[Federal Register Volume 81, Number 206 (Tuesday, October 25, 2016)]
[Rules and Regulations]
[Pages 73478-74274]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-21203]



[[Page 73477]]

Vol. 81

Tuesday,

No. 206

October 25, 2016

Part II





Environmental Protection Agency





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40 CFR Parts 9, 22, 85, et al.





Department of Transportation





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National Highway Traffic Safety Administration





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49 CFR Parts 523, 534, 535, et al.





Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- and 
Heavy-Duty Engines and Vehicles--Phase 2; Final Rule

Federal Register / Vol. 81 , No. 206 / Tuesday, October 25, 2016 / 
Rules and Regulations

[[Page 73478]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 9, 22, 85, 86, 600, 1033, 1036, 1037, 1039, 1042, 
1043, 1065, 1066, and 1068

DEPARTMENT OF TRANSPORTATION

National Highway Traffic Safety Administration

49 CFR Parts 523, 534, 535, and 538

[EPA-HQ-OAR-2014-0827; NHTSA-2014-0132; FRL-9950-25-OAR]
RIN 2060-AS16; RIN 2127-AL52


Greenhouse Gas Emissions and Fuel Efficiency Standards for 
Medium- and Heavy-Duty Engines and Vehicles--Phase 2

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

ACTION: Final rule.

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SUMMARY: EPA and NHTSA, on behalf of the Department of Transportation, 
are establishing rules for a comprehensive Phase 2 Heavy-Duty (HD) 
National Program that will reduce greenhouse gas (GHG) emissions and 
fuel consumption from new on-road medium- and heavy-duty vehicles and 
engines. NHTSA's fuel consumption standards and EPA's carbon dioxide 
(CO2) emission standards are tailored to each of four 
regulatory categories of heavy-duty vehicles: Combination tractors; 
trailers used in combination with those tractors; heavy-duty pickup 
trucks and vans; and vocational vehicles. The rule also includes 
separate standards for the engines that power combination tractors and 
vocational vehicles. Certain requirements for control of GHG emissions 
are exclusive to the EPA program. These include EPA's hydrofluorocarbon 
standards to control leakage from air conditioning systems in 
vocational vehicles and EPA's nitrous oxide (N2O) and 
methane (CH4) standards for heavy-duty engines. 
Additionally, NHTSA is addressing misalignment between the Phase 1 EPA 
GHG standards and the NHTSA fuel efficiency standards to virtually 
eliminate the differences. This action also includes certain EPA-
specific provisions relating to control of emissions of pollutants 
other than GHGs. EPA is finalizing non-GHG emission standards relating 
to the use of diesel auxiliary power units installed in new tractors. 
In addition, EPA is clarifying the classification of natural gas 
engines and other gaseous-fueled heavy-duty engines. EPA is also 
finalizing technical amendments to EPA rules that apply to emissions of 
non-GHG pollutants from light-duty motor vehicles, marine diesel 
engines, and other nonroad engines and equipment. Finally, EPA is 
requiring that engines from donor vehicles installed in new glider 
vehicles meet the emission standards applicable in the year of assembly 
of the new glider vehicle, including all applicable standards for 
criteria pollutants, with limited exceptions for small businesses and 
for other special circumstances.

DATES: This final rule is effective on December 27, 2016. The 
incorporation by reference of certain publications listed in this 
regulation is approved by the Director of the Federal Register as of 
December 27, 2016.

ADDRESSES: EPA and NHTSA have established dockets for this action under 
Docket ID No. EPA-HQ-OAR-2014-0827 (for EPA's docket) and NHTSA-2014-
0132 (for NHTSA's docket). All documents in the docket are listed on 
the https://www.regulations.gov Web site. Although listed in the index, 
some information is not publicly available, e.g., CBI or other 
information whose disclosure is restricted by statute. Certain other 
material, such as copyrighted material, is not placed on the Internet 
and will be publicly available only in hard copy form. Publicly 
available docket materials are available either electronically in 
https://www.regulations.gov or in hard copy at the following locations:
    EPA: Air and Radiation Docket and Information Center, EPA Docket 
Center, EPA/DC, EPA WJC West Building, 1301 Constitution Ave. NW., Room 
3334, 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, and the 
telephone number for the Air Docket is (202) 566-1742.
    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 telephone number for the 
docket management facility is (202) 366-9324. The docket management 
facility is open between 9 a.m. and 5 p.m. Eastern Time, Monday through 
Friday, except Federal Holidays.

FOR FURTHER INFORMATION CONTACT: 
    EPA: Tad Wysor, Office of Transportation and Air Quality, 
Assessment and Standards Division (ASD), Environmental Protection 
Agency, 2000 Traverwood Drive, Ann Arbor, MI 48105; telephone number: 
(734) 214-4332; email address: wysor.tad@epa.gov.
    NHTSA: Ryan Hagen, Office of Chief Counsel, National Highway 
Traffic Safety Administration, 1200 New Jersey Avenue SE., Washington, 
DC 20590. Telephone: (202) 366-2992; ryan.hagen@dot.gov.

SUPPLEMENTARY INFORMATION:

A. Does this action apply to me?

    This action will affect companies that manufacture, sell, or import 
into the United States new heavy-duty engines and new Class 2b through 
8 trucks, including combination tractors, all types of buses, 
vocational vehicles including municipal, commercial, recreational 
vehicles, and commercial trailers as well as \3/4\-ton and 1-ton pickup 
trucks and vans. The heavy-duty category incorporates all motor 
vehicles with a gross vehicle weight rating of 8,500 lbs. or greater, 
and the engines that power them, except for medium-duty passenger 
vehicles already covered by the greenhouse gas standards and corporate 
average fuel economy standards issued for light-duty model year 2017-
2025 vehicles.\1\ Regulated categories and entities include the 
following:
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    \1\ As discussed in Section I.A, the term heavy-duty is 
generally used in this rulemaking to refer to all vehicles with a 
gross vehicle weight rating above 8,500 lbs, including vehicles that 
are sometimes otherwise known as medium-duty vehicles.

------------------------------------------------------------------------
                                               Examples of potentially
          Category           NAICS code \a\       affected entities
------------------------------------------------------------------------
Industry...................          336111  Motor Vehicle
                                              Manufacturers, Engine
                                              Manufacturers, Truck
                                              Manufacturers, Truck
                                              Trailer Manufacturers.
                                     336112
                                     333618
                                     336120
                                     336212
Industry...................          541514  Commercial Importers of
                                              Vehicles and Vehicle
                                              Components.
                                     811112

[[Page 73479]]

 
                                     811198
Industry...................          336111  Alternative Fuel Vehicle
                                              Converters.
                                     336112
                                     422720
                                     454312
                                     541514
                                     541690
                                     811198
------------------------------------------------------------------------
Note:
\a\ North American Industry Classification System (NAICS).

    This table is not intended to be exhaustive, but rather provides a 
guide for readers regarding entities likely covered by these rules. 
This table lists the types of entities that the agencies are aware may 
be regulated by this action. Other types of entities not listed in the 
table could also be regulated. To determine whether your activities are 
regulated by this action, you should carefully examine the 
applicability criteria in the referenced regulations. You may direct 
questions regarding the applicability of this action to the persons 
listed in the preceding FOR FURTHER INFORMATION CONTACT section.

B. Did EPA conduct a peer review before issuing this document?

    This regulatory action is supported by influential scientific 
information. Therefore, EPA conducted a peer review consistent with 
OMB's Final Information Quality Bulletin for Peer Review. As described 
in Section II.C, a peer review of updates to the vehicle simulation 
model (GEM) for the Phase 2 standards has been completed. This version 
of GEM is based on the model used for the Phase 1 rule, which was peer 
reviewed by a panel of four independent subject matter experts. The 
peer review report and EPA's response to the peer review comments are 
available in Docket ID No. EPA-HQ-OAR-2014-0827. We note that this 
rulemaking is based on a vast body of existing peer-reviewed work, 
i.e., work that was peer-reviewed outside of this action, as noted in 
the references throughout this Preamble, the Regulatory Impacts 
Analysis, and the rulemaking docket. EPA also notified the SAB of its 
plans for this rulemaking and on June 11, 2014, the chartered SAB 
discussed the recommendations of its work group on the planned action 
and agreed that no further SAB consideration of the supporting science 
was merited.

C. Executive Summary

(1) Commitment to Greenhouse Gas Emission Reductions and Vehicle Fuel 
Efficiency

    In June 2013, the President announced a comprehensive Climate 
Action Plan for the United States to reduce carbon pollution, prepare 
for the impacts of climate change, and lead international efforts to 
address global climate change.\2\ In this plan, President Obama 
reaffirmed his commitment to reduce U.S. greenhouse gas emissions in 
the range of 17 percent below 2005 levels by 2020. More recently, in 
December 2015, the U.S. was one of over 190 signatories to the Paris 
Climate Agreement, widely regarded as the most ambitious climate change 
agreement in history. The Paris agreement reaffirms the goal of 
limiting global temperature increase to well below 2 degrees Celsius, 
and for the first time urged efforts to limit the temperature increase 
to 1.5 degrees Celsius. The U.S. submitted a non-binding intended 
nationally determined contribution (NDC) target of reducing economy-
wide GHG emissions by 26-28 percent below its 2005 level in 2025 and to 
make best efforts to reduce emissions by 28 percent.\3\ This pace would 
keep the U.S. on a trajectory to achieve deep economy-wide reductions 
on the order of 80 percent by 2050.
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    \2\ The White House, The President's Climate Action Plan (June, 
2013). http://www.whitehouse.gov/share/climate-action-plan.
    \3\ United States of America, Intended Nationally Determined 
Contribution, March 31, 2015, http://www4.unfccc.int/submissions/INDC/Published%20Documents/United%20States%20of%20America/1/U.S.%20Cover%20Note%20INDC%20and%20Accompanying%20Information.pdf.
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    As part of his Climate Action plan, the President specifically 
directed the Environmental Protection Agency (EPA) and the Department 
of Transportation's (DOT) National Highway Traffic Safety 
Administration (NHTSA) to set the next round of standards to reduce 
greenhouse gas (GHG) emissions and improve fuel efficiency for heavy-
duty vehicles pursuant to and consistent with the agencies' existing 
statutory authorities.\4\ More than 70 percent of the oil used in the 
United States and 26 percent of GHG emissions come from the 
transportation sector, and since 2009 EPA and NHTSA have worked with 
industry, states, and other stakeholders to develop ambitious, flexible 
standards for both the fuel economy and GHG emissions of light-duty 
vehicles and the fuel efficiency and GHG emissions of heavy-duty 
vehicles.5 6 The standards here (referred to as Phase 2) 
will build on the light-duty vehicle standards spanning model years 
2012 to 2025 and on the initial phase of standards (referred to as 
Phase 1) for new medium and heavy-duty vehicles (MDVs and HDVs) and 
engines in model years 2014 to 2018. Throughout every stage of 
development for these programs, EPA and NHTSA (collectively, the 
agencies, or ``we'') have worked in close partnership not only with one 
another, but also with the vehicle manufacturing industry, 
environmental community leaders, and the State of California among 
other entities to create a single, effective set of national standards.
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    \4\ EPA's HD Phase 2 GHG emission standards are authorized under 
the Clean Air Act, and NHTSA's HD Phase 2 fuel consumption standards 
are authorized under the Energy Independence and Security Act of 
2007.
    \5\ The White House, Improving the Fuel Efficiency of American 
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving 
Money and Supporting Manufacturing Innovation (Feb. 2014), 2.
    \6\ U.S. Environmental Protection Agency. April 2016. Inventory 
of U.S. Greenhouse Gas Emissions and Sinks: 1990-2012. EPA 430-R-16-
002. Mobile sources emitted 28 percent of all U.S. GHG emissions in 
2012. Available at  https://www3.epa.gov/climatechange/Downloads/ghgemissions/US-GHG-Inventory-2016-Main-Text.pdf.
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    Through two previous rulemakings, EPA and NHTSA have worked with 
the auto industry to develop new fuel economy and GHG emission 
standards for light-duty vehicles. Taken together with NHTSA's 2011 
CAFE standards, the light-duty vehicle standards span model years 2011 
to 2025 and are the first significant improvement in fuel economy in 
approximately two decades. Under the final program, average new car and 
light truck fuel economy is expected to nearly double by 2025

[[Page 73480]]

compared to 2010 vehicles.\7\ In the 2012 rule, the agencies projected 
the standards would save consumers $1.7 trillion at the pump--roughly 
$8,200 per vehicle for a MY 2025 vehicle--reducing oil consumption by 
2.2 million barrels a day in 2025 and slashing GHG emissions by 6 
billion metric tons over the lifetime of the vehicles sold during this 
period.\8\ These fuel economy standards are already delivering savings 
for American drivers. Between model years 2008 and 2013, the unadjusted 
average test fuel economy of new passenger cars and light trucks sold 
in the United States has increased by about four miles per gallon. 
Altogether, light-duty vehicle fuel economy standards finalized after 
2008 have already saved nearly one billion gallons of fuel and avoided 
more than 10 million tons of carbon dioxide emissions.\9\
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    \7\ The White House, Improving the Fuel Efficiency of American 
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving 
Money and Supporting Manufacturing Innovation (Feb. 2014), 2.
    \8\ Id.
    \9\ Id. at 3.
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    Similarly, EPA and NHTSA have previously developed joint GHG 
emission and fuel efficiency standards for MDVs and HDVs. Prior to 
these Phase 1 standards, heavy-duty trucks and buses--from delivery 
vans to the largest tractor-trailers--were required to meet pollution 
standards for soot and smog-causing air pollutants, but no requirements 
existed for the fuel efficiency or carbon pollution from these 
vehicles.\10\ By 2010, total fuel consumption and GHG emissions from 
MDVs and HDVs had been growing, and these vehicles accounted for 23 
percent of total U.S. transportation-related GHG emissions \11\ and 
about 20 percent of U.S. transportation-related energy use. In August 
2011, the agencies finalized the groundbreaking Phase 1 standards for 
new MDVs and HDVs in model years 2014 through 2018. This program, 
developed with support from the trucking and engine industries, the 
State of California, Environment and Climate Change Canada, and leaders 
from the environmental community, set standards based on the use of 
off-the-shelf technologies. These standards are expected to save a 
projected 530 million barrels of oil and reduce carbon emissions by 
about 270 million metric tons, representing one of the most significant 
programs available to reduce domestic fuel consumption and emissions of 
GHGs.\12\ The Phase 1 program, as well as the many additional actions 
called for in the President's 2013 Climate Action Plan \13\ including 
this Phase 2 rulemaking, not only result in meaningful decreases in GHG 
emissions and fuel consumption, but also support--indeed are critical 
for--United States leadership to encourage other countries to also 
achieve meaningful GHG reductions and fuel conservation.
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    \10\ Id.
    \11\ Id.
    \12\ Id. at 4.
    \13\ The President's Climate Action Plan calls for GHG-cutting 
actions including, for example, reducing carbon emissions from power 
plants and curbing hydrofluorocarbon and methane emissions.
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    This rule builds on our commitment to robust collaboration with 
stakeholders and the public. It follows an expansive and thorough 
outreach effort in which the agencies gathered input, data and views 
from many interested stakeholders, involving over 400 meetings with 
heavy-duty vehicle and engine manufacturers, technology suppliers, 
trucking fleets, truck drivers, dealerships, environmental 
organizations, and state agencies.\14\ As with the previous light-duty 
rules and the heavy-duty Phase 1 rule, the agencies have consulted 
frequently with the California Air Resources Board (CARB) staff during 
the development of this rule, given California's unique ability among 
the states to adopt their own GHG standards for on-highway engines and 
vehicles. Through this close coordination, the agencies are finalizing 
a Phase 2 program that will be fully aligned between EPA and NHTSA, 
while providing CARB with the opportunity to adopt a Phase 2 program 
that will allow manufacturers to continue to build a single fleet of 
vehicles and engines.
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    \14\ ``Heavy-Duty Phase 2 Stakeholder Meeting Log'', August 
2016.
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(2) Overview of Phase 1 Medium- and Heavy-Duty Vehicle Standards

    The Phase 1 program covers new trucks and heavy vehicles in model 
years 2014 and later. That program includes specific standards for 
combination tractors, heavy-duty pickup trucks and vans, and vocational 
vehicles and includes separate standards for both vehicles and engines. 
The program offers extensive flexibility, allowing manufacturers to 
reach standards through average fleet calculations, a mix of 
technologies, and the use of various credit and banking programs.
    The Phase 1 program was developed by the agencies through close 
consultation with industry and other stakeholders, resulting in 
standards tailored to the specifics of each different class of vehicles 
and engines.
     Heavy-duty combination tractors. Combination tractors--
semi trucks that typically pull trailers--are regulated under nine 
subcategories based on weight class, cab type, and roof height. These 
vehicles represent approximately 60 percent of the fuel consumption and 
GHG emissions from MDVs and HDVs.
     Heavy-duty pickup trucks and vans. Heavy-duty pickup and 
van standards are based on a ``work factor'' attribute that combines a 
vehicle's payload, towing capabilities, and the presence of 4-wheel 
drive. These vehicles represent about 23 percent of the fuel 
consumption and GHG emissions from MDVs and HDVs.
     Vocational vehicles. Specialized vocational vehicles, 
which consist of a very wide variety of truck and bus types (e.g., 
delivery, refuse, utility, dump, cement, transit bus, shuttle bus, 
school bus, emergency vehicles, and recreational vehicles) are 
regulated in three subcategories based on engine classification. These 
vehicles represent approximately 17 percent of the fuel consumption and 
GHG emissions from MDVs and HDVs. The Phase 1 program includes EPA GHG 
standards for recreational vehicles, but not NHTSA fuel efficiency 
standards.\15\
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    \15\ The Phase 2 program will also include NHTSA recreational 
vehicle fuel efficiency standards.
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     Heavy-duty engines. The Phase 1 rule has independent 
standards for heavy-duty engines to assure they contribute to reducing 
GHG emissions and fuel consumption because the Phase 1 tractor and 
vocational vehicle standards do not account for the contributions of 
engine improvements to reducing fuel consumption and GHG emissions.
    The Phase 1 standards were premised on utilization of technologies 
that were already in production on some vehicles at the time of the 
Phase 1 FRM and are adaptable to the broader fleet. The Phase 1 program 
provides flexibilities that facilitate compliance. These flexibilities 
help provide sufficient lead time for manufacturers to make necessary 
technological improvements and reduce the overall cost of the program, 
without compromising overall environmental and fuel consumption 
objectives. The primary flexibility provisions are an engine averaging, 
banking, and trading (ABT) program and a vehicle ABT program. These ABT 
programs allow for emission and/or fuel consumption credits to be 
averaged, banked, or traded within each of the averaging sets.
    The Phase 1 program was projected to save 530 million barrels of 
oil and avoid 270 million metric tons of GHG emissions.\16\ At the same 
time, the

[[Page 73481]]

program was projected to produce $50 billion in fuel savings and $49 
billion of net societal benefits. Today, the Phase 1 fuel efficiency 
and GHG reduction standards are already reducing GHG emissions and U.S. 
oil consumption, and producing fuel savings for America's trucking 
industry. The market appears to be very accepting of the Phase 1 
technologies.
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    \16\ The White House, Improving the Fuel Efficiency of American 
Trucks--Bolstering Energy Security, Cutting Carbon Pollution, Saving 
Money and Supporting Manufacturing Innovation (Feb. 2014), 4.
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(3) Overview of Phase 2 Medium- and Heavy-Duty Vehicle Standards

    The Phase 2 GHG and fuel efficiency standards for MDVs and HDVs are 
a critical next step in improving fuel efficiency and reducing GHG 
emissions. The Phase 2 national program carries forward our commitment 
to meaningful collaboration with stakeholders and the public, as they 
build on more than 400 meetings with manufacturers, suppliers, trucking 
fleets, dealerships, state air quality agencies, non-governmental 
organizations (NGOs), and other stakeholders; over 200,000 public 
comments; and two public hearings to identify and understand the 
opportunities and challenges involved with this next level of fuel-
saving technology. These meetings and public feedback, in addition to 
close coordination with CARB, have been invaluable to the agencies, 
enabling the development of a program that appropriately balances all 
potential impacts, effectively minimizes the possibility of unintended 
consequences, and allows manufacturers to continue to build a single 
fleet of vehicles and engines.
    Phase 2 will include technology-advancing standards that will phase 
in over the long-term (through model year 2027) to result in an 
ambitious, yet achievable program that will allow manufacturers to meet 
standards through a mix of different technologies at reasonable cost. 
The terminal requirements go into effect in 2027, and would apply to MY 
2027 and subsequent model year vehicles, unless modified by future 
rulemaking. The Phase 2 standards will maintain the underlying 
regulatory structure developed in the Phase 1 program, such as the 
general categorization of MDVs and HDVs and the separate standards for 
vehicles and engines. However, the Phase 2 program will build on and 
advance Phase 1 in a number of important ways including the following: 
basing standards not only on currently available technologies but also 
on utilization of technologies now under development or not yet widely 
deployed while providing significant lead time to assure adequate time 
to develop, test, and phase in these controls; developing first-time 
GHG and fuel efficiency standards for trailers; further encouraging 
innovation and providing flexibility; including vehicles produced by 
small business manufacturers with appropriate flexibilities for these 
companies; incorporating enhanced test procedures that (among other 
things) allow individual drivetrain and powertrain performance to be 
reflected in the vehicle certification process; and using an expanded 
and improved compliance simulation model.
    The Phase 2 program will provide significant GHG reductions and 
save fuel by:
     Strengthening standards to account for ongoing 
technological advancements. Relative to the baseline as of the end of 
Phase 1, these final standards are projected to achieve vehicle fuel 
savings as high as 25 percent, depending on the vehicle category. While 
costs are higher than for Phase 1, benefits greatly exceed costs, and 
payback periods are short, meaning that consumers will see substantial 
net savings over the vehicle lifetime. Payback is estimated at about 
two years for tractors and trailers, about four years for vocational 
vehicles, and about three years for heavy-duty pickups and vans. The 
agencies are finalizing a program that phases in the MY 2027 standards 
with interim standards for model years 2021 and 2024 (and for certain 
types of trailers, EPA is finalizing model year 2018 phase-in standards 
as well). The final program includes both significant strengthening of 
certain standards from the NPRM as well as adjustments to better align 
other standards with new data, analysis, and stakeholder and public 
feedback received since the time of the proposal.
     Setting standards for trailers for the first time. In 
addition to retaining the vehicle and engine categories covered in the 
Phase 1 program, the Phase 2 standards include fuel efficiency and GHG 
emission standards for trailers used in combination with tractors. 
Although the agencies are not finalizing standards for all trailer 
types, the majority of new trailers will be covered.
     Encouraging technological innovation while providing 
flexibility and options for manufacturers. For each category of HDVs, 
the standards will set performance targets that allow manufacturers to 
achieve reductions through a mix of different technologies and 
generally leave manufacturers free to choose any means of compliance. 
For tractor standards, for example, different combinations of 
improvements like advanced aerodynamics, engine improvements and waste-
heat recovery, automated transmission, lower rolling resistance tires, 
and automatic tire inflation can be used to meet standards. For 
tractors and vocational vehicles, enhanced test procedures and an 
expanded and improved compliance simulation model enable the vehicle 
standards to encompass more of the complete vehicle than the Phase 1 
program and to account for engine, transmission and driveline 
improvements. With the addition of the powertrain and driveline to the 
compliance model, representative drive cycles and vehicle baseline 
configurations become critically important to assure the standards 
promote technologies that improve real world fuel efficiency and GHG 
emissions. This rule updates drive cycles and vehicle configurations to 
better reflect real world operation. The final program includes 
adjustments to technical elements of the proposed compliance program, 
e.g., test procedures, reflecting the significant amount of stakeholder 
and public comment the agencies received on the program. Additionally, 
the agencies' analyses indicate that this rule should have no adverse 
impact on vehicle or engine safety.
     Providing flexibilities to help minimize effect on small 
businesses. All small businesses are exempt from the Phase 1 standards. 
The agencies are regulating small business entities under Phase 2 
(notably certain trailer manufacturers), but we have conducted 
extensive proceedings pursuant to section 609 of the Regulatory 
Flexibility Act, and engaged in extensive consultation with 
stakeholders, and developed an approach to provide targeted 
flexibilities geared toward helping small businesses comply with the 
Phase 2 standards. Specifically, the agencies are delaying the initial 
implementation of the Phase 2 standards by one year and simplifying 
certification requirements for small businesses. We are also adopting 
additional flexibilities and exemptions adapted to particular vehicle 
categories.
    The following tables summarize the impacts of the Heavy-Duty Phase 
2 rule.

[[Page 73482]]



  Summary of the Phase 2 Medium- and Heavy-Duty Vehicle Rule Impacts to
Fuel Consumption, GHG Emissions, Benefits and Costs Over the Lifetime of
                      Model Years 2018-2029 \a\ \b\
------------------------------------------------------------------------
                                                3%              7%
------------------------------------------------------------------------
Fuel Reductions (billion gallons).......               71-82
                                         -------------------------------
GHG Reductions (MMT, CO[ihel2]eq).......             959-1098
                                         -------------------------------
Pre-Tax Fuel Savings ($billion).........         149-169           80-87
Discounted Technology Costs ($billion)..           24-27           16-18
Value of reduced emissions ($billion)...           60-69           48-52
Total Costs ($billion)..................           29-31           19-20
Total Benefits ($billion)...............         225-260         136-151
Net Benefits ($billion).................         197-229         117-131
------------------------------------------------------------------------
Notes:
\a\ Ranges reflect two analysis methods: Method A with the 1b baseline
  and Method B with the la baseline. For an explanation of analytical
  Methods A and B, please see Section I.D; for an explanation of the
  ``flat'' baseline, 1a, and the ``dynamic'' baseline, 1b, please see
  Section X.A.1.
\b\ Benefits and net benefits (including those in the 7% discount rate
  column) use the 3 percent average Social Cost of CO[ihel2], the Social
  Cost of CH[ihel4], and the Social Cost of N[ihel2]O.


  Summary of the Phase 2 Medium- and Heavy-Duty Vehicle Annual Fuel and
  GHG Reductions, Program Costs, Benefits and Net Benefits in Calendar
                         Years 2040 and 2050 \a\
------------------------------------------------------------------------
                                               2040            2050
------------------------------------------------------------------------
Fuel Reductions (Billion Gallons).......            10.8            13.0
GHG Reduction (MMT, CO[ihel2]eq)........           166.8           199.3
Vehicle Program Costs (including                   -$6.5           -$7.5
 Maintenance; Billions of 2013$)........
Fuel Savings (Pre-Tax; Billions of                 $53.1           $63.4
 2013$).................................
Benefits (Billions of 2013$)............           $24.8           $31.7
Net Benefits (Billions of 2013$)........           $71.4           $87.6
------------------------------------------------------------------------
Note:
\a\ Benefits and net benefits (including those in the 7% discount rate
  column) use the 3 percent average Social Cost of CO[ihel2], the Social
  Cost of CH[ihel4], and the Social Cost of N[ihel2]O. Values reflect
  the final program using Method B relative to the flat baseline (a
  reference case that projects very little improvement in new vehicle
  fuel economy absent new standards).


  Summary of the Phase 2 Medium- and Heavy-Duty Vehicle Program Expected Per-Vehicle Fuel Savings, GHG Emission
                                 Reductions, and Cost for Key Vehicle Categories
----------------------------------------------------------------------------------------------------------------
                                                              MY 2021            MY 2024            MY 2027
----------------------------------------------------------------------------------------------------------------
Maximum Vehicle Fuel Savings and Tailpipe GHG Reduction
 (%):
    Tractors \b\.......................................                 13                 20                 25
    Trailers \a\.......................................                  5                  7                  9
    Vocational Vehicles \b\............................                 12                 20                 24
    Pickups/Vans.......................................                2.5                 10                 16
Per Vehicle Cost ($)\c\ \d\ (% Increase in Typical
 Vehicle Price):
    Tractors...........................................      $6,400-$6,480     $9,920-$10,100    $12,160-$12,440
                                                                      (6%)              (10%)              (12%)
    Trailers...........................................          $850-$870      $1,000-$1,030      $1,070-$1,110
                                                                      (3%)               (4%)               (4%)
    Vocational Vehicles................................      $1,110-$1,160      $1,980-$2,020      $2,660-$2,700
                                                                      (1%)               (2%)               (3%)
    Pickups/Vans.......................................          $520-$750          $760-$960      $1,340-$1,360
                                                                      (1%)               (2%)               (3%)
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ Note that the EPA standards for trailers begin in model year 2018
\b\ All engine costs are included
\c\ Please refer to Preamble Chapters 6 and 10 for additional information on the reference fleet used to analyze
  costs and benefits of the rule. Please also refer to these chapters for impacts of the rule under more dynamic
  baseline assumptions for pickups and vans.
\d\ Ranges reflect two analysis methods: Method A with the 1b baseline and Method B with the la baseline. For an
  explanation of analytical Methods A and B, please see Section I.D; for an explanation of the ``flat''
  baseline, 1a, and the ``dynamic'' baseline, 1b, please see Section X.A.1.
\e\ For this table, we use an approximate minimum vehicle price today of $100,000 for tractors, $25,000 for
  trailers, $100,000 for vocational vehicles and $40,000 for HD pickups/vans.


[[Page 73483]]


Payback Periods for MY 2027 Vehicles Under the Final Standards, Based on
                      both Analysis Methods A and B
        [Payback occurs in the year shown; using 7% discounting]
------------------------------------------------------------------------
                                                   Final standards
------------------------------------------------------------------------
Tractors/Trailers..........................  2nd.
Vocational Vehicles........................  4th.
Pickups/Vans \a\...........................  3rd.
------------------------------------------------------------------------
Note:
\a\ Please refer to Preamble Chapters 6 and 10 for additional
  information on the reference fleet used to analyze costs and benefits
  of the rule. Please also refer to these chapters for impacts of the
  rule under more dynamic baseline assumptions for pickups and vans.

(4) Issues Addressed in This Final Rule

    This Preamble contains extensive discussion of the background, 
elements, and implications of the Phase 2 program, as well as updates 
made to the final program from the proposal based on new data, 
analysis, stakeholder feedback and public comments. Section I includes 
information on the MDV and HDV industry, related regulatory and non-
regulatory programs, summaries of Phase 1 and Phase 2 programs, costs 
and benefits of the final standards, and relevant statutory authority 
for EPA and NHTSA. Section II discusses vehicle simulation, engine 
standards, and test procedures. Sections III, IV, V, and VI detail the 
final standards for combination tractors, trailers, vocational 
vehicles, and heavy-duty pickup trucks and vans. Sections VII and VIII 
discuss aggregate GHG impacts, fuel consumption impacts, climate 
impacts, and impacts on non-GHG emissions. Section IX evaluates the 
economic impacts of the final program. Sections X and XI present the 
alternatives analyses and consideration of natural gas vehicles. 
Finally, Sections XII and XIII discuss the changes that the Phase 2 
rules will have on Phase 1 standards and other regulatory provisions. 
In addition to this Preamble, the Regulatory Impact Analysis (RIA),\17\ 
provides additional data, analysis and discussion of the standards, and 
the Response to Comments Document for Joint Rulemaking (RTC) provides 
responses to comments received on the Phase 2 rulemaking through the 
public comment process.\18\
---------------------------------------------------------------------------

    \17\ Available on EPA and NHTSA's Web sites and in the public 
docket for this rulemaking.
    \18\ Available on EPA's Web site and in the public docket for 
this rulemaking.
---------------------------------------------------------------------------

Table of Contents

    A. Does this action apply to me?
    B. Did EPA conduct a peer review before issuing this document?
    C. Executive Summary
I. Overview
    A. Background
    B. Summary of Phase 1 Program
    C. Summary of the Phase 2 Standards and Requirements
    D. Summary of the Costs and Benefits of the Final Rules
    E. EPA and NHTSA Statutory Authorities
    F. Other Issues
II. Vehicle Simulation and Separate Engine Standards for Tractors 
and Vocational Chassis
    A. Introduction
    B. Phase 2 Regulatory Structure
    C. Phase 2 GEM and Vehicle Component Test Procedures
    D. Engine Test Procedures and Engine Standards
III. Class 7 and 8 Combination Tractors
    A. Summary of the Phase 1 Tractor Program
    B. Overview of the Phase 2 Tractor Program and Key Changes From 
the Proposal
    C. Phase 2 Tractor Standards
    D. Feasibility of the Final Phase 2 Tractor Standards
    E. Phase 2 Compliance Provisions for Tractors
    F. Flexibility Provisions
IV. Trailers
    A. The Trailer Industry
    B. Overview of the Phase 2 Trailer Program and Key Changes From 
the Proposal
    C. Phase 2 Trailer Standards
    D. Feasibility of the Trailer Standards
    E. Trailer Standards: Compliance and Flexibilities
V. Class 2b-8 Vocational Vehicles
    A. Summary of Phase 1 Vocational Vehicle Standards
    B. Phase 2 Standards for Vocational Vehicles
    C. Feasibility of the Vocational Vehicle Standards
    D. Compliance Provisions for Vocational Vehicles
VI. Heavy-Duty Pickups and Vans
    A. Summary of Phase 1 HD Pickup and Van Standards
    B. HD Pickup and Van Final Phase 2 Standards
    C. Use of the CAFE Model in Heavy-Duty Rulemaking
    D. NHTSA CAFE Model Analysis of the Regulatory Alternatives for 
HD Pickups and Vans: Method A
    E. Analysis of the Regulatory Alternatives for HD Pickups and 
Vans: Method B
    F. Compliance and Flexibility for HD Pickup and Van Standards
VII. Aggregate GHG, Fuel Consumption, and Climate Impacts
    A. What methodologies did the agencies use to project GHG 
emissions and fuel consumption impacts?
    B. Analysis of Fuel Consumption and GHG Emissions Impacts 
Resulting From Final Standards
    C. What are the projected reductions in fuel consumption and GHG 
emissions?
    D. Climate Impacts and Indicators
VIII. How will these rules impact non-GHG emissions and their 
associated effects?
    A. Health Effects of Non-GHG Pollutants
    B. Environmental Effects of Non-GHG Pollutants
    C. Emissions Inventory Impacts
    D. Air Quality Impacts of Non-GHG Pollutants
IX. Economic and Other Impacts
    A. Conceptual Framework
    B. Vehicle-Related Costs Associated With the Program
    C. Changes in Fuel Consumption and Expenditures
    D. Maintenance Expenditures
    E. Analysis of the Rebound Effect
    F. Impact on Class Shifting, Fleet Turnover, and Sales
    G. Monetized GHG Impacts
    H. Monetized Non-GHG Health Impacts
    I. Energy Security Impacts
    J. Other Impacts
    K. Summary of Benefits and Costs
    L. Employment Impacts
    M. Cost of Ownership and Payback Analysis
    N. Safety Impacts
X. Analysis of the Alternatives
    A. What are the alternatives that the agencies considered?
    B. How do these alternatives compare in overall fuel consumption 
and GHG emissions reductions?
XI. Natural Gas Vehicles and Engines
    A. Natural Gas Engine and Vehicle Technology
    B. GHG Lifecycle Analysis for Natural Gas Vehicles
    C. Projected Use of LNG and CNG
    D. Natural Gas Emission Control Measures
    E. Dimethyl Ether
XII. Amendments to Phase 1 Standards
    A. EPA Amendments
    B. Other Compliance Provisions for NHTSA
XIII. Other Regulatory Provisions
    A. Amendments Related to Heavy-Duty Highway Engines and Vehicles
    B. Amendments Affecting Glider Vehicles and Glider Kits
    C. Applying the General Compliance Provisions of 40 CFR Part 
1068 to Light-Duty Vehicles, Light-Duty Trucks, Chassis-Certified 
Class 2b and 3 Heavy-Duty Vehicles and Highway Motorcycles
    D. Amendments to General Compliance Provisions in 40 CFR Part 
1068
    E. Amendments to Light-Duty Greenhouse Gas Program Requirements
    F. Amendments to Highway and Nonroad Test Procedures and 
Certification Requirements
    G. Amendments Related to Locomotives in 40 CFR Part 1033
    H. Amendments Related to Nonroad Diesel Engines in 40 CFR Part 
1039
    I. Amendments Related to Marine Diesel Engines in 40 CFR Parts 
1042 and 1043
    J. Miscellaneous EPA Amendments
    K. Competition Vehicles
    L. Amending 49 CFR Parts 512 and 537 To Allow Electronic 
Submissions and Defining Data Formats for Light-Duty Vehicle 
Corporate Average Fuel Economy (CAFE) Reports
XIV. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive

[[Page 73484]]

Order 13563: Improving Regulation and Regulatory Review
    B. National Environmental Policy Act
    C. Paperwork Reduction Act
    D. Regulatory Flexibility Act
    E. Unfunded Mandates Reform Act
    F. Executive Order 13132: Federalism
    G. Executive Order 13175: Consultation and Coordination With 
Indian Tribal Governments
    H. Executive Order 13045: Protection of Children From 
Environmental Health Risks and Safety Risks
    I. Executive Order 13211: Actions Concerning Regulations That 
Significantly Affect Energy Supply, Distribution, or Use
    J. National Technology Transfer and Advancement Act and 1 CFR 
Part 51
    K. Executive Order 12898: Federal Actions To Address 
Environmental Justice in Minority Populations and Low-Income 
Populations
    L. Endangered Species Act (ESA)
    M. Congressional Review Act (CRA)
XV. EPA and NHTSA Statutory Authorities
    A. EPA
    B. NHTSA
List of Subjects

I. Overview

    The agencies issued a Notice of Proposed Rulemaking (NPRM) on July 
13, 2015, that proposed Phase 2 GHG and fuel efficiency standards for 
heavy-duty engines and vehicles.\19\ The agencies also issued a Notice 
of Data Availability (NODA) on March 2, 2016, to solicit comment on new 
material not available at the time of the NPRM.\20\ The agencies have 
revised the proposed standards and related requirements to address 
issues raised in public comments. Nevertheless, the final rules being 
adopted today remain fundamentally similar to the proposed rules.
---------------------------------------------------------------------------

    \19\ 80 FR 40137.
    \20\ 81 FR 10824.
---------------------------------------------------------------------------

    Although the agencies describe the final requirements in this 
document, readers are encouraged to also read supporting materials that 
have been place into the public dockets for these rules. In particular, 
the agencies note:

 The Final Regulatory Impact Analysis (RIA), provides 
additional technical information and analysis
 The Response to Comments Document for Joint Rulemaking (RTC), 
provides a detailed summary and analysis of public comments, including 
comments received in response to the NODA
 The NHTSA Final Environmental Impact Statement (FEIS)

    This overview of the final Phase 2 GHG emissions and fuel 
efficiency standards includes a description of the heavy-duty truck 
industry and related regulatory and non-regulatory programs, a summary 
of the Phase 1 GHG emissions and fuel efficiency program, a summary of 
the Phase 2 standards and requirements being finalized, a summary of 
the costs and benefits of the Phase 2 standards, discussion of EPA and 
NHTSA statutory authorities, and other issues.

A. Background

    For purposes of this Preamble (and consistent with all terminology 
used at proposal), the terms ``heavy-duty'' or ``HD'' are used to apply 
to all highway vehicles and engines that are not within the range of 
light-duty passenger cars, light-duty trucks, and medium-duty passenger 
vehicles (MDPV) covered by separate GHG and Corporate Average Fuel 
Economy (CAFE) standards.\21\ (The terms also do not include 
motorcycles). Thus, in this rulemaking, unless specified otherwise, the 
heavy-duty category incorporates all vehicles with a gross vehicle 
weight rating above 8,500 lbs, and the engines that power them, except 
for MDPVs.22 23 24 Note also that the terms heavy-duty truck 
and heavy-duty vehicle are sometimes used interchangeably, even though 
commercially the term heavy-duty truck can have a narrower meaning.
---------------------------------------------------------------------------

    \21\ 2017 and Later Model Year Light-Duty Vehicle Greenhouse Gas 
Emissions and Corporate Average Fuel Economy Standards; Final Rule, 
77 FR 62623, October 15, 2012.
    \22\ The CAA defines heavy-duty as a truck, bus or other motor 
vehicles with a gross vehicle weight rating exceeding 6,000 lbs (CAA 
section 202(b)(3)). The term HD as used in this action refers to a 
subset of these vehicles and engines.
    \23\ The Energy Independence and Security Act of 2007 requires 
NHTSA to set standards for commercial medium- and heavy-duty on-
highway vehicles, defined as on-highway vehicles with a GVWR of 
10,000 lbs or more, and work trucks, defined as vehicles with a GVWR 
between 8,500 and 10,000 lbs and excluding medium duty passenger 
vehicles.
    \24\ The term ``medium-duty'' is sometimes used to refer to the 
lighter end of this range of vehicles. This is typically in the 
context of statutes or reports that use the term ``medium-duty.'' 
For example, because the term medium-duty is used in EISA, the term 
is also used in much of the discussion of NHTSA's statutory 
authority.
---------------------------------------------------------------------------

    Consistent with the President's direction, over the past three 
years as we have developed this rulemaking, the agencies have met on an 
on-going basis with a very large number of diverse stakeholders. This 
includes meetings, and in many cases site visits, with truck, trailer, 
and engine manufacturers; technology supplier companies and their trade 
associations (e.g., transmissions, drivelines, fuel systems, 
turbochargers, tires, catalysts, and many others); line haul and 
vocational trucking firms and trucking associations; the trucking 
industries owner-operator association; truck dealerships and dealers 
associations; trailer manufacturers and their trade association; non-
governmental organizations (NGOs, including environmental NGOs, 
national security NGOs, and consumer advocacy NGOs); state air quality 
agencies; manufacturing labor unions; and many other stakeholders. In 
addition, EPA and NHTSA have consulted on an on-going basis with the 
California Air Resources Board (CARB) over the past three years as we 
developed the Phase 2 rule. CARB staff and managers have also 
participated with EPA and NHTSA in meetings with many external 
stakeholders, including those with vehicle OEMs and technology 
suppliers.\25\
---------------------------------------------------------------------------

    \25\ Vehicle chassis manufacturers are known in this industry as 
original equipment manufacturers or OEMs.
---------------------------------------------------------------------------

    EPA and NHTSA staff also participated in a large number of 
technical and policy conferences over the past three years related to 
the technological, economic, and environmental aspects of the heavy-
duty trucking industry. The agencies also met with regulatory 
counterparts from several other nations who either have already or are 
considering establishing fuel consumption or GHG requirements, 
including outreach with representatives from the governments of Canada, 
the European Commission, Japan, and China.
    These comprehensive outreach actions by the agencies provided us 
with information to assist in our identification of potential 
technologies that can be used to reduce heavy-duty GHG emissions and 
improve fuel efficiency. The outreach has also helped the agencies to 
identify and understand the opportunities and challenges involved with 
these standards for the heavy-duty trucks, trailers, and engines 
detailed in this Preamble, including time needed for implementation of 
various technologies and potential costs and fuel savings. The scope of 
this outreach effort to gather input for the proposal and final 
rulemaking included well over 400 meetings with stakeholders. These 
meetings and conferences have been invaluable to the agencies. We 
believe they enabled us to refine the proposal in such a way as to 
appropriately consider all of the potential impacts and to minimize the 
possibility of unintended consequences in the final rules.

[[Page 73485]]

(1) Brief Overview of the Heavy-Duty Truck Industry
    The heavy-duty sector is diverse in several respects, including the 
types of manufacturing companies involved, the range of sizes of trucks 
and engines they produce, the types of work for which the trucks are 
designed, and the regulatory history of different subcategories of 
vehicles and engines. The current heavy-duty fleet encompasses vehicles 
from the ``18-wheeler'' combination tractor-trailers one sees on the 
highway to the largest pickup trucks and vans, as well as vocational 
vehicles covering the range between these extremes. Together, the HD 
sector spans a wide range of vehicles with often specialized form and 
function. A primary indicator of the diversity among heavy-duty trucks 
is the range of load-carrying capability across the industry. The 
heavy-duty truck sector is often subdivided by vehicle weight 
classifications, as defined by the vehicle's gross vehicle weight 
rating (GVWR), which is a measure of the combined curb (empty) weight 
and cargo carrying capacity of the truck.\26\ Table I-1 below outlines 
the vehicle weight classifications commonly used for many years for a 
variety of purposes by businesses and by several Federal agencies, 
including the Department of Transportation, the Environmental 
Protection Agency, the Department of Commerce, and the Internal Revenue 
Service.
---------------------------------------------------------------------------

    \26\ GVWR describes the maximum load that can be carried by a 
vehicle, including the weight of the vehicle itself. Heavy-duty 
vehicles (including those designed for primary purposes other than 
towing) also have a gross combined weight rating (GCWR), which 
describes the maximum load that the vehicle can haul, including the 
weight of a loaded trailer and the vehicle itself.

                                                        Table I-1--Vehicle Weight Classification
--------------------------------------------------------------------------------------------------------------------------------------------------------
                 Class                         2b               3                4                5                6                7              8
--------------------------------------------------------------------------------------------------------------------------------------------------------
GVWR (lb.)............................    8,501-10,000    10,001-14,000    14,001-16,000    16,001-19,500    19,501-26,000    26,001-33,000     >33,000
--------------------------------------------------------------------------------------------------------------------------------------------------------

In the framework of these vehicle weight classifications, the heavy-
duty truck sector refers to ``Class 2b'' through ``Class 8'' vehicles 
and the engines that power those vehicles.\27\
---------------------------------------------------------------------------

    \27\ Class 2b vehicles manufactured as passenger vehicles 
(Medium Duty Passenger Vehicles, MDPVs) are covered by the light-
duty GHG and fuel economy standards and therefore are not addressed 
in this rulemaking.
---------------------------------------------------------------------------

    Unlike light-duty vehicles, which are primarily used for 
transporting passengers for personal travel, heavy-duty vehicles fill 
much more diverse operator needs. Heavy-duty pickup trucks and vans 
(Classes 2b and 3) are used chiefly as work trucks and vans, and as 
shuttle vans, as well as for personal transportation, with an average 
annual mileage in the range of 15,000 miles. The rest of the heavy-duty 
sector is used for carrying cargo and/or performing specialized tasks. 
``Vocational'' vehicles, which span Classes 2b through 8, vary widely 
in size, including smaller and larger van trucks, utility ``bucket'' 
trucks, tank trucks, refuse trucks, urban and over-the-road buses, fire 
trucks, flat-bed trucks, and dump trucks, among others. The annual 
mileage of these vehicles is as varied as their uses, but for the most 
part tends to fall in between heavy-duty pickups/vans and the large 
combination tractors, typically from 15,000 to 150,000 miles per year.
    Class 7 and 8 combination tractor-trailers--some equipped with 
sleeper cabs and some not--are primarily used for freight 
transportation. They are sold as tractors and operate with one or more 
trailers that can carry up to 50,000 lbs or more of payload, consuming 
significant quantities of fuel and producing significant amounts of GHG 
emissions. Together, Class 7 and 8 tractors and trailers account for 
approximately 60 percent of the heavy-duty sector's total 
CO2 emissions and fuel consumption. Trailer designs vary 
significantly, reflecting the wide variety of cargo types. However, the 
most common types of trailers are box vans (dry and refrigerated), 
which are a focus of this Phase 2 rulemaking. The tractor-trailers used 
in combination applications can and frequently do travel more than 
150,000 miles per year and can operate for 20-30 years.
    Heavy-duty vehicles differ significantly from light-duty vehicles 
in other ways. In particular, we note that heavy-duty engines are much 
more likely to be rebuilt. In fact, it is common for Class 8 engines to 
be rebuilt multiple times. Commercial heavy-duty vehicles are often 
resold after a few years and may be repurposed by the second or third 
owner. Thus issues of resale value and adaptability have historically 
been key concerns for purchasers.
    EPA and NHTSA have designed our respective standards in careful 
consideration of the diversity and complexity of the heavy-duty truck 
industry, as discussed in Section I.C.
(2) Related Regulatory and Non-Regulatory Programs
(a) History of EPA's Heavy-Duty Regulatory Program and Assessments of 
the Impacts of Greenhouse Gases on Climate Change
    To provide a context for EPA's program to reduce greenhouse gas 
emissions from motor vehicles, this subsection provides an overview of 
two important related areas. First, we summarize the history of EPA's 
heavy-duty regulatory program, which provides a basis for the 
compliance structure of this rulemaking. Next we summarize EPA prior 
assessments of the impacts of greenhouse gases on climate change, which 
provides a basis for much of the analysis of the environmental benefits 
of this rulemaking.
(i) History of EPA's Heavy-Duty Regulatory Program
    Since the 1980s, EPA has acted several times to address tailpipe 
emissions of criteria pollutants and air toxics from heavy-duty 
vehicles and engines. During the last two decades these programs have 
primarily addressed emissions of particulate matter (PM) and the 
primary ozone precursors, hydrocarbons (HC) and oxides of nitrogen 
(NOX). These programs, which have successfully achieved 
significant and cost-effective reductions in emissions and associated 
health and welfare benefits to the nation, were an important basis of 
the Phase 1 program. See e.g. 66 FR 5002, 5008, and 5011-5012 (January 
18, 2001) (detailing substantial public health benefits of controls of 
criteria pollutants from heavy-duty diesel engines, including bringing 
areas into attainment with primary (public health) PM NAAQS, or 
contributing substantially to such attainment); National Petrochemical 
Refiners Association v. EPA, 287 F. 3d 1130, 1134 (D.C. Cir. 2002) 
(referring to the ``dramatic reductions'' in criteria pollutant 
emissions resulting from the EPA on-

[[Page 73486]]

highway heavy-duty engine standards, and upholding all of the 
standards).
    As required by the Clean Air Act (CAA), the emission standards 
implemented by these programs include standards that apply at the time 
that the vehicle or engine is sold and continue to apply in actual use. 
EPA's overall program goal has always been to achieve emissions 
reductions from the complete vehicles that operate on our roads. The 
agency has often accomplished this goal for many heavy-duty truck 
categories by regulating heavy-duty engine emissions. A key part of 
this success has been the development over many years of a well-
established, representative, and robust set of engine test procedures 
that industry and EPA now use routinely to measure emissions and 
determine compliance with emission standards. These test procedures in 
turn serve the overall compliance program that EPA implements to help 
ensure that emissions reductions are being achieved. By isolating the 
engine from the many variables involved when the engine is installed 
and operated in a HD vehicle, EPA has been able to accurately address 
the contribution of the engine alone to overall emissions.
(ii) EPA Assessment of the Impacts of Greenhouse Gases on Climate 
Change
    In 2009, the EPA Administrator issued the document known as the 
Endangerment Finding under CAA section 202(a)(1).\28\ In the 
Endangerment Finding, which focused on public health and public welfare 
impacts within the United States, the Administrator found that elevated 
concentrations of GHG emissions in the atmosphere may reasonably be 
anticipated to endanger public health and welfare of current and future 
generations. See also Coalition for Responsible Regulation v. EPA, 684 
F. 3d 102, 117-123 (D.C. Cir. 2012) (upholding the endangerment finding 
in all respects). The following sections summarize the key information 
included in the Endangerment Finding.
---------------------------------------------------------------------------

    \28\ ``Endangerment and Cause or Contribute Findings for 
Greenhouse Gases Under section 202(a) of the Clean Air Act,'' 74 FR 
66496 (December 15, 2009) (``Endangerment Finding'').
---------------------------------------------------------------------------

    Climate change caused by human emissions of GHGs threatens public 
health in multiple ways. By raising average temperatures, climate 
change increases the likelihood of heat waves, which are associated 
with increased deaths and illnesses. While climate change also 
decreases the likelihood of cold-related mortality, evidence indicates 
that the increases in heat mortality will be larger than the decreases 
in cold mortality in the United States. Compared to a future without 
climate change, climate change is expected to increase ozone pollution 
over broad areas of the U.S., including in the largest metropolitan 
areas with the worst ozone problems, and thereby increase the risk of 
morbidity and mortality. Other public health threats also stem from 
projected increases in intensity or frequency of extreme weather 
associated with climate change, such as increased hurricane intensity, 
increased frequency of intense storms and heavy precipitation. 
Increased coastal storms and storm surges due to rising sea levels are 
expected to cause increased drownings and other adverse health impacts. 
Children, the elderly, and the poor are among the most vulnerable to 
these climate-related health effects. See also 79 FR 75242 (December 
17, 2014) (climate change, and temperature increases in particular, 
likely to increase O3 (ozone) pollution ``over broad areas 
of the U.S., including the largest metropolitan areas with the worst 
O3 problems, increas[ing] the risk of morbidity and 
mortality'').
    Climate change caused by human emissions of GHGs also threatens 
public welfare in multiple ways. Climate changes are expected to place 
large areas of the country at serious risk of reduced water supplies, 
increased water pollution, and increased occurrence of extreme events 
such as floods and droughts. Coastal areas are expected to face 
increased risks from storm and flooding damage to property, as well as 
adverse impacts from rising sea level, such as land loss due to 
inundation, erosion, wetland submergence and habitat loss. Climate 
change is expected to result in an increase in peak electricity demand, 
and extreme weather from climate change threatens energy, 
transportation, and water resource infrastructure. Climate change may 
exacerbate ongoing environmental pressures in certain settlements, 
particularly in Alaskan indigenous communities. Climate change also is 
very likely to fundamentally rearrange U.S. ecosystems over the 21st 
century. Though some benefits may balance adverse effects on 
agriculture and forestry in the next few decades, the body of evidence 
points towards increasing risks of net adverse impacts on U.S. food 
production, agriculture and forest productivity as temperature 
continues to rise. These impacts are global and may exacerbate problems 
outside the U.S. that raise humanitarian, trade, and national security 
issues for the U.S. See also 79 FR 75382 (December 17, 2014) (welfare 
effects of O3 increases due to climate change, with emphasis 
on increased wildfires).
    As outlined in Section VIII.A of the 2009 Endangerment Finding, 
EPA's approach to providing the technical and scientific information to 
inform the Administrator's judgment regarding the question of whether 
GHGs endanger public health and welfare was to rely primarily upon the 
recent, major assessments by the U.S. Global Change Research Program 
(USGCRP), the Intergovernmental Panel on Climate Change (IPCC), and the 
National Research Council (NRC) of the National Academies. These 
assessments addressed the scientific issues that EPA was required to 
examine, were comprehensive in their coverage of the GHG and climate 
change issues, and underwent rigorous and exacting peer review by the 
expert community, as well as rigorous levels of U.S. government review. 
Since the administrative record concerning the Endangerment Finding 
closed following EPA's 2010 Reconsideration Denial, a number of new 
major, peer-reviewed scientific assessments have been released. These 
include the IPCC's 2012 ``Special Report on Managing the Risks of 
Extreme Events and Disasters to Advance Climate Change Adaptation'' 
(SREX) and the 2013-2014 Fifth Assessment Report (AR5), the USGCRP's 
2014 ``Climate Change Impacts in the United States'' (Climate Change 
Impacts), and the NRC's 2010 ``Ocean Acidification: A National Strategy 
to Meet the Challenges of a Changing Ocean'' (Ocean Acidification), 
2011 ``Report on Climate Stabilization Targets: Emissions, 
Concentrations, and Impacts over Decades to Millennia'' (Climate 
Stabilization Targets), 2011 ``National Security Implications for U.S. 
Naval Forces'' (National Security Implications), 2011 ``Understanding 
Earth's Deep Past: Lessons for Our Climate Future'' (Understanding 
Earth's Deep Past), 2012 ``Sea Level Rise for the Coasts of California, 
Oregon, and Washington: Past, Present, and Future,'' 2012 ``Climate and 
Social Stress: Implications for Security Analysis'' (Climate and Social 
Stress), and 2013 ``Abrupt Impacts of Climate Change'' (Abrupt Impacts) 
assessments.
    EPA has reviewed these new assessments and finds that the improved 
understanding of the climate system they present further strengthens 
the case that GHG emissions endanger public health and welfare.
    In addition, these assessments highlight the urgency of the 
situation as the concentration of CO2 in the atmosphere 
continues to rise. Absent a reduction in emissions, a recent

[[Page 73487]]

National Research Council assessment projected that concentrations by 
the end of the century would increase to levels that the Earth has not 
experienced for millions of years.\29\ In fact, that assessment stated 
that ``the magnitude and rate of the present greenhouse gas increase 
place the climate system in what could be one of the most severe 
increases in radiative forcing of the global climate system in Earth 
history.'' \30\ What this means, as stated in another NRC assessment, 
is that:
---------------------------------------------------------------------------

    \29\ National Research Council, Understanding Earth's Deep Past, 
p. 1.
    \30\ Id., p.138.

    Emissions of carbon dioxide from the burning of fossil fuels 
have ushered in a new epoch where human activities will largely 
determine the evolution of Earth's climate. Because carbon dioxide 
in the atmosphere is long lived, it can effectively lock Earth and 
future generations into a range of impacts, some of which could 
become very severe. Therefore, emission reductions choices made 
today matter in determining impacts experienced not just over the 
next few decades, but in the coming centuries and millennia.\31\
---------------------------------------------------------------------------

    \31\ National Research Council, Climate Stabilization Targets, 
p. 3.

    Moreover, due to the time-lags inherent in the Earth's climate, the 
Climate Stabilization Targets assessment notes that the full warming 
from any given concentration of CO2 reached will not be 
realized for several centuries.
    The most recent USGCRP ``National Climate Assessment'' \32\ 
emphasizes that climate change is already happening now and is 
happening in the United States. The assessment documents the increases 
in some extreme weather and climate events in recent decades, as well 
as the resulting damage and disruption to infrastructure and 
agriculture, and projects continued increases in impacts across a wide 
range of peoples, sectors, and ecosystems.
---------------------------------------------------------------------------

    \32\ U.S. Global Change Research Program, Climate Change Impacts 
in the United States: The Third National Climate Assessment, May 
2014 Available at http://nca2014.globalchange.gov/.
---------------------------------------------------------------------------

    These assessments underscore the urgency of reducing emissions now. 
Today's emissions will otherwise lead to raised atmospheric 
concentrations for thousands of years, and raised Earth system 
temperatures for even longer. Emission reductions today will benefit 
the public health and public welfare of current and future generations.
    Finally, it should be noted that the concentration of carbon 
dioxide in the atmosphere continues to rise dramatically. In 2009, the 
year of the Endangerment Finding, the average concentration of carbon 
dioxide as measured on top of Mauna Loa was 387 parts per million.\33\ 
The average concentration in 2015 was 401 parts per million, the first 
time an annual average has exceeded 400 parts per million since record 
keeping began at Mauna Loa in 1958, and for at least the past 800,000 
years according to ice core records.\34\ Moreover, 2015 was the warmest 
year globally in the modern global surface temperature record, going 
back to 1880, breaking the record previously held by 2014; this now 
means that the last 15 years have been 15 of the 16 warmest years on 
record.\35\
---------------------------------------------------------------------------

    \33\ ftp://aftp.cmdl.noaa.gov/products/trends/co2/co2_annmean_mlo.txt.
    \34\ http://www.esrl.noaa.gov/gmd/ccgg/trends/.
    \35\ http://www.ncdc.noaa.gov/sotc/global/201513.
---------------------------------------------------------------------------

(b) The EPA and NHTSA Light-Duty National GHG and Fuel Economy Program
    On May 7, 2010, EPA and NHTSA finalized the first-ever National 
Program for light-duty cars and trucks, which set GHG emissions and 
fuel economy standards for model years 2012-2016 (see 75 FR 25324). 
More recently, the agencies adopted even stricter standards for model 
years 2017 and later (77 FR 62624, October 15, 2012). The agencies have 
used the light-duty National Program as a model for the HD National 
Program in several respects. This is most apparent in the case of 
heavy-duty pickups and vans, which are similar to the light-duty trucks 
addressed in the light-duty National Program both technologically as 
well as in terms of how they are manufactured (i.e., the same company 
often makes both the vehicle and the engine, and several light-duty 
manufacturers also manufacture HD pickups and vans).\36\ For HD pickups 
and vans, there are close parallels to the light-duty program in how 
the agencies have developed our respective heavy-duty standards and 
compliance structures. However, HD pickups and vans are true work 
vehicles that are designed for much higher towing and payload 
capabilities than are light-duty pickups and vans. The technologies 
applied to light-duty trucks are not all applicable to heavy-duty 
pickups and vans at the same adoption rates, and the technologies often 
produce a lower percent reduction in CO2 emissions and fuel 
consumption when used in heavy-duty vehicles. Another difference 
between the light-duty and the heavy-duty standards is that each agency 
adopts heavy-duty standards based on attributes other than vehicle 
footprint, as discussed below.
---------------------------------------------------------------------------

    \36\ This is more broadly true for heavy-duty pickup trucks than 
vans because every manufacturer of heavy-duty pickup trucks also 
makes light-duty pickup trucks, while only some heavy-duty van 
manufacturers also make light-duty vans.
---------------------------------------------------------------------------

    Due to the diversity of the remaining HD vehicles, there are fewer 
parallels with the structure of the light-duty program. However, the 
agencies have maintained the same collaboration and coordination that 
characterized the development of the light-duty program throughout the 
Phase 1 rulemaking and the continued efforts for Phase 2. Most notably, 
as with the light-duty program, manufacturers will continue to be able 
to design and build vehicles to meet a closely coordinated, harmonized 
national program, and to avoid unnecessarily duplicative testing and 
compliance burdens. In addition, the averaging, banking, and trading 
provisions in the HD program, although structurally different from 
those of the light-duty program, serve the same purpose, which is to 
allow manufacturers to achieve large reductions in fuel consumption and 
emissions while providing a broad mix of products to their customers. 
The agencies have also worked closely with CARB to provide harmonized 
national standards.
(c) EPA's SmartWay Program
    EPA's voluntary SmartWay Transport Partnership program encourages 
businesses to take actions that reduce fuel consumption and 
CO2 emissions while cutting costs by working with the 
shipping, logistics, and carrier communities to identify low carbon 
strategies and technologies across their transportation supply chains. 
SmartWay provides technical information, benchmarking and tracking 
tools, market incentives, and partner recognition to facilitate and 
accelerate the adoption of these strategies. Through the SmartWay 
program and its related technology assessment center, EPA has worked 
closely with truck and trailer manufacturers and truck fleets over the 
past 12 years to develop test procedures to evaluate vehicle and 
component performance in reducing fuel consumption and has conducted 
testing and has established test programs to verify technologies that 
can achieve these reductions. SmartWay partners have demonstrated these 
new and emerging technologies in their business operations, adding to 
the body of technical data and information that EPA can disseminate to 
industry, researchers and other stakeholders. Over the last several 
years, EPA has developed hands-on experience testing the largest heavy-
duty trucks and trailers and evaluating improvements in tire and 
vehicle aerodynamic performance. In developing the Phase 1

[[Page 73488]]

program, the agencies drew from this testing and from the SmartWay 
experience. In the same way, the agencies benefitted from SmartWay in 
developing the Phase 2 trailer program.
(d) DOE's SuperTruck Initiative
    The U.S. Department of Energy launched its SuperTruck I initiative 
in 2009. SuperTruck I was a DOE partnership with four industry teams, 
who at this point have either met the SuperTruck I 50 percent fuel 
efficiency improvement goal (relative to a 2009 best-in-class truck) or 
have laid the groundwork to succeed. Teams from Cummins/Peterbilt, 
Daimler, and Volvo exceeded the 50 percent efficiency improvement goal, 
with Navistar on track to exceed this target later this year. Research 
vehicles developed under SuperTruck I are Class 8 combination tractor-
trailers that have dramatically increased fuel and freight efficiency 
through the use of advanced technologies. These technologies include 
tractor and trailer aerodynamic devices, engine waste heat recovery 
systems, hybrids, automated transmissions and lightweight materials. In 
March 2016 DOE announced SuperTruck II, which is an $80M follow-on to 
SuperTruck I, where DOE will continue to partner with industry teams to 
collaboratively fund new projects to research, develop, and demonstrate 
technologies to further improve heavy-truck freight efficiency--by more 
than 100 percent, relative to a manufacturer's best-in-class 2009 
truck. Achieving these kinds of Class 8 truck efficiency increases will 
require an integrated systems approach to ensure that the various 
components of the vehicle work well together. SuperTruck II projects 
will utilize a wide variety of truck and trailer technology approaches 
to achieve performance targets, such as further improvements in engine 
efficiency, drivetrain efficiency, aerodynamic drag, tire rolling 
resistance, and vehicle weight.
    The agencies leveraged the outcomes of SuperTruck I by projecting 
how these tractor and trailer technologies could continue to advance 
from this early developmental stage toward the prototype and production 
stages. For a number of the SuperTruck technologies, the agencies are 
projecting advancement into production, given appropriate lead time. 
For example, a number of the aerodynamic and transmission technologies 
are projected to be in widespread production by 2021, and the agencies 
are finalizing 2021 standards based in part on performance of these 
SuperTruck technologies. For other more advanced SuperTruck 
technologies, such as organic Rankine cycle waste heat recovery 
systems, the agencies are projecting that additional lead time is 
needed to ensure that these technologies will be effective and reliable 
in production. For these technologies, the agencies are finalizing 2027 
standards whose stringency reflects a significant market adoption rate 
of advanced technologies, including waste heat recovery systems. 
Furthermore, the agencies are encouraged by DOE's announcement of 
SuperTruck II. We believe that the combination of HD Phase 2 and 
SuperTruck II will provide both a strong motivation and a proven means 
for manufacturers to fully develop these technologies within the lead 
times we have projected.
(e) The State of California
    California has established ambitious goals for reducing GHG 
emissions from heavy-duty vehicles and engines as part of an overall 
plan to reduce GHG emissions from the transportation sector in 
California.\37\ Heavy-duty vehicles are responsible for one-fifth of 
the total GHG emissions from transportation sources in California. In 
the past several years, the California Air Resources Board (CARB) has 
taken a number of actions to reduce GHG emissions from heavy-duty 
vehicles and engines. For example, in 2008, CARB adopted regulations to 
reduce GHG emissions from heavy-duty tractors that pull box-type 
trailers through improvements in tractor and trailer aerodynamics and 
the use of low rolling resistance tires.\38\ The tractor-trailer 
operators subject to the CARB regulation are required to use SmartWay-
certified tractors and trailers, or retrofit their existing fleet with 
SmartWay-verified technologies, consistent with California's state 
authority to regulate both new and in-use vehicles. In December 2013, 
CARB adopted regulations that establish its own parallel Phase 1 
program with standards consistent with EPA Phase 1 standards. On 
December 5, 2014, California's Office of Administrative Law approved 
CARB's adoption of the Phase 1 standards, with an effective date of 
December 5, 2014.\39\ Complementary to its regulatory efforts, CARB and 
other California agencies are investing significant public capital 
through various incentive programs to accelerate fleet turnover and 
stimulate technology innovation within the heavy-duty vehicle market 
(e.g., Air Quality Improvement, Carl Moyer, Loan Incentives, Lower-
Emission School Bus and Goods Movement Emission Reduction 
Programs).\40\ Recently, California Governor Jerry Brown established a 
target of up to 50 percent petroleum reduction by 2030.
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    \37\ See http://www.arb.ca.gov/cc/cc.htm for details on the 
California Air Resources Board climate change actions, including a 
discussion of Assembly Bill 32, and the Climate Change Scoping Plan 
developed by CARB, which includes details regarding CARB's future 
goals for reducing GHG emissions from heavy-duty vehicles.
    \38\ See http://www.arb.ca.gov/msprog/truckstop/trailers/trailers.htm for a summary of CARB's ``Tractor-Trailer Greenhouse 
Gas Regulation.''
    \39\ See http://www.arb.ca.gov/regact/2013/hdghg2013/hdghg2013.htm for details regarding CARB's adoption of the Phase 1 
standards.
    \40\ See http://www.arb.ca.gov/ba/fininfo.htm for detailed 
descriptions of CARB's mobile source incentive programs. Note that 
EPA works to support CARB's heavy-duty incentive programs through 
the West Coast Collaborative (http://westcoastcollaborative.org/) 
and the Clean Air Technology Initiative (https://www.epa.gov/cati).
---------------------------------------------------------------------------

    California has long had the unique ability among states to adopt 
its own separate new motor vehicle standards per section 209 of the 
Clean Air Act (CAA). Although section 209(a) of the CAA expressly 
preempts states from adopting and enforcing standards relating to the 
control of emissions from new motor vehicles or new motor vehicle 
engines (such as state controls for new heavy-duty engines and 
vehicles), CAA section 209(b) directs EPA to waive this preemption 
under certain conditions. Under the waiver process set out in CAA 
section 209(b), EPA has granted CARB a waiver for its initial heavy-
duty vehicle GHG regulation.\41\ Even with California's ability under 
the CAA to establish its own emission standards, EPA and CARB have 
worked closely together over the past several decades to largely 
harmonize new vehicle criteria pollutant standard programs for heavy-
duty engines and heavy-duty vehicles. In the past several years EPA and 
NHTSA also consulted with CARB in the development of the Federal light-
duty vehicle GHG and CAFE rulemakings for the 2012-2016 and 2017-2025 
model years.
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    \41\ See EPA's waiver of CARB's heavy-duty tractor-trailer 
greenhouse gas regulation applicable to new 2011 through 2013 model 
year Class 8 tractors equipped with integrated sleeper berths 
(sleeper-cab tractors) and 2011 and subsequent model year dry-can 
and refrigerated-van trailers that are pulled by such tractors on 
California highways at 79 FR 46256 (August 7, 2014).
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    As discussed above, California operates under state authority to 
establish its own new heavy-duty vehicle and engine emission standards, 
including standards for CO2, methane, N2O, and 
hydrofluorocarbons. EPA recognizes this independent authority, and we 
also recognize the potential benefits for the regulated industry if the 
Federal Phase 2 standards could result

[[Page 73489]]

in a single, National Program that would meet the EPA and NHTSA's 
statutory requirements to set appropriate and maximum feasible 
standards, and also be equivalent to potential future new heavy-duty 
vehicle and engine GHG standards established by CARB (addressing the 
same model years as addressed by the final Federal Phase 2 program and 
requiring the same technologies). In order to further the opportunity 
for maintaining coordinated Federal and California standards in the 
Phase 2 timeframe (as well as to benefit from different technical 
expertise and perspective), EPA and NHTSA consulted frequently with 
CARB while developing the Phase 2 rule. Prior to the proposal, the 
agencies' technical staff shared information on technology cost, 
technology effectiveness, and feasibility with the CARB staff. We also 
received information from CARB on these same topics. In addition, CARB 
staff and managers participated with EPA and NHTSA in meetings with 
many external stakeholders, in particular with vehicle OEMs and 
technology suppliers. The agencies continued significant consultation 
during the development of the final rules.
    EPA and NHTSA believe that through this information sharing and 
dialog we have enhanced the potential for the Phase 2 program to result 
in a National Program that can be adopted not only by the Federal 
agencies, but also by the State of California, given the strong 
interest from the regulated industry for a harmonized State and Federal 
program. In its public comments, California reiterated its support for 
a harmonized State and Federal program, although it identified several 
areas in which it believed the proposed program needed to be 
strengthened.
(f) Environment and Climate Change Canada
    On March 13, 2013, Environment and Climate Change Canada (ECCC), 
which is EPA's Canadian counterpart, published its own regulations to 
control GHG emissions from heavy-duty vehicles and engines, beginning 
with MY 2014. These regulations are closely aligned with EPA's Phase 1 
program to achieve a common set of North American standards. ECCC has 
expressed its intention to amend these regulations to further limit 
emissions of greenhouse gases from new on-road heavy-duty vehicles and 
their engines for post-2018 MYs. As with the development of the current 
regulations, ECCC is committed to continuing to work closely with EPA 
to maintain a common Canada-United States approach to regulating GHG 
emissions for post-2018 MY vehicles and engines. This approach will 
build on the long history of regulatory alignment between the two 
countries on vehicle emissions pursuant to the Canada-United States Air 
Quality Agreement.\42\ In furtherance of this coordination, EPA 
participated in a workshop hosted by ECCC on March 3, 2016 to discuss 
Canada's Phase 2 program.\43\
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    \42\ http://www.ijc.org/en_/Air_Quality__Agreement.
    \43\ ``Phase 2 of the Heavy-duty Vehicle and Engine Greenhouse 
Gas Emission Regulations; Pre-Consultation Session,'' March 3, 2016.
---------------------------------------------------------------------------

    The Government of Canada, including ECCC and Transport Canada, has 
also been of great assistance during the development of this Phase 2 
rule. In particular, the Government of Canada supported aerodynamic 
testing, and conducted chassis dynamometer emissions testing.
(g) Recommendations of the National Academy of Sciences
    In April 2010, as mandated by Congress in the EISA, the National 
Research Council (NRC) under the National Academy of Sciences (NAS) 
issued a report to NHTSA and to Congress evaluating medium- and heavy-
duty truck fuel efficiency improvement opportunities, titled 
``Technologies and Approaches to Reducing the Fuel Consumption of 
Medium- and Heavy-duty Vehicles.'' That NAS report was far reaching in 
its review of the technologies that were available and that might 
become available in the future to reduce fuel consumption from medium- 
and heavy-duty vehicles. In presenting the full range of technical 
opportunities, the report included technologies that may not be 
available until 2020 or even further into the future. The report 
provided not only a valuable list of off-the-shelf technologies from 
which the agencies drew in developing the Phase 1 program, but also 
provided useful information the agencies have considered when 
developing this second phase of regulations.
    In April 2014, the NAS issued another report: ``Reducing the Fuel 
Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty 
Vehicles, Phase Two, First Report.'' \44\ This study outlines a number 
of recommendations to the U.S. Department of Transportation and NHTSA 
on technical and policy matters to consider when addressing the fuel 
efficiency of our nation's medium- and heavy-duty vehicles. In 
particular, this report provided recommendations with respect to:
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    \44\ National Research Council ``Reducing the Fuel Consumption 
and Greenhouse Gas Emissions of Medium- and Heavy-Duty Vehicles, 
Phase Two.'' Washington, DC, The National Academies Press. 
Cooperative Agreement DTNH22-12-00389. Available electronically from 
the National Academy Press Web site at http://www.nap.edu/catalog/18736/reducing-the-fuel-consumption-and-greenhouse-gas-emissions-of-medium-and-heavy-duty-vehicles-phase-two (last accessed May 18, 
2016). On September 24, 2016, NAS will release an update report, 
consistent with Congress' quinquennial update requirement.

 The Greenhouse Gas Emission Model (GEM) simulation tool used 
by the agencies to assess compliance with vehicle standards
 Regulation of trailers
 Natural gas-fueled engines and vehicles
 Data collection on in-use operation

    The agencies are adopting many of these recommendations into the 
Phase 2 program, including recommendations relating to the GEM 
simulation tool and to trailers.

B. Summary of Phase 1 Program

(1) EPA Phase 1 GHG Emission Standards and NHTSA Phase 1 Fuel 
Consumption Standards
    The EPA Phase 1 mandatory GHG emission standards commenced in MY 
2014 and include increased stringency for standards applicable to MY 
2017 and later MY vehicles and engines. NHTSA's fuel consumption 
standards were voluntary for MYs 2014 and 2015, due to lead time 
requirements in EISA, and apply on a mandatory basis thereafter. They 
also increase in stringency for MY 2017. Both agencies allowed 
voluntary early compliance starting in MY 2013 and encouraged 
manufacturers' participation through credit incentives.
    Given the complexity of the heavy-duty industry, the agencies 
divided the industry into three discrete categories for purposes of 
setting our respective Phase 1 standards--combination tractors, heavy-
duty pickups and vans, and vocational vehicles--based on the relative 
degree of homogeneity among trucks within each category. The Phase 1 
rules also include separate standards for the engines that power 
combination tractors and vocational vehicles. For each regulatory 
category, the agencies adopted related but distinct program approaches 
reflecting the specific challenges in these segments. In the following 
paragraphs, we briefly summarize EPA's Phase 1 GHG emission standards 
and NHTSA's Phase 1 fuel consumption standards for the three regulatory 
categories of heavy-duty vehicles and for the engines powering 
vocational vehicles and

[[Page 73490]]

tractors. See Sections II, III, V, and VI for additional details on the 
Phase 1 standards. To respect differences in design and typical uses 
that drive different technology solutions, the agencies segmented each 
regulatory class into subcategories. The category-specific structure 
enabled the agencies to set standards that appropriately reflect the 
technology available for each regulatory subcategory of vehicles and 
the engines for use in each type of vehicle. The Phase 1 program also 
provided several flexibilities, as summarized in Section I.B.(3).
    The agencies proposed and are adopting Phase 2 standards based on 
test procedures that differ from those used for Phase 1, including the 
revised GEM simulation tool. Significant revisions to GEM are discussed 
in Section II and in the RIA Chapter 4, and other test procedures are 
discussed further in the RIA Chapter 3. The pre-proposal revisions from 
Phase 1 GEM reflected input from both the NAS and from industry.\45\ 
Changes since the proposal generally reflect comments received from 
industry and other key stakeholders. It is important to note that due 
to these test procedure changes, the Phase 1 and Phase 2 standards are 
not directly comparable in an absolute sense. In particular, the 
revisions being made to the 55 mph and 65 mph highway cruise cycles for 
tractors and vocational vehicles have the effect of making the cycles 
more challenging (albeit more representative of actual driving 
conditions). We are not applying these revisions to the Phase 1 program 
because doing so would significantly change the stringency of the Phase 
1 standards, for which manufacturers have already developed engineering 
plans and are now producing products to meet. Moreover, the changes to 
GEM address a broader range of technologies not part of the projected 
compliance path for use in Phase 1.
---------------------------------------------------------------------------

    \45\ For further discussion of the input the agencies received 
from NAS, see Section XII of the Phase 2 NPRM at 80 FR 40512, July 
13, 2015.
---------------------------------------------------------------------------

    Because the numeric values of the Phase 2 tractor and vocational 
standards are not directly comparable to their respective Phase 1 
standards, the Phase 1 numeric standards were not appropriate baseline 
values to use to determine Phase 2's improvements. To address this 
situation, the agencies applied all of the new Phase 2 test procedures 
and GEM software to tractors and vocational vehicles equipped with 
Phase 1 compliant levels of technology. The agencies used the results 
of this approach to establish appropriate Phase 1 baseline values, 
which are directly comparable to the Phase 2 standards. For example, in 
this rulemaking we present Phase 2 per vehicle percent reductions 
versus Phase 1, and for tractors and vocational vehicles these percent 
reductions were all calculated versus Phase 1 compliant vehicles, where 
we applied the Phase 2 test procedures and GEM software to determine 
these Phase 1 vehicles' results.
(a) Class 7 and 8 Combination Tractors
    Class 7 and 8 combination tractors and their engines contribute the 
largest portion of the total GHG emissions and fuel consumption of the 
heavy-duty sector, approximately 60 percent, due to their large 
payloads, their high annual miles traveled, and their major role in 
national freight transport. These vehicles consist of a cab and engine 
(tractor or combination tractor) and a detachable trailer. The primary 
manufacturers of combination tractors in the United States are Daimler 
Trucks North America, Navistar, Volvo/Mack, and PACCAR. Each of the 
tractor manufacturers and Cummins (an independent engine manufacturer) 
also produce heavy-duty engines used in tractors. The Phase 1 standards 
require manufacturers to reduce GHG emissions and fuel consumption for 
these tractors and engines, which we expect them to do through 
improvements in aerodynamics and tires, reductions in tractor weight, 
reduction in idle operation, as well as engine-based efficiency 
improvements.\46\
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    \46\ We note although the standards' stringency is predicated on 
use of certain technologies, and the agencies' assessed the cost of 
the rule based on the cost of use of those technologies, the 
standards can be met by any means. Put another way, the rules create 
a performance standard, and do not mandate any particular means of 
achieving that level of performance.
---------------------------------------------------------------------------

    The Phase 1 tractor standards differ depending on gross vehicle 
weight rating (GVWR) (i.e., whether the truck is Class 7 or Class 8), 
the height of the roof of the cab, and whether it is a ``day cab'' or a 
``sleeper cab.'' The agencies created nine subcategories within the 
Class 7 and 8 combination tractor category reflecting combinations of 
these attributes. The agencies set Phase 1 standards for each of these 
subcategories beginning in MY 2014, with more stringent standards 
following in MY 2017. The standards represent an overall fuel 
consumption and CO2 emissions reduction up to 23 percent 
from the tractors and the engines installed in them when compared to a 
baseline MY 2010 tractor and engine.
    For Phase 1, tractor manufacturers demonstrate compliance with the 
tractor CO2 and fuel consumption standards using a vehicle 
simulation tool described in Section II. The tractor inputs to the 
simulation tool in Phase 1 are the aerodynamic performance, tire 
rolling resistance, vehicle speed limiter, automatic engine shutdown, 
and weight reduction.
    In addition to the Phase 1 tractor-based standards for 
CO2, EPA adopted a separate standard to reduce leakage of 
hydrofluorocarbon (HFC) refrigerant from cabin air conditioning (A/C) 
systems from combination tractors, to apply to the tractor 
manufacturer. This HFC leakage standard is independent of the 
CO2 tractor standard. Manufacturers can choose technologies 
from a menu of leak-reducing technologies sufficient to comply with the 
standard, as opposed to using a test to measure performance. Given that 
HFC leakage does not relate to fuel efficiency, NHTSA did not adopt 
corresponding HFC standards.
(b) Heavy-Duty Pickup Trucks and Vans (Class 2b and 3)
    Heavy-duty vehicles with a GVWR between 8,501 and 10,000 lb. are 
classified as Class 2b motor vehicles. Heavy-duty vehicles with a GVWR 
between 10,001 and 14,000 lb. are classified as Class 3 motor vehicles. 
Class 2b and Class 3 heavy-duty vehicles (referred to in these rules as 
``HD pickups and vans'') together emit about 23 percent of today's GHG 
emissions from the heavy-duty vehicle sector.\47\
---------------------------------------------------------------------------

    \47\ EPA MOVES Model, http://www3.epa.gov/otaq/models/moves/index.htm.
---------------------------------------------------------------------------

    The majority of HD pickups and vans are \3/4\-ton and 1-ton pickup 
trucks, 12- and 15-passenger vans,\48\ and large work vans that are 
sold by vehicle manufacturers as complete vehicles, with no secondary 
manufacturer making substantial modifications prior to registration and 
use. These vehicles can also be sold as cab-complete vehicles (i.e., 
incomplete vehicles that include complete or nearly complete cabs that 
are sold to secondary manufacturers). The majority of heavy-duty 
pickups and vans are produced by companies with major light-duty 
markets in the United States. Furthermore, the technologies available 
to reduce fuel consumption and GHG emissions from this segment are 
similar to the technologies used on light-duty pickup trucks, including 
both engine efficiency improvements (for gasoline and diesel engines) 
and vehicle efficiency improvements. For these reasons, EPA and NHTSA 
concluded

[[Page 73491]]

that it was appropriate to adopt GHG standards, expressed as grams per 
mile, and fuel consumption standards, expressed as gallons per 100 
miles, for HD pickups and vans based on the whole vehicle (including 
the engine), consistent with the way these vehicles have been regulated 
by EPA for criteria pollutants and also consistent with the way their 
light-duty counterpart vehicles are regulated by EPA and NHTSA. This 
complete vehicle approach adopted by both agencies for HD pickups and 
vans was consistent with the recommendations of the NAS Committee in 
its 2010 Report.
---------------------------------------------------------------------------

    \48\ Note that 12-passenger vans are subject to the light-duty 
standards as medium-duty passenger vehicles (MDPVs) and are not 
subject to this proposal.
---------------------------------------------------------------------------

    For the light-duty GHG and fuel economy standards, the agencies 
based the emissions and fuel economy targets on vehicle footprint (the 
wheelbase times the average track width). For those standards, 
passenger cars and light trucks with larger footprints are assigned 
higher GHG and lower fuel economy target levels reflecting their 
inherent tendency to consume more fuel and emit more GHGs per mile. For 
HD pickups and vans, the agencies believe that setting standards based 
on vehicle attributes is appropriate, but have found that a work-based 
metric is a more appropriate attribute than the footprint attribute 
utilized in the light-duty vehicle rulemaking, given that work-based 
measures such as towing and payload capacities are critical elements of 
these vehicles' functionality. EPA and NHTSA therefore adopted 
standards for HD pickups and vans based on a ``work factor'' attribute 
that combines their payload and towing capabilities, with an added 
adjustment for 4-wheel drive vehicles.
    Each manufacturer's fleet average Phase 1 standard is based on 
production volume-weighting of target standards for all vehicles, which 
in turn are based on each vehicle's work factor. These target standards 
are taken from a set of curves (mathematical functions), with separate 
curves for gasoline and diesel vehicles.\49\ However, both gasoline and 
diesel vehicles in this category are included in a single averaging 
set. EPA phased in the CO2 standards gradually starting in 
the 2014 MY, at 15-20-40-60-100 percent of the MY 2018 standards 
stringency level in MYs 2014-2015-2016-2017-2018, respectively (i.e., 
the 2014 standards requires only 15 percent of the reduction required 
in 2018, etc.). The phase-in takes the form of a set of target curves, 
with increasing stringency in each MY.
---------------------------------------------------------------------------

    \49\ As explained in Section XI, as part of this rulemaking, EPA 
moved the Phase 1 requirements for pickups and vans from 40 CFR 
1037.104 into 40 CFR part 86, which is also the regulatory part that 
applies for light-duty vehicles.
---------------------------------------------------------------------------

    NHTSA allowed manufacturers to select one of two fuel consumption 
standard alternatives for MYs 2016 and later. The first alternative 
defined individual gasoline vehicle and diesel vehicle fuel consumption 
target curves that will not change for MYs 2016-2018, and are 
equivalent to EPA's 67-67-67-100 percent target curves in MYs 2016-
2017-2018-2019, respectively. The second alternative defined target 
curves that are equivalent to EPA's 40-60-100 percent target curves in 
MYs 2016-2017-2018, respectively. NHTSA allowed manufacturers to opt 
voluntarily into the NHTSA HD pickup and van program in MYs 2014 or 
2015 at target curves equivalent to EPA's target curves. If a 
manufacturer chose to opt in for one category, they would be required 
to opt in for all categories. In other words, a manufacturer would be 
unable to opt in for Class 2b vehicles, but opt out for Class 3 
vehicles.
    EPA also adopted an alternative phase-in schedule for manufacturers 
wanting to have stable standards for model years 2016-2018. The 
standards for heavy-duty pickups and vans, like those for light-duty 
vehicles, are expressed as set of target standard curves, with 
increasing stringency in each model year. The Phase 1 EPA standards for 
2018 (including a separate standard to control air conditioning system 
leakage) are estimated to represent an average per-vehicle reduction in 
GHG emissions of 17 percent for diesel vehicles and 12 percent for 
gasoline vehicles (relative to pre-control baseline vehicles). The 
NHTSA standard will require these vehicles to achieve up to about 15 
percent reduction in fuel consumption by MY 2018 (relative to pre-
control baseline vehicles). Manufacturers demonstrate compliance based 
on entire vehicle chassis certification using the same duty cycles used 
to demonstrate compliance with criteria pollutant standards.
(c) Class 2b-8 Vocational Vehicles
    Class 2b-8 vocational vehicles include a wide variety of vehicle 
types, and serve a vast range of functions. Some examples include 
service for parcel delivery, refuse hauling, utility service, dump, 
concrete mixing, transit service, shuttle service, school bus, 
emergency, motor homes, and tow trucks. In Phase 1, we defined Class 
2b-8 vocational vehicles as all heavy-duty vehicles that are not 
included in either the heavy-duty pickup and van category or the Class 
7 and 8 tractor category. EPA's and NHTSA's Phase 1 standards for this 
vocational vehicle category generally apply at the chassis manufacturer 
level. Class 2b-8 vocational vehicles and their engines emit 
approximately 17 percent of the GHG emissions and burn approximately 17 
percent of the fuel consumed by today's heavy-duty truck sector.\50\
---------------------------------------------------------------------------

    \50\ EPA MOVES model, http://www3.epa.gov/otaq/models/moves/index.htm.
---------------------------------------------------------------------------

    The Phase 1 program for vocational vehicles has vehicle standards 
and separate engine standards, both of which differ based on the weight 
class of the vehicle into which the engine will be installed. The 
vehicle weight class groups mirror those used for the engine 
standards--Classes 2b-5 (light heavy-duty or LHD in EPA regulations), 
Classes 6 and 7 (medium heavy-duty or MHD in EPA regulations) and Class 
8 (heavy heavy-duty or HHD in EPA regulations). Manufacturers 
demonstrate compliance with the Phase 1 vocational vehicle 
CO2 and fuel consumption standards using a vehicle 
simulation tool described in Section II. The Phase 1 program for 
vocational vehicles limited the simulation tool inputs to tire rolling 
resistance. The model assumes the use of a typical representative, 
compliant engine in the simulation, resulting in one overall value for 
CO2 emissions and one for fuel consumption.
(d) Engine Standards
    The agencies established separate Phase 1 performance standards for 
the engines manufactured for use in vocational vehicles and Class 7 and 
8 tractors.\51\ These engine standards vary depending on engine size 
linked to intended vehicle service class. EPA's engine-based 
CO2 standards and NHTSA's engine-based fuel consumption 
standards are being implemented using EPA's existing test procedures 
and regulatory structure for criteria pollutant emissions from heavy-
duty engines. EPA also established engine-based N2O and 
CH4 emission standards in Phase 1.
---------------------------------------------------------------------------

    \51\ See 76 FR 57114 explaining why NHTSA's authority under the 
Energy Independence and Safety Act includes authority to establish 
separate engine standards.
---------------------------------------------------------------------------

(e) Manufacturers Excluded From the Phase 1 Standards
    Phase 1 deferred greenhouse gas emissions and fuel consumption 
standards for any manufacturers of heavy-duty engines, manufacturers of 
combination tractors, and chassis manufacturers for vocational vehicles 
that meet the ``small business'' size criteria set by the Small 
Business Administration (SBA). 13 CFR 121.201

[[Page 73492]]

defines a small business by the maximum number of employees; for 
example, this is currently 1,500 for heavy-duty truck manufacturing and 
1,000 for engine manufacturing.\52\ In order to utilize this exemption, 
qualifying small businesses must submit a declaration to the agencies. 
See Section I.F.(1)(b) for a summary of how Phase 2 applies for small 
businesses.
---------------------------------------------------------------------------

    \52\ These thresholds were revised in early 2016. See http://www.regulations.gov/#!documentDetail;D=SBA-2014-0011-0031.
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    The agencies stated that they would consider appropriate GHG and 
fuel consumption standards for these entities as part of a future 
regulatory action. This includes both U.S.-based and foreign small-
volume heavy-duty manufacturers that introduce new products into the 
U.S.
(2) Costs and Benefits of the Phase 1 Program
    Overall, EPA and NHTSA estimated that the Phase 1 HD National 
Program will cost the affected industry about $8 billion, while saving 
vehicle owners fuel costs of nearly $50 billion over the lifetimes of 
MY 2014-2018 vehicles. The agencies also estimated that the combined 
standards will reduce CO2 emissions by about 270 million 
metric tons and save about 530 million barrels of oil over the life of 
MY 2014 to 2018 vehicles. The agencies estimated additional monetized 
benefits from CO2 reductions, improved energy security, 
reduced time spent refueling, as well as possible dis-benefits from 
increased driving crashes, traffic congestion, and noise. When 
considering all these factors, we estimated that Phase 1 of the HD 
National Program will yield $49 billion in net benefits to society over 
the lifetimes of MY 2014-2018 vehicles.
    EPA estimated the benefits of reduced ambient concentrations of 
particulate matter and ozone resulting from the Phase 1 program to 
range from $1.3 to $4.2 billion in 2030.\53\
---------------------------------------------------------------------------

    \53\ Note: These calendar year benefits do not represent the 
same time frame as the model year lifetime benefits described above, 
so they are not additive.
---------------------------------------------------------------------------

    In total, we estimated the combined Phase 1 standards will reduce 
GHG emissions from the U.S. heavy-duty fleet by approximately 76 
million metric tons of CO2-equivalent annually by 2030. In 
its Environmental Impact Statement for the Phase 1 rule, NHTSA also 
quantified and/or discussed other potential impacts of the program, 
such as the health and environmental impacts associated with changes in 
ambient exposures to toxic air pollutants and the benefits associated 
with avoided non-CO2 GHGs (methane, nitrous oxide, and 
HFCs).
(3) Phase 1 Program Flexibilities
    As noted above, the agencies adopted numerous provisions designed 
to give manufacturers a degree of flexibility in complying with the 
Phase 1 standards. These provisions, which are essentially identical in 
structure and function in EPA's and NHTSA's regulations, enabled the 
agencies to consider overall standards that are more stringent and that 
will become effective sooner than we could consider with a more rigid 
program, one in which all of a manufacturer's similar vehicles or 
engines would be required to achieve the same emissions or fuel 
consumption levels, and at the same time.\54\
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    \54\ NHTSA explained that it has greater flexibility in the HD 
program to include consideration of credits and other flexibilities 
in determining appropriate and feasible levels of stringency than it 
does in the light-duty CAFE program. Cf. 49 U.S.C. 32902(h), which 
applies to light-duty CAFE but not heavy-duty fuel efficiency under 
49 U.S.C. 32902(k).
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    Phase 1 included four primary types of flexibility: Averaging, 
banking, and trading (ABT) provisions; early credits; advanced 
technology credits (including hybrid powertrains); and innovative 
technology credit provisions. The ABT provisions were patterned on 
existing EPA and NHTSA ABT programs (including the light-duty GHG and 
fuel economy standards) and will allow a vehicle manufacturer to reduce 
CO2 emission and fuel consumption levels further than the 
level of the standard for one or more vehicles to generate ABT credits. 
The manufacturer can use those credits to offset higher emission or 
fuel consumption levels in the same averaging set, ``bank'' the credits 
for later use, or ``trade'' the credits to another manufacturer. As 
also noted above, for HD pickups and vans, we adopted a fleet averaging 
system very similar to the light-duty GHG and CAFE fleet averaging 
system. In both programs, manufacturers are allowed to carry-forward 
deficits for up to three years without penalty. The agencies provided 
in the ABT programs flexibility for situations in which a manufacturer 
is unable to avoid a negative credit balance at the end of the year. In 
such cases, manufacturers are not considered to be out of compliance 
unless they are unable to make up the difference in credits by the end 
of the third subsequent model year.
    In total, the Phase 1 program divides the heavy-duty sector into 14 
subcategories of vehicles and 4 subcategories of engines. These 
subcategories are grouped into 4 vehicle averaging sets and 4 engine 
averaging sets in the ABT program. For tractors and vocational 
vehicles, the fleet averaging sets are: Light heavy-duty (Classes 2b-
5); medium heavy-duty (Class 6-7); and heavy heavy-duty (Class 8). 
Complete HD pickups and vans (both spark-ignition and compression-
ignition) are the final vehicle averaging set. For engines, the fleet 
averaging sets are spark-ignition engines, compression-ignition light 
heavy-duty engines, compression-ignition medium heavy-duty engines, and 
compression-ignition heavy heavy-duty engines. ABT allows the exchange 
of credits within an averaging set. This means that a Class 8 day cab 
tractor can exchange credits with a Class 8 sleeper tractor but not 
with a smaller Class 7 tractor. Also, a Class 8 vocational vehicle can 
exchange credits with a Class 8 tractor. However, we did not allow 
trading between engines and chassis (i.e. vehicles).
    In addition to ABT, the other primary flexibility provisions in the 
Phase 1 program involve opportunities to generate early credits, 
advanced technology credits (including for use of hybrid powertrains), 
and innovative technology credits.\55\ For the early credits and 
advanced technology credits, the agencies adopted a 1.5x multiplier, 
meaning that manufacturers would get 1.5 credits for each early credit 
and each advanced technology credit. In addition, advanced technology 
credits for Phase 1 can be used anywhere within the heavy-duty sector 
(including both vehicles and engines). Put another way, as a means of 
promoting these promising technologies, the Phase 1 rule does not 
restrict averaging or trading by averaging set in this instance.
---------------------------------------------------------------------------

    \55\ Early credits are for engines and vehicles certified before 
EPA standards became mandatory, advanced technology credits are for 
hybrids and/or Rankine cycle engines, and innovative technology 
credits are for other technologies not in the 2010 fleet whose 
benefits are not reflected using the Phase 1 test procedures.
---------------------------------------------------------------------------

    For other vehicle or engine technologies that can reduce 
CO2 and fuel consumption, but whose benefits are not 
reflected if measured using the Phase 1 test procedures, the agencies 
wanted to encourage the development of such innovative technologies, 
and therefore adopted special ``innovative technology'' credits. These 
innovative technology credits apply to technologies that are shown to 
produce emission and fuel consumption reductions that are not 
adequately recognized on the Phase 1 test procedures and that were not 
yet in widespread use in the heavy-duty sector before MY 2010. 
Manufacturers

[[Page 73493]]

need to quantify the reductions in fuel consumption and CO2 
emissions that the technology is expected to achieve, above and beyond 
those achieved on the Phase 1 test procedures. As with ABT, the use of 
innovative technology credits is allowed only among vehicles and 
engines of the same defined averaging set generating the credit, as 
described above. The credit multiplier likewise does not apply for 
innovative technology credits.
(4) Implementation of Phase 1
    Manufacturers have already begun complying with the Phase 1 
standards. In some cases manufacturers voluntarily chose to comply 
early, before compliance was mandatory. The Phase 1 rule allowed 
manufacturers to generate credits for such early compliance. The market 
appears to be very accepting of the new technologies, and the agencies 
have seen no evidence of ``pre-buy'' effects in response to the 
standards. In fact sales have been higher in recent years than they 
were before Phase 1. Moreover, manufacturers' compliance plans indicate 
intention to utilize the Phase 1 flexibilities, and we have yet to see 
significant non-compliance with the standards.
(5) Litigation on Phase 1 Rule
    The D.C. Circuit rejected all challenges to the agencies' Phase 1 
regulations. The court did not reach the merits of the challenges, 
holding that none of the petitioners had standing to bring their 
actions, and that a challenge to NHTSA's denial of a rulemaking 
petition could only be brought in District Court. See Delta 
Construction v. EPA, 783 F. 3d 1291 (D.C. Cir. 2015).

C. Summary of the Phase 2 Standards and Requirements

    The agencies are adopting new standards that build on and enhance 
existing Phase 1 standards, and are adopting as well the first-ever 
standards for certain trailers used in combination with heavy-duty 
tractors. Taken together, the Phase 2 program comprises a set of 
largely technology-advancing standards that will achieve greater GHG 
and fuel consumption savings than the Phase 1 program. As described in 
more detail in the following sections, the agencies are adopting these 
standards because, based on the information available at this time and 
careful consideration of all comments, we believe they best fulfill our 
respective statutory authorities when considered in the context of 
available technology, feasible reductions of emissions and fuel 
consumption, costs, lead time, safety, and other relevant factors.
    The Phase 2 standards represent a more technology-forcing \56\ 
approach than the Phase 1 approach, predicated on use of both off-the-
shelf technologies and emerging technologies that are not yet in 
widespread use. The agencies are adopting standards for MY 2027 that we 
project will require manufacturers to make extensive use of these 
technologies. The standards increase in stringency incrementally 
beginning in MY 2018 for trailers and in MY 2021 for other segments, 
ensuring steady improvement to the MY 2027 stringency levels. For 
existing technologies and technologies in the final stages of 
development, we project that manufacturers will likely apply them to 
nearly all vehicles, excluding those specific vehicles with 
applications or uses that prevent the technology from functioning 
properly. We also project as one possible compliance pathway that 
manufacturers could apply other more advanced technologies such as 
hybrids and waste engine heat recovery systems, although at lower 
application rates than the more conventional technologies. Comments on 
the overall stringency of the proposed Phase 2 program were mixed. Many 
commenters, including most non-governmental organizations, supported 
more stringent standards with less lead time. Many technology and 
component suppliers supported more stringent standards but with the 
proposed lead time. Vehicle manufacturers did not support more 
stringent standards and emphasized the importance of lead time. To the 
extent these commenters provided technical information to support their 
comments on stringency and lead time, it is discussed in Sections II 
through VI.
---------------------------------------------------------------------------

    \56\ In this context, the term ``technology-forcing'' has a 
specific legal meaning and is used to distinguish standards that 
will effectively require manufacturers to develop new technologies 
(or to significantly improve technologies) from standards that can 
be met using off-the-shelf technology alone. See, e.g., NRDC v. EPA, 
655 F. 2d 318, 328 (D.C. Cir. 1981). Technology-forcing standards do 
not require manufacturers to use any specific technologies. See also 
76 FR 57130 (explaing that section 202(a)(2) allows EPA to adopt 
such technology-forcing standards, although it does not compell such 
standards).
---------------------------------------------------------------------------

    The standards being adopted provide approximately ten years of lead 
time for manufacturers to meet these 2027 standards, which the agencies 
believe is appropriate to implement the technologies industry could use 
to meet these standards. For some of the more advanced technologies 
production prototype parts are not yet available, though they are in 
the research stage with some demonstrations in actual vehicles.\57\ In 
the respective sections of Chapter 2 of the RIA, the agencies explain 
what further steps are needed to successfully and reliably 
commercialize these prototypes in the lead time afforded by the Phase 2 
standards. Additionally, even for the more developed technologies, 
phasing in more stringent standards over a longer timeframe will help 
manufacturers to ensure better reliability of the technology and to 
develop packages to work in a wide range of applications.
---------------------------------------------------------------------------

    \57\ ``Prototype'' as it is used here refers to technologies 
that have a potentially production-feasible design that is expected 
to meet all performance, functional, reliability, safety, 
manufacturing, cost and other requirements and objectives that is 
being tested in laboratories and on highways under a full range of 
operating conditions, but is not yet available in production 
vehicles already for sale in the market.
---------------------------------------------------------------------------

    As discussed later, the agencies are also adopting new standards in 
MYs 2018 (trailers only), 2021, and 2024 to ensure that manufacturers 
make steady progress toward the 2027 standards, thereby achieving 
steady and feasible reductions in GHG emissions and fuel consumption in 
the years leading up to the MY 2027 standards.
    Providing additional lead time can often enable manufacturers to 
resolve technological challenges or to find lower cost means of meeting 
new regulatory standards, effectively making them more feasible in 
either case. See generally NRDC v. EPA, 655 F. 2d 318, 329 (D.C. Cir. 
1981). On the other hand, manufacturers and/or operators may incur 
additional costs if regulations require them to make changes to their 
products with less lead time than manufacturers would normally have 
when bringing a new technology to the market or expanding the 
application of existing technologies. After developing a new 
technology, manufacturers typically conduct extensive field tests to 
ensure its durability and reliability in actual use. Standards that 
accelerate technology deployment can lead to manufacturers incurring 
additional costs to accelerate this development work, or can lead to 
manufacturers beginning production before such testing can be 
completed. Some industry stakeholders have informed EPA that when 
manufacturers introduced new emission control technologies (primarily 
diesel particulate filters) in response to the 2007 heavy-duty engine 
standards they did not perform sufficient product development 
validation, which led to additional costs for operators when the 
technologies required repairs or resulted in other operational issues 
in use. Thus, the issues of costs, lead time, and reliability are 
intertwined for the

[[Page 73494]]

agencies' determination of whether standards are reasonable and maximum 
feasible, respectively.
    Another important consideration was the possibility of disrupting 
the market, which would be a risk if compliance required application of 
new technologies too suddenly. Several of the heavy-duty vehicle 
manufacturers, fleets, and commercial truck dealerships informed the 
agencies that for fleet purchases that are planned more than a year in 
advance, expectations of reduced reliability, increased operating 
costs, reduced residual value, or of large increases in purchase prices 
can lead the fleets to pull-ahead by several months planned future 
vehicle purchases by pre-buying vehicles without the newer technology. 
In the context of the Class 8 tractor market, where a relatively small 
number of large fleets typically purchase very large volumes of 
tractors, such actions by a small number of firms can result in large 
swings in sales volumes. Such market impacts would be followed by some 
period of reduced purchases that can lead to temporary layoffs at the 
factories producing the engines and vehicles, as well as at supplier 
factories, and disruptions at dealerships. Such market impacts also can 
reduce the overall environmental and fuel consumption benefits of the 
standards by delaying the rate at which the fleet turns over. See 
International Harvester v. EPA, 478 F. 2d 615, 634 (D.C. Cir. 1973). A 
number of commenters stated that the 2007 EPA heavy-duty engine 
criteria pollutant standard precipitated pre-buy for the Class 8 
tractor market.\58\ The agencies understand the potential impact that 
fleets pulling ahead purchases can have on American manufacturing and 
labor, dealerships, truck purchasers, and on the program's 
environmental and fuel savings goals, and have taken steps in the 
design of the program to avoid such disruption (see also our discussion 
in RTC Section 11.7). These steps include the following:
---------------------------------------------------------------------------

    \58\ For example, see the public comments of The International 
Union, Volvo Trucks North America, United Automobile, Aerospace and 
Agricultural Implement Workers of America (UAW).

 Providing considerable lead time
 Adopting standards that will result in significantly lower 
operating costs for vehicle owners (unlike the 2007 standard, which 
increased operating costs)
 Phasing in the standards
 Structuring the program so the industry will have a 
significant range of technology choices to be considered for 
compliance, rather than the one or two new technologies the OEMs 
pursued to comply with EPA's 2007 criteria pollutant standard
 Allowing manufacturers to use emissions averaging, banking and 
trading to phase in the technology even further

As discussed in the Phase 1 final rule, NHTSA has certain statutory 
considerations to take into account when determining feasibility of the 
preferred alternative.\59\ EISA states that NHTSA (in consultation with 
EPA and the Secretary of Energy) will develop a commercial medium- and 
heavy-duty fuel efficiency program designed ``to achieve the maximum 
feasible improvement.'' \60\ Although there is no definition of maximum 
feasible standards in EISA, NHTSA is directed to consider three factors 
when determining what the maximum feasible standards are. Those factors 
are, appropriateness, cost-effectiveness, and technological 
feasibility,\61\ which modify ``feasible'' beyond its plain meaning.
---------------------------------------------------------------------------

    \59\ 75 FR 57198.
    \60\ 49 U.S.C. 32902(k).
    \61\ Id.
---------------------------------------------------------------------------

    NHTSA has the broad discretion to weigh and balance the 
aforementioned factors in order to accomplish EISA's mandate of 
determining maximum feasible standards. The fact that the factors may 
often be at odds gives NHTSA significant discretion to decide what 
weight to give each of the competing factors, policies and concerns and 
then determine how to balance them--as long as NHTSA's balancing does 
not undermine the fundamental purpose of the EISA: Energy conservation, 
and as long as that balancing reasonably accommodates ``conflicting 
policies that were committed to the agency's care by the statute.'' 
\62\
---------------------------------------------------------------------------

    \62\ Center for Biological Diversity v. National Highway Traffic 
Safety Admin., 538 F.3d 1172, 1195 (9th Cir. 2008).
---------------------------------------------------------------------------

    EPA also has significant discretion in assessing, weighing, and 
balancing the relevant statutory criteria. Section 202(a)(2) of the 
Clean Air Act (42 U.S.C. 7521(a)(2)) requires that the standards ``take 
effect after such period as the Administrator finds necessary to permit 
the development and application of the requisite technology, giving 
appropriate consideration to the cost of compliance within such 
period.'' This language affords EPA considerable discretion in how to 
weight the critical statutory factors of emission reductions, cost, and 
lead time (76 FR 57129-57130). Section 202(a)(2) also allows (although 
it does not compel) EPA to adopt technology-forcing standards. Id. at 
57130.
    Sections II through VI of this Preamble explain the consideration 
that the agencies took into account based on careful assessment and 
balancing of the statutory factors under Clean Air Act section 
202(a)(1) and (2), and under 49 U.S.C. 32902(k).
(1) Carryover From Phase 1 Program and Compliance Changes
    Phase 2 is carrying over many of the compliance approaches 
developed for Phase 1, with certain changes as described below. Readers 
are referred to the regulatory text for much more detail. Note that the 
agencies have adapted some of these Phase 1 provisions in order to 
address new features of the Phase 2 program, notably provisions related 
to trailer compliance. The agencies have also reevaluated all of the 
compliance provisions to ensure that they will be effective in 
achieving the projected reductions without placing an undue burden on 
manufacturers.
    The agencies received significant comments from vehicle 
manufacturers emphasizing the potential for the structure of the 
compliance program to impact stringency. Although the agencies do not 
agree with all of these comments (which are discussed in more detail in 
later sections), we do agree that it is important to structure the 
compliance program so that the effective stringency of standards is 
consistent with levels established by regulation. The agencies have 
made appropriate improvements to the compliance structure in response 
to these comments.
(a) Certification
    EPA and NHTSA are applying the same general certification 
procedures for Phase 2 as are currently being used for certifying to 
the Phase 1 standards. Tractors and vocational vehicles will continue 
to be certified using the vehicle simulation tool (GEM). The agencies, 
however, revised the Phase 1 GEM simulation tool to develop a new 
version, Phase 2 GEM, that more specifically reflects improvements to 
engines, transmissions, and drivetrains.\63\ Rather than the GEM 
simulation tool using default values for engines, transmissions and 
drivetrains, most manufacturers will enter measured or tested values as 
inputs reflecting performance of the actual engine, transmission and 
drivetrain technologies.
---------------------------------------------------------------------------

    \63\ As described in Section IV, although the trailer standards 
were developed using the simulation tool, the agencies are adopting 
a compliance structure that does not require trailer manufacturers 
to use it.

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[[Page 73495]]

    The Phase 1 certification process for engines used in tractors and 
vocational vehicles was based on EPA's process for showing compliance 
with the heavy-duty engine criteria pollutant standards using engine 
dynamometer testing, and the agencies are continuing it for Phase 2. We 
also will continue certifying HD pickups and vans using the Phase 1 
chassis dynamometer testing results and vehicle certification process, 
which is very similar to the light-duty vehicle certification process. 
The Phase 2 trailer certification process will resemble the Phase 2 
tractor certification approach, but with a simplified version of Phase 
2 GEM. The trailer certification process allows trailer manufacturers 
to use a simple equation to determine GEM-equivalent g/ton-mile 
emission rates without actually running GEM.
    EPA and NHTSA are also clarifying provisions related to confirming 
a manufacturer's test data during certification (i.e., confirmatory 
testing) and verifying a manufacturer's vehicles are being produced to 
perform as described in the application for certification (i.e., 
selective enforcement audits or SEAs). The EPA confirmatory testing 
provisions for engines, vehicles, and components are in 40 CFR 1036.235 
and 1037.235. The SEA provisions are in 40 CFR 1036.301 and 1037.301-
1037.320. The NHTSA provisions are in 49 CFR 535.9(a). As we proposed, 
these clarifications will also apply for Phase 1 engines and vehicles.
    In response to comments, we are making several changes to the 
proposed EPA confirmatory testing provisions. First, the regulations 
being adopted specify that EPA will conduct triplicate tests for engine 
fuel maps to minimize the impact of test-to-test variability. The final 
regulations also state that we will consider entire fuel maps rather 
than individual points. Engine manufacturers objected to EPA's proposal 
that individual points could be replaced based on a single test, 
arguing that it effectively made the vehicle standards more stringent 
due to point-to-point and test-to-test variability. We believe that the 
changes being adopted largely address these concerns. We are also 
applying this approach for axle and transmission maps for similar 
reasons.
    As described in Sections III and IV, EPA has also modified the SEA 
regulations for verifying aerodynamic performance. These revised 
regulations differ somewhat from the standard SEA regulations to 
address the unique challenges of measuring aerodynamic drag. In 
particular EPA recognizes that for coastdown testing, test-to-test 
variability is expected to be large relative to production variability. 
This differs fundamentally from traditional compliance testing, in 
which test-to-test variability is expected to be small relative to 
production variability. To address this difference, the modified 
regulations call for more repeat testing of the same vehicle, but fewer 
test samples. These revisions were generally supported by commenters. 
See Section III and IV for additional discussion.
    Some commenters suggested that the agencies should apply a 
compliance margin to confirmatory and SEA test results to account for 
test variability. However, other commenters supported following EPA's 
past practice, which has been to base the standards on technology 
projections that assume manufacturers will apply compliance margins to 
their test results for certification. In other words, they design their 
products to have emissions below the standards by some small margin so 
that test-to-test or lab-to-lab variability would not cause them to 
exceed any applicable standards. Consequently, EPA has typically not 
set standards precisely at the lowest levels achievable, but rather at 
slightly higher levels--expecting manufacturers to target the lower 
levels to provide compliance margins for themselves. As discussed in 
Sections II through VI, the agencies have applied this approach to the 
Phase 2 standards.
(b) Averaging, Banking and Trading (ABT)
    The Phase 1 ABT provisions were patterned on established EPA ABT 
programs that have proven to work well. In Phase 1, the agencies 
determined this flexibility would provide an opportunity for 
manufacturers to make necessary technological improvements and reduce 
the overall cost of the program without compromising overall 
environmental and fuel economy objectives. Commenters generally 
supported this approach for engines, pickups/vans, tractors, and 
vocational vehicles. Thus, we are generally continuing this Phase 1 
approach with few revisions to the engine and vehicle segments. 
However, as described in Section IV, in response to comments, we are 
finalizing a much more limited averaging program for trailers that will 
not go into effect until 2027. We are adopting some other provisions 
for certain vocational vehicles, which are discussed in Section V.
    The agencies see the overall ABT program as playing an important 
role in making the technology-advancing standards feasible, by helping 
to address many issues of technological challenges in the context of 
lead time and costs. It provides manufacturers flexibilities that 
assist the efficient development and implementation of new technologies 
and therefore enable new technologies to be implemented at a more 
aggressive pace than without ABT.
    ABT programs are more than just add-on provisions included to help 
reduce costs. They can be, as in EPA's Title II programs generally, an 
integral part of the standard setting itself. A well-designed ABT 
program can also provide important environmental and energy security 
benefits by increasing the speed at which new technologies can be 
implemented (which means that more benefits accrue over time than with 
later-commencing standards) and at the same time increase flexibility 
for, and reduce costs to, the regulated industry and ultimately 
consumers. Without ABT provisions (and other related flexibilities), 
standards would typically have to be numerically less stringent since 
the numerical standard would have to be adjusted to accommodate issues 
of feasibility and available lead time. See 75 FR 25412-25413. By 
offering ABT credits and additional flexibilities the agencies can 
offer progressively more stringent standards that help meet our fuel 
consumption reduction and GHG emission goals at a faster and more cost-
effective pace.\64\
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    \64\ See NRDC v. Thomas, 805 F. 2d 410, 425 (D.C. Cir. 1986) 
(upholding averaging as a reasonable and permissible means of 
implementing a statutory provision requiring technology-forcing 
standards).
---------------------------------------------------------------------------

(i) Carryover of Phase 1 Credits and Credit Life
    The agencies proposed to continue the five-year credit life 
provisions from Phase 1, and not to adopt any general restriction on 
the use of banked Phase 1 credits in Phase 2. In other words, Phase 1 
credits in MY 2019 could be used in Phase 1 or in Phase 2 in MYs 2021-
2024. CARB commented in support of a more restrictive approach for 
Phase 1 credits, based on the potential for manufacturers to delay 
implementation of technology in Phase 2 by using credits generated 
under Phase 1. We also received comments asking the agencies to provide 
a path for manufacturers to generate credits for applying technologies 
not explicitly included in the Phase 1 program. In response to these 
comments, the agencies have analyzed the potential impacts of Phase 1 
credits on the Phase 2 program for each sector and made appropriate 
adjustments in the program. For example, as described in Section 
II.D.(5), the agencies are adopting some restrictions on the carryover 
of windfall Phase 1 engine credits that result from the Phase 1 
vocational engine standards.

[[Page 73496]]

Also, as described in Section III, the agencies are projecting that 
Phase 1 credit balances for tractor manufacturers will enable them to 
meet more stringent standards for MY 2021-2023, so the agencies have 
increased the stringency of these standards accordingly.
    In contrast to the Phase 1 tractor program, the Phase 1 vocational 
chassis program currently offers fewer opportunities to generate 
credits for potential carryover into Phase 2. To address comments 
related to this particular situation and also to provide a new Phase 1 
incentive to voluntarily apply certain Phase 2 technologies, which are 
available today but currently not being adopted, the agencies are 
finalizing a streamlined Phase 1 off-cycle credit approval process for 
these Phase 2 technologies. For vocational chassis, these technologies 
include workday idle reduction technologies such as engine stop-start 
systems, automatic engine shutdown systems, shift-to-neutral at idle 
automatic transmissions, automated manual transmissions, and dual-
clutch transmissions. The agencies are also finalizing a streamlined 
Phase 1 off-cycle credit approval process for Phase 2 automatic tire 
inflation systems (ATIS), for both tractors and vocational chassis. The 
purpose for offering these streamlined off-cycle approval processes for 
Phase 1 is to encourage more early adoption of these Phase 2 
technologies during the remaining portion of the Phase 1 program (e.g., 
model years 2018, 2019, 2020). Earlier adoption of these technologies 
would help demonstrate that these newer, but not advanced, technologies 
are effective, reliable and well-accepted into the marketplace by the 
time the agencies project that they would be needed for compliance with 
the Phase 2 standards.
    The agencies are also including a provision allowing exempt small 
business manufacturers of vocational chassis to opt into the Phase 1 
program for the purpose of generating credits which can be used 
throughout the Phase 2 program, as just described.
    In conjunction with this provision allowing manufacturers to 
receive credit in Phase 1 for pulling ahead certain Phase 2 
technologies, the agencies are providing an extended credit life for 
the Light and Medium heavy-duty vocational vehicle averaging sets (see 
next subsection) to provide additional Phase 2 transition flexibility 
for these vehicles. Unlike the HD Phase 1 pickup/van and tractor 
programs, where the averaging sets are broad; where manufacturers have 
many technology choices from which to earn credits (e.g., tractor 
aerodynamic and idle reduction technologies, pickup/van engine and 
transmission technologies); and where we project manufacturers to have 
sufficient pickup/van and tractor credits to manage the transition to 
the Phase 2 standards, transitioning to the new Light and Medium 
vocational vehicle standards may be more challenging. Manufacturers 
selling lower volumes of these lighter vehicles may find themselves 
with fewer overall credits to manage the transition to the new 
standards, especially the 2027 standards. To facilitate this transition 
and better assure adequate lead time, the agencies are extending the 
credit life for the Light and Medium heavy-duty vehicle averaging sets 
(typically vehicles in Classes 2b through 7) so that all credits 
generated in 2018 and later will last at least until 2027. We are not 
doing this for the Heavy heavy-duty vocational vehicle category 
(typically Class 8) because tractor credits may be used within this 
averaging set. Because we project that manufacturers will have 
sufficient tractor credits, we believe that they will be able to manage 
the Heavy vocational transition to each set of new standards, without 
the extended credit life that we are finalizing for Light and Medium 
vocational averaging sets. Nevertheless, we will continue to monitor 
the manufacturers' progress in transitioning to the Phase 2 standards 
for each category, and we may reconsider the need for additional 
transitional flexibilities, such as extending other categories' credit 
lives.
    Although, as we have already noted, the numerical values of Phase 2 
standards are not directly comparable in an absolute sense to the 
existing Phase 1 standards (in other words, a given vehicle would have 
a different g/ton-mile emission rate when evaluated using Phase 1 GEM 
than it would when evaluated using Phase 2 GEM), we believe that the 
Phase 1 and Phase 2 credits are largely equivalent. Because the 
standards and emission levels are included in a relative sense (as a 
difference), it is not necessary for the Phase 1 and Phase 2 standards 
to be directly equivalent in an absolute sense in order for the credits 
to be equivalent.
    This is best understood by examining the way in which credits are 
calculated. For example, the credit equations in 40 CFR 1037.705 and 49 
CFR 535.7 calculate credits as the product of the difference between 
the standard and the vehicle's emission level (g/ton-mile or gallon/
1,000 ton-mile), the regulatory payload (tons), production volume, and 
regulatory useful life (miles). The Phase 2 payloads, production 
volumes, and useful lives for tractors, medium and heavy heavy-duty 
engines, or medium and heavy heavy-duty vocational vehicles are 
equivalent to those of Phase 1. However, EPA is changing the regulatory 
useful lives of HD pickups and vans, light heavy-duty vocational 
vehicles, spark-ignited engines, and light heavy-duty compression-
ignition engines. Because useful life is a factor in determining the 
value of a credit, the agencies proposed to apply interim adjustment 
factors to ensure banked credits maintain their value in the transition 
from Phase 1 to Phase 2.
    For Phase 1, EPA aligned the useful life for GHG emissions with the 
useful life already in place for criteria pollutants. After the Phase 1 
rules were finalized, EPA updated the useful life for criteria 
pollutants as part of the Tier 3 rulemaking.\65\ The new useful life 
implemented for Tier 3 is 150,000 miles or 15 years, whichever occurs 
first. This same useful life is being adopted in Phase 2 for HD pickups 
and vans, light heavy-duty vocational vehicles, spark-ignited engines, 
and light heavy-duty compression-ignition engines.\66\ The numeric 
value of the adjustment factor for each of these regulatory categories 
depends on the Phase 1 useful life. These are described in detail below 
in this Preamble in Sections II, V, and VI. Without these adjustment 
factors the changes in useful life would effectively result in a 
discount of banked credits that are carried forward from Phase 1 to 
Phase 2, which is not the intent of the changes in the useful life. 
With the relatively flat deterioration generally associated with 
CO2, EPA does not believe the changes in useful life will 
significantly affect the feasibility of the Phase 2 standards.
---------------------------------------------------------------------------

    \65\ 79 FR 23492, April 28, 2014 and 40 CFR 86.1805-17.
    \66\ NHTSA's useful life is based on mileage and years of 
duration.
---------------------------------------------------------------------------

    We note that the primary purpose of allowing manufacturers to bank 
credits is to provide flexibility in managing transitions to new 
standards. The five-year credit life is substantial, and allows credits 
generated in either Phase 1 or early in Phase 2 to be used for the 
intended purpose. The agencies believe a credit life longer than five 
years is unnecessary to accomplish this transition. Restrictions on 
credit life serve to reduce the likelihood that any manufacturer will 
be able to use banked credits to disrupt the heavy-duty vehicle market 
in any given year by effectively limiting the amount of credits that 
can be held. Without this limit, one manufacturer that saved enough 
credits over many years could achieve a significant cost advantage by 
using all the credits in a single year. The agencies

[[Page 73497]]

believe that allowing a five-year credit life for all credits, and as a 
consequence allowing use of Phase 1 credits in Phase 2, creates 
appropriate flexibility and appropriately facilitates a smooth 
transition to each new level of standards.
(ii) Averaging Sets
    EPA has historically restricted averaging to some extent for its HD 
emission standards to avoid creating unfair competitive advantages or 
environmental risks due to credits being inconsistent. It also helps to 
ensure a robust and manageable compliance program. Under Phase 1, 
averaging, banking and trading can only occur within and between 
specified ``averaging sets'' (with the exception of credits generated 
through use of specified advanced technologies). As proposed, we will 
continue this regime in Phase 2, retaining the existing vehicle and 
engine averaging sets, and creating new trailer averaging sets. We are 
also continuing the averaging set restrictions from Phase 1 in Phase 2. 
(See Section V for certain other provisions applicable to vehicles 
certified to special standards.) These general averaging sets for 
vehicles are:

 Complete pickups and vans
 Other light heavy-duty vehicles (Classes 2b-5)
 Medium heavy-duty vehicles (Class 6-7)
 Heavy heavy-duty vehicles (Class 8)
 Long dry and refrigerated van trailers \67\
---------------------------------------------------------------------------

    \67\ Averaging for trailers does not begin until 2027.
---------------------------------------------------------------------------

 Short dry and refrigerated van trailers

We are not allowing trading between engines and chassis, even within 
the same vehicle class. Such trading would essentially result in double 
counting of emission credits, because the same engine technology would 
likely generate credits relative to both standards (and indeed, certain 
engine improvements are reflected exclusively in the vehicle standards 
the agencies are adopting). We similarly limit trading among engine 
categories to trades within the designated averaging sets:

 Spark-ignition engines
 Compression-ignition light heavy-duty engines
 Compression-ignition medium heavy-duty engines
 Compression-ignition heavy heavy-duty engines

The agencies continue to believe that maintaining trading to be only 
within the classes listed above will provide adequate opportunities for 
manufacturers to make necessary technological improvements and to 
reduce the overall cost of the program without compromising overall 
environmental and fuel efficiency objectives, and it is therefore 
appropriate and reasonable under EPA's authority and maximum feasible 
under NHTSA's authority, respectively. We do not expect emissions from 
engines and vehicles--when restricted by weight class--to be 
dissimilar. We therefore expect that the lifetime vehicle performance 
and emissions levels will be very similar across these defined 
categories, and the credit calculations will fairly ensure the expected 
fuel consumption and GHG emission reductions.
    These restrictions have generally worked well for Phase 1, and we 
continue to believe that these averaging sets create flexibility 
without creating an unfair advantage for manufacturers with integrated 
portfolios, including engines and vehicles. See 76 FR 57240.
(iii) Credit Deficits
    The Phase 1 regulations allow manufacturers to carry-forward 
deficits for up to three years. This is an important flexibility 
because the program is designed to address the diversity of the heavy-
duty industry by allowing manufacturers to sell a mix of engines or 
vehicles that have very different emission levels and fuel 
efficiencies. Under this construct, manufacturers can offset sales of 
engines or vehicles not meeting the standards by selling others (within 
the same averaging set) that perform better than the standards require. 
However, in any given year it is possible that the actual sales mix 
will not balance out, and the manufacturer may be short of credits for 
that model year. The three-year provision allows for this possibility 
and creates additional compliance flexibility to accommodate it.
(iv) Advanced Technology Credits
    At the time of the proposal, the agencies believed it was no longer 
appropriate to provide extra credit for any of the technologies 
identified as advanced technologies for Phase 1, although we requested 
comment on this issue. The Phase 1 advanced technology credits were 
adopted to promote the implementation of advanced technologies that 
were not included in our basis of the feasibility of the Phase 1 
standards. Such technologies included hybrid powertrains, Rankine cycle 
waste heat recovery systems on engines, all-electric vehicles, and fuel 
cell vehicles (see 40 CFR 86.1819-14(k)(7), 1036.150(h), and 
1037.150(p)). The Phase 2 heavy-duty engine and vehicle standards are 
premised on the use of some of these technologies, making them 
equivalent to other fuel-saving technologies in this context. We 
believe the Phase 2 standards themselves will provide sufficient 
incentive to develop those specific technologies.
    Although the agencies proposed to eliminate all advanced technology 
incentives, we remained open to targeted incentives that would address 
truly advanced technology. We specifically requested comment on this 
issue with respect to electric vehicle, plug-in hybrid, and fuel cell 
technologies. Although the Phase 2 standards are premised on some use 
of Rankine cycle waste heat recovery systems on engines and hybrid 
powertrains, none of these standards are based on projected utilization 
of these other even more-advanced technologies (e.g., all-electric 
vehicles, fuel cell vehicles). 80 FR 40158. Commenters generally 
supported providing credit multipliers for these advanced technologies. 
However, Allison supported ending the incentives for hybrids, fuel 
cells, and electric vehicles in Phase 2. ATA, on the other hand, 
commented that the agencies should preserve the advanced technology 
credits which provide a credit multiplier of 1.5 in order to promote 
the use of hybrid and electric vehicles in larger vocational vehicles 
and tractors. ARB supported the use of credit multipliers even more 
strongly and provided suggestions for values larger than 1.5 that could 
be used to incentivize plug-in hybrids, electric vehicles, and fuel 
cell vehicles. Eaton recommended the continuation of advanced 
technology credits for hybrid powertrains until a sufficient number are 
in the market. Overall, the comments indicated that there is support 
for such incentives among operators, suppliers, and states. Upon 
further consideration, the agencies are adopting advanced technology 
credits for these three types of advanced technologies, as shown in 
Table I-2 below.

               Table I-2--Advanced Technology Multipliers
------------------------------------------------------------------------
                         Technology                           Multiplier
------------------------------------------------------------------------
Plug-in hybrid electric vehicles...........................          3.5
All-electric vehicles......................................          4.5
Fuel cell vehicles.........................................          5.5
------------------------------------------------------------------------

    Our intention in adopting these multipliers is to create a 
meaningful incentive to those considering adopting these qualifying 
advanced technologies into their vehicles. The values being

[[Page 73498]]

adopted are consistent with values recommended by CARB in their 
supplemental comments.\68\ CARB's values were based on a cost analysis 
that compared the costs of these technologies to costs of other 
conventional technologies. Their costs analysis showed that adopting 
multipliers in this range would make these technologies much more 
competitive with the conventional technologies and could allow 
manufacturers to more easily generate a viable business case to develop 
these technologies for heavy-duty and bring them to market at a 
competitive price.
---------------------------------------------------------------------------

    \68\ Letter from Michael Carter, ARB, to Gina McCarthy, 
Administrator, EPA and Mark Rosekind, Administrator, NHTSA, June 16, 
2016.
---------------------------------------------------------------------------

    Another important consideration in the adoption of these larger 
multipliers is the tendency of the heavy-duty sector to significantly 
lag the light-duty sector in the adoption of advanced technologies. 
There are many possible reasons for this, such as:
     Heavy-duty vehicles are more expensive than light-duty 
vehicles, which makes it a greater monetary risk for purchasers to 
invest in unproven technologies.
     These vehicles are work vehicles, which makes predictable 
reliability even more important than for light-duty vehicles.
     Sales volumes are much lower for heavy-duty vehicles, 
especially for specialized vehicles.
    As a result of factors such as these, adoption rates for these 
advanced technologies in heavy-duty vehicles are essentially non-
existent today and seem unlikely to grow significantly within the next 
decade without additional incentives.
    The agencies believe it is appropriate to provide such large 
multipliers for these very advanced technologies at least in the short 
term, because they have the potential to provide very large reductions 
in GHG emissions and fuel consumption and advance technology 
development substantially in the long term. However, because they are 
so large, we also believe that we should not necessarily allow them to 
continue indefinitely. Therefore, the agencies are adopting them as an 
interim program that will continue through MY 2027. If the agencies 
determine that these credit multipliers should be continued beyond MY 
2027, we could do so in a future rulemaking.
    As discussed in Section I.C.(1)(d), the agencies are not 
specifically accounting for upstream emissions that might occur from 
production of electricity to power these advanced vehicles. This 
approach is largely consistent with the incentives offered for electric 
vehicles in the light-duty National Program. 77 FR 62810. For light-
duty vehicles, the agencies also did not require manufacturers to 
account for upstream emissions during the initial years, as the 
technologies are being developed. While we proactively sunset this 
allowance for light-duty due to concerns about potential impacts from 
very high sales volumes, we do not have similar concerns for heavy-
duty. Nevertheless, in this program we are only adopting these credit 
multipliers through MY 2027, and should we not promulgate a future 
rulemaking to extend them beyond MY 2027, these multipliers would 
essentially sunset in MY 2027.
    One feature of the Phase 1 advanced technology program that is not 
being continued in Phase 2 is the allowance to use advanced technology 
credits across averaging sets. We believe that combined with the very 
large multipliers being adopted, there could be too large a risk of 
market distortions if we allowed the use of these credits across 
averaging sets.
(v) Transition Flexibility for Meeting the Engine Standards
    Some manufacturers commented that the proposed engine regulations 
did not offer sufficient flexibility. Although these commenters 
acknowledge that the tractor and vocational vehicle standards will 
separately drive engine improvements, they nonetheless maintain that 
the MY 2024 engine standards may constrain potential compliance paths 
too much. Some commented that advanced technologies (such as waste heat 
recovery) may need to be deployed before the technologies are fully 
reliable for every engine manufacturer, and may lead to the development 
and implementation of additional engine technologies outside of 
scheduled engine redesign cycles, which could cause manufacturers to 
incur costs which were not accounted for in the agencies' analyses. 
These costs could include both product development and equipment costs 
for the engine manufacturer, and potential increased costs for vehicle 
owners associated with potential reliability issues in-the-field.
    The agencies have considered these comments carefully. See, e.g., 
RIA Section 2.3.9 and RTC Section 3.4. The agencies recognize the 
importance of ensuring that there is adequate lead time to develop, 
test, and otherwise assure reliability of the technologies projected to 
be needed to meet the standards and for the advanced engine 
technologies in particular. See Section I.C above; see also responses 
regarding waste heat recovery technology in RTC Section 3.4, and 
Response 3.4.1. The agencies are therefore adopting an alternative, 
optional ABT flexibility for heavy-heavy and medium-heavy engines in 
partial response to these comments. This optional provision would 
affect only the MYs 2021 and 2024 standards for these engines, not the 
final MY 2027 engine standards, and to the extent manufacturers elect 
the provision would increase fuel consumption and GHG reduction 
benefits, as explained below.
    This optional provision has three aspects:

 A pull ahead of the engine standards to MY 2020
 Extended credit life for engine credits generated against MYs 
2018-2019 Phase 1 standards, the MY 2020 pull-ahead Phase 2 engine 
standards, and the MYs 2021-2024 Phase 2 engine standards
 Slightly relaxed engine standards for MYs 2024-2026 tractor 
engine standards \69\
---------------------------------------------------------------------------

    \69\ Credits can be generated against these standards as well, 
but the life of credits generated for 2025 and 2026 would be five 
years. The pull ahead of the MY 2021 standards should more than 
balance out any slight decreases in benefits attributable to such 
credits.

    Thus, the final rule provides the option of an extended credit life 
for the medium heavy-duty and heavy heavy-duty engines so that all 
credits generated in MY 2018 and later will last at least until MY 
2030.\70\ To be eligible for this allowance, manufacturers would need 
to voluntarily certify all of their HHD and/or MHD MY 2020 engines 
(tractor and vocational) to MY 2021 standards.\71\ Manufacturers could 
elect to apply this provision separately to medium heavy-duty and heavy 
heavy-duty engines, since these remain separate averaging sets. Credits 
banked by the manufacturer in Phase 1 for model year 2018 and 2019 
engines would be eligible for the extended credit life for 
manufacturers satisfying the pull ahead requirement. Such credits could 
be used in any model year 2021 through

[[Page 73499]]

2030. Manufacturers that voluntarily certify their engines to MY 2021 
standards early would then also be eligible for slightly less stringent 
engine tractor standards in MYs 2024-2026, as shown in the following 
table.
---------------------------------------------------------------------------

    \70\ The final rule (40 CFR 1036.150(p)) provides that for 
engine manufacturers choosing this alternative option, credits 
generated with MY 2018-2024 engines can be used until MY 2030. 
Credits from later model years can be used for five years from 
generation under 40 CFR 1037.740(c).
    \71\ Compliance with this requirement would be evaluated at the 
time of certification and when end of year ABT reports are 
submitted. Manufacturers that show a net credit deficit for the 
averaging set at the end of the year would not meet this 
requirement.

             Table I-3--Optional ABT Flexibility Standards for Heavy-Heavy and Medium-Heavy Engines
----------------------------------------------------------------------------------------------------------------
                                                    Medium heavy-duty--tractor       Heavy heavy-duty--tractor
                                                 ---------------------------------------------------------------
                                                      EPA          NHTSA fuel         EPA          NHTSA fuel
                   Model years                     CO[ihel2]      consumption      CO[ihel2]      consumption
                                                  standard (g/  standard  (gal/   standard (g/  standard  (gal/
                                                    bhp-hr)        100bhp-hr)       bhp-hr)        100bhp-hr)
----------------------------------------------------------------------------------------------------------------
2020-2023.......................................          473             4.6464          447             4.3910
2024-2026.......................................          467             4.5874          442             4.3418
----------------------------------------------------------------------------------------------------------------

    Once having opted into this alternative compliance path, engine 
manufacturers would have to adhere to that path for the remainder of 
the Phase 2 program. The choice would be made when certifying MY 2020 
engines. Instead of certifying engines to the final year of the Phase 1 
engine standards, manufacturers electing the alternative would indicate 
that they are instead certifying to the MY 2021 Phase 2 engine 
standard.
    Because these engine manufacturers would be reducing emissions of 
engines otherwise subject to the MY 2020 Phase 1 engine standards (and 
because engine reductions were not reflected in the Phase 1 vehicle 
program), there would be a net benefit to the environment. These 
engines would not generate credits relative to the Phase 1 standards 
(that is, MY 2020 engines would only use or generate credits relative 
to the pulled ahead MY 2021 Phase 2 engines standards) which would 
result in net reductions of CO2 and fuel consumption of 
about 2 percent for each engine. Thus, if every engine manufacturer 
chooses to use this flexibility, there could be resulting reductions of 
an additional 12MMT of CO2 and saving of nearly one billion 
gallons of diesel fuel.
    This alternative also does not have adverse implications for the 
vehicle standards. As just noted, the vehicle standards themselves are 
unaffected. Thus, these voluntary standards would not reduce the GHG 
reductions or fuel savings of the program. Vehicle manufacturers using 
the alternative MYs 2024-2026 engines would need to adopt additional 
vehicle technology (i.e. technology beyond that projected to be needed 
to meet the standard) to meet the vehicle standards. This means the 
vehicles would still achieve the same fuel efficiency in use.\72\
---------------------------------------------------------------------------

    \72\ The agencies view this alternative as of reasonable cost 
with respect to the vehicle standards. First, where engine 
manufacturers and vehicle manufacturers are vertically integrated, 
that manufacturer would choose the alternative which is most cost 
advantageous. Second, where engine manufacturers and vehicle 
manufacturers are not vertically integrated, the agencies anticipate 
that engines certified to the alternative and the main standards 
will both be available for the vehicle manufacturer to purchase, so 
that the vehicle manufacturer would not need to incur any costs 
attributable to the alternative engine standard.
---------------------------------------------------------------------------

    In sum, the agencies view this alternative as being positive from 
the environmental and energy conservation perspectives, and believe it 
will provide significant flexibility for manufacturers that may reduce 
their compliance costs. It also provides a hedge against potential 
premature introduction of advanced engine technologies, providing more 
lead time to assure in-use reliability.
(c) Innovative Technology and Off-Cycle Credits
    The agencies are continuing the Phase 1 innovative technology 
program (reflecting certain streamlining features as just discussed), 
but re-designating it as an off-cycle program for Phase 2. In other 
words, beginning in MY 2021 technologies that are not accounted for in 
the GEM simulation tool, or by compliance dynamometer testing (for 
engines or chassis certified vehicles) will be considered ``off-
cycle,'' including those technologies that may no longer be considered 
innovative technologies.
    The final rules provide that in order for a manufacturer to receive 
these credits for Phase 2, the off-cycle technology will still need to 
meet the requirement that it was not in common use prior to MY 2010. 
Although we have not identified specific off-cycle technologies at this 
time that should be excluded, we believe it is prudent to continue this 
requirement to avoid the potential for manufacturers to receive 
windfall credits for technologies that they were already using before 
MY 2010, and that are therefore reflected in the Phase 2 (and possibly 
Phase 1) baselines. However, because the Phase 2 program will be 
implemented in MY 2021 and extend at least through MY 2027, the 
agencies and manufacturers may have difficulty in the future 
determining whether an off-cycle technology was in common use prior to 
MY 2010. In order to avoid this approach becoming an unnecessary 
hindrance to the off-cycle program, the agencies will presume that off-
cycle technologies were not in common use in 2010 unless we have clear 
evidence to the contrary. Neither the agencies nor manufacturers will 
be required to demonstrate that the technology meets this 2010 
criteria. Rather, the agencies will simply retain the authority to deny 
a request for off-cycle credits if it is clear that the technology was 
in common use in 2010 and thus part of the baseline.
    Manufacturers will be able to carry over innovative technology 
credits from Phase 1 into Phase 2, subject to the same restrictions as 
other credits. Manufacturers will also be able to carry over the 
improvement factor (not the credit value) of a technology, if certain 
criteria are met. The agencies will require documentation for all off-
cycle requests similar to those required by EPA for its light-duty GHG 
program.
    Additionally, the agencies will not grant any off-cycle credits for 
crash avoidance technologies. The agencies will also require 
manufacturers to consider the safety of off-cycle technologies and will 
request a safety assessment from the manufacturer for all off-cycle 
technologies.
    Similar principles apply to off-cycle credits in this heavy-duty 
Phase 2 program as under the light-duty vehicle rules. Thus, 
technologies which are part of the basis of a Phase 2 standard would 
not be eligible for off-cycle credits. Their benefits have been 
accounted for in developing the stringency of the Phase 2 standard, as 
have their costs. See 77 FR 62835 (October 15, 2012). In addition, 
technologies which are integral or inherent to the basic vehicle design 
and are recognized in GEM or under the FTP (for pickups and vans), 
including engine, transmission, mass reduction, passive aerodynamic 
design, and base tires, will not be eligible for off-cycle credits. 77 
FR 62836.

[[Page 73500]]

Technologies integral or inherent to basic vehicle design are fully 
functioning and are thus recognized in GEM, or operate over the 
entirety of the FTP/HFET and therefore are adequately captured by the 
test procedure.
    Just as some technologies that were considered off-cycle for Phase 
1 are being adopted as primary technologies in Phase 2 on whose 
performance standard stringency is calculated, the agencies may revise 
the regulation in a future rulemaking to create a more direct path to 
recognize technologies currently considered off-cycle. For example, 
although we are including specific provisions to recognize certain 
electrified accessories, recognizing others would require the 
manufacturer to go through the off-cycle process. However, it is quite 
possible that the agencies could gather sufficient data to allow us to 
adopt specific provisions in a future rulemaking to recognize other 
accessories in a simpler manner. Because such a change would merely 
represent a simpler way to receive the same credit as could be obtained 
under the regulations being adopted today (rather than a change in 
stringency), it would not require us to reconsider the standards.
(d) Alternative Fuels and Electric Vehicles
    The agencies will largely continue the Phase 1 approach for engines 
and vehicles fueled by fuels other than gasoline and diesel.\73\ Phase 
1 engine emission standards applied uniquely for gasoline-fueled and 
diesel-fueled engines. The regulations in 40 CFR part 86 implement 
these distinctions for alternative fuels by dividing engines into Otto-
cycle and Diesel-cycle technologies based on the combustion cycle of 
the engine. However, as proposed, the agencies are making a small 
change that is described in Section II. Under this change, we will 
require manufacturers to divide their natural gas engines into primary 
intended service classes, like the current requirement for compression-
ignition engines. Any alternative fuel-engine qualifying as a heavy 
heavy-duty engine will be subject to all the emission standards and 
other requirements that apply to compression-ignition engines. Note 
that this small change in approach will also apply with respect to 
EPA's criteria pollutant program.
---------------------------------------------------------------------------

    \73\ See Section XI for additional discussion of natural gas 
engines and vehicles.
---------------------------------------------------------------------------

    We are also applying the Phase 2 standards at the vehicle tailpipe. 
That is, compliance is based on vehicle fuel consumption and GHG 
emission reductions, and does not reflect any so-called lifecycle 
emission properties. The agencies have explained why it is reasonable 
that the heavy-duty standards be fuel neutral in this manner and adhere 
to this reasoning here. See 76 FR 57123; see also 77 FR 51705 (August 
24, 2012) and 77 FR 51500 (August 27, 2012). In particular, EPA notes 
that there is a separate, statutorily-mandated program under the Clean 
Air Act which encourages use of renewable fuels in transportation 
fuels, including renewable fuel used in heavy-duty diesel engines. This 
program considers lifecycle greenhouse gas emissions compared to 
petroleum fuel. NHTSA notes that the fuel efficiency standards are 
necessarily tailpipe-based, and that a lifecycle approach would likely 
render it impossible to harmonize the fuel efficiency and GHG emission 
standards, to the great detriment of our goal of achieving a 
coordinated program. 77 FR 51500-51501; see also 77 FR 51705 (similar 
finding by EPA); see also Section I.F.(1)(a) below, Section 1.8 of the 
RTC, and Section XI.B.
    The agencies received mixed comments on this issue. Many commenters 
supported the proposed approach, generally agreeing with the agencies' 
arguments. However, some other commenters opposed this approach. 
Opposing commenters generally fell into two categories:
     Commenters concerned that upstream emissions of methane 
occurring during the production and distribution of natural gas would 
offset some or all of the GHG emission reductions observed at the 
tailpipe.
     Commenters concerned that tailpipe-only standards ignore 
the GHG benefits of using renewable fuels.
    The agencies are not issuing rules that effectively would turn 
these rules into a fuel program, rather than an emissions reduction and 
fuel efficiency program. Nor will the agencies disharmonize the program 
by having GHG standards reflect upstream emissions having no relation 
to fuel efficiency. See e.g. 77 FR 51500-51501; see also 77 FR 51705. 
We thus will continue to measure compliance at the tailpipe. Issues 
relating to whether to consider in the emission standards upstream 
emissions related to natural gas exploration and production are 
addressed in detail in Section XI below. It is sufficient to state here 
that the agencies carefully investigated the potential use of natural 
gas in the heavy-duty sector and the impacts of such use. We do not 
believe that the use of natural gas is likely to become a major fuel 
source for heavy-duty vehicles during the Phase 2 time frame. Thus, 
since we project natural gas vehicles to have little impact on both 
overall GHG emissions and fuel consumption during the Phase 2 time 
frame, the agencies see no need to make fundamental changes to the 
Phase 1 approach for natural gas engines and vehicles.
    The agencies note further that a consequence of the tailpipe-based 
approach is that the agencies will treat vehicles powered by 
electricity the same as in Phase 1. In Phase 1, EPA treated all 
electric vehicles as having zero tailpipe emissions of CO2, 
CH4, and N2O (see 40 CFR 1037.150(f)). Similarly, 
NHTSA adopted regulations in Phase 1 that set the fuel consumption 
standards based on the fuel consumed by the vehicle. The agencies also 
did not require emission testing for electric vehicles in Phase 1. The 
agencies considered the potential unintended consequence of not 
accounting for upstream emissions from the charging of heavy-duty 
electric vehicles. In our reassessment for Phase 2, we have found only 
one all-electric heavy-duty vehicle manufacturer that has certified 
through 2016. As we look to the future, we project limited adoption of 
all-electric vehicles into the market. Therefore, we believe that this 
provision is still appropriate. Unlike the 2017-2025 light-duty rule, 
which included a cap whereby upstream emissions would be counted after 
a certain volume of sales (see 77 FR 62816-62822), we believe there is 
no need to establish a cap for heavy-duty vehicles because of the small 
likelihood of significant production of EV technologies in the Phase 2 
timeframe. Commenters specifically addressing electric vehicles 
generally supported the agencies' proposal. However, some commenters 
did support accounting for emissions from the generation of electricity 
in the broader context of supporting full life-cycle analysis. As noted 
above, and in more detail in Section I.F.(2)(f) as well as Section 1.8 
of the RTC, the agencies are not predicating the standards on a full 
life-cycle approach.
(e) Phase 1 Interim Provisions
    EPA adopted several flexibilities for the Phase 1 program (40 CFR 
86.1819-14(k), 1036.150 and 1037.150) as interim provisions. Because 
the existing regulations do not have an end date for Phase 1, most of 
these provisions did not have an explicit end date. NHTSA adopted 
similar provisions. With few exceptions, the agencies are not 
continuing these provisions for Phase 2. These will generally remain in 
effect for the Phase 1 program. In particular, the agencies note that 
we are not continuing the blanket exemption for small

[[Page 73501]]

manufacturers. Instead, in Phase 2 the agencies are providing more 
targeted relief for these entities.
(f) In-Use Standards and Recall
    Section 202(a)(1) of the CAA specifies that EPA is to adopt 
emissions standards that are applicable for the useful life of the 
vehicle and for the engine. EPA finalized in-use standards for the 
Phase 1 program, whereas NHTSA's rules do not include these standards. 
For the Phase 2 program, EPA will carry-over its in-use provisions, and 
NHTSA is adopting EPA's useful life requirements for its vehicle and 
engine fuel consumption standards to ensure manufacturers consider in 
the design process the need for fuel efficiency standards to apply for 
the same duration and mileage as EPA standards. If EPA determines a 
manufacturer fails to meet its in-use standards, civil penalties may be 
assessed.
    CAA section 207(c)(1) requires ``the manufacturer'' to remedy 
certain in-use problems. The remedy process is to recall the 
nonconforming vehicles and bring them into conformity with the 
standards and the certificate. The regulations for this process are in 
40 CFR part 1068, subpart F. EPA is also adopting regulatory text 
addressing recall obligations for component manufacturers and other 
non-certifying manufacturers. We note that the CAA does not limit this 
responsibility to certificate holders, consistent with the definition 
of a ``manufacturer'' as ``any person engaged in the manufacturing or 
assembling of new motor vehicles, new motor vehicle engines, new 
nonroad vehicles or new nonroad engines, or importing such vehicles or 
engines for resale, or who acts for and is under the control of any 
such person in connection with the distribution of new motor vehicles, 
new motor vehicle engines, new nonroad vehicles or new nonroad engines, 
but shall not include any dealer with respect to new motor vehicles, 
new motor vehicle engines, new nonroad vehicles or new nonroad engines 
received by him in commerce.''
    As discussed in Section I.E.(1) below, this definition was not 
intended to restrict the definition of ``manufacturer'' to a single 
person per vehicle. Under EPA regulations, we can require any person 
meeting the definition of manufacturer for a nonconforming vehicle to 
participate in a recall. However, we would normally presume the 
certificate holder to have the primary responsibility.
    EPA requested comment on adding regulatory text that would 
explicitly apply these provisions to tire manufacturers. Comments from 
the tire industry generally opposed this noting that they are not the 
manufacturer of the vehicle. These comments are correct that tires are 
not incomplete vehicles and hence that the recall authority does not 
apply for companies that only manufacture the tires. However, EPA 
remains of the view that in the event that vehicles (e.g. trailers) do 
not conform to the standards in-use due to nonconforming tires, tire 
manufacturers would have a role to play in remedying the problem. In 
this (hypothetical) situation, a tire manufacturer would not only have 
produced the part in question, but in the case of a trailer 
manufacturer or other small vehicle manufacturer, would have 
significantly more resources and knowledge regarding how to address 
(and redress) the problem. Accordingly, EPA would likely require that a 
component manufacturer responsible for the nonconformity assist in the 
recall to an extent and in a manner consistent with the provisions of 
CAA section 208(a). This section specifies that component and part 
manufacturers ``shall establish and maintain records, perform tests 
where such testing is not otherwise reasonably available under this 
part and part C of this subchapter (including fees for testing), make 
reports and provide information the Administrator may reasonably 
require to determine whether the manufacturer or other person has acted 
or is acting in compliance with this part and part C of this subchapter 
and regulations thereunder, or to otherwise carry out the provision of 
this part and part C of this subchapter. . .''. Any such action would 
be considered on a case-by-case basis, adapted to the particular 
circumstances at the time.
(g) Vehicle Labeling
    EPA proposed to largely continue the Phase 1 engine and vehicle 
labeling requirements, but to eliminate the requirement for tractor and 
vocational vehicle manufacturers to list emission control on the label. 
The agencies consider it crucial that authorized compliance inspectors 
are able to identify whether a vehicle is certified, and if so whether 
it is in its certified condition. To facilitate this identification in 
Phase 1, EPA adopted labeling provisions for tractors that included 
several items. The Phase 1 tractor label must include the manufacturer, 
vehicle identifier such as the Vehicle Identification Number (VIN), 
vehicle family, regulatory subcategory, date of manufacture, compliance 
statements, and emission control system identifiers (see 40 CFR 
1037.135). EPA proposed to apply parallel requirements for trailers.
    In Phase 1, the emission control system identifiers are limited to 
vehicle speed limiters, idle reduction technology, tire rolling 
resistance, some aerodynamic components, and other innovative and 
advanced technologies. However, the number of emission control systems 
for greenhouse gas emissions in Phase 2 has increased significantly for 
tractors and vocational vehicles. For example, all aspects of the 
engine transmission and drive axle; accessories; tire radius and 
rolling resistance; wind averaged drag; predictive cruise control; idle 
reduction technologies; and automatic tire inflation systems are 
controls which can be evaluated on-cycle in Phase 2 (i.e. these 
technologies' performance can now be input to GEM), but could not be in 
Phase 1. Due to the complexity in determining greenhouse gas emissions 
in Phase 2, the agencies do not believe that we can unambiguously 
determine whether or not a vehicle is in a certified condition through 
simply comparing information that could be made available on an 
emission control label with the components installed on a vehicle. 
Therefore, EPA proposed to remove the requirement to include the 
emission control system identifiers required in 40 CFR 1037.135(c)(6) 
and in Appendix III to 40 CFR part 1037 from the emission control 
labels for vehicles certified to the Phase 2 standards. The agencies 
received comments on the emission control labels from Navistar, which 
supported the elimination of the emission control information from the 
vehicle GHG label.
    Although we are largely finalizing the proposed labeling 
requirements, we remain interested in finding a better approach for 
labeling. Under the agencies' existing authorities, manufacturers must 
provide detailed build information for a specific vehicle upon our 
request. Our expectation is that this information should be available 
to us via email or other similar electronic communication on a same-day 
basis, or within 24 hours of a request at the latest. The agencies have 
started to explore ideas that would provide inspectors with an 
electronic method to identify vehicles and access on-line databases 
that would list all of the engine-specific and vehicle-specific 
emissions control system information. We believe that electronic and 
Internet technology exists today for using scan tools to read a bar 
code or radio frequency identification tag affixed to a vehicle that 
could then lead to secure on-line access to a database of 
manufacturers' detailed vehicle and

[[Page 73502]]

engine build information. Our exploratory work on these ideas has 
raised questions about the level of effort that would be required to 
develop, implement and maintain an information technology system to 
provide inspectors real-time access to this information. We have also 
considered questions about privacy and data security. We requested 
comment on the concept of electronic labels and database access, 
including any available information on similar systems that exist today 
and on burden estimates and approaches that could address concerns 
about privacy and data security.
    Although we are not finalizing such a program in this rulemaking, 
we remain very interested in the use of electronic labels that could be 
used by the agencies to access vehicle information and may pursue these 
in a future rulemaking. Such a rulemaking would likely consider the 
feasibility of accessing dynamic link libraries in real-time to view 
each manufacturer's build records (and perhaps pending orders). The 
agencies envision that this could be very useful for our inspectors by 
providing them access to the build information by VIN to confirm that 
each vehicle has the proper emission control features.
(h) Model Year Definition
    The agencies proposed to continue the Phase definitions of ``model 
year'' for compliance with GHG emissions and fuel efficiency standards. 
However, in response to comments, the agencies are revising the 
definition slightly for Phase 2 tractors and vocational vehicles to 
match the model years of the engines installed in them. The revised 
definition generally sets the vehicle model year to be the calendar 
year of manufacture, but allows the vehicle manufacturer the option to 
select the prior year if the vehicle uses an engine manufactured in the 
prior model year.\74\ Because Phase 2 vehicle standards are based in 
part on engine performance, some commenters stated that the engine 
model year should dictate the vehicle's GHG and fuel efficiency 
compliance model year, and that the emissions and fuel efficiency 
compliance model year should be presented on the vehicle emissions 
label. This would allow manufacturers to market a vehicle and certify 
it to NHTSA's safety standards based on the standards applicable on the 
date of manufacture, but certify the vehicle for GHG emissions and fuel 
efficiency purposes based on the engine model compliance year. For 
example, a 2023 model year tractor might have a 2022 model year engine 
in it. The tractor would be marketed as a model year 2023 tractor, 
certified as complying with NHTSA's safety standards applicable at the 
time when certifying the vehicle, but would have an ``emissions and 
fuel efficiency compliance model year'' of 2022 for purposes of 
emissions and fuel efficiency standards. In today's action, NHTSA and 
EPA are finalizing standards that allow for the use of an ``emissions 
and fuel efficiency compliance model year.'' This is consistent with 
past program practice, in which certain manufacturers have been able to 
reclassify tractors to the previous model year for emissions purposes 
when the tractors use engines from the previous model year.
---------------------------------------------------------------------------

    \74\ Anti-stockpiling provisions will generally prevent vehicle 
manufacturers from using new engines older than the prior model 
year. See Section XIII.B for a discussion of EPA requirements for 
installing older used engines into new vehicles.
---------------------------------------------------------------------------

(2) Phase 2 Standards
    This section briefly summarizes the Phase 2 standards for each 
category and identifies the technologies that the agencies project will 
be needed to meet the standards. Given the large number of different 
regulatory categories and model years for these standards, the actual 
numerical standards are not listed. Readers are referred to Sections II 
through IV for the tables of standards.
(a) Summary of the Engine Standards
    The agencies are continuing the basic Phase 1 structure for the 
Phase 2 engine standards. There will be separate standards and test 
cycles for tractor engines, vocational diesel engines, and vocational 
gasoline engines. However, as described in Section II, we are adopting 
a revised test cycle for tractor engines to better reflect actual in-
use operation. After consideration of comments, including those 
specifically addressing whether the agencies should adopt an 
alternative with accelerated stringency targets, the agencies are 
adopting engine standards that can generally be characterized as more 
stringent than the proposed alternative.
    Specifically, for diesel tractor engines, the agencies are adopting 
standards for MY 2027 that are more stringent than the preferred 
alternative from the proposal, and require reductions in CO2 
emissions and fuel consumption that are 5.1 percent better than the 
2017 baseline for tractor engines.\75\ We are also adopting standards 
for MY 2021 and MY 2024, requiring reductions in CO2 
emissions and fuel consumption of 1.8 to 4.2 percent better than the 
2017 baseline tractor engines. For vocational diesel engines, the new 
standards will require reductions of 2.3, 3.6, and 4.2 percent in MYs 
2021, 2024, and 2027, respectively. These levels are more stringent 
than the proposed standards for these same MYs, and approximately as 
stringent in MY 2021 and MY 2024 as the Alternative 4 standards 
discussed at proposal.\76\
---------------------------------------------------------------------------

    \75\ For the flat baseline referenec case, the agencies project 
that tractors engines will meet the Phase 1 engine standards with a 
small compliancee margin. The Phase 1 standards for diesel engines 
will be fully phased-in by MY 2017, so we use MY 2017 as the 
baseline engine for tractors. Note that we project that vocational 
engines will achieve additioanl overcompliance with the Phase 1 
vocational engine standards.
    \76\ As noted in Section II, the numerical levels of the 
vocational engine standards also reflect an updated baseline in 
which Phase 1 vocational engines are more efficient than assumed for 
the proposal. In addition, the numerical levels of the tractor 
engine standards reflect an updated baseline to reflect the changes 
to the test cycle.
---------------------------------------------------------------------------

    The agencies project that these reductions will be maximum feasible 
and reasonable for diesel engines based on technological changes that 
will improve combustion and reduce energy losses. For most of these 
improvements, the agencies project (i.e., the agencies have set out a 
potential, but by no means mandatory, compliance path) that 
manufacturers will begin applying improvements to about 45 percent of 
their heavy-duty engines by 2021, and ultimately apply them to about 95 
percent of their heavy-duty engines by 2024. However, for some of these 
improvements we project more limited application rates. In particular, 
we project a more limited use of waste exhaust heat recovery systems in 
2027, projecting that about 10 percent of tractor engines will have 
turbo-compounding systems, and an additional 25 percent of tractor 
engines will employ Rankine-cycle waste heat recovery. We do not 
project that turbo-compounding or Rankine-cycle waste heat recovery 
technology will be utilized in vocational engines due to vocational 
vehicle drive cycles under which these technologies would not show 
significant benefit, and also due to low sales volumes, limiting the 
ability to invest in newer technologies for these vehicles.
    As described in Section III.D.(1)(b)(i), the agencies project that 
some engine manufacturers will be able to achieve larger reductions for 
at least some of their tractor engines. So in developing the tractor 
vehicle standards, we projected slightly better fuel efficiency for the 
average tractor engine than is required by the engine standards. We are 
projecting that similar over-compliance will occur for heavy heavy-duty 
vocational engines.
    For gasoline vocational engines, we are not adopting more stringent 
engine standards. Gasoline engines used in

[[Page 73503]]

vocational vehicles are generally the same engines as are used in the 
complete HD pickups and vans in the Class 2b and 3 weight categories, 
although the operational demands of vocational vehicles often require 
use of the largest, most powerful SI engines, so that some engines 
fitted in complete pickups and vans are not appropriate for use in 
vocational vehicles. Given the relatively small sales volumes for 
gasoline-fueled vocational vehicles, manufacturers typically cannot 
afford to invest significantly in developing separate technology for 
these vocational vehicle engines. Thus, we project that in general, 
vocational gasoline engines will incorporate much of the technology 
that will be used to meet the pickup and van chassis standards, and 
this will result in some real world reductions in CO2 
emissions and fuel consumption. The agencies received many comments 
suggesting that technologies be applied to increase the stringency of 
the SI engine standard, which technologies in fact are already presumed 
to be adopted at 100 percent to meet the MY 2016 engine standard. The 
commenters did not identify any additional engine technologies that are 
not already fully considered by the agencies in setting the MY 2016 
engine standard, that could be recognized over the HD SI Engine FTP 
test cycle. We did, however, consider some additional technologies 
recommended by commenters, which can be recognized over the GEM vehicle 
cycles. As a result, the Phase 2 vehicle standards for gasoline-fueled 
vocational vehicles are predicated on adoption of engine technologies 
beyond what is required to meet the separate engine standard, those 
additional technologies being advanced engine friction reduction and 
cylinder deactivation. As described in Section V, we are projecting 
these technologies to improve fuel consumption over the GEM cycles by 
nearly one percent in MY 2021, MY 2024, and MY 2027. In other words, 
this improvement is reflected in the vehicle standards rather than in 
the engine standards. To the extent any SI engines do not incorporate 
the projected engine technologies, manufacturers of gasoline-fueled 
vocational vehicles would need to achieve equivalent reductions from 
some other technology to meet the GEM-based vehicle standards. The 
engine standards are summarized in Table I-4.

  Table I-4--Summary of Phase 1 and Phase 2 Requirements for Engines in
              Combination Tractors and Vocational Vehicles
------------------------------------------------------------------------
                                 Phase 1 program    Final 2027 standards
------------------------------------------------------------------------
Covered in this category....  Engines installed in tractors and
                               vocational chassis.
------------------------------------------------------------------------
Share of HDV fuel             Combination tractors and vocational
 consumption and GHG           vehicles account for approximately 85
 emissions.                    percent of fuel use and GHG emissions in
                               the heavy duty truck sector.
------------------------------------------------------------------------
Per vehicle fuel consumption  5%-9% improvement     4%-5% improvement
 and CO[ihel2] improvement.    over MY 2010          over MY 2017 for
                               baseline, depending   diesel engines.
                               vehicle               Note that
                               application.          improvements are
                               Improvements are in   captured in
                               addition to           complete vehicle
                               improvements from     tractor and
                               tractor and           vocational vehicle
                               vocational vehicle    standards, so that
                               standards.            engine improvements
                                                     and the vehicle
                                                     improvement shown
                                                     below are not
                                                     additive.
------------------------------------------------------------------------
Form of the standard........  EPA: CO[ihel2] grams/horsepower-hour and
                               NHTSA: Gallons of fuel/horsepower-hour.
------------------------------------------------------------------------
Example technology options    Combustion, air       Further technology
 available to help             handling, friction    improvements and
 manufacturers meet            and emissions after-  increased use of
 standards.                    treatment             all Phase 1
                               technology            technologies, plus
                               improvements.         waste heat recovery
                                                     systems for tractor
                                                     engines (e.g.,
                                                     turbo-compound and
                                                     Rankine-cycle).
------------------------------------------------------------------------
Flexibilities...............  ABT program which     Same ABT and off-
                               allows emissions      cycle program as
                               and fuel              Phase 1.
                               consumption credits  Adjustment factor of
                               to be averaged,       1.36 for credits
                               banked, or traded     carried forward
                               (five year credit     from Phase 1 to
                               life).                Phase 2 for SI and
                               Manufacturers         LHD CI engines due
                               allowed to carry-     to change in useful
                               forward credit        life.
                               deficits for up to   Revised multipliers
                               three model years.    for Phase 2
                               Interim incentives    advanced
                               for advanced          technologies.
                               technologies,        No Phase 2 early
                               recognition of        credit multipliers.
                               innovative (off-
                               cycle) technologies
                               not accounted for
                               by the HD Phase 1
                               test procedures,
                               and credits for
                               certifying early.
------------------------------------------------------------------------

(b) Summary of the Tractor Standards
    As explained in Section III, the agencies will largely continue the 
structure of the Phase 1 tractor program, but adopt new standards and 
update test procedures, as summarized in Table I-6. The tractor 
standards for MY 2027 will achieve up to 25 percent lower 
CO2 emissions and fuel consumption than a 2017 model year 
Phase 1 tractor. The agencies project that the 2027 tractor standards 
could be met through improvements in the:

 Engine \77\ (including some use of waste heat recovery 
systems)
---------------------------------------------------------------------------

    \77\ Although the agencies are adopting new engine standards 
with separate engine certification, engine improvements will also be 
reflected in the vehicle certification process. Thus, it is 
appropriate to also consider engine improvements in the context of 
the vehicle standards.
---------------------------------------------------------------------------

 Transmission
 Driveline
 Aerodynamic design
 Tire rolling resistance
 Idle performance
 Other accessories of the tractor.

    The agencies have enhanced the Phase 2 GEM vehicle simulation tool 
to recognize these technologies, as described in Section II.C. The 
agencies' evaluation shows that some of these technologies are 
available today, but have very low adoption rates on current vehicles, 
while others will require some lead time for development and 
deployment. In addition to the proposed alternative for tractors, the 
agencies solicited comment on an alternative that reached similar 
ultimate stringencies, but at an accelerated pace.
    We have also determined that there is sufficient lead time to 
introduce many of these tractor and engine technologies into the fleet 
at a reasonable cost starting in the 2021 model year. The

[[Page 73504]]

2021 model year standards for combination tractors and engines will 
achieve up to 14 percent lower CO2 emissions and fuel 
consumption than a 2017 model year Phase 1 tractor, the 2024 model year 
standards will achieve up to 20 percent lower CO2 emissions 
and fuel consumption, and as already noted, the 2027 model year 
standards will achieve up to 25 percent lower CO2 emissions 
and fuel consumption.
    In addition to the CO2 emission standards for tractors, 
EPA is adopting new particulate matter (PM) standards which effectively 
limit which diesel fueled auxiliary power units (APUs) can be used as 
emission control devices to reduce main engine idling in tractors, as 
shown in Table I-5. Additional details are discussed in Section 
III.C.3.

             Table I-5--PM Standards Related to Diesel APUs
------------------------------------------------------------------------
                                      PM emission
            Tractor MY             standard  (g/kW-    Expected control
                                          hr)             technology
------------------------------------------------------------------------
2018-2023........................              0.15  In-cylinder PM
                                                      control.
2024.............................              0.02  DPF.
------------------------------------------------------------------------


 Table I-6--Summary of Phase 1 and Phase 2 Requirements for Class 7 and
                      Class 8 Combination Tractors
------------------------------------------------------------------------
                                 Phase 1 program    Final 2027 standards
------------------------------------------------------------------------
Covered in this category....  Tractors that are designed to pull
                               trailers and move freight.
------------------------------------------------------------------------
Share of HDV fuel             Combination tractors and their engines
 consumption and GHG           account for approximately sixty percent
 emissions.                    of fuel use and GHG emissions in the
                               heavy duty vehicle sector.
------------------------------------------------------------------------
Per vehicle fuel consumption  10%-23% improvement   19%-25% improvement
 and CO[ihel2] improvement.    over MY 2010          over tractors
                               baseline, depending   meeting the MY 2017
                               on tractor            standards.
                               category.
                               Improvements are in
                               addition to
                               improvements from
                               engine standards.
------------------------------------------------------------------------
Form of the standard........  EPA: CO[ihel2] grams/ton payload mile and
                               NHTSA: Gallons of fuel/1,000 ton payload
                               mile.
------------------------------------------------------------------------
Example technology options    Aerodynamic drag      Further technology
 available to help             improvements; low     improvements and
 manufacturers meet            rolling resistance    increased use of
 standards.                    tires; high           all Phase 1
                               strength steel and    technologies, plus
                               aluminum weight       engine
                               reduction; extended   improvements,
                               idle reduction; and   improved
                               speed limiters.       transmissions and
                                                     axles, tire
                                                     pressure systems,
                                                     and predictive
                                                     cruise control
                                                     (depending on
                                                     tractor type).
------------------------------------------------------------------------
Flexibilities...............  ABT program which     Same ABT and off-
                               allows emissions      cycle program as
                               and fuel              Phase 1.
                               consumption credits  Revised multipliers
                               to be averaged,       for Phase 2
                               banked, or traded     advanced
                               (five year credit     technologies.
                               life).
                               Manufacturers
                               allowed to carry-
                               forward credit
                               deficits for up to
                               three model years.
                               Interim incentives
                               for advanced
                               technologies,
                               recognition of
                               innovative (off-
                               cycle) technologies
                               not accounted for
                               by the HD Phase 1
                               test procedures,
                               and credits for
                               certifying early.
------------------------------------------------------------------------

(c) Summary of the Trailer Standards
    The final rules contain a set of GHG emission and fuel consumption 
standards for manufacturers of new trailers that are used in 
combination with tractors. These standards will significantly reduce 
CO2 and fuel consumption from combination tractor-trailers 
nationwide over a period of several years. As described in Section IV, 
there are numerous aerodynamic and tire technologies available to 
manufacturers to achieve these standards. Many of these technologies 
have already been introduced into the market through EPA's voluntary 
SmartWay program and California's tractor-trailer greenhouse gas 
requirements.
    The agencies are adopting Phase 2 standards that will phase-in 
beginning in MY 2018 and be fully phased-in by 2027. These standards 
are predicated on use of aerodynamic and tire improvements, with 
trailer OEMs making incrementally greater improvements in MYs 2021 and 
2024 as standard stringency increases in each of those model years. 
EPA's GHG emission standards will be mandatory beginning in MY 2018, 
while NHTSA's fuel consumption standards will be voluntary beginning in 
MY 2018, and be mandatory beginning in MY 2021. In general, the trailer 
standards being finalized apply only for box vans, flatbeds, tankers, 
and container chassis.
    As described in Section XIV.D and Chapter 12 of the RIA, the 
agencies are adopting special provisions to minimize the impacts on 
small business trailer manufacturers. These provisions have been 
informed by and are largely consistent with recommendations from the 
SBAR Panel that EPA conducted pursuant to section 609(b) of the 
Regulatory Flexibility Act (RFA). Broadly, these provisions provide 
additional lead time for small business manufacturers, as well as 
simplified testing and compliance requirements. The agencies also are 
not finalizing standards for various trailer types, including most 
specialty types of non-box trailers. Excluding these specialty trailers 
also reduces the impacts on small businesses.

[[Page 73505]]



         Table I-7--Summary of Phase 2 Requirements for Trailers
------------------------------------------------------------------------
                                 Phase 1 program    Final 2027 standards
------------------------------------------------------------------------
Covered in this category......  All lengths of dry vans, refrigerated
                                 vans, tanks, flatbeds, and container
                                 chassis hauled by low, mid, and high
                                 roof day and sleeper cab tractors.
------------------------------------------------------------------------
Share of HDV fuel consumption   Trailers are modeled together with
 and GHG emissions.              combination tractors and their engines.
                                 Together, they account for
                                 approximately sixty percent of fuel use
                                 and GHG emissions in the heavy duty
                                 truck sector.
------------------------------------------------------------------------
Per vehicle fuel consumption    N/A..............  Between 3% and 9%
 and CO[ihel2] improvement.                         improvement over MY
                                                    2018 baseline,
                                                    depending on the
                                                    trailer type.
------------------------------------------------------------------------
Form of the standard..........  N/A..............  EPA: CO[ihel2] grams/
                                                    ton payload mile and
                                                    NHTSA: Gallons/1,000
                                                    ton payload mile.
------------------------------------------------------------------------
Example technology options      N/A..............  Low rolling
 available to help                                  resistance tires and
 manufacturers meet standards.                      tire pressure
                                                    systems for most
                                                    trailers, plus
                                                    weight reduction and
                                                    aerodynamic
                                                    improvements such as
                                                    side and rear
                                                    fairings, gap
                                                    closing devices, and
                                                    undercarriage
                                                    treatment for box
                                                    vans (e.g., dry and
                                                    refrigerated).
------------------------------------------------------------------------
Flexibilities.................  N/A..............  One year delay in
                                                    implementation for
                                                    small businesses,
                                                    trailer
                                                    manufacturers may
                                                    use pre-approved
                                                    aerodynamic data in
                                                    lieu of additional
                                                    testing, averaging
                                                    program available in
                                                    MY 2027 for
                                                    manufacturers of dry
                                                    and refrigerated box
                                                    vans.
------------------------------------------------------------------------

(d) Summary of the Vocational Vehicle Standards
    As explained in Section V, the agencies are adopting new vocational 
vehicle standards that expand upon the Phase 1 Program. These new 
standards reflect further subcategorization from Phase 1, with separate 
standards based on mode of operation: Urban, regional, and multi-
purpose. The agencies are also adopting optional separate standards for 
emergency vehicles and other custom chassis vehicles.
    The agencies project that the vocational vehicle standards could be 
met through improvements in the engine, transmission, driveline, lower 
rolling resistance tires, workday idle reduction technologies, weight 
reduction, and some application of hybrid technology. These are 
described in Section V of this Preamble and in Chapter 2.9 of the RIA. 
These MY 2027 standards will achieve up to 24 percent lower 
CO2 emissions and fuel consumption than MY 2017 Phase 1 
standards. The agencies are also making revisions to the compliance 
program for vocational vehicles. These include: The addition of two 
idle cycles that will be weighted along with the other drive cycles for 
each vocational vehicle; and revisions to Phase 2 GEM to recognize 
improvements to the engine, transmission, and driveline.
    Similar to the tractor program, we have determined that there is 
sufficient lead time to introduce many of these new technologies into 
the fleet starting in MY 2021. Therefore, we are adopting new standards 
for MY 2021 and 2024. Based on our analysis, the MY 2021 standards for 
vocational vehicles will achieve up to 12 percent lower CO2 
emissions and fuel consumption than a MY 2017 Phase 1 vehicle, on 
average, and the MY 2024 standards will achieve up to 20 percent lower 
CO2 emissions and fuel consumption.
    In Phase 1, EPA adopted air conditioning (A/C) refrigerant leakage 
standards for tractors, as well as for heavy-duty pickups and vans, but 
not for vocational vehicles. For Phase 2, EPA believes that it will be 
feasible to apply similar A/C refrigerant leakage standards for 
vocational vehicles, beginning with the 2021 model year. The 
certification process for vocational vehicles to certify low-leakage A/
C components is identical to that already required for tractors.

  Table I-8--Summary of Phase 1 and Phase 2 Requirements for Vocational
                             Vehicle Chassis
------------------------------------------------------------------------
                                 Phase 1 program     Final 2027 standard
------------------------------------------------------------------------
Covered in this category....  Class 2b--8 chassis that are intended for
                               vocational services such as delivery
                               vehicles, emergency vehicles, dump truck,
                               tow trucks, cement mixer, refuse trucks,
                               etc., except those qualified as off-
                               highway vehicles.
                              Because of sector diversity, vocational
                               vehicle chassis are segmented into Light,
                               Medium and Heavy Heavy-Duty vehicle
                               categories and for Phase 2 each of these
                               segments are further subdivided using
                               three duty cycles: Regional, Multi-
                               purpose, and Urban.
------------------------------------------------------------------------
Share of HDV fuel             Vocational vehicles account for
 consumption and GHG           approximately 17 percent of fuel use and
 emissions.                    GHG emissions in the heavy duty truck
                               sector categories.
------------------------------------------------------------------------
Per vehicle fuel consumption  2% improvement over   Up to 24%
 and CO[ihel2] improvement.    MY 2010 baseline.     improvement over MY
                               Improvements are in   2017 standards.
                               addition to
                               improvements from
                               engine standards.
------------------------------------------------------------------------
Form of the standard........  EPA: CO[ihel2] grams/ton payload mile and
                               NHTSA: Gallons of fuel/1,000 ton payload
                               mile.
------------------------------------------------------------------------
Example technology options    Low rolling           Further technology
 available to help             resistance tires.     improvements and
 manufacturers meet                                  increased use of
 standards.                                          Phase 1
                                                     technologies, plus
                                                     improved engines,
                                                     transmissions and
                                                     axles, weight
                                                     reduction, hybrids,
                                                     and workday idle
                                                     reduction systems.
------------------------------------------------------------------------

[[Page 73506]]

 
Flexibilities...............  ABT program which     Same ABT and off-
                               allows emissions      cycle program as
                               and fuel              Phase 1. Adjustment
                               consumption credits   factor of 1.36 for
                               to be averaged,       credits carried
                               banked, or traded     forward from Phase
                               (five year credit     1 to Phase 2 due to
                               life).                change in useful
                               Manufacturers         life.
                               allowed to carry-    Revised multipliers
                               forward credit        for Phase 2
                               deficits for up to    advanced
                               three model years.    technologies.
                               Interim incentives   No Phase 2 early
                               for advanced          credit multipliers.
                               technologies,        Chassis intended for
                               recognition of        emergency vehicles,
                               innovative (off-      cement mixers,
                               cycle) technologies   coach buses, school
                               not accounted for     buses, transit
                               by the HD Phase 1     buses, refuse
                               test procedures,      trucks, and motor
                               and credits for       homes may
                               certifying early.     optionally use
                                                     application-
                                                     specific Phase 2
                                                     standards using a
                                                     simplified version
                                                     of GEM.
------------------------------------------------------------------------

(e) Summary of the Heavy-Duty Pickup and Van Standards
    The agencies are adopting new Phase 2 GHG emission and fuel 
consumption standards for heavy-duty pickups and vans that will be 
applied in largely the same manner as the Phase 1 standards. These 
standards are based on the extensive use of most known and proven 
technologies, and could result in some use of mild or strong hybrid 
powertrain technology. These standards will commence in MY 2021. By 
2027, these standards are projected to be 16 percent more stringent 
than the 2018-2019 standards.

  Table I-9--Summary of Phase 1 and Phase 2 Requirements for HD Pickups
                                and Vans
------------------------------------------------------------------------
                                 Phase 1 program     Final 2027 standard
------------------------------------------------------------------------
Covered in this category....  Class 2b and 3 complete pickup trucks and
                               vans, including all work vans and 15-
                               passenger vans but excluding 12-passenger
                               vans which are subject to light-duty
                               standards.
------------------------------------------------------------------------
Share of HDV fuel             HD pickups and vans account for
 consumption and GHG           approximately 23% of fuel use and GHG
 emissions.                    emissions in the heavy duty truck sector.
------------------------------------------------------------------------
Per vehicle fuel consumption  15% improvement over  16% improvement over
 and CO[ihel2] improvement.    MY 2010 baseline      MY 2018-2019
                               for diesel            standards.
                               vehicles, and 10%
                               improvement for
                               gasoline vehicles.
------------------------------------------------------------------------
Form of the standard........  Phase 1 standards are based upon a ``work
                               factor'' attribute that combines truck
                               payload and towing capabilities, with an
                               added adjustment for 4-wheel drive
                               vehicles. There are separate target
                               curves for diesel-powered and gasoline-
                               powered vehicles. The Phase 2 standards
                               are based on the same approach.
------------------------------------------------------------------------
Example technology options    Engine improvements,  Further technology
 available to help             transmission          improvements and
 manufacturers meet            improvements,         increased use of
 standards.                    aerodynamic drag      all Phase 1
                               improvements, low     technologies, plus
                               rolling resistance    engine stop-start,
                               tires, weight         and powertrain
                               reduction, and        hybridization (mild
                               improved              and strong).
                               accessories.
------------------------------------------------------------------------
Flexibilities...............  Two optional phase-   Same as Phase 1,
                               in schedules; ABT     with phase-in
                               program which         schedule based on
                               allows emissions      year-over-year
                               and fuel              increase in
                               consumption credits   stringency. Same
                               to be averaged,       ABT and off-cycle
                               banked, or traded     program as Phase 1.
                               (five year credit     Adjustment factor
                               life).                of 1.25 for credits
                               Manufacturers         carried forward
                               allowed to carry-     from Phase 1 to
                               forward credit        Phase 2 due to
                               deficits for up to    change in useful
                               three model years.    life.
                               Interim incentives   Revised multipliers
                               for advanced          for Phase 2
                               technologies,         advanced
                               recognition of        technologies.
                               innovative (off-     No Phase 2 early
                               cycle) technologies   credit multipliers.
                               not accounted for
                               by the HD Phase 1
                               test procedures,
                               and credits for
                               certifying early.
------------------------------------------------------------------------

    Similar to Phase 1, the agencies are adopting for Phase 2 a set of 
continuous equation-based standards for HD pickups and vans. Please 
refer to Section VI for a description of these standards, including 
associated tables and figures.

D. Summary of the Costs and Benefits of the Final Rules

    This section summarizes the projected costs and benefits of the 
NHTSA fuel consumption and EPA GHG emission standards. See Sections VII 
through IX and the RIA for additional details about these projections.
    For these rules, the agencies used two analytical methods for the 
heavy-duty pickup and van segment by employing both DOT's CAFE model 
and EPA's MOVES model. The agencies used EPA's MOVES model to estimate 
fuel consumption and emissions impacts for tractor-trailers (including 
the engine that powers the tractor), and vocational vehicles (including 
the engine that powers the vehicle). Additional calculations were 
performed to determine corresponding monetized program costs and 
benefits. For heavy-duty pickups and vans, the agencies performed 
separate analyses, which we refer to as ``Method A'' and ``Method B.'' 
In Method A, a new version of the CAFE model was used to project a 
pathway the industry could use to comply with each regulatory 
alternative and the estimated effects on fuel consumption, emissions, 
benefits and costs. In Method B, the CAFE model from the NPRM was used 
to project a pathway the industry could use to comply with each 
regulatory alternative, along with resultant impacts on per-vehicle 
costs. However, the MOVES model was used to calculate corresponding 
changes in total fuel consumption and annual emissions for pickups and 
vans in Method B. Additional calculations were performed to determine 
corresponding

[[Page 73507]]

monetized program costs and benefits. NHTSA considered Method A as its 
central analysis and Method B as a supplemental analysis. EPA 
considered the results of Method B. The agencies concluded that these 
methods led the agencies to the same conclusions and the same selection 
of these standards. See Section VII for additional discussion of these 
two methods.
(1) Reference Case Against Which Costs and Benefits Are Calculated
    The No Action Alternatives for today's analysis, alternatively 
referred to as the ``baselines'' or ``reference cases,'' assume that 
the agencies did not issue new rules regarding MD/HD fuel efficiency 
and GHG emissions. These are the baselines against which costs and 
benefits for these standards are calculated. The reference cases assume 
that model year 2018 engine, tractor, vocational vehicle, and HD pickup 
and van standards will be extended indefinitely and without change. 
They also assume that no new standards would be adopted for trailers.
    The agencies recognize that if these Phase 2 standards had not been 
adopted, manufacturers would nevertheless continue to introduce new 
heavy-duty vehicles in a competitive market that responds to a range of 
factors, and manufacturers might have continued to improve technologies 
to reduce heavy-duty vehicle fuel consumption. Thus, as described in 
Section VII, both agencies fully analyzed these standards and the 
regulatory alternatives against two reference cases. The first case 
uses a baseline that projects no improvement in new vehicles in the 
absence of new Phase 2 standards, and the second uses a more dynamic 
baseline that projects some significant improvements in vehicle fuel 
efficiency. NHTSA considered its primary analysis to be based on the 
dynamic baseline, where certain cost-effective technologies are assumed 
to be applied by manufacturers to improve fuel efficiency beyond the 
Phase 1 requirements in the absence of new Phase 2 standards. EPA 
considered both reference cases. The results for all of the regulatory 
alternatives relative to both reference cases, derived via the same 
methodologies discussed in this section, are presented in Section X of 
the Preamble.
    The agencies received limited comments on these reference cases. 
Some commenters expressed support for a flat baseline in the context of 
the need for the regulations, arguing that little improvement would 
occur without the regulations. Others supported the less dynamic 
baseline because they believe it more fully captures the costs. A 
number of commenters expressed that purchasers are willing to and do 
pay for fuel efficiency improving technologies, provided the cost for 
the technology is paid back through fuel savings within a certain 
period of time; this is the premise for a dynamic baseline. Some 
commenters thought it reasonable that the agencies consider both 
baselines given the uncertainty in this area. No commenters opposed the 
consideration of both baselines.
    The agencies have continued to analyze two different baselines for 
the final rules because we recognize that there are a number of factors 
that create uncertainty in projecting a baseline against which to 
compare the future effects of this action and the remaining 
alternatives. The composition of the future fleet--such as the relative 
position of individual manufacturers and the mix of products they each 
offer--cannot be predicted with certainty at this time. Additionally, 
the heavy-duty vehicle market is diverse, as is the range of vehicle 
purchasers. Heavy-duty vehicle manufacturers have reported that their 
customers' purchasing decisions are influenced by their customers' own 
determinations of minimum total cost of ownership, which can be unique 
to a particular customer's circumstances. For example, some customers 
(e.g., less-than-truckload or package delivery operators) operate their 
vehicles within a limited geographic region and typically own their own 
vehicle maintenance and repair centers within that region. These 
operators tend to own their vehicles for long time periods, sometimes 
for the entire service life of the vehicle. Their total cost of 
ownership is influenced by their ability to better control their own 
maintenance costs, and thus they can afford to consider fuel efficiency 
technologies that have longer payback periods, outside of the vehicle 
manufacturer's warranty period. Other customers (e.g., truckload or 
long-haul operators) tend to operate cross-country, and thus must 
depend upon truck dealer service centers for repair and maintenance. 
Some of these customers tend to own their vehicles for about four to 
seven years, so that they typically do not have to pay for repair and 
maintenance costs outside of either the manufacturer's warranty period 
or some other extended warranty period. Many of these customers tend to 
require seeing evidence of fuel efficiency technology payback periods 
on the order of 18 to 24 months before seriously considering evaluating 
a new technology for potential adoption within their fleet (NAS 2010, 
Roeth et al. 2013, and Klemick et al. 2014). Purchasers of HD pickups 
and vans wanting better fuel efficiency tend to demand that fuel 
consumption improvements pay back within approximately one to three 
years, but some HD pickup and van owners accrue relatively few vehicle 
miles traveled per year, such that they may be less likely to adopt new 
fuel efficiency technologies, while other owners who use their 
vehicle(s) with greater intensity may be even more willing to pay for 
fuel efficiency improvements. Regardless of the type of customer, their 
determination of minimum total cost of ownership involves the customer 
balancing their own unique circumstances with a heavy-duty vehicle's 
initial purchase price, availability of credit and lease options, 
expectations of vehicle reliability, resale value and fuel efficiency 
technology payback periods. The degree of the incentive to adopt 
additional fuel efficiency technologies also depends on customer 
expectations of future fuel prices, which directly impacts customer 
payback periods. Purchasing decisions are not based exclusively on 
payback period, but also include the considerations discussed above and 
in Section X.A.1. For the baseline analysis, the agencies use payback 
period as a proxy for all of these considerations, and therefore the 
payback period for the baseline analysis is shorter than the payback 
period industry uses as a threshold for the further consideration of a 
technology. See Section X.A.1 of this Preamble and Chapter 11 of the 
RIA for a more detailed discussion of baselines. As part of a 
sensitivity analysis, additional baseline scenarios were also evaluated 
for HD pickups and vans, including baseline payback periods of 12, 18 
and 24 months. See Section VI of this Preamble and Chapter 10 of the 
RIA for a detailed discussion of these additional scenarios.
(2) Costs and Benefits Projected for the Phase 2 Standards
    The tables below summarize the benefits and costs for the program 
in two ways: First, from the perspective of a program designed to 
improve the Nation's energy security and to conserve energy by 
improving fuel efficiency and then from the perspective of a program 
designed to reduce GHG emissions. The individual categories of benefits 
and costs presented in the tables below are defined more fully and 
presented in more detail in Chapter 8 of the RIA.
    Lifetime fuel savings, GHG reductions, benefits, costs and net 
benefits for model years 2018 through

[[Page 73508]]

2029 vehicles as presented below. This is consistent with the NPRM 
analysis and allows readers to compare the costs and benefits of the 
final program with those projected for the NPRM. It also includes for 
modeling purposes at least three model years for each standard.
    Table I-10 shows benefits and costs for these standards from the 
perspective of a program designed to improve the Nation's energy 
security and conserve energy by improving fuel efficiency. From this 
viewpoint, technology costs occur when the vehicle is purchased. Fuel 
savings are counted as benefits that occur over the lifetimes of the 
vehicles produced during the model years subject to the Phase 2 
standards as they consume less fuel.

 Table I-10--Lifetime Fuel Savings, GHG Reductions, Benefits, Costs, and
 Net Benefits for Model Years 2018-2029 Vehicles Using Analysis Method A
                       [Billions of 2013$] \a\ \b\
------------------------------------------------------------------------
            Category               3% discount rate    7% discount rate
------------------------------------------------------------------------
Fuel Reductions (Billion
 Gallons).......................                 71.1-77.7
                                 ---------------------------------------
GHG reductions (MMT CO[ihel2]
 eq)............................                 959-1049
                                 ---------------------------------------
Vehicle Program: Technology and         23.7 to 24.4        16.1 to 16.6
 Indirect Costs, Normal Profit
 on Additional Investments......
Additional Routine Maintenance..          1.7 to 1.7          0.9 to 0.9
Congestion, Crashes, Fatalities           3.1 to 3.2          1.8 to 1.9
 and Noise from Increased
 Vehicle Use \d\................
                                 ---------------------------------------
    Total Costs.................        28.5 to 29.3        18.8 to 19.4
                                 ---------------------------------------
Fuel Savings (valued at pre-tax       149.1 to 163.0        79.7 to 87.0
 prices)........................
Savings from Less Frequent                3.0 to 3.2          1.6 to 1.7
 Refueling......................
Economic Benefits from                    5.4 to 5.5          3.4 to 3.5
 Additional Vehicle Use.........
                                 ---------------------------------------
Reduced Climate Damages from GHG
 Emissions \c\..................               33.0 to 36.0
                                 ---------------------------------------
Reduced Health Damages from Non-        27.1 to 30.0        14.6 to 16.1
 GHG Emissions..................
Increased U.S. Energy Security..          7.3 to 7.9          3.9 to 4.2
                                 ---------------------------------------
    Total Benefits..............          225 to 246          136 to 149
                                 ---------------------------------------
    Net Benefits................          197 to 216          117 to 129
------------------------------------------------------------------------
Notes:
\a\ For an explanation of analytical Methods A and B, please see Section
  I.D; for an explanation of the flat baseline, 1a, and dynamic
  baseline, 1b, please see Section X.A.1.
\b\ Range reflects two reference case assumptions 1a and 1b.
\c\ Benefits and net benefits use the 3 percent global average SCC value
  applied only to CO[ihel2] emissions; GHG reductions include CO[ihel2],
  CH4, N[ihel2]O and HFC reductions, and include benefits to other
  nations as well as the U.S. See Draft RIA Chapter 8.5 and Preamble
  Section IX.G for further discussion.
\d\ ``Congestion, Crashes, Fatalities and Noise from Increased Vehicle
  Use'' includes NHTSA's monetized value of estimated reductions in the
  incidence of highway fatalities associated with mass reduction in HD
  pickup and vans, but this does not include these reductions from
  tractor-trailers or vocational vehicles. This likely results in a
  conservative overestimate of these costs.

    Table I-11 shows benefits and cost from the perspective of reducing 
GHG. As shown below in terms of MY lifetime GHG reductions, and in RIA 
Chapter 5 in terms of year-by-year GHG reductions, the final program is 
expected to reduce more GHGs over the long run than the proposed 
program. In general, the greater reductions can be attributed to 
increased market penetration and effectiveness of key technologies, 
based on new data and comments, leading to increases in stringency such 
as with the diesel engine standards (Section I.C.(2)(a) above).

 Table I-11--Lifetime Fuel Savings, GHG Reductions, Benefits, Costs and
 Net Benefits for Model Years 2018-2029 Vehicles Using Analysis Method B
                       [Billions of 2012$] \a\ \b\
------------------------------------------------------------------------
            Category               3% discount rate    7% discount rate
------------------------------------------------------------------------
Fuel Reductions (Billion
 Gallons).......................                   73-82
                                 ---------------------------------------
GHG reductions (MMT CO[ihel2]eq)                 976-1,098
                                 ---------------------------------------
Vehicle Program (e.g.,              -$26.5 to -$26.2    -$17.6 to -$17.4
 technology and indirect costs,
 normal profit on additional
 investments)...................
Additional Routine Maintenance..      -$1.9 to -$1.9      -$1.0 to -$1.0
Fuel Savings (valued at pre-tax     $149.3 to $169.1      $76.8 to $87.2
 prices)........................
Energy Security.................        $6.9 to $7.8        $3.5 to $4.0
Congestion, Crashes, and Noise        -$3.2 to -$3.2      -$1.8 to -$1.8
 from Increased Vehicle Use.....
Savings from Less Frequent              $3.4 to $4.0        $1.8 to $2.1
 Refueling......................
Economic Benefits from                $10.4 to $10.5        $5.7 to $5.7
 Additional Vehicle Use.........
Benefits from Reduced Non-GHG         $28.3 to $31.9      $13.4 to $15.0
 Emissions \c\..................
------------------------------------------------------------------------

[[Page 73509]]

 
Reduced Climate Damages from GHG
 Emissions \d\..................              $33.0 to $37.2
                                 ---------------------------------------
    Net Benefits................        $200 to $229        $114 to $131
------------------------------------------------------------------------
Notes:
\a\ For an explanation of analytical Methods A and B, please see Section
  I.D; for an explanation of the flat baseline, 1a, and dynamic
  baseline, 1b, please see Section X.A.1.
\b\ Range reflects two baseline assumptions 1a and 1b.
\c\ Range reflects both the two baseline assumptions 1a and 1b using the
  mid-point of the low and high $/ton estimates for calculating
  benefits.
\d\ Benefits and net benefits use the 3 percent average directly modeled
  SC-GHG values applied to direct reductions of CO[ihel2], CH[ihel4] and
  N[ihel2]O emissions; GHG reductions include CO[ihel2], CH[ihel4] and
  N[ihel2]O reductions.

    Table I-12 breaks down by vehicle category the benefits and costs 
for these standards using the Method A analytical approach. For 
additional detail on per-vehicle break-downs of costs and benefits, 
please see RIA Chapter 10.

 Table I-12--Per Vehicle Category Lifetime Fuel Savings, GHG Reductions,
   Benefits, Costs and Net Benefits for Model Years 2018-2029 Vehicles
Using Analysis Method A (Billions of 2013$), Relative to Baseline 1b \a\
------------------------------------------------------------------------
    Key costs and benefits by
        vehicle category           3% discount rate    7% discount rate
------------------------------------------------------------------------
                Tractors, Including Engines, and Trailers
------------------------------------------------------------------------
Fuel Reductions (Billion
 Gallons).......................                    50
                                 ---------------------------------------
GHG Reductions (MMT CO[ihel2]
 eq)............................                    685
                                 ---------------------------------------
Total Costs.....................                13.8                 9.0
Total Benefits..................               161.0                96.8
Net Benefits....................               147.2                85.5
------------------------------------------------------------------------
                 Vocational Vehicles, Including Engines
------------------------------------------------------------------------
Fuel Reductions (Billion
 Gallons).......................                    12
                                 ---------------------------------------
GHG Reductions (MMT CO[ihel2]
 eq)............................                    162
                                 ---------------------------------------
Total Costs.....................                 7.3                 4.8
Total Benefits..................                37.8                22.7
Net Benefits....................                30.5                15.3
------------------------------------------------------------------------
                           HD Pickups and Vans
------------------------------------------------------------------------
Fuel Reductions (Billion
 Gallons).......................                    10
                                 ---------------------------------------
GHG Reductions (MMT CO[ihel2]
 eq)............................                    111
                                 ---------------------------------------
Total Costs.....................                 7.4                 5.1
Total Benefits..................                26.0                16.7
Net Benefits....................                18.6                11.6
------------------------------------------------------------------------
Notes:
\a\ For an explanation of analytical Methods A and B, please see Section
  I.D; for an explanation of the flat baseline, 1a, and dynamic
  baseline, 1b, please see Section X.A.1.


                 Table I-13--Per Vehicle Costs, Using Method A (2013$), Relative to Baseline 1b
----------------------------------------------------------------------------------------------------------------
                                                                      MY 2021         MY 2024         MY 2027
----------------------------------------------------------------------------------------------------------------
Per Vehicle Cost ($): \a\
    Tractors....................................................          $6,400          $9,920         $12,160
    Trailers....................................................             850           1,000           1,070
    Vocational Vehicles.........................................           1,110           2,020           2,660
    Pickups/Vans................................................             750             760           1,340
----------------------------------------------------------------------------------------------------------------
Note:
\a\ Per vehicle costs include new engine and vehicle technology only; costs associated with increased insurance,
  taxes and maintenance are included in the payback period values.


[[Page 73510]]


                      Table I-14--Per Vehicle Costs Using Method B Relative to Baseline 1a
----------------------------------------------------------------------------------------------------------------
                                                                      MY 2021         MY 2024         MY 2027
----------------------------------------------------------------------------------------------------------------
Per Vehicle Cost ($): \a\
    Tractors....................................................          $6,484         $10,101         $12,442
    Trailers....................................................             868           1,033           1,108
    Vocational Vehicles.........................................           1,110           2,022           2,662
    Pickups/Vans................................................             524             963           1,364
----------------------------------------------------------------------------------------------------------------
Note:
\a\ Per vehicle costs include new engine and vehicle technology only; costs associated with increased insurance,
  taxes and maintenance are included in the payback period values.

    An important metric to vehicle purchasers is the payback period 
that can be expected on any new purchase. In other words, there is 
greater willingness to pay for new technology if that new technology 
``pays back'' within an acceptable period of time. The agencies make no 
effort to define the acceptable period of time, but seek to estimate 
the payback period for others to make the decision themselves. The 
payback period is the point at which reduced fuel expenditures outpace 
increased vehicle costs, including increased maintenance, insurance 
premiums and taxes. The payback periods for vehicles meeting the 
standards considered for the final year of implementation are shown in 
Table I-15, and are similar for both Method A and Method B.

Table I-15--Payback Periods for MY 2027 Vehicles Relative to Baseline 1a
        [Payback cccurs in the year shown; using 7% discounting]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Tractors/Trailers.........................  2nd.
Vocational Vehicles.......................  4th.
Pickups/Vans..............................  3rd.
------------------------------------------------------------------------


Table I-16--Payback Periods for MY 2027 Vehicles Relative to Baseline 1b
        [Payback occurs in the year shown; using 7% discounting]
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Tractors/Trailers.........................  2nd.
Vocational Vehicles.......................  4th.
Pickups/Vans..............................  3rd.
------------------------------------------------------------------------

(3) Cost Effectiveness
    These regulations implement section 32902(k) of EISA and section 
202(a)(1) and (2) of the Clean Air Act. Through the 2007 EISA, Congress 
directed NHTSA to create a medium- and heavy-duty vehicle fuel 
efficiency program designed to achieve the maximum feasible improvement 
by considering appropriateness, cost effectiveness, and technological 
feasibility to determine maximum feasible standards.\78\ The Clean Air 
Act requires that any air pollutant emission standards for heavy-duty 
vehicles and engines take into account the costs of any requisite 
technology and the lead time necessary to implement such technology. 
Both agencies considered overall costs, overall benefits and cost 
effectiveness in developing the Phase 2 standards. Although there are 
different ways to evaluate cost effectiveness, the essence is to 
consider some measure of costs relative to some measure of impacts.
---------------------------------------------------------------------------

    \78\ This EISA requirement applies to regulation of medium- and 
heavy-duty vehicles. For many years, and as reaffirmed by Congress 
in 2007, ``economic practicability'' has been among the factors EPCA 
requires NHTSA to consider when setting light-duty fuel economy 
standards at the (required) maximum feasible levels. NHTSA 
interprets ``economic practicability'' as a factor involving 
considerations broader than those likely to be involved in ``cost 
effectiveness.''
---------------------------------------------------------------------------

    Considering that Congress enacted EPCA and EISA to, among other 
things, address the need to conserve energy, the agencies have 
evaluated these standards in terms of costs per gallon of fuel 
conserved. We also considered the similar metric of cost of technology 
per ton of CO2e removed, consistent with the objective of 
CAA section 202(a)(1) and (2) to reduce emissions of air pollutants 
which contribute to air pollution which endangers public health and 
welfare. As described in the RIA, the agencies also evaluated these 
standards using the same approaches employed in HD Phase 1. Together, 
the agencies have considered the following three ratios of cost 
effectiveness:

1. Total social costs per gallon of fuel conserved
2. Technology costs per ton of GHG emissions reduced (CO2eq)
3. Technology costs minus fuel savings per ton of GHG emissions reduced

By all three of these measures, the total heavy-duty program will be 
highly cost effective.
    As discussed below, the agencies estimate that over the lifetime of 
heavy-duty vehicles produced for sale in the U.S. during model years 
2018-2029, these standards will cost about $30 billion and conserve 
about 75 billion gallons of fuel, such that the first measure of cost 
effectiveness will be about 40 cents per gallon. Relative to fuel 
prices underlying the agencies' analysis, the agencies have concluded 
that today's standards will be cost effective.
    With respect to the second measure, which is useful for comparisons 
to other GHG rules, these standards will have overall $/ton costs 
similar to the HD Phase 1 rule. As Chapter 7 of the RIA shows, social 
costs will amount to about $30 per metric ton of GHG (CO2eq) 
for the entire HD Phase 2 program. This compares well to both the HD 
Phase 1 rule, which was also estimated to cost about $30 per metric ton 
of GHG (without fuel savings), and to the agencies' estimates of the 
social cost of carbon.\79\ Thus, even without accounting for fuel 
savings, these standards will be cost-effective.
---------------------------------------------------------------------------

    \79\ As described in Section IX.G, the social cost of carbon is 
a metric that estimates the monetary value of impacts associated 
with marginal changes in CO2 emissions in a given year.
---------------------------------------------------------------------------

    The following table include the overall per-unit costs of both 
gallons of fuel conserved and metric tons of GHG emissions abated using 
both a 3 percent and a 7 percent discount rate. Table I-16 gives these 
values under the Method A analysis.

[[Page 73511]]



   Table I-17--Method A Cost Per-Unit of Fuel Savings and GHG Emission
                       Reductions by Vehicle Class
                   [Relative to the dynamic baseline]
------------------------------------------------------------------------
 Per-unit costs (2013$/Unit) by
        vehicle category           3% Discount rate    7% Discount rate
------------------------------------------------------------------------
                Tractors, Including Engines, and Trailers
------------------------------------------------------------------------
Cost per Gallon of Fuel Saved...               $0.28               $0.18
Cost per Ton of GHG Emissions                     20                  13
 Saved..........................
------------------------------------------------------------------------
                 Vocational Vehicles, Including Engines
------------------------------------------------------------------------
Cost per Gallon of Fuel Saved...                0.61                0.40
Cost per Ton of GHG Emissions                     45                  30
 Saved..........................
------------------------------------------------------------------------
                           HD Pickups and Vans
------------------------------------------------------------------------
Cost per Gallon of Fuel Saved...                0.76                0.52
Cost per Ton of GHG Emissions                     67                  46
 Saved..........................
------------------------------------------------------------------------
                              Total Program
------------------------------------------------------------------------
Cost per Gallon of Fuel Saved...                0.40                0.26
Cost per Ton of GHG Emissions                     30                  20
 Saved..........................
------------------------------------------------------------------------

    When considering these values, it is important to emphasize two 
points:
    1. As is shown throughout this rulemaking, the Phase 2 standards 
represent the most stringent standards that are technologically 
feasible and reliably implementable within the lead time provided.
    2. These are not the marginal cost-effectiveness values.
    Without understanding these two points, some readers might assume 
that because the tractor-trailer standards are more cost-effective 
overall than the other standards that manufacturers would choose to 
over-comply with the more cost-effective tractor or trailer standards 
and do less for other vehicles. However, the agencies believe this is 
not a technologically feasible option. Because the tractor and trailer 
standards represent maximum feasible standards, they will effectively 
require manufacturers to deploy all available technology to meet the 
standards. The agencies do not project that manufacturers would be able 
to over-comply with the 2027 standards by a significant margin.
    The third measure deducts fuel savings from costs, which also is 
useful for comparisons to other GHG rules. As shown in Table I-18, the 
agencies have also calculated the cost per metric ton of 
CO2e emission reductions including the savings associated 
with reduced fuel consumption. The calculations presented here include 
all engine-related costs but do not include benefits associated with 
the final program such as those associated with criteria pollutant 
reductions or energy security benefits (discussed in Chapter 8 of this 
RIA). On this basis, net costs per ton of GHG emissions reduced will be 
negative under these standards. This means that the value of the fuel 
savings will be greater than the technology costs, and there will be a 
net cost saving for vehicle owners. In other words, the technologies 
will pay for themselves (indeed, more than pay for themselves) in fuel 
savings.

Table I-18--Annual Net Cost per Metric Ton of CO2eq Emissions Reduced in the Final Program Vs. the Flat Baseline
                                    and Using Method B for Calendar Year 2030
                                          [Dollar values are 2013$] \a\
----------------------------------------------------------------------------------------------------------------
                                                     Vehicle &
                                                    maintenance    Fuel savings     GHG reduced    Net cost ($/
                  Calendar year                        costs        ($billions)        (MMT)        metric ton)
                                                    ($billions)                                         \b\
----------------------------------------------------------------------------------------------------------------
HDE Pickups and Vans............................             1.6             3.9              15               0
Vocational Vehicles.............................             1.5             3.5              14               0
Tractor-Trailers................................             2.3              16              64               0
All Vehicles....................................             5.5              23              94               0
----------------------------------------------------------------------------------------------------------------
Notes:
\a\ For an explanation of analytical Methods A and B, please see the beginning of this Section I.D; for an
  explanation of the flat baseline, 1a, and dynamic baseline, 1b, please see Section X.A.1. GHG reductions
  include CO[ihel2] and CO[ihel2] equivalents of CH4, and N[ihel2]O.
\b\ For each category, fuel savings exceed cost so there is no net cost per ton of GHG reduced.

    In addition, while the net economic benefits (i.e., total benefits 
minus total costs) of these standards is not a traditional measure of 
their cost effectiveness, the agencies have concluded that the total 
costs of these standards are justified in part by their significant 
economic benefits. As discussed in the previous subsection and in 
Section IX, this rule will provide benefits beyond the fuel conserved 
and GHG emissions avoided. The rule's net benefits is a measure that 
quantifies each of its various benefits in economic terms, including 
the economic value of the fuel it saves and the climate-related damages 
it avoids, and compares their sum to the rule's estimated costs. The 
agencies estimate that these standards will result in net economic 
benefits exceeding $100 billion, making this a highly beneficial 
program.
    EPA and NHTSA received many comments suggesting that more

[[Page 73512]]

stringent standards were feasible because many cost effective 
technologies exist for future vehicle designs. While the agencies agree 
that many cost effective technologies exist, and indeed, we reflect the 
potential for many of those technologies to be applied in our analysis 
for today's final rule, commenters who focused on the cost-
effectiveness of technologies did not consistently recognize certain 
real-world constraints on technology implementation. Manufacturers and 
suppliers have limited research and development capacities, and 
although they have some ability to expand (by adding staff or building 
new facilities), the process of developing and applying new 
technologies is inherently constrained by time. Adequate lead time is 
also necessary to complete durability, reliability, and safety testing 
and ramp up production to levels that might be necessary to meet future 
standards. If the agencies fail to account for lead time needs in 
determining the stringency of the standards, we could create unintended 
consequences, such as technologies that are applied before they are 
ready and lead to maintenance and repair problems. In addition to cost-
effectiveness, then, lead time constraints can also be highly relevant 
to feasibility of more stringent standards.

E. EPA and NHTSA Statutory Authorities

    This section briefly summarizes the respective statutory authority 
for EPA and NHTSA to promulgate the Phase 1 and Phase 2 programs. For 
additional details of the agencies' authority, see Section XV of this 
document as well as the Phase 1 rule.\80\
---------------------------------------------------------------------------

    \80\ 76 FR 57106-57129, September 15, 2011.
---------------------------------------------------------------------------

(1) EPA Authority
    Statutory authority for the emission standards in this rule is 
found in CAA section 202(a)(1) and (2) (which requires EPA to establish 
standards for emissions of pollutants from new motor vehicles and 
engines which emissions cause or contribute to air pollution which may 
reasonably be anticipated to endanger public health or welfare), and in 
CAA sections 202(a)(3), 202(d), 203-209, 216, and 301 (42 U.S.C. 7521 
(a)(1) and (2), 7521(d), 7522-7543, 7550, and 7601).
    Title II of the CAA provides for comprehensive regulation of mobile 
sources, authorizing EPA to regulate emissions of air pollutants from 
all mobile source categories. When acting under Title II of the CAA, 
EPA considers such issues as technology effectiveness, its cost (both 
per vehicle, per manufacturer, and per consumer), the lead time 
necessary to implement the technology, and based on this the 
feasibility and practicability of potential standards; the impacts of 
potential standards on emissions reductions of both GHGs and non-GHG 
emissions; the impacts of standards on oil conservation and energy 
security; the impacts of standards on fuel savings by customers; the 
impacts of standards on the truck industry; other energy impacts; as 
well as other relevant factors such as impacts on safety.
    This action implements a specific provision from Title II, section 
202(a). Section 202(a)(1) of the CAA states that ``the Administrator 
shall by regulation prescribe (and from time to time revise) . . . 
standards applicable to the emission of any air pollutant from any 
class or classes of new motor vehicles . . ., which in his judgment 
cause, or contribute to, air pollution which may reasonably be 
anticipated to endanger public health or welfare.'' With EPA's December 
2009 final findings that certain greenhouse gases may reasonably be 
anticipated to endanger public health and welfare and that emissions of 
GHGs from section 202(a) sources cause or contribute to that 
endangerment, section 202(a) requires EPA to issue standards applicable 
to emissions of those pollutants from new motor vehicles. See Coalition 
for Responsible Regulation v. EPA, 684 F. 3d at 116-125, 126-27 cert. 
granted by, in part Util. Air Regulatory Group v. EPA, 134 S. Ct. 418 
(2013), affirmed in part and reversed in part on unrelated grounds by 
Util. Air Regulatory Group v. EPA, 134 S. Ct. 2427 (2014) (upholding 
EPA's endangerment and cause and contribute findings, and further 
affirming EPA's conclusion that it is legally compelled to issue 
standards under section 202(a) to address emission of the pollutant 
which endangers after making the endangerment and cause or contribute 
findings); see also id. at 127-29 (upholding EPA's light-duty GHG 
emission standards for MYs 2012-2016 in their entirety).
    Other aspects of EPA's legal authority, including its authority 
under section 202(a), its testing authority under section 203 of the 
Act, and its enforcement authorities under sections 205 and 207 of the 
Act are discussed fully in the Phase 1 rule, and need not be repeated 
here. See 76 FR 57129-57130.
    In this final rule, EPA is establishing first-time CO2 
emission standards for trailers hauled by tractors. 80 FR 40170. 
Certain commenters, notably the Truck Trailer Manufacturers Association 
(TTMA), maintained that EPA lacks authority to adopt requirements for 
trailer manufacturers, and that emission standards for trailers could 
be implemented, if at all, by requirements applicable to the entity 
assembling a tractor-trailer combination. The argument is that trailers 
by themselves are not ``motor vehicles'' as defined in section 216(2) 
of the Act, that trailer manufacturers therefore do not manufacture 
motor vehicles, and that standards for trailers can be imposed, if at 
all, only on ``the party that joined the trailer to the tractor.'' 
Comments of TTMA, p. 4; Comments of TTMA (March 31, 2016) p. 2.
    EPA also proposed a number of changes and clarifications for rules 
respecting glider kits and glider vehicles. 80 FR 40527-40530. As shown 
in Figure I.1, a glider kit is a tractor chassis with frame, front 
axle, interior and exterior cab, and brakes.

[[Page 73513]]

[GRAPHIC] [TIFF OMITTED] TR25OC16.000

    It is intended for self-propelled highway use, and becomes a glider 
vehicle when an engine, transmission, and rear axle are added. Engines 
are often salvaged from earlier model year vehicles, remanufactured, 
and installed in the glider kit. The final manufacturer of the glider 
vehicle, i.e. the entity that installs an engine, is typically a 
different manufacturer than the original manufacturer of the glider 
kit. The final rule contains emission standards for glider vehicles, 
but does not contain separate standards for glider kits.\81\
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    \81\ As discussed in sections (c) and (d) below, however, 
manufacturers of glider kits can, and typically are, responsible for 
obtaining a certificate of conformity before shipping a glider kit. 
This is because they are manufacturers of motor vehicles, in this 
case, an incomplete vehicle.
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    Many commenters to both the proposed rule and the NODA supported 
EPA's interpretation. However, a number of commenters, including 
Daimler, argued that glider kits are not motor vehicles and so EPA 
lacks the authority to impose any rules respecting their sale or 
configuration. Comments of Daimler, pp. 122-23; Comments of Daimler 
Trucks (April 1, 2016) pp. 2-3. We respond to these comments below, 
with a more detailed response appearing in RTC Section 1.3.1 and 14.2.
    Under the Act, ``motor vehicle'' is defined as ``any self-propelled 
vehicle designed for transporting persons or property on a street or 
highway.'' CAA section 216(2). At proposal, EPA maintained that 
tractor-trailers are motor vehicles and that EPA therefore has the 
authority to promulgate emission standards for complete and incomplete 
vehicles--both the tractor and the trailer. 80 FR 40170. The same 
proposition holds for glider kits and glider vehicles. Id. at 80 FR 
40528. The argument that a trailer, or a glider kit, standing alone, is 
not self-propelled, and therefore is not a motor vehicle, misses the 
key issues of authority under the Clean Air Act to promulgate emission 
standards for motor vehicles produced in discrete segments, and the 
further issue of the entities--namely ``manufacturers''--to which 
standards and certification requirements apply. Simply put, EPA is 
authorized to set emission standards for complete and incomplete motor 
vehicles, manufacturers of complete and incomplete motor vehicles can 
be required to certify to those emission standards, and there can be 
multiple manufacturers of a motor vehicle, each of which can be 
required to certify.
(a) Standards for Complete Vehicles--Tractor-Trailers and Glider 
Vehicles
    Section 202(a)(1) authorizes EPA to set standards ``applicable to 
the emission of any air pollutant from any . . . new motor vehicles.'' 
There is no question that EPA is authorized to establish emission 
standards under this provision for complete new motor vehicles, and 
thus can promulgate emission standards for air pollutants emitted by 
tractor-trailers and by glider vehicles.
    Daimler maintained in its comments that although a glider vehicle 
is a motor vehicle, it is not a ``new'' motor vehicle because ``glider 
vehicles, when constructed retain the identity of the donor vehicle, 
such that the title has already been exchanged, making the vehicles not 
`new' under the CAA.'' Daimler Comments p. 121; see also the similar 
argument in Daimler Truck Comments (April 1, 2016), p. 4. Daimler 
maintains that because title to the powertrain from the donor vehicle 
has already been transferred, the glider vehicle to which the 
powertrain is added cannot be ``new.'' Comments of April 1, 2016 p. 4. 
Daimler also notes that NHTSA considers a truck to be ``newly 
manufactured'' and subject to Federal Motor Vehicle Safety Standards 
when a new cab is used in its assembly, ``unless the engine, 
transmission, and drive axle(s) (as a minimum) of the assembled vehicle 
are not new, and at least two of these components were taken from the 
same vehicle.'' 49 CFR 571.7(e). Daimler urges EPA to adopt a parallel 
provision here.
    First, this argument appears to be untimely. In Phase 1, EPA 
already indicated that glider vehicles are new motor vehicles, at least 
implicitly, by

[[Page 73514]]

adopting an interim exemption for them. See 76 FR 57407 (adopting 40 
CFR 1037.150(j) indicating that the general prohibition against 
introducing a vehicle not subject to current model year standards does 
not apply to MY 2013 or earlier engines). Assuming the argument that 
glider vehicles are not new can be raised in this rulemaking, EPA notes 
that the Clean Air Act defines ``new motor vehicle'' as ``a motor 
vehicle the equitable or legal title to which has never been 
transferred to an ultimate purchaser'' (section 216(3)). Glider 
vehicles are typically marketed and sold as ``brand new'' trucks. 
Indeed, one prominent assembler of glider kits and glider vehicles 
advertises that ``Fitzgerald Glider Kits offers customers the option to 
purchase a brand new 2016 tractor, in any configuration offered by the 
manufacturer . . . Fitzgerald Glider Kits has mastered the process of 
taking the `Glider Kit' and installing the components to work 
seamlessly with the new truck.'' \82\ The purchaser of a ``new truck'' 
necessarily takes initial title to that truck.\83\ Daimler would have 
it that this `new truck' terminology is a mere marketing ploy, but it 
obviously reflects reality. As shown in Figure I.1 above, the glider 
kit constitutes the major parts of the vehicle, lacking only the 
engine, transmission, and rear axle. The EPA sees nothing in the Act 
that compels the result that adding a used component to an otherwise 
new motor vehicle necessarily vitiates classification of the motor 
vehicle as ``new.'' See 80 FR 40528. Rather, reasonable judgments must 
be made, and in this case, the agency believes it reasonable that the 
tail need not wag the dog: Adding the engine and transmission to the 
otherwise-complete vehicle does not prevent the glider vehicle from 
being ``new''--as marketed. The fact that this approach is reasonable, 
if not mandated, is confirmed by the language of the Act's definition 
of ``new motor vehicle engine,'' which includes any ``engine in a new 
motor vehicle'' without regard to whether or not the engine was 
previously used. EPA has also previously addressed the issue of used 
components in new engines and vehicles explicitly in regulations in the 
context of locomotives and locomotive engines in 40 CFR part 1033. 
There we defined remanufactured locomotives and locomotive engines to 
be ``new'' locomotives and locomotive engines. See 63 FR 18980; see 
also Summary and Analysis of Comments on Notice of Proposed Rulemaking 
for Emission Standards for Locomotives and Locomotive Engines (EPA-420-
R-97-101 (December 1997)) at pp. 10-14. This is a further reason that 
the model year of the engine is not determinative of whether a glider 
vehicle is ``new.'' As to the suggestion to adopt a provision parallel 
to the NHTSA definition, EPA notes that the NHTSA definition was 
developed for different purposes using statutory authority which 
differs from the Clean Air Act in language and intent. There 
consequently is no basis for requiring EPA to adopt such a definition, 
and doing so would impede meaningful control of both GHG emissions and 
criteria pollutant emissions from glider vehicles.
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    \82\ Advertisement for Fitzgerald Glider kits in Overdrive 
magazine (December 2015) (emphasis added).
    \83\ Fitzgerald states ``All Fitzgerald glider kits will be 
titled in the state of Tennessee and you will receive a title to 
transfer to your state.'' https://www.fitzgeraldgliderkits.com/frequently-asked-questions. Last accessed July 9, 2016.
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(b) Standards for Incomplete Vehicles
    Section 202(a)(1) not only authorizes EPA to set standards 
``applicable to the emission of any air pollutant from any . . . new 
motor vehicles,'' but states further that these standards are 
applicable ``whether such vehicles . . . are designed as complete 
systems or incorporate devices to prevent or control such pollution.'' 
The Act in fact thus not only contemplates, but in some instances, 
directly commands that EPA establish standards for incomplete vehicles 
and vehicle components. See CAA section 202(a)(6) (standards for 
onboard vapor recovery systems on ``new light-duty vehicles,'' and 
requiring installation of such systems); section 202(a)(5)(A) 
(standards to control emissions from refueling motor vehicles, and 
requiring consideration of, and possible design standards for, fueling 
system components); 202(k) (standards to control evaporative emissions 
from gasoline-fueled motor vehicles). Both TTMA and Daimler argued, in 
effect, that these provisions are the exceptions that prove the rule 
and that without this type of enumerated exception, only entire, 
complete vehicles can be considered to be ``motor vehicles.'' This 
argument is not persuasive. Congress did not indicate that these 
incomplete vehicle provisions were exceptions to the definition of 
motor vehicle. Just the opposite. Without amending the new motor 
vehicle definition, or otherwise indicating that these provisions were 
not already encompassed within Title II authority over ``new motor 
vehicles'', Congress required EPA to set standards for evaporative 
emissions from a portion of a motor vehicle. Congress thus indicated in 
these provisions: (1) That standards should apply to ``vehicles'' 
whether or not the ``vehicles'' were designed as complete systems; (2) 
that some standards should explicitly apply only to certain components 
of a vehicle that are plainly not self-propelled. Congress thus 
necessarily was of the view that incomplete vehicles can be motor 
vehicles.
    Emission standards EPA sets pursuant to this authority thus can be, 
and often are focused on emissions from the new motor vehicle, and from 
portions, systems, parts, or components of the vehicle. Standards thus 
apply not just to exhaust emissions, but to emissions from non-exhaust 
portions of a vehicle, or from specific vehicle components or parts. 
See the various evaporative emission standards for light duty vehicles 
in 40 CFR part 86, subpart B (e.g., 40 CFR 86.146-96 and 86.150-98 
(refueling spitback and refueling test procedures); 40 CFR 1060.101-103 
and 73 FR 59114-59115 (various evaporative emission standards for small 
spark ignition equipment); 40 CFR 86.1813-17(a)(2)(iii) (canister bleed 
evaporative emission test procedure, where testing is solely of fuel 
tank and evaporative canister); see also 79 FR 23507 (April 28, 2014) 
(incomplete heavy duty gasoline vehicles could be subject to, and 
required to certify compliance with, evaporative emission standards)). 
These standards are implemented by testing the particular vehicle 
component, not by whole vehicle testing, notwithstanding that the 
component may not be self-propelled until it is installed in the 
vehicle or (in the case of non-road equipment), propelled by an 
engine.\84\
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    \84\ ``Non-road vehicles'' are defined differently than ``motor 
vehicles'' under the Act, but the difference does not appear 
relevant here. Non-road vehicles, like motor vehicles, must be 
propelled by an engine. See CAA section 216(11) (`` `nonroad 
vehicle' means a vehicle that is powered by a nonroad engine''). 
Pursuant to this authority, EPA has promulgated many emission 
standards applicable to components of engineless non-road equipment, 
for which the equipment manufacturer must certify.
---------------------------------------------------------------------------

    EPA thus can set standards for all or just a portion of the motor 
vehicle notwithstanding that an incomplete motor vehicle may not yet be 
self-propelled. This is not to say that the Act authorizes emission 
standards for any part of a motor vehicle, however insignificant. Under 
the Act it is reasonable to consider both the significance of the 
components in comparison to the entire vehicle and the significance of 
the components for achieving emissions reductions. A vehicle that is 
complete except for an ignition switch can be subject to standards even 
though it is not self-

[[Page 73515]]

propelled. Likewise, as just noted, vehicle components that are 
significant for controlling evaporative emissions can be subject to 
standards even though in isolation the components are not self-
propelled. However, not every individual component of a complete 
vehicle can be subjected to standards as an incomplete vehicle. To 
reflect these considerations, EPA is adopting provisions stating that a 
trailer is a vehicle ``when it has a frame with one or more axles 
attached,'' and a glider kit becomes a vehicle when ``it includes a 
passenger compartment attached to a frame with one or more axles.'' 
Section 1037.801 definition of ``vehicle,'' paragraphs (1)(ii) and 
(iii); see also Section XIII.B below.
    TTMA and Daimler each maintained that this claim of authority is 
open-ended, and can be extended to the least significant vehicle part. 
As noted above, EPA acknowledges that lines need to be drawn, but 
whether looking at the relation between the incomplete vehicle and the 
complete vehicle, or looking at the relation between the incomplete 
vehicle and the emissions control requirements, it is evident that 
trailers and glider kits should properly be treated as vehicles, albeit 
incomplete ones.\85\ They properly fall on the vehicle side of the 
line. When one finishes assembling a whole aggregation of parts to make 
a finished section of the vehicle (e.g. the trailer), that is 
sufficient. You have an entire, complete section made up of assembled 
parts. Everything needed to be a trailer is complete. This is not an 
engine block, a wheel, or a headlight. Similarly, glider kits comprise 
the largely assembled tractor chassis with front axles, frame, interior 
and exterior cab, and brakes. This is not a few assembled components; 
rather, it is an assembled truck with a few components missing. See CAA 
section 216(9) of the Act, which defines ``motor vehicle or engine part 
manufacturer'' as ``any person engaged in the manufacturing, assembling 
or rebuilding of any device, system, part, component or element of 
design which is installed in or on motor vehicles or motor vehicle 
engines.'' Trailers and glider kits are not ``installed in or on'' a 
motor vehicle. A trailer is half of the tractor-trailer, not some 
component installed on the tractor. And one would more naturally refer 
to the donor drivetrain being installed on the glider kit than vice 
versa. See Figure I.1 above. Furthermore, as discussed below, the 
trailer and the glider kit are significant for purposes of controlling 
emissions from the completed vehicle.
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    \85\ Cf. Marine Shale Processors v. EPA, 81 F. 3d 1371, 1383 
(5th Cir. 1996) (``[w]e make no comment on this argument: This is 
simply not a thimbleful case'').
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    Incomplete vehicle standards must, of course, be reasonably 
designed to control emissions caused by that particular vehicle 
segment. The standards for trailers would do so and account for the 
tractor-trailer combination by using a reference tractor in the trailer 
test procedure (and, conversely, by use of a reference trailer in the 
tractor test procedure). The Phase 2 rule contains no emission 
standards for glider kits in isolation, but the standards for glider 
vehicles necessarily reflect the contribution of the glider kit.
(c) Application of Emission Standards to Manufacturers
    In some ways, the critical issue is to whom these emission 
standards apply. As explained in this section, the emission standards 
apply to manufacturers of motor vehicles, and manufacturers thus are 
required to test and to certify compliance to those standards. 
Moreover, the Act contemplates that a motor vehicle can have multiple 
manufacturers. With respect to the further question of which 
manufacturer certifies and tests in multiple manufacturer situations, 
EPA rules have long contained provisions establishing responsibilities 
where a vehicle has multiple manufacturers. We are applying those 
principles in the Phase 2 rules. The overarching principle is that the 
entity with most control over the particular vehicle segment due to 
producing it is usually the most appropriate entity to test and 
certify.\86\ EPA is implementing the trailer and glider vehicle 
emission standards in accord with this principle, so that the entities 
required to test and certify are the trailer manufacturer and, for 
glider kits and glider vehicles, either the manufacturer of the glider 
kit or glider vehicle, depending on which is more appropriate in 
individual circumstances.
---------------------------------------------------------------------------

    \86\ See discussion of standards applicable to small SI 
equipment fuel systems, implemented by standards for the 
manufacturers of that equipment at 73 FR 59115 (``In most cases, 
nonroad standards apply to the manufacturer of the engine or the 
manufacturer of the nonroad equipment. Here, the products subject to 
the standards (fuel lines and fuel tanks) are typically manufactured 
by a different manufacturer. In most cases the engine manufacturers 
do not produce complete fuel systems and therefore are not in a 
position to do all the testing and certification work necessary to 
cover the whole range of products that will be used. We are 
therefore providing an arrangement in which manufacturers of fuel-
system components are in most cases subject to the standards and are 
subject to certification and other compliance requirements 
associated with the applicable standards'').
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(i) Definition of Manufacturer
    Emission standards are implemented through regulation of the 
manufacturer of the new motor vehicle. See, e.g. section 206(a)(1) 
(certification testing of motor vehicle submitted by ``a 
manufacturer''); 203(a)(1) (manufacturer of new motor vehicle 
prohibited from introducing uncertified motor vehicles into commerce); 
207(a)(1) (manufacturer of motor vehicle to provide warranty to 
ultimate purchaser of compliance with applicable emission standards); 
207(c) (recall authority); 208(a) (recordkeeping and testing can be 
required of every manufacturer of new motor vehicle).
    The Act further distinguishes between manufacturers of motor 
vehicles and manufacturers of motor vehicle parts. See, e.g. section 
206(a)(2) (voluntary emission control system verification testing); 
203(a)(3)(B) (prohibition on parts manufacturers and other persons 
relating to defeat devices); 207(a)(2) (parts manufacturer may provide 
warranty certification regarding use of parts); 208(a) (recordkeeping 
and testing requirements for manufacturers of vehicle and engine 
``parts or components'').
    Thus, the question here is whether a trailer manufacturer or glider 
kit manufacturer can be a manufacturer of a new motor vehicle and 
thereby become subject to the certification and related requirements 
for manufacturers, or must necessarily be classified as a manufacturer 
of a motor vehicle part or component. EPA may reasonably classify 
trailer manufacturers and glider kit manufacturers as motor vehicle 
manufacturers.
    Section 216(1) defines a ``manufacturer'' as ``any person engaged 
in the manufacturing or assembling of new motor vehicles, new motor 
vehicle engines, new nonroad vehicles or new nonroad engines, or 
importing such vehicles or engines for resale, or who acts for and is 
under the control of any such person in connection with the 
distribution of new motor vehicles, new motor vehicle engines, new 
nonroad vehicles or new nonroad engines, but shall not include any 
dealer with respect to new motor vehicles, new motor vehicle engines, 
new nonroad vehicles or new nonroad engines received by him in 
commerce.''
    It appears plain that this definition was not intended to restrict 
the definition of ``manufacturer'' to a single person per vehicle. The 
use of the conjunctive, specifying that a manufacturer is ``any person 
engaged in the manufacturing or assembling of new motor vehicles . . . 
or who acts for and is under the control of any such person

[[Page 73516]]

. . .'' (emphasis added) indicates that Congress anticipated that motor 
vehicles could have more than one manufacturer, since in at least some 
cases those will plainly be different people. The capacious reference 
to ``any person engaged in the manufacturing of motor vehicles'' 
likewise allows the natural inference that it could apply to multiple 
entities engaged in manufacturing.\87\
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    \87\ See United States v. Gonzales, 520 U.S. 1, 5, (1997) 
(``Read naturally the word `any' has an expansive meaning, that is, 
`one or some indiscriminately of whatever kind'); New York v. EPA, 
443 F.3d 880, 884-87 (D.C. Cir. 2006).
---------------------------------------------------------------------------

    The provision also applies both to entities that manufacture and 
entities that assemble, and does so in such a way as to encompass 
multiple parties: Manufacturers ``or'' (rather than `and') assemblers 
are included. Nor is there any obvious reason that only one person can 
be engaged in vehicle manufacture or vehicle assembling.
    Reading the Act to provide for multiple motor vehicle manufacturers 
reasonably reflects industry realities, and achieves important goals of 
the CAA. Since title II requirements are generally imposed on 
``manufacturers'' it is important that the appropriate parties be 
included within the definition of manufacturer--``any person engaged in 
the manufacturing or assembling of new motor vehicles.'' Indeed, as set 
out in Chapter 1 of the RIA, most heavy duty vehicles are manufactured 
or assembled by multiple entities; see also Comments of Daimler 
(October 1, 2015) p. 103.\88\ One entity produces a chassis; a 
different entity manufactures the engine; specialized components (e.g. 
garbage compactors, cement mixers) are produced by still different 
entities. For tractor-trailers, one person manufactures the tractor, 
another the trailer, a third the engine, and another typically 
assembles the trailer to the tractor. Installation of various vehicle 
components occurs at different and varied points and by different 
entities, depending on ultimate desired configurations. See, e.g. 
Comments of Navistar (October 1, 2015), pp. 12-13. The heavy duty 
sector thus differs markedly from the light duty sector (and from 
manufacturing of light duty pickups and vans), where a single company 
designs the vehicle and engine (and many of the parts), and does all 
assembling of components into the finished motor vehicle.
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    \88\ ``The EPA should understand that vehicle manufacturing is a 
multi-stage process (regardless of the technologies on the vehicles) 
and that each stage of manufacturer has the incentive to properly 
complete manufacturing . . . [T]he EPA should continue the 
longstanding industry practice of allowing primary manufacturers to 
pass incomplete vehicles with incomplete vehicle documents to 
secondary manufacturers who complete the installation.''
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(ii) Controls on Manufacturers of Trailers
    It is reasonable to view the trailer manufacturer as ``engaged in'' 
(section 216(1)) the manufacturing or assembling of the tractor-
trailer. The trailer manufacturer designs, builds, and assembles a 
complete and finished portion of the tractor-trailer. All components of 
the trailer--the tires, axles, flat bed, outsider cover, aerodynamics--
are within its control and are part of its assembling process. The 
trailer manufacturer sets the design specifications that affect the GHG 
emissions attributable to pulling the trailer. It commences all work on 
the trailer, and when that work is complete, nothing more is to be 
done. The trailer is a finished product. With respect to the trailer, 
the trailer manufacturer is analogous to the manufacturer of the light 
duty vehicle, specifying, controlling, and assembling all aspects of 
the product from inception to completion. GHG emissions attributable to 
the trailer are a substantial portion of the total GHG emissions from 
the tractor-trailer.\89\ Moreover, the trailer manufacturer is not 
analogous to the manufacturer of a vehicle part or component, like a 
tire manufacturer, or to the manufacturer of a side skirt. The trailer 
is a significant, integral part of the finished motor vehicle, and is 
essential for the tractor-trailer to carry out its commercial purpose. 
See 80 FR 40170. Although it is true that another person may ultimately 
hitch the trailer to a tractor (which might be viewed as completing 
assembly of the tractor-trailer), as noted above, EPA does not believe 
that the fact that one person might qualify as a manufacturer, due to 
``assembling'' the motor vehicle, precludes another person from 
qualifying as a manufacturer, due to ``manufacturing'' the motor 
vehicle. Given that section 216(1) does not restrict motor vehicle 
manufacturers to a single entity, it appears to be consistent with the 
facts and the Act to consider trailer manufacturers as persons engaged 
in the manufacture of a motor vehicle.
---------------------------------------------------------------------------

    \89\ The relative contribution of trailer controls depends on 
the types of tractors and trailers, as well as the tier of standards 
applicable; however, it can be approximately one-third of the total 
reduction achievable for the tractor-trailer.
---------------------------------------------------------------------------

    This interpretation of section 216(1) is also reasonable in light 
of the various provisions noted above relating to implementation of the 
emissions standards--certification under section 206, prohibitions on 
entry into commerce under section 203, warranty and recall under 
section 207, and recordkeeping/reporting under section 208. All of 
these provisions are naturally applied to the entity responsible for 
manufacturing the trailer, which manufacturer is likewise responsible 
for its GHG emissions.
    TTMA maintains that if a tractor-trailer is a motor vehicle, then 
only the entity connecting the trailer to the tractor could be subject 
to regulation.\90\ This is not a necessary interpretation of section 
216(1), as explained above. TTMA does not discuss that provision, but 
notes that other provisions refer to ``a'' manufacturer (or, in one 
instance, ``the'' manufacturer), and maintains that this shows that 
only a single entity can be a manufacturer. See TTMA Comment pp. 4-5, 
citing to sections 206(a)(1), 206(b), 207, and 203(a). This reading is 
not compelled by the statutory text. First, the term ``manufacturer'' 
in all of these provisions necessarily reflects the underlying 
definition in section 216(1), and therefore is not limited to a single 
entity, as just discussed. Second, the interpretation makes no 
practical sense. An end assembler of a tractor-trailer is not in a 
position to certify and warrant performance of the trailer, given that 
the end-assembler has no control over how trailers are designed, 
constructed, or even which trailers are attached to the tractor. It 
makes little sense for the entity least able to control the outcome to 
be responsible for that outcome. The EPA doubts that Congress compelled 
such an ungainly implementation mechanism, especially given that it is 
well known that vehicle manufacture responsibility in the heavy duty 
vehicle sector is divided, and given further that title II includes 
requirements for EPA to promulgate emission standards for portions of 
vehicles.
---------------------------------------------------------------------------

    \90\ Consequently, the essential issue here is not whether EPA 
can issue and implement emission standards for trailers, but at what 
point in the implementation process those standards apply.
---------------------------------------------------------------------------

(iii) Controls on Manufacturers of Glider Kits
    Application of these same principles indicate that a glider kit 
manufacturer is a manufacturer of a motor vehicle and, as an entity 
responsible for assuring that glider vehicles meet the Phase 2 vehicle 
emission standards, can be a party in the certification process as 
either the certificate holder or the entity which provides essential 
test information to the glider vehicle manufacturer. As noted above, 
glider kits include the entire tractor chassis, cab, tires, body, and 
brakes. Glider kit manufacturers thus control critical elements of the

[[Page 73517]]

ultimate vehicle's greenhouse gas emissions, in particular, all 
aerodynamic features and all emissions related to steer tire type. 
Glider kit manufacturers would therefore be the entity generating 
critical GEM inputs--at the least, those for aerodynamics and tires. 
Glider kit manufacturers also often know the final configuration of the 
glider vehicle, i.e. the type of engine and transmission which the 
final assembler will add to the glider kit.\91\ This is because the 
typical glider kit contains all necessary wiring, and it is necessary, 
in turn, for the glider kit manufacturer to know the end configuration 
in order to wire the kit properly. Thus, a manufacturer of a glider kit 
can reasonably be viewed as a manufacturer of a motor vehicle under the 
same logic as above: There can be multiple manufacturers of a motor 
vehicle; the glider kit manufacturer designs, builds, and assembles a 
substantial, complete and finished portion of the motor vehicle; and 
that portion contributes substantially to the GHG emissions from the 
ultimate glider vehicle. A glider kit is not a vehicle part; rather, it 
is an assembled truck with a few components missing.
---------------------------------------------------------------------------

    \91\ PACCAR indicated in its comments that manufacturers of 
glider kits may not know all details of final assembly. Provisions 
on delegated assembly, shipment of incomplete vehicles to secondary 
manufacturers, and assembly instructions for secondary vehicle 
manufacturers allow manufacturers of glider kits and glider vehicles 
to apportion responsibilities, as appropriate, including 
responsibility as to which entity shall be the certificate holder. 
See 40 CFR 1037.130, 1037.621, and 1037.622. Our point here is that 
both of these entities are manufacturers of the glider motor vehicle 
and therefore that both are within the Act's requirements for 
certification and testing.
---------------------------------------------------------------------------

    EPA rules have long provided provisions establishing 
responsibilities where there are multiple manufacturers of motor 
vehicles. See 40 CFR 1037.620 (responsibilities for multiple 
manufacturers), 40 CFR 1037.621 (delegated assembly), and 40 CFR 
1037.622 (shipment of incomplete vehicles to secondary vehicle 
manufacturers). These provisions, in essence, allow manufacturers to 
determine among themselves as to which should be the certificate 
holder, and then assign respective responsibilities depending on that 
decision. The end result is that incomplete vehicles cannot be 
introduced into commerce without one of the manufacturers being the 
certificate holder.
    Under the Phase 1 rules, glider kits are considered to be 
incomplete vehicles which may be introduced into commerce to a 
secondary manufacturer for final assembly. See 40 CFR 1037.622(b)(1)(i) 
and 1037.801 (definition of ``vehicle'' and ``incomplete vehicle'') of 
the Phase 1 regulations (76 FR 57421). Note that 40 CFR 
1037.622(b)(1)(i) was originally codified as 40 CFR 1037.620(b)(1)(i). 
EPA is expanding somewhat on these provisions, but in essence, as under 
Phase 1, glider kit and glider vehicle manufacturers could operate 
under delegated assembly provisions whereby the glider kit manufacturer 
would be the certificate holder. See 40 CFR 1037.621 of the final 
regulations. Glider kit manufacturers would also continue to be able to 
ship uncertified kits to secondary manufacturers, and the secondary 
manufacturer must assemble the vehicle into certifiable condition. 40 
CFR 1037.622.\92\
---------------------------------------------------------------------------

    \92\ Under this provision in the Phase 2 regulations, the glider 
kit manufacturer would still have some responsibility to ensure that 
products they introduce into U.S. commerce will conform with the 
regulations when delivered to the ultimate purchasers.
---------------------------------------------------------------------------

(d) Additional Authorities Supporting EPA's Actions
    Even if, against our view, trailers and glider kits are not 
considered to be ``motor vehicles,'' and the entities engaged in 
assembling trailers and glider kits are not considered to be 
manufacturers of motor vehicles, the Clean Air Act still provides 
authority for the testing requirements adopted here. Section 208 (a) of 
the Act authorizes EPA to require ``every manufacturer of new motor 
vehicle or engine parts or components'' to ``perform tests where such 
testing is not otherwise reasonably available.'' This testing can be 
required to ``provide information the Administrator may reasonably 
require to determine whether the manufacturer . . . has acted or is 
acting in compliance with this part,'' which includes showing whether 
or not the parts manufacturer is engaged in conduct which can cause a 
prohibited act. Testing would be required to show that the trailer will 
conform to the vehicle emission standards. In addition, testing for 
trailer manufacturers would be necessary here to show that the trailer 
manufacturer is not causing a violation of the combined tractor-trailer 
GHG emission standard either by manufacturing a trailer which fails to 
comply with the trailer emission standards, or by furnishing a trailer 
to the entity assembling tractor-trailers inconsistent with tractor-
trailer certified condition. Testing for glider kit manufacturers is 
necessary to prevent a glider kit manufacturer furnishing a glider kit 
inconsistent with the tractor's certified condition. In this regard, we 
note that section 203 (a)(1) of the Act not only prohibits certain 
acts, but also prohibits ``the causing'' of those acts. Furnishing a 
trailer not meeting the trailer standard would cause a violation of 
that standard, and the trailer manufacturer would be liable under 
section 203 (a)(1) for causing the prohibited act to occur. Similarly, 
a glider kit supplied in a condition inconsistent with the tractor 
standard would cause the manufacturer of the glider vehicle to violate 
the GHG emission standard, so the glider kit manufacturer would be 
similarly liable under section 203 (a)(1) for causing that prohibited 
act to occur.
    In addition, section 203 (a)(3)(B) prohibits use of `defeat 
devices'--which include ``any part or component intended for use with, 
or as part of, any motor vehicle . . . where a principal effect of the 
part or component is to . . . defeat . . . any . . . element of design 
installed . . . in a motor vehicle'' otherwise in compliance with 
emission standards. Manufacturing or installing a trailer not meeting 
the trailer emission standard could thus be a defeat device causing a 
violation of the emission standard. Similarly, a glider kit 
manufacturer furnishing a glider kit in a configuration that would not 
meet the tractor standard when the specified engine, transmission, and 
axle are installed would likewise cause a violation of the tractor 
emission standard. For example, providing a tractor with a coefficient 
of drag or tire rolling resistance level inconsistent with tractor 
certified condition would be a violation of the Act because it would 
cause the glider vehicle assembler to introduce into commerce a new 
tractor that is not covered by a valid certificate of conformity. 
Daimler argued in its comments that a glider kit would not be a defeat 
device because glider vehicles use older engines which are more fuel 
efficient since they are not meeting the more rigorous standards for 
criteria pollutant emissions. (Daimler Truck Comment, April 1, 2016, p. 
5). However, the glider kit would be a defeat device with respect to 
the tractor vehicle standard, not the separate engine standard. A non-
conforming glider kit would adversely affect compliance with the 
vehicle standard, as just explained. Furthermore, as explained in RTC 
Section 14.2, Daimler is incorrect that glider vehicles are more fuel 
efficient than Phase 1 2017 and later vehicles, much less Phase 2 
vehicles.
    In the memorandum accompanying the Notice of Data Availability, EPA 
solicited comment on adopting additional regulations based on these 
principles. EPA has decided not to adopt those provisions, but again 
notes

[[Page 73518]]

that the authorities in CAA sections 208 and 203 support the actions 
EPA is taking here with respect to trailer and glider kit testing.
(e) Standards for Glider Vehicles and Lead Time for Those Standards
    At proposal, EPA indicated that engines used in glider vehicles are 
to be certified to standards for the model year in which these vehicles 
are assembled. 80 FR 40528. This action is well within the agency's 
legal authority. As noted above, the Act's definition of ``new motor 
vehicle engine,'' includes any ``engine in a new motor vehicle'' 
without regard to whether or not the engine was previously used. Given 
the Act's purpose of controlling emissions of air pollutants from motor 
vehicle engines, with special concern for pollutant emissions from 
heavy-duty engines (see, e.g., section 202(a)(3)(A) and (B)), it is 
reasonable to require engines placed in newly-assembled vehicles to 
meet the same standards as all other engines in new motor vehicles. Put 
another way, it is both consistent with the plain language of the Act 
and reasonable and equitable for the engines in ``new trucks'' (see 
Section I.E.(1)(a) above) to meet the emission standards for all other 
engines installed in new trucks.
    Daimler challenged this aspect of EPA's proposal, maintaining that 
it amounted to regulation of vehicle rebuilding, which (according to 
the commenter) is beyond EPA's authority. Comments of Daimler, p. 123; 
Comments of Daimler Trucks (April 1, 2016) p. 3. This comment is 
misplaced. The EPA has authority to regulate emissions of pollutants 
from engines installed in new motor vehicles. As explained in 
subsection (a) above, glider vehicles are new motor vehicles. As also 
explained above, the Act's definition of ``new motor vehicle engine'' 
includes any ``engine in a new motor vehicle'' without regard to 
whether or not the engine was previously used. CAA section 216(3). 
Consequently, a previously used engine installed in a glider vehicle is 
within EPA's multiple authorities. See CAA sections 202(a)(1) (GHGs), 
202(a)(3)(A) and (B)(ii) (hydrocarbon, CO, PM and NOX from 
heavy-duty vehicles or engines), and 202(a)(3)(D) (pollutants from 
rebuilt heavy duty engines).\93\
---------------------------------------------------------------------------

    \93\ Comments from, e.g. Mondial and MEMA made clear that all of 
the donor engines installed in glider vehicles are rebuilt. See also 
http://www.truckinginfo.com/article/story/2013/04/the-return-of-the-glider.aspx (``1999 to 2002-model diesels were known for 
reliability, longevity and good fuel mileage. Fitzgerald favors 
Detroit's 12.7-liter Series 60 from that era, but also installs pre-
EGR 14-liter Cummins and 15-liter Caterpillar diesels. All are 
rebuilt. . . .'').
---------------------------------------------------------------------------

    As explained in more detail in Section XIII.B, the final rule 
requires that as of January 1, 2017, glider kit and glider vehicle 
production involving engines not meeting criteria pollutant standards 
corresponding to the year of glider vehicle assembly be allowed at the 
highest annual production for any year from 2010 to 2014. See section 
1037.150(t)(3). (Certain exceptions to this are explained in Section 
XIII.B.) The rule further requires that as of January 1, 2018, engines 
in glider vehicles meet criteria pollutant standards and GHG standards 
corresponding to the year of the glider vehicle assembly, but allowing 
certain small businesses to introduce into commerce vehicles with 
engines meeting criteria pollutant standards corresponding to the year 
of the engine for up to 300 vehicles per year, or up to the highest 
annual production volume for calendar years 2010 to 2014, whichever is 
less. Section 1037.150(t)(1)(ii) (again subject to various exceptions 
explained in Section XIII.B). Glider vehicles using these exempted 
engines will not be subject to the Phase 1 GHG vehicle standards, but 
will be subject to the Phase 2 vehicle standards beginning with MY 
2021. As explained in Section XIII.B, there are compelling 
environmental reasons for taking these actions in this time frame.
    With regard to the issue of lead time, EPA indicated at proposal 
that the agency has long since justified the criteria pollutant 
standards for engines installed in glider kits. 80 FR 40528. EPA 
further proposed that engines installed in glider vehicles meet the 
emission standard for the year of glider vehicle assembly, as of 
January 1, 2018 and solicited comment on an earlier effective date. Id. 
at 40529. The agency noted that CAA section 202(a)(3)(D) \94\ requires 
that standards for rebuilt heavy-duty engines take effect ``after a 
period . . . necessary to permit the development and application of the 
requisite control measures.'' Here, no time is needed to develop and 
apply requisite control measures for criteria pollutants because 
compliant engines are immediately available. In fact, manufacturers of 
compliant engines, and dealers of trucks containing those compliant 
engines, commented that they are disadvantaged by manufacturing more 
costly compliant engines while glider vehicles avoid using those 
engines. Not only are compliant engines immediately available, but (as 
commenters warned) there can be risk of massive pre-buys. Moreover, EPA 
does not envision that glider manufacturers will actually modify the 
older engines to meet the applicable standards. Rather, they will 
either choose from the many compliant engines available today, or they 
will seek to qualify under other flexibilities provided in the final 
rule. See Section XIII.B. Given that compliant engines are immediately 
available, the flexibilities provided in the final rule for continued 
use of donor engines for traditional glider vehicle functions and by 
small businesses, and the need to expeditiously prevent further 
perpetuation of use of heavily polluting engines, EPA sees a need to 
begin constraining this practice on January 1, 2017. However, the final 
rule is merely capping glider production using higher-polluting engines 
in 2017 at 2010-2014 production levels, which would allow for the 
production of thousands of glider vehicles using these higher polluting 
engines, and unlimited production of glider vehicles using less 
polluting engines.
---------------------------------------------------------------------------

    \94\ The engine rebuilding authority of section 202(a)(3)(D) 
includes removal of an engine from the donor vehicle. See 40 CFR 
86.004-40 and 62 FR 54702 (Oct. 21, 1997). EPA interprets this 
language as including installation of the removed engine into a 
glider kit, thereby assembling a glider vehicle.
---------------------------------------------------------------------------

    Various commenters, however, argued that the EPA must provide four 
years lead-time and three-year stability pursuant to section 
202(a)(3)(C) of the Act, which applies to regulations for criteria 
pollutant emissions from heavy duty vehicles or engines. For criteria 
pollutant standards, CAA section 202(a)(3)(C) establishes lead time and 
stability requirements for ``[a]ny standard promulgated or revised 
under this paragraph and applicable to classes or categories of heavy 
duty vehicles or engines.'' In this rule, EPA is generally requiring 
large manufacturers of glider vehicles to use engines that meet the 
standards for the model year in which a vehicle is manufactured. EPA is 
not promulgating new criteria pollutant standards. The NOX 
and PM standards that apply to heavy duty engines were promulgated in 
2001.
    We are not amending these provisions or promulgating new criteria 
pollutant standards for heavy duty engines here. EPA interprets the 
phrase ``classes or categories of heavy duty vehicles or engines'' in 
CAA section 202(a)(3)(C) to refer to categories of vehicles established 
according to features such as their weight, functional type, (e.g. 
tractor, vocational vehicle, or pickup truck) or engine cycle (spark-
ignition or compression-ignition), or weight class of the vehicle into 
which an engine is installed (LHD, MHD, or HHD). EPA has established 
several different categories

[[Page 73519]]

of heavy duty vehicles (distinguished by gross vehicle weight, engine-
cycle, and other criteria related to the vehicles' intended purpose) 
and is establishing in this rule GHG standards applicable to each 
category.\95\ By contrast, a ``glider vehicle'' is defined not by its 
weight or function but by its method of manufacture. A Class 8 tractor 
glider vehicle serves exactly the same function and market as a Class 8 
tractor manufactured by another manufacturer. Similarly, rebuilt 
engines installed in glider vehicles (i.e. donor engines) are not 
distinguished by engine cycle, but rather serve the same function and 
market as any other HHD or MHD engine. Thus, EPA considers ``glider 
vehicles'' to be a description of a method of manufacturing new motor 
vehicles, not a description of a separate ``class or category'' of 
heavy duty vehicles or engines. Consequently, EPA is not adopting new 
standards for a class or category of heavy duty engines within the 
meaning of section 202(a)(3)(C) of the Act.
---------------------------------------------------------------------------

    \95\ Note, however, the Phase 2 GHG standards for tractors and 
vocational vehicles do not apply until MY 2021.
---------------------------------------------------------------------------

    EPA believes this approach is most consistent with the statutory 
language and the goals of the Clean Air Act. The date of promulgation 
of the criteria pollutant standards was 2001. There has been plenty of 
lead time for the criteria pollutant standards and as a result, 
manufacturers of glider vehicles have many options for compliant 
engines that are available on the market today--just as manufacturers 
of other new heavy-duty vehicles do. We are even providing additional 
compliance flexibilities to glider manufacturers in recognition of the 
historic practice of salvaging a small number of engines from vehicles 
involved in crashes. See Section XIII.B. We do not believe that 
Congress intended to allow changes in how motor vehicles are 
manufactured to be a means of avoiding existing, applicable engine 
standards. Obviously, any industry attempts to avoid or circumvent 
standards will not become apparent until the standards begin to apply. 
The commenters' interpretation would effectively preclude EPA from 
curbing many types of avoidance, however dangerous, until at least four 
years from detection.
    As to Daimler's further argument that the lead time provisions in 
section 202(3)(C) not only apply but also must trump those specifically 
applicable to heavy duty engine rebuilding, the usual rule of 
construction is that the more specific provision controls. See, e.g. 
HCSC-Laundry v. U.S., 450 U.S.1, 6 (1981). Daimler's further argument 
that section 202(a)(3)(C) lead time provisions also apply to engine 
rebuilding because those provisions fall within the same paragraph 
would render the separate lead time provisions for engine rebuilding a 
virtual nullity. The sense of the provision is that Congress intended 
there to be independent lead time consideration for the distinct 
practice of engine rebuilding. In any case, as just explained, it is 
EPA's view that section 202(a)(3)(C) does not apply here.
(2) NHTSA Authority
    The Energy Policy and Conservation Act (EPCA) of 1975 mandates a 
regulatory program for motor vehicle fuel economy to meet the various 
facets of the need to conserve energy. In December 2007, Congress 
enacted the Energy Independence and Security Act (EISA), amending EPCA 
to require, among other things, the creation of a medium- and heavy-
duty fuel efficiency program for the first time.
    Statutory authority for the fuel consumption standards in this 
final rule is found in EISA section 103, 49 U.S.C. 32902(k). This 
section authorizes a fuel efficiency improvement program, designed to 
achieve the maximum feasible improvement to be created for commercial 
medium- and heavy-duty on-highway vehicles and work trucks, to include 
appropriate test methods, measurement metrics, standards, and 
compliance and enforcement protocols that are appropriate, cost-
effective and technologically feasible.
    NHTSA has responsibility for fuel economy and consumption 
standards, and assures compliance with EISA through rulemaking, 
including standard-setting; technical reviews, audits and studies; 
investigations; and enforcement of implementing regulations including 
penalty actions. This rule continues to fulfill the requirements of 
section 103 of EISA, which instructs NHTSA to create a fuel efficiency 
improvement program for ``commercial medium- and heavy-duty on-highway 
vehicles and work trucks'' by rulemaking, which is to include 
standards, test methods, measurement metrics, and enforcement 
protocols. See 49 U.S.C. 32902(k)(2).
    Congress directed that the standards, test methods, measurement 
metrics, and compliance and enforcement protocols be ``appropriate, 
cost-effective, and technologically feasible'' for the vehicles to be 
regulated, while achieving the ``maximum feasible improvement'' in fuel 
efficiency. NHTSA has broad discretion to balance the statutory factors 
in section 103 in developing fuel consumption standards to achieve the 
maximum feasible improvement.
    As discussed in the Phase 1 final rule, NHTSA has determined that 
the five year statutory limit on average fuel economy standards that 
applies to passengers and light trucks is not applicable to the HD 
vehicle and engine standards. As a result, the Phase 1 HD engine and 
vehicle standards remain in effect indefinitely at their 2018 or 2019 
MY levels until amended by a future rulemaking action. As was 
contemplated in that rule, NHTSA is finalizing a Phase 2 rulemaking 
action. Therefore, the Phase 1 standards will not remain in effect at 
their 2018 or 2019 MY levels indefinitely; they will remain in effect 
until the MY Phase 2 standards begin. In accordance with section 103 of 
EISA, NHTSA will ensure that not less than four full MYs of regulatory 
lead-time and three full MYs of regulatory stability are provided for 
in the Phase 2 standards.
    With respect to the proposal, many stakeholders opined in their 
comments as to NHTSA's legal authority to issue the Phase 2 medium- and 
heavy-duty standards (Phase 2 standards), in whole or in part. NHTSA 
addresses these comments in the following discussion.
    Allison Transmission, Inc. (Allison) questioned NHTSA's authority 
to issue the Phase 2 Standards. Allison stated that the Energy 
Independence and Security Act of 2007 (EISA) \96\ directs NHTSA to 
undertake ``a rulemaking proceeding,'' (emphasis added) predicated on a 
study by the National Academy of Sciences (NAS). Allison and the Truck 
Trailer Manufacturers Association (TTMA) asserted that because NAS has 
published a study on medium- and heavy duty vehicles and NHTSA 
promulgated the Phase 1 medium- and heavy-duty vehicle standards (Phase 
1 standards), NAS and NHTSA have fulfilled their statutory duties under 
EISA. Thus, Allison stated, NHTSA has no authority to issue standards 
beyond the Phase 1 standards.
---------------------------------------------------------------------------

    \96\ Public Law 110-140, 121 Stat. 1492. (December 19, 2007).
---------------------------------------------------------------------------

    NHTSA maintains that EISA allows the agency to promulgate medium- 
and heavy duty fuel efficiency standards beyond the Phase 1 standards. 
EISA states that NHTSA: \97\
---------------------------------------------------------------------------

    \97\ By delegation at 49 CFR 1.95(a). For purposes of this NPRM, 
grants of authority from EISA to the Secretary of Transportation 
regarding fuel efficiency will be referred to as grants of authority 
to NHTSA, as NHTSA has been delegated the authority to implement 
these programs.

by regulation, shall determine in a rulemaking proceeding how to 
implement a commercial medium- and heavy-duty on-highway vehicle and 
work truck fuel

[[Page 73520]]

efficiency program designed to achieve the maximum feasible 
improvement, and shall adopt and implement appropriate test methods, 
measurement metrics, fuel economy standards, and compliance and 
enforcement protocols . . . for commercial medium- and heavy-duty 
on-highway vehicles and work trucks.\98\
---------------------------------------------------------------------------

    \98\ Public Law 110-140, 121 Stat. 1492, Section 108. Codified 
at 49 U.S.C. 32902(k)(2).

    Allison equates the process by which Congress specified NHTSA 
promulgate standards--a rulemaking proceeding--to mean a limitation or 
constraint on NHTSA's ability to create, amend, or update the medium- 
and heavy duty fuel efficiency program. NHTSA believes the charge in 49 
U.S.C. 32902(k)(2) discusses ``a rulemaking proceeding'' only insofar 
as the statute specifies the process by which NHTSA would create a 
medium- and heavy-duty on-highway vehicle and work truck fuel 
efficiency improvement program and its associated standards.
    Allison and TTMA commented that EISA only refers to an initial NAS 
study, meaning EISA only specified that NHTSA issue one set of 
standards based on that study. As NHTSA stated in the NPRM, EISA 
requires NAS to issue updates to the initial report every five years 
through 2025.\99\ With that in mind, NAS issued an interim version of 
its first update to inform the Phase 2 NPRM. EISA's requirement that 
NAS update its initial report, which examines existing and potential 
fuel efficiency technologies that can practically be integrated into 
medium- and heavy-duty vehicles, is consistent with the conclusion that 
EISA intended the medium- and heavy-duty standards to function as part 
of an ongoing program \100\ and not a single rulemaking.
---------------------------------------------------------------------------

    \99\ 80 FR 40512 (July 13, 2015).
    \100\ ``. . . the Secretary . . . shall determine in a 
rulemaking proceeding how to implement a commercial medium- and 
heavy-duty on-highway vehicle and work truck fuel efficiency program 
designed to achieve the maximum feasible improvement . . .'' 49 
U.S.C. 42902(k)(2).
---------------------------------------------------------------------------

    Allison also noted that the language in EISA discussing lead time 
and stability refers to a single medium- and heavy-duty on-highway 
vehicle and work truck fuel economy standard.\101\ NHTSA believes the 
language highlighted by Allison serves the purpose of noting that each 
medium- and heavy-duty segment standard included in its program shall 
have the requisite amount of lead-time and stability. As discussed in 
49 U.S.C. 32902(k)(2), ``[t]he Secretary may prescribe separate 
standards for different classes of vehicles . . .'' Since NHTSA has 
elected to set standards for particular classes of vehicles, this 
language ensures each particular standard shall have the appropriate 
lead-time and stability required by EISA.
---------------------------------------------------------------------------

    \101\ 49 U.S.C. 32902(k)(3) states that, ``The commercial 
medium- and heavy-duty on-highway vehicle and work truck fuel 
economy standard adopted pursuant to this subsection shall provide 
not less than--(A) 4 full model years of regulatory lead-time; and 
(B) 3 full model years of regulatory stability.''
---------------------------------------------------------------------------

    TTMA asserted that NHTSA has no more than 24 months from the 
completion of the NAS study to issue regulations related to the medium- 
and heavy-duty program and therefore regulations issued after 2013 
``lack congressional authorization.'' This argument significantly 
misinterprets the Congressional purpose of this provision. Section 
32902(k)(2) requires that, 24 months after the completion of the NAS 
study, NHTSA begin implementing through a rulemaking proceeding a 
commercial medium- and heavy-duty on-highway vehicle and work truck 
fuel efficiency improvement program. Congress therefore authorized 
NHTSA to implement through rulemaking a ``program,'' which the 
dictionary defines as ``a plan of things that are done in order to 
achieve a specific result.'' \102\ Contrary to TTMA's assertion, 
Congress did not limit NHTSA to the establishment of one set of 
regulations, nor did it in any way limit NHTSA's ability to update and 
revise this program. The purpose of the 24 month period was simply to 
ensure that NHTSA exercised this authority expeditiously after the NAS 
study, which NHTSA accomplished by implementing the first phase of its 
fuel efficiency program in 2011.\103\ Today's rulemaking merely 
continues this program and clearly comports with the statutory language 
in 49 U.S.C. 32902(k). Further, the specific result sought by Congress 
in establishing the medium- and heavy-duty fuel efficiency program was 
a program focused on continuing fuel efficiency improvements. 
Specifically, Congress emphasized that the fuel efficiency program 
created by NHTSA be ``designed to achieve the maximum feasible 
improvement,'' allowing NHTSA to ensure the regulations implemented 
throughout the program encourage regulated entities to achieve the 
maximum feasible improvements. Congress did not limit, restrict, or 
otherwise suggest that the phrase ``designed to achieve the maximum 
feasible improvement'' be confined to the issuance of one set of 
standards. NHTSA actions are, therefore, clearly consistent with the 
authority conferred upon it in 49 U.S.C. 32902(k).
---------------------------------------------------------------------------

    \102\ ``Program.'' Merriam-Webster (2016 http://www.merriam-webster.com/dictionary/program (last accessed July 19, 2016).
    \103\ 76 FR 57016 (September 15, 2011).
---------------------------------------------------------------------------

    POP Diesel stated that the word ``fuel'' has not been defined by 
Congress, and therefore NHTSA should use its authority to define the 
term ``fuel'' as ``fossil fuel,'' allowing the agencies to assess fuel 
efficiency based on the carbon content of the fuels used in an engine 
or vehicle. Congress has already defined the term ``fuel'' in 49 U.S.C. 
32901(a)(10) as gasoline, diesel oil, or other liquid or gaseous fuel 
that the Secretary decides to include. As Congress has already spoken 
to the definition of fuel, it would be inappropriate for the agency to 
redefine ``fuel'' as ``fossil fuel.''
    Additionally, POP Diesel asserted that NHTSA's metric for measuring 
fuel efficiency is contrary to the mandate in EISA. Specifically, POP 
Diesel stated that many dictionaries define ``efficiency'' as a ratio 
of work performed to the amount of energy used, and NHTSA's load 
specific fuel consumption metric runs afoul of the plain meaning of 
statute the Phase 2 program implements. POP Diesel noted that 
Congressional debate surrounding what is now codified at 49 U.S.C. 
32902(k)(2) included a discussion that envisioned NHTSA and EPA having 
separate regulations, despite having overlapping jurisdiction.
    NHTSA continues to believe its use of load specific fuel 
consumption is an appropriate metric for assessing fuel efficiency as 
mandated by Congress. 49 U.S.C. 32902(k)(2) states, as POP Diesel 
noted, that NHTSA shall develop a medium- and heavy-duty fuel 
efficiency program. The section further states that NHTSA ``. . . shall 
adopt and implement appropriate test methods [and] measurement metrics 
. . . for commercial medium- and heavy-duty on-highway vehicles and 
work trucks.'' In the Phase 1 rulemaking, NHTSA, aided by the National 
Academies of Sciences (NAS) report, assessed potential metrics for 
evaluating fuel efficiency. NHTSA found that fuel economy would not be 
an appropriate metric for medium- and heavy-duty vehicles. Instead, 
NHTSA chose a metric that considers the amount of fuel consumed when 
moving a ton of freight (i.e., performing work).\104\ This metric, 
delegated by Congress to NHTSA to formulate, is not precluded by the 
text of the statute. It is a reasonable way by which to measure fuel 
efficiency for a program designed to reduce fuel consumption.
---------------------------------------------------------------------------

    \104\ See: 75 FR 74180 (November 30, 2010).

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

[[Page 73521]]

(a) NHTSA's Authority To Regulate Trailers
    As contemplated in the Phase 1 proposed and final rules, the 
agencies proposed standards for trailers in the Phase 2 rulemaking. 
Because Phase 1 did not include standards for trailers, NHTSA did not 
discuss its authority for regulating them in the proposed or final 
rules; that authority is described here.
    NHTSA is finalizing fuel efficiency standards applicable to heavy-
duty trailers as part of the Phase 2 program. NHTSA received several 
comments on the proposal relating to the agency's statutory authority 
to issue standards for trailers as part of the Phase 2 program. In 
particular, TTMA commented that NHTSA does not have the authority to 
regulate trailers as part of the medium- and heavy-duty standards. TTMA 
took issue with NHTSA's use of the National Traffic and Motor Vehicle 
Safety Act as an aid in defining an undefined term in EISA. 
Additionally, TTMA stated that EISA's use of GVWR instead of gross 
combination weight rating (GCWR) to define the vehicles subject to 
these regulations was intended to exclude trailers from the regulation.
    As stated in the proposal, EISA directs NHTSA to ``determine in a 
rulemaking proceeding how to implement a commercial medium- and heavy-
duty on-highway vehicle and work truck fuel efficiency improvement 
program designed to achieve the maximum feasible improvement . . . .'' 
\105\ EISA defines a commercial medium- and heavy-duty on-highway 
vehicle to mean ``an on-highway vehicle with a GVWR of 10,000 lbs or 
more.'' A ``work truck'' is defined as a vehicle between 8,500 and 
10,000 lbs GVWR that is not an MDPV. These definitions do not 
explicitly exclude trailers, in contrast to MDPVs. Because Congress did 
not act to exclude trailers when defining these terms by GVWRs, despite 
demonstrating the ability to exclude MDPVs, it is reasonable to 
interpret the provision to include them.
---------------------------------------------------------------------------

    \105\ 49 U.S.C. 42902(k)(2).
---------------------------------------------------------------------------

    Both the tractor and the trailer are vehicles subject to regulation 
by NHTSA in the Phase 2 program. Although EISA does not define the term 
``vehicle,'' NHTSA's authority to regulate motor vehicles under its 
organic statute, the Motor Vehicle Safety Act (``Safety Act''), does. 
The Safety Act defines a motor vehicle as ``a vehicle driven or drawn 
by mechanical power and manufactured primarily for use on public 
streets, roads, and highways. . . .'' \106\ NHTSA clearly has authority 
to regulate trailers under this Act as they are vehicles that are drawn 
by mechanical power--in this instance, a tractor engine--and NHTSA has 
exercised that authority numerous times.\107\ Given the absence of any 
apparent contrary intent on the part of Congress in EISA, NHTSA 
believes it is reasonable to interpret the term ``vehicle'' as used in 
the EISA definitions to have a similar meaning that includes trailers.
---------------------------------------------------------------------------

    \106\ 49 U.S.C. 30102(a)(6).
    \107\ See, e.g., 49 CFR 571.106 (Standard No. 106; Brake hoses); 
49 CFR 571.108 (Standard No. 108; Lamps, reflective devices, and 
associated equipment); 49 CFR 571.121 (Standard No. 121; Air brake 
systems); 49 CFR 571.223 (Standard No. 223; Rear impact guards).
---------------------------------------------------------------------------

    Additionally, it is worth noting that the dictionary definition of 
``vehicle'' is ``a machine used to transport goods or persons from one 
location to another.'' \108\ A trailer is a machine designed for the 
purpose of transporting goods. With these foregoing considerations in 
mind, NHTSA interprets its authority to regulate commercial medium- and 
heavy-duty on-highway vehicles, including trailers.
---------------------------------------------------------------------------

    \108\ ``Vehicle.'' Merriam-Webster (2016). http://www.merriam-webster.com/dictionary/vehicle (last accessed May 20, 2016).
---------------------------------------------------------------------------

    TTMA pointed to language in the Phase 1 NPRM where the agencies 
stated that GCWR included the weight of a loaded trailer and the 
vehicle itself. TTMA interprets this language to mean that standards 
applicable to vehicles defined by GVWR must inherently exclude 
trailers. The language TTMA cited is a clarification from a footnote in 
an introductory section describing the heavy-duty trucking industry. 
This statement was not a statement of NHTSA's legal authority over 
medium- and heavy-duty vehicles. NHTSA continues to believe a trailer 
is a vehicle under EISA if its GVWR fits within the definitions in 49 
U.S.C. 32901(a), and is therefore subject to NHTSA's applicable fuel 
efficiency regulations.
    Finally, in a comment on the Notice of Data Availability, TTMA 
stated that because NHTSA's statutory authority instructs the agency to 
develop a fuel efficiency program for medium- and heavy-duty on-highway 
vehicles, and trailers themselves do not consume fuel, trailers cannot 
be regulated for fuel efficiency. The agency disagrees with this 
assertion. A tractor-trailer is designed for the purpose of holding and 
transporting goods. While heavy-duty trailers themselves do not consume 
fuel, they are immobile and inoperative without a tractor providing 
motive power. Inherently, trailers are designed to be pulled by a 
tractor, which in turn affects the fuel efficiency of the tractor-
trailer as a whole. As previously discussed, both a tractor and trailer 
are motor vehicles under NHTSA's authority. Therefore it is reasonable 
to consider all of a tractor-trailer's parts--the engine, the cab-
chassis, and the trailer--as parts of a whole. As such they are all 
parts of a vehicle, and are captured within the scope of NHTSA's 
statutory authority. As EPA describes above, the tractor and trailer 
are both incomplete without the other. Neither can fulfill the function 
of the vehicle without the other. For this reason, and the other 
reasons stated above, NHTSA interprets its authority to regulate 
commercial medium- and heavy-duty on-highway vehicles, including 
tractor-trailers, as encompassing both tractors and trailers.
(b) NHTSA's Authority To Regulate Recreational Vehicles
    NHTSA did not regulate recreational vehicles as part of the Phase 1 
medium- and heavy-duty fuel efficiency standards, although EPA did 
regulate them as vocational vehicles for GHG emissions. In the Phase 1 
NPRM, NHTSA interpreted ``commercial medium- and heavy duty on-road 
vehicle'' to mean that recreational vehicles, such as motor homes, were 
not to be included within the program because recreational vehicles are 
not commercial. Following comments to the Phase 1 proposal, NHTSA 
reevaluated its statutory authority and proposed that recreational 
vehicles be included in the Phase 2 standards, and that early 
compliance be allowed for manufacturers who want to certify during the 
Phase 1 period.
    The Recreational Vehicle Industry Association (RVIA) and Newell 
Coach Corporation (Newell) asserted that NHTSA does not have the 
authority to regulate recreational vehicles (RVs). RVIA and Newell 
stated that NHTSA's authority under EISA is limited to commercial 
medium- and heavy-duty vehicles and that RVs are not commercial. RVIA 
pointed to the fact that EISA gives NHTSA fuel efficiency authority 
over ``commercial medium- and heavy-duty vehicles'' and ``work 
trucks,'' the latter of which is not prefaced with the word 
``commercial.'' Because of this difference, RVIA argued that NHTSA is 
ignoring a limitation on its authority--that is, that NHTSA only has 
authority over medium- and heavy-duty vehicles that are commercial in 
nature. RVIA stated that RVs are not used for commercial purposes, and 
are therefore not subject to Phase 2.
    NHTSA's authority to regulate medium- and heavy-duty vehicles under 
EISA extends to ``commercial medium- and heavy-duty on-highway 
vehicles''

[[Page 73522]]

and ``work truck[s].'' \109\ If terms in the statute are defined, NHTSA 
must apply those definitions. Both terms highlighted by RVIA have been 
defined in EISA, therefore, NHTSA will use their defined meanings. 
``Work truck'' means a vehicle that is rated between 8,500 and 10,000 
pounds GVWR and is not an MDPV.\110\ ``Commercial medium- and heavy-
duty on-road highway vehicle'' means an on-highway vehicle with a gross 
vehicle weight rating (GVWR) of 10,000 pounds or more.\111\ Based on 
the definitions in EISA, recreational vehicles would be regulated as 
class 2b-8 vocational vehicles. Neither statutory definition requires 
that those vehicles encompassed be commercial in nature, instead 
dividing the medium- and heavy-duty segments based on weight. The 
definitions of ``work truck'' and ``commercial medium- and heavy-duty 
on-highway vehicles'' collectively encompass the on-highway motor 
vehicles not covered in the light duty CAFE standards.
---------------------------------------------------------------------------

    \109\ 49 U.S.C. 42902(k)(2).
    \110\ 49 U.S.C. 42901(a)(19).
    \111\ 49 U.S.C. 42901(a)(7).
---------------------------------------------------------------------------

    RVIA further stated that NHTSA's current fuel efficiency 
regulations are not consistent with EISA and do not purport to grant 
NHTSA authority to regulate vehicles simply based on weight. NHTSA's 
regulations at 49 CFR 523.6 define, by cross-reference the language in 
49 U.S.C. 32901(a)(7) and (19), and consistent with the discussion 
above, include recreational vehicles.
    Finally, NHTSA notes that excluding recreational vehicles in Phase 
2 could create illogical results, including treating similar vehicles 
differently, as determinations over whether a given vehicle would be 
covered by the program would be based upon either its intended or 
actual use, rather than the actual characteristics of the vehicle. 
Moreover, including recreational vehicles under NHTSA regulations 
furthers the agencies' goal of one national program, as EPA regulations 
will continue to regulate recreational vehicles. NHTSA will allow early 
compliance for manufacturers that want to certify during the Phase 1 
period.

F. Other Issues

    In addition to establishing new Phase 2 standards, this document 
addresses several other issues related to those standards. The agencies 
are adopting some regulatory provisions related to the Phase 1 program, 
as well as amendments related to other EPA and NHTSA regulations. These 
other issues are summarized briefly here and discussed in greater 
detail in later sections.
(1) Opportunities for Further Oxides of Nitrogen (NOX) 
Reductions From Heavy-Duty On-Highway Engines and Vehicles
    The EPA has the authority under section 202 of the Clean Air Act to 
establish, and from time to time revise, emission standards for certain 
air pollutants emitted from heavy-duty on-highway engines and vehicles. 
The emission standards that EPA has developed for heavy-duty on-highway 
engines have become progressively more stringent over the past 40 
years, with the most recent NOX standards for new heavy-duty 
on-highway engines fully phased in with the 2010 model year. 
NOX emissions standards for heavy-duty on-highway engines 
have contributed significantly to the overall reduction in the national 
NOX emissions inventory. Nevertheless, a need for additional 
NOX reductions remains, particularly in areas of the country 
with elevated levels of air pollution. As discussed further below, in 
response to EPA's responsibilities under the Clean Air Act, the 
significant comments we received on this topic during the public 
comment period, the recent publication by the California Air Resources 
Board (CARB) of its May 2016 Mobile Source Strategy report and Proposed 
2016 Strategy for the State implementation Plan \112\ and a recent 
Petition for Rulemaking,\113\ EPA plans to further engage with 
stakeholders after the publication of this Final Rule to discuss the 
opportunities for developing more stringent federal standards to 
further reduce the level of NOX emissions from heavy-duty 
on-highway engines through a coordinated effort with CARB.
---------------------------------------------------------------------------

    \112\ See ``Mobile Source Strategy,'' May 16, 2016 from CARB. 
Available at: http://www.arb.ca.gov/planning/sip/2016sip/2016mobsrc.htm and ``Proposed 2016 State Strategy for the State 
Implementation Plan,'' May 17, 2016 from CARB. Available at http://www.arb.ca.gov/planning/sip/2016sip/2016sip.htm.
    \113\ EPA received a Petition for Rulemaking to adopt new 
NOX emission standards for on-road heavy-duty trucks and 
engines on June 3, 2016 from the South Coast Air Quality Management 
District, the Arizona Pima County Department of Environmental 
Quality, the Bay Area Air Quality Management District, the 
Connecticut Department of Energy and Environmental Protection 
Agency, the Delaware Department of Energy and Environmental 
Protection, the Nevada Washoe County Health District, the New 
Hampshire Department of Environmental Services, the New York City 
Department of Environmental Protection, the Akron Regional Air 
Quality Management District of Akron, Ohio, the Washington State 
Department of Ecology, and the Puget Sound Clean Air Agency.
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    NOX is one of the major precursors of tropospheric ozone 
(ozone), exposure to which is associated with a number of adverse 
respiratory and cardiovascular effects, as described in Section 
VIII.A.2 below. These effects are particularly pronounced among 
children, the elderly, and among people with lung disease such as 
asthma. NOX is also a major contributor to secondary 
PM2.5 formation, and exposure to PM2.5 itself has 
been linked to a number of adverse health effects (see Section 
VIII.A.1), such as heart attacks and premature mortality. In addition, 
NO2 exposure is linked to asthma exacerbation and possibly 
to asthma development in children (see Section VIII.A.3). EPA has 
already adopted many emission control programs that are expected to 
reduce ambient ozone levels. However, the U.S. Energy Information 
Administration's AEO 2015 predicts that vehicles miles travelled (VMT) 
for heavy-duty trucks will increase in the coming years,\114\ and even 
with the implementation of all current state and federal regulations, 
some of the most populous counties in the United States are expected to 
have ozone air quality that exceeds the National Ambient Air Quality 
Standards (NAAQS) into the future. As of April 22, 2016, there were 44 
ozone nonattainment areas for the 2008 ozone NAAQS composed of 216 full 
or partial counties, with a population of more than 120 million. These 
nonattainment areas are dispersed across the country, with counties in 
the west, northeastern United States, Texas, and several Great Lakes 
states. The geographic diversity of this problem necessitates action at 
the national level. In California, the San Joaquin Valley and the South 
Coast Air Basin are highly-populated areas classified as ``extreme 
nonattainment'' for the 2008 8-hour ozone standard, with an attainment 
demonstration deadline of 2031 (one year in advance of the actual 2032 
attainment date). In addition, EPA lowered the level of the primary and 
secondary NAAQS for the 8-hour standards from 75 ppb to 70 ppb in 2015 
(2015 ozone NAAQS),\115\ with plans to finalize nonattainment 
designations for the 2015 ozone NAAQS in October 2017. Further 
NOX reductions would provide reductions in ambient ozone 
levels, helping to prevent adverse health impacts associated with ozone 
exposure and assisting states and local areas in attaining and 
maintaining the applicable ozone NAAQS. Reductions in NOX 
emissions would also improve air quality and provide

[[Page 73523]]

public health and welfare benefits throughout the country by (1) 
reducing PM formed by reactions of NOX in the atmosphere; 
(2) reducing concentrations of the criteria pollutant NO2; 
(3) reducing nitrogen deposition to sensitive environments; and (4) 
improving visibility.
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    \114\ US Energy Information Administration. Annual Energy 
Outlook 2015. April 2015. Page E-8. http://www.eia.gov/forecasts/aeo/pdf/0383(2015).pdf.
    \115\ 80 FR 65292 (Oct. 26, 2015).
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    In the past year, EPA has received requests from several state and 
local air quality districts and other organizations asking that EPA 
establish more stringent NOX standards for heavy-duty on-
highway engines to help reduce the public's exposure to air pollution. 
In its comments, CARB estimated that heavy-duty on-highway vehicles 
currently contribute about one-third of all NOX emissions in 
California. In order to achieve the 2008 ozone NAAQS, California has 
estimated that the state's South Coast Air Basin will need an 80 
percent reduction in NOX emissions by 2031. California has 
the unique ability among states to adopt its own separate new motor 
engine and vehicle emission standards under section 209 of the CAA; 
however, CARB commented that EPA action to establish a new federal low-
NOX standard for heavy-duty trucks is critical, since 
California standards alone are not sufficient to demonstrate compliance 
with either the 2008 ozone NAAQS or the 2015, even more stringent ozone 
NAAQS. CARB has developed a comprehensive mobile source strategy which 
for heavy-duty on-highway vehicles includes: Lowering the emissions 
from the in-use fleet; establishing more stringent NOX 
standards for new engines; and accelerating the deployment of zero and 
near-zero emissions technology.\116\ In September of 2015, CARB 
published a draft of this strategy, Mobile Source Strategy Discussion 
Draft, after which CARB held a public workshop and provided opportunity 
for public comment. On May 16, 2016, CARB issued a final Mobile Source 
Strategy report.\117\ In this report, CARB provides a comprehensive 
strategy plan for the future of mobile sources and goods movement in 
the State of California for how mobile sources in California can meet 
air quality and climate goals over the next fifteen years. Among the 
many programs discussed are plans for a future on-highway heavy-duty 
engine and vehicle NOX control regulatory program for new 
products with implementation beginning in 2024. CARB states ``The need 
for timely action by U.S. EPA to establish more stringent engine 
performance standards in collaboration with California efforts is 
essential. About 60 percent of total heavy-duty truck VMT in the South 
Coast on any given day is accrued by trucks purchased outside of 
California, and are exempt from California standards. U.S. EPA action 
to establish a federal low-NOX standard for trucks is critical.'' CARB 
lays out a time line for a California specific action for new highway 
heavy-duty NOX standards with CARB action in 2017-2019 that 
would lead to new standards that could begin with the model year 2023. 
CARB also requests that the U.S. EPA work on a Federal rulemaking 
action in the 2017-2019 time frame which could result in standards that 
could begin with the model year 2024. The CARB Mobile Source Strategy 
document also states ``Due to the preponderance of interstate 
trucking's contribution to in-state VMT, federal action would be far 
more effective at reducing in-state emissions than a California-only 
standard. However, California is prepared to develop a California-only 
standard, if needed, to meet federal attainment targets.'' CARB goes on 
to state ``[C]ARB will begin development of new heavy-duty low 
NOX emission standard in 2017 with Board action expected in 
2019. ARB may also petition U.S. EPA in 2016 to establish new federal 
heavy-duty engine emission standards . . . . If U.S. EPA begins the 
regulatory development process for a new federal heavy-duty emission 
standard by 2017, ARB will coordinate its regulatory development 
efforts with the federal regulation.'' On May 17, 2016, CARB published 
its ``Proposed 2016 State Strategy for the State Implementation Plan.'' 
\118\ This document contains CARB staff's proposed strategy to attain 
the health-based federal air quality standards over the next fifteen 
years. With respect to future on-highway heavy-duty NOX 
standards, the proposed State Implementation Plan is fully consistent 
with the information published by CARB in the Mobile Source Strategy 
report. EPA intends to work with CARB to consider the development of a 
new harmonized Federal and California program that would apply lower 
NOX emissions standards at the national level to heavy-duty 
on-highway engines and vehicles.
---------------------------------------------------------------------------

    \116\ To foster the development of the next generation of lower 
NOX engines, in 2013, CARB adopted optional low-
NOX heavy-duty engine standards ranging from 0.10 down to 
0.02 grams per brake horsepower-hour (g/bhp-hr). CARB also funded 
over $1 million to a low-NOX engine research and 
demonstration project at Southwest Research Institute (SwRI).
    \117\ See ``Mobile Source Strategy,'' May 16, 2016 from CARB. 
Available at: http://www.arb.ca.gov/planning/sip/2016sip/2016mobsrc.htm.
    \118\ See ``Proposed 2016 State Strategy for the State 
Implementation Plan,'' May 17, 2016 from CARB. Available at http://www.arb.ca.gov/planning/sip/2016sip/2016sip.htm.
---------------------------------------------------------------------------

    In addition to CARB, EPA received compelling letters and comments 
from the National Association of Clean Air Agencies, the Northeast 
States for Coordinated Air Use Management, the Ozone Transport 
Commission, and the South Coast Air Quality Management District 
explaining the critical and urgent need to reduce NOX 
emissions that significantly contribute to ozone and fine particulate 
air quality problems in their represented areas. The comments describe 
the challenges many areas face in meeting both the 2008 and recently 
strengthened 2015 ozone NAAQS. These organizations point to the 
significant contribution of heavy-duty vehicles to NOX 
emissions in their areas, and call upon EPA to begin a rulemaking to 
require further NOX controls for the heavy-duty sector as 
soon as possible. Commenters such as the American Lung Association, 
Environmental Defense Fund, Union of Concerned Scientists, the 
California Interfaith Power and Light, Coalition for Clean Air/
California Cleaner Freight Coalition, and the Moving Forward Network 
similarly describe the air quality and public health need for 
NOX reductions and request EPA to lower NOX 
emissions standards for heavy-duty vehicles. Taken as a whole, the 
numerous comments, the expected increase in heavy-duty truck VMT, and 
the fact that ozone challenges will remain across the country 
demonstrate the critical need for more stringent nationwide 
NOX emissions standards. Such standards are vital to 
improving air quality nationwide and reducing public health effects 
associated with exposure to ozone and secondary PM2.5, 
especially for vulnerable populations and in highly impacted regions.
    On June 3, 2016, the EPA received a Petition for Rulemaking from 
the South Coast Air Quality Management District (California), the Pima 
County Department of Environmental Quality (Arizona), the Bay Area Air 
Quality Management District (California), the Connecticut Department of 
Energy and Environmental Protection Agency, the Delaware Department of 
Energy and Environmental Protection, the Washoe County Health District 
(Nevada), the New Hampshire Department of Environmental Services, the 
New York City Department of Environmental Protection, the Akron 
Regional Air Quality Management District (Ohio), the Washington State 
Department of Ecology, and the Puget Sound Clean Air

[[Page 73524]]

Agency (Washington).119 120 In a June 15, 2016 letter to 
EPA, the Commonwealth of Massachusetts also joined this petition. On 
June 22, 2016, the San Joaquin Valley Air Pollution Control District 
(California) also submitted a petition for rulemaking to EPA.\121\ In 
these Petitions, the Petitioners request that EPA establish a new, 
lower NOX emission standard for on-road heavy-duty engines. 
The Petitioners request that EPA implement a new standard by January 1, 
2022, and that EPA establish this new standard through a Final 
Rulemaking issued by December 31, 2017. EPA is not formally responding 
to this Petition in this Final Rule, but we will do so in a future 
action. In the petitions, the Petitioners include a detailed discussion 
of their views and underlying data regarding the need for large scale 
reduction in NOX emissions from heavy-duty engines, why they 
believe new standards can be achieved, and their legal views on EPA's 
responsibilities under the Clean Air Act.
---------------------------------------------------------------------------

    \119\ http://4cleanair.org/sites/default/files/resources/HD_Ultra-Low-NOX_Petition_to_EPA-060316.pdf.
    \120\ http://4cleanair.org/sites/default/files/resources/Petition_Attachments-Ultra-Low-NOX_Petition_to_EPA-060316_0.pdf.
    \121\ http://www.valleyair.org/recent_news/Media_releases/2016/PR-District-Petitions-Federal-Government-06-22-16.pdf.
---------------------------------------------------------------------------

    Since the establishment of the current heavy-duty on-highway 
standards in January of 2001,\122\ there has been continued progress in 
emissions control technology. EPA and CARB are currently investing in 
research to evaluate opportunities for further NOX 
reductions from heavy-duty on-highway vehicles and engines. Programs 
and research underway at CARB, as well as a significant body of work in 
the technical literature, indicate that reducing NOX 
emissions significantly below the current on-highway standard of 0.20 
grams per brake horsepower-hour (g/bhp-hr) is potentially 
feasible.123 124 Opportunities for additional NOX 
reductions include reducing emissions over cold start operation as well 
as low-speed, low-load off-cycle operation. Reductions are being 
accomplished through the use of improved engine management, advanced 
aftertreatment technologies (improvements in SCR catalyst design/
formulation), catalyst positioning, aftertreatment thermal management, 
and heated diesel exhaust fluid dosing. At the same time, the effect of 
these new technologies on cost and GHG emissions is being carefully 
evaluated,\124\ since it is important that any future NOX 
control technologies be considered in the context of the final Phase 2 
GHG standards. During the Phase 2 program public comment period, EPA 
received some comments stressing the need for careful evaluation of 
emerging NOX control technologies and urging EPA to consider 
the relationship between CO2 and NOX before 
setting lower NOX standards (commenters include American 
Trucking Association, Caterpillar, Daimler Trucks North America, 
Navistar Inc., PACCAR Inc., Volvo Group, Truck and Engine Manufacturers 
Association, Diesel Technology Forum, National Association of 
Manufacturers, and National Automobile Dealers Association). EPA also 
received comments pointing to advances in NOX emission 
control technologies that would lower NOX without reducing 
engine efficiency (commenters include Advanced Engine Systems 
Institute, Clean Energy, Manufacturers of Emission Controls 
Association, and Union of Concerned Scientists). EPA will continue to 
evaluate both opportunities and challenges associated with lowering 
NOX emissions from the current standards, and over the 
coming months we intend to engage with many stakeholders as we develop 
our response to the June 2016 Petitions for Rulemaking discussed above.
---------------------------------------------------------------------------

    \122\ 66 FR 5002 (January 18, 2001).
    \123\ See CARB's September 2015 Draft Technology Assessment: 
Lower NOX Heavy-Duty Diesel Engines, and Draft Technology 
Assessment: Low Emission Natural Gas and Other Alternative Fuel 
Heavy-Duty Engines.
    \124\ http://www.arb.ca.gov/research/veh-emissions/low-nox/low-nox.htm, 4/26/16. This low NOX study is in the process of 
selecting the emission reduction systems for final testing and it is 
expected that this demonstration program will be complete by the end 
of 2016.
---------------------------------------------------------------------------

    EPA believes the opportunity exists to develop, in close 
coordination with CARB and other stakeholders, a new, harmonized 
national NOX reduction strategy for heavy-duty on-highway 
engines which could include the following:
     Substantially lower NOX emission standards;
     Improvements to emissions warranties;
     Consideration of longer useful life, reflecting actual in-
use activity;
     Consideration of rebuilding/remanufacturing practices;
     Updated certification and in-use testing protocols;
     Incentives to encourage the transition to next-generation 
cleaner technologies as soon as possible;
     Improvements to test procedures and test cycles to ensure 
emission reductions occur in the real-world, not only over the 
applicable certification test cycles.
    Based on the air quality need, the requests described above, the 
continued progress in emissions control technology, and the June 2016 
petitions for rulemaking, EPA plans to engage with a range of 
stakeholders to discuss the opportunities for developing more stringent 
federal standards to further reduce the level of NOX 
emissions from heavy-duty on-highway engines, after the publication of 
this Final Rule. Recognizing the benefits of a nationally harmonized 
program and given California's unique ability under CAA section 209 to 
be allowed to regulate new motor vehicle and engine emission standards 
if certain criteria are met, EPA intends to work closely with CARB on 
this effort. EPA also intends to engage with truck and engine 
manufacturers, suppliers, state air quality agencies, NGOs, labor, the 
trucking industry, and the Petitioners over the next several months as 
we develop our formal response to the June 2016 Petitions for 
Rulemaking.
(2) Issues Related to Phase 2
(a) Natural Gas Engines and Vehicles
    This combined rulemaking by EPA and NHTSA is designed to regulate 
two separate characteristics of heavy duty vehicles and engines: GHGs 
and fuel consumption. In the case of diesel or gasoline powered 
vehicles, there is a one-to-one relationship between these two 
characteristics. For alternatively fueled vehicles, which use no 
petroleum, the situation is different. For example, a natural gas 
vehicle that achieves approximately the same fuel efficiency as a 
diesel powered vehicle will emit 20 percent less CO2; and a 
natural gas vehicle with the same fuel efficiency as a gasoline vehicle 
will emit 30 percent less CO2. Yet natural gas vehicles 
consume no petroleum. The agencies are continuing Phase 1 approach, 
which the agencies have previously concluded balances these facts by 
applying the gasoline and diesel CO2 standards to natural 
gas engines based on the engine type of the natural gas engine. Fuel 
consumption for these vehicles is then calculated according to their 
tailpipe CO2 emissions. In essence, this applies a one-to-
one relationship between fuel efficiency and tailpipe CO2 
emissions for all vehicles, including natural gas vehicles. The 
agencies determined that this approach will likely create a small 
balanced incentive for natural gas use. In other words, it created a 
small incentive for the use of natural gas engines that appropriately 
balanced concerns about the climate impact methane emissions against 
other factors such as the energy security

[[Page 73525]]

benefits of using domestic natural gas. See 76 FR 57123.
(b) Alternative Refrigerants
    In addition to use of low-leak components in air conditioning 
system design, manufacturers can also decrease the global warming 
impact of any refrigerant leakage emissions by adopting systems that 
use alternative, lower global warming potential (GWP) refrigerants, to 
replace the refrigerant most commonly used today, HFC-134a (R-134a). 
HFC-134a is a potent greenhouse gas with a GWP 1,430 times greater than 
that of CO2.
    Under EPA's Significant New Alternatives Policy (SNAP) 
Program,\125\ EPA has found acceptable, subject to use conditions, 
three alternative refrigerants that have significantly lower GWPs than 
HFC-134a for use in A/C systems in newly manufactured light-duty 
vehicles: HFC-152a, CO2 (R-744), and HFO-1234yf.\126\ HFC-
152a has a GWP of 124, HFO-1234yf has a GWP of 4, and CO2 
(by definition) has a GWP of 1, as compared to HFC-134a which has a GWP 
of 1,430.\127\ CO2 is nonflammable, while HFO-1234yf and 
HFC-152a are flammable. All three are subject to use conditions 
requiring labeling and the use of unique fittings, and where 
appropriate, mitigating flammability and toxicity. Currently, the SNAP 
listing for HFO-1234yf is limited to newly manufactured A/C systems in 
light-duty vehicles, whereas HFC-152a and CO2 have been 
found acceptable for all motor vehicle air conditioning applications, 
including heavy-duty vehicles.
---------------------------------------------------------------------------

    \125\ Section 612(c) of the Clean Air Act requires EPA to review 
substitutes for class I and class II ozone-depleting substances and 
to determine whether such substitutes pose lower risk than other 
available alternatives. EPA is also required to publish lists of 
substitutes that it determines are acceptable and those it 
determines are unacceptable. See http://www3.epa.gov/ozone/snap/refrigerants/lists/index.html, last accessed on March 5, 2015.
    \126\ Listed at 40 CFR part 82, subpart G.
    \127\ GWP values cited in this final action are from the IPCC 
Fourth Assessment Report (AR4) unless stated otherwise. Where no GWP 
is listed in AR4, GWP values are determined consistent with the 
calculations and analysis presented in AR4 and referenced materials.
---------------------------------------------------------------------------

    None of these alternative refrigerants can simply be ``dropped'' 
into existing HFC-134a air conditioning systems. In order to account 
for the unique properties of each refrigerant and address use 
conditions required under SNAP, changes to the systems will be 
necessary. Typically these changes will need to occur during a vehicle 
redesign cycle but can also occur during a refresh. For example, 
because CO2, when used as a refrigerant, is physically and 
thermodynamically very different from HFC-134a and operates at much 
higher pressures, a transition to this refrigerant would require 
significant hardware changes. A transition to A/C systems designed for 
HFO-1234yf, which is more thermodynamically similar to HFC-134a than is 
CO2, requires less significant hardware changes that 
typically include installation of a thermal expansion valve and can 
potentially require resized condensers and evaporators, as well as 
changes in other components. In addition, vehicle assembly plants 
require re-tooling in order to handle new refrigerants safely. Thus a 
change in A/C refrigerants requires significant engineering, planning, 
and manufacturing investments.
    EPA is not aware of any significant development of A/C systems 
designed to use alternative refrigerants in heavy-duty vehicles.\128\ 
However, all three lower GWP alternatives are in use or under various 
stages of development for use in LD vehicles. Of these three 
refrigerants, most manufacturers of LD vehicles have identified HFO-
1234yf as the most likely refrigerant to be used in that application. 
For that reason, EPA anticipates that HFO-1234yf will be a primary 
candidate for refrigerant substitution in the HD market in the future 
if it is listed as an acceptable substitute under SNAP for HD A/C 
applications.
---------------------------------------------------------------------------

    \128\ To the extent that some manufacturers produce HD pickups 
and vans on the same production lines or in the same facilities as 
LD vehicles, some A/C system technology commonality between the two 
vehicle classes may be developing.
---------------------------------------------------------------------------

    As mentioned above, EPA has listed as acceptable, subject to use 
conditions, two lower-GWP refrigerants, R-744 (CO2) and HFC-
152a, for use in HD vehicles. On April 18, 2016, EPA also proposed to 
list HFO-1234yf as acceptable, subject to use conditions, in A/C 
systems for newly manufactured MDPVs, HD pickup trucks, and complete HD 
vans (81 FR 22810). In that action, EPA proposed to list HFO-1234yf as 
acceptable, subject to use conditions, for those vehicle types for 
which human health and environmental risk could be assessed using the 
currently available risk assessments and analysis on LD vehicles. Also 
in that action, EPA requested ``information on development of HFO-
1234yf MVAC systems for other HD vehicle types or off-road vehicles, or 
plans to develop these systems in the future.'' EPA also stated ``This 
information may be used to inform a future listing'' (81 FR 22868).
    In another rulemaking action under the SNAP program, on July 20, 
2015, EPA published a final rule (80 FR 42870) that will change the 
listing status of HFC-134a to unacceptable for use in newly 
manufactured LD motor vehicles beginning in MY 2021 (except as allowed 
under a narrowed use limit for use in newly manufactured LD vehicles 
destined for use in countries that do not have infrastructure in place 
for servicing with other acceptable refrigerants through MY 2025). In 
that same rule, EPA listed the refrigerant blends SP34E, R-426A, R-
416A, R-406A, R-414A, R-414B, HCFC Blend Delta, Freeze 12, GHG-X5, and 
HCFC Blend Lambda as unacceptable for use in newly manufactured light-
duty vehicles beginning in MY 2017. EPA's decisions were based on the 
availability of other substitutes that pose less overall risk to human 
health and the environment, when used in accordance with required use 
conditions. Neither the April 2016 proposed rule nor the July 2015 
final rule consider a change of listing status for HFC-134a in HD 
vehicles.
    LD vehicle manufacturers are currently making investments in 
systems designed for lower-GWP refrigerants, both domestically and on a 
global basis. In support of the LD GHG rule, EPA projected a full 
transition of LD vehicles to lower-GWP alternatives in the United 
States by MY 2021. We expect the costs of transitioning to decrease 
over time as alternative refrigerants are adopted across all LD 
vehicles and trucks, in part due to increased availability of 
components and the continuing increases in refrigerant production 
capacity, as well as knowledge gained through experience. As lower-GWP 
alternatives become widely used in LD vehicles, some HD vehicle 
manufacturers may wish to also transition their vehicles. Transitioning 
could be advantageous for a variety of reasons, including platform 
standardization and company environmental stewardship policies.
    In the proposal for this Phase 2 HD rule, EPA proposed another 
action related to alternative refrigerants. EPA proposed to allow a 
manufacturer to be ``deemed to comply'' with the leakage standard if 
its A/C system used a refrigerant other than HFC-134a that was both 
listed as an acceptable substitute refrigerant for heavy-duty A/C 
systems under SNAP, and was identified in the LD GHG regulations at 40 
CFR 86.1867-12(e). 80 FR 40172. By slightly reducing the regulatory 
burden of compliance with the leakage standard for a manufacturer that 
used an alternative refrigerant, the ``deemed to comply'' provision was 
intended to provide a modest incentive for the use of such 
refrigerants. There were comments in support of this approach,

[[Page 73526]]

including from Honeywell and Chemours, both of which manufacture HFO-
1234yf.
    For several reasons, EPA has reconsidered the proposed ``deemed to 
comply'' provision for this rule, and instead, the Phase 2 program 
retains the Phase 1 requirement that manufacturers attest that they are 
using low-leak components, regardless of the refrigerant they use. CARB 
and several NGO commenters expressed concerns about the proposed 
``deemed to comply'' provision, primarily citing the potential for 
manufacturers to revert to less leak-tight components if they were no 
longer required to attest to the use of low-leak A/C system components 
because they used a lower-GWP refrigerant. In general, we expect that 
the progress LD vehicle manufacturers are making toward more leak-tight 
A/C systems will continue and that this progress will transfer to HD A/
C systems. Still, we agree that continued improvements in low-leak 
performance HD vehicles is an important goal, and that continuing the 
Phase 1 leakage requirements in the Phase 2 program should discourage 
manufacturers from reverting to higher-leak and potentially less 
expensive components. It is also important to note that there is no 
``deemed to comply'' option in the parallel LD-GHG program--
manufacturers must attest to meeting the leakage standard. There is no 
compelling reason to have a different regime for heavy duty 
applications.
    Although leakage of lower-GWP refrigerants is of less concern from 
a climate perspective than leakage of higher GWP refrigerants, we also 
agree with several commenters that expressed a concern related to the 
servicing of lower-GWP systems with higher-GWP refrigerants in the 
aftermarket. We agree that this could result due to factors such as 
price differentials between aftermarket refrigerants. However, as is 
the case for Phase 1, as a part of certification, HD manufacturers will 
attest both to the use of low-leak components as well as to the 
specific refrigerant used. Thus, in the future, a manufacturer wishing 
to certify a vehicle with an A/C system designed for an alternative 
refrigerant will attest to the use of that specific refrigerant. In 
that situation, any end-user servicing and recharging that A/C system 
with any other refrigerant would be considered tampering with an 
emission-related component under Title II of the CAA. For example, 
recharging an A/C system certified to use a lower-GWP refrigerant, such 
as HFO-1234yf, with any other refrigerant, including but not limited to 
HFC-134a, would be considered a violation of Title II tampering 
provisions.
    At the same time, EPA does not believe that finalizing the ``deemed 
to comply'' provision would have had an impact on any future transition 
of the HD industry to alternative refrigerants. As discussed above, two 
lower-GWP refrigerants are already acceptable for use in HD vehicles, 
and EPA has proposed to list HFO-1234yf as acceptable, subject to use 
conditions, for limited HD vehicle types. As also discussed above, and 
especially in light of the rapid expansion of alternative refrigerants 
that has been occurring in the LD vehicle market, similar trends may 
develop in the HD vehicle market, regardless of EPA's action regarding 
leakage of alternative refrigerants in this final rule.
(c) Small Business Issues
    The Regulatory Flexibility Act (RFA) generally requires an agency 
to prepare a regulatory flexibility analysis of any rule subject to 
notice and comment rulemaking requirements under the Administrative 
Procedure Act or any other statute unless the agency certifies that the 
rule will not have a significant economic impact on a substantial 
number of small entities. See generally 5 U.S.C. 601-612. The RFA 
analysis is discussed in Section XIV.
    Pursuant to section 609(b) of the RFA, as amended by the Small 
Business Regulatory Enforcement Fairness Act (SBREFA), EPA also 
conducted outreach to small entities and convened a Small Business 
Advocacy Review Panel to obtain advice and recommendations of 
representatives of the small entities that potentially will be subject 
to the rule's requirements. Consistent with the RFA/SBREFA 
requirements, the Panel evaluated the assembled materials and small-
entity comments on issues related to elements of the Initial Regulatory 
Flexibility Analysis (IRFA). A copy of the Panel Report was included in 
the docket for this rule.
    The agencies previously determined that the Phase 2 regulations 
could potentially have a significant economic impact on small entities. 
Specifically, the agencies identified four categories of directly 
regulated small businesses that could be impacted:

 Trailer Manufacturers
 Alternative Fuel Converters
 Vocational Chassis Manufacturers
 Glider Vehicle \129\ Assemblers
---------------------------------------------------------------------------

    \129\ Vehicles produced by installing a used engine into a new 
chassis are commonly referred to as ``gliders,'' ``glider kits,'' or 
``glider vehicles.'' See Section I.E.i and XIII.B.

    To minimize these impacts the agencies are adopting certain 
regulatory flexibilities--both general and category-specific. In 
general, we are delaying new requirements for EPA GHG emission 
standards by one initial year and simplifying certification 
requirements for small businesses. Even with this one year delay, small 
businesses will be required to comply with EPA's standards before 
NHTSA's fuel efficiency standards are mandatory. Because of this 
timing, compliance with NHTSA's regulations will not be delayed, as 
small business manufacturers will be accommodated through EPA's initial 
one year delay. The agencies are also providing the following specific 
relief:
     Trailers: Adopting simpler requirements for non-box 
trailers, which are more likely to be manufactured by small businesses; 
reduced reliance on emission averaging; and making third-party testing 
easier for certification.
     Alternative Fuel Converters: Omitting recertification of a 
converted vehicle when the engine is converted and certified; reduced 
N2O testing; and simplified onboard diagnostics and delaying 
required compliance with each new standard by one model year.
     Vocational Chassis: Less stringent standards for certain 
vehicle categories; opportunity to generate credits under the Phase 1 
program.
     Glider Vehicle Assemblers: \130\ Exempting existing small 
businesses, but limiting the small business exemption to a capped level 
of annual production (production in excess of the capped amount will be 
allowed, but subject to all otherwise applicable requirements including 
the Phase 2 standards). Providing additional flexibility for newer 
engines.
---------------------------------------------------------------------------

    \130\ EPA is amending its rules applicable to engines installed 
in glider kits, which will affect emission standards not only for 
GHGs but for criteria pollutants as well. EPA is also clarifying its 
requirements for certification and revising its definitions for 
glider kit and glider vehicle manufacturers. NHTSA is not including 
glider vehicles under its Phase 2 fuel consumption standards. See 
Section XIII.B.
---------------------------------------------------------------------------

    These flexibilities are described in more detail in Section XIV, in 
RIA Section 12 and in the Panel Report. Flexibilities specific to 
glider vehicle assemblers are described in Section XIII.
(d) Confidentiality of Test Results and GEM Inputs
    The agencies received mixed comments regarding the question of 
whether GEM inputs should be made available to public. Some commenters 
supported making this information available, while others thought it 
should

[[Page 73527]]

be protected as confidential business information (CBI). In accordance 
with Federal statutes, EPA does not release information from 
certification applications (or other compliance reports) that we 
determine to be CBI under 40 CFR part 2. Consistent with section 114(c) 
of the CAA, EPA does not consider emission test results to be CBI after 
introduction into commerce of the certified engine or vehicle. 
(However, we have generally treated test results as protected before 
the introduction into commerce date). EPA has not yet made a final 
determination for Phase 1 or Phase 2 certification test results. 
Nevertheless, at this time we expect to continue this policy and 
consider it likely that we would not treat any test results or other 
GEM inputs as CBI after the introduction into commerce date as 
identified by the manufacturer.
    With regard to NHTSA's treatment of confidential business 
information, manufacturers must submit a request for confidentiality 
with each electronic submission specifying any part of the information 
or data in a report that it believes should be withheld from public 
disclosure as trade secret or other confidential business information. 
A form is available through the NHTSA Web site to request 
confidentiality. NHTSA does not consider manufacturers to continue to 
have a business case for protecting pre-model report data after the 
vehicles contained within that report have been introduced into 
commerce.
(e) Delegated Assembly and Secondary Manufacturers
    In EPA's existing regulations (40 CFR 1068.261), we allow engine 
manufacturers to sell or ship engines that are missing certain 
emission-related components if those components will be installed by 
the vehicle manufacturer. These provisions already apply to Phase 1 
vehicles as well, providing a similar allowance for vehicle 
manufacturers to sell or ship vehicles that are missing certain 
emission-related components if those components will be installed by a 
secondary vehicle manufacturer. See section 1037.620. EPA has found 
this provision to work well and is finalizing certain amendments in 
this rule. See 40 CFR 1037.621. Under the amended rule, as conditions 
of this allowance, manufacturers will be required to:

 Have a contractual obligation with the secondary manufacturer 
to complete the assembly properly and provide instructions about how to 
do so
 Keep records to demonstrate compliance
 Apply a temporary label to the incomplete vehicles
 Take other reasonable steps to ensure the assembly is 
completed properly
 Describe in its application for certification how it will use 
this allowance

    Under delegated assembly, it is the upstream manufacturer that 
holds the certificate and assumes primary responsibility for all 
compliance requirements. Our experience applying this approach has 
shown that holding the upstream manufacturer responsible ensures that 
they will exercise due diligence throughout the process.
    EPA proposed to apply this new section broadly. However, commenters 
raised valid questions about whether it is necessary to apply this 
formal process as broadly as proposed. In response, we have 
reconsidered the proposed approach and have determined that it would be 
appropriate to allow a less formal process with components for which 
market forces will make it unlikely that a secondary manufacturer would 
not complete assembly properly. In those cases, the certifying 
manufacturers will be required to provide sufficiently detailed 
installation instructions to the secondary manufacturers, who would 
then be obligated to complete assembly properly before the vehicles are 
delivered to the ultimate purchasers.
    One example of a case for which market forces could ensure that 
assembly is completed properly would be air conditioning leakage 
requirements. Purchasers will have the expectation that the systems 
will not leak, and a secondary manufacturer should have no incentive to 
not follow the certifying manufacturer's instructions.
    As revised, Sec.  1037.621 will require the formal delegated 
assembly process for the following technologies if they are part of the 
OEM's certified configuration but not shipped with the vehicle:

 Auxiliary power units
 Aerodynamic devices
 Hybrid components
 Natural gas fuel tanks

    Certificate holders will remain responsible for other certified 
components, but will not automatically be required to comply with the 
formal delegated assembly requirements. That determination will be made 
case-by-case as part of the certification process. We are also 
explicitly making the flexibility in 40 CFR 1037.621 available for HD 
pickups and vans certified to the standards in 40 CFR part 86. As is 
currently specified in 40 CFR 1068.261, EPA will retain the authority 
to apply additional necessary conditions (at the time of certification) 
to the allowance to delegate assembly of emission to secondary 
manufacturers (when emission control equipment is not shipped with the 
vehicle to the secondary manufacturer, as just noted). In particular, 
we would likely apply such additional conditions for manufacturers that 
we determine to have previously not completed assembly properly. Issues 
of delegated assembly are addressed in more detail in Section 1.4.4 of 
the RTC.
(f) Engine/Vehicle Useful Life
    We received comment on what policies we should adopt to address the 
situation where the engine and the vehicle are subject to emission 
standards over different useful-life periods. For example, a medium 
heavy-duty engine may power vehicles in weight classes ranging from 2b 
to 8, with correspondingly different regulatory useful lives for those 
vehicles. As provided in 40 CFR 1037.140 of the final regulations, we 
have structured the vehicle regulations to generally apply the same 
useful life for the vehicle that applies for the engines. However, 
these regulations also allow vehicle manufacturers to certify their 
vehicles to longer useful lives. The agencies see no problem with 
allowing vehicles to have longer useful lives than the engines.
(g) Compliance Reports
    The agencies received comment on the NPRM from two environmental 
organizations requesting that the agencies make available to the public 
data and information that would enable the public to track trends in 
technology sales over time, as well as track company-specific 
compliance data. The commenters suggested that this should include an 
agency publication of an annual compliance report for the Heavy-duty 
Phase 2 program. The commenters requested this information to allow all 
stakeholders to see how individual companies, as well as the industry 
overall, were performing relative to their compliance obligations (see 
comments from ACEEE and NRDC).
    The agencies agree with this comment. In the context of the light-
duty vehicle GHG standards, EPA has already published four annual 
compliance reports which has made available to the public detailed 
information regarding both how individual light-duty vehicle companies 
have been meeting their compliance obligations, as well as summary 
information at the light-duty fleet level. NHTSA makes the up-to-date 
information on the light-duty fuel economy program available through 
its

[[Page 73528]]

CAFE Public Information Center (http://www.nhtsa.gov/CAFE_PIC/CAFE_PIC_Home.htm). Information includes manufacturer and overall fleet 
standards and CAFE performance, credit status, and civil penalty 
status. This information has been helpful to increase transparency to 
all stakeholders and to allow the public to see how companies are 
progressing from one year to the next with respect to their compliance 
requirements. It is EPA's intention to publish a similar annual 
compliance report for the heavy duty GHG program, covering both the 
existing Phase 1 program, as well as the Phase 2 standards contained in 
this final rule. It is NHTSA's intention to expand the Public 
Information Center to include the medium- and heavy-duty fuel 
efficiency program and to make up-to-date information collected in the 
heavy-duty fuel efficiency compliance process available publicly. Both 
the EPA and NHTSA compliance reports will provide available information 
at the vehicle subclass level for each of the four vehicle categories 
(i.e. Tractors, Trailers, Vocational, and Heavy-Duty Pickups and Vans), 
and EPA will provide available information for the other GHG standards, 
such as N2O and refrigerant leak detection standards. Prior 
to issuing the compliance reports, EPA and NHTSA will work with 
regulated manufacturers to reconcile concerns over the release of 
claimed confidential business information, consistent with 40 CFR part 
2 and 49 CFR 512.
(3) Life Cycle Emissions
    The agencies received many comments expressing concerns about 
establishing the GHG and fuel consumption standards as tailpipe 
standards that do not account for upstream emissions or other life 
cycle impacts. However, many other commenters supported this approach. 
Comments specifically related to alternative fuels or electric vehicles 
are addressed in Section I.C.(1)(d) and in Section XI.B. This section 
addresses the issue more broadly.
    As discussed below, the agencies do not see how we could accurately 
account for life cycle emissions in our vehicle standards, nor have 
commenters shown that such an accounting is needed. In addition, NHTSA 
has already noted that the fuel efficiency standards are necessarily 
tailpipe-based, and that a lifecycle approach would likely render it 
impossible to harmonize the fuel efficiency and GHG emission standards, 
to the great detriment of our goal of achieving a national, harmonized 
program. See 76 FR 57125.
    It is also worth noting that EPA's engine and vehicle emission 
standards and NHTSA's vehicle fuel consumption standards (including 
those for light-duty vehicles) have been in place for decades as 
tailpipe standards. The agencies find no reasonable basis in the 
comments or elsewhere to change fundamentally from this longstanding 
approach.
    Although the final standards do not account for life cycle 
emissions, the agencies have estimated the upstream emission impact of 
reducing fuel consumption for heavy-duty vehicles. As shown in Section 
VII and VIII, these upstream emission reductions are significant and 
worth estimating, even with some uncertainty. However, this analysis 
would not be a sufficient basis for inclusion in the standards 
themselves.
(a) Challenges for Addressing Life Cycle Emissions With Vehicle 
Standards
    Commenters supporting accounting for life cycle emissions generally 
did so in the context of one or more specific technologies. However, 
the agencies cannot accurately address life-cycle emissions on a 
technology specific basis at this time for two reasons:
     We lack data to address each technology, and see no path 
to selectively apply a life cycle analysis to some technologies, but 
not to others.
     Actual life cycle emissions are dependent on factors 
outside the scope of the rulemaking that may change in the future.
    With respect to the first reason, even if we were able to 
accurately and fully account for life cycle impacts of one technology 
(such as weight reduction), this would not allow us to address life 
cycle emissions for other technologies. For example, how would the 
agencies address potential differences in life cycle emissions for 
shifting from a manual transmission to and AMT, or the life cycle 
emissions of aerodynamic fairings? If we cannot factor in life cycle 
impacts for all technologies, how would we do it for weight reductions? 
Given the complexity of these rules and the number of different 
technologies involved, we see no way to treat the technologies 
equitably. Commenters do not provide the information necessary to 
address this challenge, nor are the agencies aware of such information.
    The second reason is just as problematic. This rulemaking is 
setting standards for vehicles under specific statutory provisions. It 
is not regulating manufacturing processes, distribution practices, or 
the locations of manufacturing facilities. And yet each of these 
factors could impact life cycle emissions. So while we could take a 
snapshot of life cycle emissions at this point in time for specific 
manufacturers, it may or may not have any relation to life cycle 
emissions in 2027, or for other manufacturers. Consider, for example, 
two component manufacturers: One that produces its components near the 
vehicle assembly plant, and relies on natural gas to power its factory; 
and a second that is located overseas and relies on coal-fired power. 
How would the agencies equitably (or even non-arbitrarily) factor in 
these differences without regulating these processes? To the extent 
commenters provided any information on life cycle impacts, they did not 
address this challenge.
(b) Need for Life Cycle Consideration in the Standards
    The agencies acknowledge that a full and accurate accounting of 
life cycle emissions (if it were possible) could potentially make the 
Phase 2 program marginally better. However, we do not agree that this 
is an issue of fundamental importance. While some commenters submitted 
estimates of the importance of life cycle emissions for light-duty 
vehicles, life cycle emissions are less important for heavy-duty 
vehicles. Consider, for example, the difference between a passenger car 
and a heavy-duty tractor. If the passenger car achieves 40 mile per 
gallon and travels 150,000 miles in its life, it would consume less 
than 4,000 gallons of fuel in its life. On the other hand, a tractor 
that achieves 8 miles per gallon and travels 1,000,000 miles would 
consume 125,000 gallons of fuel in its life, or more than 30 times the 
fuel of the passenger car. Commenters provide no basis to assume the 
energy consumption associated with tractor production would be 30 times 
that of the production of a passenger car.
(4) Amendments to the Phase 1 Program
    The agencies are revising some test procedures and compliance 
provisions used for Phase 1. These changes are described in Section 
XII. This includes both amendments specific to Phase 1, as well as 
amendments that apply more broadly than Phase 1, such as the revisions 
to the delegated assembly provisions. As a drafting matter, EPA notes 
that we are moving the GHG standards for Class 2b and 3 pickups and 
vans from 40 CFR 1037.104 to 40 CFR 86.1819-14.
    NHTSA is also amending 49 CFR part 535 to make technical 
corrections to its Phase 1 program to better align with EPA's 
compliance approach, standards and CO2 performance results. 
In general, these changes are intended to improve the regulatory 
experience for regulated

[[Page 73529]]

parties and also reduce agency administrative burden. More 
specifically, NHTSA is changing the rounding of its standards and 
performance values to have more significant digits. Increasing the 
number of significant digits for values used for compliance with NHTSA 
standards reduces differences in credits generated and overall credit 
balances for the EPA and NHTSA programs. NHTSA is also removing the 
petitioning process for off-road vehicles, clarifying requirements for 
the documentation needed for submitting innovative technology requests 
in accordance with 40 CFR 1037.610 and 49 CFR 535.7, and adding further 
detail to requirements for submitting credit allocation plans as 
specified in 49 CFR 535.9. Finally, NHTSA is adding the same 
recordkeeping requirements that EPA currently requires to facilitate 
in-use compliance inspections. These changes are intended to improve 
the regulatory experience for regulated parties and also reduce agency 
administrative burden.
    The agencies received few comments on these changes, with most 
supporting the proposed changes or suggesting improvements. These 
comments as well as the few comments opposing any of these changes are 
discussed in Section XII and in the RTC.
(5) Other Amendments to EPA Regulations
    EPA is finalizing certain other changes to regulations that we 
proposed, which are not directly related to the HD Phase 1 or Phase 2 
programs, as detailed in Section XIII. For these amendments, there are 
no corresponding changes in NHTSA regulations. Some of these amendments 
relate directly to heavy-duty highway engines, but not to the GHG 
programs. Others relate to nonroad engines. This latter category 
reflects the regulatory structure EPA uses for its mobile source 
regulations, in which regulatory provisions applying broadly to 
different types of mobile sources are codified in common regulatory 
parts such as 40 CFR part 1068. This approach creates a broad 
regulatory structure that regulates highway and nonroad engines, 
vehicles, and equipment collectively in a common program. Thus, it is 
appropriate to include some amendments to nonroad regulations in 
addition to the changes applicable only for highway engines and 
vehicles.
    Except as noted below, the agencies received relatively few 
significant comments on these issues. All comments are discussed in 
more detail in Section XIII and in the RTC. One area, for which we did 
receive significant comment was the issue of competition vehicles. As 
described in Section XIII, EPA is not finalizing the proposed 
clarification related to highway vehicles used for competition.
(a) Standards for Engines Installed In Glider Kits
    EPA regulations currently allow used pre-2013 engines to be 
installed into new glider kits without meeting currently applicable 
standards. As described in Section XIII.B, EPA is amending its 
regulations to allow only engines that have been certified to meet 
standards for the model year in which the glider vehicle is assembled 
(i.e. current model year engine standards) to be installed in new 
glider kits, with certain exceptions. First, engines certified to 
earlier MY standards that are identical to the current model year 
standards may be used. Second, engines still within their useful life 
(and certain similar engines) may be used. Note that this would not 
allow use of the pre-2002 engines that are currently being used in most 
glider vehicles because they all would be outside of the 10-year useful 
life period. Finally, the interim small manufacturer allowance for 
glider vehicles will also apply for the engines used in the exempted 
glider kits. Comments on this issue are summarized and addressed in 
Section XIII.B and in RTC Section 14.2.
(b) Nonconformance Penalty Process Changes
    Nonconformance penalties (NCPs) are monetary penalties established 
by regulation that allow a vehicle or engine manufacturer to sell 
engines that do not meet the emission standards. Manufacturers unable 
to comply with the applicable standard pay penalties, which are 
assessed on a per-engine basis.
    On September 5, 2012, EPA adopted final NCPs for heavy heavy-duty 
diesel engines that could be used by manufacturers of heavy-duty diesel 
engines unable to meet the current oxides of nitrogen (NOX) 
emission standard. On December 11, 2013 the U.S. Court of Appeals for 
the District of Columbia Circuit issued an opinion vacating that Final 
Rule. It issued its mandate for this decision on April 16, 2014, ending 
the availability of the NCPs for the current NOX standard, 
as well as vacating certain amendments to the NCP regulations due to 
concerns about inadequate notice. In particular, the amendments revise 
the text explaining how EPA determines when NCP should be made 
available. In the Phase 2 NPRM, EPA re-proposed most of these 
amendments to provide fuller notice and additional opportunity for 
public comment. As discussed in Section XIII, although EPA received one 
comment opposing these amendments, they are being finalized as 
proposed.
(c) Updates to Heavy-Duty Engine Manufacturer In-Use Testing 
Requirements
    EPA and manufacturers have gained substantial experience with in-
use testing over the last four or five years. This has led to important 
insights in ways that the test protocol can be adjusted to be more 
effective. We are accordingly making changes to the regulations in 40 
CFR part 86, subparts N and T.
(d) Extension of Certain 40 CFR Part 1068 Provisions to Highway 
Vehicles and Engines
    As part of the Phase 1 GHG standards, we applied the exemption and 
importation provisions from 40 CFR part 1068, subparts C and D, to 
heavy-duty highway engines and vehicles. We also specified that the 
defect reporting provisions of 40 CFR 1068.501 were optional. In an 
earlier rulemaking, we applied the selective enforcement auditing under 
40 CFR part 1068, subpart E (75 FR 22896, April 30, 2010). We are 
adopting the rest of 40 CFR part 1068 for heavy-duty highway engines 
and vehicles, with certain exceptions and special provisions.
    As described above, we are applying all the general compliance 
provisions of 40 CFR part 1068 to heavy-duty engines and vehicles 
subject to 40 CFR parts 1036 and 1037. We are also applying the recall 
provisions and the hearing procedures from 40 CFR part 1068 for highway 
motorcycles and for all vehicles subject to standards under 40 CFR part 
86, subpart S.
    EPA is updating and consolidating the regulations related to formal 
and informal hearings in 40 CFR part 1068, subpart G. This will allow 
us to rely on a single set of regulations for all the different 
categories of vehicles, engines, and equipment that are subject to 
emission standards. We also made an effort to write these regulations 
for improved readability.
    We are also making a number of changes to part 1068 to correct 
errors, to add clarification, and to make adjustments based on lessons 
learned from implementing these regulatory provisions.
(e) Amendments to Engine and Vehicle Test Procedures in 40 CFR Parts 
1065 and 1066
    EPA is making several changes to our engine testing procedures 
specified in

[[Page 73530]]

40 CFR part 1065. None of these changes will significantly impact the 
stringency of any standards.
(f) Amendments Related to Marine Diesel Engines in 40 CFR Parts 1042 
and 1043
    EPA's emission standards and certification requirements for marine 
diesel engines under the Clean Air Act and the act to Prevent Pollution 
from Ships are identified in 40 CFR parts 1042 and 1043, respectively. 
EPA is amending these regulations with respect to continuous 
NOX monitoring and auxiliary engines, as well as making 
several other minor revisions.
(g) Amendments Related to Locomotives in 40 CFR Part 1033
    EPA's emission standards and certification requirements for 
locomotives under the Clean Air Act are identified in 40 CFR part 1033. 
EPA is making several minor revisions to these regulations.
(6) Other Amendments to NHTSA Regulations
    NHTSA proposed to amend 49 CFR parts 512 and 537 to allow 
manufacturers to submit required compliance data for the Corporate 
Average Fuel Economy (CAFE) program electronically, rather than 
submitting some reports to NHTSA via paper and CDs and some reports to 
EPA through its VERIFY database system. NHTSA is not finalizing this 
proposal in this rulemaking and will consider electronic submission for 
CAFE reports in a future action.

II. Vehicle Simulation and Separate Engine Standards for Tractors and 
Vocational Chassis

A. Introduction

    This Section II. describes two regulatory program elements that are 
common among tractors and vocational chassis. In contrast, Sections III 
and V respectively describe the regulatory program elements that are 
unique to tractors and to vocational chassis. The common elements 
described here are the vehicle simulation approach to vehicle 
certification and the separate standards for engines. Section II.B 
discusses the reasons for this Phase 2 regulatory approach; namely, 
requiring vehicle simulation for tractor and vocational chassis 
certification, maintaining separate engine standards, and expanding and 
updating their related mandatory and optional test procedures. Section 
II.C discusses in detail the evolution and final version of the vehicle 
simulation computer program, which is called the Greenhouse gas 
Emissions Model or ``GEM.'' Section II.C also discusses the evolution 
and final versions of the test procedures for determining the GEM 
inputs that are common for tractors and vocational chassis. Section 
II.D discusses in detail the separate engine standards for GHGs and 
fuel efficiency and their requisite test procedures.
    In this final action, the agencies have built on the success of the 
Phase 1 GEM-based approach for the certification of tractors and 
vocational chassis. To better recognize the real-world impact of 
vehicle technologies, we have expanded the number of required and 
optional vehicle inputs into GEM. Inputting these additional details 
into GEM results in more accurate representations of vehicle 
performance and greater opportunities to demonstrate reductions in 
CO2 emissions and fuel consumption. We are also finalizing 
revisions to the vehicle driving patterns that are programmed into GEM 
to better reflect real-world vehicle operation and the emissions 
reductions that result from applying GHG and fuel efficiency 
technologies to vehicles. As a result of these revisions, the final 
GEM-based vehicle certification approach necessitates new testing of 
engines and testing of some other vehicle components to generate the 
additional GEM inputs for Phase 2. More detail is provided in Section 
II.C.
    Based on our assessments of the technological feasibility; cost 
effectiveness; requisite lead times for implementing new and additional 
tractor and vocational vehicle technologies; and based on comments we 
received in response to our notice of proposed rulemaking and in 
response to our more recent notice of additional data availability, the 
agencies are finalizing steadily increasing stringencies of the 
CO2 and fuel consumption standards for tractors and 
vocational chassis for vehicle model years 2021, 2024 and 2027. See 
Section I or Sections III and V respectively for these numerical 
standards for tractors and vocational chassis. As part of our 
analytical process for determining the numerical values of these 
standards, the agencies utilized GEM. Using GEM as an integral part of 
our own standard-setting process helps ensure consistency between our 
technology assessments and the GEM-based certification process that we 
require for compliance with the Phase 2 standards. Our utilization of 
GEM in our standard-setting process is described further in Section 
II.C.
    For Phase 2 we are finalizing, as proposed, the same Phase 1 
certification approach for all of the GHG and fuel efficiency separate 
engine standards for those engines installed in tractors and vocational 
chassis. For the separate engine standards, we will continue to require 
the Phase 1 engine dynamometer certification test procedures, which 
were adopted substantially from EPA's existing heavy-duty engine 
emissions test procedures. In this action we are finalizing, as 
proposed, revisions to the weighting factors of the tractor engine 13-
mode steady-state test cycle (i.e., the Supplemental Engine Test cycle 
or ``SET''). The SET is required for determining tractor engine 
CO2 emissions and fuel consumption. Consistent with the 
rationale we presented in our proposal and consistent with comments we 
received, these revised SET weighting factors better reflect the lower 
engine speed operation of modern engines, which frequently occurs at 
tractor cruise speeds. We used these revised weighting factors as part 
of our engine technology assessments of both current engine technology 
(i.e., our ``baseline engine'' technology) and future engine 
technology.
    Based on our assessments of the technological feasibility; cost 
effectiveness; requisite lead times for implementing new and additional 
engine technologies; and based on comments we received in response to 
our notice of proposed rulemaking and in response to our more recent 
notice of additional data availability, the agencies are finalizing 
steadily increasing stringencies of the CO2 and fuel 
consumption separate engine standards for engine model years 2021, 2024 
and 2027. In addition, for each of these model years, EPA is 
maintaining the Phase 1 separate engine standards for CH4 
and N2O emissions--both at their Phase 1 numeric values. 
While EPA is not finalizing at this time more stringent N2O 
emissions standards, as originally proposed, EPA may soon revisit these 
separate engine N2O standards in a future rulemaking. All of 
the final Phase 2 separate engine standards are presented in Section 
II.D, along with our related assessments.

B. Phase 2 Regulatory Structure

    As proposed, in this final action the agencies have built on the 
success of the Phase 1 GEM-based approach for the certification of 
tractors and vocational chassis, while also maintaining the Phase 1 
separate engine standards approach to engine certification. While the 
regulatory structures of both Phase 1 and Phase 2 are quite similar, 
there are a number of new elements for Phase 2. Note that we are not 
applying these new

[[Page 73531]]

Phase 2 elements for compliance with the Phase 1 standards.
    These modifications for Phase 2 are consistent with the agencies' 
Phase 1 commitments to consider a range of regulatory approaches during 
the development of future regulatory efforts (76 FR 57133), especially 
for vehicles not already subject to full vehicle chassis dynamometer 
testing. For example, we committed to consider a more sophisticated 
approach to vehicle testing to more completely capture the complex 
interactions within the total vehicle, including the engine and 
powertrain performance. We also committed to consider the potential for 
full vehicle certification of complete tractors and vocational chassis 
using a chassis dynamometer test procedure. We also considered chassis 
dynamometer testing of complete tractors and vocational chassis as a 
complementary approach for validating a more complex vehicle simulation 
approach. We committed to consider the potential for a regulatory 
program for some of the trailers hauled by tractors. After considering 
these various approaches, the agencies proposed a structure in which 
regulated tractor and vocational chassis manufacturers would 
additionally enter engine and powertrain-related inputs into GEM, which 
was not part of in Phase 1.
    The basic structure in the proposal was widely supported by 
commenters, although some commenters supported changing certain 
aspects. Some commenters suggested revising GEM to recognize additional 
technologies, such as tire pressure monitoring systems and electronic 
controls that decrease fuel consumption while a vehicle is coasting. To 
the extent that the agencies were able to collect and receive 
sufficient data to support such revisions in GEM, these changes were 
made. See Section II.C. for details. For determining certain GEM 
inputs, some commenters suggested more cost-effective test procedures 
for separate engine and transmission testing, compared to the engine-
plus-transmission powertrain test procedure that the agencies proposed. 
In collaboration with researchers at engine manufacturer test 
laboratories, at Oak Ridge National Laboratory and at Southwest 
Research Institute, the agencies completed a number of laboratory 
evaluations of these suggested test procedures.\131\ Based on these 
results, which were made available to the public for a 30-day comment 
period in the NODA, the agencies are finalizing these more cost-
effective test procedures as options, in addition to the powertrain 
test procedure we proposed. We note that we are also finalizing some of 
these more cost-effective test procedures, the cycle average approach 
for all vehicle cycles, as optional for the testing of ``pre-
transmission'' hybrids. In response to our request for comment, some 
commenters expressed support for a so-called, ``cycle-average'' 
approach for generating engine map data for input into GEM. This 
approach facilitates an accurate recognition of an engine's transient 
performance. The agencies further refined this approach, and we made 
detailed information on this approach available in the NODA.\132\ Based 
on comments, we are finalizing this approach as mandatory for mapping 
engines over GEM's transient cycle, and we are allowing this approach 
as optional for GEM's 55 mph and 65 mph cycles.
---------------------------------------------------------------------------

    \131\ Oak Ridge National Laboratory results docketed for the 
NODA: EPA-HQ-OAR-2014-0827-1622 and NHTSA-2014-0132-0183. Southwest 
Research Institute results docketed for the NODA: EPA-HQ-OAR-2014-
0827-1619 and NHTSA-2014-0132-0184.
    \132\ Ibid.
---------------------------------------------------------------------------

    Some commenters expressed concern about GEM and our proposed 
tractor standards appropriately accounting for the performance of 
powertrain technologies installed in some of the largest specialty 
tractors. We have addressed this concern by finalizing a new ``heavy-
haul'' tractor sub-category, with a unique payload and vehicle masses 
in GEM, which result in a unique set of numeric standards for these 
vehicles. This is explained in detail in Section III.D. Other 
commenters expressed concern about the greater complexity of GEM's 
additional inputs and the appropriateness of our proposed vocational 
chassis standards, as applied to certain custom-built vocational 
chassis. We have addressed these concerns by finalizing a limited 
number of optional custom chassis standards, tailored according to a 
vocational chassis' final application (e.g., school bus, refuse truck, 
cement mixer, etc.). To address the concerns about GEM's complexity for 
these specialty vehicles, these optional custom chassis standards 
require a smaller number of GEM inputs. This is explained in detail in 
Section V.D.
    Some vehicle manufacturers did not support the agencies finalizing 
separate engine standards. However, as described below, the agencies 
continue to believe that separate engine standards are necessary and 
appropriate. Thus, the agencies are finalizing the basic rule structure 
that was proposed, but with a number of refinements.
    For trailer manufacturers, which will be subject to first-time 
standards under Phase 2, we will apply the standards using a GEM-based 
certification, but to do so without actually running GEM. More 
specifically, based on the agencies' analysis of the results of running 
GEM many times and varying GEM's trailer configurations, the agencies 
have developed a simple equation that replicates GEM results, based on 
inputting certain trailer values into the equation. Use of the 
equation, rather than full GEM, should significantly facilitate trailer 
certification. As described in Chapter 2.10.5 of the RIA, the equation 
has a nearly perfect correlation with GEM, so that they can be used 
instead of GEM, without impacting stringency. This is a result of the 
relative simplicity of the trailer inputs as compared to the tractor 
and vocational vehicle inputs.
(1) Other Structures Considered
    To follow-up on the commitment to consider other approaches, the 
agencies spent significant time and resources before the proposal in 
evaluating six different options for demonstrating compliance with the 
proposed Phase 2 standards as shown in Figure II.1

[[Page 73532]]

[GRAPHIC] [TIFF OMITTED] TR25OC16.001

    As shown in Figure II.1 these six options include:
    1. Full vehicle simulation, where vehicle inputs are entered into 
simulation software.
    2. Vehicle simulation, supplemented with separate engine standards.
    3. Controllers-in-the-loop simulation, where an actual electronic 
transmission controller module (TCM) and an actual engine controller 
module (ECM) are tested in hardware.
    4. Engine-in-the-loop simulation, with or without a TCM, where at 
least the engine is tested in hardware.
    5. Vehicle simulation with powertrain-in-the-loop, where the engine 
and transmission are tested in hardware. One variation involves an 
engine standard.
    6. Full vehicle chassis dynamometer testing.
    The agencies evaluated these options in terms of the capital 
investment required of regulated manufacturers to conduct the testing 
and/or simulation, the cost per test, the accuracy of the simulation, 
and the challenges of validating the results. Other considerations 
included the representativeness compared to the real world behavior, 
maintaining existing Phase 1 certification approaches that are known to 
work well, enhancing the Phase 1 approaches that could use 
improvements, the alignment of test procedures for determining GHG and 
non-GHG emissions compliance, and the potential to circumvent the 
intent of the test procedures. The agencies presented our evaluations 
in the proposal, and we received comments on some of these approaches, 
and these comments were considered carefully in our evaluations for 
this final action. Notably, in this final action we are adopting a 
combination of these options, where some are mandatory and others are 
optional for certification via GEM. We have concluded that this 
combination of these options strikes an optimal balance between their 
costs, accuracy with respect to real-world performance, and robustness 
for ensuring compliance. In this section we present our evaluation and 
rationale for finalizing these Phase 2 certification approaches.
    Chassis dynamometer testing (Option 6) is used extensively in the 
development and certification of light-duty vehicles. It also is used 
in Phase 1 to certify complete Class 2b/3 pickups and vans, as well as 
to certify certain incomplete vehicles (at the manufacturer's option). 
The agencies considered chassis dynamometer testing more broadly as a 
heavy-duty fuel efficiency and GHG certification option because chassis 
dynamometer testing has the ability to evaluate a vehicle's performance 
in a manner that most closely resembles the vehicle's in-use 
performance. Nearly all of the fuel efficiency technologies can be 
evaluated simultaneously on a chassis dynamometer, including the 
vehicle systems' interactions that depend on the behavior of the 
engine, transmission, and other vehicle electronic controllers. One 
challenge associated with the application of wide-spread heavy-duty 
chassis testing is the small number of heavy-duty chassis test sites 
that are available in North America. As discussed in RIA Chapter 3, the 
agencies were only able to locate 11 heavy-duty chassis test sites. 
However, more recently we have seen an increased interest in building 
new sites since issuing the Phase 1 Final Rule. For example, EPA is 
currently building a heavy-duty chassis dynamometer with the ability to 
test up to 80,000 pound vehicles at the National Vehicle and Fuel 
Emissions Laboratory in Ann Arbor, Michigan.
    Nevertheless, the agencies continue to be concerned about requiring 
a chassis test procedure for certifying tractors or vocational chassis 
due to the initial cost of a new test facility and the large number of 
heavy duty tractor and vocational chassis variants that could require 
testing. We have also concluded that for heavy-duty tractors and 
vocational chassis, there can be increased test-to-test variability 
under chassis dynamometer test conditions, versus other approaches. 
First, the agencies recognize that such testing

[[Page 73533]]

requires expensive, specialized equipment that is not widely available. 
The agencies estimate that it would vary from about $1.3 to $4.0 
million per new test site depending on existing facilities.\133\ In 
addition, the large number of heavy-duty vehicle configurations would 
require significant amounts of testing to cover the sector. For 
example, for Phase 1 tractor manufacturers typically certified several 
thousand variants of one single tractor model. Finally, EPA's 
evaluation of heavy-duty chassis dynamometer testing has shown that the 
variation of chassis test results is greater than light-duty testing, 
up to 3 percent worse, based on our sponsored testing at Southwest 
Research Institute.\134\ The agencies' research identified a number of 
unique sources of test-to-test variability in HD chassis dynamometer 
testing versus other types of testing (described next). These unique 
sources include variations in HD tire performance and tire temperature 
and pressure stability; variations in human driver performance; and 
variations in the test facilities' heating, ventilation and air 
conditioning system affecting emissions after-treatment performance 
(e.g., increased fuel consumption to maintain after-treatment 
temperature) and engine accessory power (e.g., engine fan clutching). 
Although the agencies are not requiring chassis dynamometer 
certification of tractors and vocational chassis, we believe such an 
approach could potentially be appropriate in the future for some heavy 
duty vehicles if more test facilities become available and if the 
agencies are able to address the large number of vehicle variants that 
might require testing and the unique sources of test-to-test 
variability. Note, as discussed in Section II.C.(4) we are finalizing a 
manufacturer-run complete tractor heavy-duty chassis dynamometer test 
program for monitoring relative trends fuel efficiency and for 
comparing those trends to the trends indicated via GEM simulation. 
While the agencies did not receive significant comment on the 
appropriateness of full vehicle heavy-duty chassis dynamometer testing 
for certification, the agencies did receive significant, mostly 
negative, comment on the costs versus benefits of a manufacturer-run 
complete tractor heavy-duty chassis dynamometer test program for data 
collection. These comments and our responses are detailed in Section 
II.C.(4).
---------------------------------------------------------------------------

    \133\ 03-19034 TASK 2 Report-Paper 03-Class8_hil_DRAFT, 
September 30, 2013.
    \134\ GEM Validation, Technical Research Workshop, San Antonio, 
December 10-11, 2014.
---------------------------------------------------------------------------

    Another option considered for certification involves testing a 
vehicle's powertrain in a modified engine dynamometer test facility, 
which is part of option 5 shown in Figure II.1. In this case the engine 
and transmission are installed together in a laboratory test facility, 
and a dynamometer is connected to the output shaft of the transmission. 
GEM or an equivalent vehicle simulation computer program is then used 
to control the dynamometer to simulate vehicle speeds and loads. The 
step-by-step test procedure considered for this option was initially 
developed as an option for hybrid powertrain testing for Phase 1. We 
are not finalizing this approach as mandatory, but we are allowing this 
as an option for manufacturers to generate powertrain inputs for use in 
GEM. For Phase 2 we generally require this test procedure for 
evaluating hybrid powertrains for inputs into GEM, but there are 
certain exceptions where engine-only test procedures may be used to 
certify hybrids via GEM (e.g., pre-transmission hybrids).
    A key advantage of the powertrain test approach is that it directly 
measures the effectiveness of the engine, the transmission, and the 
integration of these two components. Engines and transmissions are 
particularly challenging to simulate within a computer program like GEM 
because the engines and transmissions installed in vehicles today are 
actively and interactively controlled by their own sophisticated 
electronic controls; namely the ECM and TCM.
    We believe that the capital investment impact on manufacturers for 
powertrain testing is reasonable; especially for those who already have 
heavy-duty engine dynamometer test facilities. We have found that, in 
general, medium-duty powertrains can be tested in heavy-duty engine 
test cells. EPA has successfully completed such a test facility 
conversion at the National Vehicle and Fuel Emissions Laboratory in Ann 
Arbor, Michigan. Southwest Research Institute (SwRI) in San Antonio, 
Texas has completed a similar test cell conversion. Oak Ridge National 
Laboratory in Oak Ridge, Tennessee has been operating a recently 
constructed heavy heavy-duty powertrain dynamometer facility, and EPA 
currently has an interagency agreement with DOE to fund EPA powertrain 
testing at ORNL. The results from this testing were published for a 30-
day comment period, as part of the NODA.\135\ Eaton Corporation has 
been operating a heavy-duty powertrain test cell and has provided the 
agencies with valuable test results and other comments.\136\ PACCAR 
recently constructed and began operation of a powertrain test cell that 
includes engine, transmission and axle test capabilities.\137\ EPA also 
contracted SwRI to evaluate North America's capabilities (as of 2014) 
for powertrain testing in the heavy-duty sector and the cost of 
installing a new powertrain cell that meets agency requirements.\138\ 
Results from this 2014 survey indicated that one supplier (Eaton) 
already had this capability. We estimate that the upgrade costs to an 
existing engine test facility are on the order of $1.2 million, and a 
new test facility in an existing building are on the order of $1.9 
million. We also estimate that current powertrain test cells that could 
be upgraded to measure CO2 emissions would cost 
approximately $600,000. For manufacturers or suppliers wishing to 
contract out such testing, SwRI estimated that a cost of $150,000 would 
provide about one month of powertrain testing services. Once a 
powertrain test cell is fully operational, we estimate that for a 
nominal powertrain family (i.e. one engine family tested with one 
transmission family), the cost for powertrain installation, testing, 
and data analysis would be about $70,000 in calendar year 2016, in 2016 
dollars. Since the NPRM in July 2015, the agencies and other 
stakeholders have completed significant new work toward refining the 
powertrain test procedure itself, and these results confirm the 
robustness of this approach. The agencies regulations provide details 
of the final powertrain test procedure. See 40 CFR 1037.550.
---------------------------------------------------------------------------

    \135\ Oak Ridge National Laboratory results docketed for the 
NODA: EPA-HQ-OAR-2014-0827-1622 and NHTSA-2014-0132-0183. Southwest 
Research Institute results docketed for the NODA: EPA-HQ-OAR-2014-
0827-1619 and NHTSA-2014-0132-0184.
    \136\ Eaton, Greenhouse gas emissions and fuel efficiency 
standards for medium- and heavy-duty engines and vehicles--Phase 2, 
80 FED. REG. 40,137--Docket ID NOS. EPA-HQ-OAR-2014-0827, October 1, 
2015.
    \137\ https://engines.paccar.com/technology/research-development/.
    \138\ 03-19034 TASK 2 Report-Paper 03-Class8_hil_DRAFT, 
September 30, 2013.
---------------------------------------------------------------------------

    Furthermore, the agencies have worked with key transmission 
suppliers to develop an approach to define transmission families. 
Coupled with the agencies' existing definitions of engine families (40 
CFR 1036.230 and 1037.230), we are finalizing powertrain family 
definitions in 40 CFR 1037.231 and axle and transmission families in 40 
CFR 1037.232.
    Even though there is conclusive evidence that powertrain testing is 
a

[[Page 73534]]

technically robust and cost-effective approach to evaluating the 
CO2 and fuel consumption performance of powertrains, and 
even though there has been a clear trend toward manufacturers and other 
test laboratories recognizing the benefits and investing in new 
powertrain testing facilities, the agencies also received significant 
negative comment regarding the sheer amount of powertrain testing that 
could be required to certify the large number of unique configurations 
(i.e., unique combinations of engines and transmissions). While the 
agencies proposed to allow manufacturers to group powertrains in 
powertrain families, as defined by the EPA in 40 CFR 1037.231, 
requiring powertrain testing broadly would still likely require a large 
number of tests. To address these concerns, while at the same time 
achieving most of the advantages of powertrain testing, the agencies 
are also finalizing some mandatory and optional test procedures to 
separately evaluate engine transient performance (via the mandatory 
``cycle-average'' approach for the transient cycle) and transmission 
efficiency performance. While neither of these test procedures capture 
the optimized shift logic and other benefits of deep integration of the 
engine and transmission controllers, which only powertrain testing can 
capture, these separate test procedures do capture the remaining 
benefits of powertrain testing. The advantage of these separate tests 
is that their results can be mixed and matched within GEM to represent 
many more combinations of engines and transmissions than a comparable 
number of powertrain tests. For example, separately testing three 
parent engines that each have two child ratings and separately 
efficiency testing three transmissions that each have three major 
calibrations requires the equivalent test time of testing 6 
powertrains, but without requiring the use of a powertrain test 
facility. More importantly, the results of these 6 tests can be 
combined within GEM to certify at least 27 different powertrain 
families, which would otherwise have required 27 powertrain tests--more 
than a four-fold increase in costs. This example clearly shows how 
cost-effective a vehicle simulation approach to vehicle certification 
can be.
    Another regulatory structure option considered by the agencies was 
engine-only testing over the GEM duty cycles over a range of simulated 
vehicle configurations, which is part of Option 4 in Figure II.1. This 
is essentially a ``cycle-average approach,'' which would use GEM to 
generate engine duty cycles by simulating a range of transmissions and 
other vehicle variations. These engine-level duty cycles would then be 
programmed into a separate controller of a dynamometer connected to an 
engine's output shaft. The agencies requested comment on this approach, 
and based on continued research that has been conducted since the 
proposal, and based on comments we received in response to the NODA, we 
are finalizing this approach as mandatory for determining the GEM 
inputs that characterize an engine's transient engine performance 
within GEM over the ARB Transient duty cycle. We are also finalizing 
this approach as optional for characterizing the more steady-state 
engine operation in GEM over the 55 mph and 65 mph duty cycles with 
road grade, in lieu of steady-state engine mapping for these two 
cycles. We are also finalizing this approach as an option for 
certifying pre-transmission hybrids, in lieu of powertrain testing. We 
are calling this approach the ``cycle-average'' approach, which 
generates a cycle-average engine fuel map that is input into GEM. This 
map simulates an engine family's performance over a given vehicle drive 
cycle, for the full range of vehicles into which that engine could be 
installed. Unlike the chassis dynamometer or powertrain dynamometer 
approaches, which could have significant test facility construction or 
modification costs, this engine-only approach necessitates little 
capital investment because engine manufacturers already have engine 
test facilities to both develop engines and to certify engines to meet 
both EPA's non-GHG standards and the agencies' Phase 1 fuel efficiency 
and GHG separate engine standards. This option has received significant 
attention since our notice of proposed rulemaking. EPA and others have 
published peer reviewed journal articles demonstrating the efficacy of 
this approach,139 140 and the agencies have received 
significant comments on both the information we presented in the 
proposal and in the NODA. Comments have been predominantly supportive, 
and the comments we received tended to focus on ideas for further minor 
refinements of this test procedure.136 141 142 143 144 145 
At this time the agencies believe that the wealth of experimental data 
supporting the robustness and cost-effectiveness of the cycle-average 
approach, supports the agencies' decision to finalize this test 
procedure as mandatory for the determination of the transient 
performance of engines for use in GEM (i.e., over the ARB Transient 
Cycle).
---------------------------------------------------------------------------

    \139\ H. Zhang, J, Sanchez, M, Spears, ``Alternative Heavy-duty 
Engine Test Procedure for Full Vehicle Certification,'' SAE Int. J. 
Commer. Veh. 8(2): 2015, doi:10.4271/2015-01-2768.
    \140\ G. Salemme, E.D., D. Kieffer, M. Howenstein, M. Hunkler, 
and M. Narula, An Engine and Powertrain Mapping Approach for 
Simulation of Vehicle CO2 Emissions. SAE Int. J. Commer. Veh, 
October 2015. 8: p. 440-450.
    \141\ Cummins, Inc., Comments in Response to Greenhouse Gas 
Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty 
Engines and Vehicles--Phase 2 (Docket ID No. EPA-HQ-OAR-2014-0827 
and Docket ID No. NHTSA-2014-0132).
    \142\ Paccar, Inc., Greenhouse Gas Emissions and Fuel Efficiency 
Standards for Medium- and Heavy-Duty Engines and Vehicles; Phase 2; 
Proposed Rule, 80 FR 40138 (July 13, 2015); Docket I.D. No.: EPA-HQ-
OAR-2014-0827 and NHTSA-2014-0132.
    \143\ Daimler Trucks North America LLC, Detroit Diesel 
Corporation, And Mercedes-Benz USA, Greenhouse Gas Emissions and 
Fuel Efficiency Standards for Medium- and Heavy-Duty Engines and 
Vehicles, Phase 2, Proposed Rule, Docket ID No: EPA-HQ-OAR-2014-0827 
and NHTSA-2014-0132; 80 FR 40137 (July 13, 2015).
    \144\ Volvo Group, Greenhouse Gas Emissions and Fuel Efficiency 
Standards for Medium- and Heavy-Duty Engines and Vehicles, Phase 2, 
Proposed Rule, Dockets ID No: EPA-HQ-OAR-2014-0827 and NHTSA-2014-
0132;80 FR 40137 (July 13, 2015).
    \145\ Navistar, Greenhouse Gas Emissions and Fuel Efficiency 
Standards for Medium- and Heavy-Duty Engines and Vehicles, Phase 2, 
Proposed Rule, Dockets ID No: EPA-HQ-OAR-2014-0827 and NHTSA-2014-
0132;80 FR 40137 (July 13, 2015).
---------------------------------------------------------------------------

    The agencies also considered simulating the engine, transmission, 
and vehicle using a computer program; while having the actual 
transmission electronic controller connected to the computer running 
the vehicle simulation program, which is part of Option 3 in Figure 
II.1. The output of the simulation would be an engine cycle that would 
be used to test the engine in an engine test facility. Just as in the 
cycle-average approach, this procedure would not require significant 
capital investment in new test facilities. An additional benefit of 
this approach would be that the actual transmission controller would be 
determining the transmission gear shift points during the test, without 
a transmission manufacturer having to reveal their proprietary 
transmission control logic. This approach comes with some significant 
technical challenges, however. The computer model would have to become 
more complex and tailored to each new transmission and controller to 
make sure that the controller would operate properly when it is 
connected to a computer instead of an actual transmission. Some 
examples of the transmission specific requirements would be simulating 
all the Controller Area Network (CAN) communication to and from the 
transmission controller and the specific sensor responses both through 
simulation and hardware. Each vehicle manufacturer would have to be

[[Page 73535]]

responsible for connecting the transmission controller to the computer, 
which would require a detailed verification process to ensure it is 
operating properly while it is in fact disconnected from a real 
transmission. Determining full compliance with this test procedure 
would be a significant challenge for the regulatory agencies because 
the agencies would have to be able to replicate each of the 
manufacturer's unique interfaces between the transmission controller 
and computer running GEM. The agencies did not receive any significant 
comments on this approach, presumably because commenters focused on the 
more viable options of powertrain testing and the cycle-average engine 
mapping approach. And because of the significant challenges noted 
above, the agencies did not pursue this option further between the time 
of proposal and this final action. However, should this approach 
receive more research attention in the future, such that the concerns 
noted above are sufficiently addressed, the agencies could consider 
allowing this certification approach as an option, within the context 
of a separate future rulemaking.
    Finally, the agencies considered full vehicle simulation plus 
separate engine standards (Option 2 in Figure II.1), which is the 
required approach being finalized for Phase 2. This approach is 
discussed in more detail in the following sections. It should be noted 
before concluding this subsection that the agencies do provide a 
regulatory path for manufacturers to apply for approval of alternative 
test methods that are different than those the agencies specify. See 40 
CFR part 1065, subpart A. Therefore, even though we have not finalized 
some of the certification approaches and test procedures that we 
investigated, our conclusions about these procedures do not prevent a 
manufacturer from seeking agency approval of any of these procedures or 
any other alternative procedures.
(2) Final Phase 2 Regulatory Structure
    Under the final Phase 2 structure, tractor and vocational chassis 
manufacturers will be required to provide engine, transmission, drive 
axle(s) and tire inputs into GEM (as well as the inputs already 
required under Phase 1). For Phase 1, GEM used fixed default values for 
all of these, which limited the types of technologies that could be 
recognized by GEM to show compliance with the standards. We are 
expanding GEM to account for a wider range of technological 
improvements that would otherwise need to be recognized through the 
more cumbersome off-cycle crediting approach in Phase 1. Additional 
technologies that will now be recognized in GEM also include 
lightweight thermoplastic materials, automatic tire inflation systems, 
tire pressure monitoring systems, advanced cruise control systems, 
electronic vehicle coasting controls, engine stop-start idle reduction 
systems, automatic engine shutdown systems, hybrids, and axle 
configurations that decrease the number of drive axles. The agencies 
are also continuing separate engine standards. As described below, we 
see advantages to having both engine-based and vehicle-based standards. 
Moreover, the advantages described here for full vehicle simulation do 
not necessarily correspond to disadvantages for engine testing or vice 
versa.
(a) Advantages of Vehicle Simulation
    The agencies' primary purpose in developing fuel efficiency and GHG 
emissions standards is to increase the use of vehicle technologies that 
improve fuel efficiency and decrease GHG emissions. Under the Phase 1 
tractor and vocational chassis standards, there is no regulatory 
incentive for vehicle manufacturers to consider adopting new engine, 
transmission or axle technologies because GEM was not configured to 
recognize these technologies uniquely, leaving off-cycle credits as the 
only regulatory mechanism to recognize these technologies' benefits. By 
recognizing such technologies in GEM under Phase 2, the agencies will 
be creating a direct regulatory incentive to improve engine, 
transmission, and axle technologies to improve fuel efficiency and 
decrease GHG emissions. In its 2014 report, NAS also recognized the 
benefits of full vehicle simulation and recommended that the Phase 2 
rules incorporate such an approach.\160\
    The new Phase 2 approach will create three new specific regulatory 
incentives. First, vehicle manufacturers will have an incentive to use 
the most efficient engines. Since GEM will no longer use the agency 
default engine in simulation, manufacturers will have their own engines 
recognized in GEM. Under Phase 1, engine manufacturers have a 
regulatory incentive to design efficient engines, but vehicle 
manufacturers do not have a similar regulatory incentive to use the 
most efficient engines in their vehicles. Second, the new Phase 2 
approach will create incentives for both engine and vehicle 
manufacturers to design engines and vehicles to work together to ensure 
that engines actually operate as much as possible near their most 
efficient points. This is because Phase 2 GEM will require the vehicle 
manufacturers to input specific transmission, axle, and tire 
characteristics, thus recognizing powertrain optimization, such as 
engine down-speeding, and different transmission architectures and 
technologies, such as automated manual transmissions, automatic 
transmissions, and different numbers of transmission gears, 
transmission gear ratios, axle ratios and tire revolutions per mile. No 
matter how well designed, all engines have speed and load operation 
points with differing fuel efficiency and GHG emissions. The speed and 
load point with the best fuel efficiency (i.e., peak thermal 
efficiency) is commonly known as the engine's ``sweet spot.'' The more 
frequently an engine operates near its sweet spot, the better the 
vehicle's fuel efficiency will be. In Phase 1, a vehicle manufacturer 
receives no regulatory credit under GEM for designing its vehicle to 
operate closer to its engine's sweet spot because Phase 1 GEM does not 
model the specific engine, transmission, axle, or tire revolutions per 
mile of the vehicle. Third, this approach will recognize improvements 
to the overall efficiency of the drivetrain, including the axle. The 
new version of GEM will recognize the benefits of different integrated 
axle technologies including axle lubricants (via an optional axle 
efficiency test), and technologies that reduce axle losses such as by 
enabling three-axle vehicles to deliver power to only one rear axle. 
This is accomplished through the simulation of axle disconnect 
technology (see Chapter 4.5 of the RIA). The new version of GEM also 
will be able to recognize the benefits of reducing energy losses within 
a transmission, via an optional transmission efficiency test.
    In addition to providing regulatory incentives to use more fuel 
efficient technologies, expanding GEM to recognize engine and other 
powertrain component improvements will provide important flexibility to 
vehicle manufacturers. Providing flexibility to effectively trade 
engine and other powertrain component improvements against the other 
vehicle improvements that are recognized in GEM will allow vehicle 
manufacturers to better optimize their vehicles to achieve the lowest 
cost for specific customers. Because of the improvements in GEM, GEM 
will recognize this deeper level of vehicle optimization. Vehicle 
manufacturers could use this flexibility to reduce overall compliance 
costs and/or address special applications where certain vehicle 
technologies are not preferred or

[[Page 73536]]

practical. The agencies considered in Phase 1 allowing the exchange of 
emission certification credits generated relative to the separate 
brake-specific engine standards and credits generated relative to the 
vehicle standards. However, we did not allow this in Phase 1 due in 
part to concerns about the equivalency of credits generated relative to 
different standards, with different units of measure and different test 
procedures. The Phase 2 approach eliminates these concerns because 
engine and other vehicle component improvements will be evaluated 
relative to the same vehicle standard in GEM. This also means that 
under the Phase 2 approach there is no need to consider allowing 
emissions credit trading between engine-generated and vehicle-generated 
credits because vehicle manufacturers are directly credited by the 
combination of engine and vehicle technologies they choose to install 
in each vehicle. Therefore, this approach eliminates one of the 
concerns about continuing separate engine standards, which was that a 
separate engine standard and a full vehicle standard were somehow 
mutually exclusive. That is not the case. In fact, in the next section 
we describe how we are continuing the separate engine standard along 
with recognizing engine performance at the vehicle level. The agencies 
acknowledge that maintaining a separate engine standard will limit 
flexibility in cases where a vehicle manufacturer wanted to use less 
efficient engines and make up for them using more efficient vehicle 
technologies. However, as described below, we see important advantages 
to maintaining a separate engine standard, and we believe they more 
than justify the reduced flexibility. Furthermore, in response to 
comments about some specialized vocational custom chassis, the agencies 
are finalizing a limited number of optional standards that would be met 
using a somewhat simplified version of GEM. Specifically, in this 
simplified version of GEM, which is only applicable as an option for 
certain custom chassis applications, the GEM inputs for the engine, 
transmission gears, gear ratios, gear efficiency; axle ratio, axle 
efficiency; and tire revolutions per mile are all fixed to default 
values. This simplification allows the option of certifying these 
custom chassis without penalty for utilizing less efficient engines, 
transmissions, or axles. This flexibility also addresses a comment the 
agencies received from Cummins that the inclusion of the specific 
engine in GEM limits the flexibility provided by the separate engine 
standards' emissions averaging, banking and trading program. Cummins 
explained that certain applications like emergency vehicles, cement 
mixers and recreational vehicles oftentimes require higher-performance, 
less-efficient, engines, which are credit using engines under the ABT 
program of the separate engine standards. Because these particular 
vehicle applications have few other cost-effective and practical 
vehicle-level technologies with which to offset their use of less 
efficient engines, the main Phase 2 vocational chassis standards that 
require engine and other powertrain inputs into GEM (i.e., the 
standards for other than custom chassis vocational vehicles) could be 
particularly challenging for these applications. However, the optional 
custom chassis standards solves this issue for custom chassis 
applications. This approach solves two issues. First, it provides a 
means toward certification for these custom chassis applications, 
without penalty for using the engines they need. Second, this approach 
maintains the flexibility intended by the separate engine standards' 
averaging, banking and trading program since these custom chassis 
applications would still be using certified engines.
    One disadvantage of recognizing engines and transmission in GEM is 
that it will increase complexity for the vehicle standards. For 
example, vehicle manufacturers will be required to conduct additional 
engine tests and to generate additional GEM inputs for compliance 
purposes. However, we believe that most of the burden associated with 
this increased complexity will be an infrequent burden of engine 
testing and updating information systems to track these inputs. 
Furthermore, the agencies are requiring that engine manufacturers 
certify their respective GEM inputs; namely, their own engine maps. 
Because there are a relatively small number of heavy-duty engine 
manufacturers who will be responsible for generating and complying with 
their declared engine maps for GEM, the overall engine testing burden 
to the heavy-duty vehicle industry is small. With this approach, the 
large number of vocational chassis manufacturers will not have to 
conduct any engine testing.
    Another potential disadvantage to GEM-based vehicle certification 
is that because GEM measures performance over specific duty cycles 
intended to represent average operation of vehicles in-use, this 
approach might also create an incentive to optimize powertrains and 
drivetrains for the best GEM performance rather than the best in-use 
performance for a particular application. This is always a concern when 
selecting duty cycles for certification, and so is not an issue unique 
to GEM. There will always be instances, however infrequent, where 
specific vehicle applications will operate differently than the duty 
cycles used for certification. The question is would these differences 
force manufacturers to optimize vehicles to the certification duty 
cycles in a way that decreases fuel efficiency and increases GHG 
emissions in-use? We believe that the certification duty cycles will 
not create a disincentive for manufacturers to properly optimize 
vehicles for customer fuel efficiency. First, the impact of the 
certification duty cycles versus any other real-world cycle will be 
relatively small because they affect only a small fraction of all 
vehicle technologies. Second, the emission averaging and fleet average 
provisions mean that the regulations will not require all vehicles to 
meet the standards. Vehicles exceeding a standard over the duty cycles 
because they are optimized for different in-use operation can be offset 
by other vehicles that perform better over the certification duty 
cycles. Third, vehicle manufacturers also have the ability to lower 
such a vehicle's measured GHG emissions by adding technology that would 
improve fuel efficiency both over the certification duty cycles and in-
use (and to be potentially eligible to generate off-cycle credits in 
doing so). These standards are not intended to be at a stringency where 
manufacturers will be expected to apply all technologies to all 
vehicles. Thus, there should be technologies available to add to 
vehicle configurations that initially fail to meet the Phase 2 
standards. Fourth, we are further sub-categorizing the vocational 
vehicle segment compared to Phase 1, tripling the number of 
subcategories within this segment from three to nine. These nine 
subcategories will divide each of the three Phase 1 weight categories 
into three additional vehicle speed categories. Each of the three speed 
categories will have unique duty cycle weighting factors to recognize 
that different vocational chassis are configured for different vehicle 
speed applications. This further subdivision better recognizes 
technologies' performance under the conditions for which the vocational 
chassis was configured to operate. This also decreases the potential of 
the certification duty cycles to encourage manufacturers to configure 
vocational chassis differently than the optimum configuration for 
specific customers' applications. Similarly, for the tractor

[[Page 73537]]

category we are finalizing a new ``heavy-haul'' category to recognize 
the greater payload and vehicle mass of these tractors, as well as 
their limitations to effectively utilize some technologies like 
aerodynamic technologies. These new categories help minimize 
differences between GEM simulation and real-world operation. Finally, 
we are also recognizing seven specific vocational vehicle applications 
under the optional custom chassis vocational vehicle standards.
    Another disadvantage of our full vehicle simulation approach is the 
potential requirement for engine manufacturers to disclose information 
to vehicle manufacturers who install their engines that engine 
manufacturers might consider to be proprietary. Under this approach, 
vehicle manufacturers may need to know some additional details about 
engine performance long before production, both for compliance planning 
purposes, as well as for the actual submission of applications for 
certification. Moreover, vehicle manufacturers will need to know 
details about the engine's performance that are generally not publicly 
available--specifically the detailed steady-state fuel consumption map 
of an engine. Some commenters expressed significant concern about the 
Phase 2 program forcing the disclosure of proprietary steady-state 
engine performance information to business competitors; especially 
prior to an engine being introduced into commerce. It can be argued 
that a sufficiently detailed steady-state engine map, such as the one 
required for input into GEM, can reveal proprietary engine design 
elements such as intake air, turbo-charger, and exhaust system design; 
exhaust gas recirculation strategies; fuel injection strategies; and 
exhaust after-treatment thermal management strategies. Conversely, the 
agencies also received comments requesting that all GEM inputs be made 
public, as a matter of transparency and public interest.
    It is unclear at this point whether such information is truly 
proprietary. In accordance with Federal statutes, EPA does not release 
information from certification applications (or other compliance 
reports) that we determine to be Confidential Business Information 
(CBI) under 40 CFR part 2. Consistent with section 114(c) of the CAA, 
EPA does not consider emission test results to be CBI after 
introduction into commerce of the certified engine or vehicle. However, 
we have generally treated test results as protected before a product's 
introduction into commerce date. EPA has not yet made a final CBI 
determination for Phase 1 or Phase 2 GEM inputs. Nevertheless, at this 
time we expect to continue our current policy of non-disclosure prior 
to introduction into commerce, but we consider it likely that we would 
ultimately not treat any test results or other GEM inputs as CBI after 
the introduction into commerce date, as identified by the manufacturer.
    To further address the specific concern about the Phase 2 program 
forcing the disclosure of proprietary steady-state engine maps to 
business competitors, especially prior to an engine being introduced 
into commerce, the agencies are finalizing an option for engine 
manufacturers to certify only ``cycle average'' engine maps over the 
55-mph and 65-mph GEM cycles and separately mandating the cycle average 
approach for use over the ARB Transient cycle. See Section II.B. above. 
The advantage to this approach is that each data point of a cycle 
average map represents the average emissions over an entire cycle. 
Therefore, the cycle average engine map approach does not reveal any 
potentially proprietary information about an engine's performance at a 
particular steady-state point of operation.
(b) Advantages of Separate Engine Standards
    For engines installed in tractors and vocational vehicle chassis, 
we are maintaining separate engine standards for fuel consumption and 
GHG emissions in Phase 2 for both spark-ignition (SI, generally but not 
exclusively gasoline-fueled) and compression-ignition (CI, generally 
but not exclusively diesel-fueled) engines. Moreover, we are adopting a 
sequence of new more stringent engine standards for CI engines for 
engine model years 2021, 2024 and 2027. While the vehicle standards 
alone are intended to provide sufficient incentive for improvements in 
engine efficiency, we continue to see important advantages to 
maintaining separate engine standards for both SI and CI engines. The 
agencies believe the advantages described below are critical to fully 
achieve the goals of the EPA and NHTSA standards.
    First, EPA has a robust compliance program based on separate engine 
testing. For the Phase 1 standards, we applied the existing criteria 
pollutant compliance program to ensure that engine efficiency in actual 
use reflected the improvements manufacturers claimed during 
certification. With engine-based standards, it is straightforward to 
hold engine manufacturers accountable by testing in-use engines in an 
engine dynamometer laboratory. If the engines exceed the standards, 
manufacturers can be required to correct the problem or perform other 
remedial actions. Without separate engine standards in Phase 2, 
addressing in-use compliance would be more subjective. Having clearly 
defined compliance responsibilities is important to both the agencies 
and to the manufacturers.
    Second, engine standards for CO2 and fuel efficiency 
force engine manufacturers to optimize engines for both fuel efficiency 
and control of non-CO2 emissions at the same engine 
operating points. This is of special concern for NOX 
emissions, given the strong counter-dependency between engine-out 
NOX emissions and fuel consumption. By requiring engine 
manufacturers to comply with both NOX and CO2 
standards using the same test procedures, the agencies ensure that 
manufacturers include technologies that can be optimized for both, 
rather than alternate, calibrations that would trade NOX 
emissions against fuel consumption, depending how the engine or vehicle 
is tested. In the past, when there was no CO2 engine 
standard and no steady-state NOX standard, some 
manufacturers chose this dual calibration approach instead of investing 
in technology that would allow them to simultaneously reduce both 
CO2 and NOX.
    It is worth noting that these first two advantages foster fair 
competition within the marketplace. In this respect, the separate 
engine standards help assure manufacturers that their competitors are 
not taking advantage of regulatory ambiguity. The agencies believe that 
the absence of separate engine standards would leave open the 
opportunity for a manufacturer to choose a high-risk compliance 
strategy by gaming the NOX-CO2 tradeoff. 
Manufacturer concerns that competitors might take advantage of this can 
create a dilemma for those who wish to fully comply, but also perceive 
shareholder pressure to choose a high-risk compliance strategy to 
maintain market share.
    Finally, the existence of meaningful separate engine standards 
allows the agencies to exempt certain vehicles from some or all of the 
vehicle standards and requirements without forgoing the engine 
improvements. A good example of this is the off-road vehicle exemption 
in 40 CFR 1037.631 and 49 CFR 535.3, which exempts vehicles ``intended 
to be used extensively in off-road environments'' from the vehicle 
requirements. The engines used in such vehicles must still meet the 
engine standards of 40 CFR 1036.108 and 49 CFR 535.5(d). The agencies 
see no

[[Page 73538]]

reason why efficient engines cannot be used in such vehicles. However, 
without separate engine standards, there would be no way to require the 
engines to be efficient. The engine standards provide a similar benefit 
with respect to the custom chassis program discussed in Section V.
    In the past there has been some confusion about the Phase 1 
separate engine standards somehow preventing the recognition of engine-
vehicle optimization that vehicle manufacturers perform to minimize a 
vehicle's overall fuel consumption. It was not the existence of 
separate engine standards that prevented recognition of this 
optimization. Rather it was that the agencies did not allow 
manufacturers to enter inputs into GEM that characterized unique engine 
performance. For Phase 2 we are requiring that manufacturers input such 
data because we intend for GEM to recognize this engine-vehicle 
optimization. The continuation of separate engine standards in Phase 2 
does not undermine in any way the recognition of this optimization in 
GEM.

C. Phase 2 GEM and Vehicle Component Test Procedures \146\
---------------------------------------------------------------------------

    \146\ The specific version of GEM used to develop these 
standards, and which we propose to use for compliance purposes is 
also known as GEM 3.0.
---------------------------------------------------------------------------

    GEM was originally created for the certification of tractors and 
vocational vehicle chassis to the agencies' Phase 1 CO2 and 
fuel efficiency standards. See 76 FR 57116, 57146, and 57156-57157. For 
Phase 2 the agencies proposed a number of modifications to GEM, and 
based on public comments in response to the agencies' proposed 
modifications, the agencies have further refined these modifications 
for this final action.
    In Phase 1 the agencies adopted a regulatory structure where 
regulated entities are required to use GEM to simulate and certify 
tractors and vocational vehicle chassis. This computer program is 
provided free of charge for unlimited use, and the program may be 
downloaded by anyone from EPA's Web site: http://www3.epa.gov/otaq/climate/gem.htm. GEM mathematically combines the results of a number of 
performance tests of certain vehicle components, along with other pre-
determined vehicle attributes and driving patterns to determine a 
vehicle's characteristic levels of fuel consumption and CO2 
emissions, for certification purposes. For Phase 1, the required inputs 
to GEM for tractors include vehicle aerodynamics information, tire 
rolling resistance, and whether or not a vehicle is equipped with 
certain lightweight high-strength steel or aluminum components, a 
tamper-proof speed limiter, or tamper-proof idle reduction 
technologies. For Phase 1, the sole input for vocational vehicles is 
tire rolling resistance. For Phase 1, the computer program's inputs did 
not include engine test results or attributes related to a vehicle's 
powertrain; namely, its transmission, drive axle(s), or tire 
revolutions per mile. Instead, for Phase 1 the agencies specified 
generic engine and powertrain attributes within GEM. For Phase 1 these 
are fixed and cannot be changed in GEM.\147\
---------------------------------------------------------------------------

    \147\ These attributes are recognized in Phase 1 innovative 
technology provisions at 40 CFR 1037.610.
---------------------------------------------------------------------------

    Similar to other vehicle simulation computer programs, GEM combines 
various vehicle inputs with known physical laws and justified 
assumptions to predict vehicle performance for a given period of 
vehicle operation. GEM represents this information numerically, and 
this information is integrated as a function of time to calculate 
CO2 emissions and fuel consumption. Some of the justified 
assumptions in GEM include average energy losses due to friction 
between moving parts of a vehicle's powertrain; the logical behavior of 
an average driver shifting from one transmission gear to the next; and 
speed limit assumptions such as 55 miles per hour for urban highway 
driving and 65 miles per hour for rural interstate highway driving. The 
sequence of the GEM vehicle simulation can be visualized by imagining a 
human driver initially sitting in a parked running tractor or 
vocational vehicle. The driver then proceeds to drive the vehicle over 
a prescribed route that includes three distinct patterns of driving: 
Stop-and-go city driving, urban highway driving, and rural interstate 
highway driving. The driver then exits the highway and brings the 
vehicle to a stop, with the engine still running at idle. This 
concludes the vehicle simulation sequence.
    Over each of the three driving patterns or ``duty cycles,'' GEM 
simulates the driver's behavior of pressing the accelerator, coasting, 
or applying the brakes. GEM also simulates how the engine operates as 
the gears in the vehicle's transmission are shifted and how the 
vehicle's weight, aerodynamics, and tires resist the forward motion of 
the vehicle. GEM combines the driver behavior over the duty cycles with 
the various vehicle inputs and other assumptions to determine how much 
fuel must be consumed to move the vehicle forward at each point during 
the simulation. For Phase 2 the agencies added the effect of road 
grade. In GEM the effect of road grade on fuel consumption is simulated 
by increasing fuel consumption uphill, by the amount of fuel consumed 
by the engine to provide the power needed to raise the mass of the 
vehicle and its payload against the force of Earth's gravity--while at 
the same time maintaining the duty cycle's vehicle speed. Downhill road 
grades are simulated by decreasing the engine's fuel consumption, by 
the amount of power returned to the vehicle by it moving in the same 
direction as Earth's gravity. To maintain vehicle speed downhill, 
simulated brakes are sometimes applied, and the energy lost due to 
braking results in a certain amount of fuel consumption as well. For 
each of the three duty cycles, GEM totals the amount of fuel consumed 
and then divides that amount by the product of the miles travelled and 
tons of payload carried. The tons of payload carried are specified by 
the agencies for each vehicle type and weight class, and these cannot 
be changed in GEM.
    In addition to determining fuel consumption over these duty cycles, 
for Phase 2, GEM calculates a vehicle's fuel consumption rate when it 
is stopped in traffic with the driver still operating the vehicle 
(i.e., ``drive idle'') and when the vehicle is stopped and parked with 
the engine still running (i.e., ``parked idle''). For each regulatory 
subcategory of tractor and vocational vehicle (e.g., sleeper cab 
tractor, day cab tractor, light heavy-duty urban vocational vehicle, 
heavy heavy-duty regional vocational vehicle, etc.), GEM applies the 
agencies' prescribed weighting factors to each of the three duty cycles 
and to each of the two idle fuel consumption rates to represent the 
fraction of city driving, urban highway driving, rural highway driving, 
drive idle, and parked idle that is typical of each subcategory. After 
combining the weighted results of all the cycles and idle fuel rates, 
GEM then outputs a single composite result for the vehicle, expressed 
as both fuel consumed in gallon per 1,000 ton-miles (for NHTSA 
standards) and an equivalent amount of CO2 emitted in grams 
per ton-mile (for EPA standards). These are the vehicle's GEM results 
that are used along with other information to demonstrate that a 
vehicle certificate holder (e.g., a vehicle manufacturer) complies with 
the applicable standards. This other information includes the annual 
sales volume of the vehicle family, plus information on emissions 
credits that may be generated or used as

[[Page 73539]]

part of that vehicle family's certification.
    For Phase 1 GEM's tractor inputs include vehicle aerodynamics 
information, tire rolling resistance, and whether or not a vehicle is 
equipped with lightweight materials, a tamper-proof speed limiter, or 
tamper-proof idle reduction technologies. Other vehicle and engine 
characteristics in GEM were fixed as defaults that cannot be altered by 
the user. These defaults included tabulated data of engine fuel rate as 
a function of engine speed and torque (i.e., ``engine fuel maps''), 
transmissions, axle ratios, and vehicle payloads. For tractors, Phase 1 
GEM simulates a tractor pulling a standard trailer. For vocational 
vehicles, Phase 1 GEM includes a fixed aerodynamic drag coefficient and 
vehicle frontal area.
    For Phase 2 new inputs are required and other new inputs are 
allowed as options. These include the outputs of new test procedures to 
``map'' an engine to generate steady-state and transient, cycle-
average, engine fuel rate inputs to represent the actual engine in a 
vehicle. As described in detail in RIA Chapter 4, certification to the 
Phase 2 standards will require entering new inputs into GEM to describe 
the vehicle's transmission type and its number of gears and gear 
ratios. Manufacturers must also enter attributes that describe the 
vehicle's drive axle(s) type, axle ratio and tire revolutions per mile. 
We are also finalizing a number of options to conduct additional 
component testing for the purpose of replacing some of the agencies' 
``default values'' in GEM with inputs that are based on component 
testing. These include optional axle and transmission power loss test 
procedures. We are also finalizing an optional powertrain test 
procedure that would replace both the required engine mapping and the 
agencies' default values for a transmission and its automated shift 
strategy. We are also finalizing an option to generate cycle-average 
maps for the 55 mph and 65 mph cycles in GEM. In addition, we have made 
a number of improvements to the aerodynamic coast-down test procedures 
and associated aerodynamic data analysis techniques. While these 
aerodynamic test and data analysis improvements are primarily intended 
for tractors, for Phase 2 we are providing a streamlined off-cycle 
credit pathway for vocational vehicle aerodynamic performance to be 
recognized in GEM.
    As proposed, we are finalizing a significantly expanded number of 
technologies that are recognized in GEM. These include recognizing 
lightweight thermoplastic materials, automatic tire inflation systems, 
advanced cruise control systems, workday idle reduction systems, and 
axle configurations that decrease the number of drive axles. In 
response to comments and data submitted to the agencies on the Phase 2 
proposal we are also finalizing inputs related to tire pressure 
monitoring systems and advanced electronically controlled vehicle coast 
systems.
    Although GEM is similar in concept to a number of other 
commercially available vehicle simulation computer programs, the 
applicability of GEM is unique. First, GEM was designed exclusively for 
manufacturers and regulated entities to certify tractor and vocational 
vehicle chassis to the agencies' fuel consumption and CO2 
emissions standards. For GEM to be effective for this purpose, the 
inputs to GEM include only information related to certain vehicle 
components and attributes that significantly impact vehicle fuel 
efficiency and CO2 emissions. For example, these include 
vehicle aerodynamics, tire rolling resistance, and powertrain component 
information. On the other hand, other attributes such as those related 
to a vehicle's suspension, frame strength, or interior features are not 
included, where these otherwise might be included in other commercially 
available vehicle simulation programs that are used for other purposes. 
Furthermore, the simulated payload, driver behavior and duty cycles in 
GEM cannot be changed. Keeping these values constant helps to ensure 
that all vehicles are simulated and certified in the same way. However, 
these fixed attributes in GEM largely preclude GEM from being of much 
use as a research tool for exploring the effects of payload, driver 
behavior and different duty cycles.
    Similar to Phase 1, GEM for Phase 2 is available free of charge for 
unlimited use, and the GEM source code is open source. That is, the 
programming source code of GEM is freely available upon request for 
anyone to examine, manipulate, and generally use without restriction. 
In contrast, commercially available vehicle simulation programs are 
generally not free and open source. Additional details of GEM are 
included in Chapter 4 of the RIA.
    GEM is a computer software program, and like all other software 
development processes the agencies periodically released a number of 
developmental versions of the GEM software for others to review and 
test during the Phase 2 rulemaking process. This type of user testing 
significantly helps the agencies detect and fix any problems or 
``bugs'' in the GEM software.
    As part of Phase 1, the agencies conducted a peer review of GEM 
version 1.0, which was the version released for the Phase 1 
proposal.148 149 In response to this peer review and to 
comments from stakeholders, EPA made changes to the version of GEM 
released with the Phase 1 final rule. Updates to the Phase 1 GEM were 
also made via Technical Amendments.\150\ The current version of Phase 1 
GEM is v2.0.1, which is the version applicable for the Phase 1 
standards.\150\ As part of the development of GEM for Phase 2, both a 
formal peer review \149\ and a series of expert reviews were 
conducted.151 152 153 154
---------------------------------------------------------------------------

    \148\ See 76 FR 57146-57147.
    \149\ U.S. Environmental Protection Agency. ``Peer Review of the 
Greenhouse Gas Emissions Model (GEM) and EPA's Response to 
Comments.'' EPA-420-R-11-007. Last access on November 24, 2014 at 
http://www3.epa.gov/otaq/climate/documents/420r11007.pdf.
    \150\ See EPA's Web site at http://www3.epa.gov/otaq/climate/gem.htm for the Phase 1 GEM revision dated May 2013, made to 
accommodate a revision to 49 CFR 535.6(b)(3).
    \151\ U.S. Environmental Protection Agency, GEM new release (GEM 
P2v1.1) and known issues and workarounds for GEM P2v1.0), Greenhouse 
Gas Emissions Standards and Fuel Efficiency Standards for Medium- 
and Heavy-Duty Engines and Vehicles--Phase 2--EPA-HQ-OAR-2014-0827, 
August 19, 2015.
    \152\ U.S. Environmental Protection Agency, GEM Power User 
Release for Debugging, Greenhouse Gas Emissions Standards and Fuel 
Efficiency Standards for Medium- and Heavy-Duty Engines and 
Vehicles--Phase 2--EPA-HQ-OAR-2014-0827, January 27, 2016.
    \153\ U.S. Environmental Protection Agency, GEM NODA Release, 
Greenhouse Gas Emissions Standards and Fuel Efficiency Standards for 
Medium- and Heavy-Duty Engines and Vehicles--Phase 2--EPA-HQ-OAR-
2014-0827, February 16, 2016.
    \154\ U.S. Environmental Protection Agency, GEM Power User 
Release for Debugging, Greenhouse Gas Emissions Standards and Fuel 
Efficiency Standards for Medium- and Heavy-Duty Engines and 
Vehicles--Phase 2--EPA-HQ-OAR-2014-0827, May 19, 2016.
---------------------------------------------------------------------------

    The agencies have provided numerous opportunities for comment on 
GEM, and its iterative development. Shortly after the Phase 2 
proposal's publication in July 2015 (and before the end of the public 
comment period), the agencies received comments on GEM. Based on these 
early comments, the agencies made minor revisions to fix a few bugs in 
GEM and in August 2015 released an updated version of GEM to the public 
for additional comment, which also included new information on GEM road 
grade profiles. The agencies also extended the public comment period on 
the proposal, which provided at least 30 days for public comment on 
this slightly updated version of GEM.\153\ Then, in response to 
comments submitted at the close of the comment period, in early January 
2016

[[Page 73540]]

the agencies released a ``debugging'' version of GEM to a wide range of 
expert reviewers.\152\ The agencies provided one month for expert 
reviewers to provide informal feedback for debugging purposes.\152\ 
Because the changes for this debugging version mostly added new 
features to make GEM easier to use for certifying via optional test 
procedures, like the powertrain test, there were only minor changes to 
the way that GEM performed. In the March 2016 NODA, the agencies 
included another developmental version of GEM \153\ for public comment 
and provided 30 days for public comment. Based on the NREL report, 
which was also released as part of the NODA for public comment, the 
NODA version of GEM contained updated weighting factors of the duty 
cycles and idle cycles.\155\ Therefore, the outputs of GEM for a given 
vehicle configuration changed because these duty cycle weighting 
factors changed, but there were only minor updates to how the 
individual technologies were simulated in GEM. Based on comments 
received on the NODA, the agencies made minor changes to GEM and 
released another debugging version in May 2016 to manufacturers, NGOs, 
suppliers, and CARB staff.\154\ The most significant change to GEM for 
the May 2016 version was that 0.5 miles of flat road was added to the 
beginning and end of the 55 mph and 65 mph drive cycles in response to 
concerns raised by manufacturers.\156\ This change did not change the 
way that GEM worked, but it did change GEM results because of the 
change in the duty cycles. This change was made to better align GEM 
simulation with real-world engine operation. The agencies provided the 
expert reviewers with at least a 3-week period in which to review GEM 
and provide feedback. Details on the history of the comments the 
agencies received and the history of the agencies responses leading to 
these multiple releases of GEM can be found in Section II.C.(1). The 
following list summarizes the changes in GEM in response to those 
comments and data submitted to the agencies in response to the Phase 2 
proposal, NODA and other GEM releases:
---------------------------------------------------------------------------

    \155\ EPA-HQ-OAR-2014-0827-1621 and NHTSA-2014-0132-0187.
    \156\ Memo to Docket, ``Summary of Meetings and Conference Calls 
with the Truck and Engine Manufacturers Association to Discuss the 
Phase 2 Heavy-Duty GHG Rulemaking'', August 2016.
---------------------------------------------------------------------------

     Revised road grade profiles for 55- and 65-mph cruise 
cycles, only minor changes since August 2015.
     Revised idle cycles for vocational vehicles with new 
vocational cycle weightings, weightings released for public comment in 
NODA.
     Made changes to the input file structures. Examples 
includes additions of columns for axle configuration (``6x2,'' ``6x4,'' 
``6x4D,'' ``4x2''), and additions of a few more technology improvement 
inputs, such as ``Neutral Idle,'' ``Start/Stop,'' and ``Automatic 
Engine Shutdown.'' These were minor changes, all were in NODA version 
of GEM.
     Made changes to the output file structures. Examples 
include an option to allow the user to select an output of detailed 
results on average speed, average work at the input and output of the 
transmission, and the numbers of shifts for each cycle (e.g., 55 mph 
cycle, 65 mph cycle and the ARB Transient cycle). These were minor 
changes, all were in NODA version of GEM.
     Added an input file for optional axle power losses 
(function of axle output speed and torque) and replaced a single axle 
efficiency value with lookup table of power loss. These were minor 
changes to streamline the use of GEM, all were in NODA version of GEM.
     Modified engine torque response to be more realistic, with 
a fast response region scaled by engine displacement, and a slower 
torque response in the turbo-charger's highly boosted region. These 
were minor changes, all were in NODA version of GEM.
     Added least-squares regression models to interpret cycle-
average fuel maps for all cycles. These were minor changes to 
streamline the use of GEM, all were in NODA version of GEM.
     Added different fuel properties according to 40 CFR 
1036.530. This was a fix to align GEM with regulations.
     Improved shift strategy based on testing data and comments 
received. These were minor changes, all were in NODA version of GEM.
     Added scaling factors for transmission loss and inertia, 
per regulatory subcategory. These were minor changes, all were in NODA 
version of GEM.
     Added optional input table for transmission power loss 
data. These were minor changes to streamline the use of GEM, all were 
in NODA version of GEM.
     Added minimum torque converter lock-up gear user input for 
automatic transmissions. This was a minor change to streamline the use 
of GEM, this change was in the NODA version of GEM.
     Revised the default transmission power loss tables, based 
on test data. This was a minor change to streamline the use of GEM, 
this change was in the NODA version of GEM.
     Added neutral idle and start/stop effects idle portions of 
the ARB Transient cycle. These were minor changes, all were in NODA 
version of GEM
     Adjusted shift and torque converter lockup strategy. This 
was a minor change to streamline the use of GEM, this change was in the 
NODA version of GEM.
    Notwithstanding these numerous opportunities for public comment (as 
well as many informal opportunities via individual meetings), some 
commenters maintained that they still had not received sufficient 
notice to provide informed comment because each proposal represented 
too much of a ``moving target.'' 157 158 159 The agencies 
disagree. Even at proposal, Phase 2 GEM provided nearly all of the 
essential features of the version we are promulgating in final form. 
These include: (1) The reconfiguration of the engine, transmission, and 
axle sub-models to reflect additional designs and to receive 
manufacturer inputs; and (2) the addition of road grade and idle cycles 
for vocational vehicles, along with revised weighting factors. 
Moreover, the changes the agencies have made to GEM in response to 
public comment indicates that those comments were highly informed by 
the proposal. The agencies thus do not accept the contention that 
commenters were not afforded sufficient information to provide 
meaningful comment on GEM.
---------------------------------------------------------------------------

    \157\ Memo to Docket, ``Summary of Meetings and Conference Calls 
with the Truck and Engine Manufacturers Association to Discuss the 
Phase 2 Heavy-Duty GHG Rulemaking'', August 2016.
    \158\ Memo to Docket, ``Summary of Meetings and Conference Calls 
with Allison Transmission to Discuss the Phase 2 Heavy-Duty GHG 
Rulemaking'', August 2016.
    \159\ ``Heavy-Duty Phase 2 Stakeholder Meeting Log'', August 
2016.
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(1) Description of Modifications to GEM From Phase 1 to Phase 2
    As explained above, GEM is a computer program that was originally 
developed by EPA specifically for manufacturers to use to certify to 
the Phase 1 tractor and vocational chassis standards. GEM 
mathematically combines the results of vehicle component test 
procedures with other vehicle attributes to determine a vehicle's 
certified levels of fuel consumption and CO2 emissions. 
Again as explained above, for Phase 1 the required inputs to GEM 
include vehicle aerodynamics information, tire rolling resistance, and 
whether or not a vehicle is equipped with certain lightweight

[[Page 73541]]

high-strength steel or aluminum components, a tamper-proof speed 
limiter, or tamper-proof idle reduction technologies for tractors. The 
vocational vehicle inputs to GEM for Phase 1 only included tire rolling 
resistance. For Phase 1 GEM's inputs did not include engine test 
results or attributes related to a vehicle's powertrain; namely, its 
transmission, drive axle(s), or loaded tire radius. Instead, for Phase 
1 the agencies specified a generic engine and powertrain within GEM, 
and for Phase 1 these cannot be changed in GEM.
    For this rulemaking, GEM has been modified as proposed and 
validated against a set of experimental data that represent over 130 
unique vehicle variants conducted at powertrain and chassis 
dynamometers with the manufacturers' provided transmission shifting 
tables. In addition, GEM has been validated against different types of 
tests when the EPA transmission default auto-shift strategy is used, 
which includes powertrain dynamometer tests and two truck tests running 
in a real-world driving route. Detailed comparisons can be seen in 
Chapter 4 of the RIA. As noted above, the agencies believe that this 
new version of GEM is an accurate and cost-effective alternative to 
measuring fuel consumption and CO2 over a chassis 
dynamometer test procedure. Again as noted earlier, some of the key 
modifications will require additional vehicle component test procedures 
(both mandatory and optional) to generate additional GEM inputs. The 
results of which will provide additional inputs into GEM. These include 
a new required engine test procedure to provide engine fuel consumption 
inputs into GEM. We proposed to measure fuel consumption as a matrix of 
steady-state points, but also sought comment on a newly developed 
engine test procedure that captures transient engine performance for 
use in GEM. We are specifying a combination of these procedures for the 
final rule--steady-state fuel maps for the highway cruise simulations, 
and cycle-average maps for transient simulations. As an option, cycle 
average maps could be also used for the highway cruise simulation as 
well. See Chapter 3 of the RIA for additional discussion of the fuel 
mapping procedures. We are also requiring inputs that describe the 
vehicle's transmission type, and its number of gears and gear ratios. 
We are allowing an optional powertrain test procedure that would 
provide inputs to override the agencies' simulated engine and 
transmission in GEM. In addition, in response to comments, we will also 
allow manufacturers to measure transmission efficiency in the form of 
the power loss tables to replace the default values in GEM. We are 
finalizing the proposed requirement to input a description of the 
vehicle's drive axle(s), including its type (e.g., 6x4 or 6x2) and axle 
ratio. We are also finalizing the optional axle efficiency test 
procedure for which we sought comment. This would allow manufacturers 
to override the agencies' simulated axle in GEM. Chapter 4 of the RIA 
details all of these GEM related input changes.
    As noted above, we are significantly expanding the number of 
technologies that are recognized in GEM. These include recognizing 
lightweight thermoplastic materials, automatic tire inflation systems, 
advanced cruise control systems, engine stop-start idle reduction 
systems, and axle configurations that decrease the number of drive 
axles. To better reflect real-world operation, we are also revising the 
vehicle simulation computer program's urban and rural highway duty 
cycles to include changes in road grade, and including a new duty cycle 
to capture the performance of technologies that reduce the amount of 
time a vehicle's engine is at idle during a workday. Finally, to better 
recognize that vocational vehicle powertrains are configured for 
particular applications, we are further subdividing the vocational 
chassis category into three different vehicle speed categories, where 
GEM weights the individual duty cycles' results of each of the speed 
categories differently. Section 4.2 of the RIA details all these 
modifications. The following sub-sections provide further details on 
some of these key modifications to GEM.
(a) Simulating Engines for Vehicle Certification
    Before describing the Phase 2 approach, this section first reviews 
how engines are simulated for vehicle certification in Phase 1. As 
noted earlier, GEM for Phase 1 simulates the same generic engine for 
any vehicle in a given regulatory subcategory with a data table of 
steady-state engine fuel consumption mass rates (g/s) versus a series 
of steady-state engine output shaft speeds (revolutions per minute, 
rpm) and loads (torque, N[middot]m). This data table is also sometimes 
called a ``fuel map'' or an ``engine map,'' although the term ``engine 
map'' can mean other kinds of data in different contexts. The engine 
speeds in this map range from idle to maximum governed speed and the 
loads range from engine motoring (negative load) to the maximum load of 
an engine. When GEM executes a simulation over a vehicle duty cycle, 
this data table is linearly interpolated to find a corresponding fuel 
consumption mass rate at each engine speed and load that is demanded by 
the simulated vehicle operating over the duty cycle. The fuel 
consumption mass rate of the engine is then integrated over each duty 
cycle in GEM to arrive at the total mass of fuel consumed for the 
specific vehicle and duty cycle. Under Phase 1, manufacturers were not 
allowed to input their own engine fuel maps to represent their specific 
engines in the vehicle being simulated in GEM. Because GEM was 
programmed with fixed engine fuel maps for Phase 1 that all 
manufacturers had to use, the tables themselves did not have to exactly 
represent how an actual engine might operate over these three different 
duty cycles.
    In contrast, for Phase 2 we are requiring manufacturers to generate 
their own engine fuel maps to represent each of their engine families 
in GEM. This Phase 2 approach is consistent with the 2014 NAS Phase 2 
First Report recommendation.\160\ To investigate this approach, before 
proposal we examined the results from 28 individual engine dynamometer 
tests. Three different engines were used to generate this data, and 
these engines were produced by two different engine manufacturers. One 
engine was tested at three different power ratings (13 liters at 410, 
450 & 475 bhp) and one engine was tested at two ratings (6.7 liters at 
240 and 300 bhp), and other engine with one rating (15 liters 455 bhp) 
service classes. For each engine and rating the steady-state engine 
dynamometer test procedure was conducted to generate an engine fuel map 
to represent that particular engine in GEM. Next, with GEM, we 
simulated various vehicles in which the engine could be installed. For 
each of the GEM duty cycles we are using, namely the urban local (ARB 
Transient), urban highway with road grade (55 mph), and rural highway 
with road grade (65 mph) duty cycles, we determined the GEM result for 
each vehicle configuration, and we saved the engine output shaft speed 
and torque information that GEM created to interpolate the steady-state 
engine map for each vehicle configuration We then had this same engine 
output shaft speed and torque information programmed into an engine 
dynamometer controller, and we had each engine perform the same duty 
cycles that GEM demanded of the

[[Page 73542]]

simulated version of the engine. We then compared the GEM results based 
on GEM's linear interpolation of the engine maps to the measured engine 
dynamometer results. We concluded that for the 55 mph and 65 mph duty 
cycles, GEM's interpolation of the steady-state data tables was 
sufficiently accurate versus the measured results. This is an outcome 
one would reasonably expect because even with changes in road grade, 
the 55 mph and 65 mph duty cycles do not demand rapid changes in engine 
speed or load. The 55 mph and 65 mph duty cycles are nearly steady-
state, as far as engine operation is concerned, just like the engine 
maps themselves. However, for the ARB Transient cycle, we observed a 
consistent bias when using the steady-state maps, where GEM 
consistently under-predicted fuel consumption and CO2 
emissions. This low bias over the 28 engine tests ranged from 4.2 
percent low to 7.8 percent low. The mean was 5.9 percent low and the 
90th percentile value was 7.1 percent low. These observations are 
consistent with the fact that engines generally operate less 
efficiently under transient conditions than under steady-state 
conditions.
---------------------------------------------------------------------------

    \160\ National Academy of Science. ``Reducing the Fuel 
Consumption and GHG Emissions of Medium- and Heavy-Duty Vehicles, 
Phase Two, First Report.'' 2014. Recommendation 3.8.
---------------------------------------------------------------------------

    A number of reasons explain this consistent trend. For example, 
under rapidly changing (i.e. transient) engine conditions, it is 
generally more challenging to program an engine electronic controller 
to respond with optimum fuel injection rate and timing, exhaust gas 
recirculation valve position, variable nozzle turbocharger vane 
position and other set points than under steady-state conditions. 
Transient heat and mass transfer within the intake, exhaust, and 
combustion chambers also tend to increase turbulence and enhance energy 
loss to engine coolant during transient operation. In many cases during 
cold transient operation, the thermal management is triggered in order 
to maintain optimal performance of selective catalytic reduction 
devices for a diesel engine. Furthermore, because exhaust emissions 
control is more challenging under transient engine operation, 
engineering tradeoffs sometimes need to be made between fuel efficiency 
and transient criteria pollutant emissions control. Special 
calibrations are typically also required to control smoke and manage 
exhaust temperatures during transient operation for a transient cycle.
    To account for these effects in GEM, the agencies have developed 
and are finalizing a test procedure called ``cycle average'' mapping to 
account for this transient behavior (40 CFR 1036.540). Detailed 
analyses and presentation of the test procedure was published in two 
peer-reviewed journal articles.\139,140\ A number of commenters 
likewise suggested this approach. Additionally, progress has been made 
on further improving this test procedure since publication, based on a 
large number of engine dynamometer tests conducted by a variety of 
laboratory test facilities.\161\ Since the proposal, further refinement 
of the numerical schemes used for interpreting cycle average engine 
fuel map was also completed. The engine dynamometer tests include a 
Cummins medium duty ISB engine, a Navistar heavy duty N13 engine, a 
Volvo heavy duty D13 engine, and a Cummins heavy duty ISX engine. All 
testing results indicated that the new test procedure works well for 
the transient ARB cycle.\162\ In addition, Cummins in their NODA 
comments (see the following paragraph) provided additional data 
supporting this approach with their ISL 450 bhp rating engine. This 
data corroborated earlier data showing good agreement between engine 
dynamometer tests and the cycle average engine mapping approach.\163\
---------------------------------------------------------------------------

    \161\ Memos to Docket, ``Test Procedure Review with Cummins, 
Volvo, Navistar, Paccar, Daimler Eaton and Allison.''
    \162\ Michael Ross, Validation Testing for Phase 2 Greenhouse 
Gas Test Procedures and the Greenhouse Gas Emission Model (GEM) for 
Medium and Heavy-Duty Engines and Powertrains, Final Report to EPA, 
Southwest Research Institute, June 2016, found in docket of this 
rulemaking, EPA-HQ-QAR-2014-0827.
    \163\ Cummins NODA Comments, found in Phase 2 Docket: ID No. 
EPA-HQ-OAR-2014-0817, April 1, 2016.
---------------------------------------------------------------------------

    EPA solicited comment on the cycle average approach at proposal. 80 
FR 40193. EPA also specifically provided notice and a 30-day 
opportunity for public comment on the possibility of requiring use of 
the cycle average mapping approach for the ARB Transient cycle. This 
was included in the version of GEM that was made available for public 
comment as part of the NODA \153\. In response, many comments were 
received on the cycle average approach. These include comments from 
Cummins \163\ and Volvo.\164\ Cummins was very supportive of the cycle 
average approach and also supported applying this approach to the 55 
mph and 65 mph cruise cycles in GEM. Volvo expressed some concern over 
having enough time to fully evaluate this approach. The agencies 
believe that one of the reasons that Volvo expressed concern over 
having enough time to evaluate this approach is because Volvo initially 
declined working with the agencies to collaboratively refine this 
approach. At the same time, a number of Volvo's competitors chose to 
actively coordinate laboratory testing and technical analysis to 
contribute to the development of this approach. We believe these other 
manufacturers gained a deeper understanding of the approach earlier 
than Volvo because they invested time and resources to make technical 
contributions at earlier point in time. Nevertheless, the agencies 
fully welcome and appreciate Volvo's more recent active involvement in 
reviewing the cycle average approach and for making a number of 
productive suggestions for further refinement.
---------------------------------------------------------------------------

    \164\ Volvo Group NODA Comments, found in Phase 2 Docket: ID No. 
EPA-HQ-OAR-2014-0817, April 1, 2016.
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    While the agencies are finalizing the cycle average engine mapping 
test procedure as mandatory for the ARB Transient cycle, for the 55 mph 
and 65 mph GEM drive cycles, the agencies are finalizing the same 
steady-state mapping procedure that the agencies originally proposed. 
The only difference is that we are finalizing about 85 unique steady-
state map points, versus the about 143 points that were proposed. See 
40 CFR 1036.535 for details. We are adopting a lower number of points 
because many of the originally proposed points were specified for use 
with the ARB Transient cycle.\139\ Again, as an option, the cycle 
average mapping test procedure also may be used for these two cruise 
speed cycles, in lieu of the steady-state mapping procedure.
(b) Simulating Human Driver Behavior and Transmissions for Vehicle 
Certification
    GEM for Phase 1 simulates the same generic human driver behavior 
and manual transmission shifting patterns for all vehicles. The 
simulated driver responds to changes in the target vehicle speed of the 
duty cycles by changing the simulated positions of the vehicle's 
accelerator pedal, brake pedal, clutch pedal, and gear shift lever. For 
simplicity, in Phase 1 the GEM driver shifted at pre-specified vehicle 
speeds and the manual transmission was simulated as an ideal 
transmission that did not have any delay time (i.e., torque 
interruption) between gear shifts and did not have any energy losses 
associated with clutch slip during gear shifts.
    In GEM for Phase 2 we are allowing manufacturers to select one of 
four types of transmissions to represent the transmission in the 
vehicle they are certifying: Manual transmission (MT), automated manual 
transmission (AMT), automatic transmission (AT) and dual clutch 
transmission (DCT). For Phase 2 the agencies proposed unique 
transmission shifting patters to

[[Page 73543]]

represent the different types of automated transmissions. These 
shifting patterns over the steady state cruise cycles has been further 
modified from the proposed version to be more realistic with respect to 
slight variations in vehicle speed due to road grade. In particular, 
when going downhill, the simulated vehicle is now allowed to exceed the 
speed target by 3 mph before the brakes are applied. In the proposed 
version, the driver model applied the brakes much sooner to prevent the 
vehicle from exceeding the speed target. This change allows the vehicle 
to carry additional momentum into the next hill, much the same as real 
drivers would.
    In the final version of GEM, the driver behavior and the different 
transmission types are simulated in the same basic manner as in Phase 
1, but each transmission type features unique transmission responses 
that match the transmission responses we measured during vehicle 
testing of these three transmission types. In general the transmission 
gear shifting strategy for all of the transmissions is designed to 
shift the transmission so that it is in the most efficient gear for the 
current vehicle demand, while staying within certain limits to prevent 
unrealistically high frequency shifting (i.e., to prevent ``short-
shifting''). Some examples of these limits are torque reserve limits 
(which vary as function of engine speed), minimum time-in-gear and 
minimum fuel efficiency benefit to shift to the next gear. Some of the 
differences between the transmission types include a driver ``double-
clutching'' during gear shifts of the manual transmission only, and 
``power shifts'' and torque converter torque multiplication, slip, and 
lock-up in automatic transmissions only. Refer to Chapter 4 of the RIA 
for a more detailed description of these different simulated driver 
behaviors and transmission types.
    Prior to the proposal, we considered an alternative approach where 
transmission manufacturers would provide vehicle manufacturers with 
detailed information about their automated transmissions' proprietary 
shift strategies for representation in GEM. NAS also recommended this 
approach.\165\ The advantages of this approach would include a more 
realistic representation of a transmission in GEM and potentially the 
recognition of additional fuel efficiency improving strategies to 
achieve additional fuel consumption and CO2 emissions 
reductions. However, there are a number of technical and compliance 
disadvantages of this approach. One disadvantage is that it would 
require the disclosure of proprietary information because some vehicle 
manufacturers produce their own transmissions and also use other 
suppliers' transmissions. There are technical challenges too. For 
example, some transmission manufacturers have upwards of 40 different 
shift strategies programmed into their transmission controllers. 
Depending on in-use driving conditions, some of which are not simulated 
in GEM (e.g., changing payloads, changing tire traction) a transmission 
controller can change its shift strategy. Representing dynamic 
switching between multiple proprietary shift strategies would be 
extremely complex to simulate in GEM. Furthermore, if the agencies were 
to require transmission manufacturers to provide shift strategy inputs 
for use in GEM, then the agencies would have to devise a compliance 
strategy to monitor in-use shift strategies, including a driver 
behavior model that could be implemented as part of an in-use shift 
strategy confirmatory test. This too would be very complex. If 
manufacturers were subject to in-use compliance requirements of their 
transmission shift strategies, this could lead to restricting the use 
of certain shift strategies in the heavy-duty sector, which would in 
turn potentially lead to sub-optimal vehicle configurations that do not 
improve fuel efficiency or adequately serve the wide range of customer 
needs; especially in the vocational vehicle segment. For example, if 
the agencies were to restrict the use of more aggressive and less fuel 
efficient in-use shift strategies that are used only under heavy loads 
and steep grades, then certain vehicle applications would need to 
compensate for this loss of capability through the installation of 
over-sized and over-powered engines that are subsequently poorly 
matched and less efficient under lighter load conditions. Therefore, as 
a policy consideration to preserve vehicle configuration choice and to 
preserve the full capability of heavy-duty vehicles today, the agencies 
are intentionally not allowing transmission manufacturers to submit 
detailed proprietary shift strategy information to vehicle 
manufacturers to input into GEM. The agencies are finalizing as 
proposed that vehicle manufacturers can choose from among several 
transmission types that the agencies have already developed, validated, 
and programmed into GEM. The vehicle manufacturers will then enter into 
GEM their particular transmission's number of gears and gear ratios, 
optionally together with power loss tables representing their 
transmission's gear friction, pumping and spin losses. If a 
manufacturer chooses to use the optional powertrain test procedure, 
however, then the agencies' transmission types in GEM would be 
overridden by the actual data collected during the powertrain test, 
which would recognize the transmission's unique shift strategy. 
(Presumably, vehicle manufacturers will choose to use the optional 
powertrain test procedure only if their actual transmission shift 
strategy is more efficient compared to its respective default shift 
strategy simulated by GEM.)
---------------------------------------------------------------------------

    \165\ Transportation Research Board 2014. ``Reducing the Fuel 
Consumption and Greenhouse Gas Emissions of Medium- and Heavy-Duty 
Vehicles, Phase Two.'' (``Phase 2 First Report'') Washington, DC, 
The National Academies Press. Cooperative Agreement DTNH22-12-00389. 
Available electronically from the National Academy Press Web site at 
http://www.nap.edu/catalog.php?record_id=12845 (last accessed 
December 2, 2014). Recommendation 3.7.
---------------------------------------------------------------------------

(c) Simulating Axles for Vehicle Certification
    In GEM for Phase 1 the axle ratio of the primary drive axle and the 
energy losses assumed in the simulated axle itself were the same for 
all vehicles. For Phase 2 the vehicle manufacturer will be required to 
input into GEM the axle ratio of the primary drive axle. This input 
will recognize the design to operate the engine at a particular engine 
speed when the transmission is operating in its highest transmission 
gear; especially for the 55 mph and 65 mph duty cycles in GEM. This 
input facilitates GEM's recognition of vehicle designs that take 
advantage of operating the engine at the lowest possible engine speeds. 
This is commonly known as ``engine down-speeding,'' and the general 
rule-of-thumb for heavy-duty engines is that for every 100 rpm decrease 
in engine speed, there can be about a 1 percent decrease in fuel 
consumption and CO2 emissions. Therefore, it is important 
that GEM allow this value to be input by the vehicle manufacturer. Axle 
ratio is also straightforward to verify during any in-use compliance 
audit. UCS and ACEEE commented that engine down-speeding should be 
recognized in the agencies' separate engine standards, rather than in 
the vehicle standard. The agencies disagree with this because 
recognizing down-speeding at the vehicle level ensures that the 
powertrain configuration in-use, in the real world, will lead to the 
engine operating at lower speeds. In contrast, the engine speeds 
specified in the separate engine standards' test procedures are based 
on the engine's maximum torque versus speed curve (i.e., lug curve) and 
not on the configuration of the powertrain to

[[Page 73544]]

which the engine is attached in a vehicle. This means that even if a 
manufacturer manipulated the engine's lug curve such that the separate 
engine standards' test procedure led to the engine operating at lower 
speeds during certification, that same engine could be installed in a 
vehicle with a powertrain configured for the engine to operate at 
higher engine speeds. Therefore, recognizing down-speeding within GEM, 
at the vehicle level, best ensures that the agencies' test procedures 
and standards lead to real-world engine down-speeding in-use.
    We proposed to use a fixed axle ratio energy efficiency of 95.5 
percent at all speeds and loads, but requested comment on whether this 
pre-specified efficiency is reasonable. 80 FR 40185. In general, 
commenters stated that the efficiency of the axle actually varies as a 
function of axle ratio, axle speed, and axle input torque. Therefore, 
we have modified GEM to accept an input data table of power loss as a 
function of axle speed and axle torque. The modified version of GEM 
subsequently interpolates this table over each of the duty cycles to 
represent a more realistic axle efficiency at each point of each duty 
cycle. The agencies specify a default axle efficiency table in GEM for 
any manufacturer to use. We are also finalizing an optional axle power 
loss test procedure that requires the use of a dynamometer test 
facility (40 CFR 1037.560). With this optional test procedure, a 
manufacturer can create an axle efficiency table for use in lieu of the 
EPA default table. We requested comment on this test procedure in the 
proposal, and we received supportive comments. Refer to 40 CFR 1037.560 
of the Phase 2 regulations, which contain this test procedure.
    Moreover, the final regulations allow the manufacturers to develop 
analytical methods to derive axle efficiency tables for untested axle 
configurations, based on testing of similar axles. This would be 
similar to the analytically derived CO2 emission 
calculations allowed for pickups and vans. However, manufacturers would 
be required to obtain prior approval from the agencies before using 
analytically derived values. In addition, the agencies could conduct 
confirmatory testing or require a selective enforcement audit for any 
axle configuration. See 40 CFR 1037.235.
    In addition to requiring the primary drive axle ratio input into 
GEM (and an option to input an actual axle power loss data table), we 
are requiring that the vehicle manufacturer input into GEM whether one 
or two drive axles are driven by the engine. When a heavy-duty vehicle 
is equipped with two rear axles where both are driven by the engine, 
this is called a ``6x4'' configuration. ``6'' refers to the total 
number of wheel hubs on the vehicle. In the 6x4 configuration there are 
two front wheel hubs for the two steer wheels and tires plus four rear 
wheel hubs for the four rear wheels and tires (or more commonly four 
sets of rear dual wheels and tires). ``4'' refers to the number of 
wheel hubs driven by the engine. These are the two rear axles that have 
two wheel hubs each. Compared to a 6x4 configuration, a 6x2 
configuration decreases axle energy loss due to friction and oil 
churning in two driven axles, by driving only one axle. The decrease in 
fuel consumption and CO2 emissions associated with a 6x2 
versus 6x4 axle configuration can be in the range of 2.5 percent 
depending on specific axles, which is modeled by the power loss 
table.\166\ Therefore, in the Phase 2 version of GEM, if a manufacturer 
simulates a 6x2 axle configuration using the default axle efficiencies, 
GEM decreases the overall GEM result roughly by 2.5 percent on average 
through the power loss table. Note that GEM will similarly decrease the 
overall GEM result by 2.5 percent for a 4x2 tractor or Class 8 
vocational chassis configuration if it has only two wheel hubs driven. 
If a manufacturer does not use the default efficiencies, the benefit of 
6x2 and 4x2 configurations will be reflected directly in its input 
tables. Note that the Phase 2 version of GEM does not have an option to 
simulate more than two drive axles or configurations where the front 
axle(s) are driven or where there are more than two rear axles. The 
regulations specify that such vehicles are to be simulated as 6x4 
vehicles in GEM. This is consistent with how the standards were 
developed and the agencies believe this approach will provide the 
appropriate incentive for manufacturers to apply the same fuel saving 
technologies to these vehicles, as they would to their conventional 6x4 
vehicles. Moreover, because these configurations are manufactured for 
specialized vehicles that require extra traction for off-road 
applications, they have very low sales volume and any increased fuel 
consumption and CO2 emissions from them are not significant 
in comparison to the overall reductions of the Phase 2 program. Note 
that 40 CFR 1037.631 (for off-road vocational vehicles), which is being 
continued from the Phase 1 program, exempts many of these vehicles from 
the vehicle standards because they are limited mechanically to low-
speed operation.
---------------------------------------------------------------------------

    \166\ NACFE. Executive Report--6x2 (Dead Axle) Tractors. 
November 2010. See Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

(d) Simulating Accessories for Vehicle Certification
    The agencies proposed to continue the approach from Phase 1 whereby 
GEM uses a fixed power consumption value to simulate the fuel consumed 
for powering accessories such as steering pumps and alternators. 80 FR 
40186. The final rule continues the Phase 1 approach, as proposed. 
However, Phase 2 GEM provides an option to provide a GEM input 
reflecting technology improvement inputs for the accessory loads. This 
allows the manufacturers to receive credit for those technologies that 
are not modeled in GEM. Manufacturers seeking credit for those 
technologies that are not modeled in GEM would generally follow the 
off-cycle credit program procedures in 40 CFR 1037.610.
(e) Aerodynamics in GEM for Tractor, Vocational Vehicle, and Trailer 
Certification
    Phase 2 GEM simulates aerodynamic drag in using CdA (the 
product of the drag coefficient and frontal area of the vehicle) rather 
than a drag coefficient (Cd). For tractors and trailers we 
will continue to use an aerodynamic bin approach similar to the one 
that exists in Phase 1 today, although the actual Phase 2 bins are 
being revised to reflect new test procedures and our projections for 
more aerodynamic tractors and trailers in the future. This approach 
allows manufacturers to determine CdA (or delta-
CdA in the case of trailers) from coastdown testing, scale 
wind tunnel testing and/or computational fluid dynamics modeling. It 
requires tractor manufacturers (but not trailer manufacturers) to 
conduct a certain minimum amount of coast-down vehicle testing to 
validate their methods. The regulations also provide an alternate path 
for trailer manufacturers to rely on testing performed by component 
suppliers. See 40 CFR 1037.
    The results of these tests determine into which bin a tractor or 
trailer is assigned. GEM uses the aerodynamic drag coefficient 
applicable to the bin, which is the same for all tractors (or trailers) 
within a given bin. This approach helps to account for limits in the 
repeatability of aerodynamic testing and it creates a compliance margin 
since any test result which keeps the vehicle in the same aerodynamic 
bin is considered compliant. For Phase 2 we are establishing new 
boundary values for the bins themselves and we are adding two 
additional tractor bins in order to recognize further advances in

[[Page 73545]]

aerodynamic drag reduction beyond what was recognized in Phase 1. 
Furthermore, while Phase 1 GEM used predefined frontal areas for 
tractors where the manufacturers input only a Cd value, 
manufacturers will use a measured drag area (CdA) value for 
each tractor configuration for Phase 2. See 40 CFR 1037.525. The 
agencies do not project that vocational vehicles will need to improve 
their aerodynamic performance to comply with the Phase 2 vocational 
chassis standards. However, the agencies are providing features in GEM 
for vocational vehicles to receive credit for improving the 
aerodynamics of vocational vehicles (see 40 CFR 1037.520(m)).
    In addition to these changes, we are making a number of aerodynamic 
drag test procedure improvements. One improvement is to update the 
``standard trailer'' that is prescribed for use during aerodynamic drag 
testing of a tractor. Using the CdA from such testing means 
the standard trailer would also be the hypothetical trailer modeled in 
GEM to represent a trailer paired with the tractor in actual use.\167\ 
In Phase 1, a non-aerodynamic 53-foot long box-shaped dry van trailer 
was specified as the standard trailer for tractor aerodynamic testing 
(see 40 CFR 1037.501(g)). For Phase 2 we are modifying this standard 
trailer for tractor testing to make it more similar to the trailers we 
expect to be produced during the Phase 2 timeframe. More specifically, 
we are prescribing the installation of aerodynamic trailer skirts (and 
low rolling resistance tires as applied in Phase 1) on the standard 
trailer, as discussed in further in Section III.E.2. As explained more 
fully in Sections III and IV, the agencies believe that tractor-trailer 
pairings will be optimized aerodynamically to a significant extent in-
use (such as using high-roof cabs when pulling box trailers), and that 
this real-world optimization should be reflected in the certification 
testing. We are also revising the test procedures to better account for 
average wind yaw angle to reflect the true impact of aerodynamic 
features on the in-use fuel consumption and CO2 emissions of 
tractors, again as discussed in more detail in Section III below. Refer 
to the test procedures in 40 CFR 1037.525 through 1037.527 for further 
details of these aerodynamic test procedures.
---------------------------------------------------------------------------

    \167\ See Section III. for a discussion of how GEM will model a 
more advanced trailer beginning with the 2027 model year.
---------------------------------------------------------------------------

    For trailer certification, the agencies use GEM in a different way 
than it is used for tractor certification. As described in Section IV, 
the agencies developed a simple equation to replicate GEM performance. 
The trailer standards are based on this equation, and trailer 
manufacturers use this GEM-based equation for certification. The only 
technologies recognized by this GEM-based equation for trailer 
certification are aerodynamic technologies, tire technologies 
(including tire rolling resistance and tire pressure systems), and 
weight reduction. Note that since the purpose of this equation is to 
replicate GEM performance, it can be considered as simply another form 
of the model using a different input interface. Thus, for simplicity, 
the remainder of this Section II.C. sometimes discusses GEM as being 
used for trailers, without regard to how manufacturers will actually 
input GEM variables. As with all of the standards in Phase 2, 
compliance is measured consistent with the same test methods used by 
the agencies to establish the standard.
    Similar to tractor certification, trailer manufacturers will use 
data from aerodynamic testing (e.g., coastdown testing, scale wind 
tunnel testing, computational fluid dynamics modeling, or possibly 
aerodynamic component testing) with the equation.\168\ As part of the 
protocol for generating these inputs, the agencies are specifying the 
configuration of a reference tractor for conducting trailer testing. 
Refer to Section IV of this Preamble and to 40 CFR 1037.501 of the 
regulations for details on the reference tractor configuration for 
trailer test procedures.
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    \168\ The agencies project that more than enough aerodynamic 
component vendors will take advantage of proposed optional pre-
approval process to make testing optional for trailer manufacturer.
---------------------------------------------------------------------------

    Finally, GEM has been modified to accept an optional delta 
CdA value for vocational chassis, to simulate aerodynamic 
improvements relative to pre-specified baseline defined in Chapter 4 of 
RIA. For example, a manufacturer that demonstrates that adding side 
skirts to a box truck reduces its CdA by 0.2 m\2\ could 
input that value into GEM for box trucks that include those skirts. See 
40 CFR 1037.520(m).
(f) Tires and Tire Inflation Systems for Truck and Trailer 
Certification
    For GEM in Phase 1 tractor and vocational chassis manufacturers 
input the tire rolling resistance of steer and drive tires directly 
into GEM. The agencies prescribed an internationally recognized tire 
rolling resistance test procedure, ISO 28580, for determining the tire 
rolling resistance value that is input into GEM, as described in 40 CFR 
1037.520(c). For Phase 2 we will continue this same approach and the 
use of ISO 28580, and we are expanding these requirements to trailer 
tires as well.
    In addition to tire rolling resistance, Phase 2 vehicle 
manufacturers will enter into GEM the tire manufacturer's specified 
revolutions per distance directly (revs/mile) for the vehicle's drive 
tires. This value is commonly reported by tire manufacturers already so 
that vehicle speedometers can be adjusted appropriately. This input 
value is needed so that GEM can accurately convert simulated vehicle 
speed into axle speed, transmission speed, and ultimately engine speed.
    For tractors and trailers, we proposed to allow manufacturers to 
specify whether or not an automatic tire inflation system (ATIS) is 
installed. 80 FR 40187. Based on comments and as discussed further in 
Sections III, IV, and V, in the Phase 2 final rule we are adopting 
provisions that allow manufacturers of tractors, trailers, and 
vocational vehicle chassis to input a percent decrease in overall fuel 
consumption and CO2 emissions into GEM if the vehicle 
includes either an ATIS or a tire pressure monitoring system (TPMS). 
The value that can be input depends on whether a TPMS or ATIS is 
deployed. See 40 CFR 1037.520.
(g) Weight Reduction for Tractor, Vocational Chassis and Trailer 
Certification
    Phase 2 GEM continues the weight reduction recognition approach in 
Phase 1, where the agencies prescribe fixed weight reductions, or 
``deltas,'' for using certain lightweight materials for certain vehicle 
components. In Phase 1 the agencies published a list of weight 
reductions for using high-strength steel and aluminum materials on a 
part by part basis. For Phase 2 we use updated values for high-strength 
steel and aluminum parts for tractors and for trailers and we have 
scaled these values for use in certifying the different weight classes 
of vocational chassis. In addition we use a similar part by part weight 
reduction list for tractor parts made from thermoplastic material. We 
proposed to assign a fixed weight increase to natural gas fueled 
vehicles to reflect the weight increase of natural gas fuel tanks 
versus gasoline or diesel tanks, but we are not finalizing that 
provision based on comments. 80 FR 40187. Commenters opposing this 
provision generally noted that the proposed provision was not 
consistent with how the agencies were treating other technologies. We 
agree that

[[Page 73546]]

natural gas vehicles should be treated consistently with other 
technologies and so are not adopting the proposed provision.
    For tractors, we will continue the same mathematical approach in 
GEM to assign \1/3\ of a total weight decrease to a payload increase 
and \2/3\ of the total weight decrease to a vehicle mass decrease. For 
Phase 1, these ratios were based on the average frequency that a 
tractor operates at its gross combined weight rating. We will also use 
these ratios for trailers in Phase 2. For vocational chassis, for which 
Phase 1 did not address weight reduction, we will assign \1/2\ of a 
total weight decrease to a payload increase and \1/2\ of the total 
weight decrease to a vehicle mass decrease.
(h) GEM Duty Cycles for Tractor, Vocational Chassis and Trailer 
Certification
    In Phase 1, there are three GEM vehicle duty cycles that represent 
stop-and-go city driving (ARB Transient), urban highway driving (55 
mph), and rural interstate highway driving (65 mph). In Phase 1 these 
cycles were time-based. That is, they were specified as a function of 
simulated time and the duty cycles ended once the specified time 
elapsed in simulation. The agencies proposed to continue to use these 
three drive cycles in Phase 2, but with some revisions. 80 FR 40187. We 
are finalizing revisions similar but not identical to those that were 
proposed. First, GEM will simulate these cycles on a distance-based 
specification, rather than on a time-based specification. A distance-
based specification ensures that even if a vehicle in simulation does 
not always achieve the target vehicle speed, the vehicle will have to 
continue in simulation for a longer period to complete the duty cycle. 
This ensures that vehicles are evaluated over the complete distance of 
the duty cycle and not just the portion of the duty cycle that a 
vehicle completes in a given time period. A distance-based duty cycle 
specification also facilitates a straightforward specification of road 
grade as a function of distance along the duty cycle. As noted in 
above, for Phase 2, the agencies have enhanced the 55 mph and 65 mph 
duty cycles by adding representative road grade to exercise the 
simulated vehicle's engine, transmission, axle, and tires in a more 
realistic way. A flat road grade profile over a constant speed test 
does not properly simulate a transmission with respect to shifting 
gears, and may have the unintended consequence of enabling underpowered 
vehicles or excessively down-sped drivetrains to generate credits, when 
in actuality the engine does not remain down-sped in-use when the 
vehicle encounters road grades. The road grade profile being finalized 
is the same hill and valley profile for both the 55 mph and 65 mph duty 
cycles, and is based on statistical analysis of the United States' 
national distribution of road grades. Although the final profile is 
different than that proposed, the agencies provided notice of the 
analysis that was used to generate the final profile.\169\ In written 
comments, we received in-use engine data from some manufacturers, and 
based on this information we made minor adjustments to the road grade 
to ensure that engines simulated in GEM operated similarly to that 
reported in the in-use engine data submitted to us. See Section 
III.E.(2)(b) of this document and Chapter 3.4.2.1 of the RIA for more 
details on development of the road grade profile. We believe that the 
enhancement of the 55 mph and 65 mph duty cycles with road grade is 
consistent with the NAS recommendation regarding road grade.\170\
---------------------------------------------------------------------------

    \169\ See National Renewable Energy Laboratory report ``EPA GHG 
Certification of Medium- and Heavy-Duty Vehicles: Development of 
Road Grade Profiles Representative of US Controlled Access 
Highways'' dated May 2015 and EPA memorandum ``Development of an 
Alternative, Nationally Representative, Activity Weighted Road Grade 
Profile for Use in EPA GHG Certification of Medium- and Heavy-Duty 
Vehicles'' dated May 13, 2015, both available in Docket EPA-HQ-OAR-
2014-0827. This docket also includes file 
NREL_SyntheticAndLocalGradeProfiles.xlsx which contains numerical 
representations of all road grade profiles described in the NREL 
report.
    \170\ NAS 2010 Report. Page 189. ``A fundamental concern raised 
by the committee and those who testified during our public sessions 
was the tension between the need to set a uniform test cycle for 
regulatory purposes, and existing industry practices of seeking to 
minimize the fuel consumption of medium and heavy-duty vehicles 
designed for specific routes that may include grades, loads, work 
tasks or speeds inconsistent with the regulatory test cycle. This 
highlights the critical importance of achieving fidelity between 
certification values and real-world results to avoid decisions that 
hurt rather than help real-world fuel consumption.''
---------------------------------------------------------------------------

(i) Workday Idle Operation for Vocational Chassis Certification
    In the Phase 1 program, reduction in idle emissions was recognized 
only for sleeper cab tractors, and only with respect to hoteling idle, 
where a driver needs power to operate heating, ventilation, air 
conditioning and other electrical equipment in order to use the sleeper 
cab to eat, rest, or conduct other business. As described in Section V, 
GEM for Phase 2 will recognize technologies that reduce workday idle 
emissions, such as automatic stop-start systems, daytime parked idle 
automatic engine shutdown systems, and transmissions that either 
automatically or inherently shift to neutral at idle while in drive. 
Many vocational vehicle applications operate on patterns implicating 
workday idle cycles, and the agencies use test procedures in GEM to 
account specifically for these cycles and potential idle controls. GEM 
will recognize these idle controls in two ways. For technologies like 
neutral-idle transmissions and stop-start systems that address idle 
that occurs during vehicle operation when the vehicle is stopped at a 
stop light, GEM will interpolate lower fuel rates from the engine map 
during the idle portions of the ARB Transient and during a separate GEM 
``drive idle cycle.'' For technologies like start-stop and auto-
shutdown that eliminate some of the idle that occurs when a vehicle is 
stopped or parked, GEM will assign a value of zero fuel rate during a 
separate GEM ``parked idle cycle.'' The idle cycles will be weighted 
along with the 65 mph, 55 mph, and ARB Transient duty cycles, according 
to the new vocational chassis duty cycle weighting factors. These 
weighting factors are different for each of the three vocational 
chassis speed categories for Phase 2. For tractors, only neutral idle 
and hotel idle will be addressed in GEM.
(2) Experimental Validation of GEM
    The core simulation algorithms in GEM have not changed 
significantly since the proposal. Most of the changes since proposal 
focused on streamlining how manufacturers input data into GEM; revising 
to the drive cycles in GEM; and updating how GEM weights these 
different drive cycles to determine a composite fuel consumption value. 
These changes did not alter the fundamental way that GEM simulates 
varying vehicle ``road load'' and how GEM converts vehicle speed to 
engine speed and then interpolates engine maps to determine vehicle 
fuel consumption and CO2 emissions.
    Refinements to GEM since the time of proposal that did alter GEM's 
simulation performance include modifying the default transmissions' 
shift strategies and their power losses. Another key refinement was 
cycle average mapping engines for simulation of the ARB Transient 
cycle. Each time the agencies made such modifications to GEM, GEM's 
correlation to the agencies collection of laboratory-generated engine 
and vehicle data was checked. Potential refinements to GEM were 
accepted if GEM's correlation was improved versus this set of 
experimental data. If potential refinements resulted in GEM's 
correlation to the experimental data

[[Page 73547]]

becoming worse, those potential changes were rejected. Chapter 4.3.2 of 
the RIA details the GEM validation that was performed to determine if 
potential changes to GEM should be accepted or rejected. The first step 
of the validation process involves simulating vehicles in GEM using 
engine fuel maps and transmission shifting strategies obtained from 
manufacturers and comparing GEM results to experiments conducted with 
the same engines and transmissions. This first step re-validates all of 
the non-powertrain elements of GEM, which were already validated in 
Phase 1. The second step is to use GEM's default transmissions' shift 
strategies in simulation \171\ and then compare GEM results to 
powertrain tests of several transmissions. The only difference between 
the first and second step is the shifting strategy and powertrain 
energy loss assumptions. This step facilitates tuning of GEM's default 
transmission models so that they correlate well to a variety of real 
transmissions. The third step is to compare GEM simulations to real-
world in-use recorded data from actual vehicles. This is the most 
challenging step because the experimental data includes real-world 
effects of wind, road grade, and driver behavior in traffic. The most 
important element of this third step is not absolute correlation, but 
rather, relative correlation, which demonstrates that when a technology 
is added to a real vehicle, the relative improvement in the real world 
is simulated in GEM with a high degree of correlation.
---------------------------------------------------------------------------

    \171\ K. Newman, J. Kargul, and D. Barba, ``Development and 
Testing of an Automatic Transmission Shift Schedule Algorithm for 
Vehicle Simulation, ``SAE Int. J. Engines 8(3):2015, doi:10.4271/
2015-01-1142.
---------------------------------------------------------------------------

    In the first validation step, the agencies compared GEM to over 130 
vehicle variants, consistent with the recommendation made by the NAS in 
their Phase 2-First Report.\172\ As described in Chapter 4 of the RIA, 
good agreement was observed between GEM simulations and test data over 
a wide range of vehicles. In general, the model simulations agreed with 
experimental test results within 5 percent on an absolute 
basis. As pointed out in Chapter 4.3.2 of the RIA, relative accuracy is 
more relevant to the intent of this rulemaking, which is to accelerate 
the adoption of additional fuel efficiency improving technologies. 
Consistent with the intent of this rulemaking, all of the numeric 
standards for tractors, trailers and vocational chassis are derived 
from running GEM first with Phase 1 ``baseline'' technology packages 
and then with various Phase 2 technology packages. The differences 
between these GEM results are examined to determine final stringencies. 
In other words, the agencies used the same final version of GEM to 
establish the numeric standards as will be used by manufacturers to 
demonstrate compliance. Therefore, it is most important that GEM 
accurately reflects relative changes in emissions for each added 
technology. In other words, for vehicle certification purposes it is 
less important that GEM's absolute value of the fuel consumption or 
CO2 emissions be accurate compared to laboratory testing of 
the same vehicle. The ultimate purpose of GEM is to evaluate changes or 
additions in technology, and compliance is demonstrated on a relative 
basis to the numeric standards that were also derived from GEM. 
Nevertheless, the agencies concluded that the absolute accuracy of GEM 
is generally within 5 percent, as shown in Figure II.2 2. 
Chapter 4.3.2 of the RIA shows that relative accuracy is even better, 
2-3 percent.
---------------------------------------------------------------------------

    \172\ National Academy of Science. ``Reducing the Fuel 
Consumption and GHG Emissions of Medium- and Heavy-Duty Vehicles, 
Phase Two, First Report.'' 2014. Recommendation1.2.
[GRAPHIC] [TIFF OMITTED] TR25OC16.002


[[Page 73548]]


    In addition to this successful validation against experimental 
results, the agencies have also conducted a peer review of the GEM 
source code. This peer review has been submitted to Docket number EPA-
HQ-OAR-2014-0827.
    The second validation step was to repeat the first step's GEM 
simulations with the agencies' default transmission shift 
strategies.\171\ It was expected that GEM's absolute accuracy would 
decrease because these shift strategies were tuned for best average 
performance and for a particular transmission. Nevertheless, it was 
shown that relative accuracy did not suffer; therefore, the agencies 
deemed the GEM default shift strategies acceptable for GEM 
certification purposes. Further details of this validation step are 
presented in Chapter 4.3.2.3 of the RIA and in a SwRI final 
report.\162\
    As explained above and in Chapter 4.3.2.3 of the RIA, it is 
challenging to achieve absolute correlation between any computer 
simulation and real-world vehicle operation. Therefore, the agencies 
focused on relative comparisons. Following the SAE standard procedure 
SAE J1321 ``Type II,'' two trucks have been tested and these real-world 
results were compared to GEM simulations. In summary, the relative 
comparisons between GEM simulations and the real-world testing of 
trucks showed a 2.4 percent difference. The details of this testing and 
correlation analysis is presented in Chapter 4.3.2.3 of the RIA.
    In conclusion, the agencies completed a number of validation steps 
to ensure that GEM demonstrates a reasonable degree of absolute 
accuracy, but more importantly a high degree of relative accuracy, 
versus both laboratory and real-world experimental data.
(3) Supplements to GEM Simulation
    As in Phase 1, for most tractors and vocational vehicles, 
compliance with the Phase 2 g/ton-mile vehicle standards could be 
evaluated by directly comparing the GEM result to the standard. 
However, in Phase 1, manufacturers incorporating innovative or advanced 
technologies could apply improvement factors to lower the GEM result 
before comparing to the standard.\173\ For example, a manufacturer 
incorporating a launch-assist mild hybrid that was pre-approved for a 5 
percent benefit would apply a 0.95 improvement factor to its GEM 
results for such vehicles. In this example, a GEM result of 300 g/ton-
mile will be reduced to 285 g/ton-mile.
---------------------------------------------------------------------------

    \173\ 40 CFR 1036.610, 1036.615, 1037.610, and 1037.615.
---------------------------------------------------------------------------

    For Phase 2, the agencies largely continue the existing Phase 1 
innovative technology approach, but we name it ``off-cycle'' to better 
reflect its purpose.
(a) Off-Cycle Technology Procedures
    In Phase 1 the agencies adopted an emissions credit generating 
opportunity that applied to new and innovative technologies that reduce 
fuel consumption and CO2 emissions, which were not in common 
use with heavy-duty vehicles before model year 2010 and are not 
reflected over the test procedures or GEM (i.e., the benefits are 
``off-cycle''). See 76 FR 57253. As was the case in the development of 
Phase 1, the agencies continue this approach for technologies and 
concepts with CO2 emissions and fuel consumption reduction 
potential that might not be adequately captured over the Phase 2 duty 
cycles or are not inputs to GEM. Note, however, that the agencies now 
refer to these technologies as off-cycle rather than innovative. 
Comments were generally supportive of continuing this provision. See 
Section I.C(1)(c) of this document and Section 1 of the RTC for more 
discussion of innovative and off-cycle technologies.
    We recognize that the Phase 1 testing burden associated with the 
innovative technology credit provisions discouraged some manufacturers 
from applying. To streamline recognition of many technologies, default 
values have been integrated directly into GEM. For example, automatic 
tire inflation systems have fixed default values, and such technologies 
are now recognized through a post-simulation adjustment approach, 
discussed in Chapter 4 of the RIA. This is similar to the technology 
``pick list'' from our light-duty programs. See 77 FR 62833-62835 
(October 15, 2012). If manufacturers wish to receive additional credit 
beyond these fixed values, then the off-cycle technology credit 
provisions provide a regulatory path toward that additional 
recognition.
    Beyond the additional technologies that the agencies have added to 
GEM, the agencies also believe there are several emerging technologies 
that are being developed today, but will not be accounted for in GEM 
because we do not have enough information about these technologies to 
assign fixed values to them in GEM. Any credits for these technologies 
will need to be based on the off-cycle technology credit generation 
provisions. These require the assessment of real-world fuel consumption 
and GHG reductions that can be measured with verifiable test methods 
using representative operating conditions typical of the engine or 
vehicle application.
    As in Phase 1, the agencies continue to provide two paths for 
approval of the test procedure to measure the CO2 emissions 
and fuel consumption reductions of an off-cycle technology used in the 
HD tractor. See 40 CFR 1037.610 and 49 CFR 535.7. The first path does 
not require a public approval process of the test method. A 
manufacturer can use ``pre-approved'' test methods for HD vehicles 
including the A-to-B chassis testing, powertrain testing or on-road 
testing. A manufacturer may also use any developed test procedure which 
has known quantifiable benefits. A test plan detailing the testing 
methodology is required to be approved by the agencies prior to 
collecting any test data. The agencies will also continue the second 
path which includes a public approval process of any testing method 
which could have uncertain benefits (i.e., an unknown usage rate for a 
technology). Furthermore, the agencies are modifying our provisions to 
better clarify the documentation required to be submitted for approval 
aligning them with provisions in 40 CFR 86.1869-12, and NHTSA 
separately prohibits credits from technologies addressed by any of its 
crash avoidance safety rulemakings (i.e., congestion management 
systems).
    Sections III and V separately describe tractor and vocational 
vehicle technologies, respectively, that the agencies anticipate may 
qualify for these off-cycle credit provisions.
(4) Production Vehicle Testing for Comparison to GEM
    As described in Section III.E.(2)(j), The agencies are requiring 
tractor manufacturers to annually chassis test five production vehicles 
over the GEM cycles to verify that relative reductions simulated in GEM 
are being achieved in production. See 40 CFR 1037.665. We do not expect 
absolute correlation between GEM results and chassis testing. GEM makes 
many simplifying assumptions that do not compromise its usefulness for 
certification, but do cause it to produce emission rates different from 
what would be measured during a chassis dynamometer test. Given the 
limits of correlation possible between GEM and chassis testing, we 
would not expect such testing to accurately reflect whether a vehicle 
was compliant with the GEM standards. Therefore, we are not applying 
GHG compliance liability to such testing. Rather, this testing will be 
for data collection and informational purposes only. The agencies will 
continue to evaluate in-use compliance

[[Page 73549]]

by verifying GEM inputs and testing in-use engines. (Note that NTE 
standards for criteria pollutants may apply for some portion of the 
test cycles.)
(5) Use of GEM in Establishing the Phase 2 Numerical Standards
    As in Phase 1, the agencies are setting specific numerical 
standards against which tractors and vocational vehicles will be 
certified using GEM (box trailers will use a GEM-based equation, and 
some trailers and custom chassis vocational vehicles may optionally use 
a non-GEM certification path). Although these standards are 
performance-based standards, which do not specifically require the use 
of any particular technologies,\174\ the agencies established these 
standards by evaluating specific vehicle technology packages using the 
final version of Phase 2 GEM. We note that that this means the final 
numerical standards are not directly comparable to the proposed 
standards, which were based on an intermediate version of GEM, rather 
than on the final version.
---------------------------------------------------------------------------

    \174\ The sole exception being the design-based standards for 
non-aero and partial aero trailers.
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(a) Relation to In-Use Emissions
    The purpose of this rulemaking is to achieve in-use emission and 
fuel consumption reductions by requiring manufacturers to demonstrate 
that they meet the promulgated emission standards. Thus, it is 
important that GEM simulations be reasonably representative of in-use 
operation. Testing that is unrepresentative of actual in-use operation 
does not necessarily tell us anything about whether any emission 
reductions occur. However, we recognize that certain simplifications 
are necessary for practical simulations. In the past, EPA has addressed 
this issue by including in our testing regulations a process by which 
EPA can work with manufacturers to adjust test procedures to make them 
more representative of in-use operation. For engine testing, this 
provision is in 40 CFR 1065.10(c)(1), where EPA requires manufacturers 
to notify us in cases in which they determine that the specified test 
procedures would result in measurements that do not represent in-use 
operation.
    Although we are not adopting an equivalent provision for GEM at 
this time, we expect similar principles to apply. To the extent that 
GEM fails to represent in-use emission, we would expect to work with 
manufacturers to address the issue--under the existing regulations 
where possible, or by promulgating a new rulemaking.
    We recognize that many compromises must be made between the 
practicality of testing/simulation and the matching of in-use 
operation. We have considered many aspects of the test procedures in 
this respect for the engines, vehicles, and emission controls of which 
we are currently aware. We have concluded that the procedures will 
generally result in emission simulations that are sufficiently 
representative of in-use emissions, even though not all in-use 
operation will occur during simulation. Nevertheless, we have 
identified several areas that deserve some additional discussion.
    GEM is structured to simulate a single vehicle weight (curb weight 
plus payload) per regulatory subcategory. However, we know that actual 
in-use weights will rarely be exactly the same as the simulated 
weights. Nevertheless, since the representativeness of the simulated 
weights (or lack thereof) is being fully considered in the setting of 
the standards, there would be no need to modify the procedures to 
account for different curb weights or payloads.
    GEM simulates vehicle emissions over three drive cycles plus two 
idle cycles, and weights the cycle results based on the type of vehicle 
being certified. These cycles and weightings reflect fleet average 
driving patterns and the agencies do not expect them to fully match 
driving patterns for individual vehicles. Thus, we would generally not 
consider GEM's cycles as unrepresentative for vehicles with different 
in-use driving patterns. However, if new information became available 
that demonstrated that GEM's cycles somehow did not reflect fleet 
average driving patterns, the agencies would consider such information 
in the context of the principles of representative testing, described 
above.
    Finally, GEM includes default values for axle and transmission 
efficiency derived from baseline technologies. However, we generally 
expect manufacturers to use more efficient axles and transmissions for 
Phase 2 vehicles. As noted above, based on comments, the agencies are 
allowing manufacturers to optionally input measured efficiencies to 
better represent these more efficient technologies. We would not 
consider GEM unrepresentative if manufacturers chose to use the default 
values rather than measure these efficiencies directly.
(b) Relation to Powertrain Testing
    As already noted, GEM correlates very well with powertrain testing. 
To the extent they differ, it would be expected to be primarily related 
to how transmission performance is modeled in GEM. Although GEM 
includes a sophisticated model of transmissions, it cannot represent a 
transmission better than a powertrain test of the same transmission. 
Thus, the agencies consider powertrain testing to be as good as or 
better than GEM run using engine-only fuel maps; hence the provision in 
the final rules allowing results from powertrain testing to be used as 
a GEM input.
    In some respects, powertrain testing can be considered to be a 
reference method for this rulemaking. Because manufacturers have the 
option to perform powertrain testing instead of engine-only fuel 
mapping, the stringency of the final standards can be traced to 
powertrain testing. In other words, methods that can be shown to be 
equivalent to powertrain testing can be considered to be consistent 
with the testing that was used as the basis of the final Phase 2 
standards.
    In a related context, it may be useful in the future to consider 
equivalency to powertrain testing as an appropriate criterion for 
evaluating changes to GEM to address new technologies. Consider, for 
example, a new technology that is not represented in GEM, but that is 
reflected in powertrain testing. The agencies could determine that it 
would be appropriate to modify GEM to reflect the technology rather 
than to require manufacturers to perform powertrain testing. In such a 
case, the agencies would not consider the modification to GEM to impact 
the effective stringency of the Phase 2 standards because the new 
version of GEM would be equivalent to performing powertrain testing.

D. Engine Test Procedures and Engine Standards

    In addition to the Phase 1 GEM-based vehicle certification of 
tractors and vocational chassis, the agencies also set Phase 1 separate 
CO2 and fuel efficiency standards for the engines installed 
in tractors and vocational chassis. EPA also set Phase 1 separate 
engine standards for capping methane (CH4) and nitrous oxide 
(N2O) emissions (essentially capping emissions at current 
emission levels). Compliance with all of these Phase 1 separate engine 
standards is demonstrated by measuring these emissions during an engine 
dynamometer test procedure. For Phase 1 the agencies use the same test 
procedure specified for EPA's existing heavy-duty engine emissions 
standards (e.g., NOX and PM standards). These Phase 1 engine 
standards are specified in terms of brake-specific (g/bhp-hr) fuel, 
CO2, CH4 and N2O emissions limits. 
Since the test procedure already

[[Page 73550]]

specified how to measure fuel consumption, CO2 and 
CH4, few changes were needed to utilize the test procedure 
for Phase 1, the most notable change being a modification specifying 
how to measure N2O.
    There are some differences in how these non-GHG test procedures are 
applied in Phase 1 and Phase 2. In EPA's non-GHG engine emissions 
standards, heavy-duty engines must meet brake-specific standards for 
emissions of total oxides of nitrogen (NOX), particulate 
mass (PM), non-methane hydrocarbon (NMHC), and carbon monoxide (CO). 
These standards must be met by all engines both over a 13-mode steady-
state duty cycle called the ``Supplemental Emissions Test'' (SET) \175\ 
and over a composite of a cold-start and a hot-start transient duty 
cycle called the ``Federal Test Procedure'' (FTP). In contrast, for 
Phase 1 the agencies require that engines specifically installed in 
tractors meet fuel efficiency and CO2 standards over only 
the SET but not the composite FTP. This requirement was intended to 
reflect that tractor engines typically operate near steady-state 
conditions versus transient conditions. See 76 FR 57159. For Phase 2 
the agencies are finalizing, as proposed, slight changes to the 13-
modes' weighting factors to better reflect in-use engine operation. 
These weighting factors apply only for determining SET fuel consumption 
and CO2 emissions. No changes are being made to the 
weighting factors for EPA's non-GHG emission standards. The agencies 
adopted the converse for engines installed in vocational vehicles. That 
is, these engines must meet fuel efficiency and CO2 
standards over the composite FTP but not the SET. This requirement was 
intended to reflect that vocational vehicle engines typically operate 
under transient conditions versus steady-state conditions (76 FR 
57178). For both tractor and vocational vehicle engines in Phase 1, EPA 
set CH4 and N2O emissions cap standards over the 
composite FTP only and not over the SET duty cycle. See Section II.D. 
for details on this final action's engine test procedures for Phase 2.
---------------------------------------------------------------------------

    \175\ The SET cycle is also referred to as the ``ramped-modal 
cycle'' because, for criteria pollutants, it is performed as a 
continuous cycle with ramped transitions between the individual 
modes of the SET.
---------------------------------------------------------------------------

    In response to the agencies' proposed engine standards, we received 
a number of public comments. The agencies considered those comments, 
and the following list summarizes key changes we've made in response, 
and more detailed descriptions of these changes are presented in 
Chapter 2.7 of the RIA:
     Recalculated the SET baseline using the new Phase 2 SET 
weighting factors.
     Recalculated the FTP baseline, based on MY 2016 FTP 
certification data from Cummins, DTNA, Volvo, Navistar, Hino, Isuzu, 
Ford, GM and FCA. These included HHD, MHD, and LHD engines.
     Projected how manufacturers would modify maximum fuel 
rates as a function of speed to strategically relocate SET mode points 
to achieve lowest SET results.
     Projected a higher market penetration of WHR in 2027, 
versus what we proposed.
     Decreased our projected impact of engine technology dis-
synergies by increasing the magnitude of our so-called ``dis-synergy 
factors;'' accounting for these changes by increasing the research and 
development costs needed for this additional optimization.
    The following section first describes the engine test procedures 
used to certify engines to the Phase 2 separate engine standards. 
Sections that follow describe the Phase 2 CO2, 
N2O and CH4 separate engine standards and their 
feasibility.
(1) Engine Test Procedures
(a) SET Cycle Weighting
    The SET cycle was adopted by EPA in 2000 and modified in 2005 from 
a discrete-mode test to a ramped-modal cycle to broadly cover the most 
significant part of the speed and torque map for heavy-duty engines, 
defined by three non-idle speeds and three relative torques. The low 
speed is called the ``A speed,'' the intermediate speed is called the 
``B speed,'' and the high speed is called the ``C speed.'' As is shown 
in Table II-1, the SET cumulatively weights these three speeds at 23 
percent, 39 percent, and 23 percent.

            Table II-1--SET Modes Weighting Factor in Phase 1
------------------------------------------------------------------------
                                                              Weighting
                       Speed, % Load                          factor in
                                                             Phase 1 (%)
------------------------------------------------------------------------
Idle.......................................................           15
A, 100.....................................................            8
B, 50......................................................           10
B, 75......................................................           10
A, 50......................................................            5
A, 75......................................................            5
A, 25......................................................            5
B, 100.....................................................            9
B, 25......................................................           10
C, 100.....................................................            8
C, 25......................................................            5
C, 75......................................................            5
C, 50......................................................            5
                                                            ------------
  Total....................................................          100
Cumulative A Speed.........................................           23
Cumulative B Speed.........................................           39
Cumulative C Speed.........................................           23
------------------------------------------------------------------------

    The C speed is typically in the range of 1800 rpm for current heavy 
heavy-duty engine designs. However, it is becoming much less common for 
engines to operate at such a high speeds in real-world driving 
conditions, and especially not during cruise vehicle speeds in the 55 
to 65 mph vehicle speed range. This trend has been corroborated by 
engine manufacturers' in-use data that has been submitted to the 
agencies in comments and presented at technical conferences.\176\ Thus, 
although the current SET represents highway operation better than the 
FTP cycle, it could be improved by adjusting its weighting factors to 
better reflect modern trends in in-use engine operation. Furthermore, 
the most recent trends indicate that manufacturers are configuring 
drivetrains to operate engines at speeds down to a range of 1050-1200 
rpm at a vehicle speed of 65 mph.
---------------------------------------------------------------------------

    \176\ ``OEM perspective--Meeting EPA/NHTSA GHG/Efficiency 
Standards'', 7th Integer Emissions Summit USA 2014, Volvo Group 
North America.
---------------------------------------------------------------------------

    To address this trend toward in-use engine down-speeding, the 
agencies are finalizing as proposed refined SET weighting factors for 
the Phase 2 CO2 emission and fuel consumption standards. The 
new SET mode weightings move most of the C weighting to ``A'' speed, as 
shown in Table II-2. To better align with in-use data, these changes 
also include a reduction of the idle speed weighting factor. These new 
mode weightings do not apply to criteria pollutants or to the Phase 1 
CO2 emission and fuel consumption standards.

          Table II-2--New SET Modes Weighting Factor in Phase 2
------------------------------------------------------------------------
                                                              Weighting
                        Speed/% load                          factor in
                                                             Phase 2 (%)
------------------------------------------------------------------------
Idle.......................................................           12
A, 100.....................................................            9
B, 50......................................................           10
B, 75......................................................           10
A, 50......................................................           12
A, 75......................................................           12
A, 25......................................................           12
B, 100.....................................................            9

[[Page 73551]]

 
B, 25......................................................            9
C, 100.....................................................            2
C, 25......................................................            1
C, 75......................................................            1
C, 50......................................................            1
                                                            ------------
  Total....................................................          100
Total A Speed..............................................           45
Total B Speed..............................................           38
Total C Speed..............................................            5
------------------------------------------------------------------------

(b) Engine Test Provisions for SET, FTP, and Engine Mapping for GEM 
Inputs
    Although GEM does not apply directly to engine certification, Phase 
2 will require engine manufacturers to generate and certify full load 
and motoring torque curves and engine fuel rate maps for input into GEM 
for tractor and vocational chassis manufacturers to demonstrate 
compliance to their respective standards. The full load and motoring 
torque curve procedures were previously defined in 40 CFR part 1065, 
and these are already required for non-GHG emissions certification. The 
Phase 2 final default test procedure for generating an engine map for 
GEM's 55 mph and 65 mph drive cycles is the ``steady-state'' mapping 
procedure. However, the agencies are finalizing an option for 
manufacturers to use the ``cycle average'' mapping procedure for GEM's 
55 mph and 65 mph drive cycles. The test procedure for generating an 
engine map for GEM's ARB Transient drive cycle is the ``cycle-average'' 
mapping procedure, and the agencies are not finalizing any other 
mapping options for the ARB Transient drive cycle. Note that if an 
engine manufacturer elects to conduct powertrain testing to generate 
inputs for GEM, then steady-state and cycle-average engine maps would 
not be required for those GEM vehicle configurations to which the 
powertrain test inputs would apply. The steady-state and cycle-average 
test procedures are specified in 40 CFR parts 1036 and 1065. The 
technical and confidential business information motivations for 
finalizing these test procedures are explained in II. B. (2), along 
with a summary of comments we received.
    One important consideration is the need to correct measured fuel 
consumption rates for the carbon and energy content of the test fuel. 
As proposed, we will continue the Phase 1 approach, which is specified 
in 40 CFR 1036.530. We are specifying a similar approach to GEM fuel 
maps in Phase 2.
    As proposed, the agencies are requiring that engine manufacturers 
certify fuel maps for GEM, as part of their certification to the engine 
standards. However, there were a number of manufacturer comments 
strongly questioning the particular proposed requirement that engine 
manufacturers provide these maps to vehicle manufacturers starting in 
MY 2020 for the certification of vehicles commercially marketed as MY 
2021 vehicles in calendar year 2020. This is a normal engine and 
vehicle manufacturing process, where many vehicles may be produced with 
engines having an earlier model year than the commercial model year of 
the vehicle. For example, we expect that some MY 2021 vehicles will be 
produced with MY 2020 engines. Thus, we proposed to require engine 
manufacturers to begin providing GEM fuel maps for MY 2020 engines so 
that vehicle manufacturers could run GEM to certify MY 2021 vehicles 
with MY 2020 engines. EMA and some of its members commented that MY 
2020 engines should not be subject to Phase 2 requirements, based on 
NHTSA's statutory 4-year lead-time requirement and because the 
potential higher fuel consumption of MY 2020 (i.e., Phase 1) engine 
maps could force vehicle manufacturers to install additional 
technologies that were not projected by the agencies for compliance. 
The agencies considered these comments along with the potential cost 
savings for manufacturers to align the timing of both their engines' 
and vehicle's Phase 2 product plans and certification paths. The 
agencies also considered how this situation would repeat in MY 2024 and 
MY 2027 and possibly with future standards as well. Based on these 
considerations, we have decided that it would be more appropriate to 
harmonize the engine and vehicle standards, starting in MY 2021 so that 
vehicle manufacturers will not need fuel maps for 2020 engines. Thus, 
we are not finalizing the requirement to provide fuel maps for MY 2020 
engines. However, we are requiring fuel maps for all MY 2021 engines, 
even those (e.g., small businesses) for which the Phase 2 engine and 
vehicle standards have been delayed. See 40 CFR 1036.150.
    The current engine test procedures also require the development of 
regeneration emission rate and frequency factors to determine 
infrequent regeneration adjustment factors (IRAFs) that account for the 
emission changes for criteria pollutants during an exhaust emissions 
control system regeneration event. In Phase 1 the agencies adopted 
provisions to exclude CO2 emissions and fuel consumption due 
to regeneration. However, for Phase 2, we are requiring the inclusion 
of CO2 emissions and fuel consumption due to regeneration 
over the FTP and SET (RMC) cycles, as determined using the IRAF 
provisions in 40 CFR 1065.680. While some commenters opposed this 
because of its potential impact on stringency, we do not believe this 
will significantly impact the stringency of these standards because 
manufacturers have already made great progress in reducing the 
frequency and impact of regeneration emissions since 2007. Rather, the 
agencies are including IRAF CO2 emissions for Phase 2 to 
prevent these emissions from increasing in the future to the point 
where they would otherwise become significant. Manufacturers 
qualitatively acknowledged the likely already small and decreasing 
magnitude of IRAF CO2 emissions in their comments. For 
example, EMA stated, ``the rates of infrequent regenerations have been 
going down since the adoption of the Phase 1 standards'' and that IRAF 
``contributions are minor.'' Nevertheless, we believe it is prudent to 
begin accounting for regeneration emissions to discourage manufacturers 
from adopting criteria emissions compliance strategies that could 
reverse this trend. Manufacturers expressed concern about the 
additional test burden, but the only additional requirement would be to 
measure and report CO2 emissions for the same tests they are 
already performing to determine IRAFs for other pollutants.
    At the time of the proposal, we did not specifically adjust 
baseline levels to include additional IRAF emissions because we 
believed them to be negligible and decreasing. Commenters opposing this 
proposed provision provided no data to dispute this belief. We continue 
to believe that regeneration strategies can be engineered to maintain 
these negligible rates. Thus, we do not believe they are of fundamental 
significance for our baselines in the FRM. Highway operation includes 
enough high temperature operation to make active regenerations 
unnecessary. Furthermore, recent improvements in exhaust after-
treatment catalyst formulations and exhaust temperature thermal 
management strategies, such as intake air throttling, minimize 
CO2 IRAF impacts during non-highway operation, where active 
regeneration might be required. Finally, as is discussed in Section 
II.D.(2), recent significant

[[Page 73552]]

efficiency improvements over the FTP cycle suggest that FTP emissions 
may actually be even lower than we have estimated in our updated FTP 
baselines, which would provide additional margin for manufacturers to 
manage any minor CO2 IRAF impacts that may occur.
    We are not including fuel consumption due to after-treatment 
regeneration in the creation of fuel maps used in GEM for vehicle 
compliance. We believe that the IRAF requirements for the separate SET 
and FTP engine standards, along with market forces that already exist 
to minimize regeneration events, will create sufficient incentives to 
reduce fuel consumption during regeneration over the entire fuel map.
(c) Powertrain Testing
    The agencies are finalizing a powertrain test option to afford a 
robust mechanism to quantify the benefits of CO2 reducing 
technologies that are a part of the powertrain (conventional or 
hybrid), that are not captured in the GEM simulation. Among these 
technologies are integrated engine and transmission control and hybrid 
systems. We are finalizing a number of improvements to the test 
procedure in 40 CFR 1037.550. As proposed we are finalizing the 
requirement for Phase 2 hybrid powertrains to mapped using this 
powertrain test method. The agencies are also finalizing modifications 
to 40 CFR 1037.550 to separate out the hybrid specific testing 
protocols.
    To limit the amount of testing under this rule, powertrains can be 
divided into families and are tested in a limited number of simulated 
vehicles that will cover the range of vehicles in which the powertrain 
will be used. A matrix of 8 to 9 tests will be needed per vehicle 
cycle, to enable the use of the powertrain results broadly across all 
the vehicles in which the powertrain will be installed. The individual 
tests differ by the vehicle that is being simulated during the test. 
These are discussed in detail in Chapter 3.6 of the RIA.
(i) Powertrain Test Procedure
    The agencies are expanding upon the test procedures defined 40 CFR 
1037.550 for Phase 1 hybrid vehicles. The Phase 2 expansion will 
migrate the current Phase 1 test procedure to a new 40 CFR 1037.555 and 
will modify the current test procedure in 40 CFR 1037.550, allowing its 
use for Phase 2 only. The Phase 2 modifications relative to 40 CFR 
1037.550 include the addition of the rotating inertia of the driveline 
and tires, and the axle efficiency. This revised procedure also 
requires that each of the powertrain components be cooled so that the 
temperature of each of the components is kept in the normal operation 
range. We are extending the powertrain procedure to PHEV powertrains.
    Powertrain testing contains many of the same requirements as engine 
dynamometer testing. The main differences are where the test article 
connects to the dynamometer and the software that is used to command 
the dynamometer and operator demand setpoints. The powertrain procedure 
finalized in Phase 2 allows for the dynamometer(s) to be connected to 
the powertrain either upstream of the drive axle or at the wheel hubs. 
The output of the transmission is upstream of the drive axle for 
conventional powertrains. In addition to the transmission, a hydraulic 
pump or an electric motor in the case of a series hybrid may be located 
upstream of the drive axle for hybrid powertrains. If optional testing 
with the wheel hub is used, two dynamometers will be needed, one at 
each hub. Beyond these points, the only other difference between 
powertrain testing and engine testing is that for powertrains, the 
dynamometer and throttle setpoints are not set by fixed speed and 
torque targets prescribed by the cycle, but are calculated in real time 
by the vehicle model. The powertrain test procedure requires a forward 
calculating vehicle model, thus the output of the model is the 
dynamometer speed setpoints. The vehicle model calculates the speed 
target using the measured torque at the previous time step, the 
simulated brake force from the driver model, and the vehicle parameters 
(tire rolling resistance, drag area, vehicle mass, rotating mass, and 
axle efficiency). The operator demand that is used to change the torque 
from the engine is controlled such that the powertrain follows the 
vehicle speed target for the cycle instead of being controlled to match 
the torque or speed setpoints of the cycle. The emission measurement 
procedures and calculations are identical to engine testing.
(ii) Engine Test Procedures for Replicating Powertrain Tests
    As described in Section II.B.(2)(b), the agencies are finalizing 
the proposed powertrain test option to quantify the benefits of 
CO2-reducing powertrain technologies. This option is very 
similar to the cycle average mapping approach, although these 
powertrain test results would be used to override both the engine and 
transmission (and possibly axle) simulation portions of GEM, not just 
the engine fuel map. The agencies are requiring that any manufacturer 
choosing to use this option also measure engine speed and engine torque 
during the powertrain test so that the engine's performance during the 
powertrain test could be replicated in a non-powertrain engine test 
cell. Manufacturers would be required to measure or calculate, using 
good engineering judgment, the engine shaft output torque, which would 
be close-coupled to the transmission input shaft during a powertrain 
test. Subsequent engine testing then could be conducted using the 
normal part 1065 engine test procedures as specified in 40 CFR 
1037.551, and g/bhp-hr CO2 results could be compared to the 
levels the manufacturer reported during certification. Such testing 
could apply for both confirmatory and selective enforcement audit (SEA) 
testing. This would simplify both the certification and SEA testing.
    As proposed, engine manufacturers certifying powertrain performance 
(instead of or in addition to the multi-point fuel maps) will be held 
responsible for powertrain test results. If the engine manufacturer 
does not certify powertrain performance and instead certifies only the 
steady-state and/or cycle-average fuel maps, it will held responsible 
for fuel map performance rather than the powertrain test results. 
Engine manufacturers certifying both will be responsible for both.
    Some commenters objected to the potential liability for such 
engine-only tests. However, it appears they do not understand our 
intent. This provision states clearly that this approach could be used 
only where ``the test engine's operation represents the engine 
operation observed in the powertrain test.'' Also, since the 
manufacturers perform all SEA testing themselves, this would be an 
option for the manufacturer rather than something imposed by EPA. Thus, 
this concern should be limited to the narrow circumstance in which EPA 
performs confirmatory engine testing of an engine that was certified 
using powertrain testing, follows the manufacturer's specified engine 
test cycle, and ensures that the test accurately represents the 
engine's performance during the powertrain test. However, it is not 
clear why this would be problematic. It is entirely reasonable to 
assume that testing the engine in this way would result in equivalent 
emission results. To the extent manufacturer concerns remain, each 
manufacturer would be free to certify their engines based on engine-
only fuel maps rather than powertrain testing.
(d) CO2 From Urea SCR Systems
    For diesel engines utilizing urea SCR emission control systems for 
NOX

[[Page 73553]]

reduction, the agencies will allow, but not require, correction of the 
final engine (and powertrain) fuel maps to account for the contribution 
of CO2 from the urea injected into the exhaust. This urea 
typically contributes 0.2 to 0.5 percent of the total CO2 
emissions measured from the engine, and up to 1 percent at certain map 
points. Since current urea production methods use gaseous 
CO2 captured from the atmosphere (along with 
NH3), CO2 emissions from urea consumption does 
not represent a net carbon emission. This adjustment is necessary so 
that fuel maps developed from CO2 measurements will be 
consistent with fuel maps from direct measurements of fuel flow rates. 
This adjustment is also necessary to fully align EPA's CO2 
standards with NHTSA's fuel consumption standards. Failing to account 
for urea CO2 tailpipe emissions would result in reporting 
higher fuel consumption than what was actually consumed. Thus, we are 
only allowing this correction for emission tests where CO2 
emissions are determined from direct measurement of CO2 and 
not from fuel flow measurement, which would not be impacted by 
CO2 from urea.
    We note that this correction will be voluntary for manufacturers, 
and we expect that some manufacturers may determine that the correction 
is too small to be of concern. The agencies will use this correction 
for CO2 measurements with any engines for which the engine 
manufacturer applied the correction for its fuel maps during 
certification.
    We are not allowing this correction for engine test results with 
respect to the engine CO2 standards. Both the Phase 1 
standards and the new standards for CO2 from diesel engines 
are based on test results that included CO2 from urea. In 
other words, these standards are consistent with using a test procedure 
that does not correct for CO2 from urea.
(2) Engine Standards for CO2 and Fuel Consumption
    We are largely maintaining the existing Phase 1 regulatory 
structure for engine standards, which had separate standards for spark-
ignition engines (such as gasoline engines) and compression-ignition 
engines (such as diesel engines), and for HHD, MHD and LHD engines, but 
we are changing how these standards will apply to alternative fuel 
engines as described in Section XII.A.2.
    Phase 1 applied different test cycles depending on whether the 
engine is used for tractors, vocational vehicles, or both, and we are 
continuing this approach. Tractor engines are subject to standards over 
the SET, while vocational engines are subject to standards over the 
FTP. Table II-3 shows the Phase 1 standards for diesel engines.

                                      Table II-3--Phase 1 MY 2017 Diesel Engine CO2 and Fuel Consumption Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Units                                 HHD SET            MHD SET            HHD FTP            MHD FTP            LHD FTP
--------------------------------------------------------------------------------------------------------------------------------------------------------
g/bhp-hr.................................................                460                487                555                576                576
gal/100 bhp-hr...........................................             4.5187             4.7839             5.4519             5.6582             5.6582
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In the Phase 2 proposal we assumed that these numeric values of the 
Phase 1 standards were the baselines for Phase 2. We applied our 
technology assessments to these baselines to arrive at the Phase 2 
standards for MY 2021, MY 2024 and MY 2027. In other words, for the 
Phase 2 proposal we projected that starting in MY 2017 engines would, 
on average, just meet the Phase 1 standards and not over-comply. 
However, based on comments we received on how to consistently apply our 
new SET weighting factors in our analysis and based on recent MY 2016 
engine certification data, we are updating our Phase 2 baseline 
assumptions for both the SET and FTP.
    First, with respect to the SET, in the proposal we compared our 
proposed Phase 2 standards, which are based on these new Phase 2 
weighting factors, to the Phase 1 numeric standards, which are based on 
the current Phase 1 weighting factors. Because we continue to use the 
same 13-mode brake specific CO2 and fuel consumption numeric 
values we used for the proposal to represent the performance of a MY 
2017 baseline engine, we are not projecting a different technology 
level in the baseline. Rather, this is simply correcting an ``apples-
to-oranges'' comparison from the proposal by applying the Phase 2 
weighting factors to the MY 2017 baseline engine. This was pointed out 
to us by UCS, ICCT and EDF in their public comments. While this did not 
impact our technology effectiveness or cost analyses, it did impact the 
numeric value of our baseline to which we reference the effectiveness 
of applying technologies to the 13 individual modes of the SET. Because 
the revised SET weighting factors result in somewhat lower brake 
specific CO2 and fuel consumption numeric results for the 
composite baseline SET value, this correction, in turn, lowers the 
numerical values of the final Phase 2 SET standards. Making this 
particular update did not result in a change to the relative stringency 
of the final Phase 2 numeric engine standards (relative to MY 2017 
baseline performance), but our updated feasibility analysis did; see 
Section II.D.(2)(a) below).
    Second, the agencies made adjustments to the FTP baselines, but 
these adjustments were not made because of a calculation error. Rather, 
MY 2016 FTP certification data showed an unexpected step-change 
improvement in engine fuel consumption and CO2 emissions. 
These data were not available at the time of proposal, so the agencies 
relied upon the MY 2017 Phase 1 standard as a baseline. EDF publicly 
commented in response to the NODA that the more recent certification 
data revealed this new step-change. MY 2016 certification data 
submitted to the agencies \177\ as well as to ARB \178\ show that many 
engines from many manufacturers already not only achieve the Phase 1 
FTP standards, but some were also below the MY 2027 standards proposed 
for Phase 2. This was not the case for the SET, where most 
manufacturers are still not yet complying with the MY 2017 Phase 1 SET 
standards. In view of this situation for the FTP, the agencies are 
adjusting the Phase 2 FTP baseline to reflect this shift. The 
underlying reasons for this shift are mostly related to manufacturers 
optimizing their SCR thermal management strategy over the FTP in ways 
that we (mistakenly) thought they already had in MY 2010 (i.e., the 
Phase 1 baseline). As background, the FTP includes a cold-start, a hot-
start and significant time spent at engine idle. During these portions 
of the FTP, the NOX SCR system can cool down and lose 
NOX reducing efficiency. One simplistic strategy to maintain 
SCR temperature is to inefficiently consume additional fuel, such that 
the fuel energy is lost to the

[[Page 73554]]

exhaust system in the form of heat. There are more sophisticated 
strategies to maintain SCR temperature, however, but these apparently 
required additional time from MY 2010 for research, development and 
refinement. In updating these baseline values, the agencies did 
consider the concerns raised by manufacturers about the potential 
impact of IRAFs on baseline emissions.
---------------------------------------------------------------------------

    \177\ https://www3.epa.gov/otaq/certdata.htm#oh.
    \178\ http://www.arb.ca.gov/msprog/onroad/cert/mdehdehdv/2016/2016.php.
---------------------------------------------------------------------------

    As just noted, at the time of Phase 1 we had not realized that 
these improvements were not already in the Phase 1 baseline. These 
include optimizing the use of an intake throttle to decrease excess 
intake air at idle and SCR catalyst reformulation to maintain SCR 
efficiency at lower temperatures. Based on this information, which was 
provided to the agencies by engine manufacturers, but only after we 
specifically requested this information, the agencies concluded that in 
Phase 1 we did not account for how much further these kinds of 
improvements could still impact FTP fuel consumption. Conversely, only 
by reviewing the new MY 2016 certification data did we realize how 
little SCR thermal management optimization actually occurred for the 
engine model years that we used to establish the Phase 1 baseline--
namely MY 2009 and MY 2010 engines. Because we never accounted for this 
kind of improvement in our Phase 2 proposal's stringency analysis for 
meeting the Phase 2 proposed FTP standards, this baseline shift does 
not alter our projected effectiveness and market adoption rates from 
the proposal. Therefore, we continue to apply the same improvements 
that we proposed, but we apply them to the updated FTP baseline. See 
Section II.D.(5) for a discussion on how this impacts carry-over of 
Phase 1 emission credits.
    Table II-4 shows the Phase 2 diesel engine final CO2 
baseline emissions. Note that the gasoline engine CO2 
baseline for Phase 2 is the same as the Phase 1 HD gasoline FTP 
standard, 627 g/bhp-hr. More detailed analyses on these Phase 2 
baseline values of tractor and vocational vehicles can be found in 
Chapter 2.7.4 of RIA.

                                   Table II-4--Phase 2 Diesel Engine Final CO2 and Fuel Consumption Baseline Emissions
--------------------------------------------------------------------------------------------------------------------------------------------------------
                          Units                                 HHD SET            MHD SET            HHD FTP            MHD FTP            LHD FTP
--------------------------------------------------------------------------------------------------------------------------------------------------------
g/bhp-hr.................................................                455                481                525                558                576
gal/100 bhp-hr...........................................             4.4695             4.7250             5.1572             5.4813             5.6582
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As described below, the agencies are adopting standards for new 
compression-ignition engines for Phase 2, commencing in MY 2021, that 
will require additional reductions in CO2 emissions and fuel 
consumption beyond the Phase 2 baselines. The agencies are not adopting 
new CO2 or fuel consumption engine standards for new heavy-
duty gasoline engines. Note, however, that we are projecting some small 
improvement in gasoline engine performance that will be recognized over 
the vehicle cycles (that is, reflected in the stringency of certain of 
the vocational vehicle standards). See Section V.B.2.a below.
    For diesel engines to be installed in Class 7 and 8 combination 
tractors, the agencies are adopting the SET standards shown in Table 
II-5.\179\ The MY 2027 SET standards for engines installed in tractors 
will require engine manufacturers to achieve, on average, a 5.1 percent 
reduction in fuel consumption and CO2 emissions beyond the 
Phase 2 baselines. We are also adopting SET standards in MY 2021 and MY 
2024 that will require tractor engine manufacturers to achieve, on 
average, 1.8 percent and 4.2 percent reductions in fuel consumption and 
CO2 emissions, respectively, beyond the Phase 2 baselines.
---------------------------------------------------------------------------

    \179\ The agencies note that the CO2 and fuel 
consumption standards for Class 7 and 8 combination tractors do not 
cover gasoline or LHDD engines, as those are not used in Class 7 and 
8 combination tractors.
    \180\ Tractor engine standards apply to all tractor engines, 
without regard to the actual fuel (e.g., diesel or natural gas) or 
engine-cycle classification (e.g., compression-ignition or spark-
ignition).

           Table II-5--Phase 2 Heavy-Duty Tractor Engine Standards for Engines 180 Over the SET Cycle
----------------------------------------------------------------------------------------------------------------
                                                                                   Heavy  heavy-   Medium heavy-
                  Model year                                Standard                   duty            duty
----------------------------------------------------------------------------------------------------------------
2021-2023.....................................  CO2 (g/bhp-hr)..................             447             473
                                                Fuel Consumption (gallon/100 bhp-         4.3910          4.6464
                                                 hr).
2024-2026.....................................  CO2 (g/bhp-hr)..................             436             461
                                                Fuel Consumption (gallon/100 bhp-         4.2829          4.5285
                                                 hr).
2027 and Later................................  CO2 (g/bhp-hr)..................             432             457
                                                Fuel Consumption (gallon/100 bhp-         4.2436          4.4892
                                                 hr).
----------------------------------------------------------------------------------------------------------------

    For diesel engines to be installed in vocational chassis, the 
agencies are adopting the FTP standards shown in Table II-6. The MY 
2027 FTP standards for engines installed in vocational chassis will 
require engine manufacturers to achieve, on average, a 4.2 percent 
reduction in fuel consumption and CO2 emissions beyond the 
Phase 2 baselines. We are also adopting FTP standards in MY 2021 and MY 
2024 that will require vocational chassis engine manufacturers to 
achieve, on average, 2.3 percent and 3.6 percent reductions in fuel 
consumption and CO2 emissions, respectively, beyond the 
Phase 2 baselines.

[[Page 73555]]



                Table II-6--Vocational Diesel (CI) Engine Standards Over the Heavy-Duty FTP Cycle
----------------------------------------------------------------------------------------------------------------
                                                                                  Medium  heavy-   Light  heavy-
              Model year                        Standard           Heavy  heavy-   duty  diesel    duty  diesel
                                                                    duty \181\         \181\           \182\
----------------------------------------------------------------------------------------------------------------
2021-2023.............................  CO2 (g/bhp-hr)..........             513             545             563
                                        Fuel Consumption (gallon/         5.0393          5.3536          5.5305
                                         100 bhp-hr).
2024-2026.............................  CO2 (g/bhp-hr)..........             506             538             555
                                        Fuel Consumption (gallon/         4.9705          5.2849          5.4519
                                         100 bhp-hr).
2027 and Later........................  CO2 (g/bhp-hr)..........             503             535             552
                                        Fuel Consumption (gallon/         4.9411          5.2554          5.4224
                                         100 bhp-hr).
----------------------------------------------------------------------------------------------------------------

(a) Feasibility of the Diesel (Compression-Ignition) Engine Standards
---------------------------------------------------------------------------

    \181\ Heavy heavy-duty engine standards apply to all heavy 
heavy-duty engines, without regard to the actual fuel (e.g., diesel 
or natural gas) or engine-cycle classification (e.g., compression-
ignition or spark-ignition).
    \182\ The agencies are not adopting new CO2 or fuel 
consumption engine standards for new heavy-duty gasoline engines. 
Therefore, the Phase 2 HD gasoline FTP standard is the same as the 
Phase 1 HD gasoline FTP standard, 627 g/bhp-hr, 7.0552 gallon/100 
bhp-hr.
---------------------------------------------------------------------------

    In this section, the agencies discuss our assessment of the 
feasibility of the engine standards and the extent to which they 
conform to our respective statutory authorities and responsibilities. 
More details on the technologies discussed here can be found in RIA 
Chapter 2.3. The feasibility of these standards is further discussed in 
RIA Chapter 2.7 for tractor and vocational vehicle engines. While the 
projected technologies are discussed here separately, as is discussed 
at the beginning of this Section II.D, the agencies also accounted for 
dis-synergies between technologies. Note that Section II.D.(2)(e) 
discusses the potential for some manufacturers to achieve greater 
emission reductions by introducing new engine platforms, and how and 
why these reductions are reflected in the tractor and vocational 
vehicle standards.
    Based on the technology analysis described below, the agencies 
project that a technology path exists that will allow engine 
manufacturers to meet the final Phase 2 standards by 2027, and to meet 
the MY 2021 and 2024 standards. The agencies also project that these 
manufacturers will be able to meet these standards at a reasonable cost 
and without adverse impacts on in-use reliability.
    In general, engine performance for CO2 emissions and 
fuel consumption can be improved by improving the internal combustion 
process and by reducing energy losses. More specifically, the agencies 
have identified the following key means by which fuel efficiency can be 
improved:
     Combustion optimization
     Turbocharger design and optimization
     Engine friction and other parasitic loss reduction
     Exhaust after-treatment pressure drop reduction
     Intake air and exhaust system pressure drop reduction 
(including EGR system)
     Engine down-sizing to improve core engine efficiency
     Engine down-speeding over the SET, and in-use, by lug 
curve shape optimization
     Waste heat recovery system installation and optimization
     Physics model based electronic controls for transient 
performance optimization
    The agencies are gradually phasing in the separate engine standards 
from 2021 through 2027 so that manufacturers can gradually introduce 
these technology improvements. For most of these, the agencies project 
manufacturers could begin applying these technologies to about 45-50 
percent of their heavy-duty engines by 2021, 90-95 percent by 2024, and 
ultimately apply them to 100 percent of their heavy-duty engines by 
2027. However, for some of these improvements (such as waste heat 
recovery and engine downsizing) we project lower application rates in 
the Phase 2 time frame. This phase-in structure is consistent with the 
normal manner in which manufacturers introduce new technology to manage 
limited R&D budgets as well as to allow them to work with fleets to 
fully evaluate in-use reliability before a technology is applied fleet-
wide. The agencies believe the phase-in schedule will allow 
manufacturers to complete these normal processes. See RIA 2.3.9.
    Based on our technology assessment described below, the engine 
standards appear to be consistent with the agencies' respective 
statutory authorities. All of the technologies with high penetration 
rates above 50 percent have already been demonstrated to some extent in 
the field or in research laboratories, although some development work 
remains to be completed. We note that our feasibility analysis for 
these engine standards is not based on projecting 100 percent 
application for any technology until 2027. We believe that projecting 
less than 100 percent application is appropriate and gives us 
additional confidence that the 2021 and 2024 MY standards are feasible.
    Because this analysis considers reductions from engines meeting the 
Phase 1 standards, it assumes manufacturers will continue to include 
the same compliance margins as in Phase 1. In other words, a 
manufacturer currently declaring FCLs 10 g/bhp-hr above its measured 
emission rates (in order to account for production and test-to-test 
variability) will continue to do the same in Phase 2. Both the costs 
and benefits are determined relative to these baselines, and so are 
reflective of these compliance margins.
    The agencies have carefully considered the costs of applying these 
technologies, which are summarized in Section II.D.(2)(d). These costs 
appear to be reasonable on both a per engine basis, and when 
considering payback periods.\183\ The engine technologies are discussed 
in more detail below. Readers are encouraged to see the RIA Chapter 2.7 
for additional details (and underlying references) about our 
feasibility analysis.
---------------------------------------------------------------------------

    \183\ See Section IX.M for additional information about payback 
periods.
---------------------------------------------------------------------------

(i) Combustion Optimization
    Although manufacturers are making significant improvements in 
combustion to meet the Phase 1 engine standards, the agencies project 
that even more improvement is possible after 2018. For example, 
improvements to fuel injection systems will allow more flexible fuel 
injection capability with higher injection pressure, which can provide 
more opportunities to improve engine fuel efficiency. Further 
optimization of piston bowls and injector tips will also improve engine 
performance and fuel efficiency. We project that a reduction of up to 
1.0 percent is feasible in the 2024 model year through the use of

[[Page 73556]]

these technologies, although it will likely apply to only 95 percent of 
engines until 2027.
    Another important area of potential improvement is advanced engine 
control incorporating model based calibration to reduce losses of 
control during transient operation. Improvements in computing power and 
speed will make it possible to use much more sophisticated algorithms 
that are more predictive than today's controls. Because such controls 
are only beneficial during transient operation, they will reduce 
emissions over the FTP cycle, over the ARB Transient cycle's cycle-
average mapping procedure, and during in-use operation, but this 
technology will not reduce emissions over the SET cycle or over the 
steady-state engine mapping procedure. Thus, the agencies are 
projecting model based control reductions only for vocational engines' 
FTP standards and for projecting improvements captured by the cycle-
average mapping over the ARB Transient cycle. Although this control 
concept is not currently available and is still under development, we 
project model based controls achieving a 2 percent improvement in 
transient emissions. Based on model based controls already in 
widespread use in engine laboratories for the calibration of simpler 
controllers and based on recent model based control development under 
the DOE SuperTruck partnership (e.g., DTNA's SuperTruck engine's model 
based controls), we project that such controls could be in limited 
production for some engine models by 2021. We believe that some 
vocational chassis applications would particularly benefit from these 
controls in-use (e.g., urban applications with significant in-use 
transient operation). Therefore, we project that a modest amount of 
engine models will have these controls by MY 2021. We also project that 
manufacturers will learn more from the in-use operation of these 
technology leading engines, and manufacturers will be able to improve 
these controls even further, such that they would additionally benefit 
other vocational applications, such as multi-purpose and regional 
applications. By 2027, we project that 40 percent of all vocational 
diesel engines will incorporate model-based controls at a 2 percent 
level of effectiveness.
(ii) Turbocharging System
    Many advanced turbocharger technologies can be brought into 
production in the time frame between 2021 and 2027, and some of them 
are already in production, such as mechanical or electric turbo-
compounding, more efficient variable geometry turbines, and Detroit 
Diesel's patented asymmetric turbocharger. A turbo-compound system, 
like those installed on some of Volvo's EURO VI compliant diesels and 
on some of DTNA's current U.S. offerings (supplied to DTNA by a 
division of Cummins), extracts energy from the exhaust to provide 
additional power. Mechanical turbo-compounding includes a power turbine 
located downstream of the turbine which in turn is connected to the 
crankshaft to supply additional power. On-highway demonstrations of 
this technology began in the early 1980s. It was used first in heavy 
duty production in the U.S. by Detroit Diesel for their DD15 and DD16 
engines and reportedly provided a 3 to 5 percent fuel consumption 
reduction. Results are duty cycle dependent, and require significant 
time at high load to realize an in-use fuel efficiency improvement. 
Lightly loaded vehicles on flat roads or at low vehicle speeds can 
expect little or no benefit. Volvo reports two to four percent fuel 
consumption improvement in line haul applications.\184\ Because of 
turbo-compound technology's drive cycle dependent effectiveness, the 
agencies are only projecting a market penetration of 10 percent for all 
tractor engines, at slightly less than 2 percent effectiveness over the 
SET. The agencies are considering turbo-compound to be mutually 
exclusive with WHR because both technologies seek to extract additional 
usable work from the same waste heat and are unlikely to be used 
together.
---------------------------------------------------------------------------

    \184\ http://www.volvotrucks.us/powertrain/d13/.
---------------------------------------------------------------------------

(iii) Engine Friction and Parasitic Losses
    The friction associated with each moving part in an engine results 
in a small loss of engine power. For example, frictional losses occur 
at bearings, in the valve train, and at the piston ring-cylinder 
interface. Taken together such losses represent a measurable fraction 
of all energy lost in an engine. For Phase 1, the agencies projected a 
1-2 percent reduction in fuel consumption due to friction reduction. 
However, new information leads us to project that an additional 1.4 
percent reduction is possible for some engines by 2021 and all engines 
by 2027. These reductions are possible due to improvements in bearing 
materials, lubricants, and new accessory designs such as variable-speed 
pumps.
(iv) After-Treatment Optimization
    All heavy duty diesel engine manufacturers are already using diesel 
particulate filters (DPFs) to reduce particulate matter (PM) and 
selective catalytic reduction (SCR) to reduce NOX emissions. 
The agencies see two areas in which improved after-treatment systems 
can also result in lower fuel consumption. First, increased SCR 
efficiency could allow re-optimization of combustion for better fuel 
consumption because the SCR would be capable of reducing higher engine-
out NOX emissions. We don't expect this to be significant, 
however. Manufacturers already optimize the DEF (urea) consumption and 
fuel consumption to achieve the lowest cost of operation; taking into 
account fuel consumption, DEF consumption and the prices of fuel and 
DEF. Therefore, if manufacturers re-optimized significantly for fuel 
consumption, it is possible that this would lead to higher net 
operating costs. This scenario is highly dependent upon fuel and DEF 
prices, so projecting this technology path is uncertain. Second, 
improved designs could reduce backpressure on the engine to lower 
pumping losses. If manufacturers have opportunities to lower 
backpressure within the size constraints of the vehicle, the agencies 
project that manufacturers will opt to lower after-treatment back 
pressure. The agencies project the combined impact of these 
improvements would be 0.6 percent over the SET.
    Note that this improvement is independent of cold-start 
improvements made recently by some manufacturers with respect to 
vocational engines. Thus, the changes being made to the FTP baseline 
engines do not reduce the likelihood of the benefits of re-optimizing 
after-treatment projected here.
(v) Engine Intake and Exhaust Systems
    Various high efficiency air handling for both intake air and 
exhaust systems could be produced in the 2020 and 2024 time frame. To 
maximize the efficiency of such processes, induction systems may be 
improved by manufacturing more efficiently designed flow paths 
(including those associated with air cleaners, chambers, conduit, mass 
air flow sensors and intake manifolds) and by designing such systems 
for improved thermal control. Improved turbocharging and air handling 
systems will likely include higher efficiency EGR systems and 
intercoolers that reduce frictional pressure losses while maximizing 
the ability to thermally control induction air and EGR. EGR systems 
that often rely upon an adverse pressure gradient (exhaust manifold 
pressures greater than intake manifold pressures) must be reconsidered 
and their adverse pressure gradients

[[Page 73557]]

minimized. Other components that offer opportunities for improved flow 
efficiency include cylinder heads, ports and exhaust manifolds to 
further reduce pumping losses by about 1 percent over the SET.
(vi) Engine Downsizing and Down Speeding
    Proper sizing of an engine is an important component of optimizing 
a vehicle for best fuel consumption. This Phase 2 rule will require 
reductions in road load due to aerodynamic resistance, tire rolling 
resistance and weight, which will result in a drop in the vehicle power 
demand for most operation. This drop moves the engine operating points 
down to a lower load zone, which can move the engine away from 
operating near its peak thermal efficiency (a.k.a. the ``sweet spot''). 
Engine downsizing combined with engine down speeding can allow the 
engine to move back to higher loads and a lower speed zone, thus 
achieving better fuel efficiency in the real world. However, because of 
the way engines are tested, little of the benefit of engine downsizing 
would be detected during engine testing (if power density remains the 
same) because the engine test cycles are de-normalized based on the 
full torque curve. Thus, the separate engine standards are not the 
appropriate standards for recognizing the benefits of engine 
downsizing. Nevertheless, we project that some small benefit can be 
measured over the engine test cycles depending on the characteristics 
of the engine fuel map and how the SET points are determined as a 
function of the engine's lug curve.
    After the proposal we received comments recommending that we should 
recognize some level of engine down speeding within the separate engine 
standards. Based on this comment and some additional confidential 
business information that we received, we believe that engine lug curve 
reshaping to optimize the locations of the 13-mode points is a way that 
manufacturers can demonstrate some degree of engine down-speeding over 
the engine test. As pointed out in Chapter 2.3.8 and 2.7.5 of the RIA, 
down speeding via lug curve reshaping alone can provide SET reductions 
in the range of 0.4 percent depending on the engine map 
characteristics.
(vii) Waste Heat Recovery
    More than 40 percent of all energy loss in an engine is lost as 
heat to the exhaust and engine coolant. For many years, manufacturers 
have been using turbochargers to convert some of this waste heat in the 
exhaust into usable mechanical power that is then used to compress the 
intake air. Manufacturers have also been developing a Rankine cycle-
based system to extract additional heat energy from the engine. Such 
systems are often called waste heat recovery (WHR) systems. The 
possible sources of waste heat energy include the exhaust, recirculated 
exhaust gases, compressed charge air, and engine coolant. The basic 
approach with WHR is to use waste heat from one or more of these 
sources to evaporate a working fluid, which is passed through a turbine 
or equivalent expander to create mechanical or electrical power, then 
re-condensed.
    For the proposal, the agencies projected that by 2027, 15 percent 
of tractor engines would employ WHR systems with an effectiveness of 
better than three percent. We received many comments on this 
projection, which are discussed briefly below and in more detail in the 
RTC. In particular, we note that some of the comments included 
confidential data related to systems not yet on the market. After 
carefully considering all of these comments, we have revised our 
projections to increase the effectiveness, decrease costs, and project 
higher adoption rates than we proposed.
    Prior to the Phase 1 Final Rule, the NAS estimated the potential 
for WHR to reduce fuel consumption by up to 10 percent.\185\ However, 
the agencies do not believe such levels will be achievable within the 
Phase 2 time frame. There currently are no commercially available WHR 
systems for diesel engines, although research prototype systems are 
being tested by some manufacturers. American Trucking Association, 
Navistar, DTNA, OOIDA, Volvo, and UPS commented that because WHR is 
still in the prototype stage, it should not be assumed for setting the 
stringency of the tractor engine standards. Many of these commenters 
pointed to the additional design and development efforts that will be 
needed to reduce cost, improve packaging, reduce weight, develop 
controls, select an appropriate working fluid, implement expected OBD 
diagnostics, and achieve the necessary reliability and durability. Some 
stated that the technology has not been thoroughly tested or asked that 
more real-world data be collected before setting standards based on 
WHR. Some of these commenters provided confidential business 
information pertaining to their analysis of WHR system component costs, 
failure modes, and projected warranty cost information.
---------------------------------------------------------------------------

    \185\ See 2010 NAS Report, page 57.
---------------------------------------------------------------------------

    Alternatively, a number of commenters including Cummins, ICCT, 
CARB, ACEEE, EDF, Honeywell, ARB and others stated that the agencies 
should increase the assumed application rate of WHR in the final rule 
and the overall stringency of the engine standards. They argued the 
agencies' WHR technology assessment was outdated and too conservative, 
the fuel savings and GHG reduction estimation for WHR were too low, and 
the agencies' cost estimates were based on older WHR systems where 
costs were confounded with hybrid component costs and that these have 
since been improved upon. In addition, the agencies received CBI 
information supporting the arguments of some of these commenters.
    Cummins stated the agencies underestimated the commercial viability 
of WHR and that we overstated the development challenges and timing in 
the NPRM. They said WHR can provide a 4 to 5 percent improvement in 
fuel consumption on tractor drive cycles and that WHR would be 
commercially viable and available in production as early as 2020 and 
will exceed the agencies' estimates for market penetration over the 
period of the rule. According to Cummins, the reliability of their WHR 
system has improved with each generation of the technology and they 
have developed a smaller system footprint, improved integration with 
the engine and vehicle and a low-GWP working fluid, resulting in a much 
more compact and integrated system. They added that their system would 
be evaluated in extended customer testing by the end of 2015, and that 
results of that experience will inform further technology development 
and product engineering leading to expected commercial product 
availability in the 2020 timeframe. Furthermore, they said multiple 
product development cycles over the implementation timeframe of the 
rule would provide opportunities for further development for reduced 
cost and improved performance and reliability.
    Some commenters, including EDF, said the agencies' assumed design 
had little in common with the latest designs planned for production. 
They cited several publications, including the NAS 21st Century Truck 
Program report #3 and stated WHR effectiveness is much higher than the 
agencies estimated. Gentham cited an ICCT study saying that up to a 12 
percent fuel consumption reduction from a 2010 baseline engine is 
possible with the application of advanced engine technologies and WHR.

[[Page 73558]]

    The agencies recognize that much work remains to be done, but we 
are providing significant lead time to bring WHR to market. Based on 
our assessment of each manufacturer's work to date, we are confident 
that a commercially-viable WHR capable of reducing fuel consumption by 
over three percent will be available in the 2021 to 2024 time frame. 
Concerns about the system's cost and complexity may remain high enough 
to limit the use of such systems in this time frame. Moreover, 
packaging constraints and lower effectiveness under transient 
conditions will likely limit the application of WHR systems to line-
haul tractors. Refer to RIA Chapter 2.3.9 for a detailed description of 
these systems and their applicability. For our analysis of the engine 
standards, the agencies project that WHR with the Rankine technology 
could be used on 1 percent of tractor engines by 2021, on 5 percent by 
2024, and 25 percent by 2027, with nearly all being used on sleeper 
cabs. We project this sharper increase in market adoption in the 2027 
timeframe because we have noted that most technology adoption rate 
curves follow an S-shape: Slow initial adoption, then more rapid 
adoption, and then a leveling off as the market saturates (not always 
at 100 percent).\186\ We assumed an S-shape curve for WHR adoption, 
where we project a steeper rise in market adoption in and around the 
2027 timeframe. Given our averaging, banking and trading program 
flexibilities and that manufacturers may choose from a range of other 
technologies, we believe that manufacturers will be able to meet the 
2027 standards, which we based on a 25 percent WHR adoption in tractor 
engines. Although we project these as steps, it is more likely that 
manufacturers will try to gradually increase the WHR adoption in MY 
2025 and MY 2026 from the 5 percent in 2024 to generate emission 
credits to smooth the transition to the 2027 standards.
---------------------------------------------------------------------------

    \186\ NACFE 2015 Annual Fleet Fuel Study.
---------------------------------------------------------------------------

    Commenters opposing the agencies' WHR projections argued that the 
real-world GHG and fuel consumption savings will be less than in 
prototype systems. DTNA said a heat rejection increase of 30 percent to 
40 percent with WHR systems will require larger radiators, resulting in 
more aerodynamic drag and lower fuel savings from WHR systems. DTNA 
cited a Volvo study showing a 2 percent loss of efficiency with the 
larger frontal areas needed to accommodate heat rejection from WHR 
systems. Daimler stated effectiveness may be lower than expected since 
there is large drop off in fuel savings when the tractor is not 
operating on a steady state cycle and the real world performance of WHR 
systems will be hurt by transient response issues. Daimler and ACEEE 
said the energy available from exhaust and other waste heat sources 
could diminish as tractor aerodynamics improve, thus lowering the 
expected fuel savings from WHR. Daimler said because of this, WHR 
estimated fuel savings was overestimated by the agencies. Navistar said 
WHR working fluids will have a significant GHG impact based on their 
high global warming potential. They commented that fuel and GHG 
reductions will be lower in the real world with the re-weighting of the 
RMC which results in lower engine load, and thus lower available waste 
heat. However, none of these commenters have access to the full range 
of data available to the agencies, which includes CBI.
    It is important to note that the net cost and effectiveness of 
future WHR systems depends on the sources of waste heat. Systems that 
extract heat from EGR gases may provide the side benefit of reducing 
the size of EGR coolers or eliminating them altogether. To the extent 
that WHR systems use exhaust heat, they increase the overall cooling 
system heat rejection requirement and likely require larger radiators. 
This could have negative impacts on cooling fan power needs and vehicle 
aerodynamics. Limited engine compartment space under the hood could 
leave insufficient room for additional radiator size increasing. Many 
of these issues disappear if exhaust waste heat is not recovered from 
the tailpipe and brought under the hood for conversion to mechanical 
work. In fact, it is projected that if a WHR system only utilizes heat 
that was originally within the engine compartment (e.g., EGR cooler 
heat, coolant heat, oil heat, etc.), then any conversion of that heat 
to mechanical heat actually reduces the heat rejection demand under the 
hood; potentially leading to smaller radiators and lower frontal area, 
which would actually lead toward improved aerodynamic performance. 
Refer to RIA Chapter 2.3.9 for more discussion.
    Several commenters stated that costs are highly uncertain for WHR 
technology, but argued that the agencies' assumption of a $10,523 cost 
in 2027 are likely significantly lower than reality. Volvo estimated a 
cost of $21,700 for WHR systems. Volvo said that in addition to 
hardware cost being underestimated, the agencies had not properly 
accounted for other costs such as the R&D needed to bring the 
technology into production within a vehicle. Volvo said they would lose 
$17,920 per unit R&D alone, excluding other costs such as materials and 
administrative expenses. Daimler said that costs almost always inflate 
as the complexity of real world requirements drive up need for more 
robust designs, sensors, controls, control hardware, and complete 
vehicle integration. They added that development costs will be large 
and must be amortized over limited volumes. Furthermore, OOIDA said the 
industry experience with such complex systems is that maintenance, 
repair, and down-time cost can be much greater than the initial 
purchase cost. ATA and OOIDA said that potential downtime associated 
with an unproven technology is a significant concern for the industry.
    On the other hand, some commenters argued that the agencies had 
actually overestimated WHR costs in the proposal. These commenters 
generally argued that engineering improvements to the WHR systems that 
will go into production in the Phase 2 time frame would lower costs, in 
particular by reducing components. The agencies largely agree with 
these commenters and we have revised our analysis to reflect these cost 
savings. See RIA 2.11.2.15 for additional discussion.
(viii) Technology Packages for Diesel Engines Installed in Tractors
    This Section (a)(viii) describes technology packages that the 
agencies project could be applied to Phase 1 tractor engines to meet 
the Phase 2 SET separate engine standards. Section II.D.(2)(e) also 
describes additional improvements that the agencies project some engine 
manufacturers will be able to apply to their engines.
    We received comments on the tractor engine standards in response to 
the proposal and in response to the NODA. These comments can be grouped 
into two general themes. One theme expressed by ARB, non-governmental 
environmentally focused organizations, Cummins and some technology 
suppliers like Honeywell, recommended higher engine stringencies, up to 
10-15 percent in some comments. Another theme, generally expressed by 
vertically integrated engine and vehicle manufacturers supported either 
no Phase 2 engine standards at all, or they supported the proposal's 
standards, but none of these commenters supported standards that were 
more stringent than what we proposed. An example of the contrast 
between these two themes can be shown in one report submitted to the 
docket and another submission rebutting the statements made in the

[[Page 73559]]

report. The report was submitted to the agencies by the Environmental 
Defense Fund (EDF).\187\ On the other hand, four vertically integrated 
engine and vehicle manufacturers, DTNA, Navistar, Paccar, and Volvo, 
submitted a rebuttal to EDF's findings.\188\ Some of these individual 
vehicle manufacturers also provided their own comments on EDF's 
report.189 190 Cummins also provided comments and 
recommended stringencies somewhere between EDF's recommendations and 
the integrated manufacturers' rebuttal. Cummins recommended achieving 
reductions by 2030 in the range of 9-15 percent. CARB's recommendation 
from their comments \191\ is 7.1 percent in 2024.
---------------------------------------------------------------------------

    \187\ Environmental Defense Fund, Greenhouse Gas Emission and 
Fuel Efficiency Standards for Medium-Duty and Heavy-Duty Engines and 
Vehicles--Phase 2--Notice of Data Availability,'' Docket: ID No. 
EPA-HQ-OAR-2014-0817, October 1, 2015.
    \188\ Daimler Trucks North America, Navistar, Inc, Paccar Inc, 
and Volvo Group,'' Greenhouse Gas Emission and Fuel Efficiency 
Standards for Medium-Duty and Heavy-Duty Engines and Vehicles--Phase 
2--Notice of Data Availability,'' Docket: ID No. EPA-HQ-OAR-2014-
0817, April 1, 2016.
    \189\ Navistar, Inc., Greenhouse Gas Emission and Fuel 
Efficiency Standards for Medium-Duty and Heavy-Duty Engines and 
Vehicles--Phase 2--Notice of Data Availability,'' Docket: ID No. 
EPA-HQ-OAR-2014-0817, April 1, 2016.
    \190\ Daimler Trucks North America LLC, Detroit Diesel 
Corporation, Greenhouse Gas Emission and Fuel Efficiency Standards 
for Medium-Duty and Heavy-Duty Engines and Vehicles--Phase 2--Notice 
of Data Availability,'' Docket: ID No. EPA-HQ-OAR-2014-0817, April 
1, 2016.
    \191\ California Air Resources Board (CARB), Greenhouse Gas 
Emissions and Fuel Efficiency Standards for Medium- and Heavy-Duty 
Engines and Vehicles--Phase 2 (Docket ID No. EPA-HQ-OAR-2014-0827 
and Docket ID No. NHTSA-2014-0132).
---------------------------------------------------------------------------

    The agencies carefully considered this wide range of views, and 
based on the best data available, the agencies modified some of our 
technology projections between the proposal and the final rule.
    Table II-5 lists our projected technologies together with our 
projected effectiveness and market adoption rates for tractor engines. 
The reduction values shown as ''SET reduction'' are relative to our 
Phase 2 baseline values, as shown in Table II-7. It should be pointed 
out that the reductions in Table II-7 are based on the Phase 2 final 
SET weighting factors, shown in Table II-2. RIA Chapter 2.7.5 details 
the reasoning supporting our projection of improvements attributable to 
this fleet average technology package.

                         Table II-7--Projected Tractor Engine Technologies and Reduction
----------------------------------------------------------------------------------------------------------------
                                                   SET weighted       Market          Market          Market
                    SET mode                       reduction (%)    penetration     penetration     penetration
                                                     2020-2027      (2021) (%)      (2024) (%)      (2027) (%)
----------------------------------------------------------------------------------------------------------------
Turbo compound with clutch......................             1.9               5              10              10
WHR (Rankine cycle).............................             3.6               1               5              25
Parasitic/Friction (Cyl Kits, pumps, FIE),                   1.5              45              95             100
 lubrication....................................
After-treatment (lower dP)......................             0.6              30              95             100
EGR/Intake & exhaust manifolds/Turbo/VVT/Ports..             1.1              45              95             100
Combustion/FI/Control...........................             1.1              45              95             100
Downsizing......................................             0.3              10              20              30
                                                                 -----------------------------------------------
                                                                              Overall reductions (%)
                                                                 -----------------------------------------------
Weighted reduction (%)..........................  ..............             1.7             4.0             4.8
Down speeding optimization on SET...............  ..............             0.1             0.2             0.3
                                                 ---------------------------------------------------------------
    Total % reduction...........................  ..............             1.8             4.2             5.1
----------------------------------------------------------------------------------------------------------------

    The weighted reductions shown in this table have been combined 
using the ``[Pi]-formula,'' which has been augmented to account for 
technology dis-synergies that occur when combining multiple 
technologies. A 0.85 dis-synergy factor was used for 2021, and a 0.90 
dis-synergy factor was used for 2024 and 2027.\192\ RIA Chapter 2.7.4 
provides details on the ``[Pi]-formula'' and an explanation for how the 
dis-synergy factors were determined. Some commenters argued that use of 
a single dis-synergy factor for all technologies is inappropriate. 
While we agree that it would be preferable to have a more detailed 
analysis of the dis-synergy between each pair or group of technologies, 
we do not have the information necessary to conduct such an analysis. 
In the absence of such information, the simple single value approach is 
a reasonable approximation. Moreover, we note that the degree of dis-
synergy is sufficiently small to make the impact of any errors on the 
resulting standards negligible.
---------------------------------------------------------------------------

    \192\ As used in the agencies' analyses, dis-synergy factors 
less than one reflect dis-synergy between technologies that reduce 
the overall effectiveness, while dis-synergy factors greater than 
one would indicate synergy that improves the overall effectiveness.
---------------------------------------------------------------------------

    Figure II.3 2018 HHD Figure II.4 are the samples of the HHD engine 
fuel maps used for the agencies' MY 2018 baseline engine and MY 2027 
sleeper cab engine for tractors. As can be seen from these two figures, 
the torque curve shapes are different. This is because engine down 
speeding optimization for the SET is taken into consideration, where 
the engine peak torque is increased and the engine speed is shifted to 
lower speed. All maps used by GEM for all vehicles are shown in Chapter 
2.7 of the RIA.

[[Page 73560]]

[GRAPHIC] [TIFF OMITTED] TR25OC16.003

(ix) Technology Packages for Diesel Engines Installed in Vocational 
Vehicles
    For diesel engines (and other compression-ignition engines) used in 
vocational vehicles, the MY 2021 standards will require engine 
manufacturers to achieve, on average, a 2.3 percent reduction in fuel 
consumption and CO2 emissions beyond the Phase 2 FTP 
baselines. Beginning in MY 2024, the agencies are requiring a 3.6 
percent reduction in fuel consumption and CO2 emissions 
beyond the Phase 2 FTP baselines for all diesel engines including LHD, 
MHD, and HHD, and beginning in MY 2027 this increases to 4.2 percent, 
on average. The agencies have based these FTP standards on the 
performance of reduced parasitic and friction losses, improved after-
treatment, combustion optimization, superchargers and variable geometry 
turbochargers, physics model-based controls, improved EGR pressure 
drop, and variable valve timing (only in LHD and MHD engines).

[[Page 73561]]

The percent reduction for the MY 2021, MY 2024, and MY 2027 standards 
is based on the combination of technology effectiveness and the 
respective market adoption rates projected.
    Most of the potential engine technologies discussed previously for 
tractor engines can also be applied to vocational engines. However, 
neither of the waste heat technologies, Rankine cycle nor turbo-
compound, are likely to be applied to vocational engines because they 
are less effective under transient operation, which is weighted more 
heavily for all of the vocational sub-categories. Given the projected 
cost and complexity of such systems, we believe that for the Phase 2 
time frame manufacturers will focus their WHR development work on 
tractor applications (which will have better payback for operators), 
rather than on vocational applications. In addition, the benefits due 
to engine downsizing, which can be realized in some tractor engines, 
may not be realized at all in in the vocational sector, again because 
this control technology produces few benefits under transient 
operation.
    One of the most effective technologies for vocational engines is 
the optimization of transient controls with physics model based 
control, which would replace current look-up table based controls. 
These are described more in detail in Chapter 2.3 of the RIA. We 
project that more advanced transient controls, including different 
levels of model based control, discussed in Chapter 2.3 of the RIA, 
would continue to progress and become more broadly applicable 
throughout the Phase 2 timeframe.
    Other effective technologies include parasitic load/friction 
reduction, as well as improvements to combustion, air handling systems, 
turbochargers, and after-treatment systems. Table II-8 below lists 
those potential technologies together with the agencies' projected 
market penetration rates for vocational engines. Again, similar to 
tractor engines, the technology reduction and market penetration rates 
are estimated by combining manufacturer-submitted confidential business 
information, together with estimates reflecting the agencies' judgment, 
which is informed by historical trends in the market adoption of other 
fuel efficiency improving technologies. The reduction values shown as 
``percent reduction'' are relative to the Phase 2 FTP baselines, which 
are shown in Table II-3. The overall reductions combine the technology 
reduction values with their market adoption rates. The same set of the 
dis-synergy factors as the tractor are used for MY 2021, 2024, and 
2027.

                       Table II-8--Projected Vocational Engine Technologies and Reduction
----------------------------------------------------------------------------------------------------------------
                                                      Percent         Market          Market          Market
                   Technology                        reduction      penetration     penetration     penetration
                                                     2020-2027       2021  (%)       2024 (%)        2027 (%)
----------------------------------------------------------------------------------------------------------------
Model based control.............................             2.0              25              30              40
Parasitic/Friction..............................             1.5              60              90             100
EGR/Air/VVT/Turbo...............................             1.0              60              90             100
Improved AT.....................................             0.5              30              60             100
Combustion Optimization.........................             1.0              60              90             100
Weighted reduction (%)-L/M/HHD..................  ..............             2.3             3.6             4.2
----------------------------------------------------------------------------------------------------------------

    Figure II.5 is a sample of a 2018 baseline engine fuel map for a 
MHD vocational engine.
[GRAPHIC] [TIFF OMITTED] TR25OC16.004


[[Page 73562]]


(x) Summary of the Agencies' Analysis of the Feasibility of the Diesel 
Engine Standards
    The HD Phase 2 standards are based on projected adoption rates for 
technologies that the agencies regard as the maximum feasible for 
purposes of EISA section 32902 (k) and appropriate under CAA section 
202(a) based on the technologies discussed above and in RIA Chapter 2. 
The agencies believe these technologies can be adopted at the estimated 
rates for these standards within the lead time provided, as discussed 
in RIA Chapter 2.7. The 2021 and 2024 MY standards are phase-in 
standards on the path to the 2027 MY standards, and these earlier 
standards were developed using less aggressive application rates and 
therefore have lower technology package costs than the 2027 MY 
standards.
    As described in Section II.D.(2)(d) below, the costs to comply with 
these standards are estimated to range from $275 to $1,579 per engine. 
This is slightly higher than the costs for Phase 1, which were 
estimated to be $234 to $1,091 per engine. Although the agencies did 
not separately determine fuel savings or emission reductions due to the 
engine standards apart from the vehicle program, it is expected that 
the fuel savings will be significantly larger than these costs, and the 
emission reductions will be roughly proportional to the technology 
costs when compared to the corresponding vehicle program reductions and 
costs. Thus, we regard these standards as cost-effective. This is true 
even without considering payback period. The phase-in 2021 and 2024 MY 
standards are less stringent and less costly than the 2027 MY 
standards. Given that the agencies believe these standards are 
technologically feasible, are highly cost effective, and highly cost 
effective when accounting for the fuel savings, and have no apparent 
adverse potential impacts (e.g., there are no projected negative 
impacts on safety or vehicle utility), they appear to represent a 
reasonable choice under section 202(a) of the CAA and the maximum 
feasible under NHTSA's EISA authority at 49 U.S.C. 32902(k)(2).
(b) Basis for Continuing the Phase 1 Spark-Ignited Engine Standard
    For gasoline vocational engines, we are not adopting more stringent 
engine standards. Today most SI-powered vocational vehicles are sold as 
incomplete vehicles by a vertically integrated chassis manufacturer, 
where the incomplete chassis shares most of the same technology as 
equivalent complete pickups or vans, including the powertrain. Another, 
even less common way that SI-powered vocational vehicles are built is 
by a non-integrated chassis manufacturer purchasing an engine from a 
company that also produces complete and/or incomplete HD pickup trucks 
and vans. Gasoline engines used in vocational vehicles are generally 
the same engines as are used in the complete HD pickups and vans in the 
Class 2b and 3 weight categories, although the operational demands of 
vocational vehicles often require use of the largest, most powerful SI 
engines, so that some engines fitted in complete pickups and vans are 
not appropriate for use in vocational vehicles. Given the relatively 
small sales volumes for gasoline-fueled vocational vehicles, 
manufacturers typically cannot afford to invest significantly in 
developing separate technology for these engines.
    The agencies received many comments suggesting that technologies be 
applied to increase the stringency of the SI engine standard. These 
comments were essentially misplaced, since the agencies already had 
premised the Phase 1 SI MY 2016 FTP engine standards on 100 percent 
adoption of these technologies. The commenters thus did not identify 
any additional engine technologies that the agencies did not already 
consider and account for in setting the MY 2016 FTP engine standard. 
Therefore, the Phase 1 SI engine FTP standard for these engines will 
remain in place. However, as noted above, projected engine improvements 
are being reflected in the stringency of the vehicle standard for the 
vehicle in which the engine will be installed. In part this is because 
the GEM cycles result in very different engine operation than what 
occurs when an engine is run over the engine FTP cycle. We believe that 
certain technologies will show a fuel consumption and CO2 
emissions reduction during GEM cycles that do not occur over the engine 
FTP. We received comments on engine technologies that can be recognized 
over the GEM vehicle cycles. As a result, the Phase 2 gasoline-fueled 
vocational vehicle standards are predicated on adoption of advanced 
engine friction reduction and cylinder deactivation. To the extent any 
SI engines do not incorporate the projected engine technologies, 
manufacturers of SI-powered vocational vehicles would need to achieve 
equivalent reductions from some other vehicle technology to meet the 
vehicle standards. See Section V.C of this Preamble for a description 
of how we applied these technologies to develop the vocational vehicle 
standards. See Section VI.C of this Preamble for a description of the 
SI engine technologies that have been considered in developing the HD 
pickup truck and van standards.
(c) Engine Improvements Projected for Vehicles Over the GEM Duty Cycles
    As part of the certification process for the Phase 2 vehicle 
standards, tractor and vocational vehicle manufacturers will need to 
represent their vehicles' actual engines in GEM. Although the vehicle 
standards recognize the same engine technologies as the separate engine 
standards, each have different test procedures for demonstrating 
compliance. As explained earlier in Section II.D.(1), compliance with 
the tractor separate engine standards is determined from a composite of 
the Supplemental Engine Test (SET) procedure's 13 steady-state 
operating points. Compliance with the vocational vehicle separate 
engine standards is determined over the Federal Test Procedure's (FTP) 
transient engine duty cycle. In contrast, compliance with the vehicle 
standards is determined using GEM, which calculates composite results 
over a combination of 55 mph, 65 mph, ARB Transient and idle vehicle 
cycles. Each of these duty cycles emphasize different engine operating 
points; therefore, they can each recognize certain technologies 
differently. Hence, these engine improvements can be readily recognized 
in GEM and appropriately reflected in the stringency of the vehicle 
standards. It is important to note, however, that the tractor vehicle 
standards presented in Section III project that some (but not all) 
tractor engines will achieve greater reductions than required by the 
engine standards. This was reflected in the agencies' feasibility 
analysis using projected engine fuel maps that represent engines having 
fuel efficiency better than what is required by the engine standards. 
Similarly, the vocational vehicle standards in presented in Section V 
project that the average vocational engine will achieve greater 
reductions than required by the engine standards. These additional 
reductions are recognized by GEM and are reflected in the stringency of 
the respective vehicle standards.
    Our first step in aligning our engine technology assessment at both 
the engine and vehicle levels was to separately identify how each 
technology impacts performance at each of the 13 individual test points 
of the SET steady-state engine duty cycle. For example, engine friction 
reduction technology is expected to have the greatest impact at the 
highest engine speeds, where frictional energy losses are the greatest.

[[Page 73563]]

As another example, turbocharger technology is generally optimized for 
best efficiency at steady-state cruise vehicle speed. For an engine, 
this is near its lower peak-torque speed and at a moderately high load 
that still offers sufficient torque reserve to climb modest road grades 
without frequent transmission gear shifting. The agencies also 
considered the combination of certain technologies causing dis-
synergies with respect to engine efficiency at each of these test 
points. See RIA Chapter 2.3 and 2.7 for further details. Chapter 2.8 
and 2.9 of the RIA details how the engine fuel maps are created for 
both tractor and vocational vehicles used for GEM as the default engine 
fuel maps.
(d) Engine Technology Package Costs for Tractor and Vocational Engines 
(and Vehicles)
    As described in Chapters 2 and 7 of the RIA, the agencies estimated 
costs for each of the engine technologies discussed here. All costs are 
presented relative to engines projected to at least comply with the 
model year 2017 standards--i.e., relative to our Phase 2 baseline 
engines. Note that we are not presenting any costs for gasoline engines 
(SI engines) in this section because we are not changing the SI engine 
standards. However, we are including a cost for additional engine 
technology as part of the vocational vehicle analysis in Section 
V.C.2.(e) (and appropriately so, since those engine improvements are 
reflected in the stringency of the vocational vehicle standard).
    Our engine cost estimates include a separate analysis of the 
incremental part costs, research and development activities, and 
additional equipment. Our general approach used elsewhere in this 
action (for HD pickup trucks, gasoline engines, Class 7 and 8 tractors, 
and Class 2b-8 vocational vehicles) estimates a direct manufacturing 
cost for a part and marks it up based on a factor to account for 
indirect costs. See also 75 FR 25376. We believe that approach is 
appropriate when compliance with the standards is achieved generally by 
installing new parts and systems purchased from a supplier. In such a 
case, the supplier is conducting the bulk of the research and 
development on the new parts and systems and including those costs in 
the purchase price paid by the original equipment manufacturer. 
Consequently, the indirect costs incurred by the original equipment 
manufacturer need not reflect significant cost to cover research and 
development since the bulk of that effort is already completed. For the 
MHD and HHD diesel engine segment, however, the agencies believe that 
OEMs will incur costs not associated with the purchase of parts or 
systems from suppliers or even the production of the parts and systems, 
but rather the development of the new technology by the original 
equipment manufacturer itself. Therefore, the agencies have directly 
estimated additional indirect costs to account for these development 
costs. The agencies used the same approach in the Phase 1 HD rule. EPA 
commonly uses this approach in cases where significant investments in 
research and development can lead to an emission control approach that 
requires no new hardware. For example, combustion optimization may 
significantly reduce emissions and cost a manufacturer millions of 
dollars to develop but would lead to an engine that is no more 
expensive to produce. Using a bill of materials approach would suggest 
that the cost of the emissions control was zero reflecting no new 
hardware and ignoring the millions of dollars spent to develop the 
improved combustion system. Details of the cost analysis are included 
in the RIA Chapter 2.7. To reiterate, we have used this different 
approach because the MHD and HHD diesel engines are expected to comply 
in part via technology changes that are not reflected in new hardware 
but rather reflect knowledge gained through laboratory and real world 
testing that allows for improvements in control system calibrations--
changes that are more difficult to reflect through direct costs with 
indirect cost multipliers. Note that these engines are also expected to 
incur new hardware costs as shown in Table II-9 through Table II-12. 
EPA also developed the incremental piece cost for the components to 
meet each of the 2021 and 2024 standards. The costs shown in Table II-
13 include a low complexity ICM of 1.15 and assume the flat-portion of 
the learning curve is applicable to each technology.
(i) Tractor Engine Package Costs

 Table II-9--MY 2021 Tractor Diesel Engine Component Costs Inclusive of
                Indirect Cost Markups and Adoption Rates
                                 [2013$]
------------------------------------------------------------------------
                                             Medium HD       Heavy HD
------------------------------------------------------------------------
After-treatment system (improved                      $7              $7
 effectiveness SCR, dosing, DPF)........
Valve Actuation.........................              84              84
Cylinder Head (flow optimized, increased               3               3
 firing pressure, improved thermal
 management)............................
Turbocharger (improved efficiency)......               9               9
Turbo Compounding.......................              51              51
EGR Cooler (improved efficiency)........               2               2
Water Pump (optimized, variable vane,                 44              44
 variable speed)........................
Oil Pump (optimized)....................               2               2
Fuel Pump (higher working pressure,                    2               2
 increased efficiency, improved pressure
 regulation)............................
Fuel Rail (higher working pressure).....               5               5
Fuel Injector (optimized, improved                     5               5
 multiple event control, higher working
 pressure)..............................
Piston (reduced friction skirt, ring and               1               1
 pin)...................................
Valve train (reduced friction, roller                 39              39
 tappet)................................
Waste Heat Recovery.....................              71              71
``Right sized'' engine..................             -41             -41
                                         -------------------------------
    Total...............................             284             284
------------------------------------------------------------------------
Note: ``Right sized'' diesel engine is a smaller, less costly engine
  than the engine it replaces.


[[Page 73564]]


 Table II-10--MY 2024 Tractor Diesel Engine Component Costs Inclusive of
                Indirect Cost Markups and Adoption Rates
                                 [2013$]
------------------------------------------------------------------------
                                             Medium HD       Heavy HD
------------------------------------------------------------------------
After-treatment system (improved                     $14             $14
 effectiveness SCR, dosing, DPF)........
Valve Actuation.........................             169             169
Cylinder Head (flow optimized, increased               6               6
 firing pressure, improved thermal
 management)............................
Turbocharger (improved efficiency)......              17              17
Turbo Compounding.......................              93              93
EGR Cooler (improved efficiency)........               3               3
Water Pump (optimized, variable vane,                 85              85
 variable speed)........................
Oil Pump (optimized)....................               4               4
Fuel Pump (higher working pressure,                    4               4
 increased efficiency, improved pressure
 regulation)............................
Fuel Rail (higher working pressure).....               9               9
Fuel Injector (optimized, improved                    10              10
 multiple event control, higher working
 pressure)..............................
Piston (reduced friction skirt, ring and               3               3
 pin)...................................
Valve train (reduced friction, roller                 77              77
 tappet)................................
Waste Heat Recovery.....................             298             298
``Right sized'' engine..................             -82             -82
                                         -------------------------------
    Total...............................             712             712
------------------------------------------------------------------------
Note: ``Right sized'' diesel engine is a smaller, less costly engine
  than the engine it replaces.


 Table II-11--MY 2027 Tractor Diesel Engine Component Costs Inclusive of
                Indirect Cost Markups and Adoption Rates
                                 [2013$]
------------------------------------------------------------------------
                                             Medium HD       Heavy HD
------------------------------------------------------------------------
After-treatment system (improved                     $15             $15
 effectiveness SCR, dosing, DPF)........
Valve Actuation.........................             172             172
Cylinder Head (flow optimized, increased               6               6
 firing pressure, improved thermal
 management)............................
Turbocharger (improved efficiency)......              17              17
Turbo Compounding.......................              89              89
EGR Cooler (improved efficiency)........               3               3
Water Pump (optimized, variable vane,                 85              85
 variable speed)........................
Oil Pump (optimized)....................               4               4
Fuel Pump (higher working pressure,                    4               4
 increased efficiency, improved pressure
 regulation)............................
Fuel Rail (higher working pressure).....               9               9
Fuel Injector (optimized, improved                    10              10
 multiple event control, higher working
 pressure)..............................
Piston (reduced friction skirt, ring and               3               3
 pin)...................................
Valve train (reduced friction, roller                 77              77
 tappet)................................
Waste Heat Recovery.....................           1,208           1,208
``Right sized'' engine..................            -123            -123
                                         -------------------------------
    Total...............................           1,579           1,579
------------------------------------------------------------------------
Note: ``Right sized'' diesel engine is a smaller, less costly engine
  than the engine it replaces.

(ii) Vocational Diesel Engine Package Costs

  Table II-12--MY 2021 Vocational Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption
                                                      Rates
                                                     [2013$]
----------------------------------------------------------------------------------------------------------------
                                                                     Light HD        Medium HD       Heavy HD
----------------------------------------------------------------------------------------------------------------
After-treatment system (improved effectiveness SCR, dosing, DPF)              $8              $8              $8
Valve Actuation.................................................              93              93              93
Cylinder Head (flow optimized, increased firing pressure,                      6               3               3
 improved thermal management)...................................
Turbocharger (improved efficiency)..............................              10              10              10
EGR Cooler (improved efficiency)................................               2               2               2
Water Pump (optimized, variable vane, variable speed)...........              58              58              58
Oil Pump (optimized)............................................               3               3               3
Fuel Pump (higher working pressure, increased efficiency,                      3               3               3
 improved pressure regulation)..................................
Fuel Rail (higher working pressure).............................               8               6               6
Fuel Injector (optimized, improved multiple event control,                     8               6               6
 higher working pressure).......................................
Piston (reduced friction skirt, ring and pin)...................               1               1               1
Valve train (reduced friction, roller tappet)...................              70              52              52
Model Based Controls............................................              29              29              29
                                                                 -----------------------------------------------
    Total.......................................................             298             275             275
----------------------------------------------------------------------------------------------------------------


[[Page 73565]]


  Table II-13--MY 2024 Vocational Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption
                                                      Rates
                                                     [2013$]
----------------------------------------------------------------------------------------------------------------
                                                                     Light HD        Medium HD       Heavy HD
----------------------------------------------------------------------------------------------------------------
After-treatment system (improved effectiveness SCR, dosing, DPF)             $14             $14             $14
Valve Actuation.................................................             160             160             160
Cylinder Head (flow optimized, increased firing pressure,                     10               6               6
 improved thermal management)...................................
Turbocharger (improved efficiency)..............................              16              16              16
EGR Cooler (improved efficiency)................................               3               3               3
Water Pump (optimized, variable vane, variable speed)...........              81              81              81
Oil Pump (optimized)............................................               4               4               4
Fuel Pump (higher working pressure, increased efficiency,                      4               4               4
 improved pressure regulation)..................................
Fuel Rail (higher working pressure).............................              11               9               9
Fuel Injector (optimized, improved multiple event control,                    13              10              10
 higher working pressure).......................................
Piston (reduced friction skirt, ring and pin)...................               2               2               2
Valve train (reduced friction, roller tappet)...................              97              73              73
Model Based Controls............................................              32              32              32
                                                                 -----------------------------------------------
    Total.......................................................             446             413             413
----------------------------------------------------------------------------------------------------------------


  Table II-14--MY 2027 Vocational Diesel Engine Component Costs Inclusive of Indirect Cost Markups and Adoption
                                                      Rates
                                                     [2013$]
----------------------------------------------------------------------------------------------------------------
                                                                     Light HD        Medium HD       Heavy HD
----------------------------------------------------------------------------------------------------------------
After-treatment system (improved effectiveness SCR, dosing, DPF)             $15             $15             $15
Valve Actuation.................................................             172             172             172
Cylinder Head (flow optimized, increased firing pressure,                     10               6               6
 improved thermal management)...................................
Turbocharger (improved efficiency)..............................              17              17              17
EGR Cooler (improved efficiency)................................               3               3               3
Water Pump (optimized, variable vane, variable speed)...........              85              85              85
Oil Pump (optimized)............................................               4               4               4
Fuel Pump (higher working pressure, increased efficiency,                      4               4               4
 improved pressure regulation)..................................
Fuel Rail (higher working pressure).............................              11               9               9
Fuel Injector (optimized, improved multiple event control,                    14              10              10
 higher working pressure).......................................
Piston (reduced friction skirt, ring and pin)...................               3               3               3
Valve train (reduced friction, roller tappet)...................             102              77              77
Model Based Controls............................................              41              41              41
                                                                 -----------------------------------------------
    Total.......................................................             481             446             446
----------------------------------------------------------------------------------------------------------------

(e) Feasibility of Additional Engine Improvements
    While the agencies' technological feasibility analysis for the 
engine standards focuses on what is achievable for existing engine 
platforms, we recognize that it could be possible to achieve greater 
reductions by designing entirely new engine platforms. Unlike existing 
platforms, which are limited with respect to peak cylinder pressures 
(precluding certain efficiency improvements), new platforms can be 
designed to have higher cylinder pressure than today's engines. New 
designs are also better able to incorporate recent improvements in 
materials and manufacturing, as well as other technological 
developments. Considered together, it is likely that a new engine 
platform could be about 2 percent better than engines using older 
platforms. Moreover, the agencies have seen CBI data that suggests 
improvement of more than 3 percent are possible. However, because 
designing and producing a new engine platform requires hundreds of 
millions of dollars in capital investment and significant lead time for 
research and development, it would not be appropriate to project that 
each engine manufacturer could complete a complete redesign of all of 
its engines within the Phase 2 time frame. Unlike light-duty, heavy-
duty sales volumes are not large enough to support short redesign 
cycles. As a result, it can take 20 years for a manufacturer to 
generate the necessary return on the investment associated with an 
engine redesign. Forcing a manufacturer to redesign its engines 
prematurely could easily result in significant financial strain on a 
company.
    On the other hand, how far the various manufacturers are into their 
design cycles suggests that one or more manufacturers will probably 
introduce a new engine platform during the Phase 2 time frame. This 
would not enable other engine manufacturers to meet more stringent 
standards, and thus it would not be an appropriate basis to justify 
more stringent engine standards (and certainly not engine standards 
reflecting 100 percent use of technologies premised on existence of new 
platforms). However, the availability of some more efficient engines on 
the market will provide the opportunity for vehicle manufacturers to 
lower their average fuel consumption as measured by GEM. Vehicle 
manufacturers can use a mix of newer and older engine designs to 
achieve an average engine performance significantly better than what is 
required by the engine standards. Thus, the vehicle standards can 
reflect engine platform improvements (which are amenable to measurement 
in GEM), without necessarily forcing each manufacturer to achieve these 
additional reductions,

[[Page 73566]]

which may be achievable only for new engine platforms.
    As discussed in Section III.D.(1)(b)(i), the agencies project that 
at least one engine manufacturer (and possibly more) will have 
completed a redesign for tractor engines by 2027. Accordingly, we 
project that 50 percent of tractor engines in 2027 will be redesigned 
engines and be 1.6 percent more efficient than required by the engine 
standards, so the average engine would be 0.8 percent better. However, 
we could have projected the same overall improvement by projecting 25 
percent of engine getting 3.2 percent better. Based on the CBI 
information available to us, we believe projecting a 0.8 percent 
improvement is reasonable, but may be somewhat conservative.
    Adding this 0.8 percent improvement to the 5.1 percent reduction 
required by the standards means we project the average 2027 tractor 
engine would be 5.9 percent better than Phase 1. Because engine 
improvements for tractors are applied separately for day cabs and 
sleeper cabs in the vehicle program, we estimated separate improvements 
for them here. Specifically, we project a 5.4 percent reduction for day 
cabs and a 6.4 percent reduction in fuel consumption in sleeper cabs 
beyond Phase 1. It is important to also note that manufacturers that do 
not achieve this level would be able to make up for the difference by 
applying one of the many other tractor vehicle technologies to a 
greater extent than we project, or to achieve greater reductions by 
optimizing technology efficiency further. We are not including the cost 
of developing these new engines in our cost analysis because we believe 
these engines are going to be developed due to market forces (i.e., the 
new platform, already contemplated) rather than due to this rulemaking.
    We are making a similar new engine platform projection for 
vocational vehicles. This is because many of tractor and vocational 
engines, such as HHD, would likely share the same engine hardware with 
the exception of WHR. In addition, the model based control discussed in 
Chapter 2.3 of the RIA could integrate engines better with 
transmissions on the vehicle side. We believe manufacturers will first 
focus their efforts on improving tractor engines but still believe that 
the 2027 vocational engine will be significantly better than required 
by the engine standards.
(3) EPA Engine Standards for N2O
    EPA will continue to apply the Phase 1 N2O engine 
standard of 0.10 g/bhp-hr and a 0.02 g/bhp-hr default deterioration 
factor to the Phase 2 program. EPA adopted the cap standard for 
N2O as an engine-based standard because the agency believes 
that emissions of this GHG are technologically related solely to the 
engine, fuel, and emissions after-treatment systems, and the agency is 
not aware of any influence of vehicle-based technologies on these 
emissions. Note that NHTSA did not adopt standards for N2O 
because these emissions do not impact fuel consumption in a significant 
way.
    In the proposal we considered reducing both the standard and 
deterioration factor to 0.05 and 0.01 g/bhp-hr respectively because 
engines certified in model year 2014 were generally meeting the 
proposed standard. We also explained the process behind N2O 
formation in urea SCR after-treatment systems and how that process 
could be optimized to elicit additional N2O reductions. 80 
FR 40203. While we have seen some reductions and a few increases in 
engine family certified N2O levels across the 2014, 2015, 
and 2016 model years, the majority have remained unchanged.
    While we still believe that further optimization of SCR systems is 
possible to reduce N2O emissions, as demonstrated for some 
engine families, we do not know to what extent further optimization can 
be achieved given the tradeoffs required to meet the Phase 2 
CO2 standards. These tradeoffs potentially include advancing 
fuel injection timing to reduce CO2 emissions resulting in 
an increase in NOX emissions at the engine outlet before the 
after-treatment, increasing the needed NOX reduction 
efficiency of the SCR system. We will continue to assess N2O 
emissions as SCR technology evolves and CO2 emission 
reductions phase in, and we will revisit the standard at a later date 
to further control N2O emission. This will likely be 
included in the upcoming rule to consider more stringent NOX 
standards.

[[Page 73567]]

[GRAPHIC] [TIFF OMITTED] TR25OC16.005


[[Page 73568]]


[GRAPHIC] [TIFF OMITTED] TR25OC16.006

(4) EPA Engine Standards for Methane
    EPA will continue to apply the Phase 1 methane engine standards to 
the Phase 2 program. EPA adopted the cap standards for CH4 
(along with N2O standards) as engine-based standards because 
the agency believes that emissions of this GHG are technologically 
related solely to the engine, fuel, and emissions after-treatment 
systems, and the agency is not aware of any influence of vehicle-based 
technologies on these emissions. We are applying these cap standards 
against the FTP duty-cycle because the FTP cycle is the most stringent 
with respect to emissions of these pollutants and we do not believe 
that a reduction is stringency from the current Phase 1 standards is 
warranted. Note that NHTSA did not adopt standards for CH4 
(or N2O) because these emissions do not impact fuel 
consumption in a significant way.
    EPA continues to believe that manufacturers of most engine 
technologies will be able to comply with the Phase 1 CH4 
standard with no technological improvements. We note that we are not 
aware of any new technologies that would have allowed us to adopt more 
stringent standards at this time.
(5) Compliance Provisions and Flexibilities for Engine Standards
    The agencies are continuing most of the Phase 1 compliance 
provisions and flexibilities for the Phase 2 engine standards.
(a) Averaging, Banking, and Trading
    The agencies' general approach to averaging is discussed in Section 
I. We did not propose to offer any new or special credits to engine 
manufacturers to comply with any of the separate engine standards. 
Except for early credits, the agencies are retaining all Phase 1 credit 
flexibilities and limitations to continue for use in the Phase 2 engine 
program.
    As discussed below and as proposed, EPA is changing the useful life 
for LHD engines for GHG emissions from the current 10 years/110,000 
miles to 15 years/150,000 miles to be consistent with the useful life 
of criteria pollutants recently updated in EPA's Tier 3 rule. In order 
to ensure that banked credits maintain their value in the transition 
from Phase 1 to Phase 2, EPA and NHTSA are adopting the proposed 
adjustment factor of 1.36 (i.e., 150,000 mile / 110,000 miles) for 
credits that are carried forward from Phase 1 to the MY 2021 and later 
Phase 2 standards. Without this adjustment factor the change in useful 
life would have effectively resulted in a discount of banked credits 
that are carried forward from Phase 1 to Phase 2, which is not the 
intent of the change in the useful life. See Sections V and VI for 
additional discussion of similar adjustments of vehicle-based credits.
    Finally, the agencies are limiting the carryover of certain Phase 1 
engine credits into the Phase 2 program. As described in Section 
II.D.(2) the agencies made adjustments to the FTP baselines, to address 
the unexpected step-change improvement in engine fuel consumption and 
CO2 emissions. The underlying reasons for this shift are 
mostly related to manufacturers optimizing their SCR thermal management 
strategy over the FTP in ways that we (mistakenly) thought they already 
had in MY 2010 (i.e., the Phase 1 baseline). At the time of Phase 1 we 
had not realized that these improvements were not already in the Phase 
1 baseline. This issue does not apply for SET emissions, and thus only 
significantly impacts engines certified

[[Page 73569]]

exclusively to the FTP standards (rather than both FTP and SET 
standards). To prevent manufacturers from diluting the Phase 2 engine 
program with credits generated relative to this incorrect baseline, we 
are not allowing engine credits generated against the Phase 1 FTP 
standards to be carried over into the Phase 2 program.
(b) Changing Global Warming Potential (GWP) Values in the Credit 
Program for CH4 and N2O
    The Phase 1 rule included a compliance flexibility that allowed 
heavy-duty manufacturers and conversion companies to comply with the 
respective methane or nitrous oxide standards by means of over-
complying with CO2 standards (40 CFR 1036.705(d)). The 
heavy-duty rules allow averaging only between vehicles or engines of 
the same designated type (referred to as an ``averaging set'' in the 
rules). Specifically, the Phase 1 heavy-duty rulemaking added a 
CO2 credits program which allowed heavy-duty engine 
manufacturers to average and bank emission credits to comply with the 
methane and nitrous oxide requirements after adjusting the 
CO2 emission credits based on the relative GWP equivalents. 
To establish the GWP equivalents used by the CO2 credits 
program, the Phase 1 rule incorporated the IPCC Fourth Assessment 
Report GWP values of 25 for CH4 and 298 for N2O, 
which are assessed over a 100 year lifetime.
    EPA will continue this provision for Phase 2. However, since the 
Phase 1 rule was finalized, a new IPCC report has been released (the 
Fifth Assessment Report), with new GWP estimates. This caused us to 
look again at the relative GWP equivalency of methane and nitrous oxide 
and to seek comment on whether the methane and nitrous oxide GWPs used 
to establish the equivalency value for the CO2 Credit 
program should be updated to those established by IPCC in its Fifth 
Assessment Report. 80 FR 40206. The Fifth Assessment Report provides 
four 100 year GWP values for methane ranging from 28 to 36 and two 100 
year GWP values for nitrous oxide, either 265 or 298.
    EPA is updating the GWP value to convert CO2 credits for 
use against the methane standard. We are using a GWP of 34 for the 
value of methane reductions relative to CO2 reductions. (The 
GWP remains 298 for N2O). The use of this new methane GWP 
will not begin until MY 2021, when the Phase 2 engine standards begin. 
This provides sufficient lead time for both the agencies and 
manufacturers to update systems, and also ensures that manufacturers 
would be able make any necessary design changes. The choice of when to 
commence use of this GWP value for our engines standards does not 
prejudice the choice of other GWP values for use in regulations and 
other purposes in the near term. Further discussion is found in Section 
XI.D.2.a.
(c) In-Use Compliance and Useful Life
    Consistent with section 202(a)(1) and 202(d) of the CAA, for Phase 
1, EPA established in-use standards for heavy-duty engines. Based on 
our assessment of testing variability and other relevant factors, we 
established in-use standards by adding a 3 percent adjustment factor to 
the full useful life CO2 emissions and fuel consumption 
results measured in the EPA certification process to address 
measurement variability inherent in comparing results among different 
laboratories and different engines. See 40 CFR part 1036. The agencies 
are not changing this for Phase 2 SET and FTP engine standard 
compliance.
    In Phase 1, EPA set the useful life for engines and vehicles with 
respect to GHG emissions equal to the respective useful life periods 
for criteria pollutants. In April 2014, as part of the Tier 3 light-
duty vehicle final rule, EPA extended the regulatory useful life period 
for criteria pollutants to 150,000 miles or 15 years, whichever comes 
first, for Class 2b and 3 pickup trucks and vans and some light-duty 
trucks (79 FR 23414, April 28, 2014). As proposed, EPA is applying the 
same useful life of 150,000 miles or 15 years for the Phase 2 GHG 
standards for engines primarily intended for use in vocational vehicles 
with a GVWR at or below 19,500 lbs. NHTSA will use the same useful life 
values as EPA for all heavy-duty vehicles.
    As proposed, we will continue the regulatory allowance in 40 CFR 
1036.150(g) that allows engine manufacturers to use assigned 
deterioration factors (DFs) for most engines without performing their 
own durability emission tests or engineering analysis. However, the 
engines will still be required to meet the standards in actual use 
without regard to whether the manufacturer used the assigned DFs. This 
allowance is being continued as an interim provision and may be 
discontinued for later phases of standards as more information becomes 
known. Manufacturers are allowed to use an assigned additive DF of 0.0 
g/bhp-hr for CO2 emissions from any conventional engine 
(i.e., an engine not including advanced or off-cycle technologies). 
Upon request, we could allow the assigned DF for CO2 
emissions from engines including advanced or off-cycle technologies, 
but only if we determine that it would be consistent with good 
engineering judgment. We believe that we have enough information about 
in-use CO2 emissions from conventional engines to conclude 
that they will not increase as the engines age. However, we lack such 
information about the more advanced technologies. For technologies such 
as WHR that are considered advanced in the context of Phase 1, but 
would be treated as a more ordinary technology by the end of Phase 2, 
we plan to work with manufacturers to determine if using the assigned 
zero DF would be appropriate.
(d) Alternate CO2 Standards
    In the Phase 1 rulemaking, the agencies allowed certification to 
alternate CO2 engine standards in model years 2014 through 
2016. This flexibility was intended to address the special case of 
needed lead time to implement new standards for a previously 
unregulated pollutant. Since that special case does not apply for Phase 
2, we are not adopting a similar flexibility in this rulemaking.
(e) Approach to Standards and Compliance Provisions for Natural Gas 
Engines
    EPA is also making certain clarifying changes to its rules 
regarding classification of natural gas engines. This relates to 
standards for all emissions, both greenhouse gases and criteria 
pollutants. These clarifying changes are intended to reflect the status 
quo, and therefore should not have any associated costs.
    EPA emission standards have always applied differently for 
gasoline-fueled and diesel-fueled engines. The regulations in 40 CFR 
part 86 implement these distinctions by dividing engines into Otto-
cycle and Diesel-cycle technologies. This approach led EPA to 
categorize natural gas engines according to their design history. A 
diesel engine converted to run on natural gas was classified as a 
diesel-cycle engine; a gasoline engine converted to run on natural gas 
was classified as an Otto-cycle engine.
    The Phase 1 rule described our plan to transition to a different 
approach, consistent with EPA's non-road programs, in which we divide 
engines into compression-ignition and spark-ignition technologies based 
only on the thermodynamic operating characteristics of the 
engines.\193\ However, the Phase 1 rule included a provision allowing 
us to continue with

[[Page 73570]]

the historic approach on an interim basis.
---------------------------------------------------------------------------

    \193\ See 40 CFR 1036.108.
---------------------------------------------------------------------------

    Under the existing EPA regulatory definitions of ``compression-
ignition'' and ``spark-ignition,'' a natural gas engine would generally 
be considered compression-ignition if it operates with lean air-fuel 
mixtures and uses a pilot injection of diesel fuel to initiate 
combustion, and would generally be considered spark-ignition if it 
operates with stoichiometric air-fuel mixtures and uses a spark plug to 
initiate combustion.
    EPA's basic premise here is that natural gas engines performing 
similar in-use functions as diesel engines should be subject to similar 
regulatory requirements. The compression-ignition emission standards 
and testing requirements reflect the operating characteristics for the 
full range of heavy-duty vehicles, including substantial operation in 
long-haul service characteristic of tractors. The spark-ignition 
emission standards and testing requirements do not include some of 
those provisions related to use in long-haul service or other 
applications where diesel engines predominate, such as steady-state 
testing, Not-to-Exceed standards, and extended useful life. We believe 
it would be inappropriate to apply the spark-ignition standards and 
requirements to natural gas engines that are being used in applications 
mostly served by diesel engines today. We therefore proposed to replace 
the interim provision described above with a differentiated approach to 
certification of natural gas engines across all of the EPA standards--
for both GHGs and criteria pollutants. 80 FR 40207. Under the proposed 
amendment, we would require manufacturers to divide all their natural 
gas engines into primary intended service classes, as we already 
require for compression-ignition engines, whether or not the engine has 
features that otherwise could (in theory) result in classification as 
SI under the current rules. We proposed that any natural gas engine 
qualifying as a medium heavy-duty engine (19,500 to 33,000 lbs. GVWR) 
or a heavy heavy-duty engine (over 33,000 lbs. GVWR) would be subject 
to all the emission standards and other requirements that apply to 
compression-ignition engines. However, based on comments, we are 
finalizing this change only for heavy heavy-duty engines. Commenters 
identified medium heavy-duty applications in which SI alternative fuel 
engines compete significantly with gasoline engines, which is not 
consistent with the premise of the proposal. Thus, we are not 
finalizing the proposed change for medium heavy-duty engines.
    Table II-15 describes the provisions that apply differently for 
compression-ignition and spark-ignition engines:

 Table II-15--Regulatory Provisions That Are Different for Compression-
                   Ignition and Spark-Ignition Engines
------------------------------------------------------------------------
           Provision             Compression-ignition    Spark-ignition
------------------------------------------------------------------------
Transient duty cycle...........  40 CFR part 86,       40 CFR part 86,
                                  Appendix I,           Appendix I,
                                  paragraph (f)(2)      paragraph (f)(1)
                                  cycle; divide by      cycle.
                                  1.12 to de-
                                  normalize.
Ramped-modal test (SET)........  yes.................  no.
NTE standards..................  yes.................  no.
Smoke standard.................  yes.................  no.
Manufacturer-run in-use testing  yes.................  no.
ABT--pollutants................  NOX, PM.............  NOX, NMHC.
ABT--transient conversion        6.5.................  6.3.
 factor.
ABT--averaging set.............  Separate averaging    One averaging set
                                  sets for light,       for all SI
                                  medium, and heavy     engines.
                                  HDDE.
Useful life....................  110,000 miles for     110,000 miles.
                                  light HDDE, \a\       \a\
                                  185,000 miles for
                                  medium HDDE,
                                  435,000 miles for
                                  heavy HDDE.
Warranty.......................  50,000 miles for      50,000 miles.
                                  light HDDE, 100,000
                                  miles for medium
                                  HDDE, 100,000 miles
                                  for heavy HDDE.
Detailed AECD description......  yes.................  no.
Test engine selection..........  highest injected      most likely to
                                  fuel volume.          exceed emission
                                                        standards.
------------------------------------------------------------------------
Note:
 
\a\ As proposed, useful life for light heavy-duty diesel and spark
  ignition engines is being increased to 150,000 miles for GHG
  emissions, but remains at 110,000 for criteria pollutant emissions.

    The onboard diagnostic requirements already differentiate 
requirements by fuel type, so there is no need for those provisions to 
change based on the considerations of this section.
    We are not aware of any currently certified engines that will 
change from compression-ignition to spark-ignition under this approach. 
Nonetheless, because these proposed changes could result in a change in 
standards for engines currently under development, we believe it is 
appropriate to provide additional lead time. We will therefore continue 
to apply the existing interim provision through model year 2020.\194\ 
Starting in model year 2021, all the provisions will apply as described 
above for heavy heavy-duty engines. Manufacturers will not be permitted 
to certify any engine families using carryover emission data if a 
particular engine model switched from compression-ignition to spark-
ignition, or vice versa. However, as noted above, in practice these 
vehicles are already being certified as CI engines, so we view these 
changes as clarifications ratifying the current status quo.
---------------------------------------------------------------------------

    \194\ Section 202(a)(2), applicable to emissions of greenhouse 
gases, does not mandate a specific period of lead time, but EPA sees 
no reason for a different compliance date here for GHGs and criteria 
pollutants. This is also true with respect to the closed crankcase 
emissions discussed in the following subsection. Also, as explained 
in section I.E.i.e, EPA interprets the phrase ``classes or 
categories of heavy duty vehicles or engines'' in CAA section 
202(a)(3)(C) to refer to categories of vehicles established 
according to features such as their engine cycle (spark-ignition or 
compression-ignition).l.
---------------------------------------------------------------------------

    These provisions will apply equally to engines fueled by any fuel 
other than gasoline or ethanol, should such engines be produced in the 
future. Given the current and historic market for vehicles above 33,000 
lbs. GVWR, the agencies believe any alternative-fueled vehicles in this 
weight range will be competing primarily with diesel vehicles and 
should be subject to the same requirements as them. See Sections XI and 
XII for additional discussion of natural gas fueled engines.

[[Page 73571]]

(f) Crankcase Emissions From Natural Gas Engines
    EPA proposed to require that all natural gas-fueled engines have 
closed crankcases, rather than continuing the provision that allows 
venting to the atmosphere all crankcase emissions from all compression-
ignition engines. 80 FR 40208. However, EPA is not finalizing the 
proposed requirement at this time.
    Open crankcases have been allowed as long as these vented crankcase 
emissions are measured and accounted for as part of an engine's 
tailpipe emissions. This allowance has historically been in place to 
address the technical limitations related to recirculating diesel-
fueled engines' crankcase emissions, which have high PM emissions, back 
into the engine's air intake. High PM emissions vented into the intake 
of an engine can foul turbocharger compressors and after cooler heat 
exchangers. In contrast, historically EPA has mandated closed crankcase 
technology on all gasoline fueled engines and all natural gas spark-
ignition engines.\195\ The inherently low PM emissions from these 
engines posed no technical barrier to a closed crankcase mandate. 
However, after considering the comments on this issue, we now believe 
that there are practical reasons why we should not close natural gas 
crankcases without also requiring closed crankcases for other 
compression-ignition engines. Because current natural gas engines are 
generally produced from diesel engine designs that are not designed to 
operate with closed crankcases, we have concerns that sealing the 
crankcase on the natural gas versions will require substantial 
development effort, and the seals may not function properly. Thus, we 
expect to update our regulations for crankcase emissions from all 
compression ignition engines at the same time in a future rulemaking.
---------------------------------------------------------------------------

    \195\ See 40 CFR 86.008-10(c).
---------------------------------------------------------------------------

(g) Compliance Margins
    Some commenters suggested that the agencies should apply a 
compliance margin to confirmatory and SEA test results to account for 
variability of engine maps and emission tests. However, EPA's past 
practice has been to base the standards on technology projections that 
assume manufacturers will apply compliance margins to their test 
results for certification. In other words, they design their products 
to have emissions below the standards by some small margin so that 
test-to-test or lab-to-lab variability would not cause them to exceed 
any applicable standards. Consequently, EPA has typically not set 
standards precisely at the lowest levels achievable, but rather at 
slightly higher levels--expecting manufacturers to target the lower 
levels to provide compliance margins for themselves. The agencies have 
applied this approach to the Phase 2 standards. Thus, the feasibility 
and cost analyses reflect the expectation that manufacturers will 
target lower values to provide compliance margins.
    The agencies have also improved the engine test procedures and 
compliance provisions to reduce the agencies' and the manufacturers' 
uncertainty of engine test results. For example, in the agencies' 
confirmatory test procedures we are requiring that the agencies use the 
average of at least three tests (i.e., the arithmetic mean of a sample 
size of at least three test results) for determining the values of 
confirmatory test results for any GEM engine fuel maps. We are only 
doing this for GEM engine fuel maps because these are relatively new 
tests, compared to Phase 1 testing or EPA's other emissions standards. 
Therefore, this provision does not apply to any other emissions 
testing. For all other emissions testing besides GEM engine fuel maps 
the agencies' maintain our usual convention of utilizing a sample size 
of one for confirmatory testing. For GEM engine fuel mapping this at 
least triples the test burden for the agencies to conduct confirmatory 
testing, but it also decreases confirmatory test result uncertainty by 
at least 42 percent.\196\ Based on improvements like this one, and 
others described in Section 1.4 of the RTC, we believe that SET, FTP 
and GEM's steady-state, cycle-average and powertrain test results will 
have an overall uncertainty of +/-1.0 percent. To further protect 
against falsely high emissions results or false failures due to this 
remaining level of test procedure uncertainty, we have included a +1 
percent compliance margin into our stringency analyses of the engine 
standards and the GEM fuel map inputs used to determine the tractor and 
vocational vehicle standards. In other words we set Phase 2 engine and 
vehicle standards 1 percent less stringent than if we had not 
considered this test procedure uncertainty.
---------------------------------------------------------------------------

    \196\ The statistical formula for standard error, which is a 
well-accepted measure of uncertainty, is the standard deviation 
times the reciprocal of the square root of the sample size. For a 
sample size of three, the reciprocal of the square root of three is 
approximately 0.58, which results in a 42% reduction in uncertainty, 
versus a sample size of one.
---------------------------------------------------------------------------

    In addition to the test procedure improvements and the +1 percent 
margin we incorporated into our standards, the agencies are also 
committed to a process of continuous improvement of test procedures to 
further reduce test result uncertainty. To contribute to this effort, 
in mid-2016 EPA committed $250,000 to fund research to further evaluate 
individual sources of engine mapping test procedure uncertainty. This 
work will occur at SwRI. Should the results of this work or other 
similar future work indicate test procedure improvements that would 
further reduce test result uncertainty, the agencies will incorporate 
these improvements through appropriate guidance or through technical 
amendments to the regulations via a notice and comment rulemaking. If 
we determine in the future through the SwRI work or other work that 
such improvements eliminate the need to require the agencies to conduct 
triplicate confirmatory testing of GEM engine fuel maps, we will 
promulgate technical amendments to the regulations to remove this 
requirement. If we determine in the future through the SwRI work or 
other work that the +1.0 percent we factored into our stringency 
analysis was inappropriately low or high, we will promulgate technical 
amendments to the regulations to address any inappropriate impact this 
+1.0 percent had on the stringency of the engine and vehicle 
standards.\197\ In addition, whenever the agencies determine whether or 
not confirmatory test results are statistically significantly different 
from manufacturers' declared values, the agencies will use good 
engineering judgment to appropriately factor into such determinations 
the results of this SwRI work and/or any other future work that 
quantifies our test procedures' uncertainty.
---------------------------------------------------------------------------

    \197\ Note that this +1.0 percent compliance margin built into 
the standards, or any other future determination of test procedure 
uncertainty, does not impact the agencies' technology feasibility or 
cost-benefit analyses for this rulemaking.
---------------------------------------------------------------------------

III. Class 7 and 8 Combination Tractors

    Class 7 and 8 combination tractors-trailers contribute the largest 
portion of the total GHG emissions and fuel consumption of the heavy-
duty sector, approximately 60 percent, due to their large payloads, 
their high annual miles traveled, and their major role in national 
freight transport.\198\ These vehicles

[[Page 73572]]

consist of a cab and engine (tractor or combination tractor) and a 
trailer.\199\ In general, reducing GHG emissions and fuel consumption 
for these vehicles will involve improvements to all aspects of the 
vehicle.
---------------------------------------------------------------------------

    \198\ The on-highway Class 7 and 8 combination tractor-trailers 
constitute the vast majority of this regulatory category. A small 
fraction of combination tractors are used in off-road applications 
and are regulated differently, as described in Section III.C.
    \199\ ``Tractor'' is defined in 49 CFR 571.3 to mean ``a truck 
designed primarily for drawing other motor vehicles and not so 
constructed as to carry a load other than a part of the weight of 
the vehicle and the load so drawn.''
---------------------------------------------------------------------------

    As we found during the development in Phase 1 and as continues to 
be true in the industry today, the heavy-duty combination tractor-
trailer industry consists of separate tractor manufacturers and trailer 
manufacturers. We are not aware of any manufacturer that typically 
assembles both the finished truck and the trailer and introduces the 
combination into commerce for sale to a buyer. There are also large 
differences in the kinds of manufacturers involved with producing 
tractors and trailers. For HD highway tractors and their engines, a 
relatively limited number of manufacturers produce the vast majority of 
these products. The trailer manufacturing industry is quite different, 
and includes a large number of companies, many of which are relatively 
small in size and production volume. Setting standards for the products 
involved--tractors and trailers--requires recognition of the large 
differences between these manufacturing industries, which can then 
warrant consideration of different regulatory approaches. Thus, 
although tractor-trailers operate essentially as a unit from both a 
commercial standpoint and for purposes of fuel efficiency and 
CO2 emissions, the agencies have developed separate 
standards for each.
    Based on these industry characteristics, EPA and NHTSA believe that 
the most appropriate regulatory approach for combination tractors and 
trailers is to establish standards for tractors separately from 
trailers. As discussed below in Section IV, the agencies are also 
adopting standards for certain types of trailers.

A. Summary of the Phase 1 Tractor Program

    The design of each tractor's cab and drivetrain determines the 
amount of power that the engine must produce in moving the truck and 
its payload down the road. As illustrated in Figure III-1, the loads 
that require additional power from the engine include air resistance 
(aerodynamics), tire rolling resistance, and parasitic losses 
(including accessory loads and friction in the drivetrain). The 
importance of the engine design is that it determines the basic GHG 
emissions and fuel consumption performance for the variety of demands 
placed on the vehicle, regardless of the characteristics of the cab in 
which it is installed.
[GRAPHIC] [TIFF OMITTED] TR25OC16.007

    Accordingly, for Class 7 and 8 combination tractors, the agencies 
adopted two sets of Phase 1 tractor standards for fuel consumption and 
CO2 emissions. The CO2 emission and fuel 
consumption reductions related to engine technologies are recognized in 
the engine standards. For vehicle-related emissions and fuel 
consumption, tractor manufacturers are required to meet vehicle-based 
standards. Compliance with the vehicle standard must be determined 
using the GEM vehicle simulation tool.
---------------------------------------------------------------------------

    \200\ Adapted from Figure 4.1. Class 8 Truck Energy Audit, 
Technology Roadmap for the 21st Century Truck Program: A Government-
Industry Research Partnership, 21CT-001, December 2000.
---------------------------------------------------------------------------

    The Phase 1 tractor standards were based on several key attributes 
related to GHG emissions and fuel consumption that reasonably represent 
the many differences in utility and performance among these vehicles. 
Attribute-based standards in general recognize the variety of functions 
performed by vehicles and engines, which in turn can affect the kind of 
technology that is available to control emissions and reduce fuel 
consumption, or its effectiveness. Attributes that characterize 
differences in the design of vehicles, as well as differences in how 
the vehicles will be employed in-use, can be key factors in evaluating 
technological improvements for reducing CO2 emissions and 
fuel consumption. Developing an appropriate attribute-based standard 
can also avoid interfering with the ability of the market to offer a 
variety of products to meet the customer's demand. The Phase 1 tractor 
standards differ depending on GVWR (i.e., whether the truck is Class 7 
or Class 8), the height of the roof of the cab, and whether it is a 
``day cab'' or a ``sleeper cab.'' These later two attributes are 
important

[[Page 73573]]

because the height of the roof, designed to correspond to the height of 
the trailer, significantly affects air resistance, and a sleeper cab 
generally corresponds to the opportunity for extended duration idle 
emission and fuel consumption improvements. Based on these attributes, 
the agencies created nine subcategories within the Class 7 and 8 
combination tractor category. The Phase 1 rules set standards for each 
of them. Phase 1 standards began with the 2014 model year and were 
followed with more stringent standards following in model year 
2017.\201\ The standards represent an overall fuel consumption and 
CO2 emissions reduction up to 23 percent from the tractors 
and the engines installed in them when compared to a baseline 2010 
model year tractor and engine without idle shutdown technology. 
Although the EPA and NHTSA standards are expressed differently (grams 
of CO2 per ton-mile and gallons per 1,000 ton-mile 
respectively), the standards are equivalent.
---------------------------------------------------------------------------

    \201\ Manufacturers may have voluntarily opted-in to the NHTSA 
fuel consumption standards in model years 2014 or 2015. Once a 
manufacturer opts into the NHTSA program it must stay in the program 
for all optional MYs.
---------------------------------------------------------------------------

    In Phase 1, the agencies allowed manufacturers to certify certain 
types of combination tractors as vocational vehicles. These are 
tractors that do not typically operate at highway speeds, or would 
otherwise not benefit from efficiency improvements designed for line-
haul tractors (although standards still apply to the engines installed 
in these vehicles). The agencies created a subcategory of ``vocational 
tractors,'' or referred to as ``special purpose tractors'' in 40 CFR 
part 1037, because real world operation of these tractors is better 
represented by our Phase 1 vocational vehicle duty cycle than the 
tractor duty cycles. Vocational tractors are subject to the standards 
for vocational vehicles rather than the combination tractor standards. 
In addition, specific vocational tractors and heavy-duty vocational 
vehicles primarily designed to perform work off-road or having tires 
installed with a maximum speed rating at or below 55 mph are exempted 
from the Phase 1 standards.
    In Phase 1, the agencies also established separate performance 
standards for the engines manufactured for use in these tractors. EPA's 
engine-based CO2 standards and NHTSA's engine-based fuel 
consumption standards are being implemented using EPA's existing test 
procedures and regulatory structure for criteria pollutant emissions 
from medium- and heavy-duty engines. These engine standards vary 
depending on engine size linked to intended vehicle service class 
(which are the same service classes used for many years for EPA's 
criteria pollutant standards).
    Manufacturers demonstrate compliance with the Phase 1 tractor 
standards using the GEM simulation tool. As explained in Section II 
above, GEM is a customized vehicle simulation model which is the 
preferred approach to demonstrating compliance testing for combination 
tractors rather than chassis dynamometer testing used in light-duty 
vehicle compliance. As discussed in the development of HD Phase 1 and 
recommended by the NAS 2010 study, a simulation tool is the preferred 
approach for HD tractor compliance because of the extremely large 
number of vehicle configurations.\202\ The GEM compliance tool was 
developed by EPA and is an accurate and cost-effective alternative to 
measuring emissions and fuel consumption while operating the vehicle on 
a chassis dynamometer. Instead of using a chassis dynamometer as an 
indirect way to evaluate real world operation and performance, various 
characteristics of the vehicle are measured and these measurements are 
used as inputs to the model. For HD Phase 1, these characteristics 
relate to key technologies appropriate for this category of truck 
including aerodynamic features, weight reductions, tire rolling 
resistance, the presence of idle-reducing technology, and vehicle speed 
limiters. The model also assumes the use of a representative typical 
engine in compliance with the separate, applicable Phase 1 engine 
standard. Using these inputs, the model is used to quantify the overall 
performance of the vehicle in terms of CO2 emissions and 
fuel consumption. CO2 emission reduction and fuel 
consumption technologies not measured by the model must be evaluated 
separately, and the HD Phase 1 rules establish mechanisms allowing 
credit for such ``off-cycle'' technologies.
---------------------------------------------------------------------------

    \202\ National Academy of Science. ``Technologies and Approaches 
to Reducing the Fuel Consumption of Medium- and Heavy-Duty 
Vehicles.'' 2010. Recommendation 8-4 stated ``Simulation modeling 
should be used with component test data and additional tested inputs 
from powertrain tests, which could lower the cost and administrative 
burden yet achieve the needed accuracy of results.''
---------------------------------------------------------------------------

    In addition to the final Phase 1 tractor-based standards for 
CO2, EPA adopted a separate standard to reduce leakage of 
HFC refrigerant from cabin air conditioning (A/C) systems from 
combination tractors that apply to the tractor manufacturer. This HFC 
leakage standard is independent of the CO2 tractor standard. 
Manufacturers can choose technologies from a menu of leak-reducing 
technologies sufficient to comply with the standard, as opposed to 
using a test to measure performance.
    The Phase 1 program also provided several flexibilities to advance 
the goals of the overall program while providing alternative pathways 
to achieve compliance. The primary flexibility is the averaging, 
banking, and trading program which allows emissions and fuel 
consumption credits to be averaged within an averaging set, banked for 
up to five years, or traded among manufacturers. Manufacturers with 
credit deficits were allowed to carry-forward credit deficits for up to 
three model years, similar to the LD GHG and CAFE carry-back credits. 
Phase 1 also included several interim provisions, such as incentives 
for advanced technologies and provisions to obtain credits for 
innovative technologies (called off-cycle in the Phase 2 program) not 
accounted for by the HD Phase 1 version of GEM or for certifying early.

B. Overview of the Phase 2 Tractor Program and Key Changes From the 
Proposal

    The HD Phase 2 program is similar in many respects to the Phase 1 
approach. The agencies are keeping the Phase 1 attribute-based 
regulatory structure in terms of dividing the tractor category into the 
same nine subcategories based on the tractor's GVWR, cab configuration, 
and roof height. This structure is working well in the implementation 
of Phase 1. EMA and Daimler supported this approach again in their 
comments to the Phase 2 NPRM. The one area where the agencies are 
changing the regulatory structure is related to heavy-haul tractors. As 
noted above, the Phase 1 regulations include a set of provisions that 
allow vocational tractors to be treated as vocational vehicles. 
However, because the agencies are including the powertrain as part of 
the technology basis for the tractor and vocational vehicle standards 
in Phase 2, we are classifying a certain set of these vocational 
tractors as heavy-haul tractors and subjecting them to a separate 
tractor standard that reflects their unique powertrain requirements and 
limitations in application of technologies to reduce fuel consumption 
and CO2 emissions.\203\ The agencies are adopting some 
revisions to the proposed Phase 2 criteria used to define heavy-haul 
tractors in response

[[Page 73574]]

to comments, as discussed below in Section III.C.4.
---------------------------------------------------------------------------

    \203\ See 76 FR 57138 for Phase 1 discussion. See 40 CFR 
1037.801 for Phase 2 heavy-haul tractor regulatory definition.
---------------------------------------------------------------------------

    The agencies will retain much of the certification and compliance 
structure developed in Phase 1. The Phase 2 tractor CO2 
emissions and fuel consumption standards, as in Phase 1, will be 
aligned.\204\ The agencies will also continue to have separate engine 
and vehicle standards to drive technology improvements in both areas. 
The reasoning behind maintaining separate standards is discussed above 
in Section II.B.2. As in Phase 1, the manufacturers will certify 
tractors using the GEM simulation tool and evaluate the performance of 
subsystems through testing (the results of this testing to be used as 
inputs to the GEM simulation tool). Other aspects of the HD Phase 2 
certification and compliance program also mirror the Phase 1 program, 
such as maintaining a single reporting structure to satisfy both 
agencies, requiring limited data at the beginning of the model year for 
certification, and determining compliance based on end of year reports. 
In the Phase 1 program, manufacturers participating in the ABT program 
provided 90 day and 270 day reports after the end of the model year. 
For the Phase 2 program, the agencies proposed that manufacturers would 
only be required to submit one end of the year report, which would have 
simplified reporting. Manufacturers provided comments opposing this 
approach. After further consideration, the agencies are adopting an 
approach in Phase 2 that mirrors the Phase 1 approach with a 90 day 
preliminary report and a 270 day final report, with the manufacturer 
having the option to request a waiver of the 90 day report based on 
positive credit balances.
---------------------------------------------------------------------------

    \204\ Fuel consumption is calculated from CO2 using 
the conversion factor of 10,180 grams of CO2 per gallon 
for diesel fuel.
---------------------------------------------------------------------------

    Even though many aspects of the HD Phase 2 program are similar to 
Phase 1, there are some key differences. While Phase 1 focused on 
reducing CO2 emissions and fuel consumption in tractors 
through the application of existing (``off-the-shelf'') technologies, 
the HD Phase 2 standards seek additional reductions through increased 
use of existing technologies and the development and deployment of more 
advanced technologies. The agencies received numerous comments on the 
proposed Phase 2 technology assessments in terms of the baseline, the 
technology effectiveness, the market adoption rate projections, and the 
technology costs. The agencies have made changes reflecting our 
assessment of these comments, as described in Section III.D.
    To evaluate the effectiveness of a more comprehensive set of 
technologies in Phase 2, the agencies are including several additional 
inputs to the Phase 2 GEM. The set of inputs includes the Phase 1 
inputs plus parameters to assess the performance of the engine, 
transmission, and driveline. Specific inputs for, among others, 
predictive cruise control, automatic tire inflation systems, and 6x2 
axles will now be required. The final Phase 2 program includes some 
changes to the proposed Phase 2 technology inputs to GEM. These changes 
from proposal include the use of cycle-averaged fuel maps for use when 
evaluating a vehicle over the transient cycle, optional transmission 
efficiency inputs, optional axle efficiency inputs, an increase in the 
types of idle reduction technologies recognized in GEM, and the ability 
to recognize the effectiveness of tire pressure monitoring systems, 
neutral coast, and neutral idle. As in Phase 1, in Phase 2 
manufacturers will conduct component testing to obtain the values for 
these technologies (should they choose to use them), then the testing 
values will be input into the GEM simulation tool. See Section III.D.1 
below. To effectively assess performance of the technologies, the 
agencies are adopting a revised version of the road grade profiles 
proposed for Phase 2. Finally, the agencies are adopting Phase 2 
regulations with clarified selective enforcement and confirmatory 
testing requirements for the GEM inputs that differ from the Phase 2 
NPRM based on the comments received.
    The key aerodynamic assessment areas that the agencies proposed to 
change in Phase 2 relative to Phase 1 were the use of a more 
aerodynamic reference trailer, the inclusion of the impact of wind on 
the tractor, and changes to the aerodynamic test procedures. We are 
adopting these changes in Phase 2 with some further revisions from 
those proposed for Phase 2 based on comments. To reflect the evolving 
trailer market, the agencies are adopting as proposed the addition of 
trailer skirts (an aerodynamic improving device) to the reference 
trailer (i.e. the trailer used during testing to determine the relative 
aerodynamic performance of the tractor). The agencies are also adopting 
the proposed aerodynamic certification test procedure that captures the 
impact of wind average drag on tractor aerodynamic performance. 
However, the agencies are specifying in the final rule the use of a 
single surrogate yaw angle instead of a full yaw sweep to reduce the 
aerodynamic testing burden based on further assessment of the EPA 
aerodynamic data and comments received on the NPRM. Finally, the 
agencies are adopting aerodynamic test procedure and data analysis 
changes from the Phase 2 proposal to further reduce the variability of 
aerodynamic test results. Detailed discussion of the aerodynamic test 
procedures is included in Section III.E.2.
    Another key change to the final rule is the adoption of more 
stringent particulate matter (PM) standards for auxiliary power units 
(APU) installed in new tractors.\205\ In the Phase 2 NPRM, EPA sought 
comment on the need for and feasibility of new PM standards for these 
engines because APUs can be used in lieu of operating the main engine 
during extended idle operations to provide climate control and power to 
the driver. See 80 FR 40213. APUs can reduce fuel consumption, 
NOX, HC, CH4, and CO2 emissions when 
compared to main engine idling.\206\ However, a potential unintended 
consequence of reducing CO2 emissions from combination 
tractors through the use of APUs during extended idle operation is an 
increase in PM emissions. EPA is adopting requirements for APUs 
installed in new tractors to meet lower PM standards starting in 2018, 
with a more stringent PM standard starting in 2024. Please see Section 
III.C.3 for more details.
---------------------------------------------------------------------------

    \205\ This is necessarily an EPA-only provision since it relates 
to control of criteria pollutant emissions from a type of non-road 
engine, not to fuel efficiency.
    \206\ U.S. EPA. Development of Emission Rates for Heavy-Duty 
Vehicles in the Motor Vehicle Emissions Simulator MOVES 2010. EPA-
420-B-12-049. August 2012.
---------------------------------------------------------------------------

    The agencies are also ending some of the interim provisions 
developed in Phase 1 to reflect the maturity of the program and the 
reduced need and justification for some of the Phase 1 flexibilities. 
Further discussions on all of these matters are covered in the 
following sections.

C. Phase 2 Tractor Standards

    EPA is adopting CO2 standards and NHTSA is adopting fuel 
consumption standards for new Class 7 and 8 combination tractors in 
Phase 2 that are more stringent than Phase 1. In addition, EPA is 
continuing the HFC standards for the air conditioning systems that were 
adopted in Phase 1. EPA is also adopting new standards to further 
control emissions of particulate matter (PM) from auxiliary power units 
(APU) installed in new tractors that will prevent an unintended 
consequence of

[[Page 73575]]

increasing PM emissions during long duration idling.
    This section describes these standards in detail.
(1) Final Fuel Consumption and CO2 Standards
    The Phase 2 fuel consumption and CO2 standards for the 
tractor cab are shown below in Table III-1. These standards will 
achieve reductions of up to 25 percent compared to the 2017 model year 
baseline level when fully phased in for the 2027 MY.\207\ The standards 
for Class 7 are described as ``Day Cabs'' because we are not aware of 
any Class 7 sleeper cabs in the market today; however, the agencies 
require any Class 7 tractor, regardless of cab configuration, meet the 
standards described as ``Class 7 Day Cab.''
---------------------------------------------------------------------------

    \207\ Since the HD Phase 1 tractor standards fully phase-in by 
the MY 2017, this is the logical baseline year.
---------------------------------------------------------------------------

    The agencies' analyses, as discussed briefly below and in more 
detail later in this Preamble and in the RIA Chapter 2.4 and 2.8, 
indicate that these standards are the maximum feasible (within the 
meaning of 49 U.S.C. 32902(k)) and are appropriate under each agency's 
respective statutory authorities.

  Table III-1--Phase 2 Heavy-Duty Combination Tractor EPA Emissions Standards (g CO[ihel2]/ton-mile) and NHTSA
                                 Fuel Consumption Standards (gal/1,000 ton-mile)
----------------------------------------------------------------------------------------------------------------
                                                              Day cab               Sleeper cab     Heavy-haul
                                                 ---------------------------------------------------------------
                                                      Class 7         Class 8         Class 8         Class 8
----------------------------------------------------------------------------------------------------------------
                                     2021 Model Year CO2 Grams per Ton-Mile
----------------------------------------------------------------------------------------------------------------
Low Roof........................................           105.5            80.5            72.3            52.4
Mid Roof........................................           113.2            85.4            78.0  ..............
High Roof.......................................           113.5            85.6            75.7  ..............
----------------------------------------------------------------------------------------------------------------
                               2021 Model Year Gallons of Fuel per 1,000 Ton-Mile
----------------------------------------------------------------------------------------------------------------
Low Roof........................................        10.36346         7.90766         7.10216         5.14735
Mid Roof........................................        11.11984         8.38900         7.66208  ..............
High Roof.......................................        11.14931         8.40864         7.43615  ..............
----------------------------------------------------------------------------------------------------------------
                                     2024 Model Year CO2 Grams per Ton-Mile
----------------------------------------------------------------------------------------------------------------
Low Roof........................................            99.8            76.2            68.0            50.2
Mid Roof........................................           107.1            80.9            73.5  ..............
High Roof.......................................           106.6            80.4            70.7  ..............
----------------------------------------------------------------------------------------------------------------
                          2024 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile
----------------------------------------------------------------------------------------------------------------
Low Roof........................................         9.80354         7.48527         6.67976         4.93124
Mid Roof........................................        10.52063         7.94695         7.22004  ..............
High Roof.......................................        10.47151         7.89784         6.94499  ..............
----------------------------------------------------------------------------------------------------------------
                                    2027 Model Year CO2 Grams per Ton-Mile a
----------------------------------------------------------------------------------------------------------------
Low Roof........................................            96.2            73.4            64.1            48.3
Mid Roof........................................           103.4            78.0            69.6  ..............
High Roof.......................................           100.0            75.7            64.3  ..............
----------------------------------------------------------------------------------------------------------------
                          2027 Model Year and Later Gallons of Fuel per 1,000 Ton-Mile
----------------------------------------------------------------------------------------------------------------
Low Roof........................................         9.44990         7.21022         6.29666         4.74460
Mid Roof........................................        10.15717         7.66208         6.83694  ..............
High Roof.......................................         9.82318         7.43615         6.31631  ..............
----------------------------------------------------------------------------------------------------------------
Note:
 
\a\ The 2027 MY high roof tractor standards include a 0.3 m\2\ reduction in CdA as described in Section
  III.E.2.a.vii.

    As the agencies noted in the Preamble to the proposed standards, 
the HD Phase 2 CO2 and fuel consumption standards are not 
directly comparable to the Phase 1 standards. 80 FR 40212. This is 
because the agencies are adopting several test procedure changes to 
more accurately reflect real world operation. With respect to tractors, 
these changes will result in the following differences. First, the same 
vehicle evaluated using the HD Phase 2 version of GEM will obtain 
higher (i.e. less favorable) CO2 and fuel consumption values 
because the Phase 2 drive cycles include road grade. Road grade, which 
(of course) exists in the real-world, requires the engine to operate at 
higher horsepower levels to maintain speed while climbing a hill. Even 
though the engine saves fuel on a downhill section, the overall impact 
increases CO2 emissions and fuel consumption. The second of 
the key differences between the CO2 and fuel consumption 
values in Phase 1 and Phase 2 is due to changes in the evaluation of 
aerodynamics. Vehicles are exposed to wind when in use which increases 
the drag of the vehicle and in turn increases the power required to 
move the vehicle down the road. To more appropriately reflect the in-
use aerodynamic performance of tractor-

[[Page 73576]]

trailers, the agencies are adopting a wind averaged coefficient of drag 
instead of the no-wind (zero yaw) value used in Phase 1. The final key 
difference between Phase 1 and the Phase 2 program includes a more 
realistic and improved simulation of the transmission in GEM, which 
could increase CO2 and fuel consumption relative to Phase 1.
    The agencies are adopting Phase 2 CO2 emissions and fuel 
consumption standards for the combination tractors that reflect 
reductions that can be achieved through improvements in the tractor's 
powertrain, aerodynamics, tires, and other vehicle systems. The 
agencies have analyzed the feasibility of achieving the CO2 
and fuel consumption standards, and have identified means of achieving 
these standards that are technically feasible in the lead time 
afforded, economically practicable and cost-effective. EPA and NHTSA 
present the estimated costs and benefits of these standards in Section 
III.D.1. In developing these standards for Class 7 and 8 tractors, the 
agencies have evaluated the following:

 The current levels of emissions and fuel consumption
 the types of technologies that could be utilized by tractor 
and engine manufacturers to reduce emissions and fuel consumption from 
tractors and associated engines
 the necessary lead time
 the associated costs for the industry
 fuel savings for the consumer
 the magnitude of the CO2 and fuel savings that may 
be achieved

    The technologies on whose performance the final tractor standards 
are predicated include: improvements in the engine, transmission, 
driveline, aerodynamic design, tire rolling resistance, other 
accessories of the tractor, and extended idle reduction technologies. 
These technologies, and other accessories of the tractor, are described 
in RIA Chapter 2.4 and 2.8. The agencies' evaluation shows that some of 
these technologies are available today, but have very low adoption 
rates on current vehicles, while others will require some lead time for 
development. EPA and NHTSA also present the estimated costs and 
benefits of the Class 7 and 8 combination tractor standards in RIA 
Chapter 2.8 and 2.12, explaining as well the basis for the agencies' 
stringency level.
    As explained below in Section III.D, EPA and NHTSA have determined 
that there will be sufficient lead time to introduce various tractor 
and engine technologies into the fleet starting in the 2021 model year 
and fully phasing in by the 2027 model year. This is consistent with 
NHTSA's statutory requirement to provide four full model years of 
regulatory lead time for standards. As was adopted in Phase 1, the 
agencies are adopting provisions for Phase 2 that allow manufacturers 
to generate and use credits from Class 7 and 8 combination tractors to 
show compliance with the standards. This is discussed further in 
Section III.F.
    Based on our analysis, the 2027 model year standards for 
combination tractors and engines represent up to a 25 percent reduction 
in CO2 emissions and fuel consumption over a 2017 model year 
baseline tractor, as detailed in Section III.D.1. In considering the 
feasibility of vehicles to comply with these standards over their 
useful lives, EPA also considered the potential for CO2 
emissions to increase during the regulatory useful life of the product. 
As we discuss in Phase 1 and separately in the context of deterioration 
factor (DF) testing, we have concluded that CO2 emissions 
are likely to stay the same or actually decrease in-use compared to new 
certified configurations for the projected technologies. In general, 
engine and vehicle friction decreases as products wear, leading to 
reduced parasitic losses and consequent lower CO2 emissions. 
Similarly, tire rolling resistance falls as tires wear due to the 
reduction in tread depth. In the case of aerodynamic components, we 
project no change in performance through the regulatory life of the 
vehicle since there is essentially no change in their physical form as 
vehicles age. Similarly, weight reduction elements such as aluminum 
wheels are not projected to increase in mass through time, and hence, 
we can conclude will not deteriorate with regard to CO2 
emissions performance in-use. Given all of these considerations, the 
agencies are confident in projecting that the tractor standards today 
will be technically feasible throughout the regulatory useful life of 
the program.
(2) Non-CO2 GHG Emission Standards for Tractors
    EPA is also continuing the Phase 1 standards to control non-
CO2 GHG emissions from Class 7 and 8 combination tractors.
(a) N2O and CH4 Emissions
    The final Phase 2 heavy-duty engine standards for both 
N2O and CH4 as well as details of these standards 
are included in the discussion in Section II.D.3 and II.D.4. EPA 
requested comment, but did not receive any comments (or otherwise 
obtain any new information) indicating that there were appropriate 
controls for these non-CO2 GHG emissions for the tractors 
manufacturers. Nor does EPA believe there are any technologies 
available to set vehicle standards. Therefore, EPA is not adopting any 
additional controls for N2O or CH4 emissions 
beyond those in the HD Phase 2 engine standards for the tractor 
category.
(b) HFC Emissions
    Manufacturers can reduce hydrofluorocarbon (HFC) emissions from air 
conditioning (A/C) leakage emissions in two ways. First, they can 
utilize leak-tight A/C system components. Second, manufacturers can 
largely eliminate the global warming impact of leakage emissions by 
adopting systems that use an alternative, low-Global Warming Potential 
(GWP) refrigerant, to replace the commonly used R-134a refrigerant. EPA 
is maintaining the A/C leakage standards adopted in HD Phase 1 (see 40 
CFR 1037.115). EPA believes the Phase 1 use of leak-tight components is 
at an appropriate level of stringency while maintaining the flexibility 
to produce the wide variety of A/C system configurations required in 
the tractor category. Please see Section I.F.(1)(b) for a discussion 
related to alternative refrigerants.
(3) EPA's PM Emission Standards for APUs Installed in New Tractors
    Auxiliary power units (APUs) can be used in lieu of operating the 
main engine during extended idle operations to provide climate control 
and additional hotel power for the driver. As noted above, APUs can 
reduce fuel consumption, NOX, HC, CH4, and 
CO2 emissions by a meaningful amount when compared to main 
engine idling.\208\ However, a potential unintended consequence of 
reducing CO2 emissions from combination tractors through the 
use of APUs during extended idle operation is an increase in diesel PM 
emissions. Engines currently being used to power APUs have been subject 
to the Nonroad Tier 4 p.m. standards (40 CFR 1039.101), which are less 
stringent in this power category than the heavy-duty on-highway 
standards (40 CFR 86.007-11) on a brake-specific basis. In the NPRM, 
EPA sought comment on the need for and appropriateness of further 
reducing PM emissions from APUs used as part of a compliance strategy 
for Phase 2, and suggested the basis for possible new PM

[[Page 73577]]

standards to avoid these unintended consequence. 80 FR 40213.
---------------------------------------------------------------------------

    \208\ U.S. EPA. Development of Emission Rates for Heavy-Duty 
Vehicles in the Motor Vehicle Emissions Simulator MOVES 2010. EPA-
420-B-12-049. August 2012.
---------------------------------------------------------------------------

    After considering the numerous comments submitted on this issue and 
our consideration of feasibility of PM controls, EPA is adopting a new 
PM standard of 0.02 g/kW-hr that applies exclusively to APUs installed 
in MY 2024 and later new tractors. EPA is also amending the Phase 1 GHG 
standards to provide that as of January 1, 2018 and through MY 2020, a 
tractor can receive credit for use of an AESS with an APU installed at 
the factory only if the APU engine is certified under 40 CFR part 1039 
with a deteriorated emission level for PM that is at or below 0.15 g/
kW-hr. For MY 2021 through 2023, this same emission level applies as a 
standard for all new tractors with an APU installed. Starting in MY 
2024, any APU installed in a new tractor must be certified to a PM 
emission standard of 0.02 g/kW-hr over the full useful life as 
specified in 40 CFR 1039.699. Engine manufacturers may alternatively 
meet the APU standard by certifying their engines under 40 CFR part 
1039 with a Family Emission Limit for PM at or below 0.02 g/kW-hr. APUs 
installed on MY 2024 and later tractors must have a label stating that 
the APU meets the PM requirements of 40 CFR 1039.699. Tractor 
manufacturers will be subject to a prohibition against selling new MY 
2024 and later tractors with APUs that are not certified to the 
specified standards, and manufacturers will similarly be subject to a 
prohibition against selling new MY 2021 through 2023 tractors with APUs 
that do not meet the specified emission levels. This applies for both 
new and used APUs installed in such new tractors. Manufacturers of new 
nonroad engines and new APUs may continue to produce and sell their 
products for uses other than installation in new tractors without 
violating these prohibitions. However, nonroad engine manufacturers and 
APU manufacturers would be liable if they are found to have caused a 
tractor manufacturer to violate this prohibition, such as by 
mislabeling an APU as compliant with this standard. Note also that the 
PM standard for APUs applies for new tractors, whether or not the 
engine and APU are new; conversely, the PM standard does not apply for 
APU retrofits on tractors that are no longer new, even if the engine 
and APU are new.

            Table III-2--PM Standards for Tractors Using APUs
------------------------------------------------------------------------
                                      PM emission
            Tractor MY              standard (g/kW-   Expected control
                                          hr)            technology
------------------------------------------------------------------------
MY 2021-2023 \a\..................            0.15  In-cylinder PM
                                                     control.
MY 2024 and later.................            0.02  Diesel Particulate
                                                     Filter.
------------------------------------------------------------------------
Note:
\a\ APUs installed on new tractors built January 1, 2018 and later,
  through model year 2020, must have engines that meet the same 0.15 g/
  kW-hr emission level if they rely on AESS for demonstrating compliance
  with emission standards.

    We discuss below the principal comments we received on whether to 
adopt a standard to control PM emissions from APUs used for tractor 
idle emission control, the basis for the amended standards, and how EPA 
envisions the standards operating in practice.
    Among the comments we received were those from the American Lung 
Association, National Association of Clean Air Agencies, Northeast 
States for Coordinated Air Use Management, Environmental Defense Fund, 
Natural Resources Defense Council, Environmental Law and Policy Center, 
Coalition for Clean Air/California Cleaner Freight Coalition, Moving 
Forward Network, Ozone Transport Commission, and the Center for 
Biological Diversity that urged EPA to amend the standards for PM 
emissions from these engines in order to reduce PM emission increases 
resulting from increased APU use. Bendix commented that EPA should 
consider the full vehicle emissions and fuel consumption, including the 
APU, to create a more accurate comparison when considering alternatives 
to diesel powered APUs. California's ARB supported the development of a 
federal rule that requires DPFs on APUs, similar to the requirements 
already in place in California because diesel PM poses a large public 
health risk.
    In contrast, EMA commented that EPA should not impose any new 
emission requirements on APU engines because they already meet the Tier 
4 nonroad standards and argued further that this rulemaking is not the 
proper forum for amending nonroad engine emission standards. Ingersoll 
Rand commented that they have significant concerns with regard to a 
nationwide requirement for use of DPFs in diesel-powered APUs, and 
strongly urged EPA not to impose such a perceived burden on the 
trucking industry. Ingersoll Rand's concerns are that the additional 
cost would push owners away from diesel-powered APUs to battery-powered 
APUs that, according to Ingersoll Rand, are not yet mature enough to 
serve as a replacement for diesel-powered APUs. Ingersoll Rand believes 
that high-capacity battery-powered APUs will eventually become a 
commercially available and cost-effective alternative to diesel-powered 
APUs. Ingersoll Rand stated that, although Thermo King has been 
dedicating resources to research and development in this area for some 
time, mandating this technology today would significantly decrease 
consumer choice, competitiveness in the APU marketplace, and driver 
comfort and safety. ATA is concerned that efforts to place additional 
emissions controls, and therefore additional costs, on APUs by making 
PM standards more stringent will discourage the use of this fuel 
efficient technology. EPA considered Ingersoll Rand's comments in 
developing a phased-in approach to the new PM standards for new 
tractors using APUs to, having the principal standard apply commencing 
with MY 2024 tractors in order to provide sufficient lead time.
    Following is discussion of our analysis of this issue in light of 
the information we received and of our decision to establish a new PM 
standard for these units.
(a) PM Emissions Impact Without Additional Controls
    EPA conducted an analysis using MOVES, which evaluates the 
potential impact on PM emissions due to an increase in APU adoption 
rates. In this analysis, EPA assumed that PM emission rates from 
current technology APUs would be unchanged in the future. We estimated 
an average in-use APU emission rate of 0.96 grams PM per hour from 
three in-use APUs (model years 2006 and 2011), measured in

[[Page 73578]]

different load conditions.\209\ We determined that a typical 2010 model 
year or newer tractor that uses its main engine to idle emits 0.32 
grams PM per hour, based on a similar analysis of in-use idling of 
emissions from 2010 model year and newer tractors.\12\ Thus, the use of 
an APU would lead to a potential increase in PM of as much as 0.64 
grams per hour.
---------------------------------------------------------------------------

    \209\ U.S. EPA. Updates to MOVES for Emissions Analysis of 
Greenhouse Gas Emissions and Fuel Efficiency Standards for Medium- 
and Heavy-Duty Engines and Vehicles--Phase 2 FRM. Docket Number EPA-
HQ-OAR-2014-0827. July 2016.
---------------------------------------------------------------------------

    The results from these MOVES runs are shown below in Table III-3. 
These results show that an increase in use of APUs could lead to an 
overall increase in PM emissions if no additional PM emission standards 
were put in place. Column three labeled ``Final Phase 2 GHG Program 
PM2.5 Emission Impact without Further PM Control (tons)'' 
shows the incremental increase in PM2.5 without further 
regulation of APU PM2.5 emissions, assuming the rate of APU 
use on which the final CO2 standard is premised. These PM 
emission impacts represent an increase of approximately three percent 
of the HD sector PM emissions. We note further that the pollutant at 
issue is diesel PM, which is associated with myriad serious health 
effects, including premature mortality. See Section VIII.A.6 below.

 Table III-3--Projected Impact of Increased Adoption of APUs in Phase 2
------------------------------------------------------------------------
                                                         Final phase 2
                                                          GHG program
                                       Baseline HD         PM2.5 \a\
                CY                    vehicle PM2.5     emission  impact
                                    emissions  (tons)   without  further
                                                          PM  control
                                                           (tons) \b\
------------------------------------------------------------------------
2040..............................             20,939                464
2050..............................             22,995                534
------------------------------------------------------------------------
Note:
\a\ Positive numbers mean emissions would increase from baseline to
  control case.
\b\ The impacts shown include all PM2.5 impacts from the rule including
  impacts from increased tire wear and brake wear that results from the
  slight increase in VMT projected as a result of this rule.

(b) Feasibility of PM Emission Reductions
    As EPA discussed in the NPRM, there are DPFs in the marketplace 
today that can reduce PM emissions from APUs. 80 FR 40213. Since 
January 1, 2008, California ARB has restricted the idling of sleeper 
cab tractors during periods of sleep and rest.\210\ The regulations 
apply additional requirements to diesel-fueled APUs on tractors 
equipped with 2007 model year or newer main engines. Truck owners in 
California must either: (1) Fit the APU with an ARB verified Level 3 
particulate control device that achieves 85 percent reduction in 
particulate matter; or (2) have the APU exhaust plumbed into the 
vehicle's exhaust system upstream of the particulate matter 
aftertreatment device.\211\ Currently ARB has identified four control 
devices that have been verified to meet the Level 3 p.m. requirements. 
These devices include HUSS Umwelttechnik GmbH's FS-MK Series Diesel 
Particulate filters, Impco Ecotrans Technologies' ClearSky Diesel 
Particulate Filter, Thermo King's Electric Regenerative Diesel 
Particulate Filter, and Proventia's Electronically Heated Diesel 
Particulate Filter. In addition, ARB has approved a Cummins integrated 
diesel-fueled APU and several fuel-fired heaters produced by Espar and 
Webasto.
---------------------------------------------------------------------------

    \210\ California Air Resources Board. Idle Reduction 
Technologies for Sleeper Berth Trucks. Last viewed on September 19, 
2014 at http://www.arb.ca.gov/msprog/cabcomfort/cabcomfort.htm.
    \211\ California Air Resources Board. Sec.  2485(c)(3)(A)(1).
---------------------------------------------------------------------------

    EPA received comments from Daimler, Idle Smart, MECA, and Proventia 
addressing the feasibility of PM reductions from APU engines. Daimler 
stated that they supply APUs that currently meet ARB's PM emission 
requirements and encouraged EPA to simply adopt ARB's regulations. 
Proventia commented that they have produced an ARB-approved actively 
regenerating DPF to fit the Thermo King Tripac APU since 2012 and that 
it is proven, reliable, and commercially available. Idle Smart 
commented that their start-stop idle reduction solution emits less PM 
emissions than a diesel APU without a DPF. MECA commented that a 
particulate filter in this application would be a wall flow device and, 
due to the relatively cold exhaust temperature of these small engines, 
the filters would need to use either all active or a combination of 
passive and active regeneration to periodically clean the soot from the 
filter. MECA stated that active regeneration could be achieved through 
the use of a fuel burner or electric heather upstream of the filter. 
MECA also stated that ARB's regulations demonstrate that it is feasible 
to control PM from small APU engines and that the technology has been 
available since 2008.
    California's Clean Idle program requires that diesel-powered APUs 
be fitted with a verified DPF. In some cases, limits are put on the PM 
emission level at the engine outlet (upstream of the DPF). For example, 
the ThermoKing APU approval utilizing a Yanmar engine requires that 
engine is certified to a PM level of 0.2 g/kW-hr or less (upstream of 
the DPF).\212\ Implementation of the California program and the 
subsequent approval of Level 3 verified devices has led to the 
certification of engines utilized in APUs whose PM emissions at the 
engine outlet are well below the 0.4 g/kW-hr nonroad Tier 4 final 
standard for this size engine in 40 CFR part 1039. For example, the 
Yanmar TK270M engine that is used in combination with ThermoKing's 
electronic regenerative diesel particulate filter, which is certified 
under the EPA designated engine family GYDXL0.57NUA, is certified with 
a PM level of 0.09 g/kW-hr. The addition of a DPF affords at least an 
additional 85 percent reduction from the engine outlet certified value, 
or less than 0.014 g/kW-hr.
---------------------------------------------------------------------------

    \212\ California Air Resources Board. Executive Order DE-12-006. 
Last viewed on June 21, 2016 at http://www.arb.ca.gov/diesel/verdev/pdf/executive_orders/de-12-006.pdf.
---------------------------------------------------------------------------

    EPA believes that these comments confirm our discussion at proposal 
that PM standards reflecting performance of a diesel particulate filter 
are technically feasible.

[[Page 73579]]

(c) Benefits of Further PM Controls
    Using MOVES, EPA evaluated the impact of requiring further PM 
control from APUs nationwide. As shown in Table III-3 and Table III-4, 
EPA projects that the HD Phase 2 program without additional PM controls 
would increase PM2.5 emissions by 464 tons in 2040 and 534 
tons in 2050. The annual impact of the final program to further control 
PM is projected to lead to a reduction of PM2.5 emissions 
nationwide by 927 tons in 2040 and by 1,114 tons in 2050, as shown in 
Table III-4 the column labeled ``Net Impact on National 
PM2.5 Emission with Further PM Control of APUs (tons).'' 
Note that these requirements will reduce PM emissions from APUs assumed 
in the baseline for MY 2018 and later, as well as the additional APUs 
that are projected to be used as a result of the Phase 2 standards. 
This results in projected reductions that exceed the projected increase 
in PM emissions that would have occurred with the new Phase 2 GHG 
standards but without these newly promulgated APU standards.

                     Table III-4--Projected Impact of Further Control on PM2.5 Emissions \a\
----------------------------------------------------------------------------------------------------------------
                                                                                                 Net impact on
                                      Baseline national      HD Phase 2         HD Phase 2       national PM2.5
                                          heavy-duty      program national   program national    emission with
                 CY                     vehicle PM2.5     PM2.5 emissions    PM2.5 emissions       further PM
                                       emissions (tons)   without further    with further PM    control of APUs
                                                         PM control (tons)    control (tons)         (tons)
----------------------------------------------------------------------------------------------------------------
2040................................             20,939             21,403             20,476               -927
2050................................             22,995             23,529             22,416             -1,114
----------------------------------------------------------------------------------------------------------------
Note:
\a\ The impacts shown include all PM2.5 impacts from the rule including impacts from increased tire wear and
  brake wear that results from the slight increase in VMT projected as a result of this rule.

(d) PM Emission Reduction Technology Costs
    EPA does not project any cost for meeting the requirement, 
commencing on January 1, 2018, that tractor manufacturers using APUs as 
part of a compliance path to meeting the Phase 1 GHG standards only 
receive credit in GEM for use of the APU if they use an APU with an 
engine with deteriorated PM emissions at or below 0.15 g/kW-hr. The 
same conclusion applies for MY 2021, when we adopt the PM emission 
level of 0.15 g/kW-hr as an emission standard, not only as a qualifying 
condition for using AESS for demonstrating compliance with the 
CO2 standard. First, EPA projects that the 2018-2023 
requirements can be achieved at zero cost because several engines are 
already meeting them today with in-cylinder controls. Second, this is 
only one of many potential compliance pathways for tractors meeting the 
Phase 1 standards. We nonetheless are providing extra lead time by 
tying this provision to calendar year 2018, rather than model year 
2018, to allow manufacturers time for confirming emission levels and 
otherwise complying with administrative requirements.
    PM emission reductions from APU engines beginning in MY 2024 would 
most likely be achieved through installation of a diesel particulate 
filter (DPF).\213\ In the NPRM, EPA discussed several sources for DPF 
cost estimates. The three sources included the federal Nonroad Diesel 
Tier 4 rule, ARB, and Proventia. EPA developed long-term cost 
projections for catalyzed diesel particulate filters (DPF) as part of 
the Nonroad Diesel Tier 4 rulemaking. In that rulemaking, EPA estimated 
the DPF costs would add $580 to the cost of 150 horsepower engines (69 
FR 39126, June 29, 2004). On the other hand, ARB estimated the cost of 
retrofitting a diesel powered APU with a PM trap to be $2,000 in 
2005.\214\ Proventia is charging customers $2,240 for electronically 
heated DPF for retrofitting existing APUs.\215\
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    \213\ As discussed below, a DPF could be installed by the APU 
manufacturer, the engine manufacturer, the tractor manufacturer, or 
a fourth entity, with certification and labelling responsibilities 
differing depending on which entity does the installation.
    \214\ California Air Resources Board. Staff Report: Initial 
Statement of Reasons; Notice of Public Hearing to Consider 
Requirements to Reduce Idling Emissions From New and In-Use Trucks, 
Beginning in 2008. September 1, 2005. Page 38. Last viewed on 
October 20, 2014 at http://www.arb.ca.gov/regact/hdvidle/isor.pdf.
    \215\ Proventia. Tripac Filter Kits. Last accessed on October 
21, 2014 at http://www.proventiafilters.com/purchase.html.
---------------------------------------------------------------------------

    EPA requested comment on DPF costs in the NPRM and received 
comments from MECA, Proventia, and Ingersoll Rand. MECA agreed with 
EPA's range of DPF costs discussed in the NPRM. Proventia stated that 
the $2,240 end user price cited in the NPRM is for an aftermarket 
retrofit device. Proventia estimated that the direct manufacturing cost 
of materials and manufacturing (which is less than the retail price 
equivalent) for quantities exceeding 10,000 annually would be $975 for 
an actively regenerating device. The basis for this estimate is 
Proventia's current production cost in the quantity of 50 units of 
$1069. Proventia stated that EPA's estimate of $580 for a 150hp engine 
is likely to be for a catalyzed passively regenerating DPF because 
those engines have higher exhaust temperatures. Proventia also stated 
that a cost of an actively regenerating DPF is significantly higher 
than for passively regenerating devices. Ingersoll Rand commented that 
Thermo King currently offers a DPF option on its line of diesel-powered 
APUs and the incremental price of the DPF option can be as high as 
$3,500. ATA commented that adding a DPF to an APU increases the cost of 
the device by up to 20 percent. Daimler provided DPF costs as CBI.
    EPA considered the comments and more closely evaluated NHTSA's 
contracted TetraTech cost report which found the total retail price of 
a diesel-powered APU that includes a DPF to be $10,000.\216\ Based on 
all of this information, EPA is projecting the retail price increment 
of an actively regenerating DPF installed in an APU to be $2,000. This 
cost is incremental to the diesel-powered APU technology costs 
beginning in 2024 MY.
---------------------------------------------------------------------------

    \216\ U.S. DOT/NHTSA. Commercial Medium- and Heavy-Duty Truck 
Fuel Efficiency Technology Cost Study. May 2015. Page 71.
---------------------------------------------------------------------------

    EPA regards these costs as reasonable. First, the PM standard is 
necessary to avoid an unintended consequence of GHG idle control. The 
standard adopted is also appropriate for APUs used in on-highway 
applications, since it is comparable to the heavy-duty on-highway 
standard after considering rounding conventions (the PM standard for a 
tractor's main engine is 0.01 g/hp-hr as specified in 40 CFR 86.007-
11(a)(1)(iv))). The standard is also voluntary in the sense that 
tractor

[[Page 73580]]

manufacturers can use other types of idle reducing technologies, or 
choose a Phase 2 compliance path not involving idle control. The 
agencies have developed technology packages for determining the final 
Phase 2 tractor GHG and fuel consumption standards that are predicated 
on lower penetration rates of diesel APUs than in the NPRM and have 
included several additional idle reducing technologies, making it more 
likely that alternative compliance paths are readily available. APU 
manufacturers (and manufacturers of APU engines) also can market their 
product to any entities other than MY 2024 and later new tractors 
without meeting the DPF-based PM standard. Our review of the costs of 
these standards thus indicates that they will be reasonable.
    It is also worth noting that the reductions also have monetized 
benefits far greater than the costs of the standard. Section IX.H.1 of 
this Preamble discusses the economic value of reductions in criteria 
pollutants. In this analysis, EPA estimates the economic value of the 
human health benefits associated with the resulting reductions in 
PM2.5 exposure using what are known as ``benefit per ton'' 
values. The benefit per ton values estimate the benefits of reducing 
incidence of specific PM2.5-related health impacts, 
including reduction in both premature mortality and premature morbidity 
from on-road mobile sources. The estimate of benefits from reducing one 
ton of direct PM2.5 from on-road mobile sources in 2030 
using a three percent discount rate range is between $490,000 and 
$1,100,000 (2013$) and is between $440,000 and $990,000 (2013$) using a 
seven percent discount rate.\217\ The estimated cost per ton for the 
new APU standards in 2040 is $101,717.
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    \217\ This valuation is undoubtedly conservative because it 
reflects exposure to PM2.5 generally, rather than to the 
form of PM here: Diesel exhaust particulate, a likely human 
carcinogen. See section VIII.A.6.b. Due to underlying analytical 
limitations, PM2.5-related benefit per ton values are 
only estimated out to the year 2030. For the criteria pollutant 
benefits analysis in this rulemaking, we make a conservative 
assumption that 2030 values apply to all emission reductions in 
years that extend beyond 2030. We assume benefit-per-ton values grow 
larger in the future due to income growth and a larger future 
population.
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(e) Other Considerations
    EPA considered the lead time of the new PM standards for APUs 
installed in new tractors. The 2018 provision restricting GEM credit 
for use of APUs is not a new standard, but rather a compliance 
constraint. There should be ample time for tractor manufacturers to 
consider how to obtain APUs certified to the designated deteriorated PM 
emissions level should they wish to receive GEM credit for use of APUs. 
As noted in (d) above, we concluded that the reasonable feasible lead 
time is to implement these provisions on January 1, 2018 because the 
manufacturer's contemplating use of APUs in conjunction with a Phase 1 
compliance strategy using AESS would need time to adapt their 
certification systems, which we believe requires lead time of at least 
several months.
    In MY 2021, tractor manufacturers will be subject to a prohibition 
against selling new MY 2021 through 2023 tractors with APUs that do not 
meet those specified PM emission levels. For the reasons just given, 
there is ample time to meet this requirement.
    The diesel particulate filter-based standard for APUs installed in 
new tractors begins in MY 2024. This allows several years for the 
development and application of diesel particulate filters to these 
APUs. We have concluded that, given the timing of the PM emission 
standards finalized in this document and the availability of the 
technologies, APUs can be designed to meet the new standards with the 
lead time provided (and, again, noting that tractor manufacturers have 
available compliance pathways available not involving APUs).
    In terms of safety, EPA considered the fact that diesel particulate 
filters are a known technology. DPFs have been installed on a subset of 
diesel powered APUs since the beginning of the California requirements 
and have been used with on-highway diesel engines since the sale of MY 
2007 engines. We are unaware of any safety issues with this technology. 
We are adopting these APU requirements because they allow for reduced 
fuel consumption; this also leads to a positive impact with respect to 
energy.
(f) Implementation of the Standard
    EPA has a choice as to whether to adopt these provisions as a 
tractor vehicle standard or as a standard for the non-road engine in 
the APU. Under either approach, EPA is required to consider issues of 
technical feasibility, cost, safety, energy, and lead time. EPA has 
addressed all of these factors above, and finds the 2018, 2021, and 
2024 provisions, and associated lead time, to be justified.\218\
---------------------------------------------------------------------------

    \218\ As noted above, the 2018 provision is a compliance 
constraint, not a standard.
---------------------------------------------------------------------------

    The final rule applies most directly to tractor manufacturers. 
However, other entities potentially affected are the manufacturer of 
the APU, the manufacturer of the engine installed in the APU, and a 
different entity (if any) separately installing a DPF on the APU 
engine. At present, all engines used in APUs must certify to the PM 
standard in 40 CFR 1039.101, and must label the engine accordingly (see 
40 CFR 1039.135). The provisions we are adopting for MY 2024 require 
that any APU engine being certified to the 0.02 g/kW-hr PM standard 
have a label indicating that the APU or engine is so certified. This 
puts any entity receiving that engine on notice that the APU (and its 
engine) can be used in a new tractor. Conversely, the absence of such a 
label indicates that the engine cannot be so used. Consequently, if a 
tractor manufacturer receives an APU without the supplemental label, it 
can only use the APU in a new tractor if it installs a DPF or otherwise 
retrofits the APU engine to meet the PM standard.
    The APU certification provisions in 40 CFR 1039.699 are simplified 
to account for the fact that the APU manufacturer would generally be 
adding emission control hardware without modifying the engine from its 
certified configuration. Note that engine manufacturers, tractor 
manufacturers or others installing the emission control hardware may 
also certify to the 0.02 g/kW-hr standard. Since the prohibition 
applies to the tractor manufacturer, we would not expect the delegated 
assembly provisions of 40 CFR 1037.621 or the secondary vehicle 
manufacturer provisions of 40 CFR 1037.622 to apply for APU 
manufacturers.
    As described above, we are aware that the PM standards as adopted 
would not prevent a situation in which tractors are retrofitted with 
diesel APUs after they are no longer new, without meeting the PM 
standards described above. We believe that vehicle manufacturers will 
strongly desire to apply the benefit of AESS with low-PM diesel APUs to 
help them meet CO2 standards for any installations where a 
diesel APU is a viable or likely option for in-use tractors. We will 
consider addressing this possible gap in the program with a standard 
for new APUs installed on new or used tractors. Such a standard would 
be issued exclusively under our authority to regulate nonroad engines 
as described in Clean Air Act section 213 (a)(4). If we adopt such a 
standard, we will also consider whether to adopt that same requirement 
for new APUs installed in other motor vehicles, and for other nonroad 
installations generally.

[[Page 73581]]

(4) Special Purpose Tractors and Heavy-Haul Tractors
    The agencies proposed and are adopting provisions in Phase 2 to set 
standards for a new subcategory of heavy-haul tractors. In addition and 
as noted above, in Phase 1 the agencies adopted provisions to allow 
tractor manufacturers to reclassify certain tractors as vocational 
vehicles, also called Special Purpose Tractors.\219\ The agencies 
proposed and are adopting provisions in Phase 2 to continue to allow 
manufacturers to exclude certain vocational-types of tractors (Special 
Purpose Tractors) from the combination tractor standards and instead be 
subject to the vocational vehicle standards. However, the agencies are 
making changes to the proposed Phase 2 Special Purpose Tractors and 
heavy-haul tractors in response to comments, as discussed below.
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    \219\ See 40 CFR 1037.630.
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(a) Heavy-Haul Tractors
    For Phase 2, the agencies proposed and are adopting an additional 
subcategory to the tractor category for heavy-haul tractors that are 
designed to haul much heavier loads than conventional tractors. The 
agencies recognize the need for manufacturers to build these types of 
vehicles for specific applications and also recognize that such heavy-
haul tractors are not fully represented by the way GEM simulates 
conventional tractors. We believe the appropriate way to prevent 
effectively penalizing these vehicles is to set separate standards 
recognizing a heavy-haul vehicle's unique needs, which include the need 
for a higher horsepower engine and different transmissions. In addition 
drivetrain technologies such as 6x2 axles, may not be capable of 
handling the heavier loads. The agencies are adopting this change in 
Phase 2 because, unlike in Phase 1, the engine, transmission, and 
drivetrain technologies are included in the technology packages used to 
determine the stringency of the tractor standards and are included as 
manufacturer inputs in GEM. The agencies also recognize that certain 
technologies used to determine the stringency of the Phase 2 tractor 
standards are less applicable to the heavy-haul tractors designed for 
the U.S. market. For example, heavy-haul tractors in the U.S. are not 
typically used in the same manner as long-haul tractors with extended 
highway driving, and therefore will experience less benefit from 
aerodynamics. This means that the agencies are adopting a standard that 
reflects individualized performance of these technologies in particular 
applications, in this case, heavy-haul tractors, and further, have a 
means of reliably assessing individualized performance of these 
technologies at certification.
    The typical tractor is designed in the U.S. with a Gross Combined 
Weight Rating (GCWR) of approximately 80,000 pounds due to the 
effective weight limit on the federal highway system, except in states 
with preexisting higher weight limits. The agencies proposed in Phase 2 
to consider tractors with a GCWR over 120,000 pounds as heavy-haul 
tractors. Based on comments received during the development of HD Phase 
1 (76 FR 57136-57138) and because we did not propose in Phase 2 a sales 
limit for heavy-haul as we have for the vocational tractors in Phase 1, 
the agencies also believed it would be appropriate to further define 
the heavy-haul vehicle characteristics to differentiate these vehicles 
from the vehicles in the other nine tractor subcategories. The two 
additional requirements in the Phase 2 proposal included a total gear 
reduction greater than or equal to 57:1 and a frame Resisting Bending 
Moment (RBM) greater than or equal to 2,000,000 in-lbs per rail or rail 
and liner combination. Heavy-haul tractors typically require the large 
gear reduction to provide the torque necessary to start the vehicle 
moving. These vehicles also typically require frame rails with extra 
strength to ensure the ability to haul heavy loads. We requested 
comment on the proposed heavy-haul tractor specifications, including 
whether Gross Vehicle Weight Rating (GVWR) or Gross Axle Weight Rating 
(GAWR) would be a more appropriate metric to differentiate between a 
heavy-haul tractor and a typical tractor.
    We received comments from several manufacturers about the proposed 
heavy-haul subcategory. None of the commenters were averse to creating 
such a subcategory, and many manufacturers directly supported such an 
action. Navistar supported creating a new heavy-haul subcategory 
maintaining that this type of vehicle is specified uniquely and is not 
designed for standard trailers. Volvo supported this addition since 
heavy-haul tractors require large engines and increased cooling 
capacity and most heavy-haul rigs have some requirement for off-road 
access to pick up machinery, bulk goods, and unusual loads.
    We received comments from several manufacturers about the criteria 
proposed to define the heavy-haul tractor subcategory. Allison 
commented that for heavy-haul tractors equipped with an automatic 
transmission, the gear reduction ratio should be greater than or equal 
to 24.9:1 because an automatic transmission with a torque converter 
provides a torque multiplying effect and better launch capability. EMA 
and other manufacturers commented that the proposed specifications for 
heavy-haul tractors do not allow the relevant vehicles to meet the 
proposed total gear reduction ratio of 57:1 or greater. EMA commented 
that the Allison 7-speed 4700 transmission and the Eaton 9LL products 
both are specifically designed for heavy-haul operations, could meet a 
53:1 specification, but not a 57:1 ratio. PACCAR also commented that an 
automatic transmission torque converter ratio should be included in the 
Total Reduction ratio calculation to properly incorporate the slip and 
first gear ratio combination that is inherent in an automatic 
transmission. EMA, PACCAR, and Volvo recommended that the agencies 
should change the rear axle ratio for the baseline vehicle to attain 
the 53:1 total reduction ratio because the proposed baseline heavy-haul 
vehicle did not meet the proposed total reduction ratio. Daimler 
commented that the agencies should remove both the frame resistance 
bending moment requirement and the gear reduction requirement.
    EMA and some of the manufacturers commented that the agencies 
should revise the definition of heavy-haul tractor to be ``equal to or 
greater than 120,000 pounds GCWR'' rather than ``greater than 120,000 
pounds GCWR.'' They stated that the specifications for the heavy-haul 
market start with and include 120,000 pounds GCWR. Daimler suggested 
that the minimum GCWR be set at 105,000 pounds to better catch the 
large number of Canadian vehicles that are heavy-haul. Daimler stated 
that this broader weight definition catches a very small number of US 
vehicles (0.1 to 0.9 percent of the vehicles, depending on other 
factors) but catches the large number of Canadian vehicles that Daimler 
considers to be heavy-haul.
    Volvo commented that there are multiple types of heavy-haul 
tractors, each with their own specific characteristics based on 
operational considerations: High-roof highway sleeper tractors pulling 
box vans at or above 120,000 pounds GCWR (e.g. long combination 
vehicles) that run regional and long-haul operations and can benefit 
from the same technologies as high-roof sleepers with 80,000 pound GCWR 
and should be credited for the higher payload; low- and mid-roof 
sleepers that primarily run long-haul routes (e.g. pulling low-boy 
trailers and

[[Page 73582]]

heavy equipment); low-roof day cab tractors running regional and 
shorter routes (e.g. bulk haul); and then what the industry typically 
refers to as heavy-haul that are extremely high GCWR and can haul above 
300 metric tons and sometimes run in multiple tractor configurations 
that provide for one or more tractor(s) pulling and one or more 
tractor(s) pushing.
    In part to follow up on the comments made by manufacturers, EPA 
held discussions with Environment and Climate Change Canada (ECCC) 
after the NPRM was released regarding the Special Purpose tractors and 
heavy-haul tractors.\220\ In our discussions, ECCC emphasized that the 
highway weight limitations in Canada are much greater than those in the 
U.S. Where the U.S. federal highways have limits of 80,000 pounds GCW, 
Canadian provinces have weight limits up to 140,000 pounds. This 
difference could potentially limit emission reductions that could be 
achieved if ECCC were to fully harmonize with the U.S.'s HD Phase 2 
standards because a significant portion of the tractors sold in Canada 
have GCWR greater than 120,000 pounds, the proposed limit for heavy-
haul tractors.
---------------------------------------------------------------------------

    \220\ Memo to Docket. Heavy Class 8 Discussion with Environment 
and Climate Change Canada. July 2016. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    For the FRM, EPA and NHTSA are revising the heavy-haul tractor 
provisions to balance the certainty that vehicles are regulated in an 
appropriate subcategory along with the potential to better harmonize 
the U.S. and Canadian regulations. Based on our assessment, the 
tractors with GCWR greater than or equal to 120,000 pounds truly 
represent heavy-haul applications in the U.S. Therefore, we are 
adopting criteria only based on GCWR, not the proposed RBM or total 
gear reduction ratios. The agencies are adopting Phase 2 heavy-haul 
standards for this subset of vehicles, similar to the standards 
proposed for Phase 2 and detailed below in Section III.D.1.
    In Canada, due to their differences in weight and dimension 
requirements, it is primarily tractors with a GCWR of equal to or 
greater than 140,000 pounds that are truly heavy-haul vehicles. This 
leaves a set of tractors sold in Canada with a GCWR between 120,000 and 
140,000 pounds that are used in ways that are similar to the way 
tractors with a GCWR less than 120,000 pounds (the typical Class 8 
tractor) are used in the U.S. These tractors sold in Canada could 
benefit from the deployment of additional GHG-reducing technologies 
beyond what is being required for heavy-haul tractors in the U.S., such 
as aerodynamic and idle reduction improvements. Most manufacturers tend 
to rely on U.S. certificates as their evidence of conformity for 
products sold into Canada to reduce compliance burden. Therefore, in 
Phase 2 the agencies are adopting provisions that allow the 
manufacturers the option to meet standards that reflect the appropriate 
technology improvements, along with the powertrain requirements that go 
along with higher GCWR. While these heavy Class 8 tractor standards 
will be optional for tractors sold into the U.S. market, we expect that 
Canada will consider adopting these as mandatory requirements as part 
of their regulatory development and consultation process. Given the 
unique circumstances in the Canadian fleet, we believe that there is a 
reasonable basis for considering such an approach for Canadian 
tractors. As such, the agencies have coordinated these requirements 
with ECCC. The agencies are only adopting optional heavy Class 8 
standards for MY 2021 at this time. The expectation is that ECCC will 
develop their own heavy-duty GHG regulations to harmonize with this 
Phase 2 rulemaking through its own domestic regulatory process. We 
expect that ECCC will include a mandate that heavy Class 8 tractors be 
certified to the MY 2021 heavy Class 8 tractor standards, but could 
also specify more stringent standards for later years for these 
vehicles. We plan to coordinate with ECCC to incorporate any needed 
future changes in a timely manner. Details of these optional standards 
are included in Section III.D.1.
(b) Special Purpose Tractors
    During the development of Phase 1, the agencies received comments 
from several stakeholders supporting an approach for an alternative 
treatment of a subset of tractors because they were designed to operate 
at lower speeds, in stop and go traffic, and sometimes operate off-road 
or at higher weights than the typical line-haul tractor. These types of 
applications have limited potential for improvements in aerodynamic 
performance to reduce CO2 emissions and fuel consumption. 
Therefore, we adopted provisions to allow these special purpose 
tractors to certify as vocational vehicles (or vocational tractors). 
Consistent with our approach in Phase 1, the agencies still believe 
that these vocational tractors are operated differently than line-haul 
tractors and therefore fit more appropriately into the vocational 
vehicle category. However, we need to continue to ensure that only 
tractors that are truly vocational tractors are classified as 
such.\221\ As adopted in Phase 1, a Phase 2 vehicle determined by the 
manufacturer to be a HHD vocational tractor will fall into one of the 
HHD vocational vehicle subcategories and be regulated as a vocational 
vehicle. Similarly, MHD tractors which the manufacturer chooses to 
reclassify as vocational tractors will be regulated as MHD vocational 
vehicles. Specifically, the agencies adopted in Phase 1 provisions in 
EPA's 40 CFR 1037.630 and NHTSA's regulation at 49 CFR 523.2 to only 
allow the following three types of vocational tractors to be eligible 
for reclassification by the manufacturer: Low-roof tractors intended 
for intra-city pickup and delivery, such as those that deliver bottled 
beverages to retail stores; tractors intended for off-road operation 
(including mixed service operation), such as those with reinforced 
frames and increased ground clearance; and tractors with a GCWR over 
120,000 pounds.\222\
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    \221\ As a part of the end of the year compliance process, EPA 
and NHTSA verify manufacturer's production reports to avoid any 
abuse of the vocational tractor allowance.
    \222\ See existing 40 CFR 1037.630 (a)(1)(i) through (iii).
---------------------------------------------------------------------------

    In the Phase 2 proposal, the agencies proposed to remove the third 
type of vocational tractors, heavy-haul tractors with a GCWR over 
120,000 pounds, from the Phase 2 Special Purpose Tractor category and 
set unique standard for heavy-haul tractors. 80 FR 40214. The agencies 
requested comment on the Special Purpose Tractor criteria and received 
comments from the manufacturers. EMA and PACCAR commented there is a 
group of special purpose tractors with a gross combination weight 
rating over 120,000 pounds that fall in between the proposed regulatory 
categories for heavy-haul tractors and Class 8 tractors that need to be 
accounted for in a separate and distinct manner. They stated that such 
vehicles are still appropriately categorized as Special Purpose 
Tractors and should be included at the manufacturer's option in the 
vocational tractor family, even though they may not meet the proposed 
total gear reduction requirement or the frame rail requirements. PACCAR 
and Volvo also requested a modification to the definition to include 
``equal to 120,000 GCWR.''
    Volvo provided a list of recommended Special Purpose Tractor 
criteria. Volvo stated that these characteristics differentiate these 
vehicles from line haul operation, especially in terms of fuel economy 
as well as the significant added costs for these features. Volvo's

[[Page 73583]]

recommended criteria included GCWR greater than 120,000 pounds or any 
three of the following vehicles specifications: Configuration other 
than 4x2, 6x2, or 6x4; greater than 14,600 pounds front axle load 
rating; greater than 46,000 pounds rear axle load rating; greater than 
or equal to 3.00:1 overall axle reduction in transmission high range; 
greater than 57.00:1 overall axle reduction in transmission low range; 
frame rails with a resistance bending moment greater than or equal to 
2,000,000 in-lbs., greater than or equal to 20 degree approach angle; 
or greater than or equal to 14 inch ground clearance.
    The heavy-haul tractor standards that the agencies are adopting in 
Phase 2 apply to tractors with a GCWR greater than or equal to 120,000 
pounds. As stated above, the agencies are adopting heavy-haul tractor 
criteria based only on GCWR, and are not adopting the proposed criteria 
of RBM or total gear reduction. With these Phase 2 changes to the 
proposed heavy-haul tractor definition, all tractors that would have 
been considered as Special Purpose Tractors in Phase 1 due to the GCWR 
criteria listed in EPA's 40 CFR 1037.630 and NHTSA's regulation at 49 
CFR 523.2 will now qualify as heavy-haul tractors in Phase 2. 
Therefore, we no longer believe that it is necessary for heavy-haul 
tractors to be treated as Special Purpose Tractors. The agencies also 
reviewed Volvo's suggested criteria and concluded that the Phase 1 
approach and Special Purpose Tractor criteria are working well; 
therefore, we do not see the need to adopt more restrictive criteria. 
Consequently, the agencies are adopting in Phase 2 provisions in EPA's 
40 CFR 1037.630 and NHTSA's regulation at 49 CFR 523.2 to only allow 
the following two types of vocational tractors to be eligible for 
reclassification to Special Purpose Tractors by the manufacturer:
    (1) Low-roof tractors intended for intra-city pickup and delivery, 
such as those that deliver bottled beverages to retail stores.
    (2) Tractors intended for off-road operation (including mixed 
service operation), such as those with reinforced frames and increased 
ground clearance.
    These provisions apply only for purposes of Phase 2. The agencies 
are not amending the Phase 1 provisions for special purposes tractors.
    Volvo also requested that the agencies add a Vocational Heavy-Haul 
Tractor subcategory that allows for a heavy-haul tractor which benefits 
from the utilization of a powertrain optimized to meet the vocational 
operational requirements of this segment, a technology package 
corresponding to those operational characteristics, and with a 
corresponding duty cycle and, most importantly, a payload 
representative of heavy-haul operation. The agencies considered this 
request and analyzed the expected technology package differences 
between the vocational and tractor program. As described in Section 
III.D.1, the agencies are only adopting technologies in the heavy-haul 
tractor category that would be applicable to the operation of these 
vehicles. For example, we are not adopting standards that are premised 
on any improvements to aerodynamics or extended idle reduction. 
Therefore, we concluded that there is no need to develop another 
vocational subcategory to account for heavy-haul tractors.
    Because the difference between some vocational tractors and line-
haul tractors is potentially somewhat subjective, and because of 
concerns about relative stringency, we also adopted in Phase 1 and 
proposed to continue in Phase 2 a rolling three year sales limit of 
21,000 vocational tractors per manufacturer consistent with past 
production volumes of such vehicles to limit the use of this provision. 
We proposed in Phase 2 to carry-over the existing three year sales 
limit with the recognition that heavy-haul tractors would no longer be 
permitted to be treated as vocational vehicles (suggesting a lower 
volume cap could be appropriate) but that the heavy-duty market has 
improved since the development of the HD Phase 1 rule (suggesting the 
need for a higher sales cap). The agencies requested comment on whether 
the proposed sales volume limit is set at an appropriate level looking 
into the future. 80 FR 40214.
    Several of the manufacturers commented that it would be reasonable 
to remove the sales cap limit. Allison stated that this limitation may 
have been reasonable in the initial years of the program as a 
precaution against unreasonably assigning too many tractors to the 
vocational vehicle category. However in Phase 2, Allison recommended 
that the agencies should remove the cap for three reasons: (1) Vehicle 
configurations change over time; (2) the Phase 2 vocational program 
drives technology improvements of powertrains; and (3) Phase 2 better 
represents the diversity of vocational vehicle uses that would allow 
for better alignment of vehicles with duty cycles that most represent 
their real world operation. Daimler stated that they think that with 
the addition of heavy-haul tractor standards, there will be less need 
for a sales volume limit on special purpose tractors. In Volvo Group's 
opinion, the proposed volume limit is overly constraining and 
burdensome and should be removed. Volvo stated that given the recent 
product lineup overhauls across the industry they do not believe that 
there are many models still on the market that are sold in large 
numbers into both highway tractor and vocational tractor segments, nor 
is there sufficient reason that any OEM cannot identify specific 
vehicle attributes in order to classify a tractor as suitable solely 
for highway use, or for on/off-road use. Volvo Group suggested that the 
agencies remove the vocational tractor volume restrictions and employ a 
guideline based on specific vehicle characteristics.
    The agencies evaluated the sales cap limit proposed for special 
purpose tractors and the comments addressing the issue of a sales cap. 
EPA calculated the number of vocational tractors certified in MY 2014 
and MY 2015. The number of tractors ranged between approximately 2,600 
and 6,200 per year per manufacturer that certified special purpose 
tractors, but one manufacturer did not use this provision at all.\223\ 
It is apparent that none of the manufacturers are utilizing this 
provision near the maximum allowable level in Phase 1 (a rolling three 
year sales limit of 21,000). We also believe that there is more 
incentive for manufacturers to use the special purpose tractor 
provisions in Phase 1 because the relative difference in stringency 
between the tractor and vocational programs is much greater in Phase 1 
than it will be in Phase 2. Upon further consideration, we concluded 
that there is significantly less incentive for the manufacturers to 
reclassify tractors that are not truly special purpose tractors as 
vocational vehicles as a pathway to a less stringent standard in Phase 
2 primarily since the Phase 2 vocational vehicle program stringency is 
similar to the stringency of the tractor program. In addition, the 
Phase 2 vocational vehicle compliance program and standards better 
represent the duty cycles expected of these vehicles and are predicated 
on performance of similar sets of vehicle technologies, except for 
aerodynamic technologies, as the primary tractor program. Therefore, we 
are adopting Phase 2 special purpose tractor provisions without a sales 
cap, but will continue to monitor during the Phase 2 implementation.
---------------------------------------------------------------------------

    \223\ U.S. EPA. Memo to Docket: Special Purpose Tractor 
Production Volumes. Docket EPA-HQ-OAR-2014-0827.

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

[[Page 73584]]

(5) Small Tractor Manufacturer Provisions
    In Phase 1, EPA determined that manufacturers that met the small 
business criteria specified in 13 CFR 121.201 for ``Heavy Duty Truck 
Manufacturing'' should not be subject to the initial phase of 
greenhouse gas emissions standards in 40 CFR 1037.106.\224\ The 
regulations required that qualifying manufacturers notify the 
Designated Compliance Officer each model year before introducing the 
exempted vehicles into commerce. The manufacturers are also required to 
label the vehicles to identify them as excluded vehicles. EPA and NHTSA 
proposed to eliminate this small business provision for tractor 
manufacturers in the Phase 2 program. As stated in the NPRM, the 
agencies are aware of two second stage manufacturers building custom 
sleeper cab tractors. In the proposal we stated that we could treat 
these vehicles in one of two ways. First, the vehicles may be 
considered as dromedary vehicles and therefore treated as vocational 
vehicles.\225\ Or the agencies could provide provisions that stated if 
a manufacturer changed the cab, but not the frontal area of the 
vehicle, then it could retain the aerodynamic bin of the original 
tractor. 80 FR 40214.
---------------------------------------------------------------------------

    \224\ See 40 CFR 1037.150(c).
    \225\ A dromedary is a box, deck, or plate mounted behind the 
tractor cab and forward of the fifth wheel on the frame of the power 
unit of a tractor-trailer combination to carry freight.
---------------------------------------------------------------------------

    The agencies received comments on the second stage manufacturer 
options for small manufacturers discussed in the proposal. American 
Reliance Industries (ARI) raised concerns related to the proposed 
alternative methods for excluding or exempting second stage 
manufacturers performing cab sleeper modifications. ARI is concerned 
that treating these vehicles as vocational vehicles may mean that other 
regulations related to vocational vehicles would become applicable and 
have unanticipated adverse results and that the vehicles would not be 
certified as vocational vehicles when originally certified by an OEM. 
ARI commented that if EPA and NHTSA adopt a frontal area approach for 
second stage manufacturers making cab sleeper modifications, that the 
section be revised to ensure greater clarity as to the intention and 
effect of this section. In building a custom sleeper cab, ARI stated 
that they may use wind fairings, fuel tank fairings, roof fairings, and 
side extenders that can modify the frontal area of the tractor in 
height and width as compared to the frontal area of the vehicle used to 
obtain the original certification. ARI also commented that depending on 
the custom cab sleeper modification, ARI may replace an aerodynamic 
fairing from the tractor in order to provide better aerodynamic results 
in light of the cab sleeper modification. ARI does not want to be 
precluded from continuing to provide these benefits to clients. ARI 
encourages the agencies to take a similar approach to small business 
exemption under the Phase 1 regulation in the Phase 2 regulation.
    Daimler commented on the agencies' two proposed approaches for 
second stage manufacturers that build custom sleepers. Daimler's main 
concern is to clarify that where the primary manufacturer has certified 
a vehicle as a day cab, the second stage manufacturer's actions do not 
draw the primary manufacturer into noncompliance. Daimler stated that 
in many cases, they do not know that a vehicle will be altered by a 
second stage manufacturer. Daimler did not have a preference on the way 
that the agencies proposed to regulate these secondary vehicle 
manufacturers, as long as the primary vehicle manufacturers could 
continue to sell vehicles with the expectation that anyone changing 
them from the compliant state in which it was built would certify those 
changes.
    In response to these comments, EPA is clarifying in 40 CFR 1037.622 
that small businesses may modify tractors as long as they do not modify 
the front of the vehicle and so long as the sleeper compartment is no 
more than 102 inches wide or 162 inches in height. As an interim 
provision, to allow for a better transition to Phase 2, EPA is 
finalizing a more flexible compliance path in 40 CFR 1037.150(r). This 
option allows small manufacturers to convert a low or mid roof tractor 
to a high roof configuration without recertification, provided it is 
for the purpose of building a custom sleeper tractor or for conversion 
to a natural gas tractor. Although this more flexible allowance to 
convert low and mid roof tractors to high roof tractors is being 
adopted as an interim provision, we have not established an end date at 
this time. We expect to reevaluate as manufacturers begin to make use 
of and may decide to revise it in the future, potentially deciding to 
make it a permanent allowance. To be eligible for this option, the 
secondary manufacturer must be a small manufacturer and the original 
low or mid roof tractor must be covered by a valid certificate of 
conformity. The modifications may not increase the frontal area of the 
tractor beyond the frontal area of the equivalent high roof tractor 
paired with a standard box van. With respect to Daimler's comment, 40 
CFR 1037.130 only applies to vehicles sold in an uncertified condition 
and does not apply to vehicles sold in a certified condition.
(6) Glider Vehicles
    As described in Section XIII.B, EPA is adopting new provisions 
related to glider vehicles, including glider tractors.\226\ NHTSA did 
not propose such changes. Glider vehicles and glider kits were also 
treated differently under NHTSA and EPA regulations prior to this 
rulemaking. They are exempt from NHTSA's Phase 1 fuel consumption 
standards. For EPA purposes, the CO2 provisions of Phase 1 
exempted glider vehicles and glider kits produced by small businesses 
but did not include such a blanket exemption for other glider kits. 
Thus, some gliders and glider kits are already subject to the Phase 1 
requirement to obtain a vehicle certificate prior to introduction into 
commerce as a new vehicle. 80 FR 40528.
---------------------------------------------------------------------------

    \226\ See section I.E. 1 for descriptions of glider vehicles and 
glider kits.
---------------------------------------------------------------------------

    In the NPRM, EPA proposed to revise the provisions applicable to 
glider vehicles so that the engines used in these vehicles would need 
to meet the standards for the year of the new glider vehicle. EPA's 
resolution of issues relating to glider vehicles, including glider 
tractors, and glider kits, is discussed fully in Section XIII.B and RTC 
Section 14.2.
    Similarly, NHTSA considered including glider vehicles under its 
Phase 2 program. After assessing the impact glider vehicles have on the 
tractor segment, NHTSA has elected not to include glider vehicles in 
its Phase 2 program. NHTSA may reconsider fuel efficiency regulations 
for glider vehicles in a future rulemaking.
    As discussed in the NPRM, NHTSA would like to reiterate its safety 
authority over gliders--notably, that it has become increasingly aware 
of potential noncompliance with its regulations applicable to gliders. 
While there are instances in which NHTSA regulations allow gliders to 
use a ``donor VIN'' from a ``donor tractor,'' NHTSA has learned of 
manufacturers that are creating glider vehicles that are new vehicles 
under 49 CFR 571.7(e); however, the manufacturers are not certifying 
them and obtaining a new VIN as required. NHTSA plans to pursue 
enforcement actions as applicable against noncompliant manufacturers. 
In addition to enforcement actions, NHTSA may

[[Page 73585]]

consider amending 49 CFR 571.7(e) and related regulations as necessary. 
NHTSA believes manufacturers may not be using this regulation as 
originally intended.
    We believe that the agencies having different policies for glider 
kits and glider vehicles under the Phase 2 program will not result in 
problematic disharmony between the NHTSA and EPA programs, because of 
the small number of vehicles that will be involved. EPA believes that 
its changes will result in the glider market returning to the pre-2007 
levels, in which fewer than 1,000 glider vehicles will be produced in 
most years. Only non-exempt glider vehicles will be subject to 
different requirements under the NHTSA and EPA regulations. However, we 
believe that this is unlikely to exceed a few hundred vehicles in any 
year, which will be few enough not to result in any meaningful 
disharmony between the two agencies.
(7) Useful Life and Deterioration Factors
    Section 202(a)(1) of the CAA specifies that EPA is to adopt 
emissions standards that are applicable for the useful life of the 
vehicle. The in-use Phase 2 standards that EPA is adopting will apply 
to individual vehicles and engines, just as EPA adopted for Phase 1. 
NHTSA is also adopting the same useful life mileage and years as EPA 
for Phase 2.
    EPA is also not adopting any changes to the existing provisions 
that require that the useful life for tractors with respect to 
CO2 emissions be equal to the respective useful life periods 
for criteria pollutants, as shown below in Table III-5. See 40 CFR 
1037.106(e). EPA does not expect degradation of the technologies 
evaluated for Phase 2 in terms of CO2 emissions, therefore 
we did not adopt any changes to the regulations describing compliance 
with GHG pollutants with regards to deterioration. See 40 CFR 1037.241.

                Table III-5--Tractor Useful Life Periods
------------------------------------------------------------------------
                                                        Years     Miles
------------------------------------------------------------------------
Class 7 Tractors....................................        10   185,000
Class 8 Tractors....................................        10   435,000
------------------------------------------------------------------------

D. Feasibility of the Final Phase 2 Tractor Standards

    This section describes the agencies' technical feasibility and cost 
analysis. Further detail on all of these technologies can be found in 
the RIA Chapter 2.
    Class 7 and 8 tractors are used in combination with trailers to 
transport freight. The variation in the design of these tractors and 
their typical uses drive different technology solutions for each 
regulatory subcategory. As noted above, the agencies are continuing the 
Phase 1 provisions that treat vocational tractors as vocational 
vehicles instead of as combination tractors, as noted in Section 
III.C.4. The focus of this section is on the feasibility of final 
standards for combination tractors including the heavy-haul tractors, 
but not the vocational tractors.
    EPA and NHTSA collected information on the cost and effectiveness 
of fuel consumption and CO2 emission reducing technologies 
from several sources, including new information collected since the 
NPRM was promulgated. The primary sources of pre-proposal information 
were the Southwest Research Institute evaluation of heavy-duty vehicle 
fuel efficiency and costs for NHTSA,\227\ the Department of Energy's 
SuperTruck Program,\228\ 2010 National Academy of Sciences report of 
Technologies and Approaches to Reducing the Fuel Consumption of Medium- 
and Heavy-Duty Vehicles,\229\ TIAX's assessment of technologies to 
support the NAS panel report,\230\ the analysis conducted by the 
Northeast States Center for a Clean Air Future, International Council 
on Clean Transportation, Southwest Research Institute and TIAX for 
reducing fuel consumption of heavy-duty long haul combination tractors 
(the NESCCAF/ICCT study),\231\ and the technology cost analysis 
conducted by ICF for EPA.\232\ Some additional information and data 
were also provided in comments.
---------------------------------------------------------------------------

    \227\ Reinhart, T.E. (June 2015). Commercial Medium- and Heavy-
Duty Truck Fuel Efficiency Technology Study--Report #1. (Report No. 
DOT HS 812 146). Washington, DC: National Highway Traffic Safety 
Administration.
    \228\ U.S. Department of Energy. SuperTruck Initiative. 
Information available at http://energy.gov/eere/vehicles/vehicle-technologies-office.
    \229\ Committee to Assess Fuel Economy Technologies for Medium- 
and Heavy-Duty Vehicles; National Research Council; Transportation 
Research Board (2010). Technologies and Approaches to Reducing the 
Fuel Consumption of Medium- and Heavy-Duty Vehicles. (``The 2010 NAS 
Report'') Washington, DC, The National Academies Press.
    \230\ TIAX, LLC. ``Assessment of Fuel Economy Technologies for 
Medium- and Heavy-Duty Vehicles,'' Final Report to National Academy 
of Sciences, November 19, 2009.
    \231\ NESCCAF, ICCT, Southwest Research Institute, and TIAX. 
Reducing Heavy-Duty Long Haul Combination Truck Fuel Consumption and 
CO2 Emissions. October 2009.
    \232\ ICF International. ``Investigation of Costs for Strategies 
to Reduce Greenhouse Gas Emissions for Heavy-Duty On-Road 
Vehicles.'' July 2010. Docket Number EPA-HQ-OAR-2010-0162-0283.
---------------------------------------------------------------------------

    Commenters generally supported the agencies' projection that 
manufacturers can reduce CO2 emissions and fuel consumption 
of combination tractors through use of many technologies, including 
engine, drivetrain, aerodynamic, tire, extended idle, and weight 
reduction technologies. The agencies' determination of the feasibility 
of the final HD Phase 2 standards is based on our updated projection of 
the use of these technologies and an updated assessment of their 
effectiveness. We will also discuss other technologies that could 
potentially be used, such as vehicle speed limiters, although we are 
not basing the final standards on their use for the model years covered 
by this rule, for various reasons discussed below.
(1) Projected Technology Effectiveness and Cost
    EPA and NHTSA project that CO2 emissions and fuel 
consumption reductions can be feasibly and cost-effectively met through 
technological improvements in several areas. The agencies evaluated 
each technology and estimated the most appropriate adoption rate of 
technology into each tractor subcategory. The next sections describe 
the baseline vehicle configuration, the effectiveness of the individual 
technologies, the costs of the technologies, the projected adoption 
rates of the technologies into the regulatory subcategories, and 
finally the derivation of these standards.
    Based on information available at the time of the NPRM, the 
agencies proposed Phase 2 standards that projected by 2027, all high-
roof tractors would have aerodynamic performance equal to or better 
today's SmartWay performance--which represents the best of today's 
technology. This would equate to having 40 percent of new high roof 
sleeper cabs in 2027 complying with the current best practices and 60 
percent of the new high-roof sleeper cab tractors sold in 2027 having 
better aerodynamic performance than the best tractors available today. 
For tire rolling resistance, we premised the proposed standards on the 
assumption that nearly all tires in 2027 would have rolling resistance 
equal to or superior to tires meeting today's SmartWay designation. At 
proposal, the agencies assumed the 2027 MY engines would achieve an 
additional 4 percent improvement over Phase 1 engines and we projected 
15 percent adoption of waste heat recovery (WHR) and many other 
advanced engine technologies. In addition, we proposed standards that 
projected improvements to nearly all of today's transmissions, 
incorporation of extended idle reduction technologies on 90 percent of 
sleeper cabs, and significant adoption of

[[Page 73586]]

other types of technologies such as predictive cruise control and 
automatic tire inflation systems.
    The agencies also discussed several other alternatives in the 
proposal. When considering alternatives, it is necessary to evaluate 
the impact of a regulation in terms of CO2 emission 
reductions, fuel consumption reductions, and technology costs. However, 
it is also necessary to consider other aspects, such as manufacturers' 
research and development resources, the impact on purchase price, and 
the impact on purchasers. Manufacturers are limited in their ability to 
develop and implement new technologies due to their human resources and 
budget constraints. This has a direct impact on the amount of lead time 
that is required to meet any new standards. From the owner/operator 
perspective, heavy-duty vehicles are a capital investment for firms and 
individuals so large increases in the upfront cost could impact buying 
patterns. Though the dollar value of the lifetime fuel savings will far 
exceed the upfront technology costs, purchasers often discount future 
fuel savings for a number of reasons, as discussed in more detail in 
Section IX.A. Tractor purchasers are often uncertain regarding the 
amount of fuel savings that can be expected for their specific 
operation due to the diversity of the heavy-duty tractor market. 
Although a nationwide perspective that averages out this uncertainty is 
appropriate for rulemaking analysis, individual operators must consider 
their potentially narrow operation. In addition, purchasers often put a 
premium on reliability (because downtime is costly in terms of towing, 
repair, late deliveries, and lost revenue) and may perceive any new 
technology as a potential risk with respect to reliability. Another 
factor that purchasers consider is the impact of a new technology on 
the resale market, which can also be impacted by uncertainty.
    The agencies solicited comment on all of these issues and again 
noted the possibility of adopting, in a final action, standards that 
are more accelerated than those in Alternative 3, notably what we 
termed at proposal, Alternative 4 which would have involved a three 
year pull ahead of the proposed 2027 standards. 80 FR 40211. The 
agencies also assumed in the NPRM that both the proposed standards and 
Alternative 4 could be accomplished with all changes being made during 
manufacturers' normal product design cycles. However, we noted that 
doing so would be more challenging for Alternative 4 and may require 
accelerated research and development outside of design cycles with 
attendant increased costs. Commenters were encouraged in the NPRM to 
address all aspects of feasibility analysis, including costs, the 
likelihood of developing the technology to achieve sufficient 
relaibility within the lead time, and the extent to which the market 
could utilize the technology.
    The agencies received several general comments on the overall 
stringency of the proposed Phase 2 standards. Several entities 
encouraged the agencies to adopt more stringent tractor standards, 
including adoption of Alternative 4. They pointed out that DOE's 
SuperTruck program demonstrated over 40 percent improvement over 2010 
levels, including 10.7 mpg by Cummins-Peterbuilt and 12.2 mpg by 
Daimler. CBD stated that the technology forcing nature of Clean Air Act 
section 202(a)(2) \233\ and EPCA/EISA requires more aggressive 
assumptions regarding technology adoption. UCS commented that the 
tractor standards could be strengthened by another six percent in 2024 
and seven percent in 2027 to reflect the full range of improvements to 
the powertrain and engine. ICCT stated that its analysis indicates that 
the technology potential is higher and costs are lower than the 
agencies' assessments in the NPRM. CARB stated that Alternative 4 is 
technologically feasible and will result in more emission and fuel 
consumption reductions. CARB continued to state that the increased cost 
due to accelerated implementation is minimal, about $1,000 per vehicle 
purportedly according to the NPRM.
---------------------------------------------------------------------------

    \233\ CBD is mistaken that section 202(a)(2) mandates 
technology-forcing standards, although it allows them. See generally 
74 FR 49464-465 (Sept. 28, 2009).
---------------------------------------------------------------------------

    In contrast to the commenters that called for more stringent 
standards than those proposed, several other commenters cautioned the 
agencies from adopting final standards that are more stringent than 
those proposed. Diesel Technology Forum commented that the agencies 
should proceed with caution on technologies that are not in wide use 
that have not demonstrated reliability or commercial availability. The 
International Foodservice Distributors Association is concerned about 
Alternative 4 in terms of reliability, commenting that it would require 
their members to purchase unproven and unreliable equipment in order 
for OEMs to meet the requirements. OOIDA commented if owners fear a 
reduction in reliability, increased operating costs, reduced residual 
value, or large increases in purchase prices, they will adjust their 
purchase plans.
    PACCAR commented about the importance of lead time because their 
customers need time to determine if a technology meets their specific 
needs in their specific application and need assurance that a 
technology will be reliable in use. PACCAR also stated that the timing 
provided in the NPRM Alternative 3 provides the ``greatest likelihood 
for a successful program.'' Volvo commented that SuperTruck 
demonstration vehicles serve only the purpose of demonstration but are 
not proven with respect to cost, reliability, and durability. Volvo 
stated that the purpose of SuperTruck was narrow in applicability of 
matched tractor-trailers and that it did not result in a cost effective 
tractor because each project cost between $40 and $80 million to 
produce a single vehicle. Volvo also commented that not all SuperTruck 
technologies should be forced into all applications and duty cycles and 
if they are a pre-buy (or no-buy) could result.
    The agencies considered all of the general comments associated with 
the proposed Alternative 3 and Alternative 4 tractor standards. We 
believe there is merit in many of the detailed comments received 
regarding technologies. These are discussed in detail in the following 
sections. Instead of merely choosing from among the proposed 
alternatives, the agencies have developed a set of final tractor 
standards that reflect our reevaluation of the ability to pull ahead 
certain technologies, the limitations in adoption rates and/or 
effectiveness of other technologies, and consideration of additional 
technologies. In general, the final Phase 2 tractor standards are 
similar in overall stringency as the levels proposed in Alternative 3, 
but have been determined using new technology packages that reflect 
consideration of all of the technology comments, and in some respects 
reflect greater stringency than the proposed Alternative 3.
    As can be seen from the comments, there is uncertainty and a wide 
range of opinions regarding the extent to which these technologies can 
be applied to heavy-duty tractors. Vehicle manufacturers tended to take 
the conservative position for each technology and argue that the 
agencies should not project effectiveness or adoption rates beyond that 
which is certain. Many other commenters took a more optimistic view and 
argued for the agencies to assume that each potential technology will 
be highly effective in most applications. However the agencies believe 
the most likely outcome will be that some technologies

[[Page 73587]]

will work out better than expected while others will be slightly more 
challenging than projected. Thus, the agencies have tended to make 
balanced projections for the various technologies, although some may be 
slightly optimistic while others are somewhat conservative. We believe 
the overall effect of this approach will be standards that achieve 
large reductions with minimal risks to the industry.
(a) Tractor Baselines for Costs and Effectiveness
    The fuel efficiency and CO2 emissions of combination 
tractors vary depending on the configuration of the tractor. Many 
aspects of the tractor impact its performance, including the engine, 
transmission, drive axle, aerodynamics, and rolling resistance. For 
each subcategory, the agencies selected a theoretical tractor to 
represent the average 2017 model year tractor that meets the Phase 1 
standards (see 76 FR 57212, September 15, 2011). These tractors are 
used as baselines from which to evaluate costs and effectiveness of 
additional technologies and standards.
    As noted earlier, the Phase 1 2017 model year tractor standards 
(based on Phase 1 GEM and test procedures) and the baseline 2017 model 
year tractor results (using Phase 2 GEM and test procedures) are not 
directly comparable. The same set of aerodynamic and tire rolling 
resistance technologies were used in both setting the Phase 1 standards 
and determining the baseline of the Phase 2 tractors. However, there 
are several aspects that differ. First, a new version of GEM was 
developed and validated to provide additional capabilities, including 
more refined modeling of transmissions and engines. Second, the 
determination of the HD Phase 2 CdA value takes into account 
a revised test procedure, a new standard reference trailer, and wind 
averaged drag as discussed below in Section III.E. In addition, the HD 
Phase 2 version of GEM includes road grade in the 55 mph and 65 mph 
highway cycles, as discussed below in Section III.E.
    The agencies used the same adoption rates of tire rolling 
resistance for the Phase 2 baseline as we used to set the Phase 1 2017 
MY standards. See 76 FR 57211. The tire rolling resistance level 
assumed to meet the 2017 MY Phase 1 standard high roof sleeper cab is 
considered to be a weighted average of 10 percent pre-Phase 1 baseline 
rolling resistance, 70 percent Level 1, and 20 percent Level 2. The 
tire rolling resistance to meet the 2017MY Phase 1 standards for the 
high roof day cab, low roof sleeper cab, and mid roof sleeper cab 
includes 30 percent pre-Phase 1 baseline level, 60 percent Level 1 and 
10 percent Level 2. Finally, the low and mid roof day cab 2017 MY 
standards were premised on a weighted average rolling resistance 
consisting of 40 percent baseline, 50 percent Level 1, and 10 percent 
Level 2. The agencies did not receive comments on the tire packages 
used to develop the Phase 2 baseline in the NPRM.
    The agencies sought comment on the baseline vehicle attributes 
described in the NPRM. The agencies received comments related to the 
baseline adoption rate of automatic engine shutdown systems (AESS) and 
the baseline aerodynamics assessment. In the proposal, the agencies 
noted that the manufacturers were not using tamper-proof AESS to comply 
with the Phase 1 standards so the agencies reverted back to the 
baseline APU adoption rate of 30 percent used in the Phase 1 baseline. 
EMA and TRALA commented that the agencies confused the use of an APU 
with the use of tamper-proof idle technologies in assessing the 
baseline for the proposed Phase 2 standards. They stated that a 30 
percent penetration rate of APUs is not the same as a 30 percent 
penetration rate of tamper-proof idle systems. ATA and Volvo also 
commented that the assumption that 30 percent of 2017 sleeper tractors 
will utilize the tamper-proof automatic engine shutdown is too high. 
EMA and PACCAR commented that virtually all tractors in the field have 
an automatic shutdown programmed in their engine; however, less than 
one percent of vehicles sold in recent years have tamper-proof AESS 
that are triggered in less than five minutes and cannot be reprogrammed 
for 1.259 million miles. In response to these comments, the agencies 
reassessed the baseline idle reduction adoption rates. The latest NACFE 
confidence report found that 9 percent of tractors had auxiliary power 
units and 96 percent of vehicles are equipped with adjustable automatic 
engine shutdown systems.\234\ Therefore, the agencies are projecting 
that 9 percent of sleeper cabs will contain an adjustable AESS and APU, 
while the other 87 percent will only have an adjustable AESS. 
Additional discussion on adjustable AESS is included in Section 
III.D.1.b.
---------------------------------------------------------------------------

    \234\ North American Council for Freight Efficiency. Confidence 
Report:Idle Reduction Solutions. 2014. Page 13.
---------------------------------------------------------------------------

    The Phase 2 baseline in the NPRM was determined based on the 
aerodynamic bin adoption rates used to determine the Phase 1 MY 2017 
tractor standards. Volvo, EMA, and other manufacturers also commented 
that the aerodynamic drag baseline for 2017 tractors included in the 
NPRM was too aerodynamically efficient. EMA commented that some of the 
best aerodynamic tractors available were tested by the agencies and 
then declared to be the baseline. According to the manufacturers, the 
average tractor--the true baseline--is a full bin worse than these best 
tractors. While the agencies agree with the commenters that it is 
important to develop an accurate baseline so that the appropriate 
aerodynamic technology package effectiveness and costs can be evaluated 
in determining the final Phase 2 standards, there appears to be some 
confusion regarding the NPRM baseline aerodynamic assessment. The Phase 
2 baseline in the NPRM was determined based on the aerodynamic bin 
adoption rates used to determine the Phase 1 MY 2017 tractor standards 
(see 76 FR 57211). The baseline was not determined by or declared to be 
the average results of the vehicles tested, as some commenters 
maintained. The vehicles that were tested prior to the NPRM were used 
to develop the proposed aerodynamic bin structure for Phase 2. In both 
the NPRM and this final rulemaking, we developed the Phase 2 bins such 
that there is an alignment between the Phase 1 and Phase 2 aerodynamic 
bins after taking into consideration the changes in aerodynamic test 
procedures and reference trailers required in Phase 2. The Phase 2 bins 
were developed so that tractors that performed as a Bin III in Phase 1 
would also perform as Bin III tractors in Phase 2. Additional details 
regarding how the agencies refined the aerodynamic bin values for Phase 
2 for the final rule can be found in Section III.E.2.a. The baseline 
aerodynamic value for the Phase 2 final rulemaking was determined in 
the same manner as the NPRM, using the adoption rates of the bins used 
to determine the Phase 1 standards, but reflect the final Phase 2 bin 
CdA values.
    In the NPRM, we used a transmission top gear ratio of 0.73 and 
drive axle ratio of 3.70 in the baseline 2017 MY tractor. UCS commented 
that the baseline axle ratio is too high. The agencies determined the 
rear axle ratio and final drive ratio in the baseline tractor based on 
axle market information shared by Meritor,\235\ one of the primary 
suppliers of heavy-duty axles, and confidential business information 
provided by Daimler. Our assessment of this information found that a 
rear axle ratio

[[Page 73588]]

of 3.70 and a top gear ratio of 0.73 (equivalent to a final drive ratio 
of 2.70) is a commonly spec'd tractor. Meritor's white paper on 
downspeeding stated that final drive ratios of less than 2.64 are 
considered to be ``downsped.'' \236\ The agencies recognize that there 
is a significant range in final drive ratios that will be utilized by 
tractors built in 2017 MY, we do not believe that the average (i.e., 
baseline) tractor in 2017 MY will downsped (i.e., have a final drive 
ratio of less than 2.64). Therefore, the agencies are maintaining the 
proposed top gear ratio and drive axle ratio for the assessment of the 
baseline tractor performance.
---------------------------------------------------------------------------

    \235\ NACFE. Confidence Report: Programmable Engine Parameters. 
February 2015. Page 23.
    \236\ Ostrander, Robert, et.al. (Meritor). Understanding the 
Effects of Engine Downspeeding on Drivetrain Components. 2014. Page 
2.
---------------------------------------------------------------------------

    The agencies are using the specific attributes of each tractor 
subcategory as are listed below in Table III-6 for the Phase 2 
baselines. Using these values, the agencies assessed the CO2 
emissions and fuel consumption performance of the baseline tractors 
using the Phase 2 GEM. The results of these simulations are shown below 
in Table III-7.

                                             Table III-6--GEM Inputs for the Baseline Class 7 and 8 Tractor
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Class 7                                                                      Class 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Day cab                                            Day cab                                          Sleeper cab
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Low roof          Mid roof        High roof         Low roof         Mid roof        High roof         Low roof         Mid roof        High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Engine
--------------------------------------------------------------------------------------------------------------------------------------------------------
  2017 MY 11L      2017 MY 11L      2017 MY 11L      2017 MY 15L      2017 MY 15L      2017 MY 15L      2017 MY 15L      2017 MY 15L      2017 MY 15L
   Engine 350     Engine 350 HP      Engine 350       Engine 455       Engine 455       Engine 455       Engine 455       Engine 455       Engine 455
           HP                                HP               HP               HP               HP               HP               HP               HP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Aerodynamics (CdA in m2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
         5.41             6.48             6.38             5.41             6.48             6.38             5.41             6.48             5.90
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Steer Tires (CRR in kg/metric ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
         6.99             6.99             6.87             6.99             6.99             6.87             6.87             6.87             6.54
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Drive Tires (CRR in kg/metric ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
         7.38             7.38             7.26             7.38             7.38             7.26             7.26             7.26             6.92
--------------------------------------------------------------------------------------------------------------------------------------------------------
                             Extended Idle Reduction--Adjustable AESS with no Idle Red Tech Adoption Rate @1% Effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
          N/A              N/A              N/A              N/A              N/A              N/A              87%              87%              87%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                Extended Idle Reduction--Adjustable AESS with Diesel APU Adoption Rate @3% Effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
          N/A              N/A              N/A              N/A              N/A              N/A               9%               9%               9%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Transmission = 10 Speed Manual Transmission
                                        Gear Ratios = 12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73
--------------------------------------------------------------------------------------------------------------------------------------------------------
         Drive Axle Configuration = 4 x 2           Drive Axle Configuration = 6 x 4
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Tire Revs/Mile = 512
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Drive Axle Ratio = 3.70
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                  Table III-7--Class 7 and 8 Tractor Baseline CO[ihel2] Emissions and Fuel Consumption
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Class 7                                           Class 8
                                                      --------------------------------------------------------------------------------------------------
                                                                   Day Cab                          Day Cab                        Sleeper Cab
                                                      --------------------------------------------------------------------------------------------------
                                                        Low roof   Mid roof  High roof   Low roof   Mid roof  High roof   Low roof   Mid roof  High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
CO[ihel2] (grams CO[ihel2]/ton-mile).................      119.1      127.2      129.7       91.3       96.6       98.2       84.0       90.2       87.8
Fuel Consumption (gal/1,000 ton-mile)................   11.69941   12.49509   12.74067    8.96857    9.48919    9.64637    8.25147    8.86051    8.62475
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The agencies also received comments related to the baseline heavy-
haul tractor parameters. Volvo did not agree that certain segments of 
the heavy-haul population are appropriately represented by the baseline 
in the NPRM. Volvo stated that these types of vehicles typically 
utilize an 18-speed transmission, since they require the very close 
gear ratios and nearly all heavy-haul tractors have deeper drive axle 
ratios than the agencies have assumed

[[Page 73589]]

(3.55). PACCAR commented the 14.4 first gear of the 18-speed 
transmission coupled with the 3.73 rear axle ratio is an example of a 
significant sales volume combination that meets their recommended 53:1 
Total Reduction ratio. Upon further consideration, the agencies find 
the suggestion that the baseline heavy-haul tractor is better 
represented by an 18-speed manual transmission to be persuasive. We 
therefore revised the baseline heavy-haul tractor configuration, as 
shown in Table III-8.
    The baseline 2017 MY heavy-haul tractor will emit 56.9 grams of 
CO2 per ton-mile and consume 5.59 gallons of fuel per 1,000 
ton-mile.

         Table III-8--Heavy-Haul Tractor Baseline Configuration
------------------------------------------------------------------------
                Baseline heavy-haul tractor configuration
-------------------------------------------------------------------------
Engine = 2017 MY 15L Engine with 600 HP.
------------------------------------------------------------------------
Aerodynamics (CdA in m\2\) = 5.00.
------------------------------------------------------------------------
Steer Tires (CRR in kg/metric ton) = 7.0.
------------------------------------------------------------------------
Drive Tires (CRR in kg/metric ton) = 7.4.
------------------------------------------------------------------------
Transmission = 18 speed Manual Transmission
Gear ratio = 14.4, 12.29, 8.51, 7.26, 6.05, 5.16, 4.38, 3.74, 3.2, 2.73,
 2.28, 1.94, 1.62, 1.38, 1.17, 1.00, 0.86, 0.73.
------------------------------------------------------------------------
Drive axle Ratio = 3.73.
------------------------------------------------------------------------
All Technology Improvement Factors = 0%.
------------------------------------------------------------------------

    The fuel consumption and CO2 emissions in this ``flat'' 
baseline described above remains the same over time with no assumed 
improvements after 2017, absent a Phase 2 regulation. An alternative 
baseline was also evaluated by the agencies in which there is a 
continuing uptake of technologies in the tractor market that reduce 
fuel consumption and CO2 emissions absent a Phase 2 
regulation. This alternative baseline, referred to as the ``dynamic'' 
baseline, was developed to estimate the potential effect of market 
pressures and non-regulatory government initiatives to improve tractor 
fuel consumption. The dynamic baseline assumes that the significant 
level of research funded and conducted by the Federal government, 
industry, academia and other organizations will, in the future, result 
in the adoption of some technologies beyond the levels required to 
comply with Phase 1 standards. One example of such research is the 
Department of Energy Super Truck program \237\ which has a goal of 
demonstrating cost-effective measures to improve the efficiency of 
Class 8 long-haul freight trucks by 50 percent by 2015. The dynamic 
baseline also assumes that manufacturers will not cease offering fuel 
efficiency improving technologies that currently have significant 
market penetration, such as automated manual transmissions. The 
baselines (one for each of the nine tractor types) are characterized by 
fuel consumption and CO2 emissions that gradually decrease 
between 2019 and 2028. In 2028, the fuel consumption for the 
alternative tractor baselines is approximately 4.0 percent lower than 
those shown in Table III-7. This results from the assumed introduction 
of aerodynamic technologies such as down exhaust, underbody airflow 
treatment in addition to tires with lower rolling resistance. The 
assumed introduction of these technologies reduces the CdA 
of the baseline tractors and CRR of the tractor tires. To take one 
example, the CdA for baseline high roof sleeper cabs in 
Table III-6 is 5.90 m\2\ in 2017. In 2028, the CdA of a high 
roof sleeper cab would be assumed to still be 5.90 m\2\ in the flat 
baseline case outlined above. Alternatively, in the dynamic baseline, 
the CdA for high roof sleeper cabs is 5.61 m\2\ in 2028 due 
to assumed market penetration of technologies absent the Phase 2 
regulation. The dynamic baseline analysis is discussed in more detail 
in RIA Chapter 11.
---------------------------------------------------------------------------

    \237\ U.S. Department of Energy. See SuperTruck Report to 
Congress. http://energy.gov/eere/vehicles/downloads/vehicle-technologies-office-report-adoption-new-fuel-efficient-technologies.
---------------------------------------------------------------------------

(b) Tractor Technology Effectiveness
    The agencies' assessment of the technology effectiveness was 
developed through the use of the GEM in coordination with modeling 
conducted by Southwest Research Institute. The agencies developed these 
standards through a three-step process, similar to the approach used in 
Phase 1. First, the agencies developed estimates of technology 
performance characteristics and effectiveness in terms of reducing 
CO2 emissions and fuel consumption for each technology, as 
described below. Each technology is associated with an input parameter 
which in turn is used as an input to the Phase 2 GEM simulation tool. 
There are two types of GEM input parameters. The first type requires a 
manufacturer to measure aspects of the technology. These aspects are 
used as inputs to GEM which then models the technology's effectiveness 
(i.e. the effectiveness for that technology is the GEM output). 
Aerodynamics, tire rolling resistance, engine fuel maps, axle ratio, 
the optional axle efficiency, and optional transmission efficiencies 
are examples of this first type of GEM input. The second type of GEM 
input only requires a manufacturer to install the technology onto the 
vehicle and does not require any testing to determine the GEM input. 
The agencies determined and specify in the regulations (see 40 CFR 
1037.520) the effectiveness of this second type of GEM input. The 
agencies also define the technologies that qualify to be eligible for 
these GEM technology inputs in the regulations (see 40 CFR 1037.660 and 
1037.801). Examples of these technology inputs include transmission 
type, idle reduction technologies, tire pressure systems, vehicle speed 
limiters, weight reduction, intelligent controls, and other 
accessories. The performance levels for the range of Class 7 and 8 
tractor aerodynamic packages and vehicle technologies are described 
below in Table III-10.\238\ All percentage improvements noted below are 
relative to the 2017 MY baseline tractor.
---------------------------------------------------------------------------

    \238\ These GEM default values could be superseded on a case-by-
case basis based on an appropriate off-cycle credit demonstration.
---------------------------------------------------------------------------

    As discussed in Section I.C.1.a, we assume manufacturers will 
incorporate appropriate compliance margins for all measured GEM inputs. 
In other words, they will declare values slightly higher than their 
measured values. As discussed in Section II.D.5, compliance margins 
associated with fuel maps are likely to be approximately one percent. 
For aerodynamic inputs, we believe the bin structure will eliminate the 
need for CdA compliance margins for most vehicles. However, 
for vehicles with measured CdA values very near the upper 
bin boundary, manufacturers will likely choose to certify some of them 
to the next higher bin values (as a number of commenters noted). For 
tire rolling resistance, our feasibility rests on the Phase 1 
standards, consistent with our expectation that manufacturers will to 
continue to incorporate the compliance margins they considered 
necessary for Phase 1. With respect to optional axle and/or 
transmission power loss maps, we believe manufacturers will need very 
small compliance margins. These power loss procedures require high 
precision so measurement uncertainty will likely be on the order of 0.1 
percent of the transmitted power. All of these margins are reflected in 
our projections of the emission levels that will be technologically 
feasible.
    The agencies then determined the adoption rates feasible for each

[[Page 73590]]

technology in each model year, as described in Section III.D.1.c. Then 
as described in Section III.D.1.f, the agencies combined the technology 
performance levels with a projected technology adoption rate to 
determine the GEM inputs used to set the stringency of these standards. 
The agencies input these parameters into Phase 2 GEM and used the 
output to determine the final CO2 emissions and fuel 
consumption levels.
(i) Engine Improvements
    There are several technologies that could be used to improve the 
efficiency of diesel engines used in tractors. These technologies 
include friction reduction, combustion system optimization, and waste 
heat recovery using the Rankine cycle. Details of the engine 
technologies, adoption rates, and overall fuel consumption and 
CO2 emission reductions are included in Section II.D. The 
Phase 2 engine standards will lead each manufacturer to achieve 
reductions of 1.8 percent in 2021 MY, 4.2 percent in 2024 MY, and 5.1 
percent in 2027 MY. For the final Phase 2 rule, we recognize that it 
could be possible to achieve greater reductions than those included in 
the engine standard by designing entirely new engine platforms. See 
Section II.D.2.e. Unlike existing platforms, which are limited with 
respect to peak cylinder pressures (precluding certain efficiency 
improvements), new platforms can be designed to have higher cylinder 
pressure than today's engines. New designs are also better able to 
incorporate recent improvements in materials and manufacturing, as well 
as other technological developments. Considered together, it is likely 
that a new engine platform could be about 2 percent better than engines 
using older platforms. Moreover, the agencies have seen CBI data that 
suggests improvement of more than 3 percent are possible. As discussed 
in Section II.D.2.e above, how far the various manufacturers are into 
their design cycles suggests that one or more manufacturers will 
probably introduce a new engine platform during the Phase 2 time frame. 
Thus, we project that 50 percent of tractor engines produced in 2027 MY 
will be redesigned engines (i.e. engines reflecting redesigned engine 
platforms, again based on existing engine platform redesign schedules 
within the industry). This means the average 2027 MY tractor engine 
would be 5.4 and 6.4 percent better than Phase 1 for day and sleeper 
cabs respectively.\239\ This reflects an average 0.8 percent 
improvement beyond what is required to meet the engine standards.
---------------------------------------------------------------------------

    \239\ See RIA Chapter 2.8.4.1 for the analysis of the engine 
technologies and the associated fuel maps.
---------------------------------------------------------------------------

    As noted in Section II.D.2.e, it is import to note that these new 
platforms will be developed based on normal market forces rather than 
as a result of this rulemaking. Some engine manufacturers have 
developed new platforms with the last ten years, and we do not expect 
these engines to be replaced within the Phase 2 time frame. However, 
other engines have not been fundamentally redesigned recently and will 
be due for replacement by 2027. Because these new platforms will occur 
because of market forces rather than this rulemaking, these reductions 
are in some ways windfalls for vehicle manufacturers. Thus, we have not 
included the cost of these new platforms as part of our rulemaking 
analysis.
    We have factored these levels into our analysis of the vehicle 
efficiency levels that will be achievable in MY 2027. These additional 
engine improvements will result in vehicles having lower GEM results. 
Thus, they make more stringent vehicle standards feasible, and the 
final standards are structured so that these improved engines are not 
able to generate windfall credits against the engine standards, but 
rather that their projected performance is reflected in the stringency 
of the final tractor vehicle standard. It is important to also note 
that manufacturers that do not achieve this level of engine reduction 
would be able to make up the difference by applying one of the many 
other available and cost-effective tractor technologies to a greater 
extent or more effectively, so that there are multiple technology paths 
for meeting the final standards. In other words, a manufacturer that 
does not invest in updating engine platforms in the Phase 2 time frame 
is likely to be able to invest in improving other vehicle technologies. 
(Note that these same reductions cannot be assumed as part of the 
engine standards because engine manufacturers will not have this same 
flexibility). These reductions from the engine will show up in the fuel 
maps used in GEM to set the Phase 2 tractor stringencies.
(ii) Aerodynamics
    There are opportunities to reduce aerodynamic drag from the tractor 
by further optimization of body components, but it is sometimes 
difficult to assess the benefit of individual aerodynamic features. 
Therefore, reducing aerodynamic drag requires optimizing of the entire 
system. The potential areas to reduce drag include all sides of the 
truck--front, sides, top, rear and bottom. The grill, bumper, and hood 
can be designed to minimize the pressure created by the front of the 
truck. Technologies such as aerodynamic mirrors and fuel tank fairings 
can reduce the surface area perpendicular to the wind and provide a 
smooth surface to minimize disruptions of the air flow. Roof fairings 
provide a transition to move the air smoothly over the tractor and 
trailer. Side extenders can minimize the air entrapped in the gap 
between the tractor and trailer. Lastly, underbelly treatments can 
manage the flow of air underneath the tractor. DOE has partnered with 
the heavy-duty industry to demonstrate high roof sleeper cab tractor 
and box trailer combinations that achieve a 50 percent improvement in 
freight efficiency evaluated as a 65,000 pound vehicle operating on the 
highway under somewhat controlled circumstances. However, these 
demonstration vehicles developed in SuperTruck are not necessarily 
designed to handle the rigors of daily use over actual in-use roads. 
For example, they generally have very limited ground clearance that 
would likely preclude operation in snow, and would be very susceptible 
to damage from potholes or other road hazards. Nevertheless, this 
SuperTruck program has led to significant advancements in the 
aerodynamics of combination tractor-trailers. While the agencies cannot 
simply apply the SuperTruck program achievements directly into the 
Phase 2 program because of the significant differences in the limited 
purpose of SuperTruck and the plenary applicability of a regulation to 
all operating conditions and duty cycles, it is helpful to assess the 
achievements and evaluate how the technologies could be applied into 
mass production into a variety of real world applications while 
maintaining performance throughout the full useful life of the vehicle. 
A manufacturer's SuperTruck demonstration vehicle achieved 
approximately a seven percent freight efficiency improvement over a 
2009 MY baseline vehicle due to improvements in tractor aerodynamics 
and approximately 16 percent overall for the tractor-trailer 
combination.\240\ The seven percent freight efficiency improvement due 
to tractor aerodynamics equates to roughly a 14 percent reduction in 
CdA from a 2010 MY baseline vehicle. The 2010 NAS Report on 
heavy-duty trucks found that there are achievable aerodynamic

[[Page 73591]]

improvements which yield 3 to 4 percent fuel consumption reduction or 
six to eight percent reduction in Cd values, beyond a baseline 
reflecting performance of technologies used in today's SmartWay 
trucks.\241\
---------------------------------------------------------------------------

    \240\ Daimler Truck North America. SuperTruck Program Vehicle 
Project Review. June 19, 2014.
    \241\ See TIAX, Note 230, Page 4-40.
---------------------------------------------------------------------------

    The Phase 2 aerodynamic packages are categorized as Bin I, Bin II, 
Bin III, Bin IV, Bin V, Bin VI, or Bin VII based on the wind averaged 
drag aerodynamic performance determined through testing conducted by 
the manufacturer. Bin I represents the least aerodynamic tractors, 
while Bins V-VII would be more aerodynamic than any tractor on the road 
today. A more complete description of these aerodynamic packages is 
included in Chapter 2.8.2.2 of the RIA. In general, the CdA 
values for each package and tractor subcategory were developed through 
EPA's coastdown testing of tractor-trailer combinations, the 2010 NAS 
report, and SAE papers.
    The agencies received comments on our aerodynamic technology 
assessment. A de F Limited commented that wheel covers improve the 
aerodynamics of tractors and trailers, though the results may be lost 
in the noise when evaluated on tractors and trailers separately. 
Daimler commented that they found in their SuperTruck work that there 
are diminishing opportunities for tractor aerodynamics improvements and 
there may be impediments to some due to the need to access the back of 
cab and reliability concerns. AIR CTI commented that they have built a 
truck with aerodynamic technologies such as a front spoiler that 
automatically deploys at vehicle speeds over 30 mph, aerodynamic 
mirrors, and wheel covers over the rear wheels. ICCT found in their 
workshop that opportunities exist for high roof line haul tractor 
aerodynamic improvements that could lead to a three to nine percent 
improvement in fuel consumption over a 2010 baseline.\242\ The HD 
manufacturers and EMA raised significant concerns with regard to the 
proposed aerodynamic assessment for Phase 2. They stated that even the 
best anticipated future-technology SuperTruck tractor configurations 
with a Phase 2 reference trailer likely would only qualify for the 
proposed Phase 2 Bin IV or possibly Bin V, leaving Bins V, VI and VII 
largely infeasible and unachievable.
---------------------------------------------------------------------------

    \242\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    The agencies' assessment is that the most aerodynamic tractor 
tested by EPA in 2015 achieved Bin IV performance. See RIA Chapter 
3.2.1.2. This vehicle did not include all of the possible aerodynamic 
technologies, such as wheel covers or active aerodynamics like a grill 
shutter or front air dam. Upon further analysis of simulation modeling 
of a SuperTruck tractor with a Phase 2 reference trailer with skirts, 
we agree with the manufacturers that a SuperTruck tractor technology 
package would only achieve the Bin V level of CdA, as 
discussed above and in RIA Chapter 2.8.2.2. Therefore, the agencies' 
assessment is that Bin V is achievable with known aerodynamic 
technologies, as discussed in RIA Chapter 2.4.2.1 and 2.8.2.2, but 
agree with the manufacturers that Bins VI and VII have less known 
technology paths. The agencies are including definitions of Bins VI and 
VII performance in the Phase 2 regulations with the understanding that 
aerodynamics will continue to improve over the next ten years until the 
full phase-in of the Phase 2 program and to provide a value to be input 
to GEM should they do so. However, we considered the comments and 
discuss the adoption rates of the more aerodynamic bins in Section 
III.D.1.c.i, which ultimately concludes that the standards should be 
predicated only on performance of aerodynamic technologies reflecting 
up to Bin V.
    As discussed in Section III.E.2, the agencies are increasing the 
number of aerodynamic bins for low and mid roof tractors from the two 
levels adopted in Phase 1 to seven levels in Phase 2. The agencies 
adopted an increase in the number of bins for these tractors to reflect 
the actual range of aerodynamic technologies effective in low and mid 
roof tractor applications. The aerodynamic improvements to the bumper, 
hood, windshield, mirrors, and doors are developed for the high roof 
tractor application and then carried over into the low and mid roof 
applications.
(iii) Tire Rolling Resistance
    A tire's rolling resistance is a function of the tread compound 
material, the architecture and materials of the casing, tread design, 
the tire manufacturing process, and its operating conditions (surface, 
inflation pressure, speed, temperature, etc.). Differences in rolling 
resistance of up to 50 percent have been identified for tires designed 
to equip the same vehicle. Since 2007, SmartWay designated tractors 
have had steer tires with rolling resistance coefficients of less than 
6.5 kg/metric ton for the steer tire and less than 6.6 kg/metric ton 
for the drive tire.\243\ Low rolling resistance (LRR) drive tires are 
currently offered in both dual assembly and wide-based single 
configurations. Wide based single tires can offer rolling resistance 
reduction along with improved aerodynamics and weight reduction. The 
rolling resistance coefficient target for the Phase 2 NPRM was 
developed from SmartWay's tire testing to develop the SmartWay 
certification and testing a selection of tractor tires as part of the 
Phase 1 and Phase 2 programs. Even though the coefficient of tire 
rolling resistance comes in a range of values, to analyze this range, 
the tire performance was evaluated at four levels for both steer and 
drive tires, as determined by the agencies. The four levels in the 
Phase 2 proposal included the baseline (average) from 2010, Level I and 
Level 2 from Phase 1, and Level 3 that achieves an additional 25 
percent improvement over Level 2. The Level 1 rolling resistance 
performance represents the threshold used to develop SmartWay 
designated tires for long haul tractors. The Level 2 threshold 
represents an incremental step for improvements beyond today's SmartWay 
level and represents the best in class rolling resistance of the tires 
we tested for Phase 1. The Level 3 values in the NPRM represented the 
long-term rolling resistance value that the agencies predicts could be 
achieved in the 2025 timeframe. Given the multiple year phase-in of the 
standards, the agencies expect that tire manufacturers will continue to 
respond to demand for more efficient tires and will offer increasing 
numbers of tire models with rolling resistance values significantly 
better than today's typical low rolling resistance tires.
---------------------------------------------------------------------------

    \243\ U.S. EPA. ``US EPA Low Rolling Resistance Tire Testing 
Activities'' presentation to SAE Government-Industry Meeting. 
January 22, 2016. Values represent the ISO 28580 2 meter drum 
results because these align with the test method used to certify 
tractors to the GHG and fuel consumption standards.
---------------------------------------------------------------------------

    ICCT found in their workshop that opportunities exist for 
improvements in rolling resistance for tractor tires that could lead to 
a two to six percent improvement in fuel consumption when compared to a 
2010 baseline tractor.\244\ A fuel consumption improvement in this 
range would require a six to 18 percent improvement in the tractor tire 
rolling resistance levels. Michelin commented that the proposed values 
for the drive tires seem reasonable, though the 4.5 kg/ton level would 
require significantly higher adoption rate of

[[Page 73592]]

new generation wide base single tires. Michelin also stated that the 
value of 4.3 kg/ton target for steer tires is highly unlikely based on 
current evolution and that research shows that 5.0 kg/ton would be more 
likely.
---------------------------------------------------------------------------

    \244\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    The agencies have evaluated this comment and find it persuasive. 
The agencies analyzed the 2014MY certification data for tractors 
between the NPRM and final rulemaking. We found that the lowest rolling 
resistance value submitted for 2014 MY GHG and fuel efficiency 
certification for tractors was 4.9 and 5.1 kg/metric ton for the steer 
and drive tires respectively, while the highest rolling resistance tire 
had a CRR of 9.8 kg/metric ton.\245\ We have accordingly increased the 
coefficient of rolling resistance for Level 3 tires in the final rule 
based on the comments and the certification data.
---------------------------------------------------------------------------

    \245\ U.S. EPA. Memo to Docket. Coefficient of Rolling 
Resistance and Coefficient of Drag Certification Data for Tractors. 
See Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

(iv) Tire Pressure Monitoring and Automatic Tire Inflation Systems
    Proper tire inflation is critical to maintaining proper stress 
distribution in the tire, which reduces heat loss and rolling 
resistance. Tires with low inflation pressure exhibit a larger 
footprint on the road, more sidewall flexing and tread shearing, and 
therefore, have greater rolling resistance than a tire operating at its 
optimal inflation pressure. Bridgestone tested the effect of inflation 
pressure and found a 2 percent variation in fuel consumption over a 40 
psi range.\246\ Generally, a 10 psi reduction in overall tire inflation 
results in about a one percent reduction in fuel economy.\247\ To 
achieve the intended fuel efficiency benefits of low rolling resistance 
tires, it is critical that tires are maintained at the proper inflation 
pressure.
---------------------------------------------------------------------------

    \246\ Bridgestone Tires. Real Questions, Real Answers. http://www.bridgestonetrucktires.com/us_eng/real/magazines/ra_special-edit_4/ra_special4_fuel-tires.asp
    \247\ ``Factors Affecting Truck Fuel Economy,'' Goodyear, Radial 
Truck and Retread Service Manual. Accessed February 16, 2010 at 
http://www.goodyear.com/truck/pdf/radialretserv/Retread_S9_V.pdf.
---------------------------------------------------------------------------

    Proper tire inflation pressure can be maintained with a rigorous 
tire inspection and maintenance program or with the use of tire 
pressure and inflation systems. According to a study conducted by FMCSA 
in 2003, about 1 in 5 tractors/trucks is operating with 1 or more tires 
underinflated by at least 20 psi.\248\ A 2011 FMCSA study estimated 
under inflation accounts for one service call per year and increases 
tire procurement costs 10 to 13 percent. The study found that total 
operating costs can increase by $600 to $800 per year due to under 
inflation.\249\ A recent study by The North American Council on Freight 
Efficiency, found that openness to the use of tire pressure monitoring 
systems is increasing. It also found that reliability and durability of 
commercially available tire pressure systems are good and early issues 
with the systems have been addressed.\250\ These automatic tire 
inflation systems (ATIS) monitor tire pressure and also automatically 
keep tires inflated to a specific level. The agencies proposed to 
provide a one percent CO2 and fuel consumption reduction 
value for tractors with automatic tire inflation systems installed.
---------------------------------------------------------------------------

    \248\ American Trucking Association. Tire Pressure Monitoring 
and Inflation Maintenance. June 2010. Page 3. Last accessed on 
December 15, 2014 at http://www.trucking.org/ATA%20Docs/About/Organization/TMC/Documents/Position%20Papers/Study%20Group%20Information%20Reports/Tire%20Pressure%20Monitoring%20and%20Inflation%20Maintenance%E2%80%94TMC%20I.R.%202010-2.pdf.
    \249\ TMC Future Truck Committee Presentation ``FMCSA Tire 
Pressure Monitoring Field Operational Test Results,'' February 8, 
2011.
    \250\ North American Council for Freight Efficiency, ``Tire 
Pressure Systems,'' 2013.
---------------------------------------------------------------------------

    Tire pressure monitoring systems (TPMS) notify the operator of tire 
pressure, but require the operator to manually inflate the tires to the 
optimum pressure. Because of the dependence on the operator's action, 
the agencies did not propose an emission reduction value for tire 
pressure monitoring systems. Instead, we requested comment on this 
approach and sought data from those that support a reduction value be 
assigned to tire pressure monitoring systems. 80 FR 40218.
    Many commenters including OOIDA, ATA, the truck manufacturers, RMA, 
UPS, Bendix, Doran, First Industries, NADA, and others suggested that 
the agencies should recognize TPMS as a technology in GEM, with the 
effectiveness value set at an equal level as ATIS. On the other hand, 
ARB generally supported the use of ATIS but not TPMS because it 
requires action from the driver. Many stakeholders stated that TPMS 
offers similar benefit, but at a lower cost, so is more acceptable in 
the market. UPS commented that they prefer TPMS because TPMS gives the 
truck owner an affirmative indication that there is a tire pressure 
problem, so it can be fixed, whereas the ATIS does not and they are 
concerned that ATIS simply keeps adding tire pressure automatically, 
wasting energy, and the truck owner may never know it. Bendix believes 
that both ATIS and TPMS should be available in the market in the Phase 
2 timeframe for tractors. RMA cited a NHTSA study of LD vehicles of 
model years 2004-2007 and found that the presence of a TPMS system led 
to a 55.6 percent reduction in the likelihood that a vehicle would have 
one tire that is significantly underinflated (25 percent or 
greater).\251\ RMA also stated that NHTSA found TPMS to be effective in 
reducing moderate under inflation (at least 10 percent, but under 25 
percent), which was reduced by 35.3 percent.\252\ RMA's comments also 
stated for light trucks and vans, the effectiveness rates were even 
higher, with TPMS reducing severe under inflation by 61.2 percent and 
moderate under inflation by 37.7 percent. RMA commented that NHTSA 
found that in 2011, the TPMS systems save $511 million in fuel costs 
across the vehicle fleet.\253\ Navistar said the driver alert with TPMS 
is simpler and sufficient to ensure tire inflation in commercial 
applications. Navistar also commented that in heavy duty, a 
professional driver has both the incentive and the knowledge to keep 
tires adequately inflated, neither of which may necessarily be the case 
with light duty. Doran Manufacturing cited FMCSA studies on TPMS in 
2006 that found TPMS were accurate at assessing tire pressure, in 2007 
found acceptable durability of TPMS, and in 2011 found that TPMS or 
ATIS in fleet studies showed a 1.4 percent improvement in fuel economy. 
ARB's technology assessment found ATIS benefit at one percent.\254\ 
ICCT found in their workshop that opportunities exist for ATIS that 
could lead to a 0.5 to two percent improvement in fuel 
consumption.\255\ AIR CTI discussed the consequences of improper 
inflation pressures on tire life, safety, stopping distance, vehicle 
vibration, and damage to the roads. AIR CTI commented that their 
Central Tire Inflation system controls tire pressure from controls on 
the dash and is commonly used in logging and other off-road 
transportation.
---------------------------------------------------------------------------

    \251\ 80 FR at 40173.
    \252\ 80 FR 40278.
    \253\ 80 FR at 40258.
    \254\ California Air Resources Board. Draft Technology 
Assessment: Engine/Powerplant and Drivetrain Optimization and 
Vehicle Efficiency. June 2015. Page III-3. Report is available at 
www.arb.ca.gov.
    \255\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    After consideration of the comments, the agencies found them 
persuasive and are adopting provisions in Phase 2 GEM that allow 
manufacturers flexibility to

[[Page 73593]]

show compliance with the CO2 and fuel consumption standards 
using various technologies, including the flexibility to adopt ATIS or 
TPMS (see 40 CFR 1037.520). This reflects a change from the Phase 2 
NPRM, where only ATIS (not TPMS) was a GEM input. The agencies believe 
that sufficient incentive exists for truck operators to address low 
tire pressure conditions if they are notified that they exist through a 
TPMS.
    The agencies also considered the comments to determine the 
effectiveness of TPMS and ATIS. The agencies conducted a further review 
of the FCMSA study cited by commenters and we interpret the results of 
the study to indicate that overall a combination of TPMS and ATIS in 
the field achieved 1.4 percent reduction. However, it did not separate 
the results from each technology, and therefore did not indicate that 
TPMS and ATIS achieved the same levels of reduction. Therefore, we set 
the effectiveness of TPMS slightly lower than ATIS to reflect that 
operators will be required to take some action to insure that the 
proper inflation pressure is maintained. The input values to the Phase 
2 GEM are set to 1.2 percent reduction in CO2 emissions and 
fuel consumption for ATIS and 1.0 percent reduction for TPMS. In other 
words, if a manufacturer installs an ATIS onto a vehicle, then they 
will enter 1.2 percent into the Tire Pressure System value in their GEM 
input file. If a manufacturer installs a TPMS, then they will input 1.0 
percent into the Tire Pressure System value in GEM.
    EPA proposed a definition of ATIS in 40 CFR 1037.801 to qualify it 
as a technology input to GEM. The proposed definition stated that 
``Automatic tire inflation system means a system installed on a vehicle 
to keep each tire inflated to within 10 percent of the target value 
with no operator input.'' The agencies received comment about this 
definition. Meritor suggested adopting the historical industry 
definition of ATIS as ``Automatic Tire Inflation Systems maintain tire 
pressure at a single preset level and are pneumatically or 
electronically activated. These systems eliminate the need to manually 
inflate tires.'' Meritor is concerned with the proposed definition of 
ATIS that required the system must ``keep each tire inflated to within 
10 percent'' to qualify as a technology input to GEM. Meritor commented 
that the proposed definition is not consistent with the manner in which 
these systems are used in practice. Meritor stated that an ATIS assures 
that tires will always be running at the recommended cold tire 
inflation pressure. The agencies are adopting changes to reflect the 
appropriate definition of ATIS in the final rule (see 40 CFR 1037.801).
(v) Idle Reduction
    Auxiliary power units (APU), fuel operated heaters (FOH), battery 
supplied air conditioning, and thermal storage systems are among the 
technologies available today to reduce fuel consumption and 
CO2 emissions from extended idling (or hoteling). Each of 
these technologies reduces fuel consumption during idling relative to a 
truck without this equipment. In Phase 1 and in the Phase 2 NPRM, the 
agencies took an approach whereby tractor manufacturers could input an 
idle reduction value into GEM only if a vehicle included a tamper-proof 
automatic engine shutdown system (AESS) programmed to shut down the 
engine after five minutes or less. This approach allows the 
manufacturers to use AESS as one of the technologies (in combination 
with other technologies such as aerodynamics or low rolling resistance 
tires) to demonstrate compliance with the CO2 emission and 
fuel consumption standards. The agencies also included several override 
provisions for the AESS and a discounted GEM input value for an 
expiring AESS or a system that allowed a specified number of hours of 
idling per year (see 40 CFR 1037.660).
    The agencies did not differentiate between the various idle 
reduction technologies in terms of effectiveness because we adopted in 
Phase 1 and proposed in Phase 2 a conservative effectiveness level to 
recognize that some vehicles may be sold with only an AESS but may then 
install an idle reduction technology after it leaves the factory (76 FR 
57207). The effectiveness for AESS in Phase 1 and proposed in Phase 2 
was determined by comparing the idle fuel consumption of the main 
engine at approximately 0.8 gallons per hour to the fuel consumption of 
a diesel powered APU that consumes approximately 0.2 gallons per hour. 
This difference equates to a five percent reduction in overall 
CO2 emissions and fuel consumption of a Class 8 sleeper cab. 
A diesel powered APU was selected for determining the effectiveness and 
cost because it was a conservative estimate. Diesel powered APUs have 
the highest fuel consumption and cost of the idle reduction 
technologies considered.\256\ The agencies proposed that a tamper-proof 
AESS would receive a five percent CO2 emissions and fuel 
consumption reduction in GEM for vehicles that included this 
technology. This value is in line with the TIAX assessment which found 
a five percent reduction in overall fuel consumption to be 
achievable.\257\ The agencies requested comments on the proposed 
approach.
---------------------------------------------------------------------------

    \256\ See the draft RIA Chapter 2.4.8 for details.
    \257\ See the 2010 NAS Report at 128.
---------------------------------------------------------------------------

    The agencies received a number of comments regarding ``mandating 
APU'' or ``mandating AESS.'' There is a misconception of the proposed 
Phase 2 program where stakeholders thought that the agencies were 
mandating use of APUs. This is incorrect. The tractor standards are 
performance standards. The agencies merely projected an adoption rate 
of up to 90 percent for tamper-proof AESS in our analysis for 
determining the stringency level of the proposed standard. As stated 
above, we did not propose to differentiate between the various idle 
reduction technologies in terms of effectiveness and only used the 
diesel powered APU in terms of determining the cost and effectiveness 
of a potential standard. Also, because the standards are performance 
standards, the agencies are not mandating any specific fuel consumption 
or GHG emission reducing technology. For each standard, we developed 
one potential technology pathway to demonstrate the feasibility of the 
standards, but manufacturers will be free to choose other paths.\258\
---------------------------------------------------------------------------

    \258\ The one exception being the design standards for certain 
non-aero trailers. See Section IV below.
---------------------------------------------------------------------------

    The agencies received a significant number of comments about idle 
reduction for sleeper cabs, including recommendations to the agencies 
to assess the emission reduction for a variety of idle reduction 
technologies instead of just a tamper-proof AESS. ATA, NADA, and others 
commented that fleets have a variety of choices available in providing 
the driver power and comfort in-lieu of idling including use of APUs, 
FOHs, stop-start (main engine turns on only to recharge the battery 
after several hours), shore power, battery stand-by, stand-alone anti-
idling infrastructure establishments, slip-seat operations, and hotel 
accommodations. Convoy Solutions stated that IdleAir's electrified 
parking spaces are an important bridge technology to more electrified 
solutions. IdleAir commented it may be possible to recognize off board 
behavior at the OEM level as a buyer of a new truck could enter into a 
contract with an EPS provider prior to accepting delivery. ATA and 
First Industries support efficiency credits for idling reduction 
options installed by fleets either at the OEM point-of-sale or 
installed in the after-market.

[[Page 73594]]

    The agencies also received comments regarding the level of 
effectiveness of idle reduction technologies. ICCT found in their 
workshop that opportunities exist for line haul tractor idle reduction 
improvements that could lead to a four to seven percent improvement in 
fuel consumption.\259\ MEMA recommended that the agencies modify the 
projected effectiveness level based on the merit of the individual idle 
control technology. MEMA's recommendation for effectiveness levels 
based on the fuel consumption and GHG emissions of each technology 
ranged from 7.7 g/ton-mile for fuel cell APU, 6 g/ton-mile for diesel 
APU, and 9 g/ton-mile for batter air conditioning systems, fuel 
operated heater, and combinations of technologies. MEMA supports the 
agencies' proposal that, in order to qualify for the use of an idle 
reduction technology in GEM, it is mandatory that the truck be equipped 
with an AESS. MEMA also commented that in the Phase 1 RIA, the agencies 
assumed a Class 8 sleeper cab spends 1,800 hours in extended idle per 
year and travels about 250 days per year. MEMA recommends that the 
agencies use 2,500 annual hours for APUs and 1,250 annual hours for 
FOHs to better reflect real-world application and experiences. 
Additionally, MEMA recommends that 0.87 gallon/hour fuel consumed by 
the main engine during idle be used in the calculations for credit.
---------------------------------------------------------------------------

    \259\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    The agencies also received a significant number of comments about 
idle reduction encouraging the agencies to consider recognizing 
adjustable AESS instead of only a tamper-proof AESS. ATA commented that 
most fleets already purchase ``programmable'' idle shutdown timers to 
limit idling due to the national patchwork of anti-idling laws 
currently in place. ATA continued to say that these timers are 
typically set for a given period of time throughout the initial fleet's 
ownership period. ATA also stated as witnessed under Phase I, fleets 
are unwilling to purchase hard-programmed, tamper-proof AESS given 
their need for flexibility regarding their resale of used equipment on 
the secondary market. Caterpillar also noted that fleets do not 
purchase tamper-resistant automatic engine shutdown systems; therefore, 
AESS should not be part of the stringency setting, unless the agencies 
also consider programmable versions of AESS. PACCAR, Volvo and EMA 
request the agencies to consider partial credit for AESS that are 
programmed to a 5-minute or sooner shutdown but are not tamper-
resistant to changes by an owner. Daimler and Navistar also commented 
that the agencies should consider adjustable AESS as a technology input 
to GEM. Daimler found that less than one percent of the adjustable AESS 
systems set at or below 5 minutes that were installed in customer 
tractors were deactivated or reprogrammed to a value longer than 5 
minutes. PACCAR viewed the proposed tamper-proof AESS for 1.259 million 
miles as unrealistic and not reflecting current market conditions.
    While the agencies do not necessarily believe that customer 
reluctance in the initial years of Phase 1 should be considered 
insurmountable, we do agree with commenters that the agencies should 
allow adjustable AESS to be a technology input to GEM and should 
differentiate effectiveness based on the idle reduction technology 
installed by the tractor manufacturer. We will still apply the Phase 1 
requirement that the AESS be programmed to 5 minutes or less at the 
factory to qualify as a technology input in GEM (see 40 CFR 1037.660), 
but for Phase 2 will allow a variety of both tamper-proof and 
adjustable systems to qualify for some reduction (i.e. to be recognized 
by GEM). Any changes made subsequent to the factory but prior to 
delivery to the purchaser, must be accounted for in the manufacturer's 
end of year reports.
    The agencies developed effectiveness levels for the extended idle 
technologies from literature, SmartWay work, and the 2010 NAS report. 
The agencies also reviewed the NACFE report on programmable engine 
parameters which included a fleet survey on how often the fleets change 
programmable parameters, such as automatic engine shutdown timers.\260\ 
The survey found that approximately 70 percent of these fleets never 
changed the setting. The agencies developed the effectiveness levels to 
reflect that there is some greater uncertainty of adjustable AESS 
systems, therefore the effectiveness values are discounted from the 
values determined for tamper-proof AESS. A detailed discussion 
regarding the comments and the associated calculations to determine the 
effectiveness of each of the idle reduction technologies are included 
in RIA Chapter 2.4.8.1.1. In summary, the effectiveness for each type 
of idle reduction technology is included in Table III-9.
---------------------------------------------------------------------------

    \260\ North American Council for Freight Efficiency. Confidence 
Report: Programmable Engine Parameters. February 2015. Page 48.

          Table III-9--Idle Reduction Technology Effectiveness
------------------------------------------------------------------------
                                                          Idle reduction
                Idle Reduction Technology                  value in GEM
                                                                (%)
------------------------------------------------------------------------
Tamper-Proof AESS.......................................               4
Tamper-Proof AESS w/Diesel APU..........................               4
Tamper-Proof AESS w/Battery APU.........................               6
Tamper-Proof AESS w/Automatic Stop-Start................               3
Tamper-Proof AESS w/FOH Cold, Main Engine Warm..........               3
Adjustable AESS w/Diesel APU............................               3
Adjustable AESS w/Battery APU...........................               5
Adjustable AESS w/Automatic Stop-Start..................               3
Adjustable AESS w/FOH Cold, Main Engine Warm............               2
Adjustable AESS programmed to 5 minutes.................               1
------------------------------------------------------------------------

    In addition to extended idling (or hoteling) by sleeper cabs, the 
agencies discussed work day idle by day cabs in the Phase 2 NPRM. 80 FR 
40217. Day cab tractors often idle while cargo is loaded or unloaded, 
as well as during the frequent stops that are inherent with driving in 
urban traffic conditions near cargo destinations. Prior to issuing the 
Phase 2 NPRM, the agencies reviewed literature to quantify the amount 
of idling which is conducted outside of hoteling operations. One study, 
conducted by Argonne National Laboratory, identified several different 
types of trucks which might idle for extended amounts of time during 
the work day.\261\ Idling may occur during the delivery process, 
queuing at loading docks or border crossings, during power take off 
operations, or to provide comfort during the work day. However, the 
study provided only ``rough estimates'' of the idle time and energy use 
for these vehicles. At the time of the Phase 2 NPRM, the agencies were 
not able to appropriately develop a baseline of workday idling for day 
cabs and identify the percent of this idling which could be reduced 
through the use of AESS. We welcomed comment and data on quantifying 
the effectiveness of AESS on day cabs. We further requested comment on 
the possibility of adapting the idle-only duty cycle for vocational 
vehicles to certain day cab tractors, and also considered the 
possibility of neutral idle technology for tractors using torque-
converter automatic

[[Page 73595]]

transmissions and stop-start for any tractor. Id.
---------------------------------------------------------------------------

    \261\ Gaines, L., A. Vyas, J. Anderson. Estimation of Fuel Use 
by Idling Commercial Trucks. January 2006.
---------------------------------------------------------------------------

    The agencies received a significant number of comments regarding 
day cab idle reduction. CARB commented that the agencies should include 
idle reduction technologies for day cabs, similar to the proposed 
vocational vehicle approach. CARB stated that even if the first owners 
do not see significant emission reductions, many of the day cab 
tractors are used in port and drayage applications in their second life 
where they would see significant reductions. CARB suggested that the 
GEM composite weighting factor for idle should be between 5 and 10 
percent. Bendix would like to see the vocational vehicle idle reduction 
approach extended to day cab tractors based on their data which found 
that there are many applications of day cab tractors that spend a 
significant portion of their day's drive time at idle, especially pick-
up and delivery type applications and a growing number of fleets that 
run hub and spoke type operations. MEMA supported extending neutral 
idle and stop-start technologies to day cab tractors. MEMA recommends 
that the agencies set the effectiveness of day cabs idle reduction 
technologies at a value equal to 35 percent of the effectiveness 
associated with a comparable technology in a Class 8 sleeper cab. 
Allison stated that agencies should include automatic neutral in all 
tractors. Allison stated that automatic neutral is standard with the 
Allison TC10 and is available with the Allison 3000 and 4000 Series 
transmissions.
    Daimler commented that they have not validated that stop-start 
strategies are viable for Class 7 and 8 applications and considers it 
premature for the agencies to project that stop-start strategies are 
viable for this class of engines. Daimler stated that lubrication of 
critical bearing surfaces is lacking or severely compromised during 
engine start up due to the lack of lubricating oil pressure and this 
lack of lubrication leads to metal to metal contact, wear, and 
ultimately failure. In addition, Daimler commented that firing 
pressures inherent to compression ignition engines further exacerbate 
wear as compared to, for example, spark ignition engines where stop-
start technology is being increasingly applied. Daimler also stated 
that these known problems, coupled with the extremely long million mile 
plus service life expectations for this heavier class of heavy-duty 
engines, together pose a development challenge that is significantly 
more challenging than that posed to spark ignition engines in passenger 
cars. Daimler further stated that heat soak of temperature critical 
parts and temporary disruption of their lubrication/cooling systems 
will have to be understood and possible degradations handled through 
modifications at either component or system basis, the extent of which 
is not yet fully quantified. Daimler also stated that similarly, on the 
turbocharger side, the larger speed swings will shorten turbocharger 
wheel life, which is increasingly challenged in vocational applications 
that are characteristically more transient as compared to the 
relatively steady operation nature of line haul.
    The agencies considered the comments, both supporting and raising 
concerns over idle reduction in day cabs. The agencies determined that 
neutral idle for automatic transmissions is an appropriate technology 
for use in tractors. Therefore, the agencies are adopting provisions in 
Phase 2 to recognize neutral-idle in automatic transmissions as an 
input to GEM. Our analysis shows that neutral idle effectiveness is 
approximately 0.8 to one percent over the composite day cab tractor 
cycles, as shown in RIA Chapter 2.8.2.6.2. The agencies will also 
include neutral idle as a GEM input for sleeper cabs, though the 
effectiveness is very low. The agencies are predicating the standards 
for day cabs based on a technology package that includes neutral idle.
    In terms of stop-start technologies in tractors, the agencies are 
not including it as a technology input to GEM because we believe the 
technology, as applied to tractors, needs further development. If this 
technology is developed in the future for tractors, then manufacturers 
may consider applying for off-cycle technology credits. Since the 
agencies are not predicating the Phase 2 standards on adoption of 
start-stop technologies, the agencies are also not including this 
technology as a GEM input.
(vi) Transmissions
    As discussed in the 2010 NAS report, automatic (AT) and automated 
manual transmissions (AMT) may offer the ability to improve vehicle 
fuel consumption by optimizing gear selection compared to an average 
driver.\262\ However, as also noted in the report and in the supporting 
TIAX report, the improvement is very dependent on the driver of the 
truck, such that reductions ranged from zero to eight percent.\263\ 
Well-trained drivers would be expected to perform as well or even 
better than an automated transmission since the driver can see the road 
ahead and anticipate a changing stoplight or other road condition that 
neither an automatic nor automated manual transmission can anticipate. 
However, less well-trained drivers that shift too frequently or not 
frequently enough to maintain optimum engine operating conditions could 
be expected to realize improved in-use fuel consumption by switching 
from a manual transmission to an automatic or automated manual 
transmission. As transmissions continue to evolve, dual clutch 
transmissions (DCTs) are now being used in the European heavy-duty 
vehicle market. DCTs operate similar to AMTs, but with two clutches so 
that the transmission can maintain engine speed during a shift which 
improves fuel efficiency.
---------------------------------------------------------------------------

    \262\ Manual transmissions require the driver to shift the gears 
and manually engage and disengage the clutch. Automatic 
transmissions shift gears through computer controls and typically 
include a torque converter. An AMT operates similar to a manual 
transmission, except that an automated clutch actuator disengages 
and engages the drivetrain instead of a human driver. An AMT does 
not include a clutch pedal controllable by the driver or a torque 
converter.
    \263\ See TIAX, Note 230, above at 4-70.
---------------------------------------------------------------------------

    The benefits for automated manual, automatic, and dual clutch 
transmissions were developed from literature, from simulation modeling 
conducted by Southwest Research Institute, and powertrain testing 
conducted at Oak Ridge National Laboratory. The proposed Phase 2 
benefit of these transmissions in GEM was set at a two percent 
improvement over a manual transmission due to the automation of the 
gear shifting. 80 FR 40217.
    Allison Transmission commented that their real world studies 
indicate that automatic transmissions perform as well or better than 
AMTs or DCTs in terms of GHG and fuel efficiency impact. Allison 
commented that their ATs can exceed the 2 percent level estimated at 
proposal, but believe it is a reasonable level to apply this level of 
effectiveness for ATs and AMTs. Allison stated that automatic 
transmissions in tractors have neutral at stop capability, first gear 
lockup operation, load-based and grade-based shift algorithms and 
acceleration rate management that contribute to the overall fuel 
efficiency of ATs in tractors. Allison also commented that although 
DCTs should logically perform better than the MT baseline, there was no 
record information to support that assumption. Volvo commented that 
fuel consumption with their I-Shift DCT is the same as the I-Shift AMT. 
PACCAR recommends that the agencies take a more detailed approach to 
assessing transmission advances and revise the

[[Page 73596]]

agencies' estimate to reflect technologies that are already under true 
consideration for use in production powertrains.
    UCS commented that as much as 1.3 to 2.0 percent savings from 
tractor-trailers could be added to the proposed stringency to reflect 
the true potential from tractor-trailers from powertrain optimization, 
particularly since every major manufacturer already offers at least one 
``integrated powertrain'' option in its long-haul fleet. ICCT referred 
to two studies related to tractor-trailer technologies in their 
comments.264 265 In their stakeholder workshop, they found 
that the effectiveness of automated manual transmissions ranged between 
two and three percent. They also cited another finding that highlighted 
opportunities to improve transmission efficiency, including direct 
drive, which would provide about two percent fuel consumption 
reduction.\266\
---------------------------------------------------------------------------

    \264\ Lutsey, Nic. T. Langer, S. Khan. Stakeholder Workshop on 
Tractor-Trailer Efficiency Technology in the 2015-2030 Timeframe. 
August 2014. Docket EPA-HQ-OAR-2014-0827.
    \265\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
    \266\ Stoltz, T. and Dorobantu, M. Transmission Potential to 
Contribute to CO2 Reduction: 2020 and Beyond Line Haul 
Perspective. ACEEE/ICCT Workshop on Emerging Technologies for Heavy-
Duty Fuel Efficiency. July 2014.
---------------------------------------------------------------------------

    The agencies' assessment of the comments is that Allison, ICCT, and 
Volvo support the proposed two percent effectiveness for AT and AMT 
transmission types. In addition, the agencies reviewed the NACFE report 
on electronically controlled transmissions (AT, AMT, and DCT).\267\ 
This report had similar findings as those noted above in the NAS 2010 
report. Electronically controlled transmissions were found to be more 
fuel efficient than manual transmissions, though the amount varied 
significantly. The report also stated that fleets found that 
electronically controlled transmissions also reduced the fuel 
efficiency variability between drivers. Therefore after considering the 
comments related to effectiveness and additional reports, the agencies 
are adopting as proposed a two percent effectiveness for AMT. As 
discussed in RIA 2.8.2.5, the agencies conducted powertrain testing at 
Oak Ridge National Laboratory to compare the fuel efficiency of an AMT 
to an AT. Based on the results, the agencies expect that automatic 
transmissions designed for long haul operation and automated manual 
transmissions will perform similarly and have similar effectiveness 
when compared to a manual transmission.
---------------------------------------------------------------------------

    \267\ North American Council for Freight Efficiency. Confidence 
Report: Electronically Controlled Transmissions. December 2014.
---------------------------------------------------------------------------

    The benefit of the AMT's automatic shifting compared to a manual 
transmission is recognized in Phase 2 GEM by simulating the MT as an 
AMT and increasing the emission results from the simulation by two 
percent. For ATs, the agencies developed the default automatic 
transmission inputs to GEM to represent a typical heavy-duty automatic 
transmission, which is less efficient than the TC10 (the transmission 
tested at Oak Ridge National Lab). The agencies selected more 
conservative default transmission losses in GEM so that we would not 
provide a false efficiency improvement for the less efficient automatic 
transmissions that exist in the market today. Under the regulations in 
this rulemaking, manufacturers that certify using the TC10 transmission 
would need to either conduct the optional transmission gear efficiency 
testing or powertrain testing to recognize the effectiveness of this 
type of automatic transmission in GEM. In our technology packages 
developed to set the Phase 2 standard stringencies, the agencies used a 
two percent effectiveness for automatic transmissions with neutral idle 
under the assumption that either powertrain or transmission gear 
efficiency tests would be conducted. The compliance costs for this type 
of testing (which crosses over both the vocational and tractor 
programs) are included as noted in RIA Chapter 7.2.1.2.
    The agencies agree with PACCAR that we should consider future 
transmission advances. There are three certification pathways for 
manufacturers to assess benefits of future transmissions; that is, to 
generate a value reflecting greater improvement than the two percent 
GEM input. The first is an optional powertrain test (40 CFR 1037.550), 
the second is an optional transmission efficiency test (40 CFR 
1037.565), and the third is off-cycle credits (40 CFR 1037.610).
    The agencies acknowledge UCS's comment about increasing the 
stringency of the tractor program due to the opportunity to further 
improve powertrain optimization through powertrain testing. For the 
Phase 2 final rule, we have made several changes that capture much of 
the improvement potential highlighted by UCS. First, the required use 
of a cycle average fuel map in lieu of a steady state fuel map for 
evaluating the transient cycle in GEM will recognize improvements to 
transient fuel control of the engine. The agencies are including the 
impact of improved transient fuel control in the engine fuel maps used 
to derive the final standards. Second, the optional transmission 
efficiency test will recognize the benefits of improved gear 
efficiencies. The agencies have built some improvements in transmission 
gear efficiency into the technology package used to derive the final 
standards. This leaves only the optimization of the transmission shift 
strategy, which would need to be captured on a powertrain test. The 
agencies believe that the opportunity of shift strategy optimization is 
less for tractors than for other types of vocational vehicles because a 
significant portion of the tractor drive cycles are at highway speeds 
with limited transmission shifting. Therefore, we have not included the 
powertrain optimization portion only recognized through powertrain 
testing into the standard setting for the final rule.
    The agencies also proposed standards that considered the efficiency 
benefit of transmissions that operate with top gear direct drive 
instead of overdrive. In the proposal, we estimated that direct drive 
had two percent higher gear efficiency than an overdrive gear. 80 FR 
40229. The benefit of direct drive was recognized through the 
transmission gear ratio inputs to GEM. Direct drive leads to greater 
reductions of CO2 emissions and fuel consumption during 
highway operation, but virtually none in transient operation. The 
agencies did not receive any negative comments regarding the efficiency 
difference between direct drive and overdrive; therefore, we continued 
to include the default transmission gear efficiency advantage of two 
percent for a gear with a direct drive ratio in the version of GEM 
adopted for the final Phase 2 rules.
    The agencies are also adopting in Phase 2 an optional transmission 
efficiency test (40 CFR 1037.565) for generating an input to GEM that 
overrides the default efficiency of each gear based on the results of 
the test. Although optional, the transmission efficiency test will 
allow manufacturers to reduce the CO2 emissions and fuel 
consumption by designing better transmissions with lower friction due 
to better gear design and/or mandatory use of better lubricants. The 
agencies project that transmission efficiency could improve one percent 
over the 2017 baseline transmission in Phase 2. Our assessment was 
based on comments received and discussions with transmission 
manufacturers.\268\
---------------------------------------------------------------------------

    \268\ Memorandum to the Docket ``Effectiveness of Technology to 
Increase Transmission Efficiency.'' July 2016.

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[[Page 73597]]

(vii) Drivetrain and Engine Downspeeding
    Downspeeding: As tractor manufacturers continue to reduce the 
losses due to vehicle loads, such as aerodynamic drag and rolling 
resistance, the amount of power required to move the vehicle decreases. 
In addition, engine manufacturers continue to improve the power density 
of heavy-duty engines through means such as reducing the engine 
friction due to smaller surface area. These two changes lead to the 
ability for truck purchasers to select lower displacement engines while 
maintaining the previous level of performance. Engine downsizing could 
be more effective if it is combined with the downspeeding assuming 
increased brake mean effective pressure does not affect durability. The 
increased efficiency of the vehicle moves the operating points down to 
a lower load zone on a fuel map, which often moves the engine away from 
its sweet spot to a less efficient zone. In order to compensate for 
this loss, downspeeding allows the engine to run at a lower engine 
speed and move back to higher load zones, and thus can slightly improve 
fuel efficiency. Reducing the engine size allows the vehicle operating 
points to move back to the sweet spot, thus further improving fuel 
efficiency. Engine downsizing can be accounted for as a vehicle 
technology through the use of the engine's fuel map in GEM in 
combination with the vehicle's transmission gear ratios, drive axle 
ratio, and tire diameter. The agencies evaluated the impact of 
downspeeding in setting the stringencies by modeling different rear 
axle ratios in GEM. As shown in RIA Chapter 2.8.2.7, a decrease in 
final drive ratio from 2.6 to 2.3 will lead to a 2.5 percent reduction 
in tractor CO2 emissions and fuel consumption. The reshaping 
of the torque curve of an engine to increase the low speed torque and 
reduce the speed at which maximum torque occurs, will impact the 
CO2 emissions and fuel consumption on the engine test 
cycles, but will also have a small impact on the vehicle fuel 
consumption. Higher torque at lower engine speeds will allow the 
transmission to operate in top gear for a longer period of the time 
which will reduce the number of downshifts over a cycle and in turn 
means that the engine speed is lower on average. This benefit will show 
up in GEM. Additional information on engine downspeeding can be found 
in RIA Chapter 2.3.8.
    Low Friction Axle and Wheel Bearing Lubricants: The 2010 NAS report 
assessed low friction lubricants for the drivetrain as providing a one 
percent improvement in fuel consumption based on fleet testing.\269\ A 
field trial of European medium-duty trucks found an average fuel 
consumption improvement of 1.8 percent using SAE 5W-30 engine oil, SAE 
75W90 axle oil and SAE 75W80 transmission oil when compared to SAE 
15W40 engine oil and SAE 90W axle oil, and SAE 80W transmission 
oil.\270\ The light-duty 2012-16 MY vehicle rule and the pickup truck 
portion of this program estimate that low friction lubricants can have 
an effectiveness value between zero and one percent compared to 
traditional lubricants. In the Phase 2 proposal, the agencies proposed 
the reduction in friction due to low viscosity axle lubricants of 0.5 
percent. 80 FR 40217.
---------------------------------------------------------------------------

    \269\ See the 2010 NAS Report, Note 229, page 67.
    \270\ Green, D.A., et. al. ``The Effect of Engine, Axle, and 
Transmission Lubricant, and Operating Conditions on Heavy Duty 
Diesel Fuel Economy. Part 1: Measurements.'' SAE 2011-01-2129. SAE 
International Journal of Fuels and Lubricants. January 2012.
---------------------------------------------------------------------------

    Lubrizol commented that high performing lubricants should play a 
role in Phase 2. Lubrizol also supports the axle test procedures to 
further recognize axle efficiency improvements. PACCAR recommended 
eliminating the rear axle efficiency test and provide credits based on 
calculated values.
    The agencies' assessment of axle improvements found that axles 
built in the Phase 2 timeline could be 2 percent more efficient than a 
2017 baseline axle.\271\ In lieu of a fixed value for low friction axle 
lubricants (i.e. in lieu of a specified GEM input), the agencies are 
adopting an axle efficiency test procedure (40 CFR 1037.560), as 
discussed in the NPRM. 80 FR 40185. The axle efficiency test will be 
optional, but will allow manufacturers to recognize in GEM reductions 
in CO2 emissions and fuel consumption through improved axle 
gear designs and/or mandatory use of low friction lubricants. The 
agencies are not providing an alternate path to recognize better 
lubricants without axle testing.
---------------------------------------------------------------------------

    \271\ Memorandum to the Docket ``Effectiveness of Technology to 
Increase Axle Efficiency.'' July 2016.
---------------------------------------------------------------------------

    Axle Configuration: Most tractors today have three axles--a steer 
axle and two rear drive axles, and are commonly referred to as 6x4 
tractors. Manufacturers offer 6x2 tractors that include one rear drive 
axle and one rear non-driving axle. The 6x2 tractors offer three 
distinct benefits. First, the non-driving rear axle does not have 
internal friction and therefore reduces the overall parasitic losses in 
the drivetrain. In addition, the 6x2 configuration typically weighs 
approximately 300 to 400 lbs less than a 6x4 configuration.\272\ 
Finally, the 6x2 typically costs less or is cost neutral when compared 
to a 6x4 tractor. Sources cite the effectiveness of 6x2 axles at 
between one and three percent.273 274 The NACFE report found 
in OEM evaluations of 6x2 axles that the effectiveness ranged between 
1.6 and 2.2 percent. NACFE also evaluated 6x2 axle tests conducted by 
several fleets and found the effectiveness in the range of 2.2 to 4.6 
percent. Similarly, with the increased use of double and triple 
trailers, which reduce the weight on the tractor axles when compared to 
a single trailer, manufacturers offer 4x2 axle configurations. The 4x2 
axle configuration would have as good as or better fuel efficiency 
performance than a 6x2. The agencies proposed to apply a 2.5 percent 
improvement in vehicle efficiency to 6x4 and 4x2 axle configurations. 
80 FR 40217-218.
---------------------------------------------------------------------------

    \272\ North American Council for Freight Efficiency. 
``Confidence Findings on the Potential of 6x2 Axles.'' 2014. Page 
16.
    \273\ Ibid.
    \274\ Reinhart, T.E. (June 2015). Commercial Medium- and Heavy-
Duty Truck Fuel Efficiency Technology Study--Report #1. (Report No. 
DOT HS 812 146). Washington, DC: National Highway Traffic Safety 
Administration.
---------------------------------------------------------------------------

    Meritor stated in their comments that their internal testing and 
real world testing supported the 2.5 percent efficiency proposed by the 
agencies for 6x2 axles. Meritor suggested the need to better define a 
``disengageable tandem'' when the agencies discussed what we called 
axle disconnect in the NPRM. Meritor recommends that a fuel efficiency 
benefit of 2.0 percent be assigned to the disengageable tandem for the 
55 mph and 65 mph drive cycles to account for the more limited use.
    ICCT referred to two studies related to tractor-trailer 
technologies in their comments.275 276 In their stakeholder 
workshop, they found that the effectiveness of 6x2 axles ranged between 
one and 2.5 percent.
---------------------------------------------------------------------------

    \275\ Lutsey, Nic. T. Langer, S. Khan. Stakeholder Workshop on 
Tractor-Trailer Efficiency Technology in the 2015-2030 Timeframe. 
August 2014. Docket EPA-HQ-OAR-2014-0827.
    \276\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    The agencies' assessments of these technologies show that the 
reductions are in the range of two to three percent. For the final 
rule, the agencies are simulating 6x2, 4x2, and disengageable axles 
within GEM based on the manufacturer input of the axle configuration 
instead of providing a fixed value for the reduction. This approach is 
more technically sound because it will take into account future changes 
in axle efficiency. See RIA

[[Page 73598]]

Chapter 4 for additional details regarding GEM.
(viii) Accessories and Other Technologies
    Accessory Improvements: Parasitic losses from the engine come from 
many systems, including the water pump, oil pump, and power steering 
pump. Reductions in parasitic losses are one of the areas being 
developed under the DOE SuperTruck program. As presented in the DOE 
Merit reviews, Navistar stated that they demonstrated a 0.45 percent 
reduction in fuel consumption through water pump improvements and 0.3 
percent through oil pump improvements compared to a current engine. In 
addition, Navistar showed a 0.9 percent benefit for a variable speed 
water pump and variable displacement oil pump. Detroit Diesel reports a 
0.5 percent benefit coming from improved water pump efficiency.\277\ It 
should be noted that water pump improvements include both pump 
efficiency improvement and variable speed or on/off controls. Lube pump 
improvements are primarily achieved using variable displacement pumps 
and may also include efficiency improvement. All of these results shown 
in this paragraph are demonstrated through the DOE SuperTruck program 
at a single operating point on the engine map, and therefore the 
overall expected reduction of these technologies is less than the 
single point result. The agencies proposed that compared to 2017 MY air 
conditioners, air conditioners with improved efficiency compressors 
will reduce CO2 emissions by 0.5 percent. Improvements in 
accessories, such as power steering, can lead to an efficiency 
improvement of one percent over the 2017 MY baseline. 80 FR 40218.
---------------------------------------------------------------------------

    \277\ See the RIA Chapter 2.4 for details.
---------------------------------------------------------------------------

    Navistar commented that the proposed ``electrically powered pumps 
for engine cooling'' be revised to include ``electronically controlled 
variable speed coolant pumps'' to align with the Preamble descriptions 
and technology under development as part of the SuperTruck program. 
Navistar commented that shifting to fully electronic pump creates 
reliability concerns and adds additional complexity due to the size of 
the necessary pumps (2+ horsepower) and that the increased power load 
will require a larger alternator and upgraded wiring. Navistar 
suggested that in addition to a fully electric pump, Dual Displacement 
power steering should also be included as an accessory improvement 
because this technology reduces parasitic loads by applying power 
proportional to steering demand. ZF TRW Commercial Steering commented 
that they are developing a power steering pump that uses a secondary 
chamber deactivation during highway cruise operations that reduce the 
pump drive torque by 30 to 40 percent. Navistar also commented that the 
effectiveness for an electrified air conditioning compressor is 
understated in the NPRM. Navistar's estimates are closer to 1.5 percent 
when in use which will be during the use of air conditioning and during 
defrost; therefore, the effective benefit should be one percent. 
Daimler commented that the proposed high efficiency air conditioning 
effectiveness should be refined and that other opportunities to reduce 
losses, such as blend air systems, should be considered. In response to 
the comments, the agencies evaluated a set of accessories that can be 
designed to reduce accessory losses. Due to the complexity in 
determining what qualifies as an efficient accessory, we are 
maintaining the proposed language for accessories for tractors which 
provides defined effectiveness values for only electric air 
conditioning compressors and electric power steering pumps and coolant 
pumps. Manufacturers have the option to apply for off-cycle credits for 
the other types and designs of high efficiency accessories.
    Intelligent Controls: Skilled drivers know how to control a vehicle 
to obtain maximum fuel efficiency by, among other things, considering 
road terrain. For example, the driver may allow the vehicle to slow 
down below the target speed on an uphill and allow it to go over the 
target speed when going downhill, to essentially smooth out the engine 
demand. Electronic controls can be developed to essentially mimic this 
activity. The agencies proposed to provide a two percent reduction in 
fuel consumption and CO2 emissions for vehicles configured 
with intelligent controls, such as predictive cruise control. 80 FR 
40218. ICCT found in their workshop that opportunities exist for road 
load optimization through predictive cruise, GPS, and driver feedback 
that could lead to a zero to five percent improvement in fuel 
consumption.\278\ Daimler commented that eCoast should also be 
recognized as an intelligent control within GEM. Eaton offers similar 
technology, known as Neutral Coast Mode. Neutral coast is an electronic 
feature that places an automated transmission in neutral on downhill 
grades which allows the engine speed to go idle speed. A fuel savings 
is recognized due to the difference in engine operating conditions due 
to the reduced load on the engine due to the transmission.
---------------------------------------------------------------------------

    \278\ Delgado, Oscar. N. Lutsey. Advanced Tractor-Trailer 
Efficiency Technology Potential in the 2020-2030 Timeframe. April 
2015. Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

    Based on literature information, intelligent controls such as 
predictive cruise control will reduce CO2 emissions by two 
percent, and the agencies are assuming this level of improvement in 
considering the level of the tractor standard. In addition, the 
agencies' review of literature and confidential business information 
provided based on the SuperTruck demonstration vehicles indicates that 
neutral coasting will reduce fuel consumption and CO2 
emissions by 1.5 percent.
    Solar Load Management: The agencies received a letter from the 
California Air Resources Board prior to the proposal requesting 
consideration of including technologies that reduce solar heating of 
the cab (to reduce air conditioning loads) in setting the Phase 2 
tractor standards. Solar reflective paints and solar control glazing 
technologies are discussed in RIA Chapter 2.4.9.3. The agencies 
requested comment on the Air Resources Board's letter and 
recommendations.\279\ The agencies received some clarifications from 
ARB on our evaluation of solar technologies and some CBI from Daimler, 
but not a sufficient amount of information to evaluate the baseline 
level of solar control that exists in the heavy-duty market today, 
determine the effectiveness of each of the solar technologies, or to 
develop a definition of what qualifies as a solar control technology 
that could be used in the regulations. Therefore, the agencies would 
consider solar control to be a technology that manufacturers may 
consider pursuing through the off-cycle credit program. As such, the 
agencies did not include solar load management technologies in the 
technology packages used in setting the final Phase 2 tractor standard 
stringencies.
---------------------------------------------------------------------------

    \279\ California Air Resources Board. Letter from Michael Carter 
to Matthew Spears dated December 3, 2014. Solar Control: Heavy-Duty 
Vehicles White Paper. Docket EPA-HA-OAR-2014-0827.
---------------------------------------------------------------------------

(ix) Weight Reduction
    Reductions in vehicle mass lower fuel consumption and GHG emissions 
by decreasing the overall vehicle mass that is moved down the road. 
Weight reductions also increase vehicle payload capability which can 
allow additional tons to be carried by fewer trucks consuming less fuel 
and producing

[[Page 73599]]

lower emissions on a ton-mile basis. We treated such weight reduction 
in two ways in Phase 1 to account for the fact that combination 
tractor-trailers weigh-out approximately one-third of the time and 
cube-out approximately two-thirds of the time. Therefore in Phase 1 and 
also as finalized for Phase 2, one-third of the weight reduction will 
be added payload in the denominator while two-thirds of the weight 
reduction is subtracted from the overall weight of the vehicle in GEM. 
See 76 FR 57153.
    In Phase 1, we reflected mass reductions for specific technology 
substitutions (e.g., installing aluminum wheels instead of steel 
wheels). These substitutions were included where we could with 
confidence verify the mass reduction information provided by the 
manufacturer. The weight reductions were developed from tire 
manufacturer information, the Aluminum Association, the Department of 
Energy, SABIC and TIAX. The agencies proposed to expand the list of 
weight reduction components which can be input into GEM in order to 
provide the manufacturers with additional means to comply via GEM with 
the combination tractor standards and to further encourage reductions 
in vehicle weight. As in Phase 1, we recognize that there may be 
additional potential for weight reduction in new high strength steel 
components which combine the reduction due to the material substitution 
along with improvements in redesign, as evidenced by the studies done 
for light-duty vehicles.\280\ The agencies however do not agree with 
all of the recommendations in this report. See Section I.C.1 and RTC 
Section 1 for a discussion on lifecycle emissions. In the development 
of the high strength steel component weights, we are only assuming a 
reduction from material substitution and no weight reduction from 
redesign, since we do not have any data specific to redesign of heavy-
duty components nor do we have a regulatory mechanism to differentiate 
between material substitution and improved design. Additional weight 
reduction would be evaluated as a potential off-cycle credit. As 
described in Section III.E.2 below, the agencies discuss the weight 
reduction component comments received and are adopting an expanded list 
of weight reduction options which could be input into the GEM by the 
manufacturers to reduce their certified CO2 emission and 
fuel consumption levels.
---------------------------------------------------------------------------

    \280\ American Iron and Steel Institute. ``A Cost Benefit 
Analysis Report to the North American Steel Industry on Improved 
Material and Powertrain Architectures for 21st Century ``Trucks.''
---------------------------------------------------------------------------

(x) Vehicle Speed Limiter
    Fuel consumption and GHG emissions increase proportional to the 
square of vehicle speed. Therefore, lowering vehicle speeds can 
significantly reduce fuel consumption and GHG emissions. A vehicle 
speed limiter (VSL), which limits the vehicle's maximum speed, is 
another technology option for compliance that is already utilized today 
by some fleets (though the typical maximum speed setting is often 
higher than 65 mph).
    CARB recommended not giving any credit for VSLs because the 
available data do not fully support whether VSLs result in real-world 
fuel consumption and GHG reductions. CARB referenced Oakridge National 
Laboratory's Transportation Energy Data Book, Table 5.11 that shows 
CO2 emissions decrease with increased speed. CARB also 
stated that the draft GEM model appears to offer up to 22 percent 
credit for use of VSL set to 45 mph, which they consider to be 
unreasonably high. Before including VSLs as a technology, CARB staff 
suggests that EPA and NHTSA should thoroughly evaluate whether they 
would result in real-world CO2 and fuel consumption 
benefits.
    The agencies conducted in-use tractor testing at different speeds 
and in turn used this data to validate the GEM simulations of VSL, as 
discussed in more detail in RIA Chapter 4. The agencies are confident 
that GEM appropriately recognizes the impact of VSL on CO2 
emissions and fuel consumption. The agencies have limited the range of 
inputs to the VSL in Phase 2 GEM to a minimum of 55 mph to align with 
the regulations in 40 CFR 1037.631 that provide exemptions for 
vocational vehicles intended for off-road use. A 55 mph VSL installed 
on a typical day cab tractor would reduce the composite grams of 
CO2 emitted per ton-mile by seven percent. Similarly, a 55 
mph VSL on a sleeper cab would reduce the composite grams of 
CO2 per ton-mile emitted by 10 percent. Please see RIA 
Chapter 2.8 for additional detail of technology impacts.
(xi) Hybrid Powertrains
    In Phase 2, hybrid powertrains are generally considered a 
conventional rather than innovative technology, especially for 
vocational vehicles. However, hybrid powertrain development in Class 7 
and 8 tractors has been limited to a few manufacturer demonstration 
vehicles to date. One of the key benefit opportunities for fuel 
consumption reduction with hybrids is less fuel consumption when a 
vehicle is idling, but the standard is already premised on use of 
extended idle reduction so use of hybrid technology will duplicate many 
of the same emission reductions attributable to extended idle 
reduction. NAS estimated that hybrid systems would cost approximately 
$25,000 per tractor in the 2015 through the 2020 time frame and provide 
a potential fuel consumption reduction of ten percent, of which six 
percent is idle reduction that can be achieved (less expensively) 
through the use of other idle reduction technologies.\281\ The limited 
reduction potential outside of idle reduction for Class 8 sleeper cab 
tractors is due to the mostly highway operation and limited start-stop 
operation. Due to the high cost and limited benefit during the model 
years at issue in this action, the agencies did not include hybrids in 
assessing stringency of the proposed tractor standard.
---------------------------------------------------------------------------

    \281\ See the 2010 NAS Report, Note 229, page 128.
---------------------------------------------------------------------------

    In addition to the high cost and limited utility of hybrids for 
many tractor drive cycles noted above, the agencies believe that hybrid 
powertrains systems for tractors may not be sufficiently developed and 
the necessary manufacturing capacity put in place to base a standard on 
any significant volume of hybrid tractors. Unlike hybrids for 
vocational vehicles and light-duty vehicles, the agencies are not aware 
of any full hybrid systems currently developed for long haul tractor 
applications. To date, hybrid systems for tractors have been primarily 
focused on extended idle shutdown technologies and not on the broader 
energy storage and recovery systems necessary to achieve reductions 
over typical tractor drive cycles. The Phase 2 sleeper cab tractor 
standards instead reflect the potential for extended idle shutdown 
technologies. Further, as highlighted by the 2010 NAS report, the 
agencies do believe that full hybrid powertrains may have the potential 
in the longer term to provide significant improvements in long haul 
tractor fuel efficiency and to greenhouse gas emission reductions. With 
respect to day cab tractors, the types of tractors that would receive 
the benefit from hybrid powertrains would be those such as beverage 
delivery tractors which could be treated as vocational vehicles through 
the Special Purpose Tractor provisions (40 CFR 1037.630).
    Several stakeholders commented on hybrid powertrain development for 
tractor applications. Allison agreed with the agencies' overall 
assessment of hybrids in tractors, as discussed in the

[[Page 73600]]

NPRM. Bendix agreed that hybrid systems for tractors have not been 
focused on. Bendix believed that mild hybrid systems should be included 
in GEM for credit, including stop-start and electrification of 
accessories. Daimler commented that in SuperTruck, a tractor that was 
tested on line haul-type highway routes, the hybrid system provided 
little benefit beyond what eCoast achieved because it competes with 
hybrids for energy that might be lost on hills. Overall, Daimler's view 
was that hybrid systems proved too costly relative to their benefit. 
Eaton stated that hybrids have not penetrated the commercial trucking 
landscape, primarily due to the costs but that there may be potential 
in the future for hybrids in tractor applications driven by improved 
aerodynamics and lower rolling resistance tires because it would lead 
to longer coasting times and higher braking loads, therefore greater 
regeneration opportunities. PACCAR commented that their history with 
hybrid technology was a niche market application appealing to ``green'' 
companies as long as incentives offset the cost of the technology. 
PACCAR stated that the low sales volumes were not based on performance, 
but rather on the combination of the payback of the high initial cost 
based on the limited number of gallons saved in low mileage pick up-
and-delivery applications and on the concern over resale value, since 
at some point in the vehicle's life the battery must be replaced at a 
significant cost to the owner.
    After considering the comments, the agencies are continuing the 
Phase 1 approach of not including hybrid powertrains in our feasibility 
analysis for Phase 2. Because the technology for tractor applications 
is still under development we cannot confidently assess the 
effectiveness of this technology at this point in time. In addition, 
due to the high cost, limited benefit during highway driving, and 
lacking any existing systems or manufacturing base, we cannot conclude 
that such technology will be available for tractors in the 2021-2027 
timeframe. However, manufacturers will be able to use powertrain 
testing to capture the performance of a hybrid system in GEM if systems 
are developed in the Phase 2 timeframe, so this technology remains a 
potential compliance option (without requiring an off-cycle 
demonstration).
(xii) Operational Management
    The 2010 NAS report noted many operational opportunities to reduce 
fuel consumption, such as driver training and route optimization. The 
agencies have included discussion of several of these strategies in RIA 
Chapter 2, but are not using these approaches or technologies in the 
Phase 2 standard setting process. The agencies are looking to other 
resources, such as EPA's SmartWay Transport Partnership and regulations 
that could potentially be promulgated by the Federal Highway 
Administration and the Federal Motor Carrier Safety Administration, to 
continue to encourage the development and utilization of these 
approaches. In addition, the agencies have also declined to base 
standard stringencies on technologies which are largely to chiefly 
driver-dependent, and evaluate such potential improvements through the 
off-cycle credit mechanism. See, e.g., 77 FR 62838/3 (Oct. 12, 2012).
(xiii) Consideration of Phase 1 Credits in Phase 2 Stringency Setting
    The agencies requested comment regarding the treatment of Phase 1 
credits, as discussed in Section I.C.1.b. See 80 FR 40251. As examples, 
the agencies discussed limiting the use of Phase 1 credits in Phase 2 
and factoring credit balances into the 2021 standards. Daimler 
commented that allowing Phase 1 credits in Phase 2 is necessary to 
smooth the transition into a new program that is very complex and that 
HD manufacturers cannot change over an entire product portfolio at one 
time. The agencies evaluated the status of Phase 1 credit balances in 
2015 by sector. For tractors, we found that manufacturers are 
generating significant credits, and that it appears that many of the 
credits result from their use of an optional provision for calculating 
aerodynamic drag. However, we also believe that manufacturers will 
generate fewer credits in MY 2017 and later when the final Phase 1 
standards begin. Still, the agencies believe that manufacturers will 
have significant credit balances available to them for MYs 2021-2023, 
and that much of these balances would be the result of the test 
procedure provisions rather than pull ahead of any technology. Based on 
confidential product plans for MYs 2017 and later, we expect this total 
windfall amount to be three percent of the MY 2021 standards or more. 
Therefore, the agencies are factoring in a total credit amount 
equivalent to this three percent credit (i.e. three years times 1 
percent per year). Thus, we are increasing the stringency of the 
CO2 and fuel consumption tractor standards for MYs 2021-2023 
by 1 percent to reflect these credits.
(xiv) Summary of Technology Performance
    Table III-10 describes the performance levels for the range of 
Class 7 and 8 tractor vehicle technologies.

                                                         Table III-10--Phase 2 Technology Inputs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Class 7                                                    Class 8
                                    --------------------------------------------------------------------------------------------------------------------
                                                    Day cab                                Day cab                              Sleeper cab
                                    --------------------------------------------------------------------------------------------------------------------
                                       Low roof     Mid roof    High roof     Low roof     Mid roof    High roof     Low roof     Mid roof    High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Engine
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                          2021MY       2021MY       2021MY       2021MY       2021MY       2021MY       2021MY       2021MY       2021MY
                                      11L Engine   11L Engine   11L Engine   15L Engine   15L Engine   15L Engine   15L Engine   15L Engine   15L Engine
                                          350 HP       350 HP       350 HP       455 HP       455 HP       455 HP       455 HP       455 HP       455 HP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Aerodynamics (CdA in m2)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin I..............................         6.00         7.00         7.45         6.00         7.00         7.45         6.00         7.00         7.15
Bin II.............................         5.60         6.65         6.85         5.60         6.65         6.85         5.60         6.65         6.55
Bin III............................         5.15         6.25         6.25         5.15         6.25         6.25         5.15         6.25         5.95
Bin IV.............................         4.75         5.85         5.70         4.75         5.85         5.70         4.75         5.85         5.40
Bin V..............................         4.40         5.50         5.20         4.40         5.50         5.20         4.40         5.50         4.90
Bin VI.............................         4.10         5.20         4.70         4.10         5.20         4.70         4.10         5.20         4.40
Bin VII............................         3.80         4.90         4.20         3.80         4.90         4.20         3.80         4.90         3.90
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 73601]]

 
                                                           Steer Tires (CRR in kg/metric ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................          7.8          7.8          7.8          7.8          7.8          7.8          7.8          7.8          7.8
Level 1............................          6.6          6.6          6.6          6.6          6.6          6.6          6.6          6.6          6.6
Level 2............................          5.7          5.7          5.7          5.7          5.7          5.7          5.7          5.7          5.7
Level 3............................          4.9          4.9          4.9          4.9          4.9          4.9          4.9          4.9          4.9
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Drive Tires (CRR in kg/metric ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................          8.1          8.1          8.1          8.1          8.1          8.1          8.1          8.1          8.1
Level 1............................          6.9          6.9          6.9          6.9          6.9          6.9          6.9          6.9          6.9
Level 2............................          6.0          6.0          6.0          6.0          6.0          6.0          6.0          6.0          6.0
Level 3............................          5.0          5.0          5.0          5.0          5.0          5.0          5.0          5.0          5.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Idle Reduction (% reduction)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tamper Proof AESS..................          N/A          N/A          N/A          N/A          N/A          N/A            4            4            4
Tamper Proof AESS with Diesel APU..          N/A          N/A          N/A          N/A          N/A          N/A            4            4            4
Tamper Proof AESS with Battery APU.          N/A          N/A          N/A          N/A          N/A          N/A            6            6            6
Tamper Proof AESS with Automatic             N/A          N/A          N/A          N/A          N/A          N/A            3            3            3
 Stop-Start........................
Tamper Proof AESS with FOH.........          N/A          N/A          N/A          N/A          N/A          N/A            3            3            3
Adjustable AESS....................          N/A          N/A          N/A          N/A          N/A          N/A            1            1            1
Adjustable AESS with Diesel APU....          N/A          N/A          N/A          N/A          N/A          N/A            3            3            3
Adjustable AESS with Battery APU...          N/A          N/A          N/A          N/A          N/A          N/A            5            5            5
Adjustable AESS with Automatic Stop-         N/A          N/A          N/A          N/A          N/A          N/A            5            5            5
 Start.............................
Adjustable AESS with FOH...........          N/A          N/A          N/A          N/A          N/A          N/A            2            2            2
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Transmission (% reduction)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manual.............................            0            0            0            0            0            0            0            0            0
AMT................................            2            2            2            2            2            2            2            2            2
Auto...............................            2            2            2            2            2            2            2            2            2
Dual Clutch........................            2            2            2            2            2            2            2            2            2
Top Gear Direct Drive..............            2            2            2            2            2            2            2            2            2
Trans Efficiency...................            1            1            1            1            1            1            1            1            1
Neutral Idle.......................   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in
                                         GEM          GEM          GEM          GEM          GEM          GEM          GEM          GEM          GEM
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Driveline (% reduction)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Axle Efficiency....................            2            2            2            2            2            2            2            2            2
6x2, 6x4 Axle Disconnect or 4x2              N/A          N/A          N/A   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in
 Axle..............................                                             GEM          GEM          GEM          GEM          GEM          GEM
Downspeed..........................   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in   Modeled in
                                         GEM          GEM          GEM          GEM          GEM          GEM          GEM          GEM          GEM
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Accessory Improvements (% reduction)
--------------------------------------------------------------------------------------------------------------------------------------------------------
A/C Efficiency.....................          0.5          0.5          0.5          0.5          0.5          0.5          0.5          0.5          0.5
Electric Access....................            1            1            1            1            1            1            1            1            1
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Other Technologies (% reduction)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Predictive Cruise Control..........            2            2            2            2            2            2            2            2            2
Automated Tire Inflation System....          1.2          1.2          1.2          1.2          1.2          1.2          1.2          1.2          1.2
Tire Pressure Monitoring System....            1            1            1            1            1            1            1            1            1
Neutral Coast......................          1.5          1.5          1.5          1.5          1.5          1.5          1.5          1.5          1.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Note:
``Modeled in GEM'' means that a manufacturer will input information into GEM, such as ``Yes or No'' for neutral idle, and GEM will simulate that
  condition. The values listed in the table above as percentages reflect a post-processing done within GEM after the simulation runs the drive cycles.


[[Page 73602]]

(c) Tractor Technology Adoption Rates
    As explained above, tractor manufacturers often introduce major 
product changes together, as a package. In this manner the 
manufacturers can optimize their available resources, including 
engineering, development, manufacturing and marketing activities to 
create a product with multiple new features. Since Phase 1 began, this 
approach also has allowed manufacturers to consolidate testing and 
certification requirements. In addition, manufacturers recognize that a 
truck design will need to remain competitive over the intended life of 
the design and meet future regulatory requirements. In some limited 
cases, manufacturers may implement an individual technology outside of 
a vehicle's redesign cycle.
    With respect to the levels of technology adoption used to develop 
the HD Phase 2 standards, NHTSA and EPA established technology adoption 
constraints. The first type of constraint was established based on the 
application of fuel consumption and CO2 emission reduction 
technologies into the different types of tractors. For example, 
extended idle reduction technologies are limited to Class 8 sleeper 
cabs using the reasonable assumption that day cabs are not used for 
overnight hoteling. Day cabs typically idle for shorter durations 
throughout the day.
    A second type of constraint was applied to most other technologies 
and limited their adoption based on factors reflecting the real world 
operating conditions that some combination tractors encounter (so that 
the standards are not based on use of technologies which do not provide 
in-use benefit). This second type of constraint was applied to the 
aerodynamic, tire, powertrain, vehicle speed limiter technologies, and 
other technologies. NHTSA and EPA believe that within each of these 
individual vehicle categories there are particular applications where 
the use of the identified technologies will be either ineffective or 
not technically feasible. For example, the agencies are not predicating 
these standards on the use of full aerodynamic vehicle treatments on 
100 percent of tractors because we know that in some applications (for 
example, gravel trucks engaged in local delivery) the added weight of 
the aerodynamic technologies will increase fuel consumption and hence 
CO2 emissions to a greater degree than the reduction that 
will be accomplished from the more aerodynamic nature of the tractor. 
General considerations of needed lead time also play a significant role 
in the agencies' determination of technology adoption rates.
    In the development of the standards, we generally focused initially 
on what technology could be adopted in 2027 MY after ten years of lead 
time, consistent with the general principles discussed above. Based on 
our detailed discussions with manufacturers and technology suppliers, 
we can project that the vast majority of technologies will be fully 
developed and in widespread use by 2027 MY. (One notable exception to 
this is Rankine cycle waste heat recovery, which we project to be less 
widespread in 2027). Having identified what could be achieved in 2027 
MY, we projected technology steps for 2021 MY and 2024 MY to reflect 
the gradual development and deployment of these technologies.
    This is also consistent with how manufacturers will likely approach 
complying with these standards. In general, we would expect a 
manufacturer to first identify technology packages that would allow 
them to meet the 2027 MY standards, then to structure a development 
plan to make steady progress toward the 2027 MY standards. To some 
extent, it was easier to project the technology for 2027 MY, because it 
represents a maximum feasible adoption of most technologies. The 
agencies' projections for MYs 2021 and 2024 are less certain because 
they reflect choices manufacturers would likely make to reach the 2027 
levels. As such, we have more confidence that the levels of our MYs 
2021 and 2024 standards are appropriate than we do that each 
manufacturer will follow our specific technology development path in 
2021 MY or 2024 MY.
    Table III-13, Table III-14, and Table III-15 specify the adoption 
rates that EPA and NHTSA used to develop these standards.
(i) Aerodynamics Adoption Rate
    The impact of aerodynamics on a tractor-trailer's efficiency 
increases with vehicle speed. Therefore, the usage pattern of the 
vehicle will determine the benefit of various aerodynamic technologies. 
Sleeper cabs are often used in line haul applications and drive the 
majority of their miles on the highway travelling at speeds greater 
than 55 mph. The industry has focused aerodynamic technology 
development, including SmartWay tractors, on these types of trucks. 
Therefore the agencies proposed standards that reflect the most 
aggressive aerodynamic technology application rates to this regulatory 
subcategory, along with the high roof day cabs. 80 FR 40227. All of the 
major manufacturers today offer at least one SmartWay sleeper cab 
tractor model, which is represented as Bin III aerodynamic performance. 
The agencies requested comment on the proposed aerodynamic assessment.
    The agencies received significant comment from the manufacturers 
regarding our assessment of aerodynamics in the most aerodynamic bins 
for high roof sleeper cabs. EMA commented that the assumptions that 
Class 7 and Class 8 high-roof vehicles will achieve a 35 percent 
penetration rate into Bin V, a 20 percent penetration rate into Bin VI, 
and a 5 percent penetration rate into Bin VII by 2027 are over-stated 
and unreasonable. Volvo and EMA commented that it is impossible to 
achieve the targeted aerodynamic drag reductions that ultimately are 
predicated on 60 percent of tractors achieving aero bins V, VI, and 
VII. According to their analysis, the manufacturers stated that it is 
not possible to achieve these low drag levels with any tractor design 
coupled to the non-aerodynamic test trailer prescribed in this 
proposal. Caterpillar commented that given the proposed aerodynamic 
testing procedures, the Phase 2 test trailer, and the lack of any audit 
margin for these highly variable test processes, it is infeasible to 
design tractors that can achieve bin V, and so would not be able to 
achieve bins VI and VII. Caterpillar also stated that none of the 
vehicles developed within the Department of Energy's SuperTruck program 
are capable of meeting the proposed aerodynamic targets.
    In Phase 1, the agencies determined the stringency of the tractor 
standards through the use of a mix of aerodynamic bins in the 
technology packages. For example, we included 10 percent Bin II, 70 
percent Bin III, and 20 percent Bin IV in the high roof sleeper cab 
tractor standard. The weighted average aerodynamic performance of this 
technology package is equivalent to Bin III. 76 FR 57211. In 
consideration of the comments, the agencies have adjusted the 
aerodynamic adoption rate for Class 8 high roof sleeper cabs used to 
set the final standards in 2021, 2024, and 2027 MYs (i.e., the degree 
of technology adoption on which the stringency of the standard is 
premised). Upon further analysis of simulation modeling of a SuperTruck 
tractor with a Phase 2 reference trailer with skirts, we agree with the 
manufacturers that a SuperTruck tractor technology package would only 
achieve the Bin V level of CdA, as discussed above and in 
RIA Chapter 2.8.2.2. Consequently, as noted above, the final standards 
are not premised on any adoption of Bin VI and VII technologies. 
Accordingly, we

[[Page 73603]]

determined the adoption rates in the technology packages developed for 
the final rule using a similar approach as Phase 1--spanning three 
aerodynamic bins and not setting adoption rates in the most aerodynamic 
bin(s)--to reflect that there are some vehicles whose operation limits 
the applicability of some aerodynamic technologies. We set the MY 2027 
high roof sleeper cab tractor standards using a technology package that 
included 20 percent of Bin III, 30 percent Bin IV, and 50 percent Bin V 
reflecting our assessment of the fraction of high roof sleeper cab 
tractors that we project could successfully apply these aerodynamic 
packages with this amount of lead time. The weighted average of this 
set of adoption rates is equivalent to a tractor aerodynamic 
performance near the border between Bin IV and Bin V. We believe that 
there is sufficient lead time to develop aerodynamic tractors that can 
move the entire high roof sleeper cab aerodynamic performance to be as 
good as or better than today's SmartWay designated tractors.
    The agencies phased-in the aerodynamic technology adoption rates 
within the technology packages used to determine the MY 2021 and 2024 
standards so that manufacturers can gradually introduce these 
technologies. The changes required for Bin V performance reflect the 
kinds of improvements projected in the Department of Energy's 
SuperTruck program. That program has demonstrated tractor-trailers in 
2015 with significant aerodynamic technologies. For the final rule, the 
agencies are projecting that truck manufacturers will be able to begin 
implementing some of these aerodynamic technologies on high roof 
tractors as early as 2021 MY on a limited scale. For example, in the 
2021 MY technology package, the agencies have assumed that 10 percent 
of high roof sleeper cabs will have aerodynamics better than today's 
best tractors. This phase-in structure is consistent with the normal 
manner in which manufacturers introduce new technology to manage 
limited research and development budgets as well as to allow them to 
work with fleets to fully evaluate in-use reliability before a 
technology is applied fleet-wide. The agencies believe the phase-in 
schedule will allow manufacturers to complete these normal processes. 
Overall, while the agencies are now projecting slightly less benefit 
from aerodynamic improvements than we did in the NPRM, the actual 
aerodynamic technologies being projected are very similar to what was 
projected at the time of NPRM (however, these vehicles fall into Bin V 
in the final rule, instead of Bin VI and VII in the NPRM). Importantly, 
our averaging, banking and trading provisions provide manufacturers 
with the flexibility (and incentive) to implement these technologies 
over time even though the standard changes in a single step.
    The agencies also received comment regarding our aerodynamic 
assessment of the other tractor subcategories. Daimler commented that 
due to their shorter length, day cabs are more difficult to make 
aerodynamic than sleeper cabs, and that the bin boundaries and adoption 
rates should reflect this. EMA commented that the assumed aerodynamic 
performance improvements to be achieved by day cab and mid and low-roof 
vehicles are over-estimated by at least one bin. Daimler commented that 
the agencies should adjust the average bin down in recognition of the 
fact that mid/low-roof vehicles should have lower penetration rates of 
aerodynamic vehicles to reflect market needs, reflecting these 
vehicles' use in rough environments or in hauling non-aerodynamic 
trailers.
    Aerodynamic improvements through new tractor designs and the 
development of new aerodynamic components is an inherently slow and 
iterative process. The agencies recognize that there are tractor 
applications that require on/off-road capability and other truck 
functions which restrict the type of aerodynamic equipment applicable. 
We also recognize that these types of trucks spend less time at highway 
speeds where aerodynamic technologies have the greatest benefit. The 
2002 VIUS data ranks trucks by major use.\282\ The heavy trucks usage 
indicates that up to 35 percent of the trucks may be used in on/off-
road applications or heavier applications. The uses include 
construction (16 percent), agriculture (12 percent), waste management 
(5 percent), and mining (2 percent). Therefore, the agencies analyzed 
the technologies to evaluate the potential restrictions that will 
prevent 100 percent adoption of more advanced aerodynamic technologies 
for all of the tractor regulatory subcategories and developed standards 
with new penetration rates reflecting that these vehicles spend less 
time at highway speeds. For the final rule, the agencies evaluated the 
certification data to assess how the aerodynamic performance of high 
roof day cabs compare to high roof sleeper cabs. In 2014, the high roof 
day cabs on average are certified to one bin lower than the high roof 
sleeper cabs.\283\ Consistent with the public comments, and the 
certification data, the aerodynamic adoption rates used to develop the 
final Phase 2 standards for the high roof day cab regulatory 
subcategories are less aggressive than for the Class 8 sleeper cab high 
roof tractors. In addition, the agencies are also accordingly reducing 
the adoption rates in the highest bins for low and mid roof tractors to 
follow the changes made to the high roof subcategories because we 
neither proposed nor expect the aerodynamics of a low or mid roof 
tractor to be better than a high roof tractor.
---------------------------------------------------------------------------

    \282\ U.S. Department of Energy. Transportation Energy Data 
Book, Edition 28-2009. Table 5.7.
    \283\ U.S. EPA. Memo to Docket. Coefficient of Rolling 
Resistance and Coefficient of Drag Certification Data for Tractors. 
See Docket EPA-HQ-OAR-2014-0827.
---------------------------------------------------------------------------

(ii) Low Rolling Resistance Tire Adoption Rate
    For the tire manufacturers to further reduce tire rolling 
resistance, the manufacturers must consider several performance 
criteria that affect tire selection. The characteristics of a tire also 
influence durability, traction control, vehicle handling, comfort, and 
retreadability. A single performance parameter can easily be enhanced, 
but an optimal balance of all the criteria will require improvements in 
materials and tread design at a higher cost, as estimated by the 
agencies. Tire design requires balancing performance, since changes in 
design may change different performance characteristics in opposing 
directions. Similar to the discussion regarding lesser aerodynamic 
technology application in tractor segments other than sleeper cab high 
roof, the agencies believe that the proposed standards should not be 
premised on 100 percent application of Level 3 tires in all tractor 
segments given the potential interference with vehicle utility that 
could result. 80 FR 40223.
    Several stakeholders commented about the level of rolling 
resistance used in setting the proposed level of tractor stringencies 
because the agencies used a single level for all tractor subcategories. 
ATA, First Industries, National Association of Manufacturers, PACCAR, 
Navistar and Daimler commented that the agencies erred by using the 
same rolling resistance for all types of day and sleeper cab tractors. 
They stated that the tire stringency levels should account for fleet 
and class variations and different duty-cycle needs. Caterpillar stated 
that tires need to meet demands of all conditions, including

[[Page 73604]]

unpaved roads, sloped loading docks which are frequently not treated in 
winter conditions. Caterpillar also stated that tire casings must have 
adequate durability to allow for as many as five retreads. NADA 
commented current LRRT tractor adoption rates are low and are not 
expected to increase significantly any time soon unless significant 
improvements in design are forthcoming and that there is no realistic 
means of ensuring that customers (or subsequent owners) will continue 
to use LRR tires. OOIDA commented that the LRR tire may be beneficial 
on flat terrain, but may pose a safety concern in many geographical 
regions. OOIDA also stated that a LRR tire achieves much of its 
potential fuel savings benefit by reducing the very component of 
friction or resistance that a truck driver may rely upon. PACCAR 
commented that customers with low- and mid-roof configurations 
typically operate more in urban areas where tires must withstand the 
abuse of curbs and other obstacles or in more on/off road conditions 
that are typical for flatbed, tanker, and low-boy operations, which use 
the low and mid-roof configuration vehicles. PACCAR stated that the 
tires for low and mid roof tractors vehicles are designed with 
additional side wall protection and generally have a higher coefficient 
of rolling resistance. Volvo commented with respect to tractor 
penetration and stringency setting the agencies show penetration of 
Level 3 tires starting in MY 2021. Volvo stated that they continue to 
hear customer feedback that low rolling resistance tires often lack 
adequate traction under many of the demanding conditions that trucks 
and tractors experience, such as snow and off-road. Schneider commented 
that fleet uses low rolling resistance tires on dual wheels for the 
majority of the standard fleet while using wide-based single tires for 
weight sensitive portions of the fleet. Schneider commented that 
regulations should not force the use of wide based single tires based 
solely on rolling resistance advantages without considering the overall 
performance because it may increase waste, the number of scrapped tire 
casings and landfill requirements. The commenter's view is that LRR 
dual tires are very comparable to wide based single tires (WBS) tires 
in fuel efficiency while providing better overall operating and 
economic efficiency.
    For the final rulemaking, the agencies evaluated the tire rolling 
resistance levels in the Phase 1 certification data.\284\ We found that 
high roof sleeper cabs are certified today with steer tire rolling 
resistance levels that ranged between 4.9 and 7.6 kg/ton and with drive 
tires ranging between 5.1 and 9.8 kg/ton. In the same analysis, we 
found that high roof day cabs are certified with rolling resistance 
levels ranging between 4.9 and 9.0 kg/ton for steer tires and between 
5.1 and 9.8 kg/ton for drive tires. This range spans the baseline 
through Level 3 rolling resistance performance levels. Therefore, for 
the final rule we took an approach similar to the one taken in Phase 1 
and proposed in Phase 2 that considers adoption rates across a wide 
range of tire rolling resistance levels to recognize that operators may 
have different needs. 76 FR 57211 and 80 FR 40227. The adoption rates 
for the technology packages used to determine the MY 2027 standards for 
each high roof tractor subcategory are shown in Table III-15.
---------------------------------------------------------------------------

    \284\ Memo to Docket. Coefficient of Rolling Resistance and 
Coefficient of Drag Certification Data for Tractors. Docket EPA-HQ-
OAR-2014-0827.
---------------------------------------------------------------------------

    In our analysis of the Phase 1 certification data, we found that 
the drive tires on low and mid roof sleeper cab tractors on average had 
10 to 17 percent higher rolling resistance than the high roof sleeper 
cabs. But we found only a minor difference in rolling resistance of the 
steer tires between the tractor subcategories. Based on comments 
received and further consideration of our own analysis of the 
difference in tire rolling resistance levels that exist today in the 
certification data, the agencies are adopting Phase 2 standards using a 
technology pathway that utilizes higher rolling resistance levels for 
low and mid roof tractors than the levels used to set the high roof 
tractor standards. This is also consistent with the approach that we 
took in setting the Phase 1 tractor standards. 76 FR 57211. In 
addition, the final rule reflects a reduction in Level 3 adoption rates 
for low and mid roof tractors from 25 percent in MY 2027 used at 
proposal (80 FR 40227) to zero percent adoption rate. The technology 
packages developed for the low and mid roof tractors used to determine 
the stringency of the MY 2027 standards in the final rule do not 
include any adoption rate of Level 3 drive tires to recognize the 
special needs of these applications, consistent with the comments noted 
above raising concerns about applications that limit the use of low 
rolling resistance tires.
    The agencies phased-in the low rolling resistance tire adoption 
rates within the technology packages used to determine the MY 2021 and 
2024 standards so that manufacturers can gradually introduce these 
technologies. In addition, the levels of rolling resistance used in all 
of the technology packages are achievable with either dual or wide 
based single tires, so the agencies are not forcing one technology over 
another. The adoption rates for the technology packages used to 
determine the MY 2021, 2024, and 2027 standards for each tractor 
subcategory are shown in Table III-13, Table III-14, and Table III-15.
(iii) Tire Pressure Monitoring and Automatic Tire Inflation System 
(ATIS) Adoption Rate
    The agencies used a 20 percent adoption rate of ATIS in MY 2021 and 
a 40 percent adoption rate in setting the proposed Phase 2 MY 2024 and 
2027 tractor standards. 80 FR 40227.
    ATA commented that as of 2012, roughly one percent of tractors used 
ATIS. Caterpillar and First Industries stated that the agencies should 
not force ATIS into the market by assuming any penetration rate. EMA 
commented that the assumption that 40 percent of all Class 7 and 8 
vehicles will utilize automated tire inflation systems lacked support 
and failed to account for the prevalence of tire inflation monitoring 
systems. NADA stated that they can support a 40 percent tractor 
adoption rate for MY 2027 if TPMS are considered. Volvo commented that 
given the poor reliability of past ATIS systems, they are skeptical of 
supplier's claims of current or future reliability improvements to 
these systems. Volvo stated that fleets are even more skeptical than 
truck OEMs, as an ATIS air leak results in increased fuel consumption 
due to a compressor cycling more frequently and also in potentially 
significant downtime of the vehicle. Volvo also commented that to 
incentivize truck operators to maintain tire pressure on vehicles 
equipped with a TPMS system, fleets have the ability to monitor fuel 
consumption remotely, including the ability to identify causes for 
increased fuel consumption which would be expected to motivate drivers 
to properly maintain tire pressure on TPMS equipped vehicles.
    The agencies find the comments related to a greater acceptance of 
TPMS in the tractor market to be persuasive. However, available 
information indicates that it is feasible to utilize either TPMS or 
ATIS to reduce the prevalence on underinflated tires in-use on all 
tractors. As a result, we are finalizing tractor standards that are 
predicated on the performance of a mix of TPMS and ATIS adoption rates 
in all tractor subcategories. The agencies are

[[Page 73605]]

using adoption rates of 30 percent of ATIS and 70 percent of TPMS in 
the technology packages used in setting the final Phase 2 MY 2027 
tractor standards. This represents a lower adoption rate of ATIS than 
used in the NPRM, but the agencies have added additional adoption rate 
of TPMS because none of the comments or available information disputed 
the ability to use it on all tractors. The agencies have developed 
technology packages for setting the 2021 and 2024 MY standards which 
reflect a phase in of adoption rates of each of these technologies. In 
2021 MY, the adoption rates consist of 20 percent TPMS and 20 percent 
ATIS. In 2024 MY, the adoption rates are 50 percent TPMS and 25 percent 
ATIS.
(iv) Idle Reduction Technology Adoption Rate
    Idle reduction technologies provide significant reductions in fuel 
consumption and CO2 emissions for Class 8 sleeper cabs and 
are available on the market today. There are several different 
technologies available to reduce idling. These include APUs, diesel 
fired heaters, and battery powered units. Our discussions with 
manufacturers prior to the Phase 2 NPRM indicated that idle 
technologies are sometimes installed in the factory, but that it is 
also a common practice to have the units installed after the sale of 
the truck. We want to continue to incentivize this practice and to do 
so in a manner that the emission reductions associated with idle 
reduction technology occur in use. We proposed to continue the Phase 1 
approach into Phase 2 where we recognize only idle emission reduction 
technologies that include a tamper-proof automatic engine shutoff 
system (AESS) with some override provisions.\285\ However, we welcomed 
comment on other approaches that will appropriately quantify the 
reductions that will be experienced in the real world. 80 FR 40224.
---------------------------------------------------------------------------

    \285\ The agencies are retaining the HD Phase 1 AESS override 
provisions included in 40 CFR 1037.660(b) for driver safety.
---------------------------------------------------------------------------

    We used an overall 90 percent adoption rate of tamper-proof AESS 
for Class 8 sleeper cabs in setting the proposed MY 2024 and 2027 
standards. Id. The agencies stated in the Phase 2 NPRM that we were 
unaware of reasons why AESS with extended idle reduction technologies 
could not be applied to this high fraction of tractors with a sleeper 
cab, except those deemed a vocational tractor, in the available lead 
time.
    EMA, Volvo, Daimler, and Navistar commented that the agencies 
should consider that customers are not accepting the tamper-proof AESS 
in Phase 1, therefore the adoption rates included in the proposal were 
too high and that resale concerns remain a significant issue for 
customers. PACCAR and EMA commented that the proposed 90 percent 
penetration rate of tamper-proof AESS is unachievable. Many comments 
also focused on the need for adjustable AESS. OOIDA commented that 90 
percent APU adoption is unreasonable and that the 400 pound weight 
exemption for APUs is not provided in California, Washington DC, 
Hawaii, Kentucky, Massachusetts, North Carolina, and Rhode Island. 
OOIDA also raised concerns about situations where an AESS could have 
negative consequences--such as team drivers where the co-driver was 
left asleep in the berth while the truck was shut off, or drivers with 
certain medical conditions, or pets.
    The agencies find the comments regarding the concerns for using 90 
percent adoption rates of tamper-proof AESS to be persuasive. For the 
final rule, the agencies developed a menu of idle reduction 
technologies that include both tamper-proof and adjustable AESS (as 
discussed in Section III.D.1.b) that are recognized at different levels 
of effectiveness in GEM. As discussed in the discussion of tractor 
baselines (Section III.D.1.a), the latest NACFE confidence report found 
that 96 percent of HD vehicles are equipped with adjustable automatic 
engine shutdown systems.\286\ Therefore, the agencies built this level 
of idle reduction into the baseline for sleeper cab tractors. Due to 
the high percentage acceptance of adjustable AESS today, the agencies 
project that by 2027 MY it is feasible for 100 percent of sleeper cabs 
to contain some type of AESS and idle reduction technology to meet the 
hoteling needs of the driver. However, we recognize that there are a 
variety of idle reduction technologies that meet the various needs of 
specific customers and not all customers will select diesel powered 
APUs due to the cost or weight concerns highlighted in the comments. 
Therefore, we developed an idle reduction technology package for each 
MY that reflects this variety. The idle reduction packages developed 
for the final rule contain lower AESS adoption rates than used at 
proposal. The AESS used during the NPRM assumed that it also included a 
diesel powered APU in terms of determining the effectiveness and costs. 
In the final rule, the idle reduction technology mix actually has an 
overall lower cost (even after increasing the diesel APU technology 
cost estimate for the final rule) than would have been developed for 
the final rule. In addition, the stringency of the tractor standards 
are not affected because the higher penetration rate of other idle 
reduction technologies, which are not quite as effective, but will be 
deployed more. We developed the technology package to set the 2027 MY 
sleeper cab tractor standards that includes 15 percent adoption rate of 
adjustable AESS only, 40 percent of adjustable AESS with a diesel 
powered APU, 15 percent adjustable AESS with a battery APU, 15 percent 
adjustable AESS with automatic stop/start, and 15 percent adjustable 
AESS with a fuel operated heater. We continued the same approach of 
phasing in different technology packages for the 2021 and 2024 MY 
standards, though we included some type of idle reduction on 100 
percent of the sleeper cab tractors. The 2021 MY technology package had 
a higher adoption rate of adjustable AESS with no other idle reduction 
technology and lower adoption rates of adjustable AESS with other idle 
reduction technologies. Details on the idle reduction technology 
adoption rates for the MY 2021 and 2024 standards are included in Table 
III-13 and Table III-14.
---------------------------------------------------------------------------

    \286\ North American Council for Freight Efficiency. Confidence 
Report: Idle-Reduction Solutions. 2014. Page 13.
---------------------------------------------------------------------------

(v) Transmission Adoption Rates
    The agencies' proposed standards included a 55, 80, and 90 percent 
adoption rate of automatic, automated manual, and dual clutch 
transmissions in MYs 2021, 2024, and 2027 respectively. 80 FR 40225-7. 
The agencies did not receive any comments regarding these proposed 
transmission adoption rates, and have not found any other information 
suggesting a change in approach. Therefore, we are including the same 
level of adoption rates in setting the final rule standards. The MY 
2021 and 2024 standards are likewise premised on the same adoption 
rates of these transmission technologies as at proposal.
    The agencies have added neutral idle as a technology input to GEM 
for Phase 2 in the final rulemaking. The TC10 that was tested by the 
agencies for the final rule included this technology. Therefore, we 
projected that neutral idle would be included in all of the automatic 
transmissions and therefore the adoption rates of neutral idle match 
the adoption rates of the automatic transmission in each of the MYs.
    Transmissions with direct drive as the top gear and numerically 
lower axles are

[[Page 73606]]

better suited for applications with primarily highway driving with flat 
or low rolling hills. Therefore, this technology is not appropriate for 
use in 100 percent of tractors. The agencies proposed standards 
reflected the projection that 50 percent of the tractors would have 
direct drive in top gear in MYs 2024 and 2027. 80 FR 40226-7. The 
agencies did not receive any comments regarding the adoption rates of 
transmissions with direct drive in those MYs. We therefore are 
including the same level of adoption rates in setting the final rule 
standards for MYs 2024 and 2027. Transmissions with direct drive top 
gears exist in the market today, therefore, the agencies determined it 
is feasible to also include this technology in the package for setting 
the 2021 MY standards. For the final rule, the agencies included a 20 
percent adoption rate of direct drive in the 2021 MY technology 
package.
    The agencies received comments supporting establishing a 
transmission efficiency test that measures the efficiency of each 
transmission gear and could be input into GEM. In the final rule, the 
agencies are adopting Phase 2 standards that project that 20, 40, and 
70 percent of the AMT and DCT transmissions will be tested and achieve 
a fuel consumption and CO2 emissions reduction of one 
percent in MYs 2021, 2024, and 2027, respectively.
    The adoption rates for the technology packages used to determine 
the MY 2021, 2024, and 2027 standards for each tractor subcategory are 
shown in Table III-13, Table III-14, and Table III-15.
(vi) Engine Downspeeding Adoption Rates
    The agencies proposed to include lower final drive ratios in 
setting the Phase 2 standards to account for engine downspeeding. In 
the NPRM, we used a transmission top gear ratio of 0.73 and baseline 
drive axle ratio of 3.70 in 2017 going down to a rear axle ratio of 
3.55 in 2021 MY, 3.36 in 2024 MY, and 3.20 in 2027 MY. 80 FR 40228-30.
    UCS commented that downspeeding was only partially captured as 
proposed. The agencies also received additional information from 
vehicle manufacturers and axle manufacturers that we believe supports 
using lower numerical drive axle ratios in setting the final Phase 2 
standards for sleeper cabs that spend more time on the highway than day 
cabs, directionally consistent with the UCS comment. For the final 
rules, the agencies have used 3.70 in the baseline and 3.16 for sleeper 
cabs and 3.21 for day cabs in MY 2027 to account for continued 
downspeeding opportunities. The final drive ratios used for setting the 
other model years are shown in Table III-11. These values represent the 
``average'' tractor in each of the MYs, but there will be a range of 
final drive ratios that contain more aggressive engine downspeeding on 
some tractors and less aggressive on others.

                         Table III-11--Final Drive Ratio for Tractor Technology Packages
----------------------------------------------------------------------------------------------------------------
                                                                                   Transmission
                           Model year                                Rear axle       top gear       Final drive
                                                                       ratio           ratio           ratio
----------------------------------------------------------------------------------------------------------------
                                                  Sleeper Cabs
----------------------------------------------------------------------------------------------------------------
2018............................................................            3.70            0.73            2.70
2021............................................................            3.31            0.73            2.42
2024............................................................            3.26            0.73            2.38
2027............................................................            3.16            0.73            2.31
----------------------------------------------------------------------------------------------------------------
                                                    Day Cabs
----------------------------------------------------------------------------------------------------------------
2018............................................................            3.70            0.73            2.70
2021............................................................            3.36            0.73            2.45
2024............................................................            3.31            0.73            2.42
2027............................................................            3.21            0.73            2.34
----------------------------------------------------------------------------------------------------------------

(vii) Drivetrain Adoption Rates
    The agencies' proposed standards included 6x2 axle adoption rates 
in high roof tractors of 20 percent in 2021 MY and 60 percent in MYs 
2024 and 2027. Because 6x2 axle configurations could raise concerns of 
traction, the agencies proposed standards that reflected lower adoption 
rates of 6x2 axles in low and mid roof tractors recognizing that these 
tractors may require some unique capabilities. The agencies proposed 
standards for low and mid roof tractors that included 6x2 axle adoption 
rates of 10 percent in MY 2021 and 20 percent in MYs 2024 and 2027. 80 
FR 40225-7.
    ATA and others commented that limitations to a high penetration 
rate of 6x2 axles include curb cuts, other uneven terrain features that 
could expose the truck to traction issues, lower residual values, 
traction issues, driver dissatisfaction, tire wear, and the legality of 
their use. The commenters stated that recent surveys indicate current 
market penetration rates of new line-haul 6x2 tractor sales are only in 
the range of two percent, according to a NACFE confidence report. The 
commenters also stated that while recent improvements in traction 
control systems can automatically shift weight for short periods of 
time from the non-driving axle to the driving axle during low-traction 
events, concerns remain over the impacts to highways caused by such 
shifting of weight between axles. EMA, ATA, OOIDA, Volvo, Daimler, 
PACCAR, First Industries, National Association of Manufacturers, 
Caterpillar, and others discussed that 6x2 axles are not legal in all 
U.S. states and Canadian provinces. Caterpillar and Daimler also stated 
the agencies should not assume more than 5 percent penetration rates of 
6x2 through 2027. EMA forecasts a 6x2 penetration rate of less than 5 
percent.
    Upon further consideration, the agencies have reduced the adoption 
rate of 6x2 axles and projected a 30 percent adoption rate in the 
technology package used to determine the Phase 2 2027 MY standards. The 
2021 MY standards include an adoption rate of 15 percent and the 2024 
MY standards include an adoption rate of 25 percent 6x2 axles. This 
adoption rate represents a combination of liftable 6x2 axles (which as 
noted in ATA's comments are allowed in all states but Utah, and Utah is 
expected to revise their law) and 4x2 axles. In addition, it is worth 
recognizing that state regulations related to 6x2 axles could change 
significantly

[[Page 73607]]

over the next ten years. It is also worth noting that the issue related 
to the legality of 6x2 axles was not mentioned as a barrier to adoption 
by fleets in the NACFE Confidence Report on 6x2 axles.\287\
---------------------------------------------------------------------------

    \287\ North American Council for Freight Efficiency. 
``Confidence Findings on the Potential of 6x2 Axles.'' 2014. Page 
16.
---------------------------------------------------------------------------

    In the NPRM, the agencies projected that 20 percent of 2021 MY and 
40 percent of the 2024 and 2027 MY axles would use low friction axle 
lubricants. 80 FR 40225-7. In the final rule, we are requiring that 
manufacturers conduct an axle efficiency test if they want to include 
the benefit of low friction lubricant or other axle design improvements 
when certifying in GEM. The axle efficiency test will be optional, but 
will allow manufacturers to reduce CO2 emissions and fuel 
consumption if the manufacturers have improved axle gear designs and/or 
mandatory use of low friction lubricants. The agencies' assessment of 
axle improvements found that 80 percent of the axles built in MY 2027 
could be two percent more efficient than a 2017 baseline axle. Because 
it will take time for axle manufacturers to make improvements across 
the majority of their product offerings, the agencies phased in the 
amount of axle efficiency improvements in the technology packages in 
setting the 2021 and 2024 MY standards to include 30 and 65 percent 
adoption rates, respectively.
(viii) Accessories and Other Technology Adoption Rates
    In the NPRM, the agencies projected adoption rates as show in Table 
III-12. 80 FR 40227. The agencies are adopting the same level of 
adoption rates for setting the final Phase 2 standards because we did 
not receive any comments or new data to support a change in the 
adoption rates used in the proposal.

                Table III-12--Adoption Rates Used in the Tractor Technology Packages in the NPRM
----------------------------------------------------------------------------------------------------------------
                                                                                              Higher efficiency
                  Model year                     Predictive  cruise        Electrified        air conditioning
                                                    control  (%)        accessories  (%)             (%)
----------------------------------------------------------------------------------------------------------------
2021..........................................                    20                    10                    10
2024..........................................                    40                    20                    20
2027..........................................                    40                    30                    30
----------------------------------------------------------------------------------------------------------------

(ix) Weight Reduction Technology Adoption Rates
    In the NPRM, the agencies proposed to allow manufacturers to use 
tractor weight reduction to comply with the standards. 80 FR 40223. A 
number of organizations commented generally in favor of the inclusion 
of light weight components for compliance, including the Aluminum 
Association, Meritor, American Die Casting Association, and the 
American Chemistry Council saying light-weight materials are durable 
and their use in heavy-duty vehicles can reduce weight and fuel 
consumption.
    Unlike in HD Phase 1, the agencies proposed the 2021 through 2027 
model year tractor standards without using weight reduction as a 
technology to demonstrate the feasibility of the standards. The ICCT 
stated that the agencies should include light weight components in 
setting the stringency of the standards, citing an ICCT tractor and 
trailer study showing specific light weight benefits for tractor 
components. Meritor argued that weight reduction should not be included 
in setting stringency, given the high cost to benefit ratio for weight 
reduction.
    The agencies view weight reduction as a technology with a high cost 
that offers a small benefit in the tractor sector. For example, our 
estimate of a 400 pound weight reduction will cost $2,050 (2012$) in 
2021 MY, but offers a 0.3 percent reduction in fuel consumption and 
CO2 emissions. The agencies are excluding the use of weight 
reduction components for the tractor stringency calculation due to the 
high cost associated with this technology. As noted above, Meritor in 
their comments expressed agreement with this approach.
(x) Vehicle Speed Limiter Adoption Rate
    Consistent with Phase 1, we proposed to continue the approach where 
vehicle speed limiters may be used as a technology to meet the Phase 2 
standard. See 80 FR 40224. In setting the Phase 2 proposed standard, 
however, we assumed a zero percent adoption rate of vehicle speed 
limiters. Although we expect there will be some use of VSL, currently 
it is used when the fleet involved decides it is feasible and 
practicable and increases the overall efficiency of the freight system 
for that fleet operator. To date, the compliance data provided by 
manufacturers indicate that none of the tractor configurations include 
a tamper-proof VSL setting less than 65 mph.
    At this point the agencies are not in a position to determine in 
how many additional situations use of a VSL will result in similar 
benefits to overall efficiency or how many customers will be willing to 
accept a tamper-proof VSL setting. Although we believe vehicle speed 
limiters are a simple, easy to implement, and inexpensive technology, 
we want to leave the use of vehicle speed limiters to the truck 
purchaser. In doing so, we are providing another means of meeting the 
standard that can lower compliance costs and provide a more optimal 
vehicle solution for some truck fleets or owners. For example, a local 
beverage distributor may operate trucks in a distribution network of 
primarily local roads. Under those conditions, aerodynamic fairings 
used to reduce aerodynamic drag provide little benefit due to the low 
vehicle speed while adding additional mass to the vehicle. A vehicle 
manufacturer could choose to install a VSL set at an optimized speed 
for its intended application and use this technology to assist in 
complying with our program all at a lower cost to the ultimate tractor 
purchaser.\288\
---------------------------------------------------------------------------

    \288\ Ibid.
    \288\ The agencies note that because a VSL value can be input 
into GEM, its benefits can be directly assessed with the model and 
off cycle credit applications therefore are not necessary even 
though the standard is not based on performance of VSLs (i.e. VSL is 
an on-cycle technology).
---------------------------------------------------------------------------

    We welcomed comment on whether the use of a VSL would require a 
fleet to deploy additional tractors, but did not receive responsive 
comment. ARB stated that if EPA and NHTSA decide to give credit in 
Phase 2 GEMs for VSLs, VSL benefit should also be reflected in the 
standard's stringency. Daimler supported the approach of not including 
VSLs in setting the stringency because of the resistance in the market 
to accept tamperproof VSLs. OOIDA commented that the agencies must 
consider the significant negative consequences of VSLs, such as safety 
impact from

[[Page 73608]]

differential speeds between light duty vehicles and trucks.
    After considering the comments, we still could not make a 
determination regarding the reasonableness of setting a standard based 
on a particular VSL adoption rate, for the same reasons articulated at 
proposal. Therefore, the agencies are not premising these final Phase 2 
standards on use of VSL, and instead will continue to rely on the 
industry to select VSL when circumstances are appropriate for its use 
(in which case there is an input in GEM reflecting VSL efficiency).
(d) Summary of the Adoption Rates Used To Determine the Final Phase 2 
Tractor Standards
    Table III-13 through Table III-16 provide the adoption rates of 
each technology broken down by weight class, cab configuration, and 
roof height.

                        Table III-13--Technology Adoption Rates for Class 7 and 8 Tractors for Determining the 2021 MY Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Class 7                                                    Class 8
                                    --------------------------------------------------------------------------------------------------------------------
                                                    Day cab                                Day cab                              Sleeper cab
                                    --------------------------------------------------------------------------------------------------------------------
                                       Low roof     Mid roof    High roof     Low roof     Mid roof    High roof     Low roof     Mid roof    High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Engine
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     2021 MY 11L  2021 MY 11L  2021 MY 11L  2021 MY 15L  2021 MY 15L  2021 MY 15L  2021 MY 15L  2021 MY 15L  2021 MY 15L
                                      engine 350   engine 350   engine 350   engine 455   engine 455   engine 455   engine 455   engine 455   engine 455
                                          HP           HP           HP           HP           HP           HP           HP           HP           HP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Aerodynamics
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin I..............................          10%          10%           0%          10%          10%           0%           0%          10%           0%
Bin II.............................          10%          10%           0%          10%          10%           0%          20%          10%           0%
Bin III............................          70%          70%          60%          70%          70%          60%          60%          70%          60%
Bin IV.............................          10%          10%          35%          10%          10%          35%          20%          10%          30%
Bin V..............................           0%           0%           5%           0%           0%           5%           0%           0%          10%
Bin VI.............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
Bin VII............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Steer Tires
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................           5%           5%           5%           5%           5%           5%           5%           5%           5%
Level 1............................          35%          35%          35%          35%          35%          35%          35%          35%          35%
Level 2............................          50%          50%          50%          50%          50%          50%          50%          50%          50%
Level 3............................          10%          10%          10%          10%          10%          10%          10%          10%          10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Drive Tires
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................          15%          15%           5%          15%          15%           5%          15%          15%           5%
Level 1............................          35%          35%          35%          35%          35%          35%          35%          35%          35%
Level 2............................          50%          50%          50%          50%          50%          50%          50%          50%          50%
Level 3............................           0%           0%          10%           0%           0%          10%           0%           0%          10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Idle Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tamper Proof AESS..................          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Diesel APU..          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Battery APU.          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Automatic             N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
 Stop-Start........................
Tamper Proof AESS with FOH.........          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Adjustable AESS....................          N/A          N/A          N/A          N/A          N/A          N/A          40%          40%          40%
Adjustable AESS with Diesel APU....          N/A          N/A          N/A          N/A          N/A          N/A          30%          30%          30%
Adjustable AESS with Battery APU...          N/A          N/A          N/A          N/A          N/A          N/A          10%          10%          10%
Adjustable AESS with Automatic Stop-         N/A          N/A          N/A          N/A          N/A          N/A          10%          10%          10%
 Start.............................
Adjustable AESS with FOH...........          N/A          N/A          N/A          N/A          N/A          N/A          10%          10%          10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Transmission
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manual.............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
AMT................................          40%          40%          40%          40%          40%          40%          40%          40%          40%
Auto...............................          10%          10%          10%          10%          10%          10%          10%          10%          10%
Dual Clutch........................           5%           5%           5%           5%           5%           5%           5%           5%           5%
Top Gear Direct Drive..............          20%          20%          20%          20%          20%          20%          20%          20%          20%
Trans. Efficiency..................          20%          20%          20%          20%          20%          20%          20%          20%          20%
Neutral Idle.......................          10%          10%          10%          10%          10%          10%          10%          10%          10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Driveline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Axle Efficiency....................          30%          30%          30%          30%          30%          30%          30%          30%          30%
6x2, 6x4 Axle Disconnect or 4x2              N/A          N/A          N/A          15%          15%          15%          15%          15%          15%
 Axle..............................
Downspeed (Rear Axle Ratio)........         3.36         3.36         3.36         3.36         3.36         3.36         3.31         3.31         3.31
--------------------------------------------------------------------------------------------------------------------------------------------------------

[[Page 73609]]

 
                                                                 Accessory Improvements
--------------------------------------------------------------------------------------------------------------------------------------------------------
A/C Efficiency.....................          10%          10%          10%          10%          10%          10%          10%          10%          10%
Electric Access....................          10%          10%          10%          10%          10%          10%          10%          10%          10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Other Technologies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Predictive Cruise Control..........          20%          20%          20%          20%          20%          20%          20%          20%          20%
Automated Tire Inflation System....          20%          20%          20%          20%          20%          20%          20%          20%          20%
Tire Pressure Monitoring System....          20%          20%          20%          20%          20%          20%          20%          20%          20%
Neutral Coast......................           0%           0%           0%           0%           0%           0%           0%           0%           0%
--------------------------------------------------------------------------------------------------------------------------------------------------------


                        Table III-14--Technology Adoption Rates for Class 7 and 8 Tractors for Determining the 2024 MY Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Class 7                                                    Class 8
                                    --------------------------------------------------------------------------------------------------------------------
                                                    Day cab                                Day cab                              Sleeper cab
                                    --------------------------------------------------------------------------------------------------------------------
                                       Low roof     Mid roof    High roof     Low roof     Mid roof    High roof     Low roof     Mid roof    High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Engine
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     2024 MY 11L  2024 MY 11L  2024 MY 11L  2024 MY 15L  2024 MY 15L  2024 MY 15L  2024 MY 15L  2024 MY 15L  2024 MY 15L
                                      engine 350   engine 350   engine 350   engine 455   engine 455   engine 455   engine 455   engine 455   engine 455
                                          HP           HP           HP           HP           HP           HP           HP           HP           HP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Aerodynamics
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin I..............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
Bin II.............................          20%          20%           0%          20%          20%           0%          20%          20%           0%
Bin III............................          60%          60%          40%          60%          60%          40%          60%          60%          40%
Bin IV.............................          20%          20%          40%          20%          20%          40%          20%          20%          40%
Bin V..............................           0%           0%          20%           0%           0%          20%           0%           0%          20%
Bin VI.............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
Bin VII............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Steer Tires
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................           5%           5%           5%           5%           5%           5%           5%           5%           5%
Level 1............................          25%          25%          15%          25%          25%          15%          25%          25%          15%
Level 2............................          55%          55%          60%          55%          55%          60%          55%          55%          60%
Level 3............................          15%          15%          20%          15%          15%          20%          15%          15%          20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Drive Tires
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................          10%          10%           5%          10%          10%           5%          10%          10%           5%
Level 1............................          25%          25%          15%          25%          25%          15%          25%          25%          15%
Level 2............................          65%          65%          60%          65%          65%          60%          65%          65%          60%
Level 3............................           0%           0%          20%           0%           0%          20%           0%           0%          20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Idle Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tamper Proof AESS..................          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Diesel APU..          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Battery APU.          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Automatic             N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
 Stop-Start........................
Tamper Proof AESS with FOH.........          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Adjustable AESS....................          N/A          N/A          N/A          N/A          N/A          N/A          30%          30%          30%
Adjustable AESS with Diesel APU....          N/A          N/A          N/A          N/A          N/A          N/A          40%          40%          40%
Adjustable AESS with Battery APU...          N/A          N/A          N/A          N/A          N/A          N/A          10%          10%          10%
Adjustable AESS with Automatic Stop-         N/A          N/A          N/A          N/A          N/A          N/A          10%          10%          10%
 Start.............................
Adjustable AESS with FOH...........          N/A          N/A          N/A          N/A          N/A          N/A          10%          10%          10%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Transmission
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manual.............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
AMT................................          50%          50%          50%          50%          50%          50%          50%          50%          50%
Auto...............................          20%          20%          20%          20%          20%          20%          20%          20%          20%

[[Page 73610]]

 
Dual Clutch........................          10%          10%          10%          10%          10%          10%          10%          10%          10%
Top Gear Direct Drive..............          50%          50%          50%          50%          50%          50%          50%          50%          50%
Trans. Efficiency..................          40%          40%          40%          40%          40%          40%          40%          40%          40%
Neutral Idle.......................          20%          20%          20%          20%          20%          20%          20%          20%          20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Driveline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Axle Efficiency....................          65%          65%          65%          65%          65%          65%          65%          65%          65%
6x2, 6x4 Axle Disconnect or 4x2              N/A          N/A          N/A          25%          25%          25%          25%          25%          25%
 Axle..............................
Downspeed (Rear Axle Ratio)........         3.31         3.31         3.31         3.31         3.31         3.31         3.26         3.26         3.26
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Accessory Improvements
--------------------------------------------------------------------------------------------------------------------------------------------------------
A/C Efficiency.....................          20%          20%          20%          20%          20%          20%          20%          20%          20%
Electric Access....................          20%          20%          20%          20%          20%          20%          20%          20%          20%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Other Technologies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Predictive Cruise Control..........          40%          40%          40%          40%          40%          40%          40%          40%          40%
Automated Tire Inflation System....          25%          25%          25%          25%          25%          25%          25%          25%          25%
Tire Pressure Monitoring System....          50%          50%          50%          50%          50%          50%          50%          50%          50%
Neutral Coast......................           0%           0%           0%           0%           0%           0%           0%           0%           0%
--------------------------------------------------------------------------------------------------------------------------------------------------------


                        Table III-15--Technology Adoption Rates for Class 7 and 8 Tractors for Determining the 2027 MY Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                    Class 7                                                    Class 8
                                    --------------------------------------------------------------------------------------------------------------------
                                                    Day cab                                Day cab                              Sleeper cab
                                    --------------------------------------------------------------------------------------------------------------------
                                       Low roof     Mid roof    High roof     Low roof     Mid roof    High roof     Low roof     Mid roof    High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
Engine
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     2027 MY 11L  2027 MY 11L  2027 MY 11L  2027 MY 15L  2027 MY 15L  2027 MY 15L  2027 MY 15L  2027 MY 15L  2027 MY 15L
                                      Engine 350   Engine 350   Engine 350   Engine 455   Engine 455   Engine 455   Engine 455   Engine 455   Engine 455
                                          HP           HP           HP           HP           HP           HP           HP           HP           HP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Aerodynamics
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin I..............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
Bin II.............................          20%          20%           0%          20%          20%           0%          20%          20%           0%
Bin III............................          50%          50%          30%          50%          60%          30%          40%          50%          20%
Bin IV.............................          30%          30%          30%          30%          20%          30%          40%          30%          30%
Bin V..............................           0%           0%          40%           0%           0%          40%           0%           0%          50%
Bin VI.............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
Bin VII............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Steer Tires
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................           5%           5%           5%           5%           5%           5%           5%           5%           5%
Level 1............................          20%          20%          10%          20%          20%          10%          20%          20%          10%
Level 2............................          50%          50%          50%          50%          50%          50%          50%          50%          50%
Level 3............................          25%          25%          35%          25%          25%          35%          25%          25%          35%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                       Drive Tires
--------------------------------------------------------------------------------------------------------------------------------------------------------
Base...............................           5%           5%           5%           5%           5%           5%           5%           5%           5%
Level 1............................          10%          10%          10%          10%          10%          10%          10%          10%          10%
Level 2............................          85%          85%          50%          85%          85%          50%          85%          85%          50%
Level 3............................           0%           0%          35%           0%           0%          35%           0%           0%          35%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                     Idle Reduction
--------------------------------------------------------------------------------------------------------------------------------------------------------
Tamper Proof AESS..................          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Diesel APU..          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Battery APU.          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Tamper Proof AESS with Automatic             N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
 Stop-Start........................
Tamper Proof AESS with FOH.........          N/A          N/A          N/A          N/A          N/A          N/A           0%           0%           0%
Adjustable AESS....................          N/A          N/A          N/A          N/A          N/A          N/A          15%          15%          15%
Adjustable AESS with Diesel APU....          N/A          N/A          N/A          N/A          N/A          N/A          40%          40%          40%

[[Page 73611]]

 
Adjustable AESS with Battery APU...          N/A          N/A          N/A          N/A          N/A          N/A          15%          15%          15%
Adjustable AESS with Automatic Stop-         N/A          N/A          N/A          N/A          N/A          N/A          15%          15%          15%
 Start.............................
Adjustable AESS with FOH...........          N/A          N/A          N/A          N/A          N/A          N/A          15%          15%          15%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                      Transmission
--------------------------------------------------------------------------------------------------------------------------------------------------------
Manual.............................           0%           0%           0%           0%           0%           0%           0%           0%           0%
AMT................................          50%          50%          50%          50%          50%          50%          50%          50%          50%
Auto...............................          30%          30%          30%          30%          30%          30%          30%          30%          30%
Dual Clutch........................          10%          10%          10%          10%          10%          10%          10%          10%          10%
Top Gear Direct Drive..............          50%          50%          50%          50%          50%          50%          50%          50%          50%
Trans. Efficiency..................          70%          70%          70%          70%          70%          70%          70%          70%          70%
Neutral Idle.......................          30%          30%          30%          30%          30%          30%          30%          30%          30%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                        Driveline
--------------------------------------------------------------------------------------------------------------------------------------------------------
Axle Efficiency....................          80%          80%          80%          80%          80%          80%          80%          80%          80%
6x2, 6x4 Axle Disconnect or 4x2              N/A          N/A          N/A          30%          30%          30%          30%          30%          30%
 Axle..............................
Downspeed (Rear Axle Ratio)........         3.21         3.21         3.21         3.21         3.21         3.21         3.16         3.16         3.16
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                 Accessory Improvements
--------------------------------------------------------------------------------------------------------------------------------------------------------
A/C Efficiency.....................          30%          30%          30%          30%          30%          30%          30%          30%          30%
Electric Access....................          30%          30%          30%          30%          30%          30%          30%          30%          30%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Other Technologies
--------------------------------------------------------------------------------------------------------------------------------------------------------
Predictive Cruise Control..........          40%          40%          40%          40%          40%          40%          40%          40%          40%
Automated Tire Inflation System....          30%          30%          30%          30%          30%          30%          30%          30%          30%
Tire Pressure Monitoring System....          70%          70%          70%          70%          70%          70%          70%          70%          70%
Neutral Coast......................           0%           0%           0%           0%           0%           0%           0%           0%           0%
--------------------------------------------------------------------------------------------------------------------------------------------------------

(e) Adoption Rates Used To Set the Heavy-Haul Tractor Standards
    The agencies recognize that certain technologies used to determine 
the stringency of the Phase 2 tractor standards are less applicable to 
heavy-haul tractors. Heavy-haul tractors are not typically used in the 
same manner as long-haul tractors with extended highway driving, and 
therefore will experience less benefit from aerodynamics. Aerodynamic 
technologies are very effective at reducing the fuel consumption and 
GHG emissions of tractors, but only when traveling at highway speeds. 
At lower speeds, the aerodynamic technologies may have a detrimental 
impact due to the potential of added weight. The agencies therefore 
proposed not considering the use of aerodynamic technologies in the 
development of the Phase 2 heavy-haul tractor standards. Moreover, 
because aerodynamics will not play a role in the heavy-haul standards, 
the agencies proposed to combine all of the heavy-haul tractor cab 
configurations (day and sleeper) and roof heights (low, mid, and high) 
into a single heavy-haul tractor subcategory. We welcomed comment on 
this approach. 80 FR 40233.
    The agencies received comments regarding the applicability of 
aerodynamic technologies on heavy-haul vehicles. Daimler commented that 
heavy-haul vehicles are designed to meet high cooling needs, therefore 
have large radiators and grilles, and are not designed primarily for 
hauling standard trailers on the highway. Daimler also stated that 
these vehicles are designed to operate off-road or on difficult 
terrain, which also limits the application of aerodynamic fairings, and 
that requiring aerodynamic improvements on these vehicles, may 
compromise the vehicles' work. EMA supported the agencies' proposed 
approach of not requiring the use of aerodynamic technologies as a 
component of the proposed Phase 2 heavy-haul tractor standards. EMA 
stated that those vehicles are already quite heavy (by virtue of need), 
are designed to meet high-cooling needs (thus having, for example, 
large grilles), and generally are not designed for hauling standard 
trailers on highways. EMA also stated that those vehicles are often 
designed to be capable of operation off-road or on difficult terrain. 
Volvo supported the addition of a heavy-haul subcategory since heavy-
haul tractors require large engines and increased cooling capacity that 
limits aerodynamic improvements. Volvo also stated the most heavy-haul 
rigs have some requirement for off-road access to pick up machinery, 
bulk goods, and unusual loads that also inhibit aerodynamic 
improvements. These comments largely echo the agencies' own concerns 
voiced at proposal. After considering these comments, the agencies are 
using a technology package that does not use aerodynamic improvements 
in setting the Phase 2 heavy-haul tractor standards, as we 
proposed.\289\
---------------------------------------------------------------------------

    \289\ Since aerodynamic improvements are not part of the 
technology package, the agencies likewise are not adopting any aero 
bin structure for the heavy-haul tractor subcategory.
---------------------------------------------------------------------------

    Certain powertrain and drivetrain components are also impacted 
during the design of a heavy-haul tractor,

[[Page 73612]]

including the transmission, axles, and the engine. Heavy-haul tractors 
typically require transmissions with 13 or 18 speeds to provide the 
ratio spread to ensure that the tractor is able to start pulling the 
load from a stop. Downspeed powertrains are typically not an option for 
heavy-haul operations because these vehicles require more torque to 
move the vehicle because of the heavier load. Finally, due to the 
loading requirements of the vehicle, it is not likely that a 6x2 axle 
configuration can be used in heavy-haul applications. We requested 
comments on all aspects of our heavy-haul tractor technology packages. 
80 FR 40233.
    We received comments from stakeholders about the application of 
technologies other than aerodynamics for heavy-haul tractors. Daimler 
commented that the low rolling resistance levels in the NPRM are overly 
aggressive because heavy-haul tractors require unusually high traction 
and stopping power. Daimler agreed with the agencies' assessment in the 
NPRM that did not include weight reduction because these vehicles 
require strong frames and axles to carry heavy loads. Volvo commented 
that heavy-haul tractors would not likely be able to utilize current 
SmartWay tires; would see no benefit from predictive cruise; sometimes 
utilize an auxiliary transmission for further reduction or closer 
ratios; and nearly all heavy-haul tractors have deeper drive axle 
ratios than the agencies assumed in the NPRM. After considering these 
comments and the information regarding the tire rolling resistance 
improvement opportunities, discussed in Section III.D.1.b.iii, the 
agencies have adjusted the adoption rate of low rolling resistance 
tires. Consistent with the changes made in the final rule for the 
adoption of low rolling resistance tires in low and mid roof tractors, 
the agencies did not project any adoption of Level 3 tires for heavy-
haul tractors in the final rule.
    Allison commented that AMTs in the NPRM receive a 1.8 percent 
credit in GEM for heavy-haul tractors, yet there is no similar credit 
for ATs. Allison commented that since ATs offer similar, if not 
greater, benefits, they should also receive credit and that neutral-
idle recognition should be available. The final version of Phase 2 GEM 
treats ATs and AMTs the same for heavy-haul tractors as for the other 
tractors.
    The agencies used the following heavy-haul tractor adoption rates 
for developing the final Phase 2 2021, 2024, and 2027 MY standards, as 
shown in Table III-16.

                        Table III-16--Application Rates for Heavy-Haul Tractor Standards
                                     [Heavy-haul tractor application rates]
----------------------------------------------------------------------------------------------------------------
                                               2021 MY                  2024 MY                  2027 MY
                                      --------------------------------------------------------------------------
                Engine                 2021 MY 15L engine with  2024 MY 15L engine with  2027 MY 15L engine with
                                            600 HP with 2%          600 HP with 4.2%         600 HP with 5.4%
                                        reduction over 2018 MY   reduction over 2018 MY   reduction over 2018 MY
----------------------------------------------------------------------------------------------------------------
                                                Aerodynamics--0%
----------------------------------------------------------------------------------------------------------------
                                                   Steer Tires
----------------------------------------------------------------------------------------------------------------
Phase 1 Baseline:                                          15%                      10%                       5%
    Level I..........................                      35%                      30%                      10%
    Level 2..........................                      50%                      60%                      85%
    Level 3..........................                       0%                       0%                       0%
----------------------------------------------------------------------------------------------------------------
                                                   Drive Tires
----------------------------------------------------------------------------------------------------------------
Phase 1 Baseline:                                          15%                      10%                       5%
    Level I..........................                      35%                      30%                      10%
    Level 2..........................                      50%                      60%                      85%
    Level 3..........................                       0%                       0%                       0%
----------------------------------------------------------------------------------------------------------------
                                                  Transmission
----------------------------------------------------------------------------------------------------------------
AMT..................................                      40%                      50%                      50%
Automatic with Neutral Idle..........                      10%                      20%                      20%
DCT..................................                       5%                      10%                      10%
----------------------------------------------------------------------------------------------------------------
                                               Other Technologies
----------------------------------------------------------------------------------------------------------------
6x2 Axle.............................                       0%                       0%                       0%
Transmission Efficiency..............                      20%                      40%                      70%
Axle Efficiency......................                      30%                      65%                      80%
Predictive Cruise Control............                      20%                      40%                      40%
Accessory Improvements...............                      10%                      20%                      20%
Air Conditioner Efficiency                                 10%                      20%                      20%
 Improvements........................
Automatic Tire Inflation Systems.....                      20%                      25%                      30%
Tire Pressure Monitoring System......                      20%                      50%                      70%
----------------------------------------------------------------------------------------------------------------

    The agencies are also adopting in Phase 2 provisions that allow the 
manufacturers to meet an optional heavy Class 8 tractor standard that 
reflects both aerodynamic improvements, along with the powertrain 
requirements that go along with higher GCWR. Table III-17 reflects the 
adoption rates for each of the technologies for each of the 
subcategories in MY 2021. The technology packages closely reflect those 
in the primary Class 8 tractor program. The exceptions include less 
aggressive targets for low rolling

[[Page 73613]]

resistance tires, no 6x2 axle adoption rates, and no downspeeding due 
to the heavier loads of these vehicles.

        Table III-17--Adoption Rates Used To Develop the 2021 MY Optional Heavy Class 8 Tractor Standards
                           [Optional heavy class 8 tractor application rates--2021 MY]
----------------------------------------------------------------------------------------------------------------
                                                   Low/mid roof    High roof day   Low/mid roof      High roof
                                                      day cab           cab         sleeper cab     sleeper cab
                                                 ---------------------------------------------------------------
                     Engine                         2021 MY 15L     2021 MY 15L     2021 MY 15L     2021 MY 15L
                                                    Engine with     Engine with     Engine with     Engine with
                                                      600 HP          600 HP          600 HP          600 HP
----------------------------------------------------------------------------------------------------------------
                                                  Aerodynamics
----------------------------------------------------------------------------------------------------------------
Bin I...........................................             10%              0%             10%              0%
Bin II..........................................             10%              0%             10%              0%
Bin III.........................................             70%             60%             70%             60%
Bin IV..........................................             10%             35%             10%             30%
Bin V...........................................              0%              5%              0%             10%
Bin VI..........................................              0%              0%              0%              0%
Bin VII.........................................              0%              0%              0%              0%
----------------------------------------------------------------------------------------------------------------
                                                   Steer Tires
----------------------------------------------------------------------------------------------------------------
Phase 1 Baseline                                             10%              5%             10%              5%
Level I.........................................             25%             35%             25%             35%
Level 2.........................................             65%             60%             65%             60%
Level 3.........................................              0%              0%              0%              0%
----------------------------------------------------------------------------------------------------------------
                                                   Drive Tires
----------------------------------------------------------------------------------------------------------------
Phase 1 Baseline                                             20%             10%             20%             10%
Level I.........................................             40%             30%             40%             30%
Level 2.........................................             40%             60%             40%             60%
Level 3.........................................              0%              0%              0%              0%
----------------------------------------------------------------------------------------------------------------
                                                  Transmission
----------------------------------------------------------------------------------------------------------------
AMT.............................................             40%             40%             40%             40%
Automatic with Neutral Idle.....................             10%             10%             10%             10%
DCT.............................................              5%              5%              5%              5%
----------------------------------------------------------------------------------------------------------------
                                               Other Technologies
----------------------------------------------------------------------------------------------------------------
Adjustable AESS w/Diesel APU....................             N/A             N/A             30%             30%
Adjustable AESS w/Battery APU...................             N/A             N/A             10%             10%
Adjustable AESS w/Automatic Stop-Start..........             N/A             N/A             10%             10%
Adjustable AESS w/FOH Cold, Main Engine Warm....             N/A             N/A             10%             10%
Adjustable AESS programmed to 5 minutes.........             N/A             N/A             40%             40%
Transmission Efficiency.........................             20%             20%             20%             20%
Axle Efficiency.................................             30%             30%             30%             30%
Predictive Cruise Control.......................             20%             20%             20%             20%
Accessory Improvements..........................             10%             10%             10%             10%
Air Conditioner Efficiency Improvements.........             10%             10%             10%             10%
Automatic Tire Inflation Systems................             20%             20%             20%             20%
Tire Pressure Monitoring System.................             20%             20%             20%             20%
----------------------------------------------------------------------------------------------------------------

(f) Derivation of the Final Phase 2 Tractor Standards
    The agencies used the technology effectiveness inputs and 
technology adoption rates to develop GEM inputs to derive the HD Phase 
2 fuel consumption and CO2 emissions standards for each 
subcategory of Class 7 and 8 combination tractors. Note that we have 
analyzed one technology pathway for each level of stringency, but 
manufacturers will be free to use any combination of technology to meet 
the standards, as well as the flexibility of averaging, banking and 
trading, to meet the standard on average. The agencies derived a 
scenario tractor for each subcategory by weighting the individual GEM 
input parameters included in Table III-7 with the adoption rates in 
Table III-8 through Table III-10. For example, the CdA value 
for a 2021 MY Class 8 Sleeper Cab High Roof scenario case was derived 
as 60 percent times 5.95 plus 30 percent times 5.40 plus 10 percent 
times 4.90, which is equal to a CdA of 5.68 m\2\. Similar 
calculations were made for tire rolling resistance, transmission types, 
idle reduction, and other technologies. The agencies developed fuel 
maps that achieved the CO2 emissions and fuel consumption 
reductions described in Section III.D.1.b. The agencies then ran GEM 
with a single set of vehicle inputs, as shown in Table III-18 through 
Table III-21, to derive the final standards for each subcategory. 
Additional detail is provided in the RIA Chapter 2.8.4.

[[Page 73614]]



                                     Table III-18--GEM Inputs for the 2021 MY Class 7 and 8 Tractor Standard Setting
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Class 7                                                                      Class 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Day cab                                            Day cab                                          Sleeper cab
--------------------------------------------------------------------------------------------------------------------------------------------------------
    Low roof          Mid roof        High roof         Low roof         Mid roof        High roof         Low roof         Mid roof        High roof
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         Engine
--------------------------------------------------------------------------------------------------------------------------------------------------------
2021 MY 11L         2021 MY 11L      2021 MY 11L      2021 MY 15L      2021 MY 15L      2021 MY 15L      2021 MY 15L      2021 MY 15L      2021 MY 15L
 Engine 350 HP     Engine 350 HP    Engine 350 HP    Engine 455 HP    Engine 455 HP    Engine 455 HP    Engine 455 HP    Engine 455 HP    Engine 455 HP
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               Aerodynamics (CdA in m\2\)
--------------------------------------------------------------------------------------------------------------------------------------------------------
         5.24             6.33             6.01             5.24             6.33             6.01             5.24             6.33             5.68
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Steer Tires (CRR in kg/metric ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
          6.0              6.0              6.0              6.0              6.0              6.0              6.0              6.0              6.0
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Drive Tires (CRR in kg/metric ton)
--------------------------------------------------------------------------------------------------------------------------------------------------------
          6.6              6.6              6.3              6.6              6.6              6.3              6.6              6.6              6.3
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Extended Idle Reduction Weighted Effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
          N/A              N/A              N/A              N/A              N/A              N/A             2.3%             2.3%             2.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Transmission = 10 speed Manual Transmission
                                        Gear Ratios = 12.8, 9.25, 6.76, 4.90, 3.58, 2.61, 1.89, 1.38, 1.00, 0.73
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               Drive Axle Ratio = 3.36 for day cabs, 3.31 for sleeper cabs
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             6x2 Axle Weighted Effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
          N/A              N/A              N/A             0.3%             0.3%             0.3%             0.3%             0.3%             0.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Transmission Type Weighted Effectiveness = 1.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Neutral Idle Weighted Effectiveness
--------------------------------------------------------------------------------------------------------------------------------------------------------
         0.1%             0.1%             0.1%             0.1%             0.1%             0.1%            0.02%            0.02%            0.02%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                       Direct Drive Weighted Effectiveness = 0.4%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Transmission Efficiency Weighted Effectiveness = 0.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                           Axle Efficiency Improvement = 0.6%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     Air Conditioner Efficiency Improvements = 0.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                              Accessory Improvements = 0.1%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            Predictive Cruise Control = 0.4%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Automatic Tire Inflation Systems = 0.3%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                         Tire Pressure Monitoring System = 0.2%
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             Phase 1 Credit Carry-over = 1%
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 73615]]


                                     Table III-19--GEM Inputs for the 2024 MY Class 7 and 8 Tractor Standard Setting
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Class 7                                                                      Class 8
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Day cab                                            Day cab                                          Sleeper cab
---------------------------------------------------------------------------------------------