[Federal Register Volume 76, Number 153 (Tuesday, August 9, 2011)]
[Proposed Rules]
[Pages 48758-48769]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2011-19905]


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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-9448-7; NHTSA-2010-0131]
RIN 2060-AQ54; RIN 2127-AK79


2017-2025 Model Year Light-Duty Vehicle GHG Emissions and CAFE 
Standards: Supplemental Notice of Intent

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

ACTION: Supplemental Notice of Intent.

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SUMMARY: President Obama issued a Presidential Memorandum on May 21, 
2010, concerning the development of a new generation of clean cars and 
trucks through innovative technologies and manufacturing. The President 
requested that EPA and 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 reduce fuel consumption by and 
greenhouse gas emissions of light-duty vehicles for model years 2017-
2025.
    This notice of intent generally describes the joint proposal that 
the EPA and NHTSA expect to issue to establish the National Program for 
model years 2017-2025. The agencies are developing the proposal based 
on extensive technical analyses, an examination of the factors required 
under the respective statutes and on discussions with individual motor 
vehicle manufacturers and other stakeholders. The National Program 
would apply to passenger cars, light-duty trucks, and medium-duty 
passenger vehicles (light-duty vehicles) built in those model years.

DATES: The agencies currently expect to issue a proposal for a 
coordinated National Program for model year 2017-2025 light-duty 
vehicles by September 28, 2011, and a final rule by July 31, 2012.

ADDRESSES: See the FOR FURTHER INFORMATION CONTACT section.

FOR FURTHER INFORMATION CONTACT: EPA: Christopher Lieske, Office of 
Transportation and Air Quality, Assessment and Standards Division, 
Environmental Protection Agency, 2000 Traverwood Drive, Ann Arbor, MI 
48105; telephone number: 734-214-4584; fax number: 734-214-4816; e-mail 
address: [email protected], or contact the Assessment and 
Standards Division; e-mail address: [email protected]. 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 already issued 
notices 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 TAR and the comments submitted in 
response to the first NOI \1\ by other interested persons) at any time 
by going to http://www.regulations.gov. Follow the online instructions 
for accessing the dockets.
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    \1\ 75 FR 62739 (Oct. 13, 2010).
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    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.
    The dockets established by the agencies will remain open for the 
duration of the rulemaking.

I. Background and Introduction

    Following the successful adoption of a National Program for 
greenhouse gas emissions (GHG) and fuel economy standards for model 
years (MY) 2012-2016 vehicles, the President issued a Memorandum on May 
21, 2010 requesting that the Environmental Protection Agency (EPA) and 
the National Highway Traffic Safety Administration (NHTSA), on behalf 
of the Department of Transportation, work together to develop a 
national program for model years 2017-2025. Specifically, he requested 
that the agencies develop `` * * * a coordinated national program under 
the CAA [Clean Air Act] and the EISA [Energy Independence and Security 
Act of 2007] to improve fuel efficiency and to reduce greenhouse gas 
emissions of passenger cars and light-duty trucks of model years 2017-
2025.'' \2\ The President recognized our country could take a 
leadership role in addressing the global challenges of improving energy 
security and reducing greenhouse gas pollution, stating that ``America 
has the opportunity to lead the world in the development of a new 
generation of clean cars and trucks through innovative technologies and 
manufacturing that will spur economic growth and create high-quality 
domestic jobs, enhance our energy security, and improve our 
environment.''
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    \2\ The Presidential Memorandum is found at: http://www.whitehouse.gov/the-press-office/presidential-memorandum-regarding-fuel-efficiency-standards.
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    Since that time, the agencies have worked with the state of 
California, as requested by the President, to address all elements 
requested in the May 21, 2010 memorandum. We completed an initial 
assessment of the technologies, strategies and underlying analyses that 
would be considered in setting standards for MYs 2017-2025 in 
consultation with a wide range of stakeholders.\3\ The Interim 
Technical Assessment Report (TAR) and a Notice of Intent (NOI) to 
conduct a joint rulemaking were concluded on September 30, 2010.\4\ 
Following the opportunity for public comment on the interim TAR and 
NOI, the agencies developed and published a Supplemental NOI (SNOI) \5\ 
in December 2010 highlighting many of the key comments received in 
response to the September NOI, and to the TAR. The Supplemental NOI 
also discussed the agencies' plans for many of the key technical 
analyses that have been and

[[Page 48759]]

will be undertaken in developing the upcoming proposed rulemaking.
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    \3\ In addition, NHTSA will consider analyses it is required to 
conduct under the National Environmental Policy Act.
    \4\ 75 FR 62739, October 13, 2010.
    \5\ 75 FR 76337, December 8, 2010.
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    Since the publication of the SNOI in December 2010, the agencies, 
working with California, have been engaged in discussions with 
individual auto manufacturers, automotive suppliers, states, 
environmental groups, and the United Auto Workers, who all have 
expressed support for a continuation of the National Program. The 
agencies have focused their discussions and efforts on developing 
information that will support the underlying technical assessments that 
will inform the proposed standards.
    This joint Notice of Intent announces plans by NHTSA and EPA to 
propose strong and coordinated Federal greenhouse gas and fuel economy 
standards for passenger cars, light-duty trucks, and medium-duty 
passenger vehicles (hereafter light-duty vehicles), referred to as the 
National Program.\6\ Both agencies seek to propose a coordinated 
program that can achieve important reductions of greenhouse gas (GHG) 
emissions from and fuel consumption by the light-duty vehicle part of 
the transportation sector, based on technologies that will be 
commercially available and that can be incorporated at a reasonable 
cost.
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    \6\ NHTSA is delegated responsibility for implementing the 
Energy Policy and Conservation Act (EPCA) fuel economy requirements 
assigned to the Secretary of Transportation. 49 CFR 1.50, 
501.2(a)(8).
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    Under the joint rulemaking, EPA will propose GHG emissions 
standards under the Clean Air Act (CAA), and NHTSA will propose 
Corporate Average Fuel Economy (CAFE) standards under EPCA, as amended 
by the Energy Independence and Security Act of 2007 (EISA). It is 
intended that this joint rulemaking proposal will reflect a carefully 
coordinated and harmonized approach to implementing these two statutes 
and will be in accordance with all substantive and procedural 
requirements imposed by law.\7\
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    \7\ For NHTSA, this includes the requirements of the National 
Environmental Policy Act (NEPA).
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    The program the agencies intend to propose holds out the promise of 
development of a new generation of clean cars and trucks through 
innovative technologies and manufacturing that will spur economic 
growth and create high-quality domestic jobs, enhance our energy 
security, and improve our environment. Consistent with Executive Order 
13563, it is the result of early consultation with all stakeholders, 
employs flexible regulatory approaches to reduce burdens, maintains 
freedom of choice for the public, and harmonizes federal and state 
regulations.
    The National Program would apply to passenger cars, light-duty 
trucks, and medium-duty passenger vehicles (light-duty vehicles) built 
in those model years. Together, these vehicle categories, which include 
passenger cars, sport utility vehicles, minivans, and pickup trucks, 
are responsible for approximately 60 percent of all U.S. 
transportation-related greenhouse gas emissions and fuel consumption. 
If ultimately adopted, these standards would represent a harmonized and 
consistent National Program pursuant to the separate statutory 
frameworks under which NHTSA and EPA operate. The approach addressed in 
this Notice of Intent, if ultimately adopted, is intended to allow 
manufacturers to build a single light-duty national fleet that would 
satisfy all requirements under both programs and would provide 
significant reductions in both greenhouse gas emissions and oil 
consumption.
    EPA and NHTSA's current estimate is that the standards discussed in 
this Notice of Intent would reduce greenhouse gases by approximately 2 
billion metric tons and would save approximately 4 billion barrels of 
oil, over the lifetime of the model year 2017-2025 vehicles.
    Key elements of a harmonized and coordinated National Program that 
the agencies intend to propose are the level and form of the standard, 
the available flexibilities and compliance mechanisms, and general 
implementation elements. These elements are outlined in the following 
sections. The agencies will continue to analyze all of the issues 
relevant to the proposal, and will provide their analyses for review 
and public comment with the upcoming proposal. This will include 
analyses on a variety of relevant issues, such as the costs and 
benefits of the proposal, as well as the effects that the proposal 
would have on the economy, manufacturers, and consumers. The proposal 
that the agencies intend to issue will discuss both the analyses that 
will be completed for the proposal as well as any plans for conducting 
additional analyses.

II. Broad Program Overview

A. Level of the Standards

    Consistent with the Presidential Memorandum of May 21, 2010, EPA 
and NHTSA intend to propose two separate sets of standards for model 
years 2017 through 2025, each under their respective statutory 
authorities. Both the proposed CO2 and CAFE standards would 
be footprint-based, similar to the standards currently in effect 
through model year 2016, and would become more stringent each model 
year from 2017 through 2025.
    EPA currently intends to propose standards that would be projected 
to achieve, on an average industry fleet wide basis, 163 grams/mile of 
CO2 in model year 2025 (this would be equivalent, on a mpg-
equivalent basis, to 54.5 mpg if all of the CO2 emissions 
reductions were achieved with fuel economy technology).\8\ For 
passenger cars, the CO2 compliance values associated with 
the footprint curves would be reduced on average by 5 percent per year 
from the CO2-footprint curves for the model year 2016 
passenger car standard through model year 2025. In recognition that 
full-size pick-up trucks have unique challenges compared to other 
light-duty trucks and passenger cars, EPA intends to propose a lower 
annual rate of improvement for light-duty trucks in the early years of 
the program. For light-duty trucks, the proposed average annual rate of 
CO2 emissions reduction in model years 2017 through 2021 
would be 3.5 percent per year. EPA intends to change the slopes of the 
CO2-footprint curves for light-duty trucks from those in the 
2012-2016 rule, in a manner that effectively means that the annual rate 
of improvement for smaller light-duty trucks in model years 2017 
through 2021 would be higher than 3.5 percent, and the annual rate of 
improvement for larger light-duty trucks over the same time period 
would be lower than 3.5 percent. For model years 2022 through 2025, EPA 
expects to propose an average annual rate of CO2 emissions 
reduction for light-duty trucks of 5 percent per year.
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    \8\ Real-world CO2 is typically 25 percent higher and 
real-world fuel economy is typically 20 percent lower than the 
CO2 and CAFE values discussed here.
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    NHTSA currently intends to propose standards that would be 
projected to require, on an average industry fleet wide basis, 40.9 mpg 
in model year 2021, and 49.6 mpg in model year 2025. For passenger 
cars, the annual increase in stringency between model years 2017 to 
2021 is expected to average 4.1 percent, and to average 4.3 percent 
between model years 2017 and 2025. Like EPA, in recognition of the 
utility requirements of full-size pick-up trucks and the unique 
challenges to improving fuel economy compared to other light-duty 
trucks and passenger cars, NHTSA intends to propose a lower annual rate 
of improvement for light-duty trucks in the early years of the program. 
For light-duty trucks, the proposed overall annual

[[Page 48760]]

rate of fuel economy improvement in model years 2017 through 2021 would 
be 2.9 percent per year. NHTSA expects to change the slopes of the fuel 
economy footprint curves for light-duty trucks from those in the 2012-
2016 rule, which would effectively make the annual rate of improvement 
for smaller light-duty trucks in model years 2017 through 2021 higher 
than 2.9 percent, and the annual rate of improvement for larger light-
duty trucks over the same time period lower than 2.9 percent. For model 
years 2022 through 2025, NHTSA expects to propose conditional standards 
with an overall annual rate of fuel economy improvement for light-duty 
trucks of 4.7 percent per year. For the first time, NHTSA expects to 
propose that manufacturers may include air conditioning system 
efficiency improvements as a means to comply with fuel economy 
standards, and NHTSA also expects to increase the stringency of 
standards by the amount industry is expected to improve air 
conditioning system efficiency. NHTSA notes that the intended proposed 
rates of increase in stringency for CAFE standards are lower than EPA's 
intended proposed rates of increase in stringency for GHG standards. As 
in the MY 2012-2016 rulemaking, this is for purposes of harmonization 
and in reflection of certain statutory constraints in EPCA/EISA. For 
example, NHTSA's standards do not reflect the inclusion of air 
conditioning system refrigerant and leakage improvements.
    The coefficients and industry-wide curves that NHTSA and EPA intend 
to propose are included as Appendix B.
    The agencies believe that the standards discussed above could be 
met with improvements in conventional gasoline and hybrid vehicle 
technologies and an increased market share of more advanced 
technologies including electric vehicles and plug-in hybrid electric 
vehicles.

B. Mid-Term Review

    Given the long time frame at issue in setting standards for MY2022-
2025 light-duty vehicles, and given NHTSA's obligation to conduct a 
separate rulemaking in order to establish final standards for vehicles 
for those model years, EPA and NHTSA intend to propose a comprehensive 
mid-term evaluation and agency decision-making as described in Appendix 
A to this Notice of Intent. Up to date information will be developed 
and compiled for the evaluation, through a collaborative, robust and 
transparent process, including public notice and comment. The 
evaluation will be based on (1) A holistic assessment of all of the 
factors considered by the agencies in setting standards, including 
those set forth in the rule and other relevant factors, and (2) the 
expected impact of those factors on the manufacturers' ability to 
comply, without placing decisive weight on any particular factor or 
projection. The comprehensive evaluation process will lead to final 
agency action by both agencies.
    Consistent with the Agencies' commitment to maintaining a single 
national framework for regulation of vehicle emissions and fuel 
economy, the Agencies fully expect to conduct the mid-term evaluation 
in close coordination with the California Air Resources Board (CARB). 
Moreover, the Agencies fully expect that any adjustments to the 
standards will be made with the participation of CARB and in a manner 
that ensures continued harmonization of state and Federal vehicle 
standards.

C. Key Program Elements

    EPA and NHTSA have more recently sought extensive input from 
automobile manufacturers regarding design elements for the MY 2017-2025 
National Program. In achieving the level of standards described above 
for the 2017-2025 program, the agencies expect automakers' use of 
advanced technologies to be an important element of transforming the 
vehicle fleet. To facilitate this transformation, the agencies are 
considering a number of incentive programs to encourage early adoption 
and introduction into the marketplace of advanced technologies that 
represent ``game changing'' performance improvement, including electric 
vehicles, plug-in hybrid electric vehicles and fuel cell vehicles, and 
hybrid electric large pickups. In addition, the agencies recognize 
that, as with the MY 2012-2016 program, there are technologies with the 
potential to achieve real-world CO2 and fuel consumption reductions 
that are not captured by the standard test procedures. The agencies 
intend to propose a program approach to further encourage manufacturer 
investments in these ``off-cycle'' technologies.
1. Off-Cycle Credits
    As in the MY 2012-2016 program, the objective of the off-cycle 
credits program is to promote the early market penetration of tailpipe 
CO2/fuel consumption reducing technologies that are not 
appropriately accounted for in the current test procedure. Many 
automakers indicated that they had a strong interest in pursuing off-
cycle technologies, but the process outlined in the 2012-2016 program 
should be refined and simplified so as to provide more certainty as to 
the types of technologies the agencies would consider, and so the 
process could be simplified. The agencies intend to propose to expand 
and streamline the 2012-2016 off-cycle credit provisions, including an 
approach by which the agencies would provide credit for a subset of 
beneficial off-cycle technologies to encourage early penetration of 
these technologies.
    For the NPRM, EPA and NHTSA intend to develop a minimum credit 
value on a subset of technologies for which we have sufficient data. We 
expect this list to include at least six defined technologies, if not 
more.\9\ The total number of technologies will be dependent on the 
available data. In order to make use of the pre-defined credit list of 
off-cycle technologies, a manufacturer must utilize the technology on a 
minimum percentage of the company's vehicles. EPA and NHTSA will 
continue to assess the appropriate level and will propose a level in 
the NPRM. The specific percentage values may vary by off-cycle 
technology, and will consider the applicability of the technology 
across vehicle type. Under the planned proposal, the total gram/mile 
credit from the predefined list for any given model year would not 
exceed a 10 gram/mile \10\ impact on the company's combined fleet 
average. This limit would only apply to the total for technologies 
where the company chooses to use the agency provided credit values. 
Automakers can apply for additional credits beyond the minimum credit 
value of listed technologies if they have sufficient supporting data.
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    \9\ Technologies may include active grill shutters, electric 
heat pumps, high efficiency alternators, high efficiency lights, 
start-stop, solar roof panels for battery charging on EV, PHEV or 
HEV with at least 100 watts, active transmission warm-up, and/or 
engine heat recovery using thermo-electric for 100 watts, and the 
credit for individual technologies could range from less than 1gm/
mile to approximately 5 gm/mile.
    \10\ This corresponds to 0.001125 gallon/mile.
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    In addition, the agencies are planning to propose that companies 
could also apply for off-cycle credit for technologies that are not on 
the pre-defined list, based on the submission of sufficient supporting 
data. EPA and NHTSA intend to propose a timeline for the approval 
process, including a 60-day NHTSA and EPA decision process from the 
time a manufacturer submits a complete application. EPA and NHTSA also 
intend to propose a detailed, common, step-by-step process, including a 
specification of the data that manufacturers must submit. For off-

[[Page 48761]]

cycle technologies that are both not covered by the pre-approved off-
cycle credit list and that are not quantifiable based on the 5-cycle 
test cycle option provided in the 2012-2016 rulemaking, EPA and NHTSA 
will retain the public comment process described by EPA in the MY 2012-
2016 rule.
    NHTSA and EPA also intend to propose that once a technology has 
been approved by the two agencies, either from the pre-approved list or 
through the approval process, that technology and its assigned credit 
value is available through MY 2025.
2. Incentives for Electric Vehicles, Plug-in Hybrid Electric Vehicles, 
and Fuel Cell Vehicles
    To facilitate market penetration of the most advanced vehicle 
technologies as rapidly as possible, EPA intends to propose an 
incentive multiplier for all electric vehicles (EVs), plug-in hybrid 
electric vehicles (PHEVs), and fuel cell vehicles (FCVs) sold in MYs 
2017 through 2021. This multiplier approach means that each EV/PHEV/FCV 
would count as more than one vehicle in the manufacturer's compliance 
calculation. EPA intends to propose that EVs and FCVs start with a 
multiplier value of 2.0 in MY 2017, phasing down to a value of 1.5 in 
MY 2021. PHEVs would start at a multiplier value of 1.6 in MY 2017 and 
phase down to a value of 1.3 in MY 2021.\11\ These multipliers would be 
proposed for incorporation in EPA's GHG program.
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    \11\ The multipliers for EV/FCV would be: 2017-2019--2.0, 2020--
1.75, 2021--1.5; for PHEV: 2017-2019--1.6, 2020--1.45, 2021--1.3.
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    NHTSA is precluded from offering incentives for EVs, FCVs and 
PHEVs, except as specified by EISA, and is not intending to propose 
incentive multipliers comparable to the EPA incentive multipliers 
described above.
    As an additional incentive for EVs, PHEVs and FCVs, EPA intends to 
propose allowing a value of 0 g/mile for the tailpipe compliance value 
for EVs, PHEVs (electricity usage) and FCVs for MY 2017-2021, with no 
limit on the quantity of vehicles eligible for 0 g/mi tailpipe 
emissions accounting. For MY 2022-2025, 0 g/mi will only be allowed up 
to a per-company cumulative sales cap based on significant penetration 
of these advanced vehicles in the marketplace. EPA intends to propose 
an appropriate cap in the NPRM.
3. Incentives for ``Game Changing'' Technologies Performance for Full-
Size Pickup Truck Including Hybridization
    The agencies recognize that the standards under consideration for 
MY 2017-2025 will be most challenging to large trucks, including full 
size pickup trucks. The agencies' goal is to incentivize the 
penetration into the marketplace of ``game changing'' technologies for 
these pickups, including their hybridization. The agencies intend to 
solicit information on technologies that offer significant increases in 
fuel efficiency and reduction in greenhouse gas emissions. We intend to 
propose a credit for manufacturers that employ significant quantities 
of hybridization on full size pickup trucks, by including a per-vehicle 
credit available for mild and strong hybrid electric vehicles (HEVs). 
This provides the opportunity to begin to transform the most 
challenging category of vehicles in terms of the penetration of 
advanced technologies, allowing additional opportunities to 
successfully achieve the higher levels of truck stringencies in MY 
2022-2025.
    The agencies intend that access to this credit is conditioned on a 
minimum penetration of the technology in a manufacturer's full size 
pickup truck fleet, with defined criteria for a full size pickup truck 
(e.g., minimum bed size and minimum towing capability). The agencies 
intend to propose that mild HEV pickup trucks are eligible for a 10 g/
mi \12\ credit during 2017-2021 if the technology is used on a minimum 
percentage of a company's full size pickups, beginning with at least 
30% of a company's full size pickup production in 2017 and ramping up 
to at least 80% in 2021. Strong HEV pickup trucks would be eligible for 
a 20g/mi credit during 2017-2025 if the technology is used on at least 
10% of the company's full size pickups. The agencies will propose 
specific definitions of mild and strong HEV pickup trucks, but expect 
to include stop/start, regenerative braking, minimum motor power, 
minimum battery voltage value and minimum energy storage capacity, or 
similar types of objective metrics. The agencies expect that a ``mild'' 
HEV will include moderate hybridization and not just start/stop, and 
that a ``strong'' HEV will include launch assist.
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    \12\ 0.001125 gallon/mile.
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    The agencies also intend to propose a performance based incentive 
credit for full size pickup trucks which achieve a significant 
reduction below the applicable target. This credit could also be on the 
order of 10-20 gm/mile vehicle. The same vehicle would not receive 
credit under both the HEV and the performance based approaches.
4. Air Conditioning Credits
    As with the MY2012-2016 program, manufacturers will be able to earn 
credits for improvements in air conditioning (A/C) systems, both for 
efficiency improvements (reduces tailpipe CO2 and improves 
fuel consumption) and for leakage or alternative, lower GWP (global 
warming potential) refrigerant use (reduces hydrofluorocarbon (HFC) 
emissions). EPA intends to propose that the maximum A/C credit 
available for cars is 18.8 grams/mile CO2 and for trucks is 
24.4 grams/mile CO2. The test methods used to calculate 
these credits will be very similar to those of the MY2012-2016 program.
    For the first time, NHTSA expects to propose that manufacturers may 
include air conditioning system efficiency improvements as a means to 
comply with fuel economy standards. NHTSA expects to not allow the use 
of A/C system credits that affect leakage or alternative, lower GWP 
refrigerant use, because those changes do not affect fuel efficiency. 
NHTSA also expects to increase the stringency of standards by the 
amount industry is expected to improve air conditioning system 
efficiency. NHTSA intends to propose that the maximum A/C credit 
available for cars is 0.000563 gallon/mile and for trucks is 0.000810 
gallon/mile. The test methods used to calculate these credits will be 
the same as EPA's.
5. Treatment of Compressed Natural Gas (CNG), Plug-in Hybrid Electric 
Vehicles (PHEVs), and Flexible Fuel Vehicles (FFVs)
    EPA intends that CO2 credits for plug-in hybrid electric 
vehicles (PHEVs) and bi-fuel compressed natural gas (CNG) vehicles will 
be based on the recognition that, once a consumer has paid several 
thousand dollars to be able to use a fuel that is considerably cheaper 
than gasoline, it is very likely that the consumer will seek to use the 
cheaper fuel as much as possible. Accordingly, for CO2 
emissions compliance, EPA expects to use the Society of Automotive 
Engineers ``utility factor'' methodology (based on vehicle range on the 
alternative fuel and typical daily travel mileage) to determine the 
assumed percentage of operation on alternative fuel and percentage of 
operation on CNG for both PHEVs and bi-fuel CNG vehicles, along with 
the CO2 emissions test values on the alternative fuel and 
gasoline.
    EPA does not expect to extend this method to flexible fueled 
vehicles (FFVs) using E-85 and gasoline, since there is not a 
significant cost differential

[[Page 48762]]

between an FFV and conventional gasoline vehicle and historically 
consumers have only fueled these vehicles with E85 a very small 
percentage of the time. Therefore, treatment of E85 FFVs will continue 
as the MY2016 program, based on actual usage of E85 which represents a 
real-world reduction attributed to alternative fuels.
    In the NHTSA program for MYs 2017-2019, NHTSA expects that the fuel 
economy of dual fuel vehicles will be determined in the same manner as 
specified in the MY 2012-2016 rule, and as defined by EISA. Beginning 
in MY 2020, EISA does not specify how to measure the fuel economy of 
dual fuel vehicles, and it is expected NHTSA will propose to use the 
EPA ``utility factor'' methodology for PHEV and CNG vehicles to 
determine how to proportion the fuel economy when operating on gasoline 
or diesel fuel and the fuel economy when operating on the alternative 
fuel. For FFVs, NHTSA expects to propose to use the same methodology as 
EPA to determine how to proportion the fuel economy, which would be 
based on actual usage of E85. NHTSA expects to continue to use 
Petroleum Equivalency Factors and the incentive multipliers that are 
used in the MY 2012-2016 rule, however with no cap on the amount of 
fuel economy increase allowed.
6. Credit Banking and Trading
    The agencies will propose to continue the 5-year credit carry 
forward and 3-year credit carry back provisions of the MY2012-2016 
program, with one key exception under the EPA program. To facilitate 
the transition to the increasingly more stringent standards, EPA 
intends to propose a one-time credit carry forward beyond 5 years, such 
that any credits generated from MY2010 through 2016 will be able to be 
used any time through MY 2021. This provision would not apply to early 
credits generated in MY 2009. NHTSA's program will continue the 5-year 
carry-forward and 3-year carry-back as required by statute.
    As with the MY 2012-2016 program, EPA intends to continue to allow 
manufacturers to make unlimited transfers between their car and light 
truck fleets, and unlimited credit trading between manufacturers. NHTSA 
intends to continue to allow unlimited credit trading between 
manufacturers, and credit transferring up to the limits allowed by 
statute, consistent with the approach in the MY 2012-2016 program.
7. Exclusion of Emergency and Police Vehicles
    Under EPCA, manufacturers are allowed to exclude emergency vehicles 
from their CAFE fleet and all manufacturers have historically done so. 
In the MY 2012-2016 program, EPA's GHG program does apply to these 
vehicles. However, after further consideration of this issue, EPA 
intends to propose that an exclusion is appropriate because of the 
unique features of vehicles designed specifically for law enforcement 
purposes, which have the effect of raising their GHG emissions.
8. Small Businesses and Small Volume Manufacturers
    As EPA did for the MY 2012-2016 program, EPA intends to propose to 
continue to exclude small businesses from the GHG standards, for any 
company that meets the Small Business Administration's definition of a 
small business. For vehicle manufacturers, the definition of small 
business is any firm with less than 1,000 employees. EPA believes this 
exemption is appropriate since these businesses make up less than 0.1% 
of total U.S. vehicle sales, and there is no significant impact on 
emission reductions.
    EPCA provides NHTSA with the authority to exempt from the generally 
applicable CAFE standards manufacturers that produce fewer than 10,000 
passenger cars worldwide in the model year each of the two years prior 
to the year in which they seek an exemption.\13\ If NHTSA exempts a 
manufacturer, it must establish an alternate standard for that 
manufacturer for that model year, at the level that the agency decides 
is maximum feasible for that manufacturer. The exemption and 
alternative standard apply only if the exempted manufacturer also 
produces fewer than 10,000 passenger cars worldwide in the year for 
which the exemption was granted.
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    \13\ 49 U.S.C. 32902(d). Implementing regulations may be found 
in 49 CFR part 525.
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    For small volume manufacturers, which EPA defines as manufacturers 
with U.S. annual sales of less than 5,000 vehicles, EPA intends to 
propose to bring these manufacturers into the program for the first 
time, and allow them to petition for alternative standards.

D. Conclusion

    This document outlines the key program elements of a National 
Program that EPA and NHTSA plan to propose for model year 2017-2025 
light-duty vehicles. The agencies' efforts to develop this program have 
been fully consistent with the President's May 21, 2010 Memorandum. The 
agencies have coordinated extensively with California, and held 
extensive discussions with stakeholders to ensure our proposal is based 
on the most robust technical analysis possible. The agencies plan to 
issue a Notice of Proposed Rulemaking by the end of September 2011.

Appendix A--Mid-Term Evaluation for MY 2022-2025 LDV Rules

    Given the long time frame at issue in setting standards for 
MY2022-2025 light-duty vehicles, and given NHTSA's obligation to 
conduct a separate rulemaking in order to establish final standards 
for vehicles for those model years, EPA and NHTSA will conduct a 
comprehensive mid-term evaluation and agency decision-making as 
described below. Up to date information will be developed and 
compiled for the evaluation, through a collaborative, robust and 
transparent process, including public notice and comment. The 
evaluation will be based on (1) A holistic assessment of all of the 
factors considered by the agencies in setting standards, including 
those set forth in the rule and other relevant factors, and (2) the 
expected impact of those factors on the manufacturers' ability to 
comply, without placing decisive weight on any particular factor or 
projection. The comprehensive evaluation process will lead to final 
agency action by both agencies.
    Consistent with the Agencies' commitment to maintaining a single 
national framework for regulation of vehicle emissions and fuel 
economy, the Agencies fully expect to conduct the mid-term 
evaluation in close coordination with the California Air Resources 
Board (CARB). Moreover, the Agencies fully expect that any 
adjustments to the standards will be made with the participation of 
CARB and in a manner that ensures continued harmonization of state 
and Federal vehicle standards.
     EPA will conduct a mid-term evaluation of the later 
model year light-duty GHG standards (MY2022-2025). The evaluation 
will determine whether those standards are appropriate under section 
202(a) of the Act. EPA will be legally bound to make a final 
decision, by April 1, 2018, on whether the MY 2022-2025 GHG 
standards are appropriate under section 202(a), in light of the 
record then before the agency. In the MY 2017-2025 rule EPA will 
adopt a regulation requiring EPA to make such a determination by 
that date.
     EPA, NHTSA and CARB will jointly prepare a draft 
Technical Assessment Report (TAR) to inform EPA's determination on 
the appropriateness of the GHG standards and to inform NHTSA's 
rulemaking for the CAFE standards for MYs 2022-2025. The TAR will 
examine the same issues and underlying analyses and projections 
considered in the original rulemaking, including technical and other 
analyses and projections relevant to each agency's authority to set 
standards as well as any relevant new issues that may present 
themselves. There will be an opportunity for public comment on the 
draft

[[Page 48763]]

TAR, and appropriate peer review will be performed of underlying 
analyses in the TAR. The assumptions and modeling underlying the TAR 
will be available to the public, to the extent consistent with law.
     EPA will also seek public comment on whether the 
standards are appropriate under section 202(a), e.g. comments to 
affirm or change the GHG standards (either more or less stringent). 
The agencies will carefully consider comments and information 
received and respond to comments in their respective subsequent 
final actions.
     EPA and NHTSA will consult and coordinate in developing 
EPA's determination on whether the MY 2022-2025 GHG standards are 
appropriate under section 202(a) and NHTSA's NPRM.
     In making that determination, EPA will evaluate and 
determine whether the MY2022-2025 GHG standards are appropriate 
under section 202(a) of the CAA based on a comprehensive, integrated 
assessment of all of the results of the review, as well as any 
public comments received during the evaluation, taken as a whole. 
The decision making required of the Administrator in making that 
determination is intended to be as robust and comprehensive as that 
in the original setting of the MY2017-2025 standards.
     In making this determination, EPA will consider 
information on a range of relevant factors, including but not 
limited to those listed in the draft rule and below:

    1. Development of powertrain improvements to gasoline and diesel 
powered vehicles.
    2. Impacts on employment, including the auto sector.
    3. Availability and implementation of methods to reduce weight, 
including any impacts on safety.
    4. Actual and projected availability of public and private 
charging infrastructure for electric vehicles, and fueling 
infrastructure for alternative fueled vehicles.
    5. Costs, availability, and consumer acceptance of technologies 
to ensure compliance with the standards, such as vehicle batteries 
and power electronics, mass reduction, and anticipated trends in 
these costs.
    6. Payback periods for any incremental vehicle costs associated 
with meeting the standards.
    7. Costs for gasoline, diesel fuel, and alternative fuels.
    8. Total light-duty vehicle sales and projected fleet mix.
    9. Market penetration across the fleet of fuel efficient 
technologies.
    10. Any other factors that may be deemed relevant to the review.
    [dec222] If, based on the evaluation, EPA decides that the GHG 
standards are appropriate under section 202(a), then EPA will 
announce that final decision and the basis for EPA's decision. The 
decision will be final agency action which also will be subject to 
judicial review on its merits. EPA will develop an administrative 
record for that review that will be no less robust than that 
developed for the initial determination to establish the standards. 
In the midterm evaluation, EPA will develop a robust record for 
judicial review that is the same kind of record that would be 
developed and before a court for judicial review of the adoption of 
standards.
    [dec222] Where EPA decides that the standards are not 
appropriate, EPA will initiate a rulemaking to adopt standards that 
are appropriate under section 202(a), which could result in 
standards that are either less or more stringent. In this rulemaking 
EPA will evaluate a range of alternative standards that are 
potentially effective and reasonably feasible, and the Administrator 
will propose the alternative that in her judgment is the best choice 
for a standard that is appropriate under section 202(a). In the 
2017-2025 rulemaking EPA will formally adopt the interpretation that 
the provisions of section 202(b)(1)(C) are not applicable to any 
revisions of the greenhouse standards adopted in this later 
rulemaking based on the mid-term evaluation. If EPA initiates a 
rulemaking, it will be a joint rulemaking with NHTSA. Any final 
action taken by EPA at the end of that rulemaking is also judicially 
reviewable.
    [dec222] The MY 2022-2025 GHG standards will remain in effect 
unless and until EPA changes them by rulemaking.
    [dec222] NHTSA intends to issue conditional standards for MYs 
2022-2025 in the LDV rulemaking being initiated this fall for MY 
2017 and later model years. The CAFE standards for MYs 2022-2025 
will be determined with finality in a subsequent, de novo notice and 
comment rulemaking conducted in full compliance with section 32902 
of title 49, U.S.C. and other applicable law. Accordingly, NHTSA's 
development of its proposal in that later rulemaking will include 
the making of economic and technology analyses and estimates that 
are appropriate for those model years and based on then-current 
information.
    [dec222] Any rulemaking conducted jointly by the agencies or by 
NHTSA alone will be timed to provide sufficient lead time for 
industry to make whatever changes to their products that the 
rulemaking analysis deems feasible based on the new information 
available. At the very latest, the three agencies will complete the 
mid-term evaluation process and subsequent rulemaking on the 
standards that may occur in sufficient time to promulgate final 
standards for MYs 2022-2025 with at least 18 months lead time, but 
additional lead time may be provided.
    [dec222] EPA understands that California intends to propose a 
mid-term evaluation in its program that is coordinated with EPA and 
NHTSA and is based on a similar set of factors as outlined in this 
Appendix A. The rules submitted to EPA for a waiver under the CAA 
will include such a mid-term evaluation. EPA understands that 
California intends to continue promoting harmonized state and 
federal vehicle standards. EPA further understands that California's 
2017-2025 standards to be submitted to EPA for a waiver under the 
Clean Air Act will deem compliance with EPA greenhouse gas emission 
standards, even if amended after 2012, as compliant with 
California's. Therefore, if EPA revises it standards in response to 
the mid-term review, California may need to amend one or more of its 
2022-2025 MY standards and would submit such amendments to EPA with 
a request for a waiver, or for confirmation that said amendments 
fall within the scope of an existing waiver, as appropriate.
    Consistent with the above, EPA intends to propose regulations 
that state that no later than April 1, 2018, the Administrator shall 
determine whether the standards for MY2022-25 are appropriate under 
section 202(a) of the Act, in light of the record then before the 
Administrator. An opportunity for public comment shall be provided 
before making such determination. If she determines they are not 
appropriate, she shall initiate a rulemaking to revise the 
standards, to be either more or less stringent as appropriate.
    In making the determination required by the previous paragraph, 
the Administrator shall consider the information available on the 
factors relevant to setting greenhouse gas standards under section 
202(a) for these model years, including but not limited to the 
availability and effectiveness of technology, and the appropriate 
lead time for introduction of technology; the cost on the producers 
or purchasers of new motor vehicles or new motor vehicle engines; 
the feasibility and practicability of the standards; the impact of 
the standards on reduction of emissions, oil conservation, energy 
security, and fuel savings by consumers; the impact of the standards 
on the automobile industry; the impacts of the standards on safety; 
the impact of the standards on the CAFE standards and a national 
harmonized program; and the impact of the standards on other 
relevant factors.
    The Administrator shall make the determination required based 
upon a record that includes a draft Technical Assessment Report 
(TAR) addressing issues relevant to the standard for MY2022-25, 
public comment on the TAR, public comment on whether the standards 
for MY2022-25 are appropriate under section 202(a), and such other 
materials the Administrator deems appropriate.
    No later than November 15, 2017, the Administrator shall issue a 
draft TAR addressing issues relevant to the standards for MY2022-25.
    The Administrator will set forth in detail the bases for the 
determination required as described above, including her assessment 
of each of the factors listed above.

Appendix B

EPA Curve Coefficients

a = Minimum CO2 Target [g/mile]
b = Maximum CO2 Target [g/mile]
c = Slope [g/mile per square foot]
d = Intercept [g/mile]
e = Minimum CO2 Target [g/mile] for CO2 Target 
Ceiling Curve
f = Maximum CO2 Target [g/mile] for CO2 Target 
Ceiling Curve
g = Slope [g/mile per square foot] for CO2 Target Ceiling 
Curve
h = Intercept [g/mile] for CO2 Target Ceiling Curve
Where:

Target = min(min (b,max(a, c * 
footprint+d)),min(f,max(e,g*footprint+h)

[[Page 48764]]



                                                                          Cars
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2016       2017       2018       2019       2020       2021       2022       2023       2024       2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
a.........................................     206.0      194.7      184.9      175.3      166.1      157.2      150.2      143.3      136.8      130.5
b.........................................     277.0      262.7      250.1      238.0      226.2      214.9      205.5      196.5      187.8      179.5
c.........................................       4.72       4.53       4.35       4.17       4.01       3.84       3.69       3.54       3.40       3.26
d.........................................      12.70       8.92       6.54       4.20       1.89      -0.38      -1.12      -1.83      -2.52      -3.17
e.........................................  .........     203.4      201.9      200.4      198.9      197.4      197.4      197.4      197.4      197.4
f.........................................  .........     274.4      277.0      278.5      280.0      281.5      283.0      283.0      283.0      283.0
g.........................................  .........       4.72       4.72       4.72       4.72       4.72       4.72       4.72       4.72       4.72
h.........................................  .........      10.10       8.60       7.10       5.60       4.10       4.10       4.10       4.10       4.10
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                         Trucks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2016       2017       2018       2019       2020       2021       2022       2023       2024       2025
--------------------------------------------------------------------------------------------------------------------------------------------------------
a.........................................     247.0      238.1      226.8      219.5      211.9      195.4      185.7      176.4      167.6      159.1
b.........................................     348.0      347.2      341.7      338.6      336.7      334.8      320.8      305.6      291.0      277.1
c.........................................       4.04       4.87       4.76       4.68       4.57       4.28       4.09       3.91       3.74       3.58
d.........................................      81.10      38.28      31.62      27.69      24.64      19.80      17.85      15.98      14.21      12.51
e.........................................  .........     246.4      240.9      237.8      235.9      234.0      234.0      234.0      234.0      234.0
f.........................................  .........     347.4      341.9      338.8      336.9      335.0      335.0      335.0      335.0      335.0
g.........................................  .........       4.04       4.04       4.04       4.04       4.04       4.04       4.04       4.04       4.04
h.........................................  .........      80.50      75.00      71.90      70.00      68.10      68.10      68.10      68.10      68.10
--------------------------------------------------------------------------------------------------------------------------------------------------------

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[[Page 48765]]

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[[Page 48766]]


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[[Page 48767]]



NHTSA CAFE Coefficients and Curves for Cars and Trucks

Instructions for Calculating NHTSA CAFE and EPA GHG Target Curves 
Using the Coefficients

    The target curve is calculated by:

Step 1. Calculate targets using the a, b, c, and d coefficients
Step 2. Calculate targets using the e, f, g and h coefficients
Step 3. The curve is defined by the more stringent value at each 
footprint calculated from Step 1 and Step 2
[GRAPHIC] [TIFF OMITTED] TP09AU11.018


[[Page 48768]]


[GRAPHIC] [TIFF OMITTED] TP09AU11.019

Table A.1--CAFE Target Curve Coefficients

[[Page 48769]]



                                                                                         Passenger Cars
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
           Model year                  2016            2017            2018            2019            2020            2021            2022            2023            2024            2025
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
a...............................          30.96           32.65           33.84           35.07           36.47           38.02           39.79           41.64           43.58           45.61
b...............................          41.09           43.61           45.21           46.87           48.74           50.83           53.21           55.71           58.32           61.07
c...............................      0.0005308       0.0005131       0.0004954       0.0004783       0.0004603       0.0004419       0.0004227       0.0004043       0.0003867       0.0003699
d...............................       0.002573        0.001896        0.001811        0.001729        0.001643        0.001555        0.001463        0.001375        0.001290        0.001210
e...............................  ..............          31.51           31.51           31.51           31.51           31.51           31.51           31.51           31.51           31.51
f...............................  ..............          42.06           42.06           42.06           42.06           42.06           42.06           42.06           42.06           42.06
g...............................  ..............      0.0005308       0.0005308       0.0005308       0.0005308       0.0005308       0.0005308       0.0005308       0.0005308       0.0005308
h...............................  ..............       0.002010        0.002010        0.002010        0.002010        0.002010        0.002010        0.002010        0.002010        0.002010
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------


                                                                                             Trucks
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
           Model year                  2016            2017            2018            2019            2020            2021            2022            2023            2024            2025
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
a...............................          24.74           25.09           25.20           25.25           25.25           25.25           26.29           27.53           28.83           30.19
b...............................          34.42           36.26           37.36           38.16           39.11           41.80           43.79           45.89           48.09           50.39
c...............................      0.0004546       0.0005484       0.0005358       0.0005265       0.0005140       0.0004820       0.0004607       0.0004404       0.0004210       0.0004025
d...............................       0.010413        0.005097        0.004797        0.004623        0.004494        0.004164        0.003944        0.003735        0.003534        0.003343
e...............................  ..............          25.09           25.20           25.25           25.25           25.25           25.25           25.25           25.25           25.25
f...............................  ..............          35.10           35.31           35.41           35.41           35.41           35.41           35.41           35.41           35.41
g...............................  ..............      0.0004546       0.0004546       0.0004546       0.0004546       0.0004546       0.0004546       0.0004546       0.0004546       0.0004546
h...............................  ..............       0.009851        0.009682        0.009603        0.009603        0.009603        0.009603        0.009603        0.009603        0.009603
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
a = Fuel Economy Value for Lower Footprint Cutpoint [mpg].
b = Fuel Economy Value for Upper Footprint Cutpoint [mpg].
c = Slope [gallons per mile per square foot].
d = Intercept [gallons per mile].
e = Fuel Economy Value for Lower Footprint Cutpoint [mpg] for Floor Curve.
f = Fuel Economy Value for Upper Footprint Cutpoint [mpg] for Target Floor Curve.
g = Slope [gallons per mile per square foot] for Target Floor Curve.
h = Intercept [gallons per mile] for Target Floor Curve.


    Dated: July 29, 2011
Ray LaHood,
Secretary, Department of Transportation.

    Dated: July 29, 2011.

    Lisa P. Jackson,
Administrator, Environmental Protection Agency.
[FR Doc. 2011-19905 Filed 8-8-11; 8:45 am]
BILLING CODE 6560-50-C