy Independence and Security Act (EISA), to improve fuel
economy and to reduce greenhouse gas emissions of light-duty vehicles
for model years 2017-2025. President Obama requested that the agencies
issue a Notice of Intent (NOI) to issue a proposed rulemaking that
announces plans for setting stringent fuel economy and greenhouse gas
emissions standards for light-duty
[[Page 76338]]
vehicles for model year 2017 and beyond. On September 30, 2010, the
agencies issued the requested Notice, which described the agencies'
initial assessment of potential levels of stringency for a National
Program for model years 2017-2025 (See 75 FR 62739 (Oct. 13, 2010).
This Supplemental Notice highlights input on many of the key issues the
agencies have received in response to the September NOI and the
accompanying Interim Joint Technical Assessment (TAR) developed by EPA,
NHTSA, and the California Air Resources Board, and also provides an
overview of many of the key technical analyses the agencies have
planned and are conducting to support the upcoming proposed rule.
DATES: The agencies currently expect to issue a proposed rulemaking for
a coordinated National Program for model year 2017-2025 light-duty
vehicles by September 30, 2011, and a final rulemaking by July 31,
2012.
ADDRESSES: See the FOR FURTHER INFORMATION CONTACT section.
FOR FURTHER INFORMATION CONTACT: EPA: Tad Wysor, Office of
Transportation and Air Quality, Assessment and Standards Division,
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI
48105; telephone number: 734-214-4332; fax number: 734-214-4816; e-mail
address: wysor.tad@epa.gov, or Assessment and Standards Division
Hotline; telephone number (734) 214-4636; e-mail address
asdinfo@epa.gov. DOT/NHTSA: Rebecca Yoon, Office of Chief Counsel,
National Highway Traffic Safety Administration, 1200 New Jersey Avenue,
SE., Washington, DC 20590. Telephone: (202) 366-2992.
SUPPLEMENTARY INFORMATION:
How can I get copies of this document and other related information?
NHTSA and EPA have established dockets for the September 30, 2010
Notice of Intent and upcoming rulemaking under Docket ID numbers NHTSA-
2010-0131 and EPA-HQ-OAR-2010-0799, respectively. You may read the
materials placed in the dockets (e.g., the comments submitted in
response to the September 30, 2010 Notice of Intent by other interested
persons) at any time by going to http://www.regulations.gov. Follow the
online instructions for accessing the dockets. You may also read the
materials at the EPA Docket Center or NHTSA Docket Management Facility
at the following locations: EPA: EPA Docket Center, EPA/DC, EPA West,
Room 3334, 1301 Constitution Ave., NW., Washington, DC. The Public
Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through
Friday, excluding legal holidays. The telephone number for the Public
Reading Room is (202) 566-1744. NHTSA: Docket Management Facility, M-
30, U.S. Department of Transportation, West Building, Ground Floor, Rm.
W12-140, 1200 New Jersey Avenue, SE., Washington, DC 20590. The Docket
Management Facility is open between 9 a.m. and 5 p.m. Eastern Time,
Monday through Friday, except Federal holidays.
How do I prepare and submit comments?
The dockets established by the agencies will remain open for the
duration of the rulemaking. While the agencies have not established a
set comment period for this Supplemental NOI, you may continue to
submit comments to the dockets throughout the course of the rulemaking.
An explanation of how to submit comments to the rulemaking dockets is
available in the September NOI, 75 FR 62739 (Oct. 13, 2010), or you may
contact the agency officials listed above for more information.
I. Introduction
A. Purpose of This Supplemental Notice of Intent (NOI)
This Supplemental Notice of Intent represents a further step in the
process that EPA and NHTSA have initiated to develop a proposed
rulemaking to establish greenhouse gas (GHG) and fuel economy standards
for model years 2017-2025 light-duty vehicles. This document is meant
to aid the public's understanding of some of the key issues facing the
agencies in developing the upcoming rulemaking. This Supplemental NOI
highlights many of the key comments that the agencies have received in
response to the initial Notice of Intent issued on September 30, 2010,
and to the Interim Joint Technical Assessment Report that accompanied
that Notice.\1\ This Supplemental NOI, however, does not present a
comprehensive summary of comments received to date. This Supplemental
NOI also discusses the agencies' plans for some of the key technical
work and analyses that will be undertaken in developing the upcoming
proposed rulemaking.
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\1\ In addition to publishing the September NOI in the Federal
Register (see supra Note 1 above), the agencies also posted both the
September NOI and the Interim Joint TAR on our Web sites. Readers
may access them at http://www.epa.gov/otaq/climate/regulations.htm
and http://www.nhtsa.gov/fuel-economy.
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The purpose of this Supplemental NOI has changed from the agencies'
original intent for this document. The September NOI stated that a
principal goal of the Supplemental NOI would be ``to narrow the range
of potential stringencies for the future proposed standards, as well as
to reflect new technical data and information and, as appropriate,
further analysis supplementing the Interim Joint TAR.'' \2\ However,
given the short amount of time between the issuance of the September
NOI/TAR and this Supplemental NOI, the agencies were unable to complete
several additional pieces of technical research in time for inclusion
in analysis to support this Supplemental NOI. Additionally, based on
the stakeholder input between the end of September and now and on
public comments, the agencies have concluded that narrowing the range
of potential stringencies would not be appropriate at this time. As
discussed further in this Notice, in order to develop the proposed
standards, a more complete analysis will need to be done. Therefore, at
this time we are not updating the assessment presented in the September
NOI, and instead we will continue to conduct analyses for purposes of
developing the proposal. Many of the public comments supported the
agencies' plans, noted in the September NOI, as to types and scope of
analyses to be conducted for the proposed rulemaking. Therefore, the
agencies are moving forward with this work as further described in
Section III. As NHTSA and EPA move forward, we will continue to work
with California in our technical assessments of potential standards,
and will continue extensive dialogue with stakeholders.
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\2\ 75 FR 62741.
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B. Background on the September NOI and Interim Joint Technical
Assessment Report
As discussed above, the September NOI was issued in response to a
May 21, 2010 Presidential Memorandum, which requested that NHTSA and
EPA develop, through notice and comment rulemaking, a coordinated
National Program under the Clean Air Act (CAA) and the Energy Policy
and Conservation Act (EPCA), as amended by the Energy Independence and
Security Act (EISA), to improve fuel economy and reduce greenhouse gas
emissions of light-duty vehicles for model years 2017-2025. The
Presidential Memorandum stated ``The program should also seek to
achieve substantial annual progress in reducing transportation sector
greenhouse gas emissions and fossil fuel consumption, consistent with
my Administration's overall energy and
[[Page 76339]]
climate security goals, through the increased domestic production and
use of existing, advanced, and emerging technologies, and should
strengthen the industry and enhance job creation in the United
States.'' This upcoming rulemaking will build on the first phase of the
National Program for fuel economy and GHG emissions standards, for
model year 2012-2016 vehicles, which was issued on April 1, 2010.\3\
The Presidential Memorandum also requested that the agencies work with
the State of California to develop a technical assessment to inform the
rulemaking process. EPA and NHTSA worked with CARB to develop an
initial technical assessment consistent with the President's request.
The agencies released the document, the Interim Joint Technical
Assessment Report (TAR), in conjunction with the September NOI.\4\
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\3\ See 75 FR 25324 (May 7, 2010).
\4\ ``Interim Joint Technical Assessment Report: Light-Duty
Vehicle Greenhouse Gas Emission Standards and Corporate Average Fuel
Economy Standards for Model Years 2017-2025,'' issued jointly by
EPA, NHTSA and CARB, September 2010. Available at http://
www.nhtsa.gov/fuel-economy and http://www.epa.gov/OTAQ/climate/
regulations.htm.
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In the Interim Joint TAR, the agencies and CARB conducted an
initial fleet-wide analysis of improvements in overall average GHG
emissions and fuel economy levels. The agencies stated in the September
NOI that for purposes of an initial assessment, this range represents a
reasonably broad range of stringency increases for potential future GHG
emissions standards and is also consistent with the increases suggested
by CARB in its letter of commitment in response to the President's
memorandum. We analyzed a range of potential stringency scenarios for
model year 2025, representing a 3, 4, 5, and 6 percent per year
estimated decrease in GHG levels from the model year 2016 fleet-wide
average of 250 gram/mile (g/mi). Thus, the model year 2025 scenarios
analyzed in the TAR range from 190 g/mi (calculated to be equivalent to
47 miles per gallon, mpg) under the 3 percent per year reduction
scenario to 143 g/mi (calculated to be equivalent to 62 mpg) under the
6 percent per year scenario.\5\ These levels correspond to on-road
values of 37 to 50 mpg, respectively. For each of these scenarios,
NHTSA, EPA, and CARB also analyzed four ``technological pathways'' by
which these levels could be attained. These pathways were meant to
represent ways that a hypothetical manufacturer could increase fuel
economy and reduce greenhouse gas emissions, and do not represent ways
that they would be required to or necessarily would respond to future
standards. Each technology pathway emphasizes a different mix of
advanced technologies, by assuming various degrees of penetration of
advanced gasoline technologies, mass reduction, hybrid electric
vehicles (HEVs), plug-in hybrids (PHEVs), and electric vehicles
(EVs).\6\
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\5\ The modeled scenarios, like the EPA's MY 2012-2016
standards, include the potential use of air conditioning emission
reductions, which EPA estimated at 15 grams (compared to a 2008
baseline) in 2025 for all four technology paths. The estimates for
further air conditioning reductions are largely due to an
anticipated increase in the use of alternative refrigerants. As a
result of including A/C-related emission reductions in the modeling,
however, the ``mpg-equivalent'' values presented in the September
NOI and Interim Joint TAR do not reflect analysis of potential CAFE
improvements, and should be taken as merely illustrative mpg levels
if manufacturers achieved all modeled GHG emission improvements
through reductions in tailpipe emissions. The agencies note
additionally that real-world CO2 is typically 25 percent
higher and real-world fuel economy is typically 20 percent lower.
Thus the 3% to 6% range evaluated in the September assessment would
span a range of real-world fuel economy values (again, if all
improvements were achieved through reductions of tailpipe emissions)
of approximately 37 to 50 mpg-equivalent, which correspond to the
regulatory test procedure values of 47 to 62, respectively.
\6\ Pathway A represented an approach where the industry would
focus on HEVs, with less reliance on advanced gasoline vehicles and
mass reduction, relative to Pathways B and C; Pathway B focused on
advanced gasoline vehicles and mass reduction at a more moderate
level (higher than in Pathway A but less than in Pathway C); Pathway
C focused on advanced gasoline vehicles and mass reduction, and to a
lesser extent on HEVs; and Pathway D focused on the use of PHEV, EV,
and HEV technology, and relied less on advanced gasoline vehicles
and mass reduction. Further information on the four technology
pathways is provided in Section II.A.3 of the September NOI and in
Section 6.3 of the Interim Report.
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The TAR also discusses the significant additional technical
information and analysis that will be needed to support the rulemaking
development process. For the initial assessment in the TAR, we analyzed
the vehicle fleet as one single industry-wide fleet, which did not
account for differences among individual manufacturers and did not
separately analyze car and truck fleet standards, as required by EPCA/
EISA. By focusing the analysis on the technology itself, independent of
the individual manufacturer, the agencies produced results that
indicated how that single hypothetical fleet could achieve greater GHG
reductions and improved fuel economy in the most efficient manner.
Treating the entire fleet as a single fleet assumes, for example, that
averaging GHG performance across all vehicle platforms is possible
irrespective of who the individual manufacturer is for a particular
vehicle platform. This can be thought of as analyzing the fleet as if
there was a single large manufacturer, instead of multiple individual
manufacturers. In addition, this analysis assumed there are no
statutory or other limits on manufacturers' ability to transfer credits
between passenger car and light truck fleets, no limits on the ability
to trade credits between manufacturers, and that all manufacturers
fully utilize such flexibilities with no transfer costs in doing so.
The approach used for the TAR analyses provides an initial and
approximate evaluation of the potential costs and benefits of the
fleet-wide scenarios modeled. The agencies, however, cautioned in the
Interim Joint TAR that several of the simplifications employed in the
September NOI/TAR evaluation would not be used for purposes of a full
Federal rulemaking analysis because such analysis must reflect all
statutory requirements and limitations faced by the agencies in setting
GHG and CAFE standards. The agencies noted that EPCA/EISA, in
particular, are fairly prescriptive as compared to the CAA. In order to
ensure that NHTSA's statutory framework is accounted for, and as
permitted under the CAA, the agencies' analysis for the NPRM will
examine attribute-based standards under which each manufacturer is
subject to its own individual passenger car and light truck CAFE and
GHG requirements for each model year, where the standard for each
manufacturer is based on the production-weighted average of its
passenger car and light truck targets, with the targets established in
the attribute-based curves.
Additionally, the NPRM's CAFE analysis will account for EPCA/EISA
restrictions on credit use and transfer/trading, the ability of
manufacturers to pay fines in lieu of compliance, the differential
impact of potential standards on individual manufacturers (historically
relevant to NHTSA's determinations of whether standards are
economically practicable), and a more extensive analysis of relevant
social benefits.\7\ The NOI also noted NHTSA's practice of considering
safety effects in determining appropriate levels of standards
stringency, as recognized approvingly in case law over several decades.
In addition, EPA has also considered safety impacts in previous mobile
source rules, including for the 2012-2016 National Program. Generally,
[[Page 76340]]
the agencies stressed that much work remained to be done, and that the
upcoming rulemaking to develop the standards for MYs 2017 and beyond
will be based on a full analysis that is consistent with both statutes
and similar to the analysis for the MYs 2012-2016 rulemaking. Moreover,
as noted in the September NOI, the agencies analyzed scenarios in the
3-6% range, but we have made no decisions on the appropriate standards
for the NPRM. For the full proposed rulemaking, the agencies are not
precluded from considering standards outside of this range. For
purposes of the Draft Environmental Impact Statement and NPRM discussed
below, NHTSA intends to analyze standards both within and outside this
range, as well as an alternative which is estimated to maximize net
benefits.
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\7\ Relevant social benefits would include, for example, the
social cost of carbon, criteria pollution reduction and energy
security improvements. A much more detailed discussion of caveats
with respect to the September NOI/TAR analysis can be found in
Section 6.2 of the Interim Joint TAR, pp. 6-1 through 6-6.
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II. Highlights of Stakeholder Input to Date on the September NOI and
TAR
EPA and NHTSA requested comment on the initial assessments
contained in the September NOI and the TAR. The agencies received
comments from more than 30 organizations and more than 100,000
individuals. In addition to the public comments, NHTSA, EPA, and CARB
met individually with the ten largest automobile original equipment
manufacturers (OEMs),\8\ as well as environmental non-governmental
organizations (NGOs),\9\ and representatives of State and local
governments.\10\ We summarize below some key themes that we heard from
stakeholders, both in the public comments and in the outreach meetings.
This summary is meant to provide an overview of many key issues we
heard from stakeholders, and is in no way meant to reflect a full
summary of the public comments received. We encourage readers
interested in more details to review the actual public comments
received in the agencies' dockets. The agencies will continue to
consider all of these comments as we develop the proposed rulemaking.
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\8\ NHTSA, EPA, and CARB met with the representatives of the
following OEMs: Chrysler, Ford, General Motors, Honda, Toyota,
Hyundai, Nissan, BMW, Daimler, and Volkswagen.
\9\ NHTSA, EPA, and CARB met with representatives from several
environmental NGOs, including the Natural Resources Defense Council,
Union of Concerned Scientists, Sierra Club, National Wildlife
Federation, ACEEE, Environment America, Safe Climate Campaign, and
Environmental Defense Fund.
\10\ NHTSA, EPA and CARB met with representatives of the
National Association of Clean Air Agencies (NACAA) and the Northeast
States for Coordinated Air Use Management (NESCAUM), and several
representatives of individual State and local governments.
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A. Continuing the National Program for Model Years 2017-2025
There was widespread stakeholder support for continuing the
National Program for improved fuel economy and greenhouse gas standards
for model years 2017-2025.
In both the written comments in response to the NOI and in our
recent meetings with automotive companies (both the meetings held
during July-August 2010 prior to the NOI, and in our meetings with
automotive companies in October-November 2010, after the publication of
the NOI), all manufacturers indicated their support for the
continuation of the National Program approach, established in the 2012-
2016 Joint NHTSA-EPA final rule, for model years 2017 and later. The
manufacturers emphasized the significant benefits in the development of
coordinated fuel economy and greenhouse gas standards that can be met
with a single fleet of vehicles that can be sold nationwide. OEMs were
also supportive of the on-going coordination between NHTSA and EPA with
CARB in the development of 2017-2025 program, including coordination on
the time frame for the State and Federal rulemaking, in order to help
ensure alignment of the State and Federal standards.
Many automotive companies that provided comments and two OEM
associations expressed concern regarding the potential effects a
revised California Zero Emission Vehicle (ZEV) program could have on a
manufacturer's ability to achieve a ``single national fleet,'' because
the ZEV program could drive the use of particular vehicle technologies
that may not be chosen by manufacturers to meet the Federal CAFE and
GHG standards.
Support for the concept of the National Program approach was also
included in written comments from auto dealers and automotive component
manufacturers.
The States and environmental NGOs also expressed strong support for
the continuation of the National Program in model years 2017-2025, and
stated that the agencies should continue to fully include California in
this process. Environmental NGOs stated that stringent GHG and fuel
economy standards are needed to make America more energy independent,
reduce global warming pollution to curb the impacts of climate change,
and save consumers money at the pump keeping it in the American
economy. Several NGOs also stated that future standards can help ensure
the U.S. auto industry remains competitive globally, and emphasized
that other countries and regions are moving forward with strengthened
standards and plans for vehicle electrification programs.
Although the environmental NGOs support a National Program, some
suggested that the goal of a ``single national fleet'' does not mean
that the EPA and NHTSA standards need to be identical. These commenters
suggested that, as with the MYs 2012-2016 final rulemaking, the two
agencies' standards continue to include some important differences
based on differences in statutes, such as the treatment of air
conditioning, electric vehicles, and credit transfers.
In addition, we have received comments from more than 100,000
individuals supporting stronger Federal fuel economy and greenhouse gas
standards for model years 2017-2025.
B. Level of the Standards
Since publication of the September NOI and release of the Interim
Joint Technical Report, the agencies have held further meetings with
the ten largest auto manufacturers (OEMs), and from those meetings and
written comments from OEMs and two OEM associations, we received a
range of perspectives from the companies regarding the potential levels
of stringency that the agencies should consider evaluating for model
years 2017-2025 standards in the upcoming full rulemaking. In general,
the OEMs indicated that they are investing significantly in the full
range of technologies discussed by the agencies in the September NOI
and TAR, and the OEMs agree that many of those technologies offer a
significant potential for reducing fuel consumption and GHG emissions.
However, many OEMs also commented that the potential of certain
technologies to reduce fuel consumption and GHG emissions was less than
the agencies had projected, as discussed further below. Auto
manufacturers indicated that they know how to produce a wide range of
advanced technologies, and that they intend to introduce a wide range
of vehicle models that rely upon these technologies, including advanced
gasoline and diesel vehicles, hybrid-electric vehicles, plug-in hybrid
electric vehicles, and battery-electric vehicles, during the model
years in question. Many OEMs also commented, however, that due to its
fundamental approach (as well as specific assumptions regarding
available technologies), the analysis presented in the TAR understated
the challenges and costs that manufacturers would face in attempting to
achieve the examined scenarios.
[[Page 76341]]
Manufacturers stated that EPCA does not allow unlimited credit
transfers, and stated that an analysis consistent with EPCA would
support less stringent CAFE standards than an analysis of the sort
presented in the September NOI and TAR.
Both manufacturers and the Consumer Federation of America (CFA)
supported the agencies' plans to assess manufacturers' individual
abilities to meet new standards.
Both in meetings with the agencies and in written comments, many
OEMs nonetheless indicated that the level of stringency they could
achieve in the future was not necessarily constrained by the
availability of technology--that is, that technology does exist that
they could deploy to meet fairly stringent standards. However, the OEMs
emphasized that their ability to deploy that technology in a way that
would help them to meet stringent standards and continue to offer
vehicles that consumers would purchase would depend on a number of
other important factors, some of which are outside their direct
control. Some of these factors include: the current relative high cost
for some advanced technologies and uncertainty regarding the degree of
cost reduction that will occur in the 2017-2025 timeframe; the future
price of gasoline and diesel fuel; the existence of future consumer
incentives for some advanced technologies; the level of consumer
acceptance for HEV, PHEV, and EV technologies; and the willingness of
consumers to pay higher prices for vehicles with advanced technologies
and lower fuel consumption. Many OEMs also stressed that their ability
to comply with future standards will be closely tied to the regulatory
details of the model year 2017-2025 program, including the specific
shape of the CAFE and GHG footprint-based standard curves for passenger
cars and trucks, EPA's treatment of upstream CO2 emissions
for electricity-derived vehicle power, and other details regarding the
structure of the program.
Based on the uncertainties expected during the 2017-2025 time
frame, as described above, one OEM association stated in written
comments that numeric commitments to rates of stringency increase are
not possible for the 2017-2025 time frame, and several OEMs stated
similarly in individual meetings with the agencies. However, just over
half of the firms provided comments in individual meetings with the
agencies on the maximum rate of increase in stringency that they
thought their firms could achieve for that time frame (as opposed to
rates of increase that they believed were feasible for the industry as
a whole). Most were in the 3 percent to 4 percent per year range,
although one stated 2.5 percent per year and another stated between 5
percent and 6 percent per year. In all cases, these estimates of
potential rates of increase included the assumption that 15 g/mi worth
of additional CO2 credits for air conditioning system
improvements would be available for the MY 2017-2025 period, and the
majority also included the assumption that upstream emissions from
electric power generation would not be included in their compliance
calculations for EVs and PHEVs.
Many commenters discussed the merits of the agencies including a
framework for a ``mid-term review'' of the MYs 2017-2025 standards. The
majority of OEMs supported a mid-term review, but varied in their views
of how to structure it. OEMs who supported a future review stated that
it was necessary due to a number of factors, such as the long time
between standards promulgated in 2012 and the implementation of the
standards in the model year 2017-2025 timeframe, and also a number of
key uncertainties regarding future events and conditions as mentioned
above, like OEMs' ability to reduce technology costs, future fuel
prices, and the willingness of consumers to purchase the advanced
technology vehicles. Many OEMs suggested that if the current rulemaking
established standards from model year 2017-2025, then a review of the
later model year (2020-2025, or 2021-2025) standards should be
undertaken in the 2014 to 2017 time frame, and re-examine only the
appropriateness of those model year standards, in part due to lead time
concerns with changing the earlier model year standards. As an
alternative, one auto industry association suggested that instead of
incorporating a mid-term review, the agencies should break the MY 2017-
2025 standard setting process into three separate rulemakings, rather
than establishing standards for all of these MYs in the current
rulemaking process.
OEM recommendations also varied regarding how such a review should
be undertaken, what factors should be considered, and what should be
the role of the agencies (including potentially CARB). Many OEMs
stressed that a review should not just examine their ``progress'' in
meeting the standards, but should also focus on external conditions (as
discussed above, fuel price, technology costs, and consumer
acceptance). Several manufacturers and one OEM association additionally
recommended that the review process include using an independent panel
of experts to periodically consider whether rulemaking assumptions have
turned out to be valid. Depending on the details and facts that come to
light during the review, several OEMs stated that the results of any
future review of the standards could result in an increase in
stringency, a decrease in stringency, or no change in stringency. Most
OEMs stated that they would give this topic additional consideration as
the agencies move forward with the development of the Joint NPRM.
Many State and local governments, including the Northeast States
for Coordinated Air Use Management (NESCAUM), the National Association
of Clean Air Agencies (NACAA), and the governors of nine States, along
with environmental NGOs, and a large number of individuals voiced
strong support for proposing standards based on a 6 percent annual rate
of improvement, or alternatively, a 60 mpg standard by 2025. Many of
these commenters stated that the agencies' analysis in the September
NOI and TAR indicates that the 6 percent level is technically feasible
and cost-effective, would provide the greatest estimated lifetime owner
fuel savings, and is necessary to keep the U.S. auto industry
competitive globally by requiring them to build more fuel-efficient
vehicles. NESCAUM commented that, under the initial assessment, the 6
percent rate of increase represented the only scenario that projected
widespread introduction of PHEVs and EVs. In addition, Environment
America submitted letters from more than 150 State and local elected
officials, leaders of a number of businesses, and organizations
supporting standards that would require 60 mpg by 2025.
The Governors of nine States, including New York, Maine, Maryland,
Massachusetts, New Mexico, Oregon, Pennsylvania, Vermont, and
Washington, stated their support for a standard of 60 mpg by 2025, and
cite a key reason that more efficient vehicles will reduce unnecessary
consumer spending at the pump, keeping money in their State and local
economies.
Several NGOs stated that the September NOI and Interim TAR provide
a strong basis for setting a standard of at least 6 percent annual
improvement rate, which they believe is level that provides the
greatest GHG reduction and oil saving benefits. Some groups stated that
much of the basic vehicle design and technology to build a fleet that
achieves at least 62 mpg is already in use in vehicles today, in the
form of hybrids, PHEVs, and EVs entering the market this fall. They
[[Page 76342]]
further stated that this fleetwide level is achievable for
manufacturers especially given that the agencies are providing 6 to 15
years of leadtime.
The Union of Concerned Scientists and Natural Resources Defense
Council conducted a joint analysis of fleetwide annual emission
reductions in the MYs 2017-2025 timeframe, and they stated the TAR
substantiates their assessment's conclusion that a 6% annual reduction
is both technically feasible and cost effective. Further, these groups
stated that their analysis would support a 7% annual reduction by model
year 2025 if using the TAR's 0 g/mi accounting method for EV upstream
emissions. Several other groups also recommended that the agencies
analyze scenarios more stringent than 6 percent, such as 7 percent, or
other approaches such as a rate representing the point at which net
benefits are maximized, or a rate representing the point at which total
costs are equal to total benefits. Some NGOs also commented that the 3
and 4 percent scenarios fail to significantly advance clean vehicle
technology, noting that the TAR analysis projected no use of EVs or
PHEVs by manufacturers in meeting these scenarios.
Environmental NGOs and States that offered comments on a mid-term
review expressed concern that it could be used to weaken the standards
and that it could cause uncertainty for manufacturers by implying that
later year standards would be somehow less binding. These commenters
suggested that this could undermine the development of advanced
technologies, and that any review, if one must occur, should be limited
in scope, focus only on later model years, occur only once, and
consider more stringent standards.
C. Technology Costs, Effectiveness, Feasibility, and Safety
Our stakeholder meetings with the OEMs, as well as the written
comments from several OEMs and two trade associations, raised several
concerns with the September NOI and the TAR regarding the agencies'
initial assessment of technology cost, effectiveness, and feasibility.
In addition several OEMs discussed the important issues regarding
vehicle mass reduction and potential impacts on vehicle safety. We
summarize here some of the major issues raised by the OEMs.
Most automotive companies commented that the agencies' estimates of
most technology costs were in general too low, though for some OEMs
this was not the case for all technologies. Nearly every OEM stressed
that the agencies' costs estimates for lithium-ion batteries for HEVs/
PHEVs/EVs and mass reduction in particular were significantly too low
compared to their projections for the 2020-2025 timeframe. One OEM
association provided a list of several reasons why they believe the TAR
cost estimates are too low, including the TAR projection that batteries
will last the life of the vehicle and the agencies' estimates for
indirect costs, which they stated are low compared to a 2009 National
Research Council Report. The OEM association also commented that the
agencies should consider the potential for stranded capital in the
2017-2025 analysis in the event the MYs 2017-2025 standards result in a
significant change in future vehicle designs compared to the investment
manufactures have made and are making now to comply with the MYs 2012-
2016 standards. This OEM association also noted more generally that
while the OEMs supported the MYs 2012-2016 standards, they had not
evaluated the agencies' analysis for that rulemaking carefully, and
upon revisiting it found a number of assumptions carried into the TAR
with which they do not agree.
OEMs discussed with the agencies their concerns that the
effectiveness (the technologies' ability to reduce CO2 and
fuel consumption) of both individual technologies as well as the
packages of technologies identified in the TAR were too optimistic. In
some cases manufacturers stated that they thought the differences were
due to a range of potential engineering considerations which the TAR
may not properly have accounted for, such as vehicle performance,
utility (e.g., towing capability), and comfort (e.g., noise, vibration,
and harshness), the role of competing regulatory or technical
requirements (e.g., criteria pollutant and/or safety standards), and
assumptions regarding future gasoline fuel properties (e.g., octane
levels), although OEMs acknowledged that their review of the TAR's
technical effectiveness assessment was still ongoing. However, there
were a number of OEMs that agreed with our assessment of a number of
specific packages or individual technologies. The agencies expect to
discuss these issues with the OEMs in much more depth over the next
several months in order to assess the basis of these concerns, which
could be based in part on the possibility of different assumptions
about baseline technologies by the agencies and the OEMs.
With regard to the feasibility of applying the technologies
identified in the TAR, in general the OEMs agreed with the agencies
that most of the technologies identified in the TAR could be applied to
at least some vehicle models in the 2017-2025 timeframe (as nearly all
of the technologies considered are either available today or are
expected to be introduced into the market within the next few years).
However, the OEMs highlighted several specific areas where they did not
agree with the assessment in the TAR, or they believed that challenges
exist. All OEMs stated that mass reduction will be an important element
of their future fuel economy/CO2 reduction strategy,
however; all of the OEMs also stated that mass reduction cannot be done
as aggressively as indicated by several of the Technology Pathways
analyzed in the TAR. All manufacturers and one OEM association
expressly stated that a 30 percent net mass reduction from model year
2008 to model year 2025 was not technically feasible. Reasons cited
included, but were not limited to, manufacturing constraints, mass
increases associated with known and potential vehicle safety
requirements that may be developed between now and model year 2025,
future voluntary standards (such as those established by NHTSA through
the New Car Assessment Program (NCAP) and the Insurance Institute for
Highway Safety (IIHS)), and other potential voluntary improvements,
noise/vibration/harshness considerations, and the potential safety
implications of severe weight reduction. One OEM association noted the
agencies' commitment to on-going work noted in the September NOI and
stated that the agencies must complete these studies to inform the
Joint NPRM, indicating that a failure by the agencies (and particularly
NHTSA) to evaluate fully the potential safety effects of mass reduction
in the 2017-2025 timeframe could leave the final rule legally
vulnerable. Many manufacturers commented that reducing mass in the 20-
25% range would likely not be practical for many vehicle models because
of high costs and, in some cases, because they have already
incorporated today some of the mass reduction technologies that could
be used to reduce mass in the 20-25% range. Manufacturers encouraged
the agencies to continue to analyze this issue carefully.
Several environmental NGOs and the State organizations also
expressed support for the continued technical work EPA, NHTSA, and CARB
are doing on costs, effectiveness, mass reduction, and vehicle safety.
One automotive supplier association (the Aluminum Association)
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commented that the mass reduction on the order of 15-30 percent
discussed in the TAR was technologically achievable based in part
through the use of aluminum.
Several OEMs also commented during our stakeholder meetings on the
relatively high level of penetration of full hybrids for a number of
the Technology Pathways for the higher levels of stringency evaluated
in the TAR. Some auto companies indicated that the HEV levels which
approached nearly 70 percent of the new vehicle fleet may not be
feasible from a lead-time perspective (independent of the OEMs'
concerns regarding the willingness of consumers to purchase those
quantities of HEVs).
D. Program Design Elements, Credit Opportunities and Flexibilities
Several commenters provided feedback on how various credit programs
and other flexibilities contained in the model year 2012-2016 program
might be assessed or adapted for the MYs 2017-2025 program.
1. Program Design Elements
Automotive OEMs, both in their written comments and in recent
stakeholder meetings with the agencies, have stated that the agencies
should continue many of the program design elements as well as
flexibilities provided in the model year 2012-2016 National Program. A
number of OEMs have stated that the agencies should continue with the
use of separate car and truck based standards (as required by EPCA/
EISA) and continue to use vehicle footprint as the attribute for
determining a manufacturer's CAFE and CO2 standards.
2. Credits and Flexibilities
All automotive OEMs supported the agencies providing as much
flexibility as possible through credit programs. Automotive OEMs
generally expressed support for the continuation of both NHTSA's and
EPA's regulatory provisions regarding the banking and trading of fuel
economy/GHG credits, including the provisions for carry-forward and
carry-back of credits across model years. A number of OEMs expressed
concern, that additional flexibilities could be particularly important
for the MYs 2017-2025 time frame, given the stringency of the MY 2012-
2016 standards. Regarding other program flexibilities, OEMs in general
support the continuation of the flexibilities included in the model
year 2012-2016 National Program, including the availability of emission
credits for improvement in air conditioning GHG emissions under the EPA
standards, and the availability of off-cycle GHG emission credits for
technologies that produce real-world emission reductions but that are
not captured under the regulatory test procedure, and provisions for
unlimited credit trading between cars and trucks and between companies.
A number of OEMs also supported the continuation of the 2012-2016
programs provisions for credit transfer between the car and truck
fleets, as well as trading of credits between automotive firms. Some
automotive OEMs and their trade associations suggested that EPA and
NHTSA may need to consider additional program flexibility for small and
intermediate volume manufacturers for model years 2017-2025, similar to
the compliance flexibility provided by EPA in the TLAAS program in the
model year 2012-2016 program.
Some environmental groups similarly expressed support for
provisions that give manufacturers greater flexibility, such as
averaging, banking, and trading, but emphasized that the provisions
must not undermine the technology-forcing nature or the emissions
benefits of the program. Several groups also stressed the need for
transparency to provide clear public accounting of any credits and
compliance programs. One environmental group, however, stated that
while flexibilities might have been appropriate for the early years of
the National Program, they should not persist indefinitely, and the MYs
2012-2016 standards should have provided plenty of time for
manufacturers to achieve compliance by adding technology to their
vehicles. This commenter therefore argued that the agencies should
dispense with the credits, incentives and flexibilities discussed in
the September NOI, including averaging, banking, and trading (ABT).
Environmental groups generally commented that EPA should establish
air conditioning standards rather than continue credits based on air
conditioning system improvements.
Environmental groups commented that given the extensive amount of
lead time contemplated for the rulemaking, along with the fleet
improvements that will have arisen due to model year 2012-2016
standards, the agencies should not constrain stringency levels in the
2017-2025 rule based on lead time considerations. These environmental
groups indicated, as stated in the model year 2012-2016 rulemaking and
the TAR, that most vehicle models are redesigned (not merely refreshed)
every five years, such that most manufacturers should have ample
opportunity to apply new technologies prior to MY 2025. In addition,
some environmental groups commented that there is no evidence or
compelling policy rationale to support continuing the Temporary Lead-
time Allowance Alternative Standards (TLAAS) that were provided in the
model year 2012-2016 program. In addition, one NGO commenter urged that
EPA establish standards for small volume manufacturers (i.e., those
manufacturers with annual U.S. sales of less than 5,000 vehicles), and
that NHTSA end the statutory exemption from generally-applicable CAFE
standards allowed for manufacturers of less than 10,000 vehicles
worldwide annually, as this commenter believes that by 2017, these
manufacturers will have had ample time to bring their fleets into
compliance.
3. Treatment of Upstream Emissions
With the exception of one company, all OEMs and their trade
associations supported the use of a zero gram/mile CO2
tailpipe emissions value under the EPA regulations for all electric
vehicles (EVs) as well as the grid-derived electricity for plug-in
hybrid electric vehicles (PHEVs). OEMs provided a range of reasons for
their position, including their perspectives that: automotive
manufacturers do not have any control over the GHG emissions used to
produce grid electricity, thus it would be unfair for EPA to require
manufacturers to accept the burden of emissions for which vehicles are
not directly (at the tailpipe) responsible; the inclusion of upstream
emissions would be a significant deterrent to OEMs for investing the
significant capital resources necessary to bring EVs and PHEVs to the
market, and the resulting compliance value for those vehicles would not
be significantly better than for non-EV and non-PHEV vehicles; there is
too much variation across the national electricity grid in terms of
CO2-generation intensity for a single upstream value to be
meaningful; and such an approach is not consistent with EPA's historic
regulation of light-duty vehicles, as EPA does not account for the
upstream emissions associated with gasoline and diesel production in
vehicle compliance values (the Edison Electric Institute commented
similarly).
The Edison Electric Institute (EEI) commented that EPA should be
consistent in the treatment of upstream emissions by not including
upstream emissions for any vehicles. EEI argues that there is too much
variation in upstream energy production to produce ``national average''
values for any energy type.
[[Page 76344]]
The treatment of advanced technology vehicles continues to be a key
concern for environmental groups. Environmental groups continue to
believe that upstream CO2 emissions should be accounted for
in determining vehicle emission rates for all vehicles. NRDC and the
Union of Concerned Scientists also support the inclusion of upstream
emissions accounting for electric vehicles, and they provided an
analysis and comments that they believe support standards increasing at
a 6 percent annual rate if upstream emissions are included, and up to 7
percent annual rate if a 0 g/mile CO2 emissions rate is used
for the electric portion of vehicle operation.
The agencies also received comments from Natural Gas Interests
strongly supporting the inclusion of full life-cycle GHG emissions for
all petroleum and non-petroleum-fueled vehicles in determining vehicle
compliance, noting that natural gas vehicles have 30 percent lower
life-cycle GHG emissions compared to their gasoline-fueled
counterparts.
Two automotive material supplier trade associations, the American
Iron and Steel Institute and the World Steel Association, recommended
that EPA and NHTSA include not only upstream emissions from fuel
production (e.g., gasoline fuel and electricity) in the regulatory
standard, but the entire life-cycle emissions of the vehicle
manufacturing process as well. These commenters suggested that the
inclusion of lifecycle GHG emissions at both the supplier and the OEM
levels from the manufacturing process is the most appropriate method to
ensure an overall reduction in GHG emissions from light-duty vehicles.
The State of New York Department of Transportation commented that
they recognize the valid concerns about upstream emissions generation
in the production of electricity and other energy sources used in
fuels, and encourage the agencies to work cooperatively with the
Department of Energy to develop incentives to expand clean, low-carbon
power generation in the U.S.
E. Other Comments
The agencies received additional comments in several areas
including assumptions used in economic and benefit analyses (e.g.,
discount rates should be higher or lower, rebound effect should be
higher or lower, values used to assess the social cost of carbon,
potential consumer welfare effects), ensuring program benefits beyond
fuel savings are properly accounted for, consideration of higher oil
price scenarios, and potential employment impacts. Several commenters
also provided recommendations regarding the need for the agencies to
consider the role of EV/PHEV vehicle charging locations/infrastructure
in the development of the 2017-2025 standards.
NACAA commented that they believe State and local governments have
a key role to play in supporting the development of infrastructure for
electric vehicle charging. State commenters also asked the agencies to
work with DOE to encourage the installation of charging stations in
homes and public locations, such as parking lots.
NACAA also commented that there are potential co-benefits of
improved fuel economy/GHG standards in helping meet clean air goals for
criteria pollutants and air toxics, especially if the new standards are
stringent enough to encourage meaningful penetrations of electrified
vehicles.
Several environmental NGOs recommended that the agencies should
establish backstop standards to ensure that the projected fleet-wide
reductions are still met in the event of shifts in sales mix and
average vehicle size.
All of these comments will be considered as we conduct our analyses
for the proposed rulemaking.
III. Plans for Developing the Proposed Rulemaking
A. Continued Stakeholder Outreach and Key Areas of Technical Analysis
in Developing the Proposed Rulemaking
This Supplemental NOI is an early step in NHTSA's and EPA's plans
to propose a coordinated National Program for model year 2017-2025
light-duty vehicles with which (as with the model year 2012-2016
program) manufacturers could comply by building a single vehicle fleet.
As NHTSA and EPA proceed to develop the proposed rulemaking, we plan to
continue our ongoing dialogue with stakeholders, and we specifically
welcome additional data and information that can inform our rulemaking
efforts.
EPA and NHTSA intend to continue working with the California Air
Resources Board in developing the underlying technical assessments that
will inform our future proposed standards and we will continue to work
with CARB on additional program related issues and seek their input as
we work toward our common goal of a National Program. We will continue
to coordinate on a number of on-going studies, including technology
cost, effectiveness, mass feasibility, and mass-related safety studies.
As we indicated in the September NOI and Interim Joint TAR, there
are numerous areas of technical work that EPA and NHTSA have underway
as part of developing our proposed standards. Some of these key areas
include new technical assessments of advanced gasoline, diesel, and
hybrid vehicle technology effectiveness; several new projects to
evaluate the cost, feasibility, and safety impacts of mass reduction
from vehicles; an on-going project to improve our cost estimates for
advanced technologies; further consideration of battery life,
durability, cost and safety; and further review of the lead time needed
to implement advanced technologies. The agencies are working very
closely with the Department of Energy on a number of projects related
to these technical areas.
In addition, for the 2017-2025 NPRM, NHTSA and EPA will conduct an
analysis of the effects of the proposed standards on vehicle safety,
including societal effects. CARB is undertaking and coordinating with
EPA and NHTSA on a study of how a future vehicle design that
incorporates high levels of mass reduction complies with vehicle safety
standards and voluntary safety guidelines. NHTSA is also initiating a
new study of the feasible amount of mass reduction based on a mid-size
passenger car platform, and the effects of several advanced mass
reduction design concepts on fleet safety. The NHTSA studies are being
coordinated with EPA, DOE, and CARB.
The agencies expect that several, but not all of these studies will
be completed in time to inform the NPRM. Others are expected to be
completed in time to inform the final rule.
As discussed above, the agencies' initial assessment in the Interim
Joint TAR was limited to a fleet-wide level analysis of improvements in
overall average GHG emissions and fuel economy level, which included a
number of simplifying assumptions. NHTSA and EPA acknowledged in the
September NOI that for the upcoming proposed rulemaking, we would
conduct a more refined analysis, as required by EPCA/EISA and as
allowed by the CAA, including separate analyses for car and light truck
vehicle fleets, year-by-year attribute-based standards, and
manufacturer-specific estimates of potential attribute-based standard
targets and costs, among other statutory requirements. NHTSA and EPA
also will perform a more thorough assessment of the impacts of proposed
standards, as was done for the model year 2012-2016 rulemaking,
including
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analysis of improved energy security, monetized benefits of
CO2 reductions, impacts of other pollutants, an assessment
of the societal costs and benefits of potential standards, an
assessment of potential safety impacts, an assessment of impacts on
automobile sales, an assessment of employment impacts, an assessment of
the regulatory program's key design elements and flexibility
mechanisms, and related issues.
Finally, as discussed in the September NOI, EPA is currently in the
process of conducting an assessment of the potential need for
additional controls on light-duty vehicles' non-greenhouse gas
emissions and gasoline fuel quality. EPA expects to coordinate the
timing of any final action on new non-greenhouse gas emissions
regulations for light-duty vehicles and gasoline with the final action
on greenhouse gas emissions and CAFE regulations discussed in this
Supplemental NOI.
In his May 21, 2010 Memorandum, the President highlighted the
opportunity for the U.S. to lead the world in developing a new
generation of clean cars and trucks, to spur economic growth and to
create high[hyphen]quality jobs. In developing the proposal, the
agencies will continue to gather input from stakeholders, including the
OEMs and labor unions, on the potential impacts of standards on worker
productivity, jobs, the automotive sector, and the opportunities for
economic growth.
B. Anticipated Rulemaking Schedule
The May 21, 2010 Presidential Memorandum called for EPA and NHTSA
to include in the September Notice of Intent a ``schedule for setting
those standards as expeditiously as possible, consistent with providing
sufficient leadtime to vehicle manufacturers.'' As we indicated in the
September NOI, the agencies expect to issue a joint Notice of Proposed
Rulemaking (NPRM) by September 30, 2011, and a final rule by July 31,
2012.
As required by the National Environmental Policy Act (NEPA), and by
NHTSA and Council of Environmental Quality (CEQ) regulations, NHTSA
will be developing a Draft Environmental Impact Statement (DEIS), to
inform the upcoming NPRM. In the coming months, NHTSA will issue a
scoping notice to request comment on the regulatory options that the
DEIS should consider. A Final EIS (FEIS) will be issued at least 30
days prior to the release of the final rule.
As with any notice-and-comment rulemaking process, the agencies
will provide full opportunity for the public to participate in the
rulemaking process, consistent with EPCA/EISA, the Clean Air Act,
Administrative Procedure Act, other applicable law, and Administration
policies on openness and transparency in government. Upon publication
of the NPRM, the agencies will open a public comment period for
receiving written comments and expect to hold at least one joint public
hearing to receive oral comments. We will describe all of these
opportunities for public involvement in the NPRM which will be
published in the Federal Register, and we will post this information on
each agency's Web site associated with this rulemaking.
Dated: November 30, 2010.
Ray LaHood,
Secretary, Department of Transportation.
Dated: November 30, 2010.
Lisa P. Jackson,
Administrator, Environmental Protection Agency.
[FR Doc. 2010-30631 Filed 12-7-10; 8:45 am]
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