[Federal Register Volume 89, Number 76 (Thursday, April 18, 2024)]
[Rules and Regulations]
[Pages 27842-28215]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2024-06214]



[[Page 27841]]

Vol. 89

Thursday,

No. 76

April 18, 2024

Part II





Environmental Protection Agency





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40 CFR Parts 85, 86, 600, et al.





Multi-Pollutant Emissions Standards for Model Years 2027 and Later 
Light-Duty and Medium-Duty Vehicles; Final Rule

  Federal Register / Vol. 89, No. 76 / Thursday, April 18, 2024 / Rules 
and Regulations  

[[Page 27842]]


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ENVIRONMENTAL PROTECTION AGENCY

40 CFR Parts 85, 86, 600, 1036, 1037, 1066, and 1068

[EPA-HQ-OAR-2022-0829; FRL-8953-04-OAR]
RIN 2060-AV49


Multi-Pollutant Emissions Standards for Model Years 2027 and 
Later Light-Duty and Medium-Duty Vehicles

AGENCY: Environmental Protection Agency (EPA).

ACTION: Final rule.

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SUMMARY: Under the Clean Air Act, the Environmental Protection Agency 
(EPA) is establishing new, more protective emissions standards for 
criteria pollutants and greenhouse gases (GHG) for light-duty vehicles 
and Class 2b and 3 (``medium-duty'') vehicles that will phase-in over 
model years 2027 through 2032. In addition, EPA is finalizing GHG 
program revisions in several areas, including off-cycle and air 
conditioning credits, the treatment of upstream emissions associated 
with zero-emission vehicles and plug-in hybrid electric vehicles in 
compliance calculations, medium-duty vehicle incentive multipliers, and 
vehicle certification and compliance. EPA is also establishing new 
standards to control refueling emissions from incomplete medium-duty 
vehicles, and battery durability and warranty requirements for light-
duty and medium-duty electric and plug-in hybrid electric vehicles. EPA 
is also finalizing minor amendments to update program requirements 
related to aftermarket fuel conversions, importing vehicles and 
engines, evaporative emission test procedures, and test fuel 
specifications for measuring fuel economy.

DATES: This final rule is effective on June 17, 2024. The incorporation 
by reference of certain publications listed in this regulation is 
approved by the Director of the Federal Register beginning June 17, 
2024. The incorporation by reference of certain publications listed in 
this regulation is approved by the Director of the Federal Register as 
of March 27, 2023.

ADDRESSES: EPA has established a docket for this action under Docket ID 
No. EPA-HQ-OAR-2022-0829. All documents in the docket are listed on the 
https://www.regulations.gov website. 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 electronically through https://www.regulations.gov.

FOR FURTHER INFORMATION CONTACT: Michael Safoutin, Office of 
Transportation and Air Quality, Assessment and Standards Division 
(ASD), Environmental Protection Agency, 2000 Traverwood Drive, Ann 
Arbor, MI 48105; telephone number: (734) 214-4348; email address: 
[email protected].

SUPPLEMENTARY INFORMATION: 

A. Does this action apply to me?

    Entities potentially affected by this rule include light-duty 
vehicle manufacturers, independent commercial importers, alternative 
fuel converters, and manufacturers and converters of medium-duty 
vehicles (i.e., vehicles between 8,501 and 14,000 pounds gross vehicle 
weight rating (GVWR)). Potentially affected categories and entities 
include:

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                Category                   NAICS codes \a\        Examples of potentially affected entities
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Industry................................             336111  Motor Vehicle Manufacturers.
                                                     336112
Industry................................             811111  Commercial Importers of Vehicles and Vehicle
                                                     811112   Components.
                                                     811198
                                                     423110
Industry................................             335312  Alternative Fuel Vehicle Converters.
                                                     811198
Industry................................             333618  On-highway medium-duty engine & vehicle (8,501-
                                                     336120   14,000 pounds GVWR) manufacturers.
                                                     336211
                                                     336312
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\a\ North American Industry Classification System (NAICS).

    This list is not intended to be exhaustive, but rather provides a 
guide regarding entities likely to be affected by this action. To 
determine whether particular activities may be regulated by this 
action, you should carefully examine the regulations. You may direct 
questions regarding the applicability of this action to the person 
listed in FOR FURTHER INFORMATION CONTACT.

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

    This regulatory action was supported by influential scientific 
information. EPA therefore conducted peer review in accordance with 
OMB's Final Information Quality Bulletin for Peer Review. Specifically, 
we conducted peer review on six analyses: (1) Optimization Model for 
reducing Emissions of Greenhouse gases from Automobiles (OMEGA 2.0), 
(2) Advanced Light-duty Powertrain and Hybrid Analysis (ALPHA3), (3) 
Motor Vehicle Emission Simulator (MOVES), (4) The Effects of New-
Vehicle Price Changes on New- and Used-Vehicle Markets and Scrappage; 
(5) Literature Review on U.S. Consumer Acceptance of New Personally 
Owned Light-Duty Plug-in Electric Vehicles; (6) Cost and Technology 
Evaluation, Conventional Powertrain Vehicle Compared to an Electrified 
Powertrain Vehicle, Same Vehicle Class and OEM. All peer reviews were 
in the form of letter reviews conducted by a contractor. The peer 
review reports for each analysis are in the docket for this action and 
at EPA's Science Inventory (https://cfpub.epa.gov/si/).

Table of Contents

I. Executive Summary
    A. Purpose of This Rule and Legal Authority
    B. Summary of Light- and Medium-Duty Vehicle Emissions Programs
    C. Summary of Emission Reductions, Costs, and Benefits
II. Public Health and Welfare Need for Emission Reductions
    A. Climate Change From GHG Emissions
    B. Background on Criteria and Air Toxics Pollutants Impacted by 
This Rule
    C. Health Effects Associated With Exposure to Criteria and Air 
Toxics Pollutants

[[Page 27843]]

    D. Welfare Effects Associated With Exposure to Criteria and Air 
Toxics Pollutants Impacted by the Final Standards
III. Light- and Medium-Duty Vehicle Standards for Model Years 2027 
and Later
    A. Introduction and Background
    B. EPA's Statutory Authority Under the Clean Air Act (CAA)
    C. GHG Standards for Model Years 2027 and Later
    D. Criteria Pollutant Emissions Standards
    E. Modifications to the Medium-Duty Passenger Vehicle (MDPV) 
Definition
    F. What alternatives did EPA consider?
    G. Certification, Compliance, and Enforcement Provisions
    H. On-Board Diagnostics Program Updates
    I. Coordination with Federal and State Partners
    J. Stakeholder Engagement
IV. Technical Assessment of the Standards
    A. What approach did EPA use in analyzing the standards?
    B. EPA's Approach to Considering the No Action Case and 
Sensitivities
    C. How did EPA consider technology feasibility and related 
issues?
    D. Projected Compliance Costs and Technology Penetrations
    E. How did EPA consider alternatives in selecting the final 
program?
    F. Sensitivities--LD GHG Compliance Modeling
    G. Sensitivities--MD GHG Compliance Modeling
    H. Additional Illustrative Scenarios
V. EPA's Basis That the Final Standards are Feasible and Appropriate 
Under the Clean Air Act
    A. Overview
    B. Consideration of Technological Feasibility, Compliance Costs 
and Lead Time
    C. Consideration of Emissions of GHGs and Criteria Pollutants
    D. Consideration of Impacts on Consumers, Energy, Safety and 
Other Factors
    E. Selection of the Final Standards Under CAA Section 202(a)
VI. How will this rule reduce GHG emissions and their associated 
effects?
    A. Estimating Emission Inventories in OMEGA
    B. Impact on GHG Emissions
    C. Global Climate Impacts Associated With the Rule's GHG 
Emissions Reductions
VII. How will the rule impact criteria and air toxics emissions and 
their associated effects?
    A. Impact on Emissions of Criteria and Air Toxics Pollutants
    B. How will the rule affect air quality?
    C. How will the rule affect human health?
    D. Demographic Analysis of Air Quality
VIII. Estimated Costs and Benefits and Associated Considerations
    A. Summary of Costs and Benefits
    B. Vehicle Technology and Other Costs
    C. Fueling Impacts
    D. Non-Emission Benefits
    E. Greenhouse Gas Emission Reduction Benefits
    F. Criteria Pollutant Health and Environmental Benefits
    G. Transfers
    H. U.S. Vehicle Sales Impacts
    I. Employment Impacts
    J. Environmental Justice
    K. Additional Non-Monetized Considerations Associated With 
Benefits and Costs
IX. Statutory and Executive Order Reviews
    A. Executive Order 12866: Regulatory Planning and Review and 
Executive Order 14094: Modernizing Regulatory Review
    B. Paperwork Reduction Act (PRA)
    C. Regulatory Flexibility Act
    D. Unfunded Mandates Reform Act
    E. Executive Order 13132: ``Federalism''
    F. Executive Order 13175: ``Consultation and Coordination with 
Indian Tribal Governments''
    G. Executive Order 13045: Protection of Children from 
Environmental Health Risks and Safety Risks
    H. Executive Order 13211: Energy Effects
    I. National Technology Transfer and Advancement Act (NTTAA) and 
1 CFR part 51
    J. Executive Order 12898: Federal Actions to Address 
Environmental Justice in Minority Populations and Low-Income 
Populations and Executive Order 14096: Revitalizing Our Nation's 
Commitment to Environmental Justice for All
    K. Congressional Review Act (CRA)
    L. Judicial Review
    M. Severability
X. Statutory Provisions and Legal Authority

I. Executive Summary

A. Purpose of this Rule and Legal Authority

    The Environmental Protection Agency (EPA) is finalizing 
multipollutant emissions standards for light-duty passenger cars and 
light trucks and for Class 2b and 3 vehicles (``medium-duty vehicles'' 
or MDVs) under its authority in section 202(a) of the Clean Air Act 
(CAA), 42 U.S.C. 7521(a). The program establishes new, more stringent 
vehicle emissions standards for criteria pollutant and greenhouse gas 
(GHG) emissions from motor vehicles for model years (MYs) 2027 through 
2032 and beyond.
    Section 202(a) requires EPA to establish standards for emissions of 
air pollutants from new motor vehicles which, in the Administrator's 
judgment, cause or contribute to air pollution which may reasonably be 
anticipated to endanger public health or welfare. Standards under 
section 202(a) 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.'' Thus, in establishing or revising 
section 202(a) standards designed to reduce air pollution that 
endangers public health and welfare, EPA also must consider issues of 
technological feasibility, the cost of compliance, and lead time. EPA 
also considers safety, consistent with CAA section 202(a)(4), and may 
consider other factors, and in previous vehicle standards rulemakings 
as well as in this rule, has considered impacts on the automotive 
industry, impacts on vehicle purchasers/consumers, oil conservation, 
energy security, and other relevant considerations.
    This final rule follows a Notice of Proposed Rulemaking published 
on May 5, 2023.\1\ EPA has conducted extensive engagement with the 
public, including a wide range of interested stakeholders to gather 
input which we considered in developing both the proposal and this 
final rule. In developing this final rule, EPA considered comments 
received during the public comment process, including the public 
hearings. EPA held three days of virtual public hearings on May 9-11, 
2023, and heard from approximately 240 speakers. During the public 
comment period that ended on July 5, 2023, EPA received more than 
250,000 written comments. Through the public comment process, we 
received comments, data and analysis from a variety of stakeholders 
including auto manufacturers, state and local governments, non-
governmental organizations (NGOs), labor organizations, environmental 
justice groups, suppliers, consumer groups, academics, and others.
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    \1\ 88 FR 29184, May 5, 2023.
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1. Need for Continued Emissions Reductions Under 202(a) of the Clean 
Air Act
    Since 1971, EPA has, at Congress' direction, been setting emissions 
standards for motor vehicles. The earliest standards were for light-
duty vehicles for hydrocarbons, nitrogen oxides (NOX), and 
carbon monoxide (CO), requiring a 90 percent reduction in emissions. 
Since then, EPA has continued to set standards for the full range of 
vehicle classes (including light-duty, medium-duty and heavy-duty 
vehicles and passenger, cargo and vocational vehicles) to reduce 
emissions of pollutants for which the Administrator has made an 
endangerment finding pursuant to CAA section 202. In 2009, EPA made an 
endangerment finding for GHG, and in 2010 issued the initial light-duty 
GHG standards. More recently, in 2014, EPA finalized criteria pollutant 
standards for light-duty vehicles (``Tier 3'') that were designed to be 
implemented alongside the GHG standards for light-duty vehicles that 
EPA had adopted in 2012

[[Page 27844]]

for model years 2017-2025.\2\ In 2020, EPA revised the GHG standards 
that had previously been adopted for model years 2021-2026,\3\ and in 
2021, EPA conducted a rulemaking (the ``2021 rulemaking'') \4\ that 
again revised GHG standards for light-duty passenger cars and light 
trucks for MYs 2023 through 2026, setting significantly more stringent 
standards for those MYs than had been set by the 2020 rulemaking, and 
somewhat more stringent than the standards adopted in 2012.
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    \2\ 79 FR 23414, April 28, 2014, ``Control of Air Pollution From 
Motor Vehicles: Tier 3 Motor Vehicle Emission and Fuel Standards.
    \3\ 85 FR 24174, April 30, 2020, ``The Safer Affordable Fuel-
Efficient (SAFE) Vehicles Rule for Model Years 2021-2026 Passenger 
Cars and Light Trucks.''
    \4\ 86 FR 74434, December 30, 2021, ``Revised 2023 and Later 
Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards.''
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    Despite the significant emissions reductions achieved by these and 
other rulemakings, air pollution from motor vehicles continues to 
impact public health, welfare, and the environment. Motor vehicle 
emissions contribute to ozone, particulate matter (PM), and air toxics, 
which are linked with premature death and other serious health impacts, 
including respiratory illness, cardiovascular problems, and cancer. 
This air pollution affects people nationwide, as well as those who live 
or work near transportation corridors. In addition, the effects of 
climate change represent a rapidly growing threat to human health and 
the environment, and are caused by GHG emissions from human activity, 
including motor vehicle transportation. Addressing these public health 
and welfare needs will require substantial additional reductions in 
criteria pollutants and GHG emissions from the transportation sector. 
Recent trends and developments in vehicle technologies that reduce 
emissions indicate that more stringent emissions standards are feasible 
at reasonable cost and would lead to significant improvements in public 
health and welfare.
    Addressing the public health impacts of criteria pollutants 
(including particulate matter (PM), ozone, and NOX) will 
require continued reductions in these pollutants (and their precursors) 
from the transportation sector. In 2023, mobile sources accounted for 
approximately 54 percent of anthropogenic NOX emissions, 5 
percent of anthropogenic direct PM2.5 emissions, and 23 
percent of anthropogenic volatile organic compound (VOC) emissions 
nationwide.5 6 7 Light- and medium-duty vehicles accounted 
for approximately 23 percent, 20 percent, and 52 percent of 2023 mobile 
source NOX, PM2.5, and VOC emissions, 
respectively.6 7 7 The benefits of reductions in criteria 
pollutant emissions accrue broadly across many populations and 
communities. As of November 30, 2023, there are 12 PM2.5 
nonattainment areas with a population of more than 32 million people 
\8\ and 54 ozone nonattainment areas with a population of more than 119 
million people. The importance of continued reductions in these 
emissions is detailed at length in section II of this preamble.
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    \5\ U.S. Environmental Protection Agency (2021). 2016v1 Platform 
(https://www.epa.gov/air-emissions-modeling/2016v1-platform).
    \6\ U.S. Environmental Protection Agency (2021). 2017 National 
Emissions Inventory (NEI) Data. https://www.epa.gov/air-emissions-inventories/2017-national-emissions-inventory-nei-data.
    \7\ U.S. Environmental Protection Agency (2023). MOVES 4.0.0. 
https://www.epa.gov/moves.
    \8\ The population total is calculated by summing, without 
double counting, the 1997, 2006 and 2012 PM2.5 
nonattainment populations contained in the Criteria Pollutant 
Nonattainment Summary report (https://www.epa.gov/green-book/green-book-data-download).
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    The transportation sector is the largest U.S. source of GHG 
emissions, representing 29 percent of total GHG emissions.\9\ Within 
the transportation sector, light-duty vehicles are the largest 
contributor, at 58 percent, and thus comprise 16.5 percent of total 
U.S. GHG emissions,\10\ even before considering the contribution of 
medium-duty Class 2b and 3 vehicles which are also included under this 
rule. GHG emissions have significant impacts on public health and 
welfare as evidenced by the well-documented scientific record and as 
set forth in EPA's Endangerment and Cause or Contribute Findings under 
CAA section 202(a).\11\ Additionally, major scientific assessments 
continue to be released that further advance our understanding of the 
climate system and the impacts that GHGs have on public health and 
welfare both for current and future generations, as discussed in 
section II.A of this preamble, making it clear that continued GHG 
emission reductions in the motor vehicle sector are needed to protect 
public health and welfare.
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    \9\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 1990-
2021 (EPA-430-R-23-002, published April 2023).
    \10\ Ibid.
    \11\ 74 FR 66496, December 15, 2009; 81 FR 54422, August 15, 
2016.
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    In addition to and separate from this final rule, the 
Administration has recognized the need for action to address climate 
change. Executive Order 14008 (``Tackling the Climate Crisis at Home 
and Abroad,'' January 27, 2021) recognizes the need for a government-
wide approach to addressing the climate crisis, directing Federal 
departments and agencies to facilitate the organization and deployment 
of such an effort. On April 22, 2021, the Administration announced a 
new target for the United States to achieve a 50 to 52 percent 
reduction from 2005 levels in economy-wide net greenhouse gas pollution 
in 2030, consistent with the goal of limiting global warming to no more 
than 1.5 degrees Celsius by 2050 and representing the U.S. Nationally 
Determined Contribution (NDC) under the Paris Agreement. These actions, 
while they do not inform the standards established here, serve to 
underscore the importance of EPA acting pursuant to its Clean Air Act 
authority to address pollution from motor vehicles.
    EPA is establishing both criteria pollutant and GHG standards in 
this rulemaking given the need for additional reductions in emissions 
of these air pollutants to protect public health and welfare and based 
on EPA's assessment of the suite of available control technologies for 
those pollutants, some of which are effective in controlling both GHGs 
and criteria pollutant emissions. Under these performance-based 
emissions standards, manufacturers have the discretion to choose the 
mix of technologies that achieve compliance across their fleets. EPA's 
modeling provides information about several potential compliance paths 
manufacturers could use to comply with the standards, based on multiple 
inputs and assumptions (e.g., in what we have termed the central case, 
that manufacturers will seek the lowest cost compliance path). EPA's 
central analysis shows that both within the product lines of individual 
manufacturers and for different manufacturers across the industry, 
manufacturers will make use of a diverse range of technologies, 
including advanced gasoline engines (reducing engine-out emissions), 
improvements to tailpipe controls, additional electrification of 
gasoline powertrains, and electric powertrains. EPA recognizes that, 
although it has modeled individual compliance paths for each 
manufacturer, manufacturers will make their own assessment of the 
vehicle market and their own decisions about which technologies to 
apply to which vehicles for any given model year. The standards are 
performance-based, and while EPA finds modeling useful in evaluating 
the feasibility of the standards, it is manufacturers who will decide 
the ultimate mix of vehicle

[[Page 27845]]

technologies to comply. Although EPA cannot model every possible 
compliance scenario, EPA did model several sensitivity analyses which 
identify a number of example alternative compliance scenarios for the 
industry. EPA has evaluated these alternative scenarios and has 
concluded that the lead time and estimated costs to manufacturers under 
each of these alternative compliance scenarios are reasonable and 
appropriate for standards under CAA 202(a). Furthermore, EPA finds that 
it would be technologically feasible to meet these standards without 
additional zero-emission vehicles beyond the volumes already sold 
today.\12\ Although our modeling projects that such a fleet would not 
be the lowest cost alternative for complying with the standards, the 
fact that it would comply underscores both the feasibility and the 
flexibility of the standards, and confirms that manufacturers are 
likely to continue to offer vehicles with a diverse range of 
technologies, including advanced gasoline technologies as well as zero- 
and near-zero emission vehicles for the duration of these standards and 
beyond.
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    \12\ EPA has analyzed this scenario as an illustrative scenario, 
which we refer to as the ``No additional BEVs above base year 
fleet'' scenario. For further details, please refer to Section IV.H 
of this preamble.
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    The Administrator finds that the standards herein are consistent 
with EPA's responsibilities under the CAA and appropriate under CAA 
section 202(a). EPA has carefully considered the statutory factors, 
including technological feasibility and cost of the standards and the 
available lead time for manufacturers to comply with them. Our analysis 
for this action supports the conclusion that the final standards are 
technologically feasible and that the costs of compliance for 
manufacturers will be reasonable. The standards will result in 
significant reductions in emissions of criteria pollutants, GHGs, and 
air toxics, resulting in significant benefits for public health and 
welfare. We also estimate that the standards will result in reduced 
vehicle operating costs for consumers and that the benefits of the 
program will exceed the costs. Based on EPA's analysis, it is the 
agency's assessment that the standards are appropriate and justified 
under CAA section 202(a).
2. Recent and Ongoing Advancements in Technology Enable Further 
Emissions Reductions
    Over five decades of setting standards, EPA has developed extensive 
expertise in assessing the availability of new and existing 
technologies to control pollution from motor vehicles. In some cases, 
EPA has adopted standards based on its judgment that the industry could 
further develop and commercialize technologies. In others, EPA has 
based standards on the further deployment of existing technologies, 
rather than on the further development of new technologies. Both 
approaches are consistent with EPA's general authority for emissions 
standards under section 202(a)(1)-(2), although Congress has specified 
under 202(a)(3) that for heavy-duty criteria standards the 
Administrator should identify the greatest degree of emissions 
reduction achievable, taking into consideration certain factors.
    In 2000, EPA adopted the Tier 2 standards, which required passenger 
vehicles to be 77 to 95 percent cleaner (and encouraged certification 
of zero-emitting vehicles through the establishment of ``Bin 1'', which 
is now referred to as ``Bin 0'').\13\ More recently, in 2014, EPA 
adopted Tier 3 emissions standards, which required a further reduction 
of 60 to 80 percent of emissions (depending on pollutant and vehicle 
class).\14\ Similar to the prior Tier 2 standards, Tier 3 established 
``bins'' of Federal Test Procedure (FTP) standards, including bins for 
zero-emitting vehicles.
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    \13\ 65 FR 6698 (Feb. 10, 2000).
    \14\ 79 FR 23414 (Apr. 28, 2014).
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    EPA has also consistently set GHG emission standards applicable to 
light-duty vehicles pursuant to CAA section 202(a), beginning with the 
2010 rule, and continuing through subsequent rulemakings in 2012, and 
2021.\15\ These rules achieved very significant reductions of GHGs 
(with significant anticipated impacts on liquid fuel consumption and 
costs to manufacturers which were, in some cases, comparable to or 
greater than the impacts anticipated under this rule).
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    \15\ See 75 FR 25324 (May 7, 2010) (setting GHG standards 
applicable to model year 2012-2016 LD vehicles); 77 FR 62624 (Oct. 
15, 2012) (setting GHG standards for model year 2017-2025 LD 
vehicles and ``building on the success of the first phase of the 
National program for these vehicles''); 86 FR 774434 (Dec. 30, 2021) 
(revising GHG standards for model year 2023 and later light-duty 
vehicle).
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    In designing the scope, structure, and stringency of these 
standards, the Administrator again considered a comprehensive array of 
updated, real-world information related to advancements in vehicle 
emissions control technologies. These include previous standards and 
their impacts on emissions control technologies; the activities, 
investments, and plans of manufacturers and other entities regarding 
the adoption of new technologies related to vehicle emissions control; 
trends in technology adoption by vehicle owners and operators, 
including individual consumers and fleets; and related legal 
requirements and government incentives, including most notably 
Congress's recent actions in the Bipartisan Infrastructure Law (BIL) 
and the Inflation Reduction Act (IRA). This action continues EPA's 
longstanding approach of establishing an appropriate and achievable 
trajectory of emissions reductions by means of performance-based 
standards, for both criteria pollutant and GHG emissions, that can be 
achieved by employing feasible and available emissions-reducing vehicle 
technologies for the model years for which the standards apply.
    CAA section 202(a) directs EPA to regulate emissions of air 
pollutants from new motor vehicles and engines, which in the 
Administrator's judgment cause or contribute to air pollution that may 
reasonably be anticipated to endanger public health or welfare. While 
standards promulgated pursuant to CAA section 202(a) are based on 
application of technology, the statute does not specify a particular 
technology or technologies that must be used to set such standards; 
rather, Congress has authorized and directed EPA to adapt its standards 
to emerging technologies. Thus, as with prior rules, EPA has assessed 
the feasibility of the standards considering current and anticipated 
progress by automakers in developing and deploying new technologies. 
The levels of stringency for the standards established in this rule 
continue the trend of increased emissions reductions which have been 
adopted by prior EPA rules. For example, the Clean Air Act of 1970 
required a 90 percent reduction in emissions, which drove development 
of entirely new engine and emission control technologies such as 
exhaust gas recirculation and catalytic converters, which in turn 
required a switch to unleaded fuel and the development of major new 
infrastructure to support the delivery and segregated distribution of a 
different fuel. Similarly, the 2014 Tier 3 standards achieved 
reductions of up to 80 percent in tailpipe criteria pollutant emissions 
by requiring cleaner fuel as well as improved catalytic emissions 
control systems.
    Compliance with the EPA GHG standards over the past decade has been 
achieved through both the application of advanced technologies to 
internal combustion engine (ICE) vehicles as well as the increasing 
adoption of electrification technologies. Notably, as the EPA GHG 
standards have increased in stringency, automakers have relied to

[[Page 27846]]

a greater degree on a range of electrification technologies,\16\ 
including idle stop-start, mild hybrid electric vehicles with a belt 
integrated starter-generator, hybrid electric vehicles (HEVs) and, in 
recent years, plug-in electric vehicles (PEVs), which include plug-in 
hybrid electric vehicles (PHEVs) and battery-electric vehicles (BEVs). 
As these technologies have been advancing rapidly in the past several 
years, becoming more popular with consumers and benefiting from 
continued declines in battery costs, automakers are now including PEVs 
as an integral and growing part of their current and future product 
lines. This has also led to an increasing diversity of PEVs already 
available and with an increasing array of makes and models planned for 
the market. As a result, zero- and near-zero emission technologies are 
more feasible and cost-effective now than at the time of prior 
rulemakings and, together with advanced gasoline technologies, offer 
manufacturers a wider array of compliance technologies.
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    \16\ Electrification technologies can range from electrification 
of specific accessories (for example, electric power steering to 
reduce engine loads by eliminating parasitic loss) to hybrid 
electric vehicles, which use a combination of batteries and an 
engine for propulsion energy, to electrification of the entire 
powertrain (as in the case of a battery electric vehicle).
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    Separately from this final rule, the Administration has recognized 
the recent industry advancements in zero-emission vehicle technologies 
and their potential to bring about dramatic reductions in emissions. 
Executive Order 14037 (``Strengthening American Leadership in Clean 
Cars and Trucks,'' August 5, 2021) identified a goal for 50 percent of 
U.S. new vehicle sales to be zero-emission \17\ vehicles by 2030.\18\ 
Congress passed the Bipartisan Infrastructure Law \19\ in 2021, and the 
Inflation Reduction Act \20\ in 2022, which together provide further 
support for a government-wide approach to reducing emissions by 
providing significant funding and support for emissions reductions 
across the economy, including specifically, for the component 
technology and infrastructure for the manufacture, sales, and use of 
zero- and near-zero emission vehicles.
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    \17\ The Executive Order (E.O.) defines zero-emission vehicles 
to include battery electric, plug-in hybrid and fuel cell vehicles. 
In this Preamble we refer to these vehicles collectively as zero-
emission and near-zero-emission vehicles.
    \18\ This Executive Order does not delegate any legal authority 
to EPA and this final rule is promulgated under and consistent with 
EPA's CAA section 202(a)(1)-(2) authority.
    \19\ Public Law 117-58, November 15, 2021.
    \20\ Public Law 117-169, August 16, 2022.
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    As an important addition to the suite of control technologies that 
can reduce emissions, zero- and near-zero emission cars and trucks can 
simultaneously reduce both criteria pollutant and GHG emissions by a 
large margin. Production and sale of these vehicles is already 
occurring both domestically and globally, due to significant 
investments from automakers, increased acceptance by consumers, added 
support from Congress and state governments, and emissions regulations 
in other countries. EPA recognizes that these industry advancements, 
along with the additional support provided by the BIL and the IRA, 
represent an important opportunity for achieving the public health 
goals of the Clean Air Act. Recognizing that these technologies reduce 
both criteria pollutant and GHG emissions and are already forming an 
increasing portion of the fleet, EPA finds it appropriate to coordinate 
new standards for both criteria pollutants and GHG in a single 
rulemaking, rather than continuing its prior approach of coordinating 
the standards but setting them in separate regulatory actions.\21\
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    \21\ We emphasize, however, as discussed further in Section X of 
this preamble, that the standards are severable.
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    In the U.S., recent trends in PEV production and sales show that 
demand continues to increase. Even under current standards, BEVs and 
PHEVs are becoming a rapidly increasing part of the new vehicle fleet. 
On a production basis, PEVs are growing steadily, expected to be 11.8 
percent \22\ of U.S. light-duty vehicle production for MY 2023,\23\ up 
from 6.7 percent in MY 2022, 4.4 percent in MY 2021 and 2.2 percent in 
MY 2020.\24\ On a sales basis, U.S. new PEV sales in calendar year 2023 
alone surpassed 1.4 million,25 26 an increase of more than 
50 percent over the 807,000 sales that occurred in 2022.\27\ This 
represents 9.3 percent of new light-duty passenger vehicle sales in 
2023, up from 6.8 percent in 2022 \28\ and 3.2 percent the year 
before.\29\ As depicted in Figure 1, this continues the growth trend 
seen in previous years. In California, new light-duty zero-emission 
vehicle sales have reached 25.1 percent through the third quarter of 
2023, after reaching 18.8 percent in 2022, up from 12.4 percent in 
2021.30 31
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    \22\ At time of this publication, MY 2023 production data is not 
yet final. Manufacturers will be confirming production volumes 
delivered for sale in MY 2023 later in calendar year 2024.
    \23\ Environmental Protection Agency, ``The 2023 EPA Automotive 
Trends Report: Greenhouse Gas Emissions, Fuel Economy, and 
Technology since 1975,'' EPA-420-R-23-033, December 2023.
    \24\ Environmental Protection Agency, ``The 2022 EPA Automotive 
Trends Report: Greenhouse Gas Emissions, Fuel Economy, and 
Technology since 1975,'' EPA-420-R-22-029, December 2022.
    \25\ Argonne National Laboratory, ``Light Duty Electric Drive 
Vehicles Monthly Sales Updates,'' January 30, 2024. Accessed on 
March 7, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates.
    \26\ Department of Energy, ``FOTW #1327, January 29, 2024: 
Annual New Light-Duty EV Sales Topped 1 Million for the First Time 
in 2023,'' January 29, 2024. Accessed on February 2, 2024 at https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million.
    \27\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as 
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
    \28\ Argonne National Laboratory, ``Light Duty Electric Drive 
Vehicles Monthly Sales Updates,'' January 30, 2024. Accessed on 
March 7, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates.
    \29\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as 
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
    \30\ California Energy Commission, ``New ZEV Sales in 
California'' online dashboard, viewed on February 13, 2023 at 
https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales.
    \31\ California Energy Commission, ``New ZEV Sales in 
California'' online dashboard, viewed on December 15, 2023 at 
https://www.energy.ca.gov/data-reports/energy-almanac/zero-emission-vehicle-and-infrastructure-statistics/new-zev-sales.

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[[Page 27847]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.000

Figure 1: U.S. PEV Sales by Calendar Year, 2010-2023 (Department of 
Energy) \32\
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    \32\ Department of Energy, ``FOTW #1327, January 29, 2024: 
Annual New Light-Duty EV Sales Topped 1 Million for the First Time 
in 2023,'' January 29, 2024. Accessed on February 2, 2024 at https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million.
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    Before the IRA became law, analysts were already projecting that 
significantly increased sales of PEVs would occur in the United States 
and in global markets. For example, in 2021, IHS Markit predicted a 
nearly 40 percent U.S. PEV share by 2030.\33\ Projections made in 2022 
by Bloomberg New Energy Finance suggested that under then-current 
policy and market conditions, and prior to the IRA and this final rule, 
the U.S. was on pace to reach 43 percent PEVs by 2030 and when adjusted 
for the effects of the IRA, this estimate increased to 52 
percent.34 35 Another study by the International Council on 
Clean Transportation (ICCT) and Energy Innovation that includes the 
effect of the IRA estimates that the share of BEVs will increase to 56 
to 67 percent by 2032.\36\ These projections typically are based on 
assessment of a range of existing and developing factors, including 
state policies (such as the California Advanced Clean Cars II program 
and its adoption by section 177 states); although the assumptions and 
other inputs to these forecasts vary, they point to greatly increased 
penetration of electrification across the U.S. light-duty fleet in the 
coming years, without specifically considering the effect of increased 
emission standards under this rule.
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    \33\ IHS Markit, ``US EPA Proposed Greenhouse Gas Emissions 
Standards for Model Years 2023-2026; What to Expect,'' August 9, 
2021. Accessed on March 9, 2023 at https://www.spglobal.com/mobility/en/research-analysis/us-epa-proposed-greenhouse-gas-emissions-standards-my2023-26.html. The table indicates 32.3 percent 
BEVs and combined 39.7 percent BEV, PHEV, and range-extended 
electric vehicle (REX) in 2030.
    \34\ Bloomberg New Energy Finance (BNEF), ``Electric Vehicle 
Outlook 2022,'' from chart labeled ``Global long-term EV share of 
new passenger vehicle sales by market--Economic Transition 
Scenario.''
    \35\ Tucker, S., ``Study: More Than Half of Car Sales Could Be 
Electric By 2030,'' Kelley Blue Book, October 4, 2022. Accessed on 
February 24, 2023 at https://www.kbb.com/car-news/study-more-than-half-of-car-sales-could-be-electric-by-2030/.
    \36\ International Council on Clean Transportation, ``Analyzing 
the Impact of the Inflation Reduction Act on Electric Vehicle Uptake 
in the US,'' ICCT White Paper, January 2023. Available at https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23.pdf.
---------------------------------------------------------------------------

    Recent analyses of the market penetration of plug-in electric 
vehicles have been completed that include the effects of the IRA. 
Researchers from Harvard University, MIT, and Cornell University 
examined the effects of subsidies and tax incentives provided by the 
BIL and the IRA to promote plug-in electric vehicle sales and the 
deployment of charging infrastructure. This study predicted plug-in 
electric vehicle sales shares of 55 to 58 percent in 2030 when both 
sales and infrastructure subsidies and incentives were considered.\37\ 
In addition, the U.S. Department of Energy, Office of Policy provided 
updated economy-wide analysis that represents IRA and BIL impacts in 
which they project 49 to 65 percent zero emissions light-duty vehicle 
sales shares in 2030.\38\ Bloomberg's EV Outlook for 2023 projects that 
``a major push from the Inflation Reduction Act means EVs make up 
nearly 28 percent of passenger vehicle sales by 2026.'' Finally, the 
International Energy Agency estimates U.S. PEV sales share of 
approximately 50 percent in 2030 in both stated policies and announced 
pledges scenarios.\39\ As with earlier analyses that EPA cited in the 
proposal, assumptions and inputs vary across forecasts. However, all of 
these recent studies point to greatly increased penetration of PEVs 
across the U.S. light-duty fleet in the coming years,

[[Page 27848]]

even more so when the IRA and BIL are considered, and before 
considering the effect of the revised emissions standards under this 
rule. As discussed in detail in section IV.C.1 of this preamble, these 
trends echo an ongoing global shift toward electrification and indicate 
that an increasing share of new vehicle buyers are concluding that a 
PEV is the best vehicle to meet their needs.
---------------------------------------------------------------------------

    \37\ Cole, C., Droste, M., Knittel, C., Li, S., and James, J.H., 
``Policies for Electrifying the Light-Duty Vehicle Fleet in the 
United States,'' AEA Papers and Proceedings 2023, 113 (pp.316-322).
    \38\ U.S. Department of Energy, Office of Policy, ``Investing in 
American Energy: Significant Impacts of the Inflation Reduction Act 
and Bipartisan Infrastructure Law on the U.S. Energy Economy and 
Emissions Reductions,'' August 16, 2023. Accessed on November 30, 
2023 at https://www.energy.gov/policy/articles/investing-american-energy-significant-impacts-inflation-reduction-act-and.
    \39\ International Energy Agency, ``Global EV Outlook 2023,'' p. 
114, 2023. Accessed on November 30, 2023 at https://www.iea.org/reports/global-ev-outlook-2023.
---------------------------------------------------------------------------

    Accompanying this trend has been a proliferation of announcements 
by automakers in the past several years, signaling a rapidly growing 
shift in product development focus toward electrification. For example, 
in January 2021, General Motors announced plans to become carbon 
neutral by 2040, including an effort to shift its light-duty vehicles 
entirely to zero-emissions by 2035.\40\ In March 2021, Volvo announced 
plans to make only electric cars by 2030,\41\ and Volkswagen announced 
that it expects half of its U.S. sales will be all-electric by 
2030.\42\ In April 2021, Honda announced a full electrification plan to 
take effect by 2040, with 40 percent of North American sales expected 
to be fully electric or fuel cell vehicles by 2030, 80 percent by 2035 
and 100 percent by 2040.\43\ In May 2021, Ford announced that they 
expect 40 percent of their global sales will be all-electric by 
2030.\44\ In June 2021, Fiat announced a move to all electric vehicles 
by 2030, and in July 2021 its parent corporation Stellantis announced 
an intensified focus on electrification, including both BEVs and PHEVs, 
across all of its brands.45 46 Also in July 2021, Mercedes-
Benz announced that all of its new architectures would be electric-only 
from 2025, with plans to become ready to go all-electric by 2030 where 
possible.\47\ In December 2021, Toyota announced plans to introduce 30 
BEV models by 2030.\48\ In August 2023, Subaru announced that its 
previous plan to target 40 percent combined HEVs and BEVs was being 
revised to 50 percent BEVs globally by 2030.\49\ Some automakers have 
also indicated a strong role for PHEVs in their product planning. For 
example, Toyota continues to anticipate PHEVs forming an increasing 
part of their offerings,\50\ and Stellantis will be introducing a plug-
in version of its Ram pickup for MY 2024.\51\ As discussed in more 
detail in section IV.C.1 of this preamble, the number of PHEV and BEV 
models has steadily grown and manufacturer announcements signal the 
potential for significant growth in the years to come.
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    \40\ General Motors, ``General Motors, the Largest U.S. 
Automaker, Plans to be Carbon Neutral by 2040,'' Press Release, 
January 28, 2021.
    \41\ Volvo Car Group, ``Volvo Cars to be fully electric by 
2030,'' Press Release, March 2, 2021.
    \42\ Volkswagen Newsroom, ``Strategy update at Volkswagen: The 
transformation to electromobility was only the beginning,'' March 5, 
2021. Accessed June 15, 2021 at https://www.volkswagen-newsroom.com/en/stories/strategy-update-at-volkswagen-the-transformation-to-electromobility-was-only-the-beginning-6875.
    \43\ Honda News Room, ``Summary of Honda Global CEO Inaugural 
Press Conference,'' April 23, 2021. Accessed June 15, 2021 at 
https://global.honda/newsroom/news/2021/c210423eng.html.
    \44\ Ford Motor Company, ``Superior Value From EVs, Commercial 
Business, Connected Services is Strategic Focus of Today's 
`Delivering Ford+' Capital Markets Day,'' Press Release, May 26, 
2021.
    \45\ Stellantis, ``World Environment Day 2021--Comparing 
Visions: Olivier Francois and Stefano Boeri, in Conversation to 
Rewrite the Future of Cities,'' Press Release, June 4, 2021.
    \46\ Stellantis, ``Stellantis Intensifies Electrification While 
Targeting Sustainable Double-Digit Adjusted Operating Income Margins 
in the Mid-Term,'' Press Release, July 8, 2021.
    \47\ Mercedes-Benz, ``Mercedes-Benz prepares to go all-
electric,'' Press Release, July 22, 2021.
    \48\ Toyota Motor Corporation, ``Video: Media Briefing on 
Battery EV Strategies,'' Press Release, December 14, 2021. Accessed 
on December 14, 2021 at https://global.toyota/en/newsroom/corporate/36428993.html.
    \49\ Subaru Corporation, ``Briefing on the New Management 
Policy,'' August 2, 2023. Accessed on December 5, 2023 at https://www.subaru.co.jp/pdf/news-en/en2023_0802_1_2023-08-01-193334.pdf.
    \50\ Toyota Motor Corporation, ``New Management Policy & 
Direction Announcement,'' April 7, 2023. Accessed on December 5, 
2023 at https://global.toyota/en/newsroom/corporate/39013233.html.
    \51\ Stellantis, ``All-new 2025 Ram 1500 Ramcharger Unveiled 
With Class-shattering Unlimited Battery-electric Range,'' Press 
Release, November 7, 2023. Accessed on December 5, 2023 at https://media.stellantisnorthamerica.com/newsrelease.do?id=25436.
---------------------------------------------------------------------------

    On August 5, 2021, many major automakers including Ford, GM, 
Stellantis, BMW, Honda, Volkswagen, and Volvo, as well as the Alliance 
for Automotive Innovation, expressed continued commitment to their 
announcements of a shift to electrification, and expressed their 
support for the goal of achieving 40 to 50 percent sales of zero-
emission vehicles by 2030.\52\ In September 2022, jointly with the 
Environmental Defense Fund (EDF), General Motors (GM) announced a set 
of recommendations including a recommendation that EPA establish 
standards to achieve at least a 60 percent reduction in GHG emissions 
(compared to MY 2021), and that the standards be consistent with 
eliminating tailpipe pollution from new passenger vehicles by 2035. 
These announcements have been accompanied by continued major 
investments across the automotive industry in manufacturing facilities 
for PEVs, production capacity for batteries, and sourcing of critical 
minerals, as described further in sections IV.C.1 and IV.C.7 of this 
preamble.
---------------------------------------------------------------------------

    \52\ The White House, ``Statements on the Biden Administration's 
Steps to Strengthen American Leadership on Clean Cars and Trucks,'' 
August 5, 2021. Accessed on October 19, 2021 at https://www.whitehouse.gov/briefing-room/statements-releases/2021/08/05/statements-on-the-biden-administrations-steps-to-strengthen-american-leadership-on-clean-cars-and-trucks/.
---------------------------------------------------------------------------

    In comments on the proposal, submitted in July 2023, manufacturers 
reiterated their continued commitment to electrification. Ford, for 
example, stated ``Ford is all-in on electrification. We are investing 
more than $50 billion through 2026 to deliver breakthrough electric 
vehicles (EVs)'' and expressed their support for a 2032 endpoint of 
approximately 67 percent PEVs.\53\ GM's comments ``reiterate[ ] our 
commitment'' to sell 50 percent EVs by 2030 as ``the appropriate path 
toward all EVs by 2035.'' \54\ Stellantis stated it ``is unwavering in 
its commitment to an all-electric portfolio and building an EV 
dominated market'' including a 50 percent EV mix for passenger cars and 
light trucks by 2030.\55\ Volkswagen expressed its goal of 20 percent 
BEV sales globally by 2025, and more than 50 percent by 2030.\56\ Other 
OEMs also restated their own significant commitments to 
electrification, with Honda restating its commitment to selling 40 
percent zero-emitting vehicles by 2030 and 80 percent by 2035 \57\ and 
Hyundai noting their support for selling 50 percent PEVs in 2030.\58\ 
In addition there were automakers supporting stronger standards that 
would lead to somewhat higher levels of BEVs in 2032,\59\ and some 
making commitments to significantly reduce vehicle emissions without 
identifying a particular level of PEVs they intend to sell.\60\
---------------------------------------------------------------------------

    \53\ Ford Motor Company, EPA-HQ-OAR-2022-0829-0605 at p. 1.
    \54\ General Motors, LLC, EPA-HQ-OAR-2022-0829-0700 at p. 3-4.
    \55\ Stellantis, EPA-HQ-OAR-2022-0829-0678 at p. 2.
    \56\ Volkswagen Group of America, Inc., EPA-HQ-OAR-2022-0829-
0669 at p. 2.
    \57\ American Honda Motor Co. Inc., EPA-HQ-OAR-2022-0829-0652 at 
p. 3.
    \58\ Hyundai Motor America, EPA-HQ-OAR-2022-0829-0599 at p. 2
    \59\ Tesla, Inc., EPA-HQ-OAR-2022-0829-0792, at 2 (supporting 
greater than 69% BEV penetration in 2032).
    \60\ Toyota Motor North America, EPA-HQ-OAR-2022-0829-0620 at 1 
(plan to reduce average CO2 emissions for all new 
vehicles worldwide by 33% by 2030 and by 50% by 2035, as compared to 
2019).
---------------------------------------------------------------------------

    In the second half of 2023, some automakers announced changes to 
previously announced investment plans and made statements suggesting 
increased attention to PHEVs or HEVs in their future product plans. For 
example, in mid-2023, Ford paused construction (and then restarted 
construction in

[[Page 27849]]

November 2023, as discussed below) of their recently announced battery 
plant in Marshall, Michigan,\61\ and in November 2023 announced a 
reduction in the size of the plant from 50 GWh to 20 GWh.\62\ In 2024, 
Ford also signaled a growing interest in producing HEVs and a shift 
from large BEV SUVs toward smaller BEVs.63 64 65 66 
Similarly, General Motors indicated increased attention toward 
producing PHEVs in addition to BEVs,67 68 and in an earnings 
call Mercedes suggested that it would reach 50 percent ``xEVs'' in 
``the second half of the decade.'' 69 70 Some industry 
analysts have commented on the possibility that these developments 
indicated a drop in PEV demand or a weakening of manufacturer interest 
in investing in PEV technology.71 72 73 74
---------------------------------------------------------------------------

    \61\ Reuters, ``Ford pauses work on $3.5 bln battery plant in 
Michigan,'' September 25, 2023. Accessed on December 15, 2023 at 
https://www.reuters.com/business/autos-transportation/ford-pauses-work-35-billion-battery-plant-michigan-2023-09-25/.
    \62\ New York Times, ``Ford Resumes Work on E.V. Battery Plant 
in Michigan, at Reduced Scale,'' November 21, 2023. Accessed on 
December 15, 2023 at https://www.nytimes.com/2023/11/21/business/ford-ev-battery-plant-michigan.html.
    \63\ CNBC, ``Ford is reassessing its EV plans, including 
vertical battery integration,'' February 6, 2024. Accessed on 
February 7, 2024 at https://www.cnbc.com/2024/02/06/ford-reassessing-ev-plans-including-vertical-battery-integration.html.
    \64\ Reuters, ``Ford slows EVs, sends a truckload of cash to 
investors,'' February 7, 2024. Accessed on February 14, 2024 at 
https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06/.
    \65\ Green Car Reports, ``Ford CEO: Hybrids will play 
`increasingly important role' alongside EVs,'' February 7, 2024. 
Accessed on February 9, 2024 at https://www.greencarreports.com/news/1142233_ford-ceo-hybrids-alongside-evs.
    \66\ Green Car Reports, ``Ford seeks smaller, lower-cost EVs to 
rival $25,000 Tesla, China,'' February 7, 2024. Accessed on February 
9, 2024 at https://www.greencarreports.com/news/1142232_ford-smaller-lower-cost-ev-platform-tesla-china.
    \67\ Forbes, ``GM Does a U-Turn: Plug-In Hybrids are Coming 
Back,'' January 31, 2024. Accessed on February 14, 2024 at https://www.forbes.com/sites/michaelharley/2024/01/31/gm-does-a-u-turn-plug-in-hybrids-are-coming-back/.
    \68\ Detroit Free Press, ``General Motors to bring back hybrid 
vehicles in North America, stay focused on EVs,'' January 30, 2024. 
Accessed on February 14, 2024 at https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/.
    \69\ Reuters, ``Mercedes-Benz delays electrification goal, beefs 
up combustion engine line-up,'' February 22, 2024. Accessed on March 
6, 2024 at https://www.reuters.com/business/autos-transportation/mercedes-benz-hits-cars-returns-forecast-inflation-supply-chain-costs-bite-2024-02-22/.
    \70\ Mercedes-Benz Group, ``Outlook,'' February 22, 2024. 
Accessed on March 6, 2024 at https://group.mercedes-benz.com/investors/share/outlook/.
    \71\ Reuters, ``US EV market struggles with price cuts and 
rising inventories,'' July 11, 2023. Accessed on December 15, 2023 
at https://www.reuters.com/business/autos-transportation/slow-selling-evs-are-auto-industrys-new-headache-2023-07-11/.
    \72\ Marketplace, ``Electric vehicles face reality check as 
automakers dial back production targets,'' November 2, 2023. 
Accessed on December 15, 2023 at https://www.marketplace.org/2023/11/02/ev-demand-production-reality-check/.
    \73\ The Wall Street Journal, ``EV Makers Turn to Discounts to 
Combat Waning Demand,'' November 7, 2023. Accessed on December 15, 
2023 at https://www.wsj.com/business/autos/ev-makers-turn-to-discounts-to-combat-waning-demand-3aa77535.
    \74\ The Wall Street Journal, ``The Six Months That Short-
Circuited the Electric-Vehicle Revolution,'' February 14, 2024. 
Accessed on February 15, 2024 at https://www.wsj.com/business/autos/ev-electric-vehicle-slowdown-ford-gm-tesla-b20a748e.
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    EPA acknowledges these recent announcements regarding investment 
plans. We have carefully considered these announcements, in light of 
the larger universe of information about manufacturer plans including 
comments submitted by the manufacturers on this rulemaking and our 
ongoing engagement with the manufacturers. Overall, EPA finds that 
these recent announcements do not reflect a significant change in 
manufacturer intentions regarding PEVs generally or specifically 
through the 2027-2032 timeframe of this rule. We also take into 
consideration that sales of PEVs have increased dramatically in recent 
years so periods where demand and supply of vehicles are temporarily 
misaligned (either creating shortages or an over-supply of vehicles) is 
not unexpected. Ford has since restarted construction of its plant; 
\75\ at about the same as time Ford announced the delay, Toyota 
announced an $8 billion increase in investment in its North Carolina 
plant.\76\ Nor are U.S. PEV sales data for 2023 (presented previously 
in Figure 1) consistent with a reduction in PEV demand,77 78 
with sales up by 50 percent from 2022 to 2023, consistent with and 
slightly larger than the 46 percent increase from 2021 to 2022 and in 
line with the average year-over-year increase of 52 percent from 2012 
to 2023.\79\ Both Ford and GM have characterized their recent moves as 
complementary to their continued plans to electrify an increasing 
portion of their product lines. For example, GM stated that it is 
``deploying plug-in technology in strategic segments,'' and that ``for 
calendar year 2024, EV is our focus,'' \80\ while Ford stated that its 
next generation of BEVs ``will be profitable and return their cost of 
capital.'' \81\ It is also difficult to draw conclusions about 
industry-wide PEV demand or investment from only these two examples. 
Specific factors have been active during the same period, such as the 
2023 United Auto Workers strike,\82\ and an increase in inventories for 
light-duty vehicles of all types,\83\ which may be related to economic 
conditions such as high interest rates and higher average transaction 
prices.84 85 86 Economic conditions across the industry have 
also been cited in relation to manufacturers' recent investment 
decisions.87 88 89 For

[[Page 27850]]

example, Mercedes-Benz cited slower economic growth, 48-volt component 
shortages, European policy uncertainty, lower than expected demand in 
China, and trade tensions with China as all affecting its earnings 
outlook.90 91 Meanwhile, some other manufacturers have seen 
strong BEV demand and have reaffirmed their plans, for example, Hyundai 
and Kia have indicated strong demand and are maintaining or 
accelerating investment plans,92 93 and Stellantis reported 
making a profit on EVs globally and stated that it is ``keeping full 
speed on electrification.'' 94 95 At the same time, 
automakers continue to compete in a global market where emission 
reduction targets and PEV demand continue to spur investments in these 
technologies. Given the unprecedented rate and size of recent 
investment activity in PEV technology, adjustments to previously 
announced plans would ordinarily be expected to occur, and to date have 
included both reductions and increases in investment amounts and 
pacing. Our assessment of the feasibility of the standards is based on 
our assessment of the full record as discussed in sections III and IV 
of this preamble and in the RIA, and EPA does not consider such 
adjustments to be indicative of any broad trend that would change our 
assessment of PEV feasibility as an emission control technology. 
Further, the rulemaking establishes performance-based standards, which 
manufacturers can meet using a variety of technologies, including ICE 
vehicles across a range of electrification, and the sensitivity 
analyses confirm that the standards are feasible and appropriate under 
a range of future circumstances. At the same time, the final standards 
incorporate a reduced rate of stringency increase in the early years as 
compared to the proposed standards, providing additional lead time 
which supports the kinds of product planning changes described in these 
recent announcements.\96\
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    \75\ CBS News, ``Ford resuming construction of Michigan EV 
battery plant delayed by strike, scaling back jobs,'' November 21, 
2023. Accessed on December 15, 2023 at https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/.
    \76\ Toyota Newsroom, ``Toyota Supercharges North Carolina 
Battery Plant with New $8 Billion Investment,'' Press Release, 
October 31, 2023. Available at https://pressroom.toyota.com/toyota-supercharges-north-carolina-battery-plant-with-new-8-billion-investment/.
    \77\ Fortune, ``EV sales expected to hit new U.S. record in 
2023--but Germany, China and Norway still lead the way,'' November 
23, 2023. Accessed on December 11, 2023 at https://fortune.com/2023/11/23/us-electric-vehicle-sales-2023-record/.
    \78\ BloombergNEF, ``Four Takeaways on the Future of the Global 
EV Market,'' June 8, 2023. Accessed on December 8, 2023 at https://www.bloomberg.com/news/articles/2023-06-08/global-ev-sales-have-soared-as-overall-new-car-sales-sag.
    \79\ Derived from the yearly sales depicted in Figure 1.
    \80\ Detroit Free Press, ``General Motors to bring back hybrid 
vehicles in North America, stay focused on EVs,'' January 30, 2024. 
Accessed on February 14, 2024 at https://www.freep.com/story/money/cars/general-motors/2024/01/30/gm-hybrid-vehicles-north-america/72406811007/.
    \81\ Reuters, ``Ford slows EVs, sends a truckload of cash to 
investors,'' February 7, 2024. Accessed on February 14, 2024 at 
https://www.reuters.com/business/autos-transportation/ford-offer-regular-supplemental-dividend-2024-02-06//.
    \82\ CBS News, ``Ford resuming construction of Michigan EV 
battery plant delayed by strike, scaling back jobs,'' November 21, 
2023. Accessed on December 15, 2023 at https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs/.
    \83\ National Automobile Dealers Association, ``NADA Market 
Beat,'' November 2023. Accessed on December 11, 2023 at https://www.nada.org/nada/nada-headlines/nada-market-beat-new-light-vehicle-inventory-reaches-20-month-high.
    \84\ Reuters, ``More alarm bells sound on slowing demand for 
electric vehicles,'' October 25, 2023. Accessed on December 15, 2023 
at https://www.reuters.com/business/autos-transportation/more-alarm-bells-sound-slowing-demand-electric-vehicles-2023-10-25/.
    \85\ CNBC, ``Sparse inventory drives prices for new, used 
vehicles higher,'' October 17, 2023. Accessed on December 15, 2023 
at https://www.cnbc.com/2023/10/17/sparse-inventory-drives-prices-for-new-used-cars-higher.html.
    \86\ San Diego Union-Tribune, ``Has enthusiasm for electric cars 
waned?,'' October 27, 2023. Accessed on December 15, 2023 at https://www.sandiegouniontribune.com/business/story/2023-10-27/has-enthusiasm-for-electric-cars-waned.
    \87\ Reuters, ``Hyundai, Kia see strong demand for EVs, despite 
rivals' concerns,'' November 17, 2023. Accessed on February 14, 2024 
at https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/.
    \88\ Reuters, ``Mexico gives Tesla land-use permits for 
gigafactory, says state government,'' December 12, 2023. Accessed on 
February 14, 2024 at https://www.reuters.com/business/autos-transportation/mexico-gives-tesla-land-use-permits-gigafactory-says-state-government-2023-12-13/.
    \89\ Mexico Now, ``Taxes and global economy stop Tesla plant in 
Nuevo Leon,'' October 23, 2023. Accessed on February 14, 2024 at 
https://mexico-now.com/taxes-and-global-economy-stop-tesla-plant-in-nuevo-leon/.
    \90\ Mercedes-Benz Group, ``Outlook,'' February 22, 2024. 
Accessed on March 6, 2024 at https://group.mercedes-benz.com/investors/share/outlook/.
    \91\ Seeking Alpha, ``Mercedes-Benz Group AG (MBGAF) Q4 2023 
Earnings Call Transcript,'' February 22,2024. Accessed on March 6, 
2024 at https://seekingalpha.com/article/4672324-mercedes-benz-group-ag-mbgaf-q4-2023-earnings-call-transcript.
    \92\ Reuters, ``Hyundai sticks to EV rollout plans, sees solid 
growth this year,'' October 26, 2023. Accessed on February 14, 2024 
at https://www.reuters.com/business/autos-transportation/hyundai-motors-q3-net-profit-rises-151-beats-forecasts-2023-10-26/.
    \93\ Reuters, ``Hyundai, Kia see strong demand for EVs, despite 
rivals' concerns,'' November 17, 2023. Accessed on February 14, 2024 
at https://www.reuters.com/business/autos-transportation/hyundai-kia-see-strong-demand-evs-despite-rivals-concerns-2023-11-17/. We 
note that Hyundai submitted a late comment on November 1, 2023 
reiterating its support for a mechanism to potentially revise the 
stringency of the standards in future years in light of developments 
(EPA-HQ-OAR-2022-0829-5102) but neither Hyundai nor any other 
automaker submitted additional comments after the close of the 
comment period indicating they were adjusting their plans for future 
PEV products and sales.
    \94\ CNN, ``A traditional automaker just turned a profit on 
EVs,'' February 15, 2024. Accessed on February 15, 2024 at https://www.cnn.com/2024/02/15/business/stellantis-earnings-electric-vehicles/index.html.
    \95\ The Wall Street Journal, ``Chrysler-Parent Stellantis 
Staying the Course on EVs, Despite Slowdown,'' February 15, 2024. 
Accessed on February 16, 2024 at https://www.wsj.com/livecoverage/stock-market-today-dow-jones-02-15-2024/card/chrysler-parent-stellantis-staying-the-course-on-evs-despite-slowdown-pCHVXXe6Igo4do3pBFoQ.
    \96\ Of course, as with any rulemaking, the Administrator has 
the discretion to propose modifications to the program through the 
public notice and comment process, in the case that modifications 
are found to be appropriate in the future to address any constraints 
that might have developed.
---------------------------------------------------------------------------

    Electrification plans are not limited to light-duty vehicles. 
Electrification of MDVs is also increasing rapidly, primarily within 
the area of last-mile delivery. MDV delivery vans using dedicated 
battery-electric vehicle (BEV) architectures are beginning to enter the 
U.S. market, with the first mass-produced models having become 
available for MY 2023 and additional production volume and models 
announced for MY 2024. Initial dedicated BEV van chassis have been 
predominantly targeted towards parcel delivery and include the GM 
BrightDrop Zevo 400 and Zevo 600; and the Rivian EDV 500 and EDV 
700.97 98
---------------------------------------------------------------------------

    \97\ https://www.gobrightdrop.com/.
    \98\ https://rivian.com/fleet.
---------------------------------------------------------------------------

    Numerous commitments to purchase all-electric medium-duty delivery 
vans have also been announced by large fleet owners including 
FedEx,\99\ Amazon,\100\ and Walmart,\101\ in partnerships with various 
OEMs. For example, Amazon has deployed thousands of electric delivery 
vans in over 100 cities, with the goal of 100,000 vans by 2030. Many 
other fleet electrification commitments that include large numbers of 
medium-duty and heavier vehicles have been announced by large 
corporations in many sectors of the economy, including not only 
retailers like Amazon and Walmart but also consumer product 
manufacturers with large delivery fleets (e.g., IKEA, Unilever), large 
delivery firms (e.g., DHL, FedEx, USPS), and numerous firms in many 
other sectors including power and utilities, biotech, public 
transportation, and municipal fleets across the country.\102\ As 
another example, Daimler Trucks North America announced in 2021 that it 
expected 60 percent of its sales in 2030 and 100 percent of its sales 
by 2039 would be zero-emission.\103\
---------------------------------------------------------------------------

    \99\ BrightDrop, ``BrightDrop Accelerates EV Production with 
First 150 Electric Delivery Vans Integrated into FedEx Fleet,'' 
Press Release, June 21, 2022.
    \100\ Amazon Corporation, ``Amazon's Custom Electric Delivery 
Vehicles from Rivian Start Rolling Out Across the U.S.,'' Press 
Release, July 21, 2022.
    \101\ Walmart, ``Walmart To Purchase 4,500 Canoo Electric 
Delivery Vehicles To Be Used for Last Mile Deliveries in Support of 
Its Growing eCommerce Business,'' Press Release, July 12, 2022.
    \102\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer Commitments and Public Policy 
Initiatives Supporting Electric Mobility in the U.S. and 
Worldwide,'' September 2022.
    \103\ Carey, N., ``Daimler Truck 'all in' on green energy as it 
targets costs,'' May 20, 2021.
---------------------------------------------------------------------------

    Investments in PEV charging infrastructure have likewise grown 
rapidly in recent years and are expected to continue to climb. 
According to BloombergNEF, total cumulative global investment in PEV 
charging reached almost $55 billion in 2022 and was estimated to reach 
nearly $93 billion in 2023.\104\ U.S. infrastructure spending has also 
grown significantly over the past several years with estimated public 
charging investments of $2.7 billion in 2023 alone.\105\
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    \104\ BloombergNEF, ``Zero-Emission Vehicles Factbook, A 
BloombergNEF special report prepared for COP28,'' December 2023, at 
https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf.
    \105\ BloombergNEF, ``Zero-Emission Vehicles Factbook, A 
BloombergNEF special report prepared for COP28,'' December 2023, at 
https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf.
---------------------------------------------------------------------------

    As described in the next section, the U.S. government is making 
large investments in infrastructure through the Bipartisan 
Infrastructure Law \106\ and the Inflation Reduction Act.\107\ However, 
we expect that private investments will also play a critical role in 
meeting future infrastructure needs. Private charging companies have 
already attracted billions globally in venture capital and mergers and 
acquisitions indicating strong interest in the future of the charging 
industry.\108\ And Bain projects that by 2030, the U.S. market for 
electric vehicle charging will be ``large and profitable'' with both 
revenue and profits estimated to grow

[[Page 27851]]

by a factor of twenty relative to 2021.\109\ The White House estimates 
over $25 billion in commitments to expand the U.S. charging network has 
been announced as of January 2024.\110\ This includes more than $10 
billion in private sector investments from automakers, charging 
companies, and retailers among others. See section IV.C.4 of this 
preamble and Chapter 5 of the Regulatory Impact Analysis (RIA) \111\ 
for a discussion of public and private infrastructure investments.
---------------------------------------------------------------------------

    \106\ https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf.
    \107\ https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf.
    \108\ Hampleton, ``Autotech & Mobility M&A market report 
1H2023''. Accessed March 4, 2023, at https://www.hampletonpartners.com/fileadmin/user_upload/Report_PDFs/Hampleton-Partners-Autotech-Mobility-Report-1H2023-FINAL.pdf.
    \109\ Zayer, E. et al., ``EV Charging Shifts into High Gear,'' 
Bain & Company, June 20, 2022. Accessed March 4, 2023, at https://www.bain.com/insights/electric-vehicle-charging-shifts-into-high-gear/.
    \110\ The White House, ``FACT SHEET: Biden-Harris Administration 
Announces New Actions to Cut Electric Vehicle Costs for Americans 
and Continue Building Out a Convenient, Reliable, Made-in-America EV 
Charging Network'', January 19, 2024. Accessed at https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/19/fact-sheet-biden-harris-administration-announces-new-actions-to-cut-electric-vehicle-costs-for-americans-and-continue-building-out-a-convenient-reliable-made-in-america-ev-charging-network/.
    \111\ Multi-Pollutant Emissions Standards for Model Years 2027 
and Later Light-Duty and Medium-Duty Vehicles--Regulatory Impact 
Analysis; EPA-420-R-24-004.
---------------------------------------------------------------------------

    Taken together, these developments indicate that proven 
technologies such as BEVs and PHEVs are already poised to become a 
rapidly growing segment of the U.S. fleet, as manufacturers continue to 
invest in these technologies and integrate them into their product 
plans, and infrastructure continues to be developed. Accordingly, EPA 
considers these technologies to be available and feasible for 
controlling motor vehicle emissions, and expects that these 
technologies will likely play a significant role in meeting the 
standards for both criteria pollutants and GHGs.
    At the same time, EPA anticipates that a compliant fleet under the 
final performance-based emissions standards will include a diverse 
range of technologies. The advanced gasoline technologies that have 
played a fundamental role in meeting previous standards will continue 
to play an important role going forward 112 113 114 as they 
remain key to reducing the criteria and GHG emissions of ICE, mild HEV, 
strong HEV and PHEV powertrains. PHEVs also provide a technology option 
that combines the benefits of both electric and ICE technology. EPA's 
standards are performance-based and allow each manufacturer to choose 
the array of technologies it wishes to use, without requiring any 
particular technology for any particular vehicle category. The final 
standards will also provide regulatory certainty to support the many 
private automaker announcements and investments in PEVs that have been 
outlined in the preceding paragraphs. In developing these standards, 
EPA also considered many of the key issues associated with growth in 
penetration of PEVs, including charging infrastructure, consumer 
acceptance, critical minerals and mineral security, and others, as well 
as the emissions from the wide range of ICE-based vehicle technologies 
(e.g., non-hybrid ICE, mild HEVs, strong HEVs) that will continue to be 
produced during the timeframe of these standards. We discuss each of 
these issues in more detail in respective sections of the preamble and 
RIA.
---------------------------------------------------------------------------

    \112\ Wards Auto, ``GM Investing Billions in ICE Truck, SUV 
Production,'' June 13, 2023. Accessed on January 5, 2024 at https://www.wardsauto.com/industry-news/gm-investing-billions-ice-truck-suv-production.
    \113\ Forbes, ``GM To Put Nearly $1 Billion More Into Production 
of Internal Combustion Engines,'' January 20, 2023. Accessed on 
January 5, 2024 at https://www.forbes.com/sites/edgarsten/2023/01/20/internal-combustion-engine-production-wins-nearly-all-1-billion-of-new-gm-plant-investments/?sh=ec7346969383.
    \114\ Wards Auto, ``BMW `Not Ready' to Give Up on ICE,'' August 
3, 2023. Accessed on January 5, 2024 at https://www.wardsauto.com/industry-news/bmw-not-ready-give-ice.
---------------------------------------------------------------------------

3. The Bipartisan Infrastructure Law and Inflation Reduction Act
    A particular consideration with regard to the increased penetration 
of zero-emission vehicle technology is Congress' passage of the 
Bipartisan Infrastructure Law (BIL) 115 116 in 2021 and the 
Inflation Reduction Act (IRA) \117\ in 2022. These measures represent 
significant Congressional support for investment in expanding the 
manufacture, sale, and use of zero-emission vehicles by addressing 
elements critical to the advancement of clean transportation and clean 
electricity generation in ways that will facilitate and accelerate the 
development, production and adoption of zero-emission technology during 
the time frame of this rule. Congressional passage of the BIL and IRA 
represent pivotal milestones in the creation of a broad-based 
infrastructure instrumental to the expansion of clean transportation, 
including light- and medium-duty zero-emission vehicles, and we have 
taken these developments into account in assessing the feasibility of 
the standards.
---------------------------------------------------------------------------

    \115\ https://www.congress.gov/117/plaws/publ58/PLAW-117publ58.pdf.
    \116\ Also known as the Infrastructure Investment and Jobs Act 
(IIJA).
    \117\ https://www.congress.gov/117/plaws/publ169/PLAW-117publ169.pdf.
---------------------------------------------------------------------------

    The BIL became law in November 2021 and includes a wide range of 
programs and significant funding for infrastructure investments, many 
of which are oriented toward reducing GHG emissions across the U.S. 
transportation network, upgrading power generation infrastructure, and 
making the transportation infrastructure resilient to climate impacts 
such as extreme weather. Notably, in support of light-duty zero-
emissions transportation, the BIL included $7.5 billion in funding for 
installation of public charging and other alternative fueling 
infrastructure. This will have a major impact on feasibility of PEVs 
across the U.S. by improving access to charging and other 
infrastructure, and it will further support the Administration's goal 
of deploying 500,000 PEV chargers by 2030. It also includes $5 billion 
for electrification of school buses through the Clean School Bus 
Program, providing for further reductions in emissions from the heavy-
duty sector.118 119 To help ensure that clean vehicles are 
powered by clean energy, it also includes $65 billion to upgrade the 
power infrastructure to facilitate increased use of renewables and 
clean energy. Further, the BIL allocated an additional $10.5 billion to 
DOE's Grid Deployment Office (GDO) and the Grid Resilience and 
Innovation Partnerships program (GRIP) for investments to increase the 
flexibility, efficiency and reliability of the electric power system, 
which will further support PEV adoption.
---------------------------------------------------------------------------

    \118\ https://www.epa.gov/cleanschoolbus. Accessed February 14, 
2023.
    \119\ U.S. EPA, ``EPA Clean School Bus Program Second Report to 
Congress,'' EPA 420-R-23-002, February 2023.
---------------------------------------------------------------------------

    The IRA became law in August 2022, bringing significant new 
momentum to clean vehicles (PEVs and fuel cell electric vehicles 
(FCEVs)) through measures that reduce the cost to purchase and 
manufacture them, incentivize the growth of manufacturing capacity and 
onshore sourcing of critical minerals and battery components needed for 
their manufacture, incentivize buildout of public charging 
infrastructure for PEVs, and promote modernization of the electrical 
grid that will power them. It includes significant consumer incentives 
of up to $7,500 for new clean vehicles (Clean Vehicle Credit or 
Internal Revenue Code (IRC) 30D, and Commercial Clean Vehicle Credit or 
IRC 45W) and up to $4,000 for used vehicles (Used Clean Vehicle Credit 
or IRC 25E). These credits will have a strong and immediate impact on 
the upfront affordability of these vehicles for a wide range of 
customers, including buyers at over 10,000 dealers that have registered 
to offer the 30D or

[[Page 27852]]

25E credits at the point of sale,\120\ buyers of vehicles for 
commercial and fleet use under 45W, and indirectly to lessees of 
vehicles purchased for lease to consumers. Manufacturer production tax 
incentives of $35 per kWh for U.S. production of battery cells, $10 per 
kWh for U.S. production of modules, and 10 percent of production cost 
for U.S.-made critical minerals and electrode active materials 
(Production Tax Credit, IRC 45X), will significantly reduce the 
manufacturing cost of these battery components, further reducing PEV 
and FCEV cost for consumers. In addition, the IRA includes significant 
tax credits for certain charging and hydrogen infrastructure equipment 
(Alternative Fuel Vehicle Refueling Infrastructure Property Tax Credit, 
IRC 30C), and sizeable incentives for investment in and production of 
clean electricity.
---------------------------------------------------------------------------

    \120\ U.S. Department of the Treasury, ``Remarks by Assistant 
Secretary for Tax Policy Lily Batchelder on Phase Three of 
Implementation of the Inflation Reduction Act's Clean Energy 
Provisions,'' January 31, 2024. Accessed February 4, 2024 at https://home.treasury.gov/news/press-releases/jy2070.
---------------------------------------------------------------------------

    With respect to sourcing of critical minerals and battery 
components, and building a secure supply chain for clean vehicles and 
refueling infrastructure, the IRA also includes provisions that will 
greatly reduce reliance on imports by strongly supporting the continued 
development of a domestic and North American supply chain, as well as 
securing sources among Free Trade Agreement (FTA) countries and other 
trade partners and allies. Manufacturers who want their customers to 
take advantage of the Clean Vehicle Credit (30D) must assemble the 
vehicles in North America, must meet a gradually increasing value 
requirement for sourcing of critical minerals from U.S. or free-trade 
countries, and battery components from within North America, and cannot 
utilize content acquired from foreign entities of concern (FEOCs).\121\ 
Manufacturer eligibility for the Production Tax Credit (45X) for cells 
and modules is conditioned on their manufacture in the U.S., as is 
eligibility for the 10 percent credit on the cost of producing critical 
minerals and electrode active materials. Manufacturers are already 
taking advantage of these opportunities to improve their sales and 
reduce their production costs by securing eligible sources of critical 
mineral content and siting new production facilities in the 
U.S.122 123 124 125 126 127 128 129 130 Although 45W is not 
subject to the sourcing requirements of 30D, the latter remains highly 
influential in manufacturer siting decisions; for example, Hyundai has 
increased the leasing of vehicles to consumers while also continuing 
plans to site battery and vehicle manufacturing in the U.S.,\131\ and 
the Korean battery industry is renegotiating ventures to comply with 
FEOC restrictions that impact 30D.132 133 According to ANL's 
most recent analysis of public announcements of cell manufacturing 
plants in North America through January 2024, cell manufacturers in the 
United States could supply about 10 million new light-duty electric 
vehicles each year by 2030, assuming an average pack size of 80 to 100 
kWh.\134\ There is a coordinated effort by Executive Branch agencies, 
including the Department of Energy and the National Laboratories, to 
provide guidance and resources and to administer funding to support 
this collective effort to further develop a robust supply chain for 
clean vehicles and the infrastructure that will support 
them.135 136 137 138 139 140 Section IV.C.7 of this preamble 
and Chapters 3.1.3 and 3.1.4 of the RIA discuss these provisions and 
measures in more detail.
---------------------------------------------------------------------------

    \121\ Foreign entities of concern include entities (individuals 
and businesses) ``owned by, controlled by, or subject to 
jurisdiction or direction of'' a ``covered nation'' (defined in 10 
U.S. Code 2533(c)(d)(2) as the Democratic People's Republic of North 
Korea, the People's Republic of China, the Russian Federation, and 
the Islamic Republic of Iran).
    \122\ Green Car Congress, ``Ford sources battery capacity and 
raw materials for 600K EV annual run rate by late 2023, 2M by end of 
2026; adding LFP,'' July 22, 2022.
    \123\ Ford Motor Company, ``Ford Releases New Battery Capacity 
Plan, Raw Materials Details to Scale EVs; On Track to Ramp to 600K 
Run Rate by '23 and 2M+ by '26, Leveraging Global Relationships,'' 
Press Release, July 21, 2022.
    \124\ Green Car Congress, ``GM signs major Li-ion supply chain 
agreements: CAM with LG Chem and lithium hydroxide with Livent,'' 
July 26, 2022.
    \125\ Grzelewski, J., ``GM says it has enough EV battery raw 
materials to hit 2025 production target,'' The Detroit News, July 
26, 2022.
    \126\ Hall, K., ``GM announces new partnership for EV battery 
supply,'' The Detroit News, April 12, 2022.
    \127\ Hawkins, A., ``General Motors makes moves to source rare 
earth metals for EV motors in North America,'' The Verge, December 
9, 2021.
    \128\ Piedmont Lithium, ``Piedmont Lithium Signs Sales Agreement 
With Tesla,'' Press Release, September 28, 2020.
    \129\ Subramanian, P., ``Why Honda's EV battery plant likely 
wouldn't happen without new climate credits,'' Yahoo Finance, August 
29, 2022.
    \130\ LG Chem, ``LG Chem to Establish Largest Cathode Plant in 
US for EV Batteries,'' Press Release, November 22, 2022.
    \131\ Korea Economic Daily, ``Hyundai Motor to boost EV leasing 
in US for tax credits from 2023,'' December 30, 2022. Accessed on 
February 14, 2024 at https://www.kedglobal.com/electric-vehicles/newsView/ked202212300014.
    \132\ Nikkei Asia, ``U.S. rules force South Korea's EV battery 
makers to rethink China deals,'' December 8, 2023. Accessed on 
February 14, 2024 at https://asia.nikkei.com/Business/Business-Spotlight/U.S.-rules-force-South-Korea-s-EV-battery-makers-to-rethink-China-deals.
    \133\ Korea Economic Daily, ``US regulations push Korean battery 
industry to cut reliance on China,'' December 12, 2023. Accessed on 
February 14, 2024 at https://www.kedglobal.com/batteries/newsView/ked202312120008.
    \134\ Argonne National Laboratory, ``Light Duty Electric Drive 
Vehicles Monthly Sales Updates'', January 2024. Accessed February 2, 
2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates.
    \135\ Executive Order 14017, Securing America's Supply Chains, 
February 24, 2021. https://www.whitehouse.gov/briefing-room/presidential-actions/2021/02/24/executive-order-on-americas-supply-chains/.
    \136\ The White House, ``FACT SHEET: Biden-Harris Administration 
Driving U.S. Battery Manufacturing and Good-Paying Jobs,'' October 
19, 2022. Available at: https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/19/fact-sheet-biden-harris-administration-driving-u-s-battery-manufacturing-and-good-paying-jobs/.
    \137\ Department of Energy, ``Biden Administration, DOE to 
Invest $3 Billion to Strengthen U.S. Supply Chain for Advanced 
Batteries for Vehicles and Energy Storage,'' February 11, 2022. 
Available at: https://www.energy.gov/articles/biden-administration-doe-invest-3-billion-strengthen-us-supply-chain-advanced-batteries.
    \138\ Department of Energy, ``Supply Chains Progress Report,'' 
August 2023. https://www.energy.gov/sites/default/files/2023-08/Supply%20Chain%20Progress%20Report%20-%20August%202023.pdf.
    \139\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024. https://publications.anl.gov/anlpubs/2024/03/187735.pdf.
    \140\ Argonne National Laboratory, ``Securing Critical Materials 
for the U.S. Electric Vehicle Industry: A Landscape Assessment of 
Domestic and International Supply Chains for Five Key EV Battery 
Materials,'' ANL-24/06, February 2024. https://publications.anl.gov/anlpubs/2024/03/187907.pdf.
---------------------------------------------------------------------------

    Incentives provided by the IRA, along with manufacturers' 
strategies to meet consumer demand, are expected to result in even 
greater adoption of electrification technologies. Our No Action case 
(i.e., without this rule) includes effects of the IRA. The third-party 
estimates to which we compare our No Action case are all very recent 
and include the IRA. Importantly, they do not include these standards, 
but do differ in other assumptions such as state level policies and 
consideration of manufacturer announced plans. We project PEV 
penetration of 42 percent in 2030 in the No Action case, while mid-
range third-party projections we have reviewed range from 48 to 58 
percent in 2030.141 142 143 144 145 146 147 We consider

[[Page 27853]]

our No Action case projections to be somewhat more conservative than 
these third-party estimates, although generally consistent given the 
differences in treatment of state-level policies and manufacturer 
announced plans. Nevertheless, the very substantial rates of PEV 
penetration under the No Action scenario underscore that a shift to 
widespread use of electrification technologies is already well 
underway, which contributes to the feasibility of further emissions 
controls under these standards.
---------------------------------------------------------------------------

    \141\ Cole, Cassandra, Michael Droste, Christopher Knittel, 
Shanjun Li, and James H. Stock. 2023. ``Policies for Electrifying 
the Light-Duty Fleet in the United States.'' AEA Papers and 
Proceedings 113: 316-322. doi:https://doi.org/10.1257/pandp.20231063.
    \142\ IEA. 2023. ``Global EV Outlook 2023: Catching up with 
climate ambitions.'' International Energy Agency.
    \143\ Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J. 
Michalek, and Kate S. Whitefoot. 2023. ``Technology advancement is 
driving electric vehicle adoption.'' PNAS 120 (23). doi:https://doi.org/10.1073/pnas.2219396120.
    \144\ Bloomberg NEF. 2023. ``Electric Vehicle Outlook 2023.''
    \145\ U.S. Department of Energy, Office of Policy. 2023. 
``Investing in American Energy: Significant Impacts of the Inflation 
Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy 
Economy and Emissions Reductions.''
    \146\ Slowik, Peter, Stephanie Searle, Hussein Basma, Josh 
Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023. 
``Analyzing the Impact of the Inflation Reduction Act on Electric 
Vehicle Uptake in the United States.'' International Council on 
Clean Transportation and Energy Innovation Policy & Technology LLC.
    \147\ Mid-range third-party estimates exclude more extreme 
scenarios, which did not include all IRA incentives or were 
described as ``High'' or ``Advanced'' by respective study authors. 
See RIA Chapter 4.1.2.
---------------------------------------------------------------------------

B. Summary of Light- and Medium-Duty Vehicle Emissions Programs

    EPA is establishing new emissions standards for both light-duty and 
medium-duty vehicles. The light-duty vehicle category includes 
passenger cars and light trucks consistent with previous EPA criteria 
pollutant and GHG rules. In this rule, heavy-duty Class 2b and 3 
vehicles are referred to as ``medium-duty vehicles'' (MDVs) to 
distinguish them from Class 4 and higher vehicles, which remain under 
the heavy-duty program. EPA has not previously used the MDV 
nomenclature, referring to these larger vehicles in prior rules as 
light-heavy-duty vehicles,\148\ heavy-duty Class 2b and 3 
vehicles,\149\ or heavy-duty pickups and vans.\150\ In the context of 
this rule, the MDV category includes primarily large pickups and vans 
with a gross vehicle weight rating (GVWR) of 8,501 to 14,000 pounds and 
excludes vehicles used primarily as passenger vehicles (which are 
called medium-duty passenger vehicles, or MDPVs, and which are covered 
under the light-duty program).
---------------------------------------------------------------------------

    \148\ 66 FR 5002.
    \149\ 79 FR 23414.
    \150\ 76 FR 57106.
---------------------------------------------------------------------------

    The program consists of several key elements: more stringent 
emissions standards for GHGs, more stringent emissions standards for 
criteria pollutants, changes to certain optional credit programs, 
durability provisions for light-duty and medium-duty electrified 
vehicle batteries, warranty provisions for both electrified vehicles 
and diesel engine-equipped vehicles, and various improvements to 
several elements of the existing light-duty and medium-duty programs.
    For both light- and medium-duty vehicles, the levels of stringency 
established by this rule continue the trend over the past 50 years (for 
criteria pollutants) and over the past 14 years (for GHGs) of EPA 
establishing numerically lower performance-based emissions standards in 
recognition of both the continued threat to human health and welfare 
from pollution and continued advancements in emissions control 
technology that make it possible to achieve important emissions 
reductions at a reasonable cost. EPA has also continued its 
longstanding approach of allowing manufacturers flexibilities, such as 
averaging, banking and trading, to reduce their cost of reducing 
emissions while producing a diverse fleet meeting consumers' varied 
preferences. In addition to advanced ICE technologies, including hybrid 
electric vehicles, the feasibility assessment for this rule recognizes 
the increasing availability of zero and near-zero tailpipe emissions 
technologies, including PEVs, as cost-effective compliance 
technologies. The technological feasibility of PEVs is further 
supported by the economic incentives provided in the IRA and the auto 
manufacturers' stated plans for significantly increasing the production 
of zero and near-zero emission vehicles, including PEVs, independent of 
this rule. This increased feasibility of PEVs, in addition to ICE and 
advanced ICE technologies, is one of the factors EPA considered in 
setting the stringency of the standards.
    Through the public comment process, EPA heard from a wide range of 
stakeholders and individuals who provided a diversity of views on a 
broad range of issues, including stringency and pace of the standards; 
availability and readiness of the industry to support the needs of 
electrified vehicles (such as battery critical minerals, charging 
infrastructure, electric grid, and consumer acceptance); and specific 
elements of EPA's analysis (such as potential PEV adoption rates, 
battery costs, BIL and IRA impacts, and other areas). As part of their 
comments, many stakeholders, including NGOs, industry groups, and 
others, provided detailed technical analyses for EPA to consider.
    Many commenters strongly supported the proposal overall. Comments 
from organizations representing environmental, public health, and 
consumer groups, as well as numerous state and local governments and 
associations, emphasized the importance of air pollution emissions 
reductions to protect public health and welfare and combat climate 
change, and noted that emissions reductions are especially critical in 
communities overburdened by air pollution. Many of these commenters 
recommended adopting the strongest standards possible for both GHGs and 
criteria pollutants. Some of these commenters supported light-duty GHG 
standards even more stringent than the proposal's most stringent 
alternative. Similarly, automakers that produce only electric vehicles 
(including Tesla, Rivian, and Lucid) and commenters representing the 
electric vehicle industry also expressed strong support for the 
proposal, with some of these stakeholders also advocating standards 
more stringent than the proposal's most stringent alternative. 
Automotive suppliers largely expressed strong support for performance-
based standards for GHG and criteria pollutants. Some suggested that 
the GHG standards should phase-in more gradually, relying on increased 
ICE technology in the near term. Suppliers also strongly supported the 
proposed particulate matter (PM) emissions standard, attested to the 
feasibility and readiness of gasoline particulate filter technology 
expected to be used to meet the standard, and urged that the standard 
be phased in even sooner than proposed. Several commenters provided 
supportive data on development of the battery supply chain, critical 
minerals, grid readiness, and charging infrastructure.
    Comments from automakers that historically have produced primarily 
ICE vehicles, such as comments by the Alliance for Automotive 
Innovation (hereafter referred to as ``the Alliance'') as well as 
comments by several individual automakers, generally expressed the auto 
industry's strong commitment to the goals of the proposed rule and to 
the transition to zero emission vehicles, as well as their support for 
continued efforts to reduce emissions from ICE vehicles that will 
continue to be produced during the transition to electrification. Many 
auto companies described their significant R&D investments in clean 
transportation and their corporate commitments to carbon neutrality and 
transitioning their vehicle offerings to electrified vehicles. The 
Alliance and many auto companies expressed their concern that the 
proposed standards would be very challenging to meet. A common theme 
was that the proposed GHG standards

[[Page 27854]]

``moved the goalposts'' with respect to the Administration's goal of 50 
percent zero emission vehicle sales by 2030, which the automakers had 
supported. These commenters noted that automakers' support for the 
Administration's goal was premised on various developments important to 
electrification, as well as governmental support for such developments, 
that they believe are unlikely to be ready in time to meet the proposed 
standards (for example, development of charging infrastructure, 
critical minerals, consumer acceptance, and readiness of the electric 
grid). Several auto manufacturers, including Ford, supported the MY 
2032 end point for the proposed standards, but indicated that a more 
gradual ramp rate in early years (such as the proposal's Alternative 3) 
is needed to align with their anticipated scaling of the electric 
vehicle (EV) supply chain and manufacturing base. Another common theme 
from many auto manufacturers was that meeting the proposed criteria 
pollutant standards in addition to GHG standards could divert the auto 
manufacturers' investments away from electrification and toward ICE 
technology.
    The United Auto Workers (UAW) expressed support for the transition 
to a cleaner auto industry and believes that regulations that push the 
industry to adopt cleaner technologies are important to create a strong 
domestic manufacturing base. Both UAW and the United Steelworkers 
expressed concern regarding the pace of the proposed standards and its 
possible effects on employment. These organizations believed that the 
pace of technology transition under the proposed standards could lead 
to job disruptions and lower-quality jobs, and generally suggested that 
EPA pursue GHG standards that phase in more gradually over a longer 
time period. The United Steelworkers expressed strong support for the 
proposed PM standard.
    In contrast to the strong support expressed by many state and local 
governments described above, several other state and local governments 
and a group of state Attorneys General expressed strong concerns with 
the proposal. These comments included that they question EPA's 
authority to set standards that would promote production of electric 
vehicles, believe there are significant hurdles to widespread EV 
adoption, and otherwise raise concerns with various aspects of EPA's 
analysis.
    Commenters representing the fuels industry (petroleum and/or 
biofuels) expressed many concerns with the proposal, in particular the 
levels of increased BEV penetrations projected. Other themes included 
questions regarding EPA's Clean Air Act authority related to electric 
vehicles and fleet averaging, concerns about dependence on imports of 
critical minerals, concerns about grid reliability, infrastructure 
needs, and safety. Many of the fuel industry commenters recommended 
that EPA adopt a life cycle analysis approach to setting standards and 
give greater consideration to the role of low carbon fuels.
    Utility organizations generally indicated that the proposal sends 
appropriate signals to support continued infrastructure buildout. 
Investor-owned utilities believe they can accommodate localized power 
needs at the pace of customer demand, provided customer engagement and 
enabling policies are in place. Not-for-profit electric cooperatives 
serving rural areas and underserved communities highlighted the 
substantial grid upgrade investments needed to support increased 
transportation electrification and urged EPA to account for these 
costs.
    EPA has thoroughly considered the public comments, including the 
data and information submitted by commenters, as well as our updated 
analysis based on this public record and the best available 
information. This preamble, together with the accompanying Response to 
Comments (RTC) document, responds to the comments we received on the 
proposed rule. This final rule reflects the input we received through 
the public comment process and is also supported by updated analyses 
for which EPA considered the most recent and best available technical 
and scientific data.
    The following sections summarize at a high level each of the 
standards and program provisions finalized in this rule. Section III of 
this preamble includes a more detailed discussion of each of these 
elements and how we considered public comments and updated information 
in determining the final standards and program provisions.
1. GHG Emissions Standards
    EPA is establishing GHG standards for both light-duty vehicles and 
medium-duty vehicles for MYs 2027 through 2032 that are more stringent 
than the prior standards applicable under the 2021 rule. For light-duty 
vehicles, EPA is finalizing standards that increase in stringency each 
year over a six-year period, from MYs 2027-2032. The standards are 
projected to result in an industry-wide average target for the light-
duty fleet of 85 grams/mile (g/mile) of CO2 in MY 2032, 
representing a nearly 50 percent reduction in projected fleet average 
GHG emissions target levels from the existing MY 2026 standards. Table 
1 presents a summary of the projected industry average targets for the 
light-duty GHG standards for MY 2027-2032 for cars, trucks, and the 
overall light-duty fleet.

                               Table 1--Projected Targets for Final Light-Duty Vehicle GHG Standards, by Regulatory Class
                                                                  [CO2 grams/mile] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2026
                                            (reference)        2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars....................................             131             139             125             112              99              86              73
Trucks..................................             184             184             165             146             128             109              90
Total Fleet.............................             168             170             153             136             119             102              85
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ This table does not reflect changes in credit flexibilities such as the phase-out of available off-cycle and A/C credits. Adjusted targets are shown
  in section III.C.2.iv.b of the preamble.

    In the NPRM, EPA requested comment on the proposed light-duty GHG 
standards as well as three alternatives: a more stringent alternative 
(Alternative 1), a less stringent alternative (Alternative 2), and an 
alternative that landed at the same stringency as the proposal in MY 
2032 but provided a linear ramp rate from MY 2027 to 2032 (Alternative 
3). Alternative 3's linear ramp rate had less stringent light-duty GHG 
standards than the proposed standards for MYs 2027-2031.
    As discussed in this section above, in public comments, various 
stakeholders had opposing views on the light-duty GHG standards 
stringency alternatives.

[[Page 27855]]

Many environmental and public health NGOs, states, consumer groups, 
BEV-only manufacturers, and PEV industry groups supported the strongest 
possible standards, with many supporting standards even more stringent 
than Alternative 1. The major automakers, in contrast, expressed 
concern that the proposed standards were too ambitious, that EPA's 
technical analysis was overly optimistic, and that the levels of 
battery electric vehicles (BEVs) projected under the proposed standards 
would be challenging to reach, especially given uncertainties in the 
battery supply chain, market demand, and infrastructure buildout. Labor 
groups urged a slower transition to PEVs to mitigate potential adverse 
impacts on jobs. A few automakers, including Ford, supported the 2032 
end point of the proposal, but believed that a slower ramp rate, like 
Alternative 3, was necessary in the early years to allow for the scale 
up of PEV supply chains and manufacturing. These companies recommended 
that in addition to Alternative 3, EPA should slow the phase-down of 
several credit provisions, such as the off-cycle credits and air 
conditioning leakage credits, which would be additional ways to address 
lead time in the early years.
    Based on our consideration of the public comments and our updated 
technical analysis, EPA is finalizing light-duty GHG standards that 
land at the same stringency level as proposed in MY 2032 but have a 
relatively more linear ramp rate of standards stringency, one that is 
more gradual in the early years from MYs 2027-2031. Specifically, the 
final standards are the proposal's Alternative 3 footprint 
CO2 standards curves. In addition, in response to auto 
industry and labor group concerns about lead time, particularly for MYs 
2027-2029, EPA is finalizing an extended phase-down for two optional 
credit flexibilities: off-cycle credits and air conditioning leakage 
credits. The extension of these two flexibility provisions will help to 
address lead time issues in the early years of the program, by 
providing additional paths for automakers to earn GHG credits that 
contribute to compliance with the footprint-based CO2 
standards. EPA also is delaying the phase-in of the revised PHEV 
utility factor from MY 2027 until MY 2031, to provide additional 
stability for the program, and to give manufacturers ample time to 
transition to the new compliance calculation for PHEVs. EPA discusses 
the light-duty GHG final standards in detail in section III.C.1 of this 
preamble. The off-cycle credits, air conditioning credits, and PHEV 
utility factor provisions are described in more detail in sections 
III.C.4 through III.C.6 of this preamble.
    For medium-duty vehicles, EPA is revising the existing standard for 
MY 2027 given the increased feasibility of GHG emissions reducing 
technologies in this sector in this time frame. EPA's standards for 
MDVs increase in stringency year over year from MY 2027 through MY 
2032. EPA is finalizing MDV GHG standards that land at the same 
stringency as the proposal in MY 2032, but which have a more gradual 
rate of stringency in the early years compared to the proposed 
standards. These changes are responsive to comments from manufacturers 
that recommended additional lead time in early years of the program. 
When phased in, the MDV standards are projected to result in an average 
fleet target of 274 grams/mile of CO2 by MY 2032, which 
represents a reduction of 44 percent compared to the current MY 2026 
standards. Table 2 presents a summary of the industry average targets 
projected for the medium-duty GHG standards for MYs 2027-2032, for 
vans, MDV pickups, and the MDV fleet overall.

                                  Table 2--Projected Targets for Final Medium-Duty Vehicle GHG Standards, by Body Style
                                                                    [CO2 grams/mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2026
                                            (reference)        2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vans....................................             423             392             391             355             317             281             245
Pickups.................................             522             497             486             437             371             331             290
Total Fleet.............................             488             461             453             408             353             314             274
--------------------------------------------------------------------------------------------------------------------------------------------------------

    EPA emphasizes that its standards are performance-based, and 
manufacturers are not required to use particular technologies to meet 
the standards. There are many potential pathways to compliance with the 
final standards manufacturers may choose that involve different 
mixtures of vehicle technologies. The technology pathway in our central 
case \151\ supporting the feasibility of the final rule standards 
includes a projected mix of improvements to internal combustion engine 
performance, as well as increases in use of powertrain electrification 
technologies (across the range from mild hybrid to BEV). In addition, 
to further assess the feasibility of the standards under different 
potential scenarios and to illustrate that there are many potential 
pathways to compliance with the final standards that include a wide 
range of potential technology mixes, we evaluated examples of other 
potential compliance pathways. Table 3 presents three such pathways as 
examples, including: Pathway A, which reflects a higher level of BEVs 
and a lower level of HEVs and PHEVs (and is also our central case 
analysis); Pathway B, which achieves compliance at a lower level of BEV 
production and a moderate level of HEVs and PHEVs; and Pathway C, which 
achieves compliance with no additional BEVs beyond those projected in 
the No Action case, and with a higher level of HEVs and PHEVs.\152\ EPA 
also

[[Page 27856]]

evaluated additional technology pathways as sensitivities which are 
presented fully in sections IV.F and G of this preamble and Chapter 12 
of the RIA. In addition, we evaluated an illustrative scenario that 
does not rely on any new BEV introductions beyond those in the existing 
fleet (see section IV.H.1 of the preamble).
---------------------------------------------------------------------------

    \151\ EPA recognizes that the pathway labeled as the central 
case, shown as Pathway A in Table 3, features greater BEV 
penetration than Pathways B and C, which feature greater use of 
various ICE technologies. This does not mean that EPA requires or 
prefers any manufacturer to adopt the pathway in this case over the 
other cases. EPA has conducted significant analysis for each of the 
cases. However, we had to identify a single case to subject to the 
full scope of our analysis given practical limitations on agency 
resources, the complexity and wide-ranging nature of the analysis, 
and the importance of promulgating this rule in a reasonable 
timeframe so as to address the significant public health and welfare 
impacts associated with motor vehicle emissions. Moreover, the 
reason Pathway A is the central case is not due to any a priori 
agency inclination to any specific technology, but rather because 
our evaluation of updated real-world information, described in this 
section and throughout the record, shows that the market is most 
likely to comply with increasing GHG emission standards through 
increased BEV production and that BEV technologies are the most 
cost-effective way to do so.
    \152\ Specifically, Pathway B reflects a scenario in which 
manufacturers limit production of BEVs and consumer adoption of 
PHEVs is more prevalent than for BEVs, and Pathway C reflects a 
scenario in which manufacturers sell approximately the number of 
BEVs that we project to be sold under the No Action scenario for our 
central case projection and thus produce a greater share of PHEVs 
and HEVs under the standards. In our discussion of sensitivities in 
section IV.F.5, Pathways B and C are titled ``Lower BEV Production'' 
and ``No Additional BEVs Beyond the No Action Case,'' respectively. 
See sections IV.F and G of this preamble for additional description 
of these and other sensitivity scenarios.
    \153\ In this table, the ICE category includes ICE vehicles 
(base ICE and advanced ICE) and mild HEVs. The Hybrids (HEVs) 
category represent strong hybrids only. See section III.A of this 
preamble for further clarification of definitions.

              Table 3--Projected New Vehicle Technology Penetrations for Final Light-Duty Vehicle GHG Standards for Varying Scenarios \153\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                2027         2028         2029         2030         2031         2032
                  Pathway                              Technology            (percent)    (percent)    (percent)    (percent)    (percent)    (percent)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pathway A--Higher BEV Pathway (central       ICE..........................           64           58           49           43           35           29
 analysis case).
                                             HEV..........................            4            5            5            4            3            3
                                             PHEV.........................            6            6            8            9           11           13
                                             BEV..........................           26           31           39           44           51           56
Pathway B--Moderate HEV and PHEV Pathway...  ICE..........................           62           56           49           39           28           21
                                             HEV..........................            4            4            3            6            7            6
                                             PHEV.........................           10           12           15           18           24           29
                                             BEV..........................           24           29           33           37           41           43
Pathway C--Higher HEV and PHEV Pathway.....  ICE..........................           61           41           35           27           19           17
                                             HEV..........................            4           15           13           16           15           13
                                             PHEV.........................           10           17           22           27           32           36
                                             BEV..........................           24           26           30           31           34           35
--------------------------------------------------------------------------------------------------------------------------------------------------------

    EPA also sought comment on whether the standards should continue to 
increase in stringency for future years, such as through MY 2035. While 
a few commenters supported extending standards to MY 2035, many 
commenters raised concerns with setting standards beyond 2032, pointing 
to considerable uncertainty in projecting out ten or more years the 
state of the BEV market and supporting conditions, such as charging 
infrastructure buildout, given that the proposal had projected high 
penetrations of BEVs. Other commenters suggested that if standards were 
extended beyond MY 2032, that some form of mid-course review could be 
necessary given the increased uncertainty. In consideration of these 
comments and recognizing the increased uncertainty around emissions 
technology developments and costs in the MYs 2033-2035 timeframe, EPA 
is establishing standards in this action for MYs 2027 through 2032.
    The light-duty CO2 standards continue to be footprint-
based, with separate standards curves for cars and light trucks. EPA 
has updated its assessment of the footprint standards curves to reflect 
anticipated changes in the vehicle technologies that we project will be 
used to meet the standards. EPA also has assessed ways to ensure future 
fleet mix changes do not inadvertently provide an incentive for 
manufacturers to change the size or regulatory class of vehicles as a 
compliance strategy. EPA is finalizing the proposed approach to flatten 
the slope of each footprint standards curve and to narrow the numerical 
stringency difference between the car and truck curves. The medium-duty 
vehicle standards continue to be based on a work-factor metric designed 
for commercially-oriented vehicles, which reflects a combination of 
payload, towing and 4-wheel drive equipment.
    EPA has reassessed certain credit programs available under the 
existing GHG programs considering the agency's experience with the 
program implementation to date, trends in technology development, 
recent related statutory provisions, and other factors. EPA is revising 
the air conditioning (A/C) credits program in two ways. First, for A/C 
system efficiency credits under the light-duty GHG program, EPA is 
limiting the eligibility for these voluntary credits for tailpipe 
CO2 emissions control to ICE vehicles starting in MY 2027 
(i.e., BEVs do not earn A/C efficiency credits because A/C efficiency 
improvements do not result in any reduction in direct vehicle 
emissions). Second, EPA is significantly reducing the magnitude of 
available refrigerant-based A/C credits for light-duty vehicles 
because, under a separate rulemaking, EPA has disallowed the use of 
high Global Warming Potential (GWP) refrigerants under the Technology 
Transitions Rule of October 2023, implemented under the American 
Innovation and Manufacturing (AIM) Act of 2020. EPA is finalizing 
provisions that phase-down the A/C refrigerant credits beginning in MY 
2027. For MY 2031 and later, EPA is retaining small A/C refrigerant 
credits designed to incentivize the continued application of A/C 
refrigerant leakage mitigation countermeasures and the use of 
refrigerants with GWP lower than that required under the Technology 
Transitions Rule.
    EPA is also sunsetting the off-cycle credits program for light-duty 
vehicles as follows. First, EPA is phasing out menu-based credits by 
reducing the menu credit cap year-over-year until it is fully phased 
out in MY 2033. Specifically, EPA is setting a declining menu cap of 
10/8/6/0 grams per mile (g/mile) for non-BEVs over MYs 2030-2033 such 
that MY 2032 would be the last year manufacturers could generate 
optional off-cycle credits. Second, EPA is eliminating the 5-cycle and 
public process pathways for generating off-cycle credits starting in MY 
2027. Third, EPA is limiting eligibility for off-cycle credits only to 
vehicles with tailpipe emissions greater than zero (i.e., vehicles 
equipped with IC engines) starting in MY 2027.
    EPA is not reopening its averaging, banking, and trading 
provisions, which continue to be a central part of its fleet average 
standards compliance program, and which help manufacturers to employ a 
wide range of compliance paths. EPA is also not reopening its existing 
regulations which sunset in MY 2024 light-duty multiplier incentives 
for BEVs, PHEVs and fuel cell vehicles. EPA is revising multiplier 
incentives previously in place for MDVs for MY 2027 (established in the 
heavy-duty Phase 2 rule) to end the multipliers one model year earlier, 
such that MY 2026 is the last year that MDV multipliers will be in 
effect. EPA is also finalizing regulatory text to ensure that 
compliance with vehicle GHG emissions standards continues to be 
assessed based on vehicle emissions. Under this final rule, BEVs and 
the electric operation of PHEVs will continue to be counted as zero g/
mile in a

[[Page 27857]]

manufacturer's compliance calculation as has been the case since the 
beginning of the light-duty GHG program in MY 2012.
    Finally, EPA is establishing provisions for small volume 
manufacturers (i.e., production of less than 5,000 vehicles per year) 
to transition them from the prior approach of unique case-by-case 
alternative standards to the primary program standards by MY 2032, 
recognizing that this extended lead time is appropriate given the level 
of the existing case-by-case alternative standards.
2. Criteria Pollutant Standards
    EPA is finalizing more stringent emissions standards for criteria 
pollutants \154\ for both light-duty and medium-duty vehicles that 
begin in MY 2027. For light-duty vehicles, EPA is finalizing non-
methane organic gases (NMOG) plus nitrogen oxides (NOX) 
standards \155\ that would phase-down to a fleet average level of 15 
milligrams per mile (mg/mile) by MY 2032, representing a 50 percent 
reduction from the existing 30 mg/mile standards for MY 2025 
established in the Tier 3 rule in 2014. For medium-duty vehicles, EPA 
is finalizing NMOG+NOX standards that require a fleet 
average level of 75 mg/mile by MY 2031 representing a 58 percent to 70 
percent reduction from the Tier 3 standards of 178 mg/mile for Class 2b 
vehicles and 247 mg/mile for Class 3 vehicles. EPA is also finalizing 
cold temperature (-7[deg]C) NMOG+NOX standards for all 
light-duty vehicles and gasoline medium-duty vehicles to ensure robust 
emissions control over a broad range of operating conditions.
---------------------------------------------------------------------------

    \154\ In this notice, EPA is using ``criteria pollutants'' to 
refer generally to criteria pollutants and their precursors, 
including tailpipe NMOG, NOX, PM, and CO, as well as 
evaporative and refueling HC.
    \155\ Together referred to as NMOG+NOX.
---------------------------------------------------------------------------

    For all light-duty vehicles and gasoline medium-duty vehicles, EPA 
is finalizing a particulate matter (PM) standard of 0.5 mg/mile and a 
requirement that the standard be met across three test cycles, 
including a cold temperature (-7[deg]C) test. This standard revises the 
existing PM standards established in the 2014 Tier 3 rule. Through the 
application of readily available emissions control technology and 
requiring compliance across the broad range of driving conditions 
represented by the three test cycles, EPA projects the standards will 
reduce tailpipe PM emissions from ICE vehicles by over 95 percent. In 
addition to reducing PM emissions, the standards will reduce emissions 
of mobile source air toxics.
    EPA is finalizing in-use standards for medium-duty vehicles with 
high gross combination weight rating (GCWR), changes to medium-duty 
vehicle refueling emissions requirements for incomplete vehicles, and 
several NMOG+NOX provisions aligned with the California Air 
Resources Board (CARB) Advanced Clean Cars II program for light-duty 
vehicles. EPA is finalizing changes to the carbon monoxide and 
formaldehyde standards for light- and medium-duty vehicles, including 
at -7[deg]C. EPA is not finalizing new limitations on the application 
of commanded enrichment, but will revisit the issue as a follow-on to 
this final rule. As with the GHG program, EPA is not reopening its 
averaging, banking, and trading provisions for the criteria pollutant 
program, excepting discrete provisions regarding how credits may be 
transferred from the Tier 3 program.
3. Electrified Vehicle Battery Durability and Warranty Provisions
    EPA is establishing new requirements related to battery durability 
for PEVs, substantially as proposed. As described in more detail in 
section III.G.2 of this preamble, the importance of battery durability 
in the context of PEVs is well documented and has been cited by several 
authorities in recent years. Because electrified vehicles are playing 
an increasing role in automakers' compliance strategies, their 
durability and reliability are important to achieving the full useful 
life for which emissions reductions are projected under this program. 
To this end we are establishing battery durability monitoring and 
performance requirements for light-duty PEVs and battery durability 
monitoring requirements for medium-duty PEVs. In addition, the agency 
is including PEV batteries and associated electric powertrain 
components under existing emission warranty provisions. Relatedly, EPA 
is also finalizing the addition of two new grouping definitions for 
PEVs (monitor family and battery durability family), new reporting 
requirements, and a new calculation for the PHEV charge depletion test 
to support the battery durability requirements. The background and 
content of the battery durability and warranty provisions are outlined 
in section III.G.2 of this preamble.
4. Light-Duty Vehicle Certification and Testing Program Improvements
    EPA is finalizing various improvements to the current light-duty 
program to clarify, simplify, streamline and update the certification 
and testing provisions for manufacturers. These improvements include: 
Clarification of the certification compliance and enforcement 
requirements for CO2 exhaust emission standards to more 
accurately reflect the intention of the 2010 light-duty vehicle GHG 
rule; a revision to the In Use Confirmatory Program (IUCP) threshold 
criteria; changes to the Part 2 application; updating the On Board 
Diagnostics (OBD) program to the latest version of the CARB OBD 
regulation and the removal of any conflicting or redundant text from 
EPA's OBD requirements; streamlining the test procedures for Fuel 
Economy Data Vehicles (FEDVs); streamlining the manufacturer conducted 
confirmatory testing requirements; updating the emissions warranty for 
diesel powered vehicles (including Class 2b and 3 vehicles) by 
designating major emissions components subject to the 8year/80,000 mile 
warranty period; making the definition of light-duty truck consistent 
between the GHG and criteria pollutant programs; and miscellaneous 
other amendments. EPA is also establishing, as proposed, that gasoline 
particulate filters (GPFs) qualify as specified major emission control 
components for purposes of applying warranty requirements. These 
changes are described in more detail in sections III.G and III.H of 
this preamble.

C. Summary of Emission Reductions, Costs, and Benefits

    This section summarizes our analyses of the rule's estimated 
emission impacts, costs, and monetized benefits, which are described in 
more detail in sections V through VIII of this preamble. EPA notes 
that, consistent with CAA section 202, in evaluating potential 
standards we carefully weighed the statutory factors, including the 
emissions impacts of the standards, and the feasibility of the 
standards (including cost of compliance in light of available lead 
time). We monetize benefits of the standards and evaluate costs in part 
to enable a comparison of costs and benefits pursuant to E.O. 12866, 
but we recognize there are benefits that we are currently unable to 
fully quantify and monetize. EPA's practice has been to set standards 
to achieve improved air quality consistent with CAA section 202, and 
not to rely on cost-benefit calculations, with their uncertainties and 
limitations, as identifying the appropriate standards. Nonetheless, our 
conclusion that the monetized estimated benefits exceed the estimated 
costs of the final program reinforces our view that the standards are 
appropriate under section 202(a).

[[Page 27858]]

    The standards will result in substantial net reductions of 
emissions of GHGs and criteria air pollutants in 2055, considering the 
impacts from light- and medium-duty vehicles, power plants (i.e., 
electric generating units (EGUs)), and refineries. Table 4 shows the 
GHG emission impacts in 2055 while Table 5 shows the cumulative impacts 
for the years 2027 through 2055. CO2 equivalent 
(CO2e) values use 100-year global warming potential values 
of 28 and 265 for CH4 and N2O, respectively.\156\ 
We show cumulative impacts for GHGs because elevated concentrations of 
GHGs in the atmosphere are resulting in warming and other changes in 
the Earth's climate. Table 6 shows the criteria pollutant emissions 
impacts in 2055, which include the substantial reduction in criteria 
pollutants from vehicle and refinery emissions, and the significant 
reduction in net criteria pollutant impacts as a result of this final 
rule. As shown in Table 7, we also predict reductions in air toxic 
emissions from light- and medium-duty vehicles. We project that GHG and 
criteria pollutant emissions from EGUs will increase as a result of the 
increased demand for electricity associated with the final rule, 
although those projected impacts decrease over time because of 
projected increases in clean electricity in the future power generation 
mix. We also project that GHG and criteria pollutant emissions from 
refineries will decrease as a result of the lower demand for liquid 
fuel associated with the GHG standards. Notably, even at their highest 
levels, the EGU emissions increases are more than offset by the large 
reductions in vehicle emissions as well as reductions from the refinery 
sector. Sections VI and VII of this preamble and Chapter 8 of the RIA 
provide more information on the projected emission reductions for the 
standards.
---------------------------------------------------------------------------

    \156\ IPCC, 2014: Climate Change 2014: Synthesis Report. 
Contribution of Working Groups I, II and III to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Core 
Writing Team, R.K. Pachauri and L.A. Meyer (eds.)], pp 87. Available 
online: https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf.

                       Table 4--Projected GHG Emission Impacts From the Final Rule in 2055
                                            [Million metric tons] \a\
----------------------------------------------------------------------------------------------------------------
            Pollutant                 Vehicle           EGU          Refinery       Net impact    Net impact (%)
----------------------------------------------------------------------------------------------------------------
CO2.............................            -410              21             -16            -410             -37
CH4.............................         -0.0079         0.00083        -0.00088         -0.0079             -34
N2O.............................         -0.0071          0.0001        -0.00013         -0.0072             -38
CO2e............................            -410              21             -16            -410             -37
----------------------------------------------------------------------------------------------------------------
\a\ Percent changes reflect changes associated with the light- and medium-duty fleet, not total U.S.
  inventories.


               Table 5--Projected Cumulative GHG Emission Impacts From the Final Rule in 2027-2055
                                            [Million metric tons] \a\
----------------------------------------------------------------------------------------------------------------
            Pollutant                 Vehicle           EGU          Refinery       Net impact    Net impact (%)
----------------------------------------------------------------------------------------------------------------
CO2.............................          -7,500             550            -280          -7,200             -21
CH4.............................           -0.13           0.027          -0.016           -0.12             -15
N2O.............................           -0.13          0.0034         -0.0023           -0.13             -23
CO2e............................          -7,500             550            -280          -7,200             -21
----------------------------------------------------------------------------------------------------------------
\a\ Percent changes reflect changes associated with the light- and medium-duty fleet, not total U.S.
  inventories.


                  Table 6--Projected criteria air pollutant impacts from the final rule in 2055
                                                 [U.S. tons] \a\
----------------------------------------------------------------------------------------------------------------
            Pollutant                 Vehicle           EGU          Refinery       Net impact    Net impact (%)
----------------------------------------------------------------------------------------------------------------
PM2.5...........................          -8,500           1,500          -1,800          -8,700             -22
NOX.............................         -35,000           5,500          -7,400         -36,000             -25
VOC.............................        -140,000             930          -5,100        -150,000             -46
SOX.............................          -1,900           1,300          -2,200          -2,800             -16
CO..............................      -1,700,000               0          -4,900      -1,700,000             -52
----------------------------------------------------------------------------------------------------------------
\a\ EPA did not have data available to calculate CO impacts from EGUs. Percent changes reflect changes
  associated with the light- and medium-duty fleet, not total U.S. inventories.


Table 7--Projected vehicle air toxic impacts from the final rule in 2055
                             [U.S. tons] \a\
------------------------------------------------------------------------
                Pollutant                     Vehicle       Vehicle (%)
------------------------------------------------------------------------
Acetaldehyde............................            -740             -47
Benzene.................................          -2,300             -51
Formaldehyde............................            -440             -47
Naphthalene.............................             -90             -51
1,3-Butadiene...........................            -290             -51

[[Page 27859]]

 
15 Polyaromatic Hydrocarbons............              -4             -78
------------------------------------------------------------------------
\a\ Percent changes reflect changes associated with the light- and
  medium-duty fleet, not total U.S. inventories.

    These GHG emission reductions will make an important contribution 
to efforts to limit climate change and subsequently reduce the 
probability of severe climate change related impacts including heat 
waves, drought, sea level rise, extreme climate and weather events, 
coastal flooding, and wildfires. People of color, low-income 
populations and/or indigenous peoples may be especially vulnerable to 
the impacts of climate change (see section VIII.J.2 of this preamble).
    The decreases in vehicle emissions will reduce traffic-related 
pollution in close proximity to roadways. As discussed in section 
II.C.8 of this preamble, concentrations of many air pollutants are 
elevated near high-traffic roadways, and populations who live, work, or 
go to school near high-traffic roadways experience higher rates of 
numerous adverse health effects, compared to populations far away from 
major roads. An EPA study estimated that 72 million people live near 
truck freight routes, which includes many large highways and other 
routes where light- and medium-duty vehicles operate.\157\ Our 
consideration of scientific literature indicates that people of color 
and people with low income are disproportionately exposed to elevated 
concentrations of many pollutants in close proximity to major roadways 
(see section VIII.J.3.i of this preamble).
---------------------------------------------------------------------------

    \157\ U.S. EPA (2021). Estimation of Population Size and 
Demographic Characteristics among People Living Near Truck Routes in 
the Conterminous United States. Memorandum to the Docket.
---------------------------------------------------------------------------

    The changes in emissions of criteria and toxic pollutants from 
vehicles, EGUs, and refineries will also impact ambient levels of 
ozone, PM2.5, NO2, SO2, CO, and air 
toxics over a larger geographic scale. As discussed in section VII.B of 
this preamble, we expect that in 2055 the final rule will result in 
widespread decreases in ozone, PM2.5, NO2, CO, 
and some air toxics, even when accounting for the impacts of increased 
electricity generation. We expect that in some localized areas, 
increased electricity generation will increase ambient SO2, 
PM2.5, ozone, or some air toxics. However, as the power 
sector becomes cleaner over time, these impacts will decrease as a 
result of the IRA as well as future policies that are not accounted for 
in this analysis.
    Climate benefits are monetized using estimates of the social cost 
of greenhouse gases (SC-GHG), which in principle includes the value of 
all climate change impacts (both negative and positive), however in 
practice, data and modeling limitations naturally restrain the ability 
of SC-GHG estimates to include all the important physical, ecological, 
and economic impacts of climate change, such that the estimates are a 
partial accounting of climate change impacts and will therefore, tend 
to be underestimates of the marginal benefits of abatement. In our 
proposal, EPA used interim Social Cost of GHGs (SC-GHG) values 
developed for use in benefit-cost analyses until updated estimates of 
the impacts of climate change could be developed based on the best 
available science and economics. In response to recent advances in the 
scientific literature on climate change and its economic impacts, 
incorporating recommendations made by the National Academies of 
Science, Engineering, and Medicine (National Academies, 2017), and to 
address public comments on this topic, for this final rule we are using 
updated SC-GHG values. EPA presented these updated values in a 
sensitivity analysis in the December 2022 Oil and Gas Rule RIA which 
underwent public comment on the methodology and use of these estimates 
as well as external peer review. After consideration of public comment 
and peer review, EPA issued a technical report in December 2023 
updating the estimates of SC-GHG in light of recent information and 
advances. This is discussed further in section VIII.E.1 of this 
preamble and RIA Chapter 9.
    EPA estimates that the total benefits of this action far exceed the 
total costs with the annualized value of monetized net benefits to 
society estimated at $99 billion through the year 2055, assuming a 2 
percent discount rate, as shown in Table 8.\158\ The annualized value 
of monetized emission benefits is $85 billion, with $72 billion of that 
attributed to climate-related economic benefits from reducing emissions 
of GHGs that contribute to climate change and the remainder attributed 
to reduced emissions of criteria pollutants that contribute to ambient 
concentrations of smaller particulate matter (PM2.5). 
PM2.5 is associated with premature death and serious health 
effects such as hospital admissions due to respiratory and 
cardiovascular illnesses, nonfatal heart attacks, aggravated asthma, 
and decreased lung function.
---------------------------------------------------------------------------

    \158\ All subsequent annualized costs and annualized benefits 
cited in this executive summary refer to the values generated at a 2 
percent discount rate.
---------------------------------------------------------------------------

    The annualized value of vehicle technology costs is estimated at 
$40 billion. Notably, this rule will result in significant savings in 
vehicle maintenance and repair for consumers, which we estimate at an 
annualized value of $16 billion (note that these values are presented 
as negative costs, or savings, in the table). EPA projects generally 
lower maintenance and repair costs for electric vehicles and those 
societal maintenance and repair savings grow significantly over time. 
We also estimate various impacts associated with our assumption that 
consumers choose to drive more due to the lower cost of driving under 
the standards, called the rebound effect (as discussed further in 
section VIII of this preamble and in Chapters 4, 8 and 9 of the RIA). 
Increased traffic noise and congestion costs are two such effects due 
to the rebound effect, which we estimate at an annualized value of $1.2 
billion.
    EPA also estimates impacts associated with fueling the vehicles 
under our standards. The rule will provide significant savings to 
society through reduced fuel expenditures with annualized pre-tax fuel 
savings of $46 billion. Somewhat offsetting those fuel savings is the 
expected cost of EV chargers, or electric vehicle supply equipment 
(EVSE), of $9 billion.
    This rule includes other benefits not associated with emission 
reductions. Energy security benefits are estimated at an annualized 
value of $2.1 billion. The drive value benefit, which is the value of 
consumers' choice to drive more under the rebound effect, has an 
estimated annualized value of $2.1 billion. The refueling time impact 
includes two effects: time saved refueling for ICE vehicles with lower

[[Page 27860]]

fuel consumption under our standards, and mid-trip recharging events 
for electric vehicles. Our past GHG rules have estimated that refueling 
time would be reduced due to the lower fuel consumption of new 
vehicles; hence, a benefit. However, in this analysis, we are 
estimating that refueling time will increase somewhat overall for the 
fleet due to our additional assumption for mid-trip recharging events 
for electric vehicles. Therefore, the refueling time impact represents 
a disbenefit (a negative benefit) as shown, with an annualized value at 
negative $0.8 billion. As noted in section VIII of this preamble and in 
RIA Chapter 4, we have updated our refueling time estimates but still 
consider that they may be conservatively high for electric vehicles 
considering the rapid changes taking place in electric vehicle charging 
infrastructure, including those driven by the Bipartisan Infrastructure 
Law and the Inflation Reduction Act.
    Note that some costs are shown as negative values in Table 8. Those 
entries represent savings but are included under the ``costs'' category 
because, in past rules, categories such as repair and maintenance have 
been viewed as costs of vehicle operation; as discussed above, under 
this rule we project significant savings in repair and maintenance 
costs for consumers. Where negative values are shown, we are estimating 
that those costs are lower under the final standards than in the No 
Action case.

                  Table 8--Monetized Costs, Benefits, and Net Benefits of the Final Program for Calendar Years (CYs) 2027 Through 2055
                                                          [Billions of 2022 dollars] a, b, c, d
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              CY 2055         PV, 2%          PV, 3%          PV, 7%          AV, 2%          AV, 3%          AV, 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vehicle Technology Costs................             $38            $870            $760            $450             $40             $39             $37
Insurance Costs.........................             1.9              33              28              15             1.5             1.4             1.2
Repair Costs............................            -7.1             -40             -32             -12            -1.8            -1.6           -0.99
Maintenance Costs.......................             -35            -300            -250            -110             -14             -13            -9.3
Congestion Costs........................             2.4              25              21              10             1.2             1.1            0.83
Noise Costs.............................            0.04            0.41            0.34            0.17           0.019           0.018           0.014
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Costs........................            0.59             590             530             350              27              28              29
--------------------------------------------------------------------------------------------------------------------------------------------------------
Pre-tax Fuel Savings....................              94           1,000             840             420              46              44              34
EVSE Port Costs.........................             8.6             190             160              96               9             8.8             7.9
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Fuel Savings less EVSE Port                86             820             680             330              37              35              26
     Costs..............................
--------------------------------------------------------------------------------------------------------------------------------------------------------
Drive Value Benefits....................             4.7              46              38              18             2.1               2             1.5
Refueling Time Benefits.................            -1.7             -17             -15            -7.5            -0.8           -0.76           -0.61
Energy Security Benefits................             4.1              47              39              20             2.1               2             1.6
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Non-Emission Benefits........               7              75              62              30             3.4             3.2             2.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
Climate Benefits, 2% Near-term Ramsey...             150           1,600           1,600           1,600              72              72              72
PM2.5 Health Benefits...................              25             240             200              88              13              10             7.2
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Emission Benefits............             170           1,800           1,800           1,700              85              83              80
                                         ---------------------------------------------------------------------------------------------------------------
        Net Benefits....................             270           2,100           2,000           1,700              99              94              80
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Net benefits are emission benefits, non-emission benefits, and fuel savings (less EVSE port costs) minus the costs of the program. Values rounded to
  two significant figures; totals may not sum due to rounding. Present and annualized values are based on the stream of annual calendar year costs and
  benefits included in the analysis (2027--2055) and discounted back to year 2027. Climate benefits are based on reductions in GHG emissions and are
  calculated using three different SC-GHG estimates that assume either a 1.5 percent, 2.0 percent, or 2.5 percent near-term Ramsey discount rate. See
  EPA's Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances (EPA, 2023). For presentational purposes in
  this table, we use the climate benefits associated with the SC-GHG under the 2-percent near-term Ramsey discount rate. All other costs and benefits
  are discounted using either a 2-percent, 3-percent, or 7-percent constant discount rate. For further discussion of the SC-GHGs and how EPA accounted
  for these estimates, please refer to section VIII.E of this preamble and Chapter 6.2 of the RIA.
\b\ To calculate net benefits, we use the monetized suite of total avoided PM2.5-related health effects that includes avoided deaths based on the Pope
  III et al., 2019 study, which is the larger of the two PM2.5 health benefits estimates presented in section VIII.F of this preamble.
\c\ The annual PM2.5 health benefits estimate presented in the CY 2055 column reflects the value of certain avoided health outcomes, such as avoided
  deaths, that are expected to accrue over more than a single year discounted using a 3-percent discount rate.
\d\ We do not currently have year-over-year estimates of PM2.5 benefits that discount such annual health outcomes using a 2-percent discount rate. We
  have therefore discounted the annual stream of health benefits that reflect a 3-percent discount rate lag adjustment using a 2-percent discount rate
  to populate the PV, 2 percent and AV, 2 percent columns. The annual stream of PM2.5-related health benefits that reflect a 3-percent and 7-percent
  discount rate lag adjustment were used to populate the PV/AV 3 percent and PV/AV 7 percent columns, respectively. See section VIII.F of this preamble
  for more details on the annual stream of PM2.5-related benefits associated with this rule.

    As described in section VII of this preamble and RIA Chapter 7, EPA 
conducted an air quality modeling analysis of a light- and medium-duty 
vehicle policy scenario in 2055. The results of that analysis found 
that in 2055, consistent with the emission inventory results presented 
in section VII of the preamble,\159\ the standards will result in 
widespread decreases in criteria pollutant emissions that will lead to 
substantial improvements in public health and welfare. We estimate that 
in 2055, 1,000 to 2,000 PM2.5-related premature deaths will 
be avoided as a result of the modeled policy scenario, depending on the 
assumed long-term exposure study of PM2.5-related premature 
mortality risk. We also estimate that the modeled policy scenario will 
avoid 25 to 550 ozone-related premature deaths, depending on the 
assumed study of ozone-related mortality risk. The monetized benefits 
of the improvements in public health in 2055 related to the modeled 
policy scenario (including reductions in both mortality and non-fatal 
illnesses) are $16 billion to $36 billion assuming a 2 percent discount 
rate (2022 dollars).
---------------------------------------------------------------------------

    \159\ Section VII of the preamble presents emission inventory 
results from OMEGA, EPA's light- and medium-duty GHG compliance and 
effects model. We discuss OMEGA in detail in the RIA, specifically 
Chapters 2, 4, 8 and 12.

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

[[Page 27861]]

    EPA estimates the average upfront per-vehicle cost for 
manufacturers to meet the light-duty standards to be approximately 
$1,200 on average over the six-year rulemaking period between MYs 2027-
2032, and range from about $200 in MY 2027 to about $2,100 in MY 2032, 
as shown in Table 9.\160\ We discuss per-vehicle cost in more detail in 
section IV.C of this preamble and RIA Chapter 12. These costs are 
attributable to our projection that the MY 2032 fleet will be made up 
of a larger share of BEVs relative to ICE vehicles. However, after 
considering purchase incentives and their lower operating costs 
relative to ICE vehicles, BEVs are estimated to save vehicle owners 
money over time. We estimate that the standards will save an average 
consumer approximately $6,000 over the lifetime of a light-duty 
vehicle, as compared to a vehicle meeting the MY 2026 standards.\161\ 
As another example, over an eight-year period (the average period of 
first ownership), we estimate a MY 2032 PEV owner will, on average, 
save $8,000 on purchase and operating costs compared to a gasoline 
vehicle that meets these standards.\162\ We discuss ownership savings 
and expenses in more detail in RIA Chapter 4.2.2.
---------------------------------------------------------------------------

    \160\ Unless otherwise specified, all monetized values are 
expressed in 2022 dollars.
    \161\ This vehicle lifetime savings estimate takes into account 
the fleet-wide average Federal purchase incentive under the final 
standards and under the MY 2026 standards. See RIA Chapter 4.2.2 for 
additional discussion.
    \162\ This 8-year savings estimate includes the average Federal 
purchase incentive of $6,000 for BEVs and PHEVs. See RIA Chapter 
4.2.2.

                     Table 9--Average Incremental Vehicle Cost by Reg Class, Relative to the No Action Scenario, Light-Duty Vehicles
                                                                     (2022 dollars)
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2027            2028            2029            2030            2031            2032         6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars....................................            $135            $348            $552            $968            $849            $934            $631
Trucks..................................             276             642           1,199           1,703           2,318           2,561           1,450
Total...................................             232             552           1,002           1,481           1,875           2,074           1,203
--------------------------------------------------------------------------------------------------------------------------------------------------------

    For medium-duty vehicles, EPA estimates the average upfront per-
vehicle cost for manufacturers to be approximately $1,400 over the six-
year rulemaking period between MYs 2027-2032 and range from an average 
cost of about $100 in MY 2027 to about $3,300 in MY 2032, as shown in 
Table 10.
---------------------------------------------------------------------------

    \163\ For more details on the medium-duty GHG standards, refer 
to Section III.C.3 of the preamble.

                   Table 10--Average Incremental Vehicle Cost by Body Style, Relative to the No Action Scenario, Medium-Duty Vehicles
                                                                  (2022 dollars) \163\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                               2027            2028            2029            2030            2031            2032         6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vans....................................            $178            $185          $1,443          $2,732          $4,128          $4,915          $2,264
Pickups.................................              97              88             531           1,432           1,516           2,416           1,013
Total...................................             125             122             847           1,881           2,416           3,275           1,444
--------------------------------------------------------------------------------------------------------------------------------------------------------

    In addition, the standards will result in significant savings for 
consumers from fuel savings for all vehicles and, for PEVs, reduced 
vehicle repair and maintenance. These lower operating costs will offset 
the upfront vehicle costs. The annualized retail fuel savings, which 
include fuel taxes and therefore represents the amount consumers will 
save through 2055, are estimated at $57 billion at a 2 percent discount 
rate, see section VIII.C of this preamble. These savings are in 
addition to the already mentioned savings associated with reduced 
maintenance and repair costs (See section VIII.B of this preamble and 
Chapter 4 of the RIA).

II. Public Health and Welfare Need for Emission Reductions

A. Climate Change From GHG Emissions

    Elevated concentrations of greenhouse gases (GHGs) have been 
warming the planet, leading to changes in the Earth's climate that are 
occurring at a pace and in a way that threatens human health, society, 
and the natural environment. While EPA is not making any new scientific 
or factual findings with regard to the well-documented impact of GHG 
emissions on public health and welfare in support of this rule, EPA is 
providing in this section a brief scientific background on climate 
change to offer additional context for this rulemaking and to help the 
public understand the public health and environmental impacts of GHGs.
    Extensive information on climate change is available in the 
scientific assessments and the EPA documents that are briefly described 
in this section, as well as in the technical and scientific information 
supporting them. One of those documents is EPA's 2009 Endangerment and 
Cause or Contribute Findings for Greenhouse Gases Under section 202(a) 
of the Clean Air Act (CAA) (74 FR 66496, December 15, 2009). In the 
2009 Endangerment Finding, the Administrator found under section 202(a) 
of the CAA that elevated atmospheric concentrations of six key well-
mixed GHGs--CO2, methane (CH4), nitrous oxide 
(N2O), HFCs, perfluorocarbons (PFCs), and sulfur 
hexafluoride (SF6)--``may reasonably be anticipated to endanger the 
public health and welfare of current and future generations'' (74 FR 
66523, December 15, 2009). The 2009 Endangerment Finding, together with 
the extensive scientific and technical evidence in the supporting 
record, documented that climate change caused by human emissions of 
GHGs threatens the public health of the U.S. population. It explained 
that by raising average temperatures, climate change increases the 
likelihood of heat waves, which are associated with increased deaths 
and illnesses (74 FR 66497, December 15, 2009). While climate change 
also increases the likelihood of reductions in cold-related mortality, 
evidence indicates that the increases in heat mortality will be larger 
than the decreases in cold mortality in the United States (74 FR 66525, 
December 15, 2009). The 2009 Endangerment

[[Page 27862]]

Finding further explained that compared with a future without climate 
change, climate change is expected to increase tropospheric ozone 
pollution over broad areas of the United States, including in the 
largest metropolitan areas with the worst tropospheric ozone problems, 
and thereby increase the risk of adverse effects on public health (74 
FR 66525, December 15, 2009). Climate change is also expected to cause 
more intense hurricanes and more frequent and intense storms of other 
types and heavy precipitation, with impacts on other areas of public 
health, such as the potential for increased deaths, injuries, 
infectious and waterborne diseases, and stress-related disorders (74 FR 
66525, December 15, 2009). Children, the elderly, and the poor are 
among the most vulnerable to these climate-related health effects (74 
FR 66498, December 15, 2009).
    The 2009 Endangerment Finding also documented, together with the 
extensive scientific and technical evidence in the supporting record, 
that climate change touches nearly every aspect of public welfare \164\ 
in the U.S., including: Changes in water supply and quality due to 
changes in drought and extreme rainfall events; increased risk of storm 
surge and flooding in coastal areas and land loss due to inundation; 
increases in peak electricity demand and risks to electricity 
infrastructure; and the potential for significant agricultural 
disruptions and crop failures (though offset to some extent by carbon 
fertilization). These impacts are also global and may exacerbate 
problems outside the U.S. that raise humanitarian, trade, and national 
security issues for the U.S. (74 FR 66530).
---------------------------------------------------------------------------

    \164\ The CAA states in section 302(h) that ``[a]ll language 
referring to effects on welfare includes, but is not limited to, 
effects on soils, water, crops, vegetation, manmade materials, 
animals, wildlife, weather, visibility, and climate, damage to and 
deterioration of property, and hazards to transportation, as well as 
effects on economic values and on personal comfort and well-being, 
whether caused by transformation, conversion, or combination with 
other air pollutants.'' 42 U.S.C. 7602(h).
---------------------------------------------------------------------------

    In 2016, the Administrator issued a similar finding for GHG 
emissions from aircraft under section 231(a)(2)(A) of the CAA.\165\ In 
the 2016 Endangerment Finding, the Administrator found that the body of 
scientific evidence amassed in the record for the 2009 Endangerment 
Finding compellingly supported a similar endangerment finding under CAA 
section 231(a)(2)(A), and also found that the science assessments 
released between the 2009 and the 2016 Findings ``strengthen and 
further support the judgment that GHGs in the atmosphere may reasonably 
be anticipated to endanger the public health and welfare of current and 
future generations'' (81 FR 54424).
---------------------------------------------------------------------------

    \165\ ``Finding That Greenhouse Gas Emissions From Aircraft 
Cause or Contribute to Air Pollution That May Reasonably Be 
Anticipated To Endanger Public Health and Welfare.'' 81 FR 54422, 
August 15, 2016. (``2016 Endangerment Finding'').
---------------------------------------------------------------------------

    Since the 2016 Endangerment Finding, the climate has continued to 
change, with new observational records being set for several climate 
indicators such as global average surface temperatures, GHG 
concentrations, and sea level rise. Additionally, major scientific 
assessments continue to be released that further advance our 
understanding of the climate system and the impacts that GHGs have on 
public health and welfare both for current and future generations. 
These updated observations and projections document the rapid rate of 
current and future climate change both globally and in the United 
States.\166\ \167\ \168\ \169\ \170\ \171\ \172\ \173\ \174\ \175\ 
\176\ \177\ \178\
---------------------------------------------------------------------------

    \166\ USGCRP, 2017: Climate Science Special Report: Fourth 
National Climate Assessment, Volume I [Wuebbles, D.J., D.W. Fahey, 
K.A. Hibbard, D.J. Dokken, B.C. Stewart, and T.K. Maycock (eds.)]. 
U.S. Global Change Research Program, Washington, DC, USA, 470 pp, 
doi: 10.7930/J0J964J6.
    \167\ USGCRP, 2016: The Impacts of Climate Change on Human 
Health in the United States: A Scientific Assessment. Crimmins, A., 
J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J. 
Eisen, N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M. 
Mills, S. Saha, M.C.
    \168\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United 
States: Fourth National Climate Assessment, Volume II [Reidmiller, 
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. 
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research 
Program, Washington, DC, USA, 1515 pp. doi:10.7930/NCA4.2018.
    \169\ IPCC, 2018: Global Warming of 1.5 [deg]C. An IPCC Special 
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission 
pathways, in the context of strengthening the global response to the 
threat of climate change, sustainable development, and efforts to 
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner, 
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. 
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. 
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. 
Waterfield (eds.)].
    \170\ IPCC, 2019: Climate Change and Land: an IPCC special 
report on climate change, desertification, land degradation, 
sustainable land management, food security, and greenhouse gas 
fluxes in terrestrial ecosystems [P.R. Shukla, J. Skea, E. Calvo 
Buendia, V. Masson-Delmotte, H.-O. P[ouml]rtner, D. C. Roberts, P. 
Zhai, R. Slade, S. Connors, R. van Diemen, M. Ferrat, E. Haughey, S. 
Luz, S. Neogi, M. Pathak, J. Petzold, J. Portugal Pereira, P. Vyas, 
E. Huntley, K. Kissick, M. Belkacemi, J. Malley, (eds.)].
    \171\ IPCC, 2019: IPCC Special Report on the Ocean and 
Cryosphere in a Changing Climate [H.-O. P[ouml]rtner, DC Roberts, V. 
Masson-Delmotte, P. Zhai, M. Tignor, E. Poloczanska, K. Mintenbeck, 
A. Alegr[iacute]a, M. Nicolai, A. Okem, J. Petzold, B. Rama, N.M. 
Weyer (eds.)].
    1 IPCC, 2023: Summary for Policymakers. In: Climate Change 2023: 
Synthesis Report. Contribution of Working Groups I, II and III to 
the Sixth Assessment Report of the Intergovernmental Panel on 
Climate Change [Core Writing Team, H. Lee and J. Romero (eds.)]. 
IPCC, Geneva, Switzerland, pp. 1-34, doi:10.59327/IPCC/AR6-
9789291691647.001.
    \172\ National Academies of Sciences, Engineering, and Medicine. 
2016. Attribution of Extreme Weather Events in the Context of 
Climate Change. Washington, DC: The National Academies Press. 
https://doi.org/10.17226/21852.
    \173\ National Academies of Sciences, Engineering, and Medicine. 
2017. Valuing Climate Damages: Updating Estimation of the Social 
Cost of Carbon Dioxide. Washington, DC: The National Academies 
Press. https://doi.org/10.17226/24651.
    \174\ National Academies of Sciences, Engineering, and Medicine. 
2019. Climate Change and Ecosystems. Washington, DC: The National 
Academies Press. https://doi.org/10.17226/25504.
    \175\ Blunden, J., T. Boyer, and E. Bartow-Gillies, Eds., 2023: 
``State of the Climate in 2022''. Bull. Amer. Meteor. Soc., 104 (9), 
Si-S501 https://doi.org/10.1175/2023BAMSStateoftheClimate.1.
    \176\ EPA. 2021. Climate Change and Social Vulnerability in the 
United States: A Focus on Six Impacts. U.S. Environmental Protection 
Agency, EPA 430-R-21-003.
    \177\ Jay, A.K., A.R. Crimmins, C.W. Avery, T.A. Dahl, R.S. 
Dodder, B.D. Hamlington, A. Lustig, K. Marvel, P.A. M[eacute]ndez-
Lazaro, M.S. Osler, A. Terando, E.S. Weeks, and A. Zycherman, 2023: 
Ch. 1. Overview: Understanding risks, impacts, and responses. In: 
Fifth National Climate Assessment. Crimmins, A.R., C.W. Avery, D.R. 
Easterling, K.E. Kunkel, B.C. Stewart, and T.K. Maycock, Eds. U.S. 
Global Change Research Program, Washington, DC, USA.https://doi.org/10.7930/NCA5.2023.CH1.
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Dodder, B.D. Hamlington, A. Lustig, K. Marvel, P.A. M[eacute]ndez-
Lazaro, M.S. Osler, A. Terando, E.S. Weeks, and A. Zycherman, 2023: 
Ch. 1. Overview: Understanding risks, impacts, and responses. In: 
Fifth National Climate Assessment. Crimmins, A.R., C.W. Avery, D.R. 
Easterling, K.E. Kunkel, B.C. Stewart, and T.K. Maycock, Eds. U.S. 
Global Change Research Program, Washington, DC, USA.https://doi.org/10.7930/NCA5.2023.CH1.
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    The most recent information demonstrates that the climate is 
continuing to change in response to the human-induced buildup of GHGs 
in the atmosphere. These recent assessments show that atmospheric 
concentrations of GHGs have risen to a level that has no precedent in 
human history and that they continue to climb, primarily because of 
both historical and current anthropogenic emissions, and that these 
elevated concentrations endanger our health by affecting our food and 
water sources, the air we breathe, the weather we experience, and our 
interactions with the natural and built environments. For example, 
atmospheric concentrations of one of these GHGs, CO2, 
measured at Mauna Loa in Hawaii and at other sites around the world 
reached an annual mean of 419 parts per million (ppm) in 2022 (nearly 
50 percent higher than preindustrial levels) \179\ and have continued 
to rise at a rapid rate. Global average temperature has increased by 
about 1.1 [deg]C (2.0 [deg]F) in the 2011-2020

[[Page 27863]]

decade relative to 1850-1900.\180\ The years 2015-2022 were the warmest 
8 years in the 1880-2022 record.\181\ The Intergovernmental Panel on 
Climate Change (IPCC) determined (with medium confidence) that this 
past decade was warmer than any multi-century period in at least the 
past 100,000 years.\182\ Global average sea level has risen by about 8 
inches (about 21 centimeters (cm)) from 1901 to 2018, with the rate 
from 2006 to 2018 (0.15 inches/year or 3.7 millimeters (mm)/year) 
almost twice the rate over the 1971 to 2006 period, and three times the 
rate of the 1901 to 2018 period.\183\ The rate of sea level rise over 
the 20th century was higher than in any other century in at least the 
last 2,800 years.\184\ Higher CO2 concentrations have led to 
acidification of the surface ocean in recent decades to an extent 
unusual in the past 2 million years, with negative impacts on marine 
organisms that use calcium carbonate to build shells or skeletons.\185\ 
Arctic sea ice extent continues to decline in all months of the year; 
the most rapid reductions occur in September (very likely almost a 13 
percent decrease per decade between 1979 and 2018) and are 
unprecedented in at least 1,000 years.\186\ Human-induced climate 
change has led to heatwaves and heavy precipitation becoming more 
frequent and more intense, along with increases in agricultural and 
ecological droughts \187\ in many regions.\188\
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    \179\ https://gml.noaa.gov/webdata/ccgg/trends/co2/co2_annmean_mlo.txt.
    \180\ IPCC, 2021: Summary for Policymakers. In: Climate Change 
2021: The Physical Science Basis. Contribution of Working Group I to 
the Sixth Assessment Report of the Intergovernmental Panel on 
Climate Change [Masson-Delmotte, V., P. Zhai, A. Pirani, S.L. 
Connors, C. P[eacute]an, S. Berger, N. Caud, Y. Chen, L. Goldfarb, 
M.I. Gomis, M. Huang, K. Leitzell, E. Lonnoy, J.B.R. Matthews, T.K. 
Maycock, T. Waterfield, O. Yelek[ccedil]i, R. Yu, and B. Zhou 
(eds.)]. Cambridge University Press, Cambridge, United Kingdom and 
New York, NY, USA, pp. 3-32, doi:10.1017/9781009157896.001.
    \181\ Blunden, et al. 2023.
    \182\ IPCC, 2021.
    \183\ IPCC, 2021.
    \184\ USGCRP, 2018: Impacts, Risks, and Adaptation in the United 
States: Fourth National Climate Assessment, Volume II [Reidmiller, 
D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. 
Maycock, and B.C. Stewart (eds.)]. U.S. Global Change Research 
Program, Washington, DC, USA, 1515 pp. doi:10.7930/NCA4.2018.
    \185\ IPCC, 2021.
    \186\ IPCC, 2021.
    \187\ These are drought measures based on soil moisture.
    \188\ IPCC, 2021.
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    The assessment literature demonstrates that modest additional 
amounts of warming may lead to a climate different from anything humans 
have ever experienced. The 2022 CO2 concentration of 419 ppm 
is already higher than at any time in the last 2 million years.\189\ If 
concentrations exceed 450 ppm, they would likely be higher than any 
time in the past 23 million years: \190\ at the current rate of 
increase of more than 2 ppm per year, this would occur in about 15 
years. While GHGs are not the only factor that controls climate, it is 
illustrative that 3 million years ago (the last time CO2 
concentrations were above 400 ppm) Greenland was not yet completely 
covered by ice and still supported forests, while 23 million years ago 
(the last time concentrations were above 450 ppm) the West Antarctic 
ice sheet was not yet developed, indicating the possibility that high 
GHG concentrations could lead to a world that looks very different from 
today and from the conditions in which human civilization has 
developed. If the Greenland and Antarctic ice sheets were to melt 
substantially, sea levels would rise dramatically--the IPCC estimated 
that over the next 2,000 years, sea level will rise by 7 to 10 feet 
even if warming is limited to 1.5 [deg]C (2.7 [deg]F), from 7 to 20 
feet if limited to 2 [deg]C (3.6 [deg]F), and by 60 to 70 feet if 
warming is allowed to reach 5 [deg]C (9 [deg]F) above preindustrial 
levels.\191\ For context, almost all of the city of Miami is less than 
25 feet above sea level, and the 4th National Climate Assessment NCA4 
stated that 13 million Americans would be at risk of migration due to 6 
feet of sea level rise. Moreover, the CO2 being absorbed by 
the ocean has resulted in changes in ocean chemistry due to 
acidification of a magnitude not seen in 65 million years,\192\ putting 
many marine species--particularly calcifying species--at risk.
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    \189\ Annual Mauna Loa CO2 concentration data from 
https://gml.noaa.gov/webdata/ccgg/trends/co2/co2_annmean_mlo.txt, 
accessed September 9, 2023.
    \190\ IPCC, 2013.
    \191\ IPCC, 2021.
    \192\ IPCC, 2018.
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    The NCA4 found that it is very likely (greater than 90 percent 
likelihood) that by mid-century, the Arctic Ocean will be almost 
entirely free of sea ice by late summer for the first time in about 2 
million years.\193\ Coral reefs will be at risk for almost complete (99 
percent) losses with 1 [deg]C (1.8 [deg]F) of additional warming from 
today (2 [deg]C or 3.6 [deg]F since preindustrial). At this 
temperature, between 8 and 18 percent of animal, plant, and insect 
species could lose over half of the geographic area with suitable 
climate for their survival, and 7 to 10 percent of rangeland livestock 
would be projected to be lost.\194\ The IPCC similarly found that 
climate change has caused substantial damages and increasingly 
irreversible losses in terrestrial, freshwater, and coastal and open 
ocean marine ecosystems.
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    \193\ USGCRP, 2018.
    \194\ IPCC, 2018.
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    Every additional increment of temperature comes with consequences. 
For example, the half degree of warming from 1.5 to 2 [deg]C (0.9 
[deg]F of warming from 2.7 [deg]F to 3.6 [deg]F) above preindustrial 
temperatures is projected on a global scale to expose 420 million more 
people to extreme heatwaves at least every five years, and 62 million 
more people to exceptional heatwaves at least every five years (where 
heatwaves are defined based on a heat wave magnitude index which takes 
into account duration and intensity--using this index, the 2003 French 
heat wave that led to almost 15,000 deaths would be classified as an 
``extreme heatwave'' and the 2010 Russian heatwave which led to 
thousands of deaths and extensive wildfires would be classified as 
``exceptional''). It would increase the frequency of sea-ice-free 
Arctic summers from once in 100 years to once in a decade. It could 
lead to 4 inches of additional sea level rise by the end of the 
century, exposing an additional 10 million people to risks of 
inundation as well as increasing the probability of triggering 
instabilities in either the Greenland or Antarctic ice sheets. Between 
half a million and a million additional square miles of permafrost 
would thaw over several centuries. Risks to food security would 
increase from medium to high for several lower-income regions in the 
Sahel, southern Africa, the Mediterranean, central Europe, and the 
Amazon. In addition to food security issues, this temperature increase 
would have implications for human health in terms of increasing ozone 
concentrations, heatwaves, and vector-borne diseases (for example, 
expanding the range of the mosquitoes which carry dengue fever, 
chikungunya, yellow fever, and the Zika virus, or the ticks which carry 
Lyme, babesiosis, or Rocky Mountain Spotted Fever).\195\ Moreover, 
every additional increment in warming leads to larger changes in 
extremes, including the potential for events unprecedented in the 
observational record. Every additional degree will intensify extreme 
precipitation events by about 7 percent. The peak winds of the most 
intense tropical cyclones (hurricanes) are projected to increase with 
warming. In addition to a higher intensity, the IPCC found that 
precipitation and frequency of rapid intensification of these storms 
has already increased, the movement speed has decreased, and elevated 
sea levels have increased coastal flooding,

[[Page 27864]]

all of which make these tropical cyclones more damaging.\196\
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    \195\ IPCC, 2018.
    \196\ IPCC, 2021.
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    The NCA4 also evaluated a number of impacts specific to the United 
States. Severe drought and outbreaks of insects like the mountain pine 
beetle have killed hundreds of millions of trees in the western United 
States. Wildfires have burned more than 3.7 million acres in 14 of the 
17 years between 2000 and 2016, and Federal wildfire suppression costs 
were about a billion dollars annually.\197\ The National Interagency 
Fire Center has documented U.S. wildfires since 1983, and the 10 years 
with the largest acreage burned have all occurred since 2004.\198\ 
Wildfire smoke degrades air quality, increasing health risks, and more 
frequent and severe wildfires due to climate change would further 
diminish air quality, increase incidences of respiratory illness, 
impair visibility, and disrupt outdoor activities, sometimes thousands 
of miles from the location of the fire. Meanwhile, sea level rise has 
amplified coastal flooding and erosion impacts, requiring the 
installation of costly pump stations, flooding streets, and increasing 
storm surge damages. Tens of billions of dollars of U.S. real estate 
could be below sea level by 2050 under some scenarios. Increased 
frequency and duration of drought will reduce agricultural productivity 
in some regions, accelerate depletion of water supplies for irrigation, 
and expand the distribution and incidence of pests and diseases for 
crops and livestock. The NCA4 also recognized that climate change can 
increase risks to national security, both through direct impacts on 
military infrastructure and by affecting factors such as food and water 
availability that can exacerbate conflict outside U.S. borders. 
Droughts, floods, storm surges, wildfires, and other extreme events 
stress nations and people through loss of life, displacement of 
populations, and impacts on livelihoods.\199\
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    \197\ USGCRP, 2018.
    \198\ NIFC (National Interagency Fire Center). 2021. Total 
wildland fires and acres (1983-2020). Accessed August 2021. 
www.nifc.gov/fireInfo/fireInfo_stats_totalFires.html.
    \199\ USGCRP, 2018.
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    EPA modeling efforts can further illustrate how these impacts from 
climate change may be experienced across the United States. EPA's 
Framework for Evaluating Damages and Impacts (FrEDI) \200\ uses 
information from over 30 peer-reviewed climate change impact studies to 
project the physical and economic impacts of climate change to the 
United States. resulting from future temperature changes. These impacts 
are projected for specific regions within the United States. and for 
more than 20 impact categories, which span a large number of sectors of 
the U.S. economy.\201\ Using this framework, EPA estimates that global 
emission projections, with no additional mitigation, will result in 
significant climate-related damages to the United States.\202\ These 
damages to the United States. would mainly be from increases in lives 
lost due to increases in temperatures, as well as impacts to human 
health from increases in climate-driven changes in air quality, dust 
and wildfire smoke exposure, and incidence of suicide. Additional major 
climate-related damages would occur to U.S. infrastructure such as 
roads and rail, as well as transportation impacts and coastal flooding 
from sea level rise, increases in property damage from tropical 
cyclones, and reductions in labor hours worked in outdoor settings and 
buildings without air conditioning. These impacts are also projected to 
vary from region to region with the Southeast, for example, projected 
to see some of the largest damages from sea level rise, the West Coast 
projected to experience damages from wildfire smoke more than other 
parts of the country, and the Northern Plains states projected to see a 
higher proportion of damages to rail and road infrastructure. While 
information on the distribution of climate impacts helps to better 
understand the ways in which climate change may impact the United 
States, recent analyses are still only a partial assessment of climate 
impacts relevant to U.S. interests and do not reflect increased damages 
that occur due to interactions between different sectors impacted by 
climate change or all the ways in which physical impacts of climate 
change occurring abroad have spillover effects in different regions of 
the United States.
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    \200\ (1) Hartin, C., et al. (2023). Advancing the estimation of 
future climate impacts within the United States. Earth Syst. Dynam., 
14, 1015-1037, https://doi.org/10.5194/esd-14-1015-2023. (2) 
Supplementary Material for the Regulatory Impact Analysis for the 
Supplemental Proposed Rulemaking, ``Standards of Performance for 
New, Reconstructed, and Modified Sources and Emissions Guidelines 
for Existing Sources: Oil and Natural Gas Sector Climate Review,'' 
Docket ID No. EPA-HQ-OAR-2021-0317, September 2022, (3) The Long-
Term Strategy of the United States: Pathways to Net-Zero Greenhouse 
Gas Emissions by 2050. Published by the U.S. Department of State and 
the U.S. Executive Office of the President, Washington, DC. November 
2021, (4) Climate Risk Exposure: An Assessment of the Federal 
Government's Financial Risks to Climate Change, White Paper, Office 
of Management and Budget, April 2022.
    \201\ EPA (2021). Technical Documentation on the Framework for 
Evaluating Damages and Impacts (FrEDI). U.S. Environmental 
Protection Agency, EPA 430-R-21-004, available at https://www.epa.gov/cira/fredi. Documentation has been subject to both a 
public review comment period and an independent expert peer review, 
following EPA peer-review guidelines.
    \202\ Compared to a world with no additional warming after the 
model baseline (1986-2005).
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    Some GHGs also have impacts beyond those mediated through climate 
change. For example, elevated concentrations of CO2 
stimulate plant growth (which can be positive in the case of beneficial 
species, but negative in terms of weeds and invasive species, and can 
also lead to a reduction in plant micronutrients \203\) and cause ocean 
acidification. Nitrous oxide depletes the levels of protective 
stratospheric ozone.\204\
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    \203\ Ziska, L., A. Crimmins, A. Auclair, S. DeGrasse, J.F. 
Garofalo, A.S. Khan, I. Loladze, A.A. P[eacute]rez de Le[oacute]n, 
A. Showler, J. Thurston, and I. Walls, 2016: Ch. 7: Food Safety, 
Nutrition, and Distribution. The Impacts of Climate Change on Human 
Health in the United States: A Scientific Assessment. U.S. Global 
Change Research Program, Washington, DC, 189-216. https://health2016.globalchange.gov/low/ClimateHealth2016_07_Food_small.pdf.
    \204\ WMO (World Meteorological Organization), Scientific 
Assessment of Ozone Depletion: 2018, Global Ozone Research and 
Monitoring Project--Report No. 58, 588 pp., Geneva, Switzerland, 
2018.
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    These scientific assessments, the EPA analyses, and documented 
observed changes in the climate of the planet and of the United States 
present clear support regarding the current and future dangers of 
climate change and the importance of GHG emissions mitigation.

B. Background on Criteria and Air Toxics Pollutants Impacted by This 
Rule

1. Particulate Matter
    Particulate matter (PM) is a complex mixture of solid particles and 
liquid droplets distributed among numerous atmospheric gases which 
interact with solid and liquid phases. Particles in the atmosphere 
range in size from less than 0.01 to more than 10 micrometers 
([micro]m) in diameter.\205\ Atmospheric particles can be grouped into 
several classes according to their aerodynamic diameter and physical 
sizes. Generally, the three broad classes of particles include 
ultrafine particles (UFPs, generally considered as particles with a 
diameter less than or equal to 0.1 [micro]m [typically based on 
physical size, thermal diffusivity or electrical mobility]), ``fine'' 
particles (PM2.5; particles with a nominal mean aerodynamic 
diameter less than or equal to 2.5 [micro]m), and ``thoracic'' 
particles (PM10; particles with a nominal mean aerodynamic 
diameter less than or equal to 10 [micro]m).

[[Page 27865]]

Particles that fall within the size range between PM2.5 and 
PM10, are referred to as ``thoracic coarse particles'' 
(PM10-2.5, particles with a nominal mean aerodynamic 
diameter greater than 2.5 [micro]m and less than or equal to 10 
[micro]m). EPA currently has NAAQS for PM2.5 and 
PM10.\206\
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    \205\ U.S. EPA. Policy Assessment (PA) for the Reconsideration 
of the PM NAAQS. U.S. Environmental Protection Agency, Washington, 
DC, EPA/452/R-22-004, 2022.
    \206\ Regulatory definitions of PM size fractions, and 
information on reference and equivalent methods for measuring PM in 
ambient air, are provided in 40 CFR parts 50, 53, and 58. With 
regard to NAAQS which provide protection against health and welfare 
effects, the 24-hour PM10 standard provides protection 
against effects associated with short-term exposure to thoracic 
coarse particles (i.e., PM10-2.5).
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    Most particles are found in the lower troposphere, where they can 
have residence times ranging from a few hours to weeks. Particles are 
removed from the atmosphere by wet deposition, such as when they are 
carried by rain or snow, or by dry deposition, when particles settle 
out of suspension due to gravity. Atmospheric lifetimes are generally 
longest for PM2.5, which often remains in the atmosphere for 
days to weeks before being removed by wet or dry deposition.\207\ In 
contrast, atmospheric lifetimes for UFP and PM10-2.5 are 
shorter. Within hours, UFP can undergo coagulation and condensation 
that lead to formation of larger particles in the accumulation mode, or 
can be removed from the atmosphere by evaporation, deposition, or 
reactions with other atmospheric components. PM10-2.5 are 
also generally removed from the atmosphere within hours, through wet or 
dry deposition.\208\
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    \207\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019. Table 2-
1.
    \208\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019. Table 2-
1.
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    Particulate matter consists of both primary and secondary 
particles. Primary particles are emitted directly from sources, such as 
combustion-related activities (e.g., industrial activities, motor 
vehicle operation, biomass burning), while secondary particles are 
formed through atmospheric chemical reactions of gaseous precursors 
(e.g., sulfur oxides (SOX), nitrogen oxides (NOX) 
and volatile organic compounds (VOCs)). From 2000 to 2021, national 
annual average ambient PM2.5 concentrations have declined by 
over 35 percent,\209\ largely reflecting reductions in emissions of 
precursor gases.
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    \209\ See https://www.epa.gov/air-trends/particulate-matter-pm25-trends for more information.
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    There are two primary NAAQS for PM2.5: An annual 
standard (9.0 micrograms per cubic meter ([mu]g/m\3\)) and a 24-hour 
standard (35 [mu]g/m\3\), and there are two secondary NAAQS for 
PM2.5: An annual standard (15.0 [mu]g/m\3\) and a 24-hour 
standard (35 [mu]g/m\3\). The initial PM2.5 standards were 
set in 1997 and revisions to the standards were finalized in 2006, in 
2012, and in 2024.
    We received comments on the proposal that referenced EPA modeling 
of ambient concentrations in 2032 that indicates that the primary 
annual PM2.5 NAAQS will be met in most areas of the country 
outside of California.210 211 On February 5, 2024, EPA 
finalized a rule to revise the primary annual PM2.5 standard 
to 9.0 [mu]g/m\3\.\212\ The revised primary annual PM2.5 
NAAQS could lead to additional designations of nonattainment areas in 
the future. In addition, there are many areas of the country that are 
currently in nonattainment for the annual and 24-hour primary 
PM2.5 NAAQS. As of November 30, 2023, more than 19 million 
people lived in the 3 areas that are designated as nonattainment for 
the 1997 PM2.5 NAAQS. Also, as of November 30, 2023, more 
than 31 million people lived in the 11 areas that are designated as 
nonattainment for the 2006 PM2.5 NAAQS and more than 20 
million people lived in the 5 areas designated as nonattainment for the 
2012 PM2.5 NAAQS. In total, there are currently 12 
PM2.5 nonattainment areas with a population of more than 32 
million people.\213\ The light- and medium-duty vehicle standards 
established in this rule will take effect beginning in MY 2027 and will 
assist some areas with attaining the NAAQS and may relieve areas with 
already stringent local regulations from some of the burden associated 
with adopting additional local controls. The rule will also assist some 
counties with ambient concentrations near the level of the NAAQS who 
are working to ensure long-term attainment or maintenance of the 
PM2.5 NAAQS.
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    \210\ https://www.epa.gov/pm-pollution/proposed-decision-reconsideration-national-ambient-air-quality-standards-particulate.
    \211\ Detailed discussion of the comments we received on the 
PM2.5 emissions and air quality impact of the standards 
can be found in Sections 4 and 11 of the RTC.
    \212\ https://www.epa.gov/pm-pollution/national-ambient-air-quality-standards-naaqs-pm.
    \213\ The population total is calculated by summing, without 
double counting, the 1997, 2006 and 2012 PM2.5 
nonattainment populations contained in the Criteria Pollutant 
Nonattainment Summary report (https://www.epa.gov/green-book/green-book-data-download).
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2. Ozone
    Ground-level ozone pollution forms in areas with high 
concentrations of ambient NOX and VOCs when solar radiation 
is strong. Major U.S. sources of NOX are highway and nonroad 
motor vehicles, engines, power plants and other industrial sources, 
with natural sources, such as soil, vegetation, and lightning, serving 
as smaller sources. Vegetation is the dominant source of VOCs in the 
United States. Volatile consumer and commercial products, such as 
propellants and solvents, highway and nonroad vehicles, engines, fires, 
and industrial sources also contribute to the atmospheric burden of 
VOCs at ground-level.
    The processes underlying ozone formation, transport, and 
accumulation are complex. Ground-level ozone is produced and destroyed 
by an interwoven network of free radical reactions involving the 
hydroxyl radical (OH), NO, NO2, and complex reaction 
intermediates derived from VOCs. Many of these reactions are sensitive 
to temperature and available sunlight. High ozone events most often 
occur when ambient temperatures and sunlight intensities remain high 
for several days under stagnant conditions. Ozone and its precursors 
can also be transported hundreds of miles downwind, which can lead to 
elevated ozone levels in areas with otherwise low VOC or NOX 
emissions. As an air mass moves and is exposed to changing ambient 
concentrations of NOX and VOCs, the ozone photochemical 
regime (relative sensitivity of ozone formation to NOX and 
VOC emissions) can change.
    When ambient VOC concentrations are high, comparatively small 
amounts of NOX catalyze rapid ozone formation. Without 
available NOX, ground-level ozone production is severely 
limited, and VOC reductions would have little impact on ozone 
concentrations. Photochemistry under these conditions is said to be 
``NOX-limited.'' When NOX levels are sufficiently 
high, faster NO2 oxidation consumes more radicals, dampening 
ozone production. Under these ``VOC-limited'' conditions (also referred 
to as ``NOX-saturated'' conditions), VOC reductions are 
effective in reducing ozone, and NOX can react directly with 
ozone, resulting in suppressed ozone concentrations near NOX 
emission sources. Under these NOX-saturated conditions, 
NOX reductions can actually increase local ozone under 
certain circumstances, but overall ozone production (considering 
downwind formation) decreases and even in VOC-limited areas, 
NOX reductions are not expected to increase ozone levels if 
the NOX reductions are sufficiently large--large enough to 
become NOX-limited.

[[Page 27866]]

    The primary NAAQS for ozone, established in 2015 and retained in 
2020, is an 8-hour standard with a level of 0.07 ppm.\214\ EPA is also 
implementing the previous 8-hour ozone primary standard, set in 2008, 
at a level of 0.075 ppm. As of November 30, 2023, there were 34 ozone 
nonattainment areas for the 2008 ozone NAAQS, composed of 141 full or 
partial counties, with a population of more than 90 million, and 46 
ozone nonattainment areas for the 2015 ozone NAAQS, composed of 191 
full or partial counties, with a population of more than 115 million. 
In total, there are currently, as of November 30, 2023, 54 ozone 
nonattainment areas with a population of more than 119 million 
people.\215\
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    \214\ https://www.epa.gov/ground-level-ozone-pollution/ozone-national-ambient-air-quality-standards-naaqs.
    \215\ The population total is calculated by summing, without 
double counting, the 2008 and 2015 ozone nonattainment populations 
contained in the Criteria Pollutant Nonattainment Summary report 
(https://www.epa.gov/green-book/green-book-data-download).
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    States with ozone nonattainment areas are required to take action 
to bring those areas into attainment. The attainment date assigned to 
an ozone nonattainment area is based on the area's classification. The 
attainment dates for areas designated nonattainment for the 2008 8-hour 
ozone NAAQS are in the 2015 to 2032 timeframe, depending on the 
severity of the problem in each area. Attainment dates for areas 
designated nonattainment for the 2015 ozone NAAQS are in the 2021 to 
2038 timeframe, again depending on the severity of the problem in each 
area.\216\ The standards will take effect starting in MY 2027 and will 
assist areas with attaining the NAAQS and may relieve areas with 
already stringent local regulations from some of the burden associated 
with adopting additional local controls. The rule will also provide 
assistance to counties with ambient concentrations near the level of 
the NAAQS who are working to ensure long-term attainment or maintenance 
of the NAAQS.
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    \216\ https://www.epa.gov/ground-level-ozone-pollution/ozone-naaqs-timelines.
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3. Nitrogen Oxides
    Oxides of nitrogen (NOX) refers to nitric oxide (NO) and 
nitrogen dioxide (NO2). Most NO2 is formed in the 
air through the oxidation of nitric oxide (NO) emitted when fuel is 
burned at a high temperature. NOX is a criteria pollutant, 
regulated for its adverse effects on public health and the environment, 
and highway vehicles are an important contributor to NOX 
emissions. NOX, along with VOCs, are the two major 
precursors of ozone and NOX is also a major contributor to 
secondary PM2.5 formation. There are two primary NAAQS for 
NO2: An annual standard (53 ppb) and a 1-hour standard (100 
ppb).\217\ In 2010, EPA established requirements for monitoring 
NO2 near roadways expected to have the highest 
concentrations within large cities. Monitoring within this near-roadway 
network began in 2014, with additional sites deployed in the following 
years. At present, there are no nonattainment areas for NO2.
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    \217\ The statistical form of the 1-hour NAAQS for 
NO2 is the 3-year average of the yearly distribution of 
1-hour daily maximum concentrations.
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4. Sulfur Oxides
    Sulfur dioxide (SO2), a member of the sulfur oxide 
(SOX) family of gases, is formed from burning fuels 
containing sulfur (e.g., coal or oil), extracting gasoline from oil, or 
extracting metals from ore. SO2 and its gas phase oxidation 
products can dissolve in water droplets and further oxidize to form 
sulfuric acid which reacts with ammonia to form sulfates, which are 
important components of ambient PM.
    EPA most recently completed a review of the primary SO2 
NAAQS in February 2019 and decided to retain the existing 2010 
SO2 NAAQS.\218\ The current primary NAAQS for SO2 
is a 1-hour standard of 75 ppb. As of November 30, 2023, more than two 
million people lived in the 30 areas that are designated as 
nonattainment for the 2010 SO2 NAAQS.\219\
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    \218\ https://www.epa.gov/so2-pollution/primary-national-ambient-air-quality-standard-naaqs-sulfur-dioxide.
    \219\ https://www3.epa.gov/airquality/greenbook/tnsum.html.
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5. Carbon Monoxide
    Carbon monoxide (CO) is a colorless, odorless gas formed by 
incomplete combustion of carbon-containing fuels and by photochemical 
reactions in the atmosphere. Nationally, particularly in urban areas, 
the majority of CO emissions to ambient air come from mobile 
sources.\220\
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    \220\ U.S. EPA, (2010). Integrated Science Assessment for Carbon 
Monoxide (Final Report). U.S. Environmental Protection Agency, 
Washington, DC, EPA/600/R-09/019F, 2010. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686. See Section 2.1.
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6. Diesel Exhaust
    Diesel exhaust is a complex mixture composed of particulate matter, 
carbon dioxide, oxygen, nitrogen, water vapor, carbon monoxide, 
nitrogen compounds, sulfur compounds and numerous low-molecular-weight 
hydrocarbons. A number of these gaseous hydrocarbon components are 
individually known to be toxic, including aldehydes, benzene and 1,3-
butadiene. The diesel particulate matter present in diesel exhaust 
consists mostly of fine particles (<2.5 [micro]m), of which a 
significant fraction is ultrafine particles (<0.1 [micro]m). These 
particles have a large surface area which makes them an excellent 
medium for adsorbing organics and their small size makes them highly 
respirable. Many of the organic compounds present in the gases and on 
the particles, such as polycyclic organic matter, are individually 
known to have mutagenic and carcinogenic properties.
    Diesel exhaust varies significantly in chemical composition and 
particle sizes between different engine types (heavy-duty, light-duty), 
engine operating conditions (idle, acceleration, deceleration), and 
fuel formulations (high/low sulfur fuel). Also, there are emissions 
differences between onroad and nonroad engines because the nonroad 
engines are generally of older technology. After being emitted in the 
engine exhaust, diesel exhaust undergoes dilution as well as chemical 
and physical changes in the atmosphere. The lifetimes of the components 
present in diesel exhaust range from seconds to months.
7. Air Toxics
    The most recent available data indicate that millions of Americans 
live in areas where air toxics pose potential health 
concerns.221 222 The levels of air toxics to which people 
are exposed vary depending on where people live and work and the kinds 
of activities in which they engage, as discussed in detail in EPA's 
2007 Mobile Source Air Toxics Rule.\223\ According to EPA's 2017 
National Emissions Inventory (NEI), mobile sources were responsible for 
39 percent of outdoor anthropogenic toxic emissions. Further, mobile 
sources were the largest contributor to national average risk of cancer 
and immunological and respiratory health effects from directly emitted 
pollutants, according to EPA's Air Toxics Screening

[[Page 27867]]

Assessment (AirToxScreen) for 2019.224 225 Mobile sources 
are also significant contributors to precursor emissions which react to 
form air toxics.\226\ Formaldehyde is the largest contributor to cancer 
risk of all 72 pollutants quantitatively assessed in the 2019 
AirToxScreen. Mobile sources were responsible for 26 percent of primary 
anthropogenic emissions of this pollutant in the 2017 NEI and are 
significant contributors to formaldehyde precursor emissions. Benzene 
is also a large contributor to cancer risk, and mobile sources account 
for about 60 percent of average exposure to ambient concentrations.
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    \221\ Air toxics are pollutants known to cause or suspected of 
causing cancer or other serious health effects. Air toxics are also 
known as toxic air pollutants or hazardous air pollutants. https://www.epa.gov/AirToxScreen/airtoxscreen-glossary-terms#air-toxics.
    \222\ U.S. EPA (2022) Technical Support Document EPA Air Toxics 
Screening Assessment. 2018 AirToxScreen TSD. https://www.epa.gov/system/files/documents/2023-02/AirToxScreen_2018%20TSD.pdf.
    \223\ U.S. Environmental Protection Agency (2007). Control of 
Hazardous Air Pollutants from Mobile Sources; Final Rule. 72 FR 
8434, February 26, 2007.
    \224\ U.S. EPA. (2022) 2019 AirToxScreen: Assessment Results. 
https://www.epa.gov/AirToxScreen/2019-airtoxscreen-assessment-results.
    \225\ AirToxScreen also includes estimates of risk attributable 
to background concentrations, which includes contributions from 
long-range transport, persistent air toxics, and natural sources; as 
well as secondary concentrations, where toxics are formed via 
secondary formation. Mobile sources substantially contribute to 
long-range transport and secondarily formed air toxics.
    \226\ Rich Cook, Sharon Phillips, Madeleine Strum, Alison Eyth & 
James Thurman (2020): Contribution of mobile sources to secondary 
formation of carbonyl compounds, Journal of the Air & Waste 
Management Association, DOI: 10.1080/10962247.2020.1813839.
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C. Health Effects Associated With Exposure to Criteria and Air Toxics 
Pollutants

    Emissions sources impacted by this rulemaking, including vehicles 
and power plants, emit pollutants that contribute to ambient 
concentrations of PM, ozone, NO2, SO2, CO, and 
air toxics. This section of the preamble discusses the health effects 
associated with exposure to these pollutants.
    Additionally, because children have increased vulnerability and 
susceptibility for adverse health effects related to air pollution 
exposures, EPA's findings regarding adverse effects for children 
related to exposure to pollutants that are impacted by this rule are 
noted in this section. The increased vulnerability and susceptibility 
of children to air pollution exposures may arise because infants and 
children generally breathe more relative to their size than adults do, 
and consequently may be exposed to relatively higher amounts of air 
pollution.\227\ Children also tend to breathe through their mouths more 
than adults and their nasal passages are less effective at removing 
pollutants, which leads to greater lung deposition of some pollutants, 
such as PM.228 229 Furthermore, air pollutants may pose 
health risks specific to children because children's bodies are still 
developing.\230\ For example, during periods of rapid growth such as 
fetal development, infancy and puberty, their developing systems and 
organs may be more easily harmed.231 232 EPA produces the 
report titled ``America's Children and the Environment,'' which 
presents national trends on air pollution and other contaminants and 
environmental health of children.\233\
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    \227\ EPA (2009) Metabolically-derived ventilation rates: A 
revised approach based upon oxygen consumption rates. Washington, 
DC: Office of Research and Development. EPA/600/R-06/129F. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=202543.
    \228\ U.S. EPA Integrated Science Assessment for Particulate 
Matter (Final Report, 2019). U.S. Environmental Protection Agency, 
Washington, DC, EPA/600/R-19/188, 2019. Chapter 4 ``Overall 
Conclusions'' p. 4-1.
    \229\ Foos, B.; Marty, M.; Schwartz, J.; Bennet, W.; Moya, J.; 
Jarabek, A.M.; Salmon, A.G. (2008) Focusing on children's inhalation 
dosimetry and health effects for risk assessment: An introduction. J 
Toxicol Environ Health 71A: 149-165.
    \230\ Children's environmental health includes conception, 
infancy, early childhood and through adolescence until 21 years of 
age as described in the EPA Memorandum: Issuance of EPA's 2021 
Policy on Children's Health. October 5, 2021. Available at https://www.epa.gov/system/files/documents/2021-10/2021-policy-on-childrens-health.pdf.
    \231\ EPA (2006) A Framework for Assessing Health Risks of 
Environmental Exposures to Children. EPA, Washington, DC, EPA/600/R-
05/093F, 2006.
    \232\ U.S. Environmental Protection Agency. (2005). Supplemental 
guidance for assessing susceptibility from early-life exposure to 
carcinogens. Washington, DC: Risk Assessment Forum. EPA/630/R-03/
003F. https://www3.epa.gov/airtoxics/childrens_supplement_final.pdf.
    \233\ U.S. EPA. America's Children and the Environment. 
Available at: https://www.epa.gov/americaschildrenenvironment.
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    Information on environmental effects associated with exposure to 
these pollutants is included in section II.D of the preamble, 
information on environmental justice is included in section VIII.I of 
the preamble and information on emission reductions and air quality 
impacts from this rule are included in sections VI and VII of this 
preamble.
1. Particulate Matter
    Scientific evidence spanning animal toxicological, controlled human 
exposure, and epidemiologic studies shows that exposure to ambient PM 
is associated with a broad range of health effects. These health 
effects are discussed in detail in the Integrated Science Assessment 
for Particulate Matter, which was finalized in December 2019 (2019 p.m. 
ISA), with a more targeted evaluation of studies published since the 
literature cutoff date of the 2019 p.m. ISA in the Supplement to the 
Integrated Science Assessment for PM (Supplement).234 235 
The PM ISA characterizes the causal nature of relationships between PM 
exposure and broad health categories (e.g., cardiovascular effects, 
respiratory effects, etc.) using a weight-of-evidence approach.\236\ 
Within this characterization, the PM ISA summarizes the health effects 
evidence for short-term (i.e., hours up to one month) and long-term 
(i.e., one month to years) exposures to PM2.5, 
PM10-2.5, and ultrafine particles, and concludes that 
exposures to ambient PM2.5 are associated with a number of 
adverse health effects. The following discussion highlights the PM 
ISA's conclusions, and summarizes additional information from the 
Supplement where appropriate, pertaining to the health effects evidence 
for both short- and long-term PM exposures. Further discussion of PM-
related health effects can also be found in the 2022 Policy Assessment 
for the review of the PM NAAQS.\237\
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    \234\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
    \235\ U.S. EPA. Supplement to the 2019 Integrated Science 
Assessment for Particulate Matter (Final Report, 2022). U.S. 
Environmental Protection Agency, Washington, DC, EPA/635/R-22/028, 
2022.
    \236\ The causal framework draws upon the assessment and 
integration of evidence from across scientific disciplines, spanning 
atmospheric chemistry, exposure, dosimetry and health effects 
studies (i.e., epidemiologic, controlled human exposure, and animal 
toxicological studies), and assess the related uncertainties and 
limitations that ultimately influence our understanding of the 
evidence. This framework employs a five-level hierarchy that 
classifies the overall weight-of-evidence with respect to the causal 
nature of relationships between criteria pollutant exposures and 
health and welfare effects using the following categorizations: 
causal relationship; likely to be causal relationship; suggestive 
of, but not sufficient to infer, a causal relationship; inadequate 
to infer the presence or absence of a causal relationship; and not 
likely to be a causal relationship (U.S. EPA. (2019). Integrated 
Science Assessment for Particulate Matter (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-19/188, 
Section P. 3.2.3).
    \237\ U.S. EPA. Policy Assessment (PA) for the Reconsideration 
of the National Ambient Air Quality Standards for Particulate Matter 
(Final Report, 2022). U.S. Environmental Protection Agency, 
Washington, DC, EPA-452/R-22-004, 2022.
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    EPA has concluded that recent evidence in combination with evidence 
evaluated in the 2009 p.m. ISA supports a ``causal relationship'' 
between both long- and short-term exposures to PM2.5 and 
premature mortality and cardiovascular effects and a ``likely to be 
causal relationship'' between long- and short-term PM2.5 
exposures and respiratory effects.\238\ Additionally, recent 
experimental and epidemiologic studies provide evidence supporting a 
``likely to be causal relationship''

[[Page 27868]]

between long-term PM2.5 exposure and nervous system effects, 
and long-term PM2.5 exposure and cancer. Because of 
remaining uncertainties and limitations in the evidence base, EPA 
determined a ``suggestive of, but not sufficient to infer, a causal 
relationship'' for long-term PM2.5 exposure and reproductive 
and developmental effects (i.e., male/female reproduction and 
fertility; pregnancy and birth outcomes), long- and short-term 
exposures and metabolic effects, and short-term exposure and nervous 
system effects.
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    \238\ U.S. EPA. (2009). Integrated Science Assessment for 
Particulate Matter (Final Report). U.S. Environmental Protection 
Agency, Washington, DC, EPA/600/R-08/139F.
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    As discussed extensively in the 2019 p.m. ISA and the Supplement, 
recent studies continue to support a ``causal relationship'' between 
short- and long-term PM2.5 exposures and 
mortality.239 240 For short-term PM2.5 exposure, 
multi-city studies, in combination with single- and multi-city studies 
evaluated in the 2009 p.m. ISA, provide evidence of consistent, 
positive associations across studies conducted in different geographic 
locations, populations with different demographic characteristics, and 
studies using different exposure assignment techniques. Additionally, 
the consistent and coherent evidence across scientific disciplines for 
cardiovascular morbidity, including exacerbations of chronic 
obstructive pulmonary disease (COPD) and asthma, provide biological 
plausibility for cause-specific mortality and ultimately total 
mortality. Recent epidemiologic studies evaluated in the Supplement, 
including studies that employed alternative methods for confounder 
control, provide additional support to the evidence base that 
contributed to the 2019 p.m. ISA conclusion for short-term 
PM2.5 exposure and mortality.
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    \239\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
    \240\ U.S. EPA. Supplement to the 2019 Integrated Science 
Assessment for Particulate Matter (Final Report, 2022). U.S. 
Environmental Protection Agency, Washington, DC, EPA/635/R-22/028, 
2022.
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    The 2019 p.m. ISA concluded a ``causal relationship'' between long-
term PM2.5 exposure and mortality. In addition to reanalyses 
and extensions of the American Cancer Society (ACS) and Harvard Six 
Cities (HSC) cohorts, multiple new cohort studies conducted in the 
United States and Canada consisting of people employed in a specific 
job (e.g., teacher, nurse), and that apply different exposure 
assignment techniques, provide evidence of positive associations 
between long-term PM2.5 exposure and mortality. Biological 
plausibility for mortality due to long-term PM2.5 exposure 
is provided by the coherence of effects across scientific disciplines 
for cardiovascular morbidity, particularly for coronary heart disease, 
stroke, and atherosclerosis, and for respiratory morbidity, 
particularly for the development of COPD. Additionally, recent studies 
provide evidence indicating that as long-term PM2.5 
concentrations decrease there is an increase in life expectancy. Recent 
cohort studies evaluated in the Supplement, as well as epidemiologic 
studies that conducted accountability analyses or employed alternative 
methods for confounder controls, support and extend the evidence base 
that contributed to the 2019 p.m. ISA conclusion for long-term 
PM2.5 exposure and mortality.
    A large body of studies examining both short- and long-term 
PM2.5 exposure and cardiovascular effects supports and 
extends the evidence base evaluated in the 2009 p.m. ISA. The strongest 
evidence for cardiovascular effects in response to short-term 
PM2.5 exposures is for ischemic heart disease and heart 
failure. The evidence for short-term PM2.5 exposure and 
cardiovascular effects is coherent across scientific disciplines and 
supports a continuum of effects ranging from subtle changes in 
indicators of cardiovascular health to serious clinical events, such as 
increased emergency department visits and hospital admissions due to 
cardiovascular disease and cardiovascular mortality. For long-term 
PM2.5 exposure, there is strong and consistent epidemiologic 
evidence of a relationship with cardiovascular mortality. This evidence 
is supported by epidemiologic and animal toxicological studies 
demonstrating a range of cardiovascular effects including coronary 
heart disease, stroke, impaired heart function, and subclinical markers 
(e.g., coronary artery calcification, atherosclerotic plaque 
progression), which collectively provide coherence and biological 
plausibility. Recent epidemiologic studies evaluated in the Supplement, 
as well as studies that conducted accountability analyses or employed 
alternative methods for confounder control, support and extend the 
evidence base that contributed to the 2019 p.m. ISA conclusion for both 
short- and long-term PM2.5 exposure and cardiovascular 
effects.
    Studies evaluated in the 2019 p.m. ISA continue to provide evidence 
of a ``likely to be causal relationship'' between both short- and long-
term PM2.5 exposure and respiratory effects. Epidemiologic 
studies provide consistent evidence of a relationship between short-
term PM2.5 exposure and asthma exacerbation in children and 
COPD exacerbation in adults as indicated by increases in emergency 
department visits and hospital admissions, which is supported by animal 
toxicological studies indicating worsening allergic airways disease and 
subclinical effects related to COPD. Epidemiologic studies also provide 
evidence of a relationship between short-term PM2.5 exposure 
and respiratory mortality. However, there is inconsistent evidence of 
respiratory effects, specifically lung function declines and pulmonary 
inflammation, in controlled human exposure studies. With respect to 
long term PM2.5 exposure, epidemiologic studies conducted in 
the United States and abroad provide evidence of a relationship with 
respiratory effects, including consistent changes in lung function and 
lung function growth rate, increased asthma incidence, asthma 
prevalence, and wheeze in children; acceleration of lung function 
decline in adults; and respiratory mortality. The epidemiologic 
evidence is supported by animal toxicological studies, which provide 
coherence and biological plausibility for a range of effects including 
impaired lung development, decrements in lung function growth, and 
asthma development.
    Since the 2009 p.m. ISA, a growing body of scientific evidence 
examined the relationship between long-term PM2.5 exposure 
and nervous system effects, resulting for the first time in a causality 
determination for this health effects category of a ``likely to be 
causal relationship.'' The strongest evidence for effects on the 
nervous system come from epidemiologic studies that consistently report 
cognitive decrements and reductions in brain volume in adults. The 
effects observed in epidemiologic studies in adults are supported by 
animal toxicological studies demonstrating effects on the brain of 
adult animals including inflammation, morphologic changes, and 
neurodegeneration of specific regions of the brain. There is more 
limited evidence for neurodevelopmental effects in children, with some 
studies reporting positive associations with autism spectrum disorder 
and others providing limited evidence of an association with cognitive 
function. While there is some evidence from animal toxicological 
studies indicating effects on the brain (i.e., inflammatory and 
morphological changes) to support a biologically plausible pathway for 
neurodevelopmental effects, epidemiologic studies are limited due to

[[Page 27869]]

their lack of control for potential confounding by copollutants, the 
small number of studies conducted, and uncertainty regarding critical 
exposure windows.
    Building off the decades of research demonstrating mutagenicity, 
DNA damage, and other endpoints related to genotoxicity due to whole PM 
exposures, recent experimental and epidemiologic studies focusing 
specifically on PM2.5 provide evidence of a relationship 
between long-term PM2.5 exposure and cancer. Epidemiologic 
studies examining long-term PM2.5 exposure and lung cancer 
incidence and mortality provide evidence of generally positive 
associations in cohort studies spanning different populations, 
locations, and exposure assignment techniques. Additionally, there is 
evidence of positive associations with lung cancer incidence and 
mortality in analyses limited to never smokers. The epidemiologic 
evidence is supported by both experimental and epidemiologic evidence 
of genotoxicity, epigenetic effects, carcinogenic potential, and that 
PM2.5 exhibits several characteristics of carcinogens, which 
collectively provides biological plausibility for cancer development 
and resulted in the conclusion of a ``likely to be causal 
relationship.''
    For the additional health effects categories evaluated for 
PM2.5 in the 2019 PM ISA, experimental and epidemiologic 
studies provide limited and/or inconsistent evidence of a relationship 
with PM2.5 exposure. As a result, the 2019 PM ISA concluded 
that the evidence is ``suggestive of, but not sufficient to infer a 
causal relationship'' for short-term PM2.5 exposure and 
metabolic effects and nervous system effects, and for long-term 
PM2.5 exposures and metabolic effects as well as 
reproductive and developmental effects.
    In addition to evaluating the health effects attributed to short- 
and long-term exposure to PM2.5, the 2019 PM ISA also 
conducted an extensive evaluation as to whether specific components or 
sources of PM2.5 are more strongly related with health 
effects than PM2.5 mass. An evaluation of those studies 
resulted in the 2019 PM ISA concluding that ``many PM2.5 
components and sources are associated with many health effects, and the 
evidence does not indicate that any one source or component is 
consistently more strongly related to health effects than 
PM2.5 mass.'' \241\
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    \241\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
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    For both PM10-2.5 and ultrafine particles (UFPs), for 
all health effects categories evaluated, the 2019 PM ISA concluded that 
the evidence was ``suggestive of, but not sufficient to infer, a causal 
relationship'' or ``inadequate to determine the presence or absence of 
a causal relationship.'' For PM10-2.5, although a Federal 
Reference Method was instituted in 2011 to measure PM10-2.5 
concentrations nationally, the causality determinations reflect that 
the same uncertainty identified in the 2009 PM ISA with respect to the 
method used to estimate PM10-2.5 concentrations in 
epidemiologic studies persists. Specifically, across epidemiologic 
studies, different approaches are used to estimate PM10-2.5 
concentrations (e.g., direct measurement of PM10-2.5, 
difference between PM10 and PM2.5 
concentrations), and it remains unclear how well correlated 
PM10-2.5 concentrations are both spatially and temporally 
across the different methods used.
    For UFPs, which have often been defined as particles less than 0.1 
[micro]m, the uncertainty in the evidence for the health effect 
categories evaluated across experimental and epidemiologic studies 
reflects the inconsistency in the exposure metric used (i.e., particle 
number concentration, surface area concentration, mass concentration) 
as well as the size fractions examined. In epidemiologic studies the 
size fraction examined can vary depending on the monitor used and 
exposure metric, with some studies examining number count over the 
entire particle size range, while experimental studies that use a 
particle concentrator often examine particles up to 0.3 [micro]m. 
Additionally, due to the lack of a monitoring network, there is limited 
information on the spatial and temporal variability of UFPs within the 
United States, as well as population exposures to UFPs, which adds 
uncertainty to epidemiologic study results.
    The 2019 PM ISA cites extensive evidence indicating that ``both the 
general population as well as specific populations and life stages are 
at risk for PM2.5-related health effects.'' \242\ For 
example, in support of its ``causal'' and ``likely to be causal'' 
determinations, the ISA cites substantial evidence for: (1) PM-related 
mortality and cardiovascular effects in older adults; (2) PM-related 
cardiovascular effects in people with pre-existing cardiovascular 
disease; (3) PM-related respiratory effects in people with pre-existing 
respiratory disease, particularly asthma exacerbations in children; and 
(4) PM-related impairments in lung function growth and asthma 
development in children. The ISA additionally notes that stratified 
analyses (i.e., analyses that directly compare PM-related health 
effects across groups) provide strong evidence for racial and ethnic 
differences in PM2.5 exposures and in the risk of 
PM2.5-related health effects, specifically within Hispanic 
and non-Hispanic Black populations, with some evidence of increased 
risk for populations of low socioeconomic status. Recent studies 
evaluated in the Supplement support the conclusion of the 2019 PM ISA 
with respect to disparities in both PM2.5 exposure and 
health risk by race and ethnicity and provide additional support for 
disparities for populations of lower socioeconomic status.\243\ 
Additionally, evidence spanning epidemiologic studies that conducted 
stratified analyses, experimental studies focusing on animal models of 
disease or individuals with pre-existing disease, dosimetry studies, as 
well as studies focusing on differential exposure suggest that 
populations with pre-existing cardiovascular or respiratory disease, 
populations that are overweight or obese, populations that have 
particular genetic variants, and current/former smokers could be at 
increased risk for adverse PM2.5-related health effects. The 
2022 Policy Assessment for the review of the PM NAAQS also highlights 
that factors that may contribute to increased risk of PM2.5-
related health effects include lifestage (children and older adults), 
pre-existing diseases (cardiovascular disease and respiratory disease), 
race/ethnicity, and socioeconomic status.\244\
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    \242\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
    \243\ U.S. EPA. Supplement to the 2019 Integrated Science 
Assessment for Particulate Matter (Final Report, 2022). U.S. 
Environmental Protection Agency, Washington, DC, EPA/635/R-22/028, 
2022.
    \244\ U.S. EPA. Policy Assessment (PA) for the Reconsideration 
of the National Ambient Air Quality Standards for Particulate Matter 
(Final Report, 2022). U.S. Environmental Protection Agency, 
Washington, DC, EPA-452/R-22-004, 2022, p. 3-53.
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2. Ozone
    This section provides a summary of the health effects associated 
with exposure to ambient concentrations of ozone.\245\ The information 
in this

[[Page 27870]]

section is based on the information and conclusions in the April 2020 
Integrated Science Assessment for Ozone (Ozone ISA).\246\ The Ozone ISA 
concludes that human exposures to ambient concentrations of ozone are 
associated with a number of adverse health effects and characterizes 
the weight of evidence for these health effects.\247\ The following 
discussion highlights the Ozone ISA's conclusions pertaining to health 
effects associated with both short-term and long-term periods of 
exposure to ozone.
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    \245\ Human exposure to ozone varies over time due to changes in 
ambient ozone concentration and because people move between 
locations which have notably different ozone concentrations. Also, 
the amount of ozone delivered to the lung is influenced not only by 
the ambient concentrations but also by the breathing route and rate.
    \246\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone 
and Related Photochemical Oxidants (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012, 
2020.
    \247\ The ISA evaluates evidence and draws conclusions on the 
causal relationship between relevant pollutant exposures and health 
effects, assigning one of five ``weight of evidence'' 
determinations: causal relationship, likely to be a causal 
relationship, suggestive of a causal relationship, inadequate to 
infer a causal relationship, and not likely to be a causal 
relationship. For more information on these levels of evidence, 
please refer to Table II in the Preamble of the ISA.
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    For short-term exposure to ozone, the Ozone ISA concludes that 
respiratory effects, including lung function decrements, pulmonary 
inflammation, exacerbation of asthma, respiratory-related hospital 
admissions, and mortality, are causally associated with ozone exposure. 
It also concludes that metabolic effects, including metabolic syndrome 
(i.e., changes in insulin or glucose levels, cholesterol levels, 
obesity, and blood pressure) and complications due to diabetes are 
likely to be causally associated with short-term exposure to ozone and 
that evidence is suggestive of a causal relationship between 
cardiovascular effects, central nervous system effects and total 
mortality and short-term exposure to ozone.
    For long-term exposure to ozone, the Ozone ISA concludes that 
respiratory effects, including new onset asthma, pulmonary inflammation 
and injury, are likely to be causally related with ozone exposure. The 
Ozone ISA characterizes the evidence as suggestive of a causal 
relationship for associations between long-term ozone exposure and 
cardiovascular effects, metabolic effects, reproductive and 
developmental effects, central nervous system effects and total 
mortality. The evidence is inadequate to infer a causal relationship 
between chronic ozone exposure and increased risk of cancer.
    Finally, interindividual variation in human responses to ozone 
exposure can result in some groups being at increased risk for 
detrimental effects in response to exposure. In addition, some groups 
are at increased risk of exposure due to their activities, such as 
outdoor workers and children. The Ozone ISA identified several groups 
that are at increased risk for ozone-related health effects. These 
groups are people with asthma, children and older adults, individuals 
with reduced intake of certain nutrients (i.e., Vitamins C and E), 
outdoor workers, and individuals having certain genetic variants 
related to oxidative metabolism or inflammation. Ozone exposure during 
childhood can have lasting effects through adulthood. Such effects 
include altered function of the respiratory and immune systems. 
Children absorb higher doses (normalized to lung surface area) of 
ambient ozone, compared to adults, due to their increased time spent 
outdoors, higher ventilation rates relative to body size, and a 
tendency to breathe a greater fraction of air through the mouth. 
Children also have a higher asthma prevalence compared to adults. 
Recent epidemiologic studies provide generally consistent evidence that 
long-term ozone exposure is associated with the development of asthma 
in children. Studies comparing age groups reported higher magnitude 
associations for short-term ozone exposure and respiratory hospital 
admissions and emergency room visits among children than among adults. 
Panel studies also provide support for experimental studies with 
consistent associations between short-term ozone exposure and lung 
function and pulmonary inflammation in healthy children. Additional 
children's vulnerability and susceptibility factors are listed in 
section IX.G of the preamble.
3. Nitrogen Oxides
    The most recent review of the health effects of oxides of nitrogen 
completed by EPA can be found in the 2016 Integrated Science Assessment 
for Oxides of Nitrogen--Health Criteria (Oxides of Nitrogen ISA).\248\ 
The largest source of NO2 is motor vehicle emissions, and 
ambient NO2 concentrations tend to be highly correlated with 
other traffic-related pollutants. Thus, a key issue in characterizing 
the causality of NO2-health effect relationships was 
evaluating the extent to which studies supported an effect of 
NO2 that is independent of other traffic-related pollutants. 
EPA concluded that the findings for asthma exacerbation integrated from 
epidemiologic and controlled human exposure studies provided evidence 
that is sufficient to infer a causal relationship between respiratory 
effects and short-term NO2 exposure. The strongest evidence 
supporting an independent effect of NO2 exposure comes from 
controlled human exposure studies demonstrating increased airway 
responsiveness in individuals with asthma following ambient-relevant 
NO2 exposures. The coherence of this evidence with 
epidemiologic findings for asthma hospital admissions and ED visits as 
well as lung function decrements and increased pulmonary inflammation 
in children with asthma describe a plausible pathway by which 
NO2 exposure can cause an asthma exacerbation. The 2016 ISA 
for Oxides of Nitrogen also concluded that there is likely to be a 
causal relationship between long-term NO2 exposure and 
respiratory effects. This conclusion is based on new epidemiologic 
evidence for associations of NO2 with asthma development in 
children combined with biological plausibility from experimental 
studies.
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    \248\ U.S. EPA. Integrated Science Assessment for Oxides of 
Nitrogen--Health Criteria (2016 Final Report). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-15/068, 2016.
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    In evaluating a broader range of health effects, the 2016 ISA for 
Oxides of Nitrogen concluded that evidence is ``suggestive of, but not 
sufficient to infer, a causal relationship'' between short-term 
NO2 exposure and cardiovascular effects and mortality and 
between long-term NO2 exposure and cardiovascular effects 
and diabetes, birth outcomes, and cancer. In addition, the scientific 
evidence is inadequate (insufficient consistency of epidemiologic and 
toxicological evidence) to infer a causal relationship for long-term 
NO2 exposure with fertility, reproduction, and pregnancy, as 
well as with postnatal development. A key uncertainty in understanding 
the relationship between these non-respiratory health effects and 
short- or long-term exposure to NO2 is co-pollutant 
confounding, particularly by other roadway pollutants. The available 
evidence for non-respiratory health effects does not adequately address 
whether NO2 has an independent effect or whether it 
primarily represents effects related to other or a mixture of traffic-
related pollutants.
    The 2016 ISA for Oxides of Nitrogen concluded that people with 
asthma, children, and older adults are at increased risk for 
NO2-related health effects. In these groups and lifestages, 
NO2 is consistently related to larger effects on outcomes 
related to asthma exacerbation, for which there is confidence in the 
relationship with NO2 exposure.

[[Page 27871]]

4. Sulfur Oxides
    This section provides an overview of the health effects associated 
with SO2. Additional information on the health effects of 
SO2 can be found in the 2017 Integrated Science Assessment 
for Sulfur Oxides--Health Criteria (SOX ISA).\249\ Following 
an extensive evaluation of health evidence from animal toxicological, 
controlled human exposure, and epidemiologic studies, EPA has concluded 
that there is a causal relationship between respiratory health effects 
and short-term exposure to SO2. The immediate effect of 
SO2 on the respiratory system in humans is 
bronchoconstriction. People with asthma are more sensitive to the 
effects of SO2, likely resulting from preexisting 
inflammation associated with this disease. In addition to those with 
asthma (both children and adults), there is suggestive evidence that 
all children and older adults may be at increased risk of 
SO2-related health effects. In free-breathing laboratory 
studies involving controlled human exposures to SO2, 
respiratory effects have consistently been observed following 5-10 min 
exposures at SO2 concentrations >= 400 ppb in people with 
asthma engaged in moderate to heavy levels of exercise, with 
respiratory effects occurring at concentrations as low as 200 ppb in 
some individuals with asthma. A clear concentration-response 
relationship has been demonstrated in these studies following exposures 
to SO2 at concentrations between 200 and 1000 ppb, both in 
terms of increasing severity of respiratory symptoms and decrements in 
lung function, as well as the percentage of individuals with asthma 
adversely affected. Epidemiologic studies have reported positive 
associations between short-term ambient SO2 concentrations 
and hospital admissions and emergency department visits for asthma and 
for all respiratory causes, particularly among children and older 
adults (>= 65 years). The studies provide supportive evidence for the 
causal relationship.
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    \249\ U.S. EPA. Integrated Science Assessment (ISA) for Sulfur 
Oxides--Health Criteria (Final Report, Dec 2017). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-17/451, 2017.
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    For long-term SO2 exposure and respiratory effects, EPA 
has concluded that the evidence is suggestive of a causal relationship. 
This conclusion is based on new epidemiologic evidence for positive 
associations between long-term SO2 exposure and increases in 
asthma incidence among children, together with animal toxicological 
evidence that provides a pathophysiologic basis for the development of 
asthma. However, uncertainty remains regarding the influence of other 
pollutants on the observed associations with SO2 because 
these epidemiologic studies have not examined the potential for co-
pollutant confounding.
    Consistent associations between short-term exposure to 
SO2 and mortality have been observed in epidemiologic 
studies with larger effect estimates reported for respiratory mortality 
than for cardiovascular mortality. While this finding is consistent 
with the demonstrated effects of SO2 on respiratory 
morbidity, uncertainty remains with respect to the interpretation of 
these observed mortality associations due to potential confounding by 
various copollutants. Therefore, EPA has concluded that the overall 
evidence is suggestive of a causal relationship between short-term 
exposure to SO2 and mortality.
5. Carbon Monoxide
    Information on the health effects of carbon monoxide (CO) can be 
found in the January 2010 Integrated Science Assessment for Carbon 
Monoxide (CO ISA).\250\ The CO ISA presents conclusions regarding the 
presence of causal relationships between CO exposure and categories of 
adverse health effects.\251\ This section provides a summary of the 
health effects associated with exposure to ambient concentrations of 
CO, along with the CO ISA conclusions.\252\
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    \250\ U.S. EPA, (2010). Integrated Science Assessment for Carbon 
Monoxide (Final Report). U.S. Environmental Protection Agency, 
Washington, DC, EPA/600/R-09/019F, 2010. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=218686.
    \251\ The ISA evaluates the health evidence associated with 
different health effects, assigning one of five ``weight of 
evidence'' determinations: causal relationship, likely to be a 
causal relationship, suggestive of a causal relationship, inadequate 
to infer a causal relationship, and not likely to be a causal 
relationship. For definitions of these levels of evidence, please 
refer to Section 1.6 of the ISA.
    \252\ Personal exposure includes contributions from many 
sources, and in many different environments. Total personal exposure 
to CO includes both ambient and non-ambient components; and both 
components may contribute to adverse health effects.
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    Controlled human exposure studies of subjects with coronary artery 
disease show a decrease in the time to onset of exercise-induced angina 
(chest pain) and electrocardiogram changes following CO exposure. In 
addition, epidemiologic studies presented in the CO ISA observed 
associations between short-term CO exposure and cardiovascular 
morbidity, particularly increased emergency room visits and hospital 
admissions for coronary heart disease (including ischemic heart 
disease, myocardial infarction, and angina). Some epidemiologic 
evidence is also available for increased hospital admissions and 
emergency room visits for congestive heart failure and cardiovascular 
disease as a whole. The CO ISA concludes that a causal relationship is 
likely to exist between short-term exposures to CO and cardiovascular 
morbidity. It also concludes that available data are inadequate to 
conclude that a causal relationship exists between long-term exposures 
to CO and cardiovascular morbidity.
    Animal studies show various neurological effects with in-utero CO 
exposure. Controlled human exposure studies report central nervous 
system and behavioral effects following low-level CO exposures, 
although the findings have not been consistent across all studies. The 
CO ISA concludes that the evidence is suggestive of a causal 
relationship with both short- and long-term exposure to CO and central 
nervous system effects.
    A number of studies cited in the CO ISA have evaluated the role of 
CO exposure in birth outcomes such as preterm birth or cardiac birth 
defects. There is limited epidemiologic evidence of a CO-induced effect 
on preterm births and birth defects, with weak evidence for a decrease 
in birth weight. Animal toxicological studies have found perinatal CO 
exposure to affect birth weight, as well as other developmental 
outcomes. The CO ISA concludes that the evidence is suggestive of a 
causal relationship between long-term exposures to CO and developmental 
effects and birth outcomes.
    Epidemiologic studies provide evidence of associations between 
short-term CO concentrations and respiratory morbidity such as changes 
in pulmonary function, respiratory symptoms, and hospital admissions. A 
limited number of epidemiologic studies considered copollutants such as 
ozone, SO2, and PM in two-pollutant models and found that CO 
risk estimates were generally robust, although this limited evidence 
makes it difficult to disentangle effects attributed to CO itself from 
those of the larger complex air pollution mixture. Controlled human 
exposure studies have not extensively evaluated the effect of CO on 
respiratory morbidity. Animal studies at levels of 50-100 ppm CO show 
preliminary evidence of altered pulmonary vascular remodeling and 
oxidative injury. The CO ISA concludes that the evidence is suggestive 
of a causal relationship between short-term CO exposure and respiratory 
morbidity, and inadequate to

[[Page 27872]]

conclude that a causal relationship exists between long-term exposure 
and respiratory morbidity.
    Finally, the CO ISA concludes that the epidemiologic evidence is 
suggestive of a causal relationship between short-term concentrations 
of CO and mortality. Epidemiologic evidence suggests an association 
exists between short-term exposure to CO and mortality, but limited 
evidence is available to evaluate cause-specific mortality outcomes 
associated with CO exposure. In addition, the attenuation of CO risk 
estimates which was often observed in co-pollutant models contributes 
to the uncertainty as to whether CO is acting alone or as an indicator 
for other combustion-related pollutants. The CO ISA also concludes that 
there is not likely to be a causal relationship between relevant long-
term exposures to CO and mortality.
6. Diesel Exhaust
    In EPA's 2002 Diesel Health Assessment Document (Diesel HAD), 
exposure to diesel exhaust was classified as likely to be carcinogenic 
to humans by inhalation from environmental exposures, in accordance 
with the revised draft 1996/1999 EPA cancer 
guidelines.253 254 A number of other agencies (National 
Institute for Occupational Safety and Health, the International Agency 
for Research on Cancer, the World Health Organization, California EPA, 
and the U.S. Department of Health and Human Services) made similar 
hazard classifications prior to 2002. EPA also concluded in the 2002 
Diesel HAD that it was not possible to calculate a cancer unit risk for 
diesel exhaust due to limitations in the exposure data for the 
occupational groups or the absence of a dose-response relationship.
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    \253\ U.S. EPA. (1999). Guidelines for Carcinogen Risk 
Assessment. Review Draft. NCEA-F-0644, July. Washington, DC: U.S. 
EPA. Retrieved on March 19, 2009 from http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=54932.
    \254\ U.S. EPA (2002). Health Assessment Document for Diesel 
Engine Exhaust. EPA/600/8-90/057F Office of research and 
Development, Washington DC. Retrieved on March 17, 2009 from http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060. pp. 1-1 1-2.
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    In the absence of a cancer unit risk, the Diesel HAD sought to 
provide additional insight into the significance of the diesel exhaust 
cancer hazard by estimating possible ranges of risk that might be 
present in the population. An exploratory analysis was used to 
characterize a range of possible lung cancer risk. The outcome was that 
environmental risks of cancer from long-term diesel exhaust exposures 
could plausibly range from as low as 10-5 to as high as 
10-3. Because of uncertainties, the analysis acknowledged 
that the risks could be lower than 10-5, and a zero risk 
from diesel exhaust exposure could not be ruled out.
    Noncancer health effects of acute and chronic exposure to diesel 
exhaust emissions are also of concern to EPA. EPA derived a diesel 
exhaust reference concentration (RfC) from consideration of four well-
conducted chronic rat inhalation studies showing adverse pulmonary 
effects. The RfC is 5 [micro]g/m\3\ for diesel exhaust measured as 
diesel particulate matter. This RfC does not consider allergenic 
effects such as those associated with asthma or immunologic or the 
potential for cardiac effects. There was emerging evidence in 2002, 
discussed in the Diesel HAD, that exposure to diesel exhaust can 
exacerbate these effects, but the exposure-response data were lacking 
at that time to derive an RfC based on these then-emerging 
considerations. The Diesel HAD states, ``With [diesel particulate 
matter] being a ubiquitous component of ambient PM, there is an 
uncertainty about the adequacy of the existing [diesel exhaust] 
noncancer database to identify all of the pertinent [diesel exhaust]-
caused noncancer health hazards.'' The Diesel HAD also noted ``that 
acute exposure to [diesel exhaust] has been associated with irritation 
of the eye, nose, and throat, respiratory symptoms (cough and phlegm), 
and neurophysiological symptoms such as headache, lightheadedness, 
nausea, vomiting, and numbness or tingling of the extremities.'' The 
Diesel HAD notes that the cancer and noncancer hazard conclusions 
applied to the general use of diesel engines then on the market and as 
cleaner engines replace a substantial number of existing ones, the 
applicability of the conclusions would need to be reevaluated.
    It is important to note that the Diesel HAD also briefly summarizes 
health effects associated with ambient PM and discusses EPA's then-
annual PM2.5 NAAQS of 15 [micro]g/m\3\.\255\ In 2012, EPA 
revised the level of the annual PM2.5 NAAQS to 12 [micro]g/
m\3\ and in 2024 EPA revised the level of the annual PM2.5 
NAAQS to 9.0 [micro]g/m\3\.\256\ There is a large and extensive body of 
human data showing a wide spectrum of adverse health effects associated 
with exposure to ambient PM, of which diesel exhaust is an important 
component. The PM2.5 NAAQS provides protection from the 
health effects attributed to exposure to PM2.5. The 
contribution of diesel PM to total ambient PM varies in different 
regions of the country and also within a region from one area to 
another. The contribution can be high in near-roadway environments, for 
example, or in other locations where diesel engine use is concentrated.
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    \255\ See Section II.B.1 of the preamble for discussion of the 
current PM2.5 NAAQS standard, and https://www.epa.gov/pm-pollution/national-ambient-air-quality-standards-naaqs-pm.
    \256\ https://www.epa.gov/pm-pollution/national-ambient-air-quality-standards-naaqs-pm.
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    Since 2002, several new studies have been published which continue 
to report increased lung cancer risk associated with occupational 
exposure to diesel exhaust from older engines. Of particular note since 
2011 are three new epidemiology studies that have examined lung cancer 
in occupational populations, including, truck drivers, underground 
nonmetal miners, and other diesel motor-related occupations. These 
studies reported increased risk of lung cancer related to exposure to 
diesel exhaust, with evidence of positive exposure-response 
relationships to varying degrees.257 258 259 These newer 
studies (along with others that have appeared in the scientific 
literature) add to the evidence EPA evaluated in the 2002 Diesel HAD 
and further reinforce the concern that diesel exhaust exposure likely 
poses a lung cancer hazard. The findings from these newer studies do 
not necessarily apply to newer technology diesel engines (i.e., heavy-
duty highway engines from 2007 and later model years) since the newer 
engines have large reductions in the emission constituents compared to 
older technology diesel engines.
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    \257\ Garshick, Eric, Francine Laden, Jaime E. Hart, Mary E. 
Davis, Ellen A. Eisen, and Thomas J. Smith. 2012. Lung cancer and 
elemental carbon exposure in trucking industry workers. 
Environmental Health Perspectives 120(9): 1301-1306.
    \258\ Silverman, D. T., Samanic, C. M., Lubin, J. H., Blair, A. 
E., Stewart, P. A., Vermeulen, R., & Attfield, M. D. (2012). The 
diesel exhaust in miners study: a nested case-control study of lung 
cancer and diesel exhaust. Journal of the National Cancer Institute.
    \259\ Olsson, Ann C., et al. ``Exposure to diesel motor exhaust 
and lung cancer risk in a pooled analysis from case-control studies 
in Europe and Canada.'' American journal of respiratory and critical 
care medicine 183.7 (2011): 941-948.
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    In light of the growing body of scientific literature evaluating 
the health effects of exposure to diesel exhaust, in June 2012 the 
World Health Organization's International Agency for Research on Cancer 
(IARC), a recognized international authority on the carcinogenic 
potential of chemicals and other agents, evaluated the full range of 
cancer-related health effects data for diesel engine exhaust. IARC 
concluded that diesel exhaust should be regarded as ``carcinogenic to

[[Page 27873]]

humans.'' \260\ This designation was an update from its 1988 evaluation 
that considered the evidence to be indicative of a ``probable human 
carcinogen.''
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    \260\ IARC [International Agency for Research on Cancer]. 
(2013). Diesel and gasoline engine exhausts and some nitroarenes. 
IARC Monographs Volume 105. Online at http://monographs.iarc.fr/ENG/Monographs/vol105/index.php.
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7. Air Toxics
    Light- and medium-duty engine emissions contribute to ambient 
levels of air toxics that are known or suspected human or animal 
carcinogens or that have noncancer health effects. These compounds 
include, but are not limited to, acetaldehyde, benzene, 1, 3-butadiene, 
formaldehyde, naphthalene, and polycyclic organic matter. These 
compounds were all identified as national or regional cancer risk 
drivers or contributors in the 2019 AirToxScreen 
Assessment.261 262
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    \261\ U.S. EPA (2022) Technical Support Document EPA's Air 
Toxics Screening Assessment. 2018 AirToxScreen TSD. https://www.epa.gov/system/files/documents/2023-02/AirToxScreen_2018%20TSD.pdf.
    \262\ U.S. EPA (2023) 2019 AirToxScreen Risk Drivers. https://www.epa.gov/AirToxScreen/airtoxscreen-risk-drivers.
---------------------------------------------------------------------------

i. Acetaldehyde
    Acetaldehyde is classified in EPA's IRIS database as a probable 
human carcinogen, based on nasal tumors in rats, and is considered 
toxic by the inhalation, oral, and intravenous routes.\263\ The 
inhalation unit risk estimate (URE) in IRIS for acetaldehyde is 2.2 x 
10-6 per [micro]g/m\3\.\264\ Acetaldehyde is reasonably 
anticipated to be a human carcinogen by the NTP in the 14th Report on 
Carcinogens and is classified as possibly carcinogenic to humans (Group 
2B) by the IARC.265 266
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    \263\ U.S. EPA (1991). Integrated Risk Information System File 
of Acetaldehyde. Research and Development, National Center for 
Environmental Assessment, Washington, DC. This material is available 
electronically at https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=290.
    \264\ U.S. EPA (1991). Integrated Risk Information System File 
of Acetaldehyde. This material is available electronically at 
https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=290.
    \265\ NTP (National Toxicology Program). 2016. Report on 
Carcinogens, Fourteenth Edition.; Research Triangle Park, NC: U.S. 
Department of Health and Human Services, Public Health Service. 
https://ntp.niehs.nih.gov/go/roc14.
    \266\ International Agency for Research on Cancer (IARC). 
(1999). Re-evaluation of some organic chemicals, hydrazine, and 
hydrogen peroxide. IARC Monographs on the Evaluation of Carcinogenic 
Risk of Chemical to Humans, Vol 71. Lyon, France.
---------------------------------------------------------------------------

    The primary noncancer effects of exposure to acetaldehyde vapors 
include irritation of the eyes, skin, and respiratory tract.\267\ In 
short-term (4 week) rat studies, degeneration of olfactory epithelium 
was observed at various concentration levels of acetaldehyde 
exposure.\268\ Data from these studies were used by EPA to develop an 
inhalation reference concentration of 9 [micro]g/m3. Some asthmatics 
have been shown to be a sensitive subpopulation to decrements in 
functional expiratory volume (FEV1 test) and bronchoconstriction upon 
acetaldehyde inhalation.\269\ Children, especially those with diagnosed 
asthma, may be more likely to show impaired pulmonary function and 
symptoms of asthma than are adults following exposure to 
acetaldehyde.\270\
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    \267\ U.S. EPA (1991). Integrated Risk Information System File 
of Acetaldehyde. This material is available electronically at 
https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=290.
    \268\ Appleman, L.M., R.A. Woutersen, and V.J. Feron. (1982). 
Inhalation toxicity of acetaldehyde in rats. I. Acute and subacute 
studies. Toxicology. 23: 293-297.
    \269\ Myou, S.; Fujimura, M.; Nishi K.; Ohka, T.; and Matsuda, 
T. (1993). Aerosolized acetaldehyde induces histamine-mediated 
bronchoconstriction in asthmatics. Am. Rev. Respir.Dis.148(4 Pt 1): 
940-943.
    \270\ California OEHHA, 2014. TSD for Noncancer RELs: Appendix 
D. Individual, Acute, 8-Hour, and Chronic Reference Exposure Level 
Summaries. December 2008 (updated July 2014). https://oehha.ca.gov/media/downloads/crnr/appendixd1final.pdf.
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ii. Benzene
    EPA's Integrated Risk Information System (IRIS) database lists 
benzene as a known human carcinogen (causing leukemia) by all routes of 
exposure, and concludes that exposure is associated with additional 
health effects, including genetic changes in both humans and animals 
and increased proliferation of bone marrow cells in 
mice.271 272 273 EPA states in its IRIS database that data 
indicate a causal relationship between benzene exposure and acute 
lymphocytic leukemia and suggest a relationship between benzene 
exposure and chronic non-lymphocytic leukemia and chronic lymphocytic 
leukemia. EPA's IRIS documentation for benzene also lists a range of 
2.2 x 10-6 to 7.8 x 10-6 per [micro]g/m\3\ as the 
unit risk estimate (URE) for benzene.274 275 The 
International Agency for Research on Cancer (IARC) has determined that 
benzene is a human carcinogen, and the U.S. Department of Health and 
Human Services (DHHS) has characterized benzene as a known human 
carcinogen.276 277
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    \271\ U.S. EPA. (2000). Integrated Risk Information System File 
for Benzene. This material is available electronically at: https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=276.
    \272\ International Agency for Research on Cancer. (1982). IARC 
monographs on the evaluation of carcinogenic risk of chemicals to 
humans, Volume 29, Some industrial chemicals and dyestuffs, 
International Agency for Research on Cancer, World Health 
Organization, Lyon, France 1982.
    \273\ Irons, R.D.; Stillman, W.S.; Colagiovanni, D.B.; Henry, 
V.A. (1992). Synergistic action of the benzene metabolite 
hydroquinone on myelopoietic stimulating activity of granulocyte/
macrophage colony-stimulating factor in vitro, Proc. Natl. Acad. 
Sci. 89:3691-3695.
    \274\ A unit risk estimate is defined as the increase in the 
lifetime risk of cancer of an individual who is exposed for a 
lifetime to 1 [micro]g/m3 benzene in air.
    \275\ U.S. EPA. (2000). Integrated Risk Information System File 
for Benzene. This material is available electronically at: https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=276.
    \276\ International Agency for Research on Cancer (IARC, 2018. 
Monographs on the evaluation of carcinogenic risks to humans, volume 
120. World Health Organization--Lyon, France. http://publications.iarc.fr/Book-And-Report-Series/Iarc-Monographs-On-The-Identification-Of-Carcinogenic-Hazards-To-Humans/Benzene-2018.
    \277\ NTP (National Toxicology Program). 2016. Report on 
Carcinogens, Fourteenth Edition.; Research Triangle Park, NC: U.S. 
Department of Health and Human Services, Public Health Service. 
https://ntp.niehs.nih.gov/go/roc14.
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    A number of adverse noncancer health effects, including blood 
disorders such as preleukemia and aplastic anemia, have also been 
associated with long-term exposure to benzene.278 279 The 
most sensitive noncancer effect observed in humans, based on current 
data, is the depression of the absolute lymphocyte count in 
blood.280 281 EPA's inhalation reference concentration (RfC) 
for benzene is 30 [micro]g/m\3\. The RfC is based on suppressed 
absolute lymphocyte counts seen in humans under occupational exposure 
conditions. In addition, studies sponsored by the Health Effects 
Institute (HEI) provide evidence that biochemical responses occur at 
lower levels of benzene exposure than previously 
known.282 283 284 285 EPA's IRIS program

[[Page 27874]]

has not yet evaluated these new data. EPA does not currently have an 
acute reference concentration for benzene. The Agency for Toxic 
Substances and Disease Registry (ATSDR) Minimal Risk Level (MRL) for 
acute exposure to benzene is 29 [micro]g/m\3\ for 1-14 days 
exposure.286 287
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    \278\ Aksoy, M. (1989). Hematotoxicity and carcinogenicity of 
benzene. Environ. Health Perspect. 82: 193-197. EPA-HQ-OAR-2011-
0135.
    \279\ Goldstein, B.D. (1988). Benzene toxicity. Occupational 
medicine. State of the Art Reviews. 3: 541-554.
    \280\ Rothman, N., G.L. Li, M. Dosemeci, W.E. Bechtold, G.E. 
Marti, Y.Z. Wang, M. Linet, L.Q. Xi, W. Lu, M.T. Smith, N. Titenko-
Holland, L.P. Zhang, W. Blot, S.N. Yin, and R.B. Hayes. (1996). 
Hematotoxicity among Chinese workers heavily exposed to benzene. Am. 
J. Ind. Med. 29: 236-246.
    \281\ U.S. EPA (2002). Toxicological Review of Benzene 
(Noncancer Effects). Environmental Protection Agency, Integrated 
Risk Information System (IRIS), Research and Development, National 
Center for Environmental Assessment, Washington DC. This material is 
available electronically at https://cfpub.epa.gov/ncea/iris/iris_documents/documents/toxreviews/0276tr.pdf.
    \282\ Qu, O.; Shore, R.; Li, G.; Jin, X.; Chen, C.L.; Cohen, B.; 
Melikian, A.; Eastmond, D.; Rappaport, S.; Li, H.; Rupa, D.; 
Suramaya, R.; Songnian, W.; Huifant, Y.; Meng, M.; Winnik, M.; Kwok, 
E.; Li, Y.; Mu, R.; Xu, B.; Zhang, X.; Li, K. (2003). HEI Report 
115, Validation & Evaluation of Biomarkers in Workers Exposed to 
Benzene in China.
    \283\ Qu, Q., R. Shore, G. Li, X. Jin, L.C. Chen, B. Cohen, et 
al. (2002). Hematological changes among Chinese workers with a broad 
range of benzene exposures. Am. J. Industr. Med. 42: 275-285.
    \284\ Lan, Qing, Zhang, L., Li, G., Vermeulen, R., et al. 
(2004). Hematotoxically in Workers Exposed to Low Levels of Benzene. 
Science 306: 1774-1776.
    \285\ Turtletaub, K.W. and Mani, C. (2003). Benzene metabolism 
in rodents at doses relevant to human exposure from Urban Air. 
Research Reports Health Effect Inst. Report No.113.
    \286\ U.S. Agency for Toxic Substances and Disease Registry 
(ATSDR). (2007). Toxicological profile for benzene. Atlanta, GA: 
U.S. Department of Health and Human Services, Public Health Service. 
http://www.atsdr.cdc.gov/ToxProfiles/tp3.pdf.
    \287\ A minimal risk level (MRL) is defined as an estimate of 
the daily human exposure to a hazardous substance that is likely to 
be without appreciable risk of adverse noncancer health effects over 
a specified duration of exposure.
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    There is limited information from two studies regarding an 
increased risk of adverse effects to children whose parents have been 
occupationally exposed to benzene.288 289 Data from animal 
studies have shown benzene exposures result in damage to the 
hematopoietic (blood cell formation) system during 
development.290 291 292 Also, key changes related to the 
development of childhood leukemia occur in the developing fetus.\293\ 
Several studies have reported that genetic changes related to eventual 
leukemia development occur before birth. For example, there is one 
study of genetic changes in twins who developed T cell leukemia at nine 
years of age.\294\
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    \288\ Corti, M; Snyder, CA. (1996) Influences of gender, 
development, pregnancy and ethanol consumption on the hematotoxicity 
of inhaled 10 ppm benzene. Arch Toxicol 70:209-217.
    \289\ McKinney P.A.; Alexander, F.E.; Cartwright, R.A.; et al. 
(1991) Parental occupations of children with leukemia in west 
Cumbria, north Humberside, and Gateshead, Br Med J 302:681-686.
    \290\ Keller, KA; Snyder, CA. (1986) Mice exposed in utero to 
low concentrations of benzene exhibit enduring changes in their 
colony forming hematopoietic cells. Toxicology 42:171-181.
    \291\ Keller, KA; Snyder, CA. (1988) Mice exposed in utero to 20 
ppm benzene exhibit altered numbers of recognizable hematopoietic 
cells up to seven weeks after exposure. Fundam Appl Toxicol 10:224-
232.
    \292\ Corti, M; Snyder, CA. (1996) Influences of gender, 
development, pregnancy and ethanol consumption on the hematotoxicity 
of inhaled 10 ppm benzene. Arch Toxicol 70:209-217.
    \293\ U. S. EPA. (2002). Toxicological Review of Benzene 
(Noncancer Effects). National Center for Environmental Assessment, 
Washington, DC. Report No. EPA/635/R-02/001F. https://cfpub.epa.gov/ncea/iris/iris_documents/documents/toxreviews/0276tr.pdf.
    \294\ Ford, AM; Pombo-de-Oliveira, MS; McCarthy, KP; MacLean, 
JM; Carrico, KC; Vincent, RF; Greaves, M. (1997) Monoclonal origin 
of concordant T-cell malignancy in identical twins. Blood 89:281-
285.
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iii. 1,3-Butadiene
    EPA has characterized 1,3-butadiene as carcinogenic to humans by 
inhalation.295 296 The IARC has determined that 1,3-
butadiene is a human carcinogen and the U.S. DHHS has characterized 
1,3-butadiene as a known human carcinogen.297 298 299 300 
There are numerous studies consistently demonstrating that 1,3-
butadiene is metabolized into genotoxic metabolites by experimental 
animals and humans. The specific mechanisms of 1,3-butadiene-induced 
carcinogenesis are unknown; however, the scientific evidence strongly 
suggests that the carcinogenic effects are mediated by genotoxic 
metabolites. Animal data suggest that females may be more sensitive 
than males for cancer effects associated with 1,3-butadiene exposure; 
there are insufficient data in humans from which to draw conclusions 
about sensitive subpopulations. The URE for 1,3-butadiene is 3 x 10-5 
per [micro]g/m\3\.\301\ 1,3-butadiene also causes a variety of 
reproductive and developmental effects in mice; no human data on these 
effects are available. The most sensitive effect was ovarian atrophy 
observed in a lifetime bioassay of female mice.\302\ Based on this 
critical effect and the benchmark concentration methodology, an RfC for 
chronic health effects was calculated at 0.9 ppb (approximately 2 
[micro]g/m\3\).
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    \295\ U.S. EPA. (2002). Health Assessment of 1,3-Butadiene. 
Office of Research and Development, National Center for 
Environmental Assessment, Washington Office, Washington, DC. Report 
No. EPA600-P-98-001F. This document is available electronically at 
https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=54499.
    \296\ U.S. EPA. (2002) ``Full IRIS Summary for 1,3-butadiene 
(CASRN 106-99-0)'' Environmental Protection Agency, Integrated Risk 
Information System (IRIS), Research and Development, National Center 
for Environmental Assessment, Washington, DC https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=139.
    \297\ International Agency for Research on Cancer (IARC). 
(1999). Monographs on the evaluation of carcinogenic risk of 
chemicals to humans, Volume 71, Re-evaluation of some organic 
chemicals, hydrazine and hydrogen peroxide, World Health 
Organization, Lyon, France.
    \298\ International Agency for Research on Cancer (IARC). 
(2008). Monographs on the evaluation of carcinogenic risk of 
chemicals to humans, 1,3-Butadiene, Ethylene Oxide and Vinyl Halides 
(Vinyl Fluoride, Vinyl Chloride and Vinyl Bromide) Volume 97, World 
Health Organization, Lyon, France.
    \299\ NTP (National Toxicology Program). 2016. Report on 
Carcinogens, Fourteenth Edition.; Research Triangle Park, NC: U.S. 
Department of Health and Human Services, Public Health Service. 
https://ntp.niehs.nih.gov/go/roc14.
    \300\ International Agency for Research on Cancer (IARC). 
(2012). Monographs on the evaluation of carcinogenic risk of 
chemicals to humans, Volume 100F chemical agents and related 
occupations, World Health Organization, Lyon, France.
    \301\ U.S. EPA. (2002). ``Full IRIS Summary for 1,3-butadiene 
(CASRN 106-99-0)'' Environmental Protection Agency, Integrated Risk 
Information System (IRIS), Research and Development, National Center 
for Environmental Assessment, Washington, DC https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=139.
    \302\ Bevan, C.; Stadler, J.C.; Elliot, G.S.; et al. (1996). 
Subchronic toxicity of 4-vinylcyclohexene in rats and mice by 
inhalation. Fundam. Appl. Toxicol. 32:1-10.
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iv. Formaldehyde
    In 1991, EPA concluded that formaldehyde is a Class B1 probable 
human carcinogen based on limited evidence in humans and sufficient 
evidence in animals.\303\ An Inhalation URE for cancer and a reference 
dose for oral noncancer effects were developed by EPA and posted on the 
IRIS database. Since that time, the NTP and IARC have concluded that 
formaldehyde is a known human carcinogen.304 305 306
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    \303\ EPA. Integrated Risk Information System. Formaldehyde 
(CASRN 50-00-0) https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=419.
    \304\ NTP (National Toxicology Program). 2016. Report on 
Carcinogens, Fourteenth Edition.; Research Triangle Park, NC: U.S. 
Department of Health and Human Services, Public Health Service. 
https://ntp.niehs.nih.gov/go/roc14.
    \305\ IARC Monographs on the Evaluation of Carcinogenic Risks to 
Humans Volume 88 (2006): Formaldehyde, 2-Butoxyethanol and 1-tert-
Butoxypropan-2-ol.
    \306\ IARC Monographs on the Evaluation of Carcinogenic Risks to 
Humans Volume 100F (2012): Formaldehyde.
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    The conclusions by IARC and NTP reflect the results of 
epidemiologic research published since 1991 in combination with 
previous and more recent animal, human, and mechanistic evidence. 
Research conducted by the National Cancer Institute reported an 
increased risk of nasopharyngeal cancer and specific 
lymphohematopoietic malignancies among workers exposed to 
formaldehyde.307 308 309 A National Institute of 
Occupational Safety and Health study of garment workers also reported 
increased risk of death due to leukemia among workers exposed to 
formaldehyde.\310\ Extended follow-up of

[[Page 27875]]

a cohort of British chemical workers did not report evidence of an 
increase in nasopharyngeal or lymphohematopoietic cancers, but a 
continuing statistically significant excess in lung cancers was 
reported.\311\ Finally, a study of embalmers reported formaldehyde 
exposures to be associated with an increased risk of myeloid leukemia 
but not brain cancer.\312\
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    \307\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; 
Blair, A. 2003. Mortality from lymphohematopoetic malignancies among 
workers in formaldehyde industries. Journal of the National Cancer 
Institute 95: 1615-1623.
    \308\ Hauptmann, M.; Lubin, J. H.; Stewart, P. A.; Hayes, R. B.; 
Blair, A. 2004. Mortality from solid cancers among workers in 
formaldehyde industries. American Journal of Epidemiology 159: 1117-
1130.
    \309\ Beane Freeman, L. E.; Blair, A.; Lubin, J. H.; Stewart, P. 
A.; Hayes, R. B.; Hoover, R. N.; Hauptmann, M. 2009. Mortality from 
lymphohematopoietic malignancies among workers in formaldehyde 
industries: The National Cancer Institute cohort. J. National Cancer 
Inst. 101: 751-761.
    \310\ Pinkerton, L. E. 2004. Mortality among a cohort of garment 
workers exposed to formaldehyde: an update. Occup. Environ. Med. 61: 
193-200.
    \311\ Coggon, D, EC Harris, J Poole, KT Palmer. 2003. Extended 
follow-up of a cohort of British chemical workers exposed to 
formaldehyde. J National Cancer Inst. 95:1608-1615.
    \312\ Hauptmann, M,; Stewart P. A.; Lubin J. H.; Beane Freeman, 
L. E.; Hornung, R. W.; Herrick, R. F.; Hoover, R. N.; Fraumeni, J. 
F.; Hayes, R. B. 2009. Mortality from lymphohematopoietic 
malignancies and brain cancer among embalmers exposed to 
formaldehyde. Journal of the National Cancer Institute 101:1696-
1708.
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    Health effects of formaldehyde in addition to cancer were reviewed 
by the Agency for Toxic Substances and Disease Registry in 1999, 
supplemented in 2010, and by the World Health 
Organization.313 314 315 These organizations reviewed the 
scientific literature concerning health effects linked to formaldehyde 
exposure to evaluate hazards and dose response relationships and 
defined exposure concentrations for minimal risk levels (MRLs). The 
health endpoints reviewed included sensory irritation of eyes and 
respiratory tract, reduced pulmonary function, nasal histopathology, 
and immune system effects. In addition, research on reproductive and 
developmental effects and neurological effects were discussed along 
with several studies that suggest that formaldehyde may increase the 
risk of asthma--particularly in the young.
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    \313\ ATSDR. 1999. Toxicological Profile for Formaldehyde, U.S. 
Department of Health and Human Services (HHS), July 1999.
    \314\ ATSDR. 2010. Addendum to the Toxicological Profile for 
Formaldehyde. U.S. Department of Health and Human Services (HHS), 
October 2010.
    \315\ IPCS. 2002. Concise International Chemical Assessment 
Document 40. Formaldehyde. World Health Organization.
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    In June 2010, EPA released a draft Toxicological Review of 
Formaldehyde--Inhalation Assessment through the IRIS program for peer 
review by the National Research Council (NRC) and public comment.\316\ 
That draft assessment reviewed more recent research from animal and 
human studies on cancer and other health effects. The NRC released 
their review report in April 2011.\317\ EPA addressed the NRC (2011) 
recommendations and applied systematic review methods to the evaluation 
of the available noncancer and cancer health effects evidence and 
released a new draft IRIS Toxicological Review of Formaldehyde--
Inhalation in April 2022.\318\ In this draft, updates to the 1991 IRIS 
finding include a stronger determination of the carcinogenicity of 
formaldehyde inhalation to humans, as well as characterization of its 
noncancer effects to propose an overall reference concentration for 
inhalation exposure. The National Academies of Sciences, Engineering, 
and Medicine released their review of EPA's 2022 Draft Formaldehyde 
Assessment in August 2023, concluding that EPA's ``findings on 
formaldehyde hazard and quantitative risk are supported by the evidence 
identified.'' \319\ EPA is currently revising the draft IRIS assessment 
in response to comments received.\320\
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    \316\ EPA (U.S. Environmental Protection Agency). 2010. 
Toxicological Review of Formaldehyde (CAS No. 50-00-0)--Inhalation 
Assessment: In Support of Summary Information on the Integrated Risk 
Information System (IRIS). External Review Draft. EPA/635/R-10/002A. 
U.S. Environmental Protection Agency, Washington DC [online]. 
Available: http://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=223614.
    \317\ NRC (National Research Council). 2011. Review of the 
Environmental Protection Agency's Draft IRIS Assessment of 
Formaldehyde. Washington DC: National Academies Press. http://books.nap.edu/openbook.php?record_id=13142.
    \318\ U.S. EPA. 2022. IRIS Toxicological Review of Formaldehyde-
Inhalation (External Review Draft, 2022). U.S. Environmental 
Protection Agency, Washington, DC, EPA/635/R-22/039.
    \319\ National Academies of Sciences, Engineering, and Medicine. 
2023. Review of EPA's 2022 Draft Formaldehyde Assessment. 
Washington, DC: The National Academies Press. https://doi.org/10.17226/27153.
    \320\ For more information, see https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=248150#.
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v. Naphthalene
    Naphthalene is found in small quantities in gasoline and diesel 
fuels. Naphthalene emissions have been measured in larger quantities in 
both gasoline and diesel exhaust compared with evaporative emissions 
from mobile sources, indicating it is primarily a product of 
combustion.
    Acute (short-term) exposure of humans to naphthalene by inhalation, 
ingestion, or dermal contact is associated with hemolytic anemia and 
damage to the liver and the nervous system.\321\ Chronic (long term) 
exposure of workers and rodents to naphthalene has been reported to 
cause cataracts and retinal damage.\322\ Children, especially neonates, 
appear to be more susceptible to acute naphthalene poisoning based on 
the number of reports of lethal cases in children and infants 
(hypothesized to be due to immature naphthalene detoxification 
pathways).\323\ EPA released an external review draft of a reassessment 
of the inhalation carcinogenicity of naphthalene based on a number of 
recent animal carcinogenicity studies.\324\ The draft reassessment 
completed external peer review.\325\ Based on external peer review 
comments received, EPA is developing a revised draft assessment that 
considers inhalation and oral routes of exposure, as well as cancer and 
noncancer effects.\326\ The external review draft does not represent 
official agency opinion and was released solely for the purposes of 
external peer review and public comment. The NTP listed naphthalene as 
``reasonably anticipated to be a human carcinogen'' in 2004 on the 
basis of bioassays reporting clear evidence of carcinogenicity in rats 
and some evidence of carcinogenicity in mice.\327\ California EPA has 
released a risk assessment for naphthalene,\328\ and the IARC has 
reevaluated naphthalene and re-classified it as Group 2B: possibly 
carcinogenic to humans.\329\
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    \321\ U. S. EPA. 1998. Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=56434.
    \322\ U. S. EPA. 1998. Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=56434.
    \323\ U. S. EPA. (1998). Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=56434.
    \324\ U. S. EPA. (1998). Toxicological Review of Naphthalene 
(Reassessment of the Inhalation Cancer Risk), Environmental 
Protection Agency, Integrated Risk Information System, Research and 
Development, National Center for Environmental Assessment, 
Washington, DC. This material is available electronically at https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=56434.
    \325\ Oak Ridge Institute for Science and Education. (2004). 
External Peer Review for the IRIS Reassessment of the Inhalation 
Carcinogenicity of Naphthalene. August 2004. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=84403.
    \326\ U.S. EPA. (2018) See: https://cfpub.epa.gov/ncea/iris2/chemicalLanding.cfm?substance_nmbr=436.
    \327\ NTP (National Toxicology Program). 2016. Report on 
Carcinogens, Fourteenth Edition.; Research Triangle Park, NC: U.S. 
Department of Health and Human Services, Public Health Service. 
https://ntp.niehs.nih.gov/go/roc14.
    \328\ California Environmental Protection Agency Office of 
Environmental Health Hazard. (2002). https://oehha.ca.gov/media/downloads/proposition-65/chemicals/41902not.pdf.
    \329\ International Agency for Research on Cancer (IARC). 
(2002). Monographs on the Evaluation of the Carcinogenic Risk of 
Chemicals for Humans. Vol. 82. Lyon, France.
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    Naphthalene also causes a number of non-cancer effects in animals 
following

[[Page 27876]]

chronic and less-than-chronic exposure, including abnormal cell changes 
and growth in respiratory and nasal tissues.\330\ The current EPA IRIS 
assessment includes noncancer data on hyperplasia and metaplasia in 
nasal tissue that form the basis of the inhalation RfC of 3 [micro]g/
m\3\.\331\ The ATSDR MRL for acute and intermediate duration oral 
exposure to naphthalene is 0.6 mg/kg-day based on maternal toxicity in 
a developmental toxicology study in rats.\332\ ATSDR also derived an ad 
hoc reference value of 6 x 10-2 mg/m\3\ for acute (<=24-
hour) inhalation exposure to naphthalene in a Letter Health 
Consultation dated March 24, 2014 to address a potential exposure 
concern in Illinois.\333\ The ATSDR acute inhalation reference value 
was based on a qualitative identification of an exposure level 
interpreted not to cause pulmonary lesions in mice. More recently, EPA 
developed acute RfCs for 1-, 8-, and 24-hour exposure scenarios; the 
<=24-hour reference value is 2 x 10-2 mg/m\3\.\334\ EPA's 
acute RfCs are based on a systematic review of the literature, 
benchmark dose modeling of naphthalene-induced nasal lesions in rats, 
and application of a PBPK (physiologically based pharmacokinetic) 
model.
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    \330\ U. S. EPA. (1998). Toxicological Review of Naphthalene, 
Environmental Protection Agency, Integrated Risk Information System, 
Research and Development, National Center for Environmental 
Assessment, Washington, DC. This material is available 
electronically at https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=56434.
    \331\ U.S. EPA. (1998). Toxicological Review of Naphthalene. 
Environmental Protection Agency, Integrated Risk Information System 
(IRIS), Research and Development, National Center for Environmental 
Assessment, Washington, DC https://cfpub.epa.gov/ncea/iris_drafts/recordisplay.cfm?deid=56434.
    \332\ ATSDR. Toxicological Profile for Naphthalene, 1-
Methylnaphthalene, and 2-Methylnaphthalene (2005). https://www.atsdr.cdc.gov/ToxProfiles/tp67-p.pdf.
    \333\ ATSDR. Letter Health Consultation, Radiac Abrasives, Inc., 
Chicago, Illinois (2014). https://www.atsdr.cdc.gov/HAC/pha/RadiacAbrasives/Radiac%20Abrasives,%20Inc.%20_%20LHC%20(Final)%20_%2003-24-
2014%20(2)_508.pdf.
    \334\ U. S. EPA. Derivation of an acute reference concentration 
for inhalation exposure to naphthalene. Report No. EPA/600/R-21/292. 
https://cfpub.epa.gov/ncea/risk/recordisplay.cfm?deid=355035.
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vi. POM/PAHs
    The term polycyclic organic matter (POM) defines a broad class of 
compounds that includes the polycyclic aromatic hydrocarbon compounds 
(PAHs). One of these compounds, naphthalene, is discussed separately in 
section II.C.7.vii of the preamble. POM compounds are formed primarily 
from combustion and are present in the atmosphere in gas and 
particulate form as well as in some fried and grilled foods. 
Epidemiologic studies have reported an increase in lung cancer in 
humans exposed to diesel exhaust, coke oven emissions, roofing tar 
emissions, and cigarette smoke; all of these mixtures contain POM 
compounds.335 336 In 1991 EPA classified seven PAHs 
(benzo[a]pyrene, benz[a]anthracene, chrysene, benzo[b]fluoranthene, 
benzo[k]fluoranthene, dibenz[a,h]anthracene, and indeno[1,2,3-
cd]pyrene) as Group B2, probable human carcinogens based on the 1986 
EPA Guidelines for Carcinogen Risk Assessment.\337\ Studies in multiple 
animal species demonstrate that benzo[a]pyrene is carcinogenic at 
multiple tumor sites (alimentary tract, liver, kidney, respiratory 
tract, pharynx, and skin) by all routes of exposure. An increasing 
number of occupational studies demonstrate a positive exposure-response 
relationship with cumulative benzo[a]pyrene exposure and lung cancer. 
The inhalation URE in IRIS for benzo[a]pyrene is 6 x 10-4 
per [micro]g/m\3\ and the oral slope factor for cancer is 1 per mg/kg-
day.\338\
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    \335\ Agency for Toxic Substances and Disease Registry (ATSDR). 
(1995). Toxicological profile for Polycyclic Aromatic Hydrocarbons 
(PAHs). Atlanta, GA: U.S. Department of Health and Human Services, 
Public Health Service. Available electronically at http://www.atsdr.cdc.gov/ToxProfiles/TP.asp?id=122&tid=25.
    \336\ U.S. EPA (2002). Health Assessment Document for Diesel 
Engine Exhaust. EPA/600/8-90/057F Office of Research and 
Development, Washington DC. http://cfpub.epa.gov/ncea/cfm/recordisplay.cfm?deid=29060.
    \337\ U.S. EPA (1991). Drinking Water Criteria Document for 
Polycyclic Aromatic Hydrocarbons (PAHS). ECAO-CIN-0010. EPA Research 
and Development.
    \338\ U.S. EPA (2017). Toxicological Review of Benzo[a]pyrene. 
This material is available electronically at: https://cfpub.epa.gov/ncea/iris/iris_documents/documents/toxreviews/0136tr.pdf.
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    Animal studies demonstrate that exposure to benzo[a]pyrene is also 
associated with developmental (including developmental neurotoxicity), 
reproductive, and immunological effects. In addition, epidemiology 
studies involving exposure to PAH mixtures have reported associations 
between internal biomarkers of exposure to benzo[a]pyrene 
(benzo[a]pyrene diol epoxide-DNA adducts) and adverse birth outcomes 
(including reduced birth weight, postnatal body weight, and head 
circumference), neurobehavioral effects, and decreased fertility. The 
inhalation RfC for benzo[a]pyrene is 2 x 10-6 mg/m\3\ and 
the RfD for oral exposure is 3 x 10-4 mg/kg-day.\339\
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    \339\ U.S. EPA (2017). Toxicological Review of Benzo[a]pyrene. 
This material is available electronically at: https://cfpub.epa.gov/ncea/iris/iris_documents/documents/toxreviews/0136tr.pdf.
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8. Exposure and Health Effects Associated With Traffic
    Locations near major roadways generally have elevated 
concentrations of many air pollutants emitted from motor vehicles. 
Hundreds of studies have been published in peer-reviewed journals, 
concluding that concentrations of CO, CO2, NO, 
NO2, benzene, aldehydes, particulate matter, black carbon, 
and many other compounds are elevated in ambient air within 
approximately 300-600 meters (about 1,000-2,000 feet) of major 
roadways. The highest concentrations of most pollutants emitted 
directly by motor vehicles are found within 50 meters (about 165 feet) 
of the edge of a roadway's traffic lanes.
    A large-scale review of air quality measurements in the vicinity of 
major roadways between 1978 and 2008 concluded that the pollutants with 
the steepest concentration gradients in vicinities of roadways were CO, 
ultrafine particles, metals, elemental carbon (EC), NO, NOX, 
and several VOCs.\340\ These pollutants showed a large reduction in 
concentrations within 100 meters downwind of the roadway. Pollutants 
that showed more gradual reductions with distance from roadways 
included benzene, NO2, PM2.5, and 
PM10. In reviewing the literature, Karner et al. (2010) 
reported that results varied based on the method of statistical 
analysis used to determine the gradient in pollutant concentration. 
More recent studies of traffic-related air pollutants continue to 
report sharp gradients around roadways, particularly within several 
hundred meters.341 342 343 344 345 346 347 348 There is

[[Page 27877]]

evidence that EPA's regulations for vehicles have lowered the near-road 
concentrations and gradients.\349\ Starting in 2010, EPA required 
through the NAAQS process that air quality monitors be placed near 
high-traffic roadways for determining concentrations of CO, 
NO2, and PM2.5. The monitoring data for 
NO2 and CO indicate that in urban areas, monitors near 
roadways often report the highest concentrations.350 351
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    \340\ Karner, A.A.; Eisinger, D.S.; Niemeier, D.A. (2010). Near-
roadway air quality: synthesizing the findings from real-world data. 
Environ Sci Technol 44: 5334-5344.
    \341\ McDonald, B.C.; McBride, Z.C.; Martin, E.W.; Harley, R.A. 
(2014) High-resolution mapping of motor vehicle carbon dioxide 
emissions. J. Geophys. Res. Atmos.,119, 5283-5298, doi:10.1002/
2013JD021219.
    \342\ Kimbrough, S.; Baldauf, R.W.; Hagler, G.S.W.; Shores, 
R.C.; Mitchell, W.; Whitaker, D.A.; Croghan, C.W.; Vallero, D.A. 
(2013) Long-term continuous measurement of near-road air pollution 
in Las Vegas: seasonal variability in traffic emissions impact on 
air quality. Air Qual Atmos Health 6: 295-305. DOI 10.1007/s11869-
012-0171-x.
    \343\ Kimbrough, S.; Palma, T.; Baldauf, R.W. (2014) Analysis of 
mobile source air toxics (MSATs)--Near-road VOC and carbonyl 
concentrations. Journal of the Air &Waste Management Association, 
64:3, 349-359, DOI: 10.1080/10962247.2013.863814.
    \344\ Kimbrough, S.; Owen, R.C.; Snyder, M.; Richmond-Bryant, J. 
(2017) NO to NO2 Conversion Rate Analysis and 
Implications for Dispersion Model Chemistry Methods using Las Vegas, 
Nevada Near-Road Field Measurements. Atmos Environ 165: 23-24.
    \345\ Apte, J.S.; Messier, K.P.; Gani, S.; Brauer, M.; 
Kirchstetter, T.W.; Lunden, M.M.; Marshall, J.D.; Portier, C.J.; 
Vermeulen, R.C.H.; Hamburg, S.P. (2017) High-Resolution Air 
Pollution Mapping with Google Street View Cars: Exploiting Big Data. 
Environ Sci Technol 51: 6999-7008. https://doi.org/10.1021/acs.est.7b00891.
    \346\ Gu, P.; Li, H.Z.; Ye, Q.; et al. (2018) Intercity 
variability of particulate matter is driven by carbonaceous sources 
and correlated with land-use variables. Environ Sci Technol 52: 52: 
11545-11554. [Online at http://dx.doi.org/10.1021/acs.est.8b03833].
    \347\ Hilker, N.; Wang, J.W.; Jong, C-H.; Healy, R.M.; Sofowote, 
U.; Debosz, J.; Su, Y.; Noble, M.; Munoz, A.; Doerkson, G.; White, 
L.; Audette, C.; Herod, D.; Brook, J.R.; Evans, G.J. (2019) Traffic-
related air pollution near roadways: discerning local impacts from 
background. Atmos. Meas. Tech., 12, 5247-5261. https://doi.org/10.5194/amt-12-5247-2019.
    \348\ Dabek-Zlotorzynska, E., V. Celo, L. Ding, D. Herod, C-H. 
Jeong, G. Evans, and N. Hilker. 2019. ``Characteristics and sources 
of PM2.5 and reactive gases near roadways in two 
metropolitan areas in Canada.'' Atmos Environ 218: 116980.
    \349\ Sarnat, J.A.; Russell, A.; Liang, D.; Moutinho, J.L; 
Golan, R.; Weber, R.; Gao, D.; Sarnat, S.; Chang, H.H.; Greenwald, 
R.; Yu, T. (2018) Developing Multipollutant Exposure Indicators of 
Traffic Pollution: The Dorm Room Inhalation to Vehicle Emissions 
(DRIVE) Study. Health Effects Institute Research Report Number 196. 
[Online at: https://www.healtheffects.org/publication/developing-multipollutant-exposure-indicators-traffic-pollution-dorm-room-inhalation].
    \350\ Gantt, B; Owen, R.C.; Watkins, N. (2021) Characterizing 
nitrogen oxides and fine particulate matter near major highways in 
the United States using the National Near-road Monitoring Network. 
Environ Sci Technol 55: 2831-2838. [Online at https://doi.org/10.1021/acs.est.0c05851].
    \351\ Lal, R.M.; Ramaswani, A.; Russell, A.G. (2020) Assessment 
of the near-road (monitoring) network including comparison with 
nearby monitors within U.S. cities. Environ Res Letters 15: 114026. 
[Online at https://doi.org/10.1088/1748-9326/ab8156].
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    For pollutants with relatively high background concentrations 
relative to near-road concentrations, detecting concentration gradients 
can be difficult. For example, many carbonyls have high background 
concentrations because of photochemical breakdown of precursors from 
many different organic compounds. However, several studies have 
measured carbonyls in multiple weather conditions and found higher 
concentrations of many carbonyls downwind of 
roadways.352 353 These findings suggest a substantial 
roadway source of these carbonyls.
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    \352\ Liu, W.; Zhang, J.; Kwon, J.l; et l. (2006). 
Concentrations and source characteristics of airborne carbonyl 
compounds measured outside urban residences. J Air Waste Manage 
Assoc 56: 1196-1204.
    \353\ Cahill, T.M.; Charles, M.J.; Seaman, V.Y. (2010). 
Development and application of a sensitive method to determine 
concentrations of acrolein and other carbonyls in ambient air. 
Health Effects Institute Research Report 149. Available at https://www.healtheffects.org/system/files/Cahill149.pdf.
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    In the past 30 years, many studies have been published with results 
reporting that populations who live, work, or go to school near high-
traffic roadways experience higher rates of numerous adverse health 
effects, compared to populations far away from major roads.\354\ In 
addition, numerous studies have found adverse health effects associated 
with spending time in traffic, such as commuting or walking along high-
traffic roadways, including studies among 
children.355 356 357 358
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    \354\ In the widely used PubMed database of health publications, 
between January 1, 1990 and December 31, 2021, 1,979 publications 
contained the keywords ``traffic, pollution, epidemiology,'' with 
approximately half the studies published after 2015.
    \355\ Laden, F.; Hart, J.E.; Smith, T.J.; Davis, M.E.; Garshick, 
E. (2007) Cause-specific mortality in the unionized U.S. trucking 
industry. Environmental Health Perspect 115:1192-1196.
    \356\ Peters, A.; von Klot, S.; Heier, M.; Trentinaglia, I.; 
H[ouml]rmann, A.; Wichmann, H.E.; L[ouml]wel, H. (2004) Exposure to 
traffic and the onset of myocardial infarction. New England J Med 
351: 1721-1730.
    \357\ Zanobetti, A.; Stone, P.H.; Spelzer, F.E.; Schwartz, J.D.; 
Coull, B.A.; Suh, H.H.; Nearling, B.D.; Mittleman, M.A.; Verrier, 
R.L.; Gold, D.R. (2009) T-wave alternans, air pollution and traffic 
in high-risk subjects. Am J Cardiol 104: 665-670.
    \358\ Adar, S.; Adamkiewicz, G.; Gold, D.R.; Schwartz, J.; 
Coull, B.A.; Suh, H. (2007) Ambient and microenvironmental particles 
and exhaled nitric oxide before and after a group bus trip. Environ 
Health Perspect 115: 507-512.
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    Numerous reviews of this body of health literature have been 
published. In a 2022 final report, an expert panel of the Health 
Effects Institute (HEI) employed a systematic review focusing on 
selected health endpoints related to exposure to traffic-related air 
pollution.\359\ The HEI panel concluded that there was a high level of 
confidence in evidence between long-term exposure to traffic-related 
air pollution and health effects in adults, including all-cause, 
circulatory, and ischemic heart disease mortality.\360\ The panel also 
found that there is a moderate-to-high level of confidence in evidence 
of associations with asthma onset and acute respiratory infections in 
children and lung cancer and asthma onset in adults. The panel 
concluded that there was a moderate level of evidence of associations 
with small for gestational age births, but low-to-moderate confidence 
for other birth outcomes (term birth weight and preterm birth). This 
report follows on an earlier expert review published by HEI in 2010, 
where it found strongest evidence for asthma-related traffic impacts. 
Other literature reviews have been published with conclusions generally 
similar to the HEI panels'.361 362 363 364 Additionally, in 
2014, researchers from the U.S. Centers for Disease Control and 
Prevention (CDC) published a systematic review and meta-analysis of 
studies evaluating the risk of childhood leukemia associated with 
traffic exposure and reported positive associations between postnatal 
proximity to traffic and leukemia risks, but no such association for 
prenatal exposures.\365\ The U.S. Department of Health and Human 
Services' National Toxicology Program published a monograph including a 
systematic review of traffic-related air pollution and its impacts on 
hypertensive disorders of pregnancy. The National Toxicology Program 
concluded that exposure to traffic-related air pollution is ``presumed 
to be a hazard to pregnant women'' for developing hypertensive 
disorders of pregnancy.\366\
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    \359\ HEI Panel on the Health Effects of Long-Term Exposure to 
Traffic-Related Air Pollution (2022) Systematic review and meta-
analysis of selected health effects of long-term exposure to 
traffic-related air pollution. Health Effects Institute Special 
Report 23. [Online at https://www.healtheffects.org/publication/systematic-review-and-meta-analysis-selected-health-effects-long-term-exposure-traffic] This more recent review focused on health 
outcomes related to birth effects, respiratory effects, 
cardiometabolic effects, and mortality.
    \360\ Boogaard, H.; Patton, A.P.; Atkinson, R.W.; Brook, J.R.; 
Chang, H.H.; Crouse, D.L.; Fussell, J.C.; Hoek, G.; Hoffmann, B.; 
Kappeler, R.; Kutlar Joss, M.; Ondras, M.; Sagiv, S.K.; Samoli, E.; 
Shaikh, R.; Smargiassi, A.; Szpiro, A.A.; Van Vliet, E.D.S.; 
Vienneau, D.; Weuve, J.; Lurmann, F.W.; Forastiere, F. (2022) Long-
term exposure to traffic-related air pollution and selected health 
outcomes: A systematic review and meta-analysis. Environ Internatl 
164: 107262. [Online at https://doi.org/10.1016/j.envint.2022.107262].
    \361\ Boothe, V.L.; Shendell, D.G. (2008). Potential health 
effects associated with residential proximity to freeways and 
primary roads: review of scientific literature, 1999-2006. J Environ 
Health 70: 33-41.
    \362\ Salam, M.T.; Islam, T.; Gilliland, F.D. (2008). Recent 
evidence for adverse effects of residential proximity to traffic 
sources on asthma. Curr Opin Pulm Med 14: 3-8.
    \363\ Sun, X.; Zhang, S.; Ma, X. (2014) No association between 
traffic density and risk of childhood leukemia: a meta-analysis. 
Asia Pac J Cancer Prev 15: 5229-5232.
    \364\ Raaschou-Nielsen, O.; Reynolds, P. (2006). Air pollution 
and childhood cancer: a review of the epidemiological literature. 
Int J Cancer 118: 2920-9.
    \365\ Boothe, VL.; Boehmer, T.K.; Wendel, A.M.; Yip, F.Y. (2014) 
Residential traffic exposure and childhood leukemia: a systematic 
review and meta-analysis. Am J Prev Med 46: 413-422.
    \366\ National Toxicology Program (2019) NTP Monograph on the 
Systematic Review of Traffic-related Air Pollution and Hypertensive 
Disorders of Pregnancy. NTP Monograph 7. https://ntp.niehs.nih.gov/ntp/ohat/trap/mgraph/trap_final_508.pdf.
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    For several other health outcomes there are publications to suggest 
the

[[Page 27878]]

possibility of an association with traffic-related air pollution, but 
insufficient evidence to draw definitive conclusions. Among these 
outcomes are neurological and cognitive impacts (e.g., autism and 
reduced cognitive function, academic performance, and executive 
function) and reproductive outcomes (e.g., preterm birth, low birth 
weight).367 368 369 370 371 372
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    \367\ Volk, H.E.; Hertz-Picciotto, I.; Delwiche, L.; et al. 
(2011). Residential proximity to freeways and autism in the CHARGE 
study. Environ Health Perspect 119: 873-877.
    \368\ Franco-Suglia, S.; Gryparis, A.; Wright, R.O.; et al. 
(2007). Association of black carbon with cognition among children in 
a prospective birth cohort study. Am J Epidemiol. doi: 10.1093/aje/
kwm308. [Online at http://dx.doi.org/10.1093/aje/kwm308].
    \369\ Power, M.C.; Weisskopf, M.G.; Alexeef, SE; et al. (2011). 
Traffic-related air pollution and cognitive function in a cohort of 
older men. Environ Health Perspect 2011: 682-687.
    \370\ Wu, J.; Wilhelm, M.; Chung, J.; Ritz, B. (2011). Comparing 
exposure assessment methods for traffic-related air pollution in an 
adverse pregnancy outcome study. Environ Res 111: 685-692. https://doi.org/10.1016/j.envres.2011.03.008.
    \371\ Stenson, C.; Wheeler, A.J.; Carver, A.; et al. (2021) The 
impact of traffic-related air pollution on child and adolescent 
academic performance: a systematic review. Environ Intl 155: 106696 
[Online at https://doi.org/10.1016/j.envint.2021.106696].
    \372\ Gartland, N.; Aljofi, H.E.; Dienes, K.; et al. (2022) The 
effects of traffic air pollution in and around schools on executive 
function and academic performance in children: a rapid review. Int J 
Environ Res Public Health 19: 749. https://doi.org/10.3390/ijerph19020749.
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    Numerous studies have also investigated potential mechanisms by 
which traffic-related air pollution affects health, particularly for 
cardiopulmonary outcomes. For example, some research indicates that 
near-roadway exposures may increase systemic inflammation, affecting 
organ systems, including blood vessels and 
lungs.373 374 375 376 Additionally, long-term exposures in 
near-road environments have been associated with inflammation-
associated conditions, such as atherosclerosis and 
asthma.377 378 379
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    \373\ Riediker, M. (2007). Cardiovascular effects of fine 
particulate matter components in highway patrol officers. Inhal 
Toxicol 19: 99-105. doi: 10.1080/08958370701495238.
    \374\ Alexeef, SE; Coull, B.A.; Gryparis, A.; et al. (2011). 
Medium-term exposure to traffic-related air pollution and markers of 
inflammation and endothelial function. Environ Health Perspect 119: 
481-486. doi:10.1289/ehp.1002560.
    \375\ Eckel. S.P.; Berhane, K.; Salam, M.T.; et al. (2011). 
Residential Traffic-related pollution exposure and exhaled nitric 
oxide in the Children's Health Study. Environ Health Perspect. 
doi:10.1289/ehp.1103516.
    \376\ Zhang, J.; McCreanor, J.E.; Cullinan, P.; et al. (2009). 
Health effects of real-world exposure diesel exhaust in persons with 
asthma. Res Rep Health Effects Inst 138. [Online at http://www.healtheffects.org].
    \377\ Adar, S.D.; Klein, R.; Klein, E.K.; et al. (2010). Air 
pollution and the microvasculature: a cross-sectional assessment of 
in vivo retinal images in the population-based Multi-Ethnic Study of 
Atherosclerosis. PLoS Med 7(11): E1000372. doi:10.1371/
journal.pmed.1000372. Available at http://dx.doi.org/10.1371/journal.pmed.1000372.
    \378\ Kan, H.; Heiss, G.; Rose, K.M.; et al. (2008). Prospective 
analysis of traffic exposure as a risk factor for incident coronary 
heart disease: The Atherosclerosis Risk in Communities (ARIC) study. 
Environ Health Perspect 116: 1463-1468. doi:10.1289/ehp.11290. 
Available at http://dx.doi.org/doi:10.1289/ehp.11290.
    \379\ McConnell, R.; Islam, T.; Shankardass, K.; et al. (2010). 
Childhood incident asthma and traffic-related air pollution at home 
and school. Environ Health Perspect 1021-1026.
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    As described in section VIII.I of the preamble, people who live or 
attend school near major roadways are more likely to be people of color 
and/or have a low SES. Additionally, people with low SES often live in 
neighborhoods with multiple stressors and health risk factors, 
including reduced health insurance coverage rates, higher smoking and 
drug use rates, limited access to fresh food, visible neighborhood 
violence, and elevated rates of obesity and some diseases such as 
asthma, diabetes, and ischemic heart disease. Although questions 
remain, several studies find stronger associations between air 
pollution and health in locations with such chronic neighborhood 
stress, suggesting that populations in these areas may be more 
susceptible to the effects of air 
pollution.380 381 382 383 384 385 386 387
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    \380\ Islam, T.; Urban, R.; Gauderman, W.J.; et al. (2011). 
Parental stress increases the detrimental effect of traffic exposure 
on children's lung function. Am J Respir Crit Care Med.
    \381\ Clougherty, J.E.; Kubzansky, L.D. (2009) A framework for 
examining social stress and susceptibility to air pollution in 
respiratory health. Environ Health Perspect 117: 1351-1358. 
Doi:10.1289/ehp.0900612.
    \382\ Clougherty, J.E.; Levy, J.I.; Kubzansky, L.D.; Ryan, P.B.; 
Franco Suglia, S.; Jacobson Canner, M.; Wright, R.J. (2007) 
Synergistic effects of traffic-related air pollution and exposure to 
violence on urban asthma etiology. Environ Health Perspect 115: 
1140-1146. doi:10.1289/ehp.9863.
    \383\ Finkelstein, M.M.; Jerrett, M.; DeLuca, P.; Finkelstein, 
N.; Verma, D.K.; Chapman, K.; Sears, M.R. (2003) Relation between 
income, air pollution and mortality: a cohort study. Canadian Med 
Assn J 169: 397-402.
    \384\ Shankardass, K.; McConnell, R.; Jerrett, M.; Milam, J.; 
Richardson, J.; Berhane, K. (2009) Parental stress increases the 
effect of traffic-related air pollution on childhood asthma 
incidence. Proc Natl Acad Sci 106: 12406-12411. doi:10.1073/
pnas.0812910106.
    \385\ Chen, E.; Schrier, H.M.; Strunk, R.C.; et al. (2008). 
Chronic traffic-related air pollution and stress interact to predict 
biologic and clinical outcomes in asthma. Environ Health Perspect 
116: 970-5.
    \386\ Currie, J. and R. Walker (2011) Traffic Congestion and 
Infant Health: Evidence from E-ZPass. American Economic Journal: 
Applied Economics, 3 (1): 65-90. https://doi.org/10.1257/app.3.1.65.
    \387\ Knittel, C.R.; Miller, D.L.; Sanders N.J. (2016) Caution, 
Drivers! Children Present: Traffic, Pollution, and Infant Health. 
The Review of Economics and Statistics, 98 (2): 350-366. https://doi.org/10.1162/REST_a_00548.
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    The risks associated with residence, workplace, or school near 
major roads are of potentially high public health significance due to 
the large population in such locations. We analyzed several data sets 
to estimate the size of populations living or attending school near 
major roads. Our evaluation of environmental justice concerns in these 
studies is presented in section VI.D.3 of this preamble.
    Every two years from 1997 to 2009 and in 2011 and 2013, the U.S. 
Census Bureau's American Housing Survey (AHS) conducted a survey that 
includes whether housing units are within 300 feet of an ``airport, 
railroad, or highway with four or more lanes.'' \388\ The 2013 AHS 
reports that 17.3 million housing units, or 13 percent of all housing 
units in the United States, were in such areas. Assuming that 
populations and housing units are in the same locations, this 
corresponds to a population of more than 41 million U.S. residents near 
high-traffic roadways or other transportation sources. According to the 
Central Intelligence Agency's World Factbook, based on data collected 
between 2012-2022, the United States had 6,586,610 km of roadways, 
293,564 km of railways, and 13,513 airports.\389\ As such, highways 
represent the overwhelming majority of transportation facilities 
described by this factor in the AHS.
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    \388\ The variable was known as ``ETRANS'' in the questions 
about the neighborhood.
    \389\ Central Intelligence Agenda. World Factbook: United 
States. [Online at https://www.cia.gov/the-world-factbook/countries/united-states/#transportation].
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    In examining schools near major roadways, we used the Common Core 
of Data from the U.S. Department of Education, which includes 
information on all public elementary and secondary schools and school 
districts nationwide.\390\ To determine school proximities to major 
roadways, we used a geographic information system (GIS) to map each 
school and roadway based on the U.S. Census's TIGER roadway file.\391\ 
We estimated that about 10 million students attend public schools 
within 200 meters of major roads, about 20 percent of the total number 
of public school students in the United States.392 393 394 
About 800,000 students

[[Page 27879]]

attend public schools within 200 meters of primary roads, or about 2 
percent of the total.
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    \390\ http://nces.ed.gov/ccd/.
    \391\ TIGER/Line shapefiles for the year 2010. [Online at 
https://www.census.gov/geographies/mapping-files/time-series/geo/tiger-line-file.2010.html].
    \392\ Pedde, M.; Bailey, C. (2011) Identification of Schools 
within 200 Meters of U.S. Primary and Secondary Roads. Memorandum to 
the docket.
    \393\ Here, ``major roads'' refer to those TIGER classifies as 
either ``Primary'' or ``Secondary.'' The Census Bureau describes 
primary roads as ``generally divided limited-access highways within 
the Federal interstate system or under state management.'' Secondary 
roads are ``main arteries, usually in the U.S. highway, state 
highway, or county highway system.''
    \394\ For this analysis we analyzed a 200-meter distance based 
on the understanding that roadways generally influence air quality 
within a few hundred meters from the vicinity of heavily traveled 
roadways or along corridors with significant trucking traffic. See 
U.S. EPA, 2014. Near Roadway Air Pollution and Health: Frequently 
Asked Questions. EPA-420-F-14-044.
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    EPA also conducted a study to estimate the number of people living 
near truck freight routes in the United States, which includes many 
large highways and other routes where light- and medium-duty vehicles 
operate.\395\ Based on a population analysis using the U.S. Department 
of Transportation's (USDOT) Freight Analysis Framework 4 (FAF4) and 
population data from the 2010 decennial census, an estimated 72 million 
people live within 200 meters of these FAF4 roads, which are used by 
all types of vehicles.\396\ The FAF4 analysis includes the population 
living within 200 meters of major roads, while the AHS uses a 100-meter 
distance; the larger distance and other methodological differences 
explain the difference in the two estimates for populations living near 
major roads.\397\
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    \395\ U.S. EPA (2021). Estimation of Population Size and 
Demographic Characteristics among People Living Near Truck Routes in 
the Conterminous United States. Memorandum to the Docket.
    \396\ FAF4 is a model from the USDOT's Bureau of Transportation 
Statistics (BTS) and Federal Highway Administration (FHWA), which 
provides data associated with freight movement in the U.S. It 
includes data from the 2012 Commodity Flow Survey (CFS), the Census 
Bureau on international trade, as well as data associated with 
construction, agriculture, utilities, warehouses, and other 
industries. FAF4 estimates the modal choices for moving goods by 
trucks, trains, boats, and other types of freight modes. It includes 
traffic assignments, including truck flows on a network of truck 
routes. https://ops.fhwa.dot.gov/freight/freight_analysis/faf/.
    \397\ The same analysis estimated the population living within 
100 meters of a FAF4 truck route is 41 million.
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    EPA's Exposure Factor Handbook also indicates that, on average, 
Americans spend more than an hour traveling each day, bringing nearly 
all residents into a high-exposure microenvironment for part of the 
day.398 399 While near-roadway studies focus on residents 
near roads or others spending considerable time near major roads, the 
duration of commuting results in another important contributor to 
overall exposure to traffic-related air pollution. Studies of health 
that address time spent in transit have found evidence of elevated risk 
of cardiac impacts.400 401 402
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    \398\ EPA. (2011) Exposure Factors Handbook: 2011 Edition. 
Chapter 16. Online at https://www.epa.gov/expobox/about-exposure-factors-handbook.
    \399\ It is not yet possible to estimate the long-term impact of 
growth in telework associated with the COVID-19 pandemic on travel 
behavior. There were notable changes during the pandemic. For 
example, according to the 2021 American Time Use Survey, a greater 
fraction of workers did at least part of their work at home (38%) as 
compared with the 2019 survey (24%). [Online at https://www.bls.gov/news.release/atus.nr0.htm].
    \400\ Riediker, M.; Cascio, W.E.; Griggs, T.R.; et al. (2004) 
Particulate matter exposure in cars is associated with 
cardiovascular effects in healthy young men. Am J Respir Crit Care 
Med 169. [Online at https://doi.org/10.1164/rccm.200310-1463OC].
    \401\ Peters, A.; von Klot, S.; Heier, M.; et al. (2004) 
Exposure to traffic and the onset of myocardial infarction. New Engl 
J Med 1721-1730. [Online at https://doi.org/10.1056/NEJMoa040203].
    \402\ Adar, S.D.; Gold, D.R.; Coull, B.A.; (2007) Focused 
exposure to airborne traffic particles and heart rate variability in 
the elderly. Epidemiology 18: 95-103 [Online at 351: https://doi.org/10.1097/01.ede.0000249409.81050.46].
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D. Welfare Effects Associated With Exposure to Criteria and Air Toxics 
Pollutants Impacted by the Final Standards

    This section discusses the welfare effects associated with 
pollutants affected by this rule, specifically particulate matter, 
ozone, NOX, SOX, and air toxics.
1. Visibility
    Visibility can be defined as the degree to which the atmosphere is 
transparent to visible light.\403\ Visibility impairment is caused by 
light scattering and absorption by suspended particles and gases. It is 
dominated by contributions from suspended particles except under 
pristine conditions. Visibility is important because it has direct 
significance to people's enjoyment of daily activities in all parts of 
the country. Individuals value good visibility for the well-being it 
provides them directly, where they live and work, and in places where 
they enjoy recreational opportunities. Visibility is also highly valued 
in significant natural areas, such as national parks and wilderness 
areas, and special emphasis is given to protecting visibility in these 
areas. For more information on visibility see the final 2019 p.m. 
ISA.\404\
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    \403\ National Research Council, (1993). Protecting Visibility 
in National Parks and Wilderness Areas. National Academy of Sciences 
Committee on Haze in National Parks and Wilderness Areas. National 
Academy Press, Washington, DC. This book can be viewed on the 
National Academy Press website at https://www.nap.edu/catalog/2097/protecting-visibility-in-national-parks-and-wilderness-areas.
    \404\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
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    EPA is working to address visibility impairment. Reductions in air 
pollution from implementation of various programs associated with the 
Clean Air Act Amendments of 1990 provisions have resulted in 
substantial improvements in visibility and will continue to do so in 
the future. Nationally, because trends in haze are closely associated 
with trends in particulate sulfate and nitrate due to the relationship 
between their concentration and light extinction, visibility trends 
have improved as emissions of SO2 and NOX have 
decreased over time due to air pollution regulations such as the Acid 
Rain Program.\405\ However, in the western part of the country, changes 
in total light extinction were smaller, and the contribution of 
particulate organic matter to atmospheric light extinction was 
increasing due to increasing wildfire emissions.\406\
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    \405\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
    \406\ Hand, JL;Prenni, AJ; Copeland, S; Schichtel, BA; Malm, WC. 
(2020). Thirty years of the Clean Air Act Amendments: Impacts on 
haze in remote regions of the United States (1990-2018). Atmos 
Environ 243: 117865.
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    In the Clean Air Act Amendments of 1977, Congress recognized 
visibility's value to society by establishing a national goal to 
protect national parks and wilderness areas from visibility impairment 
caused by manmade pollution.\407\ In 1999, EPA finalized the regional 
haze program to protect the visibility in Mandatory Class I Federal 
areas.\408\ There are 156 national parks, forests and wilderness areas 
categorized as Mandatory Class I Federal areas.\409\ These areas are 
defined in CAA section 162 as those national parks exceeding 6,000 
acres, wilderness areas and memorial parks exceeding 5,000 acres, and 
all international parks which were in existence on August 7, 1977.
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    \407\ See Section 169(a) of the Clean Air Act.
    \408\ 64 FR 35714, July 1, 1999.
    \409\ 62 FR 38680-38681, July 18, 1997.
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    EPA has also concluded that PM2.5 causes adverse effects 
on visibility in other areas that are not targeted by the Regional Haze 
Rule, such as urban areas, depending on PM2.5 concentrations 
and other factors such as dry chemical composition and relative 
humidity (i.e., an indicator of the water composition of the 
particles). The secondary (welfare-based) PM NAAQS provide protection 
against visibility effects. In recent PM NAAQS reviews, EPA evaluated a 
target level of protection for visibility impairment that is expected 
to be met through attainment of the existing secondary PM standards.

[[Page 27880]]

2. Ozone Effects on Ecosystems
    The welfare effects of ozone include effects on ecosystems, which 
can be observed across a variety of scales, i.e., subcellular, 
cellular, leaf, whole plant, population, and ecosystem. Ozone effects 
that begin at small spatial scales, such as the leaf of an individual 
plant, when they occur at sufficient magnitudes (or to a sufficient 
degree) can result in effects being propagated to higher and higher 
levels of biological organization. For example, effects at the 
individual plant level, such as altered rates of leaf gas exchange, 
growth, and reproduction, can, when widespread, result in broad changes 
in ecosystems, such as productivity, carbon storage, water cycling, 
nutrient cycling, and community composition.
    Ozone can produce both acute and chronic injury in sensitive plant 
species depending on the concentration level and the duration of the 
exposure.\410\ In those sensitive species,\411\ effects from repeated 
exposure to ozone throughout the growing season of the plant can tend 
to accumulate, so even relatively low concentrations experienced for a 
longer duration have the potential to create chronic stress on 
vegetation.412 413 Ozone damage to sensitive plant species 
includes impaired photosynthesis and visible injury to leaves. The 
impairment of photosynthesis, the process by which the plant makes 
carbohydrates (its source of energy and food), can lead to reduced crop 
yields, timber production, and plant productivity and growth. Impaired 
photosynthesis can also lead to a reduction in root growth and 
carbohydrate storage below ground, resulting in other, more subtle 
plant and ecosystems impacts.\414\ These latter impacts include 
increased susceptibility of plants to insect attack, disease, harsh 
weather, interspecies competition and overall decreased plant vigor. 
The adverse effects of ozone on areas with sensitive species could 
potentially lead to species shifts and loss from the affected 
ecosystems,\415\ resulting in a loss or reduction in associated 
ecosystem goods and services. Additionally, visible ozone injury to 
leaves can result in a loss of aesthetic value in areas of special 
scenic significance like national parks and wilderness areas and 
reduced use of sensitive ornamentals in landscaping.\416\ In addition 
to ozone effects on vegetation, newer evidence suggests that ozone 
affects interactions between plants and insects by altering chemical 
signals (e.g., floral scents) that plants use to communicate to other 
community members, such as attraction of pollinators.
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    \410\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone 
and Related Photochemical Oxidants (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012, 
2020.
    \411\ 73 FR 16491, March 27, 2008. Only a small percentage of 
all the plant species growing within the U.S. (over 43,000 species 
have been catalogued in the USDA PLANTS database) have been studied 
with respect to ozone sensitivity.
    \412\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone 
and Related Photochemical Oxidants (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012, 
2020.
    \413\ The concentration at which ozone levels overwhelm a 
plant's ability to detoxify or compensate for oxidant exposure 
varies. Thus, whether a plant is classified as sensitive or tolerant 
depends in part on the exposure levels being considered.
    \414\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone 
and Related Photochemical Oxidants (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012, 
2020.
    \415\ Ozone impacts could be occurring in areas where plant 
species sensitive to ozone have not yet been studied or identified.
    \416\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone 
and Related Photochemical Oxidants (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012, 
2020.
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    The Ozone ISA presents more detailed information on how ozone 
affects vegetation and ecosystems.\417\ The Ozone ISA reports causal 
and likely causal relationships between ozone exposure and a number of 
welfare effects and characterizes the weight of evidence for different 
effects associated with ozone.\418\ The Ozone ISA concludes that 
visible foliar injury effects on vegetation, reduced vegetation growth, 
reduced plant reproduction, reduced productivity in terrestrial 
ecosystems, reduced yield and quality of agricultural crops, alteration 
of below-ground biogeochemical cycles, and altered terrestrial 
community composition are causally associated with exposure to ozone. 
It also concludes that increased tree mortality, altered herbivore 
growth and reproduction, altered plant-insect signaling, reduced carbon 
sequestration in terrestrial ecosystems, and alteration of terrestrial 
ecosystem water cycling are likely to be causally associated with 
exposure to ozone.
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    \417\ U.S. EPA. Integrated Science Assessment (ISA) for Ozone 
and Related Photochemical Oxidants (Final Report). U.S. 
Environmental Protection Agency, Washington, DC, EPA/600/R-20/012, 
2020.
    \418\ The Ozone ISA evaluates the evidence associated with 
different ozone related health and welfare effects, assigning one of 
five ``weight of evidence'' determinations: causal relationship, 
likely to be a causal relationship, suggestive of a causal 
relationship, inadequate to infer a causal relationship, and not 
likely to be a causal relationship. For more information on these 
levels of evidence, please refer to Table II of the ISA.
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3. Deposition
    The Integrated Science Assessment for Oxides of Nitrogen, Oxides of 
Sulfur, and Particulate Matter--Ecological Criteria documents the 
ecological effects of the deposition of these criteria air 
pollutants.\419\ It is clear from the body of evidence that oxides of 
nitrogen, oxides of sulfur, and particulate matter contribute to total 
nitrogen (N) and sulfur (S) deposition. In turn, N and S deposition 
cause either nutrient enrichment or acidification depending on the 
sensitivity of the landscape or the species in question. Both 
enrichment and acidification are characterized by an alteration of the 
biogeochemistry and the physiology of organisms, which can result in 
ecologically harmful declines in biodiversity in terrestrial, 
freshwater, wetland, and estuarine ecosystems in the United States.
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    \419\ U.S. EPA. Integrated Science Assessment (ISA) for Oxides 
of Nitrogen, Oxides of Sulfur and Particulate Matter Ecological 
Criteria (Final Report). U.S. Environmental Protection Agency, 
Washington, DC, EPA/600/R-20/278, 2020.
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    Terrestrial, wetland, freshwater, and estuarine ecosystems in the 
United States are affected by nitrogen enrichment/eutrophication caused 
by nitrogen deposition. These effects, though improving recently as 
emissions and deposition decline, have been consistently documented 
across the United States for hundreds of species and have likely been 
occurring for decades. In terrestrial systems nitrogen loading can lead 
to loss of nitrogen-sensitive lichen species, decreased biodiversity of 
grasslands, meadows and other sensitive habitats, and increased 
potential for invasive species. In aquatic systems nitrogen loading can 
alter species assemblages and cause eutrophication. For a broader 
explanation of the topics treated here, refer to the description in 
Chapter 6 of the RIA.
    The sensitivity of terrestrial and aquatic ecosystems to 
acidification from nitrogen and sulfur deposition is predominantly 
governed by the intersection of geology and deposition. Prolonged 
exposure to excess nitrogen and sulfur deposition in sensitive areas 
acidifies lakes, rivers, and soils. Increased acidity in surface waters 
creates inhospitable conditions for biota and affects the abundance and 
biodiversity of fishes, zooplankton and macroinvertebrates and 
ecosystem function. Over time, acidifying deposition also removes 
essential nutrients from forest soils, depleting the capacity of soils 
to neutralize future acid loadings and negatively affecting forest 
sustainability. Major effects in forests in the past have included a 
decline in sensitive tree species, such as red spruce (Picea rubens) 
and sugar maple (Acer saccharum).

[[Page 27881]]

    Building materials including metals, stones, cements, and paints 
undergo natural weathering processes from exposure to environmental 
elements (e.g., wind, moisture, temperature fluctuations, sunlight, 
etc.). Pollution can worsen and accelerate these effects. Deposition of 
PM is associated with both physical damage (materials damage effects) 
and impaired aesthetic qualities (soiling effects). Wet and dry 
deposition of PM can physically affect materials, adding to the effects 
of natural weathering processes, by potentially promoting or 
accelerating the corrosion of metals, by degrading paints and by 
deteriorating building materials such as stone, concrete, and 
marble.\420\ The effects of PM are exacerbated by the presence of 
acidic gases and can be additive or synergistic due to the complex 
mixture of pollutants in the air and surface characteristics of the 
material. Acidic deposition has been shown to have an effect on 
materials including zinc/galvanized steel and other metal, carbonate 
stone (as monuments and building facings), and surface coatings 
(paints).\421\ The effects on historic buildings and outdoor works of 
art are of particular concern because of the uniqueness and 
irreplaceability of many of these objects. In addition to aesthetic and 
functional effects on metals, stone, and glass, altered energy 
efficiency of photovoltaic panels by PM deposition is also an emerging 
consideration for impacts of air pollutants on materials.
---------------------------------------------------------------------------

    \420\ U.S. EPA. Integrated Science Assessment (ISA) for 
Particulate Matter (Final Report, 2019). U.S. Environmental 
Protection Agency, Washington, DC, EPA/600/R-19/188, 2019.
    \421\ Irving, P.M., e.d. 1991. Acid Deposition: State of Science 
and Technology, Volume III, Terrestrial, Materials, Health, and 
Visibility Effects, The U.S. National Acid Precipitation Assessment 
Program, Chapter 24, page 24-76.
---------------------------------------------------------------------------

4. Welfare Effects Associated With Air Toxics
    Emissions from producing, transporting, and combusting fuel 
contribute to ambient levels of pollutants that contribute to adverse 
effects on vegetation. Volatile organic compounds (VOCs), some of which 
are considered air toxics, have long been suspected to play a role in 
vegetation damage.\422\ In laboratory experiments, a wide range of 
tolerance to VOCs has been observed.\423\ Decreases in harvested seed 
pod weight have been reported for the more sensitive plants, and some 
studies have reported effects on seed germination, flowering, and fruit 
ripening. Effects of individual VOCs or their role in conjunction with 
other stressors (e.g., acidification, drought, temperature extremes) 
have not been well studied. In a recent study of a mixture of VOCs 
including ethanol and toluene on herbaceous plants, significant effects 
on seed production, leaf water content and photosynthetic efficiency 
were reported for some plant species.\424\
---------------------------------------------------------------------------

    \422\ U.S. EPA. (1991). Effects of organic chemicals in the 
atmosphere on terrestrial plants. EPA/600/3-91/001.
    \423\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M 
Skewes, DN Price AR Brown, AD Sharpe. (2003). Effects of VOCs on 
herbaceous plants in an open-top chamber experiment. Environ. 
Pollut. 124:341-343.
    \424\ Cape JN, ID Leith, J Binnie, J Content, M Donkin, M 
Skewes, DN Price AR Brown, AD Sharpe. (2003). Effects of VOCs on 
herbaceous plants in an open-top chamber experiment. Environ. 
Pollut. 124:341-343.
---------------------------------------------------------------------------

    Research suggests an adverse impact of vehicle exhaust on plants, 
which has in some cases been attributed to aromatic compounds and in 
other cases to nitrogen oxides.425 426 427 The impacts of 
VOCs on plant reproduction may have long-term implications for 
biodiversity and survival of native species near major roadways. Most 
of the studies of the impacts of VOCs on vegetation have focused on 
short-term exposure and few studies have focused on long-term effects 
of VOCs on vegetation and the potential for metabolites of these 
compounds to affect herbivores or insects.
---------------------------------------------------------------------------

    \425\ Viskari E-L. (2000). Epicuticular wax of Norway spruce 
needles as indicator of traffic pollutant deposition. Water, Air, 
and Soil Pollut. 121:327-337.
    \426\ Ugrekhelidze D, F Korte, G Kvesitadze. (1997). Uptake and 
transformation of benzene and toluene by plant leaves. Ecotox. 
Environ. Safety 37:24-29.
    \427\ Kammerbauer H, H Selinger, R Rommelt, A Ziegler-Jons, D 
Knoppik, B Hock. (1987). Toxic components of motor vehicle emissions 
for the spruce Picea abies. Environ. Pollut. 48:235-243.
---------------------------------------------------------------------------

III. Light- and Medium-Duty Vehicle Standards for Model Years 2027 and 
Later

A. Introduction and Background

    This section III of the preamble outlines the final GHG and 
criteria pollutant standards and related provisions that are included 
in the rulemaking.
    Throughout this section and elsewhere in this FRM, EPA uses the 
following conventions to identify specific vehicle technology types and 
groupings, also depicted schematically in Figure 2.\428\
---------------------------------------------------------------------------

    \428\ More information about these vehicle technologies may be 
found in the 2016 EPA Draft Technical Assessment Report (EPA-420-D-
16-900, July 2016).
---------------------------------------------------------------------------

     ICE vehicle: a vehicle powered by an internal combustion 
engine (ICE).
     Electrified ICE vehicle: a vehicle powered by an ICE and 
any amount of powertrain electrification (includes MHEV, HEV, PHEV).
     MHEV: Mild Hybrid Electric Vehicle.\429\
---------------------------------------------------------------------------

    \429\ Mild hybrids most commonly operate at or about 48 volts 
and provide idle-stop capability and launch assistance. See also 
Draft Technical Assessment Report, EPA-420-D-16-900, July 2016, p. 
5-11.
---------------------------------------------------------------------------

     HEV: Hybrid Electric Vehicle (or strong hybrid).\430\
---------------------------------------------------------------------------

    \430\ Strong hybrids typically operate at high voltage (greater 
than 60 volts and most often up to several hundred volts) to provide 
significant engine assist and regenerative braking, and most 
commonly occur in what are known as P2 and power-split or other 
parallel/series drive configurations. See also Draft Technical 
Assessment Report, EPA-420-D-16-900, July 2016, pp. 5-11 and 5-12.
---------------------------------------------------------------------------

     PHEV: Plug-in Hybrid Electric Vehicle (or near-zero 
emission vehicle).
     BEV: Battery Electric Vehicle.
     FCEV: Fuel Cell Electric Vehicle.
     PEV: Plug-in Electric Vehicle (refers collectively to BEVs 
and PHEVs).
     Hybrid: refers collectively to HEVs and MHEVs.
     Zero-emission vehicle: refers collectively to BEV and 
FCEV.
     Electrified vehicle: refers to any vehicle with powertrain 
electrification.

[[Page 27882]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.001

Figure 2: Vehicle technology types and groupings.

1. What vehicle categories and pollutants are covered by the rule?
    EPA is establishing emissions standards for both light-duty 
vehicles and medium-duty (Class 2b and 3) vehicles. The light-duty 
vehicle category includes passenger cars, light trucks, and medium-duty 
passenger vehicles (MDPVs), consistent with previous EPA GHG and 
criteria pollutant rules.\431\ In this rule, Class 2b and 3 vehicles 
are referred to as ``medium-duty vehicles'' (MDVs) to distinguish them 
from Class 4 and higher vehicles that remain under the heavy-duty 
program in 40 CFR parts 1036 and 1037 and to distinguish them from 
light-duty categories. EPA has not previously used the MDV 
nomenclature, referring to these larger vehicles in prior rules as 
either heavy-duty Class 2b and 3 vehicles or heavy-duty pickups and 
vans.\432\ MDV nomenclature is commonly used to describe commercial use 
of Class 2b and Class 3 vans, pickups and incomplete vehicles. Our 
regulatory definition of MDV includes large pickups, vans, and 
incomplete vehicles with gross vehicle weight ratings of 8,501 to 
14,000 pounds, but excludes MDPVs. Examples of vehicles in this 
category include GM or Stellantis 2500 and 3500 series, and Ford 250 
and 350 series, pickups and vans.
---------------------------------------------------------------------------

    \431\ Light-duty trucks (LDTs) that have gross vehicle weight 
ratings above 6,000 pounds and all MDVs are considered ``heavy-duty 
vehicles'' under the CAA. See section 202(b)(3)(C). For regulatory 
purposes, we generally refer to those LDTs which are above 6,000 
pounds GVWR and at or below 8,500 pounds GVWR as ``heavy light-duty 
trucks'' made up of LDT3s and LDT4s, and we have defined MDPVs 
primarily as vehicles between 8,501 and 10,000 pounds GVWR designed 
primarily for the transportation of persons. See 40 CFR 86.1803-01.
    \432\ See 76 FR 57106 and 79 FR 23414. Heavy-duty vehicles 
subject to standards under 40 CFR part 86, subpart S, are defined at 
40 CFR 86.1803-01 to include all vehicles above 8,500 pounds GVWR, 
and also incomplete vehicles with lower GVWR if they have curb 
weight above 6,000 pounds or basic vehicle frontal area greater than 
45 square feet.
---------------------------------------------------------------------------

    Additionally, in the context of the criteria pollutant program, the 
abbreviation LDV refers to light-duty vehicles that are not otherwise 
designated as a light-duty truck (LDT) or medium-duty passenger vehicle 
(MDPV). This final rule also amends the definition of MDPV. Light-duty 
(unabbreviated) refers to LDV, LDT and MDPV combined. LDT with a number 
following (e.g., LDT1, LDT2, LDT3, LDT4) refers to specific light-duty 
truck weight categories defined in 40 CFR 86.1803-01. LDT weight 
categories may be combined with text, e.g., LDT3/4 refers to the weight 
categories LDT3 and LDT4 combined, which are also defined in 40 CFR 
86.1803-01 as ``heavy-light-duty-trucks''. In this rulemaking, the new 
nomenclature ``medium-duty vehicle'' (MDV) refers to a combination of 
both Class 2b and 3 vehicles as defined in 40 CFR 86.1803-01. ``High 
gross combination weight medium-duty vehicle'' (high GCWR MDV) is a 
separate subcategory of MDV with very high tow capability, specifically 
defined as having a GCWR of 22,001 pounds and greater.
    EPA is finalizing new standards for both light- and medium-duty 
vehicles for emissions of GHGs, hydrocarbons plus oxides of nitrogen 
(NOX), and particulate matter (PM), and emissions 
requirement changes for carbon monoxide (CO) and formaldehyde (HCHO). 
EPA's final standards are based on an assessment of all available 
vehicle emissions control technologies, including advancements in 
gasoline vehicle technologies, hybrids, PHEVs, and BEVs over the model 
years affected by the rule.
    EPA notes that it is not finalizing the proposed standards for high 
GCWR MDVs that would have required compliance with engine-based 
criteria pollutant emissions standards under EPA's heavy-duty engine 
standards under 40 CFR part 1036 rather than meeting MDV chassis-based 
standards. Instead, we are finalizing one of the alternatives for high 
GCWR MDV criteria pollutant emissions standards on which we solicited 
comment, specifically, as discussed in section III.D of this preamble, 
additional in-use standards that are comparable to those recently 
adopted by California.
2. Light-Duty and Medium-Duty Vehicle Standards: Background and History
i. GHG Standards
    This section provides an overview of the prior rules and the 
standards structures for EPA's light-duty GHG emissions standards, 
medium-duty GHG emissions standards, and criteria pollutant emissions 
standards for both light- and medium-duty vehicles.\433\ While this 
rule addresses both light- and medium-duty vehicles under a single 
umbrella rulemaking, EPA is finalizing standards for each class and for 
each

[[Page 27883]]

pollutant pursuant to the relevant statutory provisions for each class 
and pollutant based on its assessment of the feasibility of more 
stringent standards for each class and pollutant,\434\ and the programs 
will continue to follow the basic structures EPA has previously 
adopted.
---------------------------------------------------------------------------

    \433\ Previously, EPA has addressed medium-duty vehicle 
emissions as part of regulatory programs for GHG emissions along 
with the heavy-duty sector, and for criteria pollutant emissions 
along with the light-duty sector. As a result, the program structure 
for medium-duty vehicles is similar to that of the light-duty 
program for criteria pollutants but differs from that of light-duty 
program for GHG emissions.
    \434\ As discussed in Section IX.M of the preamble and elsewhere 
in this notice, EPA has independently considered and adopted each of 
these standards, as well as other elements of the final rule, and 
each is severable should there be judicial review.
---------------------------------------------------------------------------

    EPA has issued four rules establishing light-duty vehicle GHG 
standards, which EPA refers to in this rule based on the year in which 
the relevant final rule was issued, as shown in Table 11.\435\
---------------------------------------------------------------------------

    \435\ The first three rules were issued jointly with NHTSA, 
while EPA issued the 2021 Rule in coordination with NHTSA but not as 
a joint rulemaking.

                           Table 11--Previous GHG Light-Duty Vehicles Standards Rules
----------------------------------------------------------------------------------------------------------------
                                                                                             Federal Register
                 Rule                        MYs covered                 Title                   citation
----------------------------------------------------------------------------------------------------------------
2010 Rule............................  Initial 2010 rule        Light-Duty Vehicle       75 FR 25324, May 7,
                                        established standards    Greenhouse Gas           2010.
                                        for MYs 2012-2016 and    Emission Standards and
                                        later.                   Corporate Average Fuel
                                                                 Economy Standards.
2012 Rule............................  Set more stringent       2017 and Later Model     77 FR 62624, October
                                        standards for MYs 2017-  Year Light-Duty          15, 2012.
                                        2025 and later.          Vehicle Greenhouse Gas
                                                                 Emissions and
                                                                 Corporate Average Fuel
                                                                 Economy Standards.
2020 Rule............................  Revised the standards    The Safer Affordable     85 FR 24174, April 30,
                                        for MYs 2022-2025 to     Fuel-Efficient (SAFE)    2020.
                                        make them less           Vehicles Rule for
                                        stringent and            Model Years 2021-2026
                                        established a new        Passenger Cars and
                                        standard for MYs 2026    Light Trucks.
                                        and later.
2021 Rule............................  Revised the standards    Revised 2023 and Later   86 FR 74434, December
                                        for MYs 2023-2026 to     Model Year Light-Duty    30, 2021.
                                        make them more           Vehicle Greenhouse Gas
                                        stringent, with the MY   Emissions Standards.
                                        2026 standards being
                                        the most stringent GHG
                                        standards established
                                        by EPA to date.
----------------------------------------------------------------------------------------------------------------

    The GHG standards have all been based on fleet average 
CO2 emissions. Each vehicle model is assigned a 
CO2 target based on the vehicle's ``footprint'' in square 
feet (ft\2\), generally consisting of the area of the rectangle formed 
by the four points at which the tires rest on the ground. Generally, 
vehicles with larger footprints have higher assigned CO2 
emissions targets. The most recent set of footprint curves established 
by the 2021 rule for model years 2023-2026 are shown in Figure 3 and 
Figure 4, along with the curves for MYs 2021-2022, included for 
comparison. As shown, passenger cars and light trucks have separate 
footprint standards curves, which result in separate fleet average 
standards for the two sets of vehicles. The fleet-average standards are 
the production-weighted fleet average of the footprint targets for all 
the vehicles in a manufacturer's fleet for a given model year. As a 
result, the footprint-based fleet average standards, which 
manufacturers are required to meet on an annual basis, will vary for 
each manufacturer based on its actual production of vehicles in a given 
model year. Individual vehicles are not required to meet their 
footprint-based CO2 targets, although they are required to 
demonstrate compliance with applicable in-use standards.

[[Page 27884]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.002

Figure 3: Car footprint curves for MYs 2021-2026.
[GRAPHIC] [TIFF OMITTED] TR18AP24.003

Figure 4: Truck footprint curves for MYs 2021-2026.

[[Page 27885]]

    For medium-duty vehicles,\436\ EPA has established GHG standards 
previously as part of our heavy-duty vehicle GHG Phase 1 and 2 rules, 
shown in Table 12.
---------------------------------------------------------------------------

    \436\ Note, the HD GHG rules referred to MDVs as HD pickups and 
vans.

                              Table 12--Prior Heavy-Duty GHG Rules Covering MDOMVs
----------------------------------------------------------------------------------------------------------------
                                                                                             Federal Register
                 Rule                        MYs covered                 Title                   Citation
----------------------------------------------------------------------------------------------------------------
HD Phase 1...........................  Initial MDV standards    Greenhouse Gas           76 FR 57106, September
                                        phased in over MYs       Emissions Standards      15, 2011.
                                        2014-2018.               and Fuel Efficiency
                                                                 Standards for Medium-
                                                                 and Heavy-Duty Engines
                                                                 and Vehicles.
HD Phase 2...........................  More stringent MDV       Greenhouse Gas           81 FR 73478, October
                                        standards phased in      Emissions and Fuel       25, 2016.
                                        over MYs 2021-2027.      Efficiency Standards
                                                                 for Medium- and Heavy-
                                                                 Duty Engines and
                                                                 Vehicles-- Phase 2.
----------------------------------------------------------------------------------------------------------------

    The MDV standards are also attribute-based. However, they are based 
on a ``work factor'' attribute rather than the footprint attribute used 
in the light-duty vehicle program. Work-based measures such as payload 
and towing capability are two key factors that characterize differences 
in the design of vehicles, as well as differences in how the vehicles 
are expected to be regularly used. The work factor attribute combines 
vehicle payload capacity and vehicle towing capacity, in pounds (lb), 
with an additional fixed adjustment for four-wheel drive vehicles. This 
adjustment accounts for the fact that four-wheel drive, critical to 
enabling heavy-duty work (payload or trailer towing) in certain road 
conditions, results in additional vehicle weight. The GHG standards and 
work factor are calculated as follows:

CO2 Target (g/mile) = [a x WF] + b
WF = Work Factor = [0.75 x (Payload Capacity + xwd)] + [0.25 x 
Towing Capacity]
Payload Capacity = GVWR (pounds)-Curb Weight (pounds)
xwd = 500 pounds for 4wd, 0 lbs. for 2wd
Towing Capacity = GCWR (pounds)-GVWR (pounds)

    Coefficients a and b represent the mathematical slope and offset, 
respectively, that define the work-factor-based standards.
    Under this approach, CO2 targets are determined for each 
vehicle with a unique work factor (analogous to a target for each 
discrete vehicle footprint in the light-duty vehicle rules). These 
targets are then production weighted and summed to derive a 
manufacturer's annual fleet average standard for its MDVs. The current 
program includes separate standards for gasoline and diesel-fueled 
vehicles.\437\ Graphical representations of the Phase 2 work factor 
standards are shown in Figure 5 and Figure 6.
---------------------------------------------------------------------------

    \437\ See 81 FR 73736-73739.
    [GRAPHIC] [TIFF OMITTED] TR18AP24.004
    
Figure 5: EPA HD Phase 2 CO2 work factor targets for 
gasoline fueled MDVs.

[[Page 27886]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.005

Figure 6: EPA HD Phase 2 CO2 Work Factor Targets for Diesel 
Fueled MDVs.

ii. Criteria and Toxic Pollutant Emissions Standards
    Since 1971, EPA has, at Congress' direction, been setting emissions 
standards for motor vehicles. The earliest standards were for light-
duty vehicles for hydrocarbons, nitrogen oxides (NOX), and 
carbon monoxide (CO), requiring a 90 percent reduction in emissions. 
Since then, EPA has continued to set standards achieving comparably 
significant reductions in criteria pollutant (and precursor) emissions 
for the full range of vehicle classes (including light-duty, medium-
duty and heavy-duty vehicles and passenger, cargo and vocational 
vehicles). Over the last several decades, EPA has set progressively 
more stringent vehicle emissions standards for criteria 
pollutants.\438\ For example, in 1997 EPA adopted the National Low 
Emission Vehicle program, which included provisions for certifying zero 
emissions vehicles. In 2000, EPA adopted the Tier 2 standards, which 
required passenger vehicles to be 77 to 95 percent cleaner (and further 
encouraged certification of zero emission vehicles through the 
establishment of ``Bin 1'', which is referred to as ``Bin 0'').
---------------------------------------------------------------------------

    \438\ EPA's recent criteria pollutants rulemakings for passenger 
cars and light trucks can be found on our website at https://www.epa.gov/regulations-emissions-vehicles-and-engines/regulations-smog-soot-and-other-air-pollution-passenger.
---------------------------------------------------------------------------

    Most recently, in 2014, EPA adopted Tier 3 emissions standards, 
which required a further reduction of 60 to 80 percent of emissions 
(depending on pollutant and vehicle class). Unlike GHG standards, 
criteria pollutant standards are not attribute-based. The Tier 3 rule 
included standards for both light-duty and medium-duty vehicles. 
Similar to the prior Tier 2 standards, Tier 3 established ``bins'' of 
Federal Test Procedure (FTP) standards, shown in Table 13 Each bin 
contains a milligrams per mile (mg/mile) standard for non-methane 
organic gases (NMOG) plus oxides of nitrogen) or NMOG+NOX, 
particulate matter (PM), carbon monoxide (CO), and formaldehyde (HCHO).

                                Table 13--Tier 3 FTP Standards for LDVs and MDPVs
                                                    [mg/mile]
----------------------------------------------------------------------------------------------------------------
                                                     NMOG+NOX           PM              CO             HCHO
----------------------------------------------------------------------------------------------------------------
Bin 160.........................................             160               3             4.2               4
Bin 125.........................................             125               3             2.1               4
Bin 70..........................................              70               3             1.7               4
Bin 50..........................................              50               3             1.7               4
Bin 30..........................................              30               3             1.0               4
Bin 20..........................................              20               3             1.0               4
Bin 0...........................................               0               0               0               0
----------------------------------------------------------------------------------------------------------------

    Manufacturers select, or assign, a standards bin to each vehicle 
model and vehicles must meet all of the standards in that bin over the 
vehicle's full useful life. Each manufacturer must also meet a fleet 
average NMOG + NOX standard each model year, which declines 
over a phase-in period for the Tier 3 final standards. The declining 
NMOG+NOX standards are shown in Table 14. As shown, the 
fleet is split between two categories: 1) Passenger cars and small 
light trucks and 2) larger light trucks and MDPVs, with final 
NMOG+NOX

[[Page 27887]]

fleet average standards of 30 mg/mile for both vehicle categories.\439\
---------------------------------------------------------------------------

    \439\ Small light trucks are those vehicles in the LDT1 class, 
while larger light trucks are those in the LDT2-4 classes.

                                 Table 14--Tier 3 NMOG+NOX Fleet Average FTP Standards for Light-Duty Vehicles and MDPVs
                                                                        [mg/mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                  Model year
                                                    ----------------------------------------------------------------------------------------------------
                                                                                                                                                2025 and
                                                        2017        2018        2019       2020       2021       2022       2023       2024      later
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger cars and small trucks....................         86           79         72         65         58         51         44         37         30
Larger light trucks and MDPVs......................        101           93         83         74         65         56         47         38         30
--------------------------------------------------------------------------------------------------------------------------------------------------------

    The Tier 3 rule also established more stringent criteria pollutant 
emissions standards for MDVs. The Tier 3 MDV standards are also based 
on a bin structure, but with generally less stringent bin standards and 
with less stringent NMOG+NOX fleet average standards. As 
discussed in section III.A.1 of this preamble, the MDV category 
consists of vehicles with gross vehicle weight ratings (GVWR) between 
8,501-14,000 pounds. For Tier 3, EPA set separate standards for two 
sub-categories of vehicles, Class 2b (8,501-10,000 pounds GVWR) and 
Class 3 (10,001-14,000 pounds GVWR) vehicles. Table 15 provides the 
final Tier 3 FTP standards bins for MDVs and Table 16 provides the 
NMOG+NOX fleet average standards that apply to these 
vehicles in MYs 2018 and later. It is important to note that MDVs are 
tested at a higher test weight than light-duty vehicles, as discussed 
in section III.C.3 of this preamble, and as such the numeric standards 
are not directly comparable across the light-duty and MDV categories.

                                  Table 15--MDV Tier 3 FTP Final Standards Bins
----------------------------------------------------------------------------------------------------------------
                                                     NMOG+NOX           PM              CO             HCHO
----------------------------------------------------------------------------------------------------------------
                                        Class 2b (10,001-14,000 lb GVWR)
----------------------------------------------------------------------------------------------------------------
Bin 250.........................................             250               8             6.4               6
Bin 200.........................................             200               8             4.2               6
Bin 170.........................................             170               8             4.2               6
Bin 150.........................................             150               8             3.2               6
Bin 0...........................................               0               0               0               0
----------------------------------------------------------------------------------------------------------------
                                         Class 3 (8.501-10,000 lb GVWR)
----------------------------------------------------------------------------------------------------------------
Bin 400.........................................             400              10             7.3               6
Bin 270.........................................             270              10             4.2               6
Bin 230.........................................             230              10             4.2               6
Bin 200.........................................             200              10             3.7               6
Bin 0...........................................               0               0               0               0
----------------------------------------------------------------------------------------------------------------


                           Table 16--MDV Tier 3 Final Fleet Average NMOG+NOX Standards
                                                    [mg/mile]
----------------------------------------------------------------------------------------------------------------
                                       2018            2019            2020            2021       2022 and later
----------------------------------------------------------------------------------------------------------------
Class 2b........................             278             253             228             203             178
Class 3.........................             451             400             349             298             247
----------------------------------------------------------------------------------------------------------------

    EPA has also established supplemental Federal test procedure (SFTP) 
standards for light- and medium-duty vehicles, as well as cold 
temperature standards for CO and HC. These standards address emissions 
outside of the FTP test conditions such as at high vehicle speeds and 
differing ambient temperatures. EPA did not reopen the current SFTP 
standards in this rulemaking.

B. EPA's Statutory Authority Under the Clean Air Act (CAA)

    This section summarizes the statutory authority for the final rule. 
Statutory authority for the standards EPA is finalizing is found in CAA 
section 202(a)(1)-(2), 42 U.S.C. 7521 (a)(1)-(2), which requires EPA to 
establish standards applicable to emissions of air pollutants from new 
motor vehicles and engines which in the Administrator's judgment cause 
or contribute to air pollution which may reasonably be anticipated to 
endanger public health or welfare. Section 202(a)(3) further addresses 
EPA authority to establish standards for emissions of NOX, 
PM, HC, and CO from heavy-duty engines and vehicles.\440\ Additional 
statutory authority for the action is found in CAA

[[Page 27888]]

sections 202-209, 216, and 301, 42 U.S.C. 7521-7543, 7550, and 7601.
---------------------------------------------------------------------------

    \440\ Light-duty trucks (LDTs) that have gross vehicle weight 
ratings above 6,000 pounds and all MDVs are considered ``heavy-duty 
vehicles'' under the CAA. See section 202(b)(3)(C).
---------------------------------------------------------------------------

    Section III.B.1 of the preamble overviews the text of the relevant 
statutory provisions read in their context. We discuss the statutory 
definition of ``motor vehicle'' in section 216 of the Act, EPA's 
authority to establish emission standards for such motor vehicles in 
section 202, and authorities related to compliance and testing in 
sections 203, 206, and 207.
    Section III.B.2 of the preamble addresses comments regarding our 
legal authority to consider a wide range of technologies, including 
electrified technologies that completely prevent vehicle tailpipe 
emissions. EPA's standard-setting authority under section 202 is not 
limited to any specific type of emissions control technology, such as 
technologies applicable only to ICE vehicles; rather, the Agency must 
consider all technologies that reduce emissions from motor vehicles--
including technologies that allow for complete prevention of emissions 
such as battery electric vehicle (BEV) technologies--in light of the 
lead time provided and the costs of compliance. Many commenters 
supported EPA's legal authority to consider such technologies. At the 
same time, the final standards do not require the manufacturers to 
adopt any specific technological pathway and can be achieved through 
the use of a variety of technologies, including without producing 
additional BEVs to comply with this rule.
    Section III.B.3 of the preamble summarizes our responses to certain 
other comments relating to our legal authority, including whether this 
rule implicates the major questions doctrine, whether EPA has authority 
for its Averaging, Banking, and Trading (ABT) program, and whether EPA 
properly considered BEVs as part of the class of vehicles for GHG 
regulation. We discuss our legal authority and rationale for battery 
durability and warranty separately in section III.G.2 of the preamble. 
Additional discussion of legal authority for the entire rule is found 
in section 2 of the RTC. EPA's assessment of the statutory and other 
factors in selecting the final standards is found in section V of this 
preamble, and further discussion of our statutory authority in support 
of all the revised compliance provisions is found in their respective 
sections of the preamble.
1. Summary of Key Clean Air Act Provisions
    Title II of the Clean Air Act provides for comprehensive regulation 
of emissions from mobile sources, authorizing EPA to regulate emissions 
of air pollutants from all mobile source categories, including motor 
vehicles under CAA section 202(a). To understand the scope of 
permissible regulation, we first must understand the scope of the 
regulated sources. CAA section 216(2) defines ``motor vehicle'' as 
``any self-propelled vehicle designed for transporting persons or 
property on a street or highway.'' \441\ Congress has intentionally and 
consistently used the broad term ``any self-propelled vehicle'' since 
the Motor Vehicle Air Pollution Control Act of 1965 to include vehicles 
propelled by various fuels (e.g., gasoline, diesel, or hydrogen) and 
systems of propulsion, whether they be ICE engine, hybrid, or electric 
motor powertrains.\442\ The subjects of this rulemaking all fit that 
definition: they are self-propelled, via a number of different 
powertrains, and they are designed for transporting persons or property 
on a street or highway. The Act's focus is on reducing emissions from 
classes of motor vehicles and the ``requisite technologies'' that could 
feasibly reduce those emissions, giving appropriate consideration to 
cost of compliance and lead time.
---------------------------------------------------------------------------

    \441\ EPA subsequently interpreted this provision through a 1974 
rulemaking. 39 FR 32611 (Sept. 10, 1974), codified at 40 CFR 
85.1703. The regulatory provisions establish more detailed criteria 
for what qualifies as a motor vehicle, including criteria related to 
speed, safety, and practicality for use on streets and ways. The 
regulation, however, does not draw any distinctions based on whether 
the vehicle emits pollutants or its powertrain.
    \442\ The Motor Vehicle Air Pollution Act of 1965 defines 
``motor vehicle'' as ``any self-propelled vehicle designed for 
transporting persons or property on a street or highway.'' Public 
Law 89-272, 79 Stat. 992, 995 (Oct. 20, 1965). See also, e.g., 116 
S. Cong. Rec. at 42382 (Dec. 18, 1970) (Clean Air Act Amendments of 
1970--Conference Report) (``The urgency of the problems require that 
the industry consider, not only the improvement of existing 
technology, but also alternatives to the internal combustion engine 
and new forms of transportation.'').
---------------------------------------------------------------------------

    Congress delegated to the Administrator the authority to identify 
available control technologies, and it did not place any restrictions 
on the types of emission reduction technologies EPA could consider, 
including different powertrain technologies. By contrast, other parts 
of the Act explicitly limit EPA's authority by powertrain type,\443\ so 
Congress's conscious decision not to do so when defining ``motor 
vehicle'' in section 216 further highlights the breadth of EPA's 
standard-setting authority for such vehicles. As we explain further 
below, Congress did place some limitations on EPA's standard setting 
under CAA section 202(a),\444\ but these limitations generally did not 
restrict EPA's authority to broadly regulate motor vehicles to any 
particular vehicle type or emissions control technology.
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    \443\ See CAA section 213 (authorizing EPA to regulate ``non-
road'' engines''), 216(10) (defining non-road engine to ``mean[] an 
internal combustion engine''). Elsewhere in the Act, Congress also 
specified specific technological controls, further suggesting its 
decision not to limit the technological controls EPA could consider 
in section 202(a)(1)-(2) was intentional. See, e.g., CAA section 
407(d) (``Units subject to subsection (b)(1) for which an 
alternative emission limitation is established shall not be required 
to install any additional control technology beyond low 
NOX burners.'').
    \444\ See, e.g., CAA section 202(a)(4)(A) (``no emission control 
device, system, or element of design shall be used in a new motor 
vehicle or new motor vehicle engine for purposes of complying with 
requirements prescribed under this subchapter if such device, 
system, or element of design will cause or contribute to an 
unreasonable risk to public health, welfare, or safety in its 
operation or function''). In addition, Congress established 
particular limitations for discrete exercises of CAA section 
202(a)(1) authority which are not at issue in this rulemaking. See, 
e.g., CAA section 202(b)(1) (additional requirements applicable to 
certain model years).
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    We turn now to section 202(a)(1)-(2), which provides the statutory 
authority for the final standards in this action. This section governs 
EPA's authority to establish standards for light-duty vehicles, as well 
as to establish GHG standards for heavy-duty vehicles. For vehicles 
meeting the statutory definition of heavy-duty vehicles, section 
202(a)(3) provides additional and more specific criteria governing 
adoption of certain criteria pollutant emissions standards under 
section 202(a)(1); we discuss these additional criteria following our 
general discussion of section 202(a)(1)-(2).
    Section 202(a)(1) directs the Administrator to set ``standards 
applicable to the emission of any air pollutant from any class or 
classes of new motor vehicles or new motor vehicle engines, which in 
his judgment cause, or contribute to, air pollution which may 
reasonably be anticipated to endanger public health or welfare.'' This 
core directive has remained the same, with only minor edits, since 
Congress first enacted it in the Motor Vehicle Pollution Control Act of 
1965.\445\ Thus the first step when EPA regulates emissions from motor 
vehicles is a finding (the ``endangerment finding''), either as part of 
the initial standard setting or prior to it, that the emission of an 
air pollutant from a class or classes of new motor vehicles or new 
motor engines causes or contributes to air pollution which may 
reasonably be anticipated to endanger public health or welfare.
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    \445\ Public Law 89-272.
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    The statute directs EPA to define the class or classes of new motor 
vehicles for which the Administrator is making

[[Page 27889]]

the endangerment finding.\446\ EPA for decades has defined ``classes'' 
subject to regulation according to their weight and function. This is 
consistent with both Congress's functional definition of a ``motor 
vehicle,'' as discussed above, and Congress's explicit contemplation of 
functional classes or categories. See CAA section 202(b)(3)(C) 
(defining ``heavy-duty vehicle'' with reference to function and 
weight), 202(a)(3)(A)(ii) (``the Administrator may base such classes or 
categories on gross vehicle weight, horsepower, type of fuel used, or 
other appropriate factors.'').\447\
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    \446\ See CAA section 202(a)(1) (``The Administrator shall by 
regulation prescribe . . . standards applicable to the emission of 
any air pollutant from any class or classes of new motor vehicles or 
new motor vehicle engines, which in his judgment cause, or 
contribute to, air pollution which may reasonably be anticipated to 
endanger public health or welfare.'' (emphasis added)), 
202(a)(3)(A)(ii) (``the Administrator may base such classes or 
categories on gross vehicle weight, horsepower, type of fuel used, 
or other appropriate factors'' (emphasis added)).
    \447\ Section 202(a)(3)(A)(ii) applies to standards established 
under section 202(a)(3), not to standards otherwise established 
under section 202(a)(1). However, we think it nonetheless provides 
guidance on what kinds of classifications and categorizations 
Congress generally thought were appropriate.
---------------------------------------------------------------------------

    In 2009, EPA made an endangerment finding for GHG and explicitly 
stated that ``[t]he new motor vehicles and new motor vehicle engines . 
. . addressed are: Passenger cars, light-duty trucks, motorcycles, 
buses, and medium and heavy-duty trucks.'' (74 FR 66496, 66537, 
December 15, 2009) 448 449 Then EPA reviewed the GHG 
emissions data from ``new motor vehicles'' and determined that these 
classes of vehicles do contribute to air pollution that may reasonably 
be anticipated to endanger public health and welfare. The endangerment 
finding was made with regard to pollutants--in this case, GHGs--emitted 
from ``any class or classes of new motor vehicles or new motor vehicle 
engines.'' This approach--of identifying a class or classes or vehicles 
that contribute to endangerment--is how EPA has always implemented the 
statute.
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    \448\ EPA considered this list to be a comprehensive list of the 
new motor vehicle classes. See id. (``This contribution finding is 
for all of the CAA section 202(a) source categories.''); id. at 
66544 (``the Administrator is making this finding for all classes of 
new motor vehicles under CAA section 202(a)''). By contrast, in 
making an endangerment finding for GHG emissions from aircraft, EPA 
limited the endangerment finding to engines used in specific classes 
of aircraft (such as civilian subsonic jet aircraft with maximum 
take off mass greater than 5,700 kilograms). 81 FR 54421, Aug. 15, 
2016.
    \449\ EPA is not reopening the 2009 or any other prior 
endangerment finding in this action. Rather, we are discussing the 
2009 endangerment finding to provide the reader with helpful 
background information relating to this action.
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    For purposes of establishing GHG emissions standards, EPA has 
regarded passenger cars, light, medium, and heavy-duty trucks each as 
its own class and has then made further sub-categorizations based on 
weight and functionality in promulgating standards for the air 
pollutant. EPA's class and categorization framework allows the Agency 
to recognize real-world variations in how vehicles are designed to be 
used, as well as the lead time and costs of emissions control 
technology for different vehicle types. It also ensures that consumers 
can continue to access a wide variety of vehicles to meet their 
mobility needs, while enabling continued emissions reductions for all 
vehicle types, including to the point of completely preventing 
emissions where appropriate.
    In setting standards, CAA section 202(a)(1) requires that any 
standards promulgated thereunder ``shall be applicable to such vehicles 
and engines for their useful life (as determined under [CAA section 
202(d)], relating to useful life of vehicles for purposes of 
certification), whether such vehicle and engines are designed as 
complete systems or incorporate devices to prevent or control such 
pollution.'' \450\ In other words, Congress specifically determined 
that EPA's standards could be based on a wide array of technologies, 
including technologies for the engine and for the other (non-engine) 
parts of the vehicle, technologies that ``incorporate devices'' on top 
of an existing motor vehicle system as well as technologies that are 
``complete systems'' and that may involve a complete redesign of the 
vehicle. Congress also determined that EPA could base its standards on 
both technologies that ``prevent'' the pollution from occurring in the 
first place--such as the zero emissions technologies considered in this 
rule--as well as technologies that ``control'' or reduce the pollution 
once produced.\451\
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    \450\ See also Engine Mfrs. Ass'n v. S. Coast Air Quality Mgmt. 
Dist., 541 U.S. 246, 252-53 (2004) (As stated by the Supreme Court, 
a standard is defined as that which ``is established by authority, 
custom, or general consent, as a model or example; criterion; test. 
. . . This interpretation is consistent with the use of `standard' 
throughout Title II of the CAA. . .to denote requirements such as 
numerical emission levels with which vehicles or engines must comply 
. . ., or emission-control technology with which they must be 
equipped.'').
    \451\ Pollution prevention is a cornerstone of the Clean Air 
Act. The title of 42 U.S.C. chapter 85 is ``Air Pollution Prevention 
and Control''; see also CAA section 101(a)(3), (c). One of the very 
earliest vehicle pollution control technologies (one which is still 
in use by some vehicles) was exhaust gas recirculation, which 
reduces in-cylinder temperature and oxygen concentration, and, as a 
result, engine-out NOX emissions from the vehicles. More 
recent examples of pollution prevention technologies include 
cylinder deactivation, and electrification technologies such as idle 
start-stop or PEVs.
---------------------------------------------------------------------------

    While emission standards set by EPA under CAA section 202(a)(1) 
generally do not mandate use of particular technologies, they are 
technology-based, as the levels chosen must be premised on a finding of 
technological feasibility. EPA must therefore necessarily identify 
potential control technologies, evaluate the rate each technology could 
be introduced, and its cost. Standards promulgated under CAA section 
202(a) are to take effect only ``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.'' \452\ This reference to ``cost of 
compliance'' means that EPA must consider costs to those entities which 
are directly subject to the standards,\453\ but ``does not mandate 
consideration of costs to other entities not directly subject to the 
standards.'' \454\ Given the prospective nature of standard-setting and 
the inherent uncertainties in predicting the future development of 
technology, Congress entrusted the Administrator with assessing issues 
of technical feasibility and availability of lead time to implement new 
technology. Such determinations are ``subject to the restraints of 
reasonableness'' but ``EPA is not obliged to provide detailed solutions 
to every engineering problem posed in the perfection of [a particular 
device]. In the absence of theoretical objections to the technology, 
the agency need only identify the major steps necessary for development 
of the device, and give plausible reasons for its belief that the 
industry will be able to solve those problems in the time remaining. 
EPA is not required to rebut all speculation that unspecified factors 
may hinder `real world' emission control.'' \455\
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    \452\ CAA section 202(a)(2); see also NRDC v. EPA, 655 F. 2d 
318, 322 (D.C. Cir. 1981).
    \453\ Motor & Equipment Mfrs. Ass'n Inc. v. EPA, 627 F. 2d 1095, 
1118 (D.C. Cir. 1979).
    \454\ Coal. for Responsible Regulation v. EPA, 684 F.3d 120, 128 
(D.C. Cir. 2012).
    \455\ NRDC, 655 F. 2d at 328, 333-34.
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    Although standards under CAA section 202(a)(1) are technology-
based, they are not based exclusively on technological capability. 
Pursuant to the broad grant of authority in section 202, when setting 
emission standards, EPA must consider certain factors and may also 
consider other relevant factors and has done so previously when setting 
such standards. For instance, in the

[[Page 27890]]

2021 light-duty GHG rule, EPA explained that when acting under this 
authority EPA has considered such issues as technology effectiveness, 
its cost (including for manufacturers and for purchasers), the lead 
time necessary to implement the technology, and, based on this, the 
feasibility of potential standards; the impacts of potential standards 
on emissions reductions; the impacts of standards on oil conservation 
and energy security; the impacts of standards on fuel savings by 
vehicle operators; the impacts of standards on the vehicle 
manufacturing industry; as well as other relevant factors such as 
impacts on safety.\456\ EPA has considered these factors in this 
rulemaking as well.
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    \456\ 86 FR 74434, 74436.
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    Rather than specifying levels of stringency in section 202(a)(1)-
(2), Congress directed EPA to determine the appropriate level of 
stringency for the standards taking into consideration the statutory 
factors therein. EPA has clear authority to set standards under CAA 
section 202(a)(1)-(2) that are technology forcing when EPA considers 
that to be appropriate,\457\ but is not required to do so. The statute 
directs EPA to give appropriate consideration to cost and lead time 
necessary to allow for the development and application of such 
technology. The breadth of this delegated authority is particularly 
clear when contrasted with sections 202(b), (g), (h), which identify 
specific levels of emissions reductions on specific timetables for past 
model years.\458\ In determining the level of the standards, CAA 
section 202(a) does not specify the degree of weight to apply to each 
factor such that the Agency has the authority to choose an appropriate 
balance among factors and may decide how to balance stringency and 
technology considerations with cost and lead time.459 460
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    \457\ Indeed, the D.C. Circuit has repeatedly cited NRDC v. EPA, 
which construes section 202(a)(1), as support for EPA's actions when 
EPA acted pursuant to other provisions of section 202 or Title II 
that are explicitly technology forcing. See, e.g., NRDC v. Thomas, 
805 F. 2d 410, 431-34 (D.C. Cir. 1986) (section 202 (a)(3)(B), 202 
(a)(3)(A)); Husqvarna AB v. EPA, 254 F. 3d 195, 201 (D.C. Cir. 2001) 
(section 213(a)(3)); Nat'l Petroleum and Refiners Ass'n v. EPA, 287 
F. 3d 1130, 1136 (D.C. Cir. 2002) (section 202(a)(3)).
    \458\ See also CAA 202(a)(3)(A).
    \459\ See Sierra Club v. EPA, 325 F.3d 374, 378 (D.C. Cir. 2003) 
(even where a provision is technology-forcing, the provision ``does 
not resolve how the Administrator should weigh all [the statutory] 
factors''); Nat'l Petrochemical and Refiners Ass'n v. EPA, 287 F.3d 
1130, 1135 (D.C. Cir. 2002) (EPA decisions, under CAA provision 
authorizing technology-forcing standards, based on complex 
scientific or technical analysis are accorded particularly great 
deference); see also Husqvarna AB v. EPA, 254 F. 3d 195, 200 (D.C. 
Cir. 2001) (great discretion to balance statutory factors in 
considering level of technology-based standard, and statutory 
requirement ``to [give appropriate] consideration to the cost of 
applying . . . technology'' does not mandate a specific method of 
cost analysis); Hercules Inc. v. EPA, 598 F. 2d 91, 106 (D.C. Cir. 
1978) (``In reviewing a numerical standard we must ask whether the 
agency's numbers are within a zone of reasonableness, not whether 
its numbers are precisely right.'').
    \460\ Additionally, with respect to regulation of vehicular GHG 
emissions, EPA is not ``required to treat NHTSA's . . . regulations 
as establishing the baseline for the [section 202(a) standards].'' 
Coal. for Responsible Regulation, 684 F.3d at 127 (noting that the 
section 202(a) standards provide ``benefits above and beyond those 
resulting from NHTSA's fuel-economy standards'').
---------------------------------------------------------------------------

    We now turn to the more specific statutory authority for the heavy-
duty criteria pollutant standards found in section 202(a)(3). This more 
specific statutory authority applies only for heavy-duty vehicles, 
which include light-duty trucks (LDTs) that have gross vehicle weight 
ratings above 6,000 pounds and all MDVs.\461\ In addition, it only 
applies for certain criteria pollutant standards, including the PM, 
NMOG+NOX, and CO standards, EPA is establishing in today's 
final rule, but does not apply to any GHG standards. For applicable 
standards, section 202(a)(3)(A) requires that they ``reflect the 
greatest degree of emission reduction achievable through the 
application of technology which the Administrator determines will be 
available for the model year to which such standards apply, giving 
appropriate consideration to cost, energy, and safety factors 
associated with the application of such technology.'' Section 
202(a)(3)(C) further provides that standards set under section 
202(a)(3) shall apply for a period of no less than three model years 
beginning no earlier than the model year commencing four years after 
promulgation.
---------------------------------------------------------------------------

    \461\ See CAA section 202(b)(3)(C).
---------------------------------------------------------------------------

    We now turn from section 202(a) to overview several other sections 
of the Act relevant to this action. CAA section 202(d) directs EPA to 
prescribe regulations under which the ``useful life'' of vehicles and 
engines shall be determined for the purpose of setting standards under 
CAA section 202(a)(1). Useful life standards for LDV and MDV are 
described in 40 CFR 86.1805-17.
    Additional sections of the Act provide authorities relating to 
compliance, including certification, testing, and warranty. Under 
section 203 of the CAA, sales of vehicles are prohibited unless the 
vehicle is covered by a certificate of conformity, and EPA issues 
certificates of conformity pursuant to section 206 of the CAA. based on 
pre-sale testing conducted either by EPA or by the manufacturer. The 
Federal Test Procedure (FTP or ``city'' test) and the Highway Fuel 
Economy Test (HFET or ``highway'' test) are used for this purpose. 
Compliance with standards is required not only at certification but 
throughout a vehicle's useful life, so that testing requirements may 
continue post-certification. To assure each vehicle complies during its 
useful life, EPA may apply an adjustment factor to account for vehicle 
emission control deterioration or variability in use. EPA also 
establishes the test procedures under which compliance with the CAA 
emissions standards is measured. EPA has also developed tests with 
additional cycles (the so-called 5-cycle tests) which are used for 
purposes of fuel economy labeling, SFTP standards, and extending off-
cycle credits under the light-duty vehicle GHG program. The regulatory 
provisions for demonstrating compliance with emissions standards have 
been successfully implemented for decades, including compliance through 
our Averaging, Banking, and Trading (ABT) program.\462\
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    \462\ EPA's consideration of averaging in standard-setting dates 
back to 1985. 50 FR 10606 (Mar. 15, 1985) (``Emissions averaging, of 
both particulate and oxides of nitrogen emissions from heavy-duty 
engines, is allowed beginning with the 1991 model year. Averaging of 
NO, emissions from light-duty trucks is allowed beginning in 
1988.''). The availability of averaging as a compliance flexibility 
has an even earlier pedigree. See 48 FR 33456 (July 21, 1983) (EPA's 
first averaging program for mobile sources); 45 FR 79382 (Nov. 28, 
1980) (advance notice of proposed rulemaking investigating averaging 
for mobile sources). We have included banking and trading in our 
rules dating back to 1990. 55 FR 30584 (July 26, 1990) (``This final 
rule announces new programs for banking and trading of particulate 
matter and oxides of nitrogen emission credits for gasoline-, 
diesel- and methanol-powered heavy-duty engines.''). Since that 
time, ABT has been a regular feature of EPA's vehicle rules 
promulgated under section 202(a) including the Tier 2 and Tier 3 
criteria pollutant standards, and all of the GHG standards.
---------------------------------------------------------------------------

    Under CAA section 207(a), manufacturers are required to provide 
emission-related warranties. The generally applicable emission-related 
warranty period for new LD vehicles and engines under section 207(i)(1) 
is 2 years or 24,000 miles. For components designated by the 
Administrator as ``specified major emission control component[s]'' 
under section 207(i)(2), the warranty period is 8 years or 80,000 
miles. The emission-related warranty period for HD engines and vehicles 
under CAA section 207(i)(1) is ``the period established by the 
Administrator by regulation (promulgated prior to November 15, 1990) 
for such purposes unless the Administrator subsequently modifies such 
regulation.'' CAA section 207 also grants EPA broad authority to 
require manufacturers to remedy

[[Page 27891]]

nonconformity if EPA determines there are a substantial number of 
noncomplying vehicles. These warranty and remedy provisions have also 
been applied for decades under our regulations, including where 
compliance occurs through use of ABT provisions. Further discussion of 
these sections of the Act, including as they relate to the compliance 
provisions we are finalizing, is found in section III.G of the 
preamble.
2. Authority To Consider Technologies in Setting Motor Vehicle GHG 
Standards
    Having provided an overview of the key statutory authorities for 
this action, we now elaborate on the specific issue of the types of 
control technology that are to be considered in setting standards. 
EPA's position on this issue is consistent with our position in our 
prior GHG and criteria pollutant rules, and with the historical 
exercise of the Agency's authority over the last five decades, 
including under section 202(a)(1)-(2) as well as section 202(a)(3)(A). 
That is, EPA's standard-setting authority under section 202(a)(1)-(2) 
is not a priori limited to consideration of specific types of emissions 
control technology; rather, in determining the level of the standards, 
the agency must account for emissions control technologies that are 
available or will become available for the relevant model year.\463\ In 
this rulemaking, EPA has accounted for a wide range of emissions 
control technologies, including ICE engine and vehicle technologies 
(e.g., engine, transmission, drivetrain, aerodynamics, tire rolling 
resistance improvements, the use of low carbon fuels like CNG and LNG), 
advanced ICE technologies (which include advanced turbocharged 
downsized engines, advanced Atkinson engines, and Miller cycle 
engines), hybrid technologies (e.g., HEV and PHEV), and zero-emission 
vehicle technologies (e.g., BEV). These include technologies applied to 
motor vehicles with ICE (including hybrid powertrains) and without ICE, 
and a range of electrification across the technologies.
---------------------------------------------------------------------------

    \463\ For example, in 1998, EPA published regulations for the 
voluntary National Low Emission Vehicle (NLEV) program that allowed 
LD motor vehicle manufacturers to comply with tailpipe standards for 
cars and light-duty trucks more stringent than that required by EPA 
in exchange for credits for such low emission and zero emission 
vehicles. 63 FR 926 (Jan. 7, 1998). In 2000, EPA promulgated LD Tier 
2 emission standards which built upon ``the recent technology 
improvements resulting from the successful [NLEV] program.'' 65 FR 
6698 (Feb. 10, 2000).
---------------------------------------------------------------------------

    In response to the proposed rulemaking, the agency received 
numerous comments on this issue, specifically on our consideration of 
BEV technologies. Comments of regulated entities relating to these 
technologies, and those of many stakeholders, were often technical and 
policy in nature; for example, relating to the pace at which 
manufacturers could adopt and deploy such technologies in the real 
world or the pace at which enabling infrastructure could be deployed. 
We address these comments in detail in section III.C and III.D of this 
preamble and sections 3 and 17 of the RTC and have revised the 
standards from those proposed after consideration of comments.
    A few commenters, however, alleged that the agency lacked statutory 
authority altogether to consider BEVs because they believed the Act 
limited EPA to considering only technologies applicable to ICE vehicles 
or to technologies that reduce, rather than altogether prevent, 
pollution. EPA disagrees. The constraints they would impose have no 
foundation in the statutory text, are contrary to the statutory 
purpose, are undermined by a substantial body of statutory and 
legislative history, and are inconsistent with how the agency has 
applied the statute in numerous rulemakings over five decades. The 
following discussion elaborates our position on this issue; further 
discussion is found in section 2 of the RTC.
    The text of the Act directly addresses this issue and unambiguously 
provides authority for EPA to consider all motor vehicle technologies, 
including a range of electrified technologies such as fully-electrified 
vehicle technologies without an ICE that achieve zero vehicle tailpipe 
emissions (e.g., BEVs), plug-in hybrid partially electrified 
technologies, and other ICE vehicles across a range of electrification. 
As described earlier in this section, the Act directs EPA to prescribe 
emission standards for ``motor vehicles,'' which are defined broadly in 
CAA section 216(2) and do not exclude any forms of vehicle propulsion. 
The Act then directs EPA to promulgate emission standards for such 
vehicles, ``whether such vehicles and engines are designed as complete 
systems or incorporate devices to prevent or control such pollution,'' 
based on the ``development and application of the requisite 
technology.'' There is no question that electrified technologies, 
including various ICE, hybrid and BEV technologies, meet all of these 
specific statutory criteria. They apply to ``motor vehicles'', are 
systems and incorporate devices that ``prevent'' and ``control'' 
emissions,\464\ and qualify as ``technology.''
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    \464\ The statute emphasizes that the agency must consider 
emission reductions technologies regardless of ``whether such 
vehicles and engines are designed as complete systems or incorporate 
devices to prevent or control such pollution.'' CAA section 
202(a)(1); see also CAA section 202(a)(4)(B) (describing conditions 
for ``any device, system, or element of design'' used for compliance 
with the standards''; Truck Trailer Manufacturers Ass'n, Inc v. EPA, 
17 F.4th 1198, 1202 (D.C. Cir. 2021) (the statute ``created two 
categories of complete motor vehicles. Category one: motor vehicles 
with built-in pollution control. Category two: motor vehicles with 
add-in devices for pollution control.''). While the statute does not 
define system, section 202 does use the word expansively, to include 
``vapor recovery system[s]'' (CAA section 202(a)(5)(A)), ``new power 
sources or propulsion systems'' (CAA section 202(e)), and onboard 
diagnostics systems (CAA section 202(m)(1)(D)). In any event, the 
intentional use of the phrase ``complete systems'' shows that 
Congress expressly contemplated as methods of pollution control not 
only add-on devices (like catalysts that control emissions after 
they are produced by the engine), but wholesale redesigns of the 
motor vehicle and the motor vehicle engine to prevent and reduce 
pollution. Many technologies that reduce vehicle GHG emissions today 
can be characterized as systems that reduce or prevent GHG 
emissions, including advanced engine designs in ICE and hybrid 
vehicles; integration of electric drive units in hybrids, PHEVs, BEV 
and FCEV designs; high voltage batteries and controls; redesigned 
climate control systems improvements, and more.
---------------------------------------------------------------------------

    While the statute also imposes certain specific limitations on 
EPA's consideration of technology, none of these statutory limitations 
preclude the consideration of electrified technologies, a subset of 
electrified technologies, or any other technologies that achieve zero 
vehicle tailpipe emissions. Specifically, the statute states that the 
following technologies cannot serve as the basis for the standards: 
first, technologies which cannot be developed and applied within the 
relevant time period, giving appropriate consideration to the cost of 
compliance; and second, technologies that ``cause or contribute to an 
unreasonable risk to public health, welfare, or safety in [their] 
operation or function.'' CAA section 202(a)(2), (4).\465\

[[Page 27892]]

EPA has undertaken a comprehensive assessment of the statutory factors, 
further discussed in sections III, IV, and V of the preamble and 
throughout the RIA and the RTC, and has found that the CAA plainly 
authorizes the consideration of electrification technologies, including 
BEV technologies, at the levels that support the modeled potential 
compliance pathway to achieve the final standards.
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    \465\ In addition, under section 202(a)(3)(A), EPA must 
promulgate under section 202(a)(1) certain criteria pollutant 
standards for ``classes or categories'' of heavy-duty vehicles that 
``reflect the greatest degree of emission reduction achievable 
through the application of technology which the Administrator 
determines will be available . . . giving appropriate consideration 
to cost, energy, and safety factors associated with the application 
of such technology.'' EPA thus lacks discretion to base such 
standards on a technological pathway that reflects less than the 
greatest degree of emission reduction achievable for the class 
(giving consideration to cost, energy, and safety). In other words, 
where EPA has identified available control technologies that can 
completely prevent pollution and otherwise comport with the statute, 
the agency lacks the discretion to rely on less effective control 
technologies to set weaker standards that achieve fewer emissions 
reductions. And while section 202(a)(3)(A) does not govern standards 
for light-duty vehicles or any GHG standards, which are established 
only under section 202(a)(1)-(2), we think it is also informative as 
to the breadth of EPA's authority under those provisions.
---------------------------------------------------------------------------

    Having discussed what the statutory text does say, we note what the 
statutory text does not say. Nothing in section 202(a)(1)-(2) 
distinguishes technologies that prevent vehicle tailpipe emissions from 
other technologies as being suitable for consideration in establishing 
the standards. Moreover, nothing in the statute suggests that certain 
kinds of electrified technologies are appropriate for consideration 
while other kinds of electrified technologies are not.\466\ While some 
commenters suggest that BEVs represent a difference in kind from all 
other emissions control technologies, that is simply untrue. As we 
explain in section III.A of this preamble and RIA Chapter 3, 
electrified technologies comprise a large range of motor vehicle 
technologies. In fact, all new motor vehicles manufactured in the 
United States today have some degree of electrification and rely on 
electrified technology to control emissions.
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    \466\ Congress' approach here is notably distinct from its 
approach under EPCA, where it specified that DOT should not consider 
fuel economy of alternative fuel vehicles in determining fuel 
economy standards. See 49 U.S.C. 32902(h)(1).
---------------------------------------------------------------------------

    ICE vehicles are equipped with alternators that generate 
electricity and batteries that store such electricity. The electricity 
in turn is used for numerous purposes, such as starting the ICE and 
powering various vehicle electronics and accessories. More 
specifically, electrified technology is a vital part of controlling 
emissions on all new motor vehicles produced today: motor vehicles rely 
on electronic control modules for controlling and monitoring their 
operation, including the fuel mixture (whether gasoline fuel, diesel 
fuel, natural gas fuel, etc.), ignition timing, transmission, and 
emissions control system. In enacting the Clean Air Act Amendments of 
1990, Congress itself recognized the great importance of this 
particular electrified technology for emissions control in certain 
vehicles.\467\ It would be impossible to drive any ICE vehicle produced 
today or to control the emissions of such a vehicle without such 
electrified technology.
---------------------------------------------------------------------------

    \467\ See CAA 207(i)(2) (for light-duty vehicles, statutorily 
designating ``specified major emission control components'' subject 
to extended warranty provisions as including ``an electronic 
emissions control unit''). Congress also designated by statute 
``onboard emissions diagnostic devices'' as ``specified major 
emission control components''; OBD devices also rely on electrified 
technology.
---------------------------------------------------------------------------

    Indeed, many of the extensive suite of technologies that 
manufacturers have devised for controlling emissions rely on 
electrified technology and do so in a host of different ways. These 
include technologies that improve the efficiency of the engine and 
system of propulsion, such as the electronic control modules, 
electronically-controlled fuel injection (for all manners of fuel 
including but not limited to gasoline, diesel, natural gas, propane, 
and hydrogen), and automatic transmission; technologies that reduce the 
amount of ICE engine use such as engine start-stop technology and other 
idle reduction technologies; add-on technologies to control pollution 
after it has been generated by the engine, such as gasoline three-way 
catalysts, and diesel selective catalytic reduction and particulate 
filters that rely on electrified technology to control and monitor 
their performance; non-engine technologies that rely on electrified 
systems to improve vehicle aerodynamics; technologies related to 
vehicle electricity production, such as high efficiency alternators; 
and engine accessory technologies that increase the efficiency of the 
vehicle, such as electric coolant pumps, electric steering pumps, and 
electric air conditioning compressors. Because electrified technologies 
reduce emissions, EPA has long considered them relevant for regulatory 
purposes under Title II. For example, EPA has relied on various such 
technologies to justify the feasibility of the standards promulgated 
under section 202(a), promulgated requirements and guidance related to 
testing involving such technologies under section 206, required 
manufacturers to provide warranties for them under section 207, and 
prohibited their tampering under section 203.
    Certain vehicles rely to a greater extent on electrification as an 
emissions control strategy. These include (1) hybrid vehicles, which 
rely principally on an ICE to power the wheels, but also derive 
propulsion from an on-board electric motor, which can charge batteries 
through regenerative braking, and feature a range of larger batteries 
than non-hybrid ICE vehicles; \468\ (2) plug-in hybrid vehicles (PHEV), 
which have an even larger battery that can also be charged by plugging 
it into an outlet and can rely principally on electricity for 
propulsion, along with an ICE; (3) hydrogen fuel-cell vehicles (FCEV), 
which are fueled by hydrogen to produce electricity to power the wheels 
and have a range of larger battery sizes; and (4) battery electric 
vehicles (BEV), which rely entirely on plug-in charging and the battery 
to provide the energy for propulsion. Manufacturers may choose to sell 
different models of the same vehicle with different levels of 
electrification.\469\ In many but not all cases,\470\ electrified 
technologies are systems which ``prevent'' (partially or completely) 
the emission of pollution from the motor vehicle engine.\471\ Nothing 
in the statute indicates that EPA is limited from considering any of 
these technologies. For instance, nothing in the statute says that EPA 
may only consider emissions control technologies with a certain kind or 
level of electrification, e.g., where the battery is smaller than a 
certain size, where the energy derived from the battery is less than a 
certain percentage of total vehicle energy, where certain energy can be 
recharged by plugging the vehicle into an outlet as opposed to running 
the internal combustion engine, etc. The statute does not differentiate 
in terms of such details, but simply commands EPA to adopt emissions 
standards based on the ``development and application of the requisite 
technology, giving appropriate consideration to the cost of compliance 
within such period.''
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    \468\ Hybrid vehicles include both mild hybrids, which have a 
relatively smaller battery and can use the electric motor to 
supplement the propulsion provided by the ICE, as well as strong 
hybrids, which have a relatively larger battery and can drive for 
limited distances entirely on battery power.
    \469\ For example, Hyundai has offered the Ioniq as an HEV, 
PHEV, and BEV. One automaker stated in comments that ``[b]y the end 
of the decade, every model will be available with a fully electric 
version.'' Docket No. EPA-HQ-OAR-2022-0829-0744 at 2 (Comments of 
Jaguar Land Rover).
    \470\ For example, some vehicles also use electrified technology 
to preheat the catalyst and improve catalyst efficiency especially 
when starting in cold temperatures.
    \471\ CAA section 202(a)(1).
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    EPA's interpretation also accords with the purpose and primary 
operation of section 202(a), which is to reduce emissions of air 
pollutants from motor vehicles that are anticipated to endanger public 
health or welfare.\472\ This statutory purpose compels EPA to consider 
available technologies that reduce emissions of air pollutants most 
effectively, including vehicle

[[Page 27893]]

technologies that result in no vehicle tailpipe emissions of GHGs and 
completely ``prevent'' such emissions.\473\ And, given Congress's 
directive to reduce air pollution, it would make little sense for 
Congress to have authorized EPA to consider technologies that achieve 
99 percent pollution reduction (for example, as some PM filter 
technologies do to control criteria pollutants, see section III.D of 
this preamble), but not 100 percent pollution reduction. At minimum, 
the statute allows EPA to consider such technologies. Today, many of 
the available technologies that can achieve the greatest emissions 
control are those that rely on greater levels of electrification, with 
BEV technologies capable of completely preventing vehicle tailpipe 
emissions.
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    \472\ See also Coal. for Responsible Regul., Inc. v. EPA, 684 
F.3d 102, 122 (D.C. Cir. 2012), aff'd in part, rev'd in part sub 
nom. Util. Air Regul. Grp. v. EPA., 573 U.S. 302 (2014), and amended 
sub nom. Coal. for Responsible Regul., Inc. v. EPA, 606 F. App'x 6 
(D.C. Cir. 2015) (the purpose of section 202(a) is ``utilizing 
emission standards to prevent reasonably anticipated endangerment 
from maturing into concrete harm'').
    \473\ CAA section 202(a)(1); see also CAA section 202(a)(4)(B) 
directing EPA to consider whether a technology ``eliminates the 
emission of unregulated pollutants'' in assessing its safety.
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    The surrounding statutory context further highlights that Congress 
intended section 202 to lead to reductions to the point of complete 
pollution prevention. Consistent with section 202(a)(1), section 101(c) 
of the Act states ``A primary goal of this chapter is to encourage or 
otherwise promote reasonable Federal, State, and local governmental 
actions, consistent with the provisions of this chapter, for pollution 
prevention.'' \474\ Section 101(a)(3) further explains the term ``air 
pollution prevention'' (as contrasted with ``air pollution control'') 
to mean ``the reduction or elimination, through any measures, of the 
amount of pollutants produced or created at the source.'' That is to 
say, EPA is not limited to requiring small reductions, but instead has 
authority to consider technologies that may entirely prevent the 
pollution from occurring in the first place. Congress also repeatedly 
amended the Act to itself impose extremely large reductions in motor 
vehicle pollution.\475\ Similarly, Congress prescribed EPA to set 
standards achieving specific, numeric levels of emissions reductions 
(which in many instances cumulatively amount to multiple orders of 
magnitude),\476\ while explicitly stating that EPA's 202(a) authority 
allowed the agency to go still further.\477\ Consistent with these 
statutory authorities, prior rulemakings have also required very large 
emissions reductions, including to the point of completely preventing 
certain types of emissions.\478\
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    \474\ Clean Air Act Amendments, 104 Stat. 2399, 2468 (Nov. 15, 
1990); see also 42 U.S.C. chapter 85 title (``Air Pollution 
Prevention and Control'').
    \475\ See, e.g., CAA section 202(a)(3)(A)(i) (directed EPA to 
promulgate standards that ``reflect the greatest decree of emission 
reduction achievable'' for certain pollutants).
    \476\ CAA section 202(a), (g)-(h), and (j).
    \477\ See, e.g., CAA section 202(b)(1)(C) (``The Administrator 
may promulgate regulations under subsection (a)(1) revising any 
standard prescribed or previously revised under this subsection. . . 
. Any revised standard shall require a reduction of emissions from 
the standard that was previously applicable.''), (i)(3)(B)(iii) 
(``Nothing in this paragraph shall prohibit the Administrator from 
exercising the Administrator's authority under subsection (a) to 
promulgate more stringent standards for light-duty vehicles and 
light-duty . . . at any other time thereafter in accordance with 
subsection (a).'').
    \478\ See, e.g., 31 FR 5171 (Mar. 30, 1966) (``No crankcase 
emissions shall be discharged into the ambient atmosphere from any 
new motor vehicle or new motor vehicle engine subject to this 
subpart.'').
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    This reading of the statute accords with the practical reality of 
administering an effective emissions control program, a matter in which 
the Agency has developed considerable expertise over the last five 
decades. Such a program is necessarily predicated on the continuous 
development of increasingly effective emissions control technologies. 
In determining the standards, EPA appropriately considers updated data 
and analysis on pollution control technologies, without a priori 
limiting its consideration to a particular set of technologies. Given 
the continuous development of pollution control technologies since the 
early days of the CAA, this approach means that EPA has routinely 
considered new and projected technologies developed or refined since 
the time of the CAA's enactment, including for instance, 
electrification technologies.\479\ The innumerable technologies on 
which EPA's standards have been premised, or which EPA has otherwise 
incentivized, are presented in summary form later in this section and 
then in full in Chapter 3 of the RIA. This approach is inherent in the 
statutory text of section 202(a)(2): in requiring EPA to consider lead 
time for the development and application of technology before standards 
may take effect, Congress directed EPA to consider future technological 
advancements and innovation rather than limiting the Agency to only 
those technologies in place at the time the statute was enacted. The 
text of section 202(a)(3)(A) is even more clear on this point: EPA must 
establish standards that ``reflect the greatest degree of emission 
reduction achievable through the application of technology which the 
Administrator determines will be available for the model year to which 
such standards apply. . . .'' In other words, the Administrator is 
mandated to make a predictive judgment about technology availability in 
a future year, and then establish the standards based on such 
technologies. In the report accompanying the Senate bill for the 1965 
legislation establishing section 202(a), the Senate Committee wrote 
that it ``believes that exact standards need not be written 
legislatively but that the Secretary should adjust to changing 
technology.'' \480\ This forward-looking regulatory approach keeps pace 
with real-world technological developments that have the potential to 
reduce emissions and comports with Congressional intent and 
precedent.\481\
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    \479\ For example, when EPA issued its Tier 2 standards for 
light-duty and medium-duty vehicles in 2000, the Agency established 
``bins'' of standards in addition to a fleet average requirement. 65 
FR 6698, 6734-35, February 10, 2000. One ``bin'' was used to certify 
electric vehicles that have zero criteria pollutant emissions. Id. 
Under the Tier 2 program, a manufacturer could designate which bins 
their different models fit into, and the weighted average across 
bins was required to meet the fleet average standard. Id. at 6746.
    \480\ S. Rep. No. 89-192, at 4 (1965). Likewise, the report 
accompanying the House bill stated that ``the objective of achieving 
fully effective control of motor vehicle pollution will not be 
accomplished overnight. . . . [T]he techniques now available provide 
only a partial reduction in motor vehicle emissions. For the future, 
better methods of control will clearly be needed; the committee 
expects that [the agency] will accelerate its efforts in this 
area.'' H.R. Rep. No. 89-899, at 4 (1965).
    \481\ See also NRDC, 655 F.2d at 328 (EPA is ``to project future 
advances in pollution control capability. It was `expected to press 
for the development and application of improved technology rather 
than be limited by that which exists today.' '' To do otherwise 
would thwart Congressional intent and leave EPA ``unable to set 
pollutant levels until the necessary technology is already 
available.'').
---------------------------------------------------------------------------

    For all these reasons, EPA's consideration of electrified 
technologies and technologies that prevent vehicle tailpipe emissions 
in establishing the standards is unambiguously permitted by the Act; 
indeed, given the Act's purpose to use technology to prevent air 
pollution from motor vehicles, and the agency's factual finding based 
on voluminous record evidence that BEV technologies are the most 
effective and available technologies for doing so, the Agency's 
consideration of such technologies is compelled by the statute. Because 
the statutory text in its context is plain, we could end our 
interpretive inquiry here. However, we have taken the additional step 
of reviewing the extensive statutory and legislative history regarding 
the kinds of technology, including electric vehicle technology, that 
Congress expected EPA to consider in exercising its section 202(a) 
authority. Over six decades of Congressional enactments and statements 
provide overwhelming support for EPA's consideration of electrified 
technologies and technologies that prevent vehicle

[[Page 27894]]

tailpipe emissions in establishing the final standards.
    As explained, section 202 does not specify or expect any particular 
type of motor vehicle propulsion system to remain prevalent, and it was 
clear to Congress as early as the 1960s that ICE vehicles might be 
inadequate to achieve the country's air quality goals. In 1967, the 
Senate Committees on Commerce and Public Works held five days of 
hearings on ``electric vehicles and other alternatives to the internal 
combustion engine,'' which Chairman Magnuson opened by saying ``The 
electric [car] will help alleviate air pollution and urban congestion. 
The consumer will benefit from instant starting, reduced maintenance, 
long life, and the economy of electricity as a fuel. . . . The electric 
car does not mean a new way of life, but rather it is a new technology 
to help solve the new problems of our age.'' \482\ In a 1970 message to 
Congress seeking a stronger CAA, President Nixon stated he was 
initiating a program to develop ``an unconventionally powered, 
virtually pollution free automobile'' because of the possibility that 
``the sheer number of cars in densely populated areas will begin 
outrunning the technological limits of our capacity to reduce pollution 
from the internal combustion engine.'' \483\
---------------------------------------------------------------------------

    \482\ Electric Vehicles and Other Alternatives to the Internal 
Combustion Engine: Joint Hearings before the Comm. On Commerce and 
the Subcomm. On Air and Water Pollution of the Comm. On Pub. Works, 
90th Cong. (1967).
    \483\ Richard Nixon, Special Message to the Congress on 
Environmental Quality (Feb. 10, 1970), https://www.presidency.ucsb.edu/documents/special-message-the-congress-environmental-quality.
---------------------------------------------------------------------------

    Since the earliest days of the CAA, Congress has also emphasized 
that the goal of section 202 is to address air quality hazards from 
motor vehicles, not to simply reduce emissions from internal combustion 
engines to the extent feasible. In the Senate Report accompanying the 
1970 CAA Amendments, Congress made clear EPA ``is expected to press for 
the development and application of improved technology rather than be 
limited by that which exists'' and identified several 
``unconventional'' technologies that could successfully meet air 
quality-based emissions targets for motor vehicles.\484\ In the 1970 
amendments, Congress further demonstrated its recognition that 
developing new technology to ensure that pollution control keeps pace 
with economic development is not merely a matter of refining the ICE, 
but requires considering new types of motor vehicle propulsion.\485\ 
Congress provided EPA with authority to fund the development of ``low 
emission alternatives to the present internal combustion engine'' as 
well as a program to encourage Federal purchases of ``low-emission 
vehicles.'' See CAA section 104(a)(2) (previously codified as CAA 
section 212).\486\ As discussed further in RTC section 2.3, Congress 
also adopted section 202(e) expressly to grant the Administrator 
discretion under certain conditions regarding the certification of 
vehicles and engines based on ``new power sources or propulsion 
system[s],'' that is to say, power sources and propulsion systems 
beyond the existing internal combustion engine and fuels available at 
the time of the statute's enactment. As the D.C. Circuit stated in 
1975, ``We may also note that it is the belief of many experts--both in 
and out of the automobile industry--that air pollution cannot be 
effectively checked until the industry finds a substitute for the 
conventional automotive power plant--the reciprocating internal 
combustion (i.e., `piston') engine. . . . It is clear from the 
legislative history that Congress expected the Clean Air Amendments to 
force the industry to broaden the scope of its research--to study new 
types of engines and new control systems.'' \487\
---------------------------------------------------------------------------

    \484\ S. Rep. No. 91-1196, at 24-27 (1970).
    \485\ In the lead up to enactment of the CAA of 1970, Senator 
Edmund Muskie, Chair of the Subcommittee on Environmental Pollution 
of the Committee on Public Works (now the Committee on Environment 
and Public Works), stated that ``[t]he urgency of the problems 
required that the industry consider, not only the improvement of 
existing technology, but also alternatives to the internal 
combustion engine and new forms of transportation.'' 116 Cong. Rec. 
42382 (Dec. 18, 1970).
    \486\ A Senate report on the Federal Low-Emission Vehicle 
Procurement Act of 1970, the standalone legislation that ultimately 
became the low-emission vehicle procurement provisions of the 1970 
CAA, stated that the purpose of the bill was to direct federal 
procurement to ``stimulate the development, production and 
distribution of motor vehicle propulsion systems which emit few or 
no pollutants'' and explained that ``the best long range method of 
solving the vehicular air pollution problem is to substitute for 
present propulsion systems a new system which, during its life, 
produces few pollutants and performs as well or better than the 
present powerplant.'' S. Rep. No. 91-745, at 1, 4 (Mar. 20, 1970).
    \487\ Int'l Harvester Co. v. Ruckelshaus, 478 F.2d 615, 634-35 
(D.C. Cir. 1975).
---------------------------------------------------------------------------

    Moreover, Congress believed that the motor vehicle emissions 
program could achieve enormous emissions reductions, not merely modest 
ones, through the application and development of ever-improving 
emissions control technologies. For example, the Clean Air Act of 1970 
required a 90 percent reduction in emissions, which was to be achieved 
with less lead time than this rule provides for its final 
standards.\488\ Ultimately, although the industry was able to meet the 
standard using ICE technologies, the standard drove development of 
entirely new engine and emission control technologies such as exhaust 
gas recirculation and catalytic converters, which in turn required a 
switch to unleaded fuel and the development of massive new 
infrastructure (not present at the time the standard was finalized) to 
support the distribution of this fuel.\489\
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    \488\ See Clean Air Act Amendments of 1970, Public Law 91-604, 
at sec. 6, 84 Stat. 1676, 1690 (Dec. 31, 1970) (amending section 202 
of the CAA and directing EPA to issue regulations to reduce carbon 
monoxide and hydrocarbons from LD vehicles and engines by 90 percent 
in MY 1975 compared to MY 1970 and directing EPA to issue 
regulations to reduce NOX emissions from LD vehicles and 
engines by 90 percent in MY 1976 when compared with MY 1971).
    \489\ Since the new vehicle technology required on all model 
year 1975-76 vehicles would be poisoned by the lead in the existing 
gasoline, it required the rollout of an entirely new fuel to the 
marketplace with new refining technology needed to produce it. It 
was not possible for refiners to make the change that quickly to all 
of the nation's gasoline production, so this in turn required 
installation of a new parallel fuel distribution infrastructure to 
distribute and new retail infrastructure to dispense unleaded 
gasoline to the customers with MY1975 and later vehicles while still 
supplying leaded gasoline to the existing fleet. In order to ensure 
availability of unleaded gasoline across the nation, all refueling 
stations with sales greater than 200,000 gallons per year were 
required to dispense the new unleaded gasoline. In 1974, less than 
10 percent of all gasoline sold was unleaded gasoline, but by 1980 
nearly 50 percent was unleaded. See generally Richard G. Newell and 
Kristian Rogers, The U.S. Experience with the Phasedown of Lead in 
Gasoline, Resources for the Future (June 2003), available at https://web.mit.edu/ckolstad/www/Newell.pdf.
---------------------------------------------------------------------------

    Since that time, Congress has continued to emphasize the importance 
of technology development to achieving the goals of the CAA.\490\ In 
the 1990 amendments, Congress determined that evolving technologies 
could support further order of magnitude reductions in emissions. For 
example, the statutory Tier I light-duty standards required (on top of 
the existing standards) a further 30 percent reduction in nonmethane 
hydrocarbons, 60 percent reduction in NOX, and 80 percent 
reduction in PM for diesel vehicles. The Tier 2 light-duty standards in 
turn required passenger vehicles to be 77 to 95 percent cleaner.\491\ 
Congress instituted a clean fuel vehicles program to promote further 
progress in emissions reductions, which also applied to motor vehicles 
as

[[Page 27895]]

defined under section 216, see CAA section 241(1), and explicitly 
defined motor vehicles qualifying under the program as including 
vehicles running on an alternative fuel or ``power source (including 
electricity),'' CAA section 241(2).\492\
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    \490\ For example, in the lead up to the CAA Amendments of 1990, 
the House Committee on Energy and Commerce reported that ``[t]he 
Committee wants to encourage a broad range of vehicles using 
electricity, improved gasoline, natural gas, alcohols, clean diesel 
fuel, propane, and other fuels.'' H. Rep. No. 101-490, at 283 (May 
17, 1990).
    \491\ See 65 FR 28 (Feb. 10, 2000).
    \492\ See also CAA section 246(f)(4) (under the clean fuels 
program, directing the Administrator to issue standards ``for Ultra-
Low Emission Vehicles (`ULEV's) and Zero Emissions Vehicles 
(`ZEV's)'' and to conform certain such standards ``as closely as 
possible to standards which are established by the State of 
California for ULEV and ZEV vehicles in the same class.'').
---------------------------------------------------------------------------

    Congress also directed EPA to phase-in certain section 202(a) 
standards in CAA section 202(g)-(j).\493\ In doing so, Congress 
recognized that certain technologies, while extremely potent at 
achieving lower emissions, would be difficult for the entire industry 
to adopt all at once. Rather, it would be more appropriate for the 
industry to gradually implement the standards over a longer period of 
time. This is directly analogous to EPA's assessment in this final 
rule, which finds that industry will gradually shift to more effective 
emissions control technologies over a period of time. Generally 
speaking, phase-ins, fleet averages, and ABT all are means of 
addressing the question, recognized by Congress in section 202, of how 
to achieve emissions reductions to protect public health when it may be 
difficult to implement a stringency increase across the entire fleet 
simultaneously.
---------------------------------------------------------------------------

    \493\ CAA section 202(g) required a phase in for LD trucks up to 
6,000 lbs GVWR and LD vehicles beginning with MY 1994 for emissions 
of nonmethane hydrocarbons (NMHC), carbon monoxide (CO), nitrogen 
oxides (NOX), and particular matter (PM). These standards 
phased in over several years. Similarly, CAA section 202(h) required 
standards to be phased in beginning with MY 1995 for LD trucks of 
more than 6,000 lbs GVWR for the same pollutants. CAA section 202(i) 
required EPA to study whether further emission reductions should be 
required with respect to MYs after January 1, 2003 for certain 
vehicles. CAA section 202(j) required EPA to promulgate regulations 
applicable to CO emissions from LD vehicles and LD trucks when 
operated under ``cold start'' conditions i.e., when the vehicle is 
operated at 20 degrees Fahrenheit. Congress directed EPA to phase in 
these regulations beginning with MY 1994 under Phase I, and to study 
the need for further reductions of CO and the maximum reductions 
achievable for MY 2001 and later LD vehicles and LD trucks when 
operated in cold start conditions. In addition, Congress specified 
that any ``revision under this subchapter may provide for a phase-in 
of the standard.'' CAA 202(b)(1)(C).
---------------------------------------------------------------------------

    Similar to EPA's ABT program, these statutory phase-in provisions 
also evaluated compliance with respect to a manufacturers' fleet of 
vehicles over the model year. More specifically, CAA section 202(g)-(j) 
each required a specified percentage of a manufacturer's fleet to meet 
a specified standard for each model year (e.g., 40 percent of a 
manufacturer's sales volume must meet certain standards by MY 1994). 
This made the level of a manufacturer's production over a model year a 
core element of the standard. In other words, the form of the standard 
mandated by Congress in these sections recognized that pre-production 
certification would be based on a projection of production for the 
upcoming model year, with actual compliance with the required 
percentages not demonstrated until after the end of the model year. 
Compliance was evaluated not only with respect to individual vehicles, 
but with respect to the fleet as a whole. EPA's ABT provisions use this 
same approach, adopting a similar, flexible form, that also makes the 
level of a manufacturer's production a core element of the standard and 
evaluates compliance at the fleet level, in addition to at the 
individual vehicle level.
    In enacting the Energy Independence and Security Act of 2007, 
Congress also recognized the possibility of fleet-average standards. 
The statute barred Federal agencies from acquiring ``a light duty motor 
vehicle or medium duty passenger vehicle that is not a low greenhouse 
gas emitting vehicle.'' \494\ It directed the Administrator to 
promulgate guidance on such ``low greenhouse gas emitting vehicles,'' 
but explicitly prohibited vehicles from so qualifying ``if the vehicle 
emits greenhouse gases at a higher rate than such standards allow for 
the manufacturer's fleet average grams per mile of carbon dioxide-
equivalent emissions for that class of vehicle, taking into account any 
emissions allowances and adjustment factors such standards provide.'' 
\495\ Congress thus explicitly contemplated the possibility of motor 
vehicle GHG standards with a fleet average form.\496\
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    \494\ 42 U.S.C. 13212(f)(2)(A).
    \495\ 42 U.S.C. 13212(f)(3)(C) (emphasis added).
    \496\ 42 U.S.C. 13212 does not specifically refer back to 
section 202(a). However, we think it is plain that Congress intended 
for EPA in implementing section 13212 to consider relevant CAA 
section 202(a) standards as well as standards issued by the State of 
California. See 42 U.S.C. 13212(f)(3)(B) (``In identifying vehicles 
under subparagraph (A), the Administrator shall take into account 
the most stringent standards for vehicle greenhouse gas emissions 
applicable to and enforceable against motor vehicle manufacturers 
for vehicles sold anywhere in the United States.''). As explained in 
the text, EPA has historically set fleet average standards under CAA 
section 202(a) for certain emissions from motor vehicles. Under 
section 209(b) of the Clean Air Act, EPA may also authorize the 
State of California to adopt and enforce its own motor vehicle 
emissions standards subject the statutory criteria. California has 
also adopted certain fleet average motor vehicle emissions 
standards. No other Federal agency or State government has authority 
to establish emissions standards for new motor vehicles, although 
certain States may choose to adopt standards identical to 
California's pursuant to CAA section 177.
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    The recently-enacted IRA \497\ demonstrates Congress's continued 
resolve to drive down emissions from motor vehicles through the 
application of the entire range of available technologies, and 
specifically highlights the importance of ZEV technologies. The IRA 
``reinforces the longstanding authority and responsibility of [EPA] to 
regulate GHGs as air pollutants under the Clean Air Act,'' \498\ and 
``the IRA clearly and deliberately instructs EPA to use'' this 
authority by ``combin[ing] economic incentives to reduce climate 
pollution with regulatory drivers to spur greater reductions under 
EPA's CAA authorities.'' \499\ To assist with this, as described in 
sections I, III, and IV of the preamble, and RIA Chapter 2, the IRA 
provides a number of economic incentives for BEVs and the 
infrastructure necessary to support them, and specifically affirms 
Congress's previously articulated statements that non-ICE technologies 
will be a key component of achieving emissions reductions from the 
mobile source sector.\500\ The legislative history reflects that 
``Congress recognizes EPA's longstanding authority under CAA section 
202 to adopt standards that rely on zero emission technologies, and 
Congress expects that future EPA regulations will increasingly rely on 
and incentivize zero-emission vehicles as appropriate.'' \501\ These 
developments further confirm that the focus of CAA section 202 is on 
application of innovative technologies to reduce vehicular emissions, 
and not on the means by which vehicles are powered.
---------------------------------------------------------------------------

    \497\ Inflation Reduction Act, Public Law 117-169, 136 Stat. 
1818, (2022), available at https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf.
    \498\ 168 Cong. Rec. E868-02 (daily ed. Aug. 12, 2022) 
(statement of Rep. Pallone, Chairman of the House Energy and 
Commerce Committee).
    \499\ 168 Cong. Rec. E879-02, at 880 (daily ed. Aug. 26, 2022) 
(statement of Rep. Pallone).
    \500\ See Inflation Reduction Act, Public Law 117-169, at 
Sec. Sec.  13204, 13403, 13404, 13501, 13502, 50142-50145, 50151-
50153, 60101-60104, 70002 136 Stat. 1818, (2022), available at 
https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf.
    \501\ 168 Cong. Rec. E879-02, at 880 (daily ed. Aug. 26, 2022) 
(statement of Rep. Pallone).
---------------------------------------------------------------------------

    This statutory and legislative history, beginning with the 1960s 
and through the recently enacted IRA, demonstrate Congress's historical 
and contemporary commitment to reducing motor vehicle emissions through 
the application of increasingly advanced technologies. Consistent with 
Congress's intent and this legislative history, EPA's rulemakings have 
taken the same approach, basing standards on ever-

[[Page 27896]]

evolving technologies that have allowed for enormous emissions 
reductions. As required by the Act, EPA has consistently considered the 
lead time and costs of control technologies in determining whether and 
how they should be included in the technological packages for the 
standards, along with other factors that affect the real-world adoption 
or impacts of the technologies as appropriate. Over time, EPA's motor 
vehicle emission standards have been based on and stimulated the 
development of a broad set of advanced technologies--such as electronic 
fuel injection systems, gasoline catalytic convertors, diesel 
particulate filters, diesel NOX reduction catalysts, 
gasoline direct injection fuel systems, and advanced transmission 
technologies--which have been the building blocks of vehicle designs 
and have yielded not only lower pollutant emissions, but improved 
vehicle performance, reliability, and durability. Many of these 
technologies did not exist when Congress first granted EPA's section 
202(a) authority in 1965, but these technologies nonetheless have been 
successfully adopted and reduced emissions by multiple orders of 
magnitude.
    As previously discussed, beginning in 2010, EPA has set vehicle and 
engine standards under section 202(a)(1)-(2) for GHGs.\502\ 
Manufacturers have responded to these standards over the past decade by 
continuing to develop and deploy a wide range of technologies, 
including more efficient engine designs, transmissions, aerodynamics, 
tires, and air conditioning systems that contribute to lower GHG 
emissions, as well as vehicles based on methods of propulsion beyond 
diesel- and gasoline-fueled ICE vehicles, including ICE running on 
alternative fuels, as well as various levels of electrified vehicle 
technologies from mild hybrids, to strong hybrids, and up through 
battery electric vehicles and fuel-cell vehicles.
---------------------------------------------------------------------------

    \502\ 75 FR 25324, May 7, 2010; see also 76 FR 57106, September 
15, 2011 (establishing first ever GHG standards for heavy-duty 
vehicles).
---------------------------------------------------------------------------

    EPA has long established performance-based emissions standards that 
anticipate the use of new and emerging technologies. In each of EPA's 
earlier GHG rules, as in this rule, EPA specifically considered the 
availability of electrified technologies, including BEV 
technologies.\503\ In the 2010 LD GHG rule, EPA determined based on the 
record before it that BEVs should not be part of the technology 
packages to support the feasibility of the standards given that they 
were not expected to be sufficiently available during the model years 
for those rules, giving consideration to lead time and costs of 
compliance. Instead, recognizing the possible future use of those 
technologies and their potential to achieve very large emissions 
reductions, EPA incentivized their development and deployment through 
advanced technology credit multipliers, which give manufacturers 
additional ABT credits for producing such vehicles. In the 2012 rule 
which set standards for MYs 2017-2025 light-duty vehicles, EPA included 
BEV and PHEV technologies in its analysis, and projected that by MY 
2025 BEV penetrations would reach 2 percent.\504\ By the time of the 
2021 LD GHG rule, the increasing presence of PEVs in the market led EPA 
to judge that additional ABT credits for PEVs would no longer be 
warranted after MY 2024. Accordingly, EPA's technology pathway 
supporting the feasibility of the standards accounted for the 
increasing penetrations of such technologies, along with improved ICE 
technologies, in establishing the most protective LD GHG standards to 
date. In this rule, EPA continues to consider these technologies, and 
based on the updated record, finds that such technologies will be 
available at a reasonable cost during the timeframe for this rule, and 
therefore has included them in the technology packages to support the 
level of the standards under the modeled potential compliance pathway.
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    \503\ These include the 2010, 2012, 2020, and 2021 LD GHG rules, 
as well as the 2011 and 2016 HD GHG rules.
    \504\ EPA's projection turned out to be an underestimate, as 
PEVs comprised 7.5 percent of new vehicle sales in MY 2022 and sales 
are expected to continue to grow. See 2023 EPA Automotive Trends 
Report.
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    The above analysis of the statutory text, purpose and history, as 
well as EPA's history of implementing the statute, demonstrate that the 
agency must, or at a minimum may, appropriately consider available 
electrified technologies that completely prevent emissions in 
determining the final standards. In this rulemaking, EPA has done so. 
The agency has made the necessary predictive judgments as to potential 
technological developments that can support the feasibility of the 
final standards, and also as to the availability of supporting 
infrastructure and critical minerals necessary to support those 
technological developments, as applicable. In making these judgments, 
EPA has adhered to the long-standing approach established by the D.C. 
Circuit, identifying a reasonable sequence of future developments, 
noting potential difficulties, and explaining how they may be obviated 
within the lead time afforded for compliance. EPA has also consulted 
with other organizations with relevant expertise such as the 
Departments of Energy and Transportation, including through careful 
consideration of their reports and related analytic work reflected in 
the administrative record for this rulemaking.
    Although the standards are supported by the Administrator's 
predictive judgments regarding pollution control technologies and the 
modeled potential compliance pathway, we emphasize that the final 
standards are not a mandate for a specific type of technology. They do 
not legally or de facto require a manufacturer to follow a specific 
technological pathway to comply. Consistent with our historical 
practice, EPA is finalizing performance-based standards that provide 
compliance flexibility to manufacturers. While EPA projects that 
manufacturers may comply with the standards through the use of certain 
technologies, including a mix of ICE vehicles, advanced ICE, HEVs, 
PHEVs, and BEVs, manufacturers may select any technology or mix of 
technologies that would enable them to meet the final standards.
    These choices are real and valuable to manufacturers, as attested 
to by the historical record. The real-world results of our prior 
rulemakings make clear that industry sometimes chooses to comply with 
our standards in ways that the Agency did not anticipate, presumably 
because it is more cost-effective for them to do so. In other words, 
while EPA sets standards that are feasible based on our modeling of 
potential compliance pathways, manufacturers may find what they 
consider to be better pathways to meet the standards and may opt to 
comply by following those pathways instead.
    For example, in promulgating the 2010 LD GHG rule, EPA modeled a 
technology pathway for compliance with the MY 2016 standards. In 
actuality, manufacturers diverged from EPA's projections across a wide 
range of technologies, instead choosing their own technology pathways 
best suited for their fleets.505 506 For example, EPA 
projected greater penetration of dual-clutch transmissions than 
ultimately occurred in the MY 2016 fleet; by contrast, use of 6-speed 
automatic transmissions was twice what EPA had predicted. Both 
transmission

[[Page 27897]]

technologies represented substantial improvements over the existing 
transmission technologies, with the manufacturers choosing which 
specific technology was best suited for their products and customers. 
Looking specifically at electrification technologies, start-stop 
systems were projected at 45 percent and were used in 10 percent of 
vehicles, while strong hybrids were projected to be 6.5 percent of the 
MY 2016 fleet and were actually only 2 percent.\507\ Notwithstanding 
these differences between EPA's projections and actual manufacturer 
decisions, the industry as a whole was not only able to comply with the 
standards during the period of those standards (2012-2016), but to 
generate substantial additional credits for overcompliance.\508\
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    \505\ See EPA Memorandum to the docket for this rulemaking, 
``Comparison of EPA CO2 Reducing Technology Projections 
between 2010 Light-duty Vehicle Rulemaking and Actual Technology 
Production for Model Year 2016''.
    \506\ Similarly, in our 2001 final rule promulgating heavy-duty 
nitrogen oxide (NOX) and particulate matter (PM) 
standards, for example, we predicted that manufacturers would comply 
with the new nitrogen oxide (NOX) standards through the 
addition of NOX absorbers or ``traps.'' 66 FR 5002, 5036 
(Jan. 18, 2001) (``[T]he new NOX standard is projected to 
require the addition of a highly efficient NOX emission 
control system to diesel engines.''). We stated that we were not 
basing the feasibility of the standards on selective catalytic 
reduction (SCR) noting that SCR ``was first developed for stationary 
applications and is currently being refined for the transient 
operation found in mobile applications.'' Id. at 5053. However, 
industry's approach to complying with the 2001 standards ultimately 
included the use of SCR for diesel engines. We also projected that 
manufacturers would comply with the final PM standards through the 
addition of PM traps to diesel engines; however, industry was able 
to meet the PM standards without the use of PM traps or any other PM 
aftertreatment systems.
    \507\ Although in 2010, EPA overestimated technology 
penetrations for strong hybrids, in 2012, we underestimated 
technology penetrations for PEVs, projecting on 1 percent 
penetration by MY 2021, while actual sales exceeded 4 percent. 
Compare 2012 Rule RIA, table 3.5-22 with 2022 Automotive Trends 
Report, table 4.1.
    \508\ See 2022 Automotive Trends Report, Fig. ES-8 (industry 
generated credits each year from 2012-2015 and generated net credits 
for the years 2012-2016).
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    In support of the final standards, EPA has also performed 
additional modeling demonstrating that the standards can be met in 
multiple ways. As discussed in section IV.F-G of the final rule 
preamble and Chapter 2 of the RIA, while our modeled potential 
compliance pathway includes a mix of ICE, HEV, PHEV and BEV 
technologies, we also evaluated several examples of potential 
technology packages and potential compliance pathways. These include 
sensitivity analyses that account for the implementation of the 
Advanced Clean Car II program, lower and higher battery costs, faster 
and slower BEV acceptance, no credit trading, lower BEV production, and 
no additional BEV production beyond the No-Action case.\509\ Likewise, 
we have concluded based on the record that the final GHG, 
NMOG+NOX and PM standards can also be met solely with 
vehicles containing internal combustion engines.\510\ We conclude that 
per vehicle costs are also reasonable and lead time is sufficient for 
all of the sensitivity analyses, including those with higher cost 
impacts. Overall, the sensitivity analyses demonstrate that the final 
standards are achievable under a wide range of differing assumptions 
and lend additional support for the feasibility of the final standards, 
considering costs and lead time.
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    \509\ We stress, however, that these additional pathways are not 
necessary to justify this rulemaking; the statute requires EPA to 
demonstrate that the standards can be met by the development and 
application of technology, but it does not require the agency to 
identify multiple technological solutions to the pollution control 
problem before mandating more stringent standards. That EPA has done 
so in this rulemaking, identifying a wide array of technologies 
capable of further reducing emissions, only highlights the 
feasibility of the standards and the significant practical 
flexibilities manufacturers have to attain compliance. We observe 
that some past standards have been premised on the application of a 
single known technology at the time, such as the catalytic 
converter. See Int'l Harvester v. Ruckelshaus, 478 F.2d 615, 625 
(D.C. Cir. 1973) (in setting standards for light duty vehicles, the 
Court upheld EPA's reliance on a single kind of technology); see 
also 36 FR 12657 (1971) (promulgating regulations for light duty 
vehicles based on the catalytic converter).
    \510\ EPA notes that all of its compliance path modeling is 
based on an expectation that there will be at least some BEVs in the 
fleet, since BEVs are a cost-effective compliance strategy and 
represented over 9 percent of new light-duty vehicles sales in 2023. 
However, EPA has also assessed the technical feasibility of vehicles 
with ICE meeting both the GHG and criteria pollutant standards and 
has concluded that across the range of vehicle footprints it would 
be feasible for manufacturers to produce vehicles with internal 
combustion engines (e.g., PHEVs) that meet their CO2 
footprint targets (see RIA Chapter 3.5.5) and criteria pollutant 
standards (see RIA Chapter 3.2).
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3. Response to Other Comments Raising Legal Issues
    In this section, EPA summarizes our response to certain other 
comments relating to our legal authority. These include three comments 
relating to our legal authority to consider certain technologies 
discussed in section III.B.1 of this preamble above: whether this rule 
implicates the major questions doctrine, whether EPA has authority for 
its Averaging, Banking, and Trading (ABT) program, and whether EPA 
erred in considering BEVs as part of the same class as other vehicles 
in setting the standards. We separately discuss our legal authority and 
rationale for battery durability and warranty in section III.G.2-3 of 
the preamble.
    Major questions doctrine. While many commenters recognized EPA's 
legal authority to adopt the final standards, certain commenters 
claimed that this rule asserts a novel and transformative exercise of 
regulatory power that implicates the major questions doctrine and 
exceeds EPA's legal authority. These arguments were intertwined with 
arguments challenging EPA's consideration of electrified technologies. 
Some commenters claimed that the agency's decision to do so and the 
resulting standards would mandate a large increase in electric 
vehicles. According to these commenters, this in turn would cause 
indirect impacts, including relating to issues allegedly outside EPA's 
traditional areas of expertise, such as to the petroleum refining 
industry, electricity transmission and distribution infrastructure, 
grid reliability, and U.S. national security.
    EPA does not agree that this rule implicates the major questions 
doctrine, as that doctrine has been elucidated by the Supreme Court in 
West Virginia v. EPA and related cases.\511\ The Court has made clear 
that the doctrine is reserved for extraordinary cases involving 
assertions of highly consequential power beyond what Congress could 
reasonably be understood to have granted. This is not such an 
extraordinary case in which Congressional intent is unclear. Here, EPA 
is acting within the heartland of its statutory authority and 
faithfully implementing Congress's precise direction and intent.
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    \511\ W. Virginia v. Env't Prot. Agency, 142 S. Ct. 2587, 2605, 
2610 (2022).
---------------------------------------------------------------------------

    First, as we explain in section III.B.2 of the preamble, the 
statute provides clear Congressional authorization for EPA to consider 
updated data on pollution control technologies--including BEV 
technologies--and to determine the emission standards accordingly. In 
section 202(a), Congress made the major policy decision to regulate air 
pollution from motor vehicles. Congress also prescribed that EPA should 
accomplish this mandate through a technology-based approach, and it 
plainly entrusted to the Administrator's judgment the evaluation of 
pollution control technologies that are or will become available given 
the available lead-time and the consequent determination of the 
emission standards. In the final rule, the Administrator determined 
that a wide variety of technologies exist to further control GHGs from 
light- and medium-duty vehicles--including various ICE, hybrid, PHEV, 
and BEV technologies--and that such technologies could be applied at a 
reasonable cost to achieve significant reductions of GHG emissions

[[Page 27898]]

that contribute to the ongoing climate crisis. These subsidiary 
technical and policy judgments were clearly within the Administrator's 
delegated authority.
    Second, the agency is not invoking a novel authority. As described 
above, EPA has been regulating emissions from motor vehicles based upon 
the availability of feasible technologies to reduce vehicle emissions 
for over five decades. EPA has regulated GHG emissions since 2010 and 
criteria pollutant emissions since the 1970s. Our rules have 
consistently considered available technology to reduce or prevent 
emissions of the relevant pollutant, including technologies to reduce 
or completely prevent GHGs. Our consideration of zero-emitting 
technologies specifically has a long pedigree, beginning with the 1998 
National Low Emission Vehicle (NLEV) program. The administrative record 
here indicates the industry will likely choose to deploy an increasing 
number of vehicles with emissions control technologies such as PHEV and 
BEV, in light of new technological advances, the IRA and other 
government programs, as well as this rule. That the industry will 
continue to apply the latest technologies to reduce pollution is no 
different than how the industry has responded to EPA's rules for half a 
century. The agency's factual findings and resulting determination of 
the degree of stringency do not represent the exercise of a newfound 
power. Iterative increases to the stringency of an existing program 
based on new factual developments hardly reflect an unprecedented 
expansion of agency authority.
    Not only does this rule not invoke any new authority, it also falls 
well within EPA's traditionally delegated powers. Through five decades 
of regulating vehicle emissions under the CAA, EPA has developed great 
expertise in the regulation of motor vehicle emissions. The agency's 
expertise is reflected in the comprehensive analyses present in the 
administrative record. The courts have recognized the agency's 
authority in this area.\512\ The agency's analysis includes our 
assessment of available pollution control technologies; the design and 
application of a quantitative model for assessing feasible rates of 
technology adoption; the economic costs of developing, applying, and 
using pollution control technologies; the context for deploying such 
technologies (e.g., the supply of raw materials and components, and the 
availability of supporting charging and refueling infrastructure); the 
impacts of using pollution control technologies on emissions, and 
consequent impacts on public health, welfare, and the economy. While 
each rule necessarily deals with different facts, such as advances in 
new pollution control technologies at the time of that rule, the above 
factors are among the kinds of considerations that EPA regularly 
evaluates in its motor vehicle rules, including all our prior GHG 
rules.
---------------------------------------------------------------------------

    \512\ See, e.g., Massachusetts v. E.P.A., 549 U.S. 497, 532 
(2007) (``Because greenhouse gases fit well within the Clean Air 
Act's capacious definition of ``air pollutant,'' we hold that EPA 
has the statutory authority to regulate the emission of such gases 
from new motor vehicles.'').
---------------------------------------------------------------------------

    Third, this rule does not involve decisions of vast economic and 
political importance exceeding EPA's delegated authority. To begin 
with, commenters err in characterizing this rule as a ban on gasoline 
engines or a zero-emission vehicle mandate. That is false as a legal 
matter and a practical matter. As a legal matter, this rule does not 
mandate that any manufacturer use any specific technology to meet the 
standards in this rule; nor does the rule ban gasoline engines. And as 
a practical matter, as explained in section IV.F-G of the preamble and 
Chapter 2 of the RIA, manufacturers can adopt a wide array of 
technologies, including various ICE, HEV, PHEV, and BEV technologies, 
to comply with this rule.
    Specifically, EPA has concluded that the standards could be met by 
additional PHEVs and has identified several additional compliance 
pathways, with a wide range of BEVs, that can be achieved in the lead-
time provided and at a reasonable cost. In all of these pathways, 
manufacturers continue to produce gasoline engine vehicles. Indeed, 
EPA's central case modeling shows that over 84 percent of the on-road 
fleet will still use gasoline or diesel in 2032, and 58 percent will in 
2055. Moreover, the adoption of additional control technologies, 
including BEVs, are complementary to what the manufacturers are already 
doing regardless of this rule. As explained under section I.A.2 of the 
preamble, the production of new PEVs is growing steadily, and even 
without this rule, is expected to reach 11.8 percent of U.S. light-duty 
vehicle production for MY 2023,\513\ up from 6.7 percent in MY 2022, 
4.4 percent in MY 2021 and 2.2 percent in MY 2020--this reflects a 
growth of over 400 percent in three years. On a sales basis, U.S. new 
PEV sales in calendar year 2023 alone surpassed 1.4 
million,514 515 an increase of more than 50 percent over the 
807,000 sales that occurred in 2022.\516\ Looking to the future under 
the No Action case, we project that by 2030, 42 percent of new vehicles 
will be PEVs, while mid-range third-party projections we have reviewed 
range from 48 to 58 percent in 2030.
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    \513\ At time of this publication, MY 2023 production data is 
not yet final. Manufacturers will be confirming production volumes 
delivered for sale in MY 2023 later in calendar year 2024.
    \514\ Argonne National Laboratory, ``Light Duty Electric Drive 
Vehicles Monthly Sales Updates,'' January 30, 2024. Accessed on 
March 7, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates.
    \515\ Department of Energy, ``FOTW #1327, January 29, 2024: 
Annual New Light-Duty EV Sales Topped 1 Million for the First Time 
in 2023,'' January 29, 2024. Accessed on February 2, 2024 at https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million.
    \516\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as 
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
---------------------------------------------------------------------------

    Manufacturers have made significant commitments regarding increased 
production of PEVs as well as supporting announcements that the vast 
majority of their research and development funding will go towards 
PEVs, not ICE. These efforts are spurred by a wide range of factors, 
including the IRA, decreasing costs of producing electric vehicles and 
their batteries, and more protective GHG standards and EV requirements 
established by other jurisdictions. To the extent that commenters are 
concerned about vehicle electrification, that phenomenon is already 
occurring and accelerating regardless of this final rule. As such, the

[[Page 27899]]

absence of this rule is not a world with ICE vehicles being produced at 
the same high rates as in prior years; rather, it is a world with 
rapidly declining production of ICE vehicles and increasing production 
of PEVs. The final rule builds on these industry trends. It will likely 
cause some manufacturers to adopt control technologies more rapidly 
than they otherwise would (particularly in the later model years 
covered by this rule), and this will result in significant pollution 
reductions and large public health and welfare benefits. However, that 
is the entire point of section 202(a); that the regulated industry will 
deploy additional technology to comply with EPA's standards and further 
Congress's purposes does not mean the agency has exceeded its delegated 
authority.
    The regulatory burdens of this rule are also reasonable and not 
different in kind from prior exercises of EPA's authority under section 
202. The regulated community of vehicle manufacturers in this rule was 
also regulated by earlier rules. In terms of costs of compliance for 
regulated entities, the average costs per-vehicle in the final year of 
the phase-in ($2,100 in MY 2032) fall within the range of prior rules, 
for example less than that of the 2012 rule ($2,400 in MY 2025).\517\ 
The per-vehicle costs, moreover, are small relative to what Congress 
itself accepted in enacting section 202.\518\ We acknowledge that the 
total costs of compliance for this rule are greater than for prior 
rules, for example slightly over 10% higher than the costs for the 2012 
rule after adjusting for inflation ($760 billion versus $689 billion in 
2022$ (3% PV)). The moderately higher compliance costs of this rule 
hardly amount to an unprecedented and transformative change, but merely 
reflect an ordinary fluctuation in regulatory impacts in response to 
changed circumstances. The rule also does not create any other 
excessive regulatory burdens on regulated entities; for example, the 
rule does not require any manufacturer to shut down, or to curtail or 
delay production.
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    \517\ We provide detailed numerical comparisons of costs and 
other metrics between this rule and prior rules in RTC Section 2.3.
    \518\ See Motor & Equip. Mfrs. Ass'n, Inc. v. EPA, 627 F.2d 
1095, 1118 (D.C. Cir. 1979) (``Congress wanted to avoid undue 
economic disruption in the automotive manufacturing industry and 
also sought to avoid doubling or tripling the cost of motor vehicles 
to purchasers.'').
---------------------------------------------------------------------------

    While section 202 does not require EPA to consider consumer 
impacts, the agency recognizes that consumer acceptance of new 
pollution control technologies can affect the adoption of such 
technologies. As such, EPA carefully evaluated these issues. In the 
final rule, EPA considered the upfront costs associated with purchasing 
cleaner vehicles as well as the costs of operating such vehicles over 
their lifetime. EPA found that lower operating costs for vehicles 
substantially outweigh the increased technology costs of meeting the 
standards over the life of the vehicles. EPA also carefully designed 
the final rule to avoid any other kinds of disruptions to purchasers. 
For example, we recognize that light- and medium-duty vehicles 
represent a diverse array of vehicles and use cases, and we carefully 
tailored the standards to ensure that purchasers could obtain the kinds 
of vehicles they need. We also recognized that vehicles require 
supporting infrastructure (e.g., charging infrastructure) to operate, 
and we accounted for sufficient lead-time for the development of that 
infrastructure. We also identified numerous industry standards and 
safety protocols to ensure the safety of vehicles, including BEVs.
    We acknowledge the rule may have other impacts beyond those on 
regulated entities and their customers (for purposes of discussion 
here, referred to as ``indirect impacts''). But indirect impacts are 
inherent in section 202 rulemakings, including past rulemakings going 
back half a century. As the D.C. Circuit has observed, in the specific 
context of EPA's Clean Air Act Title II authority to regulate motor 
vehicles, ``[e]very effort at pollution control exacts social costs. 
Congress . . . made the decision to accept those costs.'' \519\ In 
EPA's long experience of promulgating environmental regulations, the 
presence of indirect impacts does not reflect the extraordinary nature 
of agency action, but rather the ordinary state of the highly 
interconnected and global supply chain for motor vehicles. In any 
event, EPA has considerable expertise in evaluating the broader social 
impacts of the agency's regulations, for example on public health and 
welfare, safety, energy, employment, and national security. Congress 
has recognized the agency's expertise in many of these areas in the 
Clean Air Act, including in section 202(a) itself,\520\ and EPA has 
regularly considered such indirect impacts in our prior rules.
---------------------------------------------------------------------------

    \519\ Motor & Equip. Mfrs. Ass'n, Inc. v. EPA, 627 F.2d 1095, 
1118 (D.C. Cir. 1979); see also id. (``There is no indication that 
Congress intended section 202's cost of compliance consideration to 
embody social costs of the type petitioners advance,'' and holding 
that the statute does not require EPA to consider antitrust 
concerns); Coal. for Responsible Regulation Inc. v. EPA, 684 F.3d 
102, 128 (D.C. Cir. 2012) (holding that the statute ``does not 
mandate consideration of costs to other entities not directly 
subject to the proposed standards''); Massachusetts v. EPA, 549 U.S. 
497, 534 (2007) (impacts on ``foreign affairs'' are not sufficient 
reason for EPA to decline making the endangerment finding under 
section 202(a)(1)).
    \520\ See, e.g., CAA section 202(a)(1) (requiring EPA 
Administrator to promulgate standards for emissions from motor 
vehicles ``which in his judgment cause, or contribute to, air 
pollution which may reasonably be anticipated to endanger public 
health or welfare''), 202(a)(3)(A) (requiring the agency to 
promulgate certain motor vehicle emission standards ``giving 
appropriate consideration to cost, energy, and safety factors 
associated with the application of such technology''), 203(b)(1) 
(authorizing the Administrator to ``exempt any new motor vehicle or 
new motor vehicle engine'' from certain statutory requirements 
``upon such terms and conditions as he may find necessary . . . for 
reasons of national security''), 312(a) (directing EPA to conduct a 
``comprehensive analysis of the impact of this chapter on the public 
health, economy, and environment of the United States'').
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    EPA carefully analyzed indirect impacts and coordinated with 
numerous Federal and other partners with relevant expertise, as 
described in sections III.I-J of the preamble.\521\ The consideration 
of many indirect impacts is included in our assessment of the rule's 
costs and benefits. We estimate annualized net benefits of $110 billion 
through the year 2055 when assessed at a 2 percent discount rate 
(2022$). The net benefits are not different in kind from prior rules; 
they are also a small fraction when compared to the size of the 
regulated industry itself, which grossed $1.21 trillion in 2022 and is 
rapidly

[[Page 27900]]

expanding,\522\ and a tiny fraction of the size of the U.S. 
economy.\523\
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    \521\ For example, we consulted with the following Federal 
agencies and workgroups on their relevant areas of expertise: 
National Highway Traffic Safety Administration (NHTSA) at the 
Department of Transportation (DOT), Department of Energy (DOE) 
including several national laboratories (Argonne National Laboratory 
(ANL), National Renewable Energy Laboratory (NREL), and Oak Ridge 
National Laboratory (ORNL)), United States Geological Survey (USGS) 
at the Department of Interior (DOI), Joint Office of Energy and 
Transportation (JOET), Federal Energy Regulatory Commission (FERC), 
Department of Commerce (DOC), Department of Defense (DOD), 
Department of State, Federal Consortium for Advanced Batteries 
(FCAB), and Office of Management and Budget (OMB). We also consulted 
with State and regional agencies, and we engaged extensively with a 
diverse set of stakeholders, including vehicle manufacturers, labor 
unions, technology suppliers, dealers, utilities, charging 
providers, environmental justice organizations, environmental 
organizations, public health experts, tribal governments, and other 
organizations.
    \522\ See Alliance for Automotive Innovation, Economic Insights 
Map, available at https://www.autosinnovate.org/resources/insights.
    \523\ U.S. GDP reached $25.46 trillion dollars in 2022. See 
Bureau of Economic Analysis, Gross Domestic Product, Fourth Quarter 
and Year 2022 (Second Estimate) (Feb. 23, 2023), available at 
https://www.bea.gov/news/2023/gross-domestic-product-fourth-quarter-and-year-2022-third-estimate-gdp-industry-and.
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    EPA also carefully evaluated many indirect impacts outside of the 
net benefits assessment and we identified no significant indirect harms 
and the potential for indirect benefits. Based on our analysis, EPA 
projects that this rulemaking will not cause significant adverse 
impacts on electric grid reliability or resource adequacy, that there 
will be sufficient battery production and critical minerals available 
to support increasing electric vehicle production including due to 
large increases in domestic battery and critical mineral production, 
that there will be sufficient lead-time to develop charging 
infrastructure, and that the rule will have significant positive 
national security benefits. We also identified significant initiatives 
by the Federal government (such as the BIL and IRA), State and local 
government, and private firms, that complement EPA's final rule, 
including initiatives to reduce the costs to purchase PEVs; support the 
development of domestic critical mineral, battery, and PEV production; 
improve the electric grid, and accelerate the establishment of charging 
infrastructure.
    These and other kinds of indirect impacts, moreover, are similar in 
kind to the impacts of past EPA motor vehicle rules. For example, this 
rule may reduce the demand for gasoline and diesel for light-duty and 
medium-duty vehicles domestically and affect the petroleum refining 
industry, but that has been the case for all of EPA's past GHG vehicle 
rules, which also reduced demand for liquid fuels through advances in 
ICE engine and vehicle technologies and corresponding fuel efficiency. 
And while production of PEVs does rely on a global supply chain, that 
is true for all motor vehicles, whose production rely extensively on 
imports, from raw materials like aluminum to components like 
semiconductors; addressing supply chain vulnerabilities is a key 
component of managing any significant manufacturing operation in 
today's global world. Further, while PEVs may require supporting 
infrastructure to operate, the same is true for ICE vehicles; indeed, 
supporting infrastructure for ICE vehicles has changed considerably 
over time in response to environmental regulation, for example, with 
the elimination of lead from gasoline, the provisioning of diesel 
exhaust fluid (DEF) at truck stops to support selective catalytic 
reduction (SCR) technologies, and the introduction of low sulfur diesel 
fuel to support diesel particulate filter (DPF) technologies.
    As with prior vehicle rules, many indirect impacts are positive: 
\524\ foremost, the significant benefits of mitigating air pollution 
including both criteria pollutants, which contribute to a range of 
adverse effects on human health including premature mortality, and 
GHGs, which contribute to climate change and pose catastrophic risks 
for human health and the environment, water supply and quality, storm 
surge and flooding, electricity infrastructure, agricultural 
disruptions and crop failures, human rights, international trade, and 
national security. Other positive indirect impacts include reduced 
dependence on foreign oil and increased energy security and 
independence; increased regulatory certainty for domestic production of 
pollution control technologies and their components (including PEVs, 
batteries, battery components, and critical minerals) and for the 
development of electric charging infrastructure, with attendant 
benefits for employment and US global competitiveness in these sectors; 
and increased use of electric charging and potential for vehicle-to-
grid technologies that can benefit electric grid reliability.
---------------------------------------------------------------------------

    \524\ As noted above, our use of ``indirect impacts'' in this 
section refers to impacts beyond those on regulated entities.
---------------------------------------------------------------------------

    Moreover, many of the indirect impacts find close analogs in the 
impacts Congress itself recognized and accepted. For instance, in 1970 
Congress debated whether to adopt standards that would depend heavily 
on platinum-based catalysts in light of a world-wide shortage of 
platinum,\525\ and in the leadup to the 1977 and 1990 Amendments, 
Congress recognized that increasing use of three-way catalysts to 
control motor vehicle pollution risked relying on foreign sources of 
the critical mineral rhodium.\526\ In each case, Congress nonetheless 
enacted statutory standards premised on this technology. Similarly, 
Congress recognized and accepted the potential for employment impacts 
caused by the Clean Air Act; it then chose to address such impacts not 
by limiting EPA's authority to promulgate motor vehicle rules, but by 
other measures, such as funding training and employment services for 
affected workers.\527\
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    \525\ See, e.g., Environmental Policy Division of the 
Congressional Research Service Volume 1, 93d Cong., 2d Sess., A 
Legislative History of the Clean Air Amendments of 1970 at 307 
(Comm. Print 1974) (Senator Griffin opposed the vehicle emissions 
standards because the vehicle that had been shown capable of meeting 
the standards used platinum-based catalytic converters and ``[a]side 
from the very high cost of the platinum in the exhaust system, the 
fact is that there is now a worldwide shortage of platinum and it is 
totally impractical to contemplate use in production line cars of 
large quantities of this precious material. . . .'').
    \526\ See, e.g., 136 Cong. Rec. 5102-04 (1990) and 123 Cong. 
Rec. 18173-74 (1977) (In debate over both the 1977 and 1990 
amendments to the Clean Air Act, some members of Congress supported 
relaxing NOX controls from motor vehicles due to concerns 
over foreign control of rhodium supplies); see also EPA, Tier 2 
Report to Congress, EPA420-R-98-008, July 1998, p. E-13 (describing 
concerns about potential shortages in palladium that could result 
from the Tier 2 standards).
    \527\ Public Law 101-549, at sec. 1101, amending the Job 
Training Partnership Act, 29 U.S.C. 1501 et seq. (since repealed).
---------------------------------------------------------------------------

    In sum, the final rule is a continuation of what the Administrator 
has been doing for over fifty years: evaluate updated data on pollution 
control technologies and set emissions standards accordingly. The rule 
maintains the fundamental regulatory structure of the existing program 
and iteratively strengthens the standards from its predecessor rules. 
The consequences of the rule are analogous to and not different in kind 
from those of prior rules. And while the rule is associated with 
indirect impacts, EPA comprehensively assessed such impacts and found 
that the final rule does not cause significant indirect harms as 
alleged by commenters and on balance creates net benefits for society. 
We further discuss our response to the major questions doctrine 
comments in section 2 of the RTC.
    ABT. Some commenters claim that the ABT program, or fleetwide 
averaging, or both, exceed EPA's statutory authority. As further 
explained in sections III.C.4 and III.D.2.v of the preamble, EPA has 
long employed fleetwide averaging and ABT compliance provisions, 
particularly with respect to the GHG and NMOG+NOX standards. 
In upholding the first HD final rule that included an averaging 
provision, the D.C. Circuit rejected a petitioner's challenge to EPA's 
statutory authority for averaging. NRDC v. Thomas, 805 F.2d 410, 425 
(D.C. Cir. 1986).\528\ In the subsequent 1990 amendments, Congress, 
noting NRDC v. Thomas and

[[Page 27901]]

EPA's ABT program, ``chose not to amend the Clean Air Act to 
specifically prohibit averaging, banking and trading authority.'' \529\ 
``The intention was to retain the status quo,'' i.e., EPA's existing 
authority to allow ABT and establish fleet average standards.\530\ 
Since then the agency has routinely used ABT in its motor vehicle 
programs, including in all of our motor vehicle GHG rules, and 
repeatedly considered the availability of ABT in determining the level 
of stringency of fleet average standards. Manufacturers have come to 
rely on ABT in developing their compliance plans. The agency did not 
reopen the ABT regulations in this rulemaking, with discrete exceptions 
in the criteria pollutant program corresponding to changes in the 
transition from Tier 3 to Tier 4 standards. Comments challenging the 
agency's authority for ABT regulations and use of fleet averaging are 
therefore beyond the scope of the rulemaking.
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    \528\ The court explained that ``[l]acking any clear 
congressional prohibition of averaging, the EPA's argument that 
averaging will allow manufacturers more flexibility in cost 
allocation while ensuring that a manufacturer's overall fleet still 
meets the emissions reduction standards makes sense.'' NRDC v. 
Thomas, 805 F.2d at 425.
    \529\ 136 Cong. Rec. 35,367, 1990 WL 1222469, at *1.
    \530\ 136 Cong. Rec. 35,367, 1990 WL 1222469 at *1; see also 136 
Cong. Rec. 36,713, 1990 WL 1222468 at *1.
---------------------------------------------------------------------------

    In any event, the CAA authorizes EPA to establish an ABT program 
and fleet average standards.\531\ Section 202(a)(1) directs EPA to set 
standards ``applicable to the emission of any air pollutant from any 
class or classes of new motor vehicles'' that cause or contribute to 
harmful air pollution. The term ``class or classes'' refers expressly 
to groups of vehicles, indicating that EPA may set standards based on 
the emissions performance of the class as a whole, which is precisely 
what ABT and fleet averaging enable. Moreover, as we detail in section 
III.C.4 of the preamble and section 2 of the RTC, consideration of ABT 
in standard setting relates directly to considerations of technical 
feasibility, cost, and lead time, the factors EPA is required to 
consider under CAA section 202(a)(2) in setting standards.\532\ For 
decades, EPA has found that considering ABT, particularly the averaging 
provisions, is consistent with the statute and affords regulated 
entities more flexibility in phasing in technologies in a way that is 
economically efficient, promotes the goals of the Act, supports vehicle 
redesign cycles, and responds to market fluctuations, allowing for 
successful deployment of new technologies and achieving emissions 
reductions at lower cost and with less lead time.\533\
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    \531\ As we explain in Section V.B of the preamble, EPA finds 
that the standards are feasible and appropriate even in the absence 
of trading. Thus, trading is an optional compliance flexibility for 
this rule and severable from the standards.
    \532\ While we specifically address section 202(a)(1)-(2) in 
this response regarding ABT and the following response regarding 
BEVs as part of the regulated class, the same arguments apply to 
standards under section 202(a)(3)(A)(i), which are also promulgated 
pursuant to section 202(a)(1), address standards for ``classes'' (or 
``categories'') of vehicles and require EPA to consider feasibility, 
costs, and lead-time.
    \533\ Beyond the statute's general provisions regarding cost and 
lead time, Congress has also repeatedly endorsed the specific 
concept of phase-in of advanced emissions control technologies 
throughout section 202, which is analogous to ABT in that it 
considers a manufacturer's production volume and the performance of 
vehicles across the fleet in determining compliance. See discussion 
above citing provisions including 202(g)-(j), 202(b)(1)(C).
---------------------------------------------------------------------------

    ABT and fleet average standards are also consistent with other 
provisions in Title II, including those related to compliance and 
enforcement in CAA sections 203, 206, and 207. Commenters who alleged 
inconsistency with the compliance and enforcement provisions 
fundamentally misapprehend the nature of EPA's motor vehicle program 
and the ABT regulations, where compliance and enforcement do in fact 
apply to individual vehicles consistent with the statute. It is true 
that ABT allows manufacturers to meet emissions standards by offsetting 
emissions credits and debits for individual vehicles. However, 
individual vehicles must also continue to themselves comply with in-use 
standards applicable on a vehicle-by-vehicle basis throughout that 
vehicle's useful life. As appropriate, EPA can suspend, revoke, or void 
certificates for individual vehicles. Manufacturers' warranties, which 
are mandated under CAA section 207, apply to individual vehicles. EPA 
and manufacturers perform testing on individual vehicles, and recalls 
can be implemented based on evidence of non-conformance by a 
substantial number of individual vehicles within the class. We further 
discuss our response to this comment, including detailed exposition of 
each of the relevant statutory provisions, in RTC section 2.
    BEVs as part of the regulated class. We now address the related 
comment that EPA cannot consider averaging, especially of BEVs, in 
supporting the feasibility of the standards. The comments allege that 
because BEVs do not emit the relevant air pollutants they are not part 
of the ``class'' of vehicles that can be regulated by EPA under section 
202(a)(1); therefore EPA should not establish standards based on 
manufacturers' ability to produce BEVs. We disagree with these 
commenters' reading of the statute, and moreover, as we explain further 
below, their underlying factual premise--that BEVs do not emit the 
relevant air pollutants--is incorrect.
    As discussed in section III.B.1 of the preamble, Congress required 
EPA to prescribe 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 endangers public 
health and welfare. Congress defined ``motor vehicles'' by their 
function: ``any self-propelled vehicle designed for transporting 
persons or property on a street or highway.'' \534\ Likewise, with 
regard to classes, Congress explicitly contemplated functional 
categories: ``the Administrator may base such classes or categories on 
gross vehicle weight, horsepower, type of fuel used, or other 
appropriate factors.'' \535\ It is indisputable that electric vehicles 
are ``new motor vehicles'' as defined by the statute and that they fall 
into the weight-based ``classes'' that EPA established with Congress's 
explicit support.
---------------------------------------------------------------------------

    \534\ CAA section 216(2).
    \535\ CAA section 216(a)(3)(A)(ii). This section applies to 
standards established under section 202(a)(3), not to standards 
otherwise established under section 202(a)(1). But it nonetheless 
provides guidance on what kinds of classifications and 
categorizations Congress thought were appropriate.
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    In making the GHG Endangerment Finding in 2009, EPA defined the 
classes of motor vehicles and engines as ``Passenger cars, light-duty 
trucks, motorcycles, buses, and medium and heavy-duty trucks.'' \536\ 
Light- and medium-duty BEVs fall within the classes of passenger cars, 
light-duty trucks, and medium and heavy-duty trucks. EPA did not reopen 
the 2009 Endangerment Finding in this rulemaking, and therefore 
comments on whether BEVs are part of the ``class or classes'' subject 
to GHG regulation are beyond the scope of this rulemaking.
---------------------------------------------------------------------------

    \536\ 74 FR 66496, 66537 (Dec. 15, 2009).
---------------------------------------------------------------------------

    Some commenters nonetheless contend that BEVs fall outside of EPA's 
regulatory reach under this provision because they do not cause, or 
contribute to, air pollution which endangers human health and welfare. 
That misreads the statutory text. As we explained above in regard to 
ABT, section 202(a)(1)'s focus on regulating emissions from ``class or 
classes'' indicates that Congress was concerned by the air pollution 
problem generated by a class of vehicles, as opposed to from individual 
vehicles. Accordingly, Congress authorized EPA to regulate classes of 
vehicles, and EPA has concluded that the classes of passenger cars, 
light-duty trucks, and medium and heavy-duty trucks, cause or 
contribute to dangerous pollution. As noted, the classes of these 
vehicles include BEVs,

[[Page 27902]]

along with ICE and hybrid vehicles. And EPA has consistently viewed 
passenger cars, light-duty trucks, and medium and heavy-duty trucks as 
classes of motor vehicles for regulatory purposes, including in our 
prior GHG rules. As discussed in section III.B.1 of the preamble, in 
designing its emissions standards, EPA has reasonably further 
subcategorized vehicles within the class based on weight and 
functionality to recognize real-world variations in emission control 
technology, ensure consumer access to a wide variety of vehicles to 
meet their mobility needs, and secure continued emissions reductions 
for all vehicle types.
    These commenters also misunderstand the broader statutory scheme. 
Congress directed EPA to apply the standards to vehicles whether they 
are designed as complete systems or incorporate devices to prevent or 
control pollution. Thus, Congress understood that the standards may be 
premised on and lead to technologies that prevent pollution in the 
first place. It would be perverse to conclude that in a scheme intended 
to control the emissions of dangerous pollution, Congress would have 
prohibited EPA from premising its standards on controls that completely 
prevent pollution, while also permitting the agency to premise them on 
a technology that reduces 99 percent of pollution. Such a nonsensical 
reading of the statute would mean that the availability of technology 
that can reduce 99 percent of pollution could serve as the basis for 
highly protective standards, while the availability of a technology 
that completely prevents the pollution could not be relied on to set 
emission standards at all. Such a reading would also create a perverse 
safe harbor allowing polluting vehicles to be perpetually produced, 
resulting in harmful emissions and adverse impacts on public health, 
even where available technology permits the complete prevention of such 
emissions and adverse impacts at a reasonable cost. That result cannot 
be squared with section 202(a)(1)'s purpose to reduce emissions that 
``cause or contribute to air pollution which may reasonably be 
anticipated to endanger public health or welfare,'' \537\ or with the 
statutory directive to not only ``control'' but also ``prevent'' 
pollution.
---------------------------------------------------------------------------

    \537\ See also Coal. for Responsible Regulation, 684 F. 3d at 
122 (explaining that the statutory purpose is to prevent reasonably 
anticipated endangerment from maturing into concrete harm).
---------------------------------------------------------------------------

    Commenters' suggestion that EPA define the class to exclude BEVs 
would also be unreasonable and unworkable. Ex ante, EPA does not know 
which vehicles a manufacturer may produce and, without technological 
controls including add-on devices and complete systems, all of the 
vehicles have the potential to emit dangerous pollution.\538\ 
Therefore, EPA establishes standards for the entire class of vehicles, 
based upon its consideration of all available technologies. It is only 
after the manufacturers have applied those technologies to vehicles in 
actual production that the pollution is prevented or controlled. To put 
it differently, even hypothetically assuming EPA could not set 
standards for vehicles that manufacturers intend to build as electric 
vehicles--a proposition which we do not agree with--EPA could still 
regulate vehicles manufacturers intend not to build as electric 
vehicles and that would emit dangerous pollution in the absence of EPA 
regulation.\539\ When regulating those vehicles, Congress explicitly 
authorized EPA to premise its standards for those vehicles on a 
``complete system'' technology that prevents pollution entirely, like 
BEV technologies.
---------------------------------------------------------------------------

    \538\ As noted above, manufacturers in some cases choose to 
offer different models of the same vehicle with different levels of 
electrification. And it is the manufacturer who decides whether a 
given vehicle will be manufactured to produce no emissions, low 
emissions, or higher emissions controlled by add-on technology.
    \539\ In other words, the additional BEVs EPA projecs in the 
modeled central case analysis exist in the baseline case as 
pollutant-emitting vehicles with ICE. We further note that it would 
be odd for EPA to have authority to regulate a given class of motor 
vehicles so long as those vehicles emit air pollution at the 
tailpipe, but to lose its authority to regulate those very same 
vehicles should they install emission control devices to limit such 
pollution or be designed to prevent the endangering polution in the 
first place.
---------------------------------------------------------------------------

    Finally, the commenters' argument is factually flawed. All 
vehicles, including BEVs, do in fact produce vehicle emissions. For 
example, all BEVs produce emissions from brake and tire wear, as 
discussed in RIA Chapter 7.2.1.4. Furthermore, BEVs have air 
conditioning units, which may produce GHG emissions from leakages, and 
these emissions are subject to regulation under the Act, for instance, 
as described in section III.C.5 of the preamble. Indeed, EPA has 
consistently regulated GHG emissions from LD vehicle refrigerants since 
2010 through A/C credits. Thus, even under the commenter's reading of 
the statute, BEVs would be part of the class for regulation.\540\ We 
further address this issue in RTC section 2, where we also discuss the 
related contention that BEVs cannot be part of the same class because 
electric and ICE powertrains are fundamentally different.
---------------------------------------------------------------------------

    \540\ Moreover, as already explained, manufacturers do not have 
to produce any additional BEVs to comply with the final standards. 
EPA's modeling of the alternate compliance pathway in Section IV of 
the preamble demonstrates that manufacturers could meet the standard 
using solely advanced technologies with ICEs.
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C. GHG Standards for Model Years 2027 and Later

1. Overview
    This section III.C of this preamble provides details regarding 
EPA's GHG standards and related program provisions under this 
rulemaking.
    For light-duty vehicles, EPA is finalizing standards that land at 
the same footprint target CO2 levels as our proposal in MY 
2032 but have a more linear ramp rate of standards stringency from MYs 
2027-2032 (via slower increases in stringency in the earlier years). 
Specifically, the final standards are consistent with the proposal's 
Alternative 3 footprint standards curves. The final standards also 
include extensions of the phase-down for off-cycle credits and air 
conditioning leakage credits, which provide further flexibility for 
manufacturers to meet the standards, especially in earlier years of the 
program. The final standards were developed in response to public 
comments, including those from the auto industry and labor groups which 
expressed concern that the proposed standards were challenging 
especially in the early years of the program. For example, many 
automakers expressed concern that more lead time was necessary in MYs 
2027-2029 to allow for the necessary scale up of battery supply chains 
and PEV manufacturing. The changes from the proposal address this 
concern by providing significant additional lead time. Section III.C.2 
of this preamble provides details regarding the structure and level of 
the light-duty vehicle standards.
    For medium-duty vehicles, EPA is finalizing work factor-based GHG 
standards that land at the same stringency as the proposal in MY 2032, 
but which have a more gradual rate of stringency increase from MYs 
2027-2031 than the proposed standards in order to provide additional 
lead time for compliance. EPA is also phasing in a work factor upper 
cutpoint at or above 5,500 lb work factor, coinciding with the removal 
of the proposed 22,000 lb maximum GCWR cap used in the calculation of 
the work factor. These changes are responsive to concerns from 
manufacturers over inadequate lead time and comments addressing the 
targets for the higher capability vehicles. Section III.C.3 of this 
preamble provides

[[Page 27903]]

details regarding EPA's GHG standards for MDVs.
    For light-duty vehicles, the final standards will further reduce 
the fleet average GHG emissions target levels by nearly 50 percent from 
the MY 2026 standards. For MDVs, the standards represent a reduction of 
44 percent compared to the current MY 2026 standards, which is the 
final year for Phase 2 standards applying to Class 2b and Class 3 
vehicles now that we are finalizing a revised MY 2027 MDV GHG standard.
    Additional GHG program provisions are discussed in sections 
III.C.4-III.C.9 of this preamble, including averaging, banking, and 
trading, air conditioning system requirements, phase out of off-cycle 
credits, treatment of PEVs and FCEVs in the GHG fleet average, and 
interim alternative standards for small volume manufacturers.
    While the final standards are more stringent than the prior 
standards, EPA applied numerous conservative approaches throughout our 
analysis (as identified in sections III and IV of this preamble and 
throughout the RIA) and the final standards additionally are less 
stringent than those proposed during the first several years of 
implementation leading to MY 2032. The Administrator concludes that 
this approach is appropriate based on his evaluation of the record and 
within the discretion provided under and consistent with the text and 
purpose of CAA section 202(a)(1)-(2).
2. Light-Duty Vehicle GHG Standards
i. Structure of the Light-Duty Vehicle CO2 Standards
    Since MY 2012, EPA has adopted attribute-based standards for 
passenger cars and light trucks. The CAA has no requirement to 
promulgate attribute-based standards, though in past rules EPA has 
relied on both universal and attribute-based standards (e.g., for 
nonroad engines, EPA uses the attribute of horsepower). However, given 
the advantages of using attribute-based standards,\541\ from MY 2012 
onward EPA has adopted and maintained vehicle footprint as the 
attribute for the GHG standards. Footprint is defined as a vehicle's 
wheelbase multiplied by its track width--in other words, the area 
enclosed by the points at which the wheels meet the ground.
---------------------------------------------------------------------------

    \541\ See 75 FR 25324, 25354-25355 (May 7, 2010).
---------------------------------------------------------------------------

    EPA has implemented footprint-based standards since MY 2012 by 
establishing two kinds of standards-- fleet average standards 
determined by a manufacturer's fleet makeup, and in-use standards that 
will apply to the individual vehicles that make up the manufacturer's 
fleet. Under the footprint-based standards, each manufacturer has a 
CO2 emissions performance target unique to its fleet, 
depending on the footprints of the vehicles produced by that 
manufacturer. While a manufacturer's fleet average standard could be 
estimated before and throughout the model year based on projected 
production volume of its vehicle fleet, the fleet average standard to 
which the manufacturer must comply is based on its final model year 
production figures. Each vehicle in the fleet has a compliance value 
which is used to calculate both the in-use standard applicable to that 
vehicle and the fleet average emissions. A manufacturer's calculation 
of fleet average emissions at the end of the model year will thus be 
based on the production-weighted average emissions of each vehicle in 
its fleet. EPA did not reopen the footprint-based structure for the 
standards.
    Each manufacturer has separate footprint-based standards for cars 
and for trucks. EPA did not reopen the provision for separate standard 
curves for cars and trucks. EPA also did not reopen the existing 
regulatory definitions of passenger cars and light trucks; we will 
continue to reference the NHTSA regulatory class definitions as EPA has 
done since the inception of the GHG program.
ii. How did EPA determine the slopes and relative stringencies of the 
car and truck footprint standards curves?
    In the proposal, EPA requested comment on its methodology for 
establishing the slopes for the car and truck curves. As discussed 
further below, upon evaluating the comments, EPA is finalizing our 
proposed approach of establishing the car and truck footprint curve 
slopes, as well as the offset between the car and truck footprint 
standards curves.
    In the NPRM, we discussed a methodology for determining the shape 
of the footprint-based curves for cars and for trucks (a more detailed 
description of the truck curve as it relates to the car curve, and a 
discussion of the empirical and modeling data used in developing these 
offsets is presented in RIA Chapter 1.1.3.2). In general, the slopes of 
the car and truck curve were reduced for the proposed standards and the 
alternatives along with a decreased offset between the car and truck 
curves. We proposed these changes based on our evaluation of updated 
data, finding that reduced slopes were consistent with manufacturers' 
increased adoption of more advanced emissions control technologies to 
meet more stringent standards, as well as our policy goal that 
manufacturers comply with the emissions standards by adopting advanced 
emission control technologies as contemplated by the statute, as 
opposed to engaging in intentional upsizing or downsizing of their 
fleets.
    EPA received a range of comments on the proposed slopes of the car 
and truck curves.\542\ Some individual auto manufacturers directionally 
supported EPA's rationale for the derivation of the curves and slopes. 
While noting that the proposed approach was a significant change from 
prior rulemakings, the Alliance for Automotive Innovation did not 
object to EPA's methodology. Some commenters (such as ICCT) preferred a 
single curve approach, which would essentially eliminate separate 
regulatory classes for cars vs. trucks (an issue that EPA did not 
reopen in the proposal \543\) but believed that the proposed approach 
of deriving the truck curve from the car curve was generally sound.
---------------------------------------------------------------------------

    \542\ See Section 3.2.1 of the RTC.
    \543\ Further discussion for why EPA is maintaining separate car 
and truck curves was provided in a Memo to Docket, ID No. EPA-HQ-
OAR-2022-0829 titled ``Fleet and Vehicle Attribute Analysis for the 
Development of Standard Curves.''
---------------------------------------------------------------------------

    In its comments, NADA expressed opposition to EPA's consideration 
of electric vehicles in the derivation of the flatter footprint curve 
slopes. In contrast, many commenters recommended flattening the curves 
or setting a flat (zero slope) curve for both cars and trucks. ICCT 
suggested that EPA should establish an even flatter and ``neutral'' 
slope that does not incentivize upsizing. As we explain further below, 
the proposal and our final decision to flatten the footprint curves is 
not dependent on any manufacturer adopting BEVs or any other electric 
vehicle technologies. Rather, vehicles with more advanced control 
technologies of any kind to meet more stringent emission standards will 
inherently show less sensitivity of CO2 emissions to 
footprint. The more effective the vehicle is at controlling emissions, 
the less sensitivity its emissions will have to footprint, with 
vehicles that produce no tailpipe emissions having no sensitivity to 
footprint. Conversely, retaining the existing curve slopes in light of 
more advanced control technologies would provide a significant perverse 
incentive for manufacturers to adopt upsizing--as opposed to more 
effective emissions control technologies--as a compliance strategy.
    Comments related to the magnitude of the truck offset were also 
mixed. The

[[Page 27904]]

truck offset consists of two separate offsets: one for all-wheel drive 
(AWD), and one for the additional utility associated with towing and 
hauling capabilities. The truck offset recognizes that these 
characteristics tend to increase emissions while also providing 
additional mobility and utility benefits for the consumer. EPA received 
only a few comments on the AWD offset, which were generally supportive 
although some commenters requested that the offset be scaled down based 
on the proportion of AWD vehicles in the light truck fleet.\544\ We 
also received varied feedback on EPA's assumptions used to calculate 
the utility-based offset in the derivation of the truck slope. Some 
commenters suggested the utility offset should be increased as they 
believed tow rates are higher than EPA's assumptions. Other commenters 
suggested the offset should be reduced as they believed actual in-use 
towing rates are lower than EPA's assumptions; these commenters also 
believed the offset should be scaling down proportionally across truck 
footprints.
---------------------------------------------------------------------------

    \544\ Trucks over 6000 lbs. GVWR including many full-size 
utility vehicles and pickup trucks, do not require AWD to meet 
NHTSA's definition of a Light Truck. 49 CFR 523.5.
---------------------------------------------------------------------------

    The intent of the proposed AWD offset was to separately and 
explicitly account for the tailpipe CO2 difference between 
otherwise identical 2WD and AWD vehicles, with the value of the offset 
intended to be representative of an average increase observed over 
current models. While commenters expressed views on EPA's assumptions 
for deriving the utility offset (and one OEM provided technical 
suggestions), they did not submit additional data to support their 
views. EPA's assessment is that the data used to derive the utility 
offset (as described in RIA Chapter 1.1.3) continues to be the best 
available data upon which to determine the utility offset. EPA is 
therefore finalizing its proposed utility offset for the truck curve. 
EPA believes the overall truck offset provides a difference in 
CO2 targets between cars and trucks of similar footprint 
that appropriately accounts for differences in utility.
    Taking all of these comments into consideration, and for the 
reasons explained above (and in the RTC), EPA considers the proposed 
approach for determination of the slope of the car and truck curves, 
appropriate. Therefore, we are finalizing the shape of the footprint 
curves as proposed, and as discussed in further detail below.
    When setting GHG standards, EPA recognizes the current diversity 
and distribution of vehicles in the market and that Americans have 
widely varying preferences in vehicles and that GHG control technology 
is feasible for a wide variety of vehicles. This is one of the primary 
reasons for adopting attribute-based standards and is also an important 
consideration in choosing specific attribute-based standards (i.e., the 
footprint curves). Over time, vehicle footprint sizes have steadily 
increased.\545\ This has partially offset gains in fuel economy and 
reductions in emissions. For example, in MY 2021, average fuel economy 
and emissions were essentially flat (despite improvements in emissions 
for all classes of vehicles) because of increases in the sizes of 
vehicles purchased. In developing footprint curves for this rule, EPA's 
intent was to establish slopes that would not (of their own accord) 
initiate overall fleet upsizing \546\ or downsizing as a compliance 
strategy. We have updated the slopes accordingly, recognizing that a 
slope too flat would incentivize overall fleet downsizing, while a 
slope too steep would foster upsizing. Fuller details on the analysis 
that was used to determine the revised slope determination is provided 
in RIA Chapter 1.1.3.
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    \545\ The 2022 EPA Automotive Trends Report, https://www.epa.gov/system/files/documents/2022-12/420r22029.pdf.
    \546\ EPA notes that section 202(a)'s purpose is to reduce 
vehicular emissions through the development and application of 
emissions control technologies. The regulatory scheme should 
therefore induce manufacturer action that actually reduces 
pollution. By contrast, a footprint curve that permits manufacturers 
to achieve compliance significantly through producing larger 
vehicles that produce more pollution would not be appropriate.
---------------------------------------------------------------------------

    The slopes in the latter years of this rulemaking period are 
flatter than those of prior standards. This is by design and reflects a 
continuation of the proportional reduction in targets that has been a 
fundamental feature of EPA's prior footprint standards, in which as 
program stringency is increased year over year, the g/mile change is 
greater for larger footprints than for smaller footprints.\547\ If this 
were not the case, vehicles with different footprints could be subject 
to inconsistent and possibly nonsensical targets as the standard curves 
become progressively lower. Consider that for the 2012 rule, the 
footprint-based curves were originally developed for a fleet that was 
completely made up of internal combustion engine (ICE) vehicles. From a 
physics perspective, a positive footprint slope for ICE vehicles makes 
sense because as a vehicle's size increases, its mass, road loads, and 
required power (and corresponding tailpipe CO2 emissions) 
will increase accordingly. When emissions reducing technology is 
applied, such as advanced ICE, or HEV or PHEV or BEV electrification 
technologies, the relationship between increased footprint and tailpipe 
emissions is reduced. This is because the emissions measured for 
certification arise primarily from overcoming loads of the drive 
cycles,\548\ and thus will scale with increases or decreases in the 
loads associated with changes in footprint. In other words, there is a 
physical rationale for why the increasing adoption of more effective 
emissions reducing technologies should cause the slope of the footprint 
curve to become flatter. Moreover, as the emissions control technology 
becomes increasingly more effective, the relationship between tailpipe 
emissions and footprint decreases proportionally; in the limiting case 
of vehicles with 0 g/mile tailpipe emissions such as BEVs, there is no 
relationship at all between tailpipe emissions and footprint.
---------------------------------------------------------------------------

    \547\ See 75 FR 25324, 25333-38 (2010 Rule discussion of 
footprint standards).
    \548\ As opposed to emissions that arise from idling or 
accessory losses during the certification tests.
---------------------------------------------------------------------------

    Having discussed our rationale for the flatter slopes, we turn now 
to change in the truck offset. As noted above, the truck offset 
consists of both an AWD and a utility offset (which we consider here to 
include towing and hauling capability). All-wheel drive (AWD) is one of 
the defining features for crossover vehicles (typically, small to mid-
size CUVs, e.g., the Ford Escape, Chevy Equinox, Honda CR-V, etc) to be 
classified as light trucks,\549\ and for this reason the offset in 
tailpipe emissions targets (i.e., between the car and truck regulatory 
classes) for these vehicles should be appropriately set. The design 
differences for many crossover vehicle models that are offered in both 
a two-wheel drive (2WD) and an AWD version (aside from their driveline) 
are difficult to detect. They often have the same engine, similar curb 
weight (except for the additional weight of an AWD system), and similar 
operating features (although AWD versions might be offered at a premium 
trim level that is not required of the drivetrain). EPA analyzed 
empirical data (reference Figure 1-6 in Chapter 1.1.3 of the RIA) for 
models that were offered in both 2WD and AWD versions to quantify the 
average increase in tailpipe emissions due to addition of AWD for an 
otherwise identical vehicle model.
---------------------------------------------------------------------------

    \549\ We use the term AWD to include all types of four-wheel 
drive systems, consistent with SAE standard J1952.

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[[Page 27905]]

    The light truck classification consists of crossovers (ranging from 
compact up through large crossovers), sport utility vehicles and pickup 
trucks. Many crossover vehicles and SUVs exhibit similar towing 
capability between their 2WD and AWD versions (there are some 
exceptions in cases where AWD is packaged with a larger more powerful 
engine than the base 2WD version). However, full size pickup trucks are 
the light-duty market segment with the most towing and hauling 
capability.
    As proposed, EPA is finalizing that the truck curve be based on the 
car curve (to represent the base utility across all vehicles for 
carrying people and their light cargo), but with the additional 
allowance of increased utility (including AWD) that distinguishes these 
vehicles used for more work-like activity. EPA determined a 
relationship between gross combined weight rating (GCWR) (which 
combines the cumulative utility for hauling and towing to a vehicle's 
curb weight) and required engine torque. EPA then used its ALPHA model 
to predict how the tailpipe emissions at equivalent test weight (ETW) 
(curb weight + 300 pounds) would increase as a function of increased 
utility (GCWR) based on required engine torque and assumed modest 
increases in vehicle weight and road loads commensurate with a more 
tow-capable vehicle.
    EPA also assessed the relative magnitude of tow rating across the 
light truck fleet as a function of footprint. Vehicles with the 
greatest utility are full size pickup trucks, while light trucks with 
the least utility tend to be the smaller crossovers, with an increased 
tow or haul rating near zero. As a result, EPA is finalizing an offset 
for the truck curve, compared to the car curve, that increases with 
footprint. That is, as the footprint of the truck increases, we expect 
that on average its utility would increase proportionally, and 
therefore the truck curve has a steeper slope than the car curve. 
Figure 1-9 in RIA Chapter 1 shows the general trend of increased tow 
rating with increasing footprint. Put more simply, bigger trucks 
generally have more utility than smaller trucks, so bigger trucks get a 
bigger utility offset.
    In summary, the truck curve is, mathematically, the sum of the 
scaled AWD and utility-based offsets to the car curve. A more thorough 
description of the truck curve as it relates to the car curve, and a 
discussion of the empirical and modeling data used in developing these 
offsets is presented in RIA Chapter 1.1.3.2.
iii. How did EPA determine the cutpoints for the footprint standards 
curves?
    The cutpoints are defined as the footprint boundaries (low and 
high) within which the sloped portion of the footprint curve resides. 
Above the high, and below the low, cutpoints, the curves are flat. The 
rationale for the setting of the original cutpoints for the MYs 2017-
2025 standards was based on analysis of the distribution of vehicle 
footprint for the 2008 fleet and is discussed in the 2012 proposal 
\550\ and the Technical Support Document (TSD).\551\
---------------------------------------------------------------------------

    \550\ See Section II.C.6 of the preamble.
    \551\ 2017-2025 TSD.
---------------------------------------------------------------------------

    EPA is finalizing, as proposed, an increase to the lower cutpoint 
for the car curve by 1 square foot per year from MY 2027 through MY 
2030 from 41 to 45 square feet. This will provide relatively slightly 
less stringent targets for the smallest vehicles (compared to the 
structure of the MY 2023-2026 footprint targets), which we believe is 
important so as not to disincentivize manufacturers from offering these 
smallest vehicles which are among the cleanest vehicles. EPA received 
only supportive comments for the increase of the car lower cutpoint; 
one commenter requested this change to be immediate. The upper cutpoint 
for cars (56 feet) will remain unchanged.
    EPA also is finalizing, as proposed, a change in the upper cutpoint 
for trucks. This cutpoint is 74 square feet for the MYs 2023-2026 
standards, and under this final rule will decrease by 1.0 square foot 
per year from MYs 2027 through MY 2030, to a level of 70.0 square feet 
for MY 2030 and later. EPA is making this change in upper truck 
cutpoint to ensure no loss of emissions reductions in the future 
through continued upsizing of the truck fleet. EPA reviewed sales data 
from recent model years comparing the average footprint of full-size 
pickup trucks with the upper truck cutpoint. As the upper cutpoint for 
trucks increased (under past rules) from 66.0 square feet in MY 2016 to 
69.0 square feet in MYs 2020-2021, we have observed the average 
footprint of full-size pickup trucks increasing similarly. The truck 
size trend and its relationship to the upper cutpoint is detailed in 
RIA Chapter 1.1.3.4. Because we have observed the trend of trucks 
upsizing up to the cutpoint, our goal is to bring the upper cutpoint 
back down to a level that represents a balance between setting an 
appropriate CO2 emissions target recognizing the utility of 
the largest trucks, while at the same time preventing the potential 
loss in emissions reductions that could result from truck upsizing.
    We consider the MY 2030 and beyond upper truck cutpoint of 70.0 
square feet to be appropriate. EPA's assessment is that it is feasible 
for trucks greater than 70.0 square feet to meet the CO2 
targets of the footprint curves at 70.0 square feet (i.e., the upper 
flat part of the footprint curve). This cutpoint of 70.0 square feet is 
consistent with the sales-weighted average footprint of current full-
size pickups.
    Some automakers were opposed to the reduction in the upper cutpoint 
for the truck footprint curve, although several NGOs supported the 
change in helping to counter the observed trend in upsizing and the 
associated increase in emissions. EPA agrees that a reduction in the 
cutpoint (more accurately, returning it close to the current level) 
should help mitigate the incentive for continued upsizing as a 
compliance mechanism. EPA notes that the final cutpoint value does not 
prevent any manufacturer from producing vehicles that have a larger 
footprint to satisfy customer demand. Rather, it simply ensures that 
the standards themselves do not incentivize manufacturers to upsize 
vehicles larger than the upper cutpoint as a compliance strategy. 
Moreover, as with any CO2 target along the footprint 
standards curves, the CO2 target level that is defined by 
the upper cutpoint does not necessarily need to be met by the 
individual vehicles with footprints above that cutpoint.
    Based on the review of the comments related to cutpoints for car 
and truck curves, EPA is finalizing as proposed the changes to the 
lower car cutpoint and the upper truck cutpoint. We are implementing 
the revised cutpoints in a gradual manner over four years to allow 
manufacturers time to adjust to changes in the relative stringency of 
CO2 target levels for vehicles with footprints impacted by 
the changes in cutpoints.
iv. What are the light-duty vehicle CO2 standards?
a. What CO2 footprint standards curves is EPA establishing?
    EPA is setting separate car and light truck standards--that is, 
vehicles defined as passenger vehicles (``cars'') have one set of 
footprint-based standards curves, and vehicles defined as light trucks 
have a different set.\552\ In general, for a given footprint, the 
CO2 g/

[[Page 27906]]

mile target \553\ for trucks is higher than the target for a car with 
the same footprint. The curves are described mathematically in EPA's 
regulations by a family of piecewise linear functions (with respect to 
vehicle footprint) that gradually and continually ramp down from the MY 
2026 curves established in the 2021 rule. EPA's minimum and maximum 
footprint targets and the corresponding cutpoints are provided for cars 
and trucks, respectively, in Table 17 and Table 18 for MYs 2027-2032 
along with the slope and intercept defining the linear function for 
footprints falling between the minimum and maximum footprint values. 
For footprints falling between the minimum and maximum, the targets are 
calculated as follows: Slope x Footprint + Intercept = Target.
---------------------------------------------------------------------------

    \552\ See 49 CFR part 523. Gernally, passenger cars include cars 
and smaller crossovers and SUVs, while the truck category includes 
larger corssovers and SUVs, minivans, and pickup trucks.
    \553\ Because compliance is based on a sales-weighting of the 
full range of vehicles in a manufacturer's car and truck fleets, the 
footprint-based CO2 emission levels of specific vehicles 
within the fleet are referred to as targets, rather than standards.

                                     Table 17--Footprint-Based Standard Curve Coefficients for Cars: Final Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
MIN CO2 (g/mile)........................................           135.9           123.8           110.6            98.2            85.3            71.8
MAX CO2 (g/mile)........................................           145.2           131.6           117.0           103.4            89.8            75.6
Slope (g/mile/ft2)......................................            0.66            0.60            0.54            0.47            0.41            0.35
Intercept (g/mile)......................................           108.0            97.9            87.0            76.9            66.8            56.2
MIN footprint (ft2).....................................              42              43              44              45              45              45
MAX footprint (ft2).....................................              56              56              56              56              56              56
--------------------------------------------------------------------------------------------------------------------------------------------------------


                                 Table 18--Footprint-Based Standard Curve Coefficients for Light Trucks: Final Standards
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                               2027            2028            2029            2030            2031            2032
--------------------------------------------------------------------------------------------------------------------------------------------------------
MIN CO2 (g/mile)........................................           150.3           136.8           122.7           108.8            91.8            75.7
MAX CO2 (g/mile)........................................           239.9           211.7           184.0           158.3           133.5           110.1
Slope (g/mile/ft2)......................................            2.89            2.58            2.27            1.98            1.67            1.38
Intercept (g/mile)......................................            28.9            25.8            22.7            19.8            16.7            13.8
MIN footprint (ft2).....................................              42              43              44              45              45              45
MAX footprint (ft2).....................................            73.0            72.0            71.0            70.0            70.0            70.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Figure 7 and Figure 8 show the finalized car and truck curves, 
respectively, for MY 2027 through MY 2032. Included for reference is 
the current MY 2026 (No Action) curve for each.\554\
---------------------------------------------------------------------------

    \554\ We have removed the 2026 adjusted curve that was included 
in Figure 8 and 9 from the NPRM. It was intended to show the effect 
of removal of flexibilities in the proposed standards between 2026 
and 2027. With the more gradual phase-out of flexibilities in the 
final and alternative standards, we now present fleet average 
adjusted target values in section III.F of this preamble.
---------------------------------------------------------------------------

BILLING CODE 6560-50-P
[GRAPHIC] [TIFF OMITTED] TR18AP24.006

Figure 7: Final Standards for Cars, MY 2027-2032

[[Page 27907]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.007

Figure 8: Final Standards for Trucks, MY 2027-2032

BILLING CODE 6560-50-C
    As discussed in section III.C.2.ii of the preamble, the slope of 
the car curve is significantly flatter in 2027 and continues to flatten 
progressively each year through 2032. The truck curve, largely driven 
by the allowance for towing utility, has a similar shape as in past 
rulemakings although its slope also flattens progressively each year 
from 2027 through 2032.
b. What fleet-wide CO2 emissions levels correspond to the 
standards?
    EPA is finalizing more stringent standards for MYs 2027-2032 that 
are projected to result in an industry-wide average target for the 
light-duty fleet of 85 g/mile of CO2 in MY 2032. The 
projected average annual decrease in combined industry average targets 
from the current standards in MY 2026 to the new standards in MY 2032 
is nearly 11 percent per year. Compared to past GHG rulemakings, the 
annual percentage reductions are higher. These reductions are justified 
by our feasibility assessment, which we discuss briefly below and at 
length in section IV of this preamble.
    Since the first GHG rule in 2010, EPA's feasibility assessments 
have consistently considered the full range of technologies available 
to reduce GHG emissions.\555\ The range of technologies that were 
available even in 2010 to reduce GHG emissions was quite wide--from low 
rolling resistance tires, low friction lubricants and improved 
electrical accessories, to new and improved transmission technologies 
(including turbo/downsizing, gasoline direct injection and dual clutch 
transmissions), to stop-start, hybrid and electric vehicles. Since 
then, there have been significant advancements in further developing 
and deploying technologies to reduce GHGs. Manufacturers have augmented 
GHG reductions from advanced gasoline engines with more use of 
electrification, including more hybrids, more PHEVs and more BEVs. 
Greater use of electrification technology (including the increasing 
feasibility of PHEVs and BEVs) has changed the magnitude of the 
emissions reductions that will be achievable during the timeframe of 
this rulemaking compared to prior rules. These market changes are 
already occuring, and we expect the trend toward greater 
electrification to continue. The combination of economic incentives 
provided in the IRA and the auto manufacturers' stated plans for 
producing significant volumes of zero and near-zero emission vehicles 
in the timeframe of this rule supports EPA's ability to finalize 
standards at a level of stringency greater than was feasible in past 
rules. While tailpipe emissions controls for criteria pollutants from 
ICE-based vehicles can have effectiveness values greater than 90 
percent under certain circumstances, electrification provides 100 
percent effectiveness under all operating and environmental conditions. 
This is nearly two orders of magnitude more effective than the 
historical improvements in GHG emission reductions.
---------------------------------------------------------------------------

    \555\ See e.g., 75 FR 25324, 25448-25450 (May 7, 2010), 77 FR 
62624, 62846-62852; see also Draft TAR.
---------------------------------------------------------------------------

    As in our past GHG rules, EPA has analyzed the feasibility of 
achieving the final CO2 standards, accounting for 
projections of available technology to reduce emissions of 
CO2, the projected penetration of such technologies, the 
normal redesign process for cars and trucks, and the effectiveness and 
costs of such technology. The results of these analyses are discussed 
in detail in section IV of this preamble and in Chapter 12 of the RIA. 
EPA notes that the technologies needed for compliance with these 
standards have already been developed and deployed in the on-road fleet 
in a wide variety of vehicle types. Moreover, although EPA has done 
extensive modeling to support its conclusion that the standards are 
feasible taking into account the cost of the technology and the 
available lead time, EPA notes that its primary compliance path 
modeling simply represents one possible approach the industry could 
take in achieving compliance with the standards at a reasonable cost, 
and that even within that modeling EPA anticipates different 
manufacturers will adopt different compliance strategies. EPA has also 
modeled a number of other potential compliance paths for manufacturers, 
reflecting potential differences in strategies, costs, consumer 
acceptance of BEVs, higher battery costs, etc. The standards are 
performance-based and do

[[Page 27908]]

not dictate any particular compliance strategy for manufacturers. EPA 
also presents the overall estimated costs and benefits of the final car 
and truck CO2 standards in section VIII of this preamble.
    The derivation of the 85 g/mile estimated industry-wide target for 
MY 2032 noted in the previous paragraph is based on EPA's updated fleet 
mix projections for MY 2032 (approximately 30 percent cars and 70 
percent trucks, based on AEO 2023), and is described further in section 
IV.D of this preamble. EPA aggregated the estimates for individual 
manufacturers based on projected production volumes into the fleet-wide 
averages for cars, trucks, and the entire fleet.\556\ As is the nature 
of attribute-based standards, the final fleet average standards for 
each manufacturer ultimately will depend on each manufacturer's actual 
rather than projected production in each MY from MY 2027 to MY 2032 
under the sales-weighted footprint-based standard curves for the car 
and truck regulatory classes.
---------------------------------------------------------------------------

    \556\ Due to rounding during calculations, the estimated fleet-
wide CO2 levels may vary by plus or minus 1 gram.
---------------------------------------------------------------------------

    Table 19 shows the overall fleet average target levels for both 
cars and light trucks that are projected for the final standards. A 
more detailed breakdown of how each manufacturer could potentially 
choose to achieve the projected CO2 targets and achieved 
levels is provided in RIA Chapter 12. The actual fleet-wide average g/
mile level that will be achieved in any year for cars and trucks will 
depend on the actual production of vehicles for that year, as well as 
the use of the various optional credit and averaging, banking, and 
trading provisions. For example, in any year, manufacturers will be 
able to generate credits from cars and use them for compliance with the 
truck standard, or vice versa. In RIA Chapter 8.6, EPA discusses the 
year-by-year estimate of GHG emissions reductions that are projected to 
be achieved by the final standards.
    EPA has estimated the overall fleet-wide CO2 emission 
levels that correspond with the attribute-based footprint standards, 
based on projections of the composition of each manufacturer's fleet in 
each year of the program. As shown in Table 19, for passenger cars, the 
MY 2032 standards are projected to result in CO2 fleet-
average levels of 72 g/mile in MY 2032, which is 53 percent lower than 
that of the MY 2026 standards. For trucks, the projected MY 2032 fleet 
average CO2 target is 90 g/mile which is 54 percent lower 
than that of the MY 2026 standards. The projected MY 2032 combined 
fleet target of 85 g/mile is 49 percent lower than that of the MY 2026 
standards.

             Table 19--Projected Fleet-Wide CO2 Targets Corresponding to the Final Standards \a\ \b\
----------------------------------------------------------------------------------------------------------------
                                                                                                    Total fleet
                           Model year                              Cars CO2 (g/   Trucks CO2 (g/   CO2 (g/mile)
                                                                       mile)           mile)
----------------------------------------------------------------------------------------------------------------
2026............................................................             131             184             168
2027............................................................             139             184             170
2028............................................................             125             165             153
2029............................................................             112             146             136
2030............................................................              99             128             119
2031............................................................              86             109             102
2032 and later..................................................              73              90              85
----------------------------------------------------------------------------------------------------------------
\a\ MY 2026 targets are provided for reference. This table does not reflect changes in credit flexibilities such
  as the phase-out of available off-cycle and A/C credits as finalized for MY 2027.
\b\ Fleet CO2 targets are calculated based on projected car and truck share. Truck share for the fleet is
  expected to increase to 69 percent by MY 2026 (up from 64 percent in MY 2022) and to 70 percent by MY 2030 and
  later.

    EPA is finalizing standards that set increasingly stringent levels 
of CO2 emissions control from MY 2027 through MY 2032. 
Applying the CO2 footprint curves applicable in each MY to 
the vehicles (and their footprint distributions) expected to be sold in 
each MY produces progressively lower levels of fleetwide CO2 
emissions. EPA believes manufacturers can achieve the standards' 
important CO2 emissions reductions through the application 
of available control technology at reasonable cost, as well as the use 
of program averaging, credit banking and trading, and optional off-
cycle credits, air conditioning leakage credits, and air conditioning 
efficiency credits, as available.
    One important change between the proposed standards and the final 
standards is related to the phaseout of two optional credit 
flexibilities: off-cycle credits and A/C leakage credits. As discussed 
in section III.C.5-6 of this preamble, EPA is finalizing a phase-down 
of A/C refrigerant-based credits from MY 2027-2030, and thereafter (for 
MY 2031 and beyond), we are retaining a small optional A/C leakage 
credit. EPA is finalizing a phase-out of the off-cycle credits which is 
slower than what we proposed. EPA also is finalizing its proposal to 
eliminate off-cycle credits and A/C efficiency credits for BEVs 
beginning in MY 2027.\557\ Table 20 shows the total off-cycle and A/C 
credits available to manufacturers under the final standards and Table 
21 shows available credits under the No Action case. These tables 
represent the maximum credits attainable in each category. Credits 
marked with an asterisk in Table 20 are not eligible for BEVs starting 
in MY 2027.
---------------------------------------------------------------------------

    \557\ As explained below in Sections III.C.5 and III.C.6 of the 
preamble, these credits were intended to incentivize efficiency 
gains that reduce emissions produced by an ICE and the value of such 
credits was based on the amount of ICE emissions. Because BEVs do 
not produce any engine emissions, such credits are not necessary or 
appropriate.

                              Table 20--Total Available Credits to Manufacturers, Final Standards, Expressed in CO2 g/mile
                                                      [*Not eligible for BEVs starting in MY 2027]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                     Off-cycle *      A/C efficiency *             A/C leakage                          Total possible
                 MY                 --------------------------------------------------------------------------------------------------------------------
                                        Fleet         Car         Truck         Car         Truck      Car (ICE)    Car (BEV)   Truck (ICE)  Truck (BEV)
--------------------------------------------------------------------------------------------------------------------------------------------------------
2026...............................         15.0          5.0          7.2         13.8         17.2         33.8         33.8         39.4         39.4

[[Page 27909]]

 
2027...............................         10.0          5.0          7.2         11.0         13.8         26.0         11.0         31.0         13.8
2028...............................         10.0          5.0          7.2          8.3         10.3         23.3          8.3         27.5         10.3
2029...............................         10.0          5.0          7.2          5.5          6.9         20.5          5.5         24.1          6.9
2030...............................         10.0          5.0          7.2          2.8          3.4         17.8          2.8         20.6          3.4
2031...............................          8.0          5.0          7.2          1.6          2.0         14.6          1.6         17.2          2.0
2032...............................          6.0          5.0          7.2          1.6          2.0         12.6          1.6         15.2          2.0
2033...............................          0.0          5.0          7.2          1.6          2.0          6.6          1.6          9.2          2.0
--------------------------------------------------------------------------------------------------------------------------------------------------------


                              Table 21--Total Available Credits for Manufacturers, No Action Case, Expressed in CO2 g/mile
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                Off-cycle        A/C efficiency              A/C leakage             Total possible
                              MY                              ------------------------------------------------------------------------------------------
                                                                  Fleet         Car         Truck         Car         Truck         Car         Truck
--------------------------------------------------------------------------------------------------------------------------------------------------------
2026.........................................................         15.0          5.0          7.2         13.8         17.2         33.8         39.4
2027.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
2028.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
2029.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
2030.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
2031.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
2032.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
2033.........................................................         10.0          5.0          7.2         13.8         17.2         28.8         34.4
--------------------------------------------------------------------------------------------------------------------------------------------------------

    As with prior rulemakings, our consideration of the level of the 
standards is based in part on EPA's projection of average industry-wide 
CO2-equivalent emission reductions from A/C and off-cycle improvements. 
This approach results in footprint curves that are numerically lower 
than they would otherwise be without consideration of these 
improvements. As described above, the final standards and No Action 
case have different provisions for the allowable A/C and off-cycle 
credits. In order to compare the stringencies of these two different 
policy cases on an equivalent basis, we show adjusted targets that are 
calculated by adding projected credits to the unadjusted targets. 
Figure 9 shows these adjusted industry-average CO2 targets for the 
final standards and the No Action Case through MY 2032, compared to the 
unadjusted targets.
[GRAPHIC] [TIFF OMITTED] TR18AP24.008


[[Page 27910]]



Figure 9: Projected Industry Average Targets Under the Final 2027-2032 
Standards Compared to the Current MY 2026 Standards. Adjusted Targets 
Include Effects of Projected Off-Cycle, A/C Efficiency and A/C Leakage 
Credits

    Table 22 shows the adjusted targets for cars and trucks based on 
our modeling of the final standards.

            Table 22--Projected Adjusted Fleet-Wide CO2 Targets Corresponding to the Final Standards
----------------------------------------------------------------------------------------------------------------
                                                                                                    Total fleet
                           Model year                              Cars CO2  (g/  Trucks CO2  (g/  CO2  (g/mile)
                                                                       mile)           mile)
----------------------------------------------------------------------------------------------------------------
2026............................................................             161             220             201
2027............................................................             158             209             193
2028............................................................             142             186             172
2029............................................................             125             163             151
2030............................................................             108             141             131
2031............................................................              93             118             111
2032 and later..................................................              78              98              92
----------------------------------------------------------------------------------------------------------------

    In general, the structure of the final standards allows an 
incremental phase-in to the MY 2032 level and reflects consideration of 
the appropriate lead time for manufacturers to take actions necessary 
to meet the standards. The technical feasibility of the standards is 
discussed in section IV.A of this preamble and in the RIA Chapter 3.6. 
Note that MY 2032 is the final MY in which the CO2 standards 
would become more stringent. The MY 2032 standards will remain in place 
for later MYs, unless and until revised by EPA in a future rulemaking.
c. Timeframe of the Standards and Alternate Pathway Concepts
    In the NPRM, EPA requested comment on two additional issues 
regarding the structure of the program: (1) whether the timeframe for 
the standards should extend beyond MY 2032, and (2) whether there is 
merit to considering alternative pathways for compliance with the EPA 
program. This section discusses EPA's consideration of the public 
comments received on these two topics.
    EPA requested comment on whether the trajectory (i.e., the levels 
of year-over-year stringency rates) of the standards for MYs 2027 
through 2032 should be extended through MYs 2033, 2034 or 2035, or 
whether EPA should consider additional approaches to the trajectory of 
any standards that were to continue increasing in stringency beyond MY 
2032.
    A few commenters supported setting standards through MY 2035 as 
part of this rulemaking. These commenters believed standards through 
2035 would set a clear market signal that would provide certainty to 
manufacturers in their long-term emissions reduction targets. Such 
commenters also believed that EPA should set standards that achieve 
zero emissions by 2035 and pointed to consistency with the ACC II 
program which has been adopted by California and several other states.
    Other commenters believed that EPA ultimately should set standards 
beyond MY 2032, but that it should be done as part of a separate future 
rulemaking effort. Some commenters believed that EPA should not set 
standards through MY 2035 as part of this rule, but it was important to 
them that the final standards are sufficiently stringent through MY 
2032 to ensure that the U.S. is on track to reach a zero emissions 
target by 2035.
    Most commenters did not support extending standards beyond MY 2032 
at this time. Many of these commenters pointed to the lack of certainty 
in how the EV market and supporting conditions (like infrastructure) 
will develop beyond MY 2032. Other commenters suggested that if 
standards were extended beyond MY 2032, that some form of a mid-course 
review might be necessary given what they perceived as significant 
uncertainty in that longer time frame. Other commenters believed that 
EPA's standards through MY 2032 were important in establishing a 
trajectory of emission reductions upon which EPA could come back with a 
future rule to establish appropriate standards for MYs 2033 and beyond. 
EPA understands commenters' concerns about uncertainty out to the MY 
2035 timeframe, and believes it is appropriate to consider standards 
for MY 2033 and beyond in a future rulemaking. Thus, after considering 
all of these comments, EPA is finalizing standards for MYs 2027 through 
MY 2032 for both light-duty and medium-duty vehicles.
    While EPA believes the standards are appropriate for light-duty 
vehicle manufacturers on an overall industry basis, we recognize that 
some companies today only sell BEVs and others have made public 
announcements for plans for various advanced technologies, including 
near-zero and zero-emission vehicle product launches (as discussed in 
section I.A.2.ii of this preamble) that may lead to CO2 
emissions even lower than those projected under the final standards. 
The program's existing averaging, banking, and trading provisions allow 
manufacturers to earn credits for overcompliance with the standards 
that can be banked for the company's future use (up to five model 
years) or traded to other companies (as discussed further in section 
III.C.4 of this preamble). EPA did not reopen these provisions.
    EPA sought public comments on whether there might be merit in 
establishing additional ways in which the program could provide for 
alternative compliance pathways that could encourage manufacturers to 
achieve even lower CO2 emissions than required by EPA 
standards. EPA received comment on such an approach from the 
Environmental Defense Fund (EDF), which suggested that EPA adopt a 
voluntary alternative ``leadership pathway'' that allows manufacturers 
to comply with EPA's standards by meeting California's ACC II standards 
nationwide. GM also commented in support of such a concept, suggesting 
that a leadership pathway would exceed the criteria pollutant and GHG 
emissions goals and reward automakers that are accelerating the 
transition to

[[Page 27911]]

zero-emission vehicles with less complexity and with fewer 
certification requirements. The commenters did not, however, provide 
details on how such a concept could be constructed including the many 
implementation provisions that would need to be developed. EPA 
appreciates the spirit of these suggestions and the interest of certain 
stakeholders in exploring such alternative compliance pathways that 
might incentivize manufacturers to reduce emissions even sooner than 
required under our final program and considering the relationship to 
state programs. However, at this time, we believe that such concepts 
would need additional exploration and assessment. Although we are not 
finalizing such an alternate pathway in this rulemaking, EPA is open to 
continued dialog with all stakeholders on how such concepts might be 
structured for a potential future action.
d. Useful Life Standards and Test Procedures
    The current program includes additional provisions that we did not 
reopen and so will continue to be implemented during the timeframe of 
this rule. We describe them briefly here for informational purposes.
    Consistent with the requirement of CAA section 202(a)(1) that 
standards be applicable to vehicles ``for their useful life,'' the MY 
2027-2032 vehicle standards will apply for the useful life of the 
vehicle.\558\
---------------------------------------------------------------------------

    \558\ The GHG emission standards apply for a useful life of 10 
years or 120,000 miles for LDVs and LLDTs and 11 years or 120,000 
miles for HLDTs and MDPVs. See 40 CFR 86.1805-17.
---------------------------------------------------------------------------

    The existing program also requires certain test procedures over 
which emissions are measured and weighted to determine compliance with 
the GHG standards. These procedures are the Federal Test Procedure (FTP 
or ``city'' test) and the Highway Fuel Economy Test (HFET or 
``highway'' test). EPA is making only minor changes to the GHG test 
procedures in this rulemaking. Namely, EPA will require manufacturers 
to use the same Tier 3 test fuel already specified for demonstrating 
compliance with criteria pollutant standards, as described in the next 
section. We are also revising the fleet utility factor for plug-in 
hybrid electric vehicles as described in section III.B.8 of the 
preamble and referencing an updated version of SAE J1711 to reflect the 
latest developments in measurement procedures for all types of hybrid 
electric vehicles as described in section IX.I of the preamble.
e. What test fuel is EPA finalizing?
    Within the structure of the footprint-based GHG standards, EPA is 
also finalizing that gasoline powered vehicle compliance with the 
standards be demonstrated on Tier 3 test fuel. The previous GHG 
standards for light-duty gasoline vehicles are set on the required use 
of Indolene, or Tier 2 test fuel. Tier 3 test fuel more closely 
represents the typical market fuel available to consumers in that it 
contains 10 percent ethanol. EPA had previously proposed an adjustment 
factor to allow demonstration of compliance with the existing GHG 
standards using Tier 3 test fuel but did not adopt those changes (85 FR 
28564, May 13, 2020). This rule does not require an adjustment factor 
for tailpipe GHG emissions, but rather requires manufacturers to test 
on Tier 3 test fuel and use the resultant tailpipe emissions directly 
in their compliance calculation. Such an adjustment factor is not 
required because the technology penetrations, feasibility, and cost 
estimates in this rule are based on compliance using Tier 3 test fuel.
    Both the Tier 3 and these Tier 4 criteria pollutant standards were 
based on vehicle performance with Tier 3 test fuel; as a result, 
manufacturers currently use two different test fuels to demonstrate 
compliance with GHG and criteria pollutant standards. Setting new GHG 
standards based on Tier 3 test fuel is intended to address concerns 
regarding test burden related to using two different test fuels and 
using a test fuel which is dissimilar to market fuels. Accordingly, we 
expect this change to streamline manufacturer testing and reduce the 
costs of demonstrating compliance with the final rule.
    The difference in GHG emissions between the two fuels is small but 
significant. EPA estimates that testing on Tier 3 test fuel will result 
in about 1.66 percent lower CO2 emissions.\559\ Because this 
difference in GHG emissions between the two fuels is significant in the 
context of measuring compliance with previous GHG standards, but small 
relative to the change in stringency of the finalized GHG standards in 
this rule, and because the cost of compliance on Tier 3 test fuel is 
reflected in this analysis for this rule, EPA believes that this 
rulemaking and the associated new GHG standards create an opportune 
time to shift compliance to Tier 3 fuel.
---------------------------------------------------------------------------

    \559\ EPA-420-R-18-004, ``Tier 3 Certification Fuel Impacts Test 
Program,'' January 2018.
---------------------------------------------------------------------------

    EPA is applying the change from Indolene to Tier 3 test fuel for 
demonstrating compliance with GHG standards starting in model year 
2027. This is the same year as the new standards in this final rule 
begin, and we expect this model year alignment will facilitate a smooth 
transition for manufacturers. We accordingly allow manufacturers to 
continue to rely on the interim provisions adopted in 40 CFR 600.117 
through model year 2026. These interim provisions address various 
testing concerns related to the arrangement for using different test 
fuels for different purposes. At the same time, we recognize that 
transitioning to a new test fuel is a change from how things have 
worked in the past, so we are providing additional flexibilities during 
the early years of the transition. Namely, manufacturers may optionally 
carry-over Indolene-based test results for model years 2027 through 
2029.
    For manufacturers that rely on Indolene-based test results in model 
years 2027 through 2029, we require a downward adjustment by 1.66 
percent to GHG emission test results (i.e., Tier 3 value = Tier 2 value 
/ 1.0166)) as a correction to correlate with test results that will be 
expected when testing with Tier 3 test fuel.
    We separately proposed to apply an analogous correction for the 
opposite arrangement--testing with Tier 3 test fuel to demonstrate 
compliance with a GHG standard referenced to Indolene test fuel (85 FR 
28564, May 13, 2020). We did not separately finalize the provisions in 
that proposed rule, and there is no longer a need to consider that 
provision now that vehicles are to be tested with the Tier 3 test fuel 
to demonstrate compliance with GHG standards.
    Similar considerations apply for measuring fuel economy, both to 
meet Corporate Average Fuel Economy (CAFE) requirements and to 
determine values for fuel economy labeling. In this case, EPA is 
applying the calculation adjustments described in the 2020 proposal. 
This is necessary because fuel economy standards are set through a 
different regulatory process that has not been updated to accommodate 
the change to Tier 3 test fuel. These adjustments include: (1) New test 
methods for specific gravity and carbon mass (or weight) fraction of 
Tier 3 test fuel to calculate emissions in a way that accounts for 
ethanol blending while also remaining consistent with the calculations 
used to establish the CAFE standards, (2) a revised equation for 
calculating fuel economy that uses an ``R-factor'' of 0.81 to account 
for the difference in engine performance between Tier 3 and Tier 2 test 
fuels, and (3) amended instructions for calculating fuel economy label 
values based on 5-cycle values and derived 5-cycle values.

[[Page 27912]]

Our overall goal is for manufacturers to transition to fuel economy 
testing with Tier 3 test fuel on the same schedule as described for 
demonstrating compliance with GHG standards in the preceding 
paragraphs.
    To reiterate, for the GHG compliance program, we are evaluating GHG 
compliance with standards that are set using Tier 3 fuel starting in MY 
2027; therefore, any vehicles that continue to be tested on Indolene, 
will need to have the results adjusted to be consistent with results on 
Tier 3 fuel. For the CAFE standards, we are continuing to evaluate fuel 
economy compliance with standards that are established on Indolene; 
therefore, any vehicles that are tested on Tier 3 fuel will need to 
have the results adjusted to be consistent with results on Indolene. 
Similar to the CAFE fuel economy standards, we are keeping the fuel 
economy label consistent with the current program; therefore, any 
vehicles that are tested on Tier 3 fuel will need to have the results 
adjusted to be consistent with results on Indolene.
    EPA is adopting the following (Table 23) to address fuel-related 
testing and certification requirements through the transition to the 
new standards. As noted above, for both GHG and fuel economy standards, 
vehicle manufacturers may choose to test their vehicles with either 
Indolene or Tier 3 test fuel through MY 2026. Manufacturers must 
certify all vehicles to GHG standards using Tier 3 test fuel starting 
in MY 2027; however, manufacturers may continue to meet fuel economy 
requirements through MY 2029 for any appropriate vehicles based on 
carryover data from testing performed before MY 2027.
    The Alliance for Automotive Innovation requested EPA continue to 
allow automakers the option to retest on E0 for the litmus assessment 
\560\ to determine whether to use the 5-cycle or 2-cycle testing 
methodology until the implications of the new E10 test fuel on the 
complex 5-cycle and litmus methodology can be fully examined and 
addressed. EPA will allow testing for determining the fuel economy 
label calculation method under 40 CFR 600.115-11 using either Tier 2 
(Indolene) or Tier 3 test fuel provided that the same test fuel must be 
used for all 5 cycles until such time that EPA updates the 5-cycle 
adjustment factors through guidance, at which point Tier 3 test fuel 
must be used.
---------------------------------------------------------------------------

    \560\ The ``Litmus test'' is the commonly known term used to 
describe the criteria for determining the fuel economy label 
calculation method (mpg based derived 5-cycle method or vehicle 
specific 5-cycle method or the modified 5-cycle method) for 2011 and 
later model year vehicles, as outlined in 40 CFR 600.115-08.

                                                                                   Table 23--Final Fuel-Related Testing and Certification Requirements
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                     GHG standards                                       Fuel economy standards                  Criteria for determining the fuel        Fuel cconomy and environment label values
                               ----------------------------------------------------------------------------------------------------------------  economy label calculation method  -----------------------------------------------------
                                                                                                                                                          ``litmus test''
           Test fuel                                                                                                             MY 2030 and   ------------------------------------                                        MY 2030 and
                                   Pre-MY 2027        MY 2027-2029    MY 2030 and later     Pre-MY 2027       MY 2027-2029          later                            MY 2027 and       Pre-MY 2027      MY 2027-2029          later
                                                                                                                                                   Pre-MY 2027        later \a\
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
Indolene......................  No CO2 adjustment  Carry-over test    Not allowed......  No adjustment      Carry-over        Not allowed.....  Optional: No      Optional: No      No adjustment     Carry-over        Not allowed.
                                 required.          results only;                         required.          results only;                       adjustment        adjustment        required.         results only;
                                                    Divide CO2 test                                          No adjustment                       required **.      required \b\.                       No CO2
                                                    results by                                               required.                                                                                 adjustment
                                                    1.0166.                                                                                                                                            required.
Tier 3........................  Apply proposed     No CO2 adjustment required
                                 CO2 adjustment
                                 (multiply test
                                 results by
                                 1.0166).
                                Apply revised FE equation proposed in 2020 rule
                                Apply revised FE equation proposed
                                 in 2020 rule
                                Apply revised FE equation proposed in 2020 rule; Apply
                                 proposed CO2 adjustment (multiply test results by
                                 1.0166).\a\
----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Until EPA updates the 5-cycle adjustment factors through guidance.
\b\ When performing testing for determining the fuel economy label calculation method under Sec.   600.115-11, the same test fuel must be used for all 5 cycles.

    The Alliance for Automotive Innovation (AAI) submitted comments 
that are nearly identical to the comments they submitted for the 
original 2020 Tier 3 Test Fuel NPRM. AAI submitted five specific 
comments on this rulemaking, each of which we have addressed in this 
FRM:
     Do Not Adjust the Tailpipe CO2 Value for E10: 
EPA has addressed this comment in this FRM by not adjusting 
CO2 values when vehicles are tested using Tier 3 test fuel. 
The GHG standards finalized in this FRM reflect the use of Tier 3 test 
fuel as does the feasibility analysis supporting this rule. No 
adjustment is required when testing on Tier 3 fuel.
     Set the R-Factor Equal to 1.0 for CAFE Performance on E10: 
EPA is finalizing an R-Factor of 0.81 based on the technical analysis 
provided in the 2020 Tier 3 Test Fuel NPRM.
     Delay E10 Phase-in, Allow Optional E0 Testing and 
Carryover of E0 Data and Revisit Any Adjustment as a Part of the Next 
CAFE/GHG Rulemaking: EPA accepted AAI's recommendation and is 
finalizing the Tier 3 test fuel change as part of this GHG standard 
setting rulemaking. In addition, this FRM includes provisions for 
phase-in of Tier 3 test fuel and the carry-over of data during the 
phase-in.
     Address the Impact of the E10 Transition on 5-cycle 
Testing and Litmus Test: EPA accepted this recommendation and has 
included provisions for addressing 5-cycle testing and the litmus test 
in this FRM.
     Consider Fuel Economy and Environmental Performance 
Labeling Impacts: EPA has considered impacts to the label and has 
included specific provisions in this FRM to address the use of E10 for 
vehicle testing and the resultant label values.
    Several other commenters advised that adjusting CO2 
measurements from Tier 3 test fuel upward by 1.6 percent is improper 
since E10 test fuel represents market fuel. They also suggest that the 
proposed adjusted R-value of 0.81 is too low, stating that

[[Page 27913]]

values around 0.9 have been published in recent literature, and that a 
value of 1.0 would be optimal as it avoids penalizing ethanol blends. 
One commenter explained that the computation of the test fuel's heating 
value and carbon mass fraction should be done using the original ASTM 
methods used in characterizing the historical reference fuel rather 
than the more modern methods we proposed, and that those values should 
account for sulfur and water content.
    See section 6.3 of the RTC for a more detailed discussion of 
comments related to test fuel for fuel economy measurements.
3. Medium-Duty Vehicle GHG Standards
i. What CO2 standards curves is EPA finalizing?
    Medium-duty vehicles (8,501 to 14,000 pounds GVWR) that are not 
categorized as MDPVs utilize a ``work-factor'' metric for determining 
GHG targets. Unlike the light-duty attribute metric of footprint, which 
is oriented around a vehicle's usage for personal transportation, the 
work-factor metric is designed around work potential for commercially 
oriented vehicles and accounts for a combination of payload, towing and 
4-wheel drive equipment.
    We received comments from the Alliance for Automotive Innovation 
(Alliance), GM, Ford, and Stellantis that opposed changes to the work 
factor definition that capped GCWR within the WF calculation to no 
greater than 22,000 pounds. Both the Alliance and Stellantis opposed 
the GHG standards for MDV, stating that were too stringent and with 
Stellantis further characterizing the standards as ``infeasible''. The 
Alliance and Stellantis specifically cited a 37 percent reduction in 
GHG from MY 2028 through MY 2032 as too stringent, and that the 
assumption of 98 percent electrification of van applications within the 
technology feasibility analysis for the proposal was too high. 
Stellantis requested that the Agency include PHEV technology for MDVs 
within its analysis for the final rule. Conversely, ICCT and ACEEE 
commented that too few MDV BEVs were included within the analysis and 
argued for more stringent GHG standards for MDV.
    Taking all of these comments into consideration, and for the 
reasons explained below (and in the RTC), we are finalizing the 
coefficients of the 2032 GHG standards as proposed for work factors 
less than 5,500 pounds, and we are finalizing the following changes 
relative to the proposal:
    1. We have eliminated the proposed GCWR cap within the work factor 
equation and have returned to a definition and equation for work factor 
identical to the one used chassis-certified Class 2b and 3 vehicles 
under the Heavy-duty Phase 2 GHG Program. Instead, we modified the 
structure of the MDV GHG standards directly and introduced a flattening 
of standards above specific work factor set-points.
    2. We are finalizing a more gradual and evenly-spaced change in GHG 
stringency from MY 2027 through 2031.
    3. The flattening of standards above specific work factor set-
points is phased-in gradually from MY 2028 through 2030.
    Our GHG standards for MDVs continue to be entirely chassis-
dynamometer based and continue to be work-factor-based as with the 
previous Heavy-duty Phase 2 standards. We are not finalizing our 
proposed 22,000-pound GCWR limit within the work factor equation. EPA 
had proposed this provision with the goal of preventing increases in 
the GHG emissions not fully captured within the loads and operation 
reflected during chassis dynamometer GHG emissions testing. Automaker 
commenters expressed concern that the proposal would disrupt vehicle 
categories, particularly when taking into consideration updates to the 
MDPV definition (see section III.E of this preamble). In response to 
comments, we are finalizing changes to the CO2 targets which 
flatten the standards in the following manner:
     At or above a work factor of 8,000 pounds in 2028.
     At or above a work factor of 6,800 pounds in 2029.
     At or above a work factor of 5,500 pounds for model years 
2030 and later.
    The final standards will continue to use the same work factor (WF) 
and GHG target definitions (81 FR 73478, October 25, 2016). The testing 
methodology does not directly incorporate any GCWR (i.e., trailer 
towing) related direct load or weight increases, however, flattening 
the standards above a 5,500-pound work factor upper cutpoint addresses 
concerns of potential windfall compliance credits for higher GCWR 
ratings and approximately reflects a GCWR of 22,000 pounds. Thus we are 
finalizing both a CO2 target equation and WF equation for 
determining GHG standards that are identical to those used in the 
heavy-duty Phase 2 GHG program, except with updated coefficients: \561\
---------------------------------------------------------------------------

    \561\ Note: There is no 22,000-pound GCWR cap within the WF 
equation.

CO2 Target (g/mile) = [a x WF] + b
WF = [0.75 x (Payload Capacity + xwd)] + [0.25 x Towing Capacity]
Payload Capacity = GVWR (pounds)-Curb Weight (pounds)
xwd = 500 pounds for 4wd, 0 lbs. for 2wd
Towing Capacity = GCWR (pounds)-GVWR (pounds)

    Final MDV GHG standards for model years 2027 and later are shown in 
Table 24 and Table 25.

           Table 24--Final Coefficients for MDV GHG Standards
------------------------------------------------------------------------
               Model year                        a               b
------------------------------------------------------------------------
2027....................................          0.0348             268
2028 \a\................................          0.0339             270
2029 \b\................................          0.0310             246
2030 \c\................................          0.0280             220
2031 \c\................................          0.0251             195
2032 \c\................................          0.0221             170
------------------------------------------------------------------------
Applicable WF Thresholds:
\a\ Only applicable at WF <8,000 pounds.
\b\ Only applicable at WF <6,800 pounds.
\c\ Only applicable at WF <5,500 pounds.


   Table 25--Final MDV GHG Standards Above WF Thresholds Referenced in
                                Table 24
------------------------------------------------------------------------
                                                          GHG standards,
            Model year                  WF threshold         g CO2/mi
------------------------------------------------------------------------
2028..............................  WF >=8,000 lbs......             541
2029..............................  WF >=6,800 lbs......             457
2030..............................  WF >=5,500 lbs......             374
2031..............................  WF >=5,500 lbs......             333
2032..............................  WF >=5,500 lbs......             292
------------------------------------------------------------------------

    The MDV target GHG standards are compared to the previous Heavy-
duty (HD) Phase 2 gasoline standards in Figure 10. For MY 2027, we are 
finalizing a revision to the HD Phase 2 standards under which gasoline 
MDVs are subject to fuel-neutral standards identical to the HD Phase 2 
diesel standards. MY 2027 standards for diesel MDV remain identical to 
HD Phase 2. EPA believes the revised MY 2027 MDV standard for gasoline 
MDV is reasonable given the significant advances in clean vehicle 
technology since our assessment at the time of the HD Phase 2 rule in 
2016. In our assessment conducted during the development of HD Phase 2, 
we found only one manufacturer had certified HD BEVs through MY 2016, 
and we projected limited adoption of electric vehicles into the market 
for MYs 2021 through 2027. However, as discussed in section IV.C.1 of 
this preamble and RIA Chapter 3.1, there are now a wider range of 
feasible technology options for manufacturers to apply to the MDV 
fleet. In addition to ICE-based technologies, manufacturers are 
actively increasing their PHEV and BEV vehicle offerings in the MDV

[[Page 27914]]

segment, which are supported through the IRA tax credits, and we expect 
this growth to continue through the remaining timeframe for the HD GHG 
Phase 2 program and into the timeframe of this program. Based on this 
new information, we believe the revised gasoline MDV standard for MY 
2027 is feasible, considering costs and lead time.
    We further believe that the revised MY 2027 standard is feasible on 
a fuel neutral basis, compared to the prior standards under the HD 
Phase 2 program that established separate standards for gasoline and 
diesel MDVs, with diesel MDVs subject to a more stringent standard than 
gasoline. This is consistent with the approach that we have taken 
within the LD program, where GHG standards are fuel neutral and include 
BEVs. Improvements in ICE technology, in particular HEV and PHEV 
technology and the use of dedicated hybrid engines in those 
applications, have narrowed the differences between gasoline and diesel 
GHG for both MDV and LD. This fuel-neutral approach also extends to our 
treatment of MDV BEVs. We anticipate that manufacturers will comply 
with MDV GHG standards in part through increased averaging of BEV MDV 
as their sales increase over the timeframe of our rule.
    We are finalizing standards in MY 2032 comparable to what was 
proposed except with the previously noted differences in calculating 
work factor and CO2 targets. We are also finalizing 
standards that are less stringent than the proposal for model years 
2028 through 2031 to allow additional manufacturer lead time. Note that 
all of the standards in Figure 10 continue beyond the data markers 
shown. The range of WF shown within the figure reflect the approximate 
transition from light-duty trucks to MDVs at a WF of approximately 
3,000 pounds. Also note that a GCWR of 22,000 pounds corresponds with a 
work factor of approximately 5,500 pounds, above which the GHG 
standards flatten for MY 2030 and later. We consider these standards 
feasible taking into consideration the opportunities for increasing 
penetration of advanced technologies, within both the van and MD pickup 
segments, as discussed further in section IV.C.1 of the preamble.
[GRAPHIC] [TIFF OMITTED] TR18AP24.009

Figure 10: Final GHG Standards for Medium-Duty Vehicles

ii. What fleet-wide CO2 emissions levels correspond to the 
standards?
    Table 26 shows overall fleet average target levels for both medium-
duty vans and pickup trucks that are projected for the standards. A 
more detailed break-down of the projected CO2 targets and 
achieved levels is provided in RIA Chapter 12. The actual fleet-wide 
average g/mile level that would be achieved in any year for medium-duty 
vans and pickup trucks will depend on the actual production of vehicles 
for that year, as well as the use of the credit averaging, banking, and 
trading provisions.

                 Table 26--Projected Targets for Final Medium-Duty GHG Standards, by Body Style
----------------------------------------------------------------------------------------------------------------
                                                                                  Pickups CO2 (g/   Total fleet
                           Model year                              Vans CO2 (g/        mile)       CO2 (g/mile)
                                                                       mile)
----------------------------------------------------------------------------------------------------------------
2027............................................................             392             497             461

[[Page 27915]]

 
2028............................................................             391             486             453
2029............................................................             355             437             408
2030............................................................             317             371             353
2031............................................................             281             331             314
2032 and later..................................................             245             290             274
----------------------------------------------------------------------------------------------------------------

iii. MDV Incentive Multipliers
    For the Heavy-duty (HD) GHG Phase 2 rule, EPA adopted credit 
multipliers through MY 2027 for vehicles that qualified as ``advanced 
technology'' (i.e., PHEV, BEV and FCEV) based on the administrative 
record at that time. In the proposal for this rule (88 FR at 29243), we 
described the HD GHG Phase 2 advanced technology credit multipliers as 
representing a tradeoff between incentivizing new advanced technologies 
that could have significant emissions benefits and providing credits 
that could allow higher emissions from credit-using engines and 
vehicles. At the time we finalized the HD GHG Phase 2 program in 2016, 
we estimated that there would be very little market penetration of 
PHEV, BEV, and FCEV in the heavy-duty market in the MY 2021 to MY 2027 
timeframe when the advanced technology credit multipliers would be in 
effect. Additionally, the technology packages in our technical basis of 
the feasibility of the HD GHG Phase 2 standards did not include any of 
these advanced technologies.

  Table 27--Advanced Technology Multipliers in HD GHG Phase 2--The 2016
      Final Rule Applied These Multipliers to MYs 2021 Through 2027
------------------------------------------------------------------------
                       Technology                           Multiplier
------------------------------------------------------------------------
Plug-in hybrid electric vehicles........................             3.5
All-electric vehicles...................................             4.5
Fuel cell electric vehicles.............................             5.5
------------------------------------------------------------------------

    In our assessment conducted during the development of HD GHG Phase 
2, we found only one manufacturer had certified HD BEVs through MY 
2016, and we projected ``limited adoption of all-electric vehicles into 
the market'' for MYs 2021 through 2027.\562\ At low adoption levels, 
the benefits of encouraging additional utilization of these 
technologies outweighed negative emissions impacts of multipliers. 
However, as discussed in section IV of the preamble, manufacturers are 
now actively increasing their use of PHEV and BEV technologies in the 
medium-duty segment with further support through the IRA and other 
actions, and we expect this growth to continue through the remaining 
timeframe for the HD GHG Phase 2 program and into the timeframe for 
this medium-duty program.
---------------------------------------------------------------------------

    \562\ 81 FR 73818 (October 25, 2016).
---------------------------------------------------------------------------

    While we did anticipate that some growth in development of these 
technologies would occur due to the credit incentives in the HD GHG 
Phase 2 final rule, we did not expect the level of innovation observed 
since we finalized the rule in 2016, the IRA or BIL incentives, or that 
California would adopt the Advanced Clean Trucks (ACT) rule at the same 
time these advanced technology multipliers were in effect. We therefore 
proposed phasing out multipliers for PHEV, BEV and FCEV technologies 
one year earlier than provided in the Phase 2 rule such that the 
multipliers would be eliminated in MY 2027.
    EPA received comments both in support of and in opposition to its 
proposal to eliminate MDV multiplier incentives for MY 2027 vehicles. 
Some auto industry commenters opposed the elimination of the 
multipliers for MY 2027 as they believed the multipliers are important 
to address market uncertainties and that changes in the multipliers 
could be disruptive to manufacturers' planning and development cycles 
already underway. Other commenters supported EPA's proposal to remove 
multipliers for MY 2027 believing that multipliers are no longer 
necessary given the rapid advancement of BEVs in the MDV market and 
given their concern that multipliers erode the emissions benefits of 
the program and could result in emissions backsliding.
    EPA has considered these comments (as discussed further in section 
3.1.8 of the RTC). We believe that, if left as is, the MY 2027 MDV 
multiplier credits may allow for backsliding of emission reductions 
expected from non-advanced technology vehicles for some manufacturers 
in the near term (i.e., the generation of excess credits which could 
delay the introduction of technology in the near or mid-term) as sales 
of advanced technology MDVs that can generate the incentive credit 
continue to increase. In light of the current existence of, and 
expected continued rapid increase in, adoption of advanced technologies 
(including zero-emission technologies) in the MDV market, EPA is, as 
proposed, removing the BEV, PHEV, and FCEV multipliers for MY 2027.
    In the proposal, EPA also requested comment on phasing down the MDV 
multipliers for MYs 2025 and 2026. Upon considering public comments, we 
have decided not to make any changes to the multiplier levels for MYs 
2025-2026. While one auto manufacturer supported a phase-down of the MY 
2025-2026 multipliers, another manufacturer raised the concern that 
changes to the multipliers in MY 2025-2026 would not provide sufficient 
lead time for manufacturers who have been planning to utilize the 
multipliers in their compliance plans for those model years. Given that 
MY 2025 has already begun and that MY 2026 begins as early as nine 
months from this final rule, EPA believes it would not be appropriate 
to change the MY 2025 or 2026 multipliers. Therefore, the MDV MY 2025-
2026 multipliers will remain in effect as established under the Phase 2 
rule.
4. Averaging, Banking, and Trading Provisions for GHG Standards
    Averaging, banking, and trading (ABT) is an important compliance 
flexibility that has long been built into various highway engine and 
vehicle programs (and nonroad engine and equipment programs) to support 
emissions standards that, through the introduction and application of 
new technologies, result in reductions in air pollution. EPA is 
explaining the ABT provisions of the GHG program as background 
information, as we did not reopen the existing provisions in 40 CFR 
86.1865-12.
    EPA's first mobile source program to feature averaging was issued 
in 1983

[[Page 27916]]

and included averaging for diesel light-duty vehicles to provide 
flexibility in meeting new PM standards.\563\ EPA introduced 
NOX and PM averaging for highway heavy-duty vehicles in 
1985.\564\ EPA introduced credit banking and trading in 1990 with new 
more stringent highway heavy-duty NOX and PM standards to 
provide additional compliance flexibility for manufacturers.\565\ Since 
those early rules, EPA has included ABT in many programs across a wide 
range of mobile sources.\566\ For light-duty vehicles, EPA has included 
ABT in several criteria pollutant emissions standards rules including 
in the National Low Emissions Vehicle (NLEV) program,\567\ the Tier 2 
standards,\568\ and the Tier 3 standards.\569\ ABT has also been a key 
feature of all GHG rules for both light-duty and heavy-duty 
vehicles.\570\
---------------------------------------------------------------------------

    \563\ 48 FR 33456, July 21, 1983.
    \564\ 50 FR 30584, March 15, 1985.
    \565\ 55 FR 30584, July 26, 1990.
    \566\ We note that in upholding the first HD final rule that 
included averaging, the D.C. Circuit rejected petitioner's challenge 
that Congress meant to prohibit averaging in standards promulgated 
under section 202(a). NRDC v. Thomas, 805 F.2d 410, 425 (D.C. Cir. 
1986). In the 1990 Clean Act Amendments, Congress, noting NRDC v. 
Thomas, opted to let the existing law ``remain in effect,'' 
reflecting that ``[t]he intention was to retain the status quo,'' 
i.e., EPA's existing authority to allow averaging for standards 
under section 202(a). 136 Cong. Rec. 36,713, 1990 WL 1222468 at 
*1,136 Cong. Rec. 35,367, 1990 WL 1222469 at *1.
    \567\ 62 FR 31192, June 6, 1997.
    \568\ 65 FR 6698, February 10, 2000.
    \569\ 79 FR 23414, April 28, 2014.
    \570\ The Federal Register citations for previous vehicle GHG 
rules are provided in section III.A.2 of this preamble.
---------------------------------------------------------------------------

    ABT can help to address issues of technological feasibility and 
lead time, as well as considerations of cost. In many cases, ABT 
supports the ability of automakers to comply with standards in a manner 
that is more economically efficient and possibly with less lead time. 
This provides important environmental benefits and at the same time it 
increases flexibility and reduces costs for the regulated industry. 
Furthermore, by encouraging automakers to exceed minimum requirements 
where possible, the ABT program encourages technological innovation, 
which makes further reductions in fleetwide emissions possible. The 
light-duty ABT program for GHG standards includes existing provisions 
initially established in the 2010 rule for how credits may be generated 
and used within the program. The ABT provisions of 40 CFR 86.1865-12 
include credit carry-forward, credit carry-back (also called deficit 
carry-forward), credit transfers (within a manufacturer), and credit 
trading (across manufacturers). The MDV GHG program includes similar 
ABT provisions. EPA received comments from vehicle manufacturers and 
environmental organizations generally supporting the continuation of 
the ABT provisions to allow a wide array of vehicles to be produced 
providing that no particular technologies are forced.
    Credit carry-forward refers to banking (saving) credits for future 
use, after satisfying any needs to offset prior MY debits within a 
vehicle category (car fleet or truck fleet). Credit carry-back refers 
to using credits to offset any deficit in meeting the fleet average 
standards that had accrued in a prior MY. The regulation at 40 CFR 
86.1865-12 allows a manufacturer to have a deficit at the end of a MY 
(after averaging across its fleet using credit transfers between cars 
and trucks)--that is, a manufacturer's fleet average emissions level 
may fail to meet the manufacturer's required fleet average standard for 
the MY, for a limited number of model years. The CAA does not specify 
or limit the duration of such credit provisions. In previous rules, EPA 
chose to generally adopt 5-year credit carry-forward and 3-year credit 
carry-back provisions \571\ as a reasonable approach that maintained 
consistency between EPA's GHG and NHTSA CAFE regulatory 
provisions.\572\ These provisions continue to apply during the 
timeframe for compliance with this rule, and as noted above, EPA did 
not reopen the GHG ABT program.
---------------------------------------------------------------------------

    \571\ Although the existing credit carry-forward and carry-back 
provisions generally remained in place for MY 2017 and later 
standards, EPA finalized provisions in the 2012 rule allowing all 
unused (banked) credits generated in MYs 2010-2015 (but not MY 2009 
early credits) to be carried forward through MY 2021. See 77 FR 
62788. In addition, in the 2021 rule, EPA adopted a targeted one-
year extension (6 years total carry-forward) of credit carry-forward 
for MY 2017 and 2018 credits. See 86 FR 74453.
    \572\ The EPCA/EISA statutory framework for the CAFE program 
limits credit carry-forward to 5 years and credit carry-back to 3 
years.
---------------------------------------------------------------------------

    Transferring credits in the GHG program under 40 CFR 86.1865-12 
refers to exchanging credits between the two averaging sets--passenger 
cars and light trucks--within a manufacturer. For example, credits 
accrued by overcompliance with a manufacturer's car fleet average 
standard can be used to offset debits accrued due to that manufacturer 
not meeting the truck fleet average standard in a given model 
year.\573\ Except as described in section III.D.2.v of the preamble, 
MDVs are a separate averaging set and credits are not allowed to be 
transferred between vehicles meeting the light- and medium-duty GHG 
standards due to the very different standards structure, vehicle 
testing differences (e.g., MDVs are tested at an adjusted loaded 
vehicle weight of vehicle curb weight plus half payload whereas light-
duty vehicles are tested at an estimated test weight of curb weight 
plus 300 pounds) and marketplace competitiveness issues. This 
prohibition includes traded credits such that, once traded, credits may 
not be transferred between the light- and medium-duty fleets. Finally, 
40 CFR 86.1865-12 allows accumulated credits to be traded to another 
manufacturer. Credit trading has occurred on a regular basis in EPA's 
light-duty vehicle program.\574\ Manufacturers acquiring credits may 
offset credit shortfalls and bank credits for use toward future 
compliance within the carry-forward constraints of the program.
---------------------------------------------------------------------------

    \573\ There is a VMT factor included in the credit calculations 
such that light trucks generate and use more credits than passenger 
cars based on higher lifetime VMT projections for light trucks 
compared to passenger cars. The lifetime VMT used for passenger cars 
and light trucks are 195,264 and 225,865, respectively.
    \574\ EPA provides general information on credit trades annually 
as part of its annual Automotive Trends and GHG Compliance Report. 
The latest report is available at: https://www.epa.gov/automotive-trends and in the docket for this rulemaking.
---------------------------------------------------------------------------

    The ABT provisions are an integral part of the vehicle GHG program, 
and the agency expects that manufacturers will continue to utilize 
these provisions into the future, as they give manufacturers an 
important tool to resolve any potential lead time and cost issues. 
EPA's annual Automotive Trends Report provides details on the use of 
these provisions in the GHG program.\575\ EPA did not reopen the GHG 
program ABT provisions in this rulemaking.
---------------------------------------------------------------------------

    \575\ ``The 2022 EPA Automotive Trends Report, Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-22-
029, December 2022.
---------------------------------------------------------------------------

5. Vehicle Air Conditioning System Related Provisions
    Vehicle air conditioning (A/C) contributes to vehicle emissions in 
two ways. The first is indirect emissions of GHG exhaust emissions 
resulting from the increase in fuel consumption needed to operate an AC 
system. The second is direct emissions of hydrofluorocarbon (HFC) 
greenhouse gases of refrigerant via leakage from the A/C system. EPA 
has addressed the first mechanism through the use of credits to 
encourage manufacturers to make efficiency improvements to their A/C 
systems to reduce fuel consumption and the associated GHG emissions. 
EPA has also addressed the second mechanism through a credit provision, 
providing manufacturers credits for using lower

[[Page 27917]]

global warming potential (GWP) HFC refrigerants and/or reducing the 
leakage of A/C systems. EPA has included air conditioning (A/C) system 
credits in its light-duty GHG program since the initial program adopted 
in the 2010 rule. Although the use of A/C credits has been voluntary, 
EPA in past rules has adjusted the level of the CO2 
standards downward, making them more stringent, to reflect the 
availability of technology to mitigate these two emission sources (and 
the associated availability of credits). Manufacturers opting not to 
adopt technologies that improve A/C efficiency or reduce refrigerant 
leakage emissions and earn A/C credits, meet the vehicle GHG standards 
through additional tailpipe CO2 emission reductions. In this 
FRM, EPA is revising the A/C credits program for light-duty vehicles in 
two ways. First, for A/C system efficiency, as proposed, EPA is 
limiting the eligibility for voluntary credits for tailpipe 
CO2 emissions control to ICE vehicles starting in MY 2027 
(i.e., BEVs would not earn A/C efficiency credits). Second, for A/C 
refrigerant leakage control, EPA is phasing down the credit from MYs 
2027-2030 and retaining a small permanent credit for MYs 2031 and 
later.
i. Background on A/C Emissions in Previous Programs
    As noted above, there are two mechanisms by which A/C systems 
contribute to the emissions of GHGs: through leakage of 
hydrofluorocarbon (HFC) refrigerants into the atmosphere (sometimes 
called ``direct emissions'') and through the consumption of fuel to 
provide mechanical power to the A/C system (sometimes called ``indirect 
emissions'').\576\ Since the first GHG standards in 2010, EPA has 
regulated the emissions of HFCs from vehicles by identifying control 
strategies for reducing refrigerant leakage (and for reducing the 
climate impacts of GHG leakage on a CO2e basis), offering 
credits for adopting those strategies, and then setting the stringency 
of the tailpipe emissions standards based on the feasibility of 
adopting technologies that mitigate emissions from air conditioning, 
with the final level of the standards reflecting the level of the 
credits a manufacturer could earn. Thus, since 2010, the tailpipe 
standards have been intentionally set to achieve control of HFCs. This 
program has been successful; since the 2010 rule, manufacturers have 
reduced the impacts of refrigerant leakage significantly by using 
systems that incorporate leak-tight components and by using 
refrigerants with a lower global warming potential. When EPA 
established the light-duty refrigerant credits in the 2010 rule, the 
most common refrigerant was HFC 134a which has a global warming 
potential of 1430. The high global warming potential of HFC-134a, means 
that leakage of a gram of HFC134(a) would have 1430 times the global 
warming potential of a gram of CO2. Manufacturers have 
steadily increased their use of low GWP refrigerant HFO-1234yf which 
has a GWP of 1, much lower than the GWP of the HFC refrigerant it 
replaces. The A/C system also contributes to increased tailpipe 
CO2 emissions through the additional work required to 
operate the compressor, fans, and blowers. This additional power demand 
is ultimately met by using additional fuel, which is converted into 
CO2 by the engine during combustion and exhausted through 
the tailpipe. These emissions can be reduced by increasing the overall 
efficiency of an A/C system, thus reducing the additional load on the 
engine from A/C operation, which in turn means a reduction in fuel 
consumption and a commensurate reduction in CO2 emissions.
---------------------------------------------------------------------------

    \576\ 40 CFR 1867-12 and 40 CFR 86.1868-12.
---------------------------------------------------------------------------

    In past rules, EPA adjusted the stringency of the light-duty 
CO2 footprint curves to reflect the expected adoption of 
technologies that reduce A/C emissions (and the associated A/C credits) 
by shifting the footprint curves downward. In the 2010 rule and again 
in subsequent rules, EPA increased the stringency of the footprint 
curves for cars and trucks to reflect the expected adoption of 
technologies that reduce A/C emissions and the associated and 
relatively low-cost A/C credits earned.
    For MDVs, EPA adopted a somewhat different approach to address A/C 
refrigerant emissions. In the Phase 1 rule, rather than indirectly 
regulating HFCs through offering a credit, EPA directly regulated HFCs 
through a refrigerant leakage standard.\577\ This approach eliminated 
the need to adjust the CO2 work factor-based standards to 
account for the availability of adoption of lower GWP refrigerants, as 
EPA did in setting the prior light-duty standards. EPA projected that 
manufacturers would meet the leakage standard either through the use of 
leak tight components or through the use of alternative refrigerants. 
In the Phase 2 rule, EPA revised the refrigerant leakage standard to be 
refrigerant neutral, meaning that regardless of the type of refrigerant 
used, the loss of refrigerant cannot exceed the standard of 11 g/year 
or a percentage leakage rate greater than 1.5 percent per year.\578\ 
The MDV program does not include A/C efficiency related credits or 
requirements.\579\
---------------------------------------------------------------------------

    \577\ 76 FR 57194 and 73525.
    \578\ Under the Phase 2 program, loss of refrigerant from air 
conditioning systems may not exceed a total leakage rate of 11.0 
grams per year or a percent leakage rate of 1.50 percent per year, 
whichever is greater. See 81 FR 73742 and 40 CFR 1037.115(e).
    \579\ In the previous heavy-duty GHG rules, EPA discussed but 
did not propose or finalize A/C efficiency credits for MDVs. For 
further discussion see 76 FR 57196 and 81 FR 73742.
---------------------------------------------------------------------------

ii. Modifications to the A/C Efficiency Credits
    The previous light-duty vehicle A/C indirect emissions reduction 
credits in 40 CFR 86.1868-12, which EPA also commonly refers to as A/C 
efficiency credits, are based on a technology menu with a testing 
component to confirm that the technologies provide emissions reductions 
when installed as a system on vehicles. The menu includes credits for 
improved system components and air recirculation settings designed to 
reduce the A/C load on the IC engine.\580\ The A/C efficiency credits 
are capped at 5.0 g/mile for passenger cars and 7.2 g/mile for light 
trucks. In addition, a limited amount of vehicle tailpipe testing 
(i.e., the ``AC17'' test) is required for manufacturers claiming 
credits to verify anticipated emissions reductions are occurring. The 
credits have been effective in incentivizing A/C efficiency 
improvements since the program's inception, and manufacturers' use of 
A/C menu credits has steadily increased over time. In MY 2022, 20 of 22 
manufacturers reported efficiency credits resulting in an average 
credit of 5.8 g/mile.\581\
---------------------------------------------------------------------------

    \580\ Joint Technical Support Document, Final Rulemaking for 
2017-2025 Light-Duty Vehicle Greenhouse Gas Emission Standards and 
Corporate Average Fuel Economy Standards, EPA-420-R-12-901, August 
2012.
    \581\ ``The 2023 EPA Automotive Trends Report, Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-23-
033, December 2023.
---------------------------------------------------------------------------

    EPA is finalizing its proposal that beginning with MY 2027, A/C 
efficiency credits are eligible only for vehicles equipped with IC 
engines. Thus, BEVs will no longer be eligible for A/C efficiency 
credits after MY 2026.
    The Alliance for Automotive Innovation (AAI) and some vehicle 
manufacturers provided comments opposing the elimination of A/C 
efficiency credits for BEVs. Some of these commenters noted the 
importance of more efficient A/C systems for BEVs in improving overall 
BEV efficiency. Other commenters including NGOs supported EPA's 
proposal and specifically supported the decision not to apply A/C 
efficiency credits to BEVs

[[Page 27918]]

given that BEVs have a zero grams per mile compliance value.
    The A/C efficiency credits are based on emissions reductions from 
ICE vehicles. They correspond to motor vehicle emissions reductions 
that occur when the A/C systems on ICE vehicles are operated more 
efficiently, which in turn reduces their use of electricity produced by 
the alternator and engine, and which in turn reduces pollution emitted 
by the motor vehicle engine. The credits provided an incentive for 
manufacturers to increase the efficiency of their A/C systems and in 
turn reduce the pollution emitted by the vehicle engine. The amount of 
the credits was determined based on our technical analysis of the 
emissions produced by an ICE engine and how A/C efficiency improvements 
could reduce such emissions. In turn, while the credits were optional, 
EPA established the GHG standards accounting for the level of credits 
that manufacturers could potentially obtain.
    Currently, BEVs are generating credits even though the credits are 
based solely on improvements to ICE vehicles, and not representative of 
emissions reductions for BEVs. That is, BEVs completely prevent engine 
emissions. Thus, improving A/C efficiency does not and is not needed to 
further decrease vehicle engine emissions. Moreover, the amount of the 
credits EPA previously determined based on ICE vehicle emissions has no 
real-world correlation to BEVs. Allowing BEVs to generate A/C 
efficiency credits is therefore not technically sound as it is 
unrelated to controlling emissions from the vehicle. Instead, they are 
receiving a windfall of credits that fails to correspond to any real-
world reduction in vehicle emissions, a problem which increases in 
significance as the manufacturers choose to produce an increasing 
number of BEVs.
    When EPA first established A/C efficiency credits in the 2010 rule, 
BEV sales were relatively small, and EPA anticipated that BEVs would be 
required eventually to reflect a portion of carbon emissions from 
upstream electricity generation in compliance results. However, as 
discussed in section III.C.7 of this preamble, EPA has concluded it is 
appropriate to measure compliance with vehicle emissions standards 
solely by reference to vehicle emissions and is thus removing the MY 
2027 date previously specified in the regulations for including 
upstream emissions in compliance calculations for BEVs. In addition, 
the ability of BEVs to generate A/C credits has contributed to 
manufacturers reporting BEV emissions as less than zero, which is not 
representative of actual vehicle emissions and can be a source of 
confusion. For example, in the latest Trends report, Tesla, which sells 
only BEVs, reported a fleet average performance value of negative 23 g/
mile including 18.2 g/mile of A/C credits.\579\ Initially, when BEV 
sales were very low, these issues and their impacts were small, and the 
A/C efficiency credits in turn provided some amount of incentive for 
more efficient BEVs overall and resulting upstream emission reductions. 
However, EPA has reconsidered the appropriateness of applying A/C 
efficiency credits to BEVs in light of the increasing level of BEVs 
that we anticipate manufacturers will choose to produce in future model 
years and our final rule provision to indefinitely exclude upstream 
emissions from BEV compliance calculations. For all these reasons, EPA 
believes limiting eligibility for A/C efficiency credits to only ICE 
vehicles beginning in MY 2027 is appropriate. As described for off-
cycle credits in section III.C.6.i of this preamble, the final rule 
also restricts the applicability of A/C efficiency credits for PHEVs to 
the portion of vehicle operation when the engine is running, based on 
the vehicle's utility factor. Similar to the preceding discussion of 
BEVs and A/C efficiency credits, this calculation adjustment is 
appropriate to associate A/C efficiency credits only with ICE operation 
beginning in MY 2027.
    EPA notes that its approaches for A/C efficiency credits and off-
cycle credits, discussed in detail in section III.C.6 of this preamble, 
differ even though the types of emissions the credits are designed to 
address (i.e., emissions not considered on the 2-cycle compliance test 
cycles) are similar. As discussed in section III.C.6 of this preamble, 
while EPA is phasing out the off-cycle credits entirely after MY 2032, 
EPA is not phasing out A/C efficiency credits for ICE vehicles because 
the A/C efficiency credits program is more robust as it includes a 
check of vehicle emissions performance through AC17 testing. EPA 
established the AC17 testing requirements as part of the 2012 rule to 
provide an assurance that the A/C systems earning credits were 
providing anticipated emissions reductions. As established in the 2012 
rule, the AC17 test is mandatory for MYs 2017 and later (with the 
exception that manufacturers are not required to test BEVs).\582\ The 
off-cycle credits program includes no such mechanism to check 
performance. EPA did not reopen the existing AC17 testing provisions as 
part of this rule; therefore, the AC17 testing requirements of 
manufacturers earning A/C efficiency credits will remain in effect 
under the MY 2027 and later program.
---------------------------------------------------------------------------

    \582\ 77 FR 62722.
---------------------------------------------------------------------------

    EPA's MDV GHG work factor-based program does not include A/C system 
efficiency provisions,\583\ and EPA did not reopen this issue for this 
rule.
---------------------------------------------------------------------------

    \583\ See 81 FR 73742, October 25, 2016.
---------------------------------------------------------------------------

iii. Phase-Down of A/C Credits for Reduced Refrigerant Leakage
    The previous light-duty vehicle A/C credits program in 40 CFR 
86.1867-12 that was adopted in the 2012 rule also included credits for 
low refrigerant leakage systems and/or the use of alternative low 
global warming potential (GWP) refrigerants rather than 
hydrofluorocarbons (HFCs). Under the prior program, the potential 
available A/C leakage credits are larger than the A/C efficiency 
credits. The prior program caps refrigerant related credits for 
passenger cars and light trucks, respectively, at 13.8 and 17.2 g/mile 
when an alternative refrigerant is used and 6.3 and 7.8 g/mile in cases 
where an alternative refrigerant is not used. Although the credits 
program has been voluntary since its inception, the standards were 
adjusted to reflect the anticipated use of the credits and the program 
has been effective in achieving its goal of increasing the use of low 
GWP refrigerants and low leak technologies. Since EPA established the 
refrigerant-based credits, low GWP refrigerant HFO-1234yf has been 
successfully used by many manufacturers to claim the full refrigerant 
replacement credits. As of MY 2022, 97 percent of new vehicles used the 
low GWP refrigerant.\584\ EPA adopted a different approach for MDVs by 
including in the program a refrigerant leakage standard rather than a 
credit.\585\
---------------------------------------------------------------------------

    \584\ ``The 2023 EPA Automotive Trends Report, Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-23-
033, December 2023. See Figure 5.5 in page 97.
    \585\ See 40 CFR 1037.115(e) and 81 FR 73726, October 25, 2016.
---------------------------------------------------------------------------

    In December 2020, the American Innovation and Manufacturing (AIM) 
Act (42 U.S.C. 7675) was enacted. The AIM Act, among other things, 
authorizes EPA to phase down production and consumption of HFCs in 
specific sectors and subsectors, including their use in vehicle A/C 
systems. The AIM Act has sent a strong signal to all vehicle 
manufacturers that there is no future for using high GWP refrigerants 
in new vehicles. In October 2023, in response to the AIM Act, EPA 
finalized the Technology Transitions Rule which

[[Page 27919]]

restricts the use of high GWP refrigerants such as HFCs in vehicle 
applications.\586\ The new restriction on refrigerant use is effective 
in MY 2025 for light-duty vehicles and MY 2028 for MDVs.\587\ Auto 
manufacturers have already successfully developed and employed HFO-
1234-yf low GWP refrigerants across the large majority of the fleet and 
there is no reason at this time to believe that manufacturers would 
redesign those systems again under the AIM Act, in the absence of EPA 
vehicle-based credits, to develop and use systems equipped with a 
higher GWP refrigerant. In light of the Agency's phase out of high GWP 
refrigerants pursuant to the AIM Act, EPA proposed sunsetting the 
voluntary refrigerant-related credits in MY 2027 for light-duty 
vehicles. Based on significant public comments on this issue, EPA is 
finalizing an approach that provides a phase-down of the current A/C 
leakage credits from MYs 2027-2030, and establishes a small A/C leakage 
credit for MY 2031 and later, as described in detail below.
---------------------------------------------------------------------------

    \586\ 88 FR 73098, October 24, 2023.
    \587\ EPA did not reopen the refrigerant-based credits for MYs 
2025-2026. In EPA's judgment, such an action (which we did not take) 
would appropriately be accompanied by a proposal to revise the 
stringency of the footprint curves for those model years, 
established in the 2021 rule, to account for the absence of the 
availability of refrigerant-based credits. EPA did not revisit the 
standards it established for MYs 2023-2026.
---------------------------------------------------------------------------

    Some commenters, including NGOs and states, were generally 
supportive of the proposal to eliminate A/C leakage credits given the 
AIM Act's provisions on phasing out high GWP refrigerants, although 
some of these commenters also supported regulatory changes to support 
the continued use of low leak technologies. Other comments from auto 
manufacturers expressed concerns with the proposal to end A/C leakage 
credits altogether in MY 2027, as they believed this change would have 
a significant impact on the effective stringency of the standards. Some 
auto manufacturers who supported the proposal's Alternative 3 (linear 
ramp rate) stringency as the right direction also commented that in 
order to address concerns about lead time in the early years, the 
program should also slow the phase-down of both off-cycle and A/C 
leakage credits. Some auto manufacturers also recommended that EPA 
should retain A/C leakage credits in the program as a way to continue 
to incentivize the lowest GWP refrigerants below the threshold 
established in the EPA Technology Transitions Rule.
    EPA has carefully considered these public comments and reconsidered 
its proposal for A/C leakage credits in the context of our updated 
technical analysis. We are retaining a small credit to further 
incentivize vehicle refrigerants below the threshold established in the 
EPA Technology Transitions Rule which prohibits refrigerants above a 
GWP of 150. Since much of the light-duty vehicle fleet is already using 
the HFO-1234yf refrigerant which has a GWP of 1, EPA also believes this 
credit will provide an incentive for manufacturers to not backslide, 
for example, by moving in the future to a GWP that approaches the 
Technology Transitions Rule threshold. In addition, EPA believes this 
credit will continue to incentivize low leak systems along with the use 
of very low GWP refrigerants. EPA has scaled back its existing A/C 
leakage credits to capture a credit value that represents the use of 
vehicle A/C refrigerants of less than 150 GWP. Specifically, for MY 
2031 and beyond, manufacturers may earn A/C leakage credits of up to 
1.6 g/mile for cars and 2.0 g/mile for light trucks. EPA's calculation 
methodology for these A/C credits can be found in RIA Chapter 3.6.
    We also agree with auto industry commenters that it is important to 
provide additional lead time in the early years of the program. 
Therefore, we are finalizing a phase-down of A/C leakage credits from 
MY 2027-2031. Specifically, the available A/C leakage credits will 
phase down as shown in Table 28.

 Table 28--A/C Leakage Credits Available to Manufacturers, Final Program
                              [CO2 g/mile]
------------------------------------------------------------------------
                           MY                               Car    Truck
------------------------------------------------------------------------
2026....................................................    13.8    17.2
2027....................................................    11.0    13.8
2028....................................................     8.3    10.3
2029....................................................     5.5     6.9
2030....................................................     2.8     3.4
2031....................................................     1.6     2.0
2032 and later..........................................     1.6     2.0
------------------------------------------------------------------------

    For MDVs, EPA had proposed to eliminate the MDV leakage standard in 
MY 2027. EPA received comments from some stakeholders, including the 
California Air Resources Board, that the MDV leakage standard should be 
retained as it provides additional GHG reductions. While recognizing 
that the Agency's Technology Transitions Rule will provide significant 
climate benefits by phasing out refrigerants above a GWP of 150, CARB 
pointed out that there are still benefits that the MDV leakage standard 
can achieve to ensure low leak systems regardless of the refrigerant 
used. In response to these comments, and for the reasons described 
above on the importance of a continued role for preventing emissions 
from A/C equipment in the vehicle program (recognizing that both LD and 
HD vehicles are subject to regulations to control leaks), EPA is 
retaining the existing MDV refrigerant leakage standard that was 
established under the Phase 2 program. The current MDV leakage standard 
requires that loss of refrigerant from A/C systems may not exceed a 
total leakage rate of 11.0 grams per year or a percent leakage rate of 
1.50 percent per year, whichever is greater. This leakage standard 
applies regardless of the refrigerant used in the A/C system. (See 81 
FR 73742, October 25, 2016 and 40 CFR 86.1819-14(h)).
6. Off-Cycle Credits Program
i. Background on the Off-Cycle Credits Program
    Starting with MY 2008, EPA started employing a ``five-cycle'' test 
methodology to measure fuel economy for purposes of new car window 
stickers (labels) to give consumers better information on the fuel 
economy they could more reasonably expect under real-world driving 
conditions.\588\ However, for GHG compliance, EPA continues to use the 
established ``two-cycle'' (city and highway test cycles, also known as 
the FTP and HFET) test methodology.\589\ As learned through development 
of the ``five-cycle'' methodology and prior rulemakings, there are 
technologies that provide real-world GHG emissions improvements, but 
whose improvements are not fully reflected on the ``two-cycle'' test. 
EPA established the off-cycle credit program in 40 CFR 86.1869-12 to 
provide an appropriate level of CO2 credit for technologies 
that achieve CO2 reductions but may not otherwise be chosen 
as a GHG control strategy, as their GHG benefits are not measured on 
the specified 2-cycle test. For example, high efficiency lighting is 
not measured on EPA's 2-cycle tests because lighting is not turned on 
as part of the test procedure, but this technology reduces 
CO2 emissions by decreasing the electrical load on the 
alternator and engine. Both light-duty and medium-

[[Page 27920]]

duty vehicles may generate off-cycle credits, but the program is much 
more limited in the medium-duty work factor-based program.
---------------------------------------------------------------------------

    \588\ https://www.epa.gov/vehicle-and-fuel-emissions-testing/dynamometer-drive-schedules. See also 75 FR 25439 for a discussion 
of 5-cycle testing.
    \589\ The city and highway test cycles, commonly referred to 
together as the ``2-cycle tests'' are laboratory compliance tests 
that are effectively required by law for CAFE, and also used for 
determining compliance with the GHG standards. 49 U.S.C. 32904(c).
---------------------------------------------------------------------------

    Under EPA's regulations through MY 2026, there are three pathways 
by which a manufacturer may accrue light-duty vehicle off-cycle 
technology credits.\590\ The first pathway is a predetermined list or 
``menu'' of credit values for specific off-cycle technologies that has 
been effective since MY 2014.\591\ This pathway allows manufacturers to 
use credit values established by EPA for a wide range of off-cycle 
technologies, with minimal or no data submittal or testing 
requirements. The menu includes a fleetwide cap on credits to address 
the uncertainty of a one-size-fits-all credit level for all vehicles 
and the limitations of the data and analysis used as the basis of the 
menu credits. The menu cap is 10 g/mile except for a temporary 
increased cap of 15 g/mile available only for MYs 2023-2026, adopted by 
EPA in the 2021 rule.\592\ The existing menu technologies and 
associated credits are summarized in Table 29 and Table 30.\593\
---------------------------------------------------------------------------

    \590\ ``The 2023 EPA Automotive Trends Report, Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-23-
033, December 2023, for information regarding the use of each 
pathway by manufacturers.
    \591\ See 40 CFR 86.1869-12(b).
    \592\ See 86 FR 74465.
    \593\ See 40 CFR 86.1869-12(b). See also ``Joint Technical 
Support Document: Final Rulemaking for 2017-2025 Light-duty Vehicle 
Greenhouse Gas Emission Standards and Corporate Average Fuel Economy 
Standards for the Final Rule,'' EPA-420-R-12-901, August 2012, for 
further information on the definitions and derivation of the credit 
values.

Table 29--Existing Off-Cycle Technologies and Credits for Cars and Light
                                 Trucks
------------------------------------------------------------------------
                                     Credit for cars    Credit for light
            Technology                   (g/mile)       trucks (g/mile)
------------------------------------------------------------------------
High Efficiency Alternator (at                    1.0                1.0
 73%; scalable)...................
High Efficiency Exterior Lighting                 1.0                1.0
 (at 100W)........................
Waste Heat Recovery (at 100W;                     0.7                0.7
 scalable)........................
Solar Roof Panels (for 75W,                       3.3                3.3
 battery charging only)...........
Solar Roof Panels (for 75W, active                2.5                2.5
 cabin ventilation plus battery
 charging)........................
Active Aerodynamic Improvements                   0.6                1.0
 (scalable).......................
Engine Idle Start-Stop with heater                2.5                4.4
 circulation system...............
Engine Idle Start-Stop without                    1.5                2.9
 heater circulation system........
Active Transmission Warm-Up.......                1.5                3.2
Active Engine Warm-Up.............                1.5                3.2
Solar/Thermal Control.............          Up to 3.0          Up to 4.3
------------------------------------------------------------------------


 Table 30--Existing Off-Cycle Technologies and Credits for Solar/Thermal
             Control Technologies for Cars and Light Trucks
------------------------------------------------------------------------
                                          Car credit (g/   Truck credit
       Thermal control technology              mile)         (g/mile)
------------------------------------------------------------------------
Glass or Glazing........................       Up to 2.9       Up to 3.9
Active Seat Ventilation.................             1.0             1.3
Solar Reflective Paint..................             0.4             0.5
Passive Cabin Ventilation...............             1.7             2.3
Active Cabin Ventilation................             2.1             2.8
------------------------------------------------------------------------

    A second pathway allows manufacturers of light-duty vehicles to use 
5-cycle testing to demonstrate and justify off-cycle CO2 
credits.\594\ The additional emissions tests allow emission benefits to 
be demonstrated over some elements of real-world driving not captured 
by the GHG compliance tests, including high speeds, rapid 
accelerations, and cold temperatures. Under this pathway, manufacturers 
submit test data to EPA, and EPA determines whether there is sufficient 
technical basis to approve the off-cycle credits. The third pathway 
allows manufacturers to seek EPA approval, through a notice and comment 
process, to use an alternative methodology other than the menu or 5-
cycle methodology for determining the off-cycle technology 
CO2 credits.\595\ This option is only available if the 
benefit of the technology cannot be adequately demonstrated using the 
5-cycle methodology. For MDVs, the manufacturers may use the public 
process or 5-cycle pathways for generating credits.\596\ There is no 
off-cycle credits menu for MDVs.
---------------------------------------------------------------------------

    \594\ See 40 CFR 86.1869-12(c).
    \595\ See 40 CFR 86.1869-12(d).
    \596\ See 40 CFR 86.1819-14(d)(13).
---------------------------------------------------------------------------

    EPA designed the off-cycle program to provide an incentive for new 
and innovative technologies that reduce real world CO2 
emissions primarily outside of the 2-cycle test procedures (i.e., off-
cycle) such that most of the emissions reductions are not reflected or 
``captured'' during certification testing. The program also provides 
flexibility to manufacturers since off-cycle credits may be used to 
meet their emissions reduction obligations.
    Since MY 2012, the program has successfully encouraged the 
introduction and use of a variety of off-cycle technologies, especially 
menu technologies under the light-duty program. The use of several menu 
technologies has steadily increased over time, including engine stop-
start, active aerodynamics, high efficiency alternators, high 
efficiency lighting, and thermal controls that reduce A/C energy 
demand. The program has allowed manufacturers to reduce emissions by 
applying off-cycle technologies, at lower overall costs, compared to 
the technologies that would have otherwise been used to provide 
reductions over the 2-cycle test, consistent with the intent of the 
program. Since MY 2012, the quantity of off-cycle credits generated by 
manufacturers steadily increased over time. In MY 2022, the industry 
averaged 9.2 g/mile of credits with more than 95 percent of those

[[Page 27921]]

credits based on the menu.\597\ Seven manufacturers (BMW, Ford, GM, 
Honda, Jaguar Land Rover, Stellantis, and VW) claimed the maximum menu 
credit available of 10 g/mile.\579\ Most manufacturers used at least 
some off-cycle technologies on 60-100 percent of vehicles.\598\
---------------------------------------------------------------------------

    \597\ The 2023 EPA Automotive Trends Report (EPA-420-R-23-033), 
December 2023. See Tables 5.3 and 5.4.
    \598\ Ibid. Figure 5.8.
---------------------------------------------------------------------------

    The program has had mixed results for 5-cycle and public process 
pathways. There have been few 5-cycle credit demonstrations, and the 
public process pathway has been challenging due to the complexity of 
demonstrating real-world emissions reductions for technologies not 
listed on the menu. The public process pathway was used successfully by 
several manufacturers for high efficiency alternators, resulting in EPA 
adding this technology to the off-cycle menu beginning in MY 2021.\599\ 
The program has resulted in a number of concepts for potential off-
cycle technologies over the years, but few have been implemented, at 
least partly due to the difficulty in demonstrating the quantifiable 
real-world emissions reductions associated with using the technology. 
Many credits sought by manufacturers have been relatively small (less 
than 1 g/mile). Over the past several years, manufacturers have 
commented that the process takes too long, but the length of time is 
often associated with the need for additional data and information or 
issues regarding whether a technology is eligible for credits.
---------------------------------------------------------------------------

    \599\ 85 FR 25236.
---------------------------------------------------------------------------

ii. Phase Out of Off-Cycle Credits
    EPA proposed a phase-out of the off-cycle program for light-duty 
vehicles as follows: (1) by setting a declining menu cap starting with 
the 10 g/mile cap currently in place for MY 2027 and then phasing down 
to 8.0/6.0/3.0/0.0 g/mile over MYs 2028-2031 such that MY 2030 would be 
the last year manufacturers could generate credits; (2) by eliminating 
the 5-cycle and public process pathways starting in MY 2027; and (3) by 
limiting eligibility for off-cycle credits to vehicles with tailpipe 
emissions greater than zero (i.e., vehicles equipped with IC engines) 
starting in MY 2027.
    EPA received a range of comments on the off-cycle program proposal. 
Comments received from environmental NGOs, consumer groups, and many 
states were generally supportive of the proposed phase-out of the off-
cycle credits program, and many of these commenters expressed concerns 
that the off-cycle credits are not achieving the real-world reductions 
reflected by the current menu values. Comments received from auto 
manufacturers expressed concern about the phase-out of the off-cycle 
credit program as they believe the off-cycle program provides an 
important additional pathway for vehicle technologies that they believe 
reflect real-world CO2 emissions reductions. Different auto 
manufacturers provided various suggestions on how the off-cycle program 
should be retained, and many suggested that any phase-out of the menu 
credits should be slowed down and extended for additional model years. 
Specifically, several auto manufacturers believed that, at a minimum, 
any phase-down of the off-cycle credits program, like the A/C leakage 
credits program, should be slowed down in the early years of the 
program as an additional means of providing necessary lead time for the 
revised standards. Manufacturers stated that they view the off-cycle 
credits as a potential tool for addressing uncertainties in meeting the 
level of stringency of the standards especially in the early years of 
the program, as the credits provide an additional means to ensure the 
emissions targets are met. Auto industry commenters also noted that 
manufacturers have made investments in off-cycle technologies which are 
included as part of their compliance plans and noted that off-cycle 
technologies are among the lowest cost means to reduce emissions.
    Upon considering this range of public comments, EPA is finalizing a 
phase-out of off-cycle menu credits over the MY 2030-2033 timeframe as 
a reasonable way to bring the program to an end. Specifically, EPA is 
extending the phase-out of off-cycle menu credits, compared to our 
proposal, to provide a longer transition period. As discussed in the 
proposal (section III.B.6 of the draft preamble) and above, the off-
cycle credit program was originally designed both to give an incentive 
for new and innovative technologies, and to provide additional 
flexibility for manufacturers in meeting the standards. Moreover, as 
with AC credits, the level of the standards was determined in light of 
the availability of these credits.
    EPA now finds that the off-cycle program has achieved its goal of 
incentivizing the adoption of innovative technologies for ICE-based 
vehicles to reduce emissions that might otherwise not have been 
adopted. EPA also recognizes that, as some commenters argue, the credit 
values for implementing specific technologies are outdated and may no 
longer be reflective of the real-world emissions impact of the off-
cycle technologies. These concerns are only heightened by the increase 
of BEVs in the market and the increased stringency of the standards 
(which makes off-cycle credits a greater proportion of compliance). For 
these reasons, and as explained further below, EPA finds it appropriate 
to phase out the off-cycle program, including finalizing its proposal 
to eliminate the 5-cycle and the public process pathways for off-cycle 
credits beginning in MY 2027 for both light-duty and medium-duty 
vehicles.
    At the same time, EPA recognizes that there will be a substantial 
number of ICE-based vehicles sold under these standards which would 
benefit from off-cycle technologies that reduce emissions and we 
recognize that manufacturers may have made substantial use of off-cycle 
credits in their planned compliance strategies, a concern which is 
heightened by the increase in stringency of the standards. For these 
reasons, and consistent with our past practice of taking the 
availability of credits into account in determining the appropriate 
level of the standards, we judge that it is appropriate to adopt a 
slower phase-out of the off-cycle credits to provide a smoother 
transition and reduce concerns about lead time for the early years of 
the program. Specifically, instead of the proposed menu cap phase-out 
of 10/8/6/3/0 g/mile in MYs 2027-2031, EPA is finalizing provisions 
that retain the 10 g/mile menu cap through MY 2030, with a phase-out of 
8/6/0 g/mile in MYs 2031-2033. The final phase-out of the menu cap is 
shown in Table 31.

Table 31--Off-Cycle Menu Credit Cap Phase Down, Final Program, Expressed
                              in CO2 g/mile
------------------------------------------------------------------------
                                                          Off-cycle menu
                           MY                               credit cap
                                                           (CO2 g/mile)
------------------------------------------------------------------------
2027....................................................              10
2028....................................................              10
2029....................................................              10
2030....................................................              10
2031....................................................             8.0
2032....................................................             6.0
2033 and later..........................................             0.0
------------------------------------------------------------------------

    EPA is also finalizing its proposal to limit eligibility of off-
cycle credits to vehicles equipped with an IC engine beginning in MY 
2027; thus, BEVs will no longer be eligible for off-cycle credits 
beginning in MY 2027. The off-cycle menu credits were established based 
on

[[Page 27922]]

potential emissions reductions from ICE vehicles and are not 
representative of emissions reductions from BEVs. As with A/C 
efficiency credits, there is no technical basis for providing BEVs with 
off-cycle credits to reflect technologies that decrease vehicle engine 
emissions because BEVs completely prevent engine emissions.
    Previously, the cap was applied to individual manufacturers by 
dividing the credits generated by a manufacturer's entire vehicle 
production to determine an average credit level for the model year. As 
was proposed, EPA is finalizing that starting in MY 2027, the 
denominator will include only eligible vehicles (i.e., vehicles 
equipped with an IC engine) rather than all vehicles produced by the 
manufacturer.
    Also, as discussed in detail in section III.C.8 of this preamble, 
EPA is revising the utility factor for PHEVs. While PHEVs will remain 
eligible for off-cycle credits under EPA's eligibility criteria, EPA is 
finalizing, as a reasonable approach for addressing off-cycle credits 
for PHEVs, to scale the calculated credit value for PHEVs based on the 
vehicle's assigned utility factor. For example, if a PHEV has a utility 
factor of 0.3, meaning the vehicle is estimated to operate as an ICE 
vehicle 70 percent of the vehicle's VMT, the PHEV will earn an off-
cycle credit that is 70 percent of the full value to properly account 
for the value of the off-cycle credit corresponding to expected engine 
operation. This calculation methodology corrects errors in the way we 
described how to apply a utility factor correction for PHEV off-cycle 
credits in the proposed rule. As was the case in the previous program, 
individual vehicles can generate more credits than the fleetwide cap 
value but the fleet average credits must remain at or below the 
applicable menu cap.
    EPA believes that phasing out the off-cycle program is generally 
consistent with EPA's standards and the direction it appears the 
industry is headed in changing their vehicle mix toward vehicle 
electrification technologies. EPA originally created the off-cycle 
program both to provide flexibility to manufacturers and to encourage 
the development of new and innovative technologies that might not 
otherwise be used because their benefits were not captured on the 2-
cycle test. EPA believes the off-cycle credits program has successfully 
served these purposes. However, the credits were based on estimated 
emissions improvements for ICE vehicles which at the time accounted for 
the vast majority of vehicles produced. Now with the industry focusing 
most R&D resources on vehicle electrification technology development 
and increasing production, as discussed in auto industry comments (see 
RTC section 3.3) and sections I.A.2 and IV.C.1 of this 
preamble,600 601 602 the development of additional 
technologies that might potentially generate off-cycle credits is not 
likely to be a key area of focus for manufacturers. In addition, EPA 
believes that it is not likely that manufacturers would invest 
resources on off-cycle technology in the future for their ICE vehicle 
fleet that is likely to become a smaller part of their overall vehicle 
mix over the next several years. For example, in MY 2021, credits per 
technology generated under the public process pathways were all well 
below 1 g/mile \603\ and there is little reason to expect the program 
to drive significant new innovation in the future. The public process 
pathway has been in place since the 2010 rule and manufacturers have 
had ample opportunity to consider potential off-cycle technologies. The 
5-cycle process pathway has been seldom utilized; this pathway has been 
used by only one manufacturer and for only one technology applied to 
several vehicles through MY 2017.\604\ Also, since most manufacturers 
have stated their future product plans will focus on electrifications, 
manufacturers would be recouping any investment in off-cycle 
technologies, with relatively small emission reductions, over a 
decreasing number of ICE vehicles in their fleets.
---------------------------------------------------------------------------

    \600\ Reuters, ``A Reuters analysis of 37 global automakers 
found that they plan to invest nearly $1.2 trillion in electric 
vehicles and batteries through 2030,'' October 21, 2022. Accessed on 
November 4, 2022 at https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/.
    \601\ Reuters, ``Exclusive: Automakers to double spending on 
EVs, batteries to $1.2 trillion by 2030,'' October 25, 2022. 
Accessed on November 4, 2022 at https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21/.
    \602\ Center for Automotive Research, ``Automakers Invest 
Billions in North American EV and Battery Manufacturing 
Facilities,'' July 21, 2022. Retrieved on November 10, 2022 at 
https://www.cargroup.org/automakers-invest-billions-in-north-american-ev-and-battery-manufacturing-facilities/.
    \603\ ``The 2023 EPA Automotive Trends Report: Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-23-
033, December 2023. Table 5.4.
    \604\ Ibid. Section 5.B, page 107.
---------------------------------------------------------------------------

    In addition, the off-cycle credits were initially small relative to 
the average fleet emissions and standards. For example, in the 2012 
rule, EPA established menu credits of up to 10 g/mile, a relatively 
small value compared to a projected fleet-wide average compliance value 
of about 243 g/mile in MY 2016 phasing down to 163 g/mile in MY 
2025.\605\ Across the MY 2016-2025 program, therefore, EPA projected 
menu credits would be about 4 percent to 6 percent of the standard. 
Now, EPA is finalizing standards that will reduce fleet average 
emissions to a projected 85 g/mile and therefore off-cycle credits 
would become an outsized portion (e.g., up to 12 percent) of the 
program if they were retained in their current form. One concern is 
that there is not currently a mechanism to check that off-cycle 
technologies provide emissions reductions in use commensurate with the 
level of the credits the menu provides. This is becoming more of a 
concern as vehicles become less polluting overall. The menu credits are 
based on MY 2008 vintage engine and vehicle baseline technologies 
(assessed during the 2012 rule) and therefore the credit levels are 
potentially becoming less representative of the emissions reductions 
provided by the off-cycle technologies as vehicle emissions are 
reduced. Some stakeholders have also become increasingly concerned that 
the emissions reductions reflected in the off-cycle credits may not be 
being achieved, as also expressed by some stakeholders in the public 
comments on the proposal.\606\ Also, details such as the synergistic 
effects and overlap among off-cycle technologies take on more 
importance as the credits represent a larger portion of the emissions 
reductions. During the 2021 rulemaking to revise the MY 2023-2026 
standards, EPA received comments that due to the potential for loss of 
GHG emissions reductions, the off-cycle program should be further 
constrained, or discontinued, or that a significantly more robust 
mechanism be implemented for verifying purported emissions reductions 
of off-cycle technologies. The potential for a loss of GHG emissions 
reductions could become further exacerbated as the standards become 
more stringent.\604\
---------------------------------------------------------------------------

    \605\ 77 FR 62641.
    \606\ ``Revised 2023 and Later Model Year Light-Duty Vehicle 
Greenhouse Gas Emission Standards: Response to Comments,'' Chapter 
8, EPA-420-R-21-027, December 2021.
---------------------------------------------------------------------------

    Initially, EPA addressed the uncertainty surrounding the precise 
emissions reductions from equipping vehicle models with off-cycle 
technologies by making the initial credit values conservative, but the 
values may no longer be conservative, and may even provide more credits 
than appropriate for later MY vehicles. Because off-cycle credits 
effectively displace two-cycle emissions reductions, EPA has long 
strived to ensure that off-cycle credits are based on real-world 
reductions and do not result in a loss of emissions reductions overall. 
EPA received

[[Page 27923]]

comments in past rules that it should revise the program to better 
ensure real-world emissions reductions.\604\ However, EPA has learned 
through its experience with the program to date that such 
demonstrations can be exceedingly challenging. At this time, EPA has 
not identified a single robust methodology that can provide sufficient 
assurance across potential off-cycle technologies due to the wide 
variety of off-cycle real world conditions over which a potential 
technology may reduce emissions. EPA does not have a methodology that 
would provide such assurance across a range of technologies, nor did 
commenters provide suggestions on such a methodology. Finally, while 
the off-cycle program provides an incentive for off-cycle emissions 
reduction technologies, it does not include full accounting of off-
cycle emissions. Vehicle equipment such as remote start and even roof 
racks added at the dealership may well increase off-cycle emissions. 
For all of these reasons, EPA's final rule de-emphasizes the role of 
off-cycle credits in the future and the credits will be phased out over 
time, with the program ending altogether in MY 2033 as described above.
7. Treatment of PEVs and FCEVs in the Fleet Average
    In the 2010 rule, for MYs 2012-2016, EPA measured compliance based 
on tailpipe emissions for the electric-only portion of operation of 
BEVs/PHEVs/FCEVs up to a per-company cumulative production cap.\607\ As 
originally envisioned in the 2012 rule, starting with MY 2022, the 
compliance value for BEVs, FCEVs, and the electric portion of PHEVs in 
excess of individual automaker cumulative production caps would be 
based in part on net upstream emissions accounting (i.e., EPA would 
attribute a pro rata share of national CO2 emissions from 
electricity generation to each mile driven under electric power minus a 
pro rata share of upstream emissions associated with from gasoline 
production). The 2012 rule would have required net upstream emissions 
accounting for all MY 2022 and later electrified vehicles. However, in 
the 2020 rule, prior to upstream accounting taking effect for any 
automaker, EPA revised its regulations to extend the practice of basing 
compliance on tailpipe emissions for all vehicle and fuel types through 
MY 2026 with no production cap.
---------------------------------------------------------------------------

    \607\ 75 FR 25234 (May 7, 2010). As discussed elsewhere in this 
preamble, in addition to measuring tailpipe emissions for 
compliance, EPA has adopted credit programs for ``off-cycle'' and A/
C, which reflect emissions that are not captured on the compliance 
test cycles.
---------------------------------------------------------------------------

    In this rule, EPA is making the current treatment of PEVs and FCEVs 
through MY 2026 permanent, as proposed. EPA is including only emissions 
measured directly from the vehicle in the vehicle GHG program for MYs 
2027 and later, consistent with the treatment of all other vehicles. 
For purposes of measuring compliance with tailpipe emissions standards, 
emissions from electric vehicle operation will be measured based on 
tailpipe emissions. Vehicles with no IC engine (i.e., BEVs and FCEVs) 
will be counted as 0 g/mile in compliance calculations, while PHEVs 
will apply the 0 g/mile factor to electric-only vehicle operation (see 
also section III.C.8 of the preamble for EPA's treatment of 
PHEVs).\608\ The program has now been in place for a decade, since MY 
2012, with no upstream adjustments to tailpipe compliance calculations. 
EPA originally proposed using upstream emissions in PEV compliance 
calculations at a time when there was little if any regulation of 
stationary sources for GHGs, and noted at the time this was a departure 
from its usual practice of relying on stationary source programs to 
address pollution risks from stationary sources.\609\ In the 2020 rule, 
EPA extended 0 g/mile in part because power sector emissions were 
declining and the trend was projected to continue and stated ``EPA 
agrees that, at this time, manufacturers should not account for 
upstream utility emissions.'' \610\ As noted elsewhere, power sector 
emissions are expected to decline significantly in the future. EPA 
continues to believe that it is appropriate for any vehicle which has 
zero tailpipe emissions to use 0 g/mile as its compliance value.\611\ 
This approach of looking only at vehicle emissions and letting 
stationary source GHG emissions be addressed by separate stationary 
source programs is consistent with how the compliance value for every 
other motor vehicle is calculated. EPA notes that emissions from 
stationary sources under CAA title I are regulated under an entirely 
different statutory scheme than mobile sources under CAA title II and 
the upstream adjustment EPA originally adopted would make the 
compliance test results of BEVs depend in part on factors entirely 
beyond the control of BEV manufacturers (i.e., the carbon emissions and 
transmission efficiency of the electricity grid, as compared to 
emissions of the refinery sector). Moreover, if EPA deviated from this 
tailpipe emissions approach by including upstream accounting, it is 
unclear why it would be appropriate to do so for BEV but not for all 
vehicles, including gasoline-fueled vehicles. Put more concretely, EPA 
does not think it is appropriate to subject vehicle manufacturers to a 
compliance scheme that effectively requires them to account for 
emissions arising from factors as diverse as the extraction of coal, 
natural gas, and crude oil; crude oil refining; electricity generation; 
electricity transmission; and wholesale and retail distribution of 
gasoline. These factors reinforce EPA's conclusion that the appropriate 
basis for measuring compliance with engine and vehicle standards 
promulgated under CAA 202 are emissions from vehicles and engines. EPA 
notes that while upstream emissions are not included in vehicle 
compliance determinations, which are based on direct vehicle emissions, 
upstream emissions impacts from fuel production at refineries and 
electricity generating units are considered in EPA's analysis of 
overall estimated emissions impacts and projected benefits, as detailed 
in section VIII of this preamble.
---------------------------------------------------------------------------

    \608\ EPA notes that in our regulations governing the emissions 
testing of light-duty vehicles there is a statement that 
manufacturers of BEVs need not submit test data, and ``[t]ailpipe 
emissions of regulated pollutants from vehicles powered solely by 
electricity are deemed to be zero.'' 40 CFR 86.1829-15(f). EPA 
adopted this provision in recognition of the fact that requiring BEV 
manufacturers to undertake emissions testing of their vehicles would 
be an unreasonable burden, precisely because it is well-established 
that every BEV will have zero tailpipe emissions.
    \609\ 75 FR 25434.
    \610\ 85 FR 25208.
    \611\ See Section IV.C.3 of this preamble for a full discussion 
of power sector emissions projections.
---------------------------------------------------------------------------

8. PHEV Utility Factor
i. Final Fleet Utility Factor
    A fleet utility factor provides a means of accounting for a PHEV's 
operation using electricity, known as the charge depleting mode, with 
respect to the total mileage that a PHEV travels. The distance traveled 
by a PHEV driver in charge depleting mode is dependent on two 
significant factors. The first is the size or capacity of the battery. 
Typically, a PHEV with a larger battery will have greater charge 
depleting range, all other vehicle attributes equal. The second 
important factor is the driver's propensity to charge the battery. SAE 
J2841 states explicitly that the UF represented in the SAE standard 
assumes that a PHEV is fully charged at least once per day. Recent data 
and literature have identified that the current utility factor curves 
overestimate the fraction of driving that occurs in charge depleting 
operation. Vehicle operators are not charging their

[[Page 27924]]

vehicles often enough, and/or are operating them in a manner that 
results in substantially less charge depleting operation and greater 
CO2 emissions as compared to the current PHEV compliance 
procedure. This literature also concludes that vehicles with lower 
charge depleting ranges have even greater discrepancy between the 
compliance procedure and actual CO2 emissions.
    EPA is finalizing its proposed change to the light-duty vehicle 
PHEV Fleet Utility Factor (FUF) curve used in CO2 compliance 
calculations for PHEVs but delaying its implementation in recognition 
of the benefits of providing additional lead time for manufacturers to 
adjust to this change. The current SAE J2841 FUF curve and the 
finalized FUF curve are shown in Figure 11.
[GRAPHIC] [TIFF OMITTED] TR18AP24.010

Figure 11: SAE J2841 FUF and Finalized FUF (Fleet Utility Factor) for 
PHEV Compliance

    EPA received many comments regarding the proposed change to the 
PHEV fleet utility factor (FUF). Many NGOs and state air organizations 
supported a change to the fleet utility factor based on the available 
data, third party analyses, and EPA's analysis. These commenters noted 
that the current SAE J2841-based utility factor provides too much 
credit because actual CO2 emissions from PHEVs are much 
higher than estimated in the current compliance calculation. The NGOs 
also believe that the continued application of the SAE UF could result 
in inaccurate and lower accounting of CO2 emissions for 
PHEVs than in-use data indicates, thereby allowing manufacturers to 
delay application of additional CO2-reducing technologies. 
These commenters also noted that the current PHEV data supports a 
utility factor much lower than that proposed. Several NGOs and the 
California Air Resources Board recommended that EPA adopt a lower 
utility factor than the one proposed, based on the available data.
    In contrast, the Alliance for Automotive Innovation (AAI) and 
several of its member companies recommended that EPA retain the current 
SAE J2841-based utility factor. The comments from industry noted the 
importance of PHEVs as a bridge technology to BEVs. These commenters 
hypothesized that future PHEVs would be operated in a manner better 
reflected by the SAE-based UF, based on their projections that future 
PHEVs will have increased range and power, as the result of the CARB's 
ACC II requirements, and that future expansions of charging 
infrastructure and increasing consumer familiarity with PHEVs will lead 
to consumers charging PHEVs more frequently. In addition, AAI and some 
of the vehicle manufacturers commented on the quality of the data used 
to support the proposed PHEV FUF, the California Bureau of Automotive 
Repair (BAR) data, and the analytical methods that EPA applied, for 
example, stating the data set was not statistically significant and not 
a valid representation of current or future PHEV activity. Industry and 
academic commenters also commented that the data set was skewed towards 
vehicles that had recently relocated to the state of California that 
had potentially been operated over long distances without charging. 
Several commenters also believed that the proposed FUF was not a better 
representation of the PHEV FUF as compared to the SAE J2841-based FUF 
and should therefore not be finalized. Finally, AAI, vehicle 
manufacturers and an academic coalition recommend that if a new FUF is 
appropriate, then instead of finalizing a revised FUF in this rule, EPA 
should work collaboratively with the Department of Transportation, 
Department of Energy, Society of Automotive Engineers, and vehicle 
manufacturers to develop an alternative.
    EPA carefully considered all the comments we received in response 
to the proposed revised FUF. In addition, and as noted below, we have 
received an updated set of data from BAR representing an additional 
year of PHEV activity. Also, in response to comments received, we 
duplicated and expanded the statistical analysis of all the available 
data to address the technical analysis concerns raised in comments.
    EPA agrees with commenters on the importance of PHEVs as a 
technology that might be best suited to meet the needs of some 
consumers, particularly over the timeframe of this rulemaking. PHEVs 
have the potential to reduce vehicle GHG emissions, but the degree to 
which that potential is realized depends on whether they are charged

[[Page 27925]]

and operating on electricity. EPA's goal is to apply a fleet utility 
factor which accurately accounts for PHEV greenhouse gas emissions. SAE 
J2841 states explicitly that the UF represented in SAE standard assumes 
that a PHEV is fully charged at least once per day. Recent literature 
\612\ and data have identified that the current utility factor curves 
overestimate the fraction of driving that occurs in charge depleting 
operation. This literature also concludes that vehicles with lower 
charge depleting ranges have even greater discrepancy in CO2 
emissions.
---------------------------------------------------------------------------

    \612\ Aaron Isenstadt, Zifei Yang, Stephanie Searle, John 
German. 2022. ``Real world usage of plug-in hybrid vehicles in the 
United States,'' https://theicct.org/publication/real-world-phev-us-dec22/, ICCT.
---------------------------------------------------------------------------

    While EPA used BAR data from October 2022 \613\ for the NPRM, an 
additional year of data was available to inform this FRM. In November 
2023 \614\ OBD datasets were made available for EPA to analyze. EPA 
found that the expanded data set confirms that, on average, there are 
more charge sustaining miles traveled and more gasoline miles traveled 
than are predicted by the current SAE J2841 FUF (Fleet Utility Factor) 
curves.\615\ The BAR OBD data enables the evaluation of real-world PHEV 
distances traveled in various operational modes; these include charge-
depleting engine-off distance, charge-depleting engine-on distance, 
charge-sustaining engine-on distance, total distance traveled, odometer 
readings, total fuel consumed, and total grid energy inputs and outputs 
of the battery pack. These fields allow us to filter the BAR OBD data 
and calculate real-world driving FUFs (ratios of charge depleting 
distance to total distance) and to then compare to the existing SAE 
J2841 FUFs as calculated and applied in EPA's GHG emissions 
certification using the 2-cycle charge depleting range values.\616\ 
Although we have reached a similar conclusion to other studies that 
have been conducted to evaluate PHEV utility, the BAR data has allowed 
EPA to analyze PHEV utility specifically on distance traveled in each 
mode as recorded by the vehicle itself, using recording strategies 
required by CARB and implemented by the vehicle manufacturers. In 
addition, the integrity of the data recorded by the vehicles is subject 
to CARB's regulatory enforcement. Other studies 617 618 
regarding PHEV utility have attempted to calculate distance traveled in 
each mode using energy and fuel consumption or the labeled values. 
Because energy and fuel consumption can vary greatly based on operating 
and environmental conditions distance calculations can also vary, EPA 
did not rely on these types of analyses to inform this final rule.
---------------------------------------------------------------------------

    \613\ California Air Resource Board [OBD data records]. 2022. 
October. https://www.bar.ca.gov/records-requests.
    \614\ California Air Resource Board [OBD data records]. 2023. 
November. https://www.bar.ca.gov/records-requests.
    \615\ EPA finds that the additional data provides confirmation 
that the current UF is overstating CD miles.
    \616\ The existing regulatory FUFs are separate city and highway 
curves, and the charge depleting ranges that are used with the city 
and highway FUF curves are 2-cycle range.
    \617\ Patrick Pl[ouml]tz et al, ``From lab-to-road: real-world 
fuel consumption and CO2 emissions of plug-in hybrid electric 
vehicles,'' 2021 Environ. Res. Lett. 16 054078.
    \618\ Patrick Pl[ouml]tz et al 2023, ``Corrigendum: From lab-to-
road: real-world fuel consumption and CO2 emissions of plug-in 
hybrid electric vehicles (2021 Environ. Res. Lett.16054078),'' 
Environ. Res. Lett. 18 099502.
[GRAPHIC] [TIFF OMITTED] TR18AP24.011

Figure 12: FUF Finalized, and SAE J2841 FUF Curves on 2-Cycle Combined 
GHG Emission-Certified CD Range

    Figure 12 shows an overlay of points from the BAR data, 
representing individual vehicle models, together with the current and 
final FUF curves from Figure 11, labeled ``SAE J2841 FUF'' and ``FUF 
finalized'', respectively. The finalized FUF curve represents a modest 
change of about 11 percent from SAE J2841 FUF curve.
    EPA's assessment of the updated BAR data, consistent with our 
analysis of the BAR data used for the NPRM, is that the current FUF 
based on SAE J2841 lies above the vast majority of charge depleting 
operation of current PHEV models and associated activity. While it may 
be that an even lower curve than we are finalizing might more 
appropriately reflect current real-world usage, based on our updated 
analysis and comments received, EPA is

[[Page 27926]]

finalizing the proposed curve to reflect anticipated usage patterns in 
future model years. Our updated analysis, summary of the comments 
received, and how EPA considered those comments is outlined below.
    First, the agency determined that a curve shape with a generally 
increasing slope and which asymptotically approaches its upper limit is 
appropriate. Specifically, the BAR data clearly supports EPA's, and 
SAE's, conclusion that the potential for greater charge depleting 
operation increases as a function of a PHEV's estimated charge 
depleting range. At the same time, it is reasonable to conclude that 
increases in FUF should diminish continuously as range increases in 
value (i.e. approaches an upper asymptote), since any other assumption 
would result in FUF values eventually exceeding the physical limit of 
FUF equal to 1. For these reasons, EPA has chosen to maintain the basic 
form of the SAE J2841 equation to define the final FUF curve.
    Second, having determined the appropriate shape of the curve, EPA 
has chosen a position of the curve (along the FUF-axis, vertically) 
that appropriately balances the evidence from the typical use of PHEV's 
today with the consideration of factors that are expected to increase 
charge depleting operation in the future. Several vehicle manufacturers 
and the Alliance for Automotive Innovation (AAI) asserted that ``growth 
in charging infrastructure coupled with higher capability PHEVs means 
that the current utility factor will be representative for future PHEVs 
and should remain unchanged.'' \619\ In addition, AAI noted that 
``EPA's proposed PHEV cold start requirement encourages more all-
electric operation. Further CARB requires a minimum 70-mile combined 
city and highway and 40-mile US06 all-electric range starting in MY 
2029. These requirements force all new PHEVs under development to be 
highly capable.'' \620\ While EPA disagrees that there is any 
compelling evidence that typical PHEVs in the future will reach the SAE 
J2841 level of charge depleting operation, we do see evidence in the 
BAR data where PHEVs with higher charge depleting driving capability 
and power tend to have higher FUF than typical PHEVs in use today. EPA 
observed that vehicles with higher demonstrated charge depleting 
operation in the BAR data tended to also have higher electric drive 
capability. The shaded points in Figure 12 represent vehicles that are 
more likely typical of future PHEV designs and strongly influenced 
EPA's determination of the position of the final curve. As noted below, 
this conclusion is supported by comments received.
---------------------------------------------------------------------------

    \619\ Comments of Alliance for Automotive Innovation at 107 
(Docket ID EPA-HQ-OAR-2022-0829-0701).
    \620\ California Air Resource Board, ``Advanced Clean Cars II,'' 
Accessed on February 16, 2024 at https://ww2.arb.ca.gov/our-work/programs/advanced-clean-cars-program/advanced-clean-cars-ii.
---------------------------------------------------------------------------

    EPA also recognizes that charging infrastructure is expected to 
become more widely available, and vehicle manufacturers can have a 
significant influence on PHEV operation through increased customer 
understanding of PHEV technology, supportive infrastructure, such as 
assistance in home charging installation and manufacturer provided 
charging cables, advertising which focuses on PHEV technology and 
internet resources, such as instructional videos and FAQ's, that help 
their customers maximize their vehicle's all electric operation and 
reduce GHG emissions. Because the current SAE utility factor assumes 
that PHEVs are fully charged once per day, manufacturers may have had 
less motivation to ensure that their customers were completely familiar 
with PHEV technology or that the customers had access to the 
appropriate infrastructure. While the data on current PHEV activity 
could support further revisions to the fleet utility factor, EPA is 
setting a FUF for future model years based on our expectations about 
charging and PHEV performance that will occur in those future years. We 
are also taking into consideration the views of automakers that the 
improvements they anticipate in product design (such as range), 
consumer education and awareness, and charging convenience with 
expanded infrastructure will result in PHEV activity that is similar to 
the finalized FUF. In light of manufacturer plans to improve PHEV 
technology and the potential for improved customer knowledge and 
infrastructure, EPA is finalizing the PHEV fleet utility factor as 
proposed.
    At the same time, EPA is committed to an ongoing evaluation of 
future PHEV FUF data to assess whether the revised FUF is in fact 
adequately representative of future PHEV operation, as a result of 
future PHEV designs and consumer charging behavior, or if there is 
merit in further adjusting the FUF. EPA will take a multipronged 
approach to monitor, assess and, if warranted, potentially adjust the 
FUF through a future rulemaking action. First, EPA will continue to 
gather and monitor publicly available data such as that made available 
by California BAR. EPA will also collect, and monitor data extracted 
from available in-use PHEV testing and may further supplement the data 
set through other data gathering mechanisms, such as work done by the 
Department of Energy or independent contractors and researchers. 
Although vehicle manufacturers chose not to submit data as part of 
their public comments, EPA believes that with additional time it is 
reasonable to project that vehicle manufacturers can gather the same 
type of data, and in greater quantities, on their own PHEV models than 
available to EPA through the California BAR; we encourage auto 
manufacturers to share such data with EPA to inform this future 
assessment. Thus, second, EPA encourages researchers and other 
stakeholders, including manufacturers, to supplement the publicly 
available data by providing data directly to EPA for inclusion in an 
updated analysis. These first and second steps will form the basis for 
an assessment of how well future PHEV activity is represented by the 
FUF established in this final rule, and whether there is merit for 
proposing adjustments through a future rulemaking. Finally, EPA will 
engage with stakeholders to share results of our assessments, and to 
hear from stakeholders who may have their own data and analysis to 
share, for example, through public forums. If EPA determines that 
changes to the FUF are warranted, we will engage with stakeholders on 
technical details such as the shape of the FUF curve and the 
appropriate timing for its implementation. Stakeholders will also be 
encouraged to independently assess the publicly available data and 
provide individual conclusions. This process could also be an 
opportunity for stakeholders to provide input on changes to additional 
future program elements (for example, the possibility for manufacturers 
to submit data directly to EPA as part of the compliance process to a 
inform model level specific FUF). If such evaluation were to support a 
proposed revision to the FUF, EPA could initiate a future rulemaking to 
revise the FUF for MY 2031.
    Furthermore, at the time of this final rule, MY 2025 vehicle 
production has already commenced. This means that manufacturers have 
approximately two years of lead time to address the revised standards 
and provisions finalized in this final rule. While lead time is 
addressed in many ways throughout this rulemaking, such as the year 
over year change in emission standard stringency and extensions of the 
phase-down of off-cycle and air conditioning leakage

[[Page 27927]]

credits, we recognize that a fundamental change to the compliance 
methodology for any single technology in as little as two years could 
be significantly disruptive to some vehicle manufacturers' current 
compliance plans. Several auto manufacturers commented that the 
proposed revised PHEV utility factor would impact product planning and 
the overall emission reductions projected for their fleets to meet the 
standards. We also understand that several vehicle manufacturers have 
already made significant investments in PHEV technology and are relying 
on PHEVs as an important portion of their GHG compliance strategy. 
Without adequate time to adjust their product plans to the revised 
compliance values for PHEVs under the revised utility factor, and to 
plan for additional GHG-reducing technologies to ensure adequate 
additional emissions reductions to meet the standards, the revised FUF 
may disproportionately impact those manufacturers planning large 
volumes of PHEVs as compared to manufacturers who are not relying as 
heavily on PHEV technology. To mitigate such a potential impact and to 
address concerns about adequacy of lead time for the early years of the 
program, we are delaying the application of the revised FUF until MY 
2031. EPA believes that the revising the FUF in MY 2031 will provide 
vehicle manufacturers adequate lead time for product development and 
product plan adjustments, given that the average vehicle redesign cycle 
is approximately five years.
ii. Consideration of CARB ACC II PHEV Provisions
    CARB recently set minimum performance requirements for PHEVs in 
their ACC II program. These requirements include performance over the 
US06 test cycle and a minimum range and are meant to set qualifications 
for PHEVs to be included in a manufacturer's ZEV compliance. EPA 
received comments that it should adopt ACC II for PHEVs. ACC II is a 
suite of emissions standards that includes a ZEV mandate and other 
tools EPA is not using in this rule and it would not be appropriate to 
take only the PHEV portions of ACC II. EPA is not adopting the range 
and US06 performance requirements or fleet penetration limits that are 
included in the CARB ACC II ZEV provisions. EPA agrees that PHEVs 
meeting the performance provisions required by CARB in ACC II have the 
potential to provide greater environmental benefits as compared to 
other PHEVs that are less capable. However, unlike the ACC II program, 
the GHG program in this rulemaking is performance-based and not a ZEV 
mandate. In that regard, EPA believes that it is appropriate to have a 
robust GHG compliance program for PHEVs that properly accounts for 
their GHG emissions independent of a PHEV's range or capability over 
the US06 test cycle. We are addressing the issue of ensuring 
appropriate GHG compliance values for PHEVs through the revised PHEV 
fleet utility factor as described in section III.C.8 of this preamble; 
EPA is not adopting design requirements for PHEVs, that is, we are not 
adopting minimum range requirements or specifying minimum capability 
over any prescribed test cycles.
9. Small Volume Manufacturer GHG Standards
    EPA's prior light-duty GHG program included unique provisions for 
small volume manufacturers (SVMs), defined as manufacturers with annual 
U.S. sales of less than 5,000 vehicles per year. In the 2012 rule, EPA 
adopted regulations allowing SVMs to petition EPA for alternative 
standards, recognizing the unique challenges SVMs could face in meeting 
the primary program standards in the timeframe of the MY 2017-2025 
standards. There are currently four SVMs who have applied for, and been 
approved, less stringent, alternative standards: Aston Martin, Ferrari, 
Lotus, and McLaren.\621\
---------------------------------------------------------------------------

    \621\ See 85 FR 39561, July 1, 2020.
---------------------------------------------------------------------------

    EPA believes it is appropriate to transition away from unique SVM 
standards and bring SVMs into the primary program. Although in the 2012 
rule EPA provided SVMs with the opportunity to comply with 
manufacturer-specific standards which are substantially less stringent 
than the primary program, in EPA's judgment, developments in both the 
vehicles market and the market for credits warrants a transition for 
these manufacturers to the primary compliance program. When EPA 
established the SVM alternative standards option in the 2012 rule, 
certain legacy ICE technologies were the primary CO2 control 
technologies and there was limited access to more advanced control 
technologies, particularly for luxury, high-performance, and certain 
other lower production volume vehicles. As discussed in the proposal, 
the landscape has fundamentally changed. Today, many larger 
manufacturers are already implementing more advanced technologies, 
including electrification technologies, across many vehicle types 
including both luxury and high-performance vehicles by larger 
manufacturers, and EPA expects this trend to continue. EPA believes 
that meeting the CO2 standards is becoming less a 
feasibility issue and more a lead time issue for SVMs. Also, the credit 
trading market has become more robust since we initially established 
the SVM unique standards provisions. Now that it has, we would expect 
SVMs to be able to seek credit purchases as a compliance strategy 
option should they elect to do so.\622\ As electrification technologies 
become more widespread and commonly used, EPA believes there is no 
reason SVMs cannot adopt similar technological approaches with enough 
lead time (or purchase credits or technology from other OEMs).\623\
---------------------------------------------------------------------------

    \622\ ``The 2022 EPA Automotive Trends Report, Greenhouse Gas 
Emissions, Fuel Economy, and Technology since 1975,'' EPA-420-R-22-
029, December 2022.
    \623\ https://ir.lucidmotors.com/news-releases/news-release-details/lucids-world-leading-electric-powertrain-technology-propels.
---------------------------------------------------------------------------

    As a reasonable way to transition SVMs into the primary program, 
EPA is finalizing a phase-in schedule over MYs 2027 to 2031 that will 
require SVMs to comply with primary program standards, but with 
additional years of lead time compared to larger volume manufacturers 
and compared to the proposed schedule for SVMs.\624\ After this phase-
in schedule, for MYs 2032 and later, SVMs will meet the primary program 
standards--that is, the same standards that apply to larger volume 
OEMs. EPA had proposed to have the phase-in to the primary program 
standards start with MY 2025, with the MY 2023 primary program standard 
applying for MYs 2025 and 2026. SVMs commented expressing concerns that 
beginning the phase-in to primary program standards in MYs 2025-2026 
did not provide sufficient lead time. EPA acknowledges that MY 2025 may 
have already begun, and that MY 2026 may begin as early as January 2, 
2025, approximately 9 months from the date of this final rule. In 
response to these comments, EPA believes it is appropriate to extend 
the SVM alternative standards established in MY 2021 through MY 2026, 
instead of through MY 2024 as proposed. Specifically, EPA is finalizing 
that SVM alternative standards established for MY 2021 will apply 
through MY 2026 to provide the requested stability for SVMs so that 
SVMs have an opportunity to reduce their GHG emissions in future years. 
This schedule provides a total of an additional five years of stability 
for the SVMs to transition from their

[[Page 27928]]

existing MY 2021 standards into delayed primary program standards after 
MY 2026. Starting in MY 2027, SVMs will meet primary program standards 
albeit with additional lead-time. As shown in Table 32, EPA is 
finalizing that SVMs will meet the primary program standards for MY 
2025 in MY 2027, providing an additional two years of lead time as 
compared to larger volume manufacturers. EPA is also establishing a 
period of stability (keeping the standards at MY 2021 levels for MY 
2021 through MY 2026) rather than year-over-year incremental reductions 
in the standards levels for SVMs which was 3 percent per year in their 
previous individual standards for MY 2017 to MY 2021. SVMs have fewer 
vehicle models over which to average, and EPA believes a staggered 
phase down in standards with a period of stability, and the opportunity 
to generate additional credits, between the steps is reasonable. As 
shown in Table 32, EPA is establishing a delayed schedule for SVMs to 
meet the primary program standards, until SVMs are required to meet the 
final MY 2032 standards in MY 2032. EPA did not reopen the eligibility 
requirements for the SVM standards currently in the regulations for SVM 
alternative standards and SVMs will need to remain eligible to use 
these provisions.\625\
---------------------------------------------------------------------------

    \624\ See 40 CFR 86.1818-12(h) for the primary program standards 
through MY 2026.
    \625\ See 40 CFR 86.1818-12(g).

   Table 32--Additional Lead Time for SVM Standards Under the Primary
                                 Program
------------------------------------------------------------------------
                                              Primary
                                              program        Years of
               Model year                    standards      additional
                                            that apply       lead time
------------------------------------------------------------------------
2027....................................            2025               2
2028....................................            2025               3
2029....................................            2027               2
2030....................................            2028               2
2031....................................            2030               1
2032 and later..........................            2032               0
------------------------------------------------------------------------

    This additional lead time approach is similar to the approach EPA 
used in the 2012 rule to provide additional lead time to intermediate 
volume manufacturers.\626\ As with the intermediate volume manufacturer 
temporary lead time flexibility, EPA believes that the additional lead 
time for SVMs will be sufficient to ease the transition to more 
stringent standards in the early years of the program that could 
otherwise present a difficult hurdle for them to overcome. The 
alternative phase-in will provide additional lead time for SVMs to 
better plan and implement the incorporation of CO2 reducing 
technologies and/or provide time needed to seek and secure credits from 
other manufacturers, if they so choose, to bring them into compliance 
with the primary standards.
---------------------------------------------------------------------------

    \626\ 77 FR 62795.
---------------------------------------------------------------------------

    Importantly, SVMs will continue to remain eligible to use the ABT 
5-year credit carry-forward provisions, allowing SVMs to bank credits 
in these intermediate years to further help smooth the transition from 
one step change in the standards to the next. EPA is, however, 
prohibiting any SVM opting to use the additional lead time allowance 
from trading credits generated under the additional lead time standards 
to another manufacturer. These credit provisions are already in place 
as part of the current SVM alternative standards, and EPA did not 
reopen them in this rulemaking. EPA believes that credit banking along 
with the staggered phase down of the standards will help SVMs meet the 
standards, recognizing that they have limited product lines. As with 
the SVM alternative standards, SVMs will have the option of following 
the additional lead time pathway with credit trading restrictions or 
opt into the primary program with no such restrictions. Once opted into 
the primary program, however, manufacturers will no longer be eligible 
for the alternative standards.
    Environmental and public health organizations commented in support 
of our approach for phasing the SVMs into the primary program. They 
agreed with EPA's conclusions that transitioning SVMs into the primary 
program is consistent with the recent announcements and developments in 
the business models of the SVMs who have previously been approved less 
stringent standards.
    EPA received comments from the SVMs opposing changes to the 
alternative standards approach, based on what they view as challenges 
in their ability to average across limited product lines, access to 
technology, limited volumes, and their position in the market compared 
to larger OEMs. EPA has carefully considered these comments and has 
concluded that it is appropriate to provide SVMs an extended phase in 
before meeting the standards of the primary program.
    SVMs commented that they would not be able to comply without the 
purchase of credits and that they felt there was uncertainty in 
purchasing credits and that it was unfair to have a standard that, in 
their view, required the purchase of credits. EPA notes that it has 
modeled reasonable compliance paths for the SVMs. EPA has also modeled 
a ``no credit trading'' scenario which identifies a reasonable 
compliance path for the SVMs even if no automaker is willing to sell 
credits, a situation which we consider very unlikely to occur 
(especially in light of the surplus credits generated by EV-only 
manufacturers). EPA views these modeling results as confirmatory of, 
but not necessary to, our judgment that the standards are feasible and 
appropriate for SVMs, and we also note that these compliance paths were 
modeled under the conservative assumption that SVMs must meet the final 
standards without any additional lead time allowance. EPA also notes 
that the current regulatory structure offers SVMs substantial 
compliance flexibilities. SVMs have alternative standards for MY 2021 
of between 308 and 377 g/mile, well above the primary program 
standards.\627\ In addition, EPA is maintaining the MY 2021 alternative 
standards for 5 years to enable SVMs to bank credits. EPA notes the 
increasing market for luxury and high-performance vehicles with more 
advanced control technologies, including the electrified technologies 
already applied by some manufacturers, and judges that that the final 
standards are feasible and appropriate for SVMs in light of the 
combination of additional lead time, the

[[Page 27929]]

opportunity to bank additional credits as compared to the alternative 
standards and, if necessary, the opportunity to purchase credits. 
History has shown that SVMs can purchase credits when needed, as EPA's 
compliance data confirms that such transactions have occurred. As 
discussed elsewhere in this preamble, GHG credit trading is also 
currently happening between large OEMs, and the existence of BEV-only 
manufacturers, with anticipated increased future BEV volumes, provides 
further assurance that the market is available, if needed.
---------------------------------------------------------------------------

    \627\ See 85 FR 39561, July 1, 2020. For comparison, the maximum 
footprint target for any passenger car in MY 2021 under the primary 
program is 215 g/mile.
---------------------------------------------------------------------------

D. Criteria Pollutant Emissions Standards

    EPA anticipates that internal combustion engine (ICE) vehicles will 
be a significant part of new vehicle sales for years to come. As the 
vehicle fleet ages, ICE-based vehicles will remain in-use throughout 
the analysis period for this final rule with an estimated 84 percent of 
the light- and medium-duty fleet continuing to burn fossil fuel in 
calendar year 2032 (see Chapter 8.2 of the RIA). EPA intends for its 
criteria pollutant emissions standards program to continue to obtain 
feasible and significant reductions in criteria pollutant \628\ 
emissions and mobile source air toxics, while also ensuring that 
vehicles do not backslide on existing emissions control achievements.
---------------------------------------------------------------------------

    \628\ In this notice, EPA is using ``criteria pollutants'' to 
refer generally to criteria pollutants and their precursors, 
including tailpipe NMOG, NOX, PM, and CO, as well as 
evaporative and refueling HC.
---------------------------------------------------------------------------

    EPA is finalizing changes to criteria pollutant emissions standards 
for both light-duty vehicles and medium-duty vehicles \629\ (MDV). 
These criteria pollutant standards are referred to as Tier 4 standards 
below. The light-duty vehicle standards apply to LDV, light-duty trucks 
(LDT), and medium-duty passenger vehicles (MDPV) \630\, while the MDV 
standards apply to class 2b and 3 vehicles. For both light-duty 
vehicles and MDV, NMOG+NOX bin structure, -7[deg]C 
NMOG+NOX, PM, CO, formaldehyde (HCHO), -7[deg]C CO, and 
NMOG+NOX provisions aligned with the CARB Advanced Clean 
Cars II program phase-in over a period of time. The phase-in structure 
is described in section III.D.1 of this preamble.
---------------------------------------------------------------------------

    \629\ Although we have established light-duty and medium-duty 
vehicle programs, according to size, weight and function of 
vehicles, we recognize that all vehicles with weight over 6,000 lb 
are considered ``heavy-duty vehicles'' for purposes of section 
202(a)(3), and we have revised the criteria pollutant standards for 
these vehicles consistent with that provision.
    \630\ MDPV have GVWR of MDV (8501 to 14,000 pounds) but are 
designed primarily for the transportation of people and follow 
light-duty vehicle standards. See Section III.E of the preamble for 
the Tier 4 definition of MDPV.
---------------------------------------------------------------------------

    For light-duty vehicles, EPA is finalizing more protective 
NMOG+NOX standards in the form of a MY 2027-2032 declining 
fleet average for LDV and LDT1-2, the same declining fleet average for 
LDT3-4 and MPDV in the ``early'' compliance program, or alternatively, 
a single step down in MY 2030 for LDT3-4 and MPV in the ``default'' 
program. The revisions also include the elimination of higher 
certification bins, a requirement for the same fleet average emissions 
standard to be met across four test cycles (25[deg]C FTP, HFET, US06, 
SC03), a change from a fleet average NMHC standard to a fleet average 
NMOG+NOX standard in the -7[deg]C FTP test, and three 
NMOG+NOX provisions aligned with the CARB Advanced Clean 
Cars II program. Details are discussed in sections III.D.2 and III.D.7 
of this preamble.
    NMOG+NOX changes for MDV include a fleet average that 
steps down in MY 2031 in the default program or declines from MYs 2027-
2033 in the early compliance program, the elimination of higher 
certification bins, a requirement for the same fleet average emissions 
standard to be met across four test cycles (25[deg]C FTP, HFET, US06, 
SC03), and a new fleet average NMOG+NOX standard in the -
7[deg]C FTP. EPA is also finalizing in-use standards for spark ignition 
and compression ignition MDV with GCWR above 22,000 pounds that are 
consistent with MY 2031 and later California chassis-certified MDV in-
use emissions standards.\631\ NMOG+NOX standards and other 
related provisions are discussed in sections III.D.2 and III.D.5 of 
this preamble.
---------------------------------------------------------------------------

    \631\ California Environmental Protection Agency, Air Resources 
Board. Part 1, Section I.4. California Provisions: Certification and 
In-Use testing requirements for chassis certified Medium-Duty 
Vehicles (MDV) with a Gross Combination Weight Rating (GCWR) greater 
than 14,000 pounds, using the Moving Average Window (MAW). 
``California 2026 and Subsequent Model Year Criteria Pollutant 
Exhaust Emission Standards and Test Procedures for Passenger Cars, 
Light-Duty Trucks, and Medium-Duty Vehicles.'' August 25, 2022.
---------------------------------------------------------------------------

    EPA is finalizing a PM standard of 0.5 mg/mile for light-duty 
vehicles and MDV that must be met across three test cycles (-7[deg]C 
FTP, 25[deg]C FTP, US06), a requirement for PM certification tests at 
the test group level, and a requirement that every in-use vehicle 
program (IUVP) test vehicle is tested for PM. The 0.5 mg/mile standard 
is a per-vehicle cap, not a fleet average. (Note that EPA discusses 
later in this section the background and history of per-vehicle cap 
standards and fleet-average standards). There are some differences in 
the final program from what was originally proposed, including the 
provision of additional lead time through a more gradual phase-in. 
Details are provided in section III.D.3 of this preamble.
    EPA is finalizing CO and HCHO emissions requirement changes for 
light-duty vehicles and MDVs including transitioning to emissions caps 
(as opposed to bin-specific standards), a requirement that CO emissions 
caps be met across four test cycles (25[deg]C FTP, HFET, US06, SC03), 
and a CO emissions cap for the -7[deg]C FTP that is the same for all 
light-duty vehicles and MDVs. There are changes to the requirements 
from what was proposed. Details are provided in section III.D.4 of this 
preamble.
    The Agency received significant comments on proposed programmatic 
elements related to high GCWR MDVs. Significant changes were made in 
response to comments. The Agency is finalizing proposed Alternative 2 
in order to address emissions from high GCWR MDVs. Please refer to 
section III.D.5 of the preamble for a summary of comments, summary of 
the proposed alternatives, and a detailed description of the final 
program.
    EPA is finalizing a refueling standards change to require 
incomplete MDVs to have the same on-board refueling vapor recovery 
standards as complete MDVs. See section III.E.6 of this preamble.
    EPA is not finalizing new requirements for the control of 
enrichment on gasoline vehicles. The agency will continue to gather 
data on the circumstances under which vehicles use enrichment in the 
real world, as well as estimates of the impact on emissions inventories 
due to command enrichment. In addition, we will continue to review AECD 
applications to ensure that the AECD process is being used 
appropriately. EPA may revisit additional enrichment controls in a 
future rulemaking. Additional discussion is found in section III.E.8 of 
this preamble.
    The final standards allow light-duty vehicle 25[deg]C FTP 
NMOG+NOX credits and -7[deg]C FTP NMHC credits (converting 
to NMOG+NOX credits) to be carried into the new program. It 
only allows MDV 25[deg]C FTP NMOG+NOX credits to be carried 
into the new program if a manufacturer selects the early compliance 
pathway. New credits may be generated, banked and traded within the new 
program to provide manufacturers with flexibilities in developing 
compliance strategies. Details are shown in section III.D.2.v of the 
preamble.

[[Page 27930]]

    EPA is finalizing the same criteria pollutant emissions standards 
for small volume manufacturers (SVM) as for large manufacturers but 
with a delayed phase-in to provide additional lead time to implement 
the standards. See section III.E.10 of this preamble for details.
    Useful life standards for light-duty vehicles and MDV are described 
in 40 CFR 86.1805-17.
    EPA's initial emission standards were established as per vehicle 
(``cap'') standards, with new standards often phased in as an 
increasing percentage of the fleet over time, to allow for gradual 
deployment of new technologies. Over the last two decades, EPA has 
found that fleetwide average standards can also be an effective 
approach for reducing emissions. Fleetwide average standards enable and 
encourage manufacturers to develop and deploy a variety of new 
technologies which may be more appropriate for specific segments of 
their fleet. As with ABT generally, fleetwide averaging allows greater 
flexibility and can incentivize overcompliance in some segments, which 
can benefit manufacturers, consumers and the environment (as new 
technologies are developed and deployed). However, fleetwide average 
standards may require additional testing requirements, since the 
specific level of emissions is important, not merely the meeting of a 
per vehicle standard. EPA has historically used cap standards for PM 
and CO, while it has historically used fleet average standards for 
NMOG+NOX and GHG.\632\ EPA is continuing this approach 
because it will be less disruptive to manufacturer's compliance 
planning and because EPA finds that the fleet average approach is more 
appropriate for NMOG+NOX and GHG because those standards 
offer more useful opportunities for varying the deployment of 
compliance strategies across a manufacturer's product lines, whereas 
the additional testing burden to establish precise emissions levels is 
less warranted for PM and CO emissions.\633\
---------------------------------------------------------------------------

    \632\ NMOG standards were fleet average standards under the NLEV 
program, while NOX standards were fleet average standards 
beginning with Tier 2. In Tier 3, EPA adopted NMOG+NOX 
standards as fleet average standards. GHG standards have been fleet 
average standards since they were adopted in 2010, in part to 
harmonize with the NHTSA fuel economy program.
    \633\ For example, if EPA were to adopt fleet averaging for PM, 
the variability of PM measurements would become increasingly 
important. While EPA finds that there is strong technical basis to 
measure and certify PM below 0.5 mg/mile, we conclude it is 
appropriate to gain additional experience with measuring PM at these 
levels before requiring the use of new measurement procedures for 
averaging purposes.
---------------------------------------------------------------------------

    EPA received a wide range of comments from a broad spectrum of 
stakeholders regarding the scope and stringency of the proposed 
criteria pollutant standards. NGOs, states, public health 
organizations, suppliers and a supplier trade association were strongly 
supportive of EPA finalizing the most protective criteria pollutant 
standards possible while vehicle manufacturers and their trade 
association, the Alliance for Automotive Innovation (AAI), voiced 
concerns regarding the stringency of the standards, the lack of need 
for additional emissions reductions, lack of alignment with CARB ACC 
II, phase-in timing and feasibility. Support for the revised standards 
included references to the significant public health impacts stemming 
from vehicle emissions, especially in communities with environmental 
justice concerns, and references to the need for assistance in 
attaining the NAAQS. Vehicle manufacturers stated that more stringent 
criteria pollutant standards would be a distraction from their efforts 
to electrify the light- and medium-duty fleets. Vehicle manufacturers 
also commented that they had extensive collaboration with the 
California Air Resources Board (CARB) during the development of CARB's 
recently finalized Advanced Clean Car II (ACC II) standards and 
industry broadly recommended that EPA adopt the ACC II program in lieu 
of our proposed standards.
1. Phase-In of Criteria Pollutant Standards
i. Light-Duty Vehicle Phase-In
    The phase-in of the revised criteria pollutant standards is an 
important facet of our program. EPA received comments from many states, 
NGOs, and suppliers to finalize the most stringent standards at the 
earliest opportunity, while auto manufacturers generally commented that 
additional lead time was necessary. EPA addressed these comments for 
the final program as described below.
    The criteria pollutant phase-in for light-duty vehicles applies to 
the NMOG+NOX bin structure, PM, -7[deg]C 
NMOG+NOX, CO, HCHO, -7[deg]C CO, and three provisions 
aligned with CARB ACC II (PHEV high power cold starts, early driveaway, 
intermediate soak mid-temperature starts). We are finalizing an 
extended phase-in for small volume manufacturers to provide additional 
lead time, as described below. The light-duty vehicle 
NMOG+NOX declining fleet average has its own timeline 
described in section III.D.2 of the preamble.
    Light-duty vehicle criteria pollutant phase-in schedules are shown 
in Table 33. Manufacturers comply with phase-in scenarios based on the 
projected number of vehicles sold or produced for sale in the United 
States in a given model year. LDV and LDT1-2 (GVWR <= 6000 lb) vehicles 
follow a 20, 40, 60, 100 percent phase-in schedule. LDT3-4 (GVWR 6001-
8500 lb) and MDPV may follow either a default phase-in that steps to 
100 percent in MY 2030 that provides a full four years of lead time as 
required by CAA section 202(a)(3)(C), or they may choose to follow an 
early phase-in schedule that ramps from 20 percent to 100 percent from 
MY 2027 to 2030. If a manufacturer chooses the early phase-in schedule, 
its LDV, LDT1-2, LDT3-4, and MDPV fleets are averaged together as one 
group. This scenario could be advantageous for a manufacturer as it 
allows lower emitting vehicles from one category to help with 
compliance in another. Credits from Tier 3 and new credits earned in 
Tier 4 are described in section III.D.2.v of the preamble.

                    Table 33--Tier 4 Light-Duty Vehicle Criteria Pollutant Phase-In Schedules
----------------------------------------------------------------------------------------------------------------
                                                                                   LDT3-4  (GVWR 6001-8500 lb),
                                                                  LDV, LDT1-2                  MDPV
                          Model year                           (GVWR <= 6000 lb) -------------------------------
                                                                       (%)         default  (%)     early  (%)
----------------------------------------------------------------------------------------------------------------
2027.........................................................                 20               0              20
2028.........................................................                 40               0              40
2029.........................................................                 60               0              60
2030.........................................................                100             100             100
----------------------------------------------------------------------------------------------------------------


[[Page 27931]]

    Vehicles that are not part of the phase-in percentages are 
considered interim vehicles, which must continue to demonstrate 
compliance with all Tier 3 regulations with the exception that all 
vehicles (interim and those that are part of the phase-in percentages) 
contribute to the Tier 4 light-duty vehicle NMOG+NOX 
declining fleet average described in section III.D.2 of the preamble.
    For small vehicle manufacturers (SVM),\634\ we are establishing a 
schedule that provides additional lead time in meeting the light-duty 
vehicle criteria pollutant standards. The SVMs schedule steps from 0 
percent to 100 percent in MY 2032 and is shown in Table 34. Before MY 
2032, SVMs must comply with all Tier 3 standards and all Tier 3 bins 
remain available to them.
---------------------------------------------------------------------------

    \634\ Small vehicle manufacturers (SVM) are defined in 40 CFR 
86.1838-01(a).

    Table 34--Tier 4 Light-Duty Vehicle Criteria Pollutant Phase-In Schedules for Small Volume Manufacturers
----------------------------------------------------------------------------------------------------------------
                                                       LDV, LDT1-2  (GVWR <= 6000   LDT3-4  (GVWR 6001-8500 lb),
                     Model year                                 lb)  (%)                      MDPV  (%)
----------------------------------------------------------------------------------------------------------------
2027................................................                             0                             0
2028................................................                             0                             0
2029................................................                             0                             0
2030................................................                             0                             0
2031................................................                             0                             0
2032................................................                           100                           100
----------------------------------------------------------------------------------------------------------------

    EPA received comments from the Alliance for Automotive Innovation 
(AAI) as well as some of its members regarding the proposed phase-in. 
AAI noted that had EPA adopted the CARB ACC II program, the proposed 
phase-in would have been more acceptable, however, because EPA had 
proposed new standards and test procedures the risk to a manufacturer's 
compliance planning is higher. AAI and manufacturers also commented 
that the agency should provide more time to meet the new standards.
    EPA continues to believe that the proposed criteria pollutant 
program is feasible and appropriate and has chosen not to adopt the 
CARB ACC II criteria pollutant program. With respect to phase-in, we 
have provided an additional year of phase-in in response to 
manufacturer concerns. As we elaborate further below in our discussion 
of specific requirements and in the RTC, we have separately assessed 
the reasonableness of this phase-in schedules for each of the 
requirements subject to it and found the schedule to be reasonable. For 
example, most vehicle manufacturers have considerable experience with 
additional PM controls, and some are already installing GPFs in the 
United States for sale outside of the country. Regarding alignment or 
full-scale adoption of the ACC II criteria pollutant program, although 
the goals of CARB's ACC II program are generally similar to the goals 
of EPA's NMOG+NOX program, the requirements in the CARB ACC 
II criteria pollutant program are uniquely structured to fit within the 
broader ACC II framework and would not be an appropriate solution in 
the context of EPA's performance-based criteria pollutant program. 
Under the CARB ACC II program, criteria pollutant emissions are 
guaranteed to be reduced with increasing ZEV penetrations and the 
remaining ICE-based vehicles are held at the current LEV III standards 
to prevent backsliding. EPA's performance-based standards, for both GHG 
and criteria pollutant emissions, provide the manufacturers with the 
ability to comply with a variety of technology pathways. This requires 
provisions in this final rule which are different from the CARB ACC II 
program to achieve similar emissions reductions, independent of the 
technology choices manufactures make and to prevent backsliding on ICE-
based powertrains for manufacturers with high BEV penetrations. In 
addition to providing an additional year of phase-in, EPA has been 
responsive to comments concerned about lead time for the revised 
standards by continuing to allow manufacturers to carry over Tier 3 
credits for vehicles less than 8,500 pounds GVWR.
ii. Medium-Duty Vehicle Phase-In
    The MDV phase-in for criteria pollutant standards, including the 
NMOG+NOX bin structure, PM, -7[deg]C NMOG+NOX, 
CO, HCHO, -7[deg]C CO standards, and standards for MDV with GCWR above 
22,000 pounds is described in this section.
    Default compliance phase in is required in a single step in MY 2031 
for these final criteria pollutant standards. Under default compliance, 
MDV may not carry forward Tier 3 NMOG+NOX credits (as 
allowed by the early phase-in schedule). An optional early compliance 
phase-in for MDV is shown in Table 35. Only manufacturers opting for 
the early compliance phase-in may carry forward Tier 3 credits into 
this program. Any MDVs that are not part of the phase-in percentages 
are considered Interim Tier 4 vehicles, which must continue to 
demonstrate compliance with all Tier 3 regulations with the exception 
that all vehicles (interim and those that are part of the phase-in 
percentages) contribute to the Tier 4 MDV NMOG+NOX declining 
fleet average, which has its own separate timeline (see section 
III.E.2.iv of the preamble).
    Finalized refueling standards for incomplete vehicles phase in on a 
different schedule as described in section III.D.6 of this preamble. 
The in-use standards for high GCWR MDV begin in MY 2031 regardless of 
whether or not a manufacturer opts for early compliance.

[[Page 27932]]



       Table 35--Tier 4 MDV Criteria Pollutant Phase-In Schedules
------------------------------------------------------------------------
                                                        MDV
               Model year                -------------------------------
                                           default  (%)     early  (%)
------------------------------------------------------------------------
2027....................................               0              20
2028....................................               0              40
2029....................................               0              60
2030....................................               0              80
2031....................................             100             100
------------------------------------------------------------------------

2. NMOG+NOX Standards
    EPA is finalizing new NMOG+NOX standards for MY 2027 and 
later. The standards are structured to account for the potential for 
significant emission reductions as the result of improving emissions 
control technologies for new light-duty vehicles and MDVs that is 
projected to occur over the next decade. Notably, while in our central 
case we project that these standards can be achieved by manufacturers 
choosing to increase electrification of their vehicle fleets, EPA 
projects that the standards are also feasible with the deployment of 
technologies to reduce emissions from ICE-based vehicles. Furthermore, 
absent the revised standards, we are concerned that the market shift 
towards greater electrification in the fleet could result in 
manufacturers deciding to increase the emissions relative to the status 
quo from their ICE vehicles to reduce cost.\635\ At the same time, as 
we explain below, manufacturers have considerable choice in how they 
meet the NMOG+NOX standards, including through the 
application of a range of technologies, such as electrification and 
improved ICE engine and exhaust aftertreatment designs.
---------------------------------------------------------------------------

    \635\ Tier 3 standards include a Bin 0, which allows zero 
emissions vehicles to be averaged with ICE-based vehicles. In the 
absence of the final NMOG+NOX standards, as sales of ZEVs 
increase, there would be an opportunity for the ICE portions of the 
light-duty and MDV fleets to reduce emission control system content 
and cost and comply with less stringent NMOG+NOX bins 
under Tier 3, typically referred to as ``backsliding''. If this were 
to occur, it would have the effect of increasing NMOG+NOX 
emissions from the ICE portion of the light-duty vehicle and MDV 
fleet and delay the overall fleet emission reductions of 
NMOG+NOX that would have otherwise occurred.
---------------------------------------------------------------------------

    The previous Tier 3 fleet average NMOG+NOX emissions 
standards were fully phased-in for light-duty vehicles (LDV, LDT, and 
MDPV) in MY 2025 to a 30 mg/mile fleet average standard and were fully 
phased-in for MDV (Class 2b and 3) in MY 2022 at 178 and 247 mg/mile, 
respectively.
    EPA is finalizing light-duty vehicle and MDV fleet average 
NMOG+NOX standards which are more stringent than Tier 3, 
based on our consideration of all available vehicle and engine 
technologies, including ICE-based, hybrid, and zero emission vehicles, 
in a manufacturer's compliance pathway. This approach is consistent 
with Tier 3 NMOG+NOX standards. Given the cost-effectiveness 
of BEVs for compliance with both criteria pollutant and GHG standards, 
EPA anticipates that many automakers will choose to include BEVs in 
their compliance strategies to minimize costs. However, the final 
NMOG+NOX standards continue to be performance-based fleet 
average standards with multiple feasible paths to compliance, depending 
on choices manufacturers make about deployment of emissions control 
technologies for ICE as well as electrification and credit trading.
    For instance, the final NMOG+NOX standards could be met 
by producing (A) a larger number of additional BEVs together with a 
smaller number of ICE-based vehicles with higher NMOG+NOX 
than final Tier 3 allowed, (B) a mix of BEVs together with ICE-based 
vehicles with NMOG+NOX similar to what final Tier 3 allowed, 
or (C) no BEVs and solely ICE-based vehicles with improved emissions 
controls relative to what was required by final Tier 3. BEVs, as well 
as these improved ICE-based emissions control technologies are 
available today. EPA notes that many ICE-based light-duty vehicles 
including hybrids and PHEVs are being certified below 15 mg/mile today, 
as shown in Chapter 3.2.5 of the RIA. Specific technologies available 
to reduce light-duty ICE-based emissions to below 15 mg/mile and to 
reduce MDV ICE-based emissions to below 75 mg/mile are described in 
Chapter 3.2.5.1 if the RIA.
i. NMOG+ NOX Bin Structure for Light-Duty Vehicles and 
Medium-Duty Vehicles
    The final bin structure for light-duty vehicles and MDVs set in 
this rule is shown in Table 36. The upper six bins (Bin 75 to Bin 170) 
are only available to MDV. For light-duty vehicles, the final bin 
structure removes the two highest Tier 3 bins (Bin 160 and Bin 125) and 
adds new bins such that the bins increase in 5 mg/mile increments from 
Bin 0 to Bin 70. The highest two bins are removed to remove the 
dirtiest vehicles from the future fleet and including bins from 0 to 70 
in increments of 5 mg/mile offers manufacturers more resolution in 
meeting the fleet-average standard. For MDV, the final bin structure 
also moves away from separate bins for Class 2b and Class 3 vehicles, 
adopting light-duty vehicle bins along with higher bins only available 
to MDV. In part due to comments received from MDV manufacturers, the 
final MDV-only bins have been harmonized with bins used for compliance 
with California chassis-certified MDV standards with the exception of 
elimination of any bins higher than Bin 170. The highest bin was also 
changed from Bin 160 to Bin 170 to better align with the California ACC 
II program and to serve as a cap on MDV emissions.
    Bins are used to meet in the NMOG+NOX fleet average 
standards described in section III.D.2.iii-iv of the preamble and the 
NMOG+NOX provisions aligned with the CARB ACC II program 
described in section III.D.7 of the preamble.
    Vehicles that are not part of the phase-in percentages described in 
section III.D.1 of the preamble are considered Interim Tier 4 vehicles 
and may only use Tier 3 bins, or in the case of MDV, may also use Tier 
3 bins and transitional Tier 4 MDV bins defined in 40 CFR 86.1816-18 
(bin 175 and 150 for Class 3 vehicles, and bin 125, 100, 85, 75 for all 
medium-duty vehicles). Note that transitional Tier 4 MDV bins apply 
only to Interim Tier 4 vehicles in model years 2027 through 2030, and 
not to fully phased in Tier 4 vehicles.

       Table 36--Light-Duty Vehicle and MDV NMOG+NOX Bin Structure
------------------------------------------------------------------------
                                                          NMOG+ NOX (mg/
                           Bin                                  mi)
------------------------------------------------------------------------
Bin 170 \a\.............................................             170
Bin 150\a\..............................................             150
Bin 125 \a\.............................................             125

[[Page 27933]]

 
Bin 100 \a\.............................................             100
Bin 85 \a\..............................................              85
Bin 75 \a\..............................................              75
Bin 70..................................................              70
Bin 65..................................................              65
Bin 60..................................................              60
Bin 55..................................................              55
Bin 50..................................................              50
Bin 45..................................................              45
Bin 40..................................................              40
Bin 35..................................................              35
Bin 30..................................................              30
Bin 25..................................................              25
Bin 20..................................................              20
Bin 15..................................................              15
Bin 10..................................................              10
Bin 5...................................................               5
Bin 0...................................................               0
------------------------------------------------------------------------
\a\ MDV only.

    EPA received comments on bin structure. The Alliance for Automotive 
Innovation (AAI) and GM commented that EPA should align its bin 
structure with CARB's ACC II program. AAI also recommended adding bins 
35, 45 and 90. Small volume manufacturers requested that Bin 125 remain 
available to them until MY 2035.
    In response to these comments EPA is finalizing a bin structure 
that adopts a full suite of bins from 0 to 70 for light-duty vehicles 
and MDV, and bins 75, 85, 100, 125, 150, and 170 for MDV. EPA's 
response to the bin-related SVMs comments can be found in section 
III.D.10 of the preamble.
ii. Smog Scores for the Fuel Economy and Environment Label
    EPA is updating the smog scores used on the Fuel Economy and 
Environment Label \636\ (see 40 CFR 600.311-12(g)), to work with the 
new Tier 4 bin structure, shown in Table 37. We sought comment on 
fitting the new Tier 4 bins and California LEV IV bins \637\ into the 
existing MY 2025 Tier 3 smog score structure for the Tier 4 phase-in 
period (MY 2027-2029), as the Tier 4 program is phased in, and we also 
sought comment on a new Tier 4 and LEV IV smog score structure for MY 
2030 and later. For both ratings schedules, it is important to avoid 
having any bin assigned to a higher score in a newer model year than it 
was assigned in an older model year (no ``backsliding'' for smog score 
ratings).
---------------------------------------------------------------------------

    \636\ The Fuel Economy and Environment label provisions apply to 
``automobiles'' (passenger automobiles and light trucks) and medium-
duty passenger vehicles as described in 40 CFR 600.001 and 600.002.
    \637\ See Section 1961.4, Title 13, California Code of 
Regulations. Final Regulation Order. Exhaust Emission Standards and 
Test Procedures--2026 and Subsequent Model Year Passenger Cars, 
Light-Duty Trucks, and Medium-Duty Vehicles.
---------------------------------------------------------------------------

    We received no comments on the proposal for smog scores, and we are 
finalizing structures that are consistent with the proposal but also 
reflect the fact that we are finalizing almost twice as many Tier 4 
NMOG+NOX bins as were in the proposal.
    For MY 2027-2029, EPA is finalizing a smog score schedule that 
aligns with the Tier 3 smog score schedule starting with MY 2025. This 
will allow the Tier 3 and Tier 4 bin structures to work together during 
the Tier 4 phase-in period, during which there will be a mix of Tier 3 
and interim Tier 4 vehicles. Table 37 shows the MY 2025 and forward 
Tier 3 Smog Scores and Tier 3/LEV III bins in the first two columns, 
and the MY 2027-2029 Tier 4 Smog Scores and Tier 4/LEV IV bins are 
shown in the last two columns.
    For MY 2030 and later, we are maintaining the smog ratings from MY 
2027-2029 for bin 40/ULEV 40 and lower bins and distributing the higher 
bins evenly through a smog score of 2. The interim LEV IV Bin 125 will 
be assigned a smog score of 1. Table 38 shows the smog score rating 
schedule for MY 2030 and later.
    We selected MY 2030 as the time to shift the smog scores because 
that is the final year for phasing in the Tier 4 criteria standards in 
40 CFR 86.1811-27 for vehicles subject to fuel economy labeling 
requirements. An exception applies for small volume manufacturers, 
which may continue to meet Tier 3 standards through model year 2031. 
This leaves the possibility that small volume manufacturers will 
certify their vehicles to bin standards that are higher than the bin 
standards specified for MY 2030 and later. As described in 40 CFR 
600.311(g), manufacturers that certify vehicles to bin standards that 
are higher than any values we specify automatically apply a smog score 
of 1 for those vehicles. As a result, small volume manufacturers 
certifying their vehicles to Bin 125 or Bin 160 in model years 2030 and 
2031 will apply a smog score of 1 for those vehicles. If they certify 
their vehicles to any other bins, the smog scores apply as described in 
Table 38. Note as an example that all manufacturers certifying to Bin 
70 standards in MY 2030 and 2031 would use a smog score of 2, whether 
they are meeting Tier 3 Bin 70 standards or Tier 4 Bin 70 standards, 
and all manufacturers certifying to Bin 50 standards in MY 2030 and 
2031 would use a smog score of 4, whether they are meeting Tier 3 Bin 
50 standards or Tier 4 Bin 50 standards.

                 Table 37--MY 2025--MY 2029 Smog Scores
------------------------------------------------------------------------
                                   Tier 3 and tier 4  LEV III and LEV IV
           Smog scores                   bins                bins
------------------------------------------------------------------------
1...............................  Bin 160...........  LEV 160.
2...............................  Bin 125...........  ULEV 125.
4...............................  Bin 55 through Bin  ULEV 60 or ULEV
                                   70.                 70.
5...............................  Bin 35 through Bin  ULEV 40 or ULEV
                                   50.                 50.
6...............................  Bin 25 or Bin 30..  SULEV 25 or SULEV
                                                       30.
7...............................  Bin 15 or Bin 20..  SULEV 15 or SULEV
                                                       20.
8...............................  Bin 10............
9...............................  Bin 5.............
10..............................  Bin 0.............  ZEV
------------------------------------------------------------------------


                     Table 38--MY 2030+ Smog Scores
------------------------------------------------------------------------
         MY 2030+ smog scores                  EPA and CARB bins
------------------------------------------------------------------------
1....................................  ULEV 125.
2....................................  Bin 65, Bin 70/ULEV 70.

[[Page 27934]]

 
3....................................  Bin 55, Bin 60/ULEV 60.
4....................................  Bin 45, Bin 50/ULEV 50.
5....................................  Bin 35, Bin 40/ULEV 40.
6....................................  Bin 25, Bin 30/SULEV 25, SULEV
                                        30.
7....................................  Bin 15, Bin 20/SULEV 15, SULEV
                                        20.
8....................................  Bin 10.
9....................................  Bin 5.
10...................................  Bin 0/ZEV.
------------------------------------------------------------------------

iii. NMOG+NOX Standards and Test Cycles for Light-Duty 
Vehicles
    EPA is establishing NMOG+NOX standards for light-duty 
vehicles with GVWR at or below 6,000 lb pursuant to its authority in 
section 202(a)(1)-(2), which directs EPA to set standards to take 
effect with sufficient lead time ``to permit the development and 
application of the requisite technology, giving appropriate 
consideration to the cost of compliance within such period.'' For 
light-duty vehicles above GVWR 6,000 lb, EPA is further governed in 
setting standards for NMOG+NOX by section 202(a)(3), which 
mandates ``standards which reflect the greatest degree of emission 
reduction achievable through the application of technology which the 
Administrator determines will be available for the model year to which 
such standards apply, giving appropriate consideration to cost, energy, 
and safety factors associated with the application of such technology'' 
and also meets specific lead time and stability requirements. As 
discussed in section V of the preamble, EPA finds that the standards in 
this final rule satisfy the requirement for ``greatest degree of 
emission reduction achievable'' for vehicles above 6,000 lb GVWR, and 
has adopted a default compliance schedule to ensure adequate lead time 
and stability for these vehicles, as well as an optional compliance 
schedule. Section III.D.2.iv of the preamble describes how we meet 
these same statutory requirements for medium-duty vehicles.
    The final NMOG+NOX fleet average standards for MY 2027 
and later light-duty vehicles are shown in Table 39. EPA is finalizing 
our proposal that the same bin-specific numerical standard be met 
across four test cycles: 25[deg]C FTP,\638\ HFET,\639\ US06 \640\ and 
SC03.\641\ This means that a manufacturer certifying a vehicle to 
comply with Bin 30 NMOG+NOX standards will be required to 
meet the Bin 30 emissions standards for all four test cycles. Meeting 
the same NMOG+NOX standards across four cycles is an 
increase in stringency from Tier 3, which had one standard for the 
higher of FTP and HFET, and a less stringent composite based standard 
for the SFTP (weighted average of 0.35xFTP + 0.28xUS06 + 0.37xSC03). 
Present-day engine, transmission, and exhaust aftertreatment control 
technologies allow closed-loop air-to-fuel (A/F) ratio control and good 
exhaust catalyst performance throughout the US06 and SC03 cycles. As a 
result, higher emissions standards for NMOG+NOX over these 
cycles are no longer necessary. Approximately 60 percent of the test 
group/vehicle model certifications from MY 2021 have higher 
NMOG+NOX emissions over the FTP cycle as compared to the 
US06 cycle, supporting the conclusion that the US06 cycle does not 
require a higher standard than the FTP cycle does.
---------------------------------------------------------------------------

    \638\ 40 CFR 1066.801(c)(1)(i) and 1066.815.
    \639\ 40 CFR 1066.840.
    \640\ 40 CFR 1066.831.
    \641\ 40 CFR 1066.835.
---------------------------------------------------------------------------

    For LDV and LDT1-2 (GVWR <=6,000 lb), the NMOG+NOX 
standard is a declining fleet average that brings the Tier 3 standard 
of 30 mg/mile down to 15 mg/mile in 2032 (as shown on the left side of 
Table 39). The declining fleet average reflects EPA's judgment about 
feasible further reductions in NMOG+NOX as a result of the 
application of technologies (whether the manufacturer chooses, for 
instance, further electrification, further improvements in internal 
combustion engine design and controls, or further improvements in 
exhaust aftertreatment). EPA judges that the standards could be met by 
a mix of these technologies, such as additional PHEVs with additional 
improvements in exhaust aftertreatment. For example, if the industry 
introduces BEVs into these vehicle classes at the rate projected by our 
central case modeling and if ICE vehicles remain at 30 mg/mile (Tier 
3), the declining fleet average standard provides approximately 30 
percent additional compliance headroom for emissions of 
NMOG+NOX from these vehicles in 2032. With BEV penetrations 
as low as 35 percent (e.g., as projected in our No Additional BEVs 
sensitivity) and considering many existing ICE vehicles already emit 
below 30 mg/mile, manufacturers would comply with the 
NMOG+NOX standard with minimal aftertreatment improvements 
for their remaining ICE vehicles. The additional compliance headroom 
provided by the final 15 mg/mile standard ensures the standards are 
feasible under a wide range of compliance paths (e.g., if manufacturers 
produce significantly fewer BEVs than is expected). Manufacturers with 
Tier 3 NMOG+NOX credits may carry their credits into Tier 4 
when Tier 3 is closed out, up to the end of the Tier 3 five-year credit 
life.
    For LDT3-4 (GVWR 6001-8500 lb) and MDPV, the NMOG+ standard offers 
manufacturers two alternative schedules shown on the right side of 
Table 39. The default schedule steps down from 30 mg/mile to 15 mg/mile 
in 2030 and provides 4 years of lead time and 3 years of standards 
stability, as required by the Clean Air Act (CAA) for heavy-duty 
vehicles. For lead time and standards stability, LDT3-4 and MDPV (as 
well as MDV) are considered heavy-duty vehicles. As with LDV, the final 
standards reflect EPA's judgment that about the feasibility of 
significant further reductions of NMOG+NOX through 
deployment of a range of emissions control technologies, taking into 
consideration the lead time available between now and 2030.
    The second alternative is an optional ``early'' schedule that 
declines from 30 mg/mile in 2026 (Tier 3) to 15 mg/mile in 2032, 
matching the schedule required for LDV and LDT1-2. The declining fleet 
average reflects the likelihood of increased electrification in the 
fleet over that time period. For example, if the industry introduces 
BEVs into these vehicle classes at the rate projected by our central 
case modeling and if ICE vehicles remain at 30 mg/mile (Tier 3), the 
declining fleet average standard provides approximately 10 percent 
additional compliance margin for emissions of NMOG+NOX from 
these vehicles in 2032. Manufacturers that choose the early phase-in 
schedule

[[Page 27935]]

average together their LDV, LDT1-2, LDT3-4, and MDPV vehicles. This 
scenario may be advantageous for manufacturers as it allows lower 
emitting vehicles from one category to help with compliance in another. 
Manufacturers with Tier 3 NMOG+NOX credits may carry their 
credits into Tier 4 when Tier 3 is closed out, up to the end of the 
Tier 3 five-year credit life, regardless of whether the default or 
early schedule is selected.
    Vehicles that are not part of the phase-in percentages described in 
section III.D.1 of the preamble are considered interim vehicles, which 
must continue to demonstrate compliance with all Tier 3 regulations 
with the exception that all vehicles (interim and those that are part 
of the phase-in percentages) contribute to the Tier 4 light-duty 
vehicle NMOG+NOX declining fleet average described shown in 
Table 39.
    There are two incentives for choosing the early schedule: The first 
incentive is that the manufacturer has until 2032 to reach 15 mg/mile 
instead of 2030. The second incentive is that NMOG+NOX 
emissions from LDV, LDT and MDPV are calculated as one group, allowing 
lower emitting sales in one sub-group shown in Table 39 to help meet 
the manufacturers overall NMOG+ standard. From a public health and 
environmental perspective, these incentives are justified by the early 
adoption of more stringent standards.

      Table 39--LDV, LDT, and MDPV Fleet Average NMOG+NOX Standards for 25 [deg]C FTP, HFET, US06 and SC03
----------------------------------------------------------------------------------------------------------------
                                                                    LDV, LDT1-2   LDT3-4 (GVWR 6001-8500 lb) and
                                                                   (GVWR <=6000        MDPV NMOG+NOX (mg/mi)
                           Model year                              lb) NMOG+NOX  -------------------------------
                                                                      (mg/mi)
                                                                                      default          early
----------------------------------------------------------------------------------------------------------------
2026 \a\........................................................          \a\ 30          \a\ 30          \a\ 30
2027............................................................              25          \a\ 30              25
2028............................................................              23          \a\ 30              23
2029............................................................              21          \a\ 30              21
2030............................................................              19              15              19
2031............................................................              17              15              17
2032 and later..................................................              15              15              15
----------------------------------------------------------------------------------------------------------------
\a\ Tier 3 standards provided for reference.

    For small vehicle manufacturers (SVM), we are finalizing an 
NMOG+NOX declining fleet average that provides additional 
lead time in meeting light-duty vehicle standards as shown in Table 40. 
The SVMs light-duty vehicle NMOG+NOX declining fleet average 
steps down from 51 mg/mile to 30 mg/mile in 2028, concurrent with Tier 
3 requirements for SVMs and representing no change for SVMs. The SVMs 
light-duty vehicle NMOG+NOX declining fleet average then 
steps down from 30 mg/mile to 15 mg/mile in 2032, matching the 
requirements for the larger manufacturers.

  Table 40--Light-Duty Vehicle Fleet Average NMOG+NOX Standards for 25
 [deg]C FTP, HFET, US06, and SC03 for Small Vehicle Manufacturers (SVM)
                                Criteria
------------------------------------------------------------------------
                                            LDV, LDT1-2    LDT3-4 (GVWR
                                           (GVWR <=6000    6001-8500 lb)
               Model year                  lb) NMOG+NOX      and MDPV
                                              (mg/mi)      NMOG+NOX (mg/
                                                                mi)
------------------------------------------------------------------------
2026 \a\................................          \a\ 51          \a\ 51
2027....................................              51              51
2028....................................              30              30
2029....................................              30              30
2030....................................              30              30
2031....................................              30              30
2032 and later..........................              15              15
------------------------------------------------------------------------
\a\ Tier 3 standards provided for reference.

    EPA received comments from many stakeholders with a wide range of 
inputs including supportive comments for the proposed standards and 
recommendations for program modifications for the final rule. NGOs such 
as the Environmental Defense Fund (EDF), American Lung Association and 
others provided strong support for the proposed NMOG+NOX 
standards as well as replacing the SFTP with a standard that applies 
across four test cycles (FTP, HFET, US06, SC03). The NGOs commented on 
the need to reduce emissions that contribute to poor air quality and 
negatively impact human health. The Alliance for Automotive Innovation 
(AAI) reiterated their recommendation to adopt CARB's ACC II program in 
lieu of the proposed NMOG+NOX declining fleet average that 
comingles ZEVs and ICE vehicles and instead set an ICE-only fleet 
average equal to the final Tier 3 fleet average of 30 mg/mile. AAI 
stated that the lack of certainty in BEV penetrations could result in 
compliance difficulties for some manufacturers. AAI also recommended 
that if EPA were to finalize the proposed approach, the final fleet 
average should not be overly reliant on BEV volumes. AAI also 
recommended that PHEV criteria

[[Page 27936]]

pollutant emissions should be discounted based on their all-electric 
range and utility factor, similar to how PHEV GHG compliance values are 
calculated. Stellantis also commented that the ``structure of the fleet 
average NMOG+NOX standard [is] acting like a de facto ZEV 
mandate.''
    EPA has responded to these comments by setting a higher (less 
stringent) final fleet average. The higher fleet average is informed by 
several factors, including the adoption of somewhat less stringent GHG 
standards as compared to the proposal, the inclusion of PHEVs in the 
projected compliance GHG pathway, and the potential for vehicle 
manufacturers to make improvements to their ICE powertrains in addition 
to electrification. EPA has decided to not discount PHEV emissions 
based on their estimated all electric range. While the determination of 
the utility factor for PHEVs is covered in section III.C.8 of the 
preamble, it is clear to EPA that there is considerably more engine on 
operation in charge depleting mode in the real world for current PHEVs 
than is captured on-cycle. In other words, as the result of vehicle 
design, operating conditions and/or environmental conditions, many 
current PHEVs demonstrate engine operation that is not captured in PHEV 
UF. While the utility factor may be appropriate for crediting a PHEV 
for GHG compliance, we have concluded it is not appropriate for PHEVs 
for several reasons. First, we know that criteria pollutants emission 
levels are influenced by more factors that GHG emissions, depending not 
only on whether the engine is on or off, but also the operating and 
environmental conditions under which the engine starts and runs. The 
existing and proposed PHEV UF does not adequately capture or reflect 
the specific operating conditions under which the engine starts or the 
environmental conditions, both of which have significant impact on 
criteria pollutant emissions. In addition, we note that criteria 
pollutant standards are orders of magnitude more stringent than GHG 
standards and as a result accuracy in the utility factor down to the 
milligram per mile becomes important. It may be possible in the future 
to have sufficiently accurate information about PHEV operation to 
adjust criteria pollutant emissions performance to reflect CD 
operation, and PHEV operation may change in the future as more PHEVs 
become ACC II compliant, but at this time EPA has decided not to 
discount emissions based on utility factor, although as noted we have 
adopted a less stringent final fleet average standard in part due to 
including PHEVs as a potential compliance pathway.
    Since technologies are available to further reduce 
NMOG+NOX emissions from internal combustion engines and 
vehicles relative to the current fleet, and since more than 20 percent 
of MY 2021 Bin 30 vehicle certifications already had an FTP 
certification value under 15 mg/mile NMOG+NOX, achieving 
reduced NMOG+NOX emissions through improved ICE technologies 
is feasible and reasonable. Regardless of the compliance strategy 
chosen, whether through electrification or cleaner ICE vehicles, 
overall, the fleet will become significantly cleaner.
    The final NMOG+NOX standards for the 25 [deg]C FTP, 
HFET, US06, SC03 and the associated declining fleet average, achieve 
significant reductions in NMOG+NOX. Our compliance modeling 
for the central case shows that these reductions can be achieved by 
deployment of BEV technology at levels consistent with the projected 
penetrations rates discussed for the GHG requirements. At the same 
time, this final rule continues to apply performance-based standards 
for both GHG and criteria pollutant emissions, and manufacturers are 
free to adopt any mix of technologies for different vehicles that 
achieve the levels of the final standards. EPA has reassessed the 
proposed standards in light of public comments and additional data and 
concluded that adjustments are warranted to the final 
NMOG+NOX fleet average standard to allow additional lead 
time for deploying advanced control technologies, whether BEVs, PHEVs, 
or further improvements to ICE vehicles. While EPA does not agree with 
commenters who suggested setting an ICE-only fleet average standard for 
NMOG+NOX, we continue to believe that the availability of 
clean ICE vehicles, as demonstrated by their current performance, as 
well as BEVs, support the feasibility of the final 15 mg/mile 
NMOG+NOX fleet average. Additional discussion on the 
feasibility of the final standards can be found in RIA Chapter 3.2.5.
    The final 25 [deg]C FTP NMOG+NOX standard applies 
equally at high-altitude conditions (1520-1720 meters) as at low-
altitude conditions (0-549 meters). Modern engine management systems 
can use idle speed, engine spark timing, valve timing, and other 
controls to offset the effect of lower air density on exhaust catalyst 
performance at high altitude conditions. The requirement that the same 
standard applies equally at high-altitude and low-altitude conditions 
extends to 25 [deg]C FTP NMOG+NOX, 25 [deg]C FTP PM, 25 
[deg]C FTP CO, 25 [deg]C FTP HCHO, and -7 [deg]C FTP CO standards.
    EPA is finalizing a requirement that manufacturers submit an 
engineering evaluation indicating that common calibration approaches 
are utilized at high and low altitudes for -7 [deg]C FTP 
NMOG+NOX. The same engineering evaluation requirement also 
applies to the -7 [deg]C FTP PM standard.
    EPA is replacing the existing -7 [deg]C FTP NMHC fleet average 
standard of 300 mg/mile for gasoline-fueled LDV and LDT1, and 500 mg/
mile fleet average standard for LDT2-4 and MDPV, with a single 
NMOG+NOX fleet average standard of 300 mg/mile for gasoline-
fueled LDV, LDT1-4 and MDPV to harmonize with the combined 
NMOG+NOX approach adopted in Tier 3 for all other cycles. 
NMOG should be determined as explained in 40 CFR 1066.635. EPA has 
historically not included BEVs in the calculation of fleet average -7 
[deg]C FTP NMHC emissions and EPA is taking the same approach for the 
calculation of fleet average -7 [deg]C FTP NMOG+NOX. EPA 
emissions testing at -7 [deg]C FTP showed that a 300 mg/mile standard 
is feasible with a large compliance margin for NMOG+NOX. 
Diesel-fueled LDV, LDT1-4, and MDPV are exempt from the -7 [deg]C FTP 
NMOG+NOX standard but EPA is requiring manufacturers to 
report results from this test cycle in their certifications.
    Since -7 [deg]C FTP and 25 [deg]C FTP are both cold soak tests that 
include TWC operation during light-off and hot running operating, EPA 
is finalizing the application of Tier 3 25 [deg]C FTP 
NMOG+NOX useful life to -7 [deg]C FTP NMOG+NOX 
standards.
    EPA is finalizing that -7 [deg]C FTP NMOG+NOX emissions 
be certified with at least one Emissions Data Vehicle (EDV) per test 
group for light-duty vehicles certifying to the 300 mg/mile standard 
instead of one EDV per durability group as in Tier 3.
iv. NMOG+NOX Standards and Test Cycles for Medium-Duty 
Vehicles
    The final MDV NMOG+NOX standards are shown in Table 41 
for optional early compliance and in Table 42 for default compliance. 
The CAA requires 4 years of lead time and 3 years of standards 
stability for heavy-duty vehicles when establishing emissions standards 
for certain pollutants, including NOX and hydrocarbons. MDV 
fall under the CAA definition for heavy-duty vehicles with respect to 
standards stability and lead time. Under default compliance, MDVs will 
continue to meet Tier 3 standards through the end

[[Page 27937]]

of MY 2030 and then MDVs will proceed to meeting a 75 mg/mile 
NMOG+NOX standard in a single step in MY 2031 (Table 42). 
This compliance schedule complies with CAA provisions for lead time and 
stability. Under default compliance, MDV may not carry forward Tier 3 
NMOG+NOX credits into the Tier 4 program. The optional early 
compliance path has declining NMOG+NOX standards that 
gradually phase-in from MY 2027 through MY 2033. MDV manufacturers 
opting for early compliance may carry forward Tier 3 
NMOG+NOX credits into the Tier 4 program when Tier 3 is 
closed out, up to the end of the Tier 3 five-year credit life (Table 
41).
    Note that the phase-in percentages from section III.D.1.ii of this 
preamble also apply. MDV that are not part of the phase-in percentages 
summarized in section III.D.1.ii of the preamble are considered interim 
vehicles, which must continue to demonstrate compliance with all Tier 3 
standards and regulations with the exception that all vehicles (interim 
and those that are part of the phase-in percentages) contribute to the 
Tier 4 MDV NMOG+NOX declining fleet average.
    Certification data show that for MY 2022-2023, 75 percent of sales-
weighted Class 2b/3 gasoline vehicle certifications were below 120 mg/
mile in FTP and US06 tests (see RIA Chapter 3.2.5). Diesel-powered MDVs 
designed for high towing capability (i.e., GCWR above 22,000 pounds) 
had higher emissions; however 75 percent were still below 180 mg/mile 
NMOG+ NOX. The year-over-year fleet average FTP standards 
for MDV are presented below. The rationale for the manufacturer's 
choice of early compliance and default compliance pathways is described 
in section III.D.1.ii of this preamble. For further discussion of MDV 
NMOG+NOX feasibility, please refer to Chapter 3.2.5 of the 
RIA.
    The final MDV NMOG+NOX standards are based on EPA's 
judgment as to the greatest degree of emissions reduction that is 
feasible applying existing light-duty vehicle technologies, including 
ICE and advanced ICE technologies and electrification, to MDV.\642\ As 
with the light-duty vehicle categories, EPA anticipates that there will 
be multiple compliance pathways, such as increased electrification of 
vans together with achieving 120 mg/mile NMOG+NOX for ICE-
power MDV. Present-day MDV engine and aftertreatment technology allows 
fast catalyst light-off after cold-start followed by closed-loop A/F 
control and excellent exhaust catalyst emission control on MDV, even at 
the adjusted loaded vehicle weight, ALVW [(curb + GVWR)/2] test weight, 
which is higher than loaded vehicle weight, LVW (curb + 300 pounds) 
used for testing light-duty vehicles. Diesel MDV are adopting more 
advanced SCR systems for NOX emissions control that 
incorporate dual-injection systems for urea-based reductant similar to 
SCR systems that have been developed to meet more stringent 
NOX standards for MY 2024 and later heavy-duty engine 
standards in California and federal MY 2027 and later heavy-duty engine 
standards.643 644 Under the default compliance pathway, the 
final MDV standards begin to take effect beginning in MY 2031. While 
the originally proposed date of 2030 for default compliance was fully 
consistent with the CAA section 202(a)(3)(C) lead time requirement for 
these vehicles, EPA delayed implementation in the final rule to provide 
additional lead time based in part on comments received from auto 
manufacturers concerning the need for additional lead time for 
compliance. Similarly, the early compliance pathway was delayed by one 
year relative to our proposal.
---------------------------------------------------------------------------

    \642\ Further discussion of the statutory factors of costs of 
compliance is found in Section IV of the preamble. Discussion of 
safety, and energy is found in VIII.
    \643\ California Air Resources Board. Heavy-duty Omnibus 
Regulation. https://ww2.arb.ca.gov/rulemaking/2020/hdomnibuslowno.
    \644\ 88 FR 4296. Control of Air Pollution From New Motor 
Vehicles: Heavy-Duty Engine and Vehicle Standards. January 24, 2023.

     Table 41--MDV Fleet Average NMOG+NOX Standards Under the Early
                         Compliance Pathway \a\
------------------------------------------------------------------------
                                                 NMOG+ NOX (mg/mi)
               Model year                -------------------------------
                                             Class 2b         Class 3
------------------------------------------------------------------------
2026....................................         \b\ 178         \b\ 247
                                         -------------------------------
2027....................................             175
2028....................................             160
2029....................................             140
2030....................................             120
2031 \c\................................             100
2032 \c\................................              80
2033 and later \c\......................              75
------------------------------------------------------------------------
\a\ Please refer to section III.D.1 of the preamble for further
  discussion of the early compliance and default compliance pathways.
\b\ Tier 3 FTP fleet average standards provided for reference.
\c\ MDV with a GCWR greater than 22,000 pounds must also comply with
  additional moving average window (MAW) in-use testing requirements.


    Table 42--MDV Fleet Average NMOG+NOX Standards Under the Default
                         Compliance Pathway \a\
------------------------------------------------------------------------
                                               MDV NMOG+ NOX (mg/mi)
               Model year                -------------------------------
                                             Class 2b         Class 3
------------------------------------------------------------------------
2026....................................         \b\ 178         \b\ 247
2027....................................         \b\ 178         \b\ 247
2028....................................         \b\ 178         \b\ 247
2029....................................         \b\ 178         \b\ 247
2030....................................         \b\ 178         \b\ 247
                                         -------------------------------
2031 \c\................................           \a\75
2032 \c\................................          \a\ 75
2033 and later..........................          \a\ 75
------------------------------------------------------------------------
 \a\ Please refer to section III.D.1 of the preamble for further
  discussion of the early compliance and default compliance pathways.
 \b\ Tier 3 FTP fleet average standards provided for reference.
 \c\ MDV with a GCWR greater than 22,000 pounds must also comply with
  additional moving average window (MAW) in-use testing requirements.

    EPA is not finalizing SVM MDV standards that differ from large 
manufacturer MDV standards.
    If a manufacturer has a fleet mix with relatively high sales of MDV 
BEV, that will ease compliance with MDV NMOG+NOX fleet 
average standards for MDV ICE-powered vehicles. We have also finalized 
an interim provision allowing credits generated by MY 2027 through 2032 
BEVs qualifying as MDPV to be used for complying with the Tier 4 MDV 
fleet average NMOG+NOX standards in order to help 
manufacturers transition to meeting the Tier 4 MDV NMOG+NOX 
fleet average standards (see section III.D.2.iv). An option also 
remains for manufacturers of high GCWR MDV to choose engine-
certification as a light-heavy-duty engine as an additional compliance 
flexibility. This would allow some manufacturers to choose the option 
of moving vehicles with the highest towing capability out of the fleet-
average chassis-certified standards and into the heavy-duty engine 
program. If a manufacturer has a fleet mix with relatively low BEV 
sales, then improvements in NMOG+NOX emissions control for 
ICE-powered vehicles would be required to meet the fleet average 
standards and/or more capable high GCWR MDV could be moved into the 
heavy-duty engine program and/or credits could be used from qualifying 
MDPV BEVs. Improvements to NMOG+NOX emissions from ICE-
powered vehicles are feasible with available engine, aftertreatment, 
and sensor technology, and has been shown within an analysis of MY 
2022-2023 MDV certification

[[Page 27938]]

data (see RIA Chapter 3.2.5). Under the final standards, fleet average 
NMOG+NOX will continue to decline to well below the final 
Tier 3 NMOG+NOX standards of 178 mg/mile and 247 mg/mile for 
Class 2b and 3 vehicles, respectively.
    The final standards require the same MDV numerical standards be met 
across all four test cycles, the 25 [deg]C FTP, HFET, US06 and SC03, 
consistent with the approach for light-duty vehicles described in 
section III.D.2.iii of the preamble. This would mean that a 
manufacturer certifying a vehicle to bin 75 would be required to meet 
the bin 75 emissions standards for all four cycles.
    Meeting the same NMOG+NOX standard across four cycles is 
an increase in stringency from Tier 3, which had one standard over the 
FTP and less stringent bin standards for the HD-SFTP (weighted average 
of 0.35xFTP + 0.28xHDSIM + 0.37xSC03, where HDSIM is the driving 
schedule specified in 40 CFR 86.1816-18(b)(1)(ii)). Existing MDV 
control technologies allow closed-loop A/F control and high exhaust 
catalyst emissions conversion throughout the US06 and SC03 cycles, so 
compliance with higher numerical emissions standards over these cycles 
is no longer needed. Manufacturer submitted certification data and EPA 
testing show that Tier 3 MDV typically have similar NMOG+NOX 
emissions in US06 and 25 [deg]C FTP cycles, and NMOG+NOX 
from the HFET and SC03 are typically much lower. Testing of a 2022 F250 
7.3L at EPA showed average NMOG+NOX emissions of 56 mg/mile 
in the 25 [deg]C FTP and 48 mg/mile in the US06. Manufacturer-submitted 
certifications show that MY 2021+2022 gasoline Class 2b trucks 
achieved, on average, 69 mg/mile in the FTP, 75 mg/mile in the US06, 
and 18 mg/mile in the SC03. MY 2021+2022 gasoline Class 3 trucks 
achieved, on average, 87 mg/mile in the FTP and 25 mg/mile in the SC03.
    Several Tier 3 provisions will end with the elimination of the HD-
SFTP and the combining of bins for Class 2b and class 3 vehicles. 
First, Class 2b vehicles with power-to-weight ratios at or below 0.024 
hp/pound may no longer replace the full US06 component of the SFTP with 
the second of three sampling bags from the US06. Second, Class 3 
vehicles may no longer use the LA-92 cycle in the HD-SFTP calculation 
but will instead have to meet the NMOG+NOX standard in each 
of four test cycles (25 [deg]C FTP, HFET, US06 and SC03). Third, the 
SC03 may no longer be replaced with the FTP in the SFTP calculation.
    The final MDV 25 [deg]C FTP NMOG+NOX standard applies 
equally at high altitude conditions (1520-1720 m) as at low-altitude 
conditions (0-549 m), rather than continuing compliance relief 
provisions from Tier 3 for certification at high altitude conditions. 
Modern engine management systems can use idle speed, engine spark 
timing, valve timing, and other controls to offset the effect of lower 
air density on exhaust catalyst performance at high altitude 
conditions.
    EPA is also setting a new -7 [deg]C FTP NMOG+NOX fleet 
average standard of 300 mg/mile for gasoline-fueled MDV. NMOG should be 
determined as explained in 40 CFR 1066.635. EPA testing has 
demonstrated the feasibility of a single fleet average -7 [deg]C FTP 
NMOG+NOX standard of 300 mg/mile across light-duty vehicles 
and MDV. Consistent with the proposal, our technical assessment for the 
standards, and the approach in Tier 3 to assessing compliance with the 
-7 [deg]C FTP NMHC standards, BEVs and other zero emission vehicles are 
not included and not averaged into the fleet average -7 [deg]C FTP 
NMOG+NOX standards. Diesel-fueled MDV are exempt from the -7 
[deg]C FTP NMOG+NOX standard but EPA is requiring 
manufacturers to report results from this test cycle in their 
certifications.
    For Tier 3 certification of -7 [deg]C FTP NMHC, manufacturers must 
submit an engineering evaluation indicating that common calibration 
approaches are utilized at high and low altitudes. For Tier 4 
certification, this requirement continues for -7 [deg]C FTP 
NMOG+NOX.
    Since -7 [deg]C FTP and 25 [deg]C FTP are both cold soak tests that 
include TWC operation during light-off and hot running operating, EPA 
is finalizing the application of Tier 3 25 [deg]C FTP 
NMOG+NOX useful life to -7 [deg]C FTP and 
NMOG+NOX standards.
    EPA is finalizing that -7 [deg]C FTP NMOG+NOX emissions 
be certified with at least one Emissions Data Vehicle (EDV) per test 
group for MDV certifying to the 300 mg/mile standard instead of one EDV 
per durability group as in Tier 3.
    Additional discussion on the feasibility of the proposed standards 
can be found in RIA Chapter 3.2.
v. Averaging, Banking, and Trading Provisions
    Similar to the existing criteria pollutant program, 
NMOG+NOX credits may be generated, banked, and traded within 
the Tier 4 program to provide manufacturers with flexibilities in 
developing compliance strategies. EPA did not reopen or solicit comment 
on the ABT program for criteria pollutants,\645\ with the sole 
exceptions of discrete changes relating to the transition between Tier 
3 and Tier 4 for certain NMOG+NOX credits and expanding the 
credit program for -7 [deg]C FTP testing to apply for 
NMOG+NOX emissions for light-duty and medium-duty vehicles 
(rather than only NMHC emissions for light-duty vehicles). We proposed 
and are finalizing these discrete changes, which we describe below.
---------------------------------------------------------------------------

    \645\ ABT credit provisions for the GHG program are described in 
Section III.C.4 of the preamble. As noted in that section, EPA did 
not reopen any GHG ABT provisions.
---------------------------------------------------------------------------

    EPA is allowing light-duty vehicle (LDV, LDT, MDPV) 25 [deg]C FTP 
NMOG+NOX credits to be transferred into the Tier 4 program 
when Tier 3 is closed out (i.e., when all of a manufacturers' test 
groups within a certification category are Tier 4 compliant), up to the 
end of the Tier 3 five-year credit life.\646\ In the separate program 
for light-duty vehicle -7 [deg]C FTP testing, NMHC credits may be 
transferred into the Tier 4 program on a 1:1 basis for -7 [deg]C FTP 
NMOG+NOX credits when Tier 3 is closed out, up to the end of 
the five-year credit life.
---------------------------------------------------------------------------

    \646\ We mention the length of the credit life here for 
informational purposes but note that EPA did not reopen the 
provisions governing the five-year length of the credit life.
---------------------------------------------------------------------------

    EPA is allowing MDV (Class 2b and 3 vehicles) 25 [deg]C FTP 
NMOG+NOX credits to be transferred into the Tier 4 program 
only if a manufacturer selects the early compliance phase-in for MDV. 
If the MDV early compliance phase-in is selected, MDV credits may be 
transferred into Tier 4 when Tier 3 is closed out, up to the end of the 
Tier 3 five-year credit life. There were no -7 [deg]C FTP NMHC or -7 
[deg]C NMOG+NOX standards for MDV before the Tier 4 
standards adopted in this rule so there are no MDV -7 [deg]C FTP 
credits to transfer.
    As noted in section III.E of this preamble, EPA is broadening the 
definition of MDPV to include passenger vehicles that could potentially 
fall outside the prior definition, especially as a result of increased 
weight from electrification. We have concluded that the newly 
designated MDPVs should be included in the light-duty program 
considering their size and function, but we recognize that this 
recategorization may reduce the number of electric vehicles that would 
otherwise have been available to factor into each manufacturer's 
strategy for meeting MDV standards. To help manufacturers transition to 
meeting the Tier 4 MDV

[[Page 27939]]

NMOG+NOX standards for 25 [deg]C testing, we are adopting an 
interim provision allowing credits generated by MY 2027 through 2032 
battery electric (BEV) and fuel cell vehicles (FCEV) qualifying as MDPV 
to be used for complying with the Tier 4 MDV fleet average 
NMOG+NOX standard for 25 [deg]C testing. See 40 CFR 86.1861-
17(b)(6). Manufacturers may use these credits starting in MY 2031 under 
the default phase-in, and starting in MY 2027 under the early 
compliance phase-in. Since this interim provision is addressing a 
potential issue arising from changes in an individual manufacturer's 
fleet mix of MDPV and MDV, we are not including an option to buy or 
sell these credits for a different company to use for certifying its 
MDV. Except as described here, all the other provisions for calculating 
and using credits apply as specified in 40 CFR part 86, subpart S. Note 
that this interim provision does not apply for NMOG+NOX 
standards for -7 [deg]C testing because electric vehicles are not 
subject to those standards.
3. PM Standard
i. PM Standard and Test Cycles for Light-Duty and Medium-Duty Vehicles
    EPA is finalizing changes to the current Tier 3 p.m. standards and 
requirements. These changes include a more protective standard for the 
25 [deg]C FTP and US06 test cycles, and the addition of a cold PM 
standard for the existing cold temperature test (-7 [deg]C FTP) 
presently used for CO and NMHC (40 CFR 1066.710). As proposed, the same 
numerical standard of 0.5 mg/mile and the same certification test 
cycles are being finalized for light-duty vehicles (LDV, LDT, and MDPV) 
and MDV, as shown in Table 43 for light-duty vehicles and Table 44 for 
MDV. The standard for -7 [deg]C testing applies only to gasoline-fueled 
and diesel-fueled vehicles.\647\ Comparisons to current Tier 3 p.m. 
standards are provided for reference. EPA is finalizing that the same 
Tier 3 25 [deg]C FTP useful life standard applies to all three PM test 
cycles.
---------------------------------------------------------------------------

    \647\ See 40 CFR 1066.710(d)(2) for -7 [deg]C FTP gasoline and 
diesel test fuel specifications.

       Table 43--Light-Duty Vehicle (LDV, LDT, MDPV) PM Standards
------------------------------------------------------------------------
                                                             Final PM
            Test cycle              Tier 3 standards (mg/  standard (mg/
                                             mi)                mi)
------------------------------------------------------------------------
25 [deg]C FTP.....................  3...................             0.5
US06..............................  6...................             0.5
-7 [deg]C FTP.....................  Not applicable......             0.5
------------------------------------------------------------------------


               Table 44--MDV (Class 2b and 3) PM Standards
------------------------------------------------------------------------
                                                             Final PM
            Test cycle              Tier 3 standards (mg/  standard (mg/
                                             mi)                mi)
------------------------------------------------------------------------
25 [deg]C FTP.....................  8/10 for 2b/3                    0.5
                                     vehicles.
US06..............................  10/7 for 2b/3                    0.5
                                     vehicle on SFTP.
-7 [deg]C FTP.....................  Not applicable......             0.5
------------------------------------------------------------------------

    As with NMOG+NOX, EPA notes that the Administrator is 
setting standards for vehicles under 6,000 lb GVWR pursuant to CAA 
section 202(a)(1)-(2), and is subject to the requirements of CAA 
202(a)(3) for heavier vehicles, including the requirement that 
standards reflect the greatest degree of emissions reduction 
achievable, giving appropriate consideration to cost, energy and safety 
and requirements for lead time and stability. As discussed in section V 
of the preamble, EPA finds these standards are appropriate and 
consistent with these requirements, and will reduce PM emissions over 
the broadest range of vehicle operating and environmental conditions. 
Specifically, we find that the final PM standards are feasible and 
appropriate under section 202(a)(1)-(2) for LDV and LDT1-2 for each 
model year between MY 2027-32 and take effect after such period as the 
Administrator finds necessary to permit the development and application 
of the requisite technology to control PM emissions, giving appropriate 
consideration to the cost of compliance within such period. For LDT3-4 
and MDV, we find that the final PM standards, as required by section 
202(a)(3)(A), reflect the greatest degree of emission reduction 
achievable through the application of technology to control PM 
emissions which the Administrator determined will be available for each 
model year to which such standards apply, giving appropriate 
consideration to cost, energy, and safety factors associated with the 
application of such technology. We discuss feasibility, lead time, and 
costs, of the technology for controlling PM emissions in various 
subsections in this section III.D.3 of the preamble and in Chapter 
3.2.6 of the RIA. Discussion of energy (as reflected in impact on 
CO2 emissions), safety, and other factors we considered in 
establishing the PM standards are found in RIA Chapter 3.2.6. The 
complete rationale for the PM standard is presented in sections II, 
III.D.3, V, VII of the preamble and Chapter 3.2.6 of the RIA.
    The current Tier 3 p.m. standards capture only a portion of vehicle 
operation and a narrow and benign set of environmental conditions. EPA 
has observed that PM emissions increase dramatically during cold 
temperature cold-starts and high engine power conditions not captured 
by Tier 3 p.m. test cycles. While several vehicles in the current fleet 
demonstrate emissions performance that could comply with the standards 
at 25 [deg]C, EPA projects that to meet the -7 [deg]C PM standard 
manufacturers will choose to adopt a combination of Gasoline 
Particulate Filters (GPF) and BEVs as the most practical and cost-
effective means to control PM emissions.
    GPF is a mature and cost-effective technology and current GPF 
designs (e.g., MY 2022 GPFs) have high filtration efficiency even 
without ash or soot loading. GPFs are being widely used in Europe and 
China and at least six vehicle manufacturers are

[[Page 27940]]

assembling GPF-equipped vehicles in the United States for export and 
sale in other countries.
    In support of the final PM standards, EPA conducted robust and 
detailed characterizations of GPF performance. EPA quantified PM, 
elemental carbon (EC) and polyaromatic hydrocarbon (PAH) emissions, 
with and without the GPF installed, and assessed GPF impact on GHG 
emissions and vehicle performance. EPA demonstrated no measurable GPF 
influence on GHG emissions and only slight impact on vehicle 
performance with a properly sized GPF. PM emissions were typically 
reduced by over 95 percent, EC emissions were typically reduced by over 
98 percent, and filter-collected PAH emissions were typically reduced 
by over 99 percent. The detailed characterization of GPF benefits is 
discussed Chapter 3.2.6.2 of the RIA.
    The final numerical standard (0.5 mg/mi) and the three applicable 
test cycles (25 [deg]C FTP, US06, -7 [deg]C FTP) are the same as 
proposed in the NPRM. The phase-in of the standard, however, is more 
gradual, as discussed in the section III.D.1 of the preamble.
    Commenters expressed opposing views on the stringency, feasibility 
and need of the proposed PM standard. NGOs, EJ groups, and states urged 
the strongest possible standards given the significant health benefits, 
especially important for near-roadway exposures and in communities 
overburdened by air pollution, and the need for reductions to attain 
the PM NAAQS. A 2023 remote sensing study by ICCT shows that while 
gaseous emissions decreased, per-vehicle PM emissions decreased and 
then increased from 2005 to 2022, likely due to more vehicles using GDI 
(gasoline direct injection) technology in recent years. Automotive 
suppliers provided strong support for the proposal, noting the maturity 
of GPF technology and the current manufacturing of GPF-equipped 
vehicles in the U.S. for export to meet strict PM standards in Europe 
and China. Suppliers attested to having sufficient production capacity. 
The United Steelworkers commented that GPFs can easily and affordably 
be applied to light-duty vehicles and MDV in the U.S. and supported 
requiring this technology. An analysis from the Manufacturers of 
Emissions Control Association (MECA), a supplier trade association, 
shows that a regulatory control strategy that includes a combination of 
electric vehicle penetration and best available exhaust controls for PM 
(i.e., GPF) on the remaining ICE vehicles results in approximately 
double the PM2.5 reduction achievable than electrification 
alone, during the period from 2025 to 2060.
    The Alliance for Automotive Innovation (AAI) and several vehicle 
manufacturers argued that the proposed PM standard would divert 
investments from electrification and urged adoption of a less stringent 
standard, specifically CARB's ACC II LEV IV standard of 1 mg/mile. 
Vehicle manufacturers commented that they had worked closely with CARB 
in the development of the 1 mg/mile standard and that EPA had not 
appropriately justified why a lower standard than that adopted by CARB 
is required. However, a few major OEMs supported the standard but asked 
for more lead time for application of GPFs across various models 
considering the level of effort needed to meet the collective sets of 
standards of this multipollutant rulemaking. Several OEMs raised 
concerns about measuring tailpipe PM emissions below 0.5 mg/mile, 
especially at -7 [deg]C.
    As we outlined in section II of the preamble, we are setting more 
stringent PM standards because of the health and environmental effects 
associated with exposure to PM2.5. Several commenters noted 
that the PM2.5 reductions from the proposal were needed for 
them to attain the PM2.5 NAAQS.\648\ In addition, other key 
factors informed the Agency's decision to finalize the 0.5 mg/mile PM 
standard. First, cost effective technology that is already being 
applied by most, if not all manufacturers already exists and 
demonstrates a potential to reduce harmful PM emissions by over 95 
percent in virtually all operating and environmental conditions. GPFs 
are a feasible, safe, mature, and prolific technology with tens of 
millions of filters already installed on light-duty vehicles in 
operation worldwide. Secondly, over 100 million new ICE vehicles will 
likely be produced over the coming decades and these ICE vehicles will 
be used on roadways for 20 or more years after their manufacture. EPA 
has an obligation under the Clean Air Act to establish standards that 
protect public health and welfare based on feasible technologies that 
will be available considering costs and lead time. For vehicles over 
6,000 lb EPA is obligated, as required by CAA section 202(a)(3), to set 
standards that reflect the greatest degree of emission reduction 
achievable through the application of available technology (considering 
costs, energy, and safety). Finally, EPA recognizes that GPFs are not a 
drop-in technology and that vehicle manufacturers will require lead 
time to adopt the technology for U.S. applications. OEMs' lead time 
concerns are addressed by lengthening the phase-in schedule described 
in section III.D.3.ii and more generally in section III.D.1 of the 
preamble.
---------------------------------------------------------------------------

    \648\ On February 7, 2024, EPA finalized a rule to revise the 
primary annual PM2.5 standard from 12 ug/m\3\ to 9 ug/
m\3\. https://www.epa.gov/pm-pollution/national-ambient-air-quality-standards-naaqs-pm accessed on March 7, 2024.
---------------------------------------------------------------------------

    EPA considered industry comments recommending adoption of CARB's 1 
mg/mile standard instead of our proposed 0.5 mg/mile standard. CARB 
adopted the 1 mg/mile standard as part of their 2013 LEV III program 
and set a phase-in starting in MY 2025. The 1 mg/mile PM standard was 
confirmed as part of CARB's recently finalized LEV IV program. In the 
time since the original 1 mg/mile standard was adopted by CARB there 
have been several important developments. The first is the development 
and proliferation of GPFs. At the time LEV III was finalized, GPFs were 
not in installed in significant numbers of vehicles and the technology 
was in relative infancy. Since that time, it is estimated that nearly 
100 million GPFs have been installed in vehicles as the result of 
stringent PM standards in other countries. The feasibility of meeting 
more stringent PM standards has increased significantly since CARB 
originally adopted their 1 mg/mile standard. At the same time that CARB 
confirmed their PM standard for MY 2025 and beyond, they also 
established a ZEV mandate which will result in additional significant 
and guaranteed PM reductions. EPA is maintaining performance based GHG 
standards, and as such, cannot expect the same national PM reductions 
expected by California from the whole of its ACC II program absent a 
more stringent federal PM program.
    Several commenters recommended that EPA adopt additional fuel 
controls in lieu of setting more stringent PM standards. The commenters 
noted that a change in fuel properties could provide PM emissions 
reductions from the entire gasoline vehicle in-use fleet. EPA agrees 
that adjusted fuel properties can provide widespread and important PM 
reductions and for this reason solicited comment on a possible 
additional future approach for reducing PM through new fuel controls 
(see section IX of the preamble in the NPRM, ``Consideration of 
Potential Fuels Controls for a Future Rulemaking''). However, EPA does 
not consider these strategies as interchangeable alternatives. As noted 
in the proposal and in RTC section 19, the CAA has a separate and 
distinct set of requirements for engaging in fuels regulations. Indeed, 
section 211(c)(2)(A) provides that fuel may not be regulated

[[Page 27941]]

to control harmful air pollution except after ``consideration of other 
technologically or economically feasible means of achieving emissions 
standards under section [202].'' Thus, it is entirely appropriate (if 
not required) for the Administrator to take the technologically and 
economically feasible steps of this rule before undertaking further 
controls on fuels to address emissions reduction. Furthermore, while 
achieving PM emissions reduction from the in-use fleet is important, 
reductions through fuel properties alone would not achieve the same 
level of PM reductions that are possible through the use of GPFs on new 
vehicles.
    Furthermore, EPA's authority to adopt fuel controls involves a 
distinct provision of the CAA with its own technical and legal 
requirements. As we noted in the NPRM (88 FR 29397), changes to fuel 
controls are beyond the scope of this rulemaking. EPA does however 
recognize the potential benefits of fuel property changes to reduce 
emissions from the in-use fleet and we will consider the information we 
received in response to our solicitation of comments on this topic in 
the context of possible future regulatory action.
ii. Phase-In for Light-Duty and Medium-Duty Vehicles
    The final PM standard phases in with the finalized criteria 
pollutant phase-in schedule described in section III.D.1 of the 
preamble. The finalized phase-in is more gradual than proposed to 
address manufacturer lead time concerns about applying GPFs across ICE 
product lines, and the need to install PM sampling equipment into some 
cold test facilities. The finalized phase-in reaches 100 percent in 
2030 for LDV and LDT1-2 vehicle categories, 2030 for LDT3-4 and MDPV, 
and 2031 for MDV. Section III.D.1 of the preamble provides phase-in 
percentages, including default and optional early phase-in schedules.
    Commentors submitted opposing views on phase-in. For LDV and LDT1-
2, EPA proposed a phase-in of 40/80/100 percent in 2027/2028/2029 and 
requested comment on accelerating the phase-in for PM relative to other 
criteria pollutants because of the availability of GPF technology.
    Automotive suppliers urged a faster phase-in than proposed, 
attesting to the maturity of GPF technology, abundant manufacturing 
capacity, widespread use of GPF in other markets (2017 in Europe, 2020 
in China, and 2023 in India), and manufacturers building GPF vehicles 
in the U.S. for export to other countries. MECA, Advanced Engine 
Systems Institute (AESI), and Alliance for Vehicle Efficiency (AVE) 
recommended a phase in of 60/90/100 percent in 2027/2028/2029 for LDV 
and LDT1/2.
    Most manufacturers asked for either a longer phase-in schedule than 
proposed, arguing that it takes time to integrate GPFs into various 
product lines, or adopting CARB's 1 mg/mile standard without -7 [deg]C 
testing through the ACC II phase-in. Some U.S. market trucks and SUVs 
do not have similar versions in other markets where GPFs are in 
widespread use, which would require additional engineering effort to 
apply GPFs to these vehicles. Also, some manufacturers noted that their 
cold test laboratories are not presently equipped with PM sampling 
equipment.
    EPA is finalizing a more gradual criteria pollutant phase-in 
(including PM) than proposed to provide manufacturers with additional 
lead time, but less time than some manufacturers recommended in their 
comments. Although larger U.S. vehicles may not have similar versions 
in other countries that use GPF technology, these vehicles tend to have 
the most packaging space available for a GPF, somewhat mitigating the 
need for additional lead time. We also note that BEVs are an 
alternative technology for complying with the standards and in light of 
our projections for BEV penetration (even under the No Action 
scenario), some manufacturers may find that BEV technology is 
sufficient to satisfy the phase-in for LDV and LDT1-2, at least in 
2027. Under the default phase-in scenario, manufacturers have until 
2030 to comply with the final PM standard for LDT3-4 and MDPV, and 
until 2031 to comply with the final PM standard for MDV. EPA decided 
not to adopt CARB's PM standard through the ACC II phase-in because EPA 
is not adopting a ZEV mandate as the CARB standards use, because the 
0.5 mg/mile PM standard is feasible at reasonable cost, and because 
controlling PM in cold temperatures and other off-cycle operation 
important.
iii. Feasibility of the PM Standard and Selection of Test Cycles
    The PM standard that EPA is finalizing will require vehicle 
manufacturers to produce vehicles that emit PM at or below GPF-equipped 
levels of PM. The final rule does not require that GPF hardware be used 
on ICE vehicles, but rather reflects EPA's judgement that it is 
feasible and appropriate to achieve the final PM standard considering 
the availability of this technology. EPA projects that manufacturers 
will choose to employ a combination of GPF technology on ICE vehicles 
and BEV technology as the most practical and cost-effective pathways 
for meeting the standard, especially in -7 [deg]C FTP and US06 test 
cycles.
    To establish the level of the PM standard, EPA conducted a test 
program that included multiple ICE vehicle types, powertrain 
technologies, and GPF technologies. Much like other emissions controls, 
GPFs have seen considerable development since their initial 
introduction and have provided significantly improved effectiveness. 
EPA evaluated available technologies with respect to the emissions 
benefits, including two generations of GPF technology.
    A PM test program was conducted using five chassis dynamometer test 
cells at EPA, Environment and Climate Change Canada (ECCC), and FEV 
North America Inc., and five test vehicles (2011 F150 Ecoboost, 2019 
F150 5.0L, 2021 F150 Powerboost HEV, 2021 Corolla 2.0L, 2022 F250 7.3L) 
tested in stock and GPF configurations. These test vehicles include a 
passenger car, three Class 2a trucks, and one Class 2b truck. The two 
generations of GPFs include series production MY 2019 and series 
production MY 2022 models, catalyzed and bare substrates, and close-
coupled and underfloor GPF installations. Details of the vehicles and 
test procedures are described in Chapter 3.2.6.2.1 of the RIA. Results 
from the test program are summarized in Figure 13. The study 
demonstrates that internal combustion engine-based light-duty vehicles 
and MDV equipped with GPFs currently in series production in Europe and 
China (i.e., MY 2022 GPF) can easily meet the final standard of 0.5 mg/
mile in all three test cycles with a large compliance margin. BEVs 
would of course comply as well since they do not have tailpipe 
emissions.
    In Figure 13, tests without GPFs are shown in black, tests with MY 
2019 GPFs are shown in gray, and tests performed with MY 2022 GPFs are 
shown in stripes. The top of each bar represents the highest 
measurement set mean of one vehicle in one laboratory and the bottom of 
each bar represents the lowest measurement set mean. The tops of the 
black bars are off scale in this figure, but their values are indicated 
with numbers above the bars.
    The striped bars include PM measurements from two vehicles: A 2021 
F150 Powerboost HEV (Class 2a vehicle) retrofit with a MY 2022 bare GPF 
in the underfloor location, and a 2022 F250 7.3L (Class 2b vehicle) 
retrofit with two MY 2022 bare GPFs, one for each engine bank, in the 
underfloor location.

[[Page 27942]]

    Results in Figure 13 show that vehicles equipped with MY 2022 GPFs 
met the 0.5 mg/mile standard in all three test cycles with a very 
significant compliance margin. The MY 2022 GPFs showed high filtration 
efficiencies generally over 95 percent. The mean of test sets with MY 
2022 GPF are over 95 percent lower than the mean of non-GPF test sets 
in each of the three test cycles. The results show some non-GPF 
vehicles could meet the 0.5 mg/mile standard without GPF on the 25 
[deg]C FTP and US06 cycles, but no non-GPF vehicles could meet the 
standard in the -7 [deg]C FTP test cycle. All vehicles with GPF met the 
standard for all test cycles except the MY 2019 GPFs failed to meet the 
standard in the US06 because passive GPF regeneration occurred as a 
result of high exhaust gas temperatures (GPF inlet gas temperature 
greater than 600 [deg]C) and these older generation GPFs rely on stored 
soot for high filtration efficiency. GPF regeneration oxidizes stored 
soot and reduces GPF filtration efficiency during and immediately after 
the regeneration, especially on the older generation GPFs. The results 
support the conclusion that a 0.5 mg/mile PM standard over the -7 
[deg]C FTP, 25 [deg]C FTP, and US06 test cycles is feasible and 
appropriate.
    The -7 [deg]C FTP test cycle is crucial to the final PM standard 
because it addresses uncontrolled cold PM emissions in Tier 3 vehicles, 
and absent the -7 [deg]C FTP test, vehicles would not achieve PM 
reductions commensurate with what GPF technology offers across a wide 
range of operating conditions. This is illustrated by the bottoms of 
the black bars in Figure 13 that show some vehicles without GPFs 
satisfy the 0.5 mg/mile standard in the 25 [deg]C FTP and US06 cycles, 
but fail dramatically at -7 [deg]C (an important real-world 
temperature), with the same being true at other important off-cycle 
vehicle operation. Without the -7 [deg]C FTP test cycle, vehicles would 
not have low PM under all operating conditions.
    The US06 cycle is a similarly crucial part of the final PM standard 
because it induces passive GPF regeneration in all vehicle-GPF 
combinations (i.e., light-duty vehicles and MDV, naturally aspirated 
and turbocharged engines, close-coupled and underfloor GPF 
installations, bare and catalyzed GPFs), and GPF regeneration is an 
important mode of operation with respect to emissions and frequently 
occurs in real world use. GPF regeneration does not occur in the -7 
[deg]C FTP, 25 [deg]C FTP, and LA-92 (used instead of the US06 for some 
MDV in Tier 3) across vehicle and exhaust system combinations. 
Including a certification test in which passive GPF regeneration occurs 
is important because it ensures that vehicles have good PM control 
during and immediately after GPF regenerations, which occur during high 
load operation, including road grades, towing, and driving at higher 
speeds.
    Older GPF technology does not exhibit high PM filtration during and 
immediately after GPF regeneration. Older GPF technology can have 
filtration efficiency as low as 50 percent, as opposed to generally 
more than 95 percent demonstrated by the MY 2022 GPFs shown in Figure 
13. Without the US06 test cycle, manufacturers could employ older GPF 
technology with poor PM control during high load operation. Average 
US06 p.m. from the MY 2019 GPFs is 15 times higher than average US06 
p.m. from the MY 2022 GPFs from the data shown in Figure 13.
[GRAPHIC] [TIFF OMITTED] TR18AP24.012


[[Page 27943]]



Figure 13: Results from a Five-Lab Five-Vehicle Test Program 
Illustrating the Effectiveness of Series Production MY 2019 GPFs and 
Series Production MY 2022 GPFs in Meeting the 0.5 mg/mile PM Standard 
in -7 [deg]C FTP, 25 [deg]C FTP, and US06 Test Cycles. The Top of Each 
Bar Represents the Highest Measurement Set Mean of One Vehicle in One 
Laboratory and the Bottom of Each Bar Represents the Lowest Measurement 
Set Mean

    MDVs are certified at higher test weights and road load 
coefficients than light-duty vehicles, but measurements show that 
series production MY 2022 GPF technology enables meeting the 0.5 mg/
mile standard equally well on MDV as light-duty vehicles, with 
compliance margins of over 100 percent. Measurements comparing PM from 
a Class 2b vehicle with a current technology GPF (MDV MY 2022 F250 7.3L 
with MY 2022 GPF) to a Class 2a vehicle with a current technology GPF 
(LDV MY 2021 F150 Powerboost HEV with a MY 2022 GPF) are shown in 
Figure 14. Further measurements support the same conclusion for Class 3 
vehicles.
[GRAPHIC] [TIFF OMITTED] TR18AP24.013

Figure 14: PM Measurements Comparing PM From a Class 2a Vehicle to a 
Class 2b Vehicle, Both With MY 2022 GPFs, in -7 [deg]C FTP, 25 [deg]C 
FTP, and US06 Test Cycles

    As was the case for light-duty vehicles, the -7 [deg]C FTP test 
cycle is crucial to the final PM standard because it addresses 
uncontrolled cold PM emissions in Tier 3, and absent the -7 [deg]C FTP 
test, MDV would not achieve PM reductions commensurate with what MY 
2022 GPF technology offers across a wide range of operating conditions. 
Without the -7 [deg]C FTP test cycle, MDV would not have low PM under 
all operating conditions.
    Furthermore, as was the case for light-duty vehicles, the US06 
cycle is a similarly crucial part of the PM standard. High load 
operation, which is common on MDVs, induces passive GPF regeneration 
and GPF regeneration can cause elevated emissions if MY 2022 GPF 
technology is not used. The full US06 cycle results in GPF regeneration 
across different vehicle-GPF combinations. The LA-92 cycle, which was 
used instead of the US06 cycle for certification of Tier 3 Class 3 
vehicles, usually does not induce GPF regeneration. Therefore, to 
capture high load operation and passive GPF regeneration in a test 
cycle, the full US06 cycle is required for all light-duty vehicles and 
MDV in the final PM standard.
    GPF inlet gas temperatures measured on the MY 2022 F250 7.3L during 
sampled US06, sampled hot LA-92, and -7 [deg]C FTP test cycles, are 
shown in Figure 15. Fast soot oxidation begins in a GPF around 600 
[deg]C.\649\ The US06 is the only cycle where GPF inlet gas temperature 
of the MY 2022 F250 exceeded 600 [deg]C and it exceeded it for a 
significant amount of time (265 seconds), illustrating the importance 
of the US06 cycle in the finalized PM standard. Peak inlet gas 
temperature was 674 [deg]C in the US06. In contrast, GPF inlet gas 
temperature never exceeded 600 [deg]C in the LA-92 and only exceeded 
500 [deg]C for a limited period of time. Peak GPF inlet gas temperature 
in the LA-92 (566 [deg]C) was closer to the -7 [deg]C FTP (493 [deg]C) 
than the US06 (674 [deg]C).
---------------------------------------------------------------------------

    \649\ Achleitner, E., Frenzel, H., Grimm, J., Maiwald, O., 
R[ouml]sel, G., Senft, P., Zhang, H., ``System approach for a 
vehicle with gasoline direct injection and particulate filter for 
RDE,'' 39th International Vienna Motor Symposium, Vienna, April 26-
27, 2018.
---------------------------------------------------------------------------

    Additional tests performed with the MY 2022 F250 with MY 2022 GPFs 
using test weight and road load coefficients from a MY 2022 F350 Class 
3 vehicle show that even with the higher test weight and road load, the 
GPFs did not undergo substantial regeneration in the LA-92 cycle. 
Without requiring the US06 as a certification cycle for MDV, the GPF 
may not undergo GPF regeneration and as a result, low PM emissions, 
which new GPF technology offers, would not be ensured during high load 
operation,

[[Page 27944]]

including trailer towing, road grades, or high speeds.
[GRAPHIC] [TIFF OMITTED] TR18AP24.014

Figure 15: GPF Inlet Gas Temperatures Measured on MY 2022 F250 7.3L 
Left Engine Bank GPF During Sampled US06, Sampled Hot LA-92, and -7 
[deg]C FTP Test Cycles

    Under the final standards, Class 2b vehicles with power-to-weight 
ratios at or below 0.024 hp/pound will no longer replace the full US06 
component of the SFTP with the second of three phases (the highway 
phase) of the US06 for PM certification. Class 2b vehicles with low 
power-to-weight ratios will now use the full US06 test cycle, which 
represents high load operation in urban and highway use. If a vehicle 
is unable to follow the trace, it should use maximum accelerator 
command to follow the trace as best it can, and doing so will not 
result in a voided test. This procedure mimics how vehicles with low 
power-to-weight tend to be driven in the real world.
    Also, Class 3 vehicles will not use the LA-92 for PM certification, 
as they did in Tier 3. Instead, Class 3 vehicles will have to meet the 
0.5 mg/mile PM standard across the same three test cycles as light-duty 
vehicles and other MDV: -7 [deg]C FTP, 25 [deg]C FTP, and US06.
    GPF technology is both mature and cost effective. In this 
rulemaking, unlike some prior vehicle emissions standards including 
those adopted in the Clean Air Act of 1970, the technology necessary to 
achieve the standards has already been demonstrated in production 
vehicles. It has been used in series production on all new pure 
gasoline direct injection (GDI) vehicle models in Europe since 2017 
(WLTC and RDE test cycles) and on all pure GDI vehicles in Europe since 
first registration of 2019 (WLTC and RDE test cycles) to meet Europe's 
emissions standards. All gasoline vehicles (GDI and PFI) in China have 
had to meet similar standards in the WLTC since 2020, and in the WLTC 
and RDE starting in 2023. All pure GDI vehicles in India have also had 
to meet similar GPF-forcing standards starting in 2023. GPFs like the 
MY 2022 GPFs described by Figure 13 and Figure 14 are being used in 
series production by U.S., European, and Asian manufacturers, and 
several manufacturers currently assemble vehicles equipped with GPF in 
the U.S. for export to other markets. While EPA believes that the 
prolific application of GPFs outside of the United States supports our 
feasibility assessment of GPF technology, we are not adopting more 
stringent PM standards to mimic other countries, but rather for the 
well documented health and environmental benefits from reduced PM 
emissions. In addition, while some commenters interpreted EPA's 
reference to GPF technology in other countries as implying a reduced 
level of effort to adapt the technology to U.S. applications, once 
again, EPA only means to show that the technology is in widespread use 
in other areas of the world, which demonstrates a high degree of 
technical feasibility.
    Further details and discussion of test vehicles, GPFs, test 
procedures, and results are provided in the RIA Chapter 3.2.6.
    AAI and several manufacturers requested removal of the -7 [deg]C 
FTP PM standard, exemption of GPF-equipped vehicles from the -7 [deg]C 
FTP PM standard, or the option to attest to meeting the -7 [deg]C FTP 
PM standard in lieu of test data. After consideration, EPA is not 
finalizing the three recommendations.
    EPA is requiring the -7 [deg]C FTP test cycle because it is a 
crucial part of the PM standard that addresses uncontrolled cold PM 
emissions in Tier 3, and absent the -7 [deg]C FTP test, vehicles would 
not achieve appropriate and feasible PM reductions across a wide range 
of operating conditions. For example, the 2021 Corolla in the EPA test 
program emits 0.1 mg/mile in the 25 [deg]C FTP and 3.5 mg/mile in the -
7 [deg]C FTP.
    EPA decided against exempting GPF-equipped vehicles from the -7 
[deg]C FTP PM standard because the purpose of the standard is to 
require low tailpipe emissions, not to force a certain device onto 
vehicles. If a poor GPF design were added to a non-GPF vehicle with low 
PM emissions in the 25 [deg]C FTP and US06, it could still easily fail 
the -7 [deg]C FTP and other operating conditions. Poor GPF designs can 
have very low filtration efficiencies (e.g., 50 percent) and simply not 
be effective. Allowing GPF-equipped vehicles to be exempt

[[Page 27945]]

from the -7 [deg]C FTP PM standard would be analogous to allowing 
three-way catalyst-equipped vehicles to be exempt from gaseous criteria 
pollutant standards.
    The decision not to allow indefinite attestation to the -7 [deg]C 
FTP PM standard was made because of the critical importance of this 
test in ensuring that vehicles achieve appropriate and feasible PM 
emissions reductions across a wide range of operating conditions. Based 
on manufacturer comments, however, EPA is finalizing an option for 
manufacturers to attest to meeting the -7 [deg]C FTP PM standard for MY 
2027 and MY 2028 vehicles. This option applies to vehicles at or below 
6000 lb GVWR, early phase-in schedule vehicles between 6001-8500 lb 
GVWR, and early phase-in schedule vehicles between 8501-14,000 lb GVWR, 
and provides manufacturers with extra time to integrate PM samplers 
into their cold test cells if they do not already have them. 
Manufacturers are still responsible for ensuring that vehicles comply 
with the -7 [deg]C FTP PM standard, and EPA may conduct testing to 
confirm whether vehicles meet the standard, so manufacturers must have 
confidence in their attestation.
    Although EPA decided against removing the -7 [deg]C FTP PM 
standard, exempting GPF-equipped vehicles from the -7 [deg]C FTP PM 
standard, and allowing indefinite attestation, it is finalizing PM 
relief in several areas: (1) The finalized criteria pollutant phase-in 
is more gradual than proposed (section III.D.3.ii of the preamble); (2) 
manufacturers do not have to perform -7 [deg]C FTP PM testing for IUVP, 
although EPA may check that vehicles meet the standard (section 
III.D.3.vi of the preamble); (3) all GPF OBD requirements proposed in 
the NPRM were dropped in favor harmonizing with the CARB approach to 
GPF OBD (section III.D.3.vii of the preamble); (4) temporary relief is 
provided on the criteria that trigger an IUCP (in-use confirmatory 
testing program, section III.G.4.ii of the preamble); and (5) 
manufacturers may attest to meeting the -7 [deg]C FTP PM standard for 
MY 2027 and MY 2028 vehicles, although EPA may check that vehicles meet 
the standard (above paragraph, section III.D.3.iii of the preamble). We 
adopted these relief provisions after consideration of comments and we 
believe that with these provisions, the PM standard represents a 
feasible and appropriate means of reducing PM emissions from light-duty 
and medium-duty vehicles.
iv. PM Measurement Considerations
    EPA did not propose and is not finalizing changes to PM test 
procedures because the Agency does not believe that test procedure 
changes are required to measure PM for the final PM standard. Current 
test procedures outlined in 40 CFR parts 1065 and 1066 allow robust 
gravimetric PM measurements well below the PM standard of 0.5 mg/mile, 
as demonstrated by EPA and other laboratories.
    Repeat measurements in EPA laboratories at different levels of PM 
below 0.5 mg/mile are shown in Figure 16 for vehicles (dark bars), a 
spark aerosol generator (stiped bar), and tunnel blanks (light bars). 
The size of the error bars, which represent plus/minus one standard 
deviation, relative to the measurement averages at and below 0.5 mg/
mile demonstrates that the current measurement methodology is 
sufficiently precise to support a 0.5 mg/mile standard. No changes to 
40 CFR part 1065 and 1066 procedures are required, but it is important 
to use good engineering judgment when transitioning to measuring PM 
below 0.5 mg/mile. This includes consideration of filter media 
selection, removal of static charge from filter media, dilution factor, 
filter media flow rate, using a single filter for all phases of a test 
cycle, robotic weighing, and minimizing contamination from filter 
handling, filter screens and cassettes.
[GRAPHIC] [TIFF OMITTED] TR18AP24.015


[[Page 27946]]



Figure 16: Example of Test-to-Test Repeatability of PM Measurements 
From Vehicles Without and With GPF, an Aerosol Generator, and Tunnel 
Blanks From Two EPA Test Cells

    EPA also notes that many manufacturers have submitted, and 
certified the validity of, PM test data below 0.5 g/mile to date. Over 
20 percent of MY 2021-2024 light-duty vehicle federal PM certification 
test results are below 0.5 mg/mile. We recognize that test-to-test 
variability may be of greater concern to manufacturers for the revised 
standard, but based on the round robin test results described in 
III.D.3.iv of the preamble and RIA Chapter 3.2.6, and the test-to-test 
repeatability results shown in Figure 16, we conclude that should not 
be a significant issue for certification.
    Some manufacturers raised concerns over the ability to reliably 
measure PM below 0.5 mg/mile. EPA engaged with several manufacturers in 
technical discussions on PM measurement capability during the 
development of this rule and will continue to assist and advise 
manufacturers on best practices for measuring PM at low levels. As a 
result of these conversations, EPA recognizes that current manufacturer 
PM test capability is commensurate with the Tier 3 level of the 
standards, but in some labs, changes may be needed to reliably measure 
PM below 0.5 mg/mile. Manufacturers may want to consider using power-
free gloves, avoiding clothing that sheds lint or dust, not leaning 
over exposed filters on workbenches, using sticky pads in clean room 
entranceways, wearing shoe covers to reduce dirt being tracked into the 
clean room, and regular clean room cleaning. Other elements may be less 
obvious, like grounding technicians while they handle filters, 
grounding work benches, etc. These practices are important not just in 
the PM clean room, but anywhere that filters are handled, such as when 
they are loaded and unloaded into PM sampling equipment.
    EPA's discussions with manufacturers focused on the importance of 
using PTFE membrane sample filters with FEP (fluorinated ethylene 
propylene), PMP (polymethyl pentene) or similar support rings (40 CFR 
1065.170). Such filters minimize gas-phase artifact but require good 
static charge removal during weighing using alpha-emitter static charge 
removal or other techniques with similar effectiveness (40 CFR 
1065.190). Discussions with manufacturers included improving signal-to-
noise ratio by using the lower half of the allowable dilution factor 
range (40 CFR 1066.110), elevating filter face velocity (FFV) to a 
velocity approaching the maximum allowable 140 cm/s, and loading one 
filter per test instead of one filter per phase (40 CFR 1066.815). 
Further elements of good measurement procedure include control of 
temperature, dewpoint, grounding, using HEPA-filtered dilution air, 
using an effective coarse particle separator (40 CFR 1065.145) and good 
filter handing procedures (40 CFR 1065.140 and 1065.190). Laboratories 
may also consider using robotic auto-handling for weighing (40 CFR 
1065.190) and background correction (40 CFR 1066.110), although the 
tests demonstrating the ability to measure below 0.5 mg/mile in the 
test program summarized in section III.D.3.iii of the preamble did not 
use background correction and only one of three organizations used 
robotic auto-handling. EPA welcomes additional industry interaction as 
manufacturers prepare their facilities to measure PM at the final 
standard and will be happy to share best practices and help improve PM 
measurement capability. Further discussion of PM measurement below 0.5 
mg/mile is detailed in Chapter 3.2.6 of the RIA.
v. Pre-Production Certification
    EPA is finalizing that PM emissions be certified over -7 [deg]C 
FTP, 25 [deg]C FTP, and US06 cycles with at least one Emissions Data 
Vehicle (EDV) per test group for light-duty vehicles and MDV certifying 
to the new 0.5 mg/mile standard. As described toward the end of section 
III.D.3.iii of this preamble, EPA is finalizing an option for 
manufacturers to attest to meeting the -7 [deg]C FTP PM standard for MY 
2027 and MY 2028 vehicles. Also, since BEVs do not have tailpipe 
emissions, they are not subject to the tailpipe PM standard being 
finalized.
    This level of PM certification testing matches the requirement to 
certify gaseous criteria emissions at the test group level and ensures 
that the final PM standard of 0.5 mg/mile is met across a wide range of 
ICE technologies. The requirement to certify PM emissions at the test 
group level is an increase in testing requirements relative to Tier 3, 
where PM emissions were certified at the durability group level.
    EPA is updating the instructions to select a worst-case Tier 4 test 
vehicle from each test group by considering -7 [deg]C FTP testing along 
with the other test cycles (40 CFR 86.1828-01). This contrasts with the 
Tier 3 approach where manufacturers selected worst-case test vehicles 
separate from -7 [deg]C FTP testing and then selected a test vehicle 
for -7 [deg]C FTP testing from those test vehicles included in the same 
durability group. The change in selecting a worst-case test vehicle 
from each test group is being made because concern for emissions from -
7 [deg]C FTP testing is on par with concern for emissions from other 
test cycles. As a practical matter, it becomes possible to include 
consideration of emissions from -7 [deg]C FTP testing because we are 
amending 40 CFR 86.1829-15 to require manufacturers to submit emission 
data for PM and other pollutants from -7 [deg]C FTP testing for each 
test group.
    EPA solicited comment on whether to revert to pre-production PM 
certification at the durability group level in 2030 for light-duty 
vehicles and in 2031 for MDV after PM control technologies have been 
demonstrated across a range of ICE technology and AAI was supportive of 
this concept. After consideration, EPA decided that it would be 
appropriate to review PM certification relief if it were part of a 
comprehensive review of certification test burden for all criteria 
pollutants. Such a review would appropriately consider how to select 
worst-case vehicles for certification testing if manufacturers 
demonstrate compliance based on testing vehicles from every test group 
for some standards and testing vehicles only based on the durability 
group for other standards. EPA has not begun such a comprehensive 
review at this time but will consider whether and when such a review 
would be appropriate to undertake.
    The final 25 [deg]C FTP PM standard applies equally at high-
altitude conditions (1520-1720 meters) as at low-altitude conditions 
(0-549 meters). Modern engine management systems can use idle speed, 
engine spark timing, valve timing, and other controls to offset the 
effect of lower air density on exhaust catalyst performance at high 
altitude conditions and GPF filtration of elemental carbon does not 
diminish at high altitude conditions.
    EPA is finalizing a requirement that manufacturers submit an 
engineering evaluation indicating that common calibration approaches 
are utilized at high and low altitude conditions for -7 [deg]C FTP PM.
    Since EPA is finalizing that SVMs must meet the same criteria 
pollutant emissions standards as large manufacturers, although with a 
delayed phase-in, SVMs must provide PM test data when certifying to the 
Tier 4 p.m. standard.
vi. In-Use Compliance Testing
    In addition to pre-production certification, the final PM standard

[[Page 27947]]

requires in-use compliance testing as part of the in-use vehicle 
program (IUVP). Each test vehicle must be tested in 25 [deg]C FTP and 
US06 cycles and meet the 0.5 mg/mile PM standard. This is a change from 
Tier 3, where only 50 percent of in-use test vehicles had to be tested 
for PM. The final PM standard also requires in-use vehicles to comply 
with the 0.5 mg/mile PM standard in the -7 [deg]C FTP cycle but 
manufacturers are not required to test using this cycle as part of 
IUVP. However, EPA may test in-use vehicles using -7 [deg]C FTP, 25 
[deg]C FTP, and US06 cycles to ensure compliance. IUVP test vehicles 
are not required to be tested in the -7 [deg]C FTP to reduce 
manufacturer testing burden. This testing relief is based on the 
reasoning that if a vehicle demonstrates compliance across all three 
test cycles at pre-production and demonstrates in-use compliance in 25 
[deg]C FTP and US06 cycles, then the vehicle design can be expected to 
also comply with the in-use -7 [deg]C FTP test cycle. The same in-use 
requirements apply to SVMs as to large manufacturers, although SVMs 
have a delayed phase-in.
vii. OBD Monitoring and Warranty
    Since GPF technology is a key enabler for meeting the final PM 
standard in vehicles with an internal combustion engine, OBD monitoring 
of GPFs is important. If a vehicle uses a GPF, the OBD system must 
detect GPF-related malfunctions, store trouble codes related to 
detected malfunctions, and alert operators appropriately.
    EPA is finalizing that manufacturers follow the latest CARB OBD 
requirements, which at this time are the California 2022 OBD-II 
requirements in Title 13, section 1968.2 of the California Code of 
Regulations, finalized on November 22, 2022. Following section 
1968.2(e)(17), manufacturers propose GPF OBD plans and CARB reviews the 
manufacturer plans on a case-by-case basis. This provides flexibility 
relative to diesel PM trap (DPF) monitoring requirements described in 
section 1968.2(e)(15).
    EPA had proposed GPF OBD requirements unique from those of CARB, 
but manufacturers commented that certain aspects of the EPA OBD 
requirements were difficult to achieve and that manufacturers had 
already certified GPF diagnostics with CARB. Harmonizing with CARB's 
current requirements resolves potential conflicts of having two sets of 
GPF OBD requirements and addresses manufacturer concerns about the 
difficulty of achieving the EPA-proposed diagnostics. Therefore, EPA is 
not finalizing our proposed GPF OBD requirements, and instead is 
finalizing that manufacturers follow the latest CARB GPF OBD 
requirements. EPA plans to continue to work with CARB on developing 
increasingly robust OBD for GPFs. Broader discussion of OBD system 
requirements is found in section III.H of this preamble.
    As proposed, EPA is designating the GPF as a specified major 
emission control component, which brings with it a warranty period of 8 
years or 80,000 miles of use (whichever first occurs), as detailed in 
section III.G.6 of the preamble.
viii. GPF Cost
    GPF direct manufacturing cost (DMC) is estimated using an updated 
cost model described in RIA Chapter 3.2.6.4. The cost model estimates 
DMC of bare GPF(s) in their own enclosures (cans) installed downstream 
of the TWC(s). This configuration results in a similar or slightly 
higher system cost as compared to an aftertreatment system that uses 
catalyzed GPF(s) to replace TWC(s) in the close-coupled position just 
downstream of the first TWC(s). The updated GPF DMC model is used in 
FRM OMEGA analyses. Indirect costs including R&D and markup are 
calculated separately by OMEGA.
    The updated GPF DMC model is based on the model used in the NPRM 
but uses a larger GPF swept volume ratio (GPF volume to engine 
displacement volume) of 0.80 instead of 0.55 in the NPRM, and uses 2022 
dollars instead of 2021 dollars. The larger swept volume ratio is based 
on an expanded GPF/vehicle database, input from a GPF supplier, and an 
ICCT PM/GPF fact sheet released in November 2023.\650\ Details are 
provided in RIA Chapter 3.2.6.4. The updated model estimates GPF DMC of 
$87, $131, $176 for engines with displacements of 2.0L, 4.0L, and 6.0L, 
respectively.
---------------------------------------------------------------------------

    \650\ Isenstadt, A., ``What EPA's New Multi-Pollutant Emissions 
Proposal Means for PM Emissions and GPFs,'' ICCT Fact Sheet, 
November 2023. https://www.theicct.org accessed on March 7, 2024.
---------------------------------------------------------------------------

    AAI and several manufacturers raised the issue of GPF cost, 
including the cost to re-design vehicles to accommodate GPFs. In 
response to these comments, the Agency updated the NPRM GPF cost model 
to estimate GPF cost as accurately as possible using the latest 
available information. The Agency is also finalizing a more gradual 
criteria phase-in to provide manufacturers with additional time to add 
GPFs to existing designs and in some cases add them together with 
vehicle re-design or the introduction of new models. We believe the 
updated GPF cost information and the more gradual phase-in supports 
that the final PM standard can be met at a reasonable cost.
4. CO and Formaldehyde (HCHO) Standards
i. CO and HCHO Standards for Light-Duty Vehicles
    EPA is finalizing the light-duty vehicle CO and formaldehyde (HCHO) 
per vehicle emissions standards (caps) shown in Table 45. The CO caps 
are 1.7 g/mile in the 25 [deg]C FTP, HFET, and SC03 test cycles, 9.6 g/
mile in the US06, and 10.0 g/mile in the -7 [deg]C FTP. The HCHO cap is 
4 mg/mile in the 25 [deg]C FTP. EPA is finalizing that the same Tier 3 
25 [deg]C FTP useful life standard applies to all the emissions caps 
shown in Table 45.
    The final standards contrast with Tier 3 bin-specific standards for 
the FTP (1.0 g/mile for Bins 20 and 30, 1.7 g/mile for Bins 50 and 70, 
2.1 g/mile for Bin 125, and 4.2 g/mile for Bin 160), a 4.2 g/mile 
standard for the SFTP, a 10.0 g/mile -7 [deg]C FTP CO cap for LDV and 
LDT1, a 12.5 g/mile -7 [deg]C FTP CO cap for LDT2-4 and MDPV, and a 4 
mg/mile FTP HCHO bin-specific standard for Bin 20 through Bin 160. In 
Tier 3 the -7 [deg]C FTP CO caps applied only to gasoline-fueled 
vehicles, while the 10.0 g/mile cap being finalized applies to 
gasoline-fueled and diesel-fueled vehicles.
    The majority of the CO and HCHO standards in Table 45 are the same 
as those EPA proposed with the exception of the level of the US06 
standard, which has been increased from 1.7 g/mile to 9.6 g/mile.

         Table 45--Light-Duty Vehicle CO and HCHO Emissions Caps
------------------------------------------------------------------------
 
------------------------------------------------------------------------
CO cap for 25 [deg]C FTP, HFET, SC03 (g/mi).....................     1.7
CO cap for US06 (g/mi)..........................................     9.6
CO cap for -7 [deg]C FTP (g/mi).................................    10.0
HCHO cap for 25 [deg]C FTP (mg/mi)..............................       4
------------------------------------------------------------------------

    The 1.7 g/mile CO cap for the 25 [deg]C FTP is less stringent than 
the Tier 3 25 [deg]C FTP bin specific standard for Bin 20 and Bin 30, 
but overall, the 1.7 g/mile CO cap is somewhat more stringent than Tier 
3 because it applies to three cycles instead of one, and because it is 
more stringent than the Tier 3 25 [deg]C FTP bin specific standard for 
Bin 125 and Bin 160.
    The 1.7 g/mile CO cap for the 25 [deg]C FTP, HFET, and SC03 cycles 
is feasible because most current production light-duty vehicles already 
meet the cap and existing aftertreatment technology can be applied to 
the remaining light-duty vehicles that do not already meet the standard 
during the phase-in period described in section III.D.1.i of the

[[Page 27948]]

preamble. EPA did not receive adverse comments on the feasibility of 
the 1.7 g/mile standard for the 25 [deg]C FTP, HFET, and SC03 test 
cycles.
    The final US06 cap was increased from the proposed value of 1.7 g/
mile to 9.6 g/mile for several reasons. While EPA recognizes that CO is 
a pollutant with significant health risks, the United States does not 
currently have any nonattainment areas for CO. EPA also considered the 
current Tier 3 SFTP CO standards. The current Tier 3 US06 CO emissions 
are captured as part of the Supplemental Federal Test Procedure (SFTP). 
The SFTP is a composite standard which is the numerically weighted 
result of CO emissions from the FTP, SC03 and US06 tests.\651\ The 
current Tier 3 SFTP CO cap is 4.2 g/mile for LDVs. Because the Tier 3 
US06 CO requirements are captured within the SFTP CO cap, Tier 3 allows 
higher US06 CO emissions with lower FTP and SC03 CO emissions. In their 
ACC II program, CARB also eliminated their SFTP standards and 
established a 9.6 g/mile stand-alone US06 CO standard as well as 
separate SC03 CO standards that were identical to the FTP CO standards. 
EPA confirmed that 9.6 g/mile on the US06 is commensurate with the Tier 
3 Bin 125 CO standard and is a more stringent standard for cleaner 
bins, as compared to the current Tier 3 SFTP structure.\652\ The 
implicit US06 limit under Tier 3 for a vehicle meeting 1.7 g/mile for 
SCO3 and FTP (as is required for all vehicles in Tier 4) would be 10.6 
g/mile. Additional detail can be found in RIA Chapter 3.2.3.
---------------------------------------------------------------------------

    \651\ SFTP (g/mi) = 0.35 x FTP + 0.28 x US06 + 0.37 x SC03.
    \652\ Tier 3 FTP Bin 125 has a CO standard of 2.1 g/mile. Given 
the Tier 3 SFTP cap of 4.2 g/mile, and assuming FTP CO = SC03 CO 
emissions, 4.2 g/mile = (0.35*2.1) + (0.28*2.1) + (0.37*US06) yields 
a US06 implicit limit of 9.6 g/mile. Substituting 1.7 g/mile CO (for 
Tier 3 FTP Bins 70 and 50) allows US06 CO to increase to 10.6 g/
mile.
---------------------------------------------------------------------------

    In addition, several vehicle manufacturers, and the Alliance for 
Automotive Innovation (AAI) expressed significant concern in meeting 
the 1.7 g/mile standard over the US06 test cycle. Commenters noted that 
test-to-test variability may be higher in the US06 than in other 
cycles, and the proposed US06 CO standard would most likely require 
significant engine and aftertreatment redesign and/or substantially 
reduced use of enrichment. Industry commenters recommended that EPA 
finalize a US06 CO standard of 9.6 g/mile aligned with current Tier 3 
standards and the California ACC II standard. The International Council 
for Clean Transportation (ICCT) noted in their comments the steady 
historical decline in CO emissions in the United States as the result 
of previous emissions standards.
    With consideration of the current air quality needs, current Tier 3 
standards, and the comments received, EPA has concluded that it is 
appropriate to eliminate the SFTP structure but adopt 25 [deg]C FTP, 
HFET, SC03 standards of 1.7 g/mile, and a US06 CO standard of 9.6 g/
mile. This US06 standard is less stringent than proposed but more 
stringent than the current implicit US06 limits under Tier 3 SFTP 
standards for vehicles meeting 1.7 g/mile on the FTP and SC03.
    The final 25 [deg]C FTP CO standard applies equally at high-
altitude conditions (1520-1720 meters) as at low-altitude conditions 
(0-549 meters). Modern engine management systems can use idle speed, 
engine spark timing, valve timing, and other controls to offset the 
effect of lower air density on exhaust catalyst performance at high 
altitude conditions.
    EPA is finalizing a minor increase in stringency in the -7 [deg]C 
FTP CO standard in that all light-duty vehicles will have to meet a 
10.0 g/mile cap instead of 10.0 g/mile for LDV and LDT1 and a 12.5 g/
mile cap for LDT2-4 and MDPV. All light-duty vehicle and MDPV MYs 2022-
2024 certifications already meet the finalized 10.0 g/mile cap with at 
least a 40 percent compliance margin, demonstrating the feasibility of 
this final standard. Additionally, -7 [deg]C FTP CO testing at EPA 
using a MY 2019 Ford F150 5.0L and a MYs 2021 Toyota Corolla 2.0L show 
these vehicles also meet the final standard by large compliance 
margins, so there is no question about the feasibility of this 
standard.
    The final -7 [deg]C FTP CO standard applies equally at high-
altitude conditions as at low-altitude conditions. Modern engine 
management systems can use idle speed, engine spark timing, valve 
timing, and other controls to offset the effect of lower air density on 
exhaust catalyst performance at high altitude conditions.
    EPA is finalizing that -7 [deg]C FTP CO emissions be certified with 
at least one Emissions Data Vehicle (EDV) per test group for light-duty 
vehicles certifying to the 10.0 g/mile standard instead of one EDV per 
durability group as in Tier 3.
    EPA is finalizing a HCHO cap of 4 mg/mile in the 25 [deg]C FTP, 
which has the same stringency as the Tier 3 bin-specific 4 mg/mile 
standard for Bin 20 through Bin 160, (i.e., all current light-duty 
vehicles and MDPV already meet the HCHO cap being finalized).
    The final 25 [deg]C FTP HCHO standard applies equally at high-
altitude conditions (1520-1720 m) as at low-altitude conditions.
ii. CO and HCHO Standards for Medium-Duty Vehicles
    EPA is finalizing the MDV CO and formaldehyde (HCHO) per vehicle 
emissions standards (caps) shown in Table 46. The CO caps are 3.2 g/
mile in the 25 [deg]C FTP, HFET, and SC03 test cycles, 25 g/mile in the 
US06 (i.e., identical to California MDV standards over the entire US06 
cycle), and 10.0 g/mile in the -7 [deg]C FTP. The HCHO cap is 6 mg/mile 
in the 25 [deg]C FTP. EPA is finalizing that the same Tier 3 25 [deg]C 
FTP useful life standard applies to all the emissions caps shown in 
Table 46.
    This contrasts with Tier 3 bin-specific standards for the FTP (3.2-
7.3 g/mile depending on bin and class), bin-specific standards for the 
HD-SFTP (4.0-22.0 g/mile depending on bin and class), no -7 [deg]C FTP 
standard, and a 6 mg/mile FTP HCHO bin-specific standard for all bins 
over bin 0. The 10.0 g/mile cap at -7 [deg]C applies to gasoline-fueled 
and diesel-fueled vehicles.
    The majority of the final MDV standards for CO and HCHO shown in 
Table 46 are the same as what EPA proposed with the exception of the 
US06 standard, which has been increased from 3.2 g/mile to 25 g/mile.

                Table 46--MDV CO and HCHO Emissions Caps
------------------------------------------------------------------------
 
------------------------------------------------------------------------
CO cap for 25 [deg]C FTP, HFET, SC03 (g/mi).....................     3.2
CO cap for US06 (g/mi)..........................................      25
CO cap for -7 [deg]C FTP (g/mi).................................    10.0
HCHO cap for 25 [deg]C FTP (mg/mi)..............................       6
------------------------------------------------------------------------

    The 3.2 g/mile CO cap for the 25 [deg]C FTP is equal to the 
stringency of some Tier 3 bins and more stringent than others. EPA did 
not receive adverse comments on the feasibility of the 3.2 g/mile 
standard for the 25 [deg]C FTP, HFET, and SC03 test cycles.
    The MDV US06 cap was increased from the proposed value of 3.2 g/
mile to 25 g/mile for similar reasons identified above for light-duty 
vehicles. While EPA recognizes that CO is a pollutant with significant 
health risks, the United States does not currently have any non-
attainment areas for CO. The current Tier 3 US06 CO emissions are 
captured as part of the Supplemental Federal Test Procedure (SFTP). The 
SFTP is a composite standard which is the numerically weighted result 
of CO emissions from the FTP, SC03 and US06 tests. The current Tier 3 
SFTP CO cap is 12 g/mile. Because the Tier 3 US06

[[Page 27949]]

CO requirements are captured within the SFTP CO cap, Tier 3 allows 
higher US06 CO emissions with lower FTP and SC03 CO emissions. EPA has 
determined that 25 g/mile is marginally more stringent that the current 
Tier 3 MDV CO standard and is a lower standard for the cleaner bins 
(including those that are equivalent to the Tier 4 standards), as 
compared to the current Tier 3 SFTP structure.\653\ Additional detail 
can be found in RIA Chapter 3.2.3.
---------------------------------------------------------------------------

    \653\ For example, given the Tier 3 SFTP cap of 12 g/mile, and 
assuming a vehicle is meeting 3.2 g/mile for both FTP and SC03 CO 
emissions (i.e., Tier 4 levels), 12 g/mile = (0.35*3.2) + (0.28*3.2) 
+ (0.37*US06) yields a US06 implicit limit of 27 g/mile.
---------------------------------------------------------------------------

    EPA received comments from several vehicle manufacturers and AAI 
expressing significant concern in meeting the 3.2 g/mile standard over 
US06 test cycle. Commenters noted that test-to-test variability may be 
higher in the US06 than in other cycles, and the proposed US06 CO 
standard would most likely require significant engine and 
aftertreatment redesign and/or substantially reduced use of enrichment. 
Industry commenters recommended that EPA finalize a US06 CO standard of 
25 g/mile to better align with current Tier 3 standards and the 
California ACC II standard.
    With consideration of the current air quality needs, current Tier 3 
standards and the comments received, EPA has concluded that it is 
appropriate to set a US06 CO standard that is more stringent than the 
current Tier 3 SFTP standards for cleaner bins, albeit, under the 
revised program structure of eliminating SFTP requirements.
    The final 25 [deg]C FTP CO standard applies equally at high-
altitude conditions (1520-1720 meters) as at low-altitude conditions 
(0-549 meters). Modern engine management systems can use idle speed, 
engine spark timing, valve timing, and other controls to offset the 
effect of lower air density on exhaust catalyst performance at high 
altitude conditions.
    EPA is finalizing a new 10.0 g/mile MDV CO cap for the -7 [deg]C 
FTP because CO emissions increase in cold temperatures but there were 
no MDV cold CO standards included in Tier 3 . Testing of a 2022 F250 
7.3L in the -7 [deg]C FTP at EPA showed average CO emissions of 2.7 g/
mile CO, demonstrating that a 10.0 g/mile standard is feasible for MDV. 
Present-day MDV gasoline engine aftertreatment technology allows fast 
catalyst light-off followed by closed-loop A/F control and excellent 
emissions conversion on Class 2b and 3 vehicles.
    The final -7 [deg]C FTP CO standard applies equally at high-
altitude conditions as at low-altitude conditions. Modern engine 
management systems can use idle speed, engine spark timing, valve 
timing, and other controls to offset the effect of lower air density on 
exhaust catalyst performance at high altitude conditions.
    EPA is finalizing that -7 [deg]C FTP CO emissions be certified with 
at least one Emissions Data Vehicle (EDV) per test group for MDV 
certifying to the 10.0 g/mile standard instead of one EDV per 
durability group as in Tier 3.
    EPA is finalizing a HCHO cap of 6 mg/mile in the 25 [deg]C FTP, 
which has the same stringency as the Tier 3 FTP HCHO 6 mg/mile bin-
specific standard for all bins over bin 0.
    The final 25 [deg]C FTP HCHO standard applies equally at high-
altitude conditions (1520-1720 meters) as at low-altitude conditions 
(0-549 meters).
5. Requirements for Medium-Duty Vehicles With High GCWR
    The Agency proposed requiring high GCWR MDVs, defined as MDV with a 
gross combination weight rating (GCWR) above 22,000 pounds, to be 
subject to heavy-duty engine certification instead of chassis-
certification for criteria air pollutant standards. Within the proposed 
rule, the Agency asked for comment on three alternatives to engine 
certification of high GCWR MDV:
     MDV above 22,000 pounds GCWR would comply with the MDV 
chassis dynamometer standards with the introduction of additional 
engine-dynamometer-based standards over the Supplemental Emissions Test 
as finalized within the Heavy-duty 2027 and later standards;
     MDV above 22,000 pounds GCWR would comply with the MDV 
chassis dynamometer standards with additional in-use testing and 
standards comparable to those used within the California ACC II;
     Introduction of other test procedures for demonstration of 
effective criteria pollutant emissions control under the sustained 
high-load conditions encountered during operation above 22,000 pounds 
GCWR.
    We received comments from the Alliance for Automotive Innovation 
supporting implementation of Alternative 2 for MDV in the final rule. 
Similarly, Stellantis requested that MDV comply with California ACC II 
provisions in lieu of engine certification. Alternative 2 fully 
addresses the Agency's concern that NOX emissions controls 
be designed to adequately control NOX emissions under the 
high load conditions encountered by high GCWR MDV, and thus the Agency 
is adopting Alternative 2 for the final rule. Alternative 2 includes 
PEMS-based moving-average-window in-use standards that are comparable 
to California in-use standards for chassis-certified MDV and include 
options that facilitate 50-state certification of high GCWR MDV. The 
Agency is not finalizing mandatory engine certification for compliance 
with criteria pollutant emissions standards for high GCWR MDV; however, 
there is still an option that allows manufacturers to choose compliance 
with light-heavy-duty engine standards for high GCWR MDV in lieu of 
compliance with MDV test procedures and standards.
i. Background on California ACC II/LEV IV Medium-Duty Vehicle In-Use 
Standards
    As part of ACC II and LEV IV programs, California established in-
use testing requirements for chassis certified LEV IV MDV with a GCWR 
greater than 14,000 pounds using PEMS-based moving average window (MAW) 
in-use standards.\654\ California's in-use test procedures and 
standards for chassis-certified MDV are based upon California's MAW in-
use test procedures and standards for heavy-duty engines. Under 
California's program, chassis-certified diesel MDV with a GCWR greater 
than 14,000 pounds meet NOX, NHMC, CO, and PM in-use 
emissions standards over a three-bin MAW (3B-MAW) with bins 
representing idle operation (less than or equal to 6 percent engine 
load), low-load operation (above 6 percent engine load and less than or 
equal to 20 percent engine load) and medium-high operation (above 20 
percent engine load) at up to GCWR.\655\ Chassis-certified gasoline MDV 
with a GCWR greater than 14,000 pounds attest to meeting 
NOX, NHMC, CO, and PM in-use emissions standards over a 
single MAW (1B-MAW) at up to GCWR.\653\ Note that under these 
provisions,

[[Page 27950]]

chassis certified MDV with a GCWR greater than 14,000 pounds are 
required to meet g/bhp-hr MAW standards instead of g/mile MAW standards 
and use a FTP CO2 family certification level (FCL) 
calculated either from chassis dynamometer test results or engine 
dynamometer test results.\656\ The chassis dynamometer FCL definition 
uses OBD torque data collection together with CO2 emissions 
measurement during chassis-dynamometer testing. The California MDV in-
use standards also include a conformity factor (CF) for in-use 
compliance that is multiplied by each emissions standard. The CF is set 
to 2.0 for MYs 2027 through 2029. The CF is set to 1.5 for MY 2030 and 
subsequent model year vehicles.
---------------------------------------------------------------------------

    \654\ California 2026 And Subsequent Model Year Criteria 
Pollutant Exhaust Emission Standards and Test Procedures for 
Passenger Cars, Light Duty Trucks, and Medium-Duty Vehicles; Part 1, 
section I.4. ``California Provisions: Certification and In-Use 
testing requirements for chassis certified Medium-Duty Vehicles 
(MDV) with a Gross Combination Weight Rating (GCWR) greater than 
14,000 pounds, using the Moving Average Window (MAW).'' August 25, 
2022.
    \655\ California 2026 And Subsequent Model Year Criteria 
Pollutant Exhaust Emission Standards and Test Procedures for 
Passenger Cars, Light Duty Trucks, and Medium-Duty Vehicles; Part 1, 
section I.4.1 ``Test Procedures for Three Binned Moving Average 
Window (3B-MAW) and Moving Average Window (MAW). Applies to 2027 and 
subsequent model year diesel and Otto-cycle vehicles.'' August 25, 
2022.
    \656\ California 2026 And Subsequent Model Year Criteria 
Pollutant Exhaust Emission Standards and Test Procedures for 
Passenger Cars, Light Duty Trucks, and Medium-Duty Vehicles; Part 1, 
section I.4.1.14. August 25, 2022.
---------------------------------------------------------------------------

ii. Background on Federal MAW Standards and Procedures for Light-Heavy-
Duty Engines and California Harmonization With Federal Standards
    In January 2023, the Agency finalized MAW in-use test procedures 
and NOX, PM, HC and CO in-use standards for heavy-duty 
diesel engines based upon a two-bin moving average window (2B-MAW) 
instead of California's 3B-MAW.657 658 The Federal 2B-MAW 
standards also applied a separate temperature correction to light-
heavy-duty diesel engine (LHDDE) NOX standards than the 
temperature correction used for medium- and heavy-heavy-duty diesel 
engines. The Agency established 1B-MAW test procedures for gasoline 
heavy-duty engines comparable to the California procedures, however the 
Agency did not establish 1B-MAW standards for heavy-duty gasoline 
engines.
---------------------------------------------------------------------------

    \657\ 88 FR 4296, January 24, 2023.
    \658\ 40 CFR 1036.104, and 1036.530 and 40 CFR part 1036, 
subpart E.
---------------------------------------------------------------------------

    The Federal 2B-MAW procedures for diesel engines are based upon two 
300-second moving average window (MAW) operational bins. Bin 1 
represents extended idle operation and other very low (<=6 percent) 
load operation where exhaust temperatures may drop below the optimal 
temperature for aftertreatment function. Bin 2 represents higher load 
operation (>6 percent). The California 3B-MAW procedures differ chiefly 
by dividing Bin 2 into Bin 2 and Bin 3, with Bin 2 representing 
operation from 6 percent to 20 percent load and Bin 3 having operation 
at greater than 20 percent load.
    Within the Federal in-use procedures, CO2 emissions 
rates normalized to the maximum CO2 rate of the engine are 
used as a surrogate for engine power within the bin definitions. The 
maximum CO2 rate is defined as the engine's rated maximum 
power multiplied by the engine's CO2 family certification 
level (FCL) for the FTP certification cycle.\659\
---------------------------------------------------------------------------

    \659\ 40 CFR 1036.530(e).
---------------------------------------------------------------------------

    In June 2023, a final agreement was signed by representatives of 
the California Air Resources Board (CARB), the Truck and Engine 
Manufacturers Association, Cummins, Daimler Truck, General Motors, 
Hino, Isuzu, Navistar, PACCAR, Stellantis, and Volvo.\660\ As part of 
this agreement, CARB proposed adopting the Federal 2B-MAW test 
procedures and standards from 40 CFR part 1036 for diesel heavy-duty 
engines with no changes to California's 1B-MAW standards and procedures 
for gasoline heavy-duty engines. California has previously maintained 
consistent MAW standards and procedures between their in-use medium-
duty chassis-certified Tier IV program and their medium-duty engine-
certified program.
---------------------------------------------------------------------------

    \660\ Final Agreement between Carb and EMA, 6-27-2023. https://ww2.arb.ca.gov/sites/default/files/2023-07/Final%20Agreement%20between%20CARB%20and%20EMA%202023_06_27.pdf.
---------------------------------------------------------------------------

iii. In-Use Testing Requirements for Chassis-Certified High GCWR 
Medium-Duty Vehicles Using the Moving Average Window (MAW)
    The agency is not finalizing the proposed provisions for requiring 
MY 2030 engine-certification to light-heavy-duty engine standards under 
40 CFR part 1036 for high GCWR MDV (GCWR above 22,000 pounds), however 
the final rule retains engine certification as an option for high GCWR 
MDV. See section III.D.5.iv of the preamble for further description of 
the option to certify engines under 40 CFR part 1036. The remainder of 
this section describes the in-use provisions required for high-GCWR MDV 
chassis certification 40 CFR part 86, subpart S, and 40 CFR part 1036, 
subparts B, E, and F.
    The agency is finalizing in-use standards for MY 2031 and later 
high GCWR MDVs consistent with the California provisions for 
certification and in-use standards for chassis certified medium-duty 
vehicles (MDV) based on moving average windows (i.e., Alternative 2 in 
the proposal). The timing of the standards is simultaneous with default 
compliance with other criteria pollutant standards (see section 
III.D.1.ii of the preamble) and one year after the fully phase-in of 
California's in-use program. Consistent with the proposal, note that 
this differs from the California program with respect to applicability. 
The Federal in-use standards only apply for MDV with a GCWR greater 
than 22,000 pounds whereas the California program applies above 14,000 
pounds GCWR.
    The applicability and feasibility of 2B-MAW standards to high GCWR 
diesel MDV is based upon EPA's previous analysis of in-use 2B-MAW 
standards for MY 2027 and later light-heavy-duty diesel engines.\661\ 
EPA is also allowing optional certification of high GCWR diesel MDV to 
3B-MAW standards; however, this has been included solely as a 
flexibility to facilitate 50-state certification of high GCWR MDV. 
There remains a degree of uncertainty with respect to California's 
anticipated adoption of 2B-MAW standards for diesel chassis-certified 
MDV in place of California's current 3B-MAW, and thus we will allow 
manufacturers of high GCWR diesel MDV to choose between compliance with 
2B-MAW standards or 3B-MAW standards. The levels of the 2B-MAW 
emissions standards for MY 2031 and later high GCWR MDV are identical 
to those of current 2B-MAW standards applicable to MY 2027 and later 
compression-ignition light heavy-duty engines. The levels of the 3B-MAW 
emissions standards for high GCWR MDV are consistent with MY 2030 and 
later California standards for chassis-certified MDV.
---------------------------------------------------------------------------

    \661\ U.S. EPA. Chapter 2.2--Manufacturer-Run Off-Cycle Field 
Testing Program for Compression-Ignition Engines. Control of Air 
Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle 
Standards--Regulatory Impact Analysis. EPA-420-R-22-035, December 
2022.
---------------------------------------------------------------------------

    The final in-use test procedures and standards for high GCWR MDV 
are based upon Federal heavy-duty in-use test procedures and standards 
for light-heavy-duty engines with changes that include:
     Optionally allow FCL to be derived entirely from chassis 
dynamometer testing, emissions measurement and OBD data collection.
     Addition of optional 3B-MAW standards, procedures 
calculations for high GCWR diesel MDV. Note that Federal 3B-MAW 
standards incorporate California's full-phase-in CF of 1.5.
     Addition of 1B-MAW standards for high GCWR gasoline MDV.
    The high GCWR gasoline MDV standards are summarized in Table 47. 
High GCWR diesel 3B-MAW standards and off-cycle bin definitions are 
summarized in Table 48 and Table 49. High GCWR diesel 2B-MAW standards 
and off-cycle bin definitions are

[[Page 27951]]

summarized in Table 50 and Table 51. Note that, identical to standards 
for light-heavy-duty diesel engines, the 2B-MAW standards for high GCWR 
diesel MDV also include PEMS accuracy margins (Table 52). The 2B-MAW 
and 3B-MAW NOX standards, including any applicable accuracy 
margins and temperature corrections, are compared in Figure 17 and 
Figure 18. Note that while the 2B-MAW NOX standards are 
somewhat less stringent the corresponding 3B-MAW standards, the level 
of the 2B-MAW NOX standards together with the accuracy 
margins and temperature corrections to those standards represent what 
we consider to be feasible with current and near-term urea SCR 
NOX controls and are consistent with data previously 
generated in support of the MY 2027 and later heavy-duty engine 
standards.\662\ See 40 CFR 86.1811-27 for further details regarding the 
finalized high GCWR MDV in-use standards and see 40 CFR 86.1845-04(h) 
for further details regarding the finalized high GCWR MDV in-use test 
procedures. These regulatory provisions include extensive references to 
40 CFR part 1036.
---------------------------------------------------------------------------

    \662\ U.S. EPA. Chapter 2.2--Manufacturer-Run Off-Cycle Field 
Testing Program for Compression-Ignition Engines. Control of Air 
Pollution from New Motor Vehicles: Heavy-Duty Engine and Vehicle 
Standards--Regulatory Impact Analysis. EPA-420-R-22-035, December, 
2022.

   Table 47--MY 2031 and Later Spark-Ignition Standards for Off-Cycle
                    Testing of High GCWR MDV \a\ \b\
------------------------------------------------------------------------
     NOX  mg/           HC  mg/            PM  mg/           CO  g/
   hp[middot]hr     hp[middot]hr \c\    hp[middot]hr      hp[middot]hr
------------------------------------------------------------------------
             30                210                7.5              21.6
------------------------------------------------------------------------
\a\ Standards already include a conformity factor of 1.5 and Accuracy
  Margins do not apply.
\b\ In-use standards for spark-ignition vehicles are not divided into
  separate operation bins.
\c\ There is no applicable temperature condition, Tiamb, for spark-
  ignition vehicles certifying to moving average window standards.


 Table 48--Model Year 2031 and Later Compression-Ignition Standards for Off-Cycle Testing of High GCWR MDV Over
                                          the 3B-MAW Procedures \a\ \b\
----------------------------------------------------------------------------------------------------------------
                                                                      HC  mg/         PM  mg/         CO  g/
          Off-cycle Bin a b c                    NOX \c\           hp[middot]hr    hp[middot]hr    hp[middot]hr
----------------------------------------------------------------------------------------------------------------
Bin 1.................................  7.5 g/hr................  ..............  ..............  ..............
Bin 2.................................  75 mg/hp[middot]hr......              21             7.5           23.25
Bin 3.................................  30 mg/hp[middot]hr......              21             7.5           23.25
----------------------------------------------------------------------------------------------------------------
\a\ Vehicles optionally certifying to 3-bin moving average window standards.
\b\ Standards already include a conformity factor of 1.5 and Accuracy Margins do not apply.
\c\ There is no applicable temperature condition, Tiamb, for vehicles certifying to 3-bin moving average window
  standards.


              Table 49--Criteria for 3B-MAW Off-Cycle Bins
------------------------------------------------------------------------
                               Normalized CO2 emission mass over the 300
             Bin                          second test interval
------------------------------------------------------------------------
Bin 1........................  mCO2,norm,testinterval <= 6.00%.
Bin 2........................  6.00% < mCO2,norm,testinterval <= 20.00%.
Bin 3........................  mCO2,norm,testinterval > 20.00%.
------------------------------------------------------------------------


    Table 50--Model Year 2031 and Later Compression-Ignition Standards for Off-Cycle Testing Over the 2B-MAW
----------------------------------------------------------------------------------------------------------------
                                                   Temperature        HC  mg/         PM  mg/         CO  g/
      Off-cycle Bin \a\             NOX \b\       adjustment \c\   hp[middot]hr    hp[middot]hr    hp[middot]hr
----------------------------------------------------------------------------------------------------------------
Bin 1........................  10.0 g/hr.......  (25.0-Tiamb)     ..............  ..............  ..............
                                                  [middot] 0.25.
Bin 2........................  58 mg/            (25.0-Tiamb)                120             7.5               9
                                hp[middot]hr.     [middot] 2.2.
----------------------------------------------------------------------------------------------------------------
\a\ Vehicles and engines certifying to 2-bin moving average window standards.
\b\ Use Accuracy Margins from 40 CFR 1036.420(a).
\c\ Tiamb is the mean ambient temperature over a shift-day, or equivalent. Adjust the off-cycle NOX standard for
  Tiamb below 25.0 [deg]C by adding the calculated temperature adjustment to the specified NOX standard.


              Table 51--Criteria for 2B-MAW Off-Cycle Bins
------------------------------------------------------------------------
                                           Normalized CO2 emission mass
                  Bin                        over the 300 second test
                                                     interval
------------------------------------------------------------------------
Bin 1..................................  mCO2,norm,testinterval <=
                                          6.00%.
Bin 2..................................  mCO2,norm,testinterval > 6.00%.
------------------------------------------------------------------------


                          Table 52--Accuracy Margins for In-Use Testing Over the 2B-MAW
----------------------------------------------------------------------------------------------------------------
                                       NOX                HC                PM                     CO
----------------------------------------------------------------------------------------------------------------
Bin 1.........................  0.4 g/hr.........

[[Page 27952]]

 
Bin 2.........................  5 mg/hp[middot]hr  10 mg/            6 mg/             0.025 g/hp[middot]hr.
                                                    hp[middot]hr.     hp[middot]hr.
----------------------------------------------------------------------------------------------------------------

                                                                                       [GRAPHIC] [TIFF OMITTED] TR18AP24.016
                                                                                       
Figure 17: 2B-MAW Bin 1 In-Use NOX Standard With Ambient Temperature 
Correction and PEMS Accuracy Margin Compared to 3B-MAW Bin 1 In-Use NOX 
Standard
[GRAPHIC] [TIFF OMITTED] TR18AP24.017


[[Page 27953]]



Figure 18: 2B-MAW Bin 2 In-Use NOX Standard With Ambient Temperature 
Correction and PEMS Accuracy Margin Compared to 3B-MAW Bin 2 and Bin 3 
In-Use NOX Standard

iv. Optional High GCWR Medium-Duty Vehicles Engine Certification
    The final rule includes the option for engine-based certification 
to emission standards for both spark-ignition and compression-ignition 
(diesel) engines, and complete and incomplete vehicles (see 40 CFR 
1036.635). Engine certification would require compliance with all the 
same engine certification criteria pollutant requirements and standards 
as for MY 2027 and later engines installed in heavy-duty vehicles above 
14,000 pounds GVWR, including the 2023 rule's NOX, HC, PM, 
and CO standards, useful life, warranty and in-use requirements (88 FR 
4296, January 24, 2023). Complete MDVs would still require chassis 
dynamometer testing for demonstrating compliance with GHG standards as 
described in section III.D.3 of the preamble and are included within 
the fleet average MDV GHG emissions standards along with the other 
MDVs. Manufacturers would have the option to certify incomplete MDVs to 
GHG standards under 40 CFR 86.1819 or 40 CFR parts 1036 and 1037. Note 
that existing regulations at 40 CFR 1037.150(l) already allow a similar 
dual-testing methodology, which utilizes engine dynamometer 
certification for demonstration of compliance with criteria pollutant 
emissions standards while maintaining chassis dynamometer certification 
for demonstration of compliance with GHG emissions standards under 40 
CFR 86.1819.
6. Refueling Standards for Incomplete Spark-Ignition Vehicles
    Spark-ignition medium-duty vehicles generally operate with volatile 
liquid fuel (such as gasoline or ethanol) or gaseous fuel (such as 
natural gas or liquefied petroleum gas) which have the potential to 
release high levels of evaporative and refueling hydrocarbon (HC) 
emissions. As a result, EPA has established evaporative emission 
standards at 40 CFR 86.1813-17 that apply to vehicles operated on these 
fuels. Refueling emissions are evaporative emissions that result when 
the pumped liquid fuel displaces the vapor in the vehicle tank. Without 
refueling emission controls, most of those vapors are released into the 
ambient air. The HCs emitted are a function of ambient temperature, 
fuel temperature, and fuel volatility.\663\ The emission control 
technology that collects and stores the vapor generated during 
refueling events is the Onboard Refueling Vapor Recovery (ORVR) system.
---------------------------------------------------------------------------

    \663\ E.M. Liston, American Petroleum Institute, and Stanford 
Research Institute. A Study of Variables that Effect the Amount of 
Vapor Emitted During the Refueling of Automobiles. Available online: 
http://books.google.com/books?id=KW2IGwAACAAJ, 1975.
---------------------------------------------------------------------------

    Light-duty vehicles, light-duty trucks, and chassis-certified 
complete medium-duty vehicles at or below 14,000 pounds GVWR have been 
meeting evaporative and refueling requirements for many years. ORVR 
requirements for light-duty vehicles started phasing in as part of 
EPA's National Low Emission Vehicle (NLEV) and Clean Fuel Vehicle (CFV) 
programs in 1998.\664\ In EPA's Tier 2 vehicle program, all complete 
vehicles with a GVWR of 8,501 to 14,000 pounds were required to phase-
in ORVR requirements between 2004 and 2006 model years.\665\ In the 
Tier 3 rulemaking, EPA adopted a more stringent standard of 0.20 grams 
of HC per gallon of gasoline dispensed, with implementation in model 
year 2022 (see 40 CFR 86.1813-17(b)).\666\ The 2023 final rule to set 
standards for model year 2027 and later heavy-duty engines also 
established refueling standards for incomplete heavy-duty vehicles over 
14,000 pounds GVWR (88 FR 4296, January 24, 2023). This left incomplete 
medium-duty spark-ignition engine powered vehicles 8,501 to 14,000 
pounds GVWR as the only SI vehicles not required to meet refueling 
standards.
---------------------------------------------------------------------------

    \664\ 62 FR 31192 (June 6, 1997) and 63 FR 926 (January 7, 
1998).
    \665\ 65 FR 6698 (February 10, 2000).
    \666\ 79 FR 23414 (April 28, 2014) and 80 FR 0978 (February 19, 
2015).
---------------------------------------------------------------------------

    As proposed, the agency is requiring that incomplete medium-duty 
vehicles meet the same on-board refueling vapor recovery (ORVR) 
standards as complete vehicles. Incomplete medium-duty vehicles have 
not been required to comply with the ORVR requirements to date because 
of the potential complexity of their fuel systems, primarily the filler 
neck and fuel tank.\667\ Unlike complete vehicles, which have permanent 
fuel system designs that are fully integrated into the vehicle 
structure at time of original construction by manufacturers, it was 
previously believed that for incomplete vehicles, manufacturers may 
need to change or modify some fuel system components during finishing 
assembly. For this reason, it was previously determined that ORVR might 
introduce complexity for the upfitters that is unnecessarily 
burdensome.
---------------------------------------------------------------------------

    \667\ Incomplete light-duty trucks are already subject to 
refueling emission standards. The proposed rule mistakenly requested 
comment on applying refueling emission standards for those vehicles.
---------------------------------------------------------------------------

    Since then, the agency has newly assessed both current ORVR-
equipped vehicles and their incomplete versions. Based on our updated 
assessment, the agency believes that the fuel system designs are almost 
identical, with only the ORVR components removed for the incomplete 
version. The complete and incomplete vehicles appear to share the same 
fuel tanks, lines, and filler tubes. The original thought that 
extensive differences between the original manufacturer's designs and 
the upfitter modifications to the fuel system would be required have 
not been observed. Therefore, the agency believes that all incomplete 
vehicles can comply with the same ORVR standards as complete vehicles 
with the addition of the same ORVR components on the incomplete 
vehicles to match the complete vehicles. Commenters uniformly affirmed 
the appropriateness of adopting the proposed refueling standards.
    We are finalizing, as proposed, a new refueling emission standard 
for incomplete vehicles 8,501 to 14,000 pounds GVWR, along with 
corresponding testing and certification procedures. The new standard is 
0.20 grams HC per gallon of dispensed fuel (0.15 grams for gaseous-
fueled vehicles), which is the same as the existing refueling standards 
for other vehicles.\668\ These refueling emission standards will apply 
to all liquid-fueled and gaseous-fueled spark-ignition medium-duty 
vehicles, including gasoline and ethanol blends.\669\ These standards 
will apply over a useful life of 15 years or 150,000 miles, whichever 
occurs first, consistent with existing evaporative emission standards 
for these vehicles and for complete versions.
---------------------------------------------------------------------------

    \668\ 40 CFR 86.1813-17.
    \669\ Refueling requirements for incomplete medium-duty vehicles 
that are fueled by CNG or LNG will be the same as the current 
complete gaseous-fueled Spark-ignition medium-duty vehicle 
requirements.
---------------------------------------------------------------------------

    We are applying the refueling standards for new incomplete vehicles 
starting with model year 2030. This meets the statutory obligation to 
allow four years of lead time for new emissions standards for criteria 
pollutants for vehicles above 6,000 pounds GVWR. This schedule also 
complements the optional alternative phase-in provisions adopted in our 
final rule setting these same standards for vehicles above 14,000 
pounds GVWR (88 FR 4296, January 24, 2023). Those alternative phase-in 
provisions allowed

[[Page 27954]]

for manufacturers to phase in certification of all their incomplete 
medium-duty and heavy-duty vehicles to the new standards from 2026 
through 2030. In the alternative phase-in, manufacturers would certify 
all their incomplete heavy-duty vehicles above and below 14,000 pounds 
GVWR to the refueling standards, starting with 40 percent of vehicles 
in 2026 and 2027, followed by 80 percent of vehicles in 2028 and 2029 
before reaching 100 percent of vehicles in 2030.
    See the preamble to the proposed rule \670\ and RIA Chapter 3.2.7 
for a description of ORVR technology and costs, along with a discussion 
of the feasibility of meeting the new standards.
---------------------------------------------------------------------------

    \670\ 88 FR 29271-29275.
---------------------------------------------------------------------------

    The proposed rule requested comment on amendments that would 
account for fuel vapors vented to evaporative or refueling canisters 
from vehicles with pressurized tanks just prior to fuel cap removal for 
a refueling event. Most commenters suggested that we follow the 
approach used by California ARB to require an engineering evaluation to 
demonstrate that refueling canisters have enough capacity to handle 
these ``puff losses'' in addition to the vapor directed to the 
refueling canister during the refueling emission test. Two commenters 
recommended changing the measurement procedure for refueling emissions 
as the most effective way to ensure that vehicles with pressurized fuel 
tanks would not have increased emissions resulting from puff losses. 
See the section 7.4 of the Response to Comments for a detailed 
discussion of the comments.
    The existing refueling test procedures require vehicle 
stabilization with no fuel tank pressure before the vehicle enters the 
Sealed Housing for Evaporative Determination (SHED) for emission 
measurement. In contrast, the regulation includes a partial refueling 
test in which EPA may test a vehicle using a streamlined procedure. The 
partial refueling test requires driving followed by stabilizing the 
vehicle for one to six hours before the refueling test, without 
removing the fuel cap. The partial refueling test calls for the fuel 
cap removal (and tank depressurizing, as applicable) within two minutes 
of sealing the SHED for the refueling test. This approach includes the 
canister loading from puff losses, though it does not include SHED 
measurement to ensure that vapors from depressurizing are vented to the 
canister. Nevertheless, EPA testing using the existing partial 
refueling test can confirm with testing that refueling canisters are 
properly sized to control refueling emissions from vehicles with 
pressurized fuel tanks.
    We are adopting a requirement for manufacturers to attest in their 
application for certification that their vehicles with pressurized fuel 
tanks will meet emission standards when tested over the partial 
refueling emission test. We would expect manufacturers to use their 
engineering analysis from certifying their vehicles for California ARB 
to meet this requirement.
    The running loss test at 40 CFR 86.134-96(g)(1)(xvi) describes how 
manufacturers may rely on pressurized fuel tanks as a design strategy. 
We are amending those provisions to align with the conclusions 
described in the preceding paragraphs to ensure sufficient canister 
capacity for pressurized systems.
    The amendments described in this section apply on the effective 
date of this rule. These changes do not require additional lead time 
because standards already apply for testing with partial refueling 
test, and California ARB already requires manufacturers to make the 
demonstration we are adding in this final rule. We also want to adopt 
the provision related to pressurized fuel tanks without delay to 
correspond with industry practice for certain vehicles. The requirement 
to vent puff losses to the canister has been the industry practice for 
several years, not least because California ARB has adopted this same 
requirement.
    A commenter requested that we address an ambiguity regarding the 
fuel specifications for testing flexible fuel vehicles, both medium-
duty vehicles and heavy-duty vehicles above 14,000 pounds GVWR. The 
commenter also suggested that we revisit the specification for light-
duty vehicles, which is for the test fuel to be based on splash 
blending ethanol with 9 psi RVP neat gasoline. We recognize that 
flexible fuel vehicles today will be refueled with some combination of 
E10 gasoline and a high-level ethanol fuel. The scenario of splash 
blending ethanol with an E0 fuel is no longer something that in-use 
vehicles will experience. We are therefore revising the refueling test 
fuel specification for flexible fuel vehicles to align with the test 
fuel specification for evaporative emission testing at 40 CFR 86.1810-
17(h). The refueling test fuel will instead be Tier 3 gasoline (E10 
with RVP at 9 psi). This same conclusion applies for refueling tests 
with heavy-duty vehicles subject to standards under 40 CFR 1037.103.
7. Light-Duty Vehicle Provisions Aligned With CARB ACC II Program
    EPA is finalizing three NMOG+NOX provisions for light-
duty vehicles (LDV, LDT, MDPV) aligned with the California ACC II 
program. The provisions follow the phase-in schedules described in 
section III.D.1.i of the preamble. Vehicles outside of the phase-in 
schedules (interim Tier 4 vehicles) do not have to meet the three 
NMOG+NOX provisions aligned with ACC II. Each provision 
addresses a frequently encountered vehicle operating condition that was 
not previously captured in EPA test procedures and produces significant 
criteria pollutant emissions. The operating conditions are high power 
cold starts in plug-in hybrid vehicles, early drive-away (i.e., drive-
away times shorter than in the FTP), and mid-temperature engine starts. 
The rationale and technical assessment performed by CARB applies not 
only for vehicles sold in California but for products sold across the 
country, so EPA is adopting CARB's rational and technology assessment 
\671\ for these three provisions. The phase-in for the three CARB ACC 
II program provisions follows the criteria pollutant phase-in described 
in section III.D.1 of the preamble but note that the PHEV high power 
cold starts provision has two steps with separate start dates. EPA 
requires vehicle manufacturers to provide data demonstrating compliance 
with each provision.
---------------------------------------------------------------------------

    \671\ CARB Public Hearing to Consider the Proposed Advanced 
Clean Cars II Regulations, Staff Report: Initial Statement of 
Reasons, April 12, 2022.
---------------------------------------------------------------------------

i. PHEV High Power Cold Starts
    EPA is finalizing NMOG+NOX emissions standards for PHEV 
high power cold starts (HPCS), which is when a driver demands more 
torque than the battery and electric motor can supply and the IC engine 
is started and immediately produces high torque while also working to 
light off the catalyst. NMOG+NOX emissions are measured over 
the Cold Start US06 Charge-Depleting Emission Test, as described in, 40 
CFR 1066.801(c)(10), which references ``California Test Procedures for 
2026 and Subsequent Model Year Zero-Emission Vehicles and Plug-in 
Hybrid Electric Vehicles, in the Passenger Car, Light-Duty Truck and 
Medium-Duty Vehicle Classes,'' adopted August 25th, 2022.
    EPA's final bin-specific standards are shown in Table 53. The bins 
are somewhat different than the ACC II bins. EPA is not finalizing Bin 
125 (that is part of CARB ACC II) to be consistent with EPA's Tier 4 
bin structure

[[Page 27955]]

described in section III.D.2.i of the preamble. Also, EPA is finalizing 
bins from 0 to 70 in increments of 5 to offer additional resolution to 
manufacturers. EPA is finalizing Step 1 of this provision to start with 
MY 2027, one year later than CARB, and is finalizing Step 2 of this 
provision to start in MY 2030, which is also one year later than CARB. 
Since all three provisions follow the phase-in schedules described in 
section III.D.1.i of the preamble, LDT3-4 and MDPV may follow the 
default phase-in schedule and not adopt these provisions until MY 2030.

                                    Table 53--High Power Cold Start Standards
----------------------------------------------------------------------------------------------------------------
                                                                                      NMOG+NOX (g/mi)
                                                                         ---------------------------------------
                       Vehicle emissions category                          Step 1:  2027 to
                                                                                2029 MY        Step 2:  2030+ MY
----------------------------------------------------------------------------------------------------------------
Bin 70..................................................................               0.320               0.200
Bin 65..................................................................               0.300               0.188
Bin 60..................................................................               0.280               0.175
Bin 55..................................................................               0.260               0.163
Bin 50..................................................................               0.240               0.150
Bin 45..................................................................               0.220               0.138
Bin 40..................................................................               0.200               0.125
Bin 35..................................................................               0.175               0.113
Bin 30..................................................................               0.150               0.100
Bin 25..................................................................               0.125               0.084
Bin 20..................................................................               0.100               0.067
Bin 15..................................................................               0.075               0.051
Bin 10..................................................................               0.050               0.034
Bin 5...................................................................               0.025               0.017
----------------------------------------------------------------------------------------------------------------

    For Step 1, PHEVs with Cold Start US06 all-electric range of at 
least 10 miles are exempt from the standard. For Step 2, PHEVs with 
Cold Start US06 all-electric range of at least 40 miles are exempt from 
the standard.
    CARB testing identified several existing PHEVs that started on the 
US06 and met the PHEV HPCS standard by a small margin, demonstrating 
the feasibility of the standard.
    In response to manufacturer comments, EPA is finalizing more bins 
to provide additional resolution to manufacturers. AAI recommended that 
EPA extend Step 1 requirements for larger vehicles through MY 2032 and 
not adopt Step 2. A major manufacturer also requested that EPA not 
adopt Step 2 for vehicles above 6000 lb GVWR. AAI recommended that 
manufacturers be allowed to attest to the standard to reduce test 
burden.
    After considering the recommendations, EPA is going forward with 
both Step 1 and Step 2 and is requiring manufacturers to provide data 
demonstrating compliance with the standard because according to our 
modeling of the future fleet and input from AAI and manufacturers, 
PHEVs may play a significant role in the future vehicle fleet and that 
would make PHEV HPCS an important operating mode. However, the Agency 
is providing manufacturers with an extra year to comply with Step 1 and 
Step 2, relative to the CARB program, to give manufacturers more time 
to implement design changes necessary to meet the standard.
ii. Early Driveaway
    EPA is finalizing NMOG+NOX standards that address 
emissions from earlier gear engagement (i.e., moving the shift lever 
from park to drive in a vehicle with an automatic transmission) and 
driveaway (i.e., when the vehicle begins to move for the first time 
after being started) as described by the CARB ACC II program.\672\ In a 
regular 25 [deg]C FTP, gear engagement happens at 15 seconds and 
driveaway happens at 20 seconds, but studies have shown many drivers 
begin driving earlier than this. Vehicle manufacturers have 
historically designed their aftertreatment systems and controls to meet 
emissions standards based on the timing of the FTP driveaway. However, 
given the existing field data regarding the propensity of drivers to 
drive off sooner than the delay represented in the FTP and that vehicle 
manufacturers have demonstrated that they are able to reduce the 
emissions associated with this event, it is appropriate to require 
vehicle manufacturers to reduce emissions from early driveaway.
---------------------------------------------------------------------------

    \672\ CARB Title 16, Section 1961.4. Final Regulation Order. 
Exhaust Emission Standards and Test Procedures 2026 and Subsequent 
Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty 
Vehicles.
---------------------------------------------------------------------------

    EPA is finalizing an early driveaway standard that is derived from 
the CARB ACC II program.\673\ The standard uses an early driveaway test 
described by 40 CFR 1066.801(c)(9) and involves measuring phase 1 NMOG+ 
NOX emissions from a modified 25 [deg]C FTP test where gear 
engagement happens at 6 seconds and driveaway happens at 8 seconds 
(instead of 15 and 20 seconds) and combining this phase 1 result with 
results from the other phases of a normal FTP using regular FTP phase 
weighting. The result must meet the NMOG+NOX bin standard 
shown in Table 54 below. For each bin, the early driveaway 
NMOG+NOX standard is 12 mg/mile higher than the bin name; 
for example, the early drive away standard for Bin 30 is 30+12=42 mg/
mile.
---------------------------------------------------------------------------

    \673\ CARB Title 16, Section 1961.4. Final Regulation Order. 
Exhaust Emission Standards and Test Procedures 2026 and Subsequent 
Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty 
Vehicles.
---------------------------------------------------------------------------

    The bins that EPA is finalizing are slightly different than the ACC 
II bins. Specifically, EPA is not finalizing Bin 125 as found in CARB 
ACC II and is finalizing bins from 0 to 70 in increments of 5 to 
provide manufacturers with additional resolution in certifying test 
groups to meet the standard.

                   Table 54--Early Driveaway Standards
------------------------------------------------------------------------
                                                            NMOG+NOX  (g/
                Vehicle emissions category                       mi)
------------------------------------------------------------------------
Bin 70....................................................        0.082
Bin 65....................................................        0.077
Bin 60....................................................        0.072
Bin 55....................................................        0.067
Bin 50....................................................        0.062
Bin 45....................................................        0.057
Bin 40....................................................        0.052
Bin 35....................................................        0.047
Bin 30....................................................        0.042
Bin 25....................................................        0.037
Bin 20....................................................        0.032

[[Page 27956]]

 
Bin 15....................................................        0.027
Bin 10....................................................        0.022
Bin 5.....................................................        0.017
------------------------------------------------------------------------

    The modified 25 [deg]C FTP phase 1 is being finalized with tighter 
speed tolerances than proposed in response to a concern from AAI that 
without a tighter speed tolerance, a test driver may drive off sooner 
than the 8 seconds and to ensure the vehicle is fully stopped while the 
transmission is placed into gear. The speed tolerance of a regular 25 
[deg]C FTP test is 2 mph beyond the lowest or highest point 
on the trace within 1.0 second of the given time, as described in Part 
1066.425(b)(4)(i). For an early driveaway test, EPA is finalizing that 
vehicle speed may not exceed 0.0 mph until 7.0 seconds and vehicle 
speed between 7.0 and 7.9 seconds may not exceed 2.0 mph. This reduces 
the possibility of a test driver driving off significantly earlier than 
8 seconds without setting unrealistic requirements on the test driver 
and doesn't significantly skew the trace to drive-off times larger than 
8 seconds. Table 55 below illustrates how the tighter speed tolerance 
impacts allowable vehicle speed.

                           Table 55--Tighter Speed Tolerance for Early Driveaway Test
----------------------------------------------------------------------------------------------------------------
                                                                                               Min/max speed in
                                                           Trace speed     Min/max speed  in    early driveaway
                       Time  (s)                              (mph)           regular FTP        with tighter
                                                                                 (mph)         tolerances  (mph)
----------------------------------------------------------------------------------------------------------------
6.0...................................................                0.0            0.0-2.0                 0.0
7.0...................................................                0.0            0.0-5.0             0.0-2.0
8.0...................................................                3.0            0.0-7.9             0.0-7.9
9.0...................................................                5.9           1.0-10.6            1.0-10.6
----------------------------------------------------------------------------------------------------------------

    Vehicles are exempt from the early driveaway bin standards if the 
vehicle prevents engine starting during the first 20 seconds of a 
standard 25 [deg]C FTP test and the vehicle does not use technology 
(e.g., electrically heated catalyst) that would cause the engine or 
emission controls to be preconditioned such that NMOG+NOX 
emissions would be higher during the first 505 seconds of the early 
driveaway emission test compared to the emissions during the first 505 
seconds of the standard FTP emission test.
    AAI requested the option to attest to the early drive away 
provision and recommended a tightening of the speed tolerance during 
the first seven seconds. EPA is requiring certification test data on 
the dearly driveaway standard because of the importance of this 
condition in real-world operation. EPA is finalizing the tighter speed 
tolerance described above in response to AAI's comment.
iii. Intermediate Soak Mid-Temperature Starts
    EPA is finalizing a third provision defined by the CARB ACC II 
program that addresses NMOG+NOX emissions from intermediate 
soak mid-temperature starts.\674\ Previous EPA test procedures capture 
emissions from vehicle cold start and vehicle hot start. However, 
vehicles in actual operation often experience starts after an 
intermediate time (i.e., soak times between 10 minutes and 12 hours). 
Vehicle manufacturers have not been required to control the emissions 
associated with these mid-temperature starts to the same degree that 
they manage cold and hot starts, although vehicle manufacturers have 
demonstrated they are able to address and reduce emissions from 
intermediate soak mid-temperature starts.
---------------------------------------------------------------------------

    \674\ CARB Title 16, Section 1961.4. Final Regulation Order. 
Exhaust Emission Standards and Test Procedures 2026 and Subsequent 
Model Year Passenger Cars, Light-Duty Trucks, and Medium-Duty 
Vehicles.
---------------------------------------------------------------------------

    Tier 3 vehicles achieve low start emissions when soak times are 
short because the engine and aftertreatment are still hot from prior 
operation. Start emissions after long soak periods are addressed by the 
12+ hour soak of the 25 [deg]C FTP, which requires vehicles to quickly 
heat the catalyst and sensors from an engine at ambient temperature. 
The mid-temperature intermediate soak provision addresses emissions 
from intermediate soak times where the engine and aftertreatment have 
cooled but may still be warmer than ambient temperature.
    The intermediate soak mid-temperature starts standards being 
finalized by EPA are shown in Table 56. EPA is finalizing bins that are 
closely aligned with ACC II bins. EPA is finalizing a bin structure 
that includes all CARB ACC II bins except Bin 125 and includes bins 
from 0 to 70 in increments of 5. EPA is not finalizing Bin 125 because 
EPA is eliminating this bin from the list of bins available to light-
duty vehicles (section III.D.2.i of the preamble). The inclusion of 
bins from 0 to 70 is to provide manufacturers with additional 
resolution in certifying test groups to meet the standard.
    EPA is requiring manufacturers to submit data for the 40-minute 
soak requirement that is taken between 39-41 minutes and is allowing 
manufacturers to attest to meeting the standards at all other soak 
times using linear interpolation between 10 minutes and 12 hours.

----------------------------------------------------------------------------------------------------------------
                                                        10-minute soak      40-minute soak      3-12 hour soak
             Vehicle Emissions Category                NMOG+NOX  (g/mi)    NMOG+NOX  (g/mi)    NMOG+NOX  (g/mi)
 
----------------------------------------------------------------------------------------------------------------
Bin 70..............................................               0.035               0.054               0.070
Bin 65..............................................               0.033               0.050               0.065
Bin 60..............................................               0.030               0.046               0.060
Bin 55..............................................               0.028               0.042               0.055
Bin 50..............................................               0.025               0.038               0.050
Bin 45..............................................               0.023               0.035               0.045

[[Page 27957]]

 
Bin 40..............................................               0.020               0.031               0.040
Bin 35..............................................               0.018               0.027               0.035
Bin 30..............................................               0.015               0.023               0.030
Bin 25..............................................               0.013               0.019               0.025
Bin 20..............................................               0.010               0.015               0.020
Bin 15..............................................               0.008               0.012               0.015
Bin 10..............................................               0.005               0.008               0.010
Bin 5...............................................               0.003               0.004               0.005
----------------------------------------------------------------------------------------------------------------

8. Limitation of Commanded Enrichment for Power or Component Protection
    At this time, EPA is not finalizing new requirements for the 
control of enrichment on gasoline vehicles. While we recognize the 
potential for increases in some vehicle emissions during enriched 
operation, we also are cognizant of the substantial engineering effort 
that it would take some manufacturers to eliminate enrichment at all 
engine speeds and operating conditions, in the same time frame as 
meeting the other criteria pollutant and GHG requirements of this final 
program. In light of our recognition of both the potential emissions 
reductions and engineering effort, the agency plans to continue to 
investigate this issue and may decide to revisit enrichment controls in 
a future rulemaking. EPA plans to take a multipronged approach to 
inform a potential future regulatory action. The agency will continue 
to gather data on the circumstances under which vehicles use enrichment 
in the real world. This will include additional EPA-conducted test 
programs as well as the potential for manufacturer-provided data. EPA 
also plans to assess the frequency of vehicle activity that results in 
enrichment, such as trailer towing and other high load, high speed 
operation. Based on our assessment of measured emissions increases, the 
circumstances under which enrichment occurs, and the frequency of 
enrichment, EPA will update our estimates of the impact on emissions 
inventories due to command enrichment. As part of this process, EPA 
will also engage with the auto manufacturers and other stakeholders to 
continue to assess the technologies available to eliminate enrichment 
under the broadest area of vehicle operation, as well as powertrain 
development effort, emissions control technology options, lead time and 
costs. In addition, EPA will continue to review AECD applications to 
ensure that the AECD process is being used in the manner it was 
intended. EPA plans to initiate this technical work and stakeholder 
outreach soon after the release of this final rule, and based on this 
technical work the Agency may initiate a new rulemaking related to this 
issue within the next two to three years.
    Commenters expressed opposing views on the proposed elimination of 
the allowance of the use of commanded enrichment. NACAA (National 
Association of Clean Air Agencies) supported the proposed elimination 
of enrichment for its health benefits. MECA (Manufacturers of Emissions 
Control Association) attested to the readiness of technology to support 
the proposed elimination. While several manufacturers supported the 
proposal, other OEMs also voiced strong concern with a prohibition on 
enrichment. Some OEMs argued that eliminating enrichment would require 
significant powertrain revisions, divert investment from 
electrification, and/or result in a substantial reduction in engine 
power.
    EPA had proposed a prohibition of commanded enrichment because 
enrichment results in highly elevated engine-out emissions and reduced 
effectiveness of the aftertreatment system, causing elevated emissions 
of carbon monoxide, hydrocarbons, PM, and air toxics including ammonia 
and PAH, during this operation.
9. Small Volume Manufacturer Criteria Pollutant Emissions Standards
    EPA is finalizing the identical criteria pollutant emissions 
standards for small volume manufacturers (SVMs) as for large 
manufacturers but is delaying the phase-in of the standards for SVM 
until 2032 to provide additional lead time to implement the standards.
    The phase-in schedule of criteria pollutant standards for SVMs and 
large manufacturers is discussed in section III.D.1 of the preamble. 
The criteria pollutant phase-in applies to NMOG+NOX bin 
structure, PM, -7 [deg]C NMOG+NOX, CO, HCHO, -7[deg]C CO, 
and three provisions aligned with CARB ACC II (PHEV high power cold 
starts, early driveaway, intermediate soak mid-temperature starts). The 
SVMs light-duty vehicle (LDV, LDT, MDPV) phase-in steps to 100 percent 
in 2032.
    Declining fleet average NMOG+NOX standards for SVMs and 
large manufacturers are discussed in section III.D.2 of the preamble. 
SVMs light-duty vehicle NMOG+NOX declining fleet averages 
step from 30 mg/mile to 15 mg/mile in 2032. However, SVMs encounter two 
fleet average steps between 2027 and 2032 because they were allowed 
additional time to meet Tier 3 standards. The first step occurs in MY 
2028, when SVMs step down from 51 mg/mile to the Tier 3 final fleet 
average of 30 mg/mile. The first step is aligned with the current Tier 
3 requirements and represents no change for the SVMs.\675\ The second 
step is the result of this final rule and will require SVMs to meet an 
NMOG+NOX fleet average of 15 mg/mile in MY 2032. 15 mg/mile 
is the same fleet average requirement as the remainder of the LDV 
fleet. Implementing the 15 mg/mile standard in MY 2032 provides SVMs 
with additional lead time to begin compliance with the Tier 4 program.
---------------------------------------------------------------------------

    \675\ EPA did not reopen this step in this rulemaking; rather, 
as noted in the text, this step was finalized in the Tier 3 final 
rule.
---------------------------------------------------------------------------

    Since EPA is finalizing a requirement that SVMs must meet the same 
criteria pollutant emissions standards as large manufacturers, although 
with a delayed phase-in, in Tier 4 SVMs must provide PM test data, and 
other criteria pollutant test data, for certification.
    EPA is not finalizing SVM MDV standards that differ from large 
manufacturer MDV standards.
    EPA received comments from several stakeholders regarding the 
proposed criteria pollutant standards. Vehicle manufacturers, including 
those formally identified as SVMs noted that EPA had traditionally 
provided more time to meet the final standards and that the same on-
going challenges remain for them, including challenges such as limited 
product lines with which to fleet average, infrequent vehicle 
redesigns, and lower priority support from the supplier base.
    In the Tier 3 rulemaking, EPA established provisions for small 
volume manufacturers and for those small

[[Page 27958]]

business manufacturers and operationally independent small volume 
manufacturers with average annual nationwide sales of 5,000 units or 
less. As in previous vehicle emissions rulemakings in which we have 
provided such flexibilities, our reason for doing so is that these 
entities generally have more implementation difficulty than larger 
companies. Small companies generally have more limited resources to 
carry out necessary research and development; they can be a lower 
priority for emission control technology suppliers than larger 
companies; they have lower vehicle production volumes over which to 
spread compliance costs; and they have a limited diversity of product 
lines, which limits their ability to take advantage of the phase-in and 
averaging provisions that are major elements of the Tier 3 program. For 
this FRM, EPA has decided based on the justification used in the Tier 3 
to delay SVMs requirements for NMOG+NOX and for other 
criteria pollutants until MY 2032.

E. Modifications to the Medium-Duty Passenger Vehicle (MDPV) Definition

    EPA is finalizing two modifications to the MDPV definition starting 
in MY 2027 to address passenger vehicles that could potentially fall 
outside the prior definition. First, EPA is including in the MDPV 
definition any pickup at or below 14,000 pounds GVWR with a work factor 
at or below 4,500 pounds except for pickups with a fixed interior 
length cargo area of eight feet or larger which would continue to be 
excluded from the MDPV category.\676\ This modification addresses new 
BEVs that are primarily passenger vehicles but fall above the current 
10,000 pound MDPV threshold primarily due to battery pack weight 
increasing the vehicle's GVWR. EPA believes these vehicles should be in 
the light-duty vehicle program because they are primarily passenger 
vehicles and would likely displace the purchase of other passenger 
vehicles rather than a medium-duty vehicle due to their relatively low 
utility. In selecting the 4,500-pound work factor cut point, EPA 
reviewed current vehicle offerings and comments received; based on this 
evaluation, we believe these thresholds are reasonable and will not 
pull into the MDPV category work vans or work trucks. Previously, the 
MDPV category generally included pickups below 10,000 pounds GVWR with 
a fixed interior length cargo area of less than six feet (72.0 inches).
---------------------------------------------------------------------------

    \676\ In the regulatory text, EPA is finalizing that pickups 
with an open bed interior length of 94 inches or greater will be 
excluded, which will exclude pickups with eight-foot open beds (96 
inches) with a 2-inch allowance for vehicle design variability. This 
also applies for the second change to the MDPV definition.
---------------------------------------------------------------------------

    The second updated MDPV definition modification is to include in 
the MDPV category any pickups with a GVWR below 9,500 pounds and a 
fixed interior length cargo area of less than eight feet regardless of 
whether the vehicle work factor is above 4,500 pounds. Pickups at or 
above 9,500 pounds up to 14,000 pounds GVWR with a work factor above 
4,500 pounds are included as MDPVs only if their fixed interior length 
cargo area is less than six feet.
    Historically, there has been a clear distinction between pickups in 
the light-duty vehicle category and those in the medium-duty category. 
Light-duty pickups were those pickups with a GVWR at or below 8,500 
pounds and they generally had a GVWR below 8,000 pounds. MD pickups 
were those pickups that were at or above 8,501 pounds and all such 
vehicles currently have a GVWR above 9,900 pounds.\677\ The changes to 
the MDPV definition are intended to account for any new pickup 
offerings that would fall into the GVWR ``space'' at or above 8,501 
pounds but below 9,500 pounds, as well as light-duty pickups that whose 
GVWR exceeds 8,500 pounds as the result of electrification. In 
addition, the fixed interior length cargo area and work factor 
requirements have been added to limit the revised MDPV definition to 
vehicles with their primary utility being passenger transportation and 
limited cargo, including vehicles up to 14,000 pounds GVWR. EPA is also 
concerned that differences between the light-duty and medium-duty 
pickups could become blurred if manufacturers were to offer somewhat 
more capable pickups with GVWR just above 8,500 pounds to gain access 
to less stringent emission standards. If EPA were not finalizing these 
changes to the MDPV definition, manufacturers could, in essence, move 
their light-duty pickups up into the medium-duty category through 
relatively minor vehicle modifications, to gain access to less 
stringent standards. EPA believes it is appropriate to address this 
possibility given that the light-duty vehicle footprint standards, as 
finalized, will be more stringent compared to the work factor-based 
standards for MDVs and could otherwise provide an unintended incentive 
for manufacturers to take such an approach.
---------------------------------------------------------------------------

    \677\ Currently, these pickups are covered by HDV standards in 
40 CFR 86.1816-18.
---------------------------------------------------------------------------

    Comments regarding the change in MDPV definition were received from 
the three manufacturers that have significant product offerings in this 
space: Ford, GM and Stellantis, as well as the Alliance for Automotive 
Innovation. Comments included suggested changes to the GVWR and work 
factor thresholds. EPA adopted two specific recommended changes to the 
work factor and GVWR thresholds, which are reflected above in the final 
definition values. In addition, commenters made recommendations for the 
implementation timing of the definition change, suggesting 
implementation should be delayed to MY 2030 or that manufacturers 
should be allowed to opt into the new definition, as well as some 
specific regulatory text change to provide further clarification for 
the definition change, such as how the cargo area length should be 
measured.
    Table 57 summarizes the revised MDPV definition in terms of what 
vehicles will not be covered as MDPVs under EPA's changes to the 
qualifying criteria.

     Table 57--Summary of Exclusions for the Revised MDPV Definition
------------------------------------------------------------------------
              A vehicle would be an MDV and not an MDPV if:
-------------------------------------------------------------------------
                                 WF <= 4,500 lb         WF > 4,500 lb
------------------------------------------------------------------------
GVWR <= 9,500 lb............  Cargo area fixed      Cargo area fixed
                               interior length >=    interior length >=
                               94.0 inches.          94.0 inches.
9,500 lb < GVWR <= 14,000 lb  Cargo area fixed      Cargo area fixed
                               interior length >=    interior length >=
                               94.0 inches.          72.0 inches.
------------------------------------------------------------------------


[[Page 27959]]

    EPA is also clarifying that MDPVs will include only vehicles with 
seating behind the driver's seat such that vehicles like cargo vans and 
regular cab pickups with no rear seating will remain in the MDV 
category and subject to work factor-based standards regardless of the 
changes to the MDPV definition.
    As described in section III.D.2.v of the preamble, we are also 
adopting an interim provision allowing manufacturers to use credits 
generated by MY 2027 through 2032 battery electric vehicle (BEV) or 
fuel cell electric vehicles (FCEV), qualifying as MDPVs, to be used for 
certifying MDV to the NMOG+NOX standard for 25[deg]C 
testing. We are adopting the same interim provision for GHG credits. 
Manufacturers may use these GHG credits for certifying MDV starting in 
MY 2027. See 40 CFR 86.1865-12(k)(10).
    Prior to MY 2027, a manufacturer may optionally place vehicles that 
are brought into the MDPV category by the updated MDPV definition 
revisions into the light-duty vehicles program rather than have those 
vehicles remain in the MDV program. EPA is finalizing the definition 
change to be effective starting with MY 2027. However, to ensure the 
program is compliant with applicable CAA lead time and stability 
requirements, manufacturers that are building MDPVs that are captured 
by the expanded definition and are opting for the default schedule will 
continue to be subject to Tier 3 standards through model year 2030. 
Details for the final Tier 4 criteria pollutant phase-in are discussed 
in section III.D.1. In the meantime, manufacturers will continue to 
certify those vehicles to the Tier 3 standards for medium-duty vehicles 
in 40 CFR 86.1816-18.
    EPA's historic regulatory structure for pickup trucks has been 
firmly grounded in the products available to consumers and the utility 
that the vehicles manufacturers have produced. Light-duty pickup GVWRs 
have been significantly less than the 8,500 pound threshold for LDVs 
and class 2b and 3 pickups have been built with GVWR's well above 9,000 
pounds. In addition, consumers without the need for the additional 
utility offered by medium-duty pickups, have sound reasons for buying 
the light-duty versions. Medium-duty pickups, as compared to their 
light-duty counterparts, tend to be higher priced, less fuel efficient, 
less maneuverable, and may also have a harsher ride when unloaded due 
to more capable suspensions. The emissions regulatory structure 
promulgated by EPA has recognized the substantially different utility 
offered by these two historically different regulatory classes. 
However, there are two distinct changes that precipitating EPA's 
decision to expand the MDPV definition. First, EPA recognizes that 
light-duty pickup trucks that are electrified could exceed the 8,500 
pound threshold, but do not have the same utility traditionally 
provided by this regulatory class. Secondly, EPA believes that there is 
the possibility that the pickup market could shift from light-duty 
versions to medium-duty versions of pickups due to consumer preference 
for ICE-based pickups. To meet this consumer demand, manufacturers may 
be inclined to produce pickups which, much like the EV's, exceed the 
8,500 pound GCWR threshold, but do not offer the same utility as 
traditional vehicles in the higher weight class. At this time, EPA is 
not finalizing fundamental changes to its program that will result a 
large portion of medium-duty pickups into the light-duty program to 
address this possibility due to the potential disruption such an 
approach would have both for the vehicle industry and for consumers 
needing highly capable work vehicles. EPA plans to monitor vehicle 
market trends over the next several years to identify any new trends 
that could potentially lead to the loss of emissions reductions, and if 
so, to explore appropriate ways to address such a situation.
    In an effort to illustrate and quantify the design-related GHG 
emissions impacts of medium-duty pickups compared to their light-duty 
counterparts, EPA generated emissions test data for a Ford F-150 and an 
F-250. For this example, the medium-duty F-250 emitted 170 g/mile more 
than the light-duty F-150 when operating at similar speeds and loads 
(RIA Chapter 1.2.1). The GHG emission difference observed in the data 
indicates that light to medium load operation results in much higher 
CO2 emissions in the medium-duty pickup under similar 
passenger or payload conditions. The medium-duty pickup is designed 
primarily for regular towing and therefore may have higher emissions 
under other operating conditions compared to light-duty pickups 
designed more for transportation of passengers or cargo in the bed.

F. What alternatives did EPA consider?

    In the NPRM, EPA sought comment on alternatives for the light- and 
medium-duty GHG standards levels, as well as the phase-ins. For light-
duty GHG standards, we sought comment on a range of light-duty GHG 
stringency alternatives in addition to the proposed standards. We 
sought comment on the medium-duty GHG standards for different model 
years and other aspects of the MDV standards structure. In addition, we 
sought comment on alternative phase-in schedules for criteria pollutant 
standards. EPA received comments suggesting alternative levels of 
stringency and phase-in schedules for the light- and medium-duty 
standards, for GHG and criteria pollutants. EPA discusses how we 
assessed comment on these issues and arrived at the final standards and 
phase-in schedules in sections III.C, III.D, and V of this preamble. 
EPA further considered comments on alternatives to the level and phase-
in scheduled for the standards, which we discuss in RTC section 3.3 
(GHG) and section 4.1(criteria pollutants). In the following 
discussion, we principally discuss the alternatives we considered for 
the light-duty GHG standards.
    For the light-duty GHG standards, EPA sought comment on three 
alternatives. The proposal's alternatives included a more stringent 
alternative (Alternative 1), a less stringent alternative (Alternative 
2), and an alternative (Alternative 3) that ended at the same level as 
the proposed standards in 2032, but provided a more linear ramp rate in 
the standards with the least stringent standards across all 
alternatives for MYs 2027-2029. As discussed in section III.C.2 of this 
preamble, based on our updated analysis and in consideration of the 
public comments, EPA is basing its final standards on the proposal's 
Alternative 3, and we are also extending the phase-down of certain 
credit flexibilities to address lead time concerns.
    In considering the appropriate light-duty GHG standards for this 
final rule, EPA has also considered two alternatives, one more 
stringent (Alternative A) and one less stringent (Alternative B).\678\ 
Alternative A is based on the proposed standards, and compared to the 
final standards, includes a higher rate of stringency increase in the 
earlier years (MYs 2027-2029), a more accelerated phase-out of off-
cycle credits, and the complete elimination of A/C leakage credits in 
MY 2027 instead of a gradual ramp-down to a lower value. Alternative A 
and the final standards both reach the

[[Page 27960]]

same level of footprint CO2 targets in MY 2032. Alternative 
B's trajectory is the same as the final standards through 2030, but it 
ends at a less stringent level than the final standards in MY 2032. 
These light-duty vehicle alternatives were selected to identify a range 
of stringencies we believe are appropriate to consider because they 
represent a range of standards that are anticipated to be feasible 
considering the public record and our updated analysis and protective 
of human health and the environment.
---------------------------------------------------------------------------

    \678\ EPA used the Alternative B nomenclature for this final 
rule analysis to distinguish it from the NPRM's less stringent 
alternative (Alternative 2). Alternative B differs from the NPRM 
Alternative 2: while Alternative B's MY 2032 stringency is similar 
to that of Alternative 2, Alternative B has a more gradual 
trajectory and less stringent standards for 2027-2030 (which matches 
that of the final standards) compared to the NPRM Alternative 2.
---------------------------------------------------------------------------

    The final standards will result in an industry-wide average 
emissions target of 85 g/mile of CO2 in MY 2032, 
representing a nearly 50 percent reduction in average emissions levels 
from the existing MY 2026 standards \679\ established in 2021. 
Alternative A (based on the proposed standards) is also projected to 
result in an industry-wide average target for the light-duty fleet of 
85 g/mile of CO2 in MY 2032. Alternative B is projected to 
result in an industry-wide average target of 95 g/mile of 
CO2 in MY 2032, or 10 g/mile higher (less stringent) than 
the final standards, representing a 43 percent reduction in projected 
fleet average GHG emissions target levels from the existing MY 2026 
standards. Table 58, Table 59, and Table 60 compare the projected 
targets for the final standards and the alternatives for cars, trucks, 
and the combined fleet, respectively.
---------------------------------------------------------------------------

    \679\ The projected 2026 target has increased to 168 g/mile due 
to a projected increase in truck share of the fleet.

             Table 58--Comparison of Projected Car Targets for the Final Standards and Alternatives
----------------------------------------------------------------------------------------------------------------
                                                                       Final
                                                                   standards CO2   Alternative A   Alternative B
                           Model year                                (g/mile)      CO2  (g/mile)   CO2  (g/mile)
 
----------------------------------------------------------------------------------------------------------------
2026............................................................             131             131             131
2027............................................................             139             134             139
2028............................................................             125             116             125
2029............................................................             112              98             112
2030............................................................              99              90              99
2031............................................................              86              82              91
2032 and later..................................................              73              73              82
----------------------------------------------------------------------------------------------------------------


            Table 59--Comparison of Projected Truck Targets for the Final Standards and Alternatives
----------------------------------------------------------------------------------------------------------------
                                                                       Final
                                                                   standards CO2   Alternative A   Alternative B
                           Model year                                (g/mile)      CO2  (g/mile)   CO2  (g/mile)
 
----------------------------------------------------------------------------------------------------------------
2026............................................................             184             184             184
2027............................................................             184             164             184
2028............................................................             165             143             165
2029............................................................             146             121             146
2030............................................................             128             112             128
2031............................................................             109             102             114
2032 and later..................................................              90              90             100
----------------------------------------------------------------------------------------------------------------


        Table 60--Comparison of Projected Combined Fleet Targets for the Final Standards and Alternatives
----------------------------------------------------------------------------------------------------------------
                                                                       Final
                                                                   standards CO2   Alternative A   Alternative B
                           Model year                                (g/mile)      CO2  (g/mile)   CO2  (g/mile)
 
----------------------------------------------------------------------------------------------------------------
2026............................................................             168             168             168
2027............................................................             170             155             170
2028............................................................             153             135             153
2029............................................................             136             114             136
2030............................................................             119             105             119
2031............................................................             102              96             107
2032 and later..................................................              85              85              95
----------------------------------------------------------------------------------------------------------------

    Figure 19 compares the projected targets for the final standards 
and Alternatives A and B with the MY 2026 standard (labeled as the No 
Action case).

[[Page 27961]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.018

Figure 19: Comparison of Light-Duty Vehicle Projected Fleetwide CO2 
Targets for Alternatives, the Final Standards and the No Action Case. 
(Note: For 2027-2030, Targets for the Final Standards and Alternative B 
Are Identical)

    For Alternative B, consistent with the final standards, EPA applied 
different flexibility provisions than under the proposed standards 
(Alternative A) based on public comments of concerns about lead time 
for model years 2027-2029. Specially, we revised the proposal's phase-
out of two flexibilities: air conditioning (A/C) HFC leakage credits 
and off-cycle credits. From MY 2026 allowable levels, maximum A/C 
leakage credits will phase down starting in MY 2027 to a value of 1.6 
g/mile for cars and 2.0 g/mile trucks for MY 2031 and later. The cap 
for off-cycle menu credits will phase down over three model years from 
the 10 g/mile maximum (for ICE vehicles only) in 2030 to 0 g/mile in 
2033. Alternative A maintains the phase-out of HFC leakage credits and 
off-cycle credits as originally proposed in the NPRM.
    Below, we compare the targets again, but in this case we have 
adjusted (upward) the targets to account for credit flexibilities 
available to manufacturers. These adjusted targets are meant to provide 
a common basis for comparing program stringencies between alternatives 
that have differing levels of credit flexibilities. It should be noted 
that in EPA's technical assessment, we assume that manufactures will 
take advantage of credit flexibilities that are cost-effective, and the 
availability of flexibilities can influence projected compliance costs 
and technology penetrations even when the footprint target 
CO2 curves are the same. As a result, these adjusted targets 
are more indicative of the industry's overall 2-cycle tailpipe 
CO2 targets based on achieving the fleet average levels of 
off-cycle credits and A/C leakage and efficiency credits (in g/mi) 
projected in our compliance modeling. Any difference in adjusted 
targets between years, or between alternatives within a year, is 
indicative of how much additional emissions reducing technology is 
needed to meet the targets, independent of credit flexibilities. Table 
61, Table 62 and Table 63 show the adjusted targets for cars, trucks 
and the combined fleet for the final standards, the alternatives and 
the No Action case:

            Table 61--Projected Car Targets for the Final Standards, Alternatives and No Action Case
                                                   [Adjusted]
----------------------------------------------------------------------------------------------------------------
                                                       Final
                                                   standards CO2   Alternative A   Alternative B  No action case
                   Model year                        (g/mile)      CO2  (g/mile)   CO2  (g/mile)   CO2  (g/mile)
 
----------------------------------------------------------------------------------------------------------------
2026............................................             161             161             161             161
2027............................................             158             144             160             158
2028............................................             142             125             144             158
2029............................................             125             105             127             158
2030............................................             108              95             111             158
2031............................................              93              85             101             159

[[Page 27962]]

 
2032 and later..................................              78              76              92             159
----------------------------------------------------------------------------------------------------------------


           Table 62--Projected Truck Targets for the Final Standards, Alternatives and No Action Case
                                                   [Adjusted]
----------------------------------------------------------------------------------------------------------------
                                                       Final
                                                   standards CO2   Alternative A   Alternative B  No Action case
                   Model year                        (g/mile)      CO2  (g/mile)   CO2  (g/mile)   CO2  (g/mile)
 
----------------------------------------------------------------------------------------------------------------
2026............................................             220             220             220             220
2027............................................             209             176             210             216
2028............................................             186             154             188             216
2029............................................             163             131             165             217
2030............................................             141             119             144             218
2031............................................             118             107             128             219
2032 and later..................................              98              96             114             220
----------------------------------------------------------------------------------------------------------------


          Table 63--Projected Combined Targes for the Final Standards, Alternatives and No Action Case
----------------------------------------------------------------------------------------------------------------
                                                       Final
                                                   standards CO2   Alternative A   Alternative B  No action case
                   Model year                        (g/mile)      CO2  (g/mile)   CO2  (g/mile)   CO2  (g/mile)
 
----------------------------------------------------------------------------------------------------------------
2026............................................             201             201             201             201
2027............................................             193             166             195             198
2028............................................             172             145             174             198
2029............................................             151             123             154             199
2030............................................             131             112             134             200
2031............................................             111             101             120             201
2032 and later..................................              92              90             107             202
----------------------------------------------------------------------------------------------------------------

    Figure 20 compares the adjusted targets for the final standards and 
Alternatives A and B with the MY 2026 standard (labeled as the No 
Action case), consistent with the values reflected in Table 63 in which 
we have shifted the fleet average footprint targets upward to account 
for the expected application of compliance flexibilities (off-cycle, A/
C efficiency and A/C leakage credits). Compared to Alternative A (the 
proposed standards), the adjusted CO2 target of the final 
standards decreases more gradually through 2029 before it arrives at 
the same level of stringency in MY 2032. Further analysis of the 
alternatives is provided in section IV.G of the preamble and in 
Chapters 9 and 12 of the RIA. In section V of the preamble, we 
summarize our rationale for why EPA is adopting the final standards in 
lieu of any of the alternatives.

[[Page 27963]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.019

Figure 20: Comparison of Industry Average Adjusted CO2 Targets for 
Alternatives, the Final Standards and the No Action Case. Adjusted 
Targets Include Effects of Expected Off-Cycle, A/C Efficiency and A/C 
Leakage Credits

    EPA considered criteria pollutant standards alternatives within the 
context of the GHG alternatives outlined above. For each potential set 
of GHG standards and associated projected technology application, the 
agency considered if a vehicle manufacturer could comply with both the 
GHG standards and the final criteria pollutant standards, given a 
projected mix of technologies. First, as noted in section II.D.2 of the 
preamble, the agency is finalizing a numerically higher (less 
stringent) final NMOG+NOX fleet average. This higher fleet 
average recognizes both the final GHG standards and our estimates of 
potential pathways for projected in PHEV technology penetration. In 
addition, EPA recognizes that vehicle manufacturers have a wide range 
of emission control technologies available to them which could be 
adopted, including technologies specific to hybrid and plug-in hybrid 
vehicles, which would result in substantially lower criteria pollutant 
emissions. These technologies are outlined in RIA Chapter 3.2.5. As a 
result of the change to the final NMOG+NOX fleet average, 
multiple technology pathways for compliance and the recognition that 
substantial emission control technologies are available to the 
manufacturers, across a variety of powertrain architectures, the agency 
has concluded that each of the GHG alternatives discussed in this 
section are also feasible for manufacturers to comply with the final 
criteria pollutant program standards.

G. Certification, Compliance, and Enforcement Provisions

1. Electric Vehicle Test Procedures
    Several changes to electric vehicle test procedures are implemented 
with this rule. This section reviews the general testing requirements 
that continue to apply to BEVs and PHEVs, and then describes specific 
changes to these requirements.
    To comply with EPA labeling requirements, manufacturers and EPA 
perform testing of light-duty BEVs to determine miles per gallon 
equivalent (MPGe) and electric driving range. PHEVs are also tested to 
determine charge-depleting range. The results of these tests are used 
to generate range and fuel economy values published on the fuel economy 
label.
    BEV testing consists of performing a full charge-depleting test 
using the multi-cycle test (MCT) outlined in the 2017 version of SAE 
standard J1634, Battery Electric Vehicle Energy Consumption and Range 
Test Procedure. The multi-cycle test consists of 8 cycles: Four urban 
dynamometer driving schedule (UDDS) cycles, two highway fuel economy 
test (HFET) cycles, and two constant speed cycles (CSCs).\680\ The test 
is used to determine the vehicle's usable battery energy (UBE) in DC 
Watt-hours, cycle energy consumption in Watt-hours per mile (Wh/mi), 
and A/C recharge energy in A/C watt-hours. These results are used to 
determine the BEV's unadjusted range and MPGe.
---------------------------------------------------------------------------

    \680\ The MCT consists of 8 cycles and the test results are used 
to determine city and highway test results. The highway result is 
determined by averaging the 2 HFET cycles from the MCT; the city 
result is determined by averaging the 4 UDDS cycles from the MCT. 
When discussing fuel economy labeling, the city and highway test 
results are generally referred to as 2-cycle test results.
---------------------------------------------------------------------------

    The MCT generates unadjusted city (UDDS) and highway (HFET) two-
cycle test results. These results are adjusted to 5-cycle values which 
are then published on the fuel economy label. EPA regulations allow 
manufacturers to multiply their two-cycle test results using a defined 
0.7 adjustment factor or determine a BEV 5-cycle adjustment factor by 
running all of the EPA 5-cycle tests (FTP, HFET, US06, SC03, and 20 
[deg]F FTP). This adjustment is performed to account for the 
differences between vehicle operation observed on the two-cycle tests 
and vehicle operation

[[Page 27964]]

occurring at higher speeds and loads along with hot and cold ambient 
temperatures not seen on the UDDS or HFET cycles.
    PHEVs include both an internal combustion engine and an electric 
motor and can be powered by the battery or engine or a combination of 
both power devices. Charge depleting operation is when the electric 
motor is primarily propelling the vehicle with energy from the battery. 
Charge sustaining operation is when the internal combustion engine is 
contributing energy to power the vehicle and maintain a specific state 
of charge. PHEVs are tested in both charge depleting and charge 
sustaining operation to determine the electrical range capability of 
the vehicle and the charge sustaining fuel economy.
    PHEV charge depletion testing consists of performing a single cycle 
charge depleting UDDS test and a single cycle charge depleting HFET 
test. These tests are specified in the 2010 version of SAE Standard 
J1711, Recommended Practice for Measuring the Exhaust Emissions and 
Fuel Economy of Hybrid-Electric Vehicles, Including Plug-In Hybrid 
Vehicles. The result of these tests is the actual charge depleting 
distance the vehicle can drive. The actual charge depleting distance is 
multiplied by a 0.7 adjustment factor to determine the 5-cycle charge 
depleting range. The UDDS and HFET distances are averaged to determine 
an estimated all-electric range for the vehicle. Unlike SAE Standard 
J1634 which is applied to BEVs, SAE Standard J1711 does not specify a 
methodology for determining UBE when performing charge depleting tests 
on PHEVs.
    As proposed, EPA is making several changes to the testing 
requirements to support new battery durability and warranty 
requirements for light-duty and medium-duty BEVs and PHEVs (see section 
III.G.2 of the preamble).
    Compliance with battery durability requirements will require 
additional testing of BEVs and PHEVs by manufacturers to be performed 
during the vehicle's useful life and will require additional reporting 
to demonstrate that the vehicles are meeting the durability standard.
    Manufacturers of BEVs and PHEVs will be required to develop and 
implement an on-board battery state-of-health monitor and demonstrate 
its accuracy through in-use vehicle testing. For this testing, the 
tests will be based on the currently used charge depletion tests 
performed for range and fuel economy labeling of light-duty BEVs and 
PHEVs, with the addition of the recording of the vehicle monitor value 
and comparison of the results from the charge depleting test to the 
monitor value reported by the vehicle. Specifically, light-duty and 
Class 2b and 3 BEVs will be tested according to the MCT to determine 
the vehicle's UBE and range. PHEVs will be tested according to the 
single cycle UDDS and HFET test to determine the vehicle's charge 
depleting UBE and range. Class 2b and 3 BEVs and PHEVs will be tested 
at adjusted loaded vehicle weight (ALVW),\681\ consistent with the 
testing required for measuring criteria and GHG emissions. These 
testing requirements are described in more detail in section III.G.2 of 
the preamble.
---------------------------------------------------------------------------

    \681\ ALVW is the numerical average of vehicle curb weight and 
gross vehicle weight rating.
---------------------------------------------------------------------------

    Manufacturers also will be required to demonstrate that the 
vehicles are meeting the durability requirements at certain points 
during their useful life. For this purpose, manufacturers will collect 
and report onboard state-of-health monitor values from a large sample 
of in-use vehicles, as described further in section III.G.2 of this 
preamble. This will not involve additional dynamometer testing but only 
acquisition of monitor data from in-use vehicles.
    Due to the lack of a UBE calculation in SAE J1711, to determine UBE 
for PHEVs, an additional calculation is performed after completion of 
the PHEV charge depleting test. Under PHEV charge depletion testing, 
net ampere-hours are measured to determine when the vehicle is no 
longer depleting the battery, indicating that the vehicle has switched 
to a mode in which it is maintaining rather than depleting the battery 
charge. This event marks the conclusion of the charge depletion test 
but does not result in determination of UBE. To determine UBE for a 
PHEV, manufacturers will measure the DC discharge energy of the PHEV's 
rechargeable energy storage system (RESS, i.e., the high-voltage 
battery) by measuring the change in state-of-charge in ampere-hours 
over each cycle and the average voltage of each cycle as required by 
SAE J1711. The measured DC discharge energy in watt-hours for each 
cycle will be determined by using the methodology to determine the Net 
Energy Change of the propulsion battery. The DC discharge energy is 
added for all the charge depleting cycles including the transition 
cycles used to determine the charge depleting cycle range, 
Rcdc as defined in SAE J1711.
    In the proposal, EPA sought comment regarding this methodology for 
determining UBE for PHEVs. EPA received comments from the Alliance for 
Automotive Innovation regarding the use of the 2010 version of J1711 
for determining the net energy change during PHEV charge depletion 
testing. The Alliance recommended EPA update the referenced SAE 
Standard from the 2010 version to the 2023 version of J1711. After 
reviewing the revisions to J1711, EPA concurs with the Alliance and 
agrees that the J1711 reference should be updated from the 2010 to the 
2023 version. The 2023 version of J1711 has updated the measurements 
and calculation methodology to determine the Net Energy Change (NEC) 
for the propulsion battery. These changes address the concerns raised 
by commentors regarding using only the average voltage measured at the 
beginning and end of each charge depleting cycle. The updated J1711 
standard includes specifications for measuring the DC discharge energy 
of the propulsion battery or logging the propulsion battery voltage 
over a vehicle communication network.
    EPA also sought comment regarding use of the method described for 
light-duty vehicles with SAE J1711 for determining UBE for Class 2b and 
3 PHEVs. EPA did not receive any comments regarding using SAE J1711 for 
determining UBE for Class 2b and 3 PHEVs. As EPA has concluded the 
updated 2023 version of SAE J1711 is appropriate for use for LDVs and 
LDTs, EPA is also adopting this standard for testing PHEVs to determine 
the UBE for Class 2b and 3 PHEVs.
    EPA also sought comment on whether to perform the tests on Class 2b 
and 3 PHEVs at ALVW as proposed, or at loaded vehicle weight (LVW), 
which is curb weight plus 300 pounds. EPA also did not receive any 
comments regarding testing Class 2b and 3 PHEVs at ALVW and as such is 
finalizing the agency's proposal to test Class 2b and 3 PHEVs at ALVW 
when performing charge depletion tests to determine battery UBE and 
calculate SOCE.
    EPA also sought comment regarding the proposed use of the 2017 
version of SAE J1634 for determining UBE for class 2b and 3 BEVs. EPA 
received comments from Mercedes-Benz AG, Rivian, and the Alliance 
regarding the use of the 2017 version of SAE J1634. Mercedes-Benz AG 
and the Alliance suggested EPA update to the 2021 version of SAE J1634 
from the 2017 version. Rivian submitted comments noting they generally 
support EPA's proposed approach to EV test procedures, including the 
proposed use of the 2017 version of SAE J1634 for determining UBE for 
Class 2b and 3 BEVs. Mercedes-Benz and the Alliance are concerned with 
the time required to perform MCT

[[Page 27965]]

tests. Both the Alliance and Mercedes-Benz suggested allowing the use 
of the 2021 version of SAE J1634 and the shortened MCT (SMCT) and 
shortened MCT plus (SMCT+) to reduce the time required to determine UBE 
for BEVs.
    In January 2023, EPA updated the BEV 5-cycle test procedures and 
updated the SAE J1634 reference from the 2012 version to the 2017 
version of SAE J1634.\682\ At the time the NPRM was published, the 2021 
version of J1634 had been completed and published. The Alliance 
provided comments requesting that EPA update SAE J1634 to the 2021 
version. The Alliance reiterated their previous comments regarding 
their preference for EPA to adopt the 2021 version of J1634 which 
introduces two new test procedures (SMCT and SMCT+) and includes pre-
heating of the battery and cabin for SC03 and -7 [deg]C FTP testing. 
EPA is still not prepared to adopt the 2021 version of SAE J1634 and 
will continue to use the 2017 version of SAE J1634. EPA has not 
determined whether the SMCT and SMCT+ produce results equivalent to 
those generated using the MCT which is used to determine UBE. The SC03 
test and the -7 [deg]C FTP, consisting of 2 UDDS cycles performed with 
a 10 minute soak between cycles, are used for BEV 5-cycle testing and 
are not used to determine UBE, nor is UBE measured during these test 
procedures. Testing to demonstrate compliance with battery durability 
only requires MCT testing and does not require SC03 or -7 [deg]C FTP 
testing, therefore requests to revise the SC03 test and the -7 [deg]C 
FTP are outside of the scope of what is being adopted for this 
rulemaking.
---------------------------------------------------------------------------

    \682\ 88 FR 4455.
---------------------------------------------------------------------------

    EPA also sought comment on whether to perform charge depleting 
tests on Class 2b and 3 BEVs at ALVW as proposed, or at loaded vehicle 
weight (LVW), which is curb weight plus 300 pounds. Rivian provided 
comments supportive of testing Class 2b and 3 BEVs at ALVW using the 
2017 version of J1634. EPA is finalizing our proposal to test Class 2b 
& 3 BEVs on the MCT at ALVW using the 2017 version of J1634 to 
determine UBE.
2. Battery Durability and Warranty
    This section describes the battery durability monitoring and 
performance requirements and the warranty requirements we are 
finalizing for BEVs and PHEVs. As we explained in the proposal, BEVs 
and PHEVs are playing an increasing role in vehicle manufacturers' 
compliance strategies to control emissions from LD and MD vehicles. The 
battery durability and warranty requirements support BEV and PHEV 
battery durability and thus support achieving the GHG and 
NMOG+NOX emissions reductions projected for the final 
standards. Further, these requirements support the integrity of the GHG 
and NMOG+NOX emissions credit calculations under the ABT 
program as these calculations are based on mileage over a vehicle's 
full useful life.\683\
---------------------------------------------------------------------------

    \683\ These two rationales are separate and independent 
justifications for the requirements.
---------------------------------------------------------------------------

    At the outset we note that some commenters, including the Alliance 
for Automotive Innovation (``the Alliance'') questioned EPA's authority 
to adopt durability and warranty requirements for batteries in 
BEVs.\684\ The Alliance, however, also agreed that battery degradation 
monitors and performance requirements are important tools for battery 
operation and state of health, and provided recommendations for 
modifying the program. Before describing the final rule provisions 
relating to durability and warranty, we first address the threshold 
issue of legal authority.
---------------------------------------------------------------------------

    \684\ The Alliance does not challenge the agency's authority to 
adopt durability and warranty requirements for PHEVs.
---------------------------------------------------------------------------

    The regulation of battery durability is clearly within the Agency's 
authority. EPA's authority to set and enforce durability requirements 
for emission-related components like batteries is an integral part of 
its Title II authority. Durability requirements ensure that vehicle 
manufacturers and the vehicles they produce will continue to comply 
with emissions standards set under 202(a) over the course of those 
vehicles' useful lives. Such authority arises both out of section 
202(a)(1) and 202(d) (relating to a vehicle's useful life) and section 
206(a)(1) and 206(b)(1) (relating to certification requirements for 
compliance). As is described in detail in the following section, EPA 
has exercised its authority to set emission durability requirements 
across a variety of emission-related components for decades.
    Similarly, EPA also has clear statutory authority to set warranty 
standards for BEVs and PHEVs. Section 207(a) and (i) provide clear 
statutory authority for the warranty requirements. In fact, EPA has 
already set emission warranty requirements under section 207(a) in 2010 
for all components that are used to obtain GHG credits that allow the 
manufacturer to comply with GHG standards, which includes BEV, PHEV, 
and hybrid batteries.\685\ EPA was not challenged on those 
requirements. To the extent the Alliance's comment challenges EPA's 
ability to set warranty requirements generally for any component that 
is used to obtain GHG credits that allow the manufacturer to comply 
with GHG standards, it is not timely or cognizant of this already 
established practice.
---------------------------------------------------------------------------

    \685\ See 75 FR 25486.
---------------------------------------------------------------------------

    In general, BEV batteries, just like batteries in PHEVs and other 
hybrid vehicles, are emission-related components for two reasons, thus 
providing EPA authority to set durability and warranty requirements 
applicable to them. First, they are emission-related by their nature. 
Durability and warranty requirements for batteries are not, to use the 
Alliance's analogy, like requiring a warranty for a vehicle component 
like a vehicle's ``infotainment system'' that has no relevance to a 
vehicle's emissions. Integrity of a battery in a vehicle with these 
powertrains is vital to the vehicle's emission performance; integrity 
of its ``infotainment system'' is not. It is wrong to say that the very 
component that allows a vehicle to operate entirely without emissions 
is not emission-related.
    Second, for warranty and durability purposes, EPA has historically 
implemented requirements based on an understanding that ``emission-
related'' refers to a manufacturer's ability to comply with emissions 
standards, regardless of the form of those standards. For standards to 
be meaningfully applicable across a vehicle's useful life, EPA's 
assessment of compliance with such standards necessarily includes an 
evaluation of the performance of the emissions control systems, which 
for BEVs (and PHEVs) includes the battery system both when the vehicle 
is new and across its useful life. This is particularly true given the 
averaging form of standards that EPA uses for GHG and 
NMOG+NOX emissions (and which the Alliance continues to 
support), and which most manufacturers choose for demonstrating 
compliance. Given the fleet average nature of the standards, the Agency 
needs to have confidence that the emissions reductions--and thus 
credits generated --by each BEV and PHEV introduced into the fleet are 
reflective of the real world. Ensuring that BEVs and PHEVs contain 
durable batteries is important to assuring the integrity of the 
averaging process: vehicles will perform in fact for the useful life 
mileage reflected in any credits they may generate. Put another way, 
durable batteries are a significant factor in vindicating the averaging 
form of the standard: that the standard is met per vehicle, and on 
average per fleet throughout the vehicles' useful life. The

[[Page 27966]]

battery durability and warranty provisions finalized in this rulemaking 
allow for greater confidence that the batteries installed by vehicle 
manufacturers are durable and thus support the standards.
    In addition to EPA's general authority to promulgate durability 
requirements under sections 202 and 206, EPA has additional separate 
and specific authority to require on-board monitoring systems capable 
of ``accurately identifying for the vehicle's useful life as 
established under [section 202], emission-related systems deterioration 
or malfunction.'' Section 202(m)(1)(A).\686\ As we discuss at length in 
this section, EV batteries are ``emission-related systems,'' and thus 
EPA has the authority to set durability monitoring requirements for 
such systems over the course of a vehicle's useful life.
---------------------------------------------------------------------------

    \686\ Section 202(m)(1)(A) specifically applies to light-duty 
vehicles and light-duty trucks, but section 202(m)(1) allows EPA to 
``promulgate regulations requiring manufacturers to install such 
onboard diagnostic systems on heavy-duty vehicles and engines,'' 
which provides concurrent authority for the MDV battery monitoring 
requirements discussed in this section.
---------------------------------------------------------------------------

    The Alliance suggests that EPA does not have authority to set 
durability or warranty requirements because BEV batteries are not 
emission-related for two reasons. First, the Alliance argues that 
because BEVs do not themselves emit, EPA does not have authority to set 
vehicle specific standards for them, and EPA's warranty and durability 
authorities rely on EPA's ability to set vehicle specific standards. 
But EPA does have the authority to set standards for BEVs as they are 
part of the ``class'' of regulated vehicles. See section III.B.1 of the 
preamble and RTC section 2 for EPA's full analysis of the relevant 
statutory provisions. In addition, EPA has traditionally set vehicle-
specific standards for BEVs. For instance, LD BEVs, like other LD 
vehicles, are subject to vehicle-specific, in-use GHG standards. And LD 
BEVs, like other LD vehicles, also certify to a vehicles-specific bin 
for NMOG+NOX compliance, with the BEVs certifying to a Bin 
0. MD BEVs are also subject to vehicle-specific standards and MDVs have 
a similar compliance situation as that applied to LDVs. MDV compliance 
historically also includes a Bin 0 to accommodate zero emission 
vehicles. We note that these vehicle-specific standards have applied 
for many years. For example, EPA established the framework for setting 
vehicle-specific in-use GHG standards for LD vehicles in the original 
LD GHG rule in 2010, and we established a separate bin for zero-
emitting vehicles in the 2000 Tier 2 criteria pollutant rule.
    The Alliance argues second that a component only counts as 
emission-related if its failure would allow the vehicle to continue 
operating, but with higher emissions. But nothing in the statute 
imposes such a limitation. Moreover, while it is true that the failure 
of a battery would cause the vehicle to stop operating, the same is 
true for some other vehicle components that have also historically been 
subject to durability requirements. For instance, EPA has set 
durability requirements for diesel engines (see 40 CFR 86.1823-08(c)), 
failure of which could cause the vehicle to stop operating. Similarly, 
Congress explicitly provided that electronic control modules (ECMs) 
(described in the statute as ``electronic emissions control units'') 
are ``specified major emissions control component[s]'' for warranty 
purposes per section 207(i)(2); failure of ECMs can also cause the 
vehicle to stop operating, and not necessarily increase the emissions 
of the vehicle.
    The Alliance is also mistaken in suggesting that there is no way 
for EPA to require an emission-less vehicle \687\ to warrant at time of 
sale that it is ``designed, built, and equipped so as to conform, at 
time of sale with applicable regulations under [section 202(a)(1) . . . 
.)] and . . . for its useful life, as determined under [section 
202(d)].'') Section 207(a)(1). In fact, automakers warrant at the time 
of sale that each new vehicle is designed to comply with all applicable 
emission standards and will be free from defects that may cause 
noncompliance. They do so with respect to all emission-related 
components in the manufacturer's application for certification, which 
include batteries. The final rule's provisions comport entirely with 
section 207 of the Act.\688\
---------------------------------------------------------------------------

    \687\ We note that BEVs can in fact produce vehicle emissions, 
such as through air conditioning leakages.
    \688\ The Alliance's comment argues in passing that EPA does not 
have the authority to designate a BEV battery as a ``specified major 
emission control component'' with an 8 year or 80,000 mile warranty 
because it is not a ``pollution control device or component.'' That 
term is not defined in the Act; for the reasons described in this 
section, EPA believes that BEV batteries are ``pollution control 
device or component[s]'' for the same reasons they are ``emission 
related components.''
---------------------------------------------------------------------------

    We intend for the battery durability and warranty requirements 
finalized in this rule to be entirely separate and severable from the 
revised emissions standards and other varied components of this rule, 
and also severable from each other. EPA has considered and adopted 
battery durability requirements, battery warranty requirements, and the 
remaining portions of the final rule independently, and each is 
severable should there be judicial review. If a court were to 
invalidate any one of these elements of the final rule, as discussed 
further below, we intend the remainder of this action to remain 
effective, as we have designed the program to function even if one part 
of the rule is set aside. For example, if a reviewing court were to 
invalidate the battery durability requirements, we intend the other 
components of the rule, including the GHG and NMOG+NOX 
standards, to remain effective.
    As we explain above, for manufacturers who choose to produce PEVs, 
durable batteries are important to ensuring that the manufacturer's 
overall compliance with fleet emissions standards would continue 
throughout the useful life of the vehicle. The battery durability and 
warranty provisions EPA is finalizing help assure this outcome. At the 
same time, we expect that, even if not strictly required, the majority 
of vehicle manufacturers would still produce vehicles containing 
durable batteries given their effect on vehicle performance and the 
competitive nature of the industry. Available data indicates that 
manufacturers are already providing warranty coverage similar to what 
is required by the final durability and warranty 
requirements.689 690 691 692 693 Given the competitive 
nature of the PEV market, we anticipate that manufacturers will 
continue to do so, regardless of EPA's final rule.
---------------------------------------------------------------------------

    \689\ United Nations Economic Commission for Europe Informal 
Working Group on Electric Vehicles and the Environment (UN ECE EVE), 
``Battery Durability: Review of EVE 34 discussion,'' May 19, 2020, 
p. 12. Available at https://wiki.unece.org/download/attachments/101555222/EVE-35-03e.pdf?api=v2.
    \690\ UK Department of Transport, ``Commercial electric vehicle 
battery warranty analysis,'' April 25, 2023. Available at https://wiki.unece.org/download/attachments/192840855/EVE-61-08e%20-%20UK%20warranty%20analysis.pdf?api=v2.
    \691\ CarEdge.com, ``The Best Electric Vehicle Battery 
Warranties in 2024,'' January 9, 2024. Accessed on February 16, 2024 
at https://caredge.com/guides/ev-battery-warranties.
    \692\ California Air Resources Board, ``Cars and Light-Trucks 
are Going Zero--Frequently Asked Questions.'' Accessed on February 
16, 2024 at https://ww2.arb.ca.gov/resources/documents/cars-and-light-trucks-are-going-zero-frequently-asked-questions.
    \693\ Forbes, ``By The Numbers: Comparing Electric Car 
Warranties,'' October 31, 2022. Accessed on February 16, 2024 at 
https://www.forbes.com/sites/jimgorzelany/2022/10/31/by-the-numbers-comparing-electric-car-warranties/?sh=2ed7a5243fd7.
---------------------------------------------------------------------------

    Moreover generally, the battery durability and warranty 
requirements resemble many other compliance provisions that facilitate 
manufacturers'

[[Page 27967]]

ability to comply with the standards, as well as EPA's ability to 
assure and enforce that compliance. Were a reviewing court to 
invalidate any compliance provision, that would preclude the agency 
from applying that particular provision to assure compliance, but it 
would not mean that the entire regulatory framework should fall with 
it. Specifically, were a reviewing court to invalidate the final 
durability and warranty requirements, EPA would continue to have 
numerous tools at its disposal to assure and enforce compliance of the 
final standards, including the entire panoply of certification 
requirements, in-use testing requirements, administrative and judicial 
enforcement, and so forth, so as to achieve significant emissions 
reductions. Therefore, EPA is adopting and is capable of implementing 
final standards entirely separate from the battery durability and 
warranty requirements. The contrapositive is also true: EPA is adopting 
and capable of implementing the battery durability and warranty 
requirements entirely separate from the standards. For example, even 
without the final standards, we believe the enhanced battery durability 
and warranty requirements would serve to facilitate compliance with the 
existing GHG standards established by the 2021 rule. We further discuss 
the severability of various provisions in this rule in section IX.M of 
the preamble.
i. Battery Durability
    Substantially as proposed, this rulemaking implements battery 
durability monitoring and performance requirements for light-duty BEVs 
and PHEVs, and battery durability monitoring requirements for Class 2b 
and 3 BEVs and PHEVs, beginning with MY 2027.
    As described in the proposal and in the introductory section above, 
EPA is introducing battery durability requirements for several reasons 
and in accordance with its authority under the Clean Air Act. As 
required under CAA section 202(a)(1) (``Such standards shall be 
applicable to such vehicles and engines for their useful life''), EPA 
emissions standards are applicable for the full useful life of the 
vehicle. Accordingly, EPA has historically required manufacturers to 
demonstrate the durability of engines and emission control systems on 
vehicles with ICE engines and has also specified minimum warranty 
requirements for ICE emission control components. Without durability 
demonstration requirements, EPA would not be able to assess whether 
manufacturers producing vehicles originally in compliance with relevant 
emissions standards would remain in compliance over the course of the 
useful life of those vehicles.
    For decades, EPA has required vehicle manufacturers to demonstrate 
that their vehicles will continue to comply with any relevant emissions 
standards over the course of their useful life.\694\ In the 2010 rule, 
EPA applied the same framework to CO2 emissions as 
previously applied for criteria emissions.\695\ Consistent with our 
historical practice, the 2010 rule also recognized that the performance 
of different emissions-related technologies deteriorates in different 
ways, and that different technologies warranted differing durability 
requirements. Given the most common technologies in use at the time, 
the Agency anticipated that most vehicle models would not have 
increasing difficulty in complying with CO2 emissions 
standards over time. That is, unlike some criteria emissions-related 
technologies (such as catalytic converters in ICE vehicles) which 
deteriorate in their ability to reduce criteria emissions over time, 
EPA determined that as a technical matter, CO2 emissions 
from these vehicles would be relatively consistent over time, so that 
durability requirements specifically related to CO2 
emissions from these vehicles were not needed. However, EPA did 
anticipate that there would be technologies in the future that would 
deteriorate in their ability to reduce CO2 emissions over 
time and therefore benefit from specific durability requirements.\696\ 
For example, HEVs have both a catalyst that controls criteria 
pollutants and a high-voltage battery that is integral to its 
CO2-related performance, and manufacturers are required to 
account not only for the effect of catalyst degradation on criteria 
emissions compliance but also for the effect of battery deterioration 
on CO2 compliance.
---------------------------------------------------------------------------

    \694\ See, e.g., 71 FR 2810 (Jan. 17, 2006).
    \695\ 75 FR 25324, 25474 (May 7, 2010) (``EPA requires 
manufacturers to demonstrate at the time of certification that the 
new vehicles being certified will continue to meet emission 
standards throughout their useful life.'').
    \696\ Id.
---------------------------------------------------------------------------

    EPA has already identified the high-voltage battery in hybrid 
vehicles as a technology warranting specific durability requirements. 
Specifically, EPA's regulations already require manufacturers of HEVs 
and PHEVs to account for potential battery degradation that could 
result in an increase in CO2 emissions, either due to 
increased fuel consumption or, specifically for PHEVs, the effect of a 
reduced electric driving range on the PHEV utility factor value. 40 CFR 
86.1823-08(m)(1)(iii) lays out these specific durability requirements 
for batteries in PHEVs to ensure that PHEVs continue to meet emissions 
standards over the course of their useful life.\697\ The fact that 
durability requirements already exist for hybrid and PHEV batteries 
highlights that EPA's action setting requirements for BEV batteries 
outlined in this final rule is an incremental addition to the scope of 
EPA's durability requirements writ large.
---------------------------------------------------------------------------

    \697\ While the requirements that currently appear in 40 CFR 
86.1823-08(m)(1)(iii) applied to vehicles like PHEVs since the 2010 
rule, it was amended to explicitly apply to PHEVs in the HD 2027 
Rule. 88 FR 4296, 4459 (January 24, 2023).
---------------------------------------------------------------------------

    Today's final rule continues EPA's longstanding policy of ensuring 
durability for emissions control components and builds upon the 
existing durability requirements for batteries. Recognizing that PEVs, 
including both PHEVs and BEVs, are playing an increasing role in 
automakers' compliance strategies, and that emissions credit 
calculations are based on mileage over a vehicle's full useful life, 
EPA similarly has the authority to set requirements ensuring that 
manufacturers with PEVs in their fleet will continue to comply with 
relevant emissions standards over the course of those PEVs' useful 
lives. Under 40 CFR 86.1865-12(k), credits are calculated by 
determining the grams/mile each vehicle achieves beyond the standard 
and multiplying that by the number of such vehicles and a lifetime 
mileage attributed to each vehicle (e.g., 195,264 miles for passenger 
automobiles and 225,865 miles for light trucks). Having a lifetime 
mileage figure for each vehicle is integral to calculating the credits 
attributable to that vehicle, whether those credits are used for 
calculating compliance with fleet average standards, or for banking or 
trading. Compliance with fleet average standards depends on all 
vehicles in the fleet achieving their certified level of emissions 
performance throughout their useful life. Durability requirements 
applicable to PEVs assure a certain standard of performance over the 
entire useful life of the vehicles and thus support the continuation of 
a manufacturer's overall compliance with fleet emissions standards 
throughout that useful life. Similarly, EPA would have less confidence 
that the emissions reductions projected to be achieved by a given set 
of standards would in fact be realized over the course of the program. 
Generally, credits generated by PEVs will offset debits generated by 
vehicles

[[Page 27968]]

with higher emissions. For the environmental benefits that are credited 
to PEVs to be fully realized under this structure, it is important that 
their potential to achieve a similar mileage during their lifetime be 
comparable to that of other vehicles, and this depends in part on the 
life of the battery. In particular, and especially for BEVs and PHEVs 
with shorter driving ranges, loss of too large a portion of the 
original driving range capability as the vehicle ages could reduce its 
total lifetime mileage, and this lost mileage might be replaced by 
mileage from other vehicles that have higher emissions. PHEVs 
specifically could also experience higher fuel consumption and 
increased tailpipe emissions. While the battery durability requirements 
were not specifically designed with reference to the full lifetime 
mileages assumed in the credit calculations, EPA considers the 
establishment of specific battery durability requirements in line with 
other programs to be a critical step in recognizing and addressing the 
importance of PEV durability to the integrity of the credit program as 
the presence of PEVs continues to increase in the fleet. EPA 
anticipates that modifications to the durability requirements may be 
appropriate as more data becomes available regarding the durability of 
PEV batteries in the field over time.
    For instance, although lithium-ion battery technology has been 
shown to be effective and durable in currently manufactured BEVs and 
PHEVs, it is also well known that the energy capacity of a battery will 
naturally degrade to some degree with time and usage. This degradation 
can result in some reduction in electric driving range as the vehicle 
ages. Excessive battery degradation in a PHEV could lead to higher fuel 
consumption and increased criteria pollutant tailpipe emissions, while 
a degraded battery in a BEV could impact its ability to deliver the 
lifetime mileage expected. This effectively becomes an issue of 
durability if it reduces the utility of the vehicle or its useful life, 
and EPA will closely track developments in this area and propose 
modifications as they become necessary.
    The importance of battery durability in the context of zero- and 
near-zero emission vehicles, such as BEVs and PHEVs, has been cited by 
several authorities in recent years. In their 2021 Phase 3 report,\698\ 
the National Academies of Science (NAS) identified battery durability 
as an important issue with the rise of electrification.\699\ Several 
rulemaking bodies have also recognized the importance of battery 
durability in a world with rapidly increasing numbers of zero-emission 
vehicles. In 2015 the United Nations Economic Commission for Europe (UN 
ECE) began studying the need for a Global Technical Regulation (GTR) 
governing battery durability in light-duty vehicles. In April 2022 it 
published United Nations Global Technical Regulation No. 22, ``In-
Vehicle Battery Durability for Electrified Vehicles,'' \700\ or GTR No. 
22, which provides a regulatory structure for contracting parties to 
set standards for battery durability in light-duty BEVs and PHEVs.\701\ 
The European Commission and other contracting parties have also 
recognized the importance of durability provisions and are working to 
adopt the GTR standards in their local regulatory structures. In 
addition, the California Air Resources Board, as part of the Advanced 
Clean Cars II (ACC II) program, has also included battery durability 
\702\ and warranty \703\ requirements as part of a suite of customer 
assurance provisions designed to ensure that zero-emission vehicles 
maintain similar standards for usability, useful life, and maintenance 
as for ICE vehicles. Additional background on UN GTR No. 22 and the 
California Air Resources Board battery durability and warranty 
requirements may be found in RIA Chapter 1.3.
---------------------------------------------------------------------------

    \698\ National Academies of Sciences, Engineering, and Medicine 
2021. ``Assessment of Technologies for Improving Light-Duty Vehicle 
Fuel Economy 2025-2035''. Washington, DC: The National Academies 
Press. https://doi.org/10.17226/26092.
    \699\ Among the findings outlined in that report, NAS noted 
that: ``battery capacity degradation is considered a barrier for 
market penetration of BEVs,'' (p. 5-114), and that ``[knowledge of] 
real-world battery lifetime could have implications on R&D 
priorities, warranty provision, consumer confidence and acceptance, 
and role of electrification in fuel economy policy.'' (p. 5-115). 
NAS also noted that ``life prediction guides battery sizing, 
warranty, and resale value [and repurposing and recycling]'' (p. 5-
115), and discussed at length the complexities of SOH estimation, 
life-cycle prediction, and testing for battery degradation (p. 5-113 
to 5-115).
    \700\ United Nations Economic Commission for Europe, Addendum 
22: United Nations Global Technical Regulation No. 22, United 
Nations Global Technical Regulation on In-vehicle Battery Durability 
for Electrified Vehicles, April 14, 2022. Available at: https://unece.org/sites/default/files/2022-04/ECE_TRANS_180a22e.pdf.
    \701\ EPA representatives chaired the informal working group 
that developed this GTR and worked closely with global regulatory 
agencies and industry partners to complete its development in a form 
that could be adopted in various regions of the world, including 
potentially the United States.
    \702\ State of California, California Code of Regulations, title 
13, section 1962.4.
    \703\ State of California, California Code of Regulations, title 
13, section 1962.8.
---------------------------------------------------------------------------

    EPA concurs with the emerging consensus that battery durability is 
an important issue. The ability of a zero-emission vehicle to achieve 
the expected emission reductions during its lifetime depends in part on 
the ability of the battery to maintain sufficient driving range, 
capacity, power, and general operability for a period of use comparable 
to that of any other vehicle. Durable and reliable electrified vehicles 
are therefore critical to ensuring that projected emissions reductions 
are achieved by this program.
    GTR No. 22 was developed with extensive input, leadership, and 
participation from EPA and thus it reflects what EPA considers to be an 
appropriate framework and set of requirements for ensuring battery 
durability. EPA therefore considers its integration into the context of 
this rulemaking to be an appropriate pathway to establishing needed 
durability standards. In the absence of GTR No. 22, EPA would find it 
appropriate to adopt a very similar (if not identical) battery 
durability program, but we also recognize the value for U.S. automakers 
in adopting requirements that are consistent with international market 
requirements. Thus, the requirements and general framework of the 
battery durability program under this rule are largely identical to 
those outlined in GTR No. 22 and broadly parallel the GTR in terms of 
the minimum performance requirements, as well as the hardware, 
monitoring and compliance requirements, the associated statistical 
methods and metrics that apply to determination of compliance, and 
criteria for establishing battery durability and monitor families. EPA 
is incorporating the April 14, 2022, version of GTR No. 22 by 
reference, except for some naming conventions and procedural changes 
required to adapt the GTR to EPA-based testing and compliance 
demonstration, and modification of some specific provisions (for 
example, not requiring an SOCR monitor).
    EPA requested comment on all aspects of the proposed battery 
durability program, particularly with respect to: The minimum 
performance requirements, the testing and compliance requirements for 
Part A and Part B, and the possibility of adopting more stringent or 
less stringent battery durability standards. EPA has carefully 
considered the public comments in finalizing the requirements of the 
durability program.
    Several commenters, including several proponents or manufacturers 
of zero-emission vehicles, expressed support for the provisions and 
their intent of promoting battery durability. For example, Tesla stated 
that durability

[[Page 27969]]

monitoring can be useful to ensure emission reduction benefits are met, 
and to provide integrity to credit trading.
    Some commenters, such as the Alliance for Automotive Innovation 
(``the Alliance''), questioned EPA's authority to establish battery 
durability and warranty requirements. The Alliance, however, also 
agreed that battery degradation monitors and performance requirements 
are important tools for battery operation and state of health, and 
provided recommendations for modifying the program. Comments relating 
to authority are addressed in the introductory section above.
    Positions varied regarding how the proposed durability and warranty 
program based on GTR No. 22 should exist alongside the California Air 
Resources Board (CARB) ACC II durability and warranty program (referred 
to here as the ``CARB program''). Some commenters stressed the 
differences between the proposed durability program and the CARB 
program and stated that it would be difficult for OEMs to comply with 
two different sets of requirements. Commenters within this group 
suggested a variety of solutions, including: aligning certain aspects 
of the proposed program with the CARB program; adopting the CARB 
program instead of the proposed program; or accepting compliance with 
the CARB program in lieu of compliance with the proposed program. 
Volkswagen, Volvo, and the Southern Environmental Law Center strongly 
encouraged EPA to fully harmonize with CARB, while similarly, BMW 
recommended adopting a single national approach. In contrast, Nissan 
and a coalition of environmental NGOs supported adoption of GTR No. 22 
as proposed. The Alliance for Automotive Innovation stated that both 
CARB and EPA should align with global best practices. Mercedes, several 
environmental NGOs and state organizations recommended that EPA should 
align with the CARB regulation to avoid conflicting regulatory 
requirements; Mercedes specifically recommended that EPA allow 
voluntary compliance with CARB's durability program in lieu of EPA's 
program. CARB recommended adopting the CARB durability provisions as 
well as the full suite of consumer assurance provisions under ACC II. 
Others more generally recommended that EPA work with CARB to modify 
aspects of the CARB program.
    Regarding comments that EPA should work with CARB to modify aspects 
of the CARB program, EPA considers modification of the CARB program to 
be outside the scope of this rulemaking. Regarding recommendations that 
EPA should adopt certain specific provisions of the CARB program (for 
example, inclusion of a battery reserve capacity declaration, phase-in 
of monitor accuracy tolerance, exempting shorter-range BEVs or PHEVs 
from requirements, number of decimal places for the monitor, OBD 
requirements and data parameters, basis on percentage points vs. 
percent, etc.), EPA believes that the CARB program and the proposed 
program based on GTR No. 22, in their entirety, are similarly 
effective, but that each program achieves that effectiveness by 
operating as a whole, and taking an a la carte approach of moving 
specific requirements from the context of one program into the context 
of another would compromise the integrity of either program. For this 
reason, EPA is generally not taking an approach of adopting specific 
individual elements of the CARB program at this time.
    However, EPA agrees with commenters' concerns that complying with 
both CARB and EPA durability programs may require more effort than 
complying with only one. Some commenters suggested that a solution to 
many of the issues regarding harmonization with the CARB program could 
be solved if EPA were to accept compliance with the CARB program in 
lieu of the federal program. EPA continues to believe that it is 
possible for manufacturers to comply with both programs simultaneously, 
as manufacturers that sell in California and so have to comply with the 
CARB program will often also have to comply with GTR No. 22 in other 
international jurisdictions, which is very similar to the EPA program. 
However, EPA also considers the CARB durability program, when viewed in 
its entirety with its metrics and performance requirements, to be no 
less effective than the EPA durability program.
    Accordingly, EPA will accept manufacturer compliance with the 
entirety of the CARB ACC II durability program in lieu of the EPA 
durability program. To utilize this optional pathway, manufacturers 
must declare their intention to do so, in which case their compliance 
with the CARB durability program will be deemed as compliance with the 
EPA durability program. Regardless of whether a manufacturer chooses to 
follow the CARB or the EPA program for the purpose of satisfying EPA 
battery durability requirements, failure to comply with the chosen 
program will result in the same credit loss penalty as under the EPA 
program. EPA considers the addition of the option to comply with the 
CARB durability program in lieu of the EPA durability program to be 
responsive to the various requests to adopt certain specific elements 
of the CARB program.
    EPA also requested comment on the inclusion of a requirement for an 
SOCR monitor and associated reporting requirements as specified in GTR 
No. 22. Automakers expressed general support for basing the MPR on a 
metric of usable energy, or SOCE, as specified in GTR No. 22. Several 
expressed specific opposition to a range-based metric or SOCR, while 
some NGOs encouraged use of both SOCE and SOCR. EPA continues to assess 
that SOCE is sufficient at this time as a basis for the MPR, and notes 
that at this time GTR No. 22 requires only that an SOCR monitor be 
implemented and does not use it for enforcement of the MPR. EPA 
continues to consider the addition of an SOCR monitor in a future 
rulemaking but at this time is electing not to include this requirement 
in the final standard, as proposed.
    Some commenters expressed uncertainty over whether the EPA program 
includes the virtual mileage provision of GTR No. 22, which accounts 
for use of the battery for purposes other than propulsion of the 
vehicle (e.g., vehicle-to-building (V2B) or vehicle-to-grid (V2G) 
applications), as we did not specifically mention it in the proposal. 
EPA clarifies that under the EPA program, virtual mileage is applicable 
to the mileage used for determining compliance with the durability 
provisions, as defined in GTR No. 22. However, GTR No. 22 does not 
include warranty provisions, and so the mileage used for warranty under 
the EPA program does not include virtual mileage. More discussion may 
be found where we discuss the warranty portion of the EPA durability 
and warranty program in section III.G.2.ii of the preamble.
    A variety of comments were received regarding minimum performance 
requirements (MPR) and their enforcement. Some commenters considered 
the requirements to be too stringent, while others suggested that they 
could be more stringent. VW recommended that EPA should adopt a single 
performance requirement of 70 percent at 8 years/100k miles. Tesla 
supported the proposed MPR as reasonable and achievable, while also 
advocating for a flexible approach allowing the manufacturer to use 
good engineering judgment in determining the statistically adequate and 
representative use of vehicle data. Tesla also supported the decision 
not to implement an MPR for MDVs.

[[Page 27970]]

    In response to comments suggesting that the minimum performance 
requirement (MPR) is too stringent and/or will add significant cost to 
the vehicle, EPA disagrees. As noted and cited previously, the MPR is 
very similar to warranty coverage already provided by vehicle 
manufacturers, indicating that the MPR described in the proposal is 
already largely being achieved and can continue to be achieved. In 
developing GTR No. 22, some stakeholders noted that a performance 
standard that is appropriate in the context of warranty may not 
necessarily be appropriate in the context of durability requirements, 
because the corrective action for a warranty failure is limited to the 
individual vehicles that fail, while the corrective action for a 
durability failure would involve every vehicle in a durability group. 
That is, a warranty performance standard is typically determined and 
remedied on an individual vehicle basis while a durability performance 
standard is determined and remedied on a durability group basis. 
However, EPA notes that (a) in the context of failure to meet the 
battery durability requirement, it is not requiring recall and repair 
of every battery in a failed durability group, and (b) the GTR 
specifies that a durability group meets the durability standard even 
when up to 10 percent of the vehicles in a durability group sample fail 
the Part B durability determination, without requiring recall and 
replacement of the battery in those vehicles. Thus, a given performance 
requirement in the context of the final durability program only becomes 
more binding than the same standard in the context of warranty if more 
than 10 percent of vehicles are failing the standard. Given the cost of 
battery repair and replacement, EPA expects that manufacturers would 
consider such a high warranty replacement rate to be unacceptable and 
so are designing batteries to avoid that outcome. EPA therefore 
continues to consider the durability performance standard to be 
appropriate and is not modifying the MPR at this time.
    Some commenters recommended that EPA adopt only the 8-year, 100,000 
mile requirement of the MPR, and not the 5 year, 62,000 mile 
requirement. EPA acknowledges that GTR No. 22 allows the possibility of 
local jurisdictions adopting either or both of the requirements. EPA 
agrees that requiring only the later requirement may reduce test 
burden. However, EPA also expects that the 5 year requirement will 
promote battery designs that degrade in a more or less linear fashion 
over their useful life (as opposed to a battery design that degrades 
more rapidly in earlier years, which would tend to increase the 
potential impact of lost range capacity on the total mileage the 
vehicle can attain over its life). Also, the 5-year requirement allows 
for an earlier compliance decision if a vehicle is on track to fail the 
8-year standard. In EPA's view, these substantial compliance benefits 
outweigh the added burdens of additional testing. For these reasons we 
are retaining the 5-year requirement in the program.
    The Alliance recommended that, in section 86.1815 of the regulatory 
text, that we replace the term ``electric vehicles'' with ``BEVs and 
PHEVs'' to exclude FCEVs from monitoring and durability requirements. 
Fuel cell vehicles were not included within the technical analysis or 
scope of GTR No. 22 and EPA has not as yet determined that the 
monitoring and durability requirements developed under GTR No. 22 are 
appropriate for FCEVs. Accordingly, EPA has made the requested change 
to section 86.1815.
    The Alliance also requested clarification on whether or not the 
durability and monitoring requirements are tied to the Tier 4 phase-in 
per section 86.1815. EPA clarifies that the battery durability and 
warranty standards for light-duty vehicles under 6,000 pounds begin in 
model year 2027 and for medium-duty vehicles begin when first certified 
for Tier 4. See section 86.1815.
    Regarding the durability test sample of at least 500 vehicles under 
Part B of the EPA program, the Alliance noted that distribution of some 
durability groups of PEVs across the U.S. may be insufficient to 
support the proposed sample characteristics, and proposed to keep the 
current sample size of 500 vehicles, but require that no more than 50 
percent of the vehicles in the sample be registered in the same region. 
EPA agrees that, particularly in the early years of the program, some 
durability groups may be unevenly distributed across the U.S. and is 
modifying the sample requirements per this suggestion.
    The SAVE Coalition recommended that we revise section 86.1815(a) to 
specify that the monitor should be viewable by the owner of the 
vehicle, as specified in GTR No. 22, rather than the customer, as 
specified in section 86.1815(a), to accommodate situations such as 
autonomous transportation services, where the customer of the 
autonomous service is not the owner of the vehicle. EPA agrees that 
``customer'' may be ambiguous in this application; however, we also 
believe that using the term ``owner'' might be interpreted as excluding 
lessees or other parties with a legitimate interest in the state of 
health of the battery. EPA is clarifying the regulatory text by 
changing ``customer-accessible'' to ``operator-accessible.'' As the 
customer of a fully autonomous transport service is not an operator, 
EPA believes that this modification addresses the commenter's concern.
    Some commenters requested clarification as to whether the removal 
of compliance credits earned by vehicles that fail the durability 
requirement applies only to GHG credits earned, or also to 
NMOG+NOX credits earned. In the proposal, EPA stated that in 
the case of failure to meet the durability requirements, 
``manufacturers would have to adjust their credit balance to remove 
compliance credits previously earned by those vehicles,'' and the 
regulatory text stated ``the manufacturer must adjust all credit 
balances to account for the nonconformity.'' EPA clarifies that in the 
case of BEVs, the credits affected include GHG and NMOG+NOX 
credits. For PHEVs, although PHEVs earn both GHG and 
NMOG+NOX credits, the credits affected include only GHG 
credits. PHEV credits for NMOG+NOX would not need to be 
forfeited because testing to determine compliance with 
NMOG+NOX standards is based on charge-sustaining mode when 
the engine is operating, and NMOG+NOX emissions in this mode 
are not generally impacted by the amount of grid energy that can be 
stored in the battery. EPA also clarifies that credit removal for 
failing the durability requirement, specifically the Minimum 
Performance Requirement, only applies to LD BEVs and PHEVs.
    EPA also clarifies that Annex 3 of GTR No. 22 applies only in 
jurisdictions where WLTP is used. The quantities that represent 
UBEmeasured and UBEcertified for the purpose of 
part 6.3.2 of GTR No. 22 in the context of this rule are specified in 
the regulatory text.
    As finalized, the battery durability requirements consist of two 
primary components as shown in Table 64. The first component is a 
requirement for manufacturers to provide a customer-readable battery 
state-of-health (SOH) monitor for both light-duty and Class 2b and 3 
BEVs and PHEVs. The second component is the definition of a minimum 
performance requirement (MPR) for the SOH of the high voltage battery, 
applicable only to light-duty BEVs and PHEVs. HEVs and FCEVs are not 
included in the scope of GTR No. 22 or the durability program.

[[Page 27971]]



Table 64--Applicability of Battery Durability Requirements to Light-Duty
                         and Class 2b/3 Vehicles
------------------------------------------------------------------------
                                    Light-duty BEVs     Class 2b and 3
           Requirement                 and PHEVs        BEVs and PHEVs
------------------------------------------------------------------------
Battery State of Health (SOH)     Yes...............  Yes.
 Monitor.
Monitor accuracy requirement....  Yes...............  Yes.
Minimum Performance Requirement   Yes...............  No.
 (MPR).
------------------------------------------------------------------------

    Manufacturers will be required to install a battery SOH monitor 
which estimates, monitors, and communicates the vehicle's state of 
certified energy (SOCE) as defined in GTR No. 22, and which can be read 
by the vehicle operator. This requires manufacturers to implement 
onboard algorithms to estimate the current state of certified energy of 
the battery, in terms of its current usable battery energy (UBE) 
expressed as a percentage of the original UBE when the vehicle was new. 
The state of certified range (SOCR) monitor defined in GTR No. 22 will 
not be required.
    For light-duty BEVs and PHEVs, the information provided by this 
monitor will be used for demonstrating compliance with a minimum 
performance requirement (MPR) which specifies a minimum percentage 
retention of the original UBE when the vehicle was new. As shown in 
Table 65, under the final rule, light-duty BEV and PHEV batteries will 
be subject to an MPR that requires them to retain no less than 80 
percent of their original UBE at 5 years or 62,000 miles, and no less 
than 70 percent at 8 years or 100,000 miles.

               Table 65--Minimum Performance Requirements
------------------------------------------------------------------------
                                    Light-duty BEVs     Class 2b and 3
        Years or mileage               and PHEVs        BEVs and PHEVs
------------------------------------------------------------------------
5 years or 62,000 miles.........  80 percent SOCE...  N/A.
8 years or 100,000 miles........  70 percent SOCE...  N/A.
------------------------------------------------------------------------

    In alignment with GTR No. 22, which does not currently subject UN 
ECE Category N vehicles of Category 2 (work vehicles that primarily 
carry goods) to the MPR requirement, Class 2b and 3 PEVs will not be 
subject to the MPR. The developers of GTR No. 22 chose not to set an 
MPR for Category 2 PEVs at the time, largely because the early stage of 
adoption of these vehicles meant that in-use data regarding battery 
performance of these vehicles was not readily available. MPR 
requirements for category 2 PEVs were therefore reserved for possible 
inclusion in a future amendment to the GTR, but monitoring requirements 
were retained to allow information on degradation to be collected from 
these vehicles to help inform a future amendment. For similar reasons, 
EPA is retaining the monitor requirement for Class 2b and 3 PEVs but is 
not requiring the MPR.
    Compliance with the new battery durability requirements will 
require manufacturers to perform testing beyond what is currently 
required. Previously, light-duty vehicle manufacturers were required to 
perform range testing on BEVs and PHEVs only to provide information to 
inform the EPA fuel economy label, and not for vehicle certification. 
Class 2b and 3 vehicles did not have the labeling requirement and 
therefore often did not undergo this testing. Under the new program (as 
described more fully in section III.G.1 and below), manufacturers of 
both light-duty and Class 2b and 3 BEVs and PHEVs will perform testing 
to determine and report the vehicle's UBE when new. In addition, at 
points during the useful life of the vehicle, manufacturers will 
demonstrate through in-use vehicle testing that the SOCE monitor meets 
an accuracy standard.
    Manufacturers will group the PEVs that they manufacture into 
monitor families and battery durability families as defined in GTR No. 
22 (and described in more detail in section III.G.3 of this preamble). 
As described further below, monitor families must comply with a monitor 
accuracy requirement, and battery durability families must comply with 
the applicable MPR. Because determination of compliance in either case 
depends on reference to a certified UBE value, this value must be 
determined at time of certification. Since the testing program that is 
currently performed for fuel economy labeling purposes does not 
necessarily determine such a value for all vehicle configurations that 
would need it for durability compliance purposes, additional testing of 
vehicles that would not otherwise need to be tested for labeling 
purposes may need to be performed at time of certification.
    For both light-duty and medium-duty vehicles, as described in the 
``Part A'' monitor accuracy provisions outlined in GTR No. 22, 
manufacturers will be required to meet a standard for accuracy of their 
on-board SOCE monitors. To determine the accuracy of the monitors, 
vehicles from each monitor family shall be recruited and procured in-
use at each of 2 years and 4 years after the end of production of that 
monitor family for a model year. The onboard monitor values for SOCE 
shall be recorded, and each vehicle shall then be tested to determine 
actual (measured) UBE capability of the battery. As described in 
section III.G.1 of the preamble, for this testing EPA will require the 
2017 version of SAE Standard J1634 for determining UBE for BEVs, and 
the 2023 version of SAE J1711 for determining UBE for PHEVs. The UBE 
measured by the test will be used to calculate the measured SOCE of the 
battery, as the measured UBE divided by the certified UBE. The measured 
SOCE shall be compared to the value reported by the SOCE monitor prior 
to the test. The accuracy of the SOCE monitor must not be in error more 
than 5 percent above the measured SOCE, as defined and determined via 
the Part A statistical method defined in GTR No. 22. See 40 CFR 
86.1811-27, 86.1845-04(g) and 86.1839-01(c) for detailed 
specifications.
    For light-duty vehicles, in a similar manner to the ``Part B'' 
compliance provisions of GTR No. 22, once having demonstrated Part A 
accuracy for the SOCE monitor of vehicles within a monitor family, 
manufacturers shall demonstrate compliance with the MPR by collecting 
the values of the onboard SOCE monitors of a statistically adequate and 
representative sample of in-use vehicles, in general no less than 500 
vehicles from each battery durability family that shares that monitor 
family, and reporting the data and results to EPA. The manufacturer 
shall use good engineering judgment in determining that the sample is 
statistically adequate and representative of the in-use vehicles 
comprising each durability family, subject to specific provisions in 
the regulation and approval by EPA. Manufacturers may obtain this 
sample by any appropriate method, for example by over-the-air data 
collection or by other means. A battery durability family passes if 90 
percent or more of the monitor values read from the sample are at or 
above the MPR.
    In the case that a monitor family fails the Part A accuracy 
requirement, the manufacturer will be required to recall the vehicles 
in the failing monitor family to bring the SOCE monitor into 
compliance, as demonstrated by passing the Part A statistical test with 
vehicles using the repaired monitor. In the case that a durability 
family fails the Part B durability performance requirement, the

[[Page 27972]]

manufacturer's credit balance will be adjusted to remove compliance 
credits previously earned by those vehicles. In the case of BEVs, the 
credits affected include GHG and NMOG+NOX credits, as BEVs 
do not earn credits for other pollutants. For PHEVs, the credits 
affected include only GHG credits, as emissions performance for other 
pollutants is largely independent of usable battery capacity.
    For Part B, GTR No. 22 does not specify a means of data collection. 
EPA anticipates that many manufacturers might collect this data via 
means such as telematics (remote, wireless queries) which is becoming 
increasingly present in new vehicles, or any other sampling technique 
which accurately collects data from the number of vehicles outlined in 
the GTR. For example, vehicle manufacturers may choose to physically 
connect to the required number of vehicles and read the SOCE values 
directly in lieu of remote, telematics-based data collection. The data 
collection method used for Part B must identically report the same 
quantities that were collected for the purpose of the monitor accuracy 
test under Part A.
    Unlike GTR No. 22, EPA is not requiring a state of certified range 
(SOCR) monitor in addition to an SOCE monitor. In the proposal we noted 
that some of the organizations and authorities that have examined the 
issue of battery durability have recognized that monitoring the state 
of a vehicle's full-charge driving range capability (instead of or in 
addition to UBE capability) as an indicator of battery durability 
performance may be an attractive option because driving range is a 
metric that is more directly experienced and understood by the 
consumer. GTR No. 22 requires manufacturers to install a state of 
certified range (SOCR) monitor in addition to an SOCE monitor but it is 
not required to be customer facing, and its information is collected 
only for information gathering purposes. Additional discussion of the 
decision to not include an SOCR monitor in the EPA program is provided 
in RTC section 16.
    Additional background on UN GTR No. 22 and the California Air 
Resources Board battery durability and warranty requirements may be 
found in RIA Chapter 1.3.
ii. Battery and Vehicle Component Warranty
    EPA is also finalizing new warranty requirements for BEV and PHEV 
batteries and associated electric powertrain components (e.g., electric 
machines, inverters, and similar key electric powertrain components). 
The new warranty requirements build on existing emissions control 
warranty provisions by establishing specific new requirements tailored 
to the emission control-related role of the high-voltage battery and 
associated electric powertrain components in the durability and 
emissions performance of PEVs.
    For light-duty BEVs and PHEVs, EPA is designating the high-voltage 
battery and associated electric powertrain components as specified 
major emission control components according to our authority under CAA 
section 207(i)(2), which assigns a warranty period of 8 years or 80,000 
miles for components so designated.
    For medium-duty (Class 2b and 3) BEVs and PHEVs, we are 
establishing a warranty period of 8 years or 80,000 miles for the 
battery and associated electric powertrain components on these 
vehicles, according to our authority under CAA section 207(i)(1). The 
program will provide warranty coverage for the emission control 
components on Class 2b and 3 BEVs and PHEVs equal to that for the same 
components on light-duty BEVs and PHEVs.
    EPA believes that this practice of ensuring a minimum level of 
warranty protection for emissions-related components on ICE vehicles 
should be extended to the high-voltage battery and other electric 
powertrain components of BEVs and PHEVs for multiple reasons. 
Recognizing that BEVs and PHEVs are playing an increasing role in 
manufacturers' compliance strategies, the high-voltage battery and the 
powertrain components that depend on it are emission control devices 
critical to the operation and emission performance of BEVs and PHEVs, 
as they play a critical role in reducing the emissions of PHEVs and in 
enabling BEVs to operate with zero tailpipe emissions as well as to 
reduce fleet average emissions, as discussed earlier. Further, EPA 
anticipates that compliance with the program is likely to be achieved 
with larger penetrations of BEVs and PHEVs than under the previous 
program. Although the projected emissions reductions are based on a 
spectrum of control technologies, in light of the cost-effective 
reductions achieved, especially by BEVs, EPA anticipates most if not 
all automakers will include credits generated by BEVs and PHEVs as part 
of their compliance strategies, even if those credits are obtained from 
other manufacturers; thus this is a particular concern given that the 
calculation of credits for averaging (as well as banking and trading) 
depend on the battery and emission performance being maintained for the 
full useful life of the vehicle. Additionally, warranty provisions are 
a strong complement to the battery durability requirements described in 
III.G.2. We believe that a component under warranty is more likely to 
be properly maintained and repaired or replaced if it fails, which 
would help ensure that credits granted for BEV and PHEV sales represent 
real emission reductions achieved over the life of the vehicle.
    In the proposal, EPA requested comment on all aspects of the 
proposed warranty provisions for light-duty and medium-duty PEVs, 
batteries, and associated electric powertrain components.
    The Alliance commented that warranty requirements should remain at 
the discretion of individual OEMs rather than be specified by 
regulation, and that designation of BEV batteries and associated 
components as specified major emission control components is not 
consistent with the statute. The commenter asserted that BEVs do not 
have emissions and therefore our inclusion of BEV components of any 
kind under the Administrator's authority to specify warranty 
requirements for emissions-related components is not appropriate. EPA's 
response to any questions of authority to set durability or warranty 
requirements for BEV batteries is in the introductory section. Below we 
provide additional discussion of our authority to establish warranty 
requirements specifically.
    For light-duty vehicles, CAA section 207(i)(1) specifies that the 
warranty period is 2 years or 24,000 miles of use (whichever first 
occurs), except for specified major emission control components (SMECC) 
described in 207(i)(2), for which the warranty period is 8 years or 
80,000 miles of use (whichever first occurs). For all other vehicles, 
which would include medium-duty vehicles (MDVs), CAA 207(i)(1) 
specifies that the warranty period shall be the period established by 
the Administrator. For both light-duty and medium-duty vehicles, the 
Administrator is establishing a warranty period of 8 years and 80,000 
miles.
    For light-duty vehicles, 207(i)(2) specifically identifies 
catalytic converters, electronic emissions control units, and onboard 
emissions diagnostic devices as SMECC. Currently, BEV and PHEV battery 
and electric powertrain components are not so specified, which limits 
their coverage requirement to the 2 years or 24,000 miles of CAA 
section 207(i)(1), a period which EPA believes is not sufficient, given 
the importance of

[[Page 27973]]

these components to the operation and emissions performance of these 
vehicles. As discussed in connection with battery durability, this is 
of particular concern given that the calculation of fleet average 
performance and of credits for banking and trading depend on the 
battery and emissions performance being maintained for the full useful 
life of the vehicle. However, to allow for designation of other 
pollution control components as SMECC, CAA section 207(i)(2) provides 
that the Administrator may so designate any other pollution control 
device or component, subject to the conditions that the device or 
component was not in general use on vehicles and engines manufactured 
prior to the model year 1990 and that the retail cost (exclusive of 
installation costs) of such device or component exceeds $200 (in 1989 
dollars), adjusted for inflation or deflation as calculated by the 
Administrator at the time of such determination.\704\ Adjusted for 
inflation, the $200 retail cost threshold would be about $500 today. As 
BEVs and PHEVs and thus their high-voltage battery systems and 
associated powertrain components were not in general use prior to 1990, 
and their high-voltage battery systems and associated powertrain 
components exceed this cost threshold, the Administrator determines 
that these emission control devices meet the criteria for designation 
as specified major emission control components. Accordingly, the 
Administrator designates these components as specified major emission 
control components according to his authority under CAA section 
207(i)(2).
---------------------------------------------------------------------------

    \704\ See 42 U.S.C. 7541(i)(2).
---------------------------------------------------------------------------

    Several environmental NGOs and supplier organizations indicated 
support of PEV durability and warranty requirements, and referenced 
statutory language supporting these measures. Tesla advocated for 
warranty thresholds more consistent with the industry standard, and 
adoption of a standard 8-year, 80,000 miles warranty with 70 percent 
UBE. Lucid requested that EPA consider CARB's current battery warranty 
under ACC II, which is 70 percent SoH for 8 years or 100,000 miles, and 
aligns with EPA's proposed end point durability standard. In response, 
the warranty standard is based on the statutory criterion of 8 years or 
80,000 miles for SMECC components, which does not specify a failure 
criterion for batteries. This standard matches Tesla's recommendation 
but does not specify a UBE requirement as failure criterion, consistent 
with past EPA practice regarding SMECC component warranty. In the 
proposed regulatory text EPA had tied the battery warranty failure 
criterion to the MPR criterion of 70 percent SOCE to provide clarity on 
what constitutes the need for a warranty repair. However, in light of 
comments received, additional research and consideration of existing 
warranty-related provisions in the current regulations, EPA has 
reconsidered the appropriateness of doing so at this time. EPA is not 
tying the battery warranty failure criterion to the durability 
performance requirement but will require manufacturers to specify the 
warranted percentage SOCE and will require use of the SOCE monitor 
value in determining a warranty claim, subject to the warranty claim 
procedures in 40 CFR 85.2106. See the regulatory text and further 
discussion in section 15.1 of the Response to Comments document. EPA 
has not yet determined if it is appropriate to specify a warranty 
failure criterion in this context and will continue to study the matter 
for possible inclusion in a future rulemaking.
    Some commenters raised the issue of whether or not virtual mileage 
would be included in the mileage applicable to the warranty provisions, 
with some suggesting that it should be included. However, commenters 
did not clearly explain why virtual mileage should be extended to 
warranty mileage simply because it exists in the context of durability. 
EPA notes that the virtual mileage provision originates in EPA's 
adoption of GTR No. 22, which developed a concept of virtual mileage 
specifically for the context of battery durability. GTR No. 22 does not 
consider or establish warranty provisions. EPA retained the virtual 
mileage provision in the context of durability for the purpose of 
maintaining consistency with the GTR design and structure, and not for 
the purpose of potentially extending a virtual mileage concept to other 
mileage-related aspects of our regulations.
    As an alternative to the inclusion of virtual warranty mileage, 
some commenters suggested that EPA should exclude vehicles that were 
used for V2G or V2B from warranty coverage. EPA continues to assess 
that these provisions are not necessary. We note that the warranty 
mileage, which does not include virtual mileage, is only 80,000 miles 
compared to the durability mileage of 100,000 miles. This reduced 
stringency largely addresses commenters' concerns regarding warranty 
mileage and likely levels of V2G or V2B usage. EPA also notes that V2G 
usage may not necessarily imply a shorter battery life as is commonly 
assumed. Recently, NREL found that a vehicle-to-grid control strategy 
which lowered the battery's average state of charge (SOC) when parked--
while ensuring it was fully recharged in anticipation of the driver's 
next need--could extend the life of the battery if continued over 
time.\705\ Similarly, a study by Environment and Climate Change Canada, 
NRC Canada and Transport Canada also found no significant difference in 
usable battery energy between a vehicle that was used for bidirectional 
V2G and one that was not, and identified an improved SOC profile 
resulting from V2G activity as a possible factor.\706\
---------------------------------------------------------------------------

    \705\ NREL. ``Electric Vehicles Play a Surprising Role in 
Supporting Grid Resiliency,'' October 12, 2023. Accessed November 5, 
2024 at https://www.nrel.gov/news/program/2023/evs-play-surprising-role-in-supporting-grid-resiliency.html.
    \706\ Lapointe, A. et al., ``Effects of Bi-directional Charging 
on the Battery Energy Capacity and Range of a 2018 Model Year 
Battery Electric Vehicle,'' 36th International Electric Vehicle 
Symposium and Exhibition (EVS36), June 11-14, 2023.
---------------------------------------------------------------------------

    In the proposed regulatory text, EPA explicitly tied the warranty 
performance criteria to the durability requirement, i.e. an individual 
vehicle would be deemed as eligible for warranty battery repair if it 
retains less than 80 percent SOCE at 5 years or 62,000 miles or 70 
percent SOCE at 8 years or 80,000 miles. Some commenters stated that an 
explicit connection between the two was inappropriate, because warranty 
should be determined by the manufacturer and might legitimately vary 
between different types of products.
    CARB recommended that EPA adopt the CARB warranty provisions, and 
that EPA explicitly tie battery warranty requirements to the durability 
performance requirement. However, CARB pointed out that the ``proposal 
appears to mistakenly tie all non-battery powertrain components to this 
same battery durability performance requirement when defining failures 
that merit warranty replacement. Such a connection renders the warranty 
requirements meaningless for those components.'' CARB went on to 
recommend that EPA adopt ``an appropriate failure metric(s) for 
warranty coverage for non-battery components.''
    In response to comments that EPA should not specify warranty 
performance criteria, EPA continues to find that the proposed warranty 
requirements are equivalent to those that EPA has the authority to 
require and has historically applied to other specified major emission 
control-related components for ICE vehicles under EPA's light-duty 
vehicle regulations,

[[Page 27974]]

and are similarly implemented under the authority of CAA section 207. 
However, we acknowledge that for analogous warranty requirements as 
they have pertained to emissions-related ICE powertrain components 
under the same statute, EPA has typically specified only the years and 
mileage and not the exact failure criteria that would trigger a 
warranty repair.\707\ Accordingly, at this time we are not tying the 
battery warranty performance criteria to the durability performance 
requirement. Instead, we are retaining the 8-year and 80,000 mile 
warranty duration as specified by the statute, but are allowing the 
manufacturer to specify the percentage SOCE that will trigger a 
warranty repair, and also requiring the manufacturer to (a) clearly 
disclose the warranted percentage SOCE to the customer in writing prior 
to sale, and (b) establish, describe and disclose an evaluation method 
that will be used by the manufacturer to determine whether that 
percentage SOCE has fallen below the warranted percentage, and show to 
EPA's satisfaction that it is accurate and reliable.
---------------------------------------------------------------------------

    \707\ This has largely been possible because of the way OBD 
requirements are integrated with the emissions rules, as a material 
failure of an emission component to perform as designed would 
typically result in increased emissions that would in turn activate 
a malfunction indicator lamp (MIL).
---------------------------------------------------------------------------

    In response to CARB's observation that the 70 percent SOCE 
stipulation is technically not applicable to associated powertrain 
components that are not batteries, the removal of the explicit 
connection addresses this comment. For these components EPA is 
specifying only the years and mileage terms and not specific failure 
criteria.
    In response to comments that we should clarify what is meant by 
``associated powertrain components,'' EPA has revised 40 CFR 
85.2103(d)(1)(v) of the regulatory text, which now clarifies that the 
provision applies to ``all components needed to charge the system, 
store energy, and transmit power to move the vehicle.''
    Other comments are addressed in the RTC.
3. Definitions of Durability Group, Monitor Family, and Battery 
Durability Family
    EPA is revising the durability group definition for vehicles with 
an IC engine, and adding two new grouping definitions, monitor family 
and battery durability family, for BEVs and PHEVs.
i. Durability Group Revisions
    EPA anticipates the adoption and use of gasoline particulate 
filters (GPFs) to reduce PM emissions to the levels required with the 
revised PM standard. Particulate filters are currently utilized on 
diesel-powered vehicles to meet the existing Tier 3 p.m. standard. 
EPA's durability group definition in 40 CFR 86.1820-01 includes a 
catalyst grouping statistic based on the engine displacement and 
catalyst volume and loading to define the acceptable range of designs 
that may be combined into a single durability group. Previously, EPA 
has not required manufacturers to consider PM filters in the 
determination of the durability group.
    PM filters can also be coated with precious metals resulting in the 
particulate filter performing the functions of a three-way catalyst in 
addition to reducing particulates. The Agency expects that 
manufacturers may choose to adopt PM filters with three-way catalyst 
coatings on some applications to reduce aftertreatment system cost by 
not increasing the number of substrates. We are accordingly clarifying 
that manufacturers need to include the volume and precious metal 
loading of the PM filter along with the corresponding catalyst values 
when calculating the catalyst grouping statistic. The volume of the PM 
filter will not be included in the catalyst grouping statistic if the 
PM filter does not include precious metals.
    The durability group is used to specify groups of vehicles which 
are expected to have similar emission deterioration and emission 
component durability characteristics throughout their useful life. The 
inclusion of a particulate filter on a gasoline-fueled vehicle 
aftertreatment system can have an impact on the durability 
characteristics of the aftertreatment system and as such the Agency is 
finalizing its proposal that this device, or the lack of a PM filter in 
the aftertreatment system, needs to be included in the durability group 
determination for internal combustion engine aftertreatment systems. 
Specifically, we are finalizing that vehicles may be included in the 
same durability group only if all the vehicles have no particulate 
filter, or if all the vehicles have non-catalyzed particulate filters, 
or if all the vehicles have catalyzed particulate filters.
    We are applying these updates to durability groups equally for both 
gasoline and diesel applications. However, diesel vehicles certified 
under 40 CFR part 86, subpart S, generally use a consistent 
configuration with particulate filters, so the changes are not likely 
to lead to changes in certification practices for those vehicles. The 
Agency did not receive any comments on these proposed changes to the 
durability group definition.
ii. BEV and PHEV Monitor Family
    As described in section III.G.2.i of the preamble, EPA is 
establishing battery durability requirements for BEVs and PHEVs. As 
part of this durability standard, as proposed, the Agency is finalizing 
two new groupings for BEVs and PHEVs, the battery monitor family and 
the battery durability family.
    As described in section III.G.2.i of the preamble, based on 
comments received to the NPRM, EPA will accept manufacturer compliance 
with the CARB ACC II durability program in lieu of the EPA durability 
program. Allowing BEV manufacturers to comply with the ACC II 
durability requirements has resulted in the need to revise the required 
groupings for BEVs.
    In the NPRM it was proposed that BEVs would have battery monitor 
and battery durability families and would no longer require test group 
or exhaust emission durability groups. As the California ACC II program 
groups BEVs by test groups, EPA has concluded that BEVs will still 
require the definition of an exhaust emission durability group and test 
group for all BEVs.
    In the NPRM it was proposed that PHEVs would have battery monitor 
and battery durability families in addition to test group and exhaust 
emission durability groups. PHEVs required keeping the test group and 
exhaust emission durability groups as these definitions were created to 
group vehicles based on their exhaust emission characteristics.
    As finalized in this rulemaking BEVs and PHEVs which will comply 
with the California ACC II requirements and will not comply with the 
EPA requirements will only need to specify a durability family and a 
test group for these vehicles. BEVs and PHEVs which comply with the EPA 
requirements will need to specify a durability family, test group, 
battery monitor family, and battery durability family for these 
families.
    To support the monitor accuracy evaluation requirements described 
in section III.G.2 of the preamble, manufacturers must install a 
battery SOH monitor which accurately estimates, monitors, and 
communicates the SOCE of the high-voltage battery (as defined in GTR 
No. 22 and described in section III.G.2 of the preamble) at the current 
point in the vehicle's lifetime. To evaluate the accuracy of the 
monitor during the life of the vehicle, manufacturers must procure and 
test consumer vehicles in-use. The SOCE

[[Page 27975]]

monitor is subject to the accuracy standard.
    Through the introduction of monitor families for BEVs and PHEVs, 
EPA seeks to reduce test burden by recognizing that monitor accuracy 
may be similar for vehicles with sufficiently similar design 
characteristics that use the same monitor design. As described in GTR 
No. 22, vehicles that are sufficiently similar in their characteristics 
such that the monitor can be expected to perform with the same accuracy 
may be assigned to the same monitor family. The criteria for inclusion 
in the same monitor family includes characteristics such as the 
algorithm used for SOCE monitoring, electrified vehicle type (BEV or 
PHEV), sensor characteristics and sensor configuration, and battery 
cell characteristics that would not be expected to influence SOCE 
monitor accuracy.
    In the NPRM, EPA proposed that for vehicles to be in the same 
monitor family, the following conditions must be met: the SOCE 
monitoring algorithm needs to utilize the same logic and have the same 
value for all calibration variables used in the algorithm; the 
algorithm used to determine UBE needs to utilize the same sampling and 
integration periods and the same integration technique; the locations 
of the sensor(s) (i.e. at the pack, module, or battery cell level) for 
monitoring DC discharge energy need to be the same; and the accuracy of 
the sensor(s) and the tolerance of the sensor(s) accuracy used for 
monitoring energy and range need to be the same. EPA received comments 
from the Alliance indicating their concern that the proposed 
requirements are overly restrictive with respect to defining monitor 
family. Having considered the Alliance's comment, the Agency has 
decided to remove these requirements on the sensor locations and 
algorithm requirements from the monitor family determination. The 
Agency has concluded that the criteria for inclusion in the same 
monitor family as defined in GTR No. 22 are sufficient. The Agency also 
is finalizing the proposed requirement that BEVs and PHEVs cannot be 
included in the same monitor family, as required by GTR No. 22 which is 
being incorporated by reference.
    If a manufacturer determines that additional vehicle 
characteristics affect the accuracy of SOCE estimation, the 
manufacturer can request the Administrator to allow the creation of 
additional monitor families. To request additional monitor families, 
the manufacturer may seek Agency approval and describe in their 
application the factors which produce SOCE estimation errors and how 
the monitor family will be divided to reduce the estimation errors.
    Manufacturers can request that the Administrator include in the 
same monitor family vehicles for which these characteristics would not 
otherwise allow them to be in the same monitor family (except for 
including BEVs and PHEVs in the same monitor family). When seeking 
Agency approval, the manufacturer will need to include data 
demonstrating that these differences do not cause errors in the 
estimation of SOCE.
iii. BEV and PHEV Battery Durability Family
    In introducing battery durability families for BEVs and PHEVs, EPA 
seeks to reduce test burden by recognizing that the degradation of UBE 
(as indicated by SOCE) may be similar for vehicles with sufficiently 
similar design characteristics. As described in GTR No. 22, vehicles 
that are sufficiently similar in their characteristics such that the 
UBE may be expected to degrade in the same way may be assigned to the 
same battery durability family. EPA is establishing provisions 
requiring use of the following powertrain characteristics and design 
features to determine battery durability families: maximum specified 
charging power, method of battery thermal management, battery capacity, 
battery (cathode) chemistry, and the net power of the electrical 
machines. In addition, BEVs and PHEVs cannot be placed in the same 
battery durability family.
    EPA received comments from the Alliance requesting a number of 
changes to the criteria used to determine battery durability families 
for BEVs and PHEVs. The Alliance recommended removing the cathode 
chemistry criteria and including all unique cathode chemistries in a 
single Li-Ion family. Another commenter expressed uncertainty as to 
whether variants within specific Li-Ion sub-chemistries, such as NMC or 
LFP, would be considered the same or different chemistries. The 
Alliance also suggested removing the maximum charging power criteria. 
In addition, the Alliance recommended allowing batteries with 
capacities within 20 percent to be included in the same battery 
durability family. At this time, the Agency does not have sufficient 
information to conclude that the revisions the Alliance is suggesting 
will ensure that all vehicles within a durability family would be 
expected to degrade in the same manner. For example, it is well known 
that different lithium-ion chemistries, even within specific sub-
chemistries such as NMC or LFP, can exhibit significantly different 
durability properties. As noted in this section and in the EPA 
regulations, EPA is providing manufacturers with the option to include 
in the same durability family vehicles for which these characteristics 
would not otherwise allow them to be in the same battery durability 
family. In order to make this inclusion, the manufacturer needs to 
provide data demonstrating the vehicle differences being included will 
age similarly and will degrade in an equivalent manner. The option to 
provide data applies to all of the powertrain characteristics and 
design features used to determine a battery durability family. 
Therefore, the Agency is finalizing the requirement to specify battery 
durability families based on the characteristics and design features 
described in GTR No. 22 with the provision to allow variations based on 
the submission of appropriate data demonstrating equivalent 
degradation. With regard to specific sub-chemistries, EPA clarifies 
that placement in the same battery durability family is not indicated 
when chemistry differences exist that would be expected to influence 
durability. Chemistry differences may include differences such as 
proportional metal composition of the cathode (for example, NMC811, 
NMC622, NMC333, etc.), composition of the anode (for example, graphite, 
graphite with silicon, other forms of carbon), or differences in 
particle size or morphology of cathode or anode active materials, 
unless data is provided otherwise as described above.
    Manufacturers can request that the Administrator include in the 
same battery durability family vehicles for which the characteristics 
and design features described in the above paragraphs would not 
otherwise allow them to be in the same battery durability family 
(except for including BEVs and PHEVs in the same battery durability 
family). The manufacturer will need to include data with their request 
that demonstrates that these differences do not impact the durability 
of the vehicles with respect to maintaining UBE throughout the life of 
the BEV or PHEV.
    If a manufacturer determines that additional vehicle 
characteristics result in durability differences which impact UBE, the 
manufacturer can request the Administrator to allow the creation of 
additional battery durability families. To request additional battery 
durability families the manufacturer will need to seek Agency approval. 
In their request for approval, the manufacturer must describe the 
factors which produce differences in vehicle aging and how the

[[Page 27976]]

durability grouping will be divided to better capture the differences 
in expected deterioration.
    EPA also received comments from the California Air Resources Board 
and the State of Colorado addressing EPA's proposed BEV durability 
program. Both Colorado and the California Air Resources Board were 
supportive of EPA's proposal and in both instances also asked EPA to 
implement a BEV durability program based on California's durability 
program adopted in their Advanced Clean Cars II regulation. The final 
rule accordingly includes an option for manufacturers to demonstrate 
compliance with battery durability requirements based on certification 
to CARB's ACC II program. Detailed responses to these comments can be 
found in the Response to Comments Document.
4. Light-Duty Program Improvements
i. GHG Compliance and Enforcement Requirements
    EPA is finalizing its proposal to clarify the certification 
compliance and enforcement requirements for GHG exhaust emission 
standards found in 40 CFR 86.1865-12 to more accurately reflect the 
intention of the 2010 light-duty vehicle GHG rule (75 FR 25324, May 7, 
2010). In the 2010 rule, EPA set full useful life greenhouse gas 
emissions standards with which each vehicle is required to comply. Each 
vehicle has an individual full useful life greenhouse emission standard 
which is based on the measured GHG emissions used for fuel economy 
labeling purposes. Manufacturers determine compliance with the fleet 
average greenhouse gas standard by combining the individual vehicle's 
GHG emissions useful life values and comparing this result to the 
manufacturers fleet average standard. The preamble to the 2010 rule 
clearly explained that the CAA requires a vehicle to comply with 
emission standards over its regulatory useful life and affords EPA 
broad authority for the implementation of this requirement and that EPA 
has authority to require a manufacturer to remedy any noncompliance 
issues. EPA also explained that there may be cases where a repairable 
defect could cause the non-compliance and in those cases a recall could 
be the appropriate remedy. Alternatively, there may be scenarios in 
which a GHG non-compliance exists with no repairable cause of the 
exceedance. Therefore, the remedy can range from adjusting a 
manufacturer's credit balance to the voluntary or mandatory recall of 
noncompliant vehicles.
    In the 2010 rule, EPA clearly intended to use its existing recall 
authority to remedy greenhouse gas non-compliances through traditional 
recalls when appropriate and to use the authority to correct the 
greenhouse gas credit balance as a remedy when no practical repair for 
in-use vehicles could be identified. See 75 FR 25474. However, the 
regulations did not describe these in-use compliance provisions with as 
much clarity as the preambular statements. Therefore, as proposed, EPA 
is finalizing clarifications to 40 CFR 86.1865-12(j) to make clear that 
EPA may use its existing recall authority to remedy greenhouse gas non-
compliances when appropriate and specifically may use such authority to 
correct a manufacturer's greenhouse gas credit balance as a remedy when 
no practical repair can be identified.
    The Alliance for Automotive Innovation commented that they believe 
such an approach is sensible. However, they stated that EPA does not 
have authority under section 207 of the CAA to require it. EPA 
disagrees; section 207 of the CAA clearly gives EPA the authority to 
require recall of non-compliant vehicles, but does not specify a 
precise form for such a recall. EPA responds to this comment in full in 
the Response to Comments.
    In the 2010 rule, EPA set vehicle in-use emissions standards for 
carbon-related exhaust emission (CREE) to be 10 percent above the 
vehicle-level emission test results or model-type value if no 
subconfiguration test data are available. This 10 percent factor was 
intended to account for test-to-test variability or production 
variability within a subconfiguration or model type. EPA clearly did 
not intend for this factor to be used as an allowance for manufacturers 
to design and produce vehicles that generate CO2 emissions 
up to 10 percent higher than the actual values they use to certify and 
to calculate the year end fleet average. In fact, EPA expressed 
concerns in the rulemaking that ``this in-use compliance factor could 
be perceived as providing manufacturers with the ability to design 
their fleets to generate CO2 emissions up to 10 percent 
higher than the actual values they use to certify.'' See 75 FR 25476.
    For the reasons that EPA articulated in the 2010 rulemaking, EPA 
expects that some in-use vehicles may generate slightly more 
CO2 than the certified values and some vehicles may emit 
slightly less, but the average CO2 emissions of a 
manufacturer's fleet and each model within it should be very close to 
the levels reported to EPA and used to calculate overall fleet average. 
The in-use data submitted over the last ten years largely supports this 
expectation. Nevertheless, EPA believes it is important that 
manufacturers understand their obligations under the in-use program and 
that EPA has the appropriate tools to hold manufacturers responsible 
should they fail to meet these obligations. EPA proposed two regulatory 
options, either of which would align with our original intent in the 
2010 rule.
    The first option was to clarify the regulatory language to make it 
clear that if a manufacturer's in-use data demonstrates that a 
manufacturer's CO2 results are consistently higher than the 
values used for calculation of the fleet average for any class or 
category of vehicle, EPA may use its authority to correct a 
manufacturer's greenhouse gas credit balance to ensure the 
manufacturer's GHG fleet average is representative of the actual 
vehicles it produces. This means that the credit balance post-
correction will reflect the actual in-use performance of the vehicles. 
In other words, if the manufacturer reports a value of X g/mile in 
calculating its fleet average, but its vehicles emit X+A g/mile in-use, 
we may correct the manufacturer's balance by the entire discrepancy 
(A).
    The second option was to set the in-use standards at the vehicle-
level emission test results or model-type average value if no 
subconfiguration test data are available in the GHG report. Under this 
approach, manufacturers will have the option to voluntarily raise the 
GHG values submitted in the GHG report if they wish to create an in-use 
compliance margin. The proposed change in this second option would make 
the GHG ABT program consistent with all other ABT programs used in the 
light-duty program. In all other ABT programs (e.g., FTP 
NMOG+NOX, MSAT, SFTP), manufacturers must choose a bin level 
or Family Emissions Limit (FEL) in which to certify. Manufacturers 
typically design their vehicle to emit well below the bin level or FEL 
to establish a compliance margin; however, the fleet average emissions 
are calculated based on the bin level or FEL, not the actual 
certification level. In those cases, the fleet average emissions 
calculated in the ABT report would be representative of the actual 
fleet as long as the vehicles comply with the certified bin level or 
FEL. Only the light-duty GHG ABT program allowed manufacturers to 
calculate the fleet average emissions based on the certification level. 
EPA allowed this with the expectation that vehicles in actual use would 
not normally emit more CO2 than they did

[[Page 27977]]

at the time of certification (i.e., CO2 emissions are not 
expected to increase with time or mileage).
    The Alliance for Automotive Innovation commented that they opposed 
the second option, stating that even with perfect in-use performance, 
they would expect 50 percent of vehicles to exceed the original 
certification test simply due to test-to-test variation. They 
acknowledged that most test groups would avoid IUCP given the threshold 
of 10 percent exceedance for 50 percent of the tested vehicles. They 
commented that, it is not productive to have 50 percent of all initial 
tests be identified as failures.
    Kia commented that keeping the 10-percent in-use standard is 
critical as EPA increases the stringency of criteria pollutants and GHG 
emissions 10-fold. The Alliance for Automotive Innovation commented 
that they support the first of the two options that maintains the 10 
percent allowance.
    BMW NA commented that they understand and support EPA in its 
proposal to align with the intent of the 2010 light-duty GHG rule and 
are in favor of the ``Option 1.'' However, they requested that EPA 
updates the proposal to clarify what is meant by ``consistently 
higher'' results with respect to GHG balance correction.
    EPA is finalizing language in 40 CFR 86.1865-12 to make it clear 
that if a manufacturer's in-use data demonstrates a substantial number 
of vehicles fail to comply with the in-use GHG standards for any class 
or category of vehicle, EPA may use its recall authority to remedy a 
GHG noncompliance. In some cases, this remedy could be a repair of the 
affected vehicles, and in other cases it could be an adjustment to the 
GHG credit balance. In either case, the remedy must be adequate to 
ensure the manufacturer's GHG fleet average is representative of the 
actual vehicles it produced. This means that, in the case of a credit 
adjustment, the credit balance post-correction will reflect the actual 
in-use performance of the vehicles. In other words, if the manufacturer 
reports a value of X g/mile in calculating its fleet average, but its 
vehicles emit X+A g/mile in-use, the manufacturer's balance must be 
adjusted by the entire discrepancy (A). In the case of a repair to the 
affected vehicles, the remedy would also need to be sufficient such 
that the repaired vehicles emit the same X g/mile.
    The overarching principle of compliance to the fleet average 
standards is that the calculated fleet average in the GHG report must 
accurately represent the actual fleet of vehicles a manufacture 
produced. If a manufacturer knowingly provides false or inaccurate data 
as part of their GHG report, the manufacturer may be subject to 
enforcement and EPA may void ab initio the certificates of conformity 
which relied on that data. Vehicles are covered by a certificate of 
conformity only if they are in all material respects as described in 
the manufacturer's application for certification (Part I and Part II) 
including the GHG report. If vehicles generate substantially more 
CO2 emissions in actual use than what was reported, those 
vehicles are not covered by the certificate of conformity. EPA is 
finalizing a change to the regulatory language that is designed to 
clarify the Agency's understanding of its authority to find that 
vehicles were sold in violation of a condition of a certificate. EPA is 
finalizing edits to 40 CFR 86.1848-10 to make it clearer that any 
vehicles sold that fail to meet any condition upon which the 
certificate was issued are not covered by the certificate and thus were 
sold in violation of CAA 203(a)(1). EPA did receive adverse comments to 
this change which are addressed in the RTC document.
    EPA also proposed changes to 40 CFR 86.1850-01 to allow the Agency 
to void ab initio a previously issued certificate of conformity in the 
list of possible actions the agency may take if a manufacturer commits 
any of the infractions listed in 40 CFR 86.1850-01(b), namely: if a 
manufacturer submits false or incomplete information, renders 
inaccurate any test data which it submits, or fails to make a good 
engineering judgment. Specifically, EPA proposed removing the word 
``knowingly'' from 40 CFR 86.1850-01(d). The Alliance for Automotive 
Innovation commented that EPA failed to set forth a plausible rationale 
for the proposed changes. Without taking a position on the substance of 
the comment, EPA has decided not to finalize the changes to 40 CFR 
86.1850-01 as proposed.
ii. In-Use Confirmatory Program (IUCP)
    EPA's existing regulations require manufacturers to conduct in-use 
testing as a condition of certification. Specifically, manufacturers 
must commit to later procure and test privately-owned vehicles that 
have been normally used and maintained. The vehicles are tested to 
determine the in-use levels of criteria pollutants when they are in 
their first and fourth years of service. This testing is referred to as 
the In-Use Verification Program (IUVP) testing, which was first 
implemented as part of EPA's Compliance Assurance Program (CAP) 2000 
certification program.\708\
---------------------------------------------------------------------------

    \708\ 64 FR 23906, May 4, 1999.
---------------------------------------------------------------------------

    Another component of the CAP 2000 certification program is the In-
Use Confirmatory Program (IUCP). This is a manufacturer-conducted in-
use test program that can be used as the basis for EPA to order an 
emission recall (although it is not the only potential basis for 
recall). For vehicles tested in the IUVP to qualify for IUCP, there is 
a threshold of 1.30 times the certification emission standard for 
criteria emissions (e.g., NMOG+NOX, CO) and an additional 
requirement that at least 50 percent of the test vehicles for the test 
group fail for the same substance. If these criteria are met for a test 
group, the manufacturer is required to test an additional 10 vehicles 
which are screened for proper use and maintenance.
    Since measuring PM below 0.5 mg/mile may require measurement 
procedure adjustments in some laboratories, EPA is providing a 
temporary increase in the criteria that trigger an IUCP (in-use 
confirmatory testing program). The temporary criteria only apply to 
test groups certifying to the Tier 4 PM standard (0.5 mg/mi) and only 
extends through 2030 for LDV, LDT, MDPV, and through 2031 for MDV. The 
temporary criteria consist of a mean test group PM equal to or greater 
than 1.30 times the standard and the failure rate among vehicles in 
that test group of 80 percent or higher. The criteria revert to 1.30 
times the standard and a failure rate among vehicles in that test group 
of 50 percent or higher starting in 2031 for LDV, LDT, MDPV, and 
starting in 2032 for MDV.
    The 2010 light-duty GHG rule set full useful life greenhouse gas 
emissions standards for which each vehicle is required to comply and 
required in-use testing under the In-Use Verification Program (IUVP) 
testing provisions.\709\ At that time, EPA did not set criteria for In-
Use Confirmatory Program (IUCP) for GHG but indicated that IUCP will be 
a valuable future tool for achieving compliance and that EPA would 
reassess IUCP thresholds for GHG in a future rule when more data is 
available.
---------------------------------------------------------------------------

    \709\ 75 FR 25475, May 7, 2010.
---------------------------------------------------------------------------

    Since the 2010 light-duty GHG rule, EPA has received in-use 
greenhouse gas emissions test results from over 9,500 vehicles. EPA 
believes there is now sufficient data to establish IUCP threshold 
criteria based on greenhouse gas emissions and that doing so is 
warranted.
    The 2010 light-duty GHG rule established an in-use CO2 
standard to be

[[Page 27978]]

10 percent above the vehicle-level emission test results or model-type 
value if no subconfiguration test data are available. As discussed 
above, EPA proposed two options for the in-use standard. The first 
would retain the in-use standard including the 10 percent margin 
established in the 2010 light-duty GHG rule and the second would 
eliminate the 10 percent margin from the in-use standard and apply it 
instead to the IUCP criteria. As discussed above, EPA is finalizing the 
first option and retaining the 10 percent margin in the in-use 
standard. Therefore, EPA is finalizing the threshold criteria to 
trigger IUCP when at least 50 percent of the test vehicles for a test 
group exceed the relevant in-use CO2 standard.
    The Alliance for Automotive Innovation commented that EPA did not 
adequately justify the decision to exclude a threshold such as the 1.3 
factor used for criteria pollutants in combination with the 50 percent 
trigger for IUCP testing. EPA disagrees with the comment. In the 
proposal, EPA explained that EPA did not propose a threshold for the 
average emissions of the test group (which is 1.3 times for criteria 
emissions) for a number of reasons. First, unlike criteria pollutants 
where the in-use standards are generally the same as the certification 
standards, EPA setting a margin of 10 percent above the reported GHG 
result for the in-use standard. Adding an additional multiplier on top 
of that would be unnecessary, and EPA believes a 10 percent exceedance 
threshold (either as a part of the in-use standard or as a threshold 
criteria) is appropriate given the Agency's experience with GHG 
compliance over the past decade. Second, unlike for criteria 
pollutants, the CO2 emissions performance of vehicles is 
generally not expected to deteriorate with age and mileage (see the 
2010 light-duty GHG rule). Third, unlike with criteria pollutants, the 
in-use GHG standards are not consistent within a test group and the 
compliance level is not determined by the same emissions data vehicle. 
GHG in-use standards can be different for each subconfiguration or 
model type. Fourth, the review of the data supports 10 percent above 
the reported GHG value as an appropriate criterion, because over 95 
percent of the test results EPA received complied with this in-use 
standard based on the 10 percent margin. The final IUCP criteria is 
intended to capture vehicles with both unusually high increases in 
CO2 emissions compared to the reported value and an 
unusually high failure rate.
    Therefore, consistent with our proposal, EPA is not establishing 
additional criteria based on the average emissions of the test group.
iii. Part 2 Application Changes
    As proposed, EPA is finalizing changes to 40 CFR 86.1844-01(e) 
``Part 2 Application'' to make it clearer that the Part 2 application 
must include the part numbers and descriptions of the GHG emissions 
related parts, components, systems, software or elements of design, and 
Auxiliary Emission Control Devices (AECDs) including those used to 
qualify for GHG credits (e.g., air conditioning credits, off cycle 
credits, advanced technology vehicle credits) as previously specified 
in EPA guidance letter CD-14-19. These changes are not intended to 
alter the existing reporting requirements, but rather to clarify the 
existing requirement.
    Also as proposed, EPA is finalizing changes to 40 CFR 85.2110 and 
40 CFR 86.1844-01(e) ``Part 2 Application'' to no longer accept paper 
copies of service manuals, Technical Service Bulletins (TSB), owner's 
manuals, or warranty booklets. In response to the National Archives and 
Records Administration (NARA) mandate and OMB's Memorandum for Heads of 
Executive Departments and Agencies, M-19-21, Transition to Electronic 
Records, EPA will no longer accept paper copies of these documents.
iv. Fuel Economy and In-Use Verification Test Procedure Streamlining
    The ``Federal Test Procedure'' (FTP) defines the process for 
measuring vehicle exhaust emissions, evaporative emissions, and fuel 
economy and is outlined in 40 CFR 1066.801(e). The process includes 
preconditioning steps to ensure the repeatability of the test results, 
as described in 40 CFR 86.132-96. EPA is finalizing two changes, 
consistent with our proposal, to the preconditioning process used for 
testing of only fuel economy data vehicles (FEDVs) (not emission data 
vehicles) in order reduce the testing burden while maintaining the 
repeatability and improving the accuracy of the test results.\710\ The 
changes are related to the fuel drain and refueling step and the 
preconditioning of the evaporative canister. EPA is also removing one 
fuel drain and refueling step for in-use surveillance vehicles. In 
addition, we are finalizing our proposed changes to the fuel cap 
placement during vehicle storage for all emission data and fuel economy 
vehicles.
---------------------------------------------------------------------------

    \710\ See proposed regulations in 40 CFR 86.132-96 and 
1066.801(e).
---------------------------------------------------------------------------

    Currently, all Fuel Economy Data Vehicles (FEDVs) must follow the 
regulations for preconditioning before conducting the cold-start 
portion of the test. Included in this preconditioning is the 
requirement to drain and refuel the fuel tank twice. We are finalizing 
our proposal to remove the second fuel drain step, which occurs after 
running the Urban Dynamometer Driving Schedule (UDDS) preconditioning 
cycle, but before the cold start test. The fuel drain and refuel step 
was originally included in the test procedure because fresh fuel was 
important for carbureted engines and could impact the test results. 
However, with today's fuel injection systems, EPA's assessment is that 
the refueling of the vehicle with fresh fuel does not impact the 
measured fuel economy of the vehicle.\711\ Removing this step will save 
a significant amount of fuel for each test run by the manufacturer or 
by EPA and reduce the number of voided tests due to mis-fueling and 
fueling time violations. It will also reduce the labor associated with 
refueling the vehicle for each test. EPA is also removing this step for 
in-use vehicle testing on vehicles tested under 40 CFR 86.1845-04 
(verification testing). It is difficult to drain fuel from an in-use 
vehicle because they normally do not have fuel drains. Removing this 
step will save time and fuel from the in-use verification process as 
well. EPA will still require this step for in-use confirmatory vehicles 
tested under 40 CFR 86.1846-01.
---------------------------------------------------------------------------

    \711\ Memo to Docket. ``EPA FTP Streamlining Test Results.'' See 
Docket EPA-HQ-OAR-2022-0829. March 2023.
---------------------------------------------------------------------------

    EPA is also finalizing its proposal to remove the canister loading 
and purging steps from the preconditioning for FEDVs. This will provide 
the following benefits to manufacturers and EPA: the time to run the 
test will be reduced, less butane will be consumed by the laboratories 
which reduces the cost of running a test, and the fuel economy 
measurement accuracy will improve. EPA conservatively estimates that at 
least 88 kg of butane was consumed by manufacturers in the 2021 
calendar year for the purposes of fuel economy testing, based on 909 
fuel economy test submissions to EPA and assuming 97 grams of butane 
per canister. The measurement accuracy will improve because the 
calculations for fuel economy assume that 100 percent of the fuel 
consumed during the testing has the carbon balance of the liquid fuel 
in the tank. The butane vapor that is added

[[Page 27979]]

to the canister during preconditioning has a different carbon content, 
and thus causes very small inaccuracies in the fuel economy results. 
EPA's test program also shows that the canister loading does not have 
any statistically significant effect on the fuel economy results from 
the cold start and highway fuel economy tests.\712\
---------------------------------------------------------------------------

    \712\ Ibid.
---------------------------------------------------------------------------

    Finally, the regulations at 40 CFR 86.132-96(a) currently state 
that fuel caps must be removed during any period when the vehicle is 
parked outside awaiting testing but fuel caps may be in place while in 
the test area. As proposed, EPA is amending the regulations to simply 
require that vehicles be stored in a way that prevents fuel 
contamination and preserves the integrity of the fuel system. At this 
time EPA considers the possibility of contaminants getting into the 
fuel system while the fuel cap is off to be more significant than any 
possible canister loading. Modern vehicles purge the canister 
sufficiently during the preconditioning cycles to ensure that tests 
completed on vehicles that have been parked will not significantly 
affect test results. Custodians of test vehicles should avoid parking 
test vehicles outdoors during hot conditions.
    EPA did not receive any adverse comments related to the proposed 
test streamlining described in this section. Ingevity commented that 
the streamlining steps seem acceptable as long as the full test 
procedure specified in 40 CFR part 86, subpart B, remains primary for 
EPA testing. The Agency notes that the appropriate test procedure steps 
will be followed when testing vehicles to determine compliance with the 
evaporative emission standards.
v. Miscellaneous Amendments
    We are clarifying the pre-certification exemption in 40 CFR 85.1706 
by amending the definition of ``pre-certification vehicle'' in 40 CFR 
85.1702. The amended regulation limits the exemption to companies that 
already hold a certificate showing that they meet EPA emission 
standards. This has been a longstanding practice for highway and 
nonroad engines and vehicles. Companies that are not certificate 
holders may continue to request a testing exemption under 40 CFR 
85.1705.
    Also as proposed, we are updating the test procedures in 40 CFR 
86.113-15 to reference test fuel specifications in 40 CFR part 1065 for 
diesel fuel, natural gas, and LPG. We do not expect this change to 
cause manufacturers to change the test fuels they use for 
certification, or to prevent any manufacturer from using carryover data 
to continue certifying vehicles in later model years. In the case of 
diesel fuel, the two sets of specifications are very similar except 
that 40 CFR 1065.703 takes a different approach for aromatic content of 
the fuel by specifying a minimum aromatic content of 100 g/kg. We 
expect current diesel test fuels to meet this specification. In the 
case of natural gas, 40 CFR 1065.715 decreases the minimum methane 
content from 89 to 87 percent, with corresponding adjustments in 
allowable levels of nonmethane compounds. In this case too, 
manufacturers will be able to continue meeting test fuel specifications 
without changing their current practice. In the case of LPG, 40 CFR 
86.113-94 directs manufacturers to ask EPA to approve a test fuel. The 
final rule specifies, as proposed, that the fuel specifications already 
published in 40 CFR 1065.720 are appropriate for testing vehicles 
certified und 40 CFR part 86, subpart S.
    The regulation currently requires manufacturers to include 
information in the application for certification for fuel-fired heaters 
(40 CFR 86.1844-01(d)(15)). The regulation also requires manufacturers 
to account for fuel-fired heater emissions in credit calculations for 
Tier 2 vehicles (40 CFR 86.1860-04(f)(4)). The Tier 3 regulation 
inadvertently omitted the requirement related to credit calculations in 
40 CFR 86.1860-17. As proposed, we are restoring the requirement to 
account for emissions from fuel-fired heaters in credit calculations in 
40 CFR 86.1844-01(d)(15).
    This rule includes several structural changes that lead to a need 
to make the following changes to the regulations for correct 
terminology and appropriate organization:
     We are replacing cold temperature NMHC standards with cold 
temperature NMOG+NOX standards, and we are adding a cold 
temperature PM standard. The rule includes updates to refer to cold 
temperature standards generally, or to cold temperature 
NMOG+NOX standards instead of, or in addition to, cold 
temperature NMHC standards. The regulation also now includes references 
to cold temperature testing as ``-7 [deg]C testing''. 40 CFR 86.1864-10 
is similarly adjusted to refer to cold temperature fleet average 
standards and cold temperature emission credits instead of referencing 
NMHC credits.
     We are setting separate emission standards for US06 and 
SC03 driving schedules rather than setting standards based on a 
composite calculation for the driving schedules that make up the 
Supplemental FTP. As a result, we are generally adjusting terminology 
for Tier 4 vehicles to refer to the specific cycles rather than the 
Supplemental FTP.
     The existing regulation includes several references to 
Tier 3 standards (or Tier 3 emission credits, etc.). Those references 
were generally written to say when regulatory provisions started to 
apply. Some of those provisions need to continue into Tier 4, but not 
all. The final rule includes new language in several places to clarify 
whether or how those provisions apply for Tier 4 vehicles.
     The Tier 4 standards apply nearly uniformly for both 
light-duty and medium-duty vehicles. This contrasts with earlier 
standards where many requirements and compliance provisions applied 
differently for light-duty and medium-duty vehicles. For Tier 3, that 
led us to adopt the light-duty standards in 40 CFR 86.1811-17 and the 
medium-duty standards in 40 CFR 86.1816-18. As a result, because of the 
extensive commonality for Tier 4 standards, we are finalizing the new 
criteria exhaust emission standards for all these vehicles in 40 CFR 
86.1811-27 rather than continuing to rely on 40 CFR 86.1816 for medium-
duty vehicles.
    The rule includes several instances of removing regulatory text 
that has been obsolete for several years. Removing obsolete text is 
important to prevent people from making errors from thinking that 
obsolete text continues to apply. The final rule includes additional 
housekeeping amendments to remove obsolete text and to remove or update 
cross references to obsolete or removed regulatory text.
    The proposed rule identified labeling information that included 
obsolete content for incomplete vehicles. We proposed to remove 40 CFR 
86.1807-01(d), but are instead amending that paragraph for the final 
rule to preserve the labeling information, but exclude the references 
to obsolete regulatory provisions.
    One case of obsolete text is related to special test procedures as 
specified in 40 CFR 86.1840-01. Vehicle manufacturers have completed a 
transition to following the exhaust test procedures specified in 40 CFR 
part 1066, such that those new test procedures apply instead of the 
test procedures in 40 CFR part 86, subpart B, starting with model year 
2022. Since we address special test procedures in 40 CFR 1066.10(c), 
which in turn relies on 40 CFR 1065.10(c)(2), we no longer need to rely 
on 40 CFR 86.1840-01 for special test procedures. We note the following 
aspects of the transition for special test

[[Page 27980]]

procedures, which we are finalizing as proposed:
     We are applying the provisions for special procedures 
equally to all vehicles certified under 40 CFR part 86, subpart S. The 
special test procedures were written in a way that did not apply for 
incomplete vehicles certified under 40 CFR part 86, subpart S. This is 
very likely an artifact of the changing scope of the regulation since 
2001.
     We are keeping the reference to infrequently regenerating 
aftertreatment devices in 40 CFR 86.1840-01 as an example of special 
test procedures to clarify that we are not changing the way 
manufacturers demonstrate compliance for vehicles with infrequently 
regenerating aftertreatment devices. Specifically, we are not adopting 
the measurement and reporting requirements that apply for heavy-duty 
engines under 40 CFR 1065.680.
     We are applying the provisions related to infrequently 
regenerating aftertreatment devices equally to all vehicles certified 
under 40 CFR part 86, subpart S. The provisions in 40 CFR 86.1840-01 
were written in a way that they did not apply for medium-duty passenger 
vehicles. This is very likely an artifact of the changing scope of the 
regulation since 2001.
    We are finalizing the following additional amendments, as proposed:
     Section 85.1510(d): Waiving the requirement for 
Independent Commercial Importers (ICI) to apply fuel economy labels to 
electric vehicles. Performing the necessary measurements to determine 
label values would generally require accessing high-voltage portions of 
the vehicle's electrical system. Manufacturers can appropriately and 
safely make these measurements as part of product development and 
testing. These measurements can pose an unreasonable safety risk when 
making these measurements on production vehicles. The benefit of 
labeling information for these vehicles is not enough to outweigh the 
safety risks of generating that information.
     Section 86.1816-18: The published final rule to adopt the 
Tier 3 exhaust emission standards for Class 2b and Class 3 vehicles 
inadvertently increased the numerical value of those standards a 
trillion-fold by identifying the units as Tg/mile. We are reverting to 
g/mile as we intended by adopting the Tier 3 standards.
    This rule includes expanded provisions for in-use testing under 40 
CFR 86.1845-04 as described in sections III.D.5.iii. and III.G.2.i of 
this preamble. In addition to those new testing requirements, we are 
taking the opportunity for this final rule to clarify that the 
provisions allowing manufacturers to request approval to test fewer 
vehicles also includes an alternative of testing the required number of 
vehicles by waiving the detailed specifications for test vehicles. For 
example, if manufacturers are unable to procure the required number of 
test vehicles meeting specifications for mileage, geographic 
distribution, and altitude, they may ask for EPA approval to substitute 
test vehicles that fall short of meeting all those specifications. As 
always, EPA approval would depend on manufacturers taking all 
reasonable steps to meet those requirements. We are also allowing for 
EPA to approve extended deadlines for completing testing to recognize 
that practical limitations sometimes prevent manufacturers from 
finishing a test program within the specified time frame.
    In reviewing material for the final rule, we realized that the 
proposed rule did not describe clearly enough how ICIs would need to 
manage per-vehicle compliance to certify vehicles relative to emission 
standards that allow or require manufacturers to comply with an 
averaging standard using emission credits. We are making the following 
amendments to 40 CFR 85.1515 in the final rule, largely to apply 
provisions that are consistent with certification practices for 
manufacturers where appropriate, and that are consistent with the 
practice of implementing standards for ICIs in recent years:
     The Tier 4 standards apply for ICIs starting in 2032, 
which is the first model year that small-volume manufacturers must 
comply with all the Tier 4 standards for light-duty vehicles. ICIs 
continue to be subject to Tier 3 standards through 2031.
     For both Tier 3 and Tier 4, we are clarifying that each 
imported vehicle is subject to the fleet average standard where 
manufacturers are allowed or required to demonstrate compliance based 
on emission credits. This applies for NMOG+NOX standards for 
25 [deg]C testing, NMOG+NOX standards for -7 [deg]C testing, 
and for evaporative emissions.
     For both Tier 3 and Tier 4, we are clarifying that ICIs 
may purchase emission credits to certify vehicles with emissions higher 
than the specified standards for any of the averaging-based standards. 
ICIs would need to purchase credits to enable importation of each 
vehicle individually. Aside from applying emission credits to those 
individual vehicles, ICIs would not be allowed to average, bank, or 
trade emission credits. Using this per-vehicle approach, ICIs would 
have no need to maintain an account with a balance of credits, and 
would never be in a situation where deficit credit provisions would 
apply.
     Where manufacturers certify using emission credits, we 
specify that the highest allowable emission level is the highest 
available NMOG+NOX bin or the evaporative emissions FEL cap.
     We are further clarifying that ICIs may not participate in 
the averaging, banking, and trading program for GHG emission credits.
     We are removing references to ``motor vehicle engines'' in 
some places since the ICI provisions no longer apply for heavy-duty 
engines.
     We are adding OBD to the list of standards and 
requirements for ICIs to certify vehicles. This is consistent with 
longstanding guidance.\713\
---------------------------------------------------------------------------

    \713\ ``Guidance for Certification, Fuel Economy and Final Entry 
of ICI Vehicles'', CCD-03-11 (ICI), November 25, 2003.
---------------------------------------------------------------------------

5. Light- and Medium-Duty Emissions Warranty for Certain ICE Components
    As proposed, EPA is designating several emission control components 
of light-duty ICE vehicles as specified major emission control 
components. These include components of the diesel Selective Reductant 
Catalysts (SRC) system, components of the diesel Exhaust Gas 
Recirculation (EGR) system, and diesel and gasoline particulate filters 
(DPFs and GPFs). As the result of this designation, these components 
have the same warranty requirements as other components that have been 
established as specified major emission control components.
    As described in section III.G.3 of the preamble, CAA section 207(i) 
specifies that the warranty period for light-duty vehicles is 2 years 
or 24,000 miles of use (whichever first occurs), except the warranty 
period for specified major emission control components is 8 years or 
80,000 miles of use (whichever first occurs). The Act defines the term 
``specified major emission control component'' to mean only a catalytic 
converter, an electronic emissions control unit, and an onboard 
emissions diagnostic device, except that the Administrator may 
designate any other pollution control device or component as a 
specified major emission control component if--
    (A) the device or component was not in general use on vehicles and 
engines manufactured prior to the model year 1990; and
    (B) the Administrator determines that the retail cost (exclusive of 
installation costs) of such device or component exceeds $200 (in 1989 
dollars),\714\

[[Page 27981]]

adjusted for inflation or deflation as calculated by the Administrator 
at the time of such determination.
---------------------------------------------------------------------------

    \714\ Equivalent to approximately $500 today.
---------------------------------------------------------------------------

    EPA believes that GPFs meet the requirements set forth in CAA 
section 207(i) and should be designated as specified major emission 
control components. GPFs were not in general use prior to model year 
1990 and their cost exceeds the threshold specified in the CAA. EPA 
anticipates that manufacturers will choose to comply with the PM 
standards in this rule through application of a GPF for certain 
vehicles. In the event of a GPF failure, PM emissions will most likely 
exceed the standards. It is imperative that a properly functioning GPF 
be installed on a vehicle in order to achieve the environmental 
benefits projected by this rulemaking.
    In order to meet the current emissions standards, diesel vehicles 
utilize Selective Reductant Catalysts (SRC) as the primary catalytic 
converter for NOX emissions controls and well as a Diesel 
Oxidation Catalyst (DOC) as the primary catalytic converter for CO and 
hydrocarbons and a Diesel Particulate Filter (DPF) as the primary 
catalytic converter to control particulate matter (PM). In the event 
that any one of these components fail, EPA anticipates that the 
relevant standard will be exceeded. The proper functioning of each of 
these components is necessary for the relevant emissions benefits to be 
achieved.
    More specifically, the SCR catalytic converter relies on a system 
of components needed to inject a liquid reductant called Diesel Exhaust 
Fluid (DEF) into the catalytic converter. This system includes pumps, 
injectors, NOX sensors, DEF level and quality sensors, 
storage tanks, DEF heaters and other components that all must function 
properly for the catalytic converter to work. These components meet the 
criteria for designation as specified major emission control 
components.
    Vehicles with diesel engines do not rely solely on aftertreatment 
to control emissions. Diesel engines utilize Exhaust Gas Recirculation 
(EGR) to control engine out emissions as a critical element of the 
emissions control system. Components of the EGR system such as 
electronic EGR valves and EGR coolers meet the criteria for designation 
as specified major emission control components.
    The emission-related warranty period for heavy-duty engines and 
vehicles under CAA section 207(i) is ``the period established by the 
Administrator by regulation (promulgated prior to November 15, 1990) 
for such purposes unless the Administrator subsequently modifies such 
regulation.'' The regulations specify that the warranty period for 
light heavy-duty vehicles under 40 CFR 1037.120 is 5 years or 50,000 
miles of use (whichever first occurs). EPA is clarifying, as proposed, 
that this same warranty period applies for medium-duty vehicles 
certified under 40 CFR part 86, subpart S, except that a longer 
warranty period of 8 years or 80,000 miles applies for engine-related 
components described in this section as specified major emission 
control components.
    The warranty provisions in CAA section 207(i)(2) do not explicitly 
apply to medium-duty passenger vehicles. However, as with the new 
standards in this rule, we are applying, as proposed, warranty 
requirements to medium-duty passenger vehicles in the same way that 
they apply to light-duty vehicles. We did not receive substantive 
comments regarding the proposed changes and clarifications for warranty 
provisions described in this section.
6. Definition of Light-Duty Truck
    EPA has had separate regulatory definitions for light truck for GHG 
standards and light-duty truck for criteria pollutant standards. The 
``light truck'' definition used for determining compliance with the 
light-duty GHG emission standards (40 CFR 600.002) matches the 
definition that NHTSA uses in determining compliance with their fuel 
economy standards (49 CFR 523.5). This definition contains specific 
vehicle design characteristics that must be met to qualify a vehicle as 
a truck. The broader ``light-duty truck'' definition used for 
certifying vehicles to the criteria pollutant standards (40 CFR 
86.1803-01) has allowed for some SUVs to qualify as trucks even if the 
specific vehicle does not contain the truck-like design attributes. The 
definition also includes some ambiguity that requires the manufacturers 
and EPA to apply judgment to determine the appropriate classification.
    Historically this was not an issue because the car versus truck 
distinction was clear. Nearly all vehicles were passenger cars or 
pickup trucks with open cargo beds. The earliest sport utility vehicles 
(SUVs) were primarily derived from pickup truck platforms and were 
therefore considered light trucks. However, current versions of some of 
these SUVs now have car-based platforms with car-like features. Current 
differences between the two light-truck definitions leads to some SUVs 
being certified to GHG standards as a truck and to criteria pollutant 
standards as a car. To address this concern, as proposed, we are 
transitioning to a single definition of light-duty truck with the 
implementation of the Tier 4 criteria pollutant emission standards 
starting in model year 2027.
    We are revising the definition of light-duty truck used in the 
criteria pollutant standards to match the definition of light-truck 
used in the GHG standards. This change will eliminate any confusion and 
simplify reporting for manufacturers because each vehicle will be 
treated consistently as either a car or a truck for all standards and 
reporting requirements.
    Commenters pointed out that the revised definition would cause some 
vehicle models to become subject to the more stringent evaporative 
emission standards that apply for light-duty vehicles. We did not 
intend for the revised definition to cause a change in evaporative 
emission standards. At the same time, we are aware that the less 
stringent standards for light-duty trucks were originally intended to 
reflect differences in fuel tank volumes and other vehicle 
characteristics related to controlling evaporative emissions. It is 
apparent that vehicles affected by the changing definition of ``light-
duty truck'' are not differentiated from light-duty vehicles based on 
such vehicle parameters related to evaporative emission control. From 
that perspective, the revised definition is likely to have the effect 
of accomplishing the original intent of applying standards 
corresponding to vehicles with expected evaporative-related 
characteristics for light-duty vehicles.
    To address the concern expressed in the comments, we are therefore 
adding a provision for the final rule to allow manufacturers to 
continue to meet the standard for light-duty trucks even if their 
vehicles are recategorized as light-duty vehicles based on the change 
in the definition, provided that those vehicle models continue to 
qualify for carryover certification. With this approach, manufacturers 
would do new testing to meet the more stringent standard only if they 
already need to do new testing to certify to the evaporative emission 
standards. To avoid extending this provision indefinitely, we are 
including a requirement for manufacturers to meet the more stringent 
evaporative emission standards for such vehicles starting in model year 
2032, even if they would otherwise qualify for carryover certification. 
Meeting the more stringent standards will likely involve modestly 
increasing canister volume and upgrading various design features and 
parameters in line with the technology solutions used for other light-
duty vehicles. The several years of lead time will allow manufacturers 
to plan for making those changes.

[[Page 27982]]

H. On-Board Diagnostics Program Updates

    EPA regulations state that onboard diagnostics (OBD) systems must 
generally detect malfunctions in the emission control system, store 
trouble codes corresponding to detected malfunctions, and alert 
operators appropriately. EPA adopted at 40 CFR 86.1806-17 a requirement 
for manufacturers to meet the 2013 California Air Resources Board 
(CARB) OBD regulation as a requirement for an EPA certificate, with 
certain additional provisions, clarifications and exceptions, in the 
Tier 3 Motor Vehicle Emission and Fuel Standards final rulemaking (79 
FR 23414, April 28, 2014). Since that time, CARB has made several 
updates to their OBD regulations and continues to consider changes 
periodically. In this rule, EPA is updating to the latest version of 
the CARB OBD regulation (California's 2022 OBD-II requirements that are 
part of title 13, section 1968.2 of the California Code of Regulations, 
approved on November 30, 2022). This is accomplished by adding a new 40 
CFR 86.1806-27 for model year 2027 and later vehicles. EPA had proposed 
adding a new monitoring requirement for gasoline particulate filters 
(GPFs) because the CARB regulation didn't include a specific 
requirement for them. In follow-up meetings, manufacturers explained 
they had already certified GPF diagnostics, and comments on the 
proposed rule recommended relying on CARB regulation as being 
sufficient for proper diagnostics to be created. Commenters also 
suggested that adding a separate requirement from EPA would be 
confusing. EPA has therefore decided to not finalize the proposed GPF 
monitoring requirements and instead rely on the GPF-related 
requirements already included in the CARB regulation.
    See RTC section 5 for a more detailed discussion of comments 
related to OBD.

I. Coordination With Federal and State Partners

    Executive Order 14037 directs EPA and the Department of 
Transportation (DOT) to coordinate, as appropriate and consistent with 
applicable law, during consideration of this rulemaking. EPA has 
coordinated and consulted with DOT/National Highway Traffic Safety 
Administration (NHTSA), both on a bilateral level during the 
development of this rule as well as through the interagency review of 
the EPA rule led by the Office of Management and Budget. EPA has set 
some previous light-duty vehicle GHG emission standards in joint 
rulemakings where NHTSA also established CAFE standards. Most recently, 
in establishing standards for model year 2023-2026, EPA and NHTSA 
concluded that it was appropriate to coordinate and consult but not to 
engage in joint rulemaking. EPA has similarly concluded that it is not 
necessary for this EPA rule to be issued in a joint action with NHTSA. 
In reaching this conclusion, EPA notes there is no statutory 
requirement for joint rulemaking and that the agencies have different 
statutory mandates and their respective programs have always reflected 
those differences. As the Supreme Court has noted ``EPA has been 
charged with protecting the public's 'health' and 'welfare,' a 
statutory obligation wholly independent of DOT's mandate to promote 
energy efficiency.'' \715\ Although there is no statutory requirement 
for EPA to consult with NHTSA, EPA has consulted significantly with 
NHTSA in the development of this rule. For example, staff of the two 
agencies met frequently to discuss various technical issues including 
modeling inputs and assumptions, shared technical information, and 
shared views related to the assessments conducted for each rule. 
Further technical collaboration between EPA and NHTSA, along with the 
Department of Energy and National Laboratories, on a wide range to 
technical topics, is further described below.
---------------------------------------------------------------------------

    \715\ Massachusetts v. EPA, 549 U.S. at 532.
---------------------------------------------------------------------------

    EPA also has consulted with analysts from other Federal agencies in 
developing this rule and the heavy-duty vehicles Phase 3 rulemaking, 
including the Federal Energy Regulatory Commission (FERC), the Joint 
Office for Energy and Transportation (which helps coordinate and 
leverage expertise between the U.S. Department of Energy and the U.S. 
Department of Transportation to further progress on zero-emission 
transportation infrastructure), the Department of State, the Department 
of Labor, the Department of Energy and several National Laboratories. 
EPA consulted with FERC on this rulemaking regarding potential impacts 
of these rulemakings on bulk power system reliability and related 
issues.\716\ EPA consulted with the Department of Labor on issues 
related to employment impacts and worker training. We consulted with 
the Department of State on critical materials and supply chains. EPA 
collaborated together with NHTSA, DOE and several National Laboratories 
on a wide range of topics to support this rulemaking. EPA collaborated 
with DOE and Argonne National Laboratory on battery cost analyses and 
critical materials forecasting. EPA, National Renewable Energy 
Laboratory (NREL), and DOE collaborated on forecasting the development 
of a national charging infrastructure and projecting regional charging 
demand for input into EPA's power sector modeling. EPA also coordinated 
with the Joint Office of Energy and Transportation on charging 
infrastructure. EPA and the Lawrence Berkeley National Laboratory 
collaborated on issues of consumer acceptance of plug-in electric 
vehicles. EPA and the Oak Ridge National Laboratory collaborated on 
energy security issues. EPA also participated in the Federal Consortium 
for Advanced Batteries led by DOE and the Joint Office of Energy and 
Transportation. EPA and DOE also have entered into a Joint Memorandum 
of Understanding to provide a framework for interagency cooperation and 
consultation on electric sector resource adequacy and operational 
reliability.\717\
---------------------------------------------------------------------------

    \716\ Although not a Federal agency, EPA also consulted with the 
North American Electric Reliability Corporation (NERC). NERC is the 
Electric Reliability Organization for North America, subject to 
oversight by FERC.
    \717\ Joint Memorandum on Interagency Communication and 
Consultation on Electric Reliability, U.S. Department of Energy and 
U.S. Environmental Protection Agency, March 8, 2023.
---------------------------------------------------------------------------

    E.O. 14037 also directs EPA to coordinate with California and other 
states that are leading the way in reducing vehicle emissions. EPA has 
engaged with the California Air Resources Board on technical issues in 
developing this rule. EPA has considered certain aspects of the CARB 
Advanced Clean Cars II program, adopted in August 2022, as discussed 
elsewhere in this notice. We also have engaged with other states, 
including members of the National Association of Clean Air Agencies, 
Northeast States for Coordinated Air Use Management, and the Ozone 
Transport Commission. In addition, EPA received public comments from 
numerous states and state agencies, including the organizations noted 
above, various coalitions of state and local government Attorneys 
General, as well as several individual states and state/local 
environmental protection agencies. These comments and EPA's responses 
to them are found in the Response to Comments document.

J. Stakeholder Engagement

    EPA has conducted extensive engagement with a diverse range of 
interested stakeholders in developing this rule. We have engaged with 
those

[[Page 27983]]

groups with whom E.O. 14037 specifically directs EPA to engage, 
including labor unions, states, industry, environmental justice 
organizations and public health experts. In addition, we have engaged 
with NGOs representing environmental, public health and consumer 
interests, automotive manufacturers, suppliers, dealers, utilities, 
charging providers, local governments, Tribal governments, alternative 
fuels industries, and other organizations.

IV. Technical Assessment of the Standards

A. What approach did EPA use in analyzing the standards?

1. Modeling Approach and Analytical Tools
    EPA has conducted an updated technical assessment that extends and 
improves upon the analysis conducted for the proposal. Where 
applicable, we have incorporated the most recent and best available 
data, and revised and updated our inputs, assumptions, and methods in 
consideration of comments received during the public comment period. In 
addition to an analysis of the final standards, the updated analysis 
also includes an assessment of two alternatives that were considered, 
as well as a revised set of sensitivity cases.\718\
---------------------------------------------------------------------------

    \718\ EPA's modeling results are presented in multiple locations 
throughout the rulemaking documents for convenience and clarity. 
Although every effort has been made to ensure numerical values 
appear consistently throughout the preamble, RIA and RTC, to the 
extent there are any inconsistencies in discussion of modeling 
results, the results presented in the RIA tables and figures take 
precedence.
---------------------------------------------------------------------------

    The overall approach used for this final rule is consistent with 
that of the proposal, as well as our prior rulemakings for GHG and 
criteria pollutants for light- and medium-duty vehicles. We continue to 
refer to the extensive body of prior technical work that has 
underpinned those rules, and incorporated updated tools, models and 
data, subjected to peer review where appropriate, in conducting this 
assessment, based on the best available information and the public 
record. EPA conducted peer review \719\ in accordance with OMB's Final 
Information Quality Bulletin for Peer Review on six analyses supporting 
this final rule: (1) Optimization Model for reducing Emissions of 
Greenhouse gases from Automobiles (OMEGA 2.0), (2) Advanced Light-duty 
Powertrain and Hybrid Analysis (ALPHA3), (3) Motor Vehicle Emission 
Simulator (MOVES), (4) The Effects of New-Vehicle Price Changes on New- 
and Used-Vehicle Markets and Scrappage; (5) Literature Review on U.S. 
Consumer Acceptance of New Personally Owned Light-Duty Plug-in Electric 
Vehicles; (6) Cost and Technology Evaluation, Conventional Powertrain 
Vehicle Compared to an Electrified Powertrain Vehicle, Same Vehicle 
Class and OEM. Additional information on the peer reviews for these 
analyses is discussed later in this section as well as the RIA.
---------------------------------------------------------------------------

    \719\ The peer review reports for each analysis are in the 
docket for this action and at EPA's Science Inventory (https://cfpub.epa.gov/si/).
---------------------------------------------------------------------------

    As in the proposal, some of the areas of particular focus are 
related to the significant developments in vehicle electrification that 
have continued to occur since the 2021 rule. Vehicle manufacturers have 
continued to introduce PEV products in increased volumes and new market 
segments, improving the ability to characterize the cost and 
performance of best-practice designs. Key legislation such as the IRA 
and the BIL continues to provide significant incentives for both the 
manufacture and purchase of PEVs, and for the expansion of charging 
infrastructure. Additionally, in light of public comments received, as 
well as the levels of electrification that continue to be anticipated 
under the final standards, EPA's new technical assessment contains 
additional discussion and updated assessments of battery costs, 
critical minerals, supply chain development, battery manufacturing 
capacity, impact of the IRA incentives, PEV charging infrastructure, 
and impacts on the electric grid.
    Our modeling can be broadly divided into two categories. The first 
category is compliance modeling for the vehicle manufacturers, which 
includes the potential design and technology application decisions to 
achieve compliance under the modeled standard. The second category is 
effects modeling, which is intended to capture how changes in vehicle 
design and use will impact emissions, fuel consumption, public health 
and welfare, and other factors that are relevant to a societal 
benefits-costs analysis.
    As in the proposal, EPA is using a significantly updated and peer-
reviewed version of the Optimization Model for reducing Emissions of 
Greenhouse gases from Automobiles (OMEGA) to model vehicle manufacturer 
compliance with GHG standards. The updates include several provisions 
which the agency feels improve our overall fleet projection 
capabilities. In particular, the updated version of OMEGA extends the 
prior version's projections of cost-effective manufacturer compliance 
decisions by also accounting for the relationship between manufacturer 
compliance decisions and consumer demand and including important 
constraints on technology adoption. As discussed in the proposal, OMEGA 
is designed specifically around EPA's regulatory program under the 
Clean Air Act. In addition to modeling of the influence EPA's GHG 
standards, the updated OMEGA also allows for evaluation of other 
policies, such as state-level ZEV policies. These features make this 
updated version of OMEGA well-suited for analyzing standards in a 
market where PEVs may account for a steadily increasing share of new 
vehicle sales. EPA has utilized the OMEGA model in evaluating the 
effects of not only the GHG program but the criteria pollutant 
emissions program as well.
    OMEGA takes as inputs detailed information about existing vehicles, 
technologies, costs, and definitions of the policies under 
consideration. From these inputs, the model projects the stock of 
vehicles and vehicle attributes, and their use over the analysis 
period. The updated version of the OMEGA model better accounts for the 
significant evolution over the past decade in vehicle markets, 
technologies, and mobility services. In particular, recent advancements 
in PEVs and their introduction into the full range of market segments 
provides strong evidence that increased vehicle electrification can 
play an important role in achieving greater levels of emissions 
reduction in the future. Among the key new features of OMEGA is the 
representation of consumer-producer interactions when modeling 
compliance pathways and the associated technology penetration into the 
vehicle fleet. This capability allows us to project the impacts of the 
producer and consumer incentives contained in the IRA and BIL 
legislation. It also allows us to model the rate of consumer acceptance 
of novel technologies.
    EPA received a large number of public comments and recommendations 
for how to revise the NPRM's OMEGA modeling for this final rulemaking. 
The vast majority of comments were related to EPA's specific modeling 
inputs and assumptions and were not, for example, recommending a 
different modeling approach overall. A summary of updates made to our 
technical assessment since the NPRM is provided in section IV.A.2 of 
this preamble. One especially notable update for this final rule is the 
added capability for OMEGA to consider PHEVs as a compliance 
technology. OMEGA is described in detail in RIA Chapter 2.2.

[[Page 27984]]

    EPA also uses its ALPHA vehicle simulation model to estimate 
emissions, energy rates, and other relevant vehicle performance 
estimates. The ALPHA model is described in more detail in Chapter 2 of 
the RIA. ALPHA simulation results create the inputs to the OMEGA model 
for the range of technologies considered in this rulemaking. To support 
both the proposal and the final rule analyses, we built upon our 
existing library of benchmarked engines and transmissions used in 
previous rulemakings by adding several new technologies for ICE-based 
powertrains, and newly refined models of BEV powertrains. For the final 
rule analysis we added PHEVs to ALPHA, which include both charge-
depleting and charge-sustaining models. We also adopted an updated 
approach for representing the ALPHA simulation results in OMEGA, using 
`response surfaces' of emissions and energy rates. These continuous 
technology representations can be applied across vehicles of different 
size, weight, and performance characteristics without requiring that 
vehicles be binned into discrete vehicle classes. The response surface 
approach also simplifies the model validation process, since the 
absolute values of absolute emissions and energy rates that are 
produced can be readily checked against actual vehicle test data. This 
is in contrast to the validation process needed for the incremental 
effectiveness values that were estimated in previous rulemakings using 
either a `lumped parameter model' or direct table lookup of 
effectiveness. The modeling in ALPHA and generation of response 
surfaces is described in RIA Chapter 2.4.
    As in the proposal, the technology cost estimates used in this 
final rule assessment are from both new and previously referenced 
sources, including some values used in recent rulemakings where those 
remain the best available estimates. For this final rule assessment, 
EPA has incorporated findings from several ongoing research efforts 
that were previously described in the proposal.
    We have updated many of our PEV non-battery and ICE technology 
costs based on a detailed study from FEV, a large engineering firm with 
considerable experience in the analysis of vehicle technologies which 
the agency has cited regularly in previous rulemakings. As EPA has 
historically considered vehicle teardown studies as an important source 
of detailed cost estimates, this new study included a teardown of two 
comparable ICE and BEV vehicles, and a review of ICE and PEV component 
costs from similar teardowns previously conducted by the same firm. The 
latter work in particular improved on our estimates of technology costs 
and how they should be scaled depending on engine size, vehicle type, 
electric motor power, etc.\720\ We discuss this study in more detail 
and present our non-battery and ICE technology costs and scaling 
approaches in Chapter 2 of the RIA.
---------------------------------------------------------------------------

    \720\ FEV Report and Docket Memo: ``Cost and Technology 
Evaluation, Conventional & Electrical Powertrain Vehicles, Same 
Vehicle Class and OEM''.
---------------------------------------------------------------------------

    Battery costs are an important component of PEV costs. Consistent 
with prior rulemakings, our battery cost inputs are derived from costs 
modeled by Argonne National Laboratory's (ANL) BatPaC model. As also 
indicated in the proposal, and as requested by commenters, we updated 
our battery cost inputs, by working with ANL to conduct a more detailed 
analysis of battery costs in which ANL utilized the current version of 
BatPaC to estimate future battery pack costs by taking into account 
mineral price forecasts from leading analyst firms, and a technology 
roadmap of production and chemistry improvements likely to occur over 
the time frame of the rule.\721\ Our use of the battery costs provided 
by this study result in an increase, compared to the proposal, in our 
battery cost inputs to OMEGA by between 19 and 34 percent (averaging 24 
percent between 2023 and 2035) depending on the year and the size of 
the battery. These updates to our battery pack cost estimates are also 
responsive to comments from stakeholders, some of whom considered our 
costs in the NPRM to be low in comparison to more conservative 
estimates in the publicly available literature (see Response to 
Comments document for details). The costing approaches and assumptions 
are described in more detail in RIA Chapter 2.5.
---------------------------------------------------------------------------

    \721\ Argonne National Laboratory, ``Cost Analysis and 
Projections for U.S.-Manufactured Automotive Lithium-ion 
Batteries,'' ANL/CSE-24/1, January 2024.
---------------------------------------------------------------------------

    The main function of the OMEGA compliance modeling is to show how a 
manufacturer can meet future GHG standards through the application of 
technologies. Among the many potential pathways that exist for 
achieving compliance, OMEGA aims to find a pathway that minimizes costs 
for the manufacturer given a set of inputs that includes technology 
costs and emissions rates. For any single run with its associated 
inputs, OMEGA produces merely one possible compliance path to provide 
information about the feasibility and potential costs of a set of 
standards. However, manufacturers remain free to adopt very different 
compliance paths, depending on their assessment of technologies and the 
vehicle market.
    The compliance modeling for this rulemaking also includes 
constraints on new vehicle production and sales informed by our 
assessment of manufacturer and consumer decisions, and in some cases 
account for factors that were not included in the technical assessments 
in our prior rulemakings. EPA consulted and considered data and 
forecasts from government agencies, analyst firms, and industry in 
order to assess capacity for battery production and to thereby 
establish appropriate constraints on PEV battery production (in terms 
of gigawatt-hours (GWh) in a given year) during the time frame of the 
rule.\722\ These constraints effectively act as an upper limit on PEV 
production, particularly during the earlier years of the analysis, and 
represent, for example, considerations such as availability of critical 
minerals and the lead time required to construct battery production 
facilities. For this final rule analysis, we also considered new and 
updated work provided by the Department of Energy that estimates growth 
in battery manufacturing capacity and critical mineral production 
during the time frame of the rule. The development of the battery GWh 
constraint and the sources considered are described in detail in RIA 
Chapter 3.1.5.
---------------------------------------------------------------------------

    \722\ Sources included, among others, Wood Mackenzie proprietary 
forecasts of battery manufacturing capacity, battery costs, and 
critical mineral availability; Department of Energy analyses and 
forecasts of critical mineral availability and battery manufacturing 
capacity; and other public sources. See RIA Chapters 3.1.4 and 3.1.5 
and section IV.C.7 of this preamble for a description of these 
sources and how they were used.
---------------------------------------------------------------------------

    Consistent with compliance modeling for past rulemakings, the OMEGA 
model also limits the rate at which new vehicle designs can be 
introduced by applying redesign cycle constraints (RIA Chapter 2.6). 
EPA has evaluated historic vehicle data (e.g., the rate of product 
redesigns) to ensure that the technology production pace in the 
modeling is feasible. In addition to vehicle production constraints, 
market assumptions and limits on manufacturer pricing cross-
subsidization have been implemented to constrain the number of PEVs 
that can enter the fleet. EPA has evaluated market projections from 
both public and proprietary sources to calibrate OMEGA's representation 
of the consumer market's ICE-PHEV-BEV share response. A detailed 
discussion of the constraints used in EPA's compliance modeling is 
provided in RIA Chapter 2.7.

[[Page 27985]]

    As in prior rulemakings, this assessment is a projection of the 
future, and is subject to a range of uncertainties. We have assessed a 
number of sensitivity cases for key assumptions in order to evaluate 
how they would impact the results.
2. Analytical Updates Between the Proposal and Final Rule
    EPA received numerous public comments addressing our technical 
record. In response to these comments, and consistent with our general 
approach to update data when practicable, EPA has reassessed all 
aspects of our technical analysis based on the public record and the 
best available data and information. In Table 66, we summarize the 
major updates made to our technical analyses between the proposal and 
this final rule. These updates have resulted in a more robust technical 
analysis that is responsive to numerous public comments.

 Table 66--Major Updates to Technical Analysis Between the Proposal and
                               Final Rule
------------------------------------------------------------------------
 
-------------------------------------------------------------------------
Added PHEVs as a technology option within OMEGA.
Updated light-duty vehicle fleet base year from MY 2019 to MY 2022.
Updated from AEO 2022 to AEO 2023 \a\.
Updated BEV efficiency.
Updated technology cost inputs.
Updated battery costs per DOE study \b\.
Revised battery cost learning approach for consistency with DOE study
 \b\.
Updated OMEGA to not allow GHG backsliding for ICE vehicles.
Updated IRA assumptions.
Updated infrastructure assumptions and analysis.
Updated electric grid assumptions and analysis.
Updated analysis to include lower discount rate (2%).
Updated benefits analysis to latest social cost of GHG measures.
Updated dollar year from 2020 to 2022.
Updated refinery inventory calculation methodology.
Updated estimated impact on domestic refining due to reduced domestic
 liquid fuel demand.
Updated repair cost methodology for medium-duty vehicles.
Updated refueling time estimates and costs associated with mid-trip
 charging for BEVs.
Added insurance costs and state sales taxes to the effects calculations.
------------------------------------------------------------------------
\a\ OMEGA uses AEO for projected car/truck share in future years. AEO
  2023 forecasts 70 percent trucks by 2032, which is an increase from
  AEO 2022 (which had forecast 60 percent trucks in 2032).
\b\ Argonne National Laboratory, ``Cost Analysis and Projections for
  U.S.-Manufactured Automotive Lithium-ion Batteries,'' ANL/CSE-24/1,
  January 2024.

B. EPA's Approach to Considering the No Action Case and Sensitivities

    EPA has assessed the effects of this rule with respect to a No 
Action case for the final standards and the two alternatives 
considered. The Office of Management and Budget (OMB) provides guidance 
for regulatory analysis through Circular A-4.\723\ Circular A-4 
describes, in general, how a regulatory agency should conduct an 
analysis in support of a future regulation and includes a requirement 
for assessing the baseline, or ``No Action,'' condition: ``what the 
world will be like if the rule were not adopted.'' In addition, 
Circular A-4 provides that the regulating agency may also consider 
``alternative baselines,'' which EPA has considered via several 
sensitivities for this final rule, similar to the approach used in the 
proposal. In the development of a No Action case, EPA also considers 
existing finalized rulemakings. For this rule, the finalized rules 
considered in the No Action case include the 2014 Tier 3 criteria 
pollutant regulation, the 2016 Phase 2 GHG standards for medium-duty 
vehicles, and the 2021 light-duty GHG standards for MYs 2023-2026.
---------------------------------------------------------------------------

    \723\ Note that Circular A-4 has been updated, with final 
updated guidance being published on November 10, 2023. EPA is 
continually improving our analytical methods, including working to 
incorporate this updated guidance, however, the updates to Circular 
A-4 are not effective for final rules, such as this one, that are 
submitted to OMB before January 1, 2025, and this updated guidance 
may not be fully reflected in this analysis. See https://www.whitehouse.gov/omb/briefing-room/2023/11/09/biden-harris-administration-releases-final-guidance-to-improve-regulatory-analysis/ for more information.
---------------------------------------------------------------------------

    EPA recognizes that, even prior to this rule, the industry and 
market have already developed considerable momentum toward continuing 
increases in PEV uptake (as discussed at length throughout this 
preamble). This dynamic raises an important question about what the 
projected market penetration for PEVs would be in the absence of these 
final standards and thus reflected in the No Action case. EPA also 
recognizes there are many projections from third parties and various 
stakeholders, all showing increased PEV penetration in the future. 
There are a range of assumptions that vary across such projections such 
as consumer adoption, state level policies, financial incentives, 
manufacturing capacity and vehicle price. Vehicle price is also 
impacted by range and efficiency assumptions (more efficient EVs 
require smaller batteries to travel the same distance and smaller 
batteries cost less). Depending on what specific assumptions regarding 
the future are made, there can be significant variation in future PEV 
projections. Increasingly favorable consumer sentiment towards PEVs, 
decreasing costs (either through a reduction in manufacturing costs or 
through financial incentives), and a broadening number of PEV product 
offerings all support a projected higher number of new PEV sales in the 
future, independent of additional regulatory action. As described in 
section I.A.2.ii of this preamble, EPA reviewed several recent reports 
and studies containing PEV projections all of which include the IRA. 
Altogether, these studies project PEVs spanning a range from 42 to 68 
percent of new vehicle sales in 2030. The mid-range projections of PEV 
sales from these studies, to which we compare our No Action case, range 
from 48 to 58 percent in 2030.724 725 726 727 728 729
---------------------------------------------------------------------------

    \724\ Cole, Cassandra, Michael Droste, Christopher Knittel, 
Shanjun Li, and James H. Stock. 2023. ``Policies for Electrifying 
the Light-Duty Fleet in the United States.'' AEA Papers and 
Proceedings 113: 316-322. doi:https://doi.org/10.1257/pandp.20231063.
    \725\ IEA. 2023. ``Global EV Outlook 2023: Catching up with 
climate ambitions.'' International Energy Agency.
    \726\ Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J. 
Michalek, and Kate S. Whitefoot. 2023. ``Technology advancement is 
driving electric vehicle adoption.'' PNAS 120 (23). doi:https://doi.org/10.1073/pnas.2219396120.
    \727\ Bloomberg NEF. 2023. ``Electric Vehicle Outlook 2023.''
    \728\ U.S. Department of Energy, Office of Policy. 2023. 
``Investing in American Energy: Significant Impacts of the Inflation 
Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy 
Economy and Emissions Reductions.''
    \729\ Slowik, Peter, Stephanie Searle, Hussein Basma, Josh 
Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023. 
``Analyzing the Impact of the Inflation Reduction Act on Electric 
Vehicle Uptake in the United States.'' International Council on 
Clean Transportation and Energy Innovation Policy & Technology LLC.

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[[Page 27986]]

    EPA notes that in our compliance modeling of the No Action case in 
OMEGA, the same technical, economic, and consumer inputs and 
assumptions are used as for the associated Action case. The only 
difference between the No Action and Action cases for a given central 
or sensitivity analysis is in the policy definition itself. The concept 
of an `analysis context', within which policies are evaluated, is 
discussed further in RIA Chapter 2. EPA has considered a similar set of 
factors in our analysis context as those studies conducted by other 
stakeholders. This includes detailed vehicle and battery cost analyses, 
impacts of consumer and manufacturing financial incentives (such as 
those provided by the Inflation Reduction Act), consumer acceptance 
studies, vehicle performance modeling and technology applications, and 
battery manufacturing assessments.
    The No Action case in our central analysis reaches 39 percent PEVs 
in 2030, shown in Table 76. We note that the PEV share of new vehicle 
sales was 7.5 percent in MY 2022, and will likely reach about 12 
percent for MY 2023.\730\ This projected PEV increase in the No Action 
case is driven by EPA's projections of the availability of economic 
incentives for electric vehicles for both manufacturers and consumers 
provided by the IRA, cost learning for PEV technology over time, an 
increase in consumer interest and acceptance over that period, and the 
ongoing effect of the 2021 rule and the associated standards stringency 
increases in MYs 2023 through 2026. In the absence of this rulemaking, 
the MY 2026 standards would carry forward indefinitely into future 
years and define the No Action policy case for this analysis. Notably, 
the No Action case projections do not include announcements made by 
manufacturers about their future plans and corporate goals, or state 
laws that have recently been adopted or are likely to be adopted in the 
next decade. While our projected PEV penetrations in the No Action case 
show a substantial increase over time, the 39 percent value in MY 2030 
is lower than the mid-range third-party projections described above, as 
well as some manufacturer announcements.\731\ For example, the 
International Energy Agency (IEA) synthesized industry announcements 
and concluded that for the U.S. market, OEM targets for light-duty 
electric vehicle sales match or exceed 50 percent by 2030. The same IEA 
analysis found that without consideration of these announcements, the 
projects can also be used to help effect of all existing policies and 
measures such as IRA and BIL legislation would similarly lead to 50 
percent of new light-duty vehicle sales being electric vehicles by 
2030.\732\
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    \730\ 2023 EPA Automotive Trends Report, EPA-420-R-23-033, 
December 2023.
    \731\ A summary of industry announcements and third-party 
projections of PEV penetrations is provided in Section I.A.2 of the 
preamble.
    \732\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 117 and p. 121, April 2023. Accessed on August 15, 2023 at 
https://www.iea.org/reports/global-ev-outlook-2023.
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    While we consider manufacturer announcements as additional evidence 
that high levels of PEV penetration are feasible, for purposes of this 
analysis we have not integrated manufacturer announcements directly 
into our modeling of the No Action baseline. Although PEV penetrations 
in our No Action case may appear conservative, we provide two key 
reasons why our central No Action case projections of PEV penetration 
for this rulemaking are lower than announcements from some 
manufacturers and the mid-range third party projections. First, our 
analysis is based on the assumption that manufacturers follow a purely 
cost-minimizing compliance strategy. We do not account for strategic 
business decisions or corporate policies that might cause a 
manufacturer to pursue a higher-PEV strategy such as the numerous 
manufacturer announcements and published corporate goals that suggest 
this approach may underestimate the rate of PEV adoption in a No Action 
scenario. Second, our analysis does not include the effect of state-
level policies whereas projections from other sources may include those 
policies. We did not include these policies because many are still not 
in effect; however, we do anticipate that in the next decade, state-
level policies may play an important role in driving PEV penetration. 
For this reason, we have included a sensitivity No Action case, which 
includes the ZEV requirements of the California Advanced Clean Car 
(ACC) II program for California and other participating states.
    As a way to explore the impact that alternative assumptions would 
have on the future PEV penetrations under the No Action case, the 
agency has also conducted a range of sensitivities in addition to a 
central No Action case. As described further in section IV.F of this 
preamble, the sensitivity cases include states' adoption of the 
California Advanced Clean Cars II (ACC II) program,\733\ higher and 
lower battery costs, faster and slower paces of consumer acceptance of 
PEVs, no trading of credits between manufacturers, and reduced levels 
of BEV production (the Alternative Manufacturer Pathways, described in 
section IV.F.5).\734\ Across the sensitivity analyses, No Action case 
PEV projections for MY 2030 range from 31 to 57 percent, spanning the 
39 percent central case value. Our projections through MY 2032 for PEV 
penetrations in the No Action case are shown in Figure 21.
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    \733\ EPA has not at this time approved the waiver that would 
allow California to follow the ACC II program.
    \734\ While unlikely, for purposes of illustration we also 
provide an extreme scenario in which no future BEV models are 
allowed to be sold beyond those already in production in 2022 MY. 
For this to occur, it would require a 50 percent reduction from 2022 
BEV production in our first analysis year, 2023 MY.

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[[Page 27987]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.020

Figure 21: No Action Projections of Light-Duty PEV Penetrations for 
Central and Sensitivity Cases

    We acknowledge the range of possible assumptions, and that EPA's 
central No Action case is more conservative than other projections that 
include state-level policies and/or manufacturer announced plans. We 
believe that our approach of assessing multiple potential No Action 
cases provides a technically robust method of determining the 
feasibility and costs associated with the emissions reductions required 
by the standards.

C. How did EPA Consider Technology Feasibility and Related Issues?

1. Light- and Medium-Duty Technology Feasibility
    The standards established by this rule continue EPA's longstanding 
approach of setting performance-based emissions standards that result 
in an appropriate and achievable trajectory of emissions reductions. 
EPA sets emission standards based on consideration of available and 
projected technologies, consistent with the factors EPA must consider 
when establishing standards under the Clean Air Act. As with prior 
rules, as part of the development of this rulemaking EPA has assessed 
the feasibility of the standards in light of current and anticipated 
progress by automakers in developing and deploying emissions-reducing 
technologies.
    Compliance with EPA GHG and criteria pollutant standards over the 
past decade has been achieved predominantly through the application of 
advanced technologies and improved aftertreatment systems to internal 
combustion engine (ICE) vehicles. For example, in the development of 
the 2012 GHG rule, a significant portion of EPA's analysis included an 
assessment of technologies available to manufacturers for achieving 
compliance with the standards, and ICE technologies were identified as 
playing a major role in manufacturer compliance with the emission 
reductions required by that rule.
    In that same time frame, as EPA standards have increased in 
stringency, automakers have relied to an increasing degree on a range 
of electrification technologies, including hybrid electric vehicles 
(HEVs) and, in recent years, plug-in hybrid electric vehicles (PHEVs) 
and battery-electric vehicles (BEVs). This trend in technology 
application is evidence of a continuing recognition of electrification 
as an effective technology for both criteria pollutant and GHG 
compliance. As many ICE technologies have now reached high penetrations 
across the breadth of manufacturers' product lines, electrification 
technology has become increasingly attractive as a cost-effective 
pathway to further emission reductions.
    The advantages of powertrain electrification are evident along a 
continuum of technologies, starting with HEV vehicle architectures, 
which have provided vehicle manufacturers with a powerful technology 
path for reducing both GHG and criteria pollutant emissions. For 
example, the blending of ICE and electric power allows manufacturers to 
control the engine for optimal efficiency and operating conditions to 
reduce criteria pollutants, and the higher voltage battery provides the 
opportunity to preheat the catalyst to reduce cold start emissions. 
HEVs continue to play an important and potentially increasing role in 
reducing emissions. In addition to Toyota's Prius line which has sold 
millions of units in the U.S. since its introduction to the U.S. in MY 
2001, Toyota and other OEMs have brought HEV architectures to other 
sedans as well as crossovers, SUVs and pickups. For example, Ford has 
said that 10 percent of its F-150 pickup buyers and 56 percent its 
Maverick pickup buyers choose the hybrid powertrain option over the ICE 
version, and that hybrid options will soon be added across its model

[[Page 27988]]

lineup.\735\ Reports indicate that HEVs are beginning to experience 
increased interest and in 2023 were on pace to comprise more than 8 
percent of U.S. car sales.\736\ While the potential for reductions in 
tailpipe emissions by HEVs is not as great as for PEVs and BEVs, HEVs 
on the market today often offer a lower price point and for some 
manufacturers are playing an important role in compliance with the 
current standards.
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    \735\ Motley Fool, ``Ford Motor Company (F) Q2 2023 Earnings 
Call Transcript,'' July 28, 2023. Accessed on February 16, 2024 at 
https://www.fool.com/earnings/call-transcripts/2023/07/28/ford-motor-company-f-q2-2023-earnings-call-transcr/.
    \736\ CNBC, ``Why automakers are turning to hybrids in the 
middle of the industry's EV transition,'' December 8, 2023. Accessed 
on February 16, 2024 at https://www.cnbc.com/2023/12/08/automakers-turn-to-hybrids-ev-transition.html.
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    As ICE and HEV technologies have progressed over the past two 
decades, and as battery costs continued to decline, automakers also 
began including PHEVs and BEVs (together referred to as PEVs or plug-in 
electric vehicles) in their product lines, and today there is a rapidly 
increasing diversity of these vehicles already on the market and 
planned for production. In EPA's 2021 rule that set GHG emission 
standards for MYs 2023 through 2026, we projected (as one example 
pathway) that manufacturers could comply with the 2026 standards with 
about 17 percent PEVs at the industry-wide level, reflecting the 
increased cost-effectiveness of PEV technologies in achieving 
compliance with increasingly stringent emissions standards. In light of 
subsequent developments including the BIL and IRA, we now project that 
manufacturers will sell 27 percent PEVs in 2026 under the standards 
that are currently in place.
    These developments are also driven by the need to compete in a 
diverse market, as transportation policies to control pollution 
continue to be implemented across the U.S. and across the world. An 
increasing number of U.S. states have taken actions to shift the light-
duty fleet toward zero-emissions technology. In 2022, California 
finalized the Advanced Clean Cars II (ACC II) rule 737 738 
that specifies, by 2035, all new light-duty vehicles sold in the state 
are to be zero-emission vehicles.\739\ Twelve additional states have 
adopted all or most of the zero-emission vehicle phase-in requirements 
under ACC II, including Colorado,\740\ Delaware,\741\ Maryland,\742\ 
Massachusetts,743 744 New Jersey,\745\ New Mexico,\746\ New 
York,747 748 Oregon,\749\ Rhode Island,\750\ Vermont,\751\ 
Virginia,\752\ and Washington.\753\
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    \737\ EPA has not at this time approved the waiver that would 
allow California to follow the ACC II program.
    \738\ California Air Resources Board, ``California moves to 
accelerate to 100% new zero-emission vehicle sales by 2035,'' Press 
Release, August 25, 2022. Accessed on Nov. 3, 2022 at https://ww2.arb.ca.gov/news/california-moves-accelerate-100-new-zero-emission-vehicle-sales-2035.
    \739\ State of California Office of the Governor, ``Governor 
Newsom Announces California Will Phase Out Gasoline-Powered Cars & 
Drastically Reduce Demand for Fossil Fuel in California's Fight 
Against Climate Change,'' Press Release, September 23, 2020.
    \740\ State of Colorado, ``Colorado accelerates access to clean 
cars to improve air quality, grow economy, and increase vehicle 
options for Coloradans,'' Press Release, October 20, 2023. Accessed 
on January 1, 2024 at https://cdphe.colorado.gov/press-release/colorado-accelerates-access-to-clean-cars-to-improve-air-quality-grow-economy-and.
    \741\ State of Delaware, '' DNREC Finalizes Clean Car 
Regulations,'' November 29, 2023. Accessed on January 1, 2024 at 
https://news.delaware.gov/2023/11/29/dnrec-finalizes-clean-car-regulations/.
    \742\ Maryland Department of the Environment, ``Advanced Clean 
Cars II.'' Accessed on January 1, 2024 at https://mde.maryland.gov/programs/air/MobileSources/Pages/Clean-Energy-and-Cars.aspx.
    \743\ Boston.com, ``Following California's lead, state will 
likely ban all sales of new gas-powered cars by 2035,'' August 27, 
2022. Accessed November 3, 2022 at https://www.boston.com/news/local-news/2022/08/27/following-californias-lead-state-will-likely-ban-all-sales-of-new-gas-powered-cars-by-2035/.
    \744\ Commonwealth of Massachusetts, ``Request for Comment on 
Clean Energy and Climate Plan for 2030,'' December 30, 2020.
    \745\ New Jersey Office of the Governor, ``Murphy Administration 
Adopts Zero-Emission Vehicle Standards to Improve Air Quality, Fight 
Climate Change, and Promote Clean Vehicle Choice,'' November 21, 
2023. Accessed on January 1, 2024 at https://www.nj.gov/governor/news/news/562023/20231121a.shtml.
    \746\ https://www.env.nm.gov/transportation/.
    \747\ New York State Senate, Senate Bill S2758, 2021-2022 
Legislative Session. January 25, 2021.
    \748\ Governor of New York Press Office, ``In Advance of Climate 
Week 2021, Governor Hochul Announces New Actions to Make New York's 
Transportation Sector Greener, Reduce Climate-Altering Emissions,'' 
September 8, 2021. Accessed on September 16, 2021 at https://www.governor.ny.gov/news/advance-climate-week-2021-governor-hochul-announces-new-actions-make-new-yorks-transportation.
    \749\ https://www.oregon.gov/deq/rulemaking/pages/cleancarsii.aspx.
    \750\ https://dem.ri.gov/environmental-protection-bureau/air-resources/advanced-clean-cars-ii-advanced-clean-trucks.
    \751\ https://dec.vermont.gov/air-quality/laws/recent-regs.
    \752\ Commonwealth of Virginia State Air Pollution Control 
Board, 9VAC5 Chapter 95, Regulation for Low Emissions and Zero 
Emissions Vehicle Standards. Accessed on November 3, 2023 at https://www.deq.virginia.gov/home/showpublisheddocument/14793/638043628046200000.
    \753\ Washington Department of Ecology, ``Washington sets path 
to phase out gas vehicles by 2035,'' Press Release, Sept. 7, 2022. 
Accessed on Nov. 3, 2022 at https://ecology.wa.gov/About-us/Who-we-are/News/2022/Sept-7-Clean-Vehicles-Public-Comment.

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[[Page 27989]]

    In addition to the U.S., auto manufacturers also compete in a 
global market that is becoming increasingly electrified. Globally, at 
least 20 countries, as well as numerous local jurisdictions, have 
announced targets for shifting all new passenger car sales to zero-
emission vehicles in the coming years, including Norway (2025); 
Austria, the Netherlands, Denmark, Iceland, India, Ireland, Israel, 
Scotland, Singapore, Sweden, and Slovenia (2030); Canada, Chile, 
Germany, Thailand, and the United Kingdom (2035); and France, Spain, 
and Sri Lanka (2040).754 755 756 757 758 759 In addition, in 
March 2023 the European Union approved a measure to phase out sales of 
ICE passenger vehicles in its 27 member countries by 
2035.760 761 762 Many of these announcements extend to light 
commercial vehicles as well, and several also target a shift to 100 
percent all-electric medium- and heavy-duty vehicle sales (Norway 
targeting 2030, Austria 2035, and Canada and the United Kingdom 2040). 
Together, about half of annual global light-duty sales are in countries 
with various levels of zero-emission vehicle targets by 2035,\763\ up 
from about 25 percent in 2022.\764\ As of late 2023, 17 automotive 
brands globally had announced corporate targets for phasing out ICE 
technology, representing 32 percent of the global automotive 
market.\765\ In 2023, 22 percent of new car registrations in the 
European Union were either BEVs or PHEVs,\766\ led by Norway which 
reached about 80 percent BEV and 89 percent combined BEV and PHEV 
sales.
---------------------------------------------------------------------------

    \754\ Environment and Climate Change Canada, ``Achieving a Zero-
Emission Future for Light-Duty Vehicles: Stakeholder Engagement 
Discussion Document December 17,'' EC21255, December 17, 2021. 
Accessed on February 13, 2023 at https://www.canada.ca/content/dam/eccc/documents/pdf/cepa/achieving-zero-emission-future-light-duty-vehicles.pdf.
    \755\ International Council on Clean Transportation, ``Update on 
the global transition to electric vehicles through 2019,'' July 
2020.
    \756\ International Council on Clean Transportation, ``Growing 
momentum: Global overview of government targets for phasing out new 
internal combustion engine vehicles,'' posted 11 November 2020, 
accessed April 28, 2021 at https://theicct.org/blog/staff/global-ice-phaseout-nov2020.
    \757\ United Kingdom Department for Transport, ``Government sets 
out path to zero emission vehicles by 2035,'' September 28, 2023. 
Accessed on December 1, 2023 at https://www.gov.uk/government/news/government-sets-out-path-to-zero-emission-vehicles-by-2035.
    \758\ Government of Canada, ``Proposed regulated sales targets 
for zero-emission vehicles,'' December 21, 2022. Accessed on 
December 1, 2023 at https://www.canada.ca/en/environment-climate-change/news/2022/12/proposed-regulated-sales-targets-for-zero-emission-vehicles.html.
    \759\ Reuters, ``Canada to ban sale of new fuel-powered cars and 
light trucks from 2035,'' June 29, 2021. Accessed July 1, 2021 from 
https://www.reuters.com/world/americas/canada-ban-sale-new-fuel-powered-cars-light-trucks-2035-2021-06-29/.
    \760\ Reuters, ``EU approves effective ban on new fossil fuel 
cars from 2035,'' October 28, 2022. Accessed on Nov. 2, 2022 at 
https://www.reuters.com/markets/europe/eu-approves-effective-ban-new-fossil-fuel-cars-2035-2022-10-27/.
    \761\ European Commission, ``Fit for 55: EU reaches new 
milestone to make all new cars and vans zero-emission from 2035,'' 
March 28, 2023. Accessed on January 1, 2024 at https://climate.ec.europa.eu/news-your-voice/news/fit-55-eu-reaches-new-milestone-make-all-new-cars-and-vans-zero-emission-2035-2023-03-28-_en.
    \762\ Reuters, ``EU lawmakers approve effective 2035 ban on new 
fossil fuel cars,'' February 14, 2023. Accessed on February 26, 2023 
at https://www.reuters.com/business/autos-transportation/eu-lawmakers-approve-effective-2035-ban-new-fossil-fuel-cars-2023-02-14/.
    \763\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 65, May 2023. Accessed on November 28, 2023 at https://iea.blob.core.windows.net/assets/dacf14d2-eabc-498a-8263-9f97fd5dc327/GEVO2023.pdf.
    \764\ International Energy Agency, ``Global EV Outlook 2022,'' 
p. 57, May 2022. Accessed on November 18, 2022 at https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf.
    \765\ BloombergNEF, ``Zero-Emission Vehicles Factbook: A 
BloombergNEF special report prepared for COP28, December 2023, p. 
52.
    \766\ European Automobile Manufacturers' Association (ACEA), '' 
New car registrations: +13.9% in 2023; battery electric 14.6% market 
share,'' January 18, 2024. Accessed on February 15, 2024 at https://www.acea.auto/pc-registrations/new-car-registrations-13-9-in-2023-battery-electric-14-6-market-share/.
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    These trends echo an ongoing global shift toward electrification. 
Global light-duty passenger PEV sales surpassed 10 million in 2022, up 
from 6.6 million in 2021, bringing the total number of PEVs on the road 
to more than 26 million globally.767 768 For fully-electric 
BEVs, global sales rose to 7.8 million in 2022, an increase of about 68 
percent from the previous year and representing about 10 percent of the 
new global light-duty passenger vehicle market.769 770 
Leading sales forecasts predict that PEV sales will continue to 
accelerate globally in the years to come. For example, in June 2023, 
Bloomberg New Energy Finance reported that global PEV sales were 10.5 
million in 2022 and forecasted that annual sales will rise to 27 
million in 2026 (implying an annual growth rate of about 27 percent 
from 2022), with total global PEV stock rising from 27 million in 2022 
to more than 100 million by 2026.\771\
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    \767\ International Energy Agency, ``Global EV Outlook 2022,'' 
p. 107, May 2022. Accessed on November 18, 2022 at https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf.
    \768\ International Energy Agency, ``Trends in electric light-
duty vehicles.'' Accessed on November 28, 2023 at https://www.iea.org/reports/global-ev-outlook-2023/trends-in-electric-light-duty-vehicles.
    \769\ Boston, W., ``EVs Made Up 10% of All New Cars Sold Last 
Year,'' Wall Street Journal, January 16, 2023.
    \770\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as 
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
    \771\ Bloomberg NEF. 2023. ``Electric Vehicle Outlook 2023.''
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    While ICE vehicles and HEVs together retain the largest share of 
the market, the year-over-year growth in U.S. PEV sales suggests that 
an increasing share of new vehicle buyers are concluding that a PEV is 
the best vehicle to meet their needs. Many PEVs already on the market 
today cost less to operate than ICE vehicles, offer improved 
performance and handling, have a driving range similar to that of ICE 
vehicles, and can be charged at a growing network of public chargers as 
well as at home.772 773 774 775 776 777 PEV owners often 
describe these advantages as key factors motivating their 
purchase.\778\ A 2022 survey by Consumer Reports shows that more than 
one-third of Americans would either seriously consider or definitely 
buy or lease a BEV today, if they were in the market for a 
vehicle.\779\ Given that acceptance grows with familiarity as noted in 
the survey article, and most consumers are currently much less familiar 
with BEVs than with ICE vehicles, this share is expected to rapidly 
grow as familiarity increases in

[[Page 27990]]

response to increasing numbers of BEVs on the road and growing 
visibility of charging infrastructure. Most PEV owners who purchase a 
subsequent vehicle choose another PEV, and often express resistance to 
returning to an ICE vehicle after experiencing PEV 
ownership.780 781
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    \772\ Department of Energy Vehicle Technologies Office, 
Transportation Analysis Fact of the Week #1186, ``The National 
Average Cost of Fuel for an Electric Vehicle is about 60% Less than 
for a Gasoline Vehicle,'' May 17, 2021.
    \773\ Department of Energy Vehicle Technologies Office, 
Transportation Analysis Fact of the Week #1190, ``Battery-Electric 
Vehicles Have Lower Scheduled Maintenance Costs than Other Light-
Duty Vehicles,'' June 14, 2021.
    \774\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022.
    \775\ Consumer Reports, ``Electric Cars 101: The Answers to All 
Your EV Questions,'' November 5, 2020. Accessed June 8, 2021 at 
https://www.consumerreports.org/hybrids-evs/electric-cars-101-the-answers-to-all-your-ev-questions/.
    \776\ Department of Energy Vehicle Technologies Office, 
Transportation Analysis Fact of the Week #1253, ``Fourteen Model 
Year 2022 Light-Duty Electric Vehicle Models Have a Driving Range of 
300 Miles or Greater,'' August 29, 2022.
    \777\ Department of Energy Alternative Fuels Data Center, 
Electric Vehicle Charging Station Locations. Accessed on May 19, 
2021 at https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC.
    \778\ Hardman, S., and Tal, G., ``Understanding discontinuance 
among California's electric vehicle owners,'' Nature Energy, v.538 
n.6, May 2021 (pp. 538-545).
    \779\ Consumer Reports, ``More Americans Would Buy an Electric 
Vehicle, and Some Consumers Would Use Low-Carbon Fuels, Survey 
Shows,'' July 7, 2022. Accessed on March 8, 2023 at https://www.consumerreports.org/hybrids-evs/interest-in-electric-vehicles-and-low-carbon-fuels-survey-a8457332578/.
    \780\ Muller, J., ``Most electric car buyers don't switch back 
to gas,'' Axios.com. Accessed on February 24, 2023 at https://www.axios.com/2022/10/05/ev-adoption-loyalty-electric-cars.
    \781\ Hardman, S., and Tal, G., ``Understanding discontinuance 
among California's electric vehicle owners,'' Nature Energy, v.538 
n.6, May 2021 (pp. 538-545).
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    In addition to the light-duty vehicle sector, the medium-duty 
sector is also experiencing a shift toward electrification in several 
important market segments. As described in section I.A.2 of this 
preamble, numerous commitments to produce all-electric medium-duty 
delivery vans have been announced by large fleet-operating businesses 
in partnerships with various OEMs. This rapid shift to BEVs in a fleet 
that is currently predominantly gasoline- and diesel-fueled suggests 
that the operators of these fleets consider BEV delivery vans the best 
available and most cost-effective technology for meeting their needs. 
Owing to the large size of these vehicle fleets, this segment alone is 
likely to represent a significant portion of the future electrification 
of the medium-duty vehicle fleet.
    EPA believes the PHEV architecture may also lend itself well to 
future pickup truck and large SUV applications, which may also include 
some MDV pickup truck applications. A PHEV pickup or large SUV 
architecture would provide several benefits: some amount of zero-
emission electric range (depending on battery size); increased total 
vehicle range during heavy towing and hauling operations using both 
charge depleting and charge sustaining modes (depending on ICE-
powertrain sizing); job-site utility with auxiliary power capabilities 
similar to portable worksite generators, and the efficiency 
improvements normally associated with strong hybrids that provide 
regenerative braking, extended engine idle-off, and launch assist for 
high torque demand applications. Depending on the vehicle architecture, 
PHEVs used in pickup truck applications may also offer additional 
capabilities, similar to BEV pickups, with respect to torque control 
and/or torque vectoring to reduce wheel slip during launch in very 
heavy trailer towing applications. In addition, PHEVs may help provide 
a bridge for consumers that may not be ready to adopt a fully electric 
vehicle.
    One major manufacturer, Stellantis, recently announced a new PHEV 
pickup truck, the 2025 Ram 1500 Ramcharger.\782\ Specifications include 
a 92-kWh battery pack, a 135-kW generator, over 490 kW of drive system 
power, an estimated 14,000-pound tow capability and a 2,625-pound 
payload capacity. Press reports estimate all-electric range of 
approximately 145 miles.\783\
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    \782\ https://www.ramtrucks.com/revolution/ram-1500-ramcharger.html, accessed 12/12/2023.
    \783\ ``2025 Ram 1500 Ramcharger Avoids the Range Anxiety of EV 
Trucks''. Car and Dirver, 11/7/2023, https://www.caranddriver.com/news/a45734742/2025-ram-1500-ramcharger-revealed/, accessed 12/12/
2023.
---------------------------------------------------------------------------

    The MY 2023 Jeep Grand Cherokee 4xe PHEV with the Trailhawk package 
is a current-production example of a large SUV with significant tow 
capability. The vehicle has a 6,125-pound GVWR and a 12,125-pound GCWR 
using a combination of a 270-bhp turbocharged GDI engine with P2 and P0 
electric machines of 100kW and 33kW, respectively. The vehicle also 
uses a 17.3 kWh battery pack that provides 25 miles of all-electric 
range. The MY 2023 Jeep Wrangler 4xe uses a similar powertrain and 
battery pack. The Wrangler 4xe equipped with the ``Rubicon'' package 
has a 6,400-pound GVWR and a 9,200-pound GCWR.
    PHEV light-duty and MDV pickup trucks also show considerable 
promise for reducing CO2 emissions. A study conducted by 
EPA, Southwest Research Institute, and Argonne National Laboratory 
\784\ that modeled PHEV light-duty and MDV pickup truck configurations 
with significant all-electric ranged showed approximately 80 percent 
reductions in CO2 emissions could be achieved when taking 
into account fully-phased-in 2031 fleet utility factors (see section 
III.C.8.i) for plug-in hybrids in the U.S. The modeling also simulated 
the SAE J2807 towing performance standard, which includes trailer 
towing up the Davis Dam grade on Arizona State Route 68. The modeling 
results showed that a GCWR 19,500 pounds (trailer weight of 13,000 
pounds) could be maintained for the modeled LDT4 pickup truck PHEV 
configuration and that a GCWR of 29,500 pounds (trailer weight of 
approximately 20,000 pounds) could be maintained for the modeled PHEV 
MDV pickup truck during blended or charge-sustaining operation.
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    \784\ Bhattacharjya, S., Chambon, P., Conway, G., et al. 2024. 
``Heavy-light-duty and Medium-duty Range-extended Electric Truck 
Study--Final Report''. Report submitted to Docket EPA-HQ-OAR-2022-
0829.
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    These trends in light- and medium-duty vehicle technology suggest 
that electrification is already poised to play a rapidly increasing 
role in the on-road fleet and provides further evidence that BEV and 
PHEV technologies are increasingly seen as an effective and feasible 
set of vehicle technologies that are available to manufacturers to 
achieve further emissions reductions.
    Recent literature indicates that consumer affinity for PEVs is 
strong. A recent study utilizing data from all new light-duty vehicles 
sold in the U.S. between 2014 and 2020 focused on comparisons of BEVs 
with their closest ICE counterparts, and found that BEVs are preferred 
to the ICE counterpart in some vehicle segments.\785\ In addition, when 
comparing all BEV sales with sales of the closest ICE counterparts, 
BEVs attain a market share of over 30 percent, which is significantly 
greater than the BEV market share among all vehicles.\786\ This 
suggests that the share of PEVs in the marketplace is, at least 
partially, constrained due to the lack of offerings needed to convert 
existing demand into market share.\787\ However, the number and 
diversity of electrified vehicle models is rapidly increasing.\788\ For 
example, the number of PEV models available for sale in the U.S. has 
grown from about 24 in MY 2015 to about 60 in MY 2021 and over 180 in 
MY 2023, with offerings in a growing range of vehicle segments.\789\ 
Data from JD Power and Associates shows that MY 2023 BEVs and PHEVs are 
now available as sedans, sport utility vehicles, and pickup trucks. In 
addition, the greatest offering of PEVs is in the popular crossover/SUV 
segment.\790\
---------------------------------------------------------------------------

    \785\ Gillingham, K.T., A.A. van Benthem, S. Weber, M.A. Saafi, 
and X. He. 2023. ``Has Consumer Acceptance of Electric Vehicles Been 
Increasing: Evidence from Microdata on Every New Vehicle Sale in the 
United States.'' AEA Papers and Proceedings, 113:329-35.
    \786\ Id.
    \787\ Id.
    \788\ Muratori et al., ``The rise of electric vehicles--2020 
status and future expectations,'' Progress in Energy v3n2 (2021), 
March 25, 2021. Accessed July 15, 2021 at https://iopscience.iop.org/article/10.1088/2516-1083/abe0ad.
    \789\ Fueleconomy.gov, 2015 Fuel Economy Guide, 2021 Fuel 
Economy Guide, and 2023 Fuel Economy Guide.
    \790\ Taylor, M., Fujita, K.S., Campbell, N., 2024, ``The False 
Dichotomies of Plug-in Electric Vehicle Markets'' Lawrence Berkeley 
National Laboratory.
---------------------------------------------------------------------------

    According to the U.S. Bureau of Labor Statistics, growing consumer 
demand and growing automaker commitments to electrification are 
important factors in the growth of PEV sales and that growth will be 
further supported by policy measures including the BIL and the 
IRA.\791\ As the presence of PEVs in the

[[Page 27991]]

fleet increases, consumers are encountering PEVs more often in their 
daily experience. Many analysts believe that as PEVs continue to 
increase in market share, PEV ownership will continue to broaden its 
appeal as consumers gain more exposure and experience with the 
technology and with the benefits of PEV ownership,\792\ with some 
analysts suggesting that rapidly accelerating PEV adoption may then 
result.793 794 795
---------------------------------------------------------------------------

    \791\ U.S. Bureau of Labor Statistics, ``Charging into the 
future: the transition to electric vehicles,'' Beyond the Numbers 
v12 n4, February 2023. Available at: https://www.bls.gov/opub/btn/volume-12/charging-into-the-future-the-transition-to-electric-vehicles.htm.
    \792\ Jackman, D. K., K. S. Fujita (LBNL), H. C. Yang (LBNL), 
AND M. Taylor (LBNL). Literature Review of U.S. Consumer Acceptance 
of New Personally Owned Light-Duty (LD) Plug-in Electric Vehicles 
(PEVs). U.S. Environmental Protection Agency, Washington, DC 
Available at: https://cfpub.epa.gov/si/si_public_record_report.cfm?dirEntryId=353465.
    \793\ Car and Driver, ``Electric Cars' Turning Point May Be 
Happening as U.S. Sales Numbers Start Climb,'' August 8, 2022. 
Accessed on February 24, 2023 at https://www.caranddriver.com/news/a39998609/electric-car-sales-usa/.
    \794\ Randall, T., ``US Crosses the Electric-Car Tipping Point 
for Mass Adoption,'' Bloomberg.com, July 9, 2022. Accessed on 
February 24, 2023 at https://www.bloomberg.com/news/articles/2022-07-09/us-electric-car-sales-reach-key-milestone.
    \795\ Romano, P., ``EV adoption has reached a tipping point. 
Here's how today's electric fleets will shape the future of 
mobility,'' Fortune, October 11, 2022. Accessed on February 24, 2023 
at https://fortune.com/2022/10/11/ev-adoption-tesla-semi-tipping-point-electric-fleets-future-mobility-pasquale-romano/.
---------------------------------------------------------------------------

    While PEVs are typically offered at a higher price than comparable 
ICE vehicles at this time, the price difference for BEVs, which have 
only an electric powertrain, is widely expected to narrow or disappear 
as the cost of batteries and other components fall in the coming 
years.\796\ Among the many studies that address cost parity of BEVs vs. 
ICE vehicles, an emerging consensus suggests that purchase price parity 
is likely to begin occurring by the mid- to late-2020s for some vehicle 
segments and models, and for a broader segment of the market on a total 
cost of ownership (TCO) basis.797 798 By some accounts, a 
compact car with a relatively small battery (for example, a 40 
kilowatt-hour (kWh) battery and approximately 150 miles of range) may 
already be possible to produce and sell for the same price as a compact 
ICE vehicle.\799\ For larger vehicles and/or those with a longer range 
(either of which necessitate a larger battery), many analysts expect 
examples of price parity to increasingly appear over the mid- to late-
2020s. Assessments of price parity often do not include the effect of 
various state and Federal purchase incentives. For example, the 30D 
Clean Vehicle Credit under the IRA provides a purchase incentive of up 
to $7,500, effectively making some BEVs more affordable to buy today 
than comparable ICE vehicles. Additionally, the Commercial Clean 
Vehicle Credit under the IRA permits commercial purchasers of light-
duty PEVs to receive a credit equivalent to the incremental cost of the 
PEV versus a comparable ICE vehicle, up to $7,500, allowing this 
savings to be reflected in the lease terms offered to consumer 
lessees.\800\ Many expect TCO parity to precede price parity by several 
years, as it accounts for the reduced cost of operation and maintenance 
for BEVs.801 802 For example, Kelley Blue Book already 
estimates that the vehicle with lowest TCO in both the full-size pickup 
and luxury car classes of vehicle is a BEV.803 804 Based on 
average annual mileage, BloombergNEF states that in the U.S., electric 
SUVs have already achieved lower TCO than similar ICE vehicles, and for 
higher mileages, BEVs have lower TCO than similar small, medium, and 
large ICE vehicles.\805\ Because businesses tend to pay close attention 
to TCO of business property, TCO parity of BEVs is likely to be of 
particular interest to commercial and fleet operators.
---------------------------------------------------------------------------

    \796\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022.
    \797\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022.
    \798\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer Commitments and Public Policy 
Initiatives Supporting Electric Mobility in the U.S. and 
Worldwide,'' September 2022.
    \799\ Walton, R., ``Electric vehicle models expected to triple 
in 4 years as declining battery costs boost adoption,'' 
UtilityDive.com, December 14, 2020.
    \800\ Internal Revenue Service, ``Frequently asked questions 
about the New, Previously-Owned and Qualified Commercial Clean 
Vehicles Credit,'' December 26, 2023 at https://www.irs.gov/newsroom/frequently-asked-questions-about-the-new-previously-owned-and-qualified-commercial-clean-vehicles-credit.
    \801\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022.
    \802\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer Commitments and Public Policy 
Initiatives Supporting Electric Mobility in the U.S. and 
Worldwide,'' September 2022.
    \803\ Kelley Blue Book, ``What is 5-Year Cost to Own?'', Full-
size Pickup Truck selected (Ford F-150 Lighting is lowest TCO). 
Accessed on February 28, 2023 at https://www.kbb.com/new-cars/total-cost-of-ownership/.
    \804\ Kelley Blue Book, ``What is 5-Year Cost to Own?'', Luxury 
Car selected (Polestar 2 and Tesla Model 3 are lowest TCO). Accessed 
on February 28, 2023 at https://www.kbb.com/new-cars/total-cost-of-ownership/.
    \805\ BloombergNEF, ``Zero-Emission Vehicles Factbook,'' 
December 2023, p. 36. Accessed on February 4, 2024 at https://assets.bbhub.io/professional/sites/24/2023-COP28-ZEV-Factbook.pdf.
    \806\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer & Commercial Fleet Electrification 
Commitments Supporting Electric Mobility in the United States,'' 
April 2023, p. 7.
---------------------------------------------------------------------------

    Figure 22, taken from work by the Environmental Defense Fund, shows 
how the number of PHEV and BEV models available in the U.S. has 
steadily grown, and many public model announcements by manufacturers 
indicate further growth will occur in the years to come.

[[Page 27992]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.021

Figure 22: Projection of Total Light-Duty PHEV and BEV U.S. Models 
Available by Year (EDF 2023)806

    Globally and domestically, these ongoing announcements indicate a 
strong industry momentum toward electrification that is common to every 
major manufacturer. Given the breadth of these announcements, it is 
informative to consider the penetrations of PEVs that they imply when 
taken collectively.
    Table 67 compiles public announcements of U.S. and global 
electrification targets to date by major manufacturers. Assuming that 
the MY 2022 U.S. sales shares for each manufacturer were to persist in 
2030, these targets would collectively imply a U.S. PEV sales share of 
nearly 50 percent in 2030, consisting primarily of BEVs. A version of 
this table with supporting citations for each automaker announcement, 
and the raw data with additional tabulations, are available in the 
Docket.\807\
---------------------------------------------------------------------------

    \807\ See Memo to Docket ID No. EPA-HQ-OAR-2022-0829 titled 
``Electrification Announcements and Implied PEV Penetration by 
2030.''

   Table 67--Example of U.S. Electrified New Sales Percentages Implied by OEM Announcements for 2030 or Before
----------------------------------------------------------------------------------------------------------------
                                                                                                  Implied OEM
                                         Share of total    Stated PEV                           contribution to
2022 U.S. Sales Rank         OEM            2022 U.S.     share in 2030     Powertrain \3\       2030 total PEV
                                           sales \1\ %        \2\ %                              market share %
----------------------------------------------------------------------------------------------------------------
1...................  General Motors...            16.4              50  PEV                                 8.2
2...................  Toyota...........            15.4          33 \4\  BEV                                 5.1
3...................  Ford.............            13.1              50  BEV                                 6.5
4...................  Stellantis.......            11.2              50  BEV                                 5.6
5...................  Honda............             7.2              40  BEV                                 2.9
6...................  Hyundai..........             5.7              50  BEV                                 2.8
7...................  Nissan...........             5.3              40  BEV                                 2.1
8...................  Kia..............             5.0              45  BEV                                 2.3
9...................  Subaru...........             4.1              50  BEV                                2.0%
10..................  Volkswagen, Audi.             3.6              50  BEV                                 1.8
11..................  Tesla............             3.4             100  BEV                                 3.4
12..................  Mercedes-Benz....             2.6              50  PEV                                 1.3
13..................  BMW..............             2.6              50  BEV                                 1.3
14..................  Mazda............             2.1              25  BEV                                 0.5
15..................  Volvo............             0.8             100  BEV                                 0.8
16..................  Mitsubishi.......             0.6              50  PEV \5\                             0.3
17..................  Porsche..........             0.5              80  BEV                                 0.4
18..................  Land Rover.......             0.4              60  BEV                                 0.3
19..................  Jaguar...........            0.07             100  BEV                                0.07
20..................  Lucid............            0.02             100  BEV                                0.02
                                        ------------------------------------------------------------------------
                      Total............           100.0  ..............  ....................               47.7
----------------------------------------------------------------------------------------------------------------
Notes:
\1\ 2022 U.S. sales shares based on data from Ward's Automotive Intelligence.
\2\ Where a U.S. target was not specified, the global target was assumed for the U.S.
\3\ PEV comprises both BEV and PHEV. In addition, PEV and BEV may include fuel cell electric vehicles (FCEV).
\4\ Based on announced goal of 3.5 million BEVs globally in 2030, divided by 10.5 million vehicles sold in 2022.
\5\ Announcement includes unspecified amount of HEVs.


[[Page 27993]]

    EPA understands that manufacturer announcements such as these are 
not binding, and often are conditioned as forward-looking projections 
that are subject to uncertainty. However, the breadth and scale of 
these announcements across the entire industry signals that 
manufacturers are confident in the suitability and attractiveness of 
PEV technology to serve the needs of a large portion of light-duty 
vehicle buyers.
    As seen in Figure 23, an analysis by the International Energy 
Agency (IEA) similarly concludes that the 2030 U.S. zero-emission 
vehicle sales share collectively implied by such announcements (``range 
of OEM declarations'') would amount to nearly 50 percent if not more, 
far exceeding the 20 percent that IEA considers sufficient to meet pre-
IRA U.S. policies and regulations (``Stated Policies'' scenario).\808\
---------------------------------------------------------------------------

    \808\ International Energy Agency, ``Global EV Outlook 2022,'' 
p. 107, May 2022. Accessed on November 18, 2022 at https://iea.blob.core.windows.net/assets/e0d2081d-487d-4818-8c59-69b638969f9e/GlobalElectricVehicleOutlook2022.pdf.
[GRAPHIC] [TIFF OMITTED] TR18AP24.214

Figure 23: Estimated Zero-Emission Vehicle Sales Shares Resulting From 
OEM Announcements Compared to Stated and Potential Policies (IEA 2022)

    These announcements and others like them continue a pattern over 
the past several years in which most major manufacturers have taken 
steps to significantly invest in zero-emission technologies and reduce 
their reliance on the internal-combustion engine in various markets 
around the globe,809 810 including allocating large amounts 
of new investment to electrification technologies.
---------------------------------------------------------------------------

    \809\ Environmental Defense Fund and M.J. Bradley & Associates, 
``Electric Vehicle Market Status--Update, Manufacturer Commitments 
to Future Electric Mobility in the U.S. and Worldwide,'' April 2021.
    \810\ International Council on Clean Transportation, ``The end 
of the road? An overview of combustion-engine car phase-out 
announcements across Europe,'' May 10, 2020.
---------------------------------------------------------------------------

    A 2021 analysis by the Center for Automotive Research showed that a 
significant shift in North American investment was already occurring 
toward electrification technologies, with $36 billion of about $38 
billion in total automaker manufacturing facility investments announced 
in 2021 being slated for electrification-related manufacturing in North 
America, with a similar proportion and amount expected for 2022.\811\ 
For example, in September 2021, Toyota announced large new investments 
in battery production and development to support an increasing focus on 
electrification,\812\ and in December 2021, announced plans to increase 
this investment.\813\ In December 2021, Hyundai closed its engine 
development division at its research and development center in Namyang, 
South Korea in order to refocus on BEV development.\814\ By October 
2022, another analysis indicated that 37 of the world's automakers had 
announced plans to invest a total of almost $1.2 trillion by 2030 
toward electrification,\815\ a large portion of which would be used for 
construction of manufacturing facilities for vehicles, battery cells 
and packs, and materials, supporting up to 5.8 terawatt-hours of 
battery production and 54 million BEVs per year globally.\816\ For 
example, in summer 2022, Hyundai announced an investment of $5.5 
billion

[[Page 27994]]

to fund new battery and electric vehicle manufacturing facilities in 
Georgia, and recently announced a $1.9 billion joint venture with SK 
Innovation to fund additional battery manufacturing in the 
U.S.817 818 And in 2023, Ford announced plans for a new 
battery plant in Michigan, part of $17.6 billion in investments in 
electrification announced by Ford and its partners since 
2019.819 820 By mid-2023 the International Energy Agency 
indicated that as of the previous March, major manufacturers had 
announced post-IRA investments in North American supply chains totaling 
at least $52 billion, mostly in battery manufacturing, battery 
components and vehicle assembly.\821\ By January 2024, a White House 
accounting of BIL and IRA investments indicated that the total had 
increased to at least $155 billion.\822\ The U.S. Department of Energy 
indicates this represents over $120 billion in over 200 new or expanded 
minerals, materials processing, and manufacturing facilities and over 
$35 billion in over 140 new or expanded sites for EV assembly, EV 
component, or charger manufacturing.\823\
---------------------------------------------------------------------------

    \811\ Center for Automotive Research, ``Automakers Invest 
Billions in North American EV and Battery Manufacturing 
Facilities,'' July 21, 2022. Retrieved on November 10, 2022 at 
https://www.cargroup.org/automakers-invest-billions-in-north-american-ev-and-battery-manufacturing-facilities/.
    \812\ Toyota Motor Corporation, ``Video: Media briefing & 
Investors briefing on batteries and carbon neutrality'' 
(transcript), September 7, 2021. Accessed on September 16, 2021 at 
https://global.toyota/en/newsroom/corporate/35971839.html#presentation.
    \813\ Toyota Motor Corporation, ``Video: Media Briefing on 
Battery EV Strategies,'' Press Release, December 14, 2021. Accessed 
on December 14, 2021 at https://global.toyota/en/newsroom/corporate/36428993.html.
    \814\ Do, Byung-Uk, Kim, Il-Gue, ``Hyundai Motor closes engine 
development division'', The Korea Economic Daily, December 23, 2021. 
Accessed on November 29, 2022 at https://www.kedglobal.com/electric-vehicles/newsView/ked202112230013.
    \815\ Reuters, ``A Reuters analysis of 37 global automakers 
found that they plan to invest nearly $1.2 trillion in electric 
vehicles and batteries through 2030,'' October 21, 2022. Accessed on 
November 4, 2022 at https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/.
    \816\ Reuters, ``Exclusive: Automakers to double spending on 
EVs, batteries to $1.2 trillion by 2030,'' October 25, 2022. 
Accessed on November 4, 2022 at https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21/.
    \817\ Velez, C. ``Hyundai and SK On to bring even more EV 
battery plants to U.S.'' CBT News, November 29, 2022. Accessed on 
November 29, 2022 at https://www.cbtnews.com/hyundai-and-sk-on-to-bring-even-more-ev-battery-plants-to-u-s/.
    \818\ Lee, J., Yang, H. ``Hyundai Motor, SK On sign EV battery 
supply pact for N. America'', Reuters, November 29, 2022. Accessed 
on November 29, 2022 at https://www.reuters.com/business/autos-transportation/hyundai-motor-group-sk-ev-battery-supply-pact-n-america-2022-11-29/.
    \819\ Ford Motor Company, ``Ford Taps Michigan for new LFP 
Battery Plant; New Battery Chemistry Offers Customers Value, 
Durability, Fast Charging, Creates 2,500 More New American Jobs,'' 
Press Release, February 13, 2023. https://media.ford.com/content/fordmedia/fna/us/en/news/2023/02/13/ford-taps-michigan-for-new-lfp-battery-plant--new-battery-chemis.html.
    \820\ New York Times, ``Ford Resumes Work on E.V. Battery Plant 
in Michigan, at Reduced Scale,'' November 21, 2023.
    \821\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 12, May 2023. Accessed on November 28, 2023 at https://iea.blob.core.windows.net/assets/dacf14d2-eabc-498a-8263-9f97fd5dc327/GEVO2023.pdf.
    \822\ U.S. Department of Energy, '' Building America's Clean 
Energy Future,'' at https://www.whitehouse.gov/invest/. Accessed on 
February 16, 2024.
    \823\ U.S. Department of Energy, ``Building America's Clean 
Energy Future,'' at https://www.energy.gov/invest. Accessed February 
4, 2024.
---------------------------------------------------------------------------

    In the proposal for this rulemaking, EPA did not specifically model 
the adoption of PHEV architectures, although the agency acknowledged 
that PHEVs could provide significant reductions in GHG emissions, and 
that some vehicle manufacturers may choose to utilize this technology 
as part of their technology offering portfolio. For example, PHEVs may 
be effective at meeting specific types of customer needs and may 
provide manufacturers with an additional technology option with which 
to meet emissions standards (as some firms are already doing today). We 
also indicated that we were considering adding PHEVs as a technology 
option in the analysis for the final rule, and asked for comment on 
this possibility, and on technology costs and configurations we 
presented at the time.
    Several commenters criticized the lack of PHEVs as a technology 
option in the analysis of the proposed standards. Commenters on this 
topic universally supported the addition of PHEVs in the compliance 
modeling for the final rulemaking analysis. As indicated in the 
proposal, and in response to comments received during the public 
comment period, EPA has updated its analysis to include PHEVs as a 
technology option for both light-duty and medium-duty vehicles.
    Many commenters suggested that due to their smaller battery packs, 
PHEVs could reduce the demand for critical minerals and provide a 
viable pathway to GHG compliance should critical mineral supplies be 
less than projected. In response to commenters' concerns about 
potential limits on availability of critical minerals, EPA shows 
technologically feasible paths to compliance that rely more on PHEVs, 
resulting in much lower battery demand than in the central case.
    In its comments, Auto Innovators requested that EPA include PHEVs 
such that they comprise at least 20 percent of PEVs in the compliance 
results. While that could be a potential outcome, the OMEGA model is 
designed to identify lowest-cost compliance pathways to performance-
based standards, based on all technology options available in the 
model. EPA did not find any rationale for setting a minimum PHEV to BEV 
ratio (for example, as an input constraint). However, in modeling 
results for the 2030-2032 timeframe, PHEVs do account for over 10 
percent of the total PEVs in the final standards analysis.
    ICCT suggested that adding more technologies, including PHEVs, 
could reduce costs of compliance. EPA agrees that the inclusion of more 
technology choices should generally offer more cost-effective pathways 
to compliance. While we did not evaluate the impact of each update in 
data and assumptions for this final rulemaking analysis individually, 
it is likely that an analysis that excluded PHEVs would have higher 
costs.
    EPA also requested comment on the types of PHEV architectures that 
EPA should consider in this final rulemaking analysis, including 
whether or not EPA should explicitly model PHEVs in light-duty and MDV 
pickup applications. In the proposal, EPA described ongoing contract 
work with Southwest Research Institute (SwRI) to investigate likely 
technology architectures of both PHEV and internal combustion engine 
range-extended electric light-duty and MDV pickup trucks to support 
analysis for the final rule. EPA also requested any relevant 
performance or utility data that may help inform our modeling and 
analyses.
    In their comments, Auto Innovators and Toyota both recommended that 
EPA include the more capable strong-PHEV designs that meet US06 high 
power cold starts, as well as the range-extending architecture that EPA 
has modeled through its contract with SwRI. Toyota commented that PHEVs 
could apply to all light-duty vehicles; accordingly, EPA has included 
PHEVs as a technology option across all body styles. Stellantis 
highlighted the high-capability pickup truck segment as a key area 
where PHEVs would be beneficial. In this analysis, EPA has made the 
simplifying technical assumption that PHEVs will meet basic all-
electric range requirements to qualify as ZEVs under ACC II \824\ and 
ACT \825\ for light-duty and medium-duty vehicles, respectively, as we 
think it is reasonable to assume that manufacturers will design PHEVs 
as nationwide products. For a more detailed description of EPA's PHEV 
model architectures, including battery and motor sizing as well as cost 
assumptions, please refer to RIA Chapter 2.6.1.4.
---------------------------------------------------------------------------

    \824\ California Air Resources Board, ``California moves to 
accelerate to 100% new zero-emission vehicle sales by 2035,'' Press 
Release, August 25, 2022. Accessed on Nov. 3, 2022 at https://ww2.arb.ca.gov/news/california-moves-accelerate-100-new-zero-emission-vehicle-sales-2035.
    \825\ California Air Resources Board, Advanced Clean Trucks 
Regulation, Final Statement of Reasons, March 2021. Accessed on Jan 
8, 2024 at https://ww2.arb.ca.gov/sites/default/files/barcu/regact/2019/act2019/fsor.pdf.
---------------------------------------------------------------------------

    As stated in the proposal, EPA conducted contract work with SwRI to 
investigate likely technology architectures of both PHEV and ICE range-
extended electric light-duty and MDV pickup trucks that we anticipated 
would provide data informative to the final rule. We have included 
modeling of PHEV architectures comparable to those included in SwRI's 
final report within our analysis. For more information, please refer to 
RIA Chapter 3.5. In addition, within the proposal's DRIA Chapter 
2.6.1.4 ``PHEV Powertrain Costs,'' EPA provided component technology 
descriptions and cost

[[Page 27995]]

estimates that include the major components needed to manufacture a 
PHEV, including batteries, e-motors, power electronics, and other 
ancillary systems. We requested comment on these PHEV cost estimates 
and noted that in the final rule we may rely upon the estimates and 
other information gathered through the public comment process and our 
ongoing technical work.
    In the proposal, we noted that many light- and medium-duty PHEVs 
purchased for commercial use would be eligible for the Commercial Clean 
Vehicle Credit (45W), which provides a credit of up to $7,500 for 
qualified vehicles with gross vehicle weight ratings (GVWRs) of under 
14,000 pounds.\826\ As the amount of the credit depends on the GVWR and 
the incremental cost of the vehicle relative to a comparable ICE 
vehicle, EPA requested comment on estimating the amount of the credit 
that will on average apply to commercial MDV PHEVs, such as PHEV 
pickups, and other commercial PHEVs and BEVs. We did not receive 
comment on this topic.
---------------------------------------------------------------------------

    \826\ Up to $40,000 for qualified Class 4 and higher vehicles 
above 14,000 pounds GVWR.
---------------------------------------------------------------------------

    In addition to the inclusion of PHEVs as a technology option, EPA 
also updated its characterization of other ICE and HEV vehicle 
technologies in its ALPHA modeling (see RIA Chapter 2.4). These updates 
included new hybrid architectures such as a series-parallel P4 hybrid 
for light-duty trucks, a range-extending PHEV configuration for medium-
duty trucks, and new engines for medium-duty diesels, including a large 
bore gasoline PFI engine and an updated map for its diesel engine. 
ALPHA engine maps and motor maps for HEV, PHEV and BEV technologies are 
presented in RIA Chapter 3.5.
    In RIA Chapter 3.1, we provide discussion of recent trends and 
feasibility of light-duty and medium-duty vehicle technologies that 
manufacturers have available to meet the standards. Other aspects of 
PEV feasibility, such as technology costs, consumer acceptance, 
charging infrastructure accessibility, supply chain security, 
manufacturing capacity, critical mineral availability, and effects of 
BEV penetration on upstream emissions are discussed in the respective 
chapters of the RIA.
    EPA received comments from automotive suppliers and some 
environmental NGOs that suggested we should model continued advances in 
ICE technology in both light-duty and medium-duty vehicles. Some 
commenters (e.g., ACEEE and ICCT) recommended that EPA should include 
in its modeling additional advanced ICE technology for medium-duty 
vehicles, especially MD pickups.
    EPA agrees that there is a potential for continued GHG reductions 
in ICE engine designs and manufacturers may choose to improve the 
efficiency of their ICE powertrains as part of their pathway for 
compliance. EPA's experience with modeling ICE powertrain technologies 
is that improvements are often targeting common loss mechanisms: 
reductions in pumping losses, reduction of friction and parasitics, 
improved combustion, broader and higher thermal efficiency, and on-
cycle optimization of engine operation. In our modeling, one technology 
can often be used as a surrogate to reflect a range of technologies 
that address similar levels of improvements. For example, EPA has 
observed that an ``advanced gasoline engine'' could represent 
technologies ranging from Atkinson cycle engines to turbo downsized 
engines with the overall reduction in GHG emissions and costs of 
similar magnitude. While we do not model every unique technology 
combination that could potentially be implemented by manufacturers, our 
modeling of ICE powertrains should generally represent the emissions 
reduction potential and costs of advanced engine technologies. 
Nevertheless, we acknowledge that there are a wide range of possible 
ICE powertrain combinations available to manufacturers, beyond those 
included in EPA modeling, and that some of these technology 
implementations may outperform EPA's assessment of potential GHG 
reductions.
    As evidenced by their public announcements, manufacturers have 
signaled a clear shift to focus on the development of electrified 
powertrains. Through conversations with OEMs, several companies have 
indicated that they are diverting their R&D budgets towards development 
of electric vehicles, and others have publicly indicated that the 
upcoming generation of internal combustion engines will be the last new 
designs.827 828 Accordingly, ICE engineering departments at 
automakers are being reallocated to electric vehicle design, 
development, and integration functions, or are contracting commensurate 
with the reductions in new internal combustion engine programs.
---------------------------------------------------------------------------

    \827\ https://www.motor1.com/news/660320/vw-passat-tiguan-last-ice/.
    \828\ https://www.reuters.com/business/autos-transportation/mercedes-benz-launches-e-class-its-last-new-combustion-engine-model-2023-04-25/.
---------------------------------------------------------------------------

    This shift towards significantly greater adoption and deployment of 
electrification technologies makes it possible for manufacturers to 
achieve significantly greater emissions reductions than would be 
feasible relying solely on improved efficiencies of internal combustion 
engines. Accordingly, EPA focused its modeling efforts on those 
technologies which we anticipate OEMs will likely choose to adopt in 
support of these standards. EPA's analysis projects that manufacturers 
will use electrification as their primary compliance pathway, given the 
significantly more favorable cost effectiveness of electrified 
powertrains in achieving more stringent GHG standards.
    Our assessment of technology generally represents the potential for 
cost-effective improvements and parallels the increased manufacturer 
focus on electrification. For these reasons, EPA has prioritized its 
modeling updates towards electrified technologies, rather than 
continued ICE advances. However, by maintaining performance-based GHG 
standards, the agency keeps in place a compliance architecture which 
fully recognizes all available technologies that result in reduced GHG 
emissions. Table 4 of the executive summary highlights three potential 
pathways which show a range of technology penetrations, and the 
sensitivities described in section IV.F of this preamble illustrate 
additional pathways to compliance.
2. Approach to Estimating Electrification Technology Costs
    Costs for electrification technologies, such as batteries and other 
electrified vehicle components, are an important input to the 
feasibility analysis. This section provides a general review of how 
battery and other electrification component costs were updated for this 
final rule analysis. A more detailed discussion of the electrification 
cost estimates and the sources we considered may be found in RIA 
Chapter 2. EPA responses to all of the comments on this topic may be 
found in RTC section 12.2.
    Our battery costs for the final rule analysis are higher than in 
the proposal, due to a number of factors that we took into 
consideration, both from the public comments and from the completion of 
ongoing and additional research that we described in the proposal.
    For the proposal, EPA used Argonne National Laboratory's (ANL) 
BatPaC model version 5.0 (then current) to generate base year (2022) 
direct manufacturing cost estimates for battery packs at an annual 
production volume of 250,000 packs. To estimate battery cost in future 
years, the proposal applied an annual cost reduction by

[[Page 27996]]

means of a learning equation that included the effect of cumulative 
production of batteries (in GWh) under each modeled compliance 
scenario. To validate these results, we compared them to industry 
forecasts and other literature regarding expected costs for BEV battery 
packs in future years.
    Forecasting of future battery costs is a very active research area, 
particularly at this time of rapidly increasing demand in an actively 
evolving industry. In the proposal, we noted that the battery costs we 
were using in the proposal analysis were nominally lower than the 
average pack cost that was reported in a late-breaking Bloomberg New 
Energy Finance (BNEF) report released on December 6, 2022. This annual 
battery price survey by BNEF indicated that after years of steady 
decline, the global average price for lithium-ion battery packs 
(volume-weighted across the passenger, commercial, bus, and stationary 
markets) had climbed by about 7 percent in 2022.829 830 For 
passenger vehicle BEV batteries the average price paid was reported to 
be $138 per kWh. We noted that there was uncertainty in comparing the 
BNEF survey costs to the modeled costs in our analysis due to possible 
differences in pack size, construction, or application. Since that 
time, the 2023 BNEF survey has reported that pack costs across the 
industry fell by 14 percent in 2023, with an average of $128 per kWh 
for passenger BEVs. This further illustrates the dynamic nature of the 
battery market and of battery price projections.
---------------------------------------------------------------------------

    \829\ Bloomberg New Energy Finance, ``Rising Battery Prices 
Threaten to Derail the Arrival of Affordable EVs,'' December 6, 
2022. Accessed on December 6, 2022 at: https://www.bloomberg.com/news/articles/2022-12-06/rising-battery-prices-threaten-to-derail-the-arrival-of-affordable-evs.
    \830\ Bloomberg New Energy Finance, ``Lithium-ion Battery Pack 
Prices Rise for First Time to an Average of $151/kWh,'' December 6, 
2022. Accessed on December 6, 2022 at: https://about.bnef.com/blog/lithium-ion-battery-pack-prices-rise-for-first-time-to-an-average-of-151-kwh/.
---------------------------------------------------------------------------

    In light of the 2022 BNEF report, we noted that we would consider 
this and any other new forecasts of battery cost or similar 
information, as they became available and to the extent possible, for 
the final rule analysis. We also noted that we would be working with 
ANL to continue updating our estimates of battery cost by considering 
adjustments to key inputs to the BatPaC model to represent expected 
improvements to production processes, forecasts of future mineral 
costs, and design improvements.
    In the proposal, EPA requested comment on all aspects of the 
battery and non-battery costs used in the NPRM analysis, including base 
year battery costs, future battery costs, electric vehicle driving 
range, and similar issues that would affect how battery and non-battery 
costs should be modeled. We received a variety of comments relating to 
current and future battery pack costs, and partly in response to these 
comments we have made significant updates to our battery cost 
assumptions.
    Some commenters, primarily from environmental NGOs, electric 
vehicle manufacturers, and the electrification industry, stated that 
the battery costs in the proposal were either appropriate or too high. 
Other commenters, primarily representing major automakers, the fuels 
industry, and various advocacy groups, stated that the costs were too 
low. Many of those who felt that the costs were too low referred to 
uncertainty surrounding near-term and long-term mineral costs and cited 
(among other references) the aforementioned December 2022 BNEF survey 
as evidence that our base year battery costs were too low. These 
commenters also referred to volatility of mineral and component prices 
that might be expected during a time of rapid increase in demand and 
suggested that we should consider scenarios in which battery costs 
decline at a slower rate than we had assumed, or do not decline at all. 
Some specifically suggested that we consider a paper by Mauler et 
al.\831\ that outlined the impact of future mineral costs on cell 
manufacturing costs under several pricing scenarios and set our battery 
costs and/or our battery cost sensitivities using the results of that 
paper. These commenters also criticized specific assumptions that they 
felt caused our battery costs to be too low, including too high a 
production volume in the base year, too high a learning rate in future 
years, use of cumulative GWh of battery production as an input to the 
battery cost learning equation, too low a labor rate, and a number of 
specific engineering considerations that they contend are exerting 
pressure to keep battery costs high independent of manufacturing cost 
improvements.
---------------------------------------------------------------------------

    \831\ Mauler et al., ``Technological innovation vs. tightening 
raw material markets: falling battery costs put at risk,'' Energy 
Advances, v.1, pp. 136-145 (2022).
---------------------------------------------------------------------------

    Other commenters stated that our use of nickel-based cathode 
chemistry (NMC) did not recognize the potentially lower cost of 
lithium-iron phosphate (LFP) cathode chemistry, and that this chemistry 
has less exposure to uncertainties related to critical minerals.
    Regarding PHEVs, we also received comment advocating for inclusion 
of longer-range PHEVs in the analysis, and that these vehicles could 
use the same batteries as BEVs, owing to the relatively large size of 
the battery.
    To update our estimate of current and future battery pack costs, 
and as mentioned in the proposal, we worked with the Department of 
Energy and Argonne National Laboratory to develop a year-by-year 
projection of battery costs from 2023 to 2035, using specific inputs 
that represent ANL's expert view of the current state-of-the-art and of 
the path of future battery chemistries and the battery manufacturing 
industry.\832\ By default, BatPaC estimates only a current-year battery 
production cost and does not support the specification of a future year 
for cost estimation purposes. However, some parameters can be modified 
within BatPaC to represent anticipated improvements in specific aspects 
of cell and pack production. For example, cell yield is controlled by 
an input parameter that can be modified to represent higher cell yields 
likely to result from learning-by-doing and improved manufacturing 
processes. ANL identified several parameters that could similarly 
represent future improvements. This allowed ANL to estimate future pack 
costs in each of several specific future years from 2023 to 2035, 
allowing cost trends over time to be characterized by a mathematical 
regression.
---------------------------------------------------------------------------

    \832\ Argonne National Laboratory, ``Cost Analysis and 
Projections for U.S.-Manufactured Automotive Lithium-ion 
Batteries,'' ANL/CSE-24/1, January 2024.
---------------------------------------------------------------------------

    A major element of the approach was to select BatPaC input 
parameters to reflect current and future technology advances and 
calculate the cost of batteries for different classes of vehicles at 
their anticipated production volumes. Material cost inputs to the 
BatPaC simulations were based on forecasted material prices by 
Benchmark Mineral Intelligence. That is, pack costs were estimated from 
current and anticipated future battery materials, cell and pack design 
parameters, and market prices and vehicle penetration. Pack cost 
improvements in future years were represented at three levels: 
manufacturing (increasing cell yield and plant capacity), pack 
(reducing cell and module numbers and increasing cell capacity), and 
cell (changing active material compositions and increasing electrode 
thickness). The simulations yielded battery pack cost estimates that 
can be represented by correlations for model years 2023 to 2035.
    As with the pack designs modeled by EPA for the proposal, the pack 
designs modeled by ANL follow recent trends in PEV battery design and 
configuration in high-production PEV models. Pack

[[Page 27997]]

topologies, cell sizes, and chemistry are consistent with those seen in 
emerging high-production battery platforms, such as for example the GM 
Ultium battery platform, the VW MEB vehicle platform, and the Hyundai 
E-GMP vehicle platform. ANL then considered the potential for continued 
improvements in chemistry and manufacturing over the time frame of the 
rule.
    The ANL analysis provided EPA with several equations for battery 
pack direct manufacturing costs as a function of model year and battery 
capacity (kWh), for both nickel-based (NMC) chemistry and iron-
phosphate based (LFP) chemistry. We have incorporated these costs into 
the analysis in place of the costs that were used for the proposal.
    As a result of this updated work, and as seen in Figure 24, our 
updated battery direct manufacturing costs for the final rule are 
significantly higher than in the proposal. Using an example of a 100-
kWh battery, Figure 24 compares the updated FRM battery costs (central 
case and sensitivities) to the costs and sensitivities used in the 
proposal.
[GRAPHIC] [TIFF OMITTED] TR18AP24.022

Figure 24: Comparison of OMEGA Input Costs for a 100-kWh Battery, NPRM 
to FRM

    As seen in Table 68, our battery cost inputs (example shown for a 
100 kWh battery) have increased by an average of 26 percent compared to 
the proposal, ranging from about 21 percent higher in the early years 
to about 36 percent higher in the later years.

             Table 68--Difference in Battery Cost per kWh From NPRM to FRM, 100-kWh Battery Example
----------------------------------------------------------------------------------------------------------------
                              Year                                     NPRM             FRM       Difference (%)
----------------------------------------------------------------------------------------------------------------
2023............................................................             114             138              21
2024............................................................             114             138              21
2025............................................................             113             137              21
2026............................................................             111             120               8
2027............................................................              99             115              16
2028............................................................              89             110              24
2029............................................................              83             106              27
2030............................................................              77             101              31
2031............................................................              73              97              33
2032............................................................              69              94              36
2033............................................................              66              90              36
2034............................................................              64              87              35
2035............................................................              62              83              34
----------------------------------------------------------------------------------------------------------------

    The increase in cost is largely a product of the most recent trends 
and forecasts of future mineral costs being now explicitly represented 
via the ANL work,\833\ and also are an outcome of basing the future 
costs on a specific set of technology pathways instead of applying a 
year-over-year cost reduction rate. Most other forecasts of future 
battery costs, including some of those that we cited in the proposal, 
are based largely on application of a historical cost reduction rate 
(i.e., learning rate), without reference to the specific technology 
pathways that might lead to those cost reductions. ANL's approach is 
consistent with that of the Mauler

[[Page 27998]]

paper,\834\ which also identified and modeled a specific set of 
technology pathways. EPA acknowledges one potential criticism of such 
an approach is that it may lead to conservative results, because it 
excludes the potential effect of currently unanticipated or highly 
uncertain developments that may nonetheless come to fruition. On the 
other hand, basing the costs on specific high confidence pathways 
allows the basis of the projections to have greater transparency.
---------------------------------------------------------------------------

    \833\ Id.
    \834\ Mauler et al., ``Technological innovation vs. tightening 
raw material markets: falling battery costs put at risk,'' Energy 
Advances, 2022, v. 1, pp. 136-145.
---------------------------------------------------------------------------

    Accordingly, these updated battery costs are responsive to many of 
the comments. First, the ANL work accounts more explicitly for the 
potential effect of critical mineral prices on the cost of batteries 
over time. We worked with ANL to make available medium- and long-term 
mineral price forecasts from Benchmark Mineral Intelligence, a leading 
minerals analysis firm. These were then used to estimate electrode 
material prices over the years of the ANL analysis. This is one factor 
contributing to the higher battery costs used in our updated analysis. 
Second, as one outcome of this update, in the early years of the 
program, our battery cost inputs are now in closer agreement with the 
2022 BNEF battery price survey, which commenters widely mentioned. 
Finally, the generally higher costs are responsive to general comments 
stating the position that our assumptions for current and future 
battery costs were too low. Because it allowed us to account for the 
most recent trends and developments, in particular by more fully 
considering the potential impact of mineral demand and the specific 
impact of anticipated advancements in lithium-ion technology and 
manufacturing, our use of the costs forecast by ANL is responsive to 
these comments.
    As another way to account for commenter concerns about uncertainty 
in near-term battery costs, we have retained a plateau in costs between 
2023 and 2025, in which our battery cost assumptions do not decline as 
would be indicated by the ANL equations for 2024 and 2025, but instead 
stay at the cost indicated by the ANL equations for 2023. Because the 
ANL cost equations account for the effect of projected mineral prices 
and do not indicate that battery costs will remain elevated at 2023 
levels for 2024 and 2025, our retention of the plateau is a 
conservative assumption.
    Some commenters raised the possibility that batteries manufactured 
in the U.S. (in order to capture the various IRA incentives) would 
experience higher labor rates. We also recognized the fact that, during 
the comment period and afterward, several major U.S. automakers were 
negotiating new labor contracts, with an emphasis on electrification. 
To represent higher labor costs, the ANL equations that EPA used are 
based on a $50 per hour labor cost ($70 per hour including variable 
overhead/benefits), which represents the assumption that U.S. battery 
plants will largely operate under the same labor agreements as major 
automotive plants. In comparison to the battery costs used in the NPRM 
analysis, which were based on the default value in BatPaC of $25 per 
hour ($35 including variable overhead/benefits), the higher labor cost 
resulted in an increase in pack cost per kWh of about two to three 
percent. It is well understood in the industry, and confirmed by BatPaC 
modeling, that labor is a relatively small portion of battery cost in 
comparison to material costs. The two to three percent increase is also 
generally consistent with recent remarks by General Motors that their 
new contract with the United Auto Workers would increase battery cell 
prices by about $3 per kWh.\835\
---------------------------------------------------------------------------

    \835\ LaReau, J.L., ``GM labor contracts will add $1.5 billion 
to costs, but here's how GM expects to offset it,'' Detroit Free 
Press, November 29, 2023.
---------------------------------------------------------------------------

    In response to comments regarding the ability of longer-range PHEVs 
to use BEV batteries, we note that the ANL battery cost equations were 
developed with consideration of higher power-to-energy ratios at the 
lower end of their kWh capacity range, making those battery sizes 
applicable to either BEVs or PHEVs. In the updated analysis, only 
longer-range PHEVs \836\ are placed into the fleet, and their battery 
costs are derived from the same equations as BEVs.
---------------------------------------------------------------------------

    \836\ In OMEGA, EPA assumed that light-duty vehicle PHEV 
batteries would be sized for 40 miles of all-electric range over the 
US06 cycle, while medium-duty PHEVs would be sized to drive 75 miles 
over the UDDS while tested at ALVW.
---------------------------------------------------------------------------

    Our consideration of the public comments led to another update to 
our method of accounting for future learning. In the proposal, EPA 
introduced a method of accounting for learning-by-doing by considering 
cumulative production of batteries (in GWh) resulting from various 
policy scenarios modeled by OMEGA. When the OMEGA model generated a 
compliant fleet in a given future year of the analysis, battery costs 
for BEVs in that year were determined dynamically, by applying a 
learning cost reduction factor to the base year cost. The learning 
factor was calculated in part based on the cumulative GWh of battery 
production necessary to supply the number of BEVs that OMEGA had thus 
far placed in the analysis fleet, up to that analysis year. This 
approach was consistent with ``learning by doing,'' a standard basis 
for representing cost reductions due to learning in which a specific 
percentage cost reduction occurs with each doubling of cumulative 
production over time. This dynamic method of assigning a cost reduction 
due to learning meant that different OMEGA runs that result in 
different cumulative battery production levels would project somewhat 
different battery costs. In the proposal, EPA requested comment on our 
use of cumulative GWh as a determinant of learning effects, and 
evidence and data related to the potential use of global battery 
production volumes instead of domestic volumes in that context, and/or 
the use of battery production volumes in related sectors.
    For several reasons, in the current analysis we chose to return to 
our previous practice of representing future battery cost reductions as 
a function of time rather than a function of cumulative GWh produced. 
Some commenters stated that the proposal's method was new with respect 
to previous analyses and lacked sufficient documentation; that it 
failed to establish a baseline that included global production; and 
that it should have been based on cumulative global production rather 
than only cumulative domestic production.
    In light of these comments, we make several observations here. 
Because OMEGA does not model global demand for batteries, considering 
global demand is difficult in the context of this analysis. Also, the 
establishment of a baseline would require data on historical production 
of batteries both domestic and globally, which itself would be subject 
to uncertainty. We also note that some commenters stated the importance 
of alignment of EPA standards with those of the NHTSA CAFE proposal, 
which is consistent with the use of similar battery costs. Unlike the 
EPA compliance model, NHTSA's compliance model does not support the use 
of the cumulative GWh production approach, meaning that alignment on 
battery costs would be difficult if EPA were to continue using the 
proposal approach. Another relevant factor is both agencies' use of the 
ANL battery cost study, which promotes such alignment. The future 
battery cost equations provided by ANL incorporate fixed assumptions 
for battery cost

[[Page 27999]]

reductions over time and do not support cumulative GWh of battery 
production as an input. We also found that the use of cumulative GWh as 
a factor in the cost of batteries made it difficult to communicate the 
battery costs that were used in the analysis, because under this 
approach the battery costs would vary with each compliance scenario due 
to differences in projected PEV penetration among the scenarios. 
Although we continue to believe that a battery cost learning method 
based on cumulative production can offer the advantage of allowing 
battery costs in a given compliance scenario to be properly responsive 
to large differences in battery demand and production among the 
scenarios, we have decided not to continue the use of this method at 
this time.
    For 2023 to 2035, we use the battery cost equations developed by 
ANL for our battery cost assumptions, and because these are based on 
application of specific technology pathways, we no longer develop costs 
for those years by means of a time-based cost reduction factor. For 
years after 2035, where the ANL equations no longer apply, a cost 
reduction factor remains necessary, and for those years we implemented 
a 1.5 percent year-over-year cost reduction. Our use of 1.5 percent 
results in a rate of cost reduction within the range of long-term 
reductions commonly encountered in the literature. Moreover, we 
selected this specific figure because it is consistent with preventing 
projected battery costs in the far future from declining to levels that 
have not commonly found support in the literature. A 1.5 percent year 
over year cost reduction would limit battery cost from declining lower 
than about $60 per kWh in 2055, a figure that is similar to or 
conservative with respect to a number of long-range forecasts found in 
the literature. For example, this is generally consistent with 
projections found in a review of battery cost forecasting methods by 
Mauler et al.,\837\ which describes a comprehensive survey of battery 
cost projections that average to a projection of $70 per kWh in 2050 
(which at the rate of cost reduction implied in the paper, would be 
equivalent to $63 per kWh in 2055).
---------------------------------------------------------------------------

    \837\ Mauler et al., ``Battery cost forecasting: a review of 
methods and results with an outlook to 2050,'' Energy Environ. Sci, 
v.14, pp. 4712-4739 (2021).
---------------------------------------------------------------------------

    In response to comments and updated work from ANL, EPA also updated 
the OMEGA inputs for specific energy of HEV, PHEV and BEV battery 
packs. The ANL battery cost study included projections of the future 
specific energy of NMC and LFP battery packs, as provided by the BatPaC 
model that also determined their cost. This has resulted in somewhat 
lighter batteries over time than assumed in the NPRM analysis, where 
improvements in specific energy were not modeled.
    In response to comments recommending inclusion of LFP chemistries, 
our updated battery costs are now a weighted average of ANL's cost 
equations for LFP and NMC batteries, with a weighting derived from 
forecasts of LFP cathode or battery production likely to be present in 
the U.S. PEV market. LFP is already present in a small portion of 
light-duty PEVs and its share is expected to increase in the future, 
due to its lower cost and absence of the critical minerals such as 
cobalt, manganese, and nickel. LFP chemistry is also potentially 
applicable to some medium-duty vehicles such as delivery vans, whose 
larger size may better accommodate the lower energy density of this 
chemistry. The weighting ranges from 8 percent LFP in 2023, 16 percent 
in 2025 and leveling off at 19 percent in 2028. For more discussion of 
the LFP weighting, see RIA Chapter 2.
    We also received comment on the upper and lower battery cost 
sensitivities that we considered in the proposal, where we included 
sensitivities for battery pack costs that were 25 percent higher and 15 
percent lower (on a $/kWh basis) than the battery pack costs in the 
central case. Some commenters who felt that our battery costs were too 
low and/or our learning rates were too high disagreed with the basis of 
the upper and lower sensitivity percentages as being arbitrary and/or 
insufficient, particularly on the high side. Some commenters 
specifically felt that EPA should have used an upper sensitivity of 
greater than 25 percent, or not limited to a fixed percentage over 
time, in order to capture what they believe is a more appropriate range 
of uncertainty. In particular, some commenters indicated that we should 
have considered Mauler et al. (2022) in setting the high sensitivity.
    EPA continues to believe that a fixed percentage above and below 
the central case can be an appropriate way to establish upper and lower 
bounds for a sensitivity, if the resulting band can be shown to 
adequately cover a range of reasonably plausible outcomes for future 
battery costs. For the updated analysis, we examined the 
appropriateness of the plus 25 percent and minus 15 percent range as 
applied to the updated central case battery costs which are 
significantly higher than in the proposal. We also examined the Mauler 
et al. paper and compared the range of scenarios expressed there to the 
band of costs that would be defined by this range.\838\
---------------------------------------------------------------------------

    \838\ While the Mauler paper reported cell costs instead of pack 
costs, we converted the Mauler cell cost to pack cost by dividing 
the Mauler cell cost by 0.8, as suggested by the Alliance comments 
that examined the Mauler paper. We also note that pack costs tend to 
decline with pack size, and Mauler's cell costs are by definition 
independent of pack size. Therefore, our choice of a 100-kWh pack 
for comparison to Mauler's converted cell costs may be conservative, 
as our depicted costs would be higher for a smaller pack.
---------------------------------------------------------------------------

    Figure 25 shows, for an example 100 kWh battery pack, how this band 
of sensitivities compares to the Mauler scenarios (which extend only to 
the year 2030). It shows that retaining the 25 and 15 percent 
sensitivities around the updated central case costs establishes a band 
that largely includes the Mauler scenarios, including almost all of the 
highest Mauler scenario, in which costs do not decline at all. The 
highest Mauler scenario, although not defined by the authors past 2030, 
presumably would continue its elevated price scenario indefinitely if 
it were so extended. However, such a scenario of perpetually elevated 
cost does not appear to be widely supported among analysts and is not 
consistent with the most recent forecasts of mineral prices through the 
same time frame, which indicate generally declining or flat costs for 
virtually every battery critical mineral.839 840
---------------------------------------------------------------------------

    \839\ Wood Mackenzie, ``Electric Vehicle & Battery Supply Chain 
Short-term outlook January 2024'', slide 29, February 2, 2024 
(filename: evbsc-short-term-outlook-january-2024.pdf). Available to 
subscribers.
    \840\ Wood Mackenzie, ``Global cathode and precursor short-term 
outlook January 2024,'' slide 5, January 2024 (filename: global-
cathode-and-precursor-market-short-term-outlook-january-2024.pdf). 
Available to subscribers.
---------------------------------------------------------------------------

    Regarding the lower case sensitivity, we note that the most recent 
annual BNEF battery price survey, which was released in November 2023, 
indicates that battery prices fell by 14 percent since the 2022 survey 
was published, and forecasts costs of $113 per kWh in 2025 and $80 per 
kWh in 2030.\841\ This contrasts sharply with the 7 percent increase 
that was reported in the 2022 survey, strongly suggesting that battery 
costs have begun to resume their historical downward trend, and 
reinforcing our expectation that the highest Mauler scenario is 
unlikely. This is also another factor that supports our 
characterization of our updated battery costs as conservative. BNEF's 
projections for 2026 and 2030 align well

[[Page 28000]]

with our minus 15 percent lower sensitivity, as seen in Figure 25.
---------------------------------------------------------------------------

    \841\ BloombergNEF, ``Lithium-Ion Battery Pack Prices Hit Record 
Low of $139/kWh,'' November 27, 2023. Accessed on December 6, 2023 
at https://about.bnef.com/blog/lithium-ion-battery-pack-prices-hit-record-low-of-139-kwh/.
---------------------------------------------------------------------------

    Because the range of sensitivities largely includes the extremes 
represented by the Mauler et al. paper (which was specifically cited by 
commenters), as well as the latest BNEF forecast for 2026 and 2030, EPA 
considers the plus 25 percent and minus 15 percent sensitivities in the 
updated analysis to be responsive to commenters' concerns. Specifically 
for 2023 to 2025, we truncated the high sensitivity at $150 per 
kWh,\842\ based on EPA's assessment of current battery costs as already 
lower than $150 per kWh and near-term trends not indicative of an 
increase, as described in this section.
---------------------------------------------------------------------------

    \842\ The computed +25% values that were reduced to $150/kWh are 
represented by the line labeled ``Truncated'' in Figure 25.
[GRAPHIC] [TIFF OMITTED] TR18AP24.023

Figure 25: Battery Cost Sensitivity Ranges in the Updated Analysis

    In light of the updates described above and consideration of public 
comment, EPA considers the updated battery direct manufacturing cost 
estimates and the sensitivities to be reasonable and conservative, 
based on the record and best available information at this time. In 
particular, considering recent forecasts for falling mineral prices 
during the next several years, and the trend of falling battery prices 
recently indicated by the 2023 BNEF battery price survey, we consider 
it more likely that the central case may prove to be an overestimate 
than an underestimate. We also note that the battery costs in the lower 
sensitivity case are similar to the trajectory of the BNEF forecast, 
suggesting that the program costs may be more similar to that indicated 
by the lower battery cost sensitivity if the BNEF forecast proves 
accurate. A more detailed discussion of the development of the battery 
cost estimates used in this final rule and the sources we considered 
may be found in RIA Chapter 2.
    The battery cost estimates discussed thus far do not include the 
effect of tax credits available to battery manufacturers under the 
Inflation Reduction Act. These include the cell and module production 
tax credit of up to $45 per kWh available to manufacturers under IRC 
45X, and the additional tax credit for 10 percent of the production 
cost of (a) critical minerals and (b) electrode active materials 
available to manufacturers under 45X.
    In the proposal, EPA estimated potential future uptake of the IRA 
credits and how they would impact manufacturing costs for batteries 
over the time frame of the rule. We requested comment on all aspects of 
our accounting for the IRA credits, including not only the values used 
for the credits but also whether or not we should also account for the 
additional 10 percent provisions for electrode active materials and 
critical mineral production, which we did not estimate for the 
proposal.
    The 45X cell and module credit provides a $35 per kWh tax credit 
for U.S. manufacture of battery cells, and an additional $10 per kWh 
for U.S. manufacture of battery modules. 45X also provides a credit 
equal to 10 percent of the manufacturing cost of electrode active 
materials and another 10 percent for the manufacturing cost of critical 
minerals if produced in the U.S. The credits phase out from 2030 to 
2032 (with the exception of the 10 percent for critical minerals, which 
continues indefinitely).
    In the proposal, we assumed that manufacturer ability to take 
advantage of the $35 cell credit and the $10 module credit would ramp 
up linearly from 60 percent of total cells and modules in 2023 (based 
on the approximate percentage of U.S.-based battery and cell 
manufacturing likely to be eligible today for the credit) 
843 844 845 to 100 percent in 2027, and then ramping down by 
25 percent per year as the credit phases out from 2030 (75

[[Page 28001]]

percent) through 2033 (zero percent). In making these assumptions we 
noted that many large U.S. battery production facilities were being 
actively developed by OEMs and their suppliers and their announced or 
expected capacities appeared sufficient to meet U.S. demand for 
batteries as projected by OMEGA.
---------------------------------------------------------------------------

    \843\ U.S. Department of Energy, ``FOTW #1192, June 28, 2021: 
Most U.S. Light-Duty Plug-In Electric Vehicle Battery Cells and 
Packs Produced Domestically from 2018 to 2020,'' June 28, 2021. 
https://www.energy.gov/eere/vehicles/articles/fotw-1192-june-28-2021-most-us-light-duty-plug-electric-vehicle-battery.
    \844\ Argonne National Laboratory, ``Lithium-Ion Battery Supply 
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
    \845\ U.S. Department of Energy, ``Vehicle Technologies Office 
Transportation Analysis Fact of the Week #1278, Most Battery Cells 
and Battery Packs in Plug-in Vehicles Sold in the United States From 
2010 to 2021 Were Domestically Produced,'' February 20, 2023.
---------------------------------------------------------------------------

    We received comment on a variety of aspects of our modeling of 45X. 
Common themes included: questioning the ability of U.S. battery 
manufacturing facilities currently planned or under construction to 
ramp up quickly enough; the lack of accounting for the 10 percent 
electrode active material and critical mineral credit; the ability for 
imported vehicles to benefit from the credit in accounting for their 
battery cost; and the assumption that all of the value of the 45X 
credit would be realized as a cost reduction by OEMs when purchasing 
cells or packs from suppliers.
    Comments received on our modeling of the 45X cell and module credit 
led us to further investigate our inputs for the phase-in schedule and 
average amount realized. This included working with the Department of 
Energy and Argonne National Lab (ANL) to update our assessment of U.S. 
battery manufacturing facilities and to account for gradual ramp-up of 
these facilities over time. As discussed in section IV.C.7 of this 
preamble, the updated analysis largely confirmed the previous 
assessment that currently planned U.S. battery cell manufacturing 
capacity is poised to meet projected U.S. demand during the time frame 
of the rule, even after explicitly accounting for a typical ramp-up 
period as assessed by DOE and ANL.
    Regarding the ability of imported PEVs to benefit from 45X, some 
commenters stated that imported PEVs are likely to continue to comprise 
some portion of the market in the future, and because they arrive fully 
assembled including the battery, this portion of the PEV market is 
unlikely to benefit from the 45X cell and module credit. EPA agrees 
that imported vehicles are likely to continue to comprise some portion 
of the future PEV market. We also note, however, that even foreign 
manufacturers might in some cases be able to benefit from a reduced 
battery cost by purchasing cells or battery packs from U.S. suppliers 
that are able to claim the credit. Even if this possibility is not 
widely utilized, imported PEVs must compete with the presence of 
domestic PEVs that do benefit from the credit and may become a smaller 
part of the fleet over time due to this factor. For example, European 
battery maker Northvolt's CEO Peter Carlsson has said that with the IRA 
incentives available in the U.S., ``it is basically impossible to 
operate in the North American market from anywhere else,'' and has been 
actively pursuing opportunities to build plants in the U.S. as a 
result.\846\ It is also becoming apparent that foreign manufacturers 
will often be able to benefit from local incentives in their country of 
origin that act to reduce the cost of their batteries. Programs offered 
to battery manufacturers in other countries have already begun to 
compete with the IRA to provide a similar competitive cost advantage 
for their own manufacturers. As an example, European battery maker 
Northvolt was recently awarded a 700 million Euro direct grant and a 
202 million Euro guarantee for a 60 GWh plant in Germany that the 
company says prevented a move to the U.S.,\847\ and the company also 
received a support package in Canada for a multi-billion dollar plant 
in Quebec for which the Canadian government, Ottawa, and Quebec will 
provide up to $2.7 billion for construction as well as ``production 
support to match the Inflation Reduction Act's Advanced Manufacturing 
Production Credit and value of the 45X tax credit.'' \848\
---------------------------------------------------------------------------

    \846\ Automotive News Europe, ``VW, BMW battery supplier 
Northvolt could reap billions from Biden's EV bill,'' February 15, 
2023. Accessed on February 2, 2024 at https://europe.autonews.com/automakers/northvolt-could-reap-billions-us-green-tax-incentives.
    \847\ Power Technology, ``Northvolt secures [euro]902m to build 
EV battery plant in Germany over US,'' January 10, 2024. Accessed on 
February 2, 2024 at https://www.power-technology.com/news/northvolt-ev-battery-plant-germany-us/?cf-view&cf-closed.
    \848\ CBC News, ``EV battery giant Northvolt to build 
multibillion-dollar plant in Quebec,'' September 28, 2023. Accessed 
on February 2, 2024 at https://www.cbc.ca/news/canada/montreal/quebec-northvolt-ev-battery-factory-1.6980767.
---------------------------------------------------------------------------

    Regarding the passing of 45X credit savings realized by cell and 
module suppliers to OEMs via the selling price of the cells or modules, 
we continue to expect that many suppliers and OEMs will work closely 
together as they currently do through contractual agreements and 
partnerships and that these close connections will promote fair pricing 
arrangements. The large U.S. production capacity that is projected for 
the time frame of the rule also suggests that the market will be 
competitive and that suppliers will be motivated to pass credit savings 
along to customers in order to compete on price. OEMs that vertically 
integrate will not be subject to these variables and should be able to 
realize the full amount of the credit through their integrated 
operations.
    Although EPA believes that these factors are likely to counteract 
commenters' concerns about these issues, EPA also acknowledges that at 
this early stage of the IRA credit availability, some uncertainty 
remains about the average amount of the available 45X cell and module 
credit that will in fact be realized across the U.S. PEV fleet. For 
example, if cells or modules are exported from the U.S. for use in 
vehicles that are then imported to the U.S., the value of the 45X 
credit, even if passed along to the purchaser of the cells or modules, 
would be offset to some degree by logistics and transportation costs. 
While local subsidies may exist in many jurisdictions to rival the 45X 
credit, there is no assurance that they will have the same value. We 
also note that ANL projections of U.S. battery cell manufacturing 
capacity prior to the time frame of the rule through 2025 (see section 
IV.C.7 of this preamble, at Figure 36) is roughly 50 percent of 
projected demand under the compliance scenarios, suggesting that only 
about half of PEV batteries may be claiming the 45X cell and module 
credit in those years preceding the rule. Accordingly to help account 
for uncertainties including (a) imported vehicles not necessarily 
having access to the credit, (b) the possibility that U.S. cell 
manufacturing facilities will not ramp up as quickly as announced, and 
(c) ANL's reduced projection of U.S. cell plant capacity from 2023 
through 2025, we have conservatively reduced our estimates for the 
average value of the 45X cell and module credits from 2023. 
Specifically we have modified the yearly average amount as shown in 
Table 69. In general, we reduced the 2023 value to 50 percent of the 
available $45 (from 60 percent in the NPRM), and ramped up the value 
more slowly, to 75 percent in 2030. By 2030, we expect that enough lead 
time will have occurred (primarily, for manufacturers to secure 45X-
qualifying battery supply and increase share of PEVs assembled in North 
America rather than imported), to gradually rejoin our original 
estimate of 100 percent of the available credit (now phased down by 
statute to $11.25) by 2032.
    EPA considers these updated values to be responsive to the comments 
and to be a reasonable and conservative estimate of the 45X cell and 
module credit across the industry, reflecting current uncertainties. 
Over time, we expect that the impact of 45X on OEM battery 
manufacturing cost will become more evident and could turn out to be 
higher. For our low battery cost sensitivity case, we have retained the 
NPRM assumptions for 45X. We note

[[Page 28002]]

that many commenters supported our NPRM assumptions for 45X, and we 
continue to consider those values to represent a fully reasonable 
future outcome although we have chosen to use lower and more 
conservative values in the central case.

Table 69--Updates to 45X cell and module production tax credits, average value across PEV fleet ($/kWh) in OMEGA
----------------------------------------------------------------------------------------------------------------
                                                                                                FRM % of maximum
                             Year                                   NPRM             FRM        available credit
----------------------------------------------------------------------------------------------------------------
2023.........................................................             $27          $22.50               50.0
2024.........................................................           31.50           24.11               53.6
2025.........................................................              36           25.71               57.1
2026.........................................................           40.50           27.32               60.7
2027.........................................................              45           28.93               64.3
2028.........................................................              45           30.54               67.9
2029.........................................................              45           32.14               71.4
2030.........................................................           33.75           25.31                 75
2031.........................................................           22.50           19.69               87.5
2032.........................................................           11.25           11.25                100
2033.........................................................               0               0  .................
----------------------------------------------------------------------------------------------------------------

    We also received comment that the 10 percent credit for electrode 
active materials and critical minerals under 45X could be significant, 
and therefore should be included in the analysis. To investigate this 
possibility, we consulted with the Department of Energy and Argonne 
National Laboratory to characterize the potential value of the 10 
percent provisions of 45X on a dollar per kWh basis. ANL determined 
that the maximum value of the credits would change over time, as 
critical minerals become a larger share of battery manufacturing cost 
due to efficiencies in other material and manufacturing costs. As shown 
in Table 70, the maximum value for the electrode active materials (EAM) 
credit, or both the EAM credit and the critical minerals (CM) credit, 
would range from $5.60 to $10.70 per kWh in 2026 and decline to $3.50 
to $7.60 per kWh in 2030, depending on chemistry. The decline is a 
result of ANL's projection that the amount (and hence manufacturing 
cost) of critical mineral content will decline over time due to 
improved cell chemistries for which minerals comprise a diminishing 
portion of total cost.

               Table 70--Potential Value of 45X 10 Percent CM and EAM Credits for a 75-kWh Battery
----------------------------------------------------------------------------------------------------------------
                                           High performance (Ni/Mn)                    Low Cost (LFP)
                                   -----------------------------------------------------------------------------
                                        2026         2030         2035         2026         2030         2035
----------------------------------------------------------------------------------------------------------------
EAM only, [Delta] $/kWh...........          7.2          4.5  ...........          5.6          3.5  ...........
EAM + CM, [Delta] $/kWh...........         10.7          7.6          1.8          7.2          4.9          1.4
----------------------------------------------------------------------------------------------------------------

    While these tax credits will be significant to manufacturers that 
produce EAM and CM in the U.S., their effect on average battery 
manufacturing cost across the fleet depends on the degree to which the 
average battery uses U.S.-produced EAM and CM. Because qualifying 
production of CM and EAM is unlikely to be sufficient to supply all 
U.S. PEV batteries based on announcements quantified at the time of 
ANL's analysis, the average value of the credit on a per kWh basis will 
be less than the figures above. Because of the uncertainty in 
predicting the degree of utilization across the industry, and the 
relatively small average value of the resulting credit, we have chosen 
to not include an estimate of the 10 percent credits in this analysis. 
Because some manufacturers will likely be in a position to qualify for 
some portion of the credit, this is a conservative assumption.
    As we did in the proposal, we applied the 45X credits after the RPE 
markup. Because RPE is meant to be a multiplier against the direct 
manufacturing cost, and the 45X credit does not reduce the actual 
direct manufacturing cost at the factory but only compensates the cost 
after the fact, it was most appropriate to apply the 45X credit to the 
marked-up cost. The 45X cell and module credits per kWh were applied by 
first marking up the direct manufacturing cost by the 1.5 RPE factor to 
determine the indirect cost (i.e., 50 percent of the manufacturing 
cost), then deducting the credit amount from the marked-up cost to 
create a post-credit marked-up cost. The post-credit direct 
manufacturing cost would then become the post-credit marked-up cost 
minus the indirect cost. Details on the application of the 45X credit 
in OMEGA can be found in RIA Chapter 2.5.2.1.4 and 2.6.8.
    The IRA also includes consumer purchase incentives, which do not 
affect battery manufacturing cost, but reduce vehicle purchase cost to 
consumers. A substantial Clean Vehicle Credit (IRC 30D) of up to $7,500 
is available to eligible buyers of eligible PEVs, subject to a number 
of requirements such as location of final assembly (in North America), 
critical minerals and battery component origin, vehicle retail price, 
and buyer income. Similarly, a Commercial Clean Vehicle Credit (IRC 
45W) of up to $7,500 is available for light-duty vehicles purchased for 
commercial use. Consistent with the statutory text of the IRA and 
longstanding tax rules regarding leasing, vehicles leased to consumers 
(rather than sold) are commercial vehicles and can qualify for the 
credit to be paid to the lessor, equal to the excess of the purchase 
price for such vehicle over the price of a comparable internal

[[Page 28003]]

combustion engine vehicle.\849\ EPA recognizes that this guidance could 
lead to increased relevance of 45W for vehicles and buyers that would 
not otherwise be eligible for the 30D. Relevant considerations in 
quantifying the extent to which the 45W may influence cost of PEVs to 
consumers would include factors such as the degree to which the value 
of the 45W credit (paid to lessor) would be represented in reduced 
payments to the lessee, and the degree to which manufacturers and 
dealers that currently sell vehicles outright choose to adopt a leasing 
model.
---------------------------------------------------------------------------

    \849\ Internal Revenue Service, ``Topic G--Frequently Asked 
Questions About Qualified Commercial Clean Vehicles Credit,'' 
February 3, 2023. https://www.irs.gov/newsroom/topic-g-frequently-asked-questions-about-qualified-commercial-clean-vehicles-credit.
---------------------------------------------------------------------------

    Because of the sourcing and eligibility requirements of the 30D 
credit and the uncertainties regarding relative utilization of the 45W 
credit, EPA did not assume in the proposal that all BEV sales would 
qualify for the full $7,500 30D or 45W credit. However, we did 
acknowledge that some portion of the market that is unable to capture 
the 30D credit may be capable of utilizing the 45W credit. For these 
reasons, in the analysis for the proposal, we applied only a portion of 
the $7,500 maximum from either incentive. For 2023, in the proposal, we 
estimated that an average credit amount (across all PEV purchases) of 
$3,750 per vehicle could reasonably be expected to be realized through 
a combination of the 30D and 45W tax credits. For later years, we 
recognized that the attractiveness of the credits to manufacturers and 
consumers would likely increase eligibility over time. To reflect this, 
we ramped the value linearly to $6,000 by 2032, the last year of the 
credits. The proposal analysis did not ramp to the full theoretical 
value of $7,500, in expectation that not all purchases will qualify for 
30D due to MSRP or income requirements, and that not all PEVs are 
likely to enter the market through leasing.
    We received a number of comments regarding our estimation of the 
30D and 45W credits in the proposal. Commenters that emphasized the 
potential for IRA consumer incentives such as 30D and 45W to reduce 
vehicle cost to the consumer expressed broad support for EPA's 
inclusion of the credits in the analysis and did not disagree with 
EPA's year by year estimates of the average realized value of 30D and 
45W credits. A variety of other commenters expressed the view that our 
estimates may have been too optimistic for various reasons. These 
reasons centered around their views regarding: the ability of U.S. 
battery manufacturing facilities and mineral mining and processing to 
ramp up rapidly enough to provide the critical minerals and battery 
components necessary to claim the credit; the ability of the domestic 
battery supply chain to grow fast enough to fulfill the increasing 
requirements for domestic sourcing for 30D eligibility; that the basis 
for the chosen values was unclear; that the impact of critical mineral 
and component sourcing requirements, and income and MSRP limits, was 
not quantified; and uncertainty surrounding the then-unreleased 
Treasury guidance regarding specific requirements for sourcing, 
particularly the Foreign Entity of Concern (FEOC) requirement. Some 
commenters also expressed skepticism that leasing rates under the 45W 
provision would increase sufficiently to achieve the modeled 
assumptions for 30D and 45W combined.
    These comments led us to revisit our assumptions for the combined 
effect of the 30D and 45W credits over the time frame of the rule. We 
requested the Department of Energy to perform an independent assessment 
\850\ of the potential for average combined realization of 30D and 45W 
across the fleet for each year of the rule, taking into account the 
various eligibility constraints, trends in leasing, and rate of growth 
in U.S. battery manufacturing facilities including an accounting for 
gradual ramp-up over time. The assessment was performed by DOE analysts 
across multiple offices and National Laboratories using the latest 
market data at the automaker level including data on critical minerals, 
battery components, status of the automotive supply chain, and PEV 
adoption. This work resulted in a set of year-by-year estimates of 
fleet-average credit values for the combined effect of 30D and 45W, 
shown in Table 71.
---------------------------------------------------------------------------

    \850\ Department of Energy, ``Estimating Federal Tax Incentives 
for Heavy Duty Electric Vehicle Infrastructure and for Acquiring 
Electric Vehicles Weighing Less Than 14,000 Pounds,'' Memorandum, 
March 11, 2024.
---------------------------------------------------------------------------

    DOE projected that the market-weighted average PEV can receive 
around $3,900 per vehicle in 2023 between the 30D and 45W credits, 
increasing to $6,000 in 2032. The figures are very close to the those 
that EPA used in the proposal.

                          Table 71--DOE Estimates for 30D and 45W Clean Vehicle Credit
----------------------------------------------------------------------------------------------------------------
                           Model year                                  NPRM             DOE         Difference
----------------------------------------------------------------------------------------------------------------
2022............................................................              $0              $0  ..............
2023............................................................            3750            3900            +150
2024............................................................            4000            4300            +300
2025............................................................            4250            4400            +150
2026............................................................            4500            4400            -100
2027............................................................            4750            4800             +50
2028............................................................            5000            5000  ..............
2029............................................................            5250            5200             -50
2030............................................................            5500            5500  ..............
2031............................................................            5750            5800             +50
2032............................................................            6000            6000  ..............
2033............................................................               0               0  ..............
----------------------------------------------------------------------------------------------------------------

    Data sources underlying these projections include: PEV penetration 
rates based on EPA's projections from its 2021 rule for MYs 2023-2026 
standards and the proposed standards for MYs 2027-2032; OEM production 
shares as of MY 2021 from the EPA Automotive Trends Database; share of 
cars and light trucks from the U.S. Energy Information Administration's 
Annual Energy Outlook 2023; shares of U.S. PEV sales and MSRPs derived 
from the Argonne National Laboratory E-Drive Sales Database, shares of 
North American final assembly compiled from

[[Page 28004]]

Wards Auto data by Oak Ridge National Laboratory, and public sources 
describing the establishment of new electric vehicle assembly lines 
collected by the Department of Energy; share of U.S. EV sales that meet 
the applicable percentages of critical minerals and battery components, 
estimated using expert analysis from several DOE offices considering 
several public and proprietary critical mineral and battery component 
supply chain datasets (including automaker-reported information to the 
U.S. Treasury and Internal Revenue Service tracking vehicles qualified 
for 30D as reported on FuelEconomy.gov); and share of U.S. PEV sales 
that exclude suppliers that are FEOCs (estimated by DOE using 
deliberative information during the pre-rulemaking phase of 
implementing the FEOC restriction in IRC 30D).\851\ DOE was further 
informed by confidential discussions with OEMs regarding supplier plans 
held throughout 2023. Lease rates were estimated using the latest data 
available from J.D. Power for light-duty electric vehicles. Additional 
detail and references can be found in the memorandum document cited 
above.
---------------------------------------------------------------------------

    \851\ Forthcoming final FEOC criteria could lead to average 
credit values being higher or lower than projected through the 
Excluded Entities provision.
---------------------------------------------------------------------------

    We also received comment that there is no guarantee that the full 
value of the 30D/45W credits will be passed on to the vehicle buyer but 
instead could be captured as profit by the vehicle manufacturer. 
However, we project that manufacturers will choose to produce PEVs as a 
means to comply with the standards. In this situation, we believe that 
manufacturers will be incentivized to compete with one another on a 
pricing basis. If a vehicle OEM were to capture a large portion of the 
credit as additional profit, this would conflict with the 
manufacturer's ability to sell the vehicles, which manufacturers are 
motivated to do as one of the lowest cost pathways to meeting the 
standards. In this final rule analysis, EPA continues to apply the full 
estimated average value of the 30D/45W credit toward the purchase price 
seen by the consumer. The 30D/45W credit amount is modeled in OMEGA as 
a direct reduction to the consumer purchase costs,\852\ and therefore 
has an influence on the shares of BEVs demanded by consumers within the 
model. The purchase incentive is assumed to be realized entirely by the 
consumer and does not impact the vehicle production costs for the 
producer.
---------------------------------------------------------------------------

    \852\ As described in Chapter 4.1 of the RIA, the modeling of 
consumer demand for ICE and BEV vehicles considers purchase and 
ownership costs as components of a ``consumer generalized cost'' for 
the ICE and BEV options. The purchase cost reflects the vehicle 
purchase price and any assumed purchase incentives under 30D or 45W 
of the IRA.
---------------------------------------------------------------------------

    However, EPA also acknowledges that the relative newness of the 30D 
and 45W credits, as well as the content requirements for 30D and 
outstanding Treasury guidance that has not been finalized at the time 
of this writing, contribute to uncertainty at the present time 
regarding the average combined credit value that will ultimately be 
realized across the fleet and across the diversity of future PEV 
models. For example, specific guidance has not been finalized on the 
transition rule for non-traceable battery materials and excluded entity 
provision under 30D.\853\ We also note that DOE was unable to 
incorporate into its modeling several features of the 30D and 45W tax 
credits that may affect eligibility, and which have been specifically 
raised by some commenters, including modified adjusted gross income 
(MAGI) of future buyers, the possibility that the credit may exceed the 
tax liability of some future buyers, the effect of future trends in 
vehicle prices on average MSRPs over time, lower than expected 
receptiveness to leasing, or the effect of future inflation on MAGI. 
Commenters also raised concerns about U.S. manufacturers securing IRA-
compliant content, particularly in light of outstanding final Treasury 
guidance that could affect details of 30D, and particularly in the near 
term (for example, uncertainty about qualifying sources of graphite, 
and more broadly which minerals or other inputs would ultimately fall 
under the transition rule).
---------------------------------------------------------------------------

    \853\ Federal Register Vol. 88, No. 231, p. 84098, ``Section 30 
Excluded Entities,'' December 4, 2023.
---------------------------------------------------------------------------

    EPA considers the DOE analysis to represent the best accounting of 
potential future 30D/45W credits that is possible at this time. 
However, to further respond to uncertainties raised by commenters, EPA 
has revised the DOE figures downward for use in the OMEGA compliance 
analysis in order to remain conservative with respect to these 
uncertainties. As shown in Table 72, for 2023 through 2030, EPA has 
discounted the DOE estimates by 25 percent, and then ramped up to the 
DOE estimate between 2030 and 2032.
    EPA considers this to be a reasonable accounting for the possible 
effect of these uncertainties which are not precisely quantifiable at 
this time but are not likely to have a large effect. DOE states that 
the impacts of the 30D MAGI limit ``are likely to be limited,'' stating 
further that ``IRS tax statistics indicate that 9% of the 2022 tax 
filers would be MAGI-limited.'' Further, DOE expects that the buyers 
excluded on an income basis would largely coincide with lessees (who 
remain eligible to benefit from 45W) and with the modeled 20 percent of 
vehicles that receive no credit in the DOE analysis.\854\ Similarly, we 
expect the effect of inflation on MSRP eligibility and the effect of 
limited tax liability to be small, as OEMs have considerable leeway to 
adjust MSRP (especially when a relatively small change can capture such 
a large credit), and EPA is aware of no specific data that indicates 
that new vehicle buyers are frequently unable to claim the full 
eligible credit due to limited or no tax liability. Since January 2024, 
buyers who take the 30D credit at the point of sale are not subject to 
a tax liability limitation.\855\ According to auto industry analyst 
firm Cox Automotive, the average income of new car buyers in 2023 was 
$115,000,\856\ and according to the IRS, average total income tax in 
tax year 2020 (the latest data available) for filers between $75,000 
and $100,000 was $7,363 and for filers between $100,000 and $200,000 
was $15,093.857 858
---------------------------------------------------------------------------

    \854\ Department of Energy, ``Estimating Federal Tax Incentives 
for Heavy Duty Electric Vehicle Infrastructure and for Acquiring 
Electric Vehicles Weighing Less Than 14,000 Pounds,'' Memorandum, 
March 11, 2024.
    \855\ Internal Revenue Service, ``IRS updates frequently asked 
questions related to New, Previously Owned, and Qualified Commercial 
Clean Vehicle Credits,'' FS-2023-29, December 2023. ``The amount of 
the credit that the electing taxpayer elects to transfer to the 
eligible entity may exceed the electing taxpayer's regular tax 
liability for the taxable year in which the sale occurs, and the 
excess, if any, is not subject to recapture from the dealer or the 
buyer.''
    \856\ Cox Automotive, ``Cox Automotive's Car Buyer Journey Study 
Shows Satisfaction With Car Buying Improved in 2023 After Two Years 
of Declines,'' January 17, 2024. Accessed on March 5, 2024 at 
https://www.coxautoinc.com/market-insights/2023-car-buyer-journey-study.
    \857\ Internal Revenue Service, Publication 1304 (Rev. 11-2022), 
continuation of Table 3.3 on p. 219, dividing column 61 (total 
income tax, thousands) by column 60 (number of returns), for the 
rows ``$75,000 under $100,000'' and ``$100,000 under $200,000.''
    \858\ Internal Revenue Service, ``SOI Tax Stats--Individual 
Income Tax Returns Complete Report (Publication 1304),'' website, 
located at https://www.irs.gov/statistics/soi-tax-stats-individual-income-tax-returns-complete-report-publication-1304.
---------------------------------------------------------------------------

    After 2030, we gradually phase down the 25 percent discounting of 
the DOE figures, and rejoin the DOE-determined estimate of a combined 
$6,000 in 2032. This reflects likely trends in 30D and 45W over time, 
namely, decreasing uncertainty about material supply and diminished 
influence of 45W compared to 30D. Specifically, as time passes, 
uncertainty about mineral supply decreases; that is, vehicle 
eligibility for

[[Page 28005]]

the 30D content requirements would be expected to increase as 
manufacturers increasingly have the lead time needed to maximize 
eligibility of their vehicles for 30D by securing 30D-compliant content 
and increasingly manufacturing in the U.S. EPA expects that sufficient 
lead time will have occurred by 2031 to 2032 to resolve many of the 
uncertainties acknowledged previously, for example, securing 30D-
compliant graphite as well as other content. In addition, the relative 
influence of 45W compared to 30D would be expected to decline over time 
if, as generally expected, PEV prices also decline relative to ICE 
vehicles, because the amount of the 45W credit depends on the price 
differential between a PEV and a comparable ICE vehicle. DOE included 
an estimate of this effect in their analysis. Also, if 45W is having 
less influence over time, uncertainty about leasing rates is becoming 
less important as well.

                         Table 72--Updates to 30D and 45W Clean Vehicle Credit in OMEGA
----------------------------------------------------------------------------------------------------------------
                                                                                                FRM % of maximum
                             Model year                                  NPRM         FRM       available credit
----------------------------------------------------------------------------------------------------------------
2023...............................................................       $3,750       $2,925                 39
2024...............................................................        4,000        3,225                 43
2025...............................................................        4,250        3,300                 44
2026...............................................................        4,500        3,300                 44
2027...............................................................        4,750        3,600                 48
2028...............................................................        5,000        3,750                 50
2029...............................................................        5,250        3,900                 52
2030...............................................................        5,500        4,125                 55
2031...............................................................        5,750        5,075                 68
2032...............................................................        6,000        6,000                 80
2033...............................................................            0            0  .................
----------------------------------------------------------------------------------------------------------------

    After furthering considering the DOE analysis in light of comments 
on this topic, EPA concludes these updated values are responsive to the 
comments and represent a conservative but reasonable estimate of the 
average effective impact of 30D and 45W on PEV acquisition cost by 
consumers across the PEV fleet, reflecting current uncertainties. Over 
time, we expect that the impact of 30D and 45W will become more evident 
as additional data is collected by industry observers and may well turn 
out to be higher. Because our discounted estimates are conservative, we 
did not discount the DOE estimates in our low battery cost sensitivity 
case. Although 30D/45W does not directly factor into battery 
manufacturing cost, it does impact PEV cost as seen by the consumer and 
this sensitivity is intended to show a case in which PEV cost is 
generally more optimistic than in the central case. We note that many 
commenters supported our NPRM assumptions for 30D/45W, which were very 
close to the DOE estimates, and we continue to consider those values to 
represent another reasonable possibility for a future outcome although 
we have chosen to use lower and more conservative values in the central 
case. In addition, we conducted additional sensitivity analysis 
regarding the IRA tax credit assumptions in a memo to the docket.\859\
---------------------------------------------------------------------------

    \859\ U.S. EPA. 2024. Sensitivity Analysis of IRA Tax Credit 
Assumptions, Memorandum to Docket EPA-HQ-OAR-2022-0829, March 13, 
2024. EPA considered the costs and lead time associated with this 
and other sensitivity analyses as part of our consideration of the 
feasibility and appropriateness of this rule, and as we explain in 
section V.B of the preamble, we find that the final standards are 
feasible and the costs of this rule are reasonable.
---------------------------------------------------------------------------

    EPA also considered potential impacts on battery manufacturing cost 
that might result from the battery durability and warranty requirements 
described in sections III.G.2 and III.G.3 of this preamble. We received 
comments stating the position that the existence of durability and 
warranty requirements would increase the cost of PEV batteries, and 
that we should account for this increased cost. However, commenters did 
not provide supporting data regarding cost increases that might result 
from these requirements. Because the durability minimum performance 
requirement and the minimum battery warranty are similar to currently 
observed industry practices regarding durability performance and 
warranty terms, EPA continues to expect that these requirements will 
not result in a significant increase in battery manufacturing costs.
    In the proposal, EPA also updated the non-battery powertrain costs 
that were used to determine the direct manufacturing cost of 
electrified powertrains. We referred to a variety of industry and 
academic sources, focusing primarily on teardowns of components and 
vehicles conducted by leading engineering firms. These included the 
2017 teardown of the Chevy Bolt conducted by Munro and Associates for 
UBS; \860\ a 2018 teardown of several electrified vehicle components 
conducted by Ricardo for the California Air Resources Board; \861\ a 
set of commercial teardown reports published in 2019 and 2020 by Munro 
& Associates; 862 863 864 865 866 867 and the 2021 NAS Phase 
3 report.\868\ Throughout the process of compiling the results of these 
studies, we collaborated with technical experts from the California Air 
Resources Board and NHTSA.
---------------------------------------------------------------------------

    \860\ UBS AG, ``Q-Series: UBS Evidence Lab Electric Car 
Teardown--Disruption Ahead?'' UBS Evidence Lab, May 18, 2017.
    \861\ California Air Resources Board, ``Advanced Strong Hybrid 
and Plug-In Hybrid Engineering Evaluation and Cost Analysis,'' CARB 
Agreement 15CAR018, prepared for CARB and California EPA by Munro & 
Associates, Inc. and Ricardo Strategic Consulting, April 21, 2017.
    \862\ Munro and Associates, ``Twelve Motor Side-by-Side 
Analysis,'' provided November 2020.
    \863\ Munro and Associates, ``6 Inverter Side-by-Side 
Analysis,'' provided January 2021.
    \864\ Munro and Associates, ``3 Inverter Side-by-Side 
Analysis,'' provided November 2020.
    \865\ Munro and Associates, ``BMW i3 Cost Analysis,'' dated 
January 2016, provided November 2020.
    \866\ Munro and Associates, ``2020 Tesla Model Y Cost 
Analysis,'' provided November 2020.
    \867\ Munro and Associates, ``2017 Tesla Model 3 Cost 
Analysis,'' dated 2018, provided November 12, 2020.
    \868\ National Academies of Sciences, Engineering, and Medicine 
2021. ``Assessment of Technologies for Improving Light-Duty Vehicle 
Fuel Economy 2025-2035''. Washington, DC: The National Academies 
Press. https://doi.org/10.17226/26092.
---------------------------------------------------------------------------

    In the proposal, we described a new full-vehicle teardown study 
comparing a gasoline-fueled VW Tiguan to the battery-electric VW ID.4, 
conducted for

[[Page 28006]]

EPA by FEV of America.\869\ The study was designed to compare the 
manufacturing cost and assembly labor requirements for two comparable 
vehicles, one an ICE vehicle and one a BEV, both of which were built on 
respective dedicated-ICE \870\ and dedicated-BEV \871\ platforms by the 
same manufacturer. The teardown applies a bill-of-materials approach to 
both vehicles and derives cost and assembly labor estimates for each 
component. An additional task under this work assignment was for FEV to 
review the non-battery electric powertrain costs EPA had described in 
Chapter 2.6.1 of the DRIA, with respect to the cost values used and the 
method of scaling these costs across different vehicle performance 
characteristics and vehicle classes, and to suggest alternative values 
or scalings where applicable. More details about the goals of the 
teardown study can be found in RIA Chapter 2.5.2.2.3. The complete 
teardown report, the associated bill-of-materials data worksheets, and 
the FEV review of non-battery costs and scaling were available in the 
docket during the comment period 872 873 and updated report 
material has been posted since.\874\
---------------------------------------------------------------------------

    \869\ FEV Consulting Inc., ``Cost and Technology Evaluation, 
Conventional Powertrain Vehicle Compared to an Electrified 
Powertrain Vehicle, Same Vehicle Class and OEM,'' prepared for 
Environmental Protection Agency, EPA Contract No. 68HERC19D00008, 
February 2023.
    \870\ VW MQB A2 (``Modularer Querbaukasten'' or ``Modular 
Transversal Toolkit'', version A2) global vehicle platform.
    \871\ VW MEB (``Modularer E-Antriebs Baukasten'' or ``modular 
electric-drive toolkit) global vehicle platform.
    \872\ Memo to Docket ID No. EPA-HQ-OAR-2022-0829, titled ``Cost 
and Technology Evaluation, Conventional Powertrain Vehicle Compared 
to an Electrified Powertrain Vehicle, Same Vehicle Class and OEM.''
    \873\ Memo to Docket ID No. EPA-HQ-OAR-2022-0829, titled ``EV 
Non-Battery Cost Review by FEV.''
    \874\ Memo to Docket ID No. EPA-HQ-OAR-2022-0829, titled ``FEV 
Cost and Technology Evaluation.''
---------------------------------------------------------------------------

    We also indicated in the proposal that we may rely on the 
information from this work for the final rule. For example, we 
indicated that component costs for the BEV and ICE vehicle might be 
used to support or update our battery or non-battery costs for 
electrified vehicles, or our costs for ICE vehicles; assembly labor 
data might be used to further inform the employment analysis; and any 
other qualitative or quantitative information that could be drawn from 
the report might be used in the analysis.
    The project report was delivered to EPA in February 2023 and 
underwent a contractor-managed peer review process that has now been 
completed.\875\
---------------------------------------------------------------------------

    \875\ Memo to Docket ID No. EPA-HQ-OAR-2022-0829, titled 
``External Peer Review of Cost and Technology Evaluation, 
Conventional Powertrain Vehicle Compared to an Electrified 
Powertrain Vehicle, Same Vehicle Class and OEM.''
---------------------------------------------------------------------------

    Concurrently with this contracted teardown project, EPA also 
contracted FEV to conduct a scaling exercise to develop up-to-date 
powertrain cost curves that could be used as inputs to OMEGA, using not 
only the teardown results of this project but also teardown results 
from FEV's extensive database of previous teardowns it has conducted 
for a wide variety of vehicles and components. As a result of that 
effort, we have updated our powertrain costs, including the non-battery 
technologies used in BEV, PHEV, and HEV powertrains. Chapter 2.6.1 of 
the RIA presents all of those updated powertrain cost curves. In 
general, the updated cost curves result in lower powertrain costs for 
nearly all powertrain technologies, with ICE powertrain costs being 
reduced somewhat more than those for electrified powertrains. As a 
result, the incremental costs when moving from ICE-only to any 
electrified powertrain have increased somewhat since the NPRM. 
Importantly, the scaling effort provided ICE, HEV, PHEV, and BEV 
powertrain costs that were generated using the same methodology. We 
consider the updated costs to represent the strongest and most up to 
date data available.
    Some commenters encouraged EPA to conduct a teardown analysis of a 
relatively long-range PHEV, or to conduct a comparative analysis on 
PHEV and BEV costs with involvement of stakeholders such as car and 
truck makers. It was also noted that a PHEV may not need as strong a 
chassis as a BEV due to the lighter weight of the battery, and that 
this savings should be accounted for in PHEV cost. Given the time frame 
of the analysis, it was not possible to conduct a new teardown analysis 
of a long-range PHEV. Given the scope of the FEV teardown and the 
similarity of electrical components between the BEV that was analyzed 
and a long-range PHEV, it is unlikely that the results of a teardown of 
a long-range PHEV would provide significantly different costs 
estimates. While it may be possible that a PHEV could have less 
structural content owing to the smaller size and weight of the battery, 
it is unlikely that such cost savings could be generalized across the 
entire class of vehicles from the analysis of a single vehicle. For 
these reasons we did not conduct these additional analyses.
    More discussion of the technical basis for the non-battery 
electrified vehicle cost estimates used in the final rule analysis may 
be found in RIA Chapter 2.
3. Analysis of Power Sector Emissions
    As PEVs are anticipated to represent a significant share of the 
future U.S. light- and medium-duty vehicle fleet, EPA has continued to 
develop approaches to estimate the upstream emissions (i.e., from 
electricity generation and transmission) of increased PEV charging 
demand as part of the assessment of the standards.\876\ For this final 
rule, electric generation was modeled utilizing ``EPA's Power Sector 
Modeling Platform Post-IRA 2022 Reference Case using the Integrated 
Planing Model (IPM)'' in a similar manner to the analysis for the 
proposal.\877\ IPM provides projections of least-cost capacity 
expansion, electricity dispatch, and emission control strategies for 
meeting energy demand and environmental, transmission, dispatch, and 
reliability constraints represented within 67 regions of the 48 
contiguous U.S.
---------------------------------------------------------------------------

    \876\ EPA also estimates certain upstream emissions associated 
with gasoline and diesel fuel production. See RIA Chapter 7.2.
    \877\ https://www.epa.gov/power-sector-modeling/post-ira-2022-reference-case.
---------------------------------------------------------------------------

    As with the analysis for the proposal, charge demand from scenarios 
modeled within the OMEGA compliance model were regionalized into the 67 
IPM regions using the EVI-X modeling suite of electric vehicle charging 
infrastructure analysis tools developed by the National Renewable 
Energy Laboratory (NREL) combined with a PEV likely adopter model. 
Chapter 5 of the RIA contains a detailed description of the analysis of 
PEV charging demand, electric generation and the resulting emissions 
and cost for different projected vehicle electrification scenarios. One 
update made within the power sector analysis for the final rule was the 
inclusion of heavy-duty charge demand based on an interim scenario 
developed from the Greenhouse Gas Emissions Standards for Heavy-Duty 
Vehicles--Phase 3 Proposed Rule.\878\ We combined this heavy-duty power 
sector demand together with demand for charging light- and medium-duty 
PEVs to improve forecasting of both electricity rates and power sector 
emissions factors used within the analysis of costs and benefits for 
the final rule.
---------------------------------------------------------------------------

    \878\ 88 FR 25926, April 27, 2023.
---------------------------------------------------------------------------

    Power sector modeling results of generation and grid mix from 2030 
to 2050 and CO2 emissions from 2028 to 2050 for the 
contiguous United States (CONUS) are shown in Figure 26. Power sector 
CO2 emissions for the final rule are compared to a No Action 
case in Figure 27. Power sector modeling results are summarized in more 
detail

[[Page 28007]]

within Chapter 5 of the RIA. The results show significant continued 
year-over-year growth in both total generation and the use of 
renewables for electric generation (Figure 26) and year-over-year 
reductions in CO2 emissions (Figure 27). Relative to a No 
Action case, the final light- and medium-duty standards are anticipated 
to increase generation by less than 1 percent in 2030 and by 
approximately 7.6 percent by 2050 relative to no action. When combined 
with anticipated demand from heavy-duty applications, generation is 
anticipated to increase by 11.6 percent relative to no action (Figure 
26). The impact of the light- and medium-duty standards combined 
together with the anticipated impacts due to heavy-duty on EGU 
emissions are shown in Figure 27 through Figure 30. EGU emissions of 
NOX (Figure 28), SO2 (Figure 29), 
PM2.5 (Figure 30) and other emissions followed similar 
general trends to the CO2 emissions results. Emissions trend 
downwards year over year through 2050 for both the no action and the 
policy case analyses. The policy case (final standards) analysis showed 
an approximately 13.4 percent increase in EGU CO2 emissions 
in 2050 for the light- and medium-duty final rule when combined with 
anticipated heavy-duty standards. An increase of 8.8 percent in EGU 
CO2 emissions in 2050 is estimated for light- and medium-
duty vehicle charging alone. Note that the increased CO2 
emissions from EGUs are more than offset by reductions in tailpipe 
emissions from the projected vehicle fleet under the final standards. 
Criteria pollutant emissions from EGUs follow similar trends to those 
of the EGU CO2 emissions, with similar year-over-year 
emissions declines for both the policy case and no action power sector 
modeling, and with small increases in EGU emissions for the policy case 
relative to no action. Again, it should be noted that this represents 
EGU emissions only and does not include emissions reductions from 
vehicle tailpipe or refinery emissions. Additional details on EGU 
emissions from our power sector modeling are summarized in Chapter 
5.2.3 of the RIA. Combined impacts of EGU and other upstream emissions 
are summarized in Chapter 9 of the RIA.
    Power sector modeling results showed that the increased use of 
renewables will largely displace coal and (to a lesser extent) natural 
gas EGUs and will primarily be driven by provisions of the IRA. By 
2035, power sector modeling results also showed that non-hydroelectric 
renewables (primarily wind and solar) will be the largest source of 
electric generation (approximately 45 percent of total generation), and 
would account for more than 75 percent of generation by 2050. This 
displacement of coal EGUs by renewables was also the primary factor in 
the year-over-year reductions in CO2, NOX, 
SO2, PM2.5, and other EGU emissions. Impacts on 
EGU GHG and criteria pollutant emissions due to grid-related IRA 
provisions were substantially larger than the impact of increased 
electricity demand due to projected increased electrification of light- 
and medium-duty vehicles under this rule and anticipated electricity 
demand under the proposed heavy-duty standards. As EGU emissions 
continue to decrease between 2028 and 2050 due to increasing use of 
renewables, the power sector GHG and criteria pollutant emissions 
associated with light- and medium-duty vehicle operation will continue 
to decrease, even as the number and proportion of electric vehicles 
increase over that timeframe.
    Power sector modeling also showed a significant increase in the use 
of batteries for grid storage, which is expected to be increasingly 
important for generation, transmission and distribution of electricity. 
When modeling PEV charge demand for both the final rule and for a No 
Action case, grid battery storage capacity increased from approximately 
zero capacity in 2020 to approximately 53 GW in 2030 and 150 GW in 
2050, representing the equivalent of approximately 105 GWh and 326 GWh 
of annual generation, respectively. The increase in grid battery 
storage was primarily due to modeling of incentives under the IRA.

[[Page 28008]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.024

Figure 26: 2030-2050 Power Sector Generation and Grid Mix for the No 
Action Case (Left Side of Each Pair of Bars Representing Each Year) 
Compared to the Final Rule (Right Side of Each Pair of Bars)

[[Page 28009]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.025

Figure 27: 2028 Through 2050 CONUS CO2 Emissions From 
Electricity Generation for the Final Rule Policy Case (Gray Line) 
Compared to a No Action Case (Black Dashed Line)

[[Page 28010]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.026

Figure 28: 2028 Through 2050 CONUS NOX Emissions From 
Electricity Generation for the Final Rule Policy Case (Gray Line) 
Compared to a No Action Case (Black Dashed Line)

[[Page 28011]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.027

Figure 29: 2028 Through 2050 CONUS SO2 Emissions From 
Electricity Generation for the Final Rule Policy Case (Gray Line) 
Compared to a No Action Case (Black Dashed Line)

[[Page 28012]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.028

Figure 30: 2028 Through 2050 CONUS PM2.5 Emissions From 
Electricity Generation for the Final Rule Policy Case (Gray Line) 
Compared to a No Action Case (Black Dashed Line)

4. PEV Charging Infrastructure Considerations
    We received many comments regarding future charging infrastructure 
needs. Vehicle manufacturers, dealers, and representatives of the fuels 
industry, among others, raised concerns stating that charging 
infrastructure is inadequate today and that the pace of deployment is 
not on track to meet levels needed if the proposed standards are 
finalized. Commenters noted particular challenges for those who can't 
charge at home, as well as for rural areas. Manufacturers and others 
said customers won't buy PEVs if reliable charging infrastructure is 
not available. While they recognized the importance of the BIL and the 
IRA in supporting buildout of charging infrastructure, commenters 
expressed concerns that far more funding would be needed with some 
commenters characterizing BIL funds as a `good downpayment'. We also 
received comments from states, non-governmental organizations, 
electrification groups, electric vehicle manufacturers, and utilities 
highlighting the many public and private investments in charging 
infrastructure that have been announced or are already underway, along 
with a new analysis submitted by EDF.\879\ The analysis found that, 
taken together, these investments are putting us on track to meet 
public charging infrastructure needed in 2030 if the proposed standards 
were finalized. Several commenters noted that EPA finalizing stringent 
standards would provide certainty to vehicle manufacturers, charging 
equipment providers, and others, and would spur further investments in 
charging infrastructure.
---------------------------------------------------------------------------

    \879\ Environmental Defense Fund and WSP, ``U.S. Public Electric 
Vehicle (EV) Charging Infrastructure Deployment Industry Investment 
Briefing,'' July 2023. Accessed December 18, 2023, at: https://www.edf.org/sites/default/files/2023-07/WSP%20US%20Public%20EV%20Charging%20Infrastrcuture%20Deployment%20July%202023.pdf.
---------------------------------------------------------------------------

    As an initial matter, EPA notes that it anticipates automakers will 
employ a wide variety of control technologies, applied to ICE, hybrid, 
and electric powertrains, to meet the final standards and will continue 
to offer a diverse variety of vehicles for the duration of these 
standards and beyond. For example, under our central case modeling 
(which is only one estimate of a possible compliance path for the 
industry), in MY 2032, 29 percent of new vehicle sales would be non-
hybrid ICE vehicles (with an additional 3 percent hybrid 
vehicles).\880\ We anticipate that the flexibilities offered by the 
final rule will enable manufacturers who choose to meet the final rule 
through producing more PEVs to deploy PEVs in areas and at volumes that 
meet consumer demand. At the same time, EPA agrees that continued 
expansion of reliable charging infrastructure is important for higher 
rates of PEV adoption.
---------------------------------------------------------------------------

    \880\ These figures include both advanced (21%) and base (8%) 
ICE vehicles, strong (2%) and mild (1%) hybrids.
---------------------------------------------------------------------------

    Public charging has been growing rapidly in the past few years. 
There are over 60,000 charging stations in the U.S. today with more 
than 160,000 electric vehicle supply equipment (EVSE) 
ports.881 882 This is more than double the number of public 
EVSE ports as of the

[[Page 28013]]

end of 2019.\883\ Estimates for future infrastructure needs vary widely 
in the literature based on assumptions about driving and charging 
behavior, residential charging access, and the mix of EVSE by power 
levels, among other factors. A recent national assessment by NREL (Wood 
et al. 2023) estimated that to support 33 million PEVs in 2030, about 
1.25 million public EVSE ports (including 182,000 DC fast charging 
(DCFC) ports) would be needed, along with 26.8 million private ports 
(most at single family homes, but also at multi-family homes and 
workplaces).\884\ That yields a ratio of one public EVSE port needed 
per 26 PEVs. This fits well within a range of other recent studies 
examining public infrastructure needs. An ICCT report looking across a 
dozen studies published between 2018 to 2021 found that two-thirds of 
the estimates (including its own) fell between 20 and 40 PEVs per 
public EVSE port.\885\ A new report conducted by ICF for the 
Coordinating Research Council, which assessed infrastructure needs for 
the level of PEV adoption in the proposed rule, found one public EVSE 
port would be needed for every 34 light-duty PEVs.\886\ There was 
approximately one public EVSE port for every 26 PEVs on the road as of 
the second quarter of 2023,\887\ suggesting public charging 
infrastructure is generally keeping pace with PEV adoption. For 
additional discussion on this topic, see RIA Chapter 5 and RTC section 
17.
---------------------------------------------------------------------------

    \881\ As described in RIA Chapter 5.3, each station may have one 
or more EVSE ports that provide electricity to a vehicle. The number 
of vehicles that can simultaneously charge at the station is equal 
to the number of EVSE ports.
    \882\ U.S. DOE Alternative Fuels Data Center, ``U.S. Public 
Electric Vehicle Charging Infrastructure.'' Accessed January 10, 
2023, at https://afdc.energy.gov/data/10972. U.S. DOE Alternative 
Fuels Data Center, ``Alternative Fueling Station Locator.'' Accessed 
January 10, 2024, at https://afdc.energy.gov/stations/#/analyze?country=US&fuel=ELEC.
    \883\ Ibid.
    \884\ Wood et al., ``The 2030 National Charging Network: 
Estimating U.S. Light-Duty Demand for Electric Vehicle 
Infrastructure,'' 2023. Accessed December 18, 2023, at https://driveelectric.gov/files/2030-charging-network.pdf.
    \885\ Bauer et al., ``Charging Up America: Assessing the Growing 
Need for U.S. Charging Infrastructure through 2030,'' 2021. Accessed 
November 5, 2023, at https://theicct.org/wp-content/uploads/2021/12/charging-up-america-jul2021.pdf. Note: The full range of studies 
spanned 12 to 129 PEVs per public charger though all but two were 
between 20 and 56.
    \886\ Coordinating Research Council, ``Assess the Battery Re-
charging and Hydrogen Re-fueling Infrastructure Needs, Costs, and 
Timelines Required to Support Regulatory Requirements for Light-, 
Medium-, and Heavy-Duty Zero Emission Vehicles,'' September 2023. 
Accessed December 18, 2023, at https://crcao.org/wp-content/uploads/2023/09/CRC_Infrastructure_Assessment_Report_ICF_09282023_Final-Report.pdf. (Note: The study assessed infrastructure needs 
associated with ZEV adoption in the proposed rule, the proposed 
Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles-Phase 3, 
as well as California policies including Advanced Clean Cars II 
rule.)
    \887\ Brown, A. et al., ``Electric Vehicle Charging 
Infrastructure Trends from the Alternative Fueling Station Locator: 
Third Quarter 2023,'' 2024. Accessed March 10, 2024, at: https://www.nrel.gov/docs/fy24osti/88223.pdf. Note: Estimated from 
approximately 4.16 million EVs and 160,000 public EVSE ports.
---------------------------------------------------------------------------

    We agree with commenters that keeping up with charging needs as PEV 
adoption grows will require continued investments in charging 
infrastructure. The NREL study discussed above estimated that between 
$31 billion and $55 billion would be needed by 2030 for public charging 
infrastructure, noting that $24 billion in investments from public and 
private sources had already been announced as of March 2023.\888\ The 
White House estimates that as of January 2024 total investments to 
expand the U.S. charging network had grown to over $25 billion.\889\ 
Considering 2030 is still six years away, and that (as commenters 
noted) the standards themselves will spur additional investments, 
charging infrastructure investments in the U.S. appear to be on track 
to support the PEV adoption anticipated under the final standards. 
Furthermore, as described below, there are many public and private 
parties investing in charging infrastructure, including federal, state 
and local governments, automakers, utilities, charging companies, and 
retailers among others. These parties are already responding to the 
market that is developing for infrastructure, and we see no reason to 
believe they won't continue to meet infrastructure demand as the PEV 
market grows.
---------------------------------------------------------------------------

    \888\ Wood et al., ``The 2030 National Charging Network: 
Estimating U.S. Light-Duty Demand for Electric Vehicle 
Infrastructure,'' 2023. Accessed December 18, 2023, at https://driveelectric.gov/files/2030-charging-network.pdf.
    \889\ The White House, ``FACT SHEET: Biden-Harris Administration 
Announces New Actions to Cut Electric Vehicle Costs for Americans 
and Continue Building Out a Convenient, Reliable, Made-in-America EV 
Charging Network'', January 19, 2024. Accessed at https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/19/fact-sheet-biden-harris-administration-announces-new-actions-to-cut-electric-vehicle-costs-for-americans-and-continue-building-out-a-convenient-reliable-made-in-america-ev-charging-network/.
---------------------------------------------------------------------------

    The Bipartisan Infrastructure Law (BIL) provides up to $7.5 billion 
over five years to build out a national PEV charging network.\890\ Two-
thirds of this funding is for the National Electric Vehicle 
Infrastructure (NEVI) Formula Program with the remaining $2.5 billion 
for the Charging and Fueling Infrastructure (CFI) Discretionary Grant 
Program. Both programs are administered under the Federal Highway 
Administration with support from the Joint Office of Energy and 
Transportation (JOET). The first phase of NEVI funding--a formula 
program for states--was launched in 2022 with initial plans for all 50 
states, DC, and Puerto Rico approved in September 2023.\891\ In total, 
the initial $1.5 billion of investments in the first round will help 
deploy or expand charging infrastructure on about 75,000 miles of 
highway.\892\ Ohio was the first state to open a NEVI-funded station 
near Columbus in December 2023.\893\ New York and Pennsylvania followed 
with stations in Kingston \894\ and Pittston, respectively.\895\ 
Another 30 states are soliciting proposals and making awards.\896\ An 
additional $885 million is available for state plans in FY 2024.\897\ 
In September 2023, JOET announced that up to $100 million in NEVI 
funding would available to increase reliability of the existing 
charging infrastructure network with funds going to repair or replace 
EVSE ports.\898\ This will complement efforts of the National Charging 
Experience (ChargeX) Consortium. Launched in May 2023 by JOET and led 
by U.S. DOE labs, the ChargeX Consortium will develop solutions and 
identify best practices for common problems related to the consumer 
experience, e.g., payment processing and user interface, vehicle-
charger communication, and diagnostic data sharing.\899\ Relatedly, in 
January 2024, JOET announced $46.5 million in federal funding to 
support 30 projects to increase charging access, reliability, 
resiliency, and workforce development.\900\ This includes projects

[[Page 28014]]

to increase the commercial capacity for testing and certification of 
high-power electric vehicle chargers, which will accelerate the 
deployment of interoperable, safe, and efficient electric vehicle and 
charger systems.\901\ Also in January 2024, over $600 million in grants 
under the CFI Program was announced to deploy PEV charging and 
alternative fueling infrastructure in communities and along corridors 
in 22 states.\902\ This first round of CFI grants is expected to fund 
about 7,500 EVSE ports.
---------------------------------------------------------------------------

    \890\ Enacted as the Infrastructure Investment and Jobs Act, 
Public Law 117-58. 2021. Accessed January 10, 2023, at https://www.congress.gov/bill/117th-congress/house-bill/3684.
    \891\ U.S. DOT, FHWA, ``Historic Step: All Fifty States Plus DC 
and Puerto Rico Greenlit to Move EV Charging Networks Forward, 
Covering 75,000 Miles of Highway,'' September 27, 2022. Accessed 
January 10, 2023, at https://highways.dot.gov/newsroom/historic-step-all-fifty-states-plus-dc-and-puerto-rico-greenlit-move-ev-charging-networks.
    \892\ Ibid.
    \893\ JOET, ``First Public EV Charging Station Funded by NEVI 
Open in America,'' December 13, 2023. Accessed December 18, 2023, 
at: https://driveelectric.gov/news/first-nevi-funded-stations-open.
    \894\ JOET, ``New York Continues NEVI Charging Station 
Momentum,'' December 15, 2023. Accessed December 18, 2023, at: 
https://driveelectric.gov/news/new-york-NEVI-charging-station-momentum.
    \895\ JOET, ``Pennsylvania Continues Shift Toward Thriving 
Electric Transportation Sector,'' January 23, 2024. Accessed 
February 24, 2024, at https://driveelectric.gov/news/new-pennsylvania-nevi-station.
    \896\ JOET, ``2024 Q1 NEVI Progress Update,'' February 16, 2024. 
Accessed February 24, 2024, at: https://driveelectric.gov/news/nevi-update-q1.
    \897\ JOET, ``State Plans for Electric Vehicle Charging.'' 2023. 
Accessed December 18, 2023, at: https://driveelectric.gov/state-plans.
    \898\ JOET, ``Biden-Harris Administration to Invest $100 Million 
for EV Charger Reliability,'' September 2023. Accessed December 18, 
2023, at: https://driveelectric.gov/news/ev-reliability-funding-opportunity.
    \899\ JOET, ``Joint Office Announces National Charging 
Experience Consortium,'' May 18, 2023. Accessed March 12, 2024, at: 
https://driveelectric.gov/news/chargex-consortium.
    \900\ JOET, ``New Funding Enhances EV Charging Resiliency, 
Reliability, Equity, and Workforce Development,'' January 19, 2024. 
Accessed February 24, 2024, at: https://driveelectric.gov/news/workforce-development-ev-projects.
    \901\ JOET, ``FY23 Ride and Drive FOA DE-FOA-0002881.'' Accessed 
February 25, 2024, at: https://driveelectric.gov/files/ride-and-drive-foa.pdf.
    \902\ JOET, ``Biden-Harris Administration Bolsters Electric 
Vehicle Future with More than $600 Million in New Funding,'' January 
11, 2024, https://driveelectric.gov/news/new-cfi-funding.
---------------------------------------------------------------------------

    Ensuring equitable access to charging is one of the stated goals of 
these infrastructure funds. Accordingly, FHWA instructed states to 
incorporate public engagement in their planning process for the NEVI 
Formula Program, including reaching out to Tribes and rural, 
underserved, and disadvantaged communities.\903\ Both the formula 
funding and discretionary grant program are subject to the Justice40 
Initiative target that 40 percent of the overall benefits of certain 
covered federal investments go to disadvantaged communities. Other 
programs with funding authorizations under the BIL that could be used 
in part to support charging infrastructure installations include the 
Congestion Mitigation & Air Quality Improvement Program, National 
Highway Performance Program, and Surface Transportation Block Grant 
Program among others.\904\
---------------------------------------------------------------------------

    \903\ U.S. DOT, FHWA, ``The National Electric Vehicle 
Infrastructure (NEVI) Formula Program Guidance.'' February 10. 
Accessed January 10, 2023. https://www.fhwa.dot.gov/environment/alternative_fuel_corridors/nominations/90d_nevi_formula_program_guidance.pdf.
    \904\ Ibid.
---------------------------------------------------------------------------

    The Inflation Reduction Act (IRA), signed into law on August 16, 
2022, will also help reduce the costs for deploying 
infrastructure.\905\ The IRA extends the Internal Revenue Code 30C 
Alternative Fuel Refueling Property Tax Credit (section 13404) through 
Dec 31, 2032, with modifications. Under the new provisions, residents 
in low-income or non-urban areas, representing around two-thirds of 
Americans, are eligible for a 30 percent credit for the cost of 
installing residential charging equipment up to a $1,000 cap.\906\ 
Businesses, including existing charging and fueling stations, are 
eligible for up to 30 percent of the costs associated with purchasing 
and installing charging equipment in these areas (subject to a $100,000 
cap per item) if prevailing wage and apprenticeship requirements are 
met, and up to 6 percent otherwise.\907\ ANL estimates that nearly 
three-quarters of existing gas stations are located in census tracts 
that qualify for the 30C tax credit, suggesting that a similarly high 
share of future charging stations could qualify as charging 
infrastructure buildout continues to expand across the 
country.908 909
---------------------------------------------------------------------------

    \905\ Inflation Reduction Act of 2022, Public Law 117-169, 2022. 
Accessed December 2, 2022, at https://www.congress.gov/117/bills/hr5376/BILLS-117hr5376enr.pdf.
    \906\ The White House, ``FACT SHEET: Biden-Harris Administration 
Announces New Actions to Cut Electric Vehicle Costs for Americans 
and Continue Building Out a Convenient, Reliable, Made-in-America EV 
Charging Network,'' January 19, 2024. Accessed February 24, 2024, 
at: https://www.whitehouse.gov/briefing-room/statements-releases/2024/01/19/fact-sheet-biden-harris-administration-announces-new-actions-to-cut-electric-vehicle-costs-for-americans-and-continue-building-out-a-convenient-reliable-made-in-america-ev-charging-network/.
    \907\ According to the Department of Energy, the IRS's ``good 
faith effort'' clause applicable to the apprenticeship requirement 
suggests that businesses will generally be able to meet it and take 
advantage of the full 30 percent tax credit, if otherwise eligible. 
See U.S. DOE, ``Estimating Federal Tax Incentives for Heavy Duty 
Electric Vehicle Infrastructure and for Acquiring Electric Vehicles 
Weighing Less Than 14,000 Pounds,'' Memorandum, March 2024.
    \908\ ANL's assessment found that 60 percent of existing DCFC 
stations and 51 percent of public L2 stations are located in 
qualifying census tracts, but notes that current PEV owners are more 
likely to live in urban areas compared to the overall light-duty 
vehicle population. As PEV adoption continues to expand and 
infrastructure corridors are built out, more charging station will 
be needed in low-income and non-urban census tracts where the 30C 
tax credit can help reduce capital costs for station developers.
    \909\ Gohlke, David, Zhou, Yan, and Wu, Xinyi. 2024. ``Refueling 
Infrastructure Deployment in Low-Income and Non-Urban Communities''. 
United States. Accessed March 12, 2024, at: https://www.osti.gov/servlets/purl/2318956.
---------------------------------------------------------------------------

    States, utilities, charging network providers, and others are also 
investing in and supporting PEV charging infrastructure deployment. 
California announced plans to invest $1.9 billion in state funds 
through 2027 for charging and hydrogen refueling infrastructure serving 
light-, medium-, and heavy-duty vehicles (and related activities), 
which it estimates could support 40,000 new EVSE ports.\910\ The New 
York Power Authority is investing $250 million to support up to 400 
DCFC stations.\911\ Several states including New Jersey and Utah offer 
partial rebates for residential, workplace, or public charging while 
others such as Georgia and DC offer tax credits.\912\ Other programs 
will increase charging access at multi-unit dwellings. For example, the 
municipal utility in Burlington, Vermont, in partnership with EVmatch, 
offers rebates for EVSE installations at these properties with an 
additional $300 incentive provided if owners make charging equipment 
available for public use during the day to further extend charging 
access.\913\ The NC Clean Energy Technology Center identified more than 
200 actions taken across 38 states and DC related to providing 
financial incentives for electric vehicles and/or charging 
infrastructure in 2022, a four-fold increase over the number of actions 
in 2017.\914\ The Edison Electric Institute estimates that electric 
companies are investing $5.2 billion in infrastructure and other 
transportation electrification efforts in 35 states and the District of 
Columbia.\915\ And over 60 electric companies and cooperatives serving 
customers in 48 states and the District of Columbia have joined 
together to advance fast charging through the National Electric Highway 
Coalition.\916\
---------------------------------------------------------------------------

    \910\ California Energy Commission, ``CEC Approves $1.9 Billion 
Plan to Expand Zero-Emission Transportation Infrastructure, February 
14, 2024. Accessed March 10, 2024, at: https://www.energy.ca.gov/news/2024-02/cec-approves-19-billion-plan-expand-zero-emission-transportation-infrastructure.
    \911\ New York Power Authority, ``EVolve NY's Mission: A Fast 
Electric Charging Station Near You,'' 2023. Accessed December 18, 
2023, at https://evolveny.nypa.gov/about-evolve-new-york.
    \912\ Details on eligibility, qualifying expenses, and rebate or 
tax credit amounts vary by state. See DOE Alternative Fuels Data 
Center, State Laws and Incentives. Accessed January 11, 2023, at 
https://afdc.energy.gov/laws/state.
    \913\ Darya Oreizi, ``Burlington Electric Department Launches 
New Program with EVmatch to Expand EV Charging at Multi-family 
Properties'' September 30, 2022. Available at: https://evmatch.com/
blog/burlington-electric-department-launches-new-program-with-
evmatch-to-expand-ev-charging-at-multi-family-properties/
#:~:text=Burlington%20Electric%20Department%20(BED)%20recently,statio
ns%20at%20multi%2Dfamily%20properties.
    \914\ Apadula, E. et al., ``50 States of Electric Vehicles Q4 
2022 Quarterly Report & 2022 Annual Review Executive Summary,'' 
February 2023, NC Clean Energy Technology Center. Accessed March 8, 
2023, at https://nccleantech.ncsu.edu/wp-content/uploads/2023/02/Q4-22_EV_execsummary_Final.pdf. Note: Includes actions by states and 
investor-owned utilities.
    \915\ EEI, ``Electric Transportation Biannual State Regulatory 
Update,'' December 2023. Accessed December 18, 2023, at: https://www.eei.org/-/media/Project/EEI/Documents/Issues-and-Policy/Electric-Transportation/ET-Biannual-State-Regulatory-Update.pdf. 
Note: The $5.2 billion total reflects approved filings for 
infrastructure deployments and other customer programs to advance 
transportation electrification.
    \916\ EEI, ``Issues & Policy: National Electric Highway 
Coalition''. Accessed January 11, 2023, at https://www.eei.org/issues-and-policy/national-electric-highway-coalition.
---------------------------------------------------------------------------

    In July 2023, seven automakers--BMW, GM, Honda, Hyundai, Kia, 
Mercedes-Benz, and Stellantis--announced that they would jointly deploy 
30,000 EVSE ports in North

[[Page 28015]]

America.\917\ GM is also partnering with charging provider EVgo to 
deploy over 2,700 DCFC ports \918\ and charging provider FLO to deploy 
as many as 40,000 Level 2 ports (with a focus on deployments in rural 
areas).\919\ Ford has agreements with several charging providers to 
make it easier for their customers to charge and pay across different 
networks \920\ and plans to install publicly accessible DCFC ports at 
many of its dealerships.\921\ Mercedes-Benz recently announced that it 
is planning to build 2,500 charging points in North America by 
2027.\922\ Tesla has its own network with nearly 24,000 DCFC ports and 
nearly 10,000 L2 ports in the United States.\923\ Tesla announced that 
by 2024, 7,500 or more existing and new ports (including 3,500 DCFC) 
would be open to all PEVs, and that it would double the size of its 
DCFC network.\924\ All major auto manufacturers have announced that 
they will offer the NACS standard developed by Tesla on future 
production models in order to access the Tesla 
network.925 926 Auto manufacturers are also providing 
support to customers. Volkswagen, Hyundai, and Kia all offer customers 
complimentary charging at Electrify America's public charging stations 
(subject to time limits or caps) in conjunction with the purchase of 
select new EV models.\927\
---------------------------------------------------------------------------

    \917\ Camila Domonoske, ``Big carmakers unite to build a 
charging network and reassure reluctant EV buyers.'' July 2023, NPR. 
Accessed December 18, 2023, at: https://www.npr.org/2023/07/26/1190188838/ev-chargers-network-range-anxiety-bmw-gm-honda-hyundai-kia-mercedes-stellantis.
    \918\ GM, ``To Put `Everybody In' an Electric Vehicle, GM 
introduces Ultium Charge 360,'' Accessed January 11, 2023, at 
https://media.gm.com/media/us/en/gm/home.detail.html/content/Pages/news/us/en/2021/apr/0428-ultium-charge-360.html.
    \919\ Peter Valdes-Dapena, ``GM to put thousands of electric 
vehicle chargers in rural America,'' December 7, 2022, https://www.cnn.com/2022/12/07/business/gm-chargers/index.html.
    \920\ Ford, ``Ford Introduces North America's Largest Electric 
Vehicle Charging Network, Helping Customers Confidently Switch to an 
All-Electric Lifestyle,'' October 17, 2019. Accessed January 11, 
2023, at https://media.ford.com/content/fordmedia/fna/us/en/news/2019/10/17/ford-introduces-north-americas-largest-electric-vehicle-charting-network.html.
    \921\ JOET, ``Private Sector Continues to Play Key Part in 
Accelerating Buildout of EV Charging Networks,'' February 15, 2023. 
Accessed March 6, 2023, at https://driveelectric.gov/news/#private-investment.
    \922\ Reuters, ``Mercedes to launch vehicle-charging network, 
starting in North America,'' January 6, 2023. Accessed January 11, 
2023, at https://www.reuters.com/business/autos-transportation/mercedes-launch-vehicle-charging-network-starting-north-america-2023-01-05/.
    \923\ U.S. DOE Alternative Fuels Data Center, ``Alternative 
Fueling Station Locator.'' Accessed January 10, 2024, at https://afdc.energy.gov/stations/#/analyze?country=US&fuel=ELEC.
    \924\ The White House, ``Fact Sheet: Biden-Harris Administration 
Announces New Standards and Major Progress for a Made-in-America 
National Network of EV Chargers,'' February 15, 2023. Available at: 
https://www.whitehouse.gov/briefing-room/statements-releases/2023/02/15/fact-sheet-biden-harris-administration-announces-new-standards-and-major-progress-for-a-made-in-america-national-network-of-electric-vehicle-chargers.
    \925\ Reuters, ``More automakers plug into Tesla's EV charging 
network,'' Nov 1, 2023. Available at: https://www.reuters.com/business/autos-transportation/more-automakers-plug-into-teslas-ev-charging-network-2023-10-05.
    \926\ Wired, ``Tesla Wins EV Charing! Now What?'' February 12, 
2024. Accessed on March 12, 2024, at: https://www.wired.com/story/tesla-wins-ev-charging-now-what.
    \927\ Details of complimentary charging and eligible vehicle 
models vary by auto manufacturer. See: https://www.vw.com/en/models/id-4.html, https://www.hyundaiusa.com/us/en/electrified/charging, 
and https://owners.kia.com/content/owners/en/kia-electrify.html.
---------------------------------------------------------------------------

    Other charging networks are also expanding. Francis Energy, which 
has fewer than 1,000 EVSE ports today,\928\ aims to deploy over 50,000 
by the end of the decade.\929\ Electrify America, a subsidiary of VW 
that is implementing the $2 billion investment required as part of a 
2016 Clean Air Act settlement,\930\ plans to more than double its 
network size \931\ to 10,000 fast charging ports across 1,800 U.S. and 
Canadian stations by 2026. This is supported in part by a $450 million 
investment from Siemens and Volkswagen Group.\932\ Blink plans to 
invest over $60 million to grow its network over the next decade.\933\ 
Charging companies are also partnering with major retailers, 
restaurants, and other businesses to make charging available to 
customers and the public. For example, EVgo is deploying DCFC at 
certain Meijer locations, CBL properties, and Wawa. Volta is installing 
DCFC and L2 ports at select Giant Food, Kroger, and Stop and Shop 
stores, while ChargePoint and Volvo Cars are partnering with Starbucks 
to make charging available at select Starbucks locations.\934\ Walmart 
recently announced plans to expand their network of DCFCs from fewer 
than 300 locations to thousands of Walmart and Sam's Club facilities by 
2030.\935\ Other efforts will expand charging access along major 
highways, including at up to 500 Pilot and Flying J travel centers 
(through a partnership between Pilot, GM, and EVgo) and 200 
TravelCenters of America and Petro locations (through a partnership 
between TravelCenters of America and Electrify America).\936\ BP plans 
to invest $1 billion toward charging infrastructure by the end of the 
decade, including through a partnership to provide charging at various 
Hertz locations across the country that could support rental and 
ridesharing vehicles, taxis, and the general public.\937\ About forty 
companies have announced over $500 million of investments in U.S. 
facilities to construct charging equipment, with planned domestic 
production capacity of more than 1,000,000 chargers (including 60,000 
DCFCs) annually.938 939
---------------------------------------------------------------------------

    \928\ DOE, Alternative Fuels Data Center, ``Electric Vehicle 
Charging Station Locations''. Accessed March 6, 2023, at https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC.
    \929\ JOET, ``Private Sector Continues to Play Key Part in 
Accelerating Buildout of EV Charging Networks,'' February 15, 2023. 
Accessed March 6, 2023, at https://driveelectric.gov/news/#private-investment.
    \930\ EPA, ``Volkswagen Clean Air Act Civil Settlement,'' 2023. 
Accessed December 18, 2023, at: https://www.epa.gov/enforcement/volkswagen-clean-air-act-civil-settlement#investment. Note: The $2 
billion investment is for charging or hydrogen refueling 
infrastructure as well as other activities to advance ZEVs, e.g., 
education and public outreach.
    \931\ DOE, Alternative Fuels Data Center, ``Electric Vehicle 
Charging Station Locations''. Accessed March 6, 2023, at https://afdc.energy.gov/fuels/electricity_locations.html#/find/nearest?fuel=ELEC.
    \932\ Electrify America, ``Electrify America Raises $450 
Million--Siemens Becomes a Minority Shareholder; Company Intensifies 
Commitment to Rapid Deployment of Ultra-Fast Charging,'' June 28, 
2022, https://media.electrifyamerica.com/en-us/releases/190.
    \933\ JOET, ``Private Sector Continues to Play Key Part in 
Accelerating Buildout of EV Charging Networks,'' February 15, 2023. 
Accessed March 6, 2023, at https://driveelectric.gov/news/#private-investment.
    \934\ Ibid.
    \935\ Walmart, ``Leading the Charge: Walmart Announces Plan to 
Expand Electric Vehicle Charging Network,'' April 6, 2023. Accessed 
December 18, 2023, at: https://www.wptv.com/walmart-plans-an-
expansion-of-its-electric-vehicle-charging-
services#:~:text=As%20part%20of%20a%20new,fast%20chargers%20at%20its%
20stores.
    \936\ JOET, ``Private Sector Continues to Play Key Part in 
Accelerating Buildout of EV Charging Networks,'' February 15, 2023. 
Accessed March 6, 2023, at https://driveelectric.gov/news/#private-investment.
    \937\ BP, ``bp plans to invest $1 billion in EV charging across 
US by 2030, helping to meet demand from Hertz's expanding EV 
rentals,'' February 15, 2023, https://www.bp.com/en_us/united-states/home/news/press-releases/bp-plans-to-invest-1-billion-in-ev-charging-across-us-by-2030-helping-to-meet-demand-from-hertzs-expanding-ev-rentals.html.
    \938\ DOE, ``Building America's Clean Energy Future,'' January 
11, 2024. Accessed February 24, 2024, at https://www.energy.gov/invest. Note: investment and production capacity totals include only 
those available in public announcements, as reported by DOE, and may 
not be comprehensive.
    \939\ U.S. Department of Energy, Vehicle Technologies Office, 
``FOTW #1314, October 30, 2023: Manufacturers Have Announced 
Investments of Over $500 million in More Than 40 American-Made 
Electric Vehicle Charger Plants.'' Available online: https://www.energy.gov/eere/vehicles/articles/fotw-1314-october-30-2023-manufacturers-have-announced-investments-over-500.
---------------------------------------------------------------------------

    We assess the infrastructure needs and the associated costs for 
this final

[[Page 28016]]

rulemaking from 2027 to 2055.\940\ We start with estimates of 
electricity demand for the PEV penetration levels under the Final rule 
compared to those in the No Action case using the methodology described 
in section IV.C.3 of this preamble. A suite of NREL models is used to 
characterize the quantity and mix of EVSE ports that could meet this 
demand, including EVI-Pro to simulate charging demand from typical 
daily travel, EVI-RoadTrip to simulate demand from long-distance 
travel, and EVI-OnDemand to simulate demand from ride-hailing 
applications. EVSE ports are broken out by charging location (home, 
depot, work, or public) and by charging type and power level: AC Level 
1 (L1), AC Level 2 (L2), and DC fast charging with a maximum power of 
150 kW, 250 kW, or 350 kW (DC-150, DC-250, and DC-350). We anticipate 
that the highest number of ports will be needed at homes, growing from 
under 16 million in 2027 to over 77 million in 2055 under the final 
standards. This is followed by public charging, estimated to grow from 
under 600,000 ports to over 7.8 million total EVSE ports in that 
timeframe. The majority of these are L2 ports with only about 685,000 
DCFC ports estimated to be needed by 2055. Depot and workplace charging 
needs also increase to over 3.7 million and about 5.8 million EVSE 
ports in 2055, respectively.\941\ Similar patterns are observed in the 
No Action case though fewer total ports are needed than under the Final 
rule due to the lower anticipated PEV demand. Figure 31 illustrates the 
growth in charging network size needed under the final rule and in the 
No Action case over select years.\942\ Most of the additional EVSE 
ports needed to serve PEVs in the final rulemaking appear after 2030, 
allowing years of lead time to build out an appropriate charging 
network.
---------------------------------------------------------------------------

    \940\ The Final rule and No Action cases used throughout the PEV 
charging infrastructure cost analysis were based on a preliminary 
analysis compared to the final compliance modeling. While annual PEV 
charging demand is generally higher in the compliance scenarios 
relative to those in the preliminary analysis (with annual 
differences of between plus and minus five percent), cumulative 
electricity consumption associated with PEV charging from 2027 to 
2055 in the Final rule compliance scenario is only four percent 
higher for the action case (the final standards) and one percent 
higher in the No Action case, compared to the preliminary analysis 
used to assess PEV charging infrastructure needs and costs.
    \941\ The number of EVSE ports needed to meet a given level of 
electricity demand will vary based on assumptions about the mix of 
charging ports, charging preferences, vehicle characteristics, and 
other factors. See RIA Chapter 5 for a more detailed description of 
the assumptions underlying the EVSE port counts shown here.
    \942\ See RIA Chapter 5 for figures showing estimated port 
counts for each year from 2027 to 2055.
[GRAPHIC] [TIFF OMITTED] TR18AP24.029

Figure 31: EVSE Port Counts by Charging Location and Type for the No 
Action Case (Left Side of Each Pair of Bars) and the Final Rule (Right 
Side of Each Pair of Bars) for Select Years.

[[Page 28017]]

    We estimate the costs to deploy the number of EVSE ports needed 
each year (2027-2055) to achieve the modeled network sizes for the 
Final rule and No Action case.\943\ There are many factors that can 
impact equipment and installation costs, including whether a charging 
unit has multiple EVSE ports, how many ports are installed per site, as 
well as regional differences. Costs also vary in the literature. For 
the proposal, we sourced costs for each EVSE port from several studies 
and we requested comment on any additional estimates we should 
consider. Several commenters flagged that our overall EVSE cost 
estimates were lower than those in NREL's national charging network 
assessment (Wood et al. 2023),\944\ which was published after the NPRM. 
For the final rule analysis, we have updated our assumed upfront 
hardware and installation costs for work and public EVSE ports to align 
with Wood et al. 2023. Costs for home and depot charging are assigned 
as follows. PEVs typically come with a charging cord that can be used 
for L1 charging by plugging it into a standard 120 V outlet, and, in 
some cases, for L2 charging by plugging into a 240 V outlet. We include 
the cost for this cord as part of the vehicle costs described in RIA 
Chapter 2, and therefore we do not include it here. Consistent with our 
NPRM analysis, we make the simplifying assumption that PEV owners 
opting for L1 home charging already have access to a 120 V outlet and 
therefore do not incur installation costs and that half of those in 
single-family homes opt to use the charging cord for L2 home charging 
while the other half purchase and install a wall-mounted or other Level 
2 charging unit.\945\ Costs for other home L2 charging are assigned 
assuming it serves both residents of multi-family housing as well as 
PEV owners without access to dedicated off-street parking who may use 
curbside or other neighborhood EVSE ports. Lastly, depot L2 charging 
applies to medium-duty PEVs \946\ and reflects charging at their home 
base (i.e., the location they are regularly parked when not in use). 
For some PEVs, this could be at a dedicated depot for commercial fleets 
whereas other medium-duty PEVs could be parked overnight and charged at 
the owner's home. Table 73 shows our final assumed costs per EVSE port.
---------------------------------------------------------------------------

    \943\ We assume a 15-year equipment lifetime for EVSE ports. We 
did not estimate costs for EVSE maintenance or repair though we note 
that this may be able to extend equipment lifetimes. See discussion 
in RIA Chapter 5.
    \944\ Wood et al., ``The 2030 National Charging Network: 
Estimating U.S. Light-Duty Demand for Electric Vehicle 
Infrastructure,'' 2023. Accessed December 18, 2023, at https://driveelectric.gov/files/2030-charging-network.pdf.
    \945\ For Level 2 single-family home charging, some PEV owners 
may opt to simply install or upgrade to a 240 V outlet for use with 
a charging cord while others may choose to purchase or install a 
wall-mounted or other Level 2 charging unit. We assume an even split 
for the costs shown in Table 8. Consistent with the proposal, 
residential L2 EVSE costs are estimated from costs in an ICCT study: 
Nicholas, Michael, ``Estimating electric vehicle charging 
infrastructure costs across major U.S. metropolitan areas,'' 2019. 
Accessed March 11, 2024, at: https://theicct.org/wp-content/uploads/2021/06/ICCT_EV_Charging_Cost_20190813.pdf.
    \946\ Charging infrastructure needs for medium-duty PEVs were 
not simulated for the NPRM due to timing constraints, and therefore 
depot charging and other projected medium-duty PEV demands are new 
additions for this analysis.

                            Table 73--Costs (Hardware and Installation) per EVSE Port
                                                 [2022 Dollars]
----------------------------------------------------------------------------------------------------------------
   Single-family home      Other home     Depot         Work                          Public
----------------------------------------------------------------------------------------------------------------
     L1           L2           L2           L2           L2           L2        DC-150      DC-250      DC-350
----------------------------------------------------------------------------------------------------------------
        $0       $1,280       $5,620       $6,150       $7,500       $7,500    $154,200    $193,450    $232,700
----------------------------------------------------------------------------------------------------------------

    See RIA Chapter 5 for a more complete discussion of this analysis 
including low and high sensitivities not shown here. The final PEV 
charging infrastructure costs are presented in section VIII of this 
preamble.
5. Electric Grid Impacts
    EPA acknowledges that there may be additional infrastructure needs 
and costs beyond those associated with charging equipment itself. As 
vehicle electrification load increases, alongside other new loads from 
data centers, industry, and building electrification, the grid will 
accommodate higher loads, which may require generation, transmission, 
and distribution system upgrades and additions. Our examination of the 
record, informed by our consultations with DOE, FERC, and other power 
sector stakeholders, is that the final standards of this rule, whether 
considered separately or in combination with the Phase 3 HD vehicle 
standards and upcoming power sector rules, are unlikely to adversely 
affect the reliability of the electric grid, and widespread adoption of 
PEVs could have significant benefits for the electric power 
system.\947\ We also find that managed charging can reduce the impact 
of PEVs on the grid, innovative charging solutions can accelerate the 
integration of PEV loads, and the grid can be upgraded to accommodate 
increased loads from the transportation as well as other sectors. 
Further, we find that the final rule provides regulatory certainty to 
support increasing development of supporting electricity infrastructure 
as well as increasing adoption of strategies to mitigate infrastructure 
demands, such as managed charging and other innovative tools we 
describe later in this section.
---------------------------------------------------------------------------

    \947\ Many utility sector commenters supported EPA's assessment. 
See, e.g., Comments of the Energy Strategy Coalition (``Members of 
this coalition are already engaging in long-term planning to meet 
the increased demand for electricity attributable to vehicle 
electrification, and the LMDV Proposal will provide a regulatory 
backstop supporting further investments in electrification and grid 
reliability. Demand for electricity will increase under both the 
LMDV Proposal and the recently-proposed Phase 3 Greenhouse Gas 
Emissions Standards for Heavy-Duty Vehicles . . . but the 
electricity grid is capable of planning for and accommodating such 
demand growth and has previously experienced periods of significant 
and sustained growth.''); Comments of Edison Electric Institute.
---------------------------------------------------------------------------

    In the balance of this section, we first provide an overview of the 
electric power system and grid reliability. We then discuss the impacts 
of this rule on generation. We find that the final rule, together with 
the Heavy-Duty Phase 3 GHG Proposed Rule, are associated with modest 
increases in electricity demand. We also conducted an analysis of 
resource adequacy, which is an important metric in North American 
Electric Reliability Corporation's (NERC) long-term reliability 
assessments. We find that the final rule, together with the HD Phase 3 
Rule as well as other EPA rules that regulate the EGU sector, are 
unlikely to adversely affect resource adequacy. We then discuss 
transmission and find that the need for new transmission lines

[[Page 28018]]

associated with this rule and the HD Phase 3 rule between now and 2050 
is projected to be very small, approximately one percent or less of 
transmission, and that nearly all of the additional buildout overlaps 
with existing transmission line right of ways. We find that this 
increase can reasonably be managed by the utility sector and project 
that transmission capacity will not constrain the increased demand for 
electricity associated with the final rule. Finally, we discuss our 
assessment of expected distribution system infrastructure needs. Our 
assessment is based on our own analysis as well as a state-of-the-art 
DOE Transportation Electrification Impacts Study (TEIS) conducted for 
this rulemaking and the HD Phase 3 Rule. We find that the final rule 
and the HD Phase 3 Rule are associated with a 3% increase in annual 
distribution investments, a modest increase that utilities can capably 
manage. The assessment also quantifies the significant benefits of 
basic managed charging practices applied to increasing PEV use. Based 
on the TEIS, EPA also quantified the impact on retail electric prices 
associated with the rule, concluding that there is no difference in 
retail electricity prices in 2030 and an increase of 2.5 percent in 
2055, principally due to distribution-related costs.\948\ Overall, we 
find that these relatively modest cost increases for distribution build 
out and the associated electricity price increases are reasonable.
---------------------------------------------------------------------------

    \948\ These figures compare the action case with basic managed 
charging relative to the no action with unmanaged charging.
---------------------------------------------------------------------------

i. Overview of the Electric Power System and Grid Reliability
    The National Academy of Engineering ranks electrification as ``the 
greatest engineering achievement of the 20th century.'' \949\ Comprised 
of approximately 11,000 utility-scale electric power plants,\950\ 
697,000 circuit-miles of power lines (240,000 miles of which are high-
voltage transmission lines), 21,500 substations,\951\ 5.5 million miles 
of low-voltage distribution lines,\952\ 180 million power poles,\953\ 
and serving 400 million consumers across North America,\954\ the U.S. 
electric power sector is considered ``the world's biggest machine.'' 
\955\
---------------------------------------------------------------------------

    \949\ National Academy of Engineering. 2003. Greatest 
Engineering Achievement of the 20th Century. (http://www.greatachievements.org/).
    \950\ U.S. EPA. 2024. Electric Power Sector Basics. (https://
www.epa.gov/power-sector/electric-power-sector-
basics#:~:text=Discover%20programs,How%20Is%20Electricity%20Used%3F,m
iles%20of%20high%20voltage%20lines).
    \951\ U.S. DOE. 2017. Transforming the Nation's Electricity 
System: The Second Installment of the QER. Quadrennial Energy 
Review. (https://www.energy.gov/sites/prod/files/2017/02/f34/
Appendix_Electricity%20System%20Overview.pdf).
    \952\ U.S. DOE. 2024. U.S. Department of Energy Announces $34 
Million to Improve the Reliability, Resiliency, and Security of 
America's Power Grid. (https://arpa-e.energy.gov/news-and-media/
press-releases/us-department-energy-announces-34-million-improve-
reliability#:~:text=The%20electric%20power%20distribution%20system,in
%20the%20country%20each%20year).
    \953\ Warwick WM, Hardy TD, Hoffman MG, Homer JS. 2016. 
Electricity Distribution System Baseline Report (PNNL-25178). 
Richland,WA: Pacific Northwest National-Laboratory.
    \954\ Independent Electricity System Operator (2020). The 
World's Largest Machine: The North American Power Grid. (https://
www.ieso.ca/en/Powering-Tomorrow/2020/The-Worlds-Largest-Machine-
The-North-American-Power-
Grid#:~:text=The%20North%20American%20power%20grid%20is%20a%20vast%2C
%20interconnected%20network,%E2%80%9Cthe%20world's%20largest%20machin
e.%E2%80%9D).
    \955\ U.S. DOE. 2017. Keeping an Eye on the World's Largest 
Machine: How Measurements are Modernizing the Electric Grid. 
Richland,WA: Pacific Northwest National-Laboratory. (https://www.pnnl.gov/events/keeping-eye-worlds-largest-machine-how-measurements-are-modernizing-electric-grid).
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    Operating on a ``just in time'' basis, it is comprised of three 
basic components: generation, transmission, and distribution systems. 
While the forms of generation have varied--primarily from coal-fired 
sources in the mid-2000s to renewable sources supplemented with natural 
gas-fired generation, at present--the components of the system which 
deliver electricity remain the same. These components are the 
transmission and distribution systems, which have over time increased 
in size and reliability to accommodate the overall economic growth of 
the U.S. as well as the electricity demand associated with air 
conditioning, data centers, building electrification, cryptocurrency 
mining, and now vehicle electrification.
    The electric power system in the U.S. has historically been a very 
reliable system,\956\ with utilities, system planners, and reliability 
coordinators working together to ensure an efficient and reliable grid 
with adequate resources for supply to meet demand at all times, and we 
anticipate that this will continue in the future under these standards.
---------------------------------------------------------------------------

    \956\ NREL, '' Explained: Reliability of the Current Power 
Grid'', NREL/FS-6A40-87297, January 2024 https://www.nrel.gov/docs/fy24osti/87297.pdf.
---------------------------------------------------------------------------

    Power interruptions caused by extreme weather are the most-commonly 
reported, naturally- occurring factors affecting grid reliability, with 
the frequency of these severe weather events increasing significantly 
over the past twenty years due to climate change.\957\ Conversely, 
decreasing emissions of greenhouse gases can be expected to help reduce 
future extreme weather events, which would serve to reduce the risks 
for electric power sector reliability. Extreme weather events include 
snowstorms, hurricanes, and wildfires. These power interruptions have 
significant impact on economic activity, with associated costs in the 
U.S. estimated to be $44 billion annually.\958\ By requiring 
significant reductions in GHGs from new motor vehicles, this rule 
mitigates the harmful impacts of climate change, including the 
increased incidence of extreme weather events that affect grid 
reliability.
---------------------------------------------------------------------------

    \957\ DOE, Electric Disturbance Events (OE-417) Annual Summaries 
for 2000 to 2023, https://www.oe.netl.doe.gov/OE417_annual_summary.aspx.
    \958\ LaCommare, K. H., Eto, J. H., & Caswell, H. C. (2018, 
June). Distinguishing Among the Sources of Electric Service 
Interruptions. In 2018 IEEE International Conference on 
Probabilistic Methods Applied to Power Systems (PMAPS) (pp. 1-6). 
IEEE.
---------------------------------------------------------------------------

    The average duration of annual electric power interruptions in the 
U.S., approximately two hours, decreased slightly from 2013 to 2021, 
when extreme weather events associated with climate change are excluded 
from reliability statistics. When extreme weather events associated 
with climate change are not excluded from reliability statistics, the 
national average length of annual electric power interruptions 
increased to about seven hours.\959\
---------------------------------------------------------------------------

    \959\ EIA, U.S. electricity customers averaged seven hours of 
power interruptions in 2021, 2022, https://www.eia.gov/todayinenergy/detail.php?id=54639#.
---------------------------------------------------------------------------

    Around 93 percent of all power interruptions in the U.S. occur at 
the distribution-level, with the remaining fraction of interruptions 
occurring at the transmission- and generation-levels.960 961 
As new PEV models continue to enter the U.S. market, they are 
demonstrating increasing capability for use as distributed grid energy 
resources. As of January 2024, manufacturers have introduced, or plan 
to introduce, 24 MYs 2024-2025 PEVs with bidirectional charging capable 
of supporting two to three days of residential electricity consumption. 
These PEVs have capability to discharge power on the order of 10 kW to 
residential loads or limited commercial loads. Such a capability could 
be used to provide limited backup power to service stations providing 
petroleum

[[Page 28019]]

fuels to emergency vehicles in response to a local disruption in 
electrical service.\962\
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    \960\ Eto, Joseph H, Kristina Hamachi LaCommare, Heidemarie C 
Caswell, and David Till. ``Distribution system versus bulk power 
system: identifying the source of electric service interruptions in 
the US.'' IET Generation, Transmission & Distribution 13.5 (2019) 
717-723.
    \961\ Larsen, P. H., LaCommare, K. H., Eto, J. H., & Sweeney, J. 
L. (2015). Assessing changes in the reliability of the US electric 
power system.
    \962\ Mulfati, Justin. dcBel, ``New year, new bidirectional 
cars: 2024 edition'' January 15, 2024. Accessed March 10, 2024. 
Available at: https://www.dcbel.energy/blog/2024/01/15/new-year-new-bidirectional-cars-2024-edition/.
---------------------------------------------------------------------------

    According to FERC, grid reliability is based on two key elements; 
\963\
---------------------------------------------------------------------------

    \963\ FERC, Reliability Explainer, August 16, 2023 https://www.ferc.gov/reliability-explainer.
---------------------------------------------------------------------------

     Reliable operation--A reliable power grid has the ability 
to withstand sudden electric system disturbances that can lead to 
blackouts.
     Resource adequacy--Generally speaking, resource adequacy 
is the ability of the electric system to meet the energy needs of 
electricity consumers. This means having sufficient generation to meet 
projected electric demand.
ii. Generation
    We now turn to the impacts of this rule on generation and resource 
adequacy. As discussed in section IV.C.3 of the preamble and as part of 
our upstream analysis, we modeled changes to power generation due to 
the increased electricity demand anticipated under the final standards. 
Bulk generation and transmission system impacts are felt on a larger 
scale, and thus tend to reflect smoother load growth and be more 
predictable in nature. For a no action case, we project that generation 
will increase by 4.2% between 2028 and 2030 and by 36% between 2030 and 
2050. Further, we project the additional generation needed to meet the 
projected demand of the light- and medium-duty PEVs under the final 
standards combined with our estimate of PEV demand from the Heavy-duty 
Phase 3 GHG proposed rule, to be relatively modest compared to a no 
action case, ranging from 0.93 percent in 2030 to approximately 12 
percent in 2050 for both actions combined. Of that increased 
generation, approximately 84 percent in 2030 and approximately 66 
percent in 2050 is due to light- and medium-duty PEVs, which are 
projected to represent approximately 0.78 percent and 7.6 percent of 
total U.S. generation in 2030 and 2050, respectively. Electric vehicle 
charging associated with the Action case (light- and medium-duty 
combined with heavy-duty) is expected to require 4 percent of the total 
electricity generated in 2030, which is slightly more than the increase 
in total U.S. electricity end-use consumption between 2021 and 
2022.\964\ This is also roughly equal to the combined latest U.S. 
annual electricity consumption estimates for data centers \965\ and 
cryptocurrency mining operations,\966\ both industries which have grown 
significantly in recent years and whose electricity demand the utility 
sector has capably managed.\967\ EPA's assessment is that national 
power generation will continue to be sufficient as demand increases 
from electric vehicles associated with both this rule and the HD Phase 
3 Rule.
---------------------------------------------------------------------------

    \964\ U.S. Energy Information Agency, Use of Electricity, 
December 18, 2023. https://www.eia.gov/energyexplained/electricity/
use-of-
electricity.php#:~:text=Total%20U.S.%20electricity%20end%2Duse,3.2%25
%20higher%20than%20in%202021.&text=In%202022%2C%20retail%20electricit
y%20sales,4.7%25%20higher%20than%20in%202021.
    \965\ U.S. DOE Office of Energy Efficiency and Renewable Energy, 
Data Centers and Servers https://www.energy.gov/eere/buildings/data-centers-and-servers.
    \966\ U.S. Energy Information Agency, Tracking Electricity 
Consumption From U.S. Cryptocurrency Mining Operations, February 1, 
2024, https://www.eia.gov/todayinenergy/
detail.php?id=61364#:~:text=Our%20preliminary%20estimates%20suggest%2
0that,2.3%25%20of%20U.S.%20electricity%20consumption.&text=This%20add
itional%20electricity%20use%20has,cost%2C%20reliability%2C%20and%20em
issions.
    \967\ As we noted at proposal, and as several commenters agreed, 
U.S. electric power utilities routinely upgrade the nation's 
electric power system to improve grid reliability and to meet new 
electric power demands. For example, when confronted with rapid 
adoption of air conditioners in the 1960s and 1970s, U.S. electric 
power utilities maintained reliability and met the new demand for 
electricity by planning and building upgrades to the electric power 
distribution system.
---------------------------------------------------------------------------

    Given the additional electricity demand associated with increasing 
adoption of electric vehicles, some commenters raised concerns that the 
additional demand associated with the rule could impact the reliability 
of the power grid.\968\ To further assess the impacts of this rule on 
grid reliability and resource adequacy, we conducted an additional grid 
reliability assessment of the impacts of the rule and how projected 
outcomes under the rule compare with projected baseline outcomes in the 
presence of the IRA. Because we recognize that this rule is being 
developed contemporaneously with the Greenhouse Gas Emissions Standards 
for Heavy-Duty Vehicles--Phase 3 proposed rule, which also is 
anticipated to increase demand for electricity, we analyzed the impacts 
of these two rules (the ``Vehicle Rules'') on the grid together. EPA 
also considered several recently proposed rules related to the grid 
that may directly impact the EGU sector (which we refer to as ``Power 
Sector Rules'' \969\).
---------------------------------------------------------------------------

    \968\ EPA notes that manufacturers have a wide array of 
compliance options, as discussed in Section IV of the preamble. For 
example, manufacturers could produce significantly fewer BEVs than 
in the central case, or even no BEVs beyond the no action baseline. 
Were manufacturers to choose these compliance pathways, the 
increasing in electricity demand associated with the rule would be 
smaller.
    \969\ The recently proposed rules that we considered because 
they may impact the EGU sector (which we refer to as ``Power Sector 
Rules'') include: the proposed Existing and Proposed Supplemental 
Effluent Limitations Guidelines and Standards for the Steam Electric 
Power Generation Point Source Category (88 FR 18824) (``ELG Rule''), 
New Source Performance Standards for GHG Emissions from New, 
Modified, and Reconstructed Fossil Fuel-Fired EGUs; Emission 
Guidelines for GHG emissions from Existing Fossil Fuel-Fired EGUs 
(88 FR 33240) (``111 EGU Rule''); and National Emissions Standards 
for Hazardous Air Pollutants: Coal-and Oil-Fired Electric Utility 
Steam Generating units Review of the Residual Risk and Technology 
Review (88 FR 24854) (``MATS RTR Rule''). EPA also considered all 
final rules affecting the EGU sector in the modeling for the Vehicle 
Rules.
---------------------------------------------------------------------------

    Specifically, we considered whether the Vehicles Rules alone and 
combined with the Power Sector Rules would result in anticipated power 
grid changes such that they (1) respect and remain within the confines 
of key National Electric Reliability Corporation (NERC) 
assumptions,\970\ (2) are consistent with historical trends and 
empirical data, and (3) are consistent with goals, planning efforts and 
Integrated Resource Plans (IRPs) of industry itself.\971\ We 
demonstrate that the effects of EPA's vehicle and power sector rules do 
not preclude the industry from meeting NERC resource adequacy criteria 
or otherwise adversely affect resource adequacy. This demonstration 
includes explicit modeling of the impacts of the Vehicle Rules, an 
additional quantitative analysis of the cumulative impacts of the 
Vehicles Rules and the Power Sector Rules, as well as a review of the 
existing institutions that maintain

[[Page 28020]]

grid reliability and resource adequacy in the United States. We 
conclude that the Vehicles Rules, whether alone or combined with the 
Power Sector Rules, satisfy these criteria and are unlikely to 
adversely affect the power sector's ability to maintain resource 
adequacy or grid reliability.
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    \970\ NERC was designated by FERC as the Electric Reliability 
Organization (ERO) in 2005 and, therefore, is responsible for 
establishing and enforcing mandatory reliability standards for the 
North American bulk power system. Resource Adequacy Primer for State 
Regulators, 2021, National Association of Regulatory Utility 
Commissioners (https://pubs.naruc.org/pub/752088A2-1866-DAAC-99FB-6EB5FEA73042).
    \971\ Although this final rule was developed generally 
contemporaneously with the HD Phase 3 rule, the two rulemakings are 
separate and distinct. Since the Phase 3 rule has not yet been 
finalized and was not complete as of the date of our analysis, we 
have been required to make certain assumptions for the purposes of 
this analysis to represent the results of the expected forthcoming 
Phase 3 rulemaking, which we believe are sufficiently accurate for 
purposes of this analysis. Our analysis of the proposed Power Sector 
Rules is based on the modeling conducted for proposals. We believe 
this analysis is a reasonable way of accounting for the cumulative 
impacts of our rules affecting the EGU sector, including the 
proposed Power Sector Rules, at this time. Our cumulative analysis 
of the Vehicles and Power Sector Rules supports this final rule, and 
it does not reopen any of the Power Sector Rules, which are the 
subject of separate agency proceedings. Consistent with past 
practice, as subsequent rules are finalized, EPA will perform 
additional power sector modeling that accounts for the cumulative 
impacts of the rule being finalized together with existing final 
rules at that time.
---------------------------------------------------------------------------

    Beginning with EPA's modeling of the Vehicle Rules, we used EPA's 
Integrated Planning Model (IPM), a model with built-in NERC resource 
adequacy constraints, to explicitly model the expected electric power 
sector impacts associated with the two vehicle rules. IPM is a state-
of-the-art, peer-reviewed, multi-regional, dynamic, deterministic 
linear programming model of the contiguous U.S. electric power sector. 
It provides forecasts of least cost capacity expansion, electricity 
dispatch, and emissions control strategies while meeting energy demand 
and environmental, transmission, dispatch, and resource adequacy 
constraints. IPM modeling we conducted for the Vehicle Rules includes 
in the baseline all final rules that may directly impact the power 
sector, including the final Good Neighbor Plan for the 2015 Ozone 
National Ambient Air Quality Standards (NAAQS), 88 FR 36654.
    EPA has used IPM for over two decades, including for prior 
successfully implemented rulemakings, to better understand power sector 
behavior under future business-as-usual conditions and to evaluate the 
economic and emissions impacts of prospective environmental policies. 
The model is designed to reflect electricity markets as accurately as 
possible. EPA uses the best available information from utilities, 
industry experts, gas and coal market experts, financial institutions, 
and government statistics as the basis for the detailed power sector 
modeling in IPM. The model documentation provides additional 
information on the assumptions discussed here as well as all other 
model assumptions and inputs. EPA relied on the same model platform at 
final as it did at proposal, but made substantial updates to reflect 
public comments. Of particular relevance, the model framework relies on 
resource adequacy-related constraints that come directly from NERC. 
This includes NERC target reserve margins for each region, NERC 
Electricity Supply & Demand load factors, and the availability of each 
generator to serve load across a given year as reported by the NERC 
Generating Availability Data System. Note that unit-level availability 
constraints in IPM are informed by the average planned/unplanned outage 
hours for NERC Generating Availability Data System. Therefore, the 
model projections for the Vehicle Rules are showing compliance pathways 
respecting these NERC resource adequacy criteria. These NERC resource 
adequacy criteria are standards by which FERC, NERC and the power 
sector industry judge that the grid is capable of meeting demand. Thus, 
we find that modeling results demonstrating that the grid will continue 
to operate within those resource adequacy criteria supports the 
conclusion that the rules will not have an adverse impact on resource 
adequacy, which is an essential element of grid reliability.
    EPA also considered the cumulative impacts of the Vehicle Rules 
together with the Power Sector Rules, which as noted above are several 
recent proposed rules regulating the EGU sector. In a given rulemaking, 
EPA does not generally analyze the impacts of other proposed 
rulemakings, because those rules are, by definition, not final and do 
not bind any regulated entities, and because the agency does not want 
to prejudge separate and ongoing rulemaking processes. However, some 
commenters on this rule expressed concern regarding the cumulative 
impacts of these rules when finalized, claiming that the agency's 
failure to analyze the cumulative impacts of the Vehicle Rules and its 
EGU-sector related rules rendered this rule arbitrary and capricious. 
In particular, commenters argued that renewable energy could not come 
online quickly enough to make up for generation lost due to fossil 
sources that may retire, and that this together the increasing demand 
associated with the Vehicle Rules would adversely affect resource 
adequacy and grid reliability. EPA conducted additional analysis of 
these cumulative impacts in response to these comments. Our analysis 
finds that the cumulative impacts of the Vehicle Rules and Power Sector 
Rules is associated with changes to the electric grid that are well 
within the range of fleet conditions that respect resource adequacy, as 
projected by multiple, highly respected peer-reviewed models. In other 
words, taking into consideration a wide range of potential impacts on 
the power sector as a result of the IRA and Power Sector Rules 
(including the potential for much higher variable renewable 
generation), as well the potential for increased demand for electricity 
from both this rule and the Phase 3 Heavy Duty GHG rule, EPA found that 
the Vehicle Rules and proposed Power Sector Rules are not expected to 
adversely affect resource adequacy and that EPA's rules will not 
inhibit the industry from its responsibility to maintain a grid capable 
of meeting demand without disruption.
    Finally, we note the numerous are existing and well-established 
institutional guardrails at the federal- and state-level, as well as 
non-governmental organizations, which we expect to continue to maintain 
resource adequacy and grid reliability. These well-established 
institutions--including the Federal Energy Regulatory Commission 
(FERC), state Public Service Commissions (PSC), Public Utility 
Commissions (PUC), and state energy offices, as well as NERC and 
Regional Transmission Organization (RTO) and Independent System 
Operator (ISO)--have been in place for decades, during which time they 
have ensured the resource adequacy and reliability of the electric 
power sector. As such, we expect these institutions will continue to 
ensure that the electric power sector is safe and reliable, and that 
utilities will proactively plan for electric load growth associated 
with all future electricity demand, including those increases due to 
our final rule. We also expect that utilities will continue to 
collaborate with EGU owners to ensure that any EGU retirements will 
occur in an orderly and coordinated manner. We also note that EPA's 
proposed Power Sector rules include built-in flexibilities that 
accommodate a variety of compliance pathways and timing pathways, all 
of which helps to ensure the resource adequacy and grid reliability of 
the electric power system.\972\ In sum, the power sector analysis 
conducted in support of this rule indicates that the Vehicle Rules, 
whether alone or combined with the Power Sector Rules, are unlikely to 
affect the power sector's ability to maintain resource adequacy and 
grid reliability.\973\
---------------------------------------------------------------------------

    \972\ As noted above, EPA is not prejudging the outcome of any 
of the Power Sector Rules.
    \973\ See RIA Chapter 5; ``Resource Adequacy Analysis Final Rule 
Technical Memorandum for Multi-Pollutant Emissions Standards for 
Model Years 2027 and Later Light-Duty and Medium-Duty Vehicles, and 
Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles--Phase 
3,'' available in the docket for this rulemaking.
---------------------------------------------------------------------------

iii. Transmission
    The transmission system is another component of the electric power 
system with unique grid reliability attributes. The need for new 
transmission lines associated with the final rule and the HD Phase 3 
Rule between now and 2050 is projected to be very small, approximately 
one percent or less of transmission. Nearly all of the projected new 
transmission builds appear to overlap with pre-existing transmission

[[Page 28021]]

line right of ways (ROW), which makes the permitting process simpler. 
Approximately 41-percent of the potential new transmission line builds 
projected by IPM have already been independently publicly proposed by 
developers. The agency finds that the utility sector can reasonably 
manage this very limited need for additional transmission.\974\
---------------------------------------------------------------------------

    \974\ See RIA Chapter 5.2.7.
---------------------------------------------------------------------------

    We also find that, the federal government has a role in improving 
transmission system planning,\975\ and there are a myriad of programs 
and efforts underway that will help support transmission improvements 
to the grid and provide reliability benefits. While there is congestion 
and delays in transmission buildout, utilities and other actors have 
other ways to improve reliability, by deploying Grid Enhancing 
Technologies (GET) and Storage As Transmission Asset (SATA).
---------------------------------------------------------------------------

    \975\ FERC regulates interstate regional transmission planning 
and is currently finalizing a major rule to improve transmission 
planning. The rule would require that transmission operators do long 
term planning and would require transmission providers to work with 
states to develop a cost allocation formula, among other changes. 
The primary goal of the FERC rule is to align with long-term needs, 
rather than focusing on short-term projects, which may lack capacity 
required to address future transmission needs.
---------------------------------------------------------------------------

    For example, two 230-kV transmission lines used by PPL Electric 
Utilities, in Pennsylvania, were found to be approaching their maximum 
transmission capacity in 2020. As a result, the utility paid more than 
$60 million in congestion fees in the winters of 2021-2022 and 2022-
2023. Rather than rebuilding or reconductoring the two transmission 
lines, which would have cost tens of millions of dollars, the utility 
spent under $300 thousand installing dynamic line rating (DLR) sensors, 
which helped the utility to rebalance each of the two transmission 
lines and allowed them to reliably carry an additional 18 percent of 
power.\976\
---------------------------------------------------------------------------

    \976\ PPL's Dynamic Line Ratings Implementation: https://www.energypa.org/wp-content/uploads/2023/04/Dynamic-Line-Ratings-H-Lehmann-E-Rosenberger.pdf.
---------------------------------------------------------------------------

    DOE recently announced several programs and projects aimed at 
helping to alleviate the interconnection queue backlog, including the 
Grid Resilience and Innovation Partnerships (GRIP) program, with $10.5 
billion in Bipartisan Infrastructure Law funding to develop and deploy 
Grid Enhancing Technologies (GET); and the Interconnection Innovation 
e-Xchange (i2X), which aims to increase data access and transparency, 
improve process and timing, promote economic efficiency, and maintain 
grid reliability.977 978 979 980 981 982 GRIP (among other 
DOE funding programs) also provides funding to build new transmission 
lines to unlock new clean generation sources.\983\ FERC has issued 
various orders to address interconnection queue backlogs, improve 
certainty, and prevent undue discrimination for new 
technologies.984 985 FERC Order 2023 provides generator 
interconnection procedures and agreements to address interconnection 
queue backlogs, improve certainty, and prevent undue discrimination for 
new technologies.
---------------------------------------------------------------------------

    \977\ Abboud, A. W., Gentle, J. P., Bukowski, E. E., Culler, M. 
J., Meng, J. P., & Morash, S. (2022). A Guide to Case Studies of 
Grid Enhancing Technologies (No. INL/MIS-22-69711-Rev000). Idaho 
National Laboratory (INL), Idaho Falls, ID (United States).
    \978\ DOE, Grid Deployment Office, Grid Resilience and 
Innovation Partnerships (GRIP) Program, https://www.energy.gov/gdo/grid-resilience-and-innovation-partnerships-grip-program.
    \979\ Federal Energy Regulatory Commission, Implementation of 
Dynamic Line Ratings, Docket No. AD22-5-000 (February 24, 2022), 
https://www.federalregister.gov/documents/2022/02/24/2022-03911/implementation-of-dynamic-line-ratings.
    \980\ DOE, Dynamic Line Rating, 2019, https://www.energy.gov/oe/articles/dynamic-line-rating-report-congress-june-2019.
    \981\ DOE, Advanced Transmission Technologies, 2020, https://www.energy.gov/oe/articles/advanced-transmission-technologies-report.
    \982\ DOE, About the Interconnection Innovation e-Xchange (i2X), 
2024, https://www.energy.gov/eere/i2x/about-interconnection-innovation-e-xchange-i2x.
    \983\ DOE, 2024. Grid Resilience Utility and Industry Grants. 
https://www.energy.gov/gdo/grid-resilience-and-innovation-partnerships-grip-program-projects.
    \984\ Federal Energy Regulatory Commission, Improvements to 
Generator Interconnection Procedures and Agreements, Docket No. 
RM22-14-000; Order No. 2023 (July 28, 2023), https://www.ferc.gov/media/e-1-order-2023-rm22-14-000.
    \985\ https://www.ferc.gov/news-events/news/staff-presentation-improvements-generator-interconnection-procedures-and.
---------------------------------------------------------------------------

    The capacity of existing electric power transmission lines can be 
increased by a process known as reconductoring, in which existing 
transmission lines, typically with steel cores, are replaced with 
higher capacity composite conductors. Since the process makes use of 
existing transmission towers, it typically does not require additional 
rights of way. As such, new generation capacity can be rapidly added, 
which serves to improve resource adequacy. For example, American 
Electric Power, a Texas-based transmission utility, replaced the aging 
conventional conductors of a 240 miles transmission line with advanced 
composite core conductors from 2012-2015.\986\ The reconductoring 
resulted in an approximate doubling of the previous transmission line 
capacity and was accomplished while the 345-kilovolt transmission lines 
remained energized.\987\
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    \986\ Energized Reconductor Project in the Lower Rio Grande 
Valley of Texas (https://www.aeptransmission.com/texas/RGVConductor/
).
    \987\ American Electric Power--Energized Reconductoring Project 
in the Lower Rio Grande Valley https://www.quantaenergized.com/project/574.
---------------------------------------------------------------------------

    Energy storage projects can also be used to help to reduce 
transmission line congestion and are seen as alternatives to 
transmission line construction in some cases.988 989 These 
projects, known as Storage As Transmission Asset (SATA),\990\ can help 
to reduce transmission line congestion, have smaller footprints, have 
shorter development, permitting, and construction times, and can be 
added incrementally, as required. Examples of SATA projects include the 
ERCOT Presidio Project,\991\ a 4 MW battery system that improves power 
quality and reducing momentary outages due to voltage fluctuations, the 
APS Punkin Center,\992\ a 2 MW, 8 MWh battery system deployed in place 
of upgrading 20 miles of transmission and distribution lines, the 
National Grid Nantucket Project,\993\ a 6 MW, 48 MWh battery system 
installed on Nantucket Island, MA, as a contingency to undersea 
electric supply cables, and the Oakland Clean Energy Initiative 
Projects,\994\ a 43.25 MW, 173 MWh energy storage project to replace 
fossil generation in the Bay area.
---------------------------------------------------------------------------

    \988\ Federal Energy Regulatory Commission, Managing 
Transmission Line Ratings, Docket No. RM20-16-000; Order No. 881 
(December 16, 2021), https://www.ferc.gov/media/e-1-rm20-16-000.
    \989\ Federal Energy Regulatory Commission, Staff Presentation 
Final Order Regarding Managing Transmission Line Ratings FERC Order 
881 (December 16, 2021), https://www.ferc.gov/news-events/news/staff-presentation-final-order-regarding-managing-transmission-line-ratings.
    \990\ Nguyen, T. A., & Byrne, R. H. (2020). Evaluation of Energy 
Storage As A Transmission Asset (No. SAND2020-9928C). Sandia 
National Lab.(SNL-NM), Albuquerque, NM (United States).
    \991\ http://www.ettexas.com/Content/documents/NaSBatteryOverview.pdf.
    \992\ https://www.aps.com/-/media/APS/APSCOM-PDFs/About/Our-Company/Doing-business-with-us/Resource-Planning-and-Management/APS_IRP_2023_PUBLIC.ashx?la=en&hash=B0B8ED59F4698FE246386F3CD118DEC8.

    \993\ Balducci, P. J., Alam, M. J. E., McDermott, T. E., 
Fotedar, V., Ma, X., Wu, D., . . . & Ganguli, S. (2019). Nantucket 
island energy storage system assessment (No. PNNL-28941). Pacific 
Northwest National Lab. (PNNL), Richland, WA (United States), 
https://energystorage.pnnl.gov/pdf/PNNL-28941.pdf.
    \994\ https://www.pgecurrents.com/articles/2799-pg-e-proposes-two-energy-storage-projects-oakland-clean-energy-initiative-cpuc.
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    Through such efforts, the interconnection queues can be reduced in 
length, transmission capacity on existing transmission lines can be 
increased, additional generation assets

[[Page 28022]]

can be brought online, and electricity generated by existing assets 
will be curtailed less often. These factors help to improve overall 
grid reliability. We conclude that it is reasonable to anticipate that 
transmission capacity will not constrain the increased demand for 
electricity projected in our central case modeling.
iv. Distribution
    We next discuss distribution infrastructure. We acknowledge that 
increases in electric vehicle charging associated with the final rule 
are likely to require additional distribution infrastructure. We first 
review the literature regarding and tools to support distribution needs 
associated with PEV charging, and then we discuss the TEIS, which 
specifically analyzes the distribution needs associated with this rule 
and the HD Phase 3 Rule.
    Numerous tools are available to address and mitigate anticipated 
distribution needs, including managed charging, time-of-use (TOU) 
electric rates, distributed energy resources (DERs), Power Control 
Systems (PCS), and others, which are discussed in greater detail below. 
New technologies and solutions exist and are emerging to ensure that 
new charging stations can be connected to the grid as quickly as 
possible, without adversely affecting grid reliability. Utility hosting 
capacity maps are one tool available that developers can use to 
identify faster and lower cost locations to connect new EV chargers. 
These maps can help charging station developers identify locations 
where there is excess available grid capacity. Hosting capacity maps 
provide greater transparency into the ability of the distribution grid 
to host additional distributed energy resources (DERs) such as BEV 
charging. In addition, hosting capacity maps can identify where DERs 
can alleviate or aggravate grid constraints. Hosting capacity is 
commonly defined as the additional injection or withdrawal of electric 
power up to the limits where individual grid assets exceed their power 
ratings or where a voltage violation would occur. Hosting capacity 
maps, analyzed and created by the utility that owns the distribution 
system, are usually color-coded lines or surface diagrams overlayed on 
geographic maps, representing the conditions on the grid at the time 
when the map is published or updated. The analysis is based on power 
flow simulations of the distribution circuits given specific customers' 
load profiles supplied by the electric circuit and the grid asset data 
as managed by the utility. The hosting capacity is highly location 
specific. A DOE review found that utilities have published 39 hosting 
capacity maps in 24 states and the District of Columbia.\995\
---------------------------------------------------------------------------

    \995\ DOE, ``U.S. Atlas of Electric Distribution System Hosting 
Capacity Maps,'' times to deploying BEVs. Available online: https://www.energy.gov/eere/us-atlas-electric-distribution-system-hosting-capacity-maps.
---------------------------------------------------------------------------

    Hosting capacity maps can help direct new EV charger deployment to 
less constrained portions of the grid, giving utilities more lead time 
to make distribution system upgrades. In tandem, new technologies and 
power control protocols are helping connect new EV loads faster even 
where there are grid capacity constraints. One approach is for 
utilities to make non-firm capacity available immediately as they 
construct distribution system upgrades. Southern California Edison, a 
large electric utility in California, proposed a pilot to allow faster 
connection of new EV loads in constrained areas by deploying Power 
Control Systems (PCS).\996\ In addition to the anticipated build out of 
charging infrastructure and electric distribution grids, innovative 
charging solutions implemented by electric utilities have further 
reduced lead times.
---------------------------------------------------------------------------

    \996\ In California, Southern California Edison (SCE) proposed a 
two-year Automated Load Control Management Systems (LCMS) Pilot. The 
program would use third-party owned LCMS equipment approved by SCE 
to accelerate the connection of new loads, including new EVSE, while 
``SCE completes necessary upgrades in areas with capacity 
constraints.''1 SCE would use the LCMS to require new customers to 
limit consumption during periods when the system is more 
constrained, while providing those customers access to the 
distribution system sooner than would otherwise be possible. Once 
SCE completes required grid upgrades, the LCMS limits will be 
removed, and participating customers will gain unrestricted 
distribution service. SCE hopes to evaluate the extent to which LCMS 
can be used to ``support distribution reliability and safety, reduce 
grid upgrade costs, and reduce delays to customers obtaining 
interconnection and utility power service.''1 SCE states that prior 
CPUC decisions have expressed clear support for this technology and 
SCE is commencing the LCMS Pilot immediately. This program was 
approved by CPUC in January 2024.
---------------------------------------------------------------------------

    Plans like Southern California Edison's (SCE) to use load 
constraint management systems (LCMS),\997\ which limits power that is 
available for EV charging based upon capacity limits of the 
distribution system, to connect new EV loads faster in constrained 
sections of the grid are being bolstered by new standards for load 
control technologies. UL, an organization that develops standards for 
the electronics industry, published the UL 3141 Outline of 
Investigation (OOI) for Power Control Systems (PCS) in January 
2024.\998\ Manufacturers can now use this standard for developing 
devices that utilities can use to limit the energy consumption of BEVs. 
The OOI identifies five potential functions for PCS. One of these 
functions is to serve as a Power Import Limit (PIL) or Power Export 
Limit (PEL). In these use cases, the PCS controls the flow of power 
between a local electric power system (local EPS, most often the 
building wiring on a single premises) and a broader area electric power 
system (area EPS, most often the utility's system). Critically, the 
standardized PIL function will enable the interconnection of new BEV 
charging stations faster by leveraging the flexibility of BEVs to 
charge in coordination with other loads at the premise. With this 
standard in place and manufacturer completion of conforming products, 
utilities will have a clear technological framework available to use in 
load control programs that accelerate charging infrastructure 
deployment for their customers.
---------------------------------------------------------------------------

    \997\ Load Constraint Management Systems (LCMS) allow EV 
chargers to temporarily connect to distribution systems in capacity 
constrained areas by simultaneously managing the time of charging in 
such a manner that accommodates other electricity demands before 
electric utilities can install permanent distribution system 
upgrades.
    \998\ UL Standards and Engagement. January 11, 2024. UL 3141: 
Outline of Investigation for Power Control Systems. https://www.shopulstandards.com/ProductDetail.aspx?productId=UL3141_1_O_20240111.
---------------------------------------------------------------------------

    In addition to the flexible interconnection enabled by PCS, 
technologies including battery or generation backed charging and mobile 
charging can facilitate rapid charging deployment, even before utility 
connections can be upgraded. Mobile chargers can be deployed 
immediately because they do not require an on-site grid connection. 
They can be used as a temporary solution to bring additional charging 
infrastructure to locations before a stationary, grid-connected charger 
can be deployed. Mobile chargers can also help bring charging 
infrastructure to locations where traditional charger deployments can 
be more difficult, such as at multi-unit dwellings.\999\
---------------------------------------------------------------------------

    \999\ https://www.bloomberg.com/news/articles/2023-11-04/these-electric-vehicle-chargers-will-come-to-you.
---------------------------------------------------------------------------

    Battery-integrated charging is a promising solution to deploy DCFC 
quickly and inexpensively in relatively constrained areas of the grid. 
These chargers draw power from the grid slowly throughout the day and 
use a battery to store that power and then use it to charge EVs at much 
faster rates. A recent Argonne National Laboratory analysis found that 
battery-integrated DCFC results in either lower or similar levelized 
costs relative to non-battery-integrated DCFC in regions across the

[[Page 28023]]

country, while accelerating deployment.\1000\ Battery-integrated 
chargers save money both upfront on grid distribution upgrade costs as 
well as during operation by reducing the cost of utility demand charges 
based on maximum site load. Avoiding distribution grid upgrades also 
reduces the risk of interconnection-related delays, and thus speeds 
deployment. The study found that in California, battery-integration can 
reduce peak power demand of DCFC station by 60-90 percent. Battery-
integrated chargers are already being deployed across the US. In 
several states, NEVI funding has been used to deploy battery-integrated 
DCFC, including chargers made by Freewire and Jule.\1001\
---------------------------------------------------------------------------

    \1000\ Poudel, Sajag, Jeffrey Wang, Krishna Reddi, Amgad 
Elgowainy, Joann Zhou. 2024. Innovative Charging Solutions for 
Deploying the National Charging Network: Technoeconomic Analysis. 
Argonne National Laboratory.
    \1001\ Batter-integrated chargers from Freewire and Jule have 
been selected for NEVI funding in Alaska, Colorado, Kentucky, Texas, 
and Utah. For Freewire's announcements, see https://www.linkedin.com/posts/freewiretech_nevi-program-freewire-technologies-activity-7148020388294184961-2CNA. For Jule's 
announcements, see https://www.julepower.com/resources/spotlight.
---------------------------------------------------------------------------

    Additional innovative charging solutions will further accelerate 
charging deployment by optimizing the use of chargers that have already 
been installed. Technologies are emerging to make the most of existing 
charging infrastructure. Other companies are working on facilitating 
the sharing of chargers between more drivers. One company, EVMatch, 
developed a software platform for sharing, reserving, and renting EV 
charging stations, which can allow owners of charging stations to earn 
additional revenue while making their chargers available to more EV 
drivers to maximize the benefit of each deployed charger. EVMatch is 
also rolling out a new product called the EVMatch adapter in 
partnership with Argonne National Laboratory. The EVMatch adapter is a 
smart charging adapter that can turn any Level 1 or 2 EVSE into a smart 
charger that can remotely monitor and control charging to enable even 
more efficient utilization of existing chargers.\1002\ Innovative 
charging models like these can be efficient ways to increase charging 
access for EVs with a smaller amount of physical infrastructure.\1003\
---------------------------------------------------------------------------

    \1002\ Jeff Chenoweth, ``The EVmatch Adapter Will Transform And 
Unify The Way You Monitor And Control Level 2 EV Chargers.'' March 
2, 2023. Available at: https://evmatch.com/blog/the-evmatch-adapter-will-transform-and-unify-the-way-you-monitor-and-control-level-2-ev-chargers. Jason D. Harper, ``Electric Vehicle Smart Charge Adapter 
TCF (ANL)''. July 7, 2021. Available at: https://www.energy.gov/sites/default/files/2021-07/elt271_harper_2021_p_5-17_908am_KF_ML.pdf.
    \1003\ Argonne National Laboratory, 2024. Innovative Charging 
Solutions for Deploying the National Charging Network: 
Technoeconomic Analysis.
---------------------------------------------------------------------------

    It is not uncommon for the electric power system to have 
additional, unutilized generation capacity at various times throughout 
a given day. In a manner akin to load constraint management systems 
(discussed above), grid operators can utilize this previously untapped 
generation capacity by shifting the charging of electric vehicles to 
times where excess underutilized generation capacity exists and/or 
shift electric vehicle charging away from times where generation 
capacity is less prevalent, without affecting the utility of electric 
vehicles. This allows the grid operators to more effectively use 
existing electric power system resources, which decreases overall 
operative costs for all ratepayers. Prior research efforts 
1004 1005 1006 have capitalized on the mismatch between 
electric generation capacity and demand by demonstrating the ability to 
shift up to 20 percent of electric vehicle charging load demand from 
times of the day in which electricity supply is less-plentiful and/or 
more-expensive to other times of the day, when electricity supply is 
more-plentiful and/or less-expensive.\1007\ Conversely, the research 
efforts also demonstrated the ability to increase electric vehicle 
charging loads by up to 30 percent in a given hour of the day. By more 
effectively utilizing existing electric power system assets, managed 
electric vehicle charging can also help to further reduce overall 
electricity costs by allowing for the deferral of electric power system 
upgrades, with deferment potential of between 5 and 15 years over the 
2021-2050 period.\1008\ While such deferrals reduce immediate capital 
expenditures for electric power system operators, they also extend the 
functional lifespan of these assets, provide electric utility planners 
with additional time to consider cost-effective planning options, and 
help to mitigate supply chain shortages for electric power system 
components.
---------------------------------------------------------------------------

    \1004\ Kintner-Meyer, M., Davis, S., Sridhar, S., Bhatnagar, D., 
Mahserejian, S., & Ghosal, M. (2020). Electric vehicles at scale-
phase I analysis: High EV adoption impacts on the western US power 
grid (No. PNNL-29894).
    \1005\ Pless, Shanti, Amy Allen, Lissa Myers, David Goldwasser, 
Andrew Meintz, Ben Polly, and Stephen Frank. 2020. Integrating 
Electric Vehicle Charging Infrastructure into Commercial Buildings 
and Mixed-Use Communities: Design, Modeling, and Control 
Optimization Opportunities; Preprint. Golden, CO: National Renewable 
Energy Laboratory. NREL/CP-5500-77438. https://www.nrel.gov/docs/fy20osti/77438.pdf.
    \1006\ Satchwell, A., Carvallo, J. P., Cappers, P., Milford, J., 
& Eshraghi, H. (2023). Quantifying the Financial Impacts of Electric 
Vehicles on Utility Ratepayers and Shareholders.
    \1007\ Lipman, Timothy, Alissa Harrington, and Adam Langton. 
2021. Total Charge Management of Electric Vehicles. California 
Energy Commission. Publication Number: CEC-500-2021-055.
    \1008\ Kintner-Meyer, M. C., Sridhar, S., Holland, C., Singhal, 
A., Wolf, K. E., Larimer, C. J., . . . & Murali, R. E. (2022). 
Electric Vehicles at Scale-Phase II-Distribution Systems Analysis 
(No. PNNL-32460). Pacific Northwest National Lab. (PNNL), Richland, 
WA (United States).
---------------------------------------------------------------------------

    Integration of electric vehicle charging into the power grid, by 
means of vehicle-to-grid software and systems that allow management of 
vehicle charging time and rate, has been found to create value for 
electric vehicle drivers, electric grid operators, and 
ratepayers.\1009\ The ability to shift and curtail electric power by 
managing EV charging is a feature that can improve grid operations and, 
therefore, grid reliability. Management of PEV charging can reduce 
overall costs to utility ratepayers by delaying electric utility 
customer rate increases associated with equipment upgrades and may 
allow utilities to use electric vehicle charging as a resource to 
manage intermittent renewables. When PEVs charge during hours when 
existing grid infrastructure is underutilized, they can put downward 
pressure on all customers' electric rates by spreading fixed grid 
investment costs across greater electricity sales.\1010\ The 
development of new electric utility tariffs, including those for 
submetering for electric vehicles, will also help to facilitate the 
management of electric vehicle charging and can help to reduce PEV 
operating costs. When employed as distributed energy resources (DER), 
PEVs can help to defer and/or replace the need for specific 
transmission and distribution

[[Page 28024]]

system equipment upgrades. Recently, NREL found that a vehicle-to-grid 
control strategy which lowered an EV battery's average state of charge 
when parked--while ensuring it was fully recharged in anticipation of 
the driver's next need--could extend the life of the battery if 
continued over time.\1011\ Similarly, a study by Environment and 
Climate Change Canada, NRC Canada and Transport Canada also found no 
significant different in usable battery energy between a vehicle that 
was used for bidirectional V2G and one that was not, and identified an 
improved SOC profile resulting from V2G activity as a possible 
factor.\1012\ Application programming interfaces have been developed by 
industry in partnership with ANL to manage the exchange of energy 
services contracts, enabling the dispatch of PEVs and other distributed 
energy resources in to utility planning and operations territory-wide 
or within a specific section of the distribution grid.\1013\ Further, 
automakers including BMW, Ford, and Honda developed a joint venture 
that promises to enable their EV customers to earn financial savings 
from managed charging and energy-sharing services.\1014\ See section 
IV.C.5.ii of this preamble for a discussion of DERs and their potential 
benefits.
---------------------------------------------------------------------------

    \1009\ Chhaya, S., et al., ``Distribution System Constrained 
Vehicle-to-Grid Services for Improved Grid Stability and 
Reliability; Publication Number: CEC-500-2019-027, 2019. Accessed 
December 13, 2022 at https://www.energy.ca.gov/sites/default/files/2021-06/CEC-500-2019-027.pdf.
    \1010\ Satchwell, A., Carvallo, J. P., Cappers, P., Milford, J., 
& Eshraghi, H. (2023). Quantifying the Financial Impacts of Electric 
Vehicles on Utility Ratepayers and Shareholders; Jones, et al. ``The 
Future of Transportation Electrification.'' 2018. For more 
information on how EVs might lower electricity rates, see Frost, 
Jason, Melissa Whited, and Avi Allison. ``Electric Vehicles Are 
Driving Electric Rates Down.'' Synapse Energy Economics, Inc. June 
2019 https://www.synapse-energy.com/sites/default/files/EV-Impacts-June-2019-18-122.pdf, Electric Vehicles Are Driving Rates Down for 
All Customer Update Dec 2023 (synapse-energy.com); California Public 
Utilities Commission, Electricity Vehicles Rates and Cost of Fueling 
https://www.cpuc.ca.gov/industries-and-topics/electrical-energy/
infrastructure/transportation-electrification/electricity-rates-and-
cost-of-
fueling#:~:text=Electric%20Rates%20for%20EV%20Drivers,at%20a%20more%2
0reasonable%20price.
    \1011\ NREL. ``Electric Vehicles Play a Surprising Role in 
Supporting Grid Resiliency,'' October 12, 2023. Accessed November 5, 
2024 at https://www.nrel.gov/news/program/2023/evs-play-surprising-role-in-supporting-grid-resiliency.html.
    \1012\ Lapointe, A. et al., ``Effects of Bi-directional Charging 
on the Battery Energy Capacity and Range of a 2018 Model Year 
Battery Electric Vehicle,'' 36th International Electric Vehicle 
Symposium and Exhibition (EVS36), June 11-14, 2023.
    \1013\ Evoke Systems. ``https://www.prnewswire.com/news-releases/evoke-systems-announces-development-of-open-apis-for-managed-electric-vehicle-charging-301647906.html,'' October 12, 
2022. Accessed November 5, 2024 at https://www.prnewswire.com/news-releases/evoke-systems-announces-development-of-open-apis-for-managed-electric-vehicle-charging-301647906.html.
    \1014\ Honda, ``BMW, Ford and Honda Agree to Create ChargeScape, 
a New Company Focused on Optimizing Electric Vehicle Grid 
Services,'' September 12, 2023. Accessed February 5, 2024 at https://www.prnewswire.com/news-releases/bmw-ford-and-honda-agree-to-create-chargescape-a-new-company-focused-on-optimizing-electric-vehicle-grid-services-301924860.html.
---------------------------------------------------------------------------

    Managed EV charging provides several benefits to vehicle owners, 
rate payers that do not operate electric vehicles, and the operators of 
the electric power system, including lower costs and longer lifespans 
for electric power system assets. Managed electric vehicle charging, 
when coupled with time-of-use (TOU) electric rates, can help to further 
reduce already low refueling costs of EVs by allowing vehicle operators 
to charge when electric rates are most advantageous. Since low 
electricity costs coincide with surpluses of electricity, such charging 
reduces the overall costs of electricity generation and delivery to all 
electricity rate payers, not just those charging electric vehicles. 
Researchers at the Lawrence Berkeley National Laboratory (LBNL) 
identified 136 active or approved EV-specific TOU electric utility 
rates for U.S. investor-owned utilities in 37 states and the District 
of Columbia.\1015\ Of the 136 active or approved EV-specific TOU 
electric utility rates, 54 rates are for residential customers, 48 
rates are for commercial customers, 27 rates are for utility-owned 
facilities, four rates are for fleet operators, and the remaining three 
rates are for mixed facilities. In sum, our assessment of the 
literature and recent developments finds numerous tools to mitigate and 
address distribution related needs. We expect that uptake of these 
tools will likely vary and acknowledge that some are more readily 
available than others. But given the significant benefits associated 
with these tools and the rapid advances in their development, we expect 
that increasing deployment of such tools is very likely, particularly 
as PEV adoption increases, and the economic incentives associated with 
applying such tools on a widespread scale also increases.\1016\
---------------------------------------------------------------------------

    \1015\ Cappers, P., Satchwell, A., Brooks, C., & Kozel, S. 
(2023). A Snapshot of EV-Specific Rate Designs Among US Investor-
Owned Electric Utilities. Lawrence Berkeley National Lab. (LBNL), 
Berkeley, CA (United States).
    \1016\ In addition to the tools discussed that reduce the need 
for upgrades, there will be increased supply of grid components 
available for the situations in which some upgrades are still 
needed. Please refer to ``DOE Actions to Unlock Transformer and Grid 
Component Production'': https://www.energy.gov/policy/articles/doe-actions-unlock-transformer-and-grid-component-production.
---------------------------------------------------------------------------

    To better understand the potential impacts of the final rule on the 
distribution system, EPA commissioned a study as part of an interagency 
agreement with the U.S. Department of Energy entitled the 
``Transportation Electrification Impact Study'' (TEIS) to estimate the 
potential costs and benefits associated with electrical distribution 
system upgrades that may be incurred as a result of this final rule in 
addition to those of the Greenhouse Gas Emissions Standards for Heavy-
Duty Vehicles--Phase 3 Proposed Rule.\1017\ These costs and benefits 
\1018\ include new or replacement substations, underground and overhead 
distribution feeders, and service transformers, all in rural, suburban, 
and urban locations, as well as along freight corridors. To do so, our 
study builds upon the methodology developed by the California Public 
Utility Commission (CPUC) for their Electrification Impacts Study Part 
1.\1019\ The results of this study provide further support and 
confirmation for our findings in the proposed rule that grid 
reliability is not expected to be adversely affected by this rule and 
the HD Phase 3 Rule.\1020\ Moreover, if PEV charging is managed 
(through available tools such as TOU tariffs and hosting capacity 
maps), there are likely to be net benefits from increased PEV 
penetration for all electric power system participants (including 
utilities and electricity consumers, whether they own PEVs or not).
---------------------------------------------------------------------------

    \1017\ National Renewable Energy Laboratory, Lawrence Berkeley 
National Laboratory, Kevala Inc., and U.S. Department of Energy. 
Multi-State Transportation Electrification Impact Study: Preparing 
the Grid for Light-, Medium-, and Heavy-Duty Electric Vehicles. DOE/
EE-2818, U.S. Department of Energy, 2024.
    \1018\ Benefits to non-EV owners include greater overall 
distribution system reliability, more-effective asset utilization, 
additional distribution system capacity, and decreasing retail 
electricity costs, but we have not attempted to monetize these 
benefits in our analysis.
    \1019\ California Public Utilities Commission, Order Instituting 
Rulemaking to Modernize the Electric Grid for a High Distributed 
Energy Resources Future, R.21-06-017 (July 2, 2021), https://apps.cpuc.ca.gov/apex/f?p=401:56:0::NO:RP,57,RIR:P5_PROCEEDING_SELECT:R2106017.
    \1020\ Grid reliability, broadly speaking, is dependent on 
sufficient and reliable generation, transmission and distribution. 
The TEIS study only addresses the question of potential reliability 
impacts on distribution, but we also address potential impacts on 
transmission and generation below.
---------------------------------------------------------------------------

    In the TEIS study, aggregate distribution system-level costs and 
benefits were estimated for five states using parcel-level \1021\ load 
profiles that were summed and applied to known utility infrastructure 
elements (i.e., substations, distribution feeder lines, service 
transformers, etc.) and combined with utility-specific cost 
information. Using a full-scale distribution capacity expansion 
approach from the bottom (parcel-level) up to the substation level, the 
methodology employed identifies where and when the distribution grid 
will need capacity enhancements under certain policy and charging 
behavior scenarios consistent with this final rule.
---------------------------------------------------------------------------

    \1021\ ``Parcel-level'' in this context refers to buildings with 
street addresses.
---------------------------------------------------------------------------

    Load profiles were analyzed using output from two analytical cases:
    1. A no-action case that included modeling of electric vehicle 
provisions from the IRA within the OMEGA compliance model and 
compliance with 2023 and later GHG standards (86 FR 74434) with the 
addition of heavy-duty vehicle (Class 4-8) charge demand estimated for 
the California Advanced Clean Trucks (ACT) Program.

[[Page 28025]]

    2. A final rule policy case based upon Alternative 3 from the 
light- and medium-duty proposed rule with the addition of heavy-duty 
vehicle charge demand based on an interim scenario developed from the 
Greenhouse Gas Emissions Standards for Heavy-Duty Vehicles--Phase 3 
Proposed Rule (HDP3).
    Of the scenarios modeled in IPM after the proposal, Alternative 3 
is the closest scenario with respect to PEV charging demand to the 
final rule and represents the final rule within the power sector 
analysis. Alternative 3 differs from the finalized program by 
forecasting higher PEV sales in 2027-2031 than finalized, and thus 
higher PEV charging demand in earlier years and comparable PEV charging 
demand after 2032. Thus, power sector impacts on emissions and cost 
within the final rule analysis should be considered conservatively high 
estimates. The load profiles from light-, medium- and heavy-duty are 
distributed into IPM regions using NREL's EVI-X suite of models for 
light-duty, LDVs, MDVs, and heavy-duty buses; and using LBNL's HEVI-
LOAD model for all other heavy-duty applications. The resulting 
premise-level load profiles were aggregated up to electric utility 
service territories. The system-level grid impacts and costs of 
electricity service were determined based upon the profiles. Additional 
scenarios were modeled to evaluate the impact of both unmanaged 
charging and managed charging. In the unmanaged case, the study assumes 
that EVs are charged immediately when the vehicle returns to a charger. 
In contrast, managed charging spreads the charging out more evenly over 
the period when the vehicle is parked at the charger; we note that the 
managed charging scenario evaluated only the most basic and readily 
available managed charging methods, a small subset of the numerous 
tools to address distribution needs that we reviewed in our earlier 
discussion. As a result, this study provides detailed modeling of 
potential impacts of these vehicles rules at the neighborhood level of 
electricity distribution.
    This methodology is first applied to five states, which were 
selected based upon their diversity in urban/rural population, utility 
distribution grid composition, freight travel demands, and state EV 
policies. The selected states are California, Oklahoma, Illinois, 
Pennsylvania, and New York. The results from these five states are then 
extrapolated to the 67 IPM regions that we use to represent the 
remaining 48 contiguous states within our power sector analysis.
    The TEIS national-level results found that the Action case, with 
managed charging, provides significant distribution system benefits 
relative to unmanaged charging both financially and in terms of the 
ability to defer necessary distribution system upgrades. The TEIS also 
found that the incremental grid upgrades needed in the Action cases 
relative to the No Action cases are manageable and that benefits 
outweigh costs.\1022\ Such deferment, provided by managed charging, 
allows electric utilities to more effectively schedule and coordinate 
needed distribution system upgrades, while providing greater 
flexibility in accommodating potential supply chain shortfalls. The 
study also found that the Action case, with managed charging, requires 
significantly less electricity at peak times than the No Action case, 
illustrating the electricity system benefits of employing grid 
integration technologies and techniques. Note that the Action case 
assumes the limited usage of Distributed Energy Resources (DER) based 
on the TEIS, for example, vehicle to grid communication, which can 
delay vehicle charging to off-peak times or can stagger the scheduling 
of charge demand. Some implementations of DER also involve onsite 
generation of electricity using photovoltaic cells or distribution-
level grid battery storage, however those were beyond the scope of the 
TEIS and were not included in our Action case analysis of the FRM at 
the distribution level. The TEIS provides further evidence that 
implementing smart placements of charging infrastructure where grid 
capacity is available and managed charging can more than offset the 
impact of additional EV load projected under this final rulemaking (and 
the HD Phase 3 rule) on the amount of distribution system investment 
that will be needed through 2032.
---------------------------------------------------------------------------

    \1022\ Additionally, the TEIS found that: (1) the Action case 
would require an incremental 3% annual growth in charging 
infrastructure between 2027-2032 relative to the No Action case; (2) 
Incremental distribution grid investment needs represent 
approximately 3% of current annual utility investments in the 
distribution system for scenarios consistent with the EPA proposals; 
(3) Incremental distribution grid investment needs decrease by 30% 
with basic managed charging techniques, illustrating the potential 
for significant cost savings through optimizing PEV charging and 
other loads at the local level; (4) Benefits of vehicle 
electrification to consumers outweigh the estimated cost of charging 
infrastructure and grid upgrades in scenarios consistent with the 
EPA proposals.
---------------------------------------------------------------------------

    The study also found that the distribution costs associated with 
increasing demand from the Vehicle Rules were quite small relative to 
total distribution costs. Based on utility reports to the Federal 
Energy Regulatory Commission, data from electric co-ops, and 
extrapolation for the remaining utilities, the TEIS estimated that the 
national investment in distribution systems exceeded $60 billion 
annually as of 2021. A high-level approach for scaling the national 
distribution system investment to the five states under study was 
applied to estimate that $15 billion of distribution system investment 
occurred in 2021. Through 2032, the TEIS estimated that the incremental 
investment in distribution networks (to accommodate PEV growth due to 
EPA's rulemaking) as an additional $1.6 billion of grid investment for 
PEVs relative to a no action case when charging is managed and $2.3 
billion when charging is unmanaged. Annualizing the latter number 
(reflecting unmanaged charging) between 2027 and 2032 results in an 
annual cost from the EPA light- and medium duty rule combined with the 
heavy-duty phase 3 proposed rule of $0.4 billion across the five 
states. Within the five states and extrapolated across the nation, this 
amounts to approximately 3% of existing annual distribution 
investments. We think this increase in distribution investment is 
modest and reasonable. Moreover, this value is conservative as it is 
inclusive of effects for both the light- and medium-duty vehicle 
standards and the heavy-duty Phase 3 proposed rule standards and so 
overstate the amount of grid investment associated with the final rule, 
and as it does not reflect managed charging. Given the very significant 
economic benefits of managed charging, we expect the market to adopt 
managed charging particularly under the influence of additional PEV 
adoption associated with the central case of the final rule, and that 
would further decrease the investment, to roughly $0.3 billion per 
year, or approximately 2% of annual distribution investments.
    We also estimated the impact on retail electricity prices based on 
the TEIS. The TEIS results were extrapolated to all IPM regions in 
order to estimate impacts on electricity rates using the Retail Price 
Model (see RIA Chapter 5). We modeled retail electricity rates in the 
no action case with unmanaged charging compared to the action case with 
managed charging. We think this is a reasonable approach for the reason 
noted above: given the considerable economic benefits of managed 
charging, particularly in light of the increased PEV adoption 
associated with the central case of the final rule, there is an 
extremely strong economic incentive for market actors to adopt managed 
charging practices. Our analysis projects

[[Page 28026]]

that there is no difference in retail electricity prices in 2030 and 
the difference in 2055 is only 2.5 percent.\1023\ We estimate that the 
2.5 percent difference is primarily due to distribution-level costs. 
Note also that this is comparable to the 2-3% increase in distribution-
level investments estimated for the 5 states within the TEIS noted 
above. The net cost of distribution-level upgrades are included within 
our analysis of costs and benefits for the final rule along with other 
grid-related costs modeled by IPM, and is reflected in electricity 
rates estimated using the Retail Price Model (see RIA Chapter 5).
---------------------------------------------------------------------------

    \1023\ We note that had we compared an unmanaged action scenario 
with an unmanaged no-action scenario, or a managed action scenario 
with a managed no-action scenario, we would expect only marginally 
different electricity rates, given that distribution costs are a 
very small part of total electricity costs.
---------------------------------------------------------------------------

    A 2-3 percent increase in distribution system build out correlates 
to a small increase in manufacturing output so concerns regarding 
supply chain timing and cost are minimal. The total costs are modest 
both in and of themselves, as a percentage of grid investment even 
without considering mitigation strategies, and in terms of effect on 
electricity rates for users. EPA thus believes that the costs 
associated with distributive grid buildout attributable to the rule are 
reasonable.
    Further discussion of the results of the TEIS study are included in 
the RIA Chapter 5.4.2., and additional details can be found in the TEIS 
report included in the docket for this final rule. Based on our review 
of the record, including the TEIS and other studies and public 
comments,\1024\ and our consultations with DOE, we conclude that it is 
reasonable to anticipate the power sector can continue to manage and 
improve the electricity distribution system to support greater 
deployment of PEVs, such as those we model in our compliance pathways, 
and in fact the power sector may benefit from the increased deployment 
of PEVs.
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    \1024\ We note that the Edison Electric Institute in its 
comments also supported the ability of the power sector to meet 
future anticipated needs, stating that ``[e]lectric companies can 
accommodate localized power needs at the pace of customer demand, 
provided appropriate customer engagement and enabling policies are 
in place''. Docket EPA-HQ-OAR-2022-0829-0708.
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6. Consumer Acceptance
    EPA carefully considered acceptance of light-duty vehicle 
technologies, qualitatively and quantitatively, because we recognize 
that consumer acceptance is an important factor for any innovation and 
therefore relevant factor to the feasibility of PEVs as a significant 
emissions control strategy.\1025\ When we speak of consumer acceptance, 
we mean consumer acceptance of ICE vehicles, HEVs, BEVs, and PHEVs. We 
define acceptance as a multifaceted, nonlinear process consisting of 
awareness, access, approval, and adoption.\1026\ In other words, 
``acceptance'' of a given vehicle technology, as we define it and model 
it, is not the same thing as ``purchase'' of a given vehicle 
technology. For example, high relative acceptance of BEVs may or may 
not result in BEV purchase. Relative acceptance of vehicle technologies 
influences the purchase outcome but does not necessarily determine the 
outcome. In the language of models, relative acceptance of vehicle 
technologies is an input (i.e., a numeric parameter) and purchase 
behavior is an output (i.e., projected market shares of vehicle 
technologies) that is based on acceptance as well as on other factors. 
Finally, we emphasize that in our discussion and representations of 
consumer acceptance of any one vehicle technology is only meaningful 
relative to other vehicle technologies. We represent consumer 
acceptance quantitatively in our modeling via parameterization of a 
logit model. The logit model is the most common example of a random 
utility discrete choice model and the dominant paradigm for modeling 
consumer demand. In this preamble section, we continue by focusing on 
consumer acceptance via a conceptual, non-numerical lens. See RIA 
Chapter 4.1 for an expanded presentation of consumer acceptance, the 
quantitative parameterization of consumer acceptance (i.e., 
shareweights), and modeling framework for vehicle technology choice 
(i.e., the logit model).
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    \1025\ EPA focused on light-duty vehicle acceptance among non-
commercial consumers. We acknowledge that light-duty, commercial 
consumers and medium-duty purchasers are likely to have purchase 
behavior that prioritize different criteria, for example, operating 
costs or other vehicle attributes.
    \1026\ EPA recognizes that others may not employ the same 
definitions of acceptance and adoption that we do. We did not apply 
our definitions when, for example, interpreting feedback received 
via public comments. However, these distinctions and discipline in 
adhering to these definitions are important to conceptual clarity of 
and modeling consumer processes (e.g., decision making) and 
observable behavior (e.g., purchase, sales, registration).
---------------------------------------------------------------------------

    EPA recognized that an evidence-based definition and understanding 
of consumer acceptance of PEVs was an important consideration for this 
rulemaking. Thus, EPA in coordination with the Lawrence Berkeley 
National Laboratory (LBNL), conducted a comprehensive review of the 
scientific literature regarding consumer acceptance of PEVs. That 
effort culminated in a peer-reviewed report on PEV acceptance in which 
EPA and LBNL organize and summarize the enablers and obstacles of PEV 
acceptance evident from the scientific literature.\1027\ The review 
concluded that ``there is no evidence to suggest anything immutable 
within consumers or inherent to PEVs that irremediably obstructs 
acceptance.'' More simply put, the enablers of PEV acceptance are 
external to the person. With the evolution of the environment in which 
people make decisions (e.g., infrastructure, advertising, access) and 
advancements in technology and vehicle attributes (e.g., range, body 
style, price), widespread acceptance of PEVs is very likely to follow.
---------------------------------------------------------------------------

    \1027\ Jackman, D. K., K. S. Fujita (LBNL), H. C. Yang (LBNL), 
and M. Taylor (LBNL). Literature Review of U.S. Consumer Acceptance 
of New Personally Owned Light-Duty (LD) Plug-in Electric Vehicles 
(PEVs). U.S. Environmental Protection Agency, Washington, DC 
Available at: https://cfpub.epa.gov/si/si_public_record_report.cfm?dirEntryId=353465.
---------------------------------------------------------------------------

    Consumer Reports (CR) describes trends in PEV acceptance as a 
virtuous cycle in which consumer demand for PEVs will continue to grow. 
``As automakers deliver more volume, economies of scale and intensified 
competition for customers will further feed cost declines, which will 
feed back into the cycle, and lead to increased EV demand.'' \1028\ 
Consumer Reports also argues that we have already observed this effect. 
``This is because the barriers to EV adoption identified in CR's 2022 
survey of BEV and low carbon fuels awareness are being addressed: 
purchase cost for EVs is declining, charging infrastructure is 
expanding, consumers are gaining more experience with EVs, and 
automakers are investing in new models and increased production.\1029\ 
These trends tend to reinforce one another in a virtuous cycle to 
create even more demand for these vehicles.'' \1030\
---------------------------------------------------------------------------

    \1028\ EPA-HQ-OAR-2022-0829-0728, pp. 10-14.
    \1029\ Battery Electric Vehicles & Low Carbon Fuels Survey, 
Consumer Reports, April 2022, https://article.images.consumerreports.org/image/upload/v1657127210/prod/content/dam/CRO-Images-2022/Cars/07July/2022_Consumer_Reports_BEV_and_LCF_Survey_Report.pdf. Accessed on 02/
23/2024.
    \1030\ EPA-HQ-OAR-2022-0829-0728, pp. 10-14.
---------------------------------------------------------------------------

    In other words, PEV acceptance enablers (and diminishing obstacles) 
are part of a positive and robust feedback loop. Growth in PEV adoption 
has already grown based on technology advancement alone,\1031\ and is 
expected

[[Page 28027]]

to continue to grow. The continued introduction of more PEV models, 
especially SUVs and pickups, has brought, and will continue to bring, 
more new vehicle buyers into the PEV market. PEV purchase incentives 
have led to more PEV purchases, a trend we expect will continue given 
the substantial additional incentives offered through the IRA. Easy, 
accessible residential charging has produced higher levels of PEV 
satisfaction; higher satisfaction correlates with more purchases.\1032\ 
Forsythe et al. (2023) finds that ``with the assumed technological 
innovations, even if all purchase incentives were entirely phased out, 
BEVs could still have a market share of about 50 percent relative to 
combustion vehicles by 2030, based on consumer choice alone.'' In 
conclusion, the empirical evidence strongly suggests that while 
enablers can enhance each other, the absence of any one of these 
enablers does not appear to diminish the effect of the others. In 
short, the system does not have to be perfect for PEV acceptance to 
increase and expand.
---------------------------------------------------------------------------

    \1031\ Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J. 
Michalek, and Kate S. Whitefoot. 2023. ``Technology advancement is 
driving electric vehicle adoption.'' PNAS 120 (23). doi:https://doi.org/10.1073/pnas.2219396120.
    \1032\ Hardman, S., and Tal, G., ``Understanding discontinuance 
among California's electric vehicle owners,'' Nature Energy, v.538 
n.6, May 2021.
---------------------------------------------------------------------------

    EPA further substantiates these and other findings with additional 
observations of key enablers of PEV acceptance, namely increasing 
market presence, more model choices, expanding infrastructure, and 
decreasing costs to consumers.\1033\ First, annual sales of light-duty 
PEVs in the U.S. have grown robustly and are expected to continue to 
grow. PEVs reached 9.8 percent of monthly sales in January 2024 and 
were 9.3 percent of all light-duty vehicle sales in 2023, up from 6.8 
percent in 2022.\1034\ This robust growth combined with vehicle 
manufacturers' plans to expand PEV production strongly suggests that 
PEV market share will continue to grow rapidly. Second, the number of 
PEV models available to consumers is increasing, meeting consumers 
demand for a variety of body styles and price points. Specifically, the 
number of BEV and PHEV models available for sale in the U.S. has 
increased from about 24 in MY 2015 to about 60 in MY 2021 and to over 
180 in MY 2023, with offerings in a growing range of vehicle 
segments.\1035\ Data from JD Power and Associates shows that MY 2023 
BEVs and PHEVs are now available as sedans, sport utility vehicles, and 
pickup trucks. In addition, the greatest offering of PEVs is in the 
popular crossover/SUV segment.\1036\ Third, the expansion of charging 
infrastructure has been keeping up with PEV adoption as discussed in 
section IV.C.4 of the preamble. This trend is widely expected to 
continue, particularly in light of very large public and private 
investments. Fourth, while the initial purchase price of BEVs is 
currently higher than for most ICE vehicles, the price difference is 
likely to narrow or become insignificant as the cost of batteries fall 
and PEV production rises in the coming years.\1037\ Among the many 
studies that address cost parity, an emerging consensus suggests that 
purchase price parity is likely to be achievable by the mid-2020s for 
some vehicle segments and models.1038 1039 Specifically, the 
International Council on Clean Transportation (ICCT) projects that 
price parity with ICE vehicles will ``occur between 2024 and 2026 for 
150- to 200-mile range BEVs, between 2027 and 2029 for 250- to 300-mile 
range BEVs, and between 2029 and 2033 for 350- to 400-mile range BEVs'' 
\1040\ The Environmental Defense Fund notes that ``most industry 
experts believe wide-spread price parity will happen around 2025.'' 
\1041\ Lastly, the Inflation Reduction Act provides a purchase 
incentive of up to $7,500 for eligible light-duty vehicles and buyers, 
which is expected to increase consumer uptake of zero emissions vehicle 
technology.\1042\
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    \1033\ Jackman, D K, K S Fujita, H C Yang, and M Taylor. 2023. 
Literature Review of U.S. Consumer Acceptance of New Personally 
Owned Light-duty Plug-in Electric Vehicles. Washington, DC: U.S. 
Environmental Protection Agency.
    \1034\ Argonne National Laboratory, Energy Systems and 
Infrastructure Analysis. 2024. Light-duty Electric Drive Vehicles 
Monthly Sales Updates. https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates, accessed 02/21/2024.
    \1035\ Fueleconomy.gov, 2015 Fuel Economy Guide, 2021 Fuel 
Economy Guide, and 2023 Fuel Economy Guide.
    \1036\ Taylor, M., Fujita, K.S., Campbell N., 2024, ``The False 
Dichotomies of Plug-in Electric Vehicles,'' Lawrence Berkeley 
National Laboratory.
    \1037\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022. ``This analysis does not consider the effect of any available 
state, local, or federal subsidies and tax incentives for electric 
vehicles and their charging infrastructure'' (page 30).
    \1038\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022. ``This analysis does not consider the effect of any available 
state, local, or federal subsidies and tax incentives for electric 
vehicles and their charging infrastructure'' (page 30).
    \1039\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer Commitments and Public Policy 
Initiatives Supporting Electric Mobility in the U.S. and 
Worldwide,'' September 2022. This report notes the Inflation 
Reduction Act (IRA), but estimates do not take into act effects of 
the IRA.
    \1040\ International Council on Clean Transportation, 
``Assessment of Light-Duty Electric Vehicle Costs and Consumer 
Benefits in the United States in the 2022-2035 Time Frame,'' October 
2022 (page iii). ``This analysis does not consider the effect of any 
available state, local, or federal subsidies and tax incentives for 
electric vehicles and their charging infrastructure'' (page 30).
    \1041\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer Commitments and Public Policy 
Initiatives Supporting Electric Mobility in the U.S. and 
Worldwide,'' September 2022 (page 10). This report notes the 
Inflation Reduction Act (IRA), but estimates do not take into act 
effects of the IRA.
    \1042\ Slowik, P., Searle, S., Basma, H., Miller, J., Zhou, Y., 
Rodriguez, F., . . . Baldwin, S. (2023). Analyzing the Impact of the 
Inflation Reduction Act on Electric Vehicle Uptake in the United 
States. The International Council on Clean Transportation. Retrieved 
October 26, 2023, from https://energyinnovation.org/wp-content/uploads/2023/01/IRA-EV-assessment-white-paper-letter-v46.pdf.
---------------------------------------------------------------------------

    Recent research also further substantiates the conclusion that PEVs 
acceptance and adoption will continue to grow and expand. Foremost 
among those studies are the recent third-party projections of PEV 
market shares. EPA reviewed several recent reports and studies 
containing PEV projections, all of which include the impact of the IRA; 
none consider the impact of this rule. Altogether, these studies 
project PEV market share in a range from 42 to 68 percent of new 
vehicle sales in 2030. The mid-range projections of PEV sales from 
these studies, to which we compare our No Action case, range from 48 to 
58 percent in 2030.1043 1044 1045 1046 1047 1048 In a recent 
report, LBNL challenges ``emergent rules of thumb regarding PEV 
acceptance'' (e.g., wealthy, urban, male). Their work suggests that 
there is untapped demand among mainstream vehicle buyers that emerging 
conventional wisdom regarding who buys and who doesn't buy PEVs is

[[Page 28028]]

incorrect. For example, they note that early PEVs were not well-
positioned to appeal to a large segment of the population. Most early 
EVs were hatchbacks, which represents a very small portion of overall 
US vehicle sales in a market where vehicle buyers tend to consider and 
purchase vehicles with the same body style (e.g., many buyers only 
consider SUVs.\1049\ In the hierarchy of purchase criteria, body style 
ranks very high among consumers, and tends to be a criterion they are 
unwilling to compromise.\1050\ Thus, a consumer may not consider 
purchasing a PEV, even if they are interested in PEVs generally, when 
PEVs are not available in their preferred body style but will consider 
a PEV when a PEV is available in their preferred body style. All of the 
above supports our conclusions that considerable further growth in the 
US PEV market is not only possible, with additional investment and 
product offerings by automakers and others, but likely to occur.
---------------------------------------------------------------------------

    \1043\ Cole, Cassandra, Michael Droste, Christopher Knittel, 
Shanjun Li, and James H. Stock. 2023. ``Policies for Electrifying 
the Light-Duty Fleet in the United States.'' AEA Papers and 
Proceedings 113: 316-322. doi:https://doi.org/10.1257/pandp.20231063.
    \1044\ IEA. 2023. ``Global EV Outlook 2023: Catching up with 
climate ambitions.'' International Energy Agency.
    \1045\ Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J. 
Michalek, and Kate S. Whitefoot. 2023. ``Technology advancement is 
driving electric vehicle adoption.'' PNAS 120 (23). doi:https://doi.org/10.1073/pnas.2219396120.
    \1046\ Bloomberg NEF. 2023. ``Electric Vehicle Outlook 2023.''
    \1047\ U.S. Department of Energy, Office of Policy. 2023. 
``Investing in American Energy: Significant Impacts of the Inflation 
Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy 
Economy and Emissions Reductions.''
    \1048\ Slowik, Peter, Stephanie Searle, Hussein Basma, Josh 
Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023. 
``Analyzing the Impact of the Inflation Reduction Act on Electric 
Vehicle Uptake in the United States.'' International Council on 
Clean Transportation and Energy Innovation Policy & Technology LLC.
    \1049\ Taylor, M., Fujita, K.S., and Campbell, N. 2024. Draft of 
``The False Dichotomies of Plug-in Electric Vehicle Markets.'' 
Lawrence Berkeley National Laboratory.
    \1050\ Fujita, K.S., Yang, H-C, Taylor, M., Jackman, D. 2022. 
``Green Light on Buying a Car: How Consumer Decision-Making 
Interacts with Environmental Attributes in the New Vehicle Purchase 
Process.'' Transportation Research Record: Journal of the 
Transportation Research Board, 2676:7. https://doi.org/10.1177/03611981221082566.
---------------------------------------------------------------------------

    Lastly, many individuals and institutions provided diverse comments 
on our proposed rule regarding consumer acceptance. Commenters 
expressed views about both access to and demand for PEVs, some noting 
individual/household characteristics, vehicle attributes, and/or system 
conditions affecting consumer acceptance of PEVs. For example, Consumer 
Reports identified substantial unmet demand among U.S. consumers, 
calculating that ``there are now approximately 45 EV-ready buyers for 
every EV being manufactured.'' \1051\ Individual commenters at the 
public hearings appear to have experienced this lack of access to PEVs 
firsthand, stating that despite intentions to purchase a plug-in 
electric vehicle, none were available for them to purchase. In a 
similar vein, commenters from the Carnegie Mellon University and Yale 
University ``present evidence that BEVs could constitute the majority 
or near-majority of cars and SUVs by 2030, given widespread BEV 
availability and technology trends.'' \1052\ In contrast, some 
commenters, such as Stellantis and Honda, asserted that estimates of 
PEV market growth in the proposed rule, were ``overly optimistic'' and 
did not appear to take into account that PEV adoption ``does require 
the owner to embrace a different approach'' and ``adapt their trip 
planning and driving behavior to allow for charging needs.'' \1053\ For 
example, Volkswagen Group of America expressed concerns about the 
absence of a ``prerequisite . . . comprehensive, interoperable and 
integrated charging infrastructure network across the U.S.'' \1054\ 
Relatedly, other commenters, including Nissan, Alliance for Automotive 
Innovation, Toyota, and National Automobile Dealers Association, 
suggested that PEVs could be out of reach for some consumers due to 
purchase price; the inconvenience, novelty, or expense of charging; or 
their belief that PEVs may not meet the needs of all consumers. In 
response to these and other comments, we were attentive to the 
timeframe, uncertainties, evidence, and studies associated with each 
comment.\1055\ We considered all of the information provided by 
commenters. See RTC section 13.
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    \1051\ Harto, C. (2023). Excess Demand: The Looming Shortage. 
Retrieved November 29, 2023, from https://advocacy.consumerreports.org/wp-content/uploads/2023/03/Excess-Demand-The-Looming-EV-Shortage.pdf.
    \1052\ Forsythe, C. R., Gillingham, K. T., Michalek, J. J., & 
Whitefoot, K. S. (2023). Technology advancement is driving electric 
vehicle adoption. PNAS, 120(23). Retrieved November 29, 2023, from 
https://www.pnas.org/doi/epdf/10.1073/pnas.2219396120.
    \1053\ EPA-HQ-OAR-2022-0829-0678-0002 and EPA-HQ-OAR-2022-0829-
0652-0049.
    \1054\ EPA-HQ-OAR-2022-0829-0669-003.
    \1055\ EPA-HQ-OAR-2022-0829-0594-0005, EPA-HQ-OAR-2022-0829-
0701-0069, EPA-HQ-OAR-2022-0829-0620-0029, and EPA-HQ-OAR-2022-0829-
0470-0001.
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    Taking into account all of the above--EPA and LBNL's report on PEV 
acceptance, recent acceptance research, recent third party projections 
of PEV adoption, public comments, market trends, and analyses presented 
throughout this preamble and the RIA--we conclude that PEV acceptance 
is growing and will continue to grow rapidly for all body styles, 
particularly for vehicles likely to be used largely as passenger 
vehicles such as sedans, wagons, CUVs, and SUVs. Observed and expected 
PEV adoption and acceptance aligns well with patterns of adoption of 
innovations observed through history. Typically, sales of a new 
technology are low and increase slowly and unpredictably in what is 
called the innovator and early adopter stage. After the early adopter 
stage, adoption increases very quickly, with rapidly accelerating 
demand as the technology becomes mainstream. We expect PEV adoption and 
acceptance to follow the S-shaped behavior. See RIA Chapter 4.1.
    We also conclude that our expectations for continued rapid growth 
in PEV acceptance are reasonable. The system of PEV growing acceptance 
enablers and diminishing obstacles is robust. PEV acceptance is 
responding to the evolution of the environment in which people make 
decisions (e.g., increasing market presence, expanding infrastructure, 
advancements in technology, more model choices, decreasing costs to 
consumers, increasing familiarity). Exposure to and experience with 
PEVs lead to more PEV purchase which leads to more exposure and 
experience and so on. More PEV production leads to economies of scale 
that feed cost declines, more purchase, and more production. Recent 
research also further substantiates the conclusion that PEVs acceptance 
and adoption will continue to grow and expand. Foremost among those 
studies are the recent third-party projections of PEV market shares, 
with which EPA projections align. There appears to be little if any 
evidence contrary to our conclusions among researchers and commenters 
who recognize the interactions of time and network effects on the pace 
and acceleration of the diffusion of innovation. At this time, the 
evidence we have assessed indicates that over the next several years 
consumer interest in PEVs will yield significant increases in PEV 
adoption.
    While we have emphasized PEVs and the relative growth in PEV 
acceptance here, we note that the acceptance and purchase of ICE 
vehicles, HEVs, PHEVs, and BEVs will persist throughout the timeframe 
of this rule. Therefore, in relative terms, we represent acceptance of 
all vehicle technologies. All of these technologies are well-
represented in EPA's modeling and in demonstrated compliance pathways, 
as they are in third-party projections. For more information on LD 
vehicle consumer modeling and considerations, see RIA Chapter 4.
7. Supply Chain, Manufacturing, and Mineral Security Considerations
    All new motor vehicles, including ICE vehicles and PEVs, require 
manufacturing inputs in the form of materials such as structural 
metals, plastics, electrical conductors, electronics and computer 
chips, and many other materials, minerals, and components that are 
produced both domestically and globally. These inputs rely to varying 
degrees on a highly interconnected global supply chain that includes 
mining and recycling operations, processing of mined or

[[Page 28029]]

reclaimed materials into pure metals or chemical products, manufacture 
of vehicle components, and final assembly of vehicles.
    Although the market share of PEVs in the U.S. is already rapidly 
growing, EPA recognizes that many manufacturers will likely produce 
additional PEVs as part of their chosen strategy to achieve the 
performance-based emissions standards, particularly after 2030. 
Compared to ICE vehicles, the electrified powertrain of PEVs commonly 
contains a greater proportion of conductive metals such as copper as 
well as certain minerals and mineral products that are used in the 
high-voltage battery. Accordingly, many of the public comments we 
received were related to the need to secure sources of these inputs to 
support increased manufacture of PEVs for the U.S. market.
    First, it is important to view this issue from a holistic 
perspective that also considers the inputs currently required by ICE 
vehicles. Compared to PEVs, ICE vehicles rely to a greater degree on 
certain inputs, most notably refined crude oil products such as 
gasoline or diesel. Historically, supply and price fluctuations of 
crude oil products have periodically created significant risks, costs, 
and uncertainties for the U.S. economy and for national security, and 
continue to pose them today. Manufacture of ICE vehicles also relies on 
critical minerals (for example, platinum group metals) used in emission 
control catalysts. EPA thus has many years of experience in assessing 
the availability of critical minerals as part of our assessment of 
feasibility of standards taking into consideration available 
technologies, cost, and lead time. The critical minerals used in 
emission control catalysts of ICE products, such as cerium, palladium, 
platinum, and rhodium,\1056\ historically have posed uncertainty and 
risk regarding their reliable supply. For example, platinum, which has 
historically been recognized as a precious metal, was the dominant 
platinum group metal used in early catalysts.\1057\ Platinum group 
metals were understood to be costly and potentially scarce in advance 
of emission control standards of the 1970s that were premised on use of 
those minerals for catalyst control of pollutants.1058 1059 
In the 1990s, concerns were similarly raised about possible shortages 
of palladium resulting from the Tier 2 standards, yet the supply chain 
adjusted to this need as well.\1060\ Although manufacturers have 
engineered emission control systems to reduce the amount of these 
minerals that are needed, they continue to be scarce and costly today, 
and continue to be largely sourced from countries with which the U.S. 
does not have free trade agreements. For example, South Africa and 
Russia continue to be dominant suppliers of these metals as they were 
in the 1970s, and U.S. relations with both countries have periodically 
been strained. In this sense, the need for a secure supply chain for 
the inputs required for PEV production is similar to that which 
continues to be important for ICE vehicle production.
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    \1056\ Department of Energy, ``Critical Materials Assessment,'' 
July 2023.
    \1057\ Hageluken, C., ``Markets for the Catalyst Metals 
Platinum, Palladium and Rhodium,'' Metall, v60, pp. 31-42, January 
2006.
    \1058\ For example, in floor debate over the Clean Air Act of 
1970, Senator Griffin opposed the vehicle emissions standards 
because the vehicle that had been shown capable of meeting the 
standards used platinum-based catalytic converters and ``[a]side 
from the very high cost of the platinum in the exhaust system, the 
fact is that there is now a worldwide shortage of platinum and it is 
totally impractical to contemplate use in production line cars of 
large quantities of this precious material. . . .'' Environmental 
Policy Division of the Congressional Research Service Volume 1, 93d 
Cong., 2d Sess., A Legislative History of the Clean Air Amendments 
of 1970 at 307 (Comm. Print 1974).
    \1059\ Further, in debate over both the 1977 and 1990 amendments 
to the Clean Air Act, some members of Congress supported relaxing 
NOX controls from motor vehicles due to concerns over 
foreign control of rhodium supplies, but Congress rejected those 
efforts. See 136 Cong. Rec. 5102-04 (1990); 123 Cong. Rec. 18173-74 
(1977).
    \1060\ U.S. EPA, Tier 2 Report to Congress, EPA420-R-98-008, 
July 1998, p. E-13.
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    The PEV supply chain consists of several activity stages including 
upstream, midstream, and downstream, which includes end of life. In 
this discussion, upstream refers to extraction of raw materials from 
mining activities. Midstream refers to additional processing of raw 
materials into battery-grade materials, production of electrode active 
materials (EAM), production of other battery components (i.e., 
electrolyte, foils, and separators), and electrode and cell 
manufacturing. Downstream refers to production of battery modules, and 
packs from battery cells. End of life refers to recovery and processing 
of used batteries for reuse or recycling.\1061\ Global demand for zero-
emission vehicles has already led to rapidly growing demand for 
capacity in each of these areas and subsequent buildout of this 
capacity across the world.
---------------------------------------------------------------------------

    \1061\ Rocky Mountain Institute, ``The EV Battery Supply Chain 
Explained,'' May 5, 2023. Accessed on May 15, 2023 at https://rmi.org/the-ev-battery-supply-chain-explained.
---------------------------------------------------------------------------

    The value of developing a robust and secure supply chain that 
includes these activities and the products they create has accordingly 
received broad attention in the industry and is a key theme of comments 
we have received. The primary considerations here are (a) the 
capability of global and domestic supply chains to support U.S. 
manufacturing of batteries and other PEV components, (b) the 
availability of critical minerals as manufacturing inputs, and (c) the 
possibility that sourcing of these items from other countries, to the 
extent it occurs, might pose a threat to national security. In this 
section, EPA considers how these factors relate to the feasibility of 
producing the PEVs that manufacturers may choose to produce to comply 
with the standards.
    As in the proposal, we continue to note several key themes that 
contribute to our conclusion that the proposed standards are 
appropriate with respect to these issues. First, we note that, to the 
extent that minerals, battery components, and battery cells are sourced 
from outside of the U.S., it is not because the products cannot be 
produced in the U.S., but because other countries have already invested 
in developing a supply chain for their production, while the U.S. has 
begun doing so more recently. The rapid growth in domestic demand for 
automotive lithium-ion batteries that is already taking place is 
driving the development of a supply chain for these products that 
includes development of domestic sources as well as a rapid buildout of 
production capacity in countries with which the U.S. has good 
relations, including countries with free-trade agreements (FTAs), long-
established trade allies and other economic allies.\1062\ For example 
(as described and cited later in this section), U.S. manufacturers are 
increasingly seeking out secure, reliable, and geographically proximate 
supplies of batteries, cells, and the minerals and materials needed to 
build them; this is also necessary to remain competitive in the global 
automotive market where electrification is proceeding rapidly. As a 
result, a large number of new U.S. battery, cell, and component 
manufacturing facilities have recently been announced or are already 
under

[[Page 28030]]

construction. Many automakers, suppliers, startups, and related 
industries have already recognized the need for increased domestic and 
``friendshored'' production capacity as a business opportunity, and are 
investing in building out various aspects of the supply chain 
domestically as well. Second, Congress and the Administration have 
taken significant steps to accelerate this activity by funding, 
facilitating, and otherwise promoting the rapid growth of U.S. and 
allied supply chains for these products through the Inflation Reduction 
Act (IRA), the Bipartisan Infrastructure Law (BIL), and numerous 
Executive Branch initiatives. Recent and ongoing announcements of 
investment and construction activity stimulated by these measures 
indicate that they are having a strong impact on development of the 
domestic supply chain, as illustrated by recent analysis from Argonne 
National Laboratory and the Department of Energy. Finally, to the 
extent that minerals are imported to the U.S. as constituents of 
vehicles, batteries, or cells, or for vehicle or battery production in 
the U.S., they largely remain in the U.S. and over the long term have 
the potential to be reclaimed through recycling, reducing the need for 
new materials from either domestic or foreign sources. In this updated 
analysis for the final rule, we examine these themes again in light of 
the public comments and additional data that has become available since 
the proposal.
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    \1062\ Here we use the term ``economic allies'' to refer to 
countries that are not covered nations and do not have a free-trade 
agreement (FTA) with the U.S., but which are party to other economic 
agreements or defense treaties. Economic agreements include the 
Minerals Security Partnership (MSP), Critical Minerals Agreement 
(CMA), Trade and Investment Framework Agreement (TIFA), bilateral 
investment treaties (BITs), or other international initiatives as 
described in Figure 18, ``U.S. government international initiatives 
to secure battery minerals and materials.''
---------------------------------------------------------------------------

    We received a large number of comments on our analysis of critical 
minerals, battery and mineral production capacity, and mineral 
security. Some common themes were: that the proposal did not adequately 
address critical minerals or battery manufacturing; that we should 
account for all critical minerals rather than lithium only; that the 
proposal did not adequately address the risk associated with uncertain 
availability of critical minerals in the future; and that the timeline 
and/or degree of BEV penetration anticipated by the proposal cannot be 
supported by available minerals and/or growth in domestic supplies or 
battery manufacturing. It was also suggested that the rapid growth in 
demand stemming from the rule would result in undue reliance on nations 
with which the U.S. does not have good trade relations, increased 
reliance on imports in general, and/or encourage environmentally or 
socially unsound sourcing practices. Some commenters felt that the 
discussion of national security in the proposal was not sufficient, 
pointing again to concerns about vulnerabilities resulting from a 
dependence on imported minerals and materials in order to manufacture 
vehicles or support the infrastructure they require.\1063\
---------------------------------------------------------------------------

    \1063\ While these latter concerns bear a resemblance to the 
issue of energy security, in the context of mineral or other inputs 
to vehicle manufacturing we refer to this topic as mineral security.
---------------------------------------------------------------------------

    Another frequent theme of the comments was a perception of 
uncertainty and risk, in reference to the question of whether or not 
critical mineral prices and availability will stabilize in the near 
term or even the long term. Some commenters also suggested that this 
uncertainty might be addressed by a stringency adjustment mechanism, in 
which progress in domestic sourcing of critical minerals, battery 
components, and other inputs to the supply chain would be monitored and 
the stringency of the standards adjusted if progress underperforms 
expectations. Commenters also cited the need for permitting reform and 
streamlining, as permitting is a major factor in the lead time 
necessary to develop new mineral sources. It was also suggested that 
the desire to source from responsible vendors that support 
Environmental, Social, and Governance (ESG) goals could increase the 
cost of purchased minerals by encouraging use of higher-cost domestic 
supplies. It was also suggested that BEVs are not an efficient use of 
these limited resources, and the goals of the standards could be more 
effectively met with HEVs and PHEVs, which require less critical 
mineral content and impose less demand on infrastructure, reducing the 
level of risk associated with all of these issues.
    For this final rule we considered the public comments carefully. We 
have provided detailed responses to comments relating to critical 
minerals, the supply chain, and mineral security in section 15 of the 
RTC. We also continued our ongoing consultation with industry and 
government agency sources (including the Department of Energy (DOE) and 
National Labs, the Department of State, the U.S. Geological Survey 
(USGS), and several analysis firms) to collect information on 
production capacity forecasts, price forecasts, global mineral markets, 
and related topics. Importantly, we also coordinated with DOE and NHTSA 
in their assessment of the outlook for supply chain development and 
critical mineral availability. The Department of Energy is well 
qualified for such research, as it routinely studies issues related to 
electric vehicles, development of the supply chain, and broad-scale 
issues relating to energy use and infrastructure, through its network 
of National Laboratories. DOE worked together with Argonne National 
Laboratory (ANL) beginning in 2022 to assess global critical minerals 
availability and North American battery components manufacturing, and 
coordinated with EPA to share the results of these analyses during much 
of 2023 and early 2024. In sections IV.C.7.i through IV.C.7.iv of this 
preamble, below, we review the main findings of this work, along with 
the additional information we have collected since the proposal. As in 
the proposal, we have considered the totality of information in the 
public record in reaching our conclusions regarding the influence of 
future manufacturing capacity, critical minerals, and mineral security 
on the feasibility of the final standards.
    In EPA's view, many of the concerns stated by commenters about the 
supply chain, critical minerals, and mineral security were stated as 
part of a broader argument that the proposed standards were too 
stringent; that is, that the commenter believed that the standards 
should be weakened (or withdrawn entirely) because the supply chain or 
the availability of critical minerals could not support the amount of 
vehicle electrification that would result from the standards, or it 
would create a reliance on imported products that would threaten 
national security. As will be discussed in the following sections, our 
updated assessment of the evidence continues to support the conclusion 
that the standards are appropriate from the perspective of critical 
minerals availability, the battery supply chain, and mineral security. 
Further, given the economic and other factors that are contributing to 
continued development of a robust and secure supply chain, we find no 
persuasive evidence that the need to establish supply chains for 
critical minerals or components will adversely impact national security 
by creating a long-term dependence on imports of critical minerals or 
components from covered nations or associated suppliers. The current 
and projected availability of critical minerals and components from 
domestic production or trade with friendly countries, including 
countries with FTAs, countries participating in the Mineral Security 
Partnership (MSP),1064 1065 and other economic

[[Page 28031]]

allies, as well as the continued incentives for suppliers and 
manufacturers to develop sourcing options from these countries, provide 
a sufficient basis to conclude that these materials are likely to be 
available in sufficient quantities for vehicle manufacturers without 
undue reliance on covered nations or associated suppliers that could 
potentially raise national security concerns. Moreover, we expect that 
the standards will provide increased regulatory certainty for domestic 
production of batteries and critical minerals, and for creating 
domestic supply chains, which in turn has the potential to strengthen 
the global competitiveness of the U.S. in these areas. Our assessments 
are informed by extensive consultation with the Department of Energy, 
Argonne National Laboratory, and other government agencies that 
represent some of the strongest public sector expertise in these areas.
---------------------------------------------------------------------------

    \1064\ The Minerals Security Partnership (MSP) ``aims to 
accelerate the development of diverse and sustainable critical 
energy minerals supply chains through working with host governments 
and industry to facilitate targeted financial and diplomatic support 
for strategic projects along the value chain.'' MSP partners include 
Australia, Canada, Finland, France, Germany, India, Italy, Japan, 
Norway, the Republic of Korea, Sweden, the United Kingdom, the 
United States, and the European Union (represented by the European 
Commission). https://www.state.gov/minerals-security-partnership.
    \1065\ ``Minerals Security Partnership (MSP) Principles for 
Responsible Critical Mineral Supply Chains,'' https://www.state.gov/wp-content/uploads/2023/02/MSP-Principles-for-Responsible-Critical-Mineral-Supply-Chains-Accessible.pdf.
---------------------------------------------------------------------------

    Regarding the adequacy of the supply chain in supporting the 
standards, EPA notes that it is a misconception to assume that the U.S. 
must establish a fully independent domestic supply chain for critical 
minerals or other inputs to PEV production in order to contemplate 
standards that may result in increased manufacture of PEVs. The supply 
chain that supports production of consumer products, including ICE 
vehicles, is highly interconnected across the world, and it has long 
been the norm that global supply chains are involved in providing many 
of the products that are commonly available in the U.S. market and that 
are used on a daily basis. As with almost any other product, the 
relevant standard is not complete domestic self-sufficiency, but rather 
a diversified supply chain that includes not only domestic production 
where possible and appropriate but also includes trade with FTA 
countries and other economic allies with whom the U.S. has good trade 
relations. As discussed later and further illustrated in Figure 38 of 
section IV.C.7.ii of this preamble, bilateral and multilateral trade 
agreements and other arrangements (such as defense agreements and 
various development and investment partnerships), either long-standing 
or more recently established, already exist with many countries, which 
greatly expands opportunities to develop a secure supply chain that 
reaches well beyond the borders of U.S.
    EPA also notes that no analysis of future outcomes with regard to 
the supply chain, critical minerals, or mineral security can be 
absolutely certain. In general, in establishing appropriateness of 
standards, the Clean Air Act does not require that EPA must prove that 
every potential uncertainty associated with compliance with the 
standards must be eliminated a priori. It is well-established in case 
law that ``[i]n the absence of theoretical objections to the 
technology, the agency need only identify the major steps necessary for 
development of the device, and give plausible reasons for its belief 
that the industry will be able to solve those problems in the time 
remaining. Thus, EPA is not required to rebut all speculation that 
unspecified factors may hinder `real world' emission control.'' \1066\ 
Thus, it is not required, nor would it be reasonable to expect, that 
EPA prove sufficient production capacity already exists today for 
technologies or inputs that may be needed to comply with standards in 
the future, nor that all potential uncertainties that can be identified 
regarding the development of that capacity must be eliminated. In fact, 
past EPA rulemakings have often been technology-forcing, and so have 
led industry to develop and increase production of technologies for 
which critical inputs or production capacity were not fully developed 
and in place at the time. Some examples include standards in the 1970s 
that led to the widespread use of catalysts for emission control, the 
phase-down of lead in gasoline from the 1970s to the 1980s, 
reformulated gasoline in the 1990s, and the use of selective catalytic 
reduction (and diesel exhaust fluid), in the 2010s.
---------------------------------------------------------------------------

    \1066\ NRDC v. EPA, 655 F.2d 318, 333-34 (D.C. Cir. 1981).
---------------------------------------------------------------------------

    Accordingly, our analysis of the supply chain and critical minerals 
is oriented toward recognizing the steps that are needed to support the 
increased penetrations of PEVs we project in the compliance analysis, 
and showing that these needs are capable of being addressed in a manner 
consistent with meeting the standards during the time frame of the 
rule.
    EPA has considered the public comments in total, and as described 
throughout these rulemaking documents, is finalizing standards that are 
less stringent than in the proposal, particularly in the early years of 
the program. In the public comments relating to supply chain, critical 
minerals, and mineral security, EPA finds no evidence that would lead 
it to conclude that a further reduction in the stringency of the 
standards is appropriate or necessary.
    While commenters have presented information to further demonstrate 
the well-understood concept that currently operating supply capacity 
must grow in order to meet projected future demand, and have recited 
many of the uncertainties commonly associated with predicting this or 
any future response of supply to future demand, they have failed to 
provide specific evidence to support the implication that the demand 
resulting from the standards will not or cannot be met by industry in 
the time available. Commenters question whether market forces and 
government initiatives and incentives that are already underway will 
lead to sufficient supply to meet the standards, but do not show 
specifically why these activities should reasonably be expected to 
fail. Indeed, EPA has shown that the industry is working actively and 
effectively to increase supply and secure supply chains for needed 
materials; that government incentives and initiatives have been defined 
and are moving forward with intended effect; and that current price 
forecasts and investment outlooks for the time frame of the rule do not 
suggest that industry at large foresees a looming inability to meet the 
proposed standards, especially given that they have been publicly known 
for nearly a year and were more stringent than the final standards.
    Although commenters imply that current circumstances or future 
unknowns amount to a constraint that will prevent industry from meeting 
the standards or would cause harm by doing so, they have not identified 
any specific alleged constraint or set of constraints with sufficient 
specificity that it would lead EPA to reasonably conclude that a 
reduction in stringency is necessary to address their concerns. Nor 
have commenters detailed and quantified any such constraint 
sufficiently that it could be translated into any specific degree of 
stringency reduction that commenters believe would address their 
concerns.
    The presence of uncertainty is a common element in any forward-
looking analysis, and is typically approached as a matter of risk 
assessment, including sensitivity analysis conducted around costs, 
compliance paths, or other key factors. Taken as a whole, our 
examination of the status and outlook for development of the supply 
chain, combined with the

[[Page 28032]]

robust set of sensitivity cases that we include in the updated 
analysis, explore the most significant risks and uncertainties 
surrounding the future development of these and other issues, and show 
that compliance with the final standards is possible under a broad 
range of reasonable scenarios. Included in these scenarios are 
alternative compliance pathways that would rely on fewer BEVs and more 
vehicles with ICEs across a range of electrification (including non-
hybrid ICE vehicles, HEVs and PHEVs), which would significantly reduce 
the demand for battery production and critical minerals compared to the 
central case.
    Section IV.C.7.i of the preamble provides a general review of how 
we considered supply chain and manufacturing considerations in this 
analysis, the sources we considered, and how we used this information 
in the analysis. Section IV.C.7.ii examines the issues surrounding 
availability of critical mineral inputs. Section IV.C.7.iii provides a 
high-level discussion of the security implications of increased demand 
for critical minerals and other materials used to manufacture 
electrified vehicles. Section IV.C.7.iv describes the role of battery 
and mineral recycling. Additional details on these aspects of the 
analysis may be found in RIA Chapter 3.1, including 3.1.5 where we 
describe how we used this information to develop modeling constraints 
on PEV penetration for the compliance analysis.
i. Production Capacity for Batteries and Battery Components
    Major steps in manufacturing a PEV battery pack include 
manufacturing of battery cells and assembly of cells into modules that 
can be assembled into a battery pack. Inputs to cell manufacturing 
include electrode active materials (EAM), such as cathode and anode 
powders, as well as specialized products such as electrolytes, 
separators, binders, and similar materials. Depending on the level of 
vertical integration, a plant making cells might produce some of these 
inputs in-house or purchase them from a supplier. While other battery 
chemistries exist or are under development, this section focuses on 
supply chains for lithium-ion batteries given their wide use and likely 
predominance during the time frame of the rule.
    In the proposal, we examined the outlook for U.S. and global 
battery manufacturing capacity for automotive lithium-ion batteries and 
compared it to our projection of U.S. battery demand under the proposed 
standards. We collected and reviewed a number of independent studies 
and forecasts, including numerous studies by analyst firms and various 
stakeholders, as well as a study of announced North American cell and 
battery manufacturing facilities compiled by Argonne National 
Laboratory. Our review of these studies included consideration of 
uncertainties of the sort that are common to any forward-looking 
analysis but did not identify any hard constraint that indicated that 
global or domestic battery manufacturing capacity would be insufficient 
to support battery demand under the proposed standards. The review 
indicated that the industry was already showing a rapidly growing and 
robust response to meet current and anticipated demand, that this 
activity was widely expected to continue, and that the level of North 
American manufacturing capacity that had been announced to date would 
be sufficient to meet the demand projected under the proposed 
standards. We assessed that battery manufacturing capacity was not 
likely to pose a limitation on the ability of auto manufacturers to 
meet the standards as proposed.
    We received a variety of comments, some of which disagreed with our 
assessment and others which supported it. Among those that disagreed, 
some primary themes included: that we looked only at light-duty battery 
demand and not at other transportation or product sectors that use 
lithium-ion batteries, such as heavy-duty vehicles, stationary storage, 
and portable devices; that the projections of North American 
manufacturing capacity did not include sufficient ramp-up time; and 
that we should consider active material manufacturing in addition to 
cell manufacturing. The Alliance for Automotive Innovation included in 
its comments a BMI forecast that indicated a somewhat lower battery 
manufacturing capacity than that documented by ANL.
    EPA appreciates and has carefully considered the substantive and 
detailed comments offered by the commenters. The additional information 
EPA has collected since the proposal, through these public comments and 
our continued research, informs many of the points raised by the 
commenters. Taken together, EPA does not find evidence that would 
change our previous assessment in the proposal that the outlook for 
U.S. battery production indicates that it is likely to be sufficient to 
support the standards.
    One important factor in our assessment is a study of North American 
battery and cell manufacturing capacity performed by ANL, which updates 
an earlier version of the study that we cited in the proposal.\1067\ 
The updated ANL study further reinforces our assessment of U.S. battery 
manufacturing capacity, showing that announced capacity has 
significantly increased since the prior study. EPA considers ANL's 
assessment through December 2023 to be thorough and up to date and 
notes that the BMI assessment cited in comments by the Alliance in July 
2023 necessarily represents earlier information. The updated ANL 
projections estimate the period from announcement to beginning of 
production for each individual plant based on numerous factors, and 
uses a baseline estimate of 3 years from beginning of production to 
full scale operation, based on historical cell manufacturing data. ANL 
describes this as ``a modestly conservative estimate,'' acknowledging 
that plants could reach nominal capacity more quickly or more slowly. 
ANL has also specifically accounted for the intended use of the cells 
produced in these plants, finding as expected that the vast majority 
are expected to be used in light-duty automotive applications rather 
than heavy-duty, stationary or consumer product applications.
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    \1067\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024. https://publications.anl.gov/anlpubs/2024/03/187735.pdf.
---------------------------------------------------------------------------

    Some public commenters stated that we should include consideration 
of active material manufacturing. In response, EPA notes that the 
outlook for global cathode active material manufacturing capacity was 
considered in the proposal; later in this section we consider 
additional information regarding manufacturing for electrode active 
materials and other cell components.

[[Page 28033]]

    In addition, our updated compliance analysis projects a 
substantially lower demand for battery production than in the proposal. 
This is largely due to the effect of our higher battery cost inputs, 
which reduce the penetration of BEVs, the inclusion of PHEVs which use 
smaller batteries than BEVs, and updated BEV efficiency inputs. After 
including all of these updates, projected North American automotive 
battery production capacity continues to surpass projected demand (see 
the later discussion at Figure 36). Even if a shortfall were to occur, 
our higher battery cost sensitivity accounts for higher battery costs 
that might result, and as previously noted, alternative compliance 
pathways that place less demand on battery production would continue to 
exist.
    Since the proposal, we have not found evidence to change our 
observation that U.S. PEV production to date has not been particularly 
reliant on foreign manufacture of batteries and cells, nor that 
increased PEV penetration must imply such a reliance. In the proposal 
we noted that about 57 percent of cells and 84 percent of assembled 
packs sold in the U.S. from 2010 to 2021 were manufactured in the 
U.S.1068 1069 Continued growth in U.S. BEV sales is 
dominated by manufacturers such as Tesla who largely use U.S. made 
batteries, and the large production capacity of announced U.S. plants 
under construction or planned also suggests that this will continue to 
be the case going forward.
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    \1068\ Argonne National Laboratory, ``Lithium-Ion Battery Supply 
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
    \1069\ U.S. Department of Energy, ``Vehicle Technologies Office 
Transportation Analysis Fact of the Week #1278, Most Battery Cells 
and Battery Packs in Plug-in Vehicles Sold in the United States From 
2010 to 2021 Were Domestically Produced,'' February 20, 2023.
---------------------------------------------------------------------------

    We also continue to see evidence that global lithium-ion battery 
and cell production is growing rapidly and is likely to keep pace with 
increasing global demand. In the proposal we noted a 2021 report from 
Argonne National Laboratory (ANL) \1070\ that examined the state of the 
global supply chain for electrified vehicles and included a comparison 
of recent projections of future global battery manufacturing capacity 
and projections of future global battery demand from various analysis 
firms out to 2030, as seen in Figure 32. The three most recent 
projections of capacity (from BNEF, Roland Berger, and S&P Global in 
2020-2021) that were collected by ANL at that time exceeded the 
corresponding projections of demand by a significant margin in every 
year for which they were projected, suggesting that global battery 
manufacturing capacity was already responding strongly to increasing 
demand.
---------------------------------------------------------------------------

    \1070\ Argonne National Laboratory, ``Lithium-Ion Battery Supply 
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
    \1071\ Argonne National Laboratory, ``Lithium-Ion Battery Supply 
Chain for E-Drive Vehicles in the United States: 2010-2020,'' ANL/
ESD-21/3, March 2021.
    \1072\ Federal Consortium for Advanced Batteries, ``National 
Blueprint for Lithium Batteries 2021-2030,'' June 2021 (Figure 2). 
Available at https://www.energy.gov/sites/default/files/2021-06/FCAB%20National%20Blueprint%20Lithium%20Batteries%200621_0.pdf.
[GRAPHIC] [TIFF OMITTED] TR18AP24.030

Figure 32: Future Global Li-ion Battery Demand and Production Capacity, 
2020-2030 1071 1072

[[Page 28034]]

    Since the proposal, we have not seen evidence that the general 
conclusion conveyed by Figure 32 has changed. More recent projections 
have become available that indicate that projections of future capacity 
have grown dramatically in only a short time. For example, in May 2023 
the International Energy Agency (IEA) projected a global capacity of 
3.97 TWh in 2025,\1073\ more than twice the highest projection in 
Figure 32 of about 1.75 TWh for 2025 made by BNEF in 2020. IEA also 
projected 6.8 TWh for 2030,\1074\ which is about triple the highest 
projection made for 2029 by Roland Berger in 2020. In December 2023, 
BNEF indicated that its projection of North American lithium-ion cell 
manufacturing nameplate capacity for 2030 was 76 percent higher than 
its projection for the same year in 2022, and attributed the increase 
in part to industry's response to IRA incentives including the 45X 
production tax credit. The same report indicated that global capacity 
could increase to as much as 7.4 TWh in 2025 if all project 
announcements that were public at the time were to be completed.\1075\ 
The rate of increase of projections such as these strongly indicate 
that the capacity of both domestic and global battery production is 
increasing at a rapid pace that is much greater than anticipated only 
two to three years ago. Further, the IEA indicates that the 6.8 TWh 
global capacity projected for 2030 would be enough to cover global 
battery demand under its ``Net Zero'' scenario, and would cover nearly 
twice the demand implied by currently announced pledges across the 
world.\1076\ The updated ANL study supports the continuation of this 
trend, finding projected battery cell production in MSP countries 
through 2035 (outside North America) to slightly exceed the sum in 
North America, with each reaching 1,300 GWh/year by 2030.
---------------------------------------------------------------------------

    \1073\ International Energy Agency, ''Lithium-ion battery 
manufacturing capacity, 2022-2030,'' May 22, 2023. Accessed on 
February 22, 2024 at https://www.iea.org/data-and-statistics/charts/lithium-ion-battery-manufacturing-capacity-2022-2030.
    \1074\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 112, May 2023. Accessed on November 28, 2023 at https://iea.blob.core.windows.net/assets/dacf14d2-eabc-498a-8263-9f97fd5dc327/GEVO2023.pdf.
    \1075\ BloombergNEF, ``Zero-Emission Vehicles Factbook: A 
BloombergNEF special report prepared for COP28, December 2023, p. 30 
and 40.
    \1076\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 122, May 2023. Accessed on November 28, 2023 at https://iea.blob.core.windows.net/assets/dacf14d2-eabc-498a-8263-9f97fd5dc327/GEVO2023.pdf.
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    As described in section I.A.2 of this preamble, manufacturers are 
continuing to project high levels of electrification in their future 
fleets and are continuing to make very large investments toward making 
this possible, by increasing manufacturing capacity and securing 
sources and suppliers for critical minerals, materials, and components. 
Although some manufacturers, such as Toyota and Stellantis, have most 
recently signaled a potential interest in including a significant 
percentage of HEVs and PHEVs in their fleets, this remains consistent 
with our modeling as it represents a potential compliance path that may 
be attractive to manufacturers with substantial expertise or customer 
base that supports these products. Indeed, as we show below, 
manufacturers' choosing to produce more HEVs and PHEVs would decrease 
the need for batteries, battery components, and critical minerals, 
providing even further support for our conclusion that related supply 
issues are unlikely to constrain compliance with the final rule.
    One analysis we cited in the proposal indicated that 37 of the 
world's automakers are planning to invest a total of almost $1.2 
trillion by 2030 toward electrification,\1077\ a large portion of which 
will be used for construction of manufacturing facilities for vehicles, 
battery cells and packs, and materials, supporting up to 5.8 terawatt-
hours of battery production and 54 million electric vehicles per year 
globally.\1078\ Similarly, an analysis by the Center for Automotive 
Research showed that a significant shift in North American investment 
is occurring toward electrification technologies, with $36 billion of 
about $38 billion in total automaker manufacturing facility investments 
announced in 2021 being slated for electrification-related 
manufacturing in North America, with a similar proportion and amount on 
track for 2022.\1079\
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    \1077\ Reuters, ``A Reuters analysis of 37 global automakers 
found that they plan to invest nearly $1.2 trillion in electric 
vehicles and batteries through 2030,'' October 21, 2022. Accessed on 
November 4, 2022 at https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/.
    \1078\ Reuters, ``Exclusive: Automakers to double spending on 
EVs, batteries to $1.2 trillion by 2030,'' October 25, 2022. 
Accessed on November 4, 2022 at https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21/.
    \1079\ Center for Automotive Research, ``Automakers Invest 
Billions in North American EV and Battery Manufacturing 
Facilities,'' July 21, 2022. Retrieved on November 10, 2022 at 
https://www.cargroup.org/automakers-invest-billions-in-north-american-ev-and-battery-manufacturing-facilities/.
---------------------------------------------------------------------------

    Since the proposal, ongoing work conducted by ANL examines the most 
recent developments in the growth of the supply chain and confirms 
continuation of this trend. As noted previously, ANL has continued 
tracking investments in battery and electric vehicle manufacturing to 
estimate growth of battery production in North America, based on press 
releases, financial disclosures, and news articles.\1080\ ANL finds 
that since 2000, companies have announced over $150 billion in planned 
investments for battery production in the United States.\1081\ In this 
context, battery production refers to the full chain of production 
including extraction of the raw minerals necessary to make batteries, 
processing into battery-grade materials, manufacturing of active 
materials and cell components, and production of battery cells and 
packs for end use. ANL finds that this investment has accelerated in 
recent years, with over $100 billion dollars of investment announced in 
the last two years alone.
---------------------------------------------------------------------------

    \1080\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
    \1081\ This value is based upon public statements of investment. 
Not all manufacturing facility expansions include explicit 
information about the scale of the investment. Additionally, this 
value is based on ANL tracking of investments. While diligent effort 
has been paid to include existing facilities and older press 
releases, these historical announcements are more difficult to find, 
and so this data may be biased against older investments.
---------------------------------------------------------------------------

    The majority of the battery investments are for lithium-ion 
batteries, linked to the development and deployment of electric 
vehicles. Historically, many of these investments have been in 
traditional auto manufacturing locations in eastern North America, with 
many found in a band from Ontario through Michigan and other Great 
Lakes states, and then to newer vehicle assembly plants in the south, 
especially in Alabama, Tennessee, and South Carolina. The most 
prominent battery cell manufacturing investments have roughly followed 
this pattern.
    We also noted in the proposal that the Department of Energy had in 
2021 accounted for at least 13 new battery plants, most of which will 
include cell manufacturing, that were expected to become operational in 
the U.S. in the next few years.\1082\ Among these, in partnership with 
SK Innovation, Ford is building three large new battery plants in 
Kentucky and Tennessee \1083\ and a

[[Page 28035]]

fourth in Michigan.\1084\ General Motors is partnering with LG Chem to 
build another three plants in Tennessee, Michigan, and Ohio, and 
considering another in Indiana. LG Chem has also announced plans for a 
cathode material production facility in Tennessee, said to be 
sufficient to supply 1.2 million high-performance electric vehicles per 
year by 2027.\1085\ Panasonic, already partnering with Tesla for its 
factories in Texas and Nevada, is planning two new factories in 
Oklahoma and Kansas. Toyota plans to be operational with a plant in 
Greensboro, North Carolina in 2025, and Volkswagen in Chattanooga, 
Tennessee at about the same time. According to a May 2022 forecast by 
S&P Global, announcements such as these were expected to result in a 
U.S. annual manufacturing capacity of 382 GWh by 2025,\1086\ or 580 GWh 
by 2027,\1087\ up from roughly 60 GWh 1088 1089 today.
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    \1082\ Department of Energy, Fact of the Week #1217, ``Thirteen 
New Electric Vehicle Battery Plants Are Planned in the U.S. Within 
the Next Five Years,'' December 20, 2021.
    \1083\ Ford Media Center, ``Ford to Lead America's Shift to 
Electric Vehicles with New Mega Campus in Tennessee and Twin Battery 
Plants in Kentucky; $11.4B Investment to Create 11,000 Jobs and 
Power New Lineup of Advanced EVs,'' Press Release, September 27, 
2021.
    \1084\ Ford Media Center, ``Ford Taps Michigan for New LFP 
Battery Plant; New Battery Chemistry Offers Customers Value, 
Durability, Fast Charging, Creates 2,500 More New American Jobs,'' 
Press Release, February 13, 2023.
    \1085\ LG Chem, ``LG Chem to Establish Largest Cathode Plant in 
US for EV Batteries,'' Press Release, November 22, 2022.
    \1086\ S&P Global Market Intelligence, ``US ready for a battery 
factory boom, but now it needs to hold the charge,'' October 3, 
2022. Accessed on November 22, 2022 at https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/us-ready-for-a-battery-factory-boom-but-now-it-needs-to-hold-the-charge-72262329.
    \1087\ S&P Global Mobility, ``Growth of Li-ion battery 
manufacturing capacity in key EV markets,'' May 20, 2022. Accessed 
on November 22, 2022 at https://www.spglobal.com/mobility/en/research-analysis/growth-of-liion-battery-manufacturing-capacity.html.
    \1088\ Federal Consortium for Advanced Batteries, ``National 
Blueprint for Lithium Batteries 2021-2030,'' June 2021. Available at 
https://www.energy.gov/sites/default/files/2021-06/FCAB%20National%20Blueprint%20Lithium%20Batteries%200621_0.pdf.
    \1089\ S&P Global Mobility, ``Growth of Li-ion battery 
manufacturing capacity in key EV markets,'' May 20, 2022. Accessed 
on November 22, 2022 at https://www.spglobal.com/mobility/en/research-analysis/growth-of-liion-battery-manufacturing-capacity.html.
---------------------------------------------------------------------------

    As noted in the proposal, manufacturers continue to approach 
construction of new battery manufacturing plants as part of joint 
ventures with established cell suppliers, by which the OEM may secure a 
supply of cells, modules, or battery packs for its products and develop 
a chain of supply that will support their production 
needs.1090 1091 1092 1093 1094 1095 According to 
ANL, the largest portion of total forecast North American cell 
production capacity represents joint ventures of energy companies with 
automotive companies, while a similar amount represents cell suppliers 
without a formal joint venture, and the remaining group represent OEM 
ventures.\1096\
---------------------------------------------------------------------------

    \1090\ Voelcker, J., ``Good News: Ford and GM Are Competing on 
EV Investments,'' Car and Driver, October 18, 2021. Accessed on 
December 9, 2021 at https://www.caranddriver.com/features/a37930458/ford-gm-ev-investments/.
    \1091\ Stellantis, ``Stellantis and LG Energy Solution to Form 
Joint Venture for Lithium-Ion Battery Production in North America,'' 
Press Release, October 18, 2021.
    \1092\ Toyota Motor Corporation, ``Toyota Charges into 
Electrified Future in the U.S. with 10-year, $3.4 billion 
Investment,'' Press Release, October 18, 2021.
    \1093\ Ford Motor Company, ``Ford to Lead America's Shift To 
Electric Vehicles With New Mega Campus in Tennessee and Twin Battery 
Plants in Kentucky; $11.4B Investment to Create 11,000 Jobs and 
Power New Lineup of Advanced EVs,'' Press Release, September 27, 
2021.
    \1094\ General Motors Corporation, ``GM and LG Energy Solution 
Investing $2.3 Billion in 2nd Ultium Cells Manufacturing Plant in 
U.S.,'' Press Release, April 16, 2021.
    \1095\ Shepardson, D. and Lienert, P., ``GM eyes investments of 
more than $4 billion in Michigan EV plants,'' Reuters, December 10, 
2021. Accessed on December 13, 2021 at https://www.reuters.com/business/autos-transportation/gm-eyes-3-billion-investment-michigan-ev-plants-source-2021-12-10/.
    \1096\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
---------------------------------------------------------------------------

    Overall, these investments are part of a pattern of rapidly 
increasing investment over the last three years that continues today. 
Figure 33 shows that cumulative announcements of investments in the 
battery supply chain have increased by a factor of six from about $25 
billion three years ago to about $156 billion today.\1097\ U.S. policy, 
including the BIL and the IRA, is likely to have driven much of this 
investment. As seen in the figure, cumulative investment announcements 
roughly doubled after the BIL (or IIJA) was enacted, and more than 
doubled again after the IRA was enacted. Additional announcements are 
likely as the rollout of funds and incentives from BIL and IRA 
continues. This aggressive investment in North American manufacturing 
is likely to play a strong role in minimizing risks of supply chain 
shocks and assuring U.S. manufacturing resilience.
---------------------------------------------------------------------------

    \1097\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
[GRAPHIC] [TIFF OMITTED] TR18AP24.031

Figure 33: Evolution of Battery Supply Chain Investments in the U.S. 
Since 2021

[[Page 28036]]

    Even as these investment trends have continued, in the second half 
of 2023 some automakers announced changes to previously announced 
battery production plans. For example, in mid-2023, Ford paused 
construction of their recently announced battery plant in Marshall, 
Michigan \1098\ (since restarted), and in November 2023 announced a 
reduction in the size of the plant from 50 GWh to 20 GWh.\1099\ Tesla 
also announced a delay in construction of a battery plant in 
Mexico.1100 1101 We discussed the broader topic of changes 
to manufacturer investment and product plan outlooks in section I.A.2 
of this preamble, and extending from our conclusion in that discussion, 
EPA does not consider these changes to indicate a meaningful slowdown 
or reversal of the U.S. or global battery production trends described 
here. Specific factors were active during the period when Ford made its 
announcement, such as the 2023 United Auto Workers strike,\1102\ and an 
increase in inventories for light-duty vehicles of all types,\1103\ 
which may be related to economic conditions such as high interest rates 
and higher transaction prices for all types of 
vehicles.1104 1105 1106 Ford has since restarted 
construction.\1107\ Tesla specifically cited economic conditions, and 
not a change in overall battery production plans, for its delay, while 
a delay in GM's Ultium plant in Tennessee was attributed to 
construction delays.\1108\ Despite the delays by Ford and Tesla, others 
announced increased investments or accelerated timetables at the same 
time. For example, Toyota announced an $8 billion increase in 
investment in its North Carolina plant,\1109\ and Hyundai accelerated 
construction of its Georgia plant.\1110\ Given the unprecedented rate 
and size of recent investment activity in PEV technology, adjustments 
to previously announced plans would ordinarily be expected to occur, 
and to date have included both reductions and increases in investment 
amounts and pacing. The overall trend continues to be very large and 
rapid increases in domestic production of batteries and battery 
components.
---------------------------------------------------------------------------

    \1098\ Reuters, ``Ford pauses work on $3.5 bln battery plant in 
Michigan,'' September 25, 2023. Accessed on December 15, 2023 at 
https://www.reuters.com/business/autos-transportation/ford-pauses-work-35-billion-battery-plant-michigan-2023-09-25.
    \1099\ New York Times, ``Ford Resumes Work on E.V. Battery Plant 
in Michigan, at Reduced Scale,'' November 21, 2023. Accessed on 
December 15, 2023 at https://www.nytimes.com/2023/11/21/business/ford-ev-battery-plant-michigan.html.
    \1100\ Reuters, ``Mexico gives Tesla land-use permits for 
gigafactory, says state government,'' December 12, 2023. Accessed on 
February 14, 2024 at https://www.reuters.com/business/autos-transportation/mexico-gives-tesla-land-use-permits-gigafactory-says-state-government-20231213.
    \1101\ Mexico Now, ``Taxes and global economy stop Tesla plant 
in Nuevo Leon,'' October 23, 2023. Accessed on February 14, 2024 at 
https://mexico-now.com/taxes-and-global-economy-stop-tesla-plant-in-nuevo-leon.
    \1102\ CBS News, ``Ford resuming construction of Michigan EV 
battery plant delayed by strike, scaling back jobs,'' November 21, 
2023. Accessed on December 15, 2023 at https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs.
    \1103\ National Automobile Dealers Association, ``NADA Market 
Beat,'' November 2023. Accessed on December 11, 2023 at https://www.nada.org/nada/nada-headlines/nada-market-beat-new-light-vehicle-inventory-reaches-20-month-high.
    \1104\ Reuters, ``More alarm bells sound on slowing demand for 
electric vehicles,'' October 25, 2023. Accessed on December 15, 2023 
at https://www.reuters.com/business/autos-transportation/more-alarm-bells-sound-slowing-demand-electric-vehicles-2023-10-25.
    \1105\ CNBC, ``Sparse inventory drives prices for new, used 
vehicles higher,'' October 17, 2023. Accessed on December 15, 2023 
at https://www.cnbc.com/2023/10/17/sparse-inventory-drives-prices-for-new-used-cars-higher.html.
    \1106\ San Diego Union-Tribune, ``Has enthusiasm for electric 
cars waned?,'' October 27, 2023. Accessed on December 15, 2023 at 
https://www.sandiegouniontribune.com/business/story/2023-10-27/has-enthusiasm-for-electric-cars-waned.
    \1107\ CBS News, ``Ford resuming construction of Michigan EV 
battery plant delayed by strike, scaling back jobs,'' November 21, 
2023. Accessed on December 15, 2023 at https://www.cbsnews.com/detroit/news/ford-resuming-construction-of-michigan-ev-battery-plant-delayed-by-strike-scaling-back-jobs.
    \1108\ InsideEVs.com, ``GM's Ultium Cells Plant In Tennessee 
Delayed Until 2024 (Updated),'' October 28, 2023. Accessed on 
February 22, 2024 at https://insideevs.com/news/693537/gm-ultium-cells-tennessee-plant-delayed-2024.
    \1109\ Toyota Newsroom, ``Toyota Supercharges North Carolina 
Battery Plant with New $8 Billion Investment,'' Press Release, 
October 31, 2023. Available at https://pressroom.toyota.com/toyota-supercharges-north-carolina-battery-plant-with-new-8-billion-investment.
    \1110\ Ars Technica, ``Hyundai hurries to finish factory in 
Georgia to meet US EV demand,'' September 20, 2023. Accessed on 
February 23, 2024 at https://arstechnica.com/cars/2023/09/hyundai-hurries-to-finish-factory-in-georgia-to-meet-us-ev-demand.
---------------------------------------------------------------------------

    The updated ANL analysis accounts not only for new announcements 
since the proposal, but also for recent reductions in scope, such as 
the reduction of the Ford plant's announced capacity. As seen in Figure 
34, ANL indicates that overall projections for North American battery 
production capacity by 2030 have increased by a factor of about 10 over 
the last three years. The vertical axis shows the estimated North 
American production capacity for 2030, and the horizontal axis shows 
the date of company announcements. Expected capacity for 2030 increased 
from 300 GWh/year in December 2021 to 800 GWh/year by December 2022, 
and now stands at more than 1,300 GWh/year.
[GRAPHIC] [TIFF OMITTED] TR18AP24.032

Figure 34: Evolution in Battery Cell Production Announcements in North 
America

[[Page 28037]]

    As shown in Figure 35, this updated study illustrates the rapid 
recent growth in new plant announcements. Light-duty vehicle 
applications are the largest portion of announced and operating plants. 
These production estimates are based on new plant announcements and 
construction and include an estimate of time between announcement and 
initial production based on historical data, as described 
previously.\1111\ Based on its assessment, ANL projected annual 
operating capacities by applying a 36 month linear ramp-up time from 
announced date of initial production to full-scale production. It is 
important to note that, as with all projections of future capacity, the 
apparent flattening of growth after 2030 is only an artifact of data 
availability, in that public announcements tend to extend only a 
limited period into the future. It does not indicate that investment 
past 2030 will slow or stop, as additional demand is likely to spur 
additional announcements just as it has for the earlier years.
---------------------------------------------------------------------------

    \1111\ Most announcements include initial production date, and 
some show assumed date for full-scale production. For plants without 
this information, DOE assumed 3 years from initial opening of the 
plant to full-scale production as default, based on historical 
growth of cell production plants. This may be overly conservative, 
as older plants did not have the rest of the battery infrastructure 
growing in tandem.
[GRAPHIC] [TIFF OMITTED] TR18AP24.033

Figure 35: Modeled Lithium-Ion Cell Production Capacity in North 
America From 2018 to 2035 by Transportation Sector

    Looking at cells dedicated specifically to light-duty vehicles, 
Figure 36 shows that in all years of the rule from 2027 to 2032, North 
American light-duty vehicle cell manufacturing is expected to be meet 
demand under all compliance scenarios EPA modeled.\1112\ This 
accounting of projected battery manufacturing is particularly 
conservative because it excludes production designated for vehicles but 
for which the vehicle type was not specified, and also excludes rumored 
and conditional manufacturing capacity. The lines in Figure 36 show the 
projected GWh of battery production needed to support the PEV and HEV 
market under several cases of our analysis including the central case, 
No Action case, and two alternative pathways (Pathway B and C of the 
Executive Summary). It shows that in all years of the rule, the 
projected battery demand for U.S. electrified light- and medium-duty 
vehicles is well within projected operating North American battery cell 
production capacity for light-duty vehicles. As the bulk of these 
announcements are slated for automotive applications, it shows that 
already-announced North American battery manufacturing capacity is 
likely to be more than sufficient to meet battery demand under the 
rule.\1113\ Although demand in the central case begins to approach 
projected capacity in 2032, this again is an artifact of the limited 
time frame of currently known supply announcements, as described 
previously.
---------------------------------------------------------------------------

    \1112\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
    \1113\ This finding also has implications for the ability of 
U.S. manufacturers to take advantage of the Inflation Reduction 
Act's Manufacturer Production Tax Credit (IRC 45X) of up to $45 per 
kWh for cells and modules produced in the United States. We address 
our updated assumptions for these incentives in section IV.C.2 of 
this preamble.

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

[[Page 28038]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.034

Figure 36: Planned North America Light-Duty Vehicle Cell Production 
Capacity Compared to Battery Demand Under Various Cases of the Analysis

    The annual battery production required for the compliant fleet 
generated by OMEGA under our central case is 671 GWh in 2030, far less 
than the projected operating North American light-duty vehicle battery 
production capacity of 935 GWh projected for the same year in Figure 36 
above. Demand reaches a maximum of 839 GWh in 2032, still less than 
projected capacity. These amounts compare to a maximum of about 540 GWh 
under the No Action case. Pathway B is a pathway with moderate 
penetration of HEVs and PHEVs (collectively called P/HEVs) in place of 
BEVs. Pathway C is a pathway in which no new BEV models are introduced 
beyond the No Action case, in which ICE, HEV and PHEV are more 
prevalent. Pathway C results in the lowest peak battery demand of 612 
GWh in 2032. These latter cases show that compliance with the standards 
would continue to be possible even if critical mineral availability or 
manufacturing capacity were more constrained than current projections 
indicate.
    Moving beyond battery and cell manufacturing, we now consider the 
outlook for North American manufacturing of electrode active materials 
and other cell components. Active materials include cathode and anode 
powders and electrolyte, for which critical minerals and precursor 
chemicals are important manufacturing inputs. Cell components include 
specialty products such as aluminum and copper current collector foils, 
electrode separators, and solvents and binders. In order to meet their 
projected operating capacities, the North American battery plants 
represented in Figure 36 above will either manufacture these materials 
on site or at another location, or purchase them from a supplier, or a 
combination of the two.
    Significant production of many of these items is occurring in the 
U.S. For example, several large suppliers of batteries and cells, as 
well as major OEMs, are increasingly taking steps to secure 
domestically sourced raw minerals, active materials and cell components 
to supply their battery and cell manufacturing plants. Auto 
manufacturers are also moving to secure supplies of these items to 
support their production needs and partnerships. For example, Ford has 
moved to secure sources of raw materials for its battery needs; 
1114 1115 General Motors has signed similar supply chain 
agreements, for battery materials 1116 1117 1118 as well as 
for rare-earth metals for electric machines; \1119\ and Tesla has also 
moved to secure a domestic lithium supply.\1120\ Announcements in this 
general vein have been occurring regularly since the proposal and 
continue to provide evidence that the industry is continuing to 
actively pursue domestic sources of battery materials. In addition, the 
Inflation Reduction Act (IRA) and the Bipartisan Infrastructure Law 
(BIL) continue to provide significant support to accelerate these 
efforts to build out a U.S. supply chain for mineral, cell, battery 
component, and battery production.
---------------------------------------------------------------------------

    \1114\ Green Car Congress, ``Ford sources battery capacity and 
raw materials for 600K EV annual run rate by late 2023, 2M by end of 
2026; adding LFP,'' July 22, 2022.
    \1115\ Ford Motor Company, ``Ford Releases New Battery Capacity 
Plan, Raw Materials Details to Scale EVs; On Track to Ramp to 600K 
Run Rate by '23 and 2M+ by '26, Leveraging Global Relationships,'' 
Press Release, July 21, 2022.
    \1116\ Green Car Congress, ``GM signs major Li-ion supply chain 
agreements: CAM with LG Chem and lithium hydroxide with Livent,'' 
July 26, 2022.
    \1117\ Grzelewski, J., ``GM says it has enough EV battery raw 
materials to hit 2025 production target,'' The Detroit News, July 
26, 2022.
    \1118\ Hall, K., ``GM announces new partnership for EV battery 
supply,'' The Detroit News, April 12, 2022.
    \1119\ Hawkins, A., ``General Motors makes moves to source rare 
earth metals for EV motors in North America,'' The Verge, December 
9, 2021.
    \1120\ Piedmont Lithium, ``Piedmont Lithium Signs Sales 
Agreement With Tesla,'' Press Release, September 28, 2020.
---------------------------------------------------------------------------

    In the 2024 ANL study of battery manufacturing,\1121\ ANL 
quantitatively examined the outlook for North American production of 
these components, based on currently known company announcements to 
increase production in North America of anode active material (AAM), 
cathode active material (CAM), electrolyte, foils, and separators. ANL 
then compared the potential supply with anticipated demand for domestic 
battery production.
---------------------------------------------------------------------------

    \1121\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
---------------------------------------------------------------------------

    Unlike with battery cell manufacturing, ANL found that a gap 
currently exists between anticipated future domestic demand and 
currently operating and announced future U.S. manufacturing capacity 
for many of the constituent materials and cell

[[Page 28039]]

components listed above. Based on currently known announcements, ANL 
finds that North American production can meet all of the North American 
demand for electrolyte, approximately half of the demand for electrode 
active materials, and about one quarter of the demand for separators 
and foils by the end of the decade. ANL notes that these estimates for 
North American production take ``a conservative view of future 
manufacturing announcements, only including sites which have been 
explicitly formally announced.'' \1122\
---------------------------------------------------------------------------

    \1122\ Id. at p. 50.
---------------------------------------------------------------------------

    Again, as stated previously, the relevant standard is not complete 
domestic self-sufficiency but rather a diversified supply chain that 
includes not only domestic production where possible and appropriate 
but also includes trade with FTA countries as well as our many other 
economic allies with whom the U.S. has good trade relations. While it 
is likely that some of domestic demand for the battery components 
listed above will be satisfied through imports, allies and partners 
outside of North America are likely to be key suppliers.
    ANL observes that manufacturing announcements for battery 
components often significantly lag those for battery cell 
manufacturing, and without growth in battery cell manufacturing 
creating demand for their products in the U.S., battery component 
manufacturers would have little reason to increase their manufacturing 
capacity in North America. Indeed, with any product, the mere 
identification of a gap between projected supply and projected demand 
does not by itself constitute a future shortage, and often represents 
the very signal that motivates new supply to be developed or expanded.
    ANL also notes that past history suggests that the market often 
rapidly adapts in response to demand and industrial policies.\1123\ 
Significantly, ANL does not conclude that the gap represents a hard 
constraint or that it cannot be significantly reduced or closed in the 
future, citing several factors that are likely to address the gap. 
These factors include the fact that increases in production capacity 
for these components tend to require less lead time than for cell 
production or mining operations. According to ANL, ``because of their 
shorter construction and permitting time, most battery components can 
be responsive to the demand arising from battery cell plants.'' 
Producers of these components are therefore more likely to be in a 
position to await clear demand signals, such as specific offtake 
agreements, before new projects or capacity expansions will be 
announced. That is, quoting the ANL study, companies ``may be waiting 
for certainty in demand from cell production or for availability of 
financing before publicly committing to building a manufacturing 
plant.'' Currently observed capacities for cell material and components 
production may therefore be more indicative of current offtake 
agreements and spot market demand than of production potential, and 
announcements of future capacity resulting from increased demand or 
offtake are likely to become known at a time much closer to the 
beginning of production. Plans may depend upon various other factors 
such as, for example, additional guidance on IRA provisions, or the 
progress of funding distributions. Many production plans have 
outstanding funding applications through the various DOE and other 
government funding and loan programs (described later), but have yet to 
be awarded or publicly announced. Some further capacity increases may 
occur despite the lack of a formal announcement at this time; for 
example, ANL identified an additional 590 GWh/year in nominal anode 
active material capacity that would arise by the end of the decade at 
facilities which are being planned or considered but have not yet been 
formally announced, which would close the supply-demand gap by 2032.
---------------------------------------------------------------------------

    \1123\ Id.
---------------------------------------------------------------------------

    Further, domestic production for any of these materials and 
components could be significantly underestimated to the degree that any 
of the announced cell production facilities discussed previously are 
also planning to manufacture these components onsite. Announcements of 
cell manufacturing plants typically lack sufficient detail to determine 
the degree of vertical integration that might be planned, and these 
details often are not separately announced. EPA also notes that the 
overall scale of investment in cell and component manufacturing 
capacity across the industry suggests that the industry at large has 
confidence in being able to secure sufficient supplies of materials and 
components to operate these plants in a manner that returns their 
investment.
    Importantly, as noted above, allies and partners outside of North 
America are likely to be integral to meeting domestic battery component 
demand. Some of the world leaders in production of cell materials and 
components are close allies of the U.S. and are likely to have a 
prominent role in filling the gap, as they do today. For example, Japan 
and South Korea are the second and third largest producers of electrode 
active materials,\1124\ while South Korea is dominant in separator film 
\1125\ and home to the largest manufacturer of copper foils which also 
is constructing capacity in the U.S.1126 1127
---------------------------------------------------------------------------

    \1124\ Id.
    \1125\ Byun, H., ``Korea to dominate 75% of battery separator 
market by 2030: report,'' The Korea Herald, July 17, 2023. Accessed 
on March 1, 2024 at https://www.koreaherald.com/view.php?ud=20230717000571.
    \1126\ Kim, H., ``Hopes rise for Korean copper foil makers' 
gains under IRA,'' The Korea Economic Daily, August 10, 2023. 
Accessed on March 1, 2024 at https://www.kedglobal.com/batteries/newsView/ked202308100025.
    \1127\ Kim, J., ``SK Nexilis launches copper foil production in 
Malaysia,'' November 5, 2023. Accessed on March 1, 2024 at https://www.kedglobal.com/batteries/newsView/ked202311050002.
---------------------------------------------------------------------------

    For these and similar reasons EPA does not consider the apparent 
gap between projected domestic demand and projected North American 
supply of cells, components, and material inputs identified by ANL to 
be indicative of a constraint that would prevent announced U.S. battery 
cell manufacturing from operating as planned, with a combination of 
domestically produced materials and components and those acquired 
through trade with economic allies.
    To the extent that content is imported from partner nations, it is 
important to note that this carries significance primarily for 
qualification of a vehicle for the IRC 30D clean vehicle credit or for 
concerns about U.S. reliance on imports, and does not constrain U.S. 
cell production for U.S. PEVs per se. The presence of imported content 
does not exclude any PEV from being sold in the U.S. market, nor does 
it prevent access to the similarly significant 45X cell and module 
production credit to manufacturers.\1128\ Therefore, the ability for 
North American plants to operate at the capacities projected previously 
would not be constrained by any potential shortfall in domestic 
production of cell materials and components, but only by a shortfall in 
global production, if such a shortfall were to exist.
---------------------------------------------------------------------------

    \1128\ It is also relevant that imported mineral content 
eventually becomes feedstock for recycling, through which it becomes 
a domestic resource.
---------------------------------------------------------------------------

    We now consider the outlook for global production of cell materials 
and components.\1129\ Figure 37 repeats the chart that was provided in 
the proposal, showing projections prepared by Li-Bridge for DOE,\1130\ 
and presented to the

[[Page 28040]]

Federal Consortium for Advanced Batteries (FCAB) \1131\ in November 
2022. These projections were largely derived by DOE from Benchmark 
Minerals Intelligence (BMI) projections, and indicated that global 
supplies of cathode active material (CAM) were expected to be 
sufficient through 2035.
---------------------------------------------------------------------------

    \1129\ Our assumptions for access to 30D are described 
separately in section IV.C.2 of this preamble, and implications for 
mineral security are discussed in IV.C.7.iii.
    \1130\ Slides 6 and 7 of presentation by Li-Bridge to Federal 
Consortium for Advanced Batteries (FCAB), November 17, 2022.
    \1131\ https://www.energy.gov/eere/vehicles/federal-consortium-advanced-batteries-fcab.
[GRAPHIC] [TIFF OMITTED] TR18AP24.035

Figure 37: DOE Li-Bridge Assessment of Global CAM Supply and Demand

    In the figure, the labels T1 and T2 represent supplies that BMI 
considers as having a track record of supplying these materials outside 
of China and within China, respectively. The label T3 represents 
supplies that BMI assessed as not having an established track record of 
production, and thus represent earlier stage efforts, such as for 
example, new entrants to the market that intend to supply anticipated 
demand but which may not have established offtake agreements.
    To the degree that the Li-Bridge assessment of global demand begins 
to enter T3 supply in 2029, the same observation cited above applies, 
regarding the shorter notice typically provided by announcements that 
react to demonstration of demand. That is, in the period between now 
and 2029 it is likely that increases in demand will motivate increases 
in supply that would not be announced until much closer to 2029. The 
ability of production capacity for many cell materials and components 
to adjust relatively quickly to changes in anticipated demand suggests 
that these materials do not represent a constraint to PEV production in 
the global context any more than in the domestic context. Also, new 
cell component or active material plants tend to have shorter 
construction and permitting time than cell manufacturing plants.\1132\
---------------------------------------------------------------------------

    \1132\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
---------------------------------------------------------------------------

    As another factor promoting domestic capacity, the IRA offers 
sizeable incentives and other support for further development of 
domestic and North American manufacture of electrified vehicles and 
components. These incentives represent a significant dollar investment. 
At the time of passage of the IRA, the Joint Committee on Taxation 
estimated that $30.6 billion would be realized by manufacturers through 
the 45X Advanced Manufacturing Production Credit alone.\1133\ Since the 
proposal, the Committee has significantly increased its estimates for 
IRA climate and clean energy incentives, due in part to higher expected 
utilization of 45X.\1134\ Another $6.2 billion or more may be realized 
through expansion of the 48C Advanced Energy Project Credit, a 30 
percent tax credit for investments in projects that reequip, expand, or 
establish certain energy manufacturing facilities.\1135\ The IRC 30D 
Clean Vehicle Credit also indirectly incentivizes domestic 
manufacturing investments by offering a vehicle manufacturer's eligible 
retail customers up to $7,500 toward the purchase of PEVs that have a 
specified amount of critical mineral and battery component content 
manufactured in North America. Together, these provisions are 
continuing to motivate manufacturers to invest in the continued 
development of a North American supply chain, and already appear to 
have proven influential on the plans of manufacturers to procure 
domestic or North American mineral and component sources and to 
construct domestic manufacturing facilities to claim the benefits of 
the act.1136 1137
---------------------------------------------------------------------------

    \1133\ Congressional Research Service, ``Tax Provisions in the 
Inflation Reduction Act of 2022 (H.R. 5376),'' August 10, 2022.
    \1134\ Obey, D., ``CBO Sees Higher IRA Costs From EV Credit 
Popularity, EPA Auto Rules,'' Inside EPA, February 9, 2024. Accessed 
on February 23, 2024 at https://insideepa.com/daily-news/cbo-sees-higher-ira-costs-ev-credit-popularity-epa-auto-rules.
    \1135\ Congressional Research Service, ``Tax Provisions in the 
Inflation Reduction Act of 2022 (H.R. 5376),'' August 10, 2022.
    \1136\ Subramanian, P., ``Why Honda's EV battery plant likely 
wouldn't happen without new climate credits,'' Yahoo Finance, August 
29, 2022.
    \1137\ LG Chem, ``LG Chem to Establish Largest Cathode Plant in 
US for EV Batteries,'' Press Release, November 22, 2022.

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[[Page 28041]]

    In addition, funds continue to be awarded under the BIL, which 
provides for $7.9 billion to support development of the domestic supply 
chain for battery manufacturing, recycling, and critical 
minerals.\1138\ Through this funding DOE is working to facilitate and 
support further development of the midstream and downstream supply 
chain, by identifying priorities and rapidly funding those areas 
through numerous programs and funding 
opportunities.1139 1140 1141 Programs that include midstream 
and downstream in their scope include those administered by the Office 
of Manufacturing and Energy Supply Chains (MESC), which has allocated 
about $1.9 billion in funding out of an available $4.1 billion that is 
available for active material production, separator production, 
precursor materials production, and battery cell production.\1142\ 
Across all stages of the supply chain, these programs are designed to 
have a large impact. According to a final report from the Department of 
Energy's Li-Bridge alliance,\1143\ ``the U.S. industry can double its 
value-added share by 2030 (capturing an additional $17 billion in 
direct value-add annually and 40,000 jobs in 2030 from mining to cell 
manufacturing), dramatically increase U.S. national and economic 
security, and position itself on the path to a near-circular economy by 
2050.'' \1144\ The $7.9 billion provided by the BIL for U.S. battery 
supply chain projects \1145\ represents a total of about $14 billion 
when industry cost matching is considered.1146 1147 Other 
recently announced projects will utilize another $40 billion in private 
funding.\1148\ According to DOE's Li-Bridge alliance, the total of 
these commitments already represents more than half of the capital 
investment that Li-Bridge considers necessary for supply chain 
investment to 2030.\1149\
---------------------------------------------------------------------------

    \1138\ Congressional Research Service, ``Energy and Minerals 
Provisions in the Infrastructure Investment and Jobs Act (Pub. L. 
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \1139\ Department of Energy, Li-Bridge, ``Building a Robust and 
Resilient U.S. Lithium Battery Supply Chain,'' February 2023.
    \1140\ The White House, ``Building Resilient Supply Chains, 
Revitalizing American Manufacturing, and Fostering Broad-Based 
Growth,'' 100-Day Reviews under Executive Order 14017, June 2021.
    \1141\ Federal Consortium for Advanced Batteries, ``National 
Blueprint for Lithium Batteries 2021-2030,'' June 2021. Available at 
https://www.energy.gov/sites/default/files/2021-06/FCAB%20National%20Blueprint%20Lithium%20Batteries%200621_0.pdf.
    \1142\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024.
    \1143\ https://www.anl.gov/li-bridge.
    \1144\ Department of Energy, Li-Bridge, ``Building a Robust and 
Resilient U.S. Lithium Battery Supply Chain,'' February 2023.
    \1145\ Congressional Research Service, ``Energy and Minerals 
Provisions in the Infrastructure Investment and Jobs Act (Pub. L. 
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \1146\ Department of Energy, Li-Bridge, ``Building a Robust and 
Resilient U.S. Lithium Battery Supply Chain,'' February 2023 (p. 9).
    \1147\ Department of Energy, EERE Funding Opportunity Exchange, 
EERE Funding Opportunity Announcements. Accessed March 4, 2023 at 
https://eere-exchange.energy.gov/Default.aspx#FoaId0596def9-c1cc-478d-aa4f-14b472864eba.
    \1148\ Federal Reserve Bank of Dallas, ``Automakers' bold plans 
for electric vehicles spur U.S. battery boom,'' October 11, 2022. 
Accessed on March 4, 2023 at https://www.dallasfed.org/research/economics/2022/1011.
    \1149\ Department of Energy, Li-Bridge, ``Building a Robust and 
Resilient U.S. Lithium Battery Supply Chain,'' February 2023 (p. 9).
---------------------------------------------------------------------------

    Further, the DOE Loan Programs Office continues to disburse 
substantial amounts of assistance through the Advanced Technology 
Vehicles Manufacturing (ATVM) Loan Program and Title 17 Innovative 
Energy Loan Guarantee Program, which include midstream activities such 
as manufacturing of active materials, battery components and cells 
among their focus.\1150\ These programs together comprise $110 billion 
of total available funds for loans and loan guarantees \1151\ much of 
which is available to fund such projects.
---------------------------------------------------------------------------

    \1150\ Department of Energy Loan Programs Office, ``Critical 
Materials Loans & Loan Guarantees,'' https://www.energy.gov/sites/default/files/2021-06/DOE-LPO_Program_Handout_Critical_Materials_June2021_0.pdf.
    \1151\ See Table 1 in Argonne National Laboratory, 
``Quantification of Commercially Planned Battery Component Supply in 
North America through 2035,'' ANL-24/14, March 2024.
---------------------------------------------------------------------------

    Analyst sentiment largely agrees that the U.S. is taking the 
appropriate steps to secure its supply chain. According to BNEF, Canada 
and the United States rank first and third, respectively, in their 
Global Lithium-Ion Battery Supply Chain Ranking. This annual ranking 
rates 30 countries on their relative ``potential to build a secure, 
reliable, and sustainable lithium-ion battery supply chain''. BNEF 
credits ``clear policy commitment and implementation'' for North 
America's high position, including the effect of the IRA.\1152\
---------------------------------------------------------------------------

    \1152\ Bloomberg New Energy Finance (BNEF), ``China Drops to 
Second in BloombergNEF's Global Lithium-Ion Battery Supply Chain 
Ranking as Canada Comes Out on Top,'' February 5, 2024. Accessed on 
February 24, 2024 at https://about.bnef.com/blog/china-drops-to-second-in-bloombergnefs-global-lithium-ion-battery-supply-chain-ranking-as-canada-comes-out-on-top.
---------------------------------------------------------------------------

    In consideration of this updated information on battery cell and 
cell component manufacturing, EPA has continued to identify the steps 
necessary to secure the supply of battery cells and cell materials and 
components needed to comply with the standards. EPA also notes rapidly 
growing evidence that the federal investments and initiatives under the 
IRA and BIL are continuing to build the domestic supply chain as 
intended, and indicate that the federal government is taking 
appropriate actions to support its development. It continues to be our 
assessment that the development of this supply chain is proceeding in a 
manner capable of supporting the future levels of PEV technology 
indicated in the scenarios of the compliance analysis, and is therefore 
unlikely to constrain manufacturers' ability to comply.
ii. Critical Minerals
    Critical minerals include a large diversity of minerals and metals 
that are deemed to be essential to economic or national security of the 
U.S. and whose supply chain is potentially vulnerable to 
disruption.1153 1154 The Energy Act of 2020 defines a 
``critical mineral'' as a non-fuel mineral or mineral material 
essential to the economic or national security of the United States and 
which has a supply chain vulnerable to disruption. The U.S. Geological 
Survey (USGS) lists 50 minerals as ``critical to the U.S. economy and 
national security.'' 1155 1156 Risks to mineral availability 
may stem from geological scarcity, geopolitics, trade policy, or 
similar factors.\1157\ Critical minerals range from relatively 
plentiful materials that are constrained primarily by production and 
refining capacity, such

[[Page 28042]]

as aluminum, to those that are both relatively difficult to source and 
costly to process, such as the rare-earth metals that are used in 
magnets for permanent-magnet synchronous motors (PMSMs) and some 
semiconductor products. Extraction, processing, and recycling of 
minerals are key parts of the supply chain that affect the availability 
of minerals. For the purposes of this rule, we focus on a key set of 
minerals (lithium, cobalt, nickel, manganese, and graphite) commonly 
used in BEVs; their general availability impacts the production of 
battery cells and battery components.
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    \1153\ According to USGS, the Energy Act of 2020 defines a 
``critical mineral'' as ``a non-fuel mineral or mineral material 
essential to the economic or national security of the U.S. and which 
has a supply chain vulnerable to disruption.''
    \1154\ U.S. Geological Survey, ``U.S. Geological Survey Releases 
2022 List of Critical Minerals,'' February 22, 2022. Available at: 
https://www.usgs.gov/news/national-news-release/us-geological-survey-releases-2022-list-critical-minerals.
    \1155\ Id.
    \1156\ The full list includes: Aluminum, antimony, arsenic, 
barite, beryllium, bismuth, cerium, cesium, chromium, cobalt, 
dysprosium, erbium, europium, fluorspar, gadolinium, gallium, 
germanium, graphite, hafnium, holmium, indium, iridium, lanthanum, 
lithium, lutetium, magnesium, manganese, neodymium, nickel, niobium, 
palladium, platinum, praseodymium, rhodium, rubidium, ruthenium, 
samarium, scandium, tantalum, tellurium, terbium, thulium, tin, 
titanium, tungsten, vanadium, ytterbium, yttrium, zinc, and 
zirconium.
    \1157\ International Energy Agency, ``The Role of Critical 
Minerals in Clean Energy Transitions,'' World Energy Outlook Special 
Report, Revised version. March 2022.
---------------------------------------------------------------------------

    As discussed in the opening paragraphs of section IV.C.7 of the 
preamble, certain critical minerals have long been essential to 
manufacturing both ICE vehicles and PEVs. Emission control catalysts 
for ICE vehicles utilize critical minerals including cerium, palladium, 
platinum, and rhodium, which (as described previously) were understood 
to be costly and potentially scarce in advance of emission control 
standards of the 1970s that were premised on use of those minerals for 
catalyst control of pollutants. These minerals are also required by 
PHEVs due to the presence of the ICE. Nickel-metal hydride batteries 
that have been used in many HEVs for over twenty years require 
significant amounts of nickel and rare-earth metals such as lanthanum. 
Critical minerals most important to lithium-ion battery production 
include lithium and graphite, and the cathode chemistries that are used 
in the majority of cells produced today also call for nickel, cobalt, 
and manganese. Aluminum is also used for cathode foils and in some 
cathode chemistries. Rare-earth metals are used in permanent-magnet 
electric machines, and include several elements such as dysprosium, 
neodymium, and samarium.
    The battery cell manufacturing capacity discussed in the previous 
section will depend on the ability of manufacturers to secure the 
inputs necessary for battery components, which include battery 
minerals. This is one of the reasons why extraction, processing, and 
recycling of critical minerals such as lithium, cobalt, nickel, 
manganese, and graphite are gaining a large amount of attention as 
important parts of the supply chain. They are produced in upstream 
activities which include extraction and refining of raw materials and 
are inputs to midstream activities such as manufacturing of precursor 
substances and electrode active materials and production of 
electrolytes.
    In addition to growing demand from the transportation industry, 
these minerals are also experiencing increasing demand across many 
other sectors of the global economy as the world seeks to reduce carbon 
emissions. As with any technology that is experiencing rapid demand 
growth, a robust supply chain to support increasing production of these 
products is continuing to develop. At the present time in the U.S., 
some of these minerals are not produced domestically in large 
quantities and are often sourced to varying degrees from global 
suppliers with whom manufacturers have developed supply relationships.
    Here it is important to reiterate that it is erroneous to assume 
that the U.S. must establish a fully independent domestic supply chain 
in order to contemplate increased manufacture of products that use 
these minerals. Such a position is without any credible analogy in 
other products, including ICE vehicles, that are used widely in the 
U.S. on a daily basis. As discussed previously, it has long been the 
norm that global supply chains are involved in providing many products 
that are commonly available in the U.S. market. In the context of 
critical minerals needed for PEV production, the relevant concern is to 
develop and secure a supply chain that includes not only domestic 
production where possible and appropriate but also includes sourcing 
from FTA countries as well as our many economic allies with whom the 
U.S. has good trade relations.
    In the proposal, we examined the outlook for U.S. and global 
critical mineral supply and demand in light of our projections of U.S. 
PEV demand under the proposed standards. We collected and reviewed a 
number of independent studies and forecasts, including numerous studies 
by analyst firms and various stakeholders. We also considered a 
compilation of lithium mining projects compiled by the Department of 
Energy and Argonne National Laboratory. Through this work it was our 
assessment that, among the critical minerals that were most likely to 
pose a potential constraint on PEV production, lithium availability was 
the most important consideration. We proceeded to examine detailed 
forecasts of supply and demand for lithium chemical products used in 
battery cell production, and reports of rapidly growing activity in 
securing sourcing agreements and lithium resource exploration in the 
U.S. Our review of this information indicated that the industry was 
responding rapidly to meet current and anticipated demand, and that 
this activity was likely to continue. Our analysis examined many 
uncertainties of the sort that are common to any forward-looking 
analysis but did not identify any hard constraint that indicated that 
global and domestic lithium supply would not be sufficient to support 
battery demand under the proposed standards. Our assessment found that 
availability of lithium chemical product was not likely to pose a 
limitation on the ability of auto manufacturers to meet the standards.
    We received a variety of comments on our analysis of critical 
minerals, some of which disagreed with our findings and others which 
supported them. Supportive comments often included detailed analysis 
and discussion that built upon EPA's analysis by providing additional 
examples of domestic and global activity in critical mineral 
development, examples of how the BIL and IRA have been promoting this 
activity, and other information about the outlook for critical mineral 
supply and demand. Commenters who disagreed with our findings largely 
expressed the position that EPA did not adequately address the issue of 
critical minerals, particularly for minerals other than lithium such as 
nickel, cobalt, and graphite, that we had not adequately considered the 
risks associated with potential instability of the global critical 
minerals market, and that the pace of domestic critical mineral 
development and/or domestic mineral processing would be insufficient to 
meet demand under the proposed standards.
    EPA appreciates and has carefully considered the substantive and 
detailed comments offered by the various commenters. Much of the 
information provided by commenters who disagreed with our findings 
expands upon the evidence that EPA already presented in the proposal 
concerning the risks and uncertainties associated with the development 
of the critical mineral supply chain. Much of the information provided 
by supportive commenters also expands on the evidence EPA presented in 
the proposal about the pace of activity and overall outlook for 
buildout of the critical mineral supply chain. While contributing to 
the record, the information provided by the commenters largely 
parallels the considerations and trends that were already identified 
and considered by EPA. In particular, the comments relating to risk and 
uncertainty largely present information of a similar nature to that 
which EPA identified and considered in the proposal, and do not 
identify new, specific constraints that would change the conclusions we 
reached in the proposal. Taken together,

[[Page 28043]]

the totality of information in the public record continues to indicate 
that development of the critical mineral supply chain is proceeding 
both domestically and globally in the expected manner in response to 
anticipated demand. In light of this information provided in the public 
comments and additional information that EPA has collected through 
continued research, and as further explained below, it continues to be 
our assessment that future availability of critical minerals is not 
likely to pose a constraint on automakers' ability to meet the 
standards.
    The additional information EPA has collected, and other aspects of 
the updated analysis, largely respond to the concerns raised by the 
commenters. In particular, the Department of Energy through ANL has 
conducted an updated assessment \1158\ of mineral supply development 
that further reinforces the growth in supply available from North 
America, FTA countries, MSP partners, and other economic allies that we 
noted in the proposal. The assessment considers geological resources 
and current international development activities that contribute to the 
understanding of mineral supply security as the jurisdictions around 
the world seek to reduce emissions. The ANL study \1159\ focuses on 
five materials identified in the 2023 DOE Critical Materials 
Assessment,\1160\ including lithium, nickel, cobalt, graphite, and 
manganese.
---------------------------------------------------------------------------

    \1158\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
    \1159\ Id.
    \1160\ Department of Energy, ``Critical Materials Assessment,'' 
July 2023. At https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf.
---------------------------------------------------------------------------

    The study collects and examines potential domestic sources as well 
as sources outside the U.S., including Free Trade Agreement (FTA) 
partners, members of the Mineral Security Partnership (MSP), economic 
allies without FTAs (referred to as ``Non-FTA countries'' in the ANL 
study), and FEOC sources associated with covered nations. The study 
also highlights current activities that are intended to expand a secure 
supply chain for critical minerals both domestically and among U.S. 
allies and partner nations, and considers the potential to meet U.S. 
demand with domestic and other secure sources. EPA considers the 
assessment by DOE/ANL to be thorough and up to date.
    In response to comments that we should consider availability of 
critical minerals other than lithium, we have included in this section 
additional analysis and discussion of graphite, cobalt, nickel, and 
lithium based on ANL's assessment.
    As is already true for many of the materials used to produce ICE 
vehicles, the ANL analysis confirms that imports will be needed to 
supplement domestic supplies for many of the key minerals used in PEV 
production. However, there is ample evidence to indicate that the U.S. 
is fully capable of securing these minerals in the time frame needed 
for this rulemaking without harm to economic or national security. The 
ANL analysis shows that many of the minerals needed to support 
worldwide decarbonization goals are abundant outside of China and other 
covered nations, and those needed by the U.S. to meet the final 
standards can ultimately be supplied in the time frame needed for this 
rulemaking by relying primarily if not exclusively on a combination of 
domestic sources and sources accessed through FTA partners, MSP 
partners, and other economic allies. Hence the ensuing discussion, and 
in general the issue of future adequacy of the supply chain for 
critical minerals and PEV production to support the standards, is 
focused on the outlook for securing a mineral supply chain that 
includes domestic supply as well as supply accessible through our 
global trading partners.
    In contrast to the concerns stated by some commenters, the evidence 
does not indicate that the status of mineral availability to comply 
with the standards is dire, nor that the U.S. must rely heavily in the 
long-term on covered nations or FEOCs. Rather, the U.S. and U.S. firms 
can secure sufficient minerals by executing strategies that have 
already been identified and are underway. While completing the 
development of a secure supply chain will require a deliberate effort 
between the U.S., allies, and partner countries, the work is already 
underway and is being further supported by strong government 
initiatives. The U.S. automotive industry is already engaging actively 
and successfully in efforts to secure these sources for their own 
production needs (motivated in part by IRA incentives that promote U.S. 
battery and battery component production, North American final 
assembly, and U.S./FTA mineral sourcing), and the U.S. government is 
also engaged in numerous activities that are further enabling U.S. 
industry to expand a secure supply chain for critical minerals among 
U.S. allies and partner nations. These include substantial efforts to 
scale mining supply domestically and in partner countries, strong 
financial support and technical guidance supporting investment in U.S. 
production facilities and technology research and development, building 
international partnerships that directly act to establish and secure 
mineral trade with friendly nations, and scaling battery recycling.
    To illustrate the diversity of America's trade allies, and the many 
ways in which the U.S. already has or is actively developing 
relationships relevant to securing battery minerals and materials 
through these partners, Argonne National Laboratory has compiled an 
accounting of international initiatives (Figure 38). This figure 
identifies 85 countries that together comprise our FTA partners, MSP 
partners, Trade and Investment Framework Agreement partners, and 
parties to other bilateral investment treaties, multilateral 
initiatives or defense agreements.\1161\
---------------------------------------------------------------------------

    \1161\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.

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

[[Page 28044]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.036

Figure 38: U.S. Government International Initiatives To Secure Battery 
Minerals and Materials 1162
---------------------------------------------------------------------------

    \1162\ Id.
---------------------------------------------------------------------------

    ANL concludes that a diversified sourcing strategy that includes 
these international sources coupled with strategic investments at home 
and abroad represent a viable pathway to sustainable and secure 
critical mineral supplies for the U.S. This strategy includes the 
formation of ``economic partnerships and trade with non-FTA countries 
that have significant capacity; strengthening processing, refining, and 
recycling in the U.S. and allied nations; and fostering collaborative 
efforts with FTA and MSP partners to ensure the success of mining 
projects.'' \1163\ ANL also identifies a portfolio of actions 
supporting this comprehensive approach that are already underway to 
build capacity, secure financing, improve governance, and pursue 
innovative solutions both at home and abroad.
---------------------------------------------------------------------------

    \1163\ Id.
---------------------------------------------------------------------------

    Internationally, the U.S. industry and federal government are 
actively working to facilitate the securing of minerals. These efforts 
include diversification of sourcing strategies by strengthening 
currently existing trade agreements and building new economic, 
technology, and regional security alliances. IRA incentives are also 
key to promoting onshoring and friendshoring of production. 
Manufacturers within the U.S. and globally are already beginning to 
alter their trading patterns in response, with U.S. manufacturers 
beginning to substitute supplies formerly obtained from FEOC sources 
with those from domestic sources or from FTA countries and other 
economic allies. Moves such as these are likely to reduce the potential 
for volatility in international supply chains. The U.S. government is 
facilitating this substitution through a range of initiatives that 
directly and indirectly enhance the resilience of the domestic battery 
components industry while also supporting that of its partners and 
allies.
    We now examine the outlook for U.S. battery cell and electrode 
active material manufacturers to access sufficient critical minerals 
from domestic sources and global trade partners and allies.
    As seen in Figure 39, ANL assessed potential upstream mined mineral 
supply based on the location of mine production.\1164\ ANL categorized 
potential U.S. trading partners into four primary groups: countries 
with which the U.S. has a Free Trade Agreement (FTA), countries that 
are members of the Minerals Security Partnership (MSP), countries that 
do not have an FTA agreement nor are partners of the MSP (Non FTA (Non 
MSP)), and sources that would be considered a Foreign Entity of Concern 
(FEOC) as defined by the U.S. Department of Energy.1165 1166
---------------------------------------------------------------------------

    \1164\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
    \1165\ Foreign entities of concern include entities (individuals 
and businesses) ``owned by, controlled by, or subject to 
jurisdiction or direction of'' a ``covered nation'' (defined in 10 
U.S. Code 2533(c)(d)(2) as the Democratic People's Republic of North 
Korea, the People's Republic of China, the Russian Federation, and 
the Islamic Republic of Iran).
    \1166\ Department of Energy, ``Department of Energy Releases 
Proposed Interpretive Guidance on Foreign Entity of Concern for 
Public Comment,'' December 1, 2023. https://www.energy.gov/articles/department-energy-releases-proposed-interpretive-guidance-foreign-entity-concern-public.
---------------------------------------------------------------------------

    The white horizontal line and the ``+'' represent low and high 
domestic demand scenarios, respectively. While ANL could not 
specifically assess domestic demand under the final standards (which 
were not yet public at the time of the study), ANL's description of BEV 
penetrations in each scenario indicates that the final standards would 
align closely to the ``ANL-Low'' scenario,\1167\ indicated by the white 
horizontal line.
---------------------------------------------------------------------------

    \1167\ ``In ANL-Low, the BEV sales share of LDV reaches 50% in 
2030 and 69% in 2035.'' ANL includes a figure titled ``EV sales for 
LDV and MHDV under Low and High scenarios'' in which the 2032 BEV 
penetration under the ANL-Low scenario is about 59 percent. See: 
Argonne National Laboratory, ``Securing Critical Materials for the 
U.S. Electric Vehicle Industry: A Landscape Assessment of Domestic 
and International Supply Chains for Five Key EV Battery Materials,'' 
ANL-24/06, February 2024.

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

[[Page 28045]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.037

Figure 39: Potential Upstream Mined Critical Minerals Supply Grouped by 
Location of Mine Production

    These results indicate that from 2025 to 2035, the currently 
identified capacity for lithium and nickel in the U.S. and FTA and MSP 
countries is significantly greater than U.S. demand under both the low 
and high domestic demand scenarios, and greater for cobalt under at 
least the low scenario. In particular, the U.S. is poised to become a 
key global producer of lithium, and supplemented by supply from FTA 
countries, the U.S. is positioned well for lithium through 2035. Of 
course, U.S. demand will be in competition with the demand for minerals 
created by other countries' decarbonization goals, particularly those 
outside of China. As a practical matter, this means that some portion 
of U.S. demand for these minerals might be secured to some degree from 
sources in partner countries that are not currently free trade partners 
or MSP members (but also are not covered nations or FEOCs). As 
previously shown in Figure 38, many of these non-FTA, non-MSP countries 
are economic allies that share other cooperative relationships or 
partnerships with the U.S. FTA, MSP, and the latter group of countries 
possess significant reserves. For example, an accounting of known 
mineral reserves in democratic countries across the world indicates 
that they surpass projected global needs through 2030 for the five 
minerals assessed by ANL, under a demand scenario that limits global 
temperature rise to 1.5 [deg]C.\1168\ As opposed to resources, which 
include possibly unrecoverable materials, reserves include ``measured 
and indicated deposits that have been deemed economically viable.'' 
\1169\ While this statistic does not demonstrate that these reserves 
will be extracted in any specific time frame, it demonstrates their 
presence and potential availability. As demand increases, particularly 
for secure supplies, further exploration and development of existing 
resources in these countries is likely to further increase these 
reserves. In addition, as discussed in more detail later in this 
section, EPA has examined pricing forecasts for critical minerals 
during the time frame of the rule, not only to inform its battery cost 
projections but also as a general indicator of industry sentiment 
regarding future availability. The evidence does not show expectation 
of large steep increases in future pricing, suggesting that industry at 
large has not identified hard constraints on the sufficiency of global 
supply to meet demand. Rather, the level of constructive activity in 
the auto industry and among its suppliers to secure supplies for these 
minerals suggests that the industry sees the identification of a gap 
between present supply and future demand not as a cause for panic but 
as a business opportunity.
---------------------------------------------------------------------------

    \1168\ Allan, B. et al., ``Friendshoring Critical Minerals: What 
Could the U.S. and Its Partners Produce?,'' Carnegie Endowment for 
International Peace, May 3, 2023. At https://carnegieendowment.org/2023/05/03/friendshoring-critical-minerals-what-could-u.s.-and-its-partners-produce-pub-89659.
    \1169\ Similarly, the USGS defines reserves as ``that part of 
the reserve base which could be economically extracted or produced 
at the time of determination. The term reserves need not signify 
that extraction facilities are in place and operative.'' U.S. Bureau 
of Mines and the U.S. Geological Survey, ``Principles of a Resource/
Reserve Classification For Minerals,'' Geological Survey Circular 
831, 1980.
---------------------------------------------------------------------------

    Figure 39 suggests that, among the minerals profiled, graphite is 
most exposed to potential need for supply from non-FTA, non-MSP 
countries. However, alternatives to imported graphite exist and are 
poised to become increasingly important during the time frame of the 
rule. ANL notes that synthetic graphite is already being produced and 
that scaling domestic synthetic graphite production holds significant 
promise for closing the gap. Unlike natural graphite, synthetic 
graphite does not depend on the existence of natural mineral deposits 
nor does it require the long permitting and approval time associated 
with mine development. Synthetic graphite can be manufactured from 
organic materials

[[Page 28046]]

such as lignin \1170\ as well as coal, coal waste, and plastic waste 
\1171\ and can substitute for natural graphite as a lithium-ion anode 
active material, as already done by some manufacturers.\1172\ ANL 
indicates that synthetic graphite can help meet future demands for this 
mineral over time. To this end, the Department of Energy has awarded a 
$100 million grant to Novonix to expand domestic production at its 
facility in Chattanooga, Tennessee.\1173\ Silicon is also increasingly 
used in place of a portion of anode graphite content, and on a mass 
basis can store much more lithium than graphite. The IEA indicates that 
in 2023, about 30 percent of anodes in production already contained a 
portion of silicon.\1174\ ANL has projected that anodes in common 
nickel-manganese chemistries will contain up to 15 weight percent 
silicon in the anode by 2030,\1175\ and some expect the global market 
for silicon anode material to expand by a factor of ten by 2035.\1176\ 
Both of these substitutes for imported graphite are growing and will 
play a rapidly growing role during the time frame of the rule. 
According to Wood Mackenzie, ``synthetic graphite will remain dominant 
in this space over the next decade, although the shift to silicon-
containing anodes is accelerating.'' \1177\
---------------------------------------------------------------------------

    \1170\ Zhang, J. et al., ``Graphite Flows in the U.S.: Insights 
into a Key Ingredient of Energy Transition,'' Environ. Sci. Technol. 
2023, 57, 3402-3414.
    \1171\ National Energy Technology Laboratory, ``NETL Driving 
Research To Produce Graphite for Electric Vehicles, Other Green 
Applications,'' September 19, 2023.
    \1172\ Zhang, J. et al., ``Graphite Flows in the U.S.: Insights 
into a Key Ingredient of Energy Transition,'' Environ. Sci. Technol. 
2023, 57, 3402-3414.
    \1173\ NOVONIX, ``NOVONIX Finalizes US$100 Million Grant Award 
from U.S. Department of Energy,'' Press Release, November 1, 2023. 
Accessed on February 24, 2024 at https://ir.novonixgroup.com/news-releases/news-release-details/novonix-finalizes-us100-million-grant-award-us-department-energy.
    \1174\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 58, 2023. Accessed on November 30, 2023 at https://www.iea.org/reports/global-ev-outlook-2023.
    \1175\ Argonne National Laboratory, ``Cost Analysis and 
Projections for U.S.-Manufactured Automotive Lithium-ion 
Batteries,'' ANL/CSE-24/1, January 2024.
    \1176\ Sang, S.H., ``EV battery makers' silicon anode demand set 
for take-off,'' Korea Economic Daily, February 23, 2024. Accessed on 
March 12, 2024 at https://www.kedglobal.com/batteries/newsView/ked202402230020.
    \1177\ Wood Mackenzie, ``Global graphite investment horizon 
outlook,'' slide 4, December 2023 (filename: global-graphite-
investment-horizon-outlook-q4-2023). Available to subscribers.
---------------------------------------------------------------------------

    In addition to these trends, supply sources of natural graphite are 
expected to become more diverse over time with new planned capacity in 
FTA countries (Canada and Australia) and in other economic allies 
(Tanzania and Mozambique), and others supported by the MSP.
    The DOE grant to Novonix is just one example of how the DOE's 
Office of Manufacturing and Energy Supply Chains (MESC) program, 
enabled by the BIL, is targeting key elements of the U.S. battery 
supply chain for accelerated development. As previously described in 
section IV.C.7.i, the BIL provides for $7.9 billion to support 
development of the domestic supply chain for battery manufacturing, 
recycling, and critical minerals.\1178\ For example, with respect to 
critical minerals, the BIL supports the development and implementation 
of a $675 million Critical Materials Research, Development, 
Demonstration, and Commercialization Program administered by the 
Department of Energy (DOE),\1179\ and has created numerous other 
programs in related areas, such as critical minerals data collection by 
the U.S. Geological Survey (USGS).\1180\ Provisions extend across 
several areas including critical minerals mining and recycling 
research, USGS energy and minerals research, rare earth elements 
extraction and separation research and demonstration, and expansion of 
DOE loan programs in critical minerals and zero-carbon 
technologies.1181 1182 Further, the DOE Loan Programs Office 
continues to disburse substantial amounts of assistance through its 
loans programs that include extraction, processing and recycling of 
lithium and other critical minerals.\1183\ Through the Advanced 
Technology Vehicles Manufacturing (ATVM) Loan Program and Title 17 
Innovative Energy Loan Guarantee Program over $20 billion in loans and 
loan guarantees is available to finance critical materials projects. 
Some examples of recent projects, amounting to $3.4 billion in loan 
support, are outlined in RIA Chapter 3.1.4.
---------------------------------------------------------------------------

    \1178\ Congressional Research Service, ``Energy and Minerals 
Provisions in the Infrastructure Investment and Jobs Act (Pub. L. 
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \1179\ Department of Energy, ``Biden-Harris Administration 
Launches $675 Million Bipartisan Infrastructure Law Program to 
Expand Domestic Critical Materials Supply Chains,'' August 9, 2022. 
Available at https://www.energy.gov/articles/biden-harris-administration-launches-675-million-bipartisan-infrastructure-law-program.
    \1180\ U.S. Geological Survey, ``Bipartisan Infrastructure Law 
supports critical-minerals research in central Great Plains,'' 
October 26, 2022. Available at https://www.usgs.gov/news/state-news-release/bipartisan-infrastructure-law-supports-critical-minerals-research-central.
    \1181\ Congressional Research Service, ``Energy and Minerals 
Provisions in the Infrastructure Investment and Jobs Act (Pub. L. 
117-58)'', February 16, 2022. https://crsreports.congress.gov/product/pdf/R/R47034.
    \1182\ International Energy Agency, ``Infrastructure and Jobs 
act: Critical Minerals,'' October 26, 2022. https://www.iea.org/policies/14995-infrastructure-and-jobs-act-critical-minerals.
    \1183\ Department of Energy Loan Programs Office, ``Critical 
Materials Loans & Loan Guarantees,'' https://www.energy.gov/sites/default/files/2021-06/DOE-LPO_Program_Handout_Critical_Materials_June2021_0.pdf.
---------------------------------------------------------------------------

    EPA notes that the categorization of mineral origins in Figure 39 
refers to mine location and not where the extracted material is 
processed into inputs to cell manufacturing such as precursors or 
electrode powders. As noted in the study, a large portion of processing 
capacity for mined battery minerals is located in China. However, 
unlike mining of mineral resources, refining and processing can take 
place in any country where capacity is built. Just as with other 
elements of the supply chain, mineral processing is also receiving 
attention from the domestic battery industry and the federal 
government. For example, mineral processing facilities are eligible for 
the Qualifying Advanced Energy Project Credit (48C), and are among the 
projects in a first round of $4 billion in tax credits that have been 
announced.\1184\ Critical materials processing is also included among 
projects eligible for the DOE ATVM loan program,\1185\ and the program 
has already issued conditional commitments to two projects for lithium 
carbonate and natural graphite active material production totaling $802 
million.1186 1187
---------------------------------------------------------------------------

    \1184\ Department of Energy, ``Qualifying Advanced Energy 
Project Credit (48C) Program--48C Updates,'' web page. Accessed on 
March 1, 2024 at https://www.energy.gov/infrastructure/qualifying-advanced-energy-project-credit-48c-program.
    \1185\ Id.
    \1186\ Department of Energy, ``LPO Announces Conditional 
Commitment to Ioneer Rhyolite Ridge to Advance Domestic Production 
of Lithium and Boron, Boost U.S. Battery Supply Chain,'' website 
announcement, January 13, 2023. https://www.energy.gov/lpo/articles/lpo-announces-conditional-commitment-ioneer-rhyolite-ridge-advance-domestic-production.
    \1187\ Department of Energy, ``DOE Announces First Advanced 
Technology Vehicles Manufacturing Loan in More than a Decade,'' 
website announcement, July 27, 2022. https://www.energy.gov/articles/doe-announces-first-advanced-technology-vehicles-manufacturing-loan-more-decade.
---------------------------------------------------------------------------

    In addition to EPA's assessment of the supply chain for critical 
minerals, several specific aspects of our updated compliance analysis 
act to address commenters' concerns about supply chain risk and 
uncertainty. Our updated central case projects a substantially lower 
demand for battery production than in the proposal, which would reduce 
resultant demand for critical minerals compared to the proposal. We

[[Page 28047]]

also are using substantially higher battery costs than in the proposal, 
which along with our upper battery cost sensitivity (which increases 
battery cost by an additional 25 percent), additionally recognizes and 
addresses commenters' concerns regarding uncertainty of future mineral 
prices. We also show multiple pathways that illustrate it is possible 
to comply with the standards with lower levels of BEVs (and hence lower 
demand for battery minerals) than in the central analysis, which 
further supports our conclusion that the standards can be met from the 
perspective of critical mineral availability.
    Regarding U.S. automaker access to critical minerals, EPA notes 
that U.S. automakers are actively addressing their need to secure a 
supply of critical minerals. In addition to continuing to reduce cobalt 
and rare earth magnet content in batteries and electric machines, 
manufacturers are also directly securing supplies of critical battery 
and rare-earth minerals necessary for increasing the scale of BEV 
production, often with a focus on U.S. 
sources.1188 1189 1190 1191 1192 1193 1194 1195 Here it is 
relevant to repeat that domestic sourcing of minerals primarily affects 
eligibility for the 30D Clean Vehicle Credit and does not otherwise 
prevent PEVs from contributing to the U.S. compliance fleet. EPA 
believes that these developments further indicate that the automotive 
industry has recognized the need to establish a supply chain for 
electrified vehicles and is taking appropriate action to address this 
business need.
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    \1188\ Hawkins, A.J. General Motors makes moves to source rare 
earth metals for EV motors in North America. The Verge, 12/09/2021. 
Accessed on 12/10/2021 at https://www.theverge.com/2021/12/9/22825948/gm-ev-motor-rare-earth-metal-magnet-mp-materials.
    \1189\ General Motors Press Release. GM to Source U.S.-Based 
Lithium for Next-Generation EV Batteries Through Closed-Loop Process 
with Low Carbon Emissions. Accessed on 12/10/2021 at https://media.gm.com/media/us/en/gm/home.detail.html/content/Pages/news/us/en/2021/jul/0702-ultium.html.
    \1190\ Waylund, M. GM to form new joint venture to produce 
crucial materials for EVs. CNBC, 12-0102021. Accessed on 12/10/2021 
at https://www.cnbc.com/2021/12/01/gm-to-form-new-joint-venture-to-produce-costly-raw-materials-for-evs.html.
    \1191\ Lambert, F. Tesla secures lithium supply contract from 
world's largest producer. Electrek, 11/01/2021. Accessed on 12/10/
2021 at https://electrek.co/2021/11/01/tesla-secures-lithium-supply-contract-ganfeng-lithium.
    \1192\ Lambert, F. Tesla secures large supply of nickel from New 
Caledonia for battery production. Electrek, 10/13/2021. Accessed on 
12/10/2021 at https://electrek.co/2021/10/13/tesla-secures-large-amount-nickel-from-new-caledonia-battery-production.
    \1193\ Lipinski, P., Steitz, C. Volkswagen secures raw materials 
as part of $34 billion battery push. Reuters, 12/08/2021. Accessed 
on 12/10/2021 at https://www.reuters.com/markets/deals/belgiums-umicore-plans-battery-material-venture-supply-volkswagen-2021-12-08.
    \1194\ Kilgore, T. Ford invests $50 million into EV battery 
supply chain company Redwood Materials. Marketwatch, 09/22/2021. 
Accessed on 12/10/2021 at https://www.marketwatch.com/story/ford-invests-50-million-into-ev-battery-supply-chain-company-redwood-materials-2021-09-22.
    \1195\ LaReau, J.L., ``GM forms 2 new partnerships that will 
create new factories in US,'' Detroit Free Press, December 9, 2021.
---------------------------------------------------------------------------

    As demand for these materials increases, we expect that mining and 
processing capacity across the world will continue to expand. Globally 
and in the U.S., interest and motivation toward developing new 
resources and expanding existing ones has become very high and is 
expected to remain so, as the demand outlook for lithium and other 
battery minerals continues to be robust. In the U.S. specifically, the 
process of establishing new mining capacity can be subject to greater 
uncertainty stemming from issues such as permitting; investor 
expectations of demand and future prices also make it difficult to 
predict with precision the rate at which new mines will be developed 
and brought online. For example, new lithium mining sources are 
sometimes described as taking from five to ten years or longer to 
develop. Comments from Toyota, for example, cite ``exploration and 
feasibility studies, approval and permitting processes, potential for 
project abandonment and delays, learning rates for new companies, and 
production ramp up'' as primary factors. These factors are well known 
in the industry and are typically considered by industry analysts when 
assessing production potential in future years, by assigning a 
percentage of potential production to each project based on their 
knowledge of the specific circumstances of each, including the level of 
development that has already taken place. Potential expansion of 
production at already-operating projects or resumption of halted or 
mothballed projects are typically weighted higher than entirely new 
operations. The 2024 ANL critical minerals analysis has identified 
numerous examples of mining development efforts in the U.S. that are 
currently in various stages of development, and has projected 
significant output in the future, particularly for lithium.\1196\ 
Canada is also taking specific steps to shorten permitting time, and 
also has significant mineral reserves as do other economic 
allies.\1197\
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    \1196\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
    \1197\ Reuters, ``Canada to accelerate critical mineral mining--
energy minister,'' February 13, 2024. Accessed on March 10, 2024 at 
https://www.reuters.com/markets/commodities/canada-accelerate-critical-mineral-mining-energy-minister-2024-02-13.
---------------------------------------------------------------------------

    Additionally, the U.S. government is taking steps to promote the 
production of critical minerals through both mining and recycling. This 
includes developing recommendations for improving the process of mining 
on public lands including modernization of the U.S. Mining Law of 
1872,1198 1199 and streamlining permitting processes under 
the Federal Permitting Improvement Steering Council (FAST-41).\1200\ 
The ANL mineral study also identifies a number of enabling approaches 
to promote critical mineral production. Additionally, the BIL and the 
IRA have introduced a number of incentives to scale domestic processing 
and recycling of critical minerals. These incentives include grants, 
such as the $3 billion Battery Manufacturing and Recycling Grant 
Program,\1201\ as well as the IRC 45X and 48C tax credits. In 2022, 
approximately $2.8 billion of BIL funding was invested in the battery 
supply chain, including processing and recycling, across the 
country.\1202\
---------------------------------------------------------------------------

    \1198\ U.S. Department of the Interior, ``Biden-Harris 
Administration Report Outlines Reforms Needed to Promote Responsible 
Mining on Public Lands,'' September 12, 2023. https://www.doi.gov/pressreleases/biden-harris-administration-report-outlines-reforms-needed-promote-responsible-mining.
    \1199\ Interagency Working Group on Mining Laws, Regulations, 
and Permitting, ``Recommendations to Improve Mining on Public 
Lands,'' Final Report, September 2023.
    \1200\ Department of Transportation, Permitting Dashboard 
Office, ``Permitting Council Moves to Designate the Critical 
Minerals Supply Chain as a FAST-41 Sector,'' Press Release, 
September 21, 2023.
    \1201\ Department of Energy, ``Battery Manufacturing and 
Recycling Grants,'' website. Located at https://www.energy.gov/mesc/battery-manufacturing-and-recycling-grants.
    \1202\ Department of Energy, ``Bipartisan Infrastructure Law 
Battery Materials Processing and Battery Manufacturing & Recycling 
Funding Opportunity Announcement (DE-FOA-0002678) Selections,'' 
Factsheets, October 19, 2022. Located at https://www.energy.gov/sites/default/files/2022-10/DOE%20BIL%20Battery%20FOA-2678%20Selectee%20Fact%20Sheets%20-%201_2.pdf.
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    Complementing select mining investments through the Defense 
Production Act (DPA), midstream and downstream investments are expected 
to incentivize upstream operations. Companies are competing to secure 
materials to feed domestic mid-stream operations, such as processing, 
cathode, and anode production. As of January 2024, more than 600 
facilities across the battery supply chain, including 79

[[Page 28048]]

facilities for electrode and cell manufacturing and 63 facilities for 
battery grade components manufacturing, are in various stages of 
development across the U.S.\1203\ New battery manufacturing and supply 
chain investments total more than $120 billion, with over 80,000 
potential new jobs, and DOE estimates that announced battery cell 
factories could supply batteries for more than 10 million new EVs every 
year.\1204\ Following enactment of the IRA, numerous investments in 
battery minerals have been announced across the country. Notable 
examples include the Kings Mountain lithium project by Albemarle in 
North Carolina, and the Smackover lithium project by ExxonMobil in 
Arkansas. In addition, the Export-Import Bank of the U.S. (EXIM) is 
supporting critical minerals projects, including in mining and 
processing, in the U.S. and abroad through an array of financing 
products including direct loans, loan guarantees, and export credit 
insurance.\1205\
---------------------------------------------------------------------------

    \1203\ National Renewable Energy Laboratory, ``NAATBatt Lithium-
Ion Battery Supply Chain Database,'' January 2024. Accessible at 
https://www.nrel.gov/transportation/li-ion-battery-supply-chain-database-online.html.
    \1204\ U.S. Department of Energy, ``Building America's Clean 
Energy Future,'' at https://www.whitehouse.gov/invest/. Accessed on 
February 16, 2024.
    \1205\ Export-Import Bank of the United States, ``EXIM Support 
for Critical Minerals Transactions,'' website, at: https://www.exim.gov/about/special-initiatives/ctep/critical-minerals.
---------------------------------------------------------------------------

    The federal government is also taking many other steps to assist 
with domestic critical mineral development. For example, the U.S. 
Geological Survey (USGS) is leading numerous projects under the Earth 
Mapping Resources Initiative (Earth MRI) to improve mapping and 
exploration of domestic resources, including already-announced or in-
progress projects in Alabama, Florida, New York, Montana, Kentucky, 
Tennessee, Georgia, and across the U.S. including projects focused on 
Arizona and Nevada.1206 1207 The FY24 National Defense 
Authorization Act (NDAA) created the Intergovernmental Critical 
Minerals Task Force to facilitate coordination for data sharing, 
capacity building, workforce development, policy review, environmental 
responsibility, onshoring opportunities, and identifying alternatives. 
The FY24 NDAA also directs the Department of Defense to develop a 
University Affiliated Research Center for Critical Minerals.\1208\ 
USGS, DOD, and DOE are also collaborating to leverage AI and machine 
learning for assessment of domestic critical mineral resources.\1209\ 
Many more examples of similar efforts have been compiled by ANL in its 
2024 study of critical minerals.\1210\
---------------------------------------------------------------------------

    \1206\ See website at https://www.usgs.gov/special-topics/earth-mri.
    \1207\ U.S. Geological Survey, ``News Releases or Technical 
Announcements about or related to Earth MRI,'' accessed on February 
24, 2024 at https://www.usgs.gov/special-topics/earth-mri/news.
    \1208\ National Defense Authorization Act, H.R. 2670, Section 
227. https://www.congress.gov/bill/118th-congress/house-bill/2670/text.
    \1209\ The White House, ``FACT SHEET: President Biden Announces 
New Actions to Strengthen America's Supply Chains, Lower Costs for 
Families, and Secure Key Sectors,'' November 27, 2023.
    \1210\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
---------------------------------------------------------------------------

    With regard to lithium, rapid growth in demand has driven new 
development of global resources and robust growth in supply, which is 
likely a factor in recently observed reductions in lithium price.\1211\ 
The IEA states that lithium ``is attracting substantial attention from 
mining investors'' and ``production levels are also increasing at a 
significant pace, with an annual growth rate ranging between 25 percent 
and 35 percent.'' \1212\ Growth in supply has also occurred in other 
battery minerals, sometimes outpacing growth in demand. For example, 
BloombergNEF projects that globally, cobalt and nickel reserves ``are 
now enough to supply both our Economic Transition and Net Zero 
scenarios,'' the latter of which is an aggressive global 
decarbonization scenario.\1213\
---------------------------------------------------------------------------

    \1211\ New York Times, ``Falling Lithium Prices Are Making 
Electric Cars More Affordable,'' March 20, 2023. Accessed on March 
23, 2023 at https://www.nytimes.com/2023/03/20/business/lithium-prices-falling-electric-vehicles.html.
    \1212\ International Energy Agency, ``Critical Minerals Market 
Review 2023,'' December 2023, p. 52.
    \1213\ BloombergNEF, ``Electric Vehicle Outlook 2023,'' 
Executive Summary, p. 5.
---------------------------------------------------------------------------

    In the proposal we cited expectations that the price of lithium and 
other critical minerals was likely to stabilize in the mid-2020s,\1214\ 
which we noted was also supported by proprietary battery price 
forecasts such as those EPA examined from Wood 
Mackenzie.1215 1216 Since the proposal we have continued to 
see evidence supporting that assessment. Numerous reports in the press 
that cite a decline in many critical mineral prices including lithium 
throughout 2023 1217 1218 are also supported by the latest 
subscription forecasts by Wood Mackenzie for key critical minerals and 
precursor chemicals. These forecasts indicate that prices are expected 
to stabilize and remain relatively low through 2028. For example, the 
2028 forecast for lithium carbonate and lithium hydroxide indicates 
stabilization at more than 20 percent below 2023 prices, with other 
minerals and precursors including flake graphite all similar to 2023 
prices or slightly lower.1219 1220 Further out, from 2029 to 
2032 prices for electrode raw materials, precursors and cathodes are 
projected to begin trending upward from the predicted low levels in the 
period prior to 2028 but not beyond levels already seen in 
2022.1221 1222 Similarly, projections for pricing of various 
forms of graphite do not anticipate per annum growth rates beyond low 
single digits from 2023 through 2032, indicative of a stable response 
to increasing demand.\1223\ These expectations lend further support to 
EPA's assessment that the combined cost of battery mineral content 
overall will not continually march upward from now through the time 
frame of the rulemaking as some commenters have suggested but will find 
a position within a reasonable range below the peak of prior years as 
the rapidly growing supply chain continues to mature and price 
discovery

[[Page 28049]]

gradually occurs in the developing market for each mineral.
---------------------------------------------------------------------------

    \1214\ For example, EPA cited Sun et al., ``Surging lithium 
price will not impede the electric vehicle boom,'' Joule, 
doi:10.1016/j.joule. 2022.06.028 (https://dx.doi.org/10.1016/j.joule.2022.06.028).
    \1215\ Wood Mackenzie, ``Battery & raw materials--Investment 
horizon outlook to 2032,'' September 2022 (filename: brms-q3-2022-
iho.pdf). Available to subscribers.
    \1216\ Wood Mackenzie, ``Battery & raw materials--Investment 
horizon outlook to 2032,'' accompanying data set, September 2022 
(filename: brms-data-q3-2022.xlsx). Available to subscribers.
    \1217\ The Wall Street Journal, ``Low Battery Metal Prices Set 
to Persist in 2024, Adding Friction to Energy Transition,'' December 
28, 2023. Accessed on February 24, 2024 at https://www.wsj.com/articles/low-battery-metal-prices-set-to-persist-in-2024-adding-friction-to-energy-transition-3773ba00.
    \1218\ Benchmark Minerals, ``OEMs and battery makers on alert as 
lower lithium prices to push into 2024,'' October 11, 2023. Accessed 
on February 24, 2024 at https://source.benchmarkminerals.com/article/oems-and-battery-makers-on-alert-as-lower-lithium-prices-to-push-into-2024-benchmark.
    \1219\ Wood Mackenzie, ``Electric Vehicle & Battery Supply Chain 
Short-term outlook January 2024'', slide 29, February 2, 2024 
(filename: evbsc-short-term-outlook-january-2024.pdf). Available to 
subscribers.
    \1220\ Wood Mackenzie, ``Global cathode and precursor short-term 
outlook January 2024,'' slide 5, January 2024 (filename: global-
cathode-and-precursor-market-short-term-outlook-january-2024.pdf). 
Available to subscribers.
    \1221\ Wood Mackenzie, ``Global cathode & precursor markets 
investment horizon outlook--Q4 2023,'' slides 21 and 22, December 
2023 (filename: global-cathode-and-precursor-market-investment-
horizon-outlook-december-2023.pdf). Available to subscribers.
    \1222\ Wood Mackenzie, ``Global lithium investment horizon 
outlook Q4 2023,'' slides 23 and 24, December 2023. (filename: 
global-lithium-investment-horizon-outlook-q4-2023-final.pdf). 
Available to subscribers.
    \1223\ Wood Mackenzie, ``Global graphite investment horizon 
outlook,'' slides 27 and 28, December 2023 (filename: global-
graphite-investment-horizon-outlook-q4-2023). Available to 
subscribers.
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    EPA considers this projected stability and moderate projected 
trends in pricing as further evidence of future mineral availability 
and a ``healthy'' mineral market. That is, the market has been 
anticipating large increases in mineral and active material demand 
during the time frame of the forecasts (2023-2028 and 2023-2032), and 
has also been aware of EPA's projected PEV penetrations through 2032 as 
published in the proposed rule in April 2023. These demand drivers have 
had significant time to be ``priced in'' by the market and nonetheless 
have not resulted in dramatically higher price expectations, which 
continue to be characterized by moderate upward trends in some minerals 
and little effect in others, suggesting that an irreconcilable 
shortfall is not anticipated. This suggests that like EPA, the industry 
at large has not identified hard constraints on the ability of the 
supply chain to react to growing demand without causing critical 
shortages.
    Some analysts as well as public commenters have pointed out that 
lower mineral prices, if they remain low enough for long enough, may 
begin to discourage continued investments in new supply. For example, 
in describing the growth rate of lithium production, IEA also stated 
that the ``recent decline in lithium prices could pose challenges to 
junior miners and early-stage projects.'' Others have remained 
positive; for example, strong profit margins have often remained 
afterward,\1224\ and many remain bullish in outlook.\1225\ EPA agrees 
that low prices can have the effect of discouraging long term 
investment in new production. However, it is well understood that like 
many other industries, critical mineral mining and production are 
cyclical industries in which rising prices stimulate new capacity, 
later resulting in lower prices that cause capacity to be taken out of 
production, followed again by higher prices, and so on. At this early 
stage, the previously described activities of the federal government in 
providing incentives, funding, and assistance can play an important 
role in sustaining resource development and keeping it focused on the 
longer term. Furthermore, additional federal government efforts to 
stockpile minerals, increase price transparency, and establish multi-
year procurement contracts can aid in improving certainty for critical 
minerals development.1226 1227
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    \1224\ New York Times, ``Falling Lithium Prices Are Making 
Electric Cars More Affordable,'' March 20, 2023. Accessed on March 
23, 2023 at https://www.nytimes.com/2023/03/20/business/lithium-prices-falling-electric-vehicles.html.
    \1225\ S&P Global, ``Commodities 2024: US, Canada lithium 
prospects hope to advance despite headwinds,'' December 19, 2023. 
Accessed on February 24, 2024 at https://www.spglobal.com/commodityinsights/en/market-insights/latest-news/metals/121923-us-canada-lithium-prospects-hope-to-advance-in-2024-despite-headwinds.
    \1226\ Commodity Futures Trading Commission, ``Statement of 
Commissioner Christy Goldsmith Romero on U.S. Supply Chain 
Resilience for Critical Minerals Before the Energy and Environmental 
Markets Advisory Committee,'' February 13, 2024. At https://www.cftc.gov/PressRoom/SpeechesTestimony/romerostatement021324.
    \1227\ National Defense Authorization Act, H.R. 2670, Section 
152. https://www.congress.gov/bill/118th-congress/house-bill/2670/text.
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    Some commenters cited specific examples of mines that had received 
permitting and investment but which were later put on hold, or had 
production reduced or stopped, due to declining mineral prices. 
However, EPA notes that these operations can be restarted more quickly 
in the event of higher prices than new mining operations or new 
factories. Mineral analysis firms (e.g., BMI) commonly categorize such 
projects as under ``care and maintenance,'' representing ``projects 
that were at some point in production, or have been commissioned, but 
have been idled/placed on care and maintenance,'' and ``could be 
brought online with less capital and time than other projects.'' \1228\ 
For the purpose of assessing future supply potential, BMI weights such 
projects at 90 percent of stated capacity.\1229\
---------------------------------------------------------------------------

    \1228\ Benchmark Mineral Intelligence (BMI), ``Lithium Mining 
Projects--Supply Projections,'' slide 2, Presentation, June 2023. 
Attachment to comment titled ``Comments of Environmental and Public 
Health Organizations,'' docket EPA-HQ-OAR-2022-0829.
    \1229\ Id.
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    Regarding global lithium production, we have also supplemented our 
lithium analysis from the proposal with newly available research and 
information. The outlook for lithium production has evolved rapidly, 
with new projects regularly identified and contributing to higher 
projections of resource availability and production.
    Benchmark Minerals Intelligence (BMI) conducted a comprehensive 
analysis of global and domestic lithium supply and demand in June 2023 
1230 1231 that indicates that lithium supply is likely to 
keep pace with growing demand during the time frame of the rule. In 
Figure 40 the vertical bars (at full height) represent estimated global 
demand, including U.S. demand. The top segment of each bar represents 
BMI's estimate of added U.S. demand under the proposed rule. The lowest 
line represents BMI's projection of global lithium supply (including 
U.S.) in GWh equivalent, weighted by current development status of each 
project. The middle line represents global supply where the U.S. 
portion is unweighted (i.e., all included projects reach full expected 
production). These two lines together represent a potential range for 
future global supply bounded by a standard weighted scenario (lowest 
line) and a maximum scenario applied to U.S. production only (middle 
line). In both cases, projected global lithium supply meets or 
surpasses projected global demand through 2029. Past 2029, global 
demand is either generally met or within 10 percent of projected demand 
through 2032. For reference, the uppermost line is a high supply 
scenario in which global supply is also unweighted.
---------------------------------------------------------------------------

    \1230\ Id.
    \1231\ Referenced in docket EPA-HQ-OAR-2022-0829, attachment to 
comment titled ``Comments of Environmental and Public Health 
Organizations,'' comprising comments attributed to Center for 
Biological Diversity, Conservation Law Foundation, Environmental Law 
& Policy Center, Natural Resources Defense Council, Public Citizen, 
Sierra Club, and the Union of Concerned Scientists.

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

[[Page 28050]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.038

Figure 40: Global Lithium Supply and Demand Based on Current 
Announcements--GWh Basis

    EPA notes that BMI based its estimate of U.S. demand on PEV 
penetrations under the proposed standards, which projected higher PEV 
penetrations than in the final standards. This means that the top 
segment of each bar would be shorter under the final standards, making 
the depicted results more conservative.
    EPA also notes that although BMI states that it is aware of 330 
lithium mining projects ranging from announced projects to fully 
operating projects and stages in between, the supply projections shown 
here are limited to only 153 projects that are already in production or 
have publicly identified production estimates as of December 2022 (more 
than one year ago). Excluded from both the weighted and unweighted 
supply projections are 177 projects for which no information on likely 
production level was available. It is standard practice to weight 
projects that have production estimates according to their stage of 
development, and BMI has followed this practice with the 153 projects. 
However, complete exclusion of the potential production of 177 projects 
(more than half of the total) suggests that the projections shown may 
be extremely conservative. If even a very conservative estimate of 
ultimate production from these 177 projects by 2030 were to be added to 
the chart, projected supply would increase and perhaps meet or surpass 
demand. At this time of rising mineral demand coupled with active 
private investment and U.S. government activities to promote mineral 
resource development, exclusion of potential production from these 
resources is not likely to reflect their future contribution to U.S. 
supply.
    In Figure 41 we show projections performed by ANL in February 2024 
for U.S. lithium supply and demand alone.\1232\ Like the BMI 
projections, the ANL projections include recycling potential. As 
mentioned previously, the ``ANL-Low'' scenario (solid line) is most 
similar to the final standards, indicating that domestically mined or 
recycled lithium would be sufficient to supply the majority of U.S. 
demand from 2027 to 2029 and all demand in 2030 and after.\1233\
---------------------------------------------------------------------------

    \1232\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
    \1233\ In comparing the charts, note that the lines in the BMI 
chart represent supply (in GWh equivalent), while the lines in the 
ANL chart represent demand (in K tonnes).

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

[[Page 28051]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.039

Figure 41: Potential U.S. Lithium Supply and Demand, ANL Study

    In mid-2023, some analysts began speaking of the possibility of a 
future tightness in global lithium supply. Opinions varied, however, 
about its potential development and timing, with the most bearish 
opinions suggesting as early as 2025 with others suggesting 2028 or 
2030.\1234\ However, the projections from BMI suggest only a mild gap 
in global supply beginning to form in 2030 and only if the 177 projects 
that were not quantified in the BMI study do not contribute. The ANL 
study does predict a gap but only in purely domestic supply, and there 
is no expectation that the U.S. must rely only on domestic 
lithium.\1235\ Further, the analysts quoted as predicting a future 
tightness stop well short of identifying an unavoidable hard constraint 
on lithium availability that would reasonably lead EPA to conclude that 
the standards cannot be met. Forecasts of potential supply and demand, 
including those that purport to identify a supply shortfall, typically 
are also accompanied by descriptions of burgeoning activity and 
investment oriented toward supplying demand, rather than a paucity of 
activity and investment that would be more indicative of a critical 
shortage. EPA also notes that since the time of the referenced article, 
demand for lithium has increasingly been depicted as having 
underperformed peak expectations. The final standards also project a 
lower PEV penetration than in the proposal, which would lead to lower 
demand from the standards than the proposal would have suggested.
---------------------------------------------------------------------------

    \1234\ CNBC, ``A worldwide lithium shortage could come as soon 
as 2025,'' August 29, 2023. Accessed on February 25, 2024 at https://www.cnbc.com/2023/08/29/a-worldwide-lithium-shortage-could-come-as-soon-as-2025.html.
    \1235\ In the case of the solid black line (ANL-Low scenario) 
which is similar to the final standards in PEV penetration.
---------------------------------------------------------------------------

    We also continue to note developments indicating that the lithium 
supply continues to respond robustly to demand. Since the proposal, in 
which we described ongoing work by DOE to characterize lithium mining 
developments in the U.S.,\1236\ the outlook for domestic lithium 
supplies has continued to expand as new resources have been identified 
and characterized, projects have continued through engineering economic 
assessments, and others begin permitting or construction. Significant 
lithium deposits exist in the U.S. in Nevada, California and several 
other states,1237 1238 and are currently attracting 
development interest from suppliers and automakers.\1239\ For example, 
largely since the proposal or the date of analyses available at the 
time, several large U.S. lithium resources have been announced and 
considered for development, including what could be the largest known 
lithium resource in the world.1240 1241 1242 The recent 
discovery of such sources and increased interest in development of 
known but unutilized sources suggests that resources of lithium, which 
previously was used only in a limited number of applications, may be 
underexplored and underdeveloped, and suggests that additional 
discoveries and developments will continue to improve our understanding 
of lithium availability.\1243\
---------------------------------------------------------------------------

    \1236\ Department of Energy, communication to EPA titled 
``Lithium Supplies--additional datapoints and research,'' March 8, 
2023. See memorandum to Docket ID No. EPA-HQ-OAR-2022-0829 titled 
``DOE Communication to EPA Regarding Critical Mineral Projects.''
    \1237\ U.S. Geological Survey, ``Mineral Commodity Summaries 
2022--Lithium'', January 2022. Available at https://pubs.usgs.gov/periodicals/mcs2022/mcs2022-lithium.pdf.
    \1238\ U.S. Geological Survey, ``Lithium Deposits in the United 
States,'' June 1, 2020. Available at https://www.usgs.gov/data/lithium-deposits-united-states.
    \1239\ Investing News, ``Which Lithium Juniors Have Supply Deals 
With EV Makers?,'' February 8, 2023. Accessed on March 24, 2023 at 
https://investingnews.com/lithium-juniors-ev-supply-deals.
    \1240\ Yirka, B., ``New evidence suggests McDermitt Caldera may 
be among the largest known lithium reserves in the world,'' August 
31, 2023. Accessed on October 18, 2023 at https://phys.org/news/2023-08-evidence-mcdermitt-caldera-largest-lithium.html.
    \1241\ ExxonMobil, ``ExxonMobil drilling first lithium well in 
Arkansas, aims to be a leading supplier for electric vehicles by 
2030,'' Press release, November 13, 2023. Accessed on December 16, 
2023 at https://corporate.exxonmobil.com/news/news-releases/2023/1113_exxonmobil-drilling-first-lithium-well-in-arkansas.
    \1242\ Reuters, ``Exxon to start lithium production for EVs in 
the US by 2027,'' November 13, 2023. Accessed on December 16, 2023 
at https://www.reuters.com/markets/commodities/exxon-start-producing-lithium-by-2027-2023-1-13-.
    \1243\ Washington Post, ``A Huge Lithium Discovery That 
Economists Were Expecting,'' September 11, 2023. Accessed on 
December 16, 2023 at https://www.washingtonpost.com/business/energy/2023/09/11/discovery-of-vast-new-lithium-deposit-in-us-shows-power-of-market/baad25be-50d211ee-accf-88c266213aac_story.html.
---------------------------------------------------------------------------

    DOE's lithium resource assessment work has continued via the 
February 2024 ANL critical minerals study.\1244\ The study continues to 
confirm a trend of rapidly growing identification of U.S. lithium 
resources and extraction development. The identification of these 
resources, some of which were publicly announced within the last year,

[[Page 28052]]

exemplifies the dynamic nature of the industry and the likely 
conservative aspect of existing assessments.
---------------------------------------------------------------------------

    \1244\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.

                                            Table 74--Examples of Domestic Lithium Projects Identified by ANL
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   Anticipated
                                                                      annual                                        Projected
            Property name                  Development stage         capacity                 State              start date \a\        Data source
                                                                   (tonnes LCE)
--------------------------------------------------------------------------------------------------------------------------------------------------------
Paradox..............................  Feasibility Complete....           13,074  Utah.........................            2025  Anson Resources.
Silver Peak..........................  Operational.............            5,000  Nevada.......................          Active  Steven, 2022.
South-West Arkansas..................  Prefeasibility complete.           26,400  Arkansas.....................            2027  Standard Lithium.
Fort Cady............................  Under Construction......            4,990  California...................            2026  5E Advanced Materials.
Clayton Valley (Zeus)................  Preliminary assessment/            31,900  Nevada.......................            2030  Noram Lithium Corp.
                                        Prefeasibility.
Round Top............................  Preliminary assessment/             9,800  Texas........................            2030  Texas Mineral Resource
                                        Prefeasibility.                                                                           Corp.
Clayton Valley.......................  Feasibility Started.....           27,400  Nevada.......................            2028  Century Lithium.
Thacker Pass (Phase I)...............  Under Construction......           40,000  Nevada.......................            2026  Lithium Americas.
Thacker Pass (Phase II)..............  Construction Planned....           80,000  Nevada.......................            2029  Lithium Americas.
Piedmont.............................  Feasibility Complete....           26,400  North Carolina...............            2025  Piedmont Lithium.
Rhyolite Ridge.......................  Construction Planned....           20,600  Nevada.......................            2026  Ioneer.
TLC Phase I..........................  Prefeasibility..........           24,000  Nevada.......................            2028  American Lithium.
ABTC.................................  Construction Planned....           26,400  Nevada.......................            2026  American Battery
                                                                                                                                  Technology Co.
Kings Mountain.......................  Under Construction......           50,000  North Carolina...............            2026  Albemarle.
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ The start dates for the projects are adopted as provided through press releases or company investor reports. In cases where an anticipated start
  date is not specified, ANL provides an estimated start date. This estimate is based on assumptions about the typical timeline for project initiation,
  provided all necessary elements align as anticipated. It is important to note that any failure in meeting necessary prerequisites such as technical
  requirements, sustaining project economics, permitting, or financing could result in project delays or, in extreme cases, even cancellation. Thus,
  actual start dates could be earlier or later than reported here. The data was last updated in February 2024. The list only includes projects with
  publicly available information and is intended solely for illustrative purposes. Some evaluated projects are excluded from this list.

    As shown in Figure 42, ANL anticipates that projects such as these 
will increase U.S. lithium production by almost an order of magnitude 
from about 50,000 metric tons of lithium carbonate equivalent in 2025 
to over 450,000 metric tons by 2030.\1245\
---------------------------------------------------------------------------

    \1245\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
[GRAPHIC] [TIFF OMITTED] TR18AP24.040

Figure 42: Prospective Domestic Lithium Supply, 2023 to 2035

    We also note that the example provided by the critical mineral 
content requirements for $3,750 of the 30D Clean Vehicle Credit has 
spurred other countries to consider action that would further expand 
global lithium supply. For example, the European Union is seeking to 
promote rapid development of Europe's battery supply chains by 
considering targeted measures such as accelerating permitting processes 
and encouraging private investment. To these ends the European 
Parliament proposed a Critical Raw Materials Act on March 16, 2023, 
which includes these and other measures to encourage the development of 
new supplies of critical minerals not currently

[[Page 28053]]

anticipated in market projections.1246 1247 1248 The Act was 
adopted in December 2023.\1249\
---------------------------------------------------------------------------

    \1246\ European Union, ``7th High-Level Meeting of the European 
Battery Alliance: main takeaways by the Chair Maro[scaron] 
[Scaron]ef[ccaron]ovi[ccaron] and the Council Presidency,'' March 1, 
2023. Accessed on March 9, 2023 at https://single-market-economy.ec.europa.eu/system/files/2023-03/Main%20takeaways_7th%20High-Level%20Meeting%20of%20EBA.pdf.
    \1247\ New York Times, ``U.S. Eyes Trade Deals With Allies to 
Ease Clash Over Electric Car Subsidies,'' February 24, 2023.
    \1248\ European Parliament, ``Proposal for a regulation of the 
European Parliament and of the Council establishing a framework for 
ensuring a secure and sustainable supply of critical raw 
materials,'' March 16, 2023. https://single-market-economy.ec.europa.eu/publications/european-critical-raw-materials-act_en.
    \1249\ European Parliament, ``Critical raw materials: MEPs adopt 
plans to secure the EU's supply and sovereignty,'' Press release, 
December 12, 2023. At https://www.europarl.europa.eu/news/en/press-room/20231208IPR15763/critical-raw-materials-plans-to-secure-the-eu-s-supply.
---------------------------------------------------------------------------

    We also note, as in the proposal, that supply and demand of some 
critical minerals is subject to the potential substitution of some 
minerals for others. We noted as an example that some PEV battery 
applications already employ a lithium-iron phosphate (LFP) cathode 
which does not require cobalt, nickel, or manganese. Since the 
proposal, we continue to see evidence that LFP batteries are 
increasingly specified for PEV use. Globally, LFP already has about 30 
percent market share in PEV applications.\1250\ In the U.S., LFP share 
is currently lower, but in section IV.C.2 of this preamble we discuss 
evidence that indicates LFP share will grow to about 20 percent in the 
time frame of the rule. The ANL battery production study finds a 
similar LFP share among announced U.S. cell manufacturing plants.\1251\ 
Other innovations in battery technology also have the potential to 
dramatically reduce demand for key battery minerals and are continuing 
to be developed in both the private and public sector. For example, DOE 
is prioritizing the reduction or elimination of the use of cobalt in 
batteries, and Lawrence Berkeley National Laboratory is leading a 
consortium focused on cheaper, more abundant alternatives to nickel and 
cobalt.\1252\ Sodium-ion chemistry has potential to eventually 
substitute for lithium-ion and does not require lithium,\1253\ lithium-
sulfur chemistry has similar potential to replace critical minerals in 
the cathode.\1254\ and silicon is already increasingly displacing 
graphite in the lithium-ion anode.\1255\ Although our analysis has not 
assumed that these latter chemistries will be ready for vehicle use in 
the time frame of the rule, they demonstrate a path by which critical 
minerals may become far less important to PEV battery production in the 
future than they are today.
---------------------------------------------------------------------------

    \1250\ International Energy Agency, ``Global EV Outlook 2023,'' 
p. 57, 2023. Accessed on November 30, 2023 at https://www.iea.org/reports/global-ev-outlook-2023.
    \1251\ Argonne National Laboratory, ``Quantification of 
Commercially Planned Battery Component Supply in North America 
through 2035,'' ANL-24/14, March 2024. See Figure 18 therein, titled 
``Modeled lithium-ion cell production capacity in North America from 
2018 to 2035 by cathode chemistry.''
    \1252\ Duque, T., ``New Consortium to Make Batteries for 
Electric Vehicles More Sustainable,'' News from Berkeley Lab, 
September 11, 2023. At https://newscenter.lbl.gov/2023/09/11/new-consortium-to-make-ev-batteries-more-sustainable/.
    \1253\ Argonne National Laboratory, ``Cathode innovation makes 
sodium-ion battery an attractive option for electric vehicles,'' 
January 8, 2024. Accessed on March 12, 2024 at https://www.anl.gov/article/cathode-innovation-makes-sodiumion-battery-an-attractive-option-for-electric-vehicles.
    \1254\ Argonne National Laboratory, ``Lithium-sulfur batteries 
are one step closer to powering the future,'' January 6, 2023. 
Accessed on March 12, 2024 at https://www.anl.gov/article/lithiumsulfur-batteries-are-one-step-closer-to-powering-the-future.
    \1255\ Patel, P., ``The Age of Silicon Is Here . . . for 
Batteries,'' IEEE Spectrum, May 4, 2023. Accessed on March 12, 2024 
at https://spectrum.ieee.org/silicon-anode-battery.
---------------------------------------------------------------------------

    Similarly, we continue to assess that rare earth metals used in 
permanent-magnet electric machines have alternatives in the form of 
ferrite or other advanced magnets, or the use of induction machines or 
advanced externally excited motors, which do not use permanent magnets. 
EPA does not anticipate shortages or high prices in rare earth metals 
that would prevent compliance with the standards, as indicated by 
evidence of a gradually increasing but apparently stable price outlook 
for rare earths used in magnets, and a generally declining outlook for 
other rare earths, during the time frame of the rule.\1256\ According 
to Wood Mackenzie, ``Demand growth and tight supply will incentivize 
expansions at existing operations and the development of new supply, 
both within and outside of China.'' \1257\ EPA has reached similar 
conclusions regarding electrical steel, and we discuss the outlook for 
electrical steel in detail in section 12.2.3 of the Response to 
Comments document.
---------------------------------------------------------------------------

    \1256\ Wood Mackenzie, ``Global rare earths investment horizon 
outlook,'' December 2023, p. 15 and 16 (filename: global-rare-
earths-investment-horizon-outlook-q4-2023.pdf). Available to 
subscribers.
    \1257\ Id.
---------------------------------------------------------------------------

    In RIA Chapter 3.1.5, we describe our reasoning behind the 
selection of lithium supply as the primary mineral-based limiting 
factor in constraining the potential rate of PEV penetration for 
modeling purposes. In addition, with respect to other cathode and anode 
minerals, we note that there is some flexibility in choice of these 
minerals, as in many cases, opportunity will exist to reduce cobalt and 
manganese content or to substitute with iron-phosphate chemistries that 
do not utilize nickel, cobalt or manganese, or use other forms of 
carbon in the anode, or in conjunction with silicon. However, all 
chemistries currently used in PEV batteries require lithium in the 
electrolyte and the cathode, and these have no viable substitute that 
is expected to be commercially available in the near term.\1258\ 
Accordingly, in RIA Chapter 3.1.5 we focused on lithium availability as 
a potential limiting factor on the rate of growth of PEV production, 
and thus the most appropriate basis for establishing a modeling 
constraint on the rate of PEV penetration into the fleet over the time 
frame of this rule. In that analysis, we conclude that the scale and 
pace of demand growth and investment in lithium supply means that it is 
well positioned to meet anticipated demand as demand increases and 
supply grows.
---------------------------------------------------------------------------

    \1258\ In RIA Chapter 3.1.4 we discuss the outlook for 
alternatives to lithium in battery chemistries that are under 
development.
---------------------------------------------------------------------------

    Finally, EPA notes that manganese is listed as being ``not 
critical'' by a 2023 DOE Critical Minerals Assessment in both the near 
and medium terms, due both to a lack of supply risk and overall level 
of importance to clean energy technologies.\1259\ The 2024 ANL critical 
mineral report includes analysis of manganese and notes that 
``significant manganese reserves are concentrated among a few FTA and 
MSP trade partners, such as Australia, Canada, and India. Manganese 
supply from these countries is quite substantial and is likely to be 
sufficient to meet U.S. demand in both the near and medium term.'' 
\1260\
---------------------------------------------------------------------------

    \1259\ Department of Energy, ``Critical Materials Assessment,'' 
July 2023. At https://www.energy.gov/sites/default/files/2023-07/doe-critical-material-assessment_07312023.pdf.
    \1260\ See p. 63, Argonne National Laboratory, ``Securing 
Critical Materials for the U.S. Electric Vehicle Industry: A 
Landscape Assessment of Domestic and International Supply Chains for 
Five Key EV Battery Materials,'' ANL-24/06, February 2024.
---------------------------------------------------------------------------

    Taken together these outlooks support the perspective that critical 
minerals are not likely to encounter a critical shortage as supply 
responds to meet growing demand. It continues to be EPA's assessment 
that future availability of critical minerals will not pose a 
constraint on automakers' ability to meet the standards.

[[Page 28054]]

    For additional details on the mineral supply outlook for the time 
frame of this rule, see Chapter 3.1.4 of the RIA.
iii. Mineral Security
    Mineral security refers to the ability for the U.S. to meet its 
needs for critical minerals, and the potential economic or national 
security risks posed by their sourcing.\1261\ This section examines the 
outlook for mineral security as it relates to demand for critical 
minerals resulting from increased PEV production under the final 
standards. We note that this section focuses on mineral security, and 
not on energy security, which relates to security of energy consumed by 
transportation and other needs. Energy security is discussed separately 
in section VIII.D.3 of this preamble.
---------------------------------------------------------------------------

    \1261\ For additional context, consider that according to USGS, 
the Energy Act of 2020 defines a ``critical mineral'' as ``a non-
fuel mineral or mineral material essential to the economic or 
national security of the U.S. and which has a supply chain 
vulnerable to disruption.''
---------------------------------------------------------------------------

    In the context of vehicle manufacturing, concern for U.S. mineral 
security relates to the global distribution of established supply 
chains for critical minerals that are important to vehicle production, 
and the fact that, at present, not all domestic demand for these 
materials is satisfied through domestic sources or from secure sources 
such as FTA countries, MSP countries or other economic allies.
    Currently, despite a wide distribution of mineral resources 
globally, mineral production is not evenly distributed across the 
world. At present, production is concentrated in a relatively small 
number of countries due to several factors, including where the 
resources are found in nature, the level of investment that has 
occurred to develop the resources, economic factors such as 
infrastructure, and the presence or absence of government policy 
relating to their production. For example, investment in mineral 
refinement and processing has received strong emphasis in China, while 
Japan and South Korea have become leaders in cell and cell component 
manufacturing, and countries with abundant mineral resources have 
become leading producers, for example Indonesia for nickel, Australia 
for lithium, and Democratic Republic of Congo for cobalt.
    While the U.S. is not currently a leading producer of minerals used 
in PEV production, substantial investment has already gone towards and 
continues to be deployed toward expanding domestic mineral supply and 
building a more secure supply chain among FTA partners, MSP partners, 
and economic allies.
    To examine U.S. mineral security in the context of the rule, first 
it is important to understand how mineral security compares to the 
similar but distinct topic of energy security. As EPA defines them, 
energy security relates primarily to the securing of energy sources, 
while mineral security relates to mineral sources that are not a source 
of energy. Supply disruptions and fluctuating prices are relevant to 
critical minerals as well as to energy markets, but the impacts of such 
disruptions to the mineral market are felt differently and by different 
parties. Disruptions in the price or availability of oil or gasoline 
has an immediate impact on consumers through higher fuel prices, and 
thus has an immediate effect on the cost or ability to travel. The same 
disruptions in critical minerals do not impact the immediate ability to 
travel but affect only the production and cost of new vehicles. In 
practice, short-term price fluctuations do not always translate to 
higher production cost as most manufacturers purchase minerals via 
long-term contracts that insulate them to a degree from volatility in 
spot prices. Moreover, critical minerals are not concentrated among a 
small group of commodities such as crude oil or natural gas, but 
comprise a larger number of distinct commodities, each having its own 
supply and demand dynamics, and some being capable of substitution by 
other minerals. Importantly, while oil is consumed as a fuel and thus 
requires continuous supply, minerals become a constituent part of the 
vehicle and have the potential to be recovered and recycled. Thus, even 
when minerals are imported from other countries, their acquisition adds 
to the domestic mineral stock that is available for domestic recycling 
in the future.
    In the proposal, EPA analyzed the primary issues surrounding 
mineral security. We collected and reviewed information relating to the 
present geographical distribution of developed and known critical 
mineral resources and products, including information from the U.S. 
Geological Survey, analyst firms and various stakeholders. In 
considering these sources we highlighted and examined the potential for 
the U.S. to secure its sources for critical minerals. Our assessment of 
the available evidence indicated that the increase in PEV production 
projected to result from the proposed standards could be accommodated 
without causing harm to national security.
    We received a variety of comments on our analysis, some of which 
disagreed with our findings and others which supported them. Supportive 
comments often pointed to examples of rapidly increasing attention to 
development of mineral resources in the U.S. and in nations with which 
the U.S. has good trade relations, and also pointed to the current and 
ongoing influence of support from the BIL and IRA in advancing such 
projects. Commenters who disagreed with our findings largely expressed 
the position that EPA did not adequately address the issue, or did not 
adequately consider the risks posed by increased demand for critical 
minerals or products that use them. Because mineral security is closely 
related to development of the domestic supply chain, comments often 
included references to the state of the domestic supply chain and the 
commenter's views on how it either is or is not advancing at a 
sufficient pace to allay mineral security concerns.
    EPA appreciates and has carefully considered the substantive and 
detailed comments offered by the various commenters. Much of the 
information provided by commenters who disagreed with our assessment 
tends to expand upon the evidence that EPA already presented in the 
proposal concerning the risks and uncertainties associated with the 
future impact of mineral demand on mineral security. Much of the 
information provided by supportive commenters also expands on the 
evidence EPA presented in the proposal about the pace of activity and 
overall outlook for buildout of the critical mineral supply chain. 
While contributing to the record, the information provided by the 
commenters largely serves to further inform the trends that were 
already identified and considered by EPA in the proposal, and do not 
identify new, specific aspects of mineral security that were not 
acknowledged in the proposal. Taken together, the totality of 
information in the public record continues to indicate that development 
of the critical mineral supply chain is proceeding both domestically 
and globally in a manner that supports the industry's compliance with 
the final standards. In light of this information provided in the 
public comments and additional information that EPA has collected 
through continued research, it continues to be our assessment that the 
increase in PEV production projected under the standards will not 
adversely impact national security.
    The findings discussed in section IV.C.7 of this preamble inform 
our basis for this assessment. In fact, rather than harming national 
security, EPA finds that the final rule will promote the

[[Page 28055]]

interest of national security by reducing exposure to the risks 
associated with reliance on petroleum (benefits which EPA monetizes in 
section VIII of the preamble), and by providing regulatory and market 
certainty for the continued development of a secure domestic and allied 
supply chain for critical minerals (as previously mentioned at the 
beginning of this section IV.C.7 of the preamble). This is consistent 
with views prevalent in the industry that acknowledge the value of 
regulatory certainty in driving investment in 
production.1262 1263 1264 Some commenters, such as the 
``Environmental and Public Health Organizations'' and ZETA, echoed this 
principle, stating for example, ``clear regulatory signals--like EPA's 
vehicle emissions regulations--can create further confidence in the 
private sector to accelerate and expand investments.'' If commenters 
citing concerns about national security are correct that development of 
a domestic supply chain for these products will be important to 
national security and global competitiveness of the U.S., it is also 
relevant to note that it was in the absence of (i.e., prior to) this 
rule that U.S. domestic production capacity has lagged far behind that 
of China and other countries. While the domestic supply chain has 
already begun to develop in part as a result of rapidly growing 
industry attention to vehicle electrification as well as the influence 
of the IRA and BIL, the need to comply with the standards provides 
additional market certainty to improve confidence in investment in this 
area and is likely to lead to even faster development of the supply 
chain. In fact, many of the same critical minerals and the same types 
of production capacity are necessary not only for complying with the 
standards, but also for the general competitiveness of the U.S. on a 
global stage, at a time when the need to reduce greenhouse gases, 
reduce other pollutants, and produce clean energy is being recognized 
across the world. The standards are thus consistent with, and are 
likely to promote, the competitiveness of U.S. industry as well as the 
national security benefits that accompany such an outcome.
---------------------------------------------------------------------------

    \1262\ Allen & Overy, ``U.S. Inflation Reduction Act takes 
climate change out of political cycle,'' November 3, 2022. Accessed 
on February 16, 2024 at https://www.allenovery.com/en-gb/global/news-and-insights/publications/us-inflation-reduction-act-takes-climate-change-out-of-political-cycle.
    \1263\ Union of Concerned Scientists, ``Production Tax Credit 
for Renewable Energy,'' February 9, 2015. Accessed on February 16, 
2024 at https://www.ucsusa.org/resources/production-tax-credit-renewable-energy.
    \1264\ Bistline, J. et al., ``Economic Implications of the 
Climate Provisions of the Inflation Reduction Act,'' Brookings 
Papers on Economic Activity, BPEA Conference Draft, March 30-31, 
2023. Accessed on February 16, 2024 at https://www.brookings.edu/wp-content/uploads/2023/03/BPEA_Spring2023_Bistline-et-al_unembargoedUpdated.pdf.
---------------------------------------------------------------------------

    In the proposal, we also acknowledged the well-known fact that 
critical minerals are distributed widely across the world and are 
traded via a highly globalized supply chain that includes numerous 
stages of their production. A description of worldwide sources of 
critical minerals as they exist today, and key takeaways from the ANL 
study which explores these issues,\1265\ are provided in Chapter 3 of 
the RIA.
---------------------------------------------------------------------------

    \1265\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
---------------------------------------------------------------------------

    The development of critical mineral mining, processing, and related 
manufacturing capacity in the U.S. is a primary focus of efforts on the 
part of both industry and the federal government toward building a 
secure supply chain that reduces or eliminates exposure to security 
risks. These efforts are being greatly facilitated by the provisions of 
the BIL and the IRA as well as large private-sector investments that 
are already underway and continuing. The Inflation Reduction Act and 
the Bipartisan Infrastructure Law are in fact continuing to be a highly 
effective means by which Congress and the Administration are supporting 
the building of a robust supply chain, and accelerating this activity 
to ensure that it forms as rapidly as possible.
    The U.S. is also taking advantage of a significant and growing 
portfolio of international engagements to secure mineral supplies, 
including FTAs, the Minerals Security Partnership (MSP), Trade 
Investment Framework Agreements (TIFAs), and other bilateral and 
multilateral agreements such as the Partnership for Global 
Infrastructure and Investment (PGI). In the words of Assistant 
Secretary of State for Energy Resources Geoffrey R. Pyatt in June 2023, 
the administration is ``using all the tools at its disposal, such as 
investments, loan programs, public-private partnerships, and technical 
assistance for energy infrastructure and supply chain development.'' 
\1266\ Government entities, including the White House, the U.S. Agency 
for International Development (USAID), the U.S. Development Finance 
Corporation (DFC), the U.S. Export-Import Bank (EXIM), and the 
Departments of Defense, State, Commerce, Labor, Interior, and Energy, 
are engaged in these efforts. These agencies have engaged governments 
in Asia, Africa, Europe, South America, and Australia on issues 
spanning investment, cooperative agreements, anti-corruption efforts, 
research, and economic development. Extensive details on the work being 
pursued by these and similar efforts are outlined in the ANL 
study.\1267\
---------------------------------------------------------------------------

    \1266\ Written Testimony of Geoffrey R. Pyatt, Assistant 
Secretary for Energy Resources, United States Department of State 
Before the House Foreign Affairs Committee, ``Assessing U.S. Efforts 
to Counter China's Coercive Belt and Road Diplomacy, ``June 14, 
2023. https://docs.cchouse.gov/meetings/FA/FA00/20230614/116025/HHRG-118-FA00-Wstate-PyattG-20230614.pdf.
    \1267\ Argonne National Laboratory, ``Securing Critical 
Materials for the U.S. Electric Vehicle Industry: A Landscape 
Assessment of Domestic and International Supply Chains for Five Key 
EV Battery Materials,'' ANL-24/06, February 2024.
---------------------------------------------------------------------------

    For example, in 2023, the State Department launched the Minerals 
Investment Network for Vital Energy Security and Transition (MINVEST), 
a public-private partnership between the U.S. Department of State and 
SAFE Center for Critical Minerals Strategy to spur investment in 
mining, processing, and recycling opportunities.1268 1269 
Another example is the work of Li-Bridge, a public-private alliance 
committed to accelerating the development of a robust and secure 
domestic supply chain for lithium-based batteries. It has set forth a 
goal that by 2030 the United States should capture 60 percent of the 
economic value associated with the U.S. domestic demand for lithium 
batteries. Achieving this target would double the economic value 
expected in the U.S. under ``business as usual'' growth.\1270\ More 
evidence of recent growth in the supply chain is found in a February 
2023 report by Pacific Northwest National Laboratory (PNNL), which 
documents robust growth in the North American lithium battery 
industry.\1271\
---------------------------------------------------------------------------

    \1268\ Department of State, ``MINVEST: Minerals Investment 
Network for Vital Energy Security and Transition,'' website, https://www.state.gov/minvest.
    \1269\ Department of State, ``Final MINVEST One-Pager.'' https://www.state.gov/wp-content/uploads/2024/02/FINAL-MINVEST-One-Pager.pdf.
    \1270\ Department of Energy, Li-Bridge, ``Building a Robust and 
Resilient U.S. Lithium Battery Supply Chain,'' February 2023.
    \1271\ Pacific Northwest National Laboratory, ``North American 
Lithium Battery Materials V 1.2,'' February 2023. Available at 
https://www.pnnl.gov/projects/north-american-lithium-battery-materials-industry-report.
---------------------------------------------------------------------------

    Recent policy recommendations from Congress have also expressed the 
goal of expanding and strengthening trade relationships with allies. In 
December 2023 the House Select Committee on US-China Competition 
released a series

[[Page 28056]]

of policy recommendations \1272\ that included a resource reserve, 
advancement of trade agreements, investigation of product dumping, 
restriction of recycled material exports, enhancement of training 
programs, and expansion of the MSP. A November letter from Senators 
Marco Rubio (R-FL) and Mark Warner (D-VA) to the Export-Import Bank 
requested that projects to secure critical mineral supply chains in 
allied and partner nations be prioritized.\1273\ The 2024 National 
Defense Authorization Act signed on December 22, 2023 also contains 
numerous provisions related to securing and diversifying the supply 
chain for critical materials.\1274\
---------------------------------------------------------------------------

    \1272\ ``Reset, Prevent, Build: A Strategy to Win America's 
Economic Competition with the Chinese Communist Party.'' At https://selectcommitteeontheccp.house.gov/sites/evo-subsites/selectcommitteeontheccp.house.gov/files/evo-media-document/reset-prevent-build-scc-report.pdf.
    \1273\ Letter from Sens. Marco Rubio and Mark Warner to Reta Jo 
Lewis, President of the Export-Import Bank of the U.S., November 16, 
2023. https://www.warner.senate.gov/public/_cache/files/1/7/17def9a2-d95c-40b1-9028-119f35769394/FCB942C1068EB79B54E8769260B13F59.11.16.23-rubio-warner-letter-to-exim-re-critical-minerals.pdf-.
    \1274\ https://www.congress.gov/bill/118th-congress/house-bill/2670/text.
---------------------------------------------------------------------------

    Since the proposal, EPA has observed a general trend of continued 
activity to build the domestic and allied supply chain for critical 
minerals. EPA believes that this continued progress indicates that 
automakers, suppliers, and investors are taking advantage of the 
business opportunities that this need presents, and that the U.S. 
manufacturing industry is taking the necessary steps to create a secure 
supply chain for these products. Our assessment of the available 
evidence indicates that the increase in PEV production projected to 
result from the proposed standards can be accommodated without causing 
harm to national security.
iv. Battery and Mineral Recycling
    EPA received comment on the potential role of recycling as a means 
of reducing future reliance on newly mined or acquired critical 
minerals over the long term. Some commenters supported EPA's view that 
battery recycling will contribute to mineral security and 
sustainability, gradually becoming more important as a domestically 
produced mineral source that will reduce reliance on foreign-sourced 
minerals. Other commenters expressed the view that recycling would not 
be a significant factor or would not develop quickly enough.
    In the proposal, EPA reviewed the potential for recycling to become 
an important source of future mineral supply but did not specifically 
rely on projections of growth in recycling activity or recycled content 
to justify the feasibility of the standards. Similarly, the compliance 
analysis for the final standards does not specifically consider 
recycled content nor rely on specific assumptions regarding the growth 
of recycling in the future. As such, our analysis is conservative: we 
find that critical minerals and the battery supply chain will not 
constrain manufacturers who choose to produce PEVs to comply with the 
final standards, assuming no recycling activities, even though we 
believe that recycling has the potential to provide a significant 
source of critical minerals and other materials for battery production, 
particularly in later years of the program.
    As in the proposal, EPA continues to recognize that recycling will 
take time to become a strong contributor to ongoing domestic mineral 
supply. For example, we noted that growth in the return of end-of-life 
PEV batteries will lag the market penetration of PEVs, and that it is 
important to consider the development of a battery recycling supply 
chain during the time frame of the rule and beyond. We also noted 
evidence that suggest by 2050, battery recycling could be capable of 
meeting 25 to 50 percent of total lithium demand for battery 
production.1275 1276 The lithium supply projections 
performed by BMI and ANL described in section IV.C.7.i of the preamble 
do include projections of recycled lithium content although at lower 
percentages reflecting the earlier time frame of the estimates. EPA 
considers the BMI and ANL estimates of potential recycled lithium 
content to be reasonable and consistent with prevailing expectations 
that recycled content will be relatively small at first and grow over 
time as more end-of-life batteries become available for recycling.
---------------------------------------------------------------------------

    \1275\ Sun et al., ``Surging lithium price will not impede the 
electric vehicle boom,'' Joule, doi:10.1016/j.joule. 2022.06.028 
(https://dx.doi.org/10.1016/j.joule.2022.06.028).
    \1276\ Ziemann et al., ``Modeling the potential impact of 
lithium recycling from EV batteries on lithium demand: a dynamic MFA 
approach,'' Resour. Conserv. Recycl. 133, pp. 76-85. https://doi.org/10.1016/j.resconrec.2018.01.031.
---------------------------------------------------------------------------

    EPA continues to note that battery recycling has been and remains a 
very active area of research. The Department of Energy coordinates much 
research in this area through the ReCell Center, described as ``a 
national collaboration of industry, academia and national laboratories 
working together to advance recycling technologies along the entire 
battery life-cycle for current and future battery chemistries.'' \1277\ 
Funding is also being disbursed as directed by the Bipartisan 
Infrastructure Law.\1278\ A growing number of private companies are 
entering the battery recycling market as the rate of recyclable 
material becoming available from battery production facilities and 
salvaged vehicles has grown, and manufacturers are already reaching 
agreements to use these recycled materials for domestic battery 
manufacturing. For example, Panasonic has contracted with Redwood 
Materials Inc. to supply domestically processed cathode material, much 
of which will be sourced from recycled batteries.\1279\ Ford and Volvo 
have also partnered with Redwood to collect end-of-life batteries for 
recycling and promote a circular, closed-loop supply chain utilizing 
recycled materials.\1280\ Redwood has also announced a battery active 
materials plant in South Carolina with capacity to supply materials for 
100 GWh per year of battery production, and is likely to provide these 
materials to many of the ``battery belt'' factories that are developing 
in a corridor between Michigan and Georgia.\1281\ General Motors and LG 
Energy Solution have also partnered with Li-Cycle to provide recycling 
of GM's Ultium cells.\1282\
---------------------------------------------------------------------------

    \1277\ https://recellcenter.org/about.
    \1278\ Department of Energy, ``Biden-Harris Administration 
Announces Nearly $74 Million To Advance Domestic Battery Recycling 
And Reuse, Strengthen Nation's Battery Supply Chain,'' Press 
Release, November 16, 2022.
    \1279\ Randall, T., ``The Battery Supply Chain Is Finally Coming 
to America,'' Bloomberg, November 15, 2022.
    \1280\ Automotive News Europe, ``Ford, Volvo join Redwood in EV 
battery recycling push in California,'' February 17, 2022. https://europe.autonews.com/automakers/ford-volvo-join-redwood-ev-battery-recycling-push-california.
    \1281\ Wards Auto, ``Battery Recycler Redwood Plans $3.5 Billion 
South Carolina Plant,'' December 27, 2022. https://www.wardsauto.com/industry-news/battery-recycler-redwood-plans-35-billion-south-carolina-plant.
    \1282\ General Motors, ``Ultium Cells LLC and Li-Cycle 
Collaborate to Expand Recycling in North America,'' Press Release, 
May 11, 2021. https://news.gm.com/newsroom.detail.html/Pages/news/us/en/2021/may/0511-ultium.html.
---------------------------------------------------------------------------

    Recycling infrastructure is the subject of several provisions of 
the BIL. It includes a Battery Processing and Manufacturing program, 
which grants significant funds to promote U.S. processing and 
manufacturing of batteries for automotive and electric grid use, by 
awarding grants for demonstration projects, new construction, retooling 
and retrofitting, and facility expansion. It will provide a total of $3 
billion for battery material processing, $3 billion for battery 
manufacturing and recycling, $10 million for a lithium-ion battery

[[Page 28057]]

recycling prize competition, $60 million for research and development 
activities in battery recycling, an additional $50 million for state 
and local programs, and $15 million to develop a collection system for 
used batteries. In addition, the Electric Drive Vehicle Battery 
Recycling and Second-Life Application Program will provide $200 million 
in funds for research, development, and demonstration of battery 
recycling and second-life applications.\1283\ Outside the BIL, DOE 
recently announced the three-phase Electronics Scrap Recycling 
Advancement Prize, a $3.95 million challenge with the goal of 
increasing the domestic supply of critical minerals from electronics 
scrap.\1284\
---------------------------------------------------------------------------

    \1283\ Environmental Defense Fund and ERM, ``Electric Vehicle 
Market Update: Manufacturer Commitments and Public Policy 
Initiatives Supporting Electric Mobility in the U.S. and 
Worldwide,'' September 2022.
    \1284\ Department of Energy, ``Electronics Scrap Recycling 
Advancement Prize,'' web page. At https://www.energy.gov/eere/ammto/electronics-scrap-recycling-advancement-prize.
---------------------------------------------------------------------------

    The efforts to fund and build a mid-chain processing supply chain 
for active materials and related products will also be important to 
reclaiming minerals through domestic recycling. While domestic 
recycling can recover minerals and other materials needed for battery 
cell production, these materials commonly are recovered in elemental 
forms that require further midstream processing into precursor 
substances and active material powders that can be used in cell 
production. The DOE ReCell Center coordinates extensive research on 
development of a domestic lithium-ion recycling supply chain, including 
direct recycling, in which materials can be recycled for direct use in 
cell production without destroying their chemical structure, and 
advanced resource recovery, which uses chemical conversion to recover 
raw minerals for processing into new constituents.\1285\
---------------------------------------------------------------------------

    \1285\ Department of Energy, ``The ReCell Center for Advanced 
Battery Recycling FY22 Q4 Report,'' October 20, 2022. Available at: 
https://recellcenter.org/2022/12/15/recell-advanced-battery-recycling-center-fourth-quarter-progress-report-2022/.
---------------------------------------------------------------------------

    Currently, pilot-scale battery recycling research projects and 
private recycling startups have access to only limited amounts of 
recycling stock that originate from sources such as manufacturer waste, 
crashed vehicles, and occasional manufacturer recall/repair events. As 
PEVs are currently only a small portion of the U.S. vehicle stock, some 
time will pass before vehicle scrappage can provide a steady supply of 
end-of-life batteries to support large-scale battery recycling. During 
this time, we expect that the mid-chain processing portion of the 
supply chain will continue to develop and will be able to capture much 
of the resources made available by the recycling of used batteries 
coming in from the fleet.

D. Projected Compliance Costs and Technology Penetrations

1. Technology Penetration Rates
i. Light-Duty Technology Penetrations
    In this section, we discuss the projected new vehicles sales 
technology penetration rates from EPA's analysis for the final 
standards. EPA has incorporated PHEVs into our analysis for the final 
rule, as requested by commenters and as we had indicated in the 
proposal was our plan. Table 75 and Table 76 reflect the projected 
penetration rates of PEVs (which include BEVs and PHEVs \1286\) for the 
final standards and No Action case, respectively, by body style 
(sedans, crossover/SUVs and pickups). It is important to note that 
these are projections and represent one of many possible compliance 
pathways for the industry. The standards are performance-based and do 
not mandate any specific technology for any manufacturer or any vehicle 
type. Each manufacturer is free to choose its own set of technologies 
with which it will demonstrate compliance with the standards. In our 
projections, as the final standards become more stringent over MYs 2027 
to 2032, the penetration of PEVs increases by 36 percentage points over 
this 6-year period, from 32 percent in MY 2027 to 68 percent of overall 
vehicle production in MY 2032. Note that the standards are not 
anticipated to increase PEV penetration significantly above the No 
Action scenario in 2027, and while the standards are anticipated to 
increase PEV penetration to 68 percent by 2032, the level of PEVs under 
the No Action case are projected to reach 47 percent in that year. 
Thus, the majority of the increase in PEV penetration is anticipated to 
occur as a result of developments in the market attributable to factors 
such as the IRA, increasing consumer acceptance, and automaker 
investments, rather than as a result of EPA's standards.
---------------------------------------------------------------------------

    \1286\ PHEVs were added as a technology option to all vehicle 
types in OMEGA in a similar fashion as BEV and ICE technologies. A 
more detailed description of the PHEV modeling assumptions can be 
found in RIA Chapter 2.4.4.2 and 2.6.1.4.
---------------------------------------------------------------------------

    We note that we have also analyzed several sensitivities (refer to 
section IV.F of this preamble), including one looking at the impact of 
adoption of ACC II policies in various states and other sensitivities 
considering the possibility of higher or lower battery costs.\1287\ 
These scenarios may have different penetrations of various technologies 
for their No Action case as well as for the final standards. For 
example, PEV penetration rates in the No Action baseline in 2032 for 
these sensitivities varies from 18 percent to 60 percent and PEV 
penetration rates under the final standards in 2032 range from 62 
percent to 70 percent. The penetration rates for other technologies 
similarly vary, e.g., ICE penetration rates in these analyses range 
from 2 percent to 32 percent under the final standards in 2032. EPA 
considers our central case analysis combined with the range of 
sensitivity analyses to illustrate a range of possible outcomes which 
are each technically feasible, have reasonable costs, and provide 
sufficient lead time.
---------------------------------------------------------------------------

    \1287\ Though not considered as a sensitivity, we also assessed 
an additional illustrative scenario, ``No Additional BEVs,'' which 
assumes no additional BEV production beyond that in the MY 2022 base 
year fleet. See Section IV.H of the preamble.

         Table 75--Fleet PEV Penetration Rates, by Body Style, Under the Final Light-Duty GHG Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           40           47           58           66           69           75
Crossovers/SUVs...................           31           35           43           49           59           66
Pickups...........................           27           31           45           55           63           67
----------------------------------------------------------------------------------------------------------------
    Total.........................           32           37           46           53           61           68
----------------------------------------------------------------------------------------------------------------


[[Page 28058]]


                 Table 76--Fleet PEV Penetration Rates, by Body Style, Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           40           41           45           46           52           56
Crossovers/SUVs...................           30           32           36           38           40           45
Pickups...........................           25           30           34           38           39           45
----------------------------------------------------------------------------------------------------------------
    Total.........................           31           33           37           39           42           47
----------------------------------------------------------------------------------------------------------------

    For both the final standards as well as the No Action case, BEVs 
make up the majority of PEVs. From 2027 MY to 2032 MY for the final 
standards, PHEV projections grow from 4 percent to 8 percent in sedans, 
7 percent to 14 percent in pickups and 6 percent up to 13 percent in 
crossovers. The remainder of the projected PEV shares are BEVs. Table 
77 and Table 78 show projected PHEV penetrations rates for the final 
standards and the No Action case.

         Table 77--Fleet PHEV Penetration Rates, by Body Style, Under the Final Light-Duty GHG Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................            4            5            6            7            9            8
Crossovers/SUVs...................            6            7            8            9           10           13
Pickups...........................            7            5            8           12           13           14
                                   -----------------------------------------------------------------------------
    Total.........................            6            6            8            9           11           13
----------------------------------------------------------------------------------------------------------------


                 Table 78--Fleet PHEV Penetration Rates, by Body Style, Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................            4            5            6            6            7           10
Crossovers/SUVs...................            6            6            8            9            9           13
Pickups...........................            6            4            7            8            9           14
                                   -----------------------------------------------------------------------------
    Total.........................            5            6            7            8            8           12
----------------------------------------------------------------------------------------------------------------

    Table 79 and Table 80 show the projected market penetrations for 
strong HEVs under the final standards and the No Action case. For MY 
2027-2032, penetrations are less than 5 percent, and under the final 
standards are projected to decrease over time. However, these results 
do not imply that strong HEVs are ineffective as a compliance option. 
Instead, under the cost-minimizing compliance strategy used in our 
analysis, strong HEVs are being displaced by PEVs that provide 
emissions reductions at a relatively lower cost per Mg CO2 
reduced. In other words, comparing the incremental cost of HEVs and 
PEVs relative to the amount of vehicle CO2 pollution they 
prevent, we find that PEVs cost much less to reduce the same amount of 
CO2. While manufacturers may choose any compliance pathway 
that meets the final standards, we expect that they, as any other 
private businesses, would generally choose the least-cost pathway 
(i.e., PEVs over strong HEVs, as well as the advanced ICE discussed 
below). This choice would be made not because of an EPA regulatory 
mandate (since EPA does not mandate any particular technology for 
compliance), but rather in order to maximize profits and remain 
economically competitive within the vehicle manufacturing sector. In 
the No Action case, the industry is already overachieving the standards 
due to increased sales of BEVs and the market penetration of strong 
HEVs remains relatively constant. The potential for strong HEVs as a 
potentially important compliance technology is discussed in section 
IV.F.4 of this preamble.

                     Table 79--Fleet Strong HEV Penetration Rates Under the Final Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................            4            1            1            1            1            1
Crossovers/SUVs...................            4            6            5            5            4            3
Pickups...........................            2            2            2            2            2            2
                                   -----------------------------------------------------------------------------
    Total.........................            4            4            4            3            3            2
----------------------------------------------------------------------------------------------------------------


[[Page 28059]]


                     Table 80--Fleet strong HEV Penetrations Rates Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................            5            1            2            2            1            1
Crossovers/SUVs...................            4            4            4            4            3            3
Pickups...........................            3            2            2            2           13           14
                                   -----------------------------------------------------------------------------
    Total.........................            4            3            3            3            5            5
----------------------------------------------------------------------------------------------------------------

    Consistent with past rulemakings, EPA has evaluated a range of 
advanced technologies for ICE vehicles (``advanced ICE'') which include 
advanced turbocharged downsized engines (TURB12), advanced Atkinson 
(ATK) engines, and Miller (MIL) cycle engines.\1288\ Further details on 
EPA's modeling of engine technologies can be found in RIA Chapters 
2.4.5.1 and 3.5.1. This grouping of ICE engines includes some of the 
more cost-effective non-electrified technologies for GHG compliance. 
However, like HEVs, they are still not as cost-effective as PEVs in 
achieving lower levels of GHG targets and are not eligible for tax 
credits under the IRA. The advanced ICE technologies are projected to 
decline as sales of PEVs increase over time, both for the final 
standards as well as the No Action case. For example, advanced ICE is 
anticipated to capture 33 percent of the market in 2032 under the No 
Action scenario, down to 21 percent under the final standards. Table 81 
and Table 82 show the projected market penetrations for advanced ICE 
engines in the final standards and the No Action case. Note that a 
majority of ICE vehicles are projected to be advanced ICE vehicles for 
both the final standards and the No Action case. Table 83 and Table 84 
show the projected penetrations of advanced ICE vehicles as a 
percentage of ICE vehicles under the final standards and the No Action 
case, respectively.
---------------------------------------------------------------------------

    \1288\ All mild hybrid vehicles, with or without advanced 
engines, are grouped separately as MHEVs. As a result, technology 
groupings are distributed into one of the following independent 
architectures: BEV, PHEV, strong HEV, MHEV, advanced ICE and base 
ICE.

                       Table 81--Advanced ICE Penetration Rates Under the Final Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           44           27           22           18           17           14
Crossovers/SUVs...................           48           41           37           33           26           21
Pickups...........................           64           60           48           39           32           28
                                   -----------------------------------------------------------------------------
    Total.........................           50           42           36           31           26           21
----------------------------------------------------------------------------------------------------------------


                        Table 82--Advanced ICE Penetration Rates Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           44           36           33           33           29           26
Crossovers/SUVs...................           48           42           39           38           37           34
Pickups...........................           66           61           58           54           42           36
                                   -----------------------------------------------------------------------------
    Total.........................           51           44           41           40           36           33
----------------------------------------------------------------------------------------------------------------


        Table 83--Advanced ICE Penetration Rates (Percentage of ICE Vehicles), Under the Final Standards
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           79           57           57           58           60           59
Crossovers/SUVs...................           74           71           71           71           71           71
Pickups...........................           91           91           91           91           90           90
                                   -----------------------------------------------------------------------------
    Total.........................           78           73           73           73           73           73
----------------------------------------------------------------------------------------------------------------


         Table 84--Advanced ICE Penetrations Rates (Percentage of ICE Vehicles) Under the No Action Case
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Sedans............................           79           65           65           66           65           65
Crossovers/SUVs...................           74           65           65           65           65           66
Pickups...........................           90           90           90           89           87           86
                                   -----------------------------------------------------------------------------

[[Page 28060]]

 
    Total.........................           78           70           70           70           69           69
----------------------------------------------------------------------------------------------------------------

ii. Medium-Duty Technology Penetrations
    In this section we discuss the projected MDV \1289\ technology 
penetration rates based on EPA's analysis for the final standards. 
Table 85 and Table 86 show EPA projected penetration rates of PEV 
technology under the final standards and the No Action case by body 
style, comparing vans, MDV pickups and the fleet total. It is important 
to note that this is a projection and represents one of many possible 
compliance pathways manufacturers could choose. The standards are 
performance-based and do not mandate any specific technology for any 
manufacturer or any vehicle type. Each manufacturer is free to choose 
its own set of technologies with which it will demonstrate compliance 
with the standards. As the standards become more stringent over MYs 
2027 to 2032, the projected penetration of PEVs (driven largely by 
electrification of vans) increases from 3 percent in MY 2027 to 43 
percent of overall MDV production in MY 2032.
---------------------------------------------------------------------------

    \1289\ MDVs were not broken down into separate Class 2b and 
Class 3 categories in the analysis for this rule. The GHG standards 
apply to Class 2b and Class 3 as a single MDV class. The analysis 
does include a breakdown between MDV vans and MDV pickups due to 
differences in use-case and applicable technologies.

    Table 85--Fleet PEV Penetration Rates, by Body Style, Under the Final Standards for Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................            3            4           24           44           64           76
Pickups...........................            3            4            8           17           15           26
                                   -----------------------------------------------------------------------------
    Total.........................            3            4           14           27           32           43
----------------------------------------------------------------------------------------------------------------


     Table 86--Fleet PEV Penetration Rates, by Body Style, Under the No Action Case for Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................            3            4            5            6            7            8
Pickups...........................            3            4            5            6            7            8
                                   -----------------------------------------------------------------------------
    Total.........................            3            4            5            6            7            8
----------------------------------------------------------------------------------------------------------------

    The projected PHEV penetrations (which are a subset of total PEVs) 
are provided for the final standards in Table 87. Similar to what was 
seen in light-duty vehicles, for the van segment and the MDV fleet 
overall, most of the PEVs in the medium-duty compliance modeling are 
projected to be BEVs. However, for MDV pickups PHEV penetrations make 
up over half of the PEVs for that segment by MY 2032.

    Table 87--Fleet PHEV Penetration Rates, by Body Style, Under the Final Standards for Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................            0            0            0            0            0            1
Pickups...........................            0            0            0            8            5           16
                                   -----------------------------------------------------------------------------
    Total.........................            0            0            0            5            3           11
----------------------------------------------------------------------------------------------------------------

    No strong HEVs were projected for the medium-duty fleet. However, 
there remain a significant penetration of advanced ICE vehicles 
(although their sales shares are projected to decline as the standards 
become more stringent). Table 88 and Table 89 show the penetration 
rates for advanced ICE vehicles for the final standards and the No 
Action case. For reference, Table 90 shows the advanced ICE percentage 
of all ICE vehicles for the final standards.

[[Page 28061]]



   Table 88--Advanced ICE Penetration Rates, by Body Style, Under the Final Standards for Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................           86           85           68           50           32           22
Pickups...........................           42           41           39           35           37           32
                                   -----------------------------------------------------------------------------
    Total.........................           57           57           49           40           35           28
----------------------------------------------------------------------------------------------------------------


   Table 89--Advanced ICE Penetration Rates, by Body Style, Under the No Action Case for Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................           87           86           85           84           83           82
Pickups...........................           42           41           41           40           40           39
                                   -----------------------------------------------------------------------------
    Total.........................           57           57           56           55           55           54
----------------------------------------------------------------------------------------------------------------


 Table 90--Advanced ICE Penetration Rates (Percentage of ICE Vehicles), by Body Style, Under the Final Standards
                                            for Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Vans..............................           89           89           89           89           89           89
Pickups...........................           43           43           43           43           43           43
                                   -----------------------------------------------------------------------------
    Total.........................           59           59           57           55           51           50
----------------------------------------------------------------------------------------------------------------

2. Criteria Pollutant Technology Penetrations
    To meet the final criteria pollutant standards, vehicle 
manufacturers are anticipated to apply better emissions control 
technologies to ICE, hybrid and PHEV vehicles. While BEVs are 
anticipated to provide some contribution to a manufacturer's 
compliance, we expect that manufacturers will also choose to improve 
the emissions control of their ICE vehicles. ICE vehicles, hybrids and 
PHEVs can continue their downward trend in NMOG+NOX 
emissions through better design, controls, and calibrations of engines 
and TWC systems. EPA anticipates that all ICE-based vehicles will be 
equipped with gasoline particulate filters by the time this rulemaking 
is fully phased in to meet the final PM standards. Changes will also be 
required to meet the revised CO standards. In order to meet the three 
light-duty vehicle provisions aligned with the CARB ACC II program, we 
expect manufacturers will choose to adopt improved controls on ICE 
vehicles to meet the early driveaway requirements and the mid-
temperature starts. Similarly, manufacturers that choose to produce 
PHEVs will require PHEV control changes to meet the new high load cold 
start provision. Finally, incomplete medium-duty vehicles will require 
evaporative emission controls to support the new ORVR requirement. 
Additional detail regarding technology adoption for meeting the 
criteria pollutant standards, refer to RIA Chapters 3.2.5.1 and 
3.2.6.1.
3. CO2 Targets and Compliance Levels
i. Light-Duty Vehicle CO2 Targets and Compliance Levels
    The final footprint CO2 standards curve coefficients for 
light-duty vehicles were presented in section III.C.2.iv of the 
preamble. Here we present the projected industry average fleet targets 
for both the final standards and the No Action case for reference. 
These average targets (for the final standards and the No Action 
case,\1290\ respectively) are presented for both the car and truck 
regulatory classes in Table 91 and Table 92, and then for three 
different modeled body styles: sedans, crossovers and SUVs, and pickup 
trucks,\1291\ in Table 93 and Table 94. The projected targets for each 
are based on the industry sales weighted average of vehicle models (and 
their respective footprints) within the regulatory class or body 
style.\1292\ The industry total targets have increased slightly 
compared to the respective Alternative 3 targets presented in the NPRM, 
due mainly to an increase in the truck sales share as projected by AEO 
2023, and also slightly larger size trucks in the updated base year 
vehicle fleet. AEO 2023 predicts that new vehicle sales in 2032 will be 
30 percent cars and 70 percent trucks (in NPRM, the projection was 40 
percent cars and 60 percent trucks).
---------------------------------------------------------------------------

    \1290\ The No Action case continues MY 2026 flexibilities for 
the off-cycle and A/C credits available to OEMs as defined in the 
2021 Final Rule.
    \1291\ All sedans are of the car regulatory class; crossovers 
and SUVs include both cars and trucks; and all pickups are of the 
truck regulatory class.
    \1292\ Note that these targets are projected based on both 
projected future sales in applicable MYs and our final standards; 
the targets will change in each future model year depending on each 
manufacturer's actual sales.

[[Page 28062]]



           Table 91--Projected Targets for Final Light-Duty Vehicle GHG Standards, by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          139          125          112           99           86           73
Trucks............................          184          165          146          128          109           90
                                   -----------------------------------------------------------------------------
    Total.........................          170          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------


             Table 92--Projected Targets for Light-Duty Vehicle No Action Case, by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          132          131          132          132          133          133
Trucks............................          185          185          186          186          187          188
                                   -----------------------------------------------------------------------------
    Total.........................          168          169          169          170          171          171
----------------------------------------------------------------------------------------------------------------


              Table 93--Projected Targets for Final Light-Duty Vehicle GHG Standards, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          139          126          112           99           86           73
Crossovers/SUVs...................          167          149          133          117           99           83
Pickups...........................          216          193          171          149          126          104
                                   -----------------------------------------------------------------------------
    Total.........................          170          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------


                Table 94--Projected Targets for Light-Duty Vehicle No Action Case, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          133          133          133          133          134          134
Crossovers/SUVs...................          164          164          165          165          165          166
Pickups...........................          222          223          224          225          228          229
                                   -----------------------------------------------------------------------------
    Total.........................          168          169          169          170          171          171
----------------------------------------------------------------------------------------------------------------

    The modeled achieved CO2 levels for the final standards 
and the No Action case are shown for both the car and truck regulatory 
class in Table 97 and Table 98 and then by body style in Table 99 and 
Table 100, respectively. These values were produced by the modeling 
analysis and represent the projected, sales-weighted average 
certification emissions values for possible compliance approaches with 
the standards. The achieved CO2 levels are calculated from 
projected 2-cycle tailpipe emissions (via modeled application of 
emissions-reduction technologies) minus the modeled application of off-
cycle credit technologies and A/C credits. Table 95 and Table 96 
summarize the fleet average contribution of off-cycle credits and A/C 
credits towards the achieved CO2 levels for the final 
standards and the No Action case.\1293\
---------------------------------------------------------------------------

    \1293\ In contrast to the maximum allowable credits presented in 
Table 10 and Table 11 in section III.C of the preamble, these credit 
levels shown are modeling results that reflect projected penetration 
of BEVs for the final standards and No Action case.

                    Table 95--Final Light-Duty Vehicle GHG Standards--Achieved Levels Summary
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Tailpipe emissions................        187.5        169.2        145.7        127.6        109.3         94.3
A/C leakage credits...............         12.9          9.7          6.5          3.2          1.9          1.9
Off-cycle + A/C eff credits.......         10.2         10.1          9.0          8.5          7.0          5.3
                                   -----------------------------------------------------------------------------
Achieved CO2 g/mile (unrounded)...        164.4        149.3        130.2        115.8        100.5         87.1
----------------------------------------------------------------------------------------------------------------


[[Page 28063]]


                                Table 96--No Action Case--Achieved Levels Summary
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Tailpipe emissions................        189.4        182.4        171.8        166.5        157.9        147.6
A/C leakage credits...............         16.1         16.2         16.2         16.2         16.2         16.2
Off-cycle + A/C eff credits.......         13.5         13.5         13.6         13.8         13.8         13.9
Achieved CO2 g/mile (unrounded)...        159.8        152.7        142.0        136.6        127.9        117.6
----------------------------------------------------------------------------------------------------------------


              Table 97--Final Light-Duty Vehicle GHG Standards--Achieved Levels by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          116           97           83           72           67           57
Trucks............................          186          173          151          135          115          100
                                   -----------------------------------------------------------------------------
    Total.........................          164          149          130          116          100           87
----------------------------------------------------------------------------------------------------------------


              Table 98--Light-Duty Vehicle GHG No Action Case--Achieved Levels by Regulatory Class
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Cars..............................          110          102           94           92           83           76
Trucks............................          182          175          163          156          148          136
                                   -----------------------------------------------------------------------------
    Total.........................          160          153          142          137          128          118
----------------------------------------------------------------------------------------------------------------


                 Table 99--Final Light-Duty Vehicle GHG Standards--Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          110           91           75           63           63           52
Crossovers/SUVs...................          165          150          135          125          106           91
Pickups...........................          221          211          172          139          122          111
                                   -----------------------------------------------------------------------------
    Total.........................          164          149          130          116          100           87
----------------------------------------------------------------------------------------------------------------


                   Table 100--Light-Duty Vehicle No Action Case--Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Sedans............................          104           97           88           86           74           69
Crossovers/SUVs...................          160          155          144          141          134          124
Pickups...........................          222          204          194          174          161          147
                                   -----------------------------------------------------------------------------
    Total.........................          160          153          142          137          128          118
----------------------------------------------------------------------------------------------------------------

    Comparing the target and achieved values (e.g., Table 91 vs. Table 
97) it can be seen that within any given year, the achieved values may 
be over target (higher emissions) or under target (lower emissions), 
depending on the body style or regulatory class. This is a feature of 
the unlimited credit transfer provision, which results in a compliance 
determination that is based on the combined car and truck fleet credits 
for each manufacturer, rather than a separate determination of each 
fleet's compliance. The application of technologies is influenced by 
the relative cost-effectiveness of technologies among each 
manufacturer's vehicles. For the combined fleet, the achieved values 
are typically close to or slightly under the target values, which would 
represent the banking of credits that can be carried over into other 
model years. This indicates that overall, the modeled fleet tracks the 
standards very closely from year-to-year. Note that an achieved value 
for a manufacturer's combined fleet that is above the target in a given 
model year does not indicate a likely failure to comply with the 
standards, since the model includes the GHG program credit banking 
provisions that allow credits from one year to be carried into another 
year.
    The modeling predicts that the industry will over comply against 
the MY 2027-2032 standards in the No Action scenario, driven by the 
projected significant increase in PEVs. This is in part due to the 
economic opportunities provided for PEVs to both manufacturers and 
consumers by the IRA. Figure 43 shows a plot of industry average 
achieved g/mile compared to the projected targets for both the No 
Action case and the final standards. In

[[Page 28064]]

MY 2027, achieved g/mile are lower for the No Action case than shown 
for the final standards. This is an effect of the additional off-cycle 
and A/C credits being available in the No Action case that are phased 
out in the final standards. This makes it appear as though there is a 
better g/mile outcome under the No Action case. If the No Action case 
reflected the phasing out of those credits, then it would show higher 
average compliance g/mile values than are achieved under the final 
standards. A relative comparison between the two policies, but without 
this difference in the credit phase out, can be seen by comparing Table 
95 and Table 96, which show that the tailpipe g/mile are lower in the 
final standards for all years than in the No Action case. The modeling 
results show that the industry as a whole should be able to achieve the 
standards over the MY 2027-2032 time frame.
[GRAPHIC] [TIFF OMITTED] TR18AP24.041

Figure 43: Achieved vs. Target GHG g/mile for No Action Case and Final 
Standards

[[Page 28065]]

ii. Medium-Duty Vehicle Targets and Compliance Levels
    Based on the work-factor based standards curve coefficients 
described in section III.C.3 of the preamble, we present the projected 
industry average medium-duty vehicle fleet targets for both the final 
standards and the No Action case in Table 101 and Table 102. These 
average targets are shown for two different modeled body styles: vans 
and pickup trucks. The projected targets for each case are based on the 
industry sales weighted average of vehicle models (and their respective 
work factors) within each body style.\1294\
---------------------------------------------------------------------------

    \1294\ Note that these targets are projected based on both 
projected future sales in applicable MYs and our final standards; 
the actual targets will change each MY depending on each 
manufacturer's actual sales.

             Table 101--Projected Targets for Final Medium-Duty Vehicle GHG Standards, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          392          391          355          317          281          245
Pickups...........................          497          486          437          371          331          290
                                   -----------------------------------------------------------------------------
    Total.........................          461          453          408          353          314          274
----------------------------------------------------------------------------------------------------------------


              Table 102--Projected Targets for Medium-Duty Vehicles, No Action Case, by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          413          412          412          412          412          411
Pickups...........................          508          508          508          507          507          506
                                   -----------------------------------------------------------------------------
    Total.........................          475          475          474          474          474          474
----------------------------------------------------------------------------------------------------------------

    The modeled achieved CO2 levels for the final standards 
and the No Action case are shown for both vans and pickups in Table 103 
and Table 104. These values were produced by the modeling analysis and 
represent the projected certification emissions values for possible 
compliance approaches with the final standards, grouped by body style.

        Table 103--Final GHG Standards for Medium-Duty Vehicles--Projected Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          434          429          340          249          151          103
Pickups...........................          468          463          443          405          396          361
                                   -----------------------------------------------------------------------------
    Total.........................          456          451          407          351          312          272
----------------------------------------------------------------------------------------------------------------


           Table 104--No Action Case for Medium-Duty Vehicles--Projected Achieved Levels by Body Style
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Vans..............................          435          431          426          422          418          414
Pickups...........................          468          463          458          454          449          444
                                   -----------------------------------------------------------------------------
    Total.........................          456          452          447          443          438          434
----------------------------------------------------------------------------------------------------------------

    Similar to light-duty vehicles, within a given year it can be seen 
that the achieved values might be over target (higher emissions) or 
under target (lower emissions). This is another example of the 
unlimited credit transfer provision, which results in a compliance 
determination that is based on the overall fleet credits for each 
manufacturer, rather than a separate compliance determination for 
individual vehicles or groups of vehicles. The application of 
technologies is influenced by the relative cost-effectiveness of 
technologies among each manufacturer's vehicles. For the combined 
fleet, the achieved values are typically close to or slightly under the 
target values, which would represent the banking of credits that can be 
carried over into other model years. This indicates that overall, the 
modeled fleet tracks the standards very closely from year-to-year. Note 
that an achieved value for a manufacturer's combined fleet that is 
above the target in a given model year does not indicate a likely 
failure to comply with the standards, since the model includes the GHG 
program credit banking provisions that allow credits from one year to 
be carried into another year.

[[Page 28066]]

4. Compliance Costs per Vehicle for the Final Standards
i. Light-Duty Projected Compliance Costs
    EPA has performed an assessment of the estimated per-vehicle costs 
for manufacturers to meet the MY 2027-2032 GHG and criteria air 
pollutant standards. The fleet average costs per vehicle, again grouped 
by both regulatory class and body style, are shown in Table 105 and 
Table 106. As shown, the combined cost for cars and trucks are about 
$200 for MY 2027 and then increase gradually through MY 2032.

                           Table 105--Average Incremental Vehicle Cost by Regulatory Class, Relative to the No Action Scenario
                                                                     [2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032      6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Cars.........................................................         $135         $348         $552         $968         $849         $934         $631
Trucks.......................................................          276          642        1,199        1,703        2,318        2,561        1,450
                                                              ------------------------------------------------------------------------------------------
    Total....................................................          232          552        1,002        1,481        1,875        2,074        1,203
--------------------------------------------------------------------------------------------------------------------------------------------------------


                              Table 106--Average Incremental Vehicle Cost by Body Style, Relative to the No Action Scenario
                                                                     [2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032      6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Sedans.......................................................         $115         $277         $555       $1,036         $666         $821         $578
Crossovers/SUVs..............................................          185          694          961        1,443        2,249        2,558        1,348
Pickups......................................................          528          349        1,611        2,066        1,816        1,659        1,338
                                                              ------------------------------------------------------------------------------------------
    Total....................................................          232          552        1,002        1,481        1,875        2,074        1,203
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Overall, EPA estimates the average costs of this final rule at 
approximately $2,100 per vehicle in MY 2032 relative to meeting the No 
Action case in MY 2032. However, these estimates represent the 
incremental technology costs to manufacturers; for consumers, these 
costs are offset by savings in the reduced fuel costs, and, for PEVs, 
maintenance and repair costs, as discussed in section VIII of the 
preamble. Additionally, consumers may also benefit from IRA purchase 
incentives for PEVs.
    These light-duty compliance costs are somewhat different from the 
values presented in the NPRM, and now show lower costs in earlier years 
and higher costs in 2031 and 2032. These changes are the result of the 
additional credit flexibilities in the final standards that were not 
included in the proposed standards, as well as a number of modeling 
updates made in response to public comments and consideration of the 
latest and most appropriate data. As described in section IV.A.1 of the 
preamble, noteworthy updates to projected battery costs and revised ICE 
powertrain costs both contribute to the increased compliance costs in 
later years.
ii. Medium-Duty Projected Compliance Costs
    EPA's assessment of the estimated per-vehicle costs for 
manufacturers to meet the final MY 2027-2032 GHG and criteria air 
pollutant standards for medium-duty vehicles is presented here. The 
fleet average costs per vehicle, grouped by body style, are shown in 
Table 107. As shown, the combined cost for vans and pickups generally 
increases from MY 2027 through MY 2032.

                                     Table 107--Average Incremental Vehicle Cost by Body Style, Medium-Duty Vehicles
                                                                     [2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032      6-year avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vans.........................................................         $178         $185       $1,443       $2,732       $4,128       $4,915       $2,264
Pickups......................................................           97           88          531        1,432        1,516        2,416        1,013
                                                              ------------------------------------------------------------------------------------------
    Total....................................................          125          122          847        1,881        2,416        3,275        1,444
--------------------------------------------------------------------------------------------------------------------------------------------------------

    Overall, EPA estimates the average costs of this rule at 
approximately $3,300 per medium-duty vehicle in MY 2032 relative to 
meeting the No Action case in MY 2032. Similar to our light-duty costs, 
these estimates represent the incremental costs to manufacturers; for 
consumers, these costs are offset by savings in reduced fuel costs, and 
for PEVs, maintenance and repair costs, as discussed in section VIII of 
the preamble. Additionally, consumers may also benefit from IRA 
purchase incentives for PEVs.

E. How did EPA consider alternatives in selecting the final program?

    In section III.F of this preamble, we described alternatives that 
we considered in addition to the final light-duty vehicle GHG 
standards. See Figure 5 and Table 18 in section II.C of this preamble. 
The alternatives analyzed for the final rule, in addition to the 
standards we are finalizing, are Alternative A (the proposed standards) 
and Alternative B (less stringent standards). The analyses of the 
technology penetrations, targets and achieved levels, and compliance 
cost are summarized below. Additional details for each alternative are 
presented in the RIA Chapters 4, 8 and 12.

[[Page 28067]]

    In comparing the per-vehicle costs of the final standards and the 
two alternatives, costs of Alternative A (the proposed standards) have 
increased compared to the projections of costs for the proposed 
standards as estimated in the NPRM. This cost increase is due to 
updates in technical inputs, as discussed in section IV.D.3 of this 
preamble and detailed in RIA Chapter 2.1.3. The final standards, which 
include a slower phase-out of flexibilities and a more gradual year-
over-year stringency increase in the standards curves for MY 2027 
through 2030, have reduced compliance costs compared to Alternative A.
    The 6-year average of the final standards is about $1,200 per 
vehicle, which is about half of the 6-year average costs for 
Alternative A ($2,400). The lower costs of the final standards are 
largely attributed to the reduced compliance costs for MY 2027 through 
MY 2029 which are projected at or less than $1000 per vehicle.
    While Alternative A achieves slightly greater cumulative 
CO2 emissions reductions than the final standards in the 
early years, the final standards achieve similar cumulative 
CO2 reductions through 2055 as Alternative A, and 1.8 
billion metric tons (about 30 percent) more than Alternative B. See RIA 
Chapter 8.6.6.1.
    EPA's updated analysis shows that the final standards and 
Alternative A achieve similar levels of technology penetration in MY 
2032. The important difference between the final standards and 
Alternative A is in the per-vehicle costs during the earlier years (MYs 
2027 through 2030), where we believe the lower costs of the final 
standards are important considering the shorter lead time for 
manufacturers. EPA discusses further in section V of this preamble the 
reasons we believe the final standards represent the appropriate 
standards under the CAA.
    Table 108 compares the projected PEV penetration rates for the 
final standards, the alternatives and the No Action case.

             Table 108--Comparison of Projected PEV Penetrations for Alternatives vs Final Standards
----------------------------------------------------------------------------------------------------------------
                                                 Final standards    Alternative A    Alternative B    No action
                  Model year                           (%)               (%)              (%)          case (%)
----------------------------------------------------------------------------------------------------------------
2027..........................................                 32               39               32           31
2028..........................................                 37               45               36           33
2029..........................................                 46               54               46           37
2030..........................................                 53               58               51           39
2031..........................................                 61               64               58           42
2032..........................................                 68               69               65           47
----------------------------------------------------------------------------------------------------------------

    Table 109 compares the projected targets for the alternatives and 
the final standards, while Table 110 compares the achieved levels for 
each.

                    Table 109--Comparison of Projected Combined Fleet Targets to Alternatives
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                                                                                      No action
                  Model year                     Final standards    Alternative A    Alternative B       case
----------------------------------------------------------------------------------------------------------------
2026..........................................                168              168              168          168
2027..........................................                170              155              170          168
2028..........................................                153              135              153          169
2029..........................................                136              114              136          169
2030..........................................                119              105              119          170
2031..........................................                102               96              107          171
2032..........................................                 85               85               95          171
----------------------------------------------------------------------------------------------------------------


                Table 110--Comparison of Projected Combined Fleet Achieved Levels to Alternatives
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                                                                                                      No action
                  Model year                     Final standards    Alternative A    Alternative B       case
----------------------------------------------------------------------------------------------------------------
2026..........................................                166              166              166          166
2027..........................................                164              160              163          160
2028..........................................                149              132              149          153
2029..........................................                130              115              128          142
2030..........................................                116              103              116          137
2031..........................................                100               93              104          128
2032..........................................                 87               82               86          118
----------------------------------------------------------------------------------------------------------------

    Table 111 presents a comparison of average incremental per-vehicle 
costs for the final standards and the alternatives, as well as the 
average annual cost over the rulemaking period.

[[Page 28068]]



             Table 111--Comparison of Projected Incremental Costs Relative to the No Action Scenario
                                                [CO2 grams/mile]
----------------------------------------------------------------------------------------------------------------
                         Model year                           Final standards    Alternative A    Alternative B
----------------------------------------------------------------------------------------------------------------
2027.......................................................               $232           $1,114             $214
2028.......................................................                552            1,794              437
2029.......................................................              1,002            2,088              936
2030.......................................................              1,481            2,390            1,375
2031.......................................................              1,875            2,418            1,561
2032.......................................................              2,074            2,425            1,867
6-year avg.................................................              1,203            2,038            1,065
----------------------------------------------------------------------------------------------------------------

F. Sensitivities--LD GHG Compliance Modeling

    EPA often conducts sensitivity analyses to help assess key areas of 
uncertainty in both underlying data and modeling assumptions, 
consistent with OMB Circular No. A-4 which establishes guidelines for 
conducting regulatory impact analyses, including benefit-cost 
analysis.\1295\ In the analysis for this rule, EPA has evaluated the 
feasibility and appropriateness of the standards using the central case 
assumptions for technology, market acceptance, and various other 
assumptions described throughout this preamble and RIA. For a number of 
these key assumptions, we have conducted sensitivity analyses for the 
final standards using alternative sets of assumptions. We believe that, 
together with the central case assumptions, these sensitivities span 
ranges of values that reasonably cover uncertainties in the critical 
areas of state policies, battery costs, the market for PEVs, and 
manufacturer participation in credit trading. As with the central case, 
we reach the conclusion that the final standards are feasible given 
consideration of lead time and cost under each of the individual 
sensitivity cases presented here.
---------------------------------------------------------------------------

    \1295\ Though Circular A-4 was revised on November 9, 2023, the 
updated guidance will not become effective for final rules that are 
submitted for OMB review until after December 31, 2024. The analyses 
conducted in support of this rule follow guidance from Circular A-4 
finalized in 2003.
---------------------------------------------------------------------------

1. State-Level ZEV Policies (ACC II)
    We have provided an analysis that accounts for state-level zero-
emission vehicle (ZEV) policies as described by California's ACC II 
program and other participating states under CAA section 177. 
California has submitted to EPA a request for a waiver for its ACC II 
program, which is currently under review; EPA is not prejudging the 
outcome of any waiver process or whether or not certain states are able 
to adopt California's regulations under the criteria of section 177. 
Nevertheless, it is an important question to analyze what the potential 
effect of state adoption of ZEV policies might be in the context of the 
No Action case, particularly since manufacturers may be adjusting 
product plans to account for ACC II, and thus we are providing this 
sensitivity analysis to explore this question. As shown in Table 112, 
state adoption of ACC II is projected to amount to about 30 percent of 
total U.S. light-duty sales in 2027 and beyond. Within the states 
adopting ACC II, manufacturers are required to sell a certain portion 
of vehicles that meet the ZEV definition, which includes BEVs, FCEVs, 
and a limited number of PHEVs that satisfy a minimum requirement for 
charge depleting range. The required ZEV shares increase by model year, 
reaching 100 percent in 2035 as shown in Table 113.

    Table 112--Sales Share of U.S. New Light-Duty Vehicles in States
                     Adopting ACC II, by Model Year
------------------------------------------------------------------------
                               Portion of U.S. new   States adopting ACC
         Model years          light-duty sales (%)           II
------------------------------------------------------------------------
2018 to 2025................                  12.6  CA.
2026........................                  25.3  CA, MA, NY, OR, VA,
                                                     VT, WA.
2027 and later..............                  32.8  CA, CO, DC, DE, MA,
                                                     MD, NM, NJ, NY, OR,
                                                     RI, VA, VT, WA.
------------------------------------------------------------------------


                                Table 113--ZEV Percentage Sales Requirements Within States Adopting ACC II, by Model Year
--------------------------------------------------------------------------------------------------------------------------------------------------------
   2022       2023       2024       2025       2026       2027       2028       2029       2030       2031       2032       2033       2034       2035
--------------------------------------------------------------------------------------------------------------------------------------------------------
   14.5       17.0       19.5       22.0       35.0       43.0       51.0       59.0       68.0       76.0       82.0       88.0       94.0      100.0
--------------------------------------------------------------------------------------------------------------------------------------------------------

    EPA's analysis of state-level ZEV mandates was conducted by 
separating the base year fleet into two regions. We applied a minimum 
PEV sales share constraint to the portion of new vehicles in the ACC 
II-adopting states, using the values in Table 113. For the remainder of 
new vehicles, a minimum PEV sales share value of zero was specified. In 
both ZEV and non-ZEV regions, the OMEGA modeling allowed manufacturers 
to exceed the minimum PEV shares if it resulted in lower producer 
generalized cost, while still meeting other modeling constraints 
including compliance with the National GHG standards for the particular 
policy case and satisfying the consumer demand for PEVs. The results of 
the analysis for this state-level ZEV mandate sensitivity are 
summarized in Table 114 through Table 120.

[[Page 28069]]



   Table 114--Projected Targets With ACC II, for No Action Case and Final Standard (CO2 grams/mile)--cars and
                                                 trucks combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          169          170          171          172          171          172
Final Standards...................          171          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------


 Table 115--Projected Achieved Levels With ACC II, for No Action Case and Final Standard (CO2 grams/mile)--Cars
                                             and Trucks Combined \a\
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          145          129          116          104           91           83
Final Standards...................          152          136          126          114          100           92
----------------------------------------------------------------------------------------------------------------
\a\ Due to a lower limit of available AC leakage, off-cycle and A/C efficiency credits, the achieved levels in
  the Final Standards appear higher than in the No Action case, although tailpipe CO2 is equal or less than the
  No Action case in each year. That is, we expect the final standards to drive CO2 emissions decreases relative
  to the No Action case.


    Table 116--PEV Penetrations With ACC II, for No Action Case and Final Standard--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           37           41           45           50           56           59
Final Standards...................           37           42           47           53           60           64
----------------------------------------------------------------------------------------------------------------


   Table 117--PHEV Penetrations With ACC II, for No Action Case and Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            5            6            6            8           14           14
Final Standards...................            5            6            7            6            8            8
----------------------------------------------------------------------------------------------------------------


Table 118--Strong HEV Penetrations With ACC II, for No Action Case and Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            4            4            4            4            4            4
Final Standards...................            4            5            5            5            5            5
----------------------------------------------------------------------------------------------------------------


    Table 119--Advanced ICE Penetrations With ACC II, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           45           38           35           31           27           25
Final Standards...................           46           40           36           31           25           22
----------------------------------------------------------------------------------------------------------------


               Table 120--Average Incremental Vehicle Cost vs. No Action Case With ACC II for the Final Standard--Cars and Trucks Combined
                                                                     [2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032       6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards..............................................         $143          $82          $95         $227         $969       $1,003         $420
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. Battery Costs
    The following section presents key OMEGA results for the low and 
high battery cost sensitivities, which are described in more detail in 
section IV.C.2 of the preamble.
i. Low Battery Costs
    The low battery cost assumes a 15 percent reduction in battery pack 
costs

[[Page 28070]]

(on a $/kWh basis) from the central case compliance analysis, as 
described in section IV.C.2. Additionally, we use the 45X figures from 
the NPRM analysis and the 30D/45W estimates from DOE without the 
reductions described in IV.C.2 that were applied in the central 
analysis. The corresponding GHG targets and achieved g/mile levels are 
provided in Table 121 and Table 122. Technology penetrations of PEVs, 
PHEVs, strong HEVs, and advanced ICE vehicles are summarized in Table 
123, Table 124, Table 125, and Table 126. The resulting incremental 
compliance costs (against the corresponding No Action case) are given 
in Table 127.

  Table 121--Projected Targets With Low Battery Costs, for No Action Case and Final Standard (CO2 Grams/Mile)--
                                            Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          170          171          172          172          172          172
Final Standards...................          171          154          136          119          102           85
----------------------------------------------------------------------------------------------------------------


 Table 122--Projected Achieved Levels With Low Battery Costs, for No Action Case and Final Standards (CO2 Grams/
                                         Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          131          111          101          101          100          103
Final Standards...................          140          119          113          111           96           82
----------------------------------------------------------------------------------------------------------------


   Table 123--PEV Penetrations With Low Battery Costs, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           42           47           51           51           51           50
Final Standards...................           42           50           54           55           63           70
----------------------------------------------------------------------------------------------------------------


  Table 124--PHEV Penetrations With Low Battery Costs, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            5            6            7            8            8            9
Final Standards...................            5            6            7            8            9           11
----------------------------------------------------------------------------------------------------------------


   Table 125--Strong HEV Penetrations With Low Battery Costs, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            3            4            3            3            3            4
Final Standards...................            3            3            3            3            3            2
----------------------------------------------------------------------------------------------------------------


  Table 126--Advanced ICE Penetrations With Low Battery Costs, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           42           34           31           31           31           31
Final Standards...................           42           35           32           30           25           20
----------------------------------------------------------------------------------------------------------------


         Table 127--Average Incremental Vehicle Cost vs. No Action Case for Low Battery Costs for the Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards.......................................         $106          -$12          -$72           $25          $653        $1,416          $353
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 28071]]

ii. High Battery Costs
    The high battery cost assumes a 25 percent increase in battery pack 
costs (on a $/kWh basis) from the central case compliance analysis. The 
corresponding GHG targets and achieved g/mile levels are provided in 
Table 128 and Table 129. Technology penetrations of PEVs, PHEVs, strong 
HEVs, and advanced ICE vehicles are summarized in Table 130, Table 131, 
Table 132, and Table 133. The resulting incremental compliance costs 
(against the corresponding No Action case) are given in Table 134.

 Table 128--Projected Targets With High Battery Costs, for No Action Case and Final Standard (CO2 Grams/Mile)--
                                            Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          168          168          169          169          170          170
Final Standards...................          170          154          136          120          102           85
----------------------------------------------------------------------------------------------------------------


Table 129--Projected Achieved Levels With High Battery Costs, for No Action Case and Final Standards (CO2 Grams/
                                         Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          163          149          148          144          134          128
Final Standards...................          168          137          126          108           95           83
----------------------------------------------------------------------------------------------------------------


  Table 130--PEV Penetrations With High Battery Costs, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           29           29           29           31           35           39
Final Standards...................           30           36           43           52           61           68
----------------------------------------------------------------------------------------------------------------


  Table 131--PHEV Penetrations With High Battery Costs, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           10            9            8            9           11           13
Final Standards...................           10           12           12           13           15           18
----------------------------------------------------------------------------------------------------------------


  Table 132--Strong HEV Penetrations With High Battery Costs, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            5            9            9            9            8            8
Final Standards...................            5           11           11           12           11            8
----------------------------------------------------------------------------------------------------------------


 Table 133--Advanced ICE Penetrations With High Battery Costs, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           49           39           39           38           35           33
Final Standards...................           49           25           22           16           12           10
----------------------------------------------------------------------------------------------------------------


         Table 134--Average Incremental Vehicle Cost vs. No Action Case for High Battery Costs for the Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards.......................................         $230        $1,562        $2,300        $3,335        $3,818        $4,187        $2,572
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 28072]]

3. Consumer Acceptance of PEVs
    We have included sensitivities on the rate of BEV and PHEV 
acceptance. Given uncertainties in vehicle markets, we estimate results 
assuming both faster and slower rates of BEV acceptance for all body 
styles. We also acknowledge that PHEV acceptance could be more 
prevalent than we estimate in our central case. For information on what 
these BEV and PHEV acceptance rates are, refer to RIA Chapter 4.1.3.
i. Faster BEV Acceptance
    Results assuming a faster rate of BEV acceptance are provided here. 
The corresponding GHG targets and achieved g/mile levels are provided 
in Table 135 and Table 136. Technology penetrations of PEVs, PHEVs, 
strong HEVs, and advanced ICE vehicles are summarized in Table 137, 
Table 138, Table 139, and Table 140. The resulting incremental 
compliance costs (against the corresponding No Action case) are given 
in Table 141.

Table 135--Projected Targets With Faster BEV Acceptance, for No Action Case and Final Standard (CO2 Grams/Mile)--
                                            Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          170          171          172          173          173          174
Final Standards...................          171          154          136          120          102           85
----------------------------------------------------------------------------------------------------------------


  Table 136--Projected Achieved Levels With Faster BEV Acceptance, for No Action Case and Final Standards (CO2
                                      Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          133          108           94           86           75           67
Final Standards...................          140          114          103           99           91           78
----------------------------------------------------------------------------------------------------------------


 Table 137--PEV Penetrations With Faster BEV Acceptance, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           41           48           54           57           62           65
Final Standards...................           41           51           57           60           65           71
----------------------------------------------------------------------------------------------------------------


Table 138--PHEV Penetrations With Faster BEV Acceptance, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            4            5            6            6            8            9
Final Standards...................            5            5            5            6            6            9
----------------------------------------------------------------------------------------------------------------


 Table 139--Strong HEV Penetrations With Faster BEV Acceptance, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            3            3            3            3            2            3
Final Standards...................            3            3            3            2            2            2
----------------------------------------------------------------------------------------------------------------


  Table 140--Advanced ICE Penetrations With Faster BEV Acceptance, for No Action Case and Final Standards--Cars
                                               and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           42           34           30           28           25           23
Final Standards...................           42           33           29           27           24           19
----------------------------------------------------------------------------------------------------------------


[[Page 28073]]


       Table 141--Average Incremental Vehicle Cost vs. No Action Case for Faster BEV Acceptance for the Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards.......................................         $138          $193          $181           $40          -$19          $274          $134
--------------------------------------------------------------------------------------------------------------------------------------------------------

ii. Slower BEV Acceptance
    Results assuming a slower rate of BEV acceptance are provided here. 
The corresponding GHG targets and achieved g/mile levels are provided 
in Table 142 and Table 143. Technology penetrations of PEVs, PHEVs, 
strong HEVs, and advanced ICE vehicles are summarized in Table 144, 
Table 145, Table 146, and Table 147. The resulting incremental 
compliance costs (against the corresponding No Action case) are given 
in Table 148.

Table 142--Projected Targets With Slower BEV Acceptance, for No Action Case and Final Standard (CO2 Grams/Mile)--
                                            Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          168          170          170          170          171          171
Final Standards...................          170          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------


  Table 143--Projected Achieved Levels With Slower BEV Acceptance, for No Action Case and Final Standards (CO2
                                      Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          161          151          145          141          129          125
Final Standards...................          162          136          122          107           98           81
----------------------------------------------------------------------------------------------------------------


 Table 144--PEV Penetrations With Slower BEV Acceptance, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           29           26           29           31           37           39
Final Standards...................           31           36           45           52           60           68
----------------------------------------------------------------------------------------------------------------


Table 145--PHEV Penetrations With Slower BEV Acceptance, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            9            9           10           10           11           12
Final Standards...................           10           11           13           14           15           17
----------------------------------------------------------------------------------------------------------------


 Table 146--Strong HEV Penetrations With Slower BEV Acceptance, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            5           14           13           13           12           12
Final Standards...................            5           15           13           15           15           12
----------------------------------------------------------------------------------------------------------------


  Table 147--Advanced ICE Penetrations With Slower BEV Acceptance, for No Action Case and Final Standards--Cars
                                               and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           48           34           33           32           30           29
Final Standards...................           46           25           22           15           11            8
----------------------------------------------------------------------------------------------------------------


[[Page 28074]]


       Table 148--Average Incremental Vehicle Cost vs. No Action Case for Slower BEV Acceptance for the Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards.......................................         $426        $1,074        $1,512        $2,158        $2,291        $2,887        $1,725
--------------------------------------------------------------------------------------------------------------------------------------------------------

4. No Credit Trading Case
    As described in section III.C.4 of this preamble, averaging, 
banking and trading are some of the key compliance flexibilities that 
EPA has included in its emissions standards dating back to 1983. EPA 
expects manufacturers to leverage each of these flexibilities to some 
extent, including the trading of credits between companies. The OMEGA 
model is set up to allow trading between companies and can be 
configured so that all of the credits generated are traded to 
manufacturers that need them (perfect trading), or that only a 
percentage of credits are traded (imperfect trading), down to a 
hypothetical ``no trading'' case where each manufacturer must comply on 
its own using only averaging and banking without the ability to 
purchase credits earned by another manufacturer.
    As we did for the proposal,\1296\ in our central case EPA assumes a 
CME (credit market efficiency) of 0.8, which indicates that 80 percent 
of a manufacturer's total debits may be purchased from another 
manufacturer, with the remaining debits having to be made up via 
implementation of additional vehicle technology. For this ``no 
trading'' sensitivity, we are setting the CME at a value of 0. As we 
did in our no trading sensitivity for the proposal, we also apply a 10 
percent compliance buffer which requires the manufacturer to 
strategically aim for a CO2 level (in total Mg 
CO2) that is 10 percent below the target level in each year, 
so that a sufficient buffer of banked credits is maintained, in lieu of 
the use of the credit trading flexibility.
---------------------------------------------------------------------------

    \1296\ See the memo to docket, EPA-HQ-OAR-2022-0829.
---------------------------------------------------------------------------

    Table 149 and Table 150 present the targets and achieved levels for 
the No Trading case and the No Action No Trading case. Table 151 
through Table 154 show the respective technology penetrations for PEVs, 
PHEVs, strong HEVs and advanced ICE vehicles, while Table 155 shows the 
incremental compliance costs for the No Trading case.

Table 149--Projected Targets Under the No Trading Sensitivity for No Action Case and Final Standards (CO2 Grams/
                                         Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............          170          169          169          170          170          170
Final Standards-No Trading........          171          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------


  Table 150--Projected Achieved Levels Under the No Trading Sensitivity for No Action Case and Final Standards
                                   (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............          142          141          133          129          121          117
Final Standards-No Trading........          146          132          116          103           89           77
----------------------------------------------------------------------------------------------------------------


 Table 151--PEV Penetrations Under the No Trading Sensitivity, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............           33           34           37           39           42           45
Final Standards-No Trading........           34           40           48           55           63           70
----------------------------------------------------------------------------------------------------------------


 Table 152--PHEV Penetrations Under the No Trading Sensitivity, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............            6            6            7            8            9           10
Final Standards-No Trading........            6            7            8            9           11           13
----------------------------------------------------------------------------------------------------------------


[[Page 28075]]


  Table 153--Strong HEV Penetrations Under the No Trading Censitivity, for No Action Case and Final Standards--
                                            Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............            7            7            7            7            6            6
Final Standards-No Trading........            7           12           10           12           11           10
----------------------------------------------------------------------------------------------------------------


 Table 154--Advanced ICE Penetrations Under the No Trading Sensitivity, for No Action Case and Final Standards--
                                            Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............           39           46           44           43           40           39
Final Standards-No Trading........           38           32           28           21           17           13
----------------------------------------------------------------------------------------------------------------


    Table 155--Average Incremental Vehicle Cost vs. No Action Case Under the No Trading Sensitivity for the Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards-No Trading............................         $268        $1,055        $1,420        $1,983        $2,365        $2,807        $1,650
--------------------------------------------------------------------------------------------------------------------------------------------------------

5. Alternative Manufacturer Pathways
i. Lower BEV Production
    This sensitivity was developed to illustrate a hypothetical 
scenario where manufacturers choose to limit BEV production and focus 
on PHEVs as a more significant part of their compliance strategy than 
in the Central case. Note that this is the scenario referred to as 
``Pathway B'' in section I.B.1 of this preamble. To characterize this 
scenario, we assume that consumers eventually consider PHEVs and ICE 
vehicles equally acceptable, all else equal. We also apply a production 
restriction to BEVs increasing over time in a trajectory similar to the 
No Action central case.
    Results assuming Lower BEV Production are provided below. Table 156 
and Table 157 give the targets and achieved levels for the Lower BEV 
Production case and the No Action case. Table 158 through Table 161 
show the respective technology penetrations for PEVs, PHEVs, strong 
HEVs and advanced ICE vehicles, while Table 162 shows the incremental 
compliance costs for this pathway compared to its No Action case.

          Table 156--Projected Targets for Lower BEV Production, for No Action Case and Final Standard
                                     (CO2 G/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          168          169          169          170          171          171
Final Standards...................          170          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------


Table 157--Projected Achieved Levels for Lower BEV Production, for No Action Case and Final Standards (CO2 Grams/
                                         Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          160          153          142          137          128          118
Final Standards...................          160          146          133          117          102           88
----------------------------------------------------------------------------------------------------------------


  Table 158--PEV Penetrations for Lower BEV Production, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           31           33           37           39           42           47
Final Standards...................           34           41           47           54           65           73
----------------------------------------------------------------------------------------------------------------


[[Page 28076]]


 Table 159--PHEV Penetrations for Lower BEV Production, for No Action Case and Final Standards--Cars and Trucks
                                                    Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            5            6            7            8            8           12
Final Standards...................           10           12           15           18           24           29
----------------------------------------------------------------------------------------------------------------


  Table 160--Strong HEV Penetrations for Lower BEV Production, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            4            4            4            4            5            6
Final Standards...................            4            4            3            6            7            6
----------------------------------------------------------------------------------------------------------------


 Table 161--Advanced ICE Penetrations for Lower BEV Production, for No Action Case and Final Standards--Cars and
                                                 Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           51           44           41           40           36           33
Final Standards...................           46           41           36           28           20           15
----------------------------------------------------------------------------------------------------------------


   Table 162--Average Incremental Vehicle Cost vs. No Action Case for Lower BEV Production Scenario for the Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          2027 (%)      2028 (%)      2029 (%)      2030 (%)      2031 (%)      2032 (%)      6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards.......................................         $449          $788          $980        $1,639        $2,303        $2,575        $1,456
--------------------------------------------------------------------------------------------------------------------------------------------------------

ii. No Additional BEVs Beyond the No Action Case
    This sensitivity was developed to illustrate a hypothetical 
scenario where manufacturers choose to limit BEV production to the 
trajectory observed in the Central No Action case. Again, we assume 
that manufacturers use an increasing number of PHEVs to comply with the 
final standards. This scenario is also referred to as ``Pathway C'' in 
section I.B.1 of this preamble. To characterize this scenario, we 
assume that consumers eventually consider PHEVs and ICE vehicles 
equally acceptable, all else equal. We also apply a production 
restriction to BEVs increasing over time in a trajectory similar to the 
No Action central case.
    Results for this sensitivity are provided below. Table 163 and 
Table 164 give the targets and achieved levels for the No Additional 
BEVs case and the No Action case. Table 165 through Table 168 show the 
respective technology penetrations for PEVs, PHEVs, strong HEVs and 
advanced ICE vehicles, while Table 169 shows the incremental compliance 
costs for this pathway compared to its No Action case.

   Table 163--Projected Targets for No Additional BEVs Beyond the No Action Case, for No Action Case and Final
                                 Standard (CO2 G/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          168          169          169          170          171          171
Final Standards...................          170          155          137          121          103           86
----------------------------------------------------------------------------------------------------------------


  Table 164--Projected Achieved Levels for No Additional BEVs Beyond the No Action Case, for No Action Case and
                           Final Standards (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action.........................          160          153          142          137          128          118
Final Standards...................          159          124          112          100           95           90
----------------------------------------------------------------------------------------------------------------


[[Page 28077]]


   Table 165--PEV Penetrations for No Additional BEVs Beyond the No Action Case, for No Action Case and Final
                                       Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           31           33           37           39           42           47
Final Standards...................           35           43           52           57           66           71
----------------------------------------------------------------------------------------------------------------


   Table 166--PHEV Penetrations for No Additional BEVs Beyond the No Action Case, for No Action Case and Final
                                       Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            5            6            7            8            8           12
Final Standards...................           10           17           22           27           32           36
----------------------------------------------------------------------------------------------------------------


   Table 167--Strong HEV Penetrations for No Additional BEVs Beyond the No Action Case, for No Action Case and
                                    Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................            4            4            4            4            5            6
Final Standards...................            4           15           13           16           15           13
----------------------------------------------------------------------------------------------------------------


  Table 168--Advanced ICE Penetrations for No Additional BEVs Beyond the No Action Case, for No Action Case and
                                    Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action.........................           51           44           41           40           36           33
Final Standards...................           46           20           17           10            6            5
----------------------------------------------------------------------------------------------------------------


 Table 169--Average Incremental Vehicle Cost vs. No Action Case for No Additional BEVs Beyond the No Action Case Scenario for the Final Standards--Cars
                                                                   and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards.......................................         $536        $2,517        $2,630        $3,120        $3,334        $3,112        $2,542
--------------------------------------------------------------------------------------------------------------------------------------------------------

6. Overall Consideration of Sensitivity Analyses
    The following is a summary of the sensitivities conducted and a 
comparison of resulting PEV penetrations and incremental technology 
costs for the standards compared to the respective No Action case.
    As can be seen, the projected targets for the final standards are 
not significantly different across the range of sensitivities discussed 
in this section.\1297\ It is important to note that manufacturers are 
able to meet the targets for the standards in every year for the range 
of sensitivities analyzed here. However, the achieved levels do vary in 
each sensitivity; in some cases, there is greater level of 
overcompliance (most notably in the Faster BEV Acceptance case).
---------------------------------------------------------------------------

    \1297\ While manufacturers may adjust their product mix as one 
of their compliance strategies, the OMEGA future car/truck mix is 
fixed, and based on the forecast from AEO 2023.
---------------------------------------------------------------------------

    Table 170 and Table 171 present a comparison for the projected 
targets and achieved levels for the final standards, based on the 
various identified sensitivities (the central No Action case is 
provided for reference). While total PEV penetrations projected to meet 
the standards (shown in Table 174) do not vary much across the 
sensitivity cases, the mix of PHEVs and BEVs does vary across 
sensitivities (refer to Table 175 and Table 176). PEV penetrations in 
the No Action case vary significantly: projected MY 2032 PEV 
penetrations range from 39 percent to 65 percent based on different 
input assumptions which affect consumer demand for electric vehicles 
and in the case of the State-level ZEV Policies scenario also reflect 
state required BEV shares. The range of PEV penetrations in the No 
Action case is provided in Table 177.
    Of the metrics considered, the range of sensitivities have the 
greatest impact on incremental vehicle cost compared to their 
respective No Action case. We have also provided industry average 
absolute vehicle costs in Table 178, with the incremental costs of 
compliance for each sensitivity in Table 179. Compared to a 6-year 
average incremental cost of about $1,200 for the central case, these 
sensitivities result in a range of 6-year average incremental costs 
from $100 (the Faster BEV Acceptance case) per vehicle to about $2,600 
(the High Battery Costs case). The two sensitivity cases that result in 
less BEV penetrations in the No Action case--High Battery Costs and the 
No Additional BEVs cases--result in the highest incremental costs. 
Three

[[Page 28078]]

sensitivities have substantially lower incremental costs than the 
central case--the Low Battery Costs, Faster BEV Acceptance, and State-
Level ZEV Policies scenarios. Three other sensitivities have 
incremental costs comparable to those of the central case--Slower BEV 
Acceptance, No Trading case, and Lower BEV Production. We believe the 
costs are reasonable across this range of sensitivities, as discussed 
in section V.B.

           Table 170--Range of Targets for Final Standards (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Central case--No Action                     168          169          169          170          171          171
 (reference)......................
Central case--Final Standards.....          170          153          136          119          102           85
----------------------------------------------------------------------------------------------------------------
                                                  Sensitivities
----------------------------------------------------------------------------------------------------------------
State-level Policies..............          171          153          136          119          102           85
Low Battery Costs.................          171          154          136          119          102           85
High Battery Costs................          170          154          136          120          102           85
Faster BEV Acceptance.............          171          154          136          120          102           85
Slower BEV Acceptance.............          170          153          136          119          102           85
No Trading case...................          171          153          136          119          102           85
Lower BEV Production..............          170          153          136          119          102           85
No Additional BEVs................          170          155          137          121          103           86
----------------------------------------------------------------------------------------------------------------


      Table 171--Range of Achieved Levels for Final Standards (CO2 Grams/Mile)--Cars and Trucks Combined a
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Central case--No Action                     160          153          142          137          128          118
 (reference)......................
Central case--Final Standards.....          164          149          130          116          100           87
----------------------------------------------------------------------------------------------------------------
                                                  Sensitivities
----------------------------------------------------------------------------------------------------------------
State-level Policies..............          152          136          126          114          100           92
Low Battery Costs.................          131          111          101          101          100          103
High Battery Costs................          168          137          126          108           95           83
Faster BEV Acceptance.............          140          114          103           99           91           78
Slower BEV Acceptance.............          162          136          122          107           98           81
No Trading case...................          146          132          116          103           89           77
Lower BEV Production..............          160          146          133          117          102           88
No Additional BEVs................          159          124          112          100           95           90
----------------------------------------------------------------------------------------------------------------
\a\ Achieved levels for the No Action case are lower in MY 2027 due to additional off-cycle and A/C credits
  available to manufacturers.


            Table 172--Range of Targets for No Action Case (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Central case......................          168          169          169          170          171          171
State-level Policies..............          169          170          171          172          171          172
Low Battery Costs.................          170          171          172          172          172          172
High Battery Costs................          168          168          169          169          170          170
Faster BEV Acceptance.............          170          171          172          173          173          174
Slower BEV Acceptance.............          168          170          170          170          171          171
No Trading case...................          170          169          169          170          170          170
Lower BEV Production..............          168          169          169          170          171          171
No Additional BEVs................          168          169          169          170          171          171
----------------------------------------------------------------------------------------------------------------


        Table 173--Range of Achieved Levels for No Action Case (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Central case......................          160          153          142          137          128          118
State-level Policies..............          145          129          116          104           91           83
Low Battery Costs.................          131          111          101          101          100          103
High Battery Costs................          163          149          148          144          134          128
Faster BEV Acceptance.............          133          108           94           86           75           67
Slower BEV Acceptance.............          161          151          145          141          129          125
No Trading case...................          142          141          133          129          121          117
Lower BEV Production..............          160          153          142          137          128          118
No Additional BEVs................          160          153          142          137          128          118
----------------------------------------------------------------------------------------------------------------


[[Page 28079]]


               Table 174--Range of PEV Penetrations for Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Central case--No Action                      31           33           37           39           42           47
 (reference)......................
Central case--Final Standards.....           32           37           46           53           61           68
----------------------------------------------------------------------------------------------------------------
                                                  Sensitivities
----------------------------------------------------------------------------------------------------------------
State-level Policies..............           37           42           47           53           60           64
Low Battery Costs.................           42           50           54           55           63           70
High Battery Costs................           30           36           43           52           61           68
Faster BEV Acceptance.............           41           51           57           60           65           71
Slower BEV Acceptance.............           31           36           45           52           60           68
No Trading case...................           34           40           48           55           63           70
Lower BEV Production..............           34           41           47           54           65           73
No Additional BEVs................           35           43           52           57           66           71
----------------------------------------------------------------------------------------------------------------


               Table 175--Range of BEV Penetrations for Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Central case--No Action                      26           27           30           31           34           35
 (reference)......................
Central case--Final Standards.....           26           31           39           44           51           56
----------------------------------------------------------------------------------------------------------------
                                                  Sensitivities
----------------------------------------------------------------------------------------------------------------
State-level Policies..............           31           36           40           47           52           56
Low Battery Costs.................           37           44           47           48           54           59
High Battery Costs................           20           25           30           38           46           50
Faster BEV Acceptance.............           37           46           52           54           58           62
Slower BEV Acceptance.............           21           25           32           38           44           52
No Trading case...................           28           33           41           46           52           56
Lower BEV Production..............           24           29           33           37           41           43
No Additional BEVs................           24           26           30           31           34           35
----------------------------------------------------------------------------------------------------------------


               Table 176--Range of PHEV Penetrations for Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Central case--No Action                       5            6            7            8            8           12
 (reference)......................
Central case--Final Standards.....            6            6            8            9           11           13
----------------------------------------------------------------------------------------------------------------
                                                  Sensitivities
----------------------------------------------------------------------------------------------------------------
State-level Policies..............            5            6            7            6            8            8
Low Battery Costs.................            5            6            7            8            9           11
High Battery Costs................           10           12           12           13           15           18
Faster BEV Acceptance.............            5            5            5            6            6            9
Slower BEV Acceptance.............           10           11           13           14           15           17
No Trading case...................            6            7            8            9           11           13
Lower BEV Production..............           10           12           15           18           24           29
No Additional BEVs................           10           17           22           27           32           36
----------------------------------------------------------------------------------------------------------------


                Table 177--Range of PEV Penetrations for No Action Case--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Central case......................           31           33           37           39           42           47
State-level Policies..............           37           41           45           50           56           59
Low Battery Costs.................           42           47           51           51           51           50
High Battery Costs................           29           29           29           31           35           39
Faster BEV Acceptance.............           41           48           54           57           62           65
Slower BEV Acceptance.............           29           26           29           31           37           39
No Trading case...................           33           34           37           39           42           45
Lower BEV Production..............           31           33           37           39           42           47
No Additional BEVs................           31           33           37           39           42           47
----------------------------------------------------------------------------------------------------------------


[[Page 28080]]


                                 Table 178--Range of Absolute Vehicle Costs for No Action Case--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032       6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Central case.................................................      $43,412      $43,561      $43,761      $43,948      $44,357      $44,915      $43,992
State-level Policies.........................................       44,127       44,643       44,844       45,313       45,165       45,641       44,956
Low Battery Costs............................................       43,374       43,953       43,996       44,219       44,478       44,593       44,102
High Battery Costs...........................................       43,952       44,359       44,157       44,330       44,828       45,175       44,467
Faster BEV Acceptance........................................       44,697       45,532       45,716       46,044       46,496       46,959       45,907
Slower BEV Acceptance........................................       43,298       43,897       43,934       44,044       44,516       44,721       44,068
No Trading case..............................................       44,260       44,083       44,155       44,264       44,567       44,830       44,360
Lower BEV Production.........................................       43,412       43,561       43,761       43,948       44,357       44,915       43,992
No Additional BEVs...........................................       43,412       43,561       43,761       43,948       44,357       44,915       43,992
--------------------------------------------------------------------------------------------------------------------------------------------------------


                      Table 179--Range of Incremental Vehicle Cost vs. No Action Case for Final Standards--Cars and Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Central case..........................................         $232          $552        $1,002        $1,481        $1,875        $2,074        $1,203
State-level Policies..................................          143            82            95           227           969         1,003           420
Low Battery Costs.....................................          106           -12           -72            25           653         1,416           353
High Battery Costs....................................          230         1,562         2,300         3,335         3,818         4,187         2,572
Faster BEV Acceptance.................................          138           193           181            40           -19           274           134
Slower BEV Acceptance.................................          426         1,074         1,512         2,158         2,291         2,887         1,725
No Trading case.......................................          268         1,055         1,420         1,983         2,365         2,807         1,650
Lower BEV Production..................................          449           788           980         1,639         2,303         2,575         1,456
No Additional BEVs....................................          536         2,517         2,630         3,120         3,334         3,112         2,542
--------------------------------------------------------------------------------------------------------------------------------------------------------


Table 180--Absolute Cost Comparison of No Action and Final Standards for Central Case and Sensitivities--2032 MY
----------------------------------------------------------------------------------------------------------------
                                                                                       Final
                                                                     No action       standards      Incremental
                                                                   absolute cost   absolute cost       cost
----------------------------------------------------------------------------------------------------------------
Central case....................................................         $44,915         $46,989          $2,074
State-level Policies............................................          45,641          46,644           1,003
Low Battery Costs...............................................          44,593          46,009           1,416
High Battery Costs..............................................          45,175          49,362           4,187
Faster BEV Acceptance...........................................          46,959          47,233             274
Slower BEV Acceptance...........................................          44,721          47,608           2,887
No Trading case.................................................          44,830          47,637           2,807
Lower BEV Production............................................          44,915          47,490           2,575
No Additional BEVs..............................................          44,915          48,027           3,112
----------------------------------------------------------------------------------------------------------------

G. Sensitivities--MD GHG Compliance Modeling

1. Battery Costs (Low and High)
    For medium-duty vehicles, we have conducted high and low battery 
pack cost sensitivities, similar to those done for the light-duty GHG 
analysis (for more information refer to section IV.F.2 of this 
preamble). The low and high battery pack cost sensitivities have been 
combined into the summary tables in this section.
    Table 181 and Table 182 present a comparison for the targets and 
the projected achieved levels for the final standards, based on battery 
costs assumed for the central case and the low and high cost 
sensitivity cases. The range of PEV penetrations and PHEV penetrations 
for the final MD standards are provided in Table 183 and Table 184. 
These tables show generally consistent results between the central case 
and the battery cost sensitivities because consumer behavior was not 
reflected in the medium-duty compliance analysis.
    Battery costs have the greatest impact on incremental vehicle cost 
compared to the No Action case. Compared to a 6-year average 
incremental costs of about $1,400 for the central case, these 
sensitivities result in a range of incremental costs from $1,100 per 
vehicle to about $1,900. Incremental vehicle costs for the final 
standards for the two sensitivities are provided in Table 185.

      Table 181--Projected Targets for Final Standards (CO2 Grams/Mile)--Central Case, Low and High Battery
                                       Sensitivities--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Central case......................          461          453          408          353          314          274
Low Battery Costs.................          461          453          408          353          314          274

[[Page 28081]]

 
High Battery Costs................          461          453          409          353          315          275
----------------------------------------------------------------------------------------------------------------


  Table 182--Projected Achieved Levels for Final Standards (CO2 Grams/Mile)--Central Case, Low and High Battery
                                       Sensitivities--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
Central case......................          456          451          407          351          312          272
Low Battery Costs.................          456          452          407          351          311          272
High Battery Costs................          456          451          408          352          314          273
----------------------------------------------------------------------------------------------------------------


 Table 183--PEV Penetrations for Final Standards--Central Case, Low and High Battery Sensitivities--Medium-Duty
                                                    Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Central case......................            3            4           14           27           32           43
Low Battery Costs.................            3            4           14           27           33           44
High Battery Costs................            3            4           14           27           31           42
----------------------------------------------------------------------------------------------------------------


 Table 184--PHEV Penetrations for Final Standards--Central Case, Low and High Battery Sensitivities--Medium-Duty
                                                    Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
Central case......................            0            0            0            5            3           11
Low Battery Costs.................            0            0            0            5            5           12
High Battery Costs................            0            0            4            9            6           11
----------------------------------------------------------------------------------------------------------------


    Table 185--Average Incremental Vehicle Cost vs. No Action Case for Final Standards--Central Case, Low and High Battery Sensitivities--Medium-Duty
                                                                        Vehicles
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                   2027         2028         2029         2030         2031         2032       6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Central case.................................................         $125         $122         $847       $1,881       $2,416       $3,275       $1,444
Low Battery Costs............................................          125          122          553        1,356        1,863        2,696        1,119
High Battery Costs...........................................          125          121        1,120        2,493        3,247        4,206        1,885
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. No Credit Trading Case
    Similar to the approach we used for the light-duty GHG modeling 
sensitivity (section IV.F.4 of the preamble), we conducted a No Trading 
sensitivity for medium-duty vehicles. Refer to section IV.F.4 of this 
preamble for modeling details that we applied for this No Trading case.
    Table 186 and Table 187 present the CO2 targets and 
achieved levels for the No Trading case and the No Action No Trading 
case. Table 188 and Table 189 show the respective technology 
penetrations for PEVs and PHEVs. Table 190 shows the incremental 
compliance costs for the No Trading case for medium-duty vehicles.

Table 186--Projected Targets Under the No Trading Sensitivity for No Action Case and Final Standards (CO2 Grams/
                                           Mile)--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............          473          473          473          473          474          473
Final Standards-No Trading........          460          452          408          352          313          274
----------------------------------------------------------------------------------------------------------------


[[Page 28082]]


  Table 187--Projected Achieved Levels Under the No Trading Sensitivity for No Action Case and Final Standards
                                     (CO2 Grams/Mile)--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............          426          425          424          423          422          420
Final Standards-No Trading........          413          406          366          317          282          247
----------------------------------------------------------------------------------------------------------------


   Table 188--PEV Penetrations for Final Standards--Central Case, No Trading Sensitivity--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............            8            8            8            8            8            9
Final Standards-No Trading........           10           11           20           32           40           50
----------------------------------------------------------------------------------------------------------------


  Table 189--PHEV Penetrations for Final Standards--Central Case, No Trading Sensitivity--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No Trading..............            0            0            0            0            0            0
Final Standards-No Trading........            0            0            0            5           11           20
----------------------------------------------------------------------------------------------------------------


     Table 190--Average Incremental Vehicle Cost vs. No Action Case for Final Standards--Central Case, No Trading Sensitivity--Medium-Duty Vehicles
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards-No Trading............................         $326          $412        $1,086        $2,072        $2,846        $3,806        $1,758
--------------------------------------------------------------------------------------------------------------------------------------------------------

H. Additional Illustrative Scenarios

1. No New BEVs Above Base Year Fleet--Light-Duty Vehicles
    For this analysis, EPA has also assessed the ability for 
manufacturers to comply with the final standards in an illustrative 
scenario where No New BEV models are sold beyond those that were 
already present in the MY 2022 fleet (5 percent of the new vehicle 
market). In this ``No New BEVs Above Base Year Fleet'' scenario, we 
restricted OMEGA so that ICE vehicles, HEVs and PHEVs cannot be 
redesigned as a new BEV. EPA also applied this restriction to the No 
Action case associated with this scenario. It is important to note that 
MY 2023 BEV sales for the U.S. are expected to approach 10 percent 
market share, so this analysis assumes a 50 percent reduction in BEV 
sales even from current levels. Although EPA recognizes that this 
scenario is highly unlikely to occur given the ongoing investment and 
growth in consumer acceptance of BEVs, it is illustrative of the 
potential range of compliance options available to manufacturers to 
meet these standards.
    EPA developed this scenario to evaluate concerns raised by some 
commenters that the standards imposed a BEV ``mandate'' that would 
dramatically transform the U.S. economy. All regulated entities 
indicated their intention to produce BEVs as an increasing share of 
their fleet to achieve GHG emissions reductions--including in the 
absence of this rule due to their market strategies, the IRA, and other 
factors. As already explained, the final standards do not impose any 
BEV mandate, either legally or practically, and we expect manufacturers 
to choose to produce a range of BEV, PHEV, HEV and ICE vehicles during 
the timeframe for this rule. Nothing in the Clean Air Act requires EPA 
to identify multiple technology pathways to achieve compliance or to 
show that manufacturers can achieve the standards solely by relying on 
alternatives to what is currently the most effective technology for 
controlling emissions. Nonetheless, EPA performed this illustrative 
scenario to evaluate certain commenters' claims that this rule would 
force increased BEV adoption. EPA's modeling demonstrates that this is 
not the case. Rather, the final standards are feasible even with no new 
BEV adoption, albeit at a greater cost. As the modeling results show, 
the industry can comply with the final standards by producing the base 
year percentage of BEVs and a significant percentage of PHEVs. However, 
as PHEVs are not as cost-effective for compliance as BEVs, the cost of 
compliance increases. The corresponding GHG targets and achieved g/mile 
levels are provided in Table 191 and Table 192. Technology penetrations 
of PEVs, PHEVs, strong HEVs, and advanced ICE vehicles are summarized 
in Table 193 through Table 196. Incremental costs are relative to the 
alternative No Action case which also restricts additional production 
of new BEVs. Costs are provided in Table 197.

[[Page 28083]]



 Table 191--Projected Targets Under the No New BEVs Above Base Year Fleet Scenario for No Action Case and Final
                              Standards (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............          167          167          166          168          167          167
Final Standards-No New BEVs.......          169          152          134          118          101           84
----------------------------------------------------------------------------------------------------------------


Table 192--Projected Achieved Levels Under the No New BEVs Above Base Year Fleet Scenario for No Action Case and
                           Final Standards (CO2 Grams/Mile)--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............          165          165          164          166          164          165
Final Standards-No New BEVs.......          167          150          133          117          102           84
----------------------------------------------------------------------------------------------------------------


 Table 193--PEV Penetrations Under the No New BEVs Above Base Year Fleet Scenario, for No Action Case and Final
                                       Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............           14           14           14           13           12           13
Final Standards-No New BEVs.......           15           25           36           48           74           91
----------------------------------------------------------------------------------------------------------------


 Table 194--PHEV Penetrations Under the No New BEVs Above Base Year Fleet Scenario, for No Action Case and Final
                                       Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............            9            8            9            7            7            7
Final Standards-No New BEVs.......           10           19           31           43           69           86
----------------------------------------------------------------------------------------------------------------


 Table 195--Strong HEV Penetrations Under the No New BEVs Above Base Year Fleet Scenario, for No Action Case and
                                    Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............           20           22           24           18           22           23
Final Standards-No New BEVs.......           23           26           21           19           15            5
----------------------------------------------------------------------------------------------------------------


  Table 196--Advanced ICE Penetrations Under the No New BEVs Above Base Year Fleet Scenario, for No Action Case
                                  and Final Standards--Cars and Trucks Combined
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............           28           35           37           34           33           37
Final Standards--No New BEVs......           20           13            8            5            0            0
----------------------------------------------------------------------------------------------------------------


  Table 197--Average Incremental Vehicle Cost vs. No Action Case Under the No New BEVs Above Base Year Fleet Scenario for the Final Standards--Cars and
                                                                     Trucks Combined
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards-No New BEVs...........................         $205        $1,538        $2,536        $3,019        $4,722        $5,459        $2,913
--------------------------------------------------------------------------------------------------------------------------------------------------------

2. No New BEVs Above Base Year Fleet--Medium-Duty Vehicles
    As we did for light-duty vehicles, EPA has also assessed the 
ability for manufacturers to comply with the final medium-duty GHG 
standards in a scenario where No New BEV models are sold beyond those 
already present in the base year fleet used for this analysis.\1298\ In 
the medium-duty ``No New BEVs'' scenario, OMEGA is restricted so that 
any ICE, HEV or PHEV vehicle cannot be redesigned as a new BEV. We also

[[Page 28084]]

restrict OMEGA from redesigning new BEVs for the corresponding No 
Action case; OMEGA applies PHEVs to satisfy CARB's Advanced Clean 
Trucks (ACT) ZEV requirements. Although EPA recognizes that the No New 
BEVs scenario is highly unlikely to occur given the ongoing investment 
in BEVs, it is illustrative of the range of compliance options 
available to the industry to meet these standards.
---------------------------------------------------------------------------

    \1298\ No BEVs existed in the market for the MY 2020 medium-duty 
vehicle base year fleet used for this analysis; therefore, ``No New 
BEVs'' is analogous to ``No BEVs.'' Accordingly, all electrified 
vehicles for this scenario are PHEVs.
---------------------------------------------------------------------------

    As the modeling results show, the industry can still comply with 
the final medium-duty GHG standards by producing a significant 
percentage of PHEVs. However, as PHEVs are not as cost-effective for 
compliance as pure battery electric vehicles, the costs of compliance 
increase. The corresponding GHG targets and achieved g/mile levels are 
provided in Table 198 and Table 199. Technology penetrations of PEVs, 
PHEVs, and advanced ICE vehicles \1299\ are summarized in Table 200 
through Table 202. Incremental costs are relative to the alternative No 
Action case which also restricts additional production of new BEVs. 
Costs are provided in Table 203.
---------------------------------------------------------------------------

    \1299\ As discussed, strong HEVs were not modeled for medium-
duty vans and pickup trucks.

   Table 198--Projected Targets Under the No New BEVs Above Base Year Fleet Sensitivity for No Action Case and
                             Final Standards (CO2 Grams/Mile)--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............          477          477          477          478          478          478
Final Standards-No New BEVs.......          461          454          411          355          318          278
----------------------------------------------------------------------------------------------------------------


 Table 199--Projected Achieved Levels Under the No New BEVs Above Base Year Fleet Sensitivity for No Action Case
                           and Final Standards (CO2 Grams/Mile)--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                        2027         2028         2029         2030         2031         2032
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............          459          455          452          448          445          441
Final Standards-No New BEVs.......          459          454          411          356          317          279
----------------------------------------------------------------------------------------------------------------


   Table 200--PEV Penetrations Under the No New BEVs Above Base Year Fleet Sensitivity, for No Action Case and
                                      Final Standards--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............            3            4            5            6            7            8
Final Standards-No New BEVs.......            3            4           16           30           39           51
----------------------------------------------------------------------------------------------------------------


  Table 201--PHEV Penetrations Under the No New BEVs Above Base Year Fleet Sensitivity, for No Action Case and
                                      Final Standards--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............            3            4            5            6            7            8
Final Standards-No New BEVs.......            3            4           16           30           39           51
----------------------------------------------------------------------------------------------------------------


Table 202--Advanced ICE Penetrations Under the No New BEVs Above Base Year Fleet Sensitivity, for No Action Case
                                    and Final Standards--Medium-Duty Vehicles
----------------------------------------------------------------------------------------------------------------
                                      2027 (%)     2028 (%)     2029 (%)     2030 (%)     2031 (%)     2032 (%)
----------------------------------------------------------------------------------------------------------------
No Action-No New BEVs.............           57           57           56           55           55           54
Final Standards-No New BEVs.......           57           56           50           42           38           31
----------------------------------------------------------------------------------------------------------------


 Table 203--Average Incremental Vehicle Cost vs. No Action Case Under the No New BEVs Above Base Year Fleet Sensitivity for the Final Standards--Medium-
                                                                      Duty Vehicles
                                                                     [2022 Dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                            2027          2028          2029          2030          2031          2032        6-yr avg
--------------------------------------------------------------------------------------------------------------------------------------------------------
Final Standards-No New BEVs...........................         $129          $181        $1,284        $2,850        $4,189        $5,360        $2,332
--------------------------------------------------------------------------------------------------------------------------------------------------------


[[Page 28085]]

V. EPA's Basis That the Final Standards are Feasible and Appropriate 
Under the Clean Air Act

A. Overview

    The Clean Air Act authorizes EPA to establish emissions standards 
for motor vehicles to regulate emissions of air pollutants that 
contribute to air pollution which, in the Administrator's judgment, may 
reasonably be anticipated to endanger public health or welfare. See 
also Coalition for Responsible Regulation v. EPA, 684 F. 3d at 122 
(``the job Congress gave [EPA] in CAA section 202(a)'' is ``utilizing 
emission standards to prevent reasonably anticipated endangerment from 
maturing into concrete harm''). As discussed in section II of this 
preamble, emissions from motor vehicles contribute to ambient levels of 
pollutants for which EPA has established health-based NAAQS. These 
pollutants are linked with respiratory and/or cardiovascular problems 
and other adverse health impacts leading to increased medication use, 
hospital admissions, emergency department visits, and premature 
mortality. In addition, light and medium-duty vehicles are significant 
contributors to the U.S. GHG emissions inventories. As discussed in 
section II of this preamble, there is a critical need for further 
criteria pollutant and GHG reductions to address the adverse impacts of 
air pollution from light- and medium-duty vehicles on public health and 
welfare.
    To this end, as in EPA's past light and medium duty rulemakings, in 
this final rule we considered the following factors in setting final 
standards: technology effectiveness, its cost (including per vehicle, 
per manufacturer, and per purchaser), the lead time necessary to 
implement the technology, and, based on this, the feasibility of 
potential standards; the impacts of potential standards on emissions 
reductions; the impacts of standards on oil conservation and energy 
security; the impacts of standards on fuel savings by vehicle 
operators; the impacts of standards on the vehicle manufacturing 
industry; as well as other relevant factors such as impacts on safety. 
To evaluate and balance these statutory factors and other relevant 
considerations, EPA must necessarily estimate a means of compliance: 
what technologies are projected to be available to be used, what do 
they cost, and what is appropriate lead time for their deployment. 
Thus, to support the feasibility of the final standards, EPA identified 
a potential compliance pathway. Having identified one means of 
compliance, EPA's task is to ``answe[r] any theoretical objections'' to 
that means of compliance, ``identif[y] the major steps necessary,'' and 
to ``offe[r] plausible reasons for believing that each of those steps 
can be completed in the time available.'' NRDC v. EPA, 655 F. 2d at 
332. That is what EPA has done here in this final rule, and indeed what 
it has done in all of the motor vehicle emission standard rules 
implementing section 202(a) of the Act for half a century.
    In assessing the means of compliance, EPA considers updated data 
available at the time of this rulemaking, including real-world 
technological and corresponding costs developments related to 
emissions-reducing technologies for light and medium duty vehicles. The 
statute directs EPA to assess the ``development and application of the 
requisite technology, giving appropriate consideration to the cost of 
compliance within'' the relevant timeframe, and specifically compels 
EPA to consider relevant emissions-reduction technologies on vehicles 
and engines regardless of ``whether such vehicles and engines are 
designed as complete systems or incorporate devices to prevent or 
control such pollution.'' CAA section 202(a)(1), (2). The statute does 
not prescribe particular technologies, but rather entrusts to the EPA 
Administrator the authority and obligation to identify a range of 
available technologies that have the potential to significantly control 
or prevent emissions of the relevant pollutants and establish standards 
based on his consideration of the lead-time and costs for such 
technologies, along with other factors. Pursuant to the statutory 
mandate and as explained throughout this preamble, EPA has considered 
the full range of vehicle technologies that meet these criteria and 
that we anticipate will be available in the MY 2027-32 timeframe, 
including numerous ICE and advanced ICE vehicle, HEV, PHEV, and BEV 
technologies.
    With continued advances in internal combustion emissions controls 
and a range of vehicle electrification technologies being more widely 
deployed, EPA believes substantial further emissions reductions are 
feasible and appropriate under the Clean Air Act. It has been a decade 
since EPA updated light-duty vehicle criteria pollutant standards. 
While light-duty GHG standards have been updated more recently, various 
developments since the most recent light-duty standards are supportive 
of even greater levels of production and adoption of PEV technology, 
which is highly effective for controlling tailpipe emissions of 
criteria pollutants and GHGs.\1300\ These developments include the 
public announcements by manufacturers about their plans to transition 
fleets to electrified vehicles, the increase in PEV model availability 
across all vehicle types, continued growth in consumer acceptance--and 
sales--of PEVs, and the additional support for PEVs provided by the 
Inflation Reduction Act (IRA). Prior to the passage of the IRA, EPA 
received input from auto manufacturers that increasing the market share 
of PEVs is now technologically feasible but that it is important to 
address consumer issues such as charging infrastructure and the cost to 
purchase a PEV, as well as manufacturing issues such as battery supply 
and manufacturing costs. The IRA provides powerful incentives in all of 
these areas that will address these issues in the timeframe considered 
in this rulemaking. Indeed, EPA's projections, which are consistent 
with a range of third-party projections, suggest that automakers sell 
significant numbers of PEVs even absent any revised standards, in part 
due to the incentives of the IRA. EPA has consulted closely with DOE in 
considering the impacts of the IRA in our assessment of the appropriate 
standards and those impacts are an important element of EPA's cost and 
feasibility assessment.\1301\
---------------------------------------------------------------------------

    \1300\ See also the extensive discussion of recent developments 
in emission-reducing technologies, including PEV technology, in 
sections I.A.2 and IV.C.1 of this preamble.
    \1301\ It is important to note that, although E.O. 14037 
identified a goal for 50 percent of U.S. new vehicle sales to be 
zero-emission vehicles by 2030, the E.O. only directed EPA to 
consider beginning work on a new rulemaking and to do so consistent 
with applicable law. EPA exercised its technical judgment based on 
the record before it in developing this rule consistent with the 
authority of section 202 of the Clean Air Act.
---------------------------------------------------------------------------

    The balance of this section summarizes the key factors found in the 
administrative record (including the entire preamble, RIA, and RTC) 
that form the basis for the Administrator's determination that the 
final standards are feasible and appropriate under our Clean Air Act 
authority. Section V.B of the preamble discusses the statutory factors 
of technological feasibility, compliance costs, and lead time, and it 
explains that the final standards are predicated upon technologies that 
are feasible and of moderate cost during the timeframe for this rule. 
Section V.C of the preamble evaluates emissions of GHGs and criteria 
pollutants, and it finds that the final standards would achieve 
significant GHG and criteria pollutant reductions that make an 
important contribution to mitigating air pollution, including climate 
change.

[[Page 28086]]

Section V.D of the preamble evaluates other relevant factors that are 
important to evaluating the real-world feasibility of the standards as 
well as their impact, including impacts on purchasers, energy, safety, 
and other factors. It concludes that the final standards will result in 
considerable benefits for purchasers and operators of light and medium 
duty vehicles, create positive energy security benefits for the United 
States, and not create an unreasonable risk to safety. Section V.E of 
the preamble explains how the Administrator exercised the discretion 
Congress entrusted the agency with in balancing the various factors we 
considered. It articulates the key factors that were dispositive to the 
Administrator's decision in selecting the final standards, such as 
feasibility, compliance costs, lead time, and emissions reductions; as 
well as other factors that were not used to select the standards but 
that nonetheless provide further support for the Administrator's 
decision. On balance, this section V, together with the rest of the 
administrative record, demonstrates that the final standards are 
supported by voluminous evidence, the product of the agency's well-
considered technical judgment and the Administrator's careful weighing 
of the relevant factors, and that these standards faithfully implement 
the important directive contained in section 202(a) of the Clean Air 
Act to reduce emissions of air pollutants from motor vehicles which 
cause or contribute air pollution that may reasonably be anticipated to 
endanger public health or welfare.

B. Consideration of Technological Feasibility, Compliance Costs and 
Lead Time

    The technological readiness of the auto industry to meet the final 
standards for model years 2027-2032 is best understood in the context 
of over a decade of light-duty vehicle emissions reduction programs in 
which the auto industry has introduced emissions-reducing technologies 
in a wide lineup of ever more cost-effective, efficient, and high-
volume vehicle applications. Among the range of technologies that have 
been demonstrated over the past decade, electrification technologies 
have seen particularly rapid development and lower costs. Since EPA 
first started assessing technologies for reducing GHG emissions, we 
have recognized that ``electrification'' represents a full spectrum of 
technologies, from reducing demand on a gasoline powertrain for certain 
accessories or circumstances (such as regenerative braking or engine 
stop-start), to hybrid gasoline-electric powertrains to pure electric 
powertrains. In light of increased automaker investment and reduced 
costs, the level of electrification across all the No Action scenarios, 
as well as the policy alternatives considered in this rule, is higher 
than in any of EPA's prior rulemakings. In particular, the advancements 
across the spectrum of electrification technologies, including those 
with tailpipe emissions rates much lower than ICE-only vehicles, are 
supportive of EPA setting standards with much lower GHG, 
NMOG+NOX, and PM levels than was achievable in earlier 
rulemakings. Manufacturers have also demonstrated impressive gains in 
controlling NMOG+NOX and PM from vehicles with internal 
combustion engines. Many vehicles are already demonstrating emissions 
performance at one-third to one half of the Tier 3 NMOG+NOX 
final fleet average of 30 mg/mile through optimized engine and 
aftertreatment design and controls. In addition, there have been 
approximately 100 million gasoline particulate filters (GPFs) installed 
in light-duty vehicles worldwide, with current GPFs typically reducing 
PM emissions by over 95 percent.
    In this rulemaking, unlike some prior vehicle emissions standards 
(including those adopted in the Clean Air Act of 1970), the technology 
necessary to achieve significantly more stringent standards has already 
been developed and demonstrated in production vehicles. For example, 
vehicles equipped with gasoline particulate filters are already in 
widespread use in Europe and China; manufacturers have been building 
gasoline particulate filter equipped cars and trucks in the U.S. for 
export to countries with more stringent PM standards; and at least one 
manufacturer has been selling vehicles with gasoline particulate 
filters in the U.S.\1302\ PEVs are now being produced in large numbers 
in every segment and size of the current light-duty fleet, ranging from 
small cars such as Tesla's Model 3 or Hyundai's Kona to light trucks 
such as Ford's F150 Lightning, and their production for the U.S. market 
have quadrupled in the last few years.\1303\ Large fleet owners have 
also begun fulfilling fleet electrification commitments by taking 
delivery of rapidly growing numbers of BEV medium-duty delivery 
vans.\1304\ In setting standards, EPA considers the extent of further 
deployment that is warranted to provide the benefits to public health 
and welfare, and potential constraints, such as costs, raw material 
availability, component supplies, redesign cycles, refueling 
infrastructure, and consumer acceptance. The extent of these potential 
constraints has diminished significantly, even since the 2021 rule, as 
evidenced by increased automaker investments, increased acceptance by 
consumers, further deployment of charging infrastructure, and 
significant support from Congress to address such areas as upfront 
purchase price, charging infrastructure, critical mineral supplies, and 
domestic supply chain manufacturing.
---------------------------------------------------------------------------

    \1302\ Ferrari noted in its comments it has been selling 
vehicles with GPF in the US since 2019. (Docket EPA-HQ-OAR-2022-
0829-0637, p. 3).
    \1303\ Estimated at 8.4 percent of production in MY 2022, up 
from 4.4 percent in MY 2021 and 2.2 percent in MY 2020. See also the 
discussion of U.S. PEV penetration in I.A.2.ii.
    \1304\ See the discussion of fleet electrification commitments 
in I.A.2.ii.
---------------------------------------------------------------------------

    In response to these diminished constraints and the increased 
stringency of the standards, we expect that automakers will continue to 
adopt advanced technologies at an increasing pace across more of their 
vehicle fleets. EPA has carefully considered potential remaining 
constraints on further deployment of these advanced technologies. For 
example, in addition to considering the breadth of current product 
offerings, EPA has also considered vehicle redesign cycles. Based on 
previous public comments and industry trends, manufacturers generally 
require about five years to design, develop, and produce a new vehicle 
model.\1305\ EPA's technical assessment for this rule accounts for 
these redesign limits.\1306\ Within the modeling that EPA conducted to 
support this rule, we have assumed limits to the rate at which a 
manufacturer can alter its technology mix. We have also, after 
consultation with DOE, applied limits to the ramp up of battery 
production, considering the time needed to increase the availability of 
raw materials and construct or expand battery production facilities. 
Constraints for redesign and battery production in our compliance 
modeling are described in more detail in Chapter 2.6 of the RIA. Our 
modeling also incorporates constraints related to

[[Page 28087]]

consumer acceptance. Under our central case analysis assumptions, the 
model anticipates that consumers will in the near term tend to favor 
ICE vehicles over PEVs when two vehicles are comparable in cost and 
capability.\1307\ Taking into account individual consumer preferences, 
we anticipate that PEV acceptance and adoption will continue to 
accelerate as consumer familiarity with PEVs grows, as demonstrated in 
the scientific literature on PEV acceptance and consistent with typical 
diffusion of innovation. Adoption of PEVs is expected to be further 
supported by expansion of key enablers of PEV acceptance, namely 
increasing market presence of PEVs, more model choices, expanding 
infrastructure, and decreasing costs to consumers.\1308\ See also 
section IV.C.5 of the preamble and RIA Chapter 4. Overall, given the 
flexibility to adopt diverse compliance strategies, the number and 
breadth of current low- or zero-emission vehicles and the assumptions 
we have made to limit the rate at which new vehicle technologies are 
adopted, our assessment shows that there is sufficient lead time for 
the industry to deploy existing technologies more broadly and 
successfully comply with the final standards.
---------------------------------------------------------------------------

    \1305\ For example, in its comments on the 2012 rule, Ford 
stated that manufacturers typically begin to firm up their product 
plans roughly five years in advance of actual production. Docket 
OAR-2009-0472-7082.1, p. 10.
    \1306\ In our compliance modeling, we have limited vehicle 
redesign opportunities through MY 2029 in our compliance modeling to 
every 7 years for light- and medium-duty pickup trucks and medium-
duty vans, and 5 years for all other vehicles. We are assuming that 
manufacturers have sufficient lead team to adjust product redesign 
years after MY 2029, so we do not continue to apply redesign 
constraints for MYs 2030 and beyond.
    \1307\ EPA's compliance modeling estimates the consumer demand 
for PHEV, BEV and ICE vehicles using a consumer ``generalized cost'' 
that includes elements of the purchase cost (including any purchase 
incentives), vehicle maintenance and repair costs, and fuel 
operating costs as described in RIA Chapter 4.1.
    \1308\ Jackman, D K, K S Fujita, H C Yang, and M Taylor. 2023. 
Literature Review of U.S. Consumer Acceptance of New Personally 
Owned Light Duty Plug-in Electric Vehicles. Washington, DC: U.S. 
Environmental Protection Agency.
---------------------------------------------------------------------------

    Our analysis projects that for the industry overall, one potential 
compliance strategy manufacturers could choose to meet the standards is 
by using 68 percent PEVs in MY 2032, of which 56 percent are BEVs and 
13 percent are PHEVs. EPA believes that this is an achievable level 
based on our technical assessment for this rule that includes 
consideration of the feasibility and required lead time, including 
acceptance of PEVs in the market. Our assessment of the appropriateness 
of the level of PEVs in our analysis is also informed by public 
announcements by manufacturers about their plans to transition fleets 
to electrified vehicles, as described in section I.A.2 of this preamble 
and further discussed in RIA Chapter 3.1.3. We also note that our ``No 
Action'' scenario, which models the effect of the IRA but does not 
attempt to account for manufacturers' announced strategies, shows that 
PEV penetration in the absence of revised standards is expected to grow 
from 31 percent in MY 2027 to 39 percent in MY 2030. We have good 
reason to believe that our No Action PEV estimates are conservative, 
and that they could be higher given that mid-range third party 
estimates range from 48 percent to 58 percent in 
2030.1309 1310 1311 1312 1313 1314 Mid-range third party 
estimates exclude extreme estimates, which did not implement all IRA 
incentives (42 percent in 2030) or are self-described as ``High'' (60 
and 68 percent in 2030) or ``Advanced'' (65 percent in 2030) by 
respective study authors.1315 1316 1317 1318 We project our 
standards, if manufacturers choose the potential compliance path 
modeled, would result in PEV penetration rates of 32 percent in MY 2027 
and 53 percent in MY 2030 (i.e., almost no change in MY 2027 and only 
an 14 percentage point increase in 2030 as compared to the No Action 
scenario). We do anticipate greater PEV penetration in later years 
(growing from 47 percent in the No Action scenario in MY 2032 to 68 
percent under the modeled potential compliance path in 2032) but the 
very substantial rates of PEV penetration under the No Action scenario 
underscore that a shift to widespread use of electrification 
technologies is already well underway, which contributes to the 
feasibility of further emissions controls under these standards. 
Indeed, in light of the very substantial rates of PEV penetration 
anticipated by EPA, as well as a variety of third parties, even in the 
No Action scenario (i.e., absent revised standards) it would be 
unreasonable for EPA not to take electrification technologies into 
account in assessing the feasibility of additional reductions of 
dangerous air pollutants. More detail about our technical assessment, 
and the assumptions for the production feasibility and consumer 
acceptance of PEVs is provided in section IV of this preamble, and 
Chapters 2, 3, 4, and 6 of the RIA.
---------------------------------------------------------------------------

    \1309\ Cole, Cassandra, Michael Droste, Christopher Knittel, 
Shanjun Li, and James H. Stock. 2023. ``Policies for Electrifying 
the Light-Duty Fleet in the United States.'' AEA Papers and 
Proceedings 113: 316-322. doi: https://doi.org/10.1257/pandp.20231063.
    \1310\ IEA. 2023. ``Global EV Outlook 2023: Catching up with 
climate ambitions.'' International Energy Agency.
    \1311\ Forsythe, Connor R., Kenneth T. Gillingham, Jeremy J. 
Michalek, and Kate S. Whitefoot. 2023. ``Technology advancement is 
driving electric vehicle adoption.'' PNAS 120 (23). doi: https://doi.org/10.1073/pnas.2219396120.
    \1312\ Bloomberg NEF. 2023. ``Electric Vehicle Outlook 2023.''
    \1313\ U.S. Department of Energy, Office of Policy. 2023. 
``Investing in American Energy: Significant Impacts of the Inflation 
Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy 
Economy and Emissions Reductions.''
    \1314\ Slowik, Peter, Stephanie Searle, Hussein Basma, Josh 
Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023. 
``Analyzing the Impact of the Inflation Reduction Act on Electric 
Vehicle Uptake in the United States.'' International Council on 
Clean Transportation and Energy Innovation Policy & Technology LLC.
    \1315\ Cole, Cassandra, Michael Droste, Christopher Knittel, 
Shanjun Li, and James H. Stock. 2023. ``Policies for Electrifying 
the Light-Duty Fleet in the United States.'' AEA Papers and 
Proceedings 113: 316-322. doi: https://doi.org/10.1257/pandp.20231063.
    \1316\ Slowik, Peter, Stephanie Searle, Hussein Basma, Josh 
Miller, Yuanrong Zhou, Felipe Rodriguez, Claire Buysse, et al. 2023. 
``Analyzing the Impact of the Inflation Reduction Act on Electric 
Vehicle Uptake in the United States.'' International Council on 
Clean Transportation and Energy Innovation Policy & Technology LLC.
    \1317\ Wood, Eric, Brennan Borlaug, Matt Moniot, D-Y Lee, Yanbo 
Ge, Fan Yang, and Zhaocai Liu. 2023. ``The 2030 National Charging 
Network: Estimating U.S. Light-Duty Demand for Electric Vehicle 
Charging Infrastructure.'' National Renewable Energy Laboratory. 
Accessed December 18, 2023. https://www.nrel.gov/docs/fy23osti/85654.pdf.
    \1318\ U.S. Department of Energy, Office of Policy. 2023. 
``Investing in American Energy: Significant Impacts of the Inflation 
Reduction Act and Bipartisan Infrastructure Law on the U.S. Energy 
Economy and Emissions Reductions.''
---------------------------------------------------------------------------

    At the same time, we note that the GHG and criteria pollutant 
standards are performance-based, phase-in over six years, and do not 
mandate any specific technology for any manufacturer or any vehicle. 
Moreover, the overall industry does not necessarily need to reach this 
level of PEVs, or this particular percentage of BEVs and PHEVs, in 
order to comply--the projection in our analysis is one of many possible 
compliance pathways that manufacturers could choose to take under the 
performance-based standards. For example, for the GHG standards, our 
analysis indicates that it would be technologically feasible for PHEVs 
to meet the CO2 footprint targets established in this rule 
across a wide range of footprints and vehicle styles (and thus for a 
manufacturer to meet the fleetwide average standards with a diverse 
fleet of PHEVs). The structure of the standards--performance-based with 
averaging, banking and trading (ABT) flexibilities, phased-in over six 
model years--enables manufacturers to choose which technologies to 
apply to which vehicles and when to apply them, which increases 
consumer choice and reduces costs. For example, under the GHG 
standards, manufacturers that choose to increase their sales of HEV 
technologies or apply more advanced technology to existing non-hybrid 
ICE vehicles, would require a smaller number of PEVs than we have 
projected in our assessment to comply with the standards. Similarly, 
manufacturers that choose to sell more vehicles with PHEV

[[Page 28088]]

technology would need less improvement to non-hybrid ICE vehicles and 
smaller volumes of HEVs and BEVs in order to comply.
    Moreover, while all the standards can be met by an array of 
different technologies, the array of available technologies for meeting 
each standard varies. For example, in addition to the above 
possibilities, a manufacturer could meet the PM standard solely through 
adding gasoline particulate filters to ICE vehicles. Similarly, 
manufacturers could meet the NMOG+NOX standard solely 
through improvements in engines and aftertreatment systems in ICE 
vehicles. In addition, while EPA is basing its judgment regarding 
feasibility of the standards on the numerous technologies it has 
identified as available today for meeting all the standards, 
manufacturers and their suppliers are highly innovative and may develop 
novel technologies, not available at this time, or find ways of 
reducing cost and complexity while increasing effectiveness of existing 
technologies for achieving the requisite emissions reductions. For 
example, when EPA implemented certain statutory standards following the 
1970 Clean Air Act Amendments, manufacturers met those standards 
through three-way catalysts, a heretofore unproven technology. More 
recently, manufacturers responded to EPA's 2007 heavy-duty rule by 
applying selective catalytic reduction technologies, even though EPA 
had not anticipated such technology would be available for 
compliance.\1319\
---------------------------------------------------------------------------

    \1319\ 66 FR 5002, 5036.
---------------------------------------------------------------------------

    In our technical assessment, we present various sensitivities in 
which the industry overall is projected to apply technologies in 
different proportions, with each scenario representing a different 
feasible compliance pathway. We do not expect, and the standards do not 
require, that all manufacturers follow a similar pathway. Instead, 
individual manufacturers can choose to apply a mix of technologies--
including various levels of base ICE, advanced ICE, strong HEV, PHEV, 
and BEV technologies--that best suits the company's particular product 
mix and market position as well as its strategies for investment and 
technology development. Considering the range of potential paths for 
designing compliant vehicles and the diversity of consumer demand for 
vehicles, EPA anticipates that manufacturers will employ a wide range 
of technologies, applied to ICE, hybrid, plug-in hybrid and fully 
electric vehicles to meet their fleetwide average standards.
    In considering the feasibility of the standards, EPA also considers 
the impact of available compliance flexibilities on automakers' 
compliance options.\1320\ The advanced technologies that automakers are 
continuing to incorporate in vehicle models today directly contribute 
to each company's compliance plan (i.e., these vehicle models have 
lower criteria pollutant and GHG emissions), and manufacturers can 
choose to comply with the standards outright through their choice of 
emissions reducing technologies. That is, the standards are feasible 
even absent credit trading across manufacturers, as demonstrated by our 
``no credit trading'' sensitivity in section IV.F.4 and G.2.\1321\
---------------------------------------------------------------------------

    \1320\ While EPA considered these compliance flexibilities in 
assessing the feasibility of the standards, EPA did not reopen such 
flexibilities, except to the extent that we finalized a specific 
flexibility as in section III of this preamble. Specifically, EPA 
did not reopen the structure or general availability of ABT.
    \1321\ Technical feasibility of the standards is further 
discussed in RIA Chapters 3.2 and 3.5.
---------------------------------------------------------------------------

    At the same time, automakers typically have widely utilized the 
program's established ABT provisions which provide a variety of 
flexible paths to plan compliance. We have discussed this dynamic at 
length in past rules, and we anticipate that this same dynamic will 
support compliance with this rulemaking. Although the ABT program for 
GHG and criteria pollutants have some differences (as discussed in 
detail in sections III.C.4 and III.D.9 of the preamble), they 
fundamentally operate in a similar fashion. The GHG credit program was 
designed to recognize that automakers typically have compliance 
opportunities and strategies that differ across their fleet, as well as 
a multi-year redesign cycle, so not every vehicle will be redesigned 
every year to add emissions-reducing technology. Moreover, when 
technology is added, a given vehicle will generally not achieve 
emissions reductions corresponding exactly to a single year-over-year 
change in stringency of the standards. Instead, in any given model 
year, some vehicles will be ``credit generators,'' over-performing 
compared to their footprint-based CO2 emissions targets in 
that model year, while other vehicles will be ``debit generators'' and 
under-performing against their standards or targets. As the standards 
reach increasingly lower numerical emissions levels, some vehicle 
designs that had generated credits in earlier model years may instead 
generate debits in later model years. In MY 2032 when the final 
standards reach the lowest level, it is possible that only some vehicle 
technologies are generating positive credits, and vehicles equipped 
with other technologies all generate varying levels of debits. In the 
criteria pollutant program, the NMOG+NOX standards also 
allow manufacturers to average emissions across their fleet, allowing 
some vehicles to have higher emissions (i.e., certify to higher 
emissions ``bins''), and other vehicles lower emissions (i.e., certify 
to lower emissions bins), than the fleet-wide average standard. For 
example, along the continuum of vehicle electrification, PHEVs with 
longer all electric range and efficient internal combustion engines and 
BEVs might generate credits, while non-hybrid ICE vehicles and some 
less effective PHEVs and strong HEVs might generate some debits. Even 
in this case, the application of a greater degree of vehicle 
electrification short of BEV technology, and further adoption of ICE 
and advanced ICE technologies can remain an important part of a 
manufacturer's compliance strategy by reducing the amount of debits 
generated by these vehicles. A greater application of technologies to 
vehicles with internal combustion engines (e.g., strong hybrids and 
PHEVs) can enable compliance with fewer BEVs than if less technology 
was adopted for such vehicles, and therefore enable the tailoring of a 
compliance strategy to the manufacturer's specific market and product 
offerings. Together, an automaker's mix of credit-generating and debit-
generating vehicles determine its compliance with GHG standards, and 
certain criteria pollutant standards, for that year.
    Moreover, the trading provisions of the program allow each 
manufacturer to design a compliance strategy relying not only on 
overcompliance and undercompliance by different vehicles or in 
different years within its own fleet, but also between different 
manufacturers. Credit trading is a compliance flexibility provision 
that allows one vehicle manufacturer to purchase credits from another, 
accommodating the ability of manufacturers to make strategic choices in 
planning for and reacting to normal fluctuations in an automotive 
business cycle. When credits are available for less than the marginal 
cost of compliance, EPA would anticipate that an automaker might choose 
to adopt a compliance strategy relying at least in part on purchasing 
credits.
    The final performance-based standards with ABT provisions give 
manufacturers a degree of flexibility in the design of specific 
vehicles and their fleet offerings, while allowing industry

[[Page 28089]]

overall to meet the standards and thus achieve the health and 
environmental benefits projected for this rulemaking at a lower cost. 
EPA has considered ABT in the feasibility assessments for many previous 
rulemakings since EPA first began incorporating ABT credits provisions 
in mobile source rulemakings in the 1980s (see section III.C.4 of the 
preamble for further information on the history of ABT) and continues 
that practice for this rule. EPA's annual Automotive Trends Report 
illustrates how different automakers have chosen to make use of the GHG 
program's various credit features.\1322\ It is clear that manufacturers 
are widely utilizing the various credit programs available, and we have 
every expectation that manufacturers will continue to take advantage of 
the compliance flexibilities and crediting programs to their fullest 
extent, thereby providing them with additional tools in finding the 
lowest cost compliance solutions in light of the revised standards.
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    \1322\ Environmental Protection Agency, ``The 2023 EPA 
Automotive Trends Report: Greenhouse Gas Emissions, Fuel Economy, 
and Technology since 1975,'' EPA-420-R-23-033, December 2023.
---------------------------------------------------------------------------

    While the potential value of credit trading as a means of reducing 
costs to automakers was always clear, there is increasing evidence that 
automakers have successfully adopted credit trading as an important 
compliance strategy that reduces costs. The market for trading credits 
is now well established. As shown in the most recent EPA Trends Report, 
21 vehicle firms collectively have participated in over 100 credit 
trading transactions totaling 194 Tg of credits since the inception of 
the EPA program through Model Year 2022. These firms include many of 
the largest automotive firms.\1323\ Several of these manufacturers have 
publicly acknowledged the importance of considering credit purchase or 
sales as part of their business plans to improve their competitive 
position.1324 1325 For firms with new vehicle production 
made up entirely or primarily of credit-generating vehicles, the 
revenue generated from credit sales can help to fund the development of 
GHG-reducing technologies and offset production costs. Other firms have 
the option of purchasing credits if they choose to make a fleet that is 
overall deficit-generating. This can be a cost-effective compliance 
strategy, especially for companies that make lower-volume vehicles 
where the incremental development costs for GHG-reducing technologies 
would be higher on a per-vehicle basis than for another company. The 
opportunity to purchase credits can also enable a company to continue 
specializing in vehicle applications where the application of advanced 
GHG-reducing technologies may be more costly than purchasing credits. 
For example, manufacturers of light- and medium-duty pickups might 
choose to purchase credits rather than apply BEV technology to some of 
those vehicles used frequently for long distance towing applications, 
at least in the shorter term when higher capacity batteries might be 
used to accommodate the existing charging infrastructure. As another 
example, a small volume manufacturer, which tends to have fewer vehicle 
models, might choose to comply partly through the purchase of credits 
instead of adding across its entire line of models technology that 
brings the emissions of each vehicle down to the target level.
---------------------------------------------------------------------------

    \1323\ EPA 2023 Trends Report, Figure 5.12.
    \1324\ ``FCA historically pursued compliance with fuel economy 
and greenhouse gas regulations in the markets where it operated 
through the most cost effective combination of developing, 
manufacturing and selling vehicles with better fuel economy and 
lower GHG emissions, purchasing compliance credits, and, as allowed 
by the U.S. federal Corporate Average Fuel Economy (``CAFE'') 
program, paying regulatory penalties.'' Stellantis N.V. (2020). 
``Annual Report and Form 20-F for the year ended December 31, 
2020.''
    \1325\ ``We have several options to comply with existing and 
potential new global regulations. Such options include increasing 
production and sale of certain vehicles, such as EVs, and curtailing 
production of less fuel efficient ICE vehicles; technology changes, 
including fuel consumption efficiency and engine upgrades; payment 
of penalties; and/or purchase of credits from third parties. We 
regularly evaluate our current and future product plans and 
strategies for compliance with fuel economy and GHG regulations'' 
General Motors Company (2022). ``Annual Report and Form 10-K for the 
fiscal year ended December 31, 2021.''
---------------------------------------------------------------------------

    In light of the evidence of increased adoption of trading as a 
compliance strategy and the increased vehicle sales from EV-only 
manufacturers (who are likely to view credit sales as a potential 
revenue stream), EPA has included the ability of manufacturers to trade 
credits as part of our central case compliance modeling for this rule, 
rather than as a sensitivity analysis as we did in the modeling for the 
2021 rule. We anticipate that the economic efficiencies of credit 
trading will generally be attractive to automakers, and thus we 
consider it appropriate to take trading into account in estimating the 
costs of the standards. However, trading is an optional compliance 
flexibility, and we recognize that automakers may choose to use it in 
their compliance strategies to varying degrees. For this final rule, 
EPA has analyzed a sensitivity case in which we assume that no 
manufacturers take advantage of the credit trading flexibility. As 
noted above, the active and widespread participation in credit trading 
(including by EV-only manufacturers) to date indicates that such an 
assumption is unlikely to apply across the entire industry. However, it 
is an illustrative bounding case since we find that all manufacturers 
can comply by only the application of technology without any reliance 
on purchased credits, at a cost that is similar to our central case 
analysis. In other words, we conclude that the standards are feasible 
and appropriate even in the absence of trading.
    As part of its assessment of technological feasibility and lead 
time, EPA has considered the cost for the auto industry to comply with 
the revised standards. See section IV.D of the preamble and Chapter 12 
of the RIA for our analysis of compliance costs. The estimated average 
cost to manufacturers to meet the light-duty standards (both criteria 
and GHG) is approximately $2,100 (2022 dollars) per vehicle in MY 2032, 
which is within the range of costs projected in prior rules, which EPA 
estimated at about $1,800 (2010 dollars, equivalent to approximately 
$2,400 in 2022 dollars), and $1,000 (2018 dollars, equivalent to 
approximately $1,200 in 2022 dollars) per vehicle for the 2012 and 2021 
LD GHG rules respectively. The estimated average cost to comply for 
medium-duty manufacturers is projected to be $3,300 (2022 dollars) in 
2032, compared to $1,400 (2013 dollars, equivalent to $1,700 in 2022 
dollars) in the HD Phase 2 rulemaking.\1326\ Over the entire MY 2027-
2032 timeframe, the average cost of the light-duty standards ($1,200) 
represents less than 3 percent of the projected average cost of a new 
vehicle (about $44,000), comparable to relative cost increases in prior 
rules.1327 1328 Similarly, the medium-

[[Page 28090]]

duty vehicle six-year average (MYs 2027-2032) cost increase is $1,400, 
which is 2% higher than the 6-year average in the no action case.\1329\
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    \1326\ We note that the costs we present for this rule in this 
paragraph reflect the costs of controls to meet all the standards we 
are promulgating, including for GHG, PM, and NMOG+NOX. By 
contrast, the costs we present for the prior 2012 LD GHG, 2021 LD 
GHG, and HD Phase 2 GHG Rules reflects only costs to achieve GHG 
standards. Were EPA to consider the cumulative costs of prior GHG 
and criteria pollutant rules, those costs would appear relatively 
higher.
    \1327\ The 2010 rule estimated an average MY 2016 per-vehicle 
cost of $948 (2007 dollar years, see 75 FR 25348), which represents 
2.8 percent of the average price of a vehicle in 2016 ($34,077). The 
2012 rule estimated an average MY 2023 vehicle cost of $1,425 (2010 
dollar years, see 77 FR 62920), which represents 2.9 percent of the 
average price of a vehicle in 2023 ($48,759). Source for 2016 
average vehicle price: https://www.edmunds.com/about/press/average-
vehicle-transaction-price-hits-all-time-high-in-2016-according-to-
edmundscom.html#:~:text=SANTA%20MONICA%2C%20CA%20%E2%80%94%20December
%2015,shopping%20network%2C%20Edmunds.com. Source for 2023 average 
vehicle price:https://mediaroom.kbb.com/2024-01-11-Automotive-
Market-Shifts-to-Favor-Buyers-as-US-New-Vehicle-Prices-Down-Record-
2-4-Year-Over-Year-in-December-
2023#:~:text=The%20average%20transaction%20price%20(ATP,from%202.7%25
%20one%20year%20ago (last accessed February 26, 2024).
    \1328\ Further, the highest estimated model year cost (MY 2032) 
of $2,100 represents about 4.5 percent of the projected average cost 
of a new MY 2032 light-duty vehicle (about $46,700) (both estimates 
in 2022 dollars). Note that these values are averages across all 
body styles, powertrains, makes, models, and trims, and there will 
be differences for each individual vehicle. Also note that, as 
discussed in RIA Chapter 4.2, the price of a new vehicle has been 
increasing over time due to factors not associated with our rules. 
If the average price of a MY 2032 vehicle is higher than our 
estimate shown here, this estimated percentage increase in cost 
could well be smaller than 4.5 percent compared to the cost of a new 
MY 2032 vehicle.
    \1329\ EPA's central case assessment projects a $3,300 increase 
in MY2032, which is a 4.5% increase in the average total vehicle 
costs for the no action case.
---------------------------------------------------------------------------

    EPA also carefully evaluated a range of sensitivities for both the 
light-duty and medium-duty standards, as described in detail in section 
IV of the preamble and RIA Chapter 12.1.4 and 12.2.4. Taken together 
these sensitivities, encompass a wide array of potential uncertainties 
and future scenarios, including higher and lower battery cost, greater 
and lesser consumer acceptance for different vehicle technologies, 
different assumptions about the availability of IRA tax credits, and a 
diversity of manufacturer compliance strategies. Specifically, for the 
light-duty vehicle sensitivity assessments presented in sections IV.F 
and IV.H.1 of the preamble and RIA Chapter 12.1.4, for the majority of 
scenarios we estimate six-year average cost increases that represent 
between 0.3 percent and 3.9 percent increase in the projected total 
costs of a new vehicle (six-year average costs of $130 to $1,700), with 
two of the sensitivities showing a projected 5.8 percent increase (six-
year average costs of $2,500-$2,600).\1330\ These potential cost 
increases are small in comparison to the average costs of a new 
vehicle, and they are similar to the projected cost increase in a new 
vehicle under our central assessment of 2.7 percent, and in some cases 
smaller. Two of the sensitivities (the ``high battery cost'' and ``no 
additional BEVs'') have projected six-year average cost increases as 
high as 5.8 percent of a new vehicle cost. EPA believes both 
sensitivities are unlikely to occur. The high battery cost sensitivity 
battery cost projections are much higher than the EPA, DOE or the 
majority of third party projections, in particular for the 2030-2032 
time frame, and in fact we believe our central battery costs 
projections are conservative and that actual battery costs are likely 
to be lower. The ``no additional BEVs'' (beyond the no action case) 
sensitivity is also unlikely to occur, as it is inconsistent with the 
public announcements and the investments being made by many of the 
major automotive manufacturers as well as the projections from many 
researchers and automotive industry consultants. EPA also evaluated an 
illustrative scenario where no new BEV models are sold beyond those 
that were already present in the MY 2022 fleet. In this scenario, the 
six-year average costs ($2,900) increase the projected total cost of a 
new vehicle by 6.6 percent. We think this scenario is highly unlikely 
to occur given the ongoing investment and growth in consumer acceptance 
of BEVs and the fact that 2023 BEV sales already exceed this level, but 
it is illustrative of the potential range of compliance options 
available to manufacturers to meet these standards.
---------------------------------------------------------------------------

    \1330\ We present detailed costs for each of the sensitivities, 
including for each MY, in section IV of the preamble and RIA Chapter 
12.1.4 and 12.2.4. We considered all the costs presented in 
evaluating the cost of compliance.
---------------------------------------------------------------------------

    EPA also performed cost assessments for the medium-duty vehicle 
CO2 standards, as discussed in sections IV.D.4, IV.G, and 
IV.H.2 of the preamble. EPA performed a central analysis and three 
medium-duty vehicle sensitivity assessments; across the range of 
sensitivities, the projected cost increases are similar to those of the 
central analysis. For the six-year average costs, the central case cost 
increases ($1,400) represent 2 percent of the total vehicle costs, and 
across the sensitivities, the six-year average cost increases ($1,100 
to $1,900) represent a range from 1.5 percent to 2.6 percent of the 
total new vehicle cost.\1331\ In addition, EPA also assessed an 
illustrative scenario, which we believe is highly unlikely to occur, in 
which we assumed there are no new BEVs produced beyond those included 
in the base year fleet (which for MDVs is MY 2020). Under this 
illustrative scenario, the six-year average costs ($2,300) represent 
3.2 percent of the total vehicle cost. Similar to the light-duty 
vehicle scenarios, the highest projected cost increases from the 
medium-duty vehicle scenarios come from the ``high battery cost'' and 
``no new BEVs'' scenarios. For similar reasons as for the light-duty 
sensitivities, EPA finds that that ``high battery cost'' scenario is 
unlikely to occur, while the ``no new BEVs'' scenario is highly 
unlikely to occur.
---------------------------------------------------------------------------

    \1331\ The projected average cost of a new MY 2032 medium-duty 
vehicle in our modeling analysis is about $72,500 (in 2022 dollars).
---------------------------------------------------------------------------

    EPA recognizes that, although the costs of the final standards in 
the first year of the program are lower than those of the proposed 
standards, updates to our technology cost estimates, for example our 
battery cost estimates, have resulted in the estimated costs per 
vehicle of the final standards being higher than the costs of the 
proposed standards in the later years of the program. Over the 6-year 
rulemaking period of MYs 2027-2032, average new light-duty vehicle 
manufacturing costs are increased by $1,200 due to the final standards, 
compared to the increase of $680 for the proposed standards over the 
same period. Costs of the final standards in the earlier years are 
lower and remain in the $200-$1,000 range for MYs 2027-2029. Light-duty 
vehicle costs increase in the latter three years (MYs 2030-2032) range 
from $1,500 to the above mentioned $2,100 for MY 2032, which is within 
the proposal's cost range of $500 to $2,800 (in 2022 dollars) for that 
year across the sensitivity cases. The general increase in costs is a 
result of EPA's updated analysis of the inputs and assumptions for the 
modeling used in projecting costs, informed by public comments, and in 
consultation with DOE and NHTSA. The final rule uses the same OMEGA2 
modeling approach as was used for the proposal, but as discussed in 
section IV of this preamble and Chapters 2, 3, 4, and 8 of the RIA, 
various inputs and assumptions have been improved to address certain 
issues EPA identified in the proposal and in response to public 
comments. For example, EPA and NHTSA have engaged in extended 
consultation with DOE and the National Labs to better estimate future 
availability and cost of batteries used in PEVs and to assess the 
impacts of the tax credits established in the IRA on manufacturer 
costs. As a result of this and other work, EPA has updated its inputs 
for both ICE technology costs and batteries. EPA has also explicitly 
modeled PHEVs as a compliance option for the final rulemaking analysis. 
In addition, EPA has revised its car/truck sales share forecast 
according to the 2023 version of EIA's Annual Energy Outlook, which now 
projects an increased share of truck sales for future years. This shift 
to a higher share of truck sales also tends to increase the cost of the 
fleetwide standards. Overall, these incremental refinements to the 
inputs have improved the robustness of the

[[Page 28091]]

modeling results. Despite the increased costs of the final standards 
compared to our estimate at proposal, the cost of compliance of the 
standards in the final year are still smaller than those of the 2012 
rule when adjusted for inflation ($2,400 in MY 2025 ($2022)).
    As also discussed in section I.A.2.ii of this preamble, EPA has 
observed a shift toward increased use of electrification technologies 
both in vehicle sales and across the automotive industry at large, and 
that these changes are being driven to a large degree by the 
technological innovation of the automotive industry and the significant 
funds, estimated at $1.2 trillion by at least one 
analysis,1332 1333 those firms intend to spend by 2030 on 
developing and deploying electrification technologies. This very 
significant investment and, particularly in light of the available 
compliance flexibilities and multiple paths for compliance, supports 
EPA's conclusion that the standards are feasible and will not cause 
economic disruption in the automotive industry. Indeed, EPA notes that 
for the early years of the revised standards our projection is that the 
standards will have very little cost for manufacturers as we anticipate 
that the IRA and manufacturers' own product plans will drive sufficient 
technology adoption to meet the standards for these years with some 
additional compliance planning. For these years the agency finds that 
the standards will provide an important degree of certainty and send 
appropriate market signals to facilitate anticipated investments, not 
only in technology adoption but also in complementary areas such as 
supply chains and charging infrastructure. In later years, EPA's 
modeling suggests that automakers are likely to choose to sell more 
PEVs than they would under the existing standards, and incur increased 
costs of emissions control technologies. However, we do not believe the 
estimated increase in marginal vehicle cost will lead to detrimental 
effects to automakers for multiple reasons, including the fact that 
macroeconomic effects are a much larger factor in OEM revenues (for 
example, inflation, supply chain disruptions, or labor costs), and that 
automakers regularly adjust product plans and choose the mix of 
vehicles they produce to maximize profits. We also note that in the 
first half of 2023, domestic automakers reported increased profits 
compared to the same period in 2022.\1334\ And in that previous year, 
the same automakers had already reported the highest profits since 
2016, even as domestic vehicle sales fell. We also note that our 
estimates of sales impacts in RIA Chapter 4.4 show very small impacts 
(ranging from about -0.2 percent to -0.9 percent per year) on vehicle 
sales. In addition, the significant investments by industry and 
Congress (e.g., BIL and IRA) in supporting technology that eliminates 
both criteria and GHG tailpipe emissions, presents an opportunity for a 
significant step forward in achieving the goals of the Clean Air Act. 
The compliance costs per vehicle in this rule are reasonable and 
generally consistent with those in past GHG rules while the standards 
will achieve substantial emissions reductions for both GHG and criteria 
pollutants.
---------------------------------------------------------------------------

    \1332\ Reuters, ``A Reuters analysis of 37 global automakers 
found that they plan to invest nearly $1.2 trillion in electric 
vehicles and batteries through 2030,'' October 21, 2022. Accessed on 
November 4, 2022 at https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr/.
    \1333\ Reuters, ``Exclusive: Automakers to double spending on 
EVs, batteries to $1.2 trillion by 2030,'' October 25, 2022. 
Accessed on November 4, 2022 at https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21/.
    \1334\ Stellantis Press Release, '' First Half 2023 Results'' 
July 26,2023. Accessed December 18, 2023 at https://www.stellantis.com/en/news/press-releases/2023/july/first-half-2023-results.
---------------------------------------------------------------------------

    For this rule, EPA finds that standards are feasible in the lead 
time available, and that the expected compliance costs for automakers 
are reasonable, in light of the emissions reductions in air pollutants 
and the resulting benefits for public health and welfare. In making 
this finding we have considered our central case projection, as well as 
the full range of sensitivity analyses, considering the range of the 
projected costs, their respective likelihoods, the factors underlying 
them (e.g., differences in battery costs or consumer acceptance), and 
their relationship to the central case, for each of light-duty and 
medium-duty.

C. Consideration of Emissions of GHGs and Criteria Pollutants

    An essential factor that EPA considered in determining the 
appropriate level of the standards is the reductions in air pollutant 
emissions that will result from the program, including emissions of 
GHGs, criteria pollutants and air toxics, and associated public health 
and welfare impacts.
    Although EPA has to date coordinated its light-duty GHG and 
criteria pollutants standards, this is the first time EPA has 
established both GHG and criteria pollutant standards in a single 
rulemaking for light-duty, as well as medium-duty, vehicles. The final 
standards will achieve very significant reductions of both GHG and 
criteria pollutants. The cumulative GHG emissions reductions through 
2055 are projected to be 7,200 MMT of CO2, 0.12 MMT of 
CH4 and 0.13 MMT of N2O, as the fleet turns over 
year-by-year to new vehicles that meet the light- and medium-duty 
standards. This represents a 21 percent reduction in CO2 
over that time period relative to the No Action case. See section VI of 
this preamble and Chapter 8 of the RIA. These GHG emission reductions 
will make an important contribution to efforts to limit climate change 
and its anticipated impacts. See Coal. For Resp. Reg., 684 F. 3d at 128 
(removal of 960 million metric tons of CO2e over the life of the GHG 
vehicle emission standards rule was found by EPA to be ``meaningful 
mitigation'' of GHG emissions). We also project, in calendar year 2055, 
16 percent to 25 percent reductions in PM2.5, 
NOX, and SOX emissions. Further, we project over 
45 percent reduction in VOC emissions in the year 2055. See section VII 
of this preamble and Chapter 8 of the RIA. EPA finds that the 
additional emissions reductions of GHG and criteria pollutants that 
will be achieved under these standards are important, considered both 
severally, and together, in reducing the public health and welfare 
impacts of air pollution, consistent with the purpose and mandate of 
section 202.
    As discussed in section VIII of the preamble, we monetize benefits 
of the standards and evaluate other costs in part to enable a 
comparison of costs and benefits pursuant to E.O. 12866, but we 
recognize there are benefits that we are currently unable to fully 
quantify. EPA's practice has been to set standards to achieve improved 
air quality consistent with CAA section 202, and not to rely on cost-
benefit calculations, with their uncertainties and limitations, as 
identifying the appropriate standards. Nonetheless, our conclusion that 
the estimated benefits exceed the estimated costs of the program 
reinforces our view that the standards are appropriate under section 
202(a).
    The annualized value of climate benefits attributable to the 
standards are estimated at $72 billion using a 2 percent discount rate 
through 2055. See section VIII of the preamble and Chapter 9 of the RIA 
for a full discussion of the SC-GHG estimates used to monetize climate 
benefits and the data and modeling limitations that constrain the 
ability of SC-GHG estimates to include all the important physical, 
ecological, and economic impacts of climate change, such that the 
estimates are a partial accounting of climate change impacts and will 
therefore tend to be

[[Page 28092]]

underestimates of the marginal benefits of abatement.
    The annualized value of PM2.5-related health benefits 
attributable to the standards through 2055 is estimated to total $6.4 
billion to $13 billion (assuming a 2 percent discount rate and 
depending on the assumed long-term exposure study of PM2.5-
related premature mortality risk; see section VIII.F of the 
preamble).\1335\ We separately estimate that in 2055, 1,000 to 2,000 
PM2.5-related premature deaths will be avoided as a result 
of the modeled policy scenario, depending on the assumed long-term 
exposure study of PM2.5-related premature mortality risk. We 
also estimate that the modeled policy scenario will avoid 25 to 550 
ozone-related premature deaths, depending on the assumed study of 
ozone-related mortality risk (see section VII.C of the preamble).
---------------------------------------------------------------------------

    \1335\ The criteria pollutant benefits associated with the 
standards presented here do not include the full complement of 
health and environmental benefits that, if quantified and monetized, 
would increase the total monetized benefits (such as the benefits 
associated with reductions in human exposure to ambient 
concentrations of ozone). See section VIII.E of the preamble and RIA 
Chapter 6 for more information about benefits we are not currently 
able to fully quantify.
---------------------------------------------------------------------------

D. Consideration of Impacts on Consumers, Energy, Safety and Other 
Factors

    EPA also considered the impact of the final light- and medium-duty 
standards on consumers as well as on energy and safety. EPA concludes 
that the standards would be beneficial for consumers because the lower 
operating costs would offset increases in vehicle technology costs, 
even without consideration of PEV purchase incentives in the IRA. For 
example, in 2055, when the standards have been fully implemented and 
the in-use vehicle fleet has largely turned over to the new standards, 
EPA estimates the rule would provide $57 billion in consumer savings 
associated with reduced fuel consumption despite the increased 
consumption of electricity of $18 billion (both values on an annualized 
basis through 2055 at a 2 percent discount rate, see section VIII.C.1 
of this preamble). Vehicle technology cost increases for light-and 
medium-duty vehicles through 2055 are estimated at $40 billion on an 
annualized basis at a 2 percent discount rate. Annualized maintenance 
and repair costs at a 2 percent discount rate through 2055 are 
estimated to be $16 billion lower due to the final standards (See 
sections VIII.C and VIII.G of the preamble and Chapter 9 of the RIA). 
Thus, considering fuel savings and the lower maintenance and repair 
costs the final rule will result in significant savings for consumers.
    In addition to the above, EPA also carefully considered the 
distribution of consumer impacts of these standards, specifically the 
impacts of low-income consumers. We recognize that increases in upfront 
purchase costs are likely to be of particular concern to low-income 
households, but we anticipate that automakers will continue to offer a 
variety of models at different price points (see Chapter 4 of the RIA). 
Moreover, because lower-income households spend more of their income on 
fuel than other households, the effects of reduced fuel costs may be 
especially important for these households. Similarly, low-income 
households are more likely to buy used vehicles and own older vehicles, 
and thus would benefit from significant savings in repair and 
maintenance costs if they purchase electric vehicles. Furthermore, for 
used BEVs, there is evidence that the original purchase incentive is 
passed on to the next buyer (i.e., reduces the used price of 
BEVs).\1336\ In addition, BEV purchase incentives for used vehicles are 
provided through the IRA. Thus, EPA expects that low-income households 
like other households will experience significant savings on vehicle 
operating costs projected as a result of these standards.
---------------------------------------------------------------------------

    \1336\ Turrentine, T., Tal, G., Rapson, D., ``The Dynamics of 
Plug-in Electric Vehicles in the Secondary Market and Their 
Implications for Vehicle Demand, Durability, and Emissions,'' April 
2018, National Center for Sustainable Transportation, UC Davis, 
Institute of Transportation Studies, p. 39. Accessed on December 1, 
2023 at https://escholarship.org/uc/item/8wj5b0hn.
---------------------------------------------------------------------------

    EPA has also considered the impact of this rule on consumers 
through the need for sufficient charging infrastructure and potential 
impacts on the electricity grid. We expect that through 2055 the 
majority of light and medium duty PEV charging will occur at home, but 
we recognize the need for additional public charging infrastructure to 
support anticipated levels of PEV adoption. As discussed in section 
IV.C.5 of the preamble and RIA Chapter 5.3, charging infrastructure has 
grown rapidly over the last decade, and investments in charging 
infrastructure continue to grow. Based on our evaluation of the record, 
EPA finds the market for charging is already responding to increased 
demand through investments from a wide range of public and private 
entities, and it is reasonable to expect the market will continue to 
keep up with demand. We further anticipate these final standards will 
encourage additional investments in charging infrastructure. EPA does 
not find that the increase in electricity consumption associated with 
modeled increases in PEV sales will adversely affect reliability of the 
electric grid, and, as explained in section IV of this preamble and 
Chapter 5 of the RIA, more widespread adoption of PEVs could have 
significant benefits for the electric power system.
    EPA also evaluated the impacts of the light- and medium-duty 
standards on energy, in terms of fuel consumption and energy security. 
This rule is projected to result in a reduction of U.S. gasoline 
consumption by 780 billion gallons through 2055 and an increase of 
6,700 Terawatt hours (TWh) of electricity consumption (see RIA Chapter 
8). EPA considered the impacts of these projected changes in fuel 
consumption on energy security, specifically the avoided costs of 
macroeconomic disruption (See section VIII.H of the preamble). 
Promoting energy independence and security through reducing demand for 
refined petroleum use by motor vehicles has long been a goal of both 
Congress and the Executive Branch because of both the economic and 
national security benefits of reduced dependence on imported oil, and 
was an important reason for amendments to the Clean Air Act in 1990, 
2005, and 2007.\1337\ A reduction of U.S. net petroleum imports reduces 
both financial and strategic risks caused by potential sudden 
disruptions in the supply of petroleum

[[Page 28093]]

to the U.S., thus increasing U.S. energy security. EPA finds this rule 
to have significant benefits from an energy security perspective. We 
estimate the annualized energy security benefits of the rule through 
2055 at $1.5 billion to $2.1 billion depending on discount rate (see 
section VIII.E of this preamble and Chapter 9 of the RIA).
---------------------------------------------------------------------------

    \1337\ See e.g., 136 Cong. Rec. 11989 (May 23, 1990) (Rep. 
Waxman stating that clean fuel vehicles program is ``tremendously 
significant as well for our national security. We are overly 
dependent on oil as a monopoly; we need to run our cars on 
alternative fuels.''); Remarks by President George W. Bush upon 
signing Energy Policy Act of 2005, 2005 U.S.C.C.A.N. S19, 2005 WL 
3693179 (``It's an economic bill, but as [Sen. Pete Domenici] 
mentioned, it's also a national security bill. . . . Energy 
conservation is more than a private virtue; it's a public virtue''); 
Energy Independence and Security Act, P.L. 110-140, section 806 
(finding ``the production of transportation fuels from renewable 
energy would help the United States meet rapidly growing domestic 
and global energy demands, reduce the dependence of the United 
States on energy imported from volatile regions of the world that 
are politically unstable, stabilize the cost and availability of 
energy, and safeguard the economy and security of the United 
States''); Statement by George W. Bush upon signing, 2007 
U.S.C.C.A.N. S25, 2007 WL 4984165 (``One of the most serious long-
term challenges facing our country is dependence on oil--especially 
oil from foreign lands. It's a serious challenge. . . . Because this 
dependence harms us economically through high and volatile prices at 
the gas pump; dependence creates pollution and contributes to 
greenhouse gas admissions [sic]. It threatens our national security 
by making us vulnerable to hostile regimes in unstable regions of 
the world. It makes us vulnerable to terrorists who might attack oil 
infrastructure.'')
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    Section 202(a)(4)(A) of the CAA specifically prohibits the use of 
an emission control device, system or element of design that will cause 
or contribute to an unreasonable risk to public health, welfare, or 
safety. EPA has a long history of considering the safety implications 
of its emission standards from 1980 regulations establishing criteria 
pollutant standards \1338\ up to and including the 2021 light-duty GHG 
rule. The relationship between emissions standards and safety is multi-
faceted, and can be influenced not only by control technologies, but 
also by consumer decisions about vehicle ownership and use. EPA has 
estimated the impacts of this rule on safety by accounting for changes 
in new vehicle purchase, fleet turnover and VMT, changes in vehicle 
footprint, and vehicle weight changes that are in some cases lower (as 
an emissions control strategy) and in other cases higher (with the 
additional weight often associated with electrified vehicles). EPA 
finds that under this rule, there is no statistically significant 
change in the estimated risk of fatalities per distance traveled. EPA 
is presenting non-statistically significant values here in part to 
enable comparison with prior rules. We have found no change in fatality 
risk as a result of the standards (see section VIII.K of the preamble). 
However, as the costs of driving decline due to the improvement in fuel 
economy, we project consumers overall will choose to drive more miles 
(this is the ``VMT rebound'' effect). As a result of this personal 
decision by consumers to drive more due to the reduced cost of driving, 
EPA projects this will result in an increase in accidents, injuries, 
and fatalities (i.e., although the rate of injury per mile stays 
virtually unchanged, an increase in miles driven results in an increase 
in total number of injuries). EPA's goal in setting motor vehicle 
standards is to protect public health and welfare while recognizing the 
importance of the mobility choices of Americans. Because the only 
statistically significant projected increase in accidents, injuries, 
and fatalities would be the result of consumers' voluntary choices to 
drive more when operating costs are reduced, EPA believes it is 
appropriate to place emphasis on the level of risk of injury per mile 
traveled, and to consider the projected change in injuries in that 
context.
---------------------------------------------------------------------------

    \1338\ See, e.g., 45 FR 14496, 14503. ``EPA would not require a 
particulate control technology that was known to involve serious 
safety problems.''.
---------------------------------------------------------------------------

    As with the 2021 rule, EPA considers safety impacts in the context 
of all projected health impacts from the rule including public health 
benefits from the projected reductions in air pollution. In considering 
these estimates in the context of anticipated public health benefits, 
EPA notes that the air quality modeling, as discussed further in 
Chapter 7 of the RIA, estimates that in 2055 such a scenario would 
prevent between 1,000 and 2,000 premature deaths associated with 
exposure to PM2.5 and prevent between 25 and 550 premature 
deaths associated with exposure to ozone. We expect that the cumulative 
number of premature deaths avoided that would occur during the entire 
period of 2027-2055 as a result of the rule would be much larger than 
the 2055 estimate.
    Finally, EPA notes that the estimated benefits of the standards 
exceed the estimated costs, and estimates of the present values of net 
benefits of this rule through 2055 range from $1.7 trillion to $2.1 
trillion (7 percent and 2 percent discount rates, with 2 percent near-
term Ramsey discount rate for SC-GHG) (see section VIII of the preamble 
and Chapter 9 of the RIA). We recognize the uncertainties and 
limitations in these estimates (including unquantified benefits), and 
the Administrator has not relied on these estimates in identifying the 
appropriate standards under section 202. Nonetheless, we take note of 
the fact that estimated benefits exceed the estimated costs of these 
standards.

E. Selection of the Final Standards Under CAA Section 202(a)

    Under section 202(a)(1) EPA has a statutory obligation to set 
standards to reduce air pollution from classes of motor vehicles that 
the Administrator has found contribute to air pollution that may be 
expected to endanger public health and welfare. Consistent with our 
longstanding approach to setting motor vehicle standards, the 
Administrator has considered a number of factors in setting these 
vehicles standards. In setting such standards, the Administrator must, 
pursuant to section 202(a)(2), provide adequate lead time for the 
development and application of technology to meet the standards, taking 
into consideration the cost of compliance. Furthermore, in setting 
standards for NMOG+NOX, PM and CO for heavy-duty vehicles 
(including MDVs and light trucks over 6,000 pounds GWVR), EPA acts 
pursuant to its authority under CAA section 202(a)(3)(A)(i), and such 
standards shall reflect the greatest degree of emissions reduction that 
the Administrator determines is achievable for the model year, giving 
appropriate consideration to cost, energy and safety factors. EPA's 
standards properly implement these statutory provisions. As discussed 
in sections II, VI, and VII of the preamble, the standards will achieve 
significant and important reductions in emissions of a wide range of 
air pollutants that endanger public health and welfare. Furthermore, as 
discussed throughout this preamble, the emission reduction technologies 
needed to meet the standards have already been developed and are 
feasible and available for manufacturers to utilize in their fleets at 
reasonable cost in the timeframe of these standards, even after 
considering key constraints including battery manufacturing capacity, 
critical materials availability, and vehicle redesign cadence.
    Moreover, the provisions for credit carry-forward and deficit 
carry-forward under the existing GHG program, as well as carry forward 
of Tier 3 NMOG+NOX credits, enable manufacturers to spread 
the compliance requirement for any particular vehicle model year across 
multiple model years. Similarly, the provisions for averaging enable 
manufacturers to spread compliance requirements across multiple vehicle 
models within a model year. Together, these credit banking and 
averaging provisions further support EPA's conclusion that the 
standards provide sufficient time for the development and application 
of technology, giving appropriate consideration to cost.
    As noted above, section 202(a)(3) is explicit that, for certain 
pollutants for certain vehicles, the Administrator shall establish 
standards that achieve the greatest degree of emissions reduction 
achievable, although the provision identifies other factors to consider 
and requires the Administrator to exercise judgment in weighing those 
factors. Section 202(a)(1)-(2) provides greater discretion to the 
Administrator to weigh various factors but, as with the 2021 rule, the 
Administrator notes that the purpose of adopting standards under that 
provision of the Clean Air Act is to address air pollution that may 
reasonably be anticipated to endanger public health and welfare and 
that reducing air pollution has traditionally been the focus of such 
standards. Thus, for this rulemaking the agency's focus in identifying 
final standards is on

[[Page 28094]]

achieving significant emissions reductions, within the constraints 
identified by CAA section 202.
    There have been very significant developments in the feasibility of 
further control of pollution from motor vehicles since EPA promulgated 
the 2021 rule. While at the time of the 2021 rule, estimates of 
financial commitments to electric vehicle technologies by the 
automotive industry were in the range of $500-600 billion, more recent 
estimates are $1.2 trillion, approximately twice that of only two years 
ago.1339 1340 The European Union has finalized standards 
requiring 100 percent of new cars and vans to have zero tailpipe 
emissions by 2035, to complement other countries' decisions to phase 
out ICE engines.1341 1342 In 2022, BEVs alone accounted for 
about 807,000 U.S. new car sales, or about 5.8 percent of the new 
light-duty passenger vehicle market, up from 3.2 percent BEVs the year 
before, while in 2023 PEVs were around 1.4 million vehicles, of which 
1.1 million were BEVs.1343 1344 PEV sales represented 9.1 
percent of new light-duty passenger vehicle sales in 2023, up from 6.8 
percent in 2022 and 3.2 percent the year before.\1345\ The year-over-
year growth in U.S. PEV sales suggests that an increasing share of new 
vehicle buyers are concluding that a PEV is the best vehicle to meet 
their needs. Furthermore, published studies indicate that consumer 
demand for PEVs is strong, and that limited availability was a greater 
constraint than consumer acceptance.1346 1347
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    \1339\ Reuters, ``A Reuters analysis of 37 global automakers 
found that they plan to invest nearly $1.2 trillion in electric 
vehicles and batteries through 2030,'' October 21, 2022. Accessed on 
November 4, 2022 at https://graphics.reuters.com/AUTOS-INVESTMENT/ELECTRIC/akpeqgzqypr.
    \1340\ Reuters, ``Exclusive: Automakers to double spending on 
EVs, batteries to $1.2 trillion by 2030,'' October 25, 2022. 
Accessed on November 4, 2022 at https://www.reuters.com/technology/exclusive-automakers-double-spending-evs-batteries-12-trillion-by-2030-2022-10-21.
    \1341\ European Commission, ``Fit for 55: EU reaches new 
milestone to make all new cars and vans zero-emission from 2035,'' 
March 28, 2023. Accessed on January 1, 2024 at https://climate.ec.europa.eu/news-your-voice/news/fit-55-eu-reaches-new-milestone-make-all-new-cars-and-vans-zero-emission-2035-2023-03-28_en.
    \1342\ The EU regulations allow for the use of zero carbon fuels 
to meet the emissions requirements for 2035 and beyond.
    \1343\ Colias, M., ``U.S. EV Sales Jolted Higher in 2022 as 
Newcomers Target Tesla,'' Wall Street Journal, January 6, 2023.
    \1344\ DOE, FOTW #1327, January 29, 2024: Annual New Light-Duty 
EV Sales Topped 1 Million for the First Time in 2023 (``Annual sales 
of EVs more than quadrupled from 2020 to 2023, with a period of 
rapid growth beginning in 2021. . .'') Accessed on February 21, 2024 
at https://www.energy.gov/eere/vehicles/articles/fotw-1327-january-29-2024-annual-new-light-duty-ev-sales-topped-1-million.
    \1345\ Argonne National Laboratory, ``Light Duty Electric Drive 
Vehicles Monthly Sales Updates,'' January 30, 2024. Accessed on 
February 2, 2024 at https://www.anl.gov/esia/light-duty-electric-drive-vehicles-monthly-sales-updates.
    \1346\ Gillingham, K.T., A.A. van Benthem, S. Weber, M.A. Saafi, 
and X. He. 2023. ``Has Consumer Acceptance of Electric Vehicles Been 
Increasing: Evidence from Microdata on Every New Vehicle Sale in the 
United States.'' AEA Papers and Proceedings, 113:329-35.
    \1347\ Bartlett, Jeff. 2022. More Americans Would Buy and 
Electric Vehicle, and Some Consumers Would Use Low-Carbon Fuels, 
Survey Shows. Consumer Reports. July 7. Accessed March 2, 2023. 
https://www.consumerreports.org/hybrids-evs/interest-in-electric-vehicles-and-low-carbon-fuels-survey-a8457332578.
---------------------------------------------------------------------------

    One of the most significant developments for U.S. automakers and 
consumers is Congressional passage of the IRA, which takes a 
comprehensive approach to addressing many of the potential barriers to 
wider adoption of PEVs in the United States. The IRA provides tens of 
billions of dollars in tax credits and direct Federal funding to reduce 
the upfront cost to consumers of purchasing PEVs, to increase the 
number of charging stations across the country, to reduce the cost of 
manufacturing batteries, and to promote domestic sources of critical 
minerals and other important elements of the PEV supply chain. By 
addressing all of these potential obstacles to wider PEV adoption in a 
coordinated, well-financed, strategy, Congress significantly advanced 
the potential for PEV adoption, and associated emissions reductions, in 
the near term. In fact, EPA anticipates that the increased PEV 
penetration for the initial years of these standards will be driven by 
automakers and consumers making use of IRA incentives, and would occur 
even in the absence of the revised standards.
    In developing this rule, EPA has recognized that these significant 
developments in automaker investment, PEV market growth, and 
Congressional support through the BIL and IRA represent a significant 
opportunity to ensure that the emissions reductions these developments 
make possible will be realized as fully as possible and at a reasonable 
cost over the time frame of the rule. It is clear that these ongoing 
developments have already led to PEVs being increasingly employed 
across the fleet in both light-duty and medium-duty applications, 
largely independent of EPA's prior standards. Although the 2021 rule 
projected a PEV penetration rate of 17 percent for 2026, our updated 
modeling of the No Action case for this rule suggests a PEV penetration 
rate for 2026 of 27 percent, even with no change in the standards. As 
noted above. this projection is consistent with, if not more 
conservative than, the projections of third-party 
analysts.1348 1349 This rule seeks to build on the trends 
that these developments and projections indicate, and accelerate the 
continued deployment of these technologies to achieve further emissions 
reductions in 2027 and beyond.
---------------------------------------------------------------------------

    \1348\ In 2021, IHS Markit projected 27.8 percent BEV, PHEV, and 
range-extended electric vehicle (REX) for 2027. ``US EPA Proposed 
Greenhouse Gas Emissions Standards for Model Years 2023-2026; What 
to Expect,'' August 9, 2021. Accessed on October 28, 2021 at https://www.spglobal.com/mobility/en/research-analysis/us-epa-proposed-greenhouse-gas-emissions-standards-my2023-26.html.
    \1349\ In early 2023 ICCT projected 39 percent PEVs for 2027 
under the moderate IRA impact scenario. See International Council on 
Clean Transportation, ``Analyzing the Impact of the Inflation 
Reduction Act on Electric Vehicle Uptake in the US,'' ICCT White 
Paper, January 2023. Available at https://theicct.org/wp-content/uploads/2023/01/ira-impact-evs-us-jan23.pdf.
---------------------------------------------------------------------------

    In developing our PEV penetration estimates, EPA considered a 
variety of constraints which have, to date, limited PEV adoption and/or 
could limit it in the future, including: cost to manufacturers and 
consumers; refresh and redesign cycles for manufacturers; availability 
of raw materials, batteries, and other necessary supply chain elements; 
adequate electricity supply and distribution; and barriers to consumer 
acceptance such as adequate charging infrastructure and a wide range of 
vehicle model choices that meet a diverse set of consumer needs.\1350\ 
We also assessed the potential impact of PEVs on the electric grid, as 
discussed in section IV.C.5 of the preamble, and we conclude that the 
reliability and resource adequacy of the electric grid will not be 
adversely affected by this rule. EPA has fully assessed the public 
record including public comments, and has consulted extensively with 
analysts from other agencies, including the Federal Energy Regulatory 
Commission, DOE and the National Labs, DOT, and the Joint Office for 
Energy and Transportation, extensively reviewed published literature 
and other data, and, as discussed thoroughly in this preamble and the 
accompanying RIA, has incorporated limitations into our

[[Page 28095]]

modeling to address these potential constraints, as appropriate.
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    \1350\ Although EPA has considered consumer acceptance 
(including consumer costs) in exercising our discretion under the 
statute based on the record before us, to assess the feasibility and 
appropriateness of the standards, we note that it is not a 
statutorily-enumerated factor under section 202(a)(1)-(3).
---------------------------------------------------------------------------

    We also developed further analyses, recognizing that there are 
uncertainties in our projections. For example, battery costs may turn 
out to be higher or lower than we project, and consumers may adopt PEVs 
faster or slower than we anticipate. Overall, we identified a range of 
potential costs and PEV penetrations which we view as representing a 
wider range of possible, and still feasible and reasonable, compliance 
pathways under the standards.
    Taking both the significant developments in the automotive market 
and all of these potential constraints and uncertainties into account, 
EPA's analyses found that it would be feasible to reduce net emissions 
(compared to the No Action case) by 37 percent for CO2, 22 
percent for PM2.5, 25 percent for NOX, and 46 
percent for VOCs in 2055, the final year analyzed. EPA also analyzed a 
range of standards which are somewhat more stringent and somewhat less 
stringent than the final standards.
    In particular, EPA carefully considered comments in response to the 
range of alternatives for GHG standards presented in the proposal. 
Specifically, EPA considered standards somewhat more stringent 
(Alternative A, the proposed standards) and somewhat less stringent 
(Alternative B) than the final standards, as described in section III.F 
of the preamble. EPA's comparison of costs, technology penetrations and 
CO2 emissions reductions for these alternatives is presented 
in section IV.E of this preamble. We now conclude that Alternative A 
would be too stringent before MY 2032. Although EPA anticipates that 
the IRA incentives, consumer demand and significant industry 
investments will lead to high levels of PEV penetration even in the 
absence of revised standards, EPA also recognizes that the industry is 
undergoing a significant shift as a result of a number of forces, 
including consumer demand, the IRA, automaker strategies and state and 
international policy direction. This shift, as noted by commenters, 
requires a number of complementary actions, such as increased battery 
production (which in turn depends on increased materials supply) and 
the scale up of PEV production capabilities.
    Based on our review of the entire record, including public comments 
and extensive consultation with other agencies such as the Federal 
Energy Regulatory Commission, DOE and the National Labs, DOT, and the 
Joint Office for Energy and Transportation, EPA concludes it is 
reasonable, for the reasons discussed in section IV of the preamble and 
the RIA, to anticipate these complementary actions will all occur. EPA 
also concludes that it is appropriate to provide more lead time to 
achieve reductions to allow for the possibility that additional 
flexibility is required for automakers to implement their compliance 
strategies. EPA takes note of the very significant investments in 
shifting to cleaner technologies that automakers are anticipated to 
make before 2030. These standards align with those investments and are 
not based on significant additional technology costs in those initial 
years. The final standards established in this rule still achieve the 
same projected fleet average CO2 target in MY 2032 and 
beyond as the proposed standards (Alternative A), and the cumulative 
reductions through 2055 are very similar; we estimate the cumulative 
CO2 reductions through 2055 to be 7.2 billion metric tons 
under the final standards and 7.6 billion metric tons under the 
proposed standards curves (Alternative A), as shown in RIA Chapter 
8.6.6.1.
    EPA finds that the final standards achieve an appropriate level of 
emission reduction, but the more gradual phase-in of the standards 
between MYs 2027 and 2032 gives more appropriate consideration to costs 
and lead-time, particularly in light of the shifts to cleaner 
technologies occurring in the automotive industry.
    EPA also considered adopting less stringent standards (i.e., 
Alternative B as described in section III.F of the preamble) in this 
rule. However, EPA concludes that the final standards, particularly 
with the additional flexibility and lead time before MY 2032, resulting 
in reduced costs, are feasible and appropriate. EPA notes that for some 
vehicles and some pollutants it is required by section 202(a)(3) to set 
standards at the maximum achievable level. However, even for pollutants 
for which EPA is not required to adopt the maximum achievable 
stringency, in light of the need for and public health and welfare 
benefits of additional reductions in air pollution (as discussed in 
section II of the preamble), EPA finds it appropriate to set standards 
that achieve significant pollution reductions taking into consideration 
costs and lead time and other relevant factors. EPA takes note that the 
less stringent alternative EPA analyzed would result in materially more 
cumulative GHG emissions through 2055 and finds that forgoing those 
emissions reductions would not be appropriate under section 202(a).
    We acknowledge that both those stakeholders pressing for more and 
less rapid increases in stringency have submitted considerable 
technical studies in support of their positions, including analyses 
purportedly demonstrating that a more or less rapid adoption of 
emissions reduction technologies, including zero-emissions 
technologies, is feasible. These studies account for the vast range of 
economic, technology, regulatory, and other factors described 
throughout this preamble; draw different assumptions about key 
variables; and reach very different conclusions. We have carefully 
reviewed all these studies and further discuss them in the RIA and the 
RTC. The agency's final standards are premised upon our own extensive 
technical assessment, which in turn is based on a wide review of the 
literature and test data, extensive expertise with the industry and 
with implementation of past standards, peer review, and our modeling 
analyses. The data and resulting modeling demonstrate a relatively 
moderate rate of adoption of emission reduction technologies, at rates 
bounded between the higher and lower rates in studies provided by 
commenters.
    On balance, we think the various comments and studies pressing for 
faster or slower increases in stringency than the final rule each have 
their strengths and weaknesses, and we recognize the inherent 
uncertainties associated with predicting the future of the highly 
dynamic vehicle and related industries up to eight years from today 
through MY 2032. This uncertainty pervades both scenarios with lesser 
and greater increases in stringency than the final standards. For 
example, slower increases in stringency would be more certainly 
feasible and less costly for manufacturers, but they would also risk 
giving up emissions reductions and consequent benefits to public health 
and welfare that are actually achievable. By contrast, faster increases 
in stringency would aim to achieve greater emissions reductions and 
consequent benefits for public health and welfare, but they would also 
run the risk of incurring greater costs of compliance and potentially 
being infeasible in light of the lead time provided. The final 
standards reflect our technical expertise in discerning a reasoned path 
among the varying sources of data, analyses, and other evidence we have 
considered, as well as the Administrator's policy judgment as to the 
appropriate level of emissions reductions that can be achieved at a 
reasonable cost in the available lead time.
    While the final standards are more stringent than the prior 
standards, EPA applied numerous conservative approaches throughout our 
analysis (as identified throughout this section IV of the preamble and 
in the RIA) and the final standards additionally are less stringent 
than those proposed during the first several years of implementation 
leading to MY 2032. As explained above and throughout this notice, EPA 
has assessed the appropriateness and feasibility of these standards 
taking into consideration the potential benefits to public health and 
welfare, existing market trends and financial incentives

[[Page 28096]]

for PEV adoption, and constraints which could shape technology adoption 
in the future, including: cost to manufacturers and consumers; refresh 
and redesign cycles for manufacturers; availability of raw materials, 
batteries, and other necessary supply chain elements; adequate 
electricity supply and distribution; and barriers to consumer 
acceptance such as adequate charging infrastructure and a wide range of 
vehicle model choices that meet a diverse set of consumer needs. As a 
result of re-evaluating data and analyses in light of public comments, 
we have revised both our cost estimates and our assessment of the 
feasibility of more stringent standards, particularly for the early 
years of the program. For these years the agency is setting standards 
that we judge can be largely met if manufacturers stay on the 
technology path we anticipate they would follow in the absence of 
revised standards, given the IRA and their own product plans, because 
we find that it is important for the standards to provide an degree of 
certainty and send appropriate market signals to facilitate the 
anticipated investments, not only in technology adoption but also in 
complementary areas such as supply chains and charging infrastructure. 
In later years of the program, we judge that it will be possible to 
build on these investments to achieve greater emissions reductions. The 
Administrator concludes that this approach is within the discretion 
provided under and consistent with the text and purpose of CAA section 
202(a)(1)-(2).
    EPA also takes into consideration that this rule is setting 
coordinated but separate standards for both GHG and criteria 
pollutants. The widespread adoption of electrification technologies 
provides an important opportunity for EPA to achieve reductions of 
these different pollutants which each pose a continuing threat to 
public health and welfare. In other words, electrification technologies 
are extremely effective technologies at controlling emissions not only 
because they can reduce emissions to zero, but because they 
simultaneously reduce the emissions of multiple harmful pollutants.
    Thus, as we have noted in section III of the preamble, the 
potential compliance strategies we model for the GHG standards would 
also be sufficient to achieve compliance with the final 
NMOG+NOX standards. However, PEVs are certainly not the only 
potential compliance strategies for meeting the final 
NMOG+NOX standards. The standards reflect EPA's judgment 
about feasible further reductions in NMOG+NOX as a result of 
the application of technologies (whether the manufacturer chooses, for 
instance, further electrification, further improvements to internal 
combustion engines, or further improvements to exhaust aftertreatment). 
The technological feasibility of the ICE-based vehicle 
NMOG+NOX reductions is discussed in RIA Chapter 3.2.5. EPA 
judges that the standards could be met at a reasonable cost in the 
relevant lead time by a mix of these technologies, such as additional 
PHEVs with additional exhaust aftertreatment.
    Likewise, although BEVs are one compliance path to meeting the PM 
standards, EPA judges that GPF technology is an alternative compliance 
path which is available at a reasonable cost in the relevant lead time 
for vehicles that have an internal combustion engine.
    Moreover, EPA not only judges the NMOG+NOX and PM 
standards to be appropriate under section 202(a)(2) for light duty 
vehicles in light of cost and lead time, it judges them as required 
under section 202(a)(3) for heavy duty vehicles, as representing the 
greatest degree of emissions reduction achievable through the 
applicable of technology which will be available, giving consideration 
to cost, energy and safety. The Administrator judges that it would not 
be consistent with section 202(a)(3) for EPA to set NMOG+NOX 
or PM standards for vehicles over 6,000 lbs that are less stringent.
    Although EPA finds it appropriate to continue to coordinate GHG and 
criteria pollutant standards, taking into consideration that some of 
the available control technologies for these pollutants overlap, EPA 
has evaluated the feasibility and appropriateness of further GHG and 
criteria pollutant reductions separately. Each standard that we have 
set is justified in and of itself. As discussed above, for example, the 
GHG, NMOG+NOX, and PM standards, for each of light-duty and 
medium-duty vehicles, for each year, are independently justified.\1351\
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    \1351\ We recognize that our presentation of the rationale for 
the final standards in Section V of this preamble largely discusses 
the standards as a whole, with select references to specific 
standards. We emphasize, however, as discussed further in Section X 
of this preamble, that the standards are severable. As noted in the 
text here, each standard is set under a separate exercise of EPA's 
legal authority, and in some cases under the exercise of a different 
authority. For example, light-duty GHG, NMOG+NOX, and PM, 
and medium-duty GHG, are each set under a separate exercise of 
section 202(a)(1)-(2) authority, while medium-duty 
NMOG+NOX and PM, are each set under a separate exercise 
of section 202(a)(3)(A)(i) authority. Further, each standard 
addresses different air pollution problems and impacts on public 
health and welfare, given both the nature of each pollutant at 
issue, see Section II of this preamble, as well as the distinct 
characteristics of light- and medium-duty vehicles, see Section III 
of this preamble. Moreover, while there is partial overlap in the 
technology pathways that support the standards (since some 
technologies such as electrification control more than one pollutant 
simultaneously), we have assessed the technologies supporting and 
costs for each standard separately. For example, as noted, the PM 
standards can be met entirely through the adoption of gasoline 
particulate filters, regardless of the level of electrification, and 
EPA estimates the direct manufacturing costs of adopting this 
technology at up to $180 per vehicle depending on vehicle's engine 
size (see Section III.D.3.viii of this preamble). And while EPA 
demonstrated the feasibility of the GHG and NMOG+NOX 
based on the same central case technology pathway, consisting of 
increases in BEV and PHEV technologies, the NMOG+NOX 
standards can be met entirely through increases in ICE technologies 
relating to engine and aftertreatment improvements. In addition, EPA 
concludes that each set of standards is feasible, including 
considering costs, absent the existence of the other standards, and 
would conclude that it is appropriate to finalize each standard 
independently even in the absence of the other standards. For more 
details, see RIA Chapter 3.
---------------------------------------------------------------------------

    Taking into consideration the importance of reducing criteria 
pollutant and GHG emissions and the primary purpose of CAA section 202 
to reduce the threat posed to human health and the environment by air 
pollution, the Administrator finds it is appropriate and consistent 
with the text and purpose of section 202 to adopt standards that, when 
implemented, would result in significant reductions of light- and 
medium-duty vehicle emissions both in the near term and over the longer 
term, taking into consideration the cost of compliance within the 
available lead time. Likewise, the Administrator concludes that these 
standards are consistent with the text and purpose of section 202 for 
heavy-duty vehicles by achieving significant reductions of GHGs, taking 
into consideration the cost of compliance within the available lead 
time, and by achieving the greatest degree of emissions reduction 
achievable for certain other pollutants, taking into consideration 
cost, lead-time, energy and safety factors as specified in section 
202(a)(3)(B).
    In summary, after consideration of the very significant reductions 
in criteria pollutant and GHG emissions, given the technical 
feasibility of the final standards and the costs per vehicle in the 
available lead time, and taking into account a number of other factors 
such as the savings to consumers in operating costs over the lifetime 
of the vehicle, safety, the benefits for energy security, and the 
greater quantified benefits compared to quantified costs, EPA believes 
that the final standards are appropriate under EPA's section 202(a) 
authority.

[[Page 28097]]

VI. How will this rule reduce GHG emissions and their associated 
effects?

A. Estimating Emission Inventories in OMEGA

    To estimate emission inventory effects due to a potential policy, 
OMEGA uses as inputs a set of vehicle emission rates generated using 
MOVES vehicle inventories and the associated MOVES VMT and fuel 
consumption. For refinery emissions, OMEGA uses as inputs the refinery 
emission inventories generated in support of our air quality modeling 
along with estimates of the liquid fuel refined to calculate refinery 
emission rates. Those refinery emissions rates, along with estimates of 
how changes in domestic liquid fuel demand impact domestic refining, 
then allow OMEGA to estimate refinery emissions for a given policy. For 
electricity generating unit (EGU) emissions, OMEGA similarly uses as 
inputs a set of EGU inventories generated using EPA's Power Sector 
Modeling Platform, v.6.21,1352 1353 along with estimates of 
U.S. electricity generation, to calculate EGU emission rates specific 
to a given policy. EPA discusses the methodology used to estimate 
vehicle, refinery and EGU emissions in greater detail in Chapter 8 of 
the RIA.
---------------------------------------------------------------------------

    \1352\ https://www.epa.gov/power-sector-modeling.
    \1353\ https://www.epa.gov/power-sector-modeling/post-ira-2022-reference-case.
---------------------------------------------------------------------------

B. Impact on GHG Emissions

    Using OMEGA as described in section VI.A of this preamble and in 
Chapter 8 of the RIA, we estimated annual GHG emissions impacts 
associated with the final standards for the calendar years 2027 through 
2055, as shown in Table 204. CO2 equivalent 
(CO2e) values use 100-year global warming potential values 
of 28 and 265 for CH4 and N2O, 
respectively.\1354\ The table shows that the final standards will 
result in significant net GHG reductions compared to the No Action 
scenario. The cumulative CO2, CH4, N2O 
and CO2e emissions reductions from the program total 7,200 
MMT, 0.12 MMT, 0.13 MMT and 7,200 MMT, respectively, through 2055. 
These reductions represent 21 percent, 15 percent, 23 percent and 21 
percent reductions, respectively, relative to the No Action case (see 
Chapter 8 of the RIA). In addition, though not quantified, there is the 
potential that the final program could result in reductions of 
hydrofluorocarbon (HFC) emissions, depending on how manufacturers 
respond to the optional A/C leakage credits for MYs 2031 and later (as 
described in section III.D.5 of this preamble).
---------------------------------------------------------------------------

    \1354\ IPCC, 2014: Climate Change 2014: Synthesis Report. 
Contribution of Working Groups I, II and III to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Core 
Writing Team, R.K. Pachauri and L.A. Meyer (eds.)], pp 87. Available 
online: https://www.ipcc.ch/site/assets/uploads/2018/02/SYR_AR5_FINAL_full.pdf.

                             Table 204--Estimated GHG Impacts of the Final Standards Relative to the No Action Scenario \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                         Emission impacts relative to no action (million metric                Percent change from no action
                                                             tons per year)                      -------------------------------------------------------
             Calendar year             ----------------------------------------------------------
                                             CO2           CH4            N2O           CO2e           CO2           CH4           N2O          CO2e
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027..................................         -0.41      0.000011      -0.0000064         -0.41        -0.027         0.022        -0.028        -0.027
2028..................................          -3.5      0.000024       -0.000042          -3.5         -0.24         0.052         -0.19         -0.24
2029..................................           -12     -0.000011        -0.00017           -12         -0.83        -0.026         -0.77         -0.83
2030..................................           -24     -0.000057        -0.00039           -24          -1.8         -0.14          -1.9          -1.8
2031..................................           -40       -0.0001        -0.00064           -40            -3         -0.27          -3.2            -3
2032..................................           -58      -0.00023        -0.00097           -58          -4.6         -0.64            -5          -4.6
2033..................................           -85      -0.00054         -0.0015           -86            -7          -1.6          -7.8            -7
2034..................................          -110      -0.00092          -0.002          -110          -9.5          -2.9           -11          -9.5
2035..................................          -140       -0.0013         -0.0025          -140           -12          -4.5           -14           -12
2036..................................          -170       -0.0018          -0.003          -170           -15          -6.3           -17           -15
2037..................................          -200       -0.0023         -0.0035          -200           -18          -8.4           -19           -18
2038..................................          -220       -0.0029         -0.0039          -230           -20           -11           -22           -20
2039..................................          -250       -0.0034         -0.0043          -250           -23           -13           -24           -23
2040..................................          -270        -0.004         -0.0047          -270           -25           -16           -27           -25
2041..................................          -290       -0.0045         -0.0051          -290           -27           -18           -29           -27
2042..................................          -310        -0.005         -0.0054          -310           -29           -21           -31           -29
2043..................................          -330       -0.0055         -0.0057          -330           -31           -23           -33           -31
2044..................................          -340        -0.006          -0.006          -350           -32           -26           -34           -32
2045..................................          -360       -0.0064         -0.0063          -360           -34           -28           -35           -34
2046..................................          -370       -0.0068         -0.0065          -370           -35           -30           -36           -35
2047..................................          -380        -0.007         -0.0066          -380           -36           -31           -37           -36
2048..................................          -390       -0.0073         -0.0068          -390           -36           -32           -37           -36
2049..................................          -390       -0.0075         -0.0069          -400           -37           -33           -38           -37
2050..................................          -400       -0.0077          -0.007          -400           -37           -34           -38           -37
2051..................................          -400       -0.0078         -0.0071          -410           -37           -34           -38           -37
2052..................................          -410       -0.0078         -0.0071          -410           -38           -34           -38           -38
2053..................................          -410       -0.0079         -0.0071          -410           -38           -35           -38           -38
2054..................................          -410       -0.0079         -0.0072          -410           -37           -34           -38           -37
2055..................................          -410       -0.0079         -0.0072          -410           -37           -34           -38           -37
                                       -----------------------------------------------------------------------------------------------------------------
    Sum...............................        -7,200         -0.12           -0.13        -7,200           -21           -15           -23           -21
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Negative numbers represent emission decreases while positive numbers represent increases. Percent changes reflect changes associated with the light-
  and medium-duty fleet, not total U.S. inventories.

    The estimated emission impacts include refinery emissions and the 
consideration of the impact of reduced liquid fuel demand on domestic 
refining. In the NPRM, the central analysis estimated that 93 percent 
of the reduced liquid fuel demand resulted in reduced domestic 
refining. EPA noted the possibility, through a sensitivity

[[Page 28098]]

analysis, that reduced domestic demand for liquid fuel would have no 
impact on domestic refining. In other words, domestic refiners would 
continue refining liquid fuel at the same levels and any excess from 
reduced domestic demand for liquid fuel would be exported for use 
elsewhere. In that event, there would be no decrease in domestic 
refinery emissions. In the proposal, EPA requested comment on the 
correct portion of reduced liquid fuel demand that would result in 
reduced domestic refining. At least one commenter responded by noting 
EPA's own statements in the proposal about uncertainty around refinery 
emissions impacts under our standards and urged EPA to explain its 
basis behind any assumptions. EPA's description of the methodology for 
assessing refinery emissions impacts is in Chapter 8.6.4 of the RIA.
    Considering the comments and an updated analysis of the domestic 
refining industry (see RIA Chapter 8.6), the final analysis estimates 
that 50 percent of reduced domestic liquid fuel demand will result in 
reduced domestic refining. That estimate is reflected in the results 
presented in Table 204. As a sensitivity, EPA also estimated that 20 
percent of reduced domestic liquid fuel demand would result in reduced 
domestic refining. We chose this sensitivity as an estimate that falls 
between our central case where 50 percent of reduced demand would 
result in reduced domestic refining and a possible case in which this 
final rule would have no impact on domestic refining. EPA presents 
these results as a sensitivity given the uncertainty surrounding how 
changes in domestic demand for liquid fuel may or may not impact 
domestic refining of liquid fuel. The GHG impacts under that 
sensitivity are shown in Table 205.

                Table 205--Estimated GHG Impacts of the Final Standards Relative to the No Action Scenario Under the Refinery Sensitivity
                                                               [20 Percent assumption] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                             Emission impacts relative to no action (million metric              Percent change from no action
                                                                 tons per year)                      ---------------------------------------------------
               Calendar year               ----------------------------------------------------------
                                                CO2            CH4             N2O           CO2e         CO2          CH4          N2O          CO2e
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027......................................         -0.4        0.000011      -0.0000063         -0.4       -0.027        0.024       -0.027       -0.026
2028......................................         -3.4        0.000029       -0.000041         -3.4        -0.23        0.064        -0.18        -0.23
2029......................................          -11       0.0000058        -0.00016          -11        -0.81        0.014        -0.76        -0.81
2030......................................          -23       -0.000024        -0.00038          -24         -1.7       -0.058         -1.8         -1.7
2031......................................          -39       -0.000045        -0.00064          -39         -2.9        -0.12         -3.2         -2.9
2032......................................          -57        -0.00014        -0.00096          -57         -4.5         -0.4         -4.9         -4.5
2033......................................          -83        -0.00042         -0.0015          -84         -6.8         -1.2         -7.7         -6.8
2034......................................         -110        -0.00076          -0.002         -110         -9.3         -2.4          -11         -9.3
2035......................................         -140         -0.0011         -0.0025         -140          -12         -3.8          -14          -12
2036......................................         -170         -0.0016          -0.003         -170          -15         -5.4          -16          -15
2037......................................         -190          -0.002         -0.0034         -190          -17         -7.3          -19          -17
2038......................................         -220         -0.0026         -0.0039         -220          -20         -9.6          -22          -20
2039......................................         -240         -0.0031         -0.0043         -240          -22          -12          -24          -22
2040......................................         -270         -0.0036         -0.0047         -270          -25          -14          -26          -25
2041......................................         -280         -0.0041          -0.005         -290          -26          -17          -28          -26
2042......................................         -300         -0.0046         -0.0054         -310          -28          -19          -30          -28
2043......................................         -320          -0.005         -0.0057         -320          -30          -21          -32          -30
2044......................................         -340         -0.0055         -0.0059         -340          -31          -23          -33          -31
2045......................................         -350         -0.0059         -0.0062         -350          -33          -25          -35          -33
2046......................................         -360         -0.0063         -0.0064         -360          -34          -27          -36          -34
2047......................................         -370         -0.0065         -0.0065         -370          -35          -28          -36          -35
2048......................................         -380         -0.0068         -0.0067         -380          -35          -29          -37          -35
2049......................................         -390          -0.007         -0.0068         -390          -36          -30          -37          -36
2050......................................         -390         -0.0071         -0.0069         -390          -36          -31          -38          -36
2051......................................         -390         -0.0072          -0.007         -400          -36          -31          -38          -36
2052......................................         -400         -0.0073          -0.007         -400          -36          -31          -38          -36
2053......................................         -400         -0.0074         -0.0071         -400          -36          -32          -38          -36
2054......................................         -400         -0.0074         -0.0071         -400          -36          -32          -38          -36
2055......................................         -400         -0.0074         -0.0071         -400          -36          -31          -37          -36
                                           -------------------------------------------------------------------------------------------------------------
    Sum...................................       -7,000           -0.11           -0.12       -7,100          -21          -13          -23          -21
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Negative numbers represent emission decreases while positive numbers represent increases. Percent changes reflect changes associated with the light-
  and medium-duty fleet, not total U.S. inventories.

C. Global Climate Impacts Associated With the Rule's GHG Emissions 
Reductions

    The transportation sector is the largest U.S. source of GHG 
emissions, representing 29 percent of total GHG emissions.\1355\ Within 
the transportation sector, light-duty vehicles are the largest 
contributor, at 58 percent, and thus comprise 16.5 percent of total 
U.S. GHG emissions,\1356\ even before considering the contribution of 
medium-duty Class 2b and 3 vehicles which are also included under this 
rule. Reducing GHG emissions, including the three GHGs (CO2, 
CH4, and N2O) affected by this program, will make 
an important contribution to the efforts to limit climate change and 
subsequently reducing the probability of severe climate change related 
impacts including heat waves, drought, sea level rise, extreme climate 
and weather events, coastal flooding, and wildfires. Because of the 
long lifetime of GHGs, and in particular CO2, every ton 
emitted contributes to an increase in global

[[Page 28099]]

temperatures for decades and centuries in the future: therefore, every 
ton abated has benefits for centuries. The warming impacts of GHGs are 
cumulative. While the EPA did not conduct modeling to specifically 
quantify changes in climate impacts resulting from this rule in terms 
of avoided temperature change or sea-level rise, the Agency did 
quantify the climate benefits by monetizing the emission reductions 
through the application of the social cost of greenhouse gases (SC-
GHGs), as described in section VIII.E of this preamble.
---------------------------------------------------------------------------

    \1355\ Inventory of U.S. Greenhouse Gas Emissions and Sinks: 
1990-2021. (EPA-430-R-23-002, published April 2023)
    \1356\ Ibid.
---------------------------------------------------------------------------

VII. How will the rule impact criteria and air toxics emissions and 
their associated effects?

    As described in section VI.A of this preamble (and in more detail 
in Chapter 8 of the RIA), EPA used OMEGA to estimate criteria air 
pollutant and air toxic emission inventories associated with the final 
standards. These estimates are presented in section VII.A of this 
preamble, and additional estimates for the two alternatives are 
presented in RIA Chapter 8.6. OMEGA's emissions estimates include 
emissions from vehicles (using MOVES), electricity generation (using 
IPM, as described in section IV.B.3 of the preamble), and refineries.
    Section VII.B of this preamble discusses the air quality impacts of 
the rule, section VII.C of the preamble describes how the rule will 
affect human health, and section VII.D of the preamble presents a 
summary of a demographic analysis on air quality.

A. Impact on Emissions of Criteria and Air Toxics Pollutants

    Table 206 presents changes in criteria air pollutant emissions from 
vehicles resulting from the final standards.
    Table 207 presents changes in criteria air pollutant emissions from 
EGUs and refineries resulting from the final standards. Note that we 
were not able to estimate EGU CO emissions.
    Table 208 presents net changes in criteria air pollutant emissions 
from vehicles, EGUs and refineries resulting from the final standards.
    Table 209 presents net changes in criteria air pollutant emissions 
from vehicles, EGUs, and refineries resulting from the final standards 
using our sensitivity case regarding the changes in U.S. refining in 
response to the projected lowered demand for liquid fuel (this 
sensitivity case is described in section VI.B of the preamble). EPA 
presents these results as a sensitivity given the uncertainty 
surrounding how changes in domestic demand for liquid fuel may impact 
domestic refining of liquid fuel.
    Table 210 presents changes in emissions of air toxic pollutants 
from vehicles resulting from the final standards. Note that we were not 
able to estimate EGU or refinery toxic emissions.
    The vehicle reductions in PM2.5, NOX, NMOG, 
and CO emissions shown in Table 206 are related to the final standards 
for these pollutants. Vehicle SOX emissions are a function 
of the sulfur content of gasoline and diesel fuel. Therefore, the 
reductions in SOX emissions from vehicles result from the 
decrease in gasoline and diesel fuel consumption associated with the 
GHG standards.

  Table 206--OMEGA Estimated Vehicle Criteria Emission Impacts of the Final Standards Relative to the No Action
                                                    Scenario
                                            [U.S. tons per year] \a\
----------------------------------------------------------------------------------------------------------------
          Calendar year                PM2.5            NOX            NMOG             SOX             CO
----------------------------------------------------------------------------------------------------------------
2027............................            -110              14             -37            -2.9            -410
2028............................            -290             -88            -470             -21          -6,700
2029............................            -510            -580          -1,700             -66         -25,000
2030............................            -860          -1,600          -3,700            -130         -54,000
2031............................          -1,200          -2,700          -6,400            -220         -91,000
2032............................          -1,600          -4,300          -9,400            -320        -130,000
2033............................          -2,000          -6,400         -14,000            -460        -210,000
2034............................          -2,500          -8,500         -19,000            -600        -290,000
2035............................          -2,900         -11,000         -25,000            -750        -380,000
2036............................          -3,300         -13,000         -31,000            -890        -470,000
2037............................          -3,800         -15,000         -37,000          -1,000        -570,000
2038............................          -4,300         -17,000         -43,000          -1,100        -670,000
2039............................          -4,800         -19,000         -48,000          -1,200        -770,000
2040............................          -5,300         -22,000         -54,000          -1,300        -870,000
2041............................          -5,700         -23,000         -60,000          -1,400        -960,000
2042............................          -6,100         -25,000         -67,000          -1,500      -1,100,000
2043............................          -6,400         -27,000         -73,000          -1,600      -1,200,000
2044............................          -6,700         -28,000         -80,000          -1,700      -1,300,000
2045............................          -7,000         -30,000         -85,000          -1,700      -1,300,000
2046............................          -7,300         -31,000         -92,000          -1,800      -1,400,000
2047............................          -7,500         -32,000         -99,000          -1,800      -1,500,000
2048............................          -7,700         -32,000        -110,000          -1,900      -1,600,000
2049............................          -7,900         -33,000        -110,000          -1,900      -1,600,000
2050............................          -8,000         -33,000        -120,000          -1,900      -1,600,000
2051............................          -8,200         -34,000        -120,000          -1,900      -1,700,000
2052............................          -8,300         -34,000        -130,000          -1,900      -1,700,000
2053............................          -8,300         -34,000        -130,000          -1,900      -1,700,000
2054............................          -8,400         -35,000        -140,000          -1,900      -1,700,000
2055............................          -8,500         -35,000        -140,000          -1,900      -1,700,000
----------------------------------------------------------------------------------------------------------------
\a\ Negative numbers present emission decreases while positive numbers represent increases.

    Table 207 shows the ``upstream'' emissions impacts from EGUs and 
refineries. As explained in section IV.C.3 of the preamble, our power 
sector modeling predicts that EGU emissions will decrease between 2028 
and 2055 due to increasing use of clean electricity primarily driven by 
provisions of the Inflation Reduction Act (IRA). As a

[[Page 28100]]

result, the increase in EGU emissions associated with the anticipated 
increased electricity demand would peak in the late 2030s/early 2040s 
(depending on the pollutant) and then generally decrease or level off 
through 2055. Chapter 8.6 of the RIA provides more detail on the 
estimation of refinery emissions, which EPA predicts will decrease due 
to the decreased demand for liquid fuel associated with the final GHG 
standards.

                 Table 207--OMEGA Estimated Upstream Criteria Emission Impacts of the Final Standards Relative to the No Action Scenario
                                                                [U.S. tons per year] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                             EGU                                                     Refinery
           Calendar year            --------------------------------------------------------------------------------------------------------------------
                                        PM2.5         NOX          NMOG         SOX         PM2.5         NOX          NMOG         SOX           CO
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027...............................           17          110          7.8          110         -2.6          -11         -7.6         -3.2         -7.1
2028...............................           73          500           34          490          -18          -74          -53          -22          -49
2029...............................          180        1,200           92        1,000          -55         -230         -160          -68         -150
2030...............................          370        2,200          190        1,700         -110         -460         -330         -140         -310
2031...............................          630        3,700          310        2,800         -190         -780         -550         -230         -520
2032...............................          860        4,900          430        3,700         -270       -1,100         -800         -340         -740
2033...............................        1,100        6,200          570        4,600         -390       -1,600       -1,200         -490       -1,100
2034...............................        1,400        7,300          700        5,100         -520       -2,200       -1,500         -650       -1,400
2035...............................        1,600        8,000          820        5,300         -650       -2,700       -1,900         -810       -1,800
2036...............................        1,700        8,500          900        5,500         -780       -3,200       -2,300         -970       -2,100
2037...............................        1,800        8,600          950        5,400         -890       -3,700       -2,600       -1,100       -2,500
2038...............................        1,800        8,500          980        5,200       -1,000       -4,200       -3,000       -1,200       -2,800
2039...............................        1,800        8,200        1,000        4,800       -1,100       -4,600       -3,300       -1,400       -3,100
2040...............................        1,800        7,900        1,000        4,300       -1,200       -5,100       -3,600       -1,500       -3,300
2041...............................        1,800        7,800        1,000        4,100       -1,300       -5,400       -3,800       -1,600       -3,600
2042...............................        1,800        7,600        1,100        3,800       -1,400       -5,800       -4,100       -1,700       -3,800
2043...............................        1,800        7,400        1,100        3,500       -1,500       -6,100       -4,300       -1,800       -4,000
2044...............................        1,800        7,000        1,100        3,000       -1,500       -6,400       -4,500       -1,900       -4,200
2045...............................        1,700        6,600        1,100        2,600       -1,600       -6,600       -4,600       -2,000       -4,400
2046...............................        1,700        6,500        1,000        2,400       -1,600       -6,800       -4,800       -2,000       -4,500
2047...............................        1,600        6,300        1,000        2,100       -1,700       -7,000       -4,900       -2,100       -4,600
2048...............................        1,600        6,000        1,000        1,800       -1,700       -7,100       -5,000       -2,100       -4,700
2049...............................        1,500        5,700          960        1,500       -1,700       -7,200       -5,000       -2,100       -4,800
2050...............................        1,500        5,500          940        1,300       -1,700       -7,300       -5,100       -2,200       -4,800
2051...............................        1,500        5,600          940        1,300       -1,800       -7,400       -5,100       -2,200       -4,800
2052...............................        1,500        5,600          950        1,300       -1,800       -7,400       -5,200       -2,200       -4,900
2053...............................        1,500        5,600          950        1,300       -1,800       -7,400       -5,200       -2,200       -4,900
2054...............................        1,500        5,600          940        1,300       -1,800       -7,400       -5,100       -2,200       -4,900
2055...............................        1,500        5,500          930        1,300       -1,800       -7,400       -5,100       -2,200       -4,900
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Negative numbers present emission decreases while positive numbers represent increases; CO emission rates were not available for calculating CO
  inventories from EGUs.

    Table 208 shows the net impact of the final standards on emissions 
of criteria pollutants, accounting for vehicle, EGU, and refinery 
emissions. In 2055, when the fleet will be largely comprised of 
vehicles that meet the standards, there will be a net decrease in 
emissions of PM2.5, NMOG, NOX, and SOX 
(i.e., all the pollutants for which EPA has emissions estimates from 
all three source sectors). The rule will result in net reductions of 
PM2.5, NOX, NMOG, and CO emissions for all years 
between 2030 and 2055. Net SOX emissions will be reduced 
beginning in 2043. Until then, the increased electricity generation 
associated with the final standards will result in net increases in 
SOX emissions, which will peak in the mid-2030s.

          Table 208--OMEGA Estimated Net Criteria Emission Impacts of the Final Standards Relative to the No Action Scenario, Light-Duty and Medium-Duty Vehicles, EGUs and Refineries
                                                                                    [U.S. tons per year] \a\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Emission impacts relative to no action  (thousand U.S. tons)                    Percent change from no action
                         Calendar year                         ---------------------------------------------------------------------------------------------------------------------------------
                                                                   PM2.5         NOX          NMOG         SOX           CO         PM2.5         NOX          NMOG         SOX           CO
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2027..........................................................          -93          120          -37          110         -420        -0.22        0.023      -0.0054         0.32      -0.0039
2028..........................................................         -230          330         -490          450       -6,700        -0.55        0.072       -0.079          1.3       -0.068
2029..........................................................         -380          350       -1,800          880      -25,000        -0.92        0.085        -0.31          2.6        -0.28
2030..........................................................         -600          170       -3,900        1,500      -54,000         -1.5        0.045        -0.72          4.7        -0.64
2031..........................................................         -770          170       -6,600        2,400      -92,000         -1.9        0.049         -1.3          7.7         -1.2
2032..........................................................         -970         -480       -9,800        3,100     -140,000         -2.4        -0.16           -2           10         -1.9
2033..........................................................       -1,300       -1,700      -15,000        3,600     -210,000         -3.3        -0.63         -3.2           12         -3.2
2034..........................................................       -1,600       -3,400      -20,000        3,800     -300,000         -4.2         -1.3         -4.4           14         -4.7
2035..........................................................       -2,000       -5,400      -26,000        3,800     -380,000         -5.2         -2.3         -6.1           15         -6.6
2036..........................................................       -2,400       -7,500      -32,000        3,700     -470,000         -6.3         -3.5         -7.9           15         -8.9
2037..........................................................       -2,900      -10,000      -38,000        3,300     -570,000         -7.7         -5.1          -10           13          -12
2038..........................................................       -3,500      -13,000      -45,000        2,800     -680,000         -9.3           -7          -12           12          -15
2039..........................................................       -4,100      -16,000      -51,000        2,200     -780,000          -11         -9.1          -14          9.4          -18
2040..........................................................       -4,700      -19,000      -57,000        1,500     -870,000          -13          -11          -17          6.7          -21
2041..........................................................       -5,200      -21,000      -63,000        1,100     -970,000          -14          -13          -19          4.9          -25
2042..........................................................       -5,600      -23,000      -70,000          600   -1,100,000          -15          -15          -22          2.8          -29
2043..........................................................       -6,100      -25,000      -77,000           78   -1,200,000          -16          -17          -24         0.37          -32
2044..........................................................       -6,500      -28,000      -83,000         -510   -1,300,000          -18          -19          -27         -2.5          -36

[[Page 28101]]

 
2045..........................................................       -6,900      -30,000      -89,000       -1,100   -1,300,000          -19          -20          -29         -5.7          -39
2046..........................................................       -7,200      -31,000      -96,000       -1,400   -1,400,000          -19          -22          -32         -7.5          -42
2047..........................................................       -7,500      -32,000     -100,000       -1,800   -1,500,000          -20          -23          -34         -9.5          -44
2048..........................................................       -7,800      -34,000     -110,000       -2,100   -1,600,000          -21          -23          -36          -12          -46
2049..........................................................       -8,100      -34,000     -120,000       -2,500   -1,600,000          -21          -24          -38          -14          -48
2050..........................................................       -8,300      -35,000     -120,000       -2,800   -1,700,000          -22          -25          -40          -16          -49
2051..........................................................       -8,400      -36,000     -130,000       -2,800   -1,700,000          -22          -25          -41          -16          -50
2052..........................................................       -8,500      -36,000     -130,000       -2,800   -1,700,000          -22          -25          -43          -16          -51
2053..........................................................       -8,600      -36,000     -140,000       -2,800   -1,700,000          -22          -25          -44          -16          -51
2054..........................................................       -8,700      -36,000     -140,000       -2,800   -1,700,000          -22          -25          -45          -16          -51
2055..........................................................       -8,700      -36,000     -150,000       -2,800   -1,700,000          -22          -25          -46          -16          -52
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Negative numbers present emission decreases while positive numbers represent increases; CO emission rates were not available for calculating CO inventories from EGUs, so CO impacts are
  from vehicles and refineries only. Percent changes reflect changes associated with the light- and medium-duty fleet, not total U.S. inventories.

    The estimated refinery emission impacts include consideration of 
the impact of reduced liquid fuel demand on domestic refining. In the 
NPRM, the central analysis estimated that impact at 93 percent. In 
other words, 93 percent of the reduced liquid fuel demand results in 
reduced domestic refining. EPA noted the possibility that reduced 
domestic demand for liquid fuel would have no impact on domestic 
refining. In other words, domestic refiners would continue refining 
liquid fuel at the same levels and any excess would be exported for use 
elsewhere. In that event, there would be no decrease in domestic 
refinery emissions. In the proposal, EPA requested comment on the 
correct portion of reduced liquid fuel demand that would result in 
reduced domestic refining. EPA summarized those comments and provided 
responses in section VI.B of the preamble.
    As discussed in RIA Chapter 8.6, the final analysis estimates that 
50 percent of reduced domestic liquid fuel demand will result in 
reduced domestic refining. That estimate is reflected in the results 
presented in Table 208. As a sensitivity, EPA also estimated that just 
20 percent of reduced domestic liquid fuel demand would result in 
reduced domestic refining. We chose this sensitivity as an estimate 
that falls between our central case where 50 percent of reduced demand 
would result in reduced domestic refining and a possible case in which 
this final rule would have no impact on domestic refining. The criteria 
pollutant impacts under that sensitivity case are shown in Table 209.

Table 209--OMEGA Estimated Net Criteria Emission Impacts of the Final Standards Relative to the No Action Scenario, Light-Duty and Medium-Duty Vehicles, EGUs and Refineries, Under the Refinery
                                                                                           Sensitivity
                                                                                    [U.S. tons per year] \a\
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Emission impacts relative to no action  (thousand U.S. tons)                    Percent change from no action
                         Calendar year                         ---------------------------------------------------------------------------------------------------------------------------------
                                                                   PM2.5         NOX          NMOG         SOX           CO         PM2.5         NOX          NMOG         SOX           CO
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
2027..........................................................          -91          120          -32          110         -410        -0.21        0.024      -0.0048         0.33      -0.0039
2028..........................................................         -220          380         -460          460       -6,700        -0.53        0.081       -0.074          1.3       -0.068
2029..........................................................         -350          490       -1,700          920      -25,000        -0.83         0.12        -0.29          2.7        -0.28
2030..........................................................         -540          450       -3,700        1,500      -54,000         -1.3         0.12        -0.68          4.9        -0.64
2031..........................................................         -660          630       -6,300        2,500      -92,000         -1.6         0.18         -1.2            8         -1.2
2032..........................................................         -810          190       -9,300        3,300     -140,000           -2        0.062         -1.9           10         -1.9
2033..........................................................       -1,100         -760      -14,000        3,900     -210,000         -2.6        -0.27           -3           13         -3.2
2034..........................................................       -1,300       -2,100      -19,000        4,200     -290,000         -3.3        -0.81         -4.2           15         -4.7
2035..........................................................       -1,600       -3,700      -25,000        4,200     -380,000         -4.1         -1.6         -5.8           16         -6.6
2036..........................................................       -1,900       -5,600      -31,000        4,200     -470,000           -5         -2.6         -7.5           16         -8.9
2037..........................................................       -2,400       -7,900      -37,000        3,900     -570,000         -6.2         -3.9         -9.7           16          -12
2038..........................................................       -2,900      -10,000      -43,000        3,600     -670,000         -7.6         -5.5          -12           14          -15
2039..........................................................       -3,400      -13,000      -49,000        3,000     -770,000           -9         -7.4          -14           12          -18
2040..........................................................       -3,900      -16,000      -55,000        2,400     -870,000          -10         -9.2          -16           10          -21
2041..........................................................       -4,400      -18,000      -61,000        2,000     -960,000          -12          -11          -18          8.8          -25
2042..........................................................       -4,800      -20,000      -67,000        1,600   -1,100,000          -13          -13          -21          7.2          -29
2043..........................................................       -5,200      -22,000      -74,000        1,200   -1,200,000          -14          -14          -23          5.3          -32
2044..........................................................       -5,600      -24,000      -80,000          630   -1,300,000          -15          -16          -26          2.9          -36
2045..........................................................       -5,900      -26,000      -86,000           72   -1,300,000          -16          -17          -28         0.35          -39
2046..........................................................       -6,200      -27,000      -93,000         -230   -1,400,000          -16          -18          -30         -1.1          -42
2047..........................................................       -6,500      -28,000     -100,000         -540   -1,500,000          -17          -19          -33         -2.7          -44
2048..........................................................       -6,800      -29,000     -110,000         -870   -1,600,000          -18          -20          -35         -4.4          -46
2049..........................................................       -7,000      -30,000     -110,000       -1,200   -1,600,000          -18          -21          -37         -6.2          -47
2050..........................................................       -7,200      -31,000     -120,000       -1,500   -1,700,000          -19          -21          -38         -7.9          -49
2051..........................................................       -7,300      -31,000     -120,000       -1,500   -1,700,000          -19          -21          -40         -7.9          -50
2052..........................................................       -7,400      -32,000     -130,000       -1,500   -1,700,000          -19          -21          -41         -7.9          -50
2053..........................................................       -7,500      -32,000     -130,000       -1,500   -1,700,000          -19          -21          -43         -7.9          -51
2054..........................................................       -7,600      -32,000     -140,000       -1,500   -1,700,000          -19          -21          -44         -7.9          -51

[[Page 28102]]

 
2055..........................................................       -7,700      -32,000     -140,000       -1,500   -1,700,000          -19          -21          -44         -7.8          -51
------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Negative numbers present emission decreases while positive numbers represent increases; CO emission rates were not available for calculating CO inventories from EGUs, so CO impacts are
  from vehicles and refineries only. Percent changes reflect changes associated with the light- and medium-duty fleet, not total U.S. inventories.

    Table 210 shows reductions in vehicle emissions of air toxics. EPA 
expects this rule will reduce emissions of air toxics from light- and 
medium-duty vehicles. The GPF technology that EPA projects 
manufacturers will choose to use in meeting the final PM standards will 
decrease particle-phase pollutants, and the NMOG+NOX 
standards will decrease gas-phase toxics.
    For most air toxic emissions, EPA relies on estimates from EPA's 
MOVES emissions model. In MOVES, emissions of most gaseous toxic 
compounds are estimated as fractions of the emissions of VOC. Toxic 
species in the particulate phase (e.g., polycyclic aromatic 
hydrocarbons (PAHs)) are estimated as fractions of total organic carbon 
smaller than 2.5 [mu]m (OC2.5). Thus, reductions in air 
toxic emissions are proportional to modelled reductions in total VOCs 
and/or OC2.5.\1357\ Emission measurements of PAHs in EPA's 
recent GPF test program (see section III.D.3 of the preamble and RIA 
Chapter 3.2.5) suggest this is a conservative estimate, as they 
indicate reduction in emissions of particle-phase PAH compounds of over 
99 percent, compared to about 95 percent for total PM.
---------------------------------------------------------------------------

    \1357\ U. S. EPA (2020) Air Toxic Emissions from Onroad Vehicles 
in MOVES3. Assessment and Standards Division, Office of 
Transportation and Air Quality, Report No. EPA-420-R-20-022. 
November 2020. https://nepis.epa.gov/Exe/ZyPDF.cgi?Dockey=P1010TJM.pdf.

   Table 210--OMEGA Estimated Vehicle Air Toxic Emission Impacts of the Final Standards Relative to the No Action Scenario, Light-Duty and Medium-Duty
                                                                        Vehicles
                                                                [U.S. tons per year] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                      Calendar year                        Acetaldehyde       Benzene      Formaldehyde     Naphthalene    1,3 Butadiene      15 PAH
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027....................................................           -0.74            -2.1           -0.33          -0.093           -0.27          -0.031
2028....................................................            -5.2             -15            -2.6           -0.72            -2.1          -0.093
2029....................................................             -18             -46            -9.5            -2.2            -6.9           -0.18
2030....................................................             -38             -99             -21            -4.4             -15           -0.33
2031....................................................             -64            -170             -35            -7.3             -24           -0.49
2032....................................................             -93            -240             -52             -11             -35           -0.65
2033....................................................            -140            -370             -79             -16             -54           -0.89
2034....................................................            -190            -510            -110             -22             -74            -1.1
2035....................................................            -250            -650            -140             -28             -95            -1.3
2036....................................................            -300            -790            -160             -34            -110            -1.6
2037....................................................            -340            -930            -190             -40            -130            -1.8
2038....................................................            -390          -1,100            -220             -46            -150              -2
2039....................................................            -440          -1,200            -250             -52            -170            -2.3
2040....................................................            -490          -1,300            -280             -57            -190            -2.5
2041....................................................            -520          -1,500            -300             -62            -200            -2.7
2042....................................................            -560          -1,600            -320             -67            -220            -2.9
2043....................................................            -600          -1,700            -340             -71            -230            -3.1
2044....................................................            -630          -1,800            -360             -75            -240            -3.3
2045....................................................            -650          -1,900            -380             -79            -250            -3.4
2046....................................................            -680          -2,000            -400             -82            -260            -3.5
2047....................................................            -700          -2,000            -410             -84            -270            -3.7
2048....................................................            -710          -2,100            -420             -86            -280            -3.8
2049....................................................            -720          -2,100            -430             -87            -280            -3.8
2050....................................................            -730          -2,200            -430             -89            -280            -3.9
2051....................................................            -740          -2,200            -440             -89            -280              -4
2052....................................................            -740          -2,300            -440             -90            -290              -4
2053....................................................            -750          -2,300            -440             -90            -290            -4.1
2054....................................................            -740          -2,300            -440             -90            -290            -4.1
2055....................................................            -740          -2,300            -440             -90            -290            -4.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Negative numbers represent emission decreases while positive numbers represent increases. Note that emission rates were not available for estimating
  toxics emissions from EGUs or refineries.

B. How will the rule affect air quality?

    As discussed in section VII.A of the preamble, we project that the 
standards in the final rule will result in meaningful reductions in 
emissions of criteria and toxic pollutants from light- and medium-duty 
vehicles. We also project that the final standards will impact 
corresponding ``upstream''

[[Page 28103]]

emission sources like EGUs (electric generating units) and refineries. 
When feasible, we conduct full-scale photochemical air quality modeling 
to estimate levels of criteria and air toxic pollutants, because the 
atmospheric chemistry related to ambient concentrations of 
PM2.5, ozone, and air toxics is very complex. Air quality 
modeling was conducted for this rulemaking for the future year 2055, 
when the program will be fully implemented and when most of the 
regulated fleet will have turned over. We also modeled a sensitivity 
case that examined only the air quality impacts of the onroad emissions 
changes from the rule.
    On the basis of the air quality modeling for this final rule, which 
uses projected emission impacts from the proposed standards,\1358\ we 
conclude that the rule will result in widespread decreases in air 
pollution in 2055, even when accounting for the impacts of increased 
electricity generation. We expect the power sector to become cleaner 
over time as a result of the IRA and future policies, which will reduce 
the air quality impacts of EGUs. Although the spatial resolution of the 
air quality modeling is not sufficient to quantify them, this rule's 
emission reductions will also lead to air pollution reductions in close 
proximity to major roadways, where people of color and people with low 
income are disproportionately exposed to elevated concentrations of 
many air pollutants. The emission reductions provided by the final 
standards will also be useful in helping areas attain and maintain the 
NAAQS and prevent future nonattainment. In addition, the final 
standards are expected to result in better visibility and reduced 
deposition of air pollutants. Additional information and maps showing 
expected changes in ambient concentrations of air pollutants in 2055 
are included in Chapter 7 of the RIA and in the Air Quality Modeling 
Memo to the Docket.
---------------------------------------------------------------------------

    \1358\ Decisions about the emissions and other elements used in 
the air quality modeling were made early in the analytical process 
for the final rulemaking. Accordingly, the air quality analysis does 
not fully represent the final regulatory scenario; however, we 
consider the modeling results to be a fair reflection of the impact 
the standards will have on air quality in 2055. Chapter 7 of the RIA 
has more detail on the modeled scenarios.
---------------------------------------------------------------------------

1. Particulate Matter
    We project that the rule will decrease annual average 
PM2.5 concentrations by an average of 0.02 [mu]g/m\3\ in 
2055, with a maximum decrease of 0.36 [mu]g/m\3\ and a maximum increase 
of 0.20 [mu]g/m\3\. The population-weighted average change in annual 
average PM2.5 concentrations will be a decrease of 0.04 
[mu]g/m\3\ in 2055. In a few isolated areas, this rule is expected to 
result in increases in annual average PM2.5, due to 
increases in EGU emissions. However, we project that more than 99 
percent of the population will experience reductions in annual average 
PM2.5 concentrations as a result of this rule.
    When only the onroad emissions impacts of the rule are considered, 
annual average PM2.5 concentrations will decrease by an 
average of 0.02 [mu]g/m\3\ in 2055, with a maximum decrease of 0.13 
[mu]g/m\3\. The population-weighted average change in annual average 
PM2.5 concentrations attributable to the onroad emissions 
reductions will be a decrease of 0.04 [mu]g/m\3\ in 2055.
    We received a few comments about the impacts on ambient 
PM2.5 from the final standards. These commenters noted that 
the air quality improvements from the PM exhaust standards were not 
presented separately, and that the reductions in ambient 
PM2.5 from the rule are a relatively small improvement 
compared to the level of the annual average NAAQS. Additionally, a 
commenter noted that we did not present projections of county-level 
concentrations in 2055 which could be compared to the level of the 
NAAQS. For purposes of the air quality analyses, we model the total 
impacts of the standards.\1359\ Chapter 7.4 of the RIA contains more 
detail on the impacts of the rule on PM2.5, as well as its 
impacts on county-level PM2.5 design value concentrations in 
2055. Detailed discussion of the comments we received on the 
PM2.5 emissions and air quality impact of the standards can 
be found in sections 4 and 11 of the RTC.
---------------------------------------------------------------------------

    \1359\ Although the air quality modeling results lend further 
support to the rationality of the standards, EPA does not view air 
quality modeling as necessary to the justification of any of the 
standards. The rationales for the standards, including the 
significant emissions reductions from the regulated classes of motor 
vehicles, are set forth in section V of this preamble.
---------------------------------------------------------------------------

2. Ozone
    We project that the rule will decrease ozone concentrations by an 
average of 0.09 ppb in 2055, with a maximum decrease of 0.71 ppb and a 
maximum increase of 0.36 ppb. The population-weighted average change in 
ozone concentrations will be a decrease of 0.16 ppb in 2055. In a few 
isolated areas, this rule is expected to result in increases in annual 
average ozone, likely due mainly to increases in EGU emissions. 
However, we project that more than 99 percent of the population will 
experience reductions in annual average ozone concentrations as a 
result of this rule.
    When only the onroad emissions impacts of the rule are considered, 
ozone concentrations will decrease by an average of 0.09 ppb in 2055, 
with a maximum decrease of 0.70 ppb. The population-weighted average 
change in ozone concentrations attributable to the onroad emissions 
reductions will be a decrease of 0.16 ppb in 2055.
    Chapter 7.4 of the RIA contains more detail on the impacts of the 
rule on ozone concentrations, as well as its impacts on county-level 
ozone design value concentrations in 2055.
3. Nitrogen Dioxide
    We project that the rule will decrease annual NO2 
concentrations by an average of 0.01 ppb in 2055, with a maximum 
decrease of 0.34 ppb and a maximum increase of 0.11 ppb. The 
population-weighted average change in annual average NO2 
concentrations will be a decrease of 0.08 ppb in 2055. In a few 
isolated areas, this rule is expected to result in increases in annual 
average NO2, likely due to increases in EGU emissions. However, we 
project that more than 99 percent of the population will experience 
reductions in annual average NO2 concentrations as a result 
of this rule.
    When only the onroad emissions impacts of the rule are considered, 
NO2 concentrations will decrease by an average of 0.01 ppb 
in 2055, with a maximum decrease 0.28 ppb. The population-weighted 
average change in ozone concentrations attributable to the onroad 
emissions reductions will be a decrease of 0.07 ppb in 2055
    Chapter 7.4 of the RIA contains more detail on the impacts of the 
rule on NO2 concentrations.
4. Sulfur Dioxide
    We project that the rule will decrease annual SO2 
concentrations by an average of 0.001 ppb in 2055, with a maximum 
decrease of 0.26 ppb and a maximum increase of 0.32 ppb. The 
population-weighted average change in annual average SO2 
concentrations will be a decrease of 0.003 ppb in 2055. In some areas, 
this rule is expected to result in increases in annual average 
SO2, likely due to increases in EGU emissions. However, we 
project that more than 99 percent of the population will experience 
reductions in annual average SO2 concentrations as a result 
of this rule.
    When only the onroad emissions impacts of the rule are considered, 
SO2 concentrations will decrease by an average of 0.0002 ppb 
in 2055, with a maximum decrease of 0.01 ppb. The

[[Page 28104]]

population-weighted average change in SO2 concentrations 
attributable to the onroad emissions reductions will be a decrease of 
0.001 ppb in 2055.
    Chapter 7.4 of the RIA contains more detail on the impacts of the 
rule on SO2 concentrations.
5. Air Toxics
    In general, the air quality modeling results indicate that the rule 
will have relatively little impact on national average ambient 
concentrations of the modeled air toxics in 2055. Specifically, in 
2055, our modeling projects that ambient 1,3-butadiene, benzene, and 
naphthalene concentrations will decrease by an average of less than 
0.001 ug/m3 across the country. Acetaldehyde and formaldehyde will 
generally have small decreases in most areas with average annual 
reductions of 0.0021 ug/m3 and 0.0023 ppb for acetaldehyde and 
formaldehyde, respectively. We do project slight increases in benzene 
and formaldehyde concentrations in a few isolated areas of the country. 
Chapter 7.4 of the RIA contains more detail on the impacts of the 
modeled scenario on air toxics concentrations.

C. How will the rule affect human health?

    As described in section VII.B of this preamble and RIA Chapter 7, 
EPA conducted an air quality modeling analysis of a light- and medium-
duty vehicle policy scenario in 2055. The results of that analysis 
found that in 2055, consistent with the OMEGA-based analysis, the 
standards will result in widespread decreases in criteria pollutant 
emissions that will lead to substantial improvements in public health 
and welfare. We estimate that in 2055, 1,000 to 2,000 PM2.5-
related premature deaths will be avoided as a result of the modeled 
policy scenario, depending on the assumed long-term exposure study of 
PM2.5-related premature mortality risk. We also estimate 
that the modeled policy scenario will avoid 25 to 550 ozone-related 
premature deaths, depending on the assumed study of ozone-related 
mortality risk. The monetized benefits of the improvements in public 
health in 2055 related to the modeled policy scenario (which include 
the monetized benefits of reductions in both mortality and non-fatal 
illnesses) are $16 to $36 billion at a 2 percent discount rate. See RIA 
Chapter 7.5 for more detail about the PM2.5 and ozone health 
benefits analysis. We also note that the rule will result in widespread 
decreases in GHG emissions, leading to significant benefits, including 
improvements in human health. We discuss climate-related health impacts 
in section II.A of the preamble and monetize the Social Cost of GHGs in 
section VIII.E of the preamble.

D. Demographic Analysis of Air Quality

    As noted in section VIII.J of the preamble, EPA received several 
comments related to the environmental justice (EJ) impacts of light- 
and medium-duty vehicles in general and the impacts of the proposal 
specifically. After consideration of comments, we conducted an EJ 
analysis using the 2055 air quality modeling data to evaluate how human 
exposure to future air quality varies with population characteristics 
relevant to potential environmental justice concerns in scenarios with 
and without the rule in place. The analysis is described in detail in 
RIA Chapter 7.6.
    This rule applies nationally and will be implemented consistently 
throughout the nation. Specifically, because this final rule affects 
both onroad and upstream emissions, and because PM emission precursors 
and ozone can undergo long-range transport, we believe it is 
appropriate to conduct a national-scale EJ assessment of the contiguous 
U.S. As described in section VII.B of the preamble, and as depicted in 
the maps presented in RIA Chapter 7.4, these reductions will be 
geographically widespread. However, the spatial resolution of the air 
quality modeling data (12km by 12km grid cells) is not sufficient to 
capture the very local heterogeneity of human exposures, particularly 
the pollution concentration gradients near roads. Taking these factors 
into consideration, this analysis evaluates both national population-
weighted average exposures and the distribution of exposure outcomes 
that will result from the final rule.
    On average, all population groups included in the analysis will 
benefit from reductions in exposure to ambient PM2.5 and 
ozone due to the final rule. However, we found that projected 
disparities in national average PM2.5 and ozone 
concentration exposure in 2055 are not likely mitigated or exacerbated 
by the rule for most of the population groups evaluated, due to the 
relatively similar pollution concentration reductions across 
demographic groups, especially for ozone. However, for some population 
groups, nationally-averaged exposure disparity is mitigated to a small 
degree in both absolute and relative terms.
    While national average results can provide some insight when 
comparing within and across population groups, they do not provide 
information on the full distribution of concentration impacts. This is 
because both population groups and ambient concentrations can be 
unevenly distributed across the spectrum of exposures, meaning that 
average exposures may mask important regional disparities. We therefore 
conducted a distributional analysis and found that for most of the 
population groups, the small differences in the distribution of 
pollution exposure reductions suggest that the rule is not likely to 
exacerbate nor mitigate PM2.5 or ozone exposure concerns. 
However, differences in the distribution of impacts between some groups 
do exist. Most notably, we found that populations who live in large 
urban areas and those who are linguistically isolated are more likely 
to experience larger reductions in PM2.5 concentrations than 
their comparison groups. We also observed that some race/ethnicity 
groups, such as Hispanic, Non-Hispanic Black, and Non-Hispanic Asian 
populations are more likely to experience larger reductions in 
PM2.5 concentration than other race/ethnicity groups.
    See RIA Chapter 7.6 for a detailed description of the methods and 
results of these analyses, including tables of national population-
weighted average PM2.5 and ozone exposure concentrations for 
each population group included in the analysis and plots of the 
cumulative distribution of reductions in pollution related to the final 
rule for the same population groups.

VIII. Estimated Costs and Benefits and Associated Considerations

    This section summarizes our analyses of the rule's estimated costs, 
savings, and benefits. Overall, these analyses further support the 
reasonableness of the final standards.
    Section VIII.A of the preamble summarizes the monetized costs, 
benefits, and net benefits of the final standards. Component costs and 
benefits, as well as transfers, are further discussed in sections 
VIII.B (vehicle technology and other costs), VIII.C (fueling impacts), 
V.D (non-emissions benefits), V.E (GHG benefits), V.F (criteria 
benefits), and V.G (transfers) of the preamble. Overall, EPA finds that 
the final rule creates significant positive net benefits for society. 
In addition, even when considering costs alone, this rule creates large 
cost savings due to cost increases (principally associated with higher 
vehicle technology and EVSE costs) being offset by significantly larger 
cost savings (principally associated with repair, maintenance,

[[Page 28105]]

and fuel savings). The benefits for this rule are also significant. The 
greatest benefits accrue from GHG and PM2.5 emissions 
reductions, but we also find large benefits from energy security and 
increased driving value, as well as disbenefits associated with 
somewhat greater refueling times.
    EPA notes that, consistent with CAA section 202, in evaluating 
potential standards we carefully weighed the statutory factors, 
including the emissions impacts of the standards and the feasibility of 
the standards (including cost of compliance in light of available lead 
time). We monetize benefits of the standards and evaluate other costs 
in part to enable a comparison of costs and benefits pursuant to E.O. 
12866, but we recognize there are benefits that we are currently unable 
to fully quantify. EPA's practice has been to set standards to achieve 
improved air quality consistent with CAA section 202, and not to rely 
on cost-benefit calculations, with their uncertainties and limitations, 
in identifying the appropriate standards. Nonetheless, our conclusion 
that the estimated benefits exceed the estimated costs of the final 
program reinforces our view that the standards are appropriate under 
section 202(a).
    In sections VIII.H-K of this preamble, we consider additional non-
monetized factors. As with the cost-benefit analysis, we did not rely 
on these factors in identifying the appropriate standards, but we find 
that these factors further support the reasonableness of this rule. In 
section VIII.H of this preamble, we find that this rule would have very 
small impacts (less than 0.8 percent) on light-duty vehicle sales, with 
increases in some years and decreases in other years. Though we do not 
expect this rule to impact new vehicle sales in a large way, as 
explained in section VIII.D.1 of this preamble we do expect the final 
standards will lead to increases in vehicle efficiency, making it 
possible for people to drive more without spending more and thus 
benefit from increased access to mobility. In section VIII.I of this 
preamble, we assess potential employment impacts, noting that the final 
standards are expected to increase employment in some sectors (e.g., 
PEV and battery production), but decrease employment in other sectors 
(e.g., ICE vehicle production). While we have not been able to 
comprehensively quantify the employment impacts, our partial 
quantitative analysis finds the potential for either an increase or 
decrease in net employment, with results that lean toward increased 
levels of net employment. In section VIII.J of this preamble, we 
describe how large GHG emissions reductions resulting from the rule 
will positively impact environmental justice. We also describe how the 
vehicle-related criteria emissions reductions are also expected to 
improve environmental conditions for communities near roadways. As 
described in section VII of this preamble, we expect that this rule 
will result in widespread decreases in air pollution in 2055, and 
associated improvements in human health, even when accounting for the 
impacts of increased electricity generation. In section VIII.K of this 
preamble, we consider additional factors. Among other things, while we 
expect increases in fatalities due to expected increases in driving, we 
find that the rule has no statistically significant impact on 
fatalities per mile driven. We do find a small, non-statistically 
significant decrease of 0.01 percent in annual fatalities per billion 
miles driven. On balance, our analysis of all the factors in section 
VIII of this preamble further support the reasonableness of the final 
standards.

A. Summary of Costs and Benefits

    EPA estimates that the total benefits of this action far exceed the 
total costs with the annualized value of monetized net benefits to 
society estimated at $99 billion through the year 2055, assuming a 2 
percent discount rate, as shown in Table 211.\1360\ The annualized 
value of monetized emission benefits is $85 billion, with $72 billion 
of that attributed to climate-related economic benefits from reducing 
emissions of GHGs that contribute to climate change and the remainder 
attributed to reduced emissions of criteria pollutants that contribute 
to ambient concentrations of smaller particulate matter 
(PM2.5). PM2.5 is associated with premature death 
and serious health effects such as hospital admissions due to 
respiratory and cardiovascular illnesses, nonfatal heart attacks, 
aggravated asthma, and decreased lung function.
---------------------------------------------------------------------------

    \1360\ All subsequent annualized costs and annualized benefits 
cited in this section refer to the values generated at a 2 percent 
discount rate.
---------------------------------------------------------------------------

    The annualized value of vehicle technology costs is estimated at 
$40 billion. Notably, this rule will result in significant savings in 
vehicle maintenance and repair for consumers, which we estimate at an 
annualized value of $16 billion (note that these values are presented 
as negative costs, or savings, in the table). EPA projects generally 
lower maintenance and repair costs for electric vehicles and those 
societal maintenance and repair savings grow significantly over time. 
We also estimate various impacts associated with our assumption that 
consumers choose to drive more due to the lower cost of driving under 
the standards, called the rebound effect (as discussed further in 
section VIII of this preamble and in Chapters 8 and 9 of the RIA). 
Increased traffic noise and congestion costs are two such effects due 
to the rebound effect, which we estimate at an annualized value of $1.2 
billion.
    EPA also estimates impacts associated with fueling the vehicles 
under our standards. The rule will provide significant savings to 
society through reduced fuel expenditures with annualized pre-tax fuel 
savings of $46 billion. Somewhat offsetting those fuel savings is the 
expected cost of EV chargers, or electric vehicle supply equipment 
(EVSE), of $9 billion.
    This rule includes other benefits not associated with emission 
reductions. Energy security benefits are estimated at an annualized 
value of $2.1 billion. The drive value benefit, which is the value of 
consumers' choice to drive more under the rebound effect, has an 
estimated annualized value of $2.1 billion. The refueling time impact 
includes two effects: time saved refueling for ICE vehicles with lower 
fuel consumption under our standards, and mid-trip recharging events 
for electric vehicles. Our past GHG rules have estimated that refueling 
time would be reduced due to the lower fuel consumption of new 
vehicles; hence, a benefit. However, in this analysis, we are 
estimating that refueling time will increase somewhat overall for the 
fleet due to our additional assumption for mid-trip recharging events 
for electric vehicles. Therefore, the refueling time impact represents 
a disbenefit (a negative benefit) as shown, with an annualized value at 
negative $0.8 billion. As noted in section VIII of this preamble and in 
RIA Chapter 4, we have updated our refueling time estimates but still 
consider them to be conservatively high for electric vehicles 
considering the rapid changes taking place in electric vehicle charging 
infrastructure driven largely by the Bipartisan Infrastructure Law and 
the Inflation Reduction Act.
    Note that some costs are shown as negative values in Table 211. 
Those entries represent savings but are included under the ``costs'' 
category because, in past rules, categories such as repair and 
maintenance have been viewed as costs of vehicle operation; as 
discussed above, under this rule we project significant savings in 
repair and maintenance costs for consumers. Where negative values are 
shown, we

[[Page 28106]]

are estimating that those costs are lower under the final standards 
than in the No Action case.
    EPA received several comments related to the benefit-cost analysis. 
We summarize and respond to those comments in the Response to Comments 
document that accompanies this rulemaking. We have updated our analysis 
in light of comments and new data although we have not changed our 
general framework for conducting our benefit cost analysis. 
Consideration of comments also did not affect our conclusion that the 
benefits of the proposed and final rules significantly outweigh the 
costs. EPA follows applicable guidance and best practices when 
conducting its benefit-cost analyses.\1361\ We therefore consider our 
analysis methodologically rigorous and a best estimate of the projected 
benefits and costs associated with the final rule.
---------------------------------------------------------------------------

    \1361\ Monetized climate benefits are presented under a 2 
percent near-term Ramsey discount rate, consistent with EPA's 
updated estimates of the SC-GHG. The 2003 version of OMB's Circular 
A-4 had generally recommended 3 percent and 7 percent as default 
discount rates for costs and benefits, though as part of the 
Interagency Working Group on the Social Cost of Greenhouse Gases, 
OMB had also long recognized that climate effects should be 
discounted only at appropriate consumption-based discount rates. 
While we were conducting the analysis for this rule, OMB finalized 
an update to Circular A-4, in which it recommended the general 
application of a 2 percent discount rate to costs and benefits 
(subject to regular updates), as well as the consideration of the 
shadow price of capital when costs or benefits are likely to accrue 
to capital (OMB 2023). Because the SC-GHG estimates reflect net 
climate change damages in terms of reduced consumption (or monetary 
consumption equivalents), the use of the social rate of return on 
capital (7 percent under OMB Circular A-4 (2003)) to discount 
damages estimated in terms of reduced consumption would 
inappropriately underestimate the impacts of climate change for the 
purposes of estimating the SC-GHG. See section of VIII.E of the 
preamble and RIA Chapter 6.2 for more detail.
---------------------------------------------------------------------------

    Here we summarize results for the final standards. We present 
results for the two alternatives in Chapter 9 of the RIA.

[[Page 28107]]



                                        Table 211--Summary of Costs, Fuel Savings and Benefits of the Final Rule
                                                       [Billions of 2022 dollars] \a\ \b\ \c\ \d\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              CY 2055         PV, 2%          PV, 3%          PV, 7%          AV, 2%          AV, 3%          AV, 7%
--------------------------------------------------------------------------------------------------------------------------------------------------------
Vehicle Technology Costs................             $38            $870            $760            $450             $40             $39             $37
Insurance Costs.........................             1.9              33              28              15             1.5             1.4             1.2
Repair Costs............................            -7.1             -40             -32             -12            -1.8            -1.6           -0.99
Maintenance Costs.......................             -35            -300            -250            -110             -14             -13            -9.3
Congestion Costs........................             2.4              25              21              10             1.2             1.1            0.83
Noise Costs.............................            0.04            0.41            0.34            0.17           0.019           0.018           0.014
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Costs........................            0.59             590             530             350              27              28              29
Pre-tax Fuel Savings....................              94           1,000             840             420              46              44              34
EVSE Port Costs.........................             8.6             190             160              96               9             8.8             7.9
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Fuel Savings less EVSE Port                86             820             680             330              37              35              26
     Costs..............................
Drive Value Benefits....................             4.7              46              38              18             2.1               2             1.5
Refueling Time Benefits.................            -1.7             -17             -15            -7.5            -0.8           -0.76           -0.61
Energy Security Benefits................             4.1              47              39              20             2.1               2             1.6
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Non-Emission Benefits........               7              75              62              30             3.4             3.2             2.5
Climate Benefits, 2% Near-term Ramsey...             150           1,600           1,600           1,600              72              72              72
PM2.5 Health Benefits...................              25             240             200              88              13              10             7.2
                                         ---------------------------------------------------------------------------------------------------------------
    Sum of Emission Benefits............             170           1,800           1,800           1,700              85              83              80
        Net Benefits....................             270           2,100           2,000           1,700              99              94              80
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Net benefits are emission benefits, non-emission benefits, and fuel savings (less EVSE port costs) minus the costs of the program. Values rounded to
  two significant figures; totals may not sum due to rounding. Present and annualized values are based on the stream of annual calendar year costs and
  benefits included in the analysis (2027--2055) and discounted back to year 2027. Climate benefits are based on reductions in GHG emissions and are
  calculated using three different SC-GHG estimates that assume either a 1.5 percent, 2.0 percent, or 2.5 percent near-term Ramsey discount rate. See
  EPA's Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances (EPA, 2023). For presentational purposes in
  this table, we use the climate benefits associated with the SC-GHG under the 2-percent near-term Ramsey discount rate. See section VIII.E of this
  preamble for the full range of monetized climate benefit estimates. All other costs and benefits are discounted using either a 2-percent, 3-percent,
  or 7-percent constant discount rate. For further discussion of the SC-GHGs and how EPA accounted for these estimates, please refer to section VIII.E
  of this preamble and Chapter 6.2 of the RIA.
\b\ To calculate net benefits, we use the monetized suite of total avoided PM2.5-related health effects that includes avoided deaths based on the Pope
  III et al., 2019 study, which is the larger of the two PM2.5 health benefits estimates presented in section VIII.F of this preamble.
\c\ The annual PM2.5 health benefits estimate presented in the CY 2055 column reflects the value of certain avoided health outcomes, such as avoided
  deaths, that are expected to accrue over more than a single year discounted using a 3-percent discount rate.
\d\ We do not currently have year-over-year estimates of PM2.5 benefits that discount such annual health outcomes using a 2-percent discount rate. We
  have therefore discounted the annual stream of health benefits that reflect a 3-percent discount rate lag adjustment using a 2-percent discount rate
  to populate the PV, 2 percent and AV, 2 percent columns. The annual stream of PM2.5-related health benefits that reflect a 3-percent and 7-percent
  discount rate lag adjustment were used to populate the PV/AV 3 percent and PV/AV 7 percent columns, respectively. See section VIII.F of this preamble
  for more details on the annual stream of PM2.5-related benefits associated with this rule.


[[Page 28108]]

B. Vehicle Technology and Other Costs

    Table 212 shows the estimated annual costs of the program for the 
indicated calendar years (CY). The table also shows the present-values 
(PV) of those costs and the annualized values (AV) for the calendar 
years 2027-2055 using 2, 3 and 7 percent discount rates.\1362\
---------------------------------------------------------------------------

    \1362\ For the estimation of the stream of costs and benefits, 
we assume that the MY 2032 standards apply to each year thereafter.

                                                     Table 212--Costs Associated With the Final Rule
                                                               [Billions of 2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                              Vehicle
              Calendar year                 technology       Insurance     Repair costs     Maintenance     Congestion      Noise costs    Sum of costs
                                               costs           costs                           costs           costs
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027....................................            $2.6           $0.02          $0.027          $0.042         $0.0013       $0.000015            $2.7
2028....................................             7.3            0.06           0.081           0.096           0.027         0.00041             7.6
2029....................................              16            0.15            0.16           0.089            0.05         0.00077              17
2030....................................              23            0.27            0.26          -0.027           0.073          0.0011              24
2031....................................              29            0.41            0.35           -0.35           0.094          0.0015              29
2032....................................              30            0.55            0.38           -$0.9            0.11          0.0017              30
2035....................................              55             1.5             0.7            -3.3            0.59          0.0095              54
2040....................................              50             2.1           -0.81             -13             1.3           0.021              40
2045....................................              46             2.3            -3.4             -24             1.9            0.03              23
2050....................................              42             2.1            -5.7             -32             2.3           0.037             9.4
2055....................................              38             1.9            -7.1             -35             2.4            0.04            0.59
PV2.....................................             870              33             -40            -300              25            0.41             590
PV3.....................................             760              28             -32            -250              21            0.34             530
PV7.....................................             450              15             -12            -110              10            0.17             350
AV2.....................................              40             1.5            -1.8             -14             1.2           0.019              27
AV3.....................................              39             1.4            -1.6             -13             1.1           0.018              28
AV7.....................................              37             1.2           -0.99            -9.3            0.83           0.014              29
--------------------------------------------------------------------------------------------------------------------------------------------------------

1. Vehicle Technology Costs
    We expect the technology costs of the program will result in a rise 
in the average purchase price for consumers, for both new and used 
vehicles. While we expect that vehicle manufacturers may choose to 
strategically price vehicles (e.g., subsidizing a lower price for some 
vehicles with a higher price for others), we assume in our modeling 
that increased vehicle technology costs will fully impact purchase 
prices paid by consumers. The projected vehicle technology costs shown 
in Table 212 represent the incremental costs to manufacturers and, 
because we are presenting social costs, they exclude cost reductions 
available to manufacturers by the IRA battery tax credits (i.e., the 
IRC 45X credits). For consumers, projected vehicle technology costs are 
offset by savings in reduced operating costs, including fuel savings 
and reduced maintenance and repair costs, as discussed in section 
VIII.K of this preamble and in Chapter 4 of the RIA. Additionally, 
consumers may also benefit from IRA purchase incentives for PEVs.
    Our estimated incremental vehicle technology costs have increased 
since the NPRM, which we discuss at length throughout this preamble. 
The technology cost updates resulted in generally lower cost inputs but 
the magnitude of the changes were larger for ICE technologies than for 
HEV, PHEV and BEV technologies. As a result, the incremental costs of 
our Action scenarios compared to the No Action case have increased.
2. Insurance Costs
    Associated with the changing cost of vehicles will be a change in 
insurance paid by owners and drivers of those vehicles. We received 
comment that we should have included insurance costs in our analysis, 
and we agree that it is appropriate to do so. To estimate insurance 
costs, we made use of an analysis done by ANL which focused on 
insurance costs associated with comprehensive and collision 
coverage.\1363\ In that report, ANL presented the data shown in Table 
213 which is what we have used in OMEGA to estimate insurance costs.
---------------------------------------------------------------------------

    \1363\ ``Comprehensive Total Cost of Ownership Quantification 
for Vehicles with Different Size Classes and Powertrains, ANL/ESD-
21/4,'' Argonne National Laboratory, Energy Systems Division, April 
2021.

     Table 213--Annual Comprehensive and Collision Premium With $500
                      Deductible, 2019 Dollars \a\
------------------------------------------------------------------------
               Body style                ICE, HEV, PHEV, BEV powertrains
------------------------------------------------------------------------
Car....................................  (Vehicle value x 0.009 + $220)
                                          x 1.19.
CUV/SUV................................  (Vehicle value x 0.005 + $240)
                                          x 1.19.
Pickup.................................  (Vehicle value x 0.006 + $210)
                                          x 1.19.
------------------------------------------------------------------------
\a\ Vehicle value is calculated as the depreciated value of the vehicle
  as it ages.

    To estimate the vehicle value in calculating insurance costs, we 
used a 14.9 percent annual depreciation rate (see Chapter 4.3.6 of the 
RIA). That depreciation rate is applied to the estimated price of the 
vehicle when new, which we take to be the purchase price calculated 
within OMEGA taking into consideration cross-subsidies and any 
applicable battery tax credits or, in other words, the estimated price 
paid by the consumer prior to receiving a vehicle purchase tax credit.
    We did not estimate insurance costs in the NPRM, so these costs are 
new and represent increased costs relative to the proposal. As 
discussed, our estimated insurance rates differ slightly by body-style, 
but not by powertrain type. Note that insurance costs are calculated 
for all years of a vehicle's lifetime.
3. Maintenance and Repair Costs
    Maintenance and repair (M&R) are significant components of the cost 
of ownership for any vehicle. According to Edmunds, maintenance costs 
consist of two types of maintenance: scheduled and unscheduled. 
Scheduled maintenance is the performance of factory-recommended items 
at periodic mileage or calendar intervals. Unscheduled maintenance 
includes wheel alignment and the replacement of items subject to wear 
and usage such as the low-voltage battery, brakes, headlights, hoses, 
exhaust system parts,

[[Page 28109]]

taillight/turn signal bulbs, tires, and wiper blades/inserts.\1364\ 
Repairs, in contrast, are done to fix malfunctioning parts that inhibit 
the use of the vehicle. The differentiation between the items that are 
included in unscheduled maintenance versus repairs may be arbitrary, 
but the items considered repairs generally follow the systems that are 
covered in vehicle comprehensive (i.e., ``bumper-to-bumper'') 
warranties offered by automakers, which exclude common ``wear'' items 
like tires, brakes, and the low-voltage battery.\1365\
---------------------------------------------------------------------------

    \1364\ Edmunds, ``Edmunds.com/tco.html,'' Edmunds, [Online]. 
Available: Edmunds.com/tco.html. Accessed 24 February 2022.
    \1365\ D. Muller, ``Warranties Defined: The Truth behind the 
Promises,'' Car and Driver, 29 May 2017.
---------------------------------------------------------------------------

    We received comment that replacement of the high-voltage battery in 
PEVs should be considered as a maintenance and repair cost. EPA 
disagrees that high-voltage batteries will routinely need to be 
replaced in this way during the useful life of the vehicle. Based on 
current experience with vehicles in use in the field, and consultations 
on this topic that EPA has conducted with experts, stakeholders, and 
manufacturers, EPA finds no evidence that battery replacements out of 
warranty will typically be necessary for PEVs during their useful life, 
and therefore we do not include the cost of battery replacement in the 
cost of PEV maintenance and repair. We also note that the battery 
durability and warranty standards established in this rule provide 
greater assurance and transparency regarding battery performance and 
the conditions under which a warranty repair or replacement must be 
honored.
    To estimate maintenance and repair costs, we have used the data 
gathered and summarized by Argonne National Laboratory (ANL) in their 
evaluation of the total cost of ownership for vehicles of various sizes 
and powertrains.\1366\
---------------------------------------------------------------------------

    \1366\ ``Comprehensive Total Cost of Ownership Quantification 
for Vehicles with Different Size Classes and Powertrains, ANL/ESD-
21/4,'' Argonne National Laboratory, Energy Systems Division, April 
2021.
---------------------------------------------------------------------------

i. Maintenance Costs
    Maintenance costs are an important consideration in the full 
accounting of social benefits and costs and in a consumer's purchase 
decision process. In their study, ANL developed a generic maintenance 
service schedule for various powertrain types using owner's manuals 
from various vehicle makes and models, assuming that drivers would 
follow the recommended service intervals. After developing the 
maintenance schedules, the authors collected national average costs for 
each of the preventative and unscheduled services, noting several 
instances where differences in consumer characteristics and in vehicle 
attributes were likely important but not quantified/quantifiable.
    Using the schedules and costs developed by the ANL authors and 
presented in the RIA, OMEGA calculates the cumulative maintenance costs 
from mile zero through mile 225,000. Because maintenance costs 
typically increase over the life of the vehicle, we estimate 
maintenance and repair costs per mile at a constant slope with an 
intercept set to $0 per mile such that the cumulative costs per the 
maintenance schedule are reached at 225,000 miles. Following this 
approach, the maintenance cost per mile curves calculated within OMEGA 
are as shown in Figure 44.
[GRAPHIC] [TIFF OMITTED] TR18AP24.042

Figure 44: Maintenance Cost per Mile (2019 Dollars) at Various Odometer 
Readings

    Using these maintenance cost per mile curves, OMEGA then calculates 
the estimated maintenance costs in any given year of a vehicle's life 
based on the miles traveled in that year. Table 212 presents the 
maintenance costs (savings) associated with the final rule. For a more 
detailed discussion of maintenance costs, including costs associated 
with the alternative scenarios analyzed in support of this final rule, 
see RIA Chapter 4.
    Our maintenance savings are lower in the final analysis than in the 
NPRM. Because maintenance costs are estimated to depend on both 
powertrain type and miles driven, our incremental

[[Page 28110]]

maintenance costs are lower because the central case final analysis has 
slightly fewer BEVs and slightly more PHEVs and HEVs than the proposal, 
and because we have more rebound driving in the final analysis than in 
the NPRM for reasons discussed in Chapter 8.3 of the RIA.
ii. Repair Costs
    Repairs are done to fix malfunctioning parts that inhibit the use 
of the vehicle and are generally considered to address problems 
associated with parts or systems that are covered under typical 
manufacturer bumper-to-bumper type warranties. In the ANL study, the 
authors were able to develop a repair cost curve for a gasoline car and 
a series of scalers that could be applied to that curve to estimate 
repair costs for other powertrains and vehicle types.
    OMEGA makes use of ANL's cost curve and multipliers to estimate 
repair costs per mile at any age in a vehicle's life. Figure 45 
provides repair cost per mile for a $35,000 car, van/SUV, and pickup, 
and Figure 46 provides the same information for medium-duty vans and 
pickups.
[GRAPHIC] [TIFF OMITTED] TR18AP24.043

Figure 45: Repair Cost Per Mile (2019 Dollars) for a $35,000 Car, Van/
SUV, and Pickup With Various Powertrains by Vehicle Age in Years
[GRAPHIC] [TIFF OMITTED] TR18AP24.044

Figure 46: Repair Cost Per Mile (2019 Dollars) for a Medium-Duty Van 
and Pickup With Various Powertrains by Vehicle Age in Years

    Table 212 presents the repair costs associated with the final rule. 
A more detailed discussion of repair costs appears in RIA Chapter 4.
    Similar to maintenance savings, our incremental repair savings are 
lower in the final analysis compared to the NPRM but for slightly 
different reasons. Our estimated repair costs depend on body style, 
powertrain type and, importantly, estimated vehicle cost when new. 
While our final analysis has more pickups and SUVs than our proposal, 
which serves to reduce repair costs, our final analysis also has 
slightly fewer BEVs and more HEVs and PHEVs than in our NPRM which 
serves to increase costs. More importantly, our incremental vehicle 
costs are higher in the final analysis due in part to the updated 
technology costs as discussed in Chapters 2.5 and 2.6 of the RIA and 
because of inflationary effects on manufacturer suggested retail prices 
in our base year analysis fleet.
4. Congestion and Noise Costs
    Costs associated with congestion and noise can increase in the 
event that drivers with more efficient vehicles drive more than they 
otherwise would have. This can occur because more efficient vehicles 
have lower fuel costs per mile of driving which allows drivers to drive 
more miles while spending the same amount of money they spent while 
driving their old, less efficient vehicle. This is known as the 
``rebound effect.'' Delays associated with congestion impose higher 
costs on road users in the form of increased travel time and operating 
expenses. Likewise, vehicles driving more miles on roadways leads to 
more road noise from tires, wind, engines, and motors.
    As in past rulemakings (i.e., GHG 2010, 2012, and 2021), EPA relies 
on estimates of congestion and noise costs developed by the Federal 
Highway Administration's (FHWA's), specifically the ``Middle'' 
estimates for marginal congestion and noise costs, to estimate the 
increased external costs caused by added driving due to the rebound 
effect. FHWA's congestion and noise cost estimates focus on freeways. 
EPA, however, applies the congestion cost to all vehicle miles, freeway 
and non-freeway and including rebound miles to ensure that these costs 
are not underestimated. Table 214 shows the values used as inputs to 
OMEGA and

[[Page 28111]]

adjusted within the model to the dollar basis used in the analysis.

                              Table 214--Costs Associated With Congestion and Noise
                                         [2018 Dollars per vehicle mile]
----------------------------------------------------------------------------------------------------------------
                                                               Sedans/wagons     CUVs/SUVs/vans       Pickups
----------------------------------------------------------------------------------------------------------------
Congestion..................................................           0.0634             0.0634          0.0566
Noise.......................................................           0.0009             0.0009          0.0009
----------------------------------------------------------------------------------------------------------------

    Both incremental congestion and noise costs are higher in our final 
analysis than our NPRM due to the additional rebound miles estimated in 
the final analysis which uses the same rebound rates as in the NPRM but 
with an updated methodology to more appropriately account for PHEVs 
(See Chapter 8.3 of the RIA).

C. Fueling Impacts

1. Fuel Savings
    The final standards are projected to reduce liquid fuel consumption 
(gasoline and diesel) while simultaneously increasing electricity 
consumption. The net effect of these changes in consumption for 
consumers is decreased fuel expenditures or fuel savings. For more 
information regarding fuel consumption, including other considerations 
like rebound driving, see RIA Chapter 4.
    Fuel savings arise from reduced expenditures on liquid fuel due to 
reduced consumption of those fuels. Electricity consumption is expected 
to increase, with a corresponding increase in expenditures on 
electricity, due to electric vehicles replacing liquid-fueled vehicles. 
We describe how we calculate reduced fuel consumption and increased 
electricity consumption in Chapter 8 of the RIA. Table 215 presents 
liquid-fuel and electricity consumption impacts.

            Table 215--Liquid-Fuel and Electricity Consumption Impacts Associated With the Final Rule
----------------------------------------------------------------------------------------------------------------
                                                                     Gasoline         Diesel
                          Calendar year                              (billion        (billion       Electricity
                                                                     gallons)        gallons)      (billion kWh)
----------------------------------------------------------------------------------------------------------------
2027............................................................          -0.068         -0.0025            0.94
2028............................................................           -0.47         -0.0043             4.1
2029............................................................            -1.4           -0.03              13
2030............................................................            -2.9          -0.097              27
2031............................................................            -4.8           -0.17              47
2032............................................................            -6.9           -0.27              67
2035............................................................             -16           -0.54             150
2040............................................................             -29            -0.8             260
2045............................................................             -38           -0.99             330
2050............................................................             -41            -1.1             350
2055............................................................             -42            -1.3             360
                                                                 -----------------------------------------------
    sum.........................................................            -760             -21           6,700
----------------------------------------------------------------------------------------------------------------

    Table 216 presents the retail fuel savings, net of savings in 
liquid fuel expenditures and increases in electricity expenditures. 
These represent savings that consumers would realize. The table also 
presents the pretax fuel savings, net of savings in liquid fuel 
expenditures and increases in electricity expenditures. These represent 
the savings included in the net benefit calculation since fuel taxes do 
not contribute to the value of the fuel. We present fuel tax impacts 
along with other transfers in section VIII.G of this preamble.

                                                 Table 216--Fuel Savings Associated With the Final Rule
                                                             [Billions of 2022 dollars] \a\
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                          Gasoline                   Diesel                  Electricity                   Sum
                  Calendar year                  -------------------------------------------------------------------------------------------------------
                                                     Retail       Pretax       Retail       Pretax       Retail       Pretax       Retail       Pretax
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027............................................        $0.18        $0.14      $0.0092      $0.0079       $0.021        $0.02        $0.21        $0.17
2028............................................          1.4          1.1        0.016        0.013        -0.26        -0.24          1.1         0.89
2029............................................          4.3          3.5         0.11        0.095         -1.2         -1.1          3.2          2.5
2030............................................          8.5          7.1         0.35          0.3         -2.6         -2.5          6.3          4.9
2031............................................           14           12         0.61         0.52         -4.5         -4.3           10          7.9
2032............................................           20           17            1         0.86         -6.8         -6.4           14           11
2035............................................           47           39            2          1.7          -14          -13           35           28
2040............................................           85           72            3          2.6          -22          -21           66           53
2045............................................          110           94          3.8          3.3          -27          -26           87           71
2050............................................          130          110          4.5          3.9          -28          -27          100           86
2055............................................          140          120          4.9          4.3          -29          -27          110           94
PV2.............................................        1,600        1,300           57           49         -380         -360        1,200        1,000

[[Page 28112]]

 
PV3.............................................        1,300        1,100           47           41         -320         -300        1,000          840
PV7.............................................          660          560           24           21         -170         -160          520          420
AV2.............................................           72           61          2.6          2.3          -18          -17           57           46
AV3.............................................           68           58          2.5          2.2          -17          -16           54           44
AV7.............................................           54           46            2          1.7          -14          -13           42           34
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Positive values represent monetary savings while negative values represent increased costs.

    Our incremental retail fuel savings in the final analysis are lower 
than those estimated in the NPRM due to the lower share of BEVs in the 
vehicle stock (roughly 42 percent in 2055 versus nearly 50 percent in 
the NPRM).
2. EVSE Costs
    Another fueling impact included in the net benefits calculation is 
the EVSE costs discussed in section IV.C of this preamble and in 
Chapter 5 of the RIA. We present our estimated EVSE costs in Table 217. 
Note that the costs shown in Table 217 represent costs associated with 
the EVSE ports themselves and not the electricity delivered by them. 
Those electricity costs are included in Table 216.

          Table 217--EVSE Costs Associated With the Final Rule
                     [Billions of 2022 dollars] \a\
------------------------------------------------------------------------
                      Calendar year                         EVSE costs
------------------------------------------------------------------------
2027....................................................            $1.3
2028....................................................            0.55
2029....................................................             2.3
2030....................................................             2.3
2031....................................................              10
2032....................................................              10
2035....................................................              10
2040....................................................               9
2045....................................................              12
2050....................................................              13
2055....................................................             8.6
PV2.....................................................             190
PV3.....................................................             160
PV7.....................................................              96
AV2.....................................................               9
AV3.....................................................             8.8
AV7.....................................................             7.9
------------------------------------------------------------------------
\a\ Positive values represent costs.

D. Non-Emission Benefits

    Table 218 presents the estimated benefits that are not a direct 
result of emission inventory changes. Those benefits include the drive 
value, reductions in refueling time, and energy security. As shown in 
the table, the refueling time benefits are negative, meaning they are 
disbenefits. This benefit category in past rules has primarily 
represented reduced time spent on refueling due to improved vehicle 
efficiency. However, in this rule we're also including an estimate of 
mid-trip charging for BEVs, which includes increased time for refueling 
compared to ICE vehicles, resulting in more refueling time overall 
under the final standards and, therefore, a disbenefit.

                         Table 218--Non-Emission Benefits Associated With the Final Rule
                                         [Billions of 2022 dollars] \a\
----------------------------------------------------------------------------------------------------------------
                                                 Drive value   Refueling time   Energy security
                Calendar year                     benefits         benefits         benefits            Sum
----------------------------------------------------------------------------------------------------------------
2027.........................................          $0.002         $0.0022            $0.0047         $0.0089
2028.........................................           0.042           0.026              0.032             0.1
2029.........................................           0.081          -0.012                0.1            0.17
2030.........................................            0.12           -0.11               0.21            0.22
2031.........................................            0.16           -0.27               0.36            0.26
2032.........................................             0.2           -0.47               0.53            0.26
2035.........................................               1           -0.59                1.3             1.7
2040.........................................             2.3           -0.86                2.5             3.9
2045.........................................             3.3            -1.1                3.4             5.6
2050.........................................             4.2            -1.4                  4             6.8
2055.........................................             4.7            -1.7                4.1               7
PV2..........................................              46             -17                 47              75
PV3..........................................              38             -15                 39              62
PV7..........................................              18            -7.5                 20              30
AV2..........................................             2.1            -0.8                2.1             3.4
AV3..........................................               2           -0.76                  2             3.2
AV7..........................................             1.5           -0.61                1.6             2.5
----------------------------------------------------------------------------------------------------------------
\a\ Negative values represent disbenefits.

1. Drive Value
    Mentioned briefly above and discussed in greater detail in Chapter 
4 of the RIA, the rebound effect might occur when an increase in 
vehicle efficiency makes it possible for people to choose to drive more 
without spending more because of the lower cost per mile of driving. 
Additional driving can lead to costs and benefits that can be 
monetized. See RIA Chapter 4 for a discussion of our estimates of the 
rebound effect. In this section, we take the size of the rebound 
effect, as discussed in the RIA, and highlight the costs and benefits 
associated with additional driving.

[[Page 28113]]

    The increase in travel associated with the rebound effect produces 
social and economic opportunities that become accessible with 
additional travel. We estimate the economic benefits from increased 
rebound-effect driving as the sum of the fuel costs paid to drive those 
miles and the owner/operator surplus from the additional accessibility 
that driving provides. These benefits are known as the drive value and 
appear in Table 218.
    The economic value of the increased owner/operator surplus provided 
by additional driving is estimated as one half of the product of the 
fuel savings per mile and rebound miles.\1367\ Because fuel savings 
differ among vehicles in response to standards, the value of benefits 
from increased vehicle use differs by model year and varies across our 
sensitivity cases and alternative standards considered.
---------------------------------------------------------------------------

    \1367\ The fuel costs of the rebound miles driven are simply the 
number of rebound miles multiplied by the cost per mile of driving 
them.
---------------------------------------------------------------------------

    Our incremental drive value benefits are higher in the final 
analysis than the NPRM due entirely to revised estimation of rebound 
miles used for the final analysis and as discussed in Chapter 8.3 of 
the RIA. As noted in section VIII.B.4 of the preamble the change in 
rebound miles between the final analysis and the NPRM is the result of 
our improved calculation approach within OMEGA and not the result of 
any changes to the elasticity parameter used in calculating rebound.
2. Refueling Time
    In our analyses, we take into account refueling differences among 
liquid fuel vehicles, BEVs, and PHEVs. Provided fuel tanks on liquid 
fueled vehicles retain their capacity, lower fuel consumption is 
expected to reduce the frequency of refueling events and therefore 
reduce the time spent refueling resulting from less time spent seeking 
a refueling opportunity. OEMs may also elect to package smaller fuel 
tanks, leveraging lower fuel consumption to meet vehicle range, which 
would maintain fueling frequency but decrease the time spent refueling 
since it takes less time to fill a smaller fuel tank. Consistent with 
past analyses, we have estimated the former of these possibilities with 
respect to liquid fueled vehicles.
    Electric vehicles are fueled via charging events. Many charging 
events are expected to occur at an owner's residence via a personally 
owned charge point or during work hours using an employer owned charge 
point, both of which impose very little time burden on the driver. 
However, charging events will also occur in public places where the 
burden on the driver's time may be relatively long (e.g., when drivers 
are in the midst of an extended road trip). Thus, liquid fueling events 
and mid-trip charging events are the focus of our refueling time 
analysis. See RIA Chapter 4 for a more detailed discussion of this 
analysis.
    The estimated incremental refueling time disbenefits are lower in 
the final analysis than the NPRM due largely to the updated number of 
miles per hour of mid-trip charging where the NPRM used a value of 100 
miles per hour of charging and the final analysis uses a value of 400 
miles per hour of charging. We discuss this change in more detail in 
Chapter 4.3 of the RIA.
3. Energy Security Impacts
    In this section, we evaluate the energy security impacts of the 
final standards. Energy security is broadly defined as the 
uninterrupted availability of energy sources at affordable 
prices.\1368\ Energy independence and energy security are distinct but 
related concepts, and an analysis of energy independence informs our 
assessment of energy security. The goal of U.S. energy independence is 
the elimination of all U.S. imports of petroleum and other foreign 
sources of energy, but more broadly, it is the elimination of U.S. 
sensitivity to variations in the price and supply of foreign sources of 
energy.\1369\ Promoting energy independence and security through 
reducing demand for refined petroleum use by motor vehicles has long 
been a goal of both Congress and the Executive Branch because of both 
the economic and national security benefits of reduced dependence on 
imported oil, and was an important reason for amendments to the Clean 
Air Act in 1990, 2005, and 2007.\1370\ See Chapter 10 of the RIA for a 
more detailed assessment of energy security and energy independence 
impacts of this final rule. See section IV.C.7.iii of this preamble and 
Chapter 3 of the RIA for a discussion of critical materials and PEV 
supply chains.
---------------------------------------------------------------------------

    \1368\ IEA, Energy Security: ensuring the uninterrupted 
availability of energy sources at an affordable price. 2019. 
December.
    \1369\ Greene, D. 2010. Measuring energy security: Can the 
United States achieve oil independence? Energy Policy. 38. pp. 1614-
1621.
    \1370\ See e.g., 136 Cong. Rec. 11989 (May 23, 1990) (Rep. 
Waxman stating that clean fuel vehicles program is ``tremendously 
significant as well for our national security. We are overly 
dependent on oil as a monopoly; we need to run our cars on 
alternative fuels.''); Remarks by President George W. Bush upon 
signing Energy Policy Act of 2005, 2005 U.S.C.C.A.N. S19, 2005 WL 
3693179 (``It's an economic bill, but as [Sen. Pete Domenici] 
mentioned, it's also a national security bill. . . . Energy 
conservation is more than a private virtue; it's a public virtue''); 
Energy Independence and Security Act, Public Law 110-140, section 
806 (finding ``the production of transportation fuels from renewable 
energy would help the United States meet rapidly growing domestic 
and global energy demands, reduce the dependence of the United 
States on energy imported from volatile regions of the world that 
are politically unstable, stabilize the cost and availability of 
energy, and safeguard the economy and security of the United 
States''); Statement by George W. Bush upon signing, 2007 
U.S.C.C.A.N. S25, 2007 WL 4984165 ``One of the most serious long-
term challenges facing our country is dependence on oil--especially 
oil from foreign lands. It's a serious challenge. . . . Because this 
dependence harms us economically through high and volatile prices at 
the gas pump; dependence creates pollution and contributes to 
greenhouse gas admissions [sic]. It threatens our national security 
by making us vulnerable to hostile regimes in unstable regions of 
the world. It makes us vulnerable to terrorists who might attack oil 
infrastructure.''
---------------------------------------------------------------------------

    The U.S.'s oil consumption had been gradually increasing in recent 
years (2015-2019) before the COVID-19 pandemic in 2020 dramatically 
decreased U.S. and global oil consumption.\1371\ By July 2021, U.S. oil 
consumption had returned to pre-pandemic levels and has remained fairly 
stable since then.\1372\ The U.S. has increased its production of oil, 
particularly ``tight'' (i.e., shale) oil, over the last decade.\1373\ 
As a result of the recent increase in U.S. oil production, the U.S. 
became a net exporter of crude oil and refined petroleum products in 
2020 and is projected to be a net exporter of crude oil and refined 
petroleum products for the foreseeable future.\1374\ This is a 
significant reversal of the U.S.'s net export position since the U.S. 
has been a substantial net importer of crude oil and refined petroleum 
products starting in the early 1950s.\1375\
---------------------------------------------------------------------------

    \1371\ EIA. Monthly Energy Review. Table 3.1. Petroleum 
Overview. December 2022.
    \1372\ Ibid.
    \1373\ Ibid.
    \1374\ EIA. Annual Energy Outlook 2023. Table A11: Petroleum and 
Other Liquid Supply and Disposition (Reference Case). 2022.
    \1375\ U.S. EIA. Oil and Petroleum Products Explained. November 
2, 2022.
---------------------------------------------------------------------------

    Oil is a commodity that is globally traded and, as a result, an oil 
price shock is transmitted globally. Given that the U.S. is projected 
to be a net exporter of crude oil and refined petroleum products for 
the time frame of this analysis (2027-2055), one could reason that the 
U.S. no longer has a significant energy security problem. However, U.S. 
refineries still rely on significant imports of heavy crude oil which 
could be subject to supply disruptions. Also, oil exporters with a 
large share of global production have the ability to raise or lower the 
price of oil by exerting the market power associated with the

[[Page 28114]]

Organization of Petroleum Exporting Countries (OPEC) to alter oil 
supply relative to demand. These factors contribute to the 
vulnerability of the U.S. economy to episodic oil supply shocks and 
price spikes, even when the U.S. is projected to be an overall net 
exporter of crude oil and refined products.
    We anticipate that U.S. consumption and net imports of petroleum 
will be reduced as a result of this final rule, both from an increase 
in fuel efficiency of light- and medium-duty vehicles using petroleum-
based fuels and from the greater use of PEVs which are fueled with 
electricity. A reduction of U.S. net petroleum imports reduces both the 
financial and strategic risks caused by potential sudden disruptions in 
the supply of petroleum to the U.S. and global market, thus increasing 
U.S. energy security. Table 219 presents the impacts on U.S. imports of 
oil for selected years for the final rule. For EPA's assessment of the 
U.S. oil impacts of a more stringent and a less stringent alternative 
standard, see the Chapter 8 of the RIA.

  Table 219--U.S. Oil Import Impacts for Selected Years Associated With
               the Final Rule, Light-Duty and Medium-Duty
     [Million barrels of imported oil per day in the given year] \a\
------------------------------------------------------------------------
                                                     U.S. oil import
                 Calendar year                     impacts, final rule
------------------------------------------------------------------------
2027...........................................                  -0.0035
2030...........................................                    -0.15
2032...........................................                    -0.36
2040...........................................                     -1.5
2050...........................................                     -2.1
2055...........................................                     -2.1
------------------------------------------------------------------------
\a\ Negative values represent reduced imports.

    It is anticipated that vehicle manufacturers will choose to comply 
with the final standards in part with an increased penetration of PEVs. 
Compared to the use of petroleum-based fuels to power vehicles, 
electricity used in PEVs is anticipated to be generally more affordable 
and more stable in its price, i.e., have less price volatility. See 
Chapter 10 of the RIA for an analysis of PEV affordability and 
electricity price stability compared to gasoline prices. Thus, the 
greater use of electricity for PEVs is anticipated to improve the 
U.S.'s overall energy security position. Also, since the electricity to 
power PEVs will likely be almost exclusively produced in the U.S., this 
final rule will move the U.S. towards the goal of energy independence. 
See Chapter 10 of the RIA for more discussion of how the final rule 
moves the U.S. to the goal of energy independence.
    Several commenters claimed that the proposal would improve the 
U.S.'s energy security and independence position by increasing the 
wider use of electric vehicles. We agree with these commenters that the 
wider use of electricity in light- and medium-duty PEVs will improve 
the U.S.'s energy security and energy independence position. We respond 
to these comments in more detail in section 21 of the RTC document.
    In order to understand the energy security implications of reducing 
U.S. oil imports, EPA has worked with Oak Ridge National Laboratory 
(ORNL), which has developed approaches for evaluating the social costs 
and energy security implications of oil use. When conducting this 
analysis, ORNL estimates the risk of reductions in U.S. economic output 
and disruption to the U.S. economy caused by sudden disruptions in 
world oil supply and associated price shocks (i.e., labeled the avoided 
macroeconomic disruption/adjustment costs). These risks are quantified 
as ``macroeconomic oil security premiums'', i.e., the extra costs of 
using oil besides its market price.
    One commenter supported the use of the ORNL energy security 
methodology being used by EPA to estimate the oil security premiums in 
the proposed LMDV rule. Another commenter raised concerns that the ORNL 
oil security premium estimates that EPA is using in this proposed LMDV 
GHG rule are too high. This commenter claimed that the energy security 
methodology developed by ORNL is outdated and is no longer applicable 
to the current structure of global oil markets. In response, EPA notes 
that the ORNL model is continually updated to the current structure of 
global oil markets. Also, EPA and ORNL have worked together to revise 
the macroeconomic oil security premiums based upon the recent energy 
security literature. Based on the above, EPA concludes that the 
macroeconomic oil security premiums used in this final rulemaking are 
reasonable. We respond to these comments in more detail in the RTC 
document (see RTC section 21).
    For this final rule, EPA is using macroeconomic oil security 
premiums estimated using ORNL's methodology, which incorporates updated 
oil price projections and energy market and economic trends from the 
U.S. Department of Energy's Energy Information Administration's (EIA) 
Annual Energy Outlook (AEO) 2023. To calculate the macroeconomic oil 
security benefits of this final rule, EPA is using the ORNL 
macroeconomic oil security premium methodology with: (1) estimated oil 
savings calculated by EPA and (2) an oil import reduction factor of 
94.8 percent, which reflects our estimate of how much changes in U.S. 
oil consumption anticipated under the final standards will be reflected 
in changes in U.S. net oil imports. Based upon comments EPA received on 
this proposal and in consultation with DOE and NHTSA, the oil import 
reduction factor is being updated for this final rule to be consistent 
with revised estimates that U.S. refineries will operate at higher 
production levels than EPA estimated in the proposed rule. See Chapter 
8 of the RIA and section 12 of the RTC document for more discussion of 
how EPA is updating its refinery throughput assumptions and, in turn, 
air quality impacts from refinery emissions, as a result of this rule. 
See Chapter 10 of the RIA and section 21 of the RTC document for EPA's 
discussion of how EPA is updating the oil import reduction factor to be 
consistent with new estimates of refinery throughput for this final 
rule. Below EPA presents macroeconomic oil security premiums for 
selected years being used for the final standards in Table 220. The 
energy security benefits for selected years for this final rule are 
presented in Table 218 and Table 9-7 in Chapter 9 of the RIA. For EPA's 
assessment of the energy security benefits of a more and a less

[[Page 28115]]

stringent alternative for this final rule, see the Chapter 9.6 of the 
RIA.

  Table 220--Macroeconomic Oil Security Premiums for Selected Years for
                             This Final Rule
                           [2022$/barrel] \a\
------------------------------------------------------------------------
                                                      Macroeconomic oil
                   Calendar year                      security premiums
                                                           (range)
------------------------------------------------------------------------
2027...............................................  $3.73 ($0.51-$7.02)
2030...............................................     3.92 (0.51-7.46)
2032...............................................     4.05 (0.53-7.77)
2040...............................................     4.62 (0.65-8.85)
2050...............................................     5.22 (0.91-9.89)
2055 \b\...........................................     5.22 (0.91-9.89)
------------------------------------------------------------------------
\a\ Top values in each cell are the mid-points; the values in
  parentheses are the 90 percent confidence intervals.
\b\ Annual oil security premia are estimated using data from Annual
  Energy Outlook projections, which are only available through 2050. For
  the years 2051 through 2055 we use the 2050 premium estimates as a
  proxy.

    Some commenters suggested that the proposal would reduce the demand 
for renewable fuels since the proposal focused on the promotion of the 
wider use of PEVs. These commenters asserted that EPA should instead 
focus upon achieving U.S. energy security and energy independence 
objectives by increasing the use of flexible-fueled vehicles/higher 
ethanol blends and the greater use of renewable fuels (e.g., renewable 
diesel). Further, one commenter claimed that the proposed rule was at 
odds with the Congressional intent of the Renewable Fuel Standard 
Program (RFS) of mandating renewable fuels to achieve energy security/
energy independence objectives. EPA agrees with the commenters that the 
increased use of renewable fuels in the U.S. transportation sector will 
improve the U.S.'s energy security/energy independence position. EPA 
addresses the issue of the role that renewable fuels can play in 
reducing GHG emissions in the U.S. transportation sector in the 
recently finalized RFS Set rule. On June 21, 2023, EPA announced a 
final rule to establish renewable fuel volume requirements and 
associated percentage standards for cellulosic biofuel, biomass-based 
diesel, advanced biofuels, and total renewable fuel for the 2023-2025 
timeframe.\1376\ The recently finalized RFS Set Rule and this final 
rule are complimentary in achieving GHG reductions in the U.S. 
transportation sector. We respond to these comments in more detail in 
the RTC document (see RTC section 21).
---------------------------------------------------------------------------

    \1376\ Renewable Fuel Standard (RFS) Program: Standards for 
2023-2025 and Other Changes. Federal Register/Vol. 88, No. 132/
Wednesday, July 12, 2023.
---------------------------------------------------------------------------

    Many commenters asserted that while EPA focuses on the energy 
security benefits of reduced dependence on U.S. oil imports, EPA fails 
to address the energy security threats of the U.S.'s increasing 
dependence on imports of minerals and PEV battery supply chains as a 
result of this rule. For this rule, EPA distinguishes between energy 
security, mineral/metal security and security issues associated with 
the importation of PEV batteries and component parts. Since energy 
security, metal/mineral security and issues associated with the 
importation of PEV batteries and various components are distinct issues 
in terms of their characteristics and potential impacts, EPA separates 
these types of security issues in this rulemaking. We address energy 
security issues associated with this final rule in section 21 of the 
RTC document. Comments associated with wider use of PEVs impacts on the 
U.S.'s mineral/metal security and security issues associated with the 
importation of PEV batteries and their component parts are addressed in 
separate EPA responses in this rule's RTC document (see RTC section 
15).
    In light of the public comments and consideration of the 
information in the public record, it continues to be our assessment 
that the energy security benefits of the final standards are 
substantial and, as discussed in section IV.C.7.iii of this preamble, 
we do not find that compliance with the standards will lead to a long-
term dependence on foreign imports of critical minerals or components 
that would adversely impact national security.

E. Greenhouse Gas Emission Reduction Benefits

1. Climate Benefits
    EPA estimates the climate benefits of GHG emissions reductions 
expected from the final rule using estimates of the social cost of 
greenhouse gases (SC-GHG) that reflect recent advances in the 
scientific literature on climate change and its economic impacts and 
incorporate recommendations made by the National Academies of Science, 
Engineering, and Medicine.\1377\ EPA published and used these estimates 
in the RIA for the Final Oil and Gas NSPS/EG Rulemaking, ``Standards of 
Performance for New, Reconstructed, and Modified Sources and Emissions 
Guidelines for Existing Sources: Oil and Natural Gas Sector Climate 
Review'', which was signed by the EPA Administrator on December 2nd, 
2023.\1378\ EPA solicited public comment on the methodology and use of 
these estimates in the RIA for the agency's December 2022 Oil and Gas 
NSPS/EG Supplemental Proposal and has conducted an external peer review 
of these estimates, as described further below. Chapter 9.4 of the RIA 
lays out the details of the updated SC-GHG used within this final rule.
---------------------------------------------------------------------------

    \1377\ National Academies of Sciences, Engineering, and Medicine 
(National Academies). 2017. Valuing Climate Damages: Updating 
Estimation of the Social Cost of Carbon Dioxide. National Academies 
Press.
    \1378\ U.S. EPA. (2023f). Supplementary Material for the 
Regulatory Impact Analysis for the Final Rulemaking, ``Standards of 
Performance for New, Reconstructed, and Modified Sources and 
Emissions Guidelines for Existing Sources: Oil and Natural Gas 
Sector Climate Review'': EPA Report on the Social Cost of Greenhouse 
Gases: Estimates Incorporating Recent Scientific Advances. 
Washington, DC: U.S. EPA.
---------------------------------------------------------------------------

    The SC-GHG is the monetary value of the net harm to society 
associated with a marginal increase in GHG emissions in a given year, 
or the benefit of avoiding that increase. In principle, SC-GHG includes 
the value of all climate change impacts (both negative and positive), 
including (but not limited to) changes in net agricultural 
productivity, human health effects, property damage from increased 
flood risk and natural disasters, disruption of energy systems, risk of 
conflict, environmental migration, and the value of ecosystem

[[Page 28116]]

services. The SC-GHG, therefore, reflects the societal value of 
reducing emissions of the gas in question by one metric ton and is the 
theoretically appropriate value to use in conducting benefit-cost 
analyses of policies that affect GHG emissions. In practice, data and 
modeling limitations restrain the ability of SC-GHG estimates to 
include all physical, ecological, and economic impacts of climate 
change, implicitly assigning a value of zero to the omitted climate 
damages. The estimates are, therefore, a partial accounting of climate 
change impacts and likely underestimate the marginal benefits of 
abatement.
    Since 2008, EPA has used estimates of the social cost of various 
greenhouse gases (i.e., SC-CO2, SC-CH4, and SC-
N2O), collectively referred to as the SC-GHG, in analyses of 
actions that affect GHG emissions. The values used by EPA from 2009 to 
2016 and since 2021--including in the proposal for this rulemaking--
have been consistent with those developed and recommended by the IWG on 
the SC-GHG; and the values used from 2017 to 2020 were consistent with 
those required by Executive Order (E.O.) 13783, which disbanded the 
IWG. During 2015-2017, the National Academies conducted a comprehensive 
review of the SC-CO2 and issued a final report in 2017 
recommending specific criteria for future updates to the SC-
CO2 estimates, a modeling framework to satisfy the specified 
criteria, and both near-term updates and longer-term research needs 
pertaining to various components of the estimation process (National 
Academies, 2017). The IWG was reconstituted in 2021 and E.O. 13990 
directed it to develop a comprehensive update of its SC-GHG estimates, 
recommendations regarding areas of decision-making to which SC-GHG 
should be applied, and a standardized review and updating process to 
ensure that the recommended estimates continue to be based on the best 
available economics and science going forward.
    EPA is a member of the IWG and is participating in the IWG's work 
under E.O. 13990. As noted in previous EPA RIAs--including in the 
proposal RIA for this rulemaking-, while that process continues, EPA is 
continuously reviewing developments in the scientific literature on the 
SC-GHG, including more robust methodologies for estimating damages from 
emissions, and looking for opportunities to further improve SC-GHG 
estimation. In the December 2022 Oil and Gas Supplemental Proposal 
RIA,\1379\ the Agency included a sensitivity analysis of the climate 
benefits of that rule using a new set of SC-GHG estimates that 
incorporates recent research addressing recommendations of the National 
Academies \1380\ in addition to using the interim SC-GHG estimates 
presented in the Technical Support Document: Social Cost of Carbon, 
Methane, and Nitrous Oxide Interim Estimates under Executive Order 
13990 \1381\ that the IWG recommended for use until updated estimates 
that address the National Academies' recommendations are available.
---------------------------------------------------------------------------

    \1379\ U.S. EPA. (2023). Supplementary Material for the 
Regulatory Impact Analysis for the Final Rulemaking, ``Standards of 
Performance for New, Reconstructed, and Modified Sources and 
Emissions Guidelines for Existing Sources: Oil and Natural Gas 
Sector Climate Review'': EPA Report on the Social Cost of Greenhouse 
Gases: Estimates Incorporating Recent Scientific Advances. 
Washington, DC: U.S. EPA.
    \1380\ Ibid.
    \1381\ Interagency Working Group on Social Cost of Carbon (IWG). 
2021 (February). Technical Support Document: Social Cost of Carbon, 
Methane, and Nitrous Oxide: Interim Estimates under Executive Order 
13990. United States Government.
---------------------------------------------------------------------------

    EPA solicited public comment on the sensitivity analysis and the 
accompanying draft technical report, External Review Draft of Report on 
the Social Cost of Greenhouse Gases: Estimates Incorporating Recent 
Scientific Advances, which explains the methodology underlying the new 
set of estimates and was included as supplementary material to the RIA 
for the December 2022 Supplemental Oil and Gas Proposal.\1382\ The 
response to comments document can be found in the docket for that 
action.\1383\
---------------------------------------------------------------------------

    \1382\ https://www.epa.gov/environmental-economics/scghg-tsd-peer-review.
    \1383\ Supplementary Material for the Regulatory Impact Analysis 
for the Final Rulemaking, ``Standards of Performance for New, 
Reconstructed, and Modified Sources and Emissions Guidelines for 
Existing Sources: Oil and Natural Gas Sector Climate Review'', EPA 
Report on the Social Cost of Greenhouse Gases: Estimates 
Incorporating Recent Scientific Advances, Docket ID No. EPA-HQ-OAR-
2021-0317, November 2023.
---------------------------------------------------------------------------

    As we noted in the light- and medium-duty vehicle NPRM, to ensure 
that the methodological updates adopted in the technical report are 
consistent with economic theory and reflect the latest science, EPA 
also initiated an external peer review panel to conduct a high-quality 
review of the technical report (see 88 FR 29372, noting this peer 
review process was ongoing at the time of our proposal); this peer 
review was completed in May 2023. The peer reviewers commended the 
agency on its development of the draft update, calling it a much-needed 
improvement in estimating the SC-GHG and a significant step towards 
addressing the National Academies' recommendations with defensible 
modeling choices based on current science. The peer reviewers provided 
numerous recommendations for refining the presentation and for future 
modeling improvements, especially with respect to climate change 
impacts and associated damages that are not currently included in the 
analysis. Additional discussion of omitted impacts and other updates 
were incorporated in the technical report to address peer reviewer 
recommendations. Complete information about the external peer review, 
including the peer reviewer selection process, the final report with 
individual recommendations from peer reviewers, and EPA's response to 
each recommendation is available on EPA's website.\1384\
---------------------------------------------------------------------------

    \1384\ https://www.epa.gov/environmental-economics/scghg-tsd-peer-review.
---------------------------------------------------------------------------

    Chapter 6.1 of the RIA provides an overview of the methodological 
updates incorporated into the SC-GHG estimates used in this final rule. 
A more detailed explanation of each input and the modeling process is 
provided in the final technical report, EPA Report on the Social Cost 
of Greenhouse Gases: Estimates Incorporating Recent Scientific Advances 
(U.S. EPA, 2023e).
    Commenters on our LMDV NPRM brought up issues regarding baseline 
scenarios, climate modeling (e.g., equilibrium climate sensitivity) and 
IAMS, claiming that they all used outdated assumptions. Other 
commenters suggested that EPA use lower discount rates as well as 
utilize the latest research and values from the December 2022 
Supplemental Oil and Gas Proposal. EPA's decision to use the updated 
SC-GHG values from U.S. EPA (2023f) addresses several of the concerns 
voiced within the comments. See RTC section 20 for further detail on 
the comments received and EPA's responses. For a detailed description 
of the updated modeling please see RIA Chapter 7 for the final rule as 
well as U.S. EPA (2023f).
    Table 221 through Table 224 present the estimated annual, 
undiscounted climate benefits of the net GHG emissions reductions 
associated with the final rule, and consequently the annual quantified 
benefits (i.e., total GHG benefits), for each of the three SC-GHG 
values estimated by the 2023 Report on SC-GHG for the stream of years 
beginning with the first year of rule implementation, 2027, through 
2055. Also shown are the present values (PV) and equivalent annualized 
values

[[Page 28117]]

(AV) associated with each of the three SC-GHG values. For a thorough 
discussion of the SC-GHG methodology, limitations and uncertainties see 
Chapter 9.4 of the RIA.

           Table 221--Climate Benefits From Reduction in CO2 Emissions Associated With the Final Rule
                                           [Billions of 2022 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                          Near-term Ramsey discount rate
                          Calendar year                          -----------------------------------------------
                                                                       2.5%             2%             1.5%
----------------------------------------------------------------------------------------------------------------
2027............................................................          $0.063            $0.1           $0.17
2028............................................................            0.54            0.87             1.5
2029............................................................             1.8               3               5
2030............................................................             3.9             6.2              10
2031............................................................             6.5              10              17
2032............................................................             9.7              15              26
2035............................................................              25              40              66
2040............................................................              53              81             130
2045............................................................              76             110             180
2050............................................................              92             140             220
2055............................................................             100             150             230
PV..............................................................             940           1,600           2,800
AV..............................................................              46              72             120
----------------------------------------------------------------------------------------------------------------
Notes: Climate benefits are based on changes (reductions) in CO2, CH4, and N2O emissions and are calculated
  using three different estimates of the social cost of carbon (SC-CO2), the social cost of methane (SC-CH4),
  and the social cost of nitrous oxide (SC-N2O) (model average at 1.5-percent, 2-percent, and 2.5-percent Ramsey
  discount rates). See EPA's Report on the Social Cost of Greenhouse Gases: Estimates Incorporating Recent
  Scientific Advances (EPA, 2023). We emphasize the importance and value of considering the benefits calculated
  using all three SC-CO2, SC-CH4, and SC-N2O estimates. We use constant discount rates (1.5-percent, 2-percent,
  and 2.5-percent) similar to the near-term Ramsey discount rates to calculate the present and annualized value
  of SC-GHGs for internal consistency. Annual benefits shown are undiscounted values.


           Table 222--Climate Benefits From Reduction in CH4 Emissions Associated With the Final Rule
                                           [Billions of 2022 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                          Near-term Ramsey discount rate
                          Calendar year                          -----------------------------------------------
                                                                       2.5%             2%             1.5%
----------------------------------------------------------------------------------------------------------------
2027............................................................      -$0.000021      -$0.000026      -$0.000035
2028............................................................       -0.000048        -0.00006        -0.00008
2029............................................................        0.000023        0.000028        0.000038
2030............................................................         0.00012         0.00015          0.0002
2031............................................................         0.00023         0.00028         0.00037
2032............................................................         0.00053         0.00065         0.00085
2035............................................................          0.0035          0.0043          0.0055
2040............................................................           0.012           0.015           0.019
2045............................................................           0.022           0.027           0.034
2050............................................................            0.03           0.036           0.045
2055............................................................           0.035           0.041           0.051
PV..............................................................            0.26            0.35            0.48
AV..............................................................           0.013           0.016           0.021
----------------------------------------------------------------------------------------------------------------
Notes: See prior table.


           Table 223--Climate Benefits From Reduction in N2O Emissions Associated With the Final Rule
                                           [Billions of 2022 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                          Near-term Ramsey discount rate
                          Calendar year                          -----------------------------------------------
                                                                       2.5%             2%             1.5%
----------------------------------------------------------------------------------------------------------------
2027............................................................         $0.0003        $0.00045         $0.0007
2028............................................................           0.002           0.003          0.0047
2029............................................................          0.0081           0.012           0.019
2030............................................................           0.019           0.029           0.045
2031............................................................           0.033           0.049           0.075
2032............................................................           0.051           0.075            0.12
2035............................................................            0.14             0.2            0.31
2040............................................................            0.29            0.42            0.63
2045............................................................            0.42             0.6             0.9
2050............................................................            0.51            0.73             1.1
2055............................................................            0.57             0.8             1.2
PV..............................................................             5.2             8.2              13

[[Page 28118]]

 
AV..............................................................            0.26            0.38            0.58
----------------------------------------------------------------------------------------------------------------
Notes: See prior table.


           Table 224--Climate Benefits From Reduction in GHG Emissions Associated With the Final Rule
                                           [Billions of 2022 dollars]
----------------------------------------------------------------------------------------------------------------
                                                                          Near-term Ramsey discount rate
                          Calendar year                          -----------------------------------------------
                                                                       2.5%             2%             1.5%
----------------------------------------------------------------------------------------------------------------
2027............................................................          $0.063            $0.1           $0.17
2028............................................................            0.54            0.87             1.5
2029............................................................             1.9               3               5
2030............................................................             3.9             6.2              10
2031............................................................             6.6              10              17
2032............................................................             9.8              15              26
2035............................................................              26              40              66
2040............................................................              53              82             130
2045............................................................              76             120             180
2050............................................................              92             140             220
2055............................................................             100             150             230
PV..............................................................             950           1,600           2,800
AV..............................................................              46              72             120
----------------------------------------------------------------------------------------------------------------
Notes: See prior table.

F. Criteria Pollutant Health and Environmental Benefits

    The light-duty passenger cars and light trucks and medium-duty 
vehicles subject to the standards are significant sources of mobile 
source air pollution, including directly-emitted PM2.5 as 
well as NOX and VOC emissions (both precursors to ozone 
formation and secondarily-formed PM2.5). The final program 
will reduce exhaust emissions of these pollutants from the regulated 
vehicles, which will in turn reduce ambient concentrations of ozone and 
PM2.5. Emissions from upstream sources will likely increase 
in some cases (e.g., power plants) and decrease in others (e.g., 
refineries). We project that in total, the final standards will result 
in substantial net reductions of emissions of pollutants like 
PM2.5, NOX and VOCs. Criteria and toxic pollutant 
emissions changes attributable to the final standards are presented in 
section VII of this preamble. Exposures to ambient pollutants such as 
PM2.5 and ozone are linked to adverse environmental and 
human health impacts, such as premature deaths and non-fatal illnesses 
(as explained in section II.C of this preamble). Reducing human 
exposure to these pollutants results in significant and measurable 
health benefits. Changes in ambient concentrations of ozone, 
PM2.5, and air toxics that will result from the standards 
are expected to improve human health by reducing premature deaths and 
other serious human health effects, and they are also expected to 
result in other important improvements in public health and welfare 
(see section II of this preamble). Children, especially, benefit from 
reduced exposures to criteria and toxic pollutants because they tend to 
be more sensitive to the effects of these respiratory pollutants. Ozone 
and particulate matter have been associated with increased incidence of 
asthma and other respiratory effects in children, and particulate 
matter has been associated with a decrease in lung maturation.
    This section discusses the economic benefits from reductions in 
adverse health and environmental impacts resulting from criteria 
pollutant emission reductions that can be expected to occur as a result 
of the final emission standards. When feasible, EPA conducts full-scale 
photochemical air quality modeling to demonstrate how its national 
mobile source regulatory actions affect ambient concentrations of 
regional pollutants throughout the United States. The estimation of the 
human health impacts of a regulatory action requires national-scale 
photochemical air quality modeling to conduct a full-scale assessment 
of PM2.5 and ozone-related health benefits.
    EPA conducted an air quality modeling analysis of a regulatory 
scenario in 2055 involving light- and medium-duty vehicle emission 
reductions and corresponding changes in ``upstream'' emission sources 
like EGU (electric generating unit) emissions and refinery emissions. 
The results of this analysis are summarized in section VII of this 
preamble and discussed in more detail in RIA Chapter 7. Year 2055 was 
selected as a year that best represents the fleet turning over to 
nearly full implementation of the final standards. Decisions about the 
emissions and other elements used in the air quality modeling were made 
early in the analytical process for the final rulemaking. Accordingly, 
the air quality analysis does not fully represent the final regulatory 
scenario; however, we consider the modeling results to be a fair 
reflection of the impact the standards will have on PM2.5 
and ozone air quality, as well as associated health impacts, in the 
snapshot year of 2055. Because the air quality analysis only represents 
projected conditions with and without the standards in 2055, we used 
the OMEGA-based emissions analysis (see section VII.A of this preamble) 
and benefit-per-ton (BPT) values to estimate the criteria pollutant 
(PM2.5) health benefits of the standards for the benefit-
cost analysis of the final emission standards.
    The BPT approach estimates the monetized economic value of 
PM2.5-related emission reductions or increases (such as 
direct PM, NOX, and SO2) due

[[Page 28119]]

to implementation of the program. Similar to the SC-GHG approach for 
monetizing reductions in GHGs, the BPT approach monetizes the health 
benefits of avoiding one ton of PM2.5-related emissions from 
a particular onroad mobile or upstream source. The value of health 
benefits from reductions (or increases) in PM2.5 emissions 
associated with this rule were estimated by multiplying 
PM2.5-related BPT values by the corresponding annual 
reduction (or increase) in tons of directly-emitted PM2.5 
and PM2.5 precursor emissions (NOX and 
SO2). As explained in Chapter 6.4 in the RIA, the 
PM2.5 BPT values represent the monetized value of human 
health benefits, including reductions in both premature mortality and 
morbidity.
    For the analysis of the final standards, we use the same mobile 
sector BPT estimates that were used in the proposal, except the 
constant dollar year they represent has been updated from year 2020 
dollars to year 2022 dollars. The mobile sector BPTs were first 
published in 2019 and then updated to be consistent with the suite of 
premature mortality and morbidity studies used by EPA for the 2023 PM 
NAAQS Reconsideration Proposal.1385 1386 The upstream BPT 
estimates used in this final rule are also the same as those used in 
the proposal, and were also updated to year 2022 dollars.\1387\ The 
health benefits Technical Support Document (Benefits TSD) that 
accompanied the 2023 PM NAAQS Proposal details the approach used to 
estimate the PM2.5-related benefits reflected in these 
BPTs.\1388\ For more detailed information about the benefits analysis 
conducted for this rule, including the BPT unit values used in this 
analysis, please refer to Chapter 6.4 of the RIA.
---------------------------------------------------------------------------

    \1385\ Wolfe, P.; Davidson, K.; Fulcher, C.; Fann, N.; Zawacki, 
M.; Baker, K. R. 2019. Monetized Health Benefits Attributable to 
Mobile Source Emission Reductions across the United States in 2025. 
Sci. Total Environ. 650, 2490-2498. Available at: https://doi.org/10.1016/J.SCITOTENV.2018.09.273.
    \1386\ U.S. Environmental Protection Agency (U.S. EPA). 2022. PM 
NAAQS Reconsideration Proposal RIA. EPA-HQ-OAR-2019-0587.
    \1387\ U.S. Environmental Protection Agency (U.S. EPA). 2023. 
Technical Support Document: Estimating the Benefit per Ton of 
Reducing Directly-Emitted PM2.5, PM2.5 
Precursors and Ozone Precursors from 21 Sectors.
    \1388\ U.S. Environmental Protection Agency (U.S. EPA). 2023. 
Estimating PM2.5- and Ozone-Attributable Health Benefits. 
Technical Support Document (TSD) for the PM NAAQS Reconsideration 
Proposal RIA. EPA-HQ-OAR-2019-0587.
---------------------------------------------------------------------------

    A chief limitation to using PM2.5-related BPT values is 
that they do not reflect benefits associated with reducing ambient 
concentrations of ozone. The PM2.5-related BPT values also 
do not capture the benefits associated with reductions in direct 
exposure to NO2 and mobile source air toxics, nor do they 
account for improved ecosystem effects or visibility. The estimated 
benefits of this rule would be larger if we were able to monetize these 
unquantified benefits at this time.
    Table 225 presents the annual, undiscounted PM2.5-
related health benefits estimated for the stream of years beginning 
with the first year of rule implementation, 2027, through 2055 for the 
final standards. Benefits are presented by source (onroad and upstream) 
and are estimated using either a 3 percent or 7 percent discount rate 
to account for annual avoided health outcomes that are expected to 
accrue over more than a single year (the ``cessation'' lag between the 
change in PM exposures and the total realization of changes in health 
effects). Because premature mortality typically constitutes the vast 
majority of monetized benefits in a PM2.5 benefits 
assessment, we present benefits based on risk estimates reported from 
two different long-term exposure studies using different cohorts to 
account for uncertainty in the benefits associated with avoiding PM-
related premature deaths.1389 1390 Table 225 also presents 
the present and annualized value of PM2.5-related health 
benefits using a 3-percent and 7-percent discount rate. The total 
annualized value of PM2.5-related benefits for the final 
program between 2027 and 2055 (discounted back to 2027) is $5.3 to $10 
billion assuming a 3-percent discount rate and $3.6 to $7.2 billion 
assuming a 7-percent discount rate. Results for the alternative 
scenarios estimated in support of the final standards can be found in 
Chapter 9.6 of the RIA.
---------------------------------------------------------------------------

    \1389\ Wu, X, Braun, D, Schwartz, J, Kioumourtzoglou, M and 
Dominici, F (2020). Evaluating the impact of long-term exposure to 
fine particulate matter on mortality among the elderly. Science 
advances 6(29): eaba5692.
    \1390\ Pope III, CA, Lefler, JS, Ezzati, M, Higbee, JD, 
Marshall, JD, Kim, S-Y, Bechle, M, Gilliat, KS, Vernon, SE and 
Robinson, AL (2019). Mortality risk and fine particulate air 
pollution in a large, representative cohort of U.S. adults. 
Environmental health perspectives 127(7): 077007.

    Table 225--Monetized PM2.5 Health Benefits of Onroad and Upstream Emissions Reductions Associated With the Final Rule, Light-Duty and Medium-Duty
                                                               [Billions of 2022 dollars]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                   Onroad                                 Upstream                                  Total
           Calendar year           ---------------------------------------------------------------------------------------------------------------------
                                     3% Discount rate   7% Discount rate    3% Discount rate     7% Discount rate    3% Discount rate   7% Discount rate
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027..............................      0.078 to 0.17       0.07 to 0.15    -0.0087 to -0.019    -0.0078 to -0.017      0.069 to 0.15      0.062 to 0.13
2028..............................       0.21 to 0.45       0.19 to 0.41     -0.034 to -0.072      -0.03 to -0.064       0.18 to 0.38       0.16 to 0.34
2029..............................       0.38 to 0.81       0.34 to 0.73      -0.064 to -0.14      -0.057 to -0.12       0.31 to 0.67       0.28 to 0.61
2030..............................        0.74 to 1.5        0.66 to 1.4       -0.12 to -0.25       -0.11 to -0.23        0.61 to 1.3        0.55 to 1.1
2031..............................           1 to 2.1        0.93 to 1.9        -0.2 to -0.42       -0.18 to -0.38        0.84 to 1.7        0.75 to 1.6
2032..............................         1.3 to 2.8         1.2 to 2.5       -0.26 to -0.53       -0.23 to -0.47         1.1 to 2.2          0.98 to 2
2035..............................         2.9 to 5.9         2.6 to 5.3       -0.28 to -0.55        -0.25 to -0.5         2.6 to 5.3         2.4 to 4.8
2040..............................            6 to 12          5.4 to 11         0.21 to 0.43         0.19 to 0.38          6.2 to 12          5.5 to 11
2045..............................          8.7 to 17          7.8 to 15           0.7 to 1.4          0.63 to 1.3          9.4 to 18          8.5 to 17
2050..............................           11 to 21          9.7 to 19            0.99 to 2           0.9 to 1.8           12 to 23           11 to 21
2055..............................           12 to 23           11 to 21               1 to 2          0.91 to 1.8           13 to 25           12 to 23
PV................................          97 to 190           43 to 86           4.6 to 9.3           1.3 to 2.6         100 to 200           45 to 88

[[Page 28120]]

 
AV................................          5.1 to 10           3.5 to 7         0.24 to 0.49         0.11 to 0.22          5.3 to 10         3.6 to 7.2
--------------------------------------------------------------------------------------------------------------------------------------------------------
Notes: The benefits in this table reflect two separate but equally plausible premature mortality estimates derived from the Medicare study (Wu et al.,
  2020) and the NHIS study (Pope et al., 2019), respectively. All benefits estimates are rounded to two significant figures. Annual benefit values
  presented here are not discounted. Negative values are health disbenefits related to increases in estimated emissions. The present value of benefits
  is the total aggregated value of the series of discounted annual benefits that occur between 2027-2055 (in 2022 dollars) using either a 3 percent or 7
  percent discount rate. The upstream impacts associated with the standards presented here include health benefits associated with reduced criteria
  pollutant emissions from refineries and health disbenefits associated with increased criteria pollutant emissions from EGUs. The benefits in this
  table also do not include the full complement of health and environmental benefits (such as health benefits related to reduced ozone exposure) that,
  if quantified and monetized, would increase the total monetized benefits.

    We use a constant 3-percent and 7-pecent discount rate to calculate 
present and annualized values in Table 225, consistent with current 
applicable OMB Circular A-4 guidance. For the purposes of presenting 
total net benefits (see section VIII.A of this preamble), we also use a 
constant 2-percent discount rate to calculate present and annualized 
values. We note that we do not currently have BPT estimates that use a 
2-percent discount rate to account for the value of those avoided 
health outcomes that are expected to accrue over more than a single 
year. If we discount the stream of annual benefits in Table 225 based 
on the 3-percent cessation lag BPT using a constant 2-percent discount 
rate, the present value of total PM2.5-related benefits 
would be $120 to $240 billion and the annualized value of total 
PM2.5-related benefits would be $6.4 to $13 billion, 
depending on the assumed long-term exposure study of PM2.5-
related premature mortality risk.
    We believe the PM2.5-related benefits presented here are 
our best estimate of benefits associated with the final standards from 
2027 through 2055 absent air quality modeling and we have confidence in 
the BPT approach and the appropriateness of relying on BPT health 
estimates for this rulemaking. Please refer to RIA Chapter 6 for more 
information on the uncertainty associated with the benefits presented 
here.

G. Transfers

    There are four types of transfers included in our analysis. Two of 
these transfers come in the form of tax credits arising from the 
Inflation Reduction Act to encourage investment in battery technology 
and the purchase of electrified vehicles. These are transfers from the 
government to producers of vehicles (the 45X battery production tax 
credits), or to purchasers of vehicles (the 30D tax credit) or to 
lessors or commercial purchasers (the 45W tax credit). There are also 
transfers from the government to individuals and businesses who install 
EVSE (the 30C tax credit) \1391\ though we don't quantify these 
transfers as part of our analysis. The third, new for the final rule, 
is state taxes on the purchase of new, higher cost vehicles which 
represents transfers from purchasers to government. The fourth is fuel 
and electricity taxes which are transfers from purchasers of fuel and 
electricity to the government. The final rule results in less liquid-
fuel consumed and, therefore, less money transferred from purchasers of 
liquid-fuel to the government while the reverse is true for electricity 
consumption where the increase associated with PEVs results in more 
money transferred from purchasers to the government. For more detail on 
the IRC section 45X, 30D and 45W tax credits please see section IV of 
this preamble and Chapter 2.6.8 of the RIA.
---------------------------------------------------------------------------

    \1391\ The IRA extends the Internal Revenue Code 30C Alternative 
Fuel Refueling Property Tax Credit through Dec 31, 2032, with 
modifications. See section IV.C.4 of the preamble and RIA Chapter 5 
for more details.

           Table 226--Transfers Associated With the Final Rule, From the Vehicle Purchaser Perspective
                                         [Billions of 2022 dollars] \a\
----------------------------------------------------------------------------------------------------------------
                                                      Vehicle
          Calendar year             Battery tax    purchase tax     State sales     Fuel taxes          Sum
                                      credits         credit           taxes
----------------------------------------------------------------------------------------------------------------
2027............................           $0.25            $0.4          -$0.12          $0.036           $0.56
2028............................             1.4               2           -0.27            0.23             3.4
2029............................             4.1             5.4           -0.61            0.69             9.5
2030............................             5.1             9.2            -0.9             1.4              15
2031............................             5.4              15            -1.2             2.2              22
2032............................             3.6              20            -1.3             3.2              25
2035............................               0               0            -2.7             7.3             4.5
2040............................               0               0            -2.5              13              10
2045............................               0               0            -2.3              16              13
2050............................               0               0            -2.1              18              16
2055............................               0               0            -1.9              18              16
PV2.............................              18              47             -43             230             250
PV3.............................              17              45             -37             190             220
PV7.............................              15              38             -22              98             130
AV2.............................            0.83             2.2              -2              10              11
AV3.............................            0.91             2.4            -1.9             9.9              11

[[Page 28121]]

 
AV7.............................             1.2             3.1            -1.8             7.9              10
----------------------------------------------------------------------------------------------------------------
\a\ Negative values reflect transfers from taxpayers to governments; positive values reflect transfers from
  government to taxpayers.

H. U.S. Vehicle Sales Impacts

1. Light-Duty Vehicle Sales Impacts
    As discussed in section IV.A of this preamble, EPA used the OMEGA 
model to analyze projected impacts of this rule, including impacts on 
vehicle sales. The OMEGA model accounts for interactions in producer 
and consumer decisions in total sales and in the share of ICE and PEV 
vehicles in the market. As in the proposal, the sales impacts are based 
on a set of assumptions and inputs, including assumptions about the 
role of fuel consumption in vehicle purchase decisions, and assumptions 
on consumers' demand elasticity.\1392\ Our analysis indicates that this 
rule will have very small impacts on light-duty vehicle sales, with 
minor decreases from the No Action case estimated between 2027 and 
2032. However, as explained in section VIII.D.1 of this preamble above, 
even though there are minor decreases in sales from the No Action case, 
consumers will benefit from increased access to mobility due to 
increased vehicle efficiency.
---------------------------------------------------------------------------

    \1392\ The demand elasticity is the percent change in quantity 
associated with percent increase in price. For price, we use net 
price, where net price is the difference in technology costs less an 
estimate of the change in fuel costs over the number of years we 
assume fuel costs are taken into account. PEV purchase incentives 
from the IRA are also accounted for in the net consumer prices used 
in OMEGA. See RIA Chapter 2.6.8 for more information.
---------------------------------------------------------------------------

    As in the proposal, for this final rule EPA separately represents 
the producer's perception of the purchase decision and the consumer's 
purchase decision. Focusing on producers, EPA assumes that automakers 
believe that LD vehicle buyers account for about 2.5 years of fuel 
consumption in their purchase decision.\1393\ This is based on the 2021 
National Academy of Sciences (NAS) report,\1394\ citing the 2015 NAS 
report, which observed that automakers ``perceive that typical 
consumers would pay upfront for only one to four years of fuel 
savings'' (pp. 9-10). However, as discussed in the proposal and in the 
2021 rule,\1395\ there is not a consensus around the role of fuel 
consumption in vehicle purchase decisions. Based on how consumers 
actually behave, Greene et al. (2018) estimate the mean willingness to 
pay for a one cent per mile reduction in fuel costs over the lifetime 
of the vehicle to be $1,880 with very large standard deviation, and a 
median of $990. For the purpose of comparison, saving one cent per mile 
on fuel, assuming 15,000 vehicle miles traveled per year, yields 
roughly $375 of savings over 2.5 years (or $150 to $600 over 1 to 4 
years). Thus, automakers seem to operate under a perception of consumer 
willingness to pay for additional fuel economy that is substantially 
less than the mean and median values estimated by Greene et al. (2018), 
indicating that automakers do not appear to fully account for how 
consumers actually behave. We did not receive any public comments on 
the use of 2.5 years of fuel savings in our analysis.
---------------------------------------------------------------------------

    \1393\ For a discussion of the purchase decision from the 
perspective of the consumer, see RIA Chapter 4.1.
    \1394\ National Academies of Sciences, Engineering, and 
Medicine. 2021. Assessment of Technologies for Improving Light-Duty 
Vehicle Fuel Economy--2025-2035. Washington, DC: The National 
Academies Press. https://doi.org/10.17226/26092.
    \1395\ 86 FR 74434, December 30, 2021, ``Revised 2023 and Later 
Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards.''
---------------------------------------------------------------------------

    In OMEGA, we use an estimate of demand elasticity to model the 
change in vehicle demand due to this rule. The demand elasticity is the 
percent change in quantity of vehicles demanded associated with a one 
percent change in vehicle price. This is explained further in Chapter 
4.4.1 of the RIA. We received comment on the use of a demand elasticity 
of -0.4 in the proposal, with one commenter stating that it was too 
small. The commenter urged us to use an elasticity of at least -1.0, 
similar to what was used for previous rules and what NHTSA has used for 
previous rules. Continuing the approach in the proposal, however, EPA 
is using a demand elasticity for new LD vehicles of -0.4. The choice of 
elasticity is based on a 2021 EPA peer reviewed report, which included 
a literature review on and estimates of the effects of new vehicle 
price changes on the new vehicle market,\1396\ and the commenter did 
not provide data that would support a shift away from the conclusions 
of the report. As noted in EPA's report, -0.4 appears to be the largest 
estimate (in absolute value) for a long-run new vehicle demand 
elasticity in recent studies. EPA's report examining the relationship 
between new and used vehicle markets shows that, for plausible values 
reflecting that interaction, the new vehicle demand elasticity varies 
from -0.15 to -0.4. We chose the larger value of this range for our 
analysis because it will lead to more conservative estimates (a larger 
change in demand for the same change in vehicle price) that are still 
within the range estimated within the report.
---------------------------------------------------------------------------

    \1396\ U.S. EPA. 2021. The Effects of New-Vehicle Price Changes 
on New- and Used-Vehicle Markets and Scrappage. EPA-420-R-21-019. 
https://cfpub.epa.gov/si/si_public_record_Report.cfm?dirEntryId=352754&Lab=OTAQ.
---------------------------------------------------------------------------

    Under the final standards, there is a small change projected in 
total new LD vehicle sales compared to sales under the No Action 
scenario for each year under from MY 2027 through MY 2032.\1397\ See 
Table 227 for total new vehicle sales impacts under the final rule. 
These impacts range from a decrease of about 0.18 percent in MY 2027, 
to a decrease of about 0.92 percent in MY 2032. These impacts are 
generally smaller than those estimated for the 2021 rulemaking,\1398\ 
where sales impacts were estimated to range from a decrease of about 1 
percent in 2027 to a decrease of 0.9 percent in 2032.
---------------------------------------------------------------------------

    \1397\ The No Action scenario consists of the 2021 rule 
standards and IRA provisions as explained in section IV.B of this 
preamble.
    \1398\ 86 FR 74434, December 30, 2021, ``Revised 2023 and Later 
Model Year Light-Duty Vehicle Greenhouse Gas Emissions Standards.''

[[Page 28122]]



                             Table 227--Total New LD Sales Impacts in the Final Rule
----------------------------------------------------------------------------------------------------------------
                                                           No action                   Final rule
                                                       ---------------------------------------------------------
                         Year                                                             Change from no action
                                                          Total sales     Total sales              (%)
----------------------------------------------------------------------------------------------------------------
2027..................................................      16,046,000      16,017,000           -29,000 (-0.18)
2028..................................................      15,848,000      15,790,000           -58,000 (-0.37)
2029..................................................      15,923,000      15,840,000           -83,000 (-0.52)
2030..................................................      15,792,000      15,670,000          -122,000 (-0.78)
2031..................................................      15,669,000      15,534,000          -135,000 (-0.86)
2032..................................................      15,585,000      15,442,000          -143,000 (-0.92)
----------------------------------------------------------------------------------------------------------------

    Similar to the sales impacts of the final rule, total new vehicle 
sales impacts under the alternative scenarios analyzed show a very 
small change in sales compared to the No Action scenario. For more 
information on the estimates of sales impacts under the more and less 
stringent alternatives analyzed for this final rule, see Chapter 4.4 of 
the RIA.
2. Medium-Duty Sales Impacts
    In contrast to the light-duty market, the medium-duty vehicle 
market largely serves commercial applications. Thus, the assumptions in 
our analysis of the MD sales response are specific to that market, and 
do not arise from studies focused on the LD vehicle market.\1399\ 
Commercial vehicle owners purchase vehicles based on the needs of their 
business, and we expect them to be less sensitive to changes in vehicle 
price than personal vehicle owners.\1400\ These MD vehicle purchasers 
will not do without the MDV that meets their needs. In addition, as 
pointed out by commenters in section 14.2 of the RTC, there are factors 
that MD vehicle commercial purchasers consider more strongly in their 
purchase decision than consumers purchasing a light-duty vehicle, 
including maintenance costs, fuel efficiency, and warranty 
considerations. The elasticity of demand affects the sensitivity of 
vehicle buyers to a change in the price of vehicles: The smaller the 
elasticity, in absolute value, the smaller the estimated change in 
sales due to a change in vehicle price. Therefore, as explained in 
Chapter 4.4 of the RIA, the estimates of a change in sales due to this 
rule depend on the elasticity of demand assumptions. For this final 
rule, we are assuming an elasticity of 0 for the MD vehicle sales 
impacts estimates, and we are not projecting any differences in the 
number of MD vehicles sold between the No Action and the final 
standards. This implicitly assumes that the buyers of MD vehicles are 
not going to change purchase decisions if the price of the vehicle 
changes, all else equal. In other words, as long as the characteristics 
of the vehicle do not change, commercial buyers will still purchase the 
vehicle that fits their needs. See RIA Chapter 4.4.1 and RTC section 
14.2 for more on the elasticity of demand for MD vehicle sales impacts.
---------------------------------------------------------------------------

    \1399\ Similarly, the literature referenced for light-duty sales 
impacts pertains to light-duty vehicles, primarily purchased and 
used as personal vehicles by individuals and households.
    \1400\ See RIA Chapter 4.1.1 for more information.
---------------------------------------------------------------------------

    A possible, though unlikely, sales effect on commercial medium-duty 
vehicles is pre-buy and low-buy. Pre-buy occurs when a purchaser makes 
a planned purchase sooner than originally intended in anticipation of 
EPA regulation that may make a future vehicle, under new regulations, 
have a higher upfront or operational cost, or have reduced reliability. 
Low-buy occurs when a vehicle that would have been purchased after the 
implementation of a regulation is either not purchased at all, or the 
purchase is delayed. Low-buy may occur directly as a function of pre-
buy (where a vehicle was instead purchased prior to implementation of 
the new regulation), or due to a vehicle purchaser delaying the 
purchase of a vehicle due to cost or uncertainty. Pre- and low-buy are 
short-term effects, with research indicating that effects are seen for 
one year or less before and after a regulation is implemented.\1401\ 
Current research on this phenomenon is focused on larger heavy-duty 
vehicles, mainly Class 8 ICE vehicles (traditional semi-trucks, for 
example). An EPA report on HD sales effects \1402\ found no evidence of 
pre- or low-buy impacts of previous HD rules for Class 6 
vehicles.\1403\ This may be due to many reasons, including the 
generally lower price of smaller class vehicles and less data available 
to analyze. MD vehicles subject to this rule are predominantly 
commercial vehicles, with private purchasers representing a smaller 
portion of the market. In our analysis of the central case, we project 
an increase in electrification for both MD and LD vehicles, which is 
associated with operational costs savings (including fuel, maintenance 
and repair), as discussed in sections VII.B.3 and VII.C.1 of this 
preamble. In addition, it should be noted that many studies estimating 
how large or expensive purchases are made, purchase decisions are 
heavily influenced by macroeconomic factors unrelated to regulations, 
for example, interest rates, economic activity, and the general state 
of the economy.\1404\ Based on this combined information, we expect any 
possible pre- or low-buy that may occur in the medium-duty segment as a 
result of this rule would be small and short lived.
---------------------------------------------------------------------------

    \1401\ See the EPA report ``Analysis of Heavy-Duty Vehicle Sales 
Impacts Due to New Regulation'' at https://cfpub.epa.gov/si/si_public_pra_view.cfm?dirEntryID=349838&Lab=OTAQ for a literature 
review and EPA analysis of pre-buy and low-buy due to HD 
regulations.
    \1402\ ``Analysis of Heavy-Duty Vehicle Sales Impacts Due to New 
Regulation'' at https://cfpub.epa.gov/si/si_public_pra_view.cfm?dirEntryID=349838&Lab=OTAQ.
    \1403\ Results for Class 7 vehicles was mixed, with some results 
showing no evidence of pre- or low-buy, and other results indicating 
increased purchases after promulgation, and decreased purchases 
beforehand.
    \1404\ See the literature review found in the ERG, ``Analysis of 
Heavy-Duty Vehicle Sales Impacts Due to New Regulation.'' Found at 
https://cfpub.epa.gov/si/si_public_pra_view.cfm?dirEntryID=349838&Lab=OTAQ for more 
information.
---------------------------------------------------------------------------

    In the NPRM, we asked for comment on our assumptions for MD vehicle 
sales impacts. One commenter stated that the assumption of an 
elasticity of 0 for MD vehicle sales impacts was not appropriate, 
suggesting that we use an elasticity of at least -1.0. The commenter 
did not provide research or data to support a change in our assumption 
for this rule, especially not to increase the price sensitivity of 
medium-duty vehicle buyers to be greater than that of light-duty 
vehicle purchasers. Though there may be impacts in the short term that 
are not captured by our demand assumptions, in the long term, we assume 
that commercial vehicle buyers will purchase the vehicle that fits 
their

[[Page 28123]]

needs, regardless of this rule, and the elasticity measures we use for 
our analyses are long-term elasticities.

I. Employment Impacts

    In this section, we assess the employment impacts associated with 
this rule. As we explain in sections I and IV of this preamble, 
manufacturers are already rapidly shifting production away from ICE 
vehicles and toward PEVs, a trend that is occuring independent of this 
rulemaking and strongly supported by the Inflation Reduction Act. This 
shift is associated with decreased employment in some sectors (e.g., 
ICE vehicle manufacturing) and increased employment in other sectors 
(e.g., PEV and battery manufacturing). We expect manufacturers to 
increase their deployment of PEVs in response to this rule, which will 
accentuate any employment shifts that may occur due to changes in the 
share of PEVs produced. While it is not possible to comprehensively 
quantify the nature of the employment shifts, our research and 
estimations presented in this section indicate that there are 
opportunities for increased employment due to an increase in the share 
of PEVs produced and sold.
    First, given the rapid surge in PEVs expected over the next decade, 
there is a tremendous opportunity for increases in domestic 
manufacturing and employment associated with PEVs and their components, 
such as batteries. Congress strongly supported these increases in 
domestic manufacturing through the BIL, CHIPS Act, and IRA as described 
further in section VIII.I.1 of this preamble, below. Consistent with 
Congressional policy, this rulemaking further signals strong demand for 
PEVs domestically to meet GHG emissions reduction targets and 
contributes to a favorable regulatory environment for the United States 
to capture the increased manufacturing and employment associated with 
PEVs and their components. This positive impact is consistent with the 
history of EPA's Clean Air Act programs, where strong emission 
standards have historically contributed to the U.S. being a global 
leader in the supply of air pollution control equipment, with 
corresponding benefits for U.S. global competitiveness and domestic 
employment. In addition, there are extensive opportunities related to 
PEV charging infrastructure build-out and maintenance. These 
opportunities are enhanced by many projects and efforts put forth by 
Federal and State agencies and other public and private groups, as 
described throughout this section, as well as in Chapter 4.5 of the RIA 
and section 20 of the RTC.
    Second, while EPA has not been able to comprehensively quantify the 
net changes in employment associated with this rule, we do estimate a 
partial quantitative analysis of employment impacts associated with 
this rule. The partial analysis finds that there is greater potential 
for overall job growth in the sectors included in the analysis for this 
rule than potential job losses, and that the potential for positive 
employment impacts increases over time.
1. Background on Employment Effects
    If the U.S. economy is at full employment, even a large-scale 
environmental regulation is unlikely to have a noticeable impact on 
aggregate net employment. Instead, labor would primarily be reallocated 
from one productive use to another, and net national employment effects 
from environmental regulation would be small and transitory (e.g., as 
workers move from one job to another). In sectors experiencing 
transitory effects, some workers may retrain or relocate in 
anticipation of new requirements or require time to search for new 
jobs, while shortages in some sectors or regions could bid up wages to 
attract workers. These adjustment costs can lead to local labor 
disruptions. As of 2020, although the three largest automakers in the 
U.S. provide employment opportunities in the automotive supply chain in 
31 states,\1405\ the majority of jobs in the U.S. automotive sector are 
concentrated in a handful of states including Michigan, Alabama, 
Indiana, Ohio, and Kentucky.\1406\ Even if the net change in the 
national workforce is small, localized reductions in employment may 
adversely impact individuals and communities just as localized 
increases may have positive impacts. If the economy is operating at 
less than full employment, economic theory does not clearly indicate 
the direction or magnitude of the net impact of environmental 
regulation on employment; it could cause either a short-run net 
increase or short-run net decrease. Research on domestic employment in 
the EV transition funded by the Department of Energy (DOE) indicates 
that a wide range of jobs in the ICE vehicle sector have a relatively 
high similarity in needed skill sets to jobs in the EV sector, as well 
as in other sectors.\1407\ The research also indicates that higher-wage 
jobs with more specialized skills may be better positioned to 
transition their skill sets from ICE sectors to EV sectors, although 
thy are more geographically concentrated and hence dependent on co-
location of EV production capacity with automotive production for 
transition opportunities.
---------------------------------------------------------------------------

    \1405\ https://www.americanautomakers.org/sites/default/files/AAPC%20ECR%20Q3%202020.pdf.
    \1406\ Based on information on automotive industry employment, 
earning and hours from the Bureau of Labor Statistics: https://www.bls.gov/iag/tgs/iagauto.htm#emp_state.
    \1407\ Workforce Analytic Approaches to Find Degrees of Freedom 
in the EV Transition; https://papers.ssrn.com/sol3/papers.cfm?abstract_id=4699308.
---------------------------------------------------------------------------

    Economic theory of labor demand indicates that employers affected 
by environmental regulation may change their demand for different types 
of labor in different ways. They may increase their demand for some 
types, decrease demand for other types, or maintain demand for still 
other types. The uncertain direction of labor impacts is due to the 
different channels by which regulations affect labor demand. A variety 
of conditions can affect employment impacts of environmental 
regulation, including baseline labor market conditions, employer and 
worker characteristics, industry, and region. In general, the 
employment effects of environmental regulation are difficult to 
disentangle from other economic changes (especially the state of the 
macroeconomy) and business decisions that affect employment, both over 
time and across regions and industries. In light of these difficulties, 
we look to economic theory to provide a constructive framework for 
approaching these assessments and for better understanding the inherent 
complexities in such assessments.
    In the proposal and previous rules (for example the 2021 rule), we 
estimated a partial employment effect on LD ICE vehicle manufacturing 
due to the increase in technology costs of the rule. In addition, the 
increasing penetration of electric vehicles in the market is likely to 
affect both the number and the nature of employment in the auto and 
parts sectors and related sectors, such as providers of charging 
infrastructure. Over time, as PEVs become a greater portion of the new 
vehicle fleet, the kinds of jobs in auto manufacturing are expected to 
change. For instance, there is no need for engine and exhaust system 
assembly for BEVs, while many assembly tasks for BEVs involve 
electrical rather than mechanical fitting. In addition, batteries 
represent a significant portion of the manufacturing content of an 
electrified vehicle, both BEVs and PHEVs, and some automakers are 
likely to purchase the cells, if not

[[Page 28124]]

pre-assembled modules or packs, from suppliers. According to the U.S. 
Energy and Employment Report (USEER), jobs related to the energy sector 
increased from 2020 to 2021, and at a faster rate than the workforce 
overall.\1408\ These energy-sector-related jobs include electric power 
generation; transmission, distribution and storage; fuels; energy 
efficiency; and motor vehicles and component parts. The report states 
that employment in motor vehicles and component parts increased about 
2.5 percent from 2020 to 2021, and jobs in clean energy vehicles 
increased by almost 21 percent, with BEVs increasing by 27 percent and 
PHEVs increasing by 10 percent. Employment in producing, building and 
maintaining charging infrastructure needed to support the ever-
increasing number of PEVs on the road is also expected to affect the 
nature of employment in automotive and related sectors. For many of 
these effects, there is considerable uncertainty in the data to 
quantitatively assess how employment might change as a function of the 
increased electrification expected to result under the final standards.
---------------------------------------------------------------------------

    \1408\ https://www.energy.gov/sites/default/files/2022-06/USEER%202022%20Fact%20Sheet_0.pdf.
---------------------------------------------------------------------------

    In comments on the proposed rule, California Air Resources Board 
(CARB) stated that the proposed standards present opportunities for 
growth in many sectors across the U.S., including auto manufacturing, 
electricity in general and ZEV supply chains. A report by the Economic 
Policy Institute suggests that U.S. employment in the auto sector could 
increase if the share of vehicles, or powertrains, sold in the United 
States that are produced in the United States increases.\1409\ The 
BlueGreen Alliance (BGA) also states that though BEVs have fewer parts 
than their ICE counterparts, there is potential for job growth in 
electric vehicle component manufacturing, including batteries, electric 
motors, regenerative braking systems and semiconductors, and 
manufacturing those components in the United States can lead to an 
increase in jobs.\1410\ BGA goes on to state that if the United States 
does not become a major producer for these components, there is risk of 
job loss. In addition, a recent report from the World Resources 
Institute indicates that if the right investments are made in 
manufacturing and infrastructure, autoworkers and communities will 
benefit from job growth, lower auto related costs, and reduced air 
pollution.\1411\ The report focused on effects that would be felt in 
Michigan, which, as of 2023 has the most clean energy jobs in the 
Midwest, and the ranks 5th nationally.\1412\ Michigan also ranks 
second, behind California, for the most hybrid and electric vehicle 
employment. Taking Michigan as an example, clean energy jobs grew by 
almost 4.6 percent in 2022, which was twice as fast as the overall 
economy. Electric vehicle-related jobs, specifically, grew by about 14 
percent in the state in 2022. In addition to the 21 percent increase in 
employment in 2021 that USEER reported in clean energy vehicles, EDF 
also reports that the job growth and investment in the EV sector that 
has been seen nationally over the last eight years is expected to 
continue, with new factories or production lines for EVs, batteries, 
components and chargers supporting more than 125,000 jobs being 
announced across 26 states.\1413\ EDF reports that more than 140,000 
new jobs have been announced in the U.S. since 2015, with 60,000 jobs 
being created in U.S. battery manufacturing.\1414\ They also point out 
that 66 percent of those job announcements were made in the time after 
BIL was passed, and 32 percent of those jobs were announced after the 
IRA was passed, and 86 percent of those jobs announcements were 
concentrated in ten states: Michigan, Tennessee, Georgia, Nevada, 
Kentucky, South Carolina, Ohio, North Carolina, Indiana and Kansas. DOE 
reports that more than 80,000 potential jobs in U.S. battery 
manufacturing and supply chain, and more than 50,000 potential jobs in 
U.S. EV component and assembly have been announced since 2020.\1415\
---------------------------------------------------------------------------

    \1409\ https://www.epi.org/publication/ev-policy-workers.
    \1410\ BGA stated this in a report found at https://www.bluegreenalliance.org/wp-content/uploads/2021/04/Backgrounder-EVs-Are-Coming.-Will-They-Be-Made-in-the-USA-vFINAL.pdf as well as 
in their public comments on the proposed rule found in Section 20 of 
the RTC.
    \1411\ https://www.wri.org/insights/michigan-electric-vehicle-job-creation, https://www.wri.org/research/michigan-ev-future-assessment-employment-just-transition.
    \1412\ https://www.governing.com/work/michigan-leads-electric-
vehicle-jobs-but-lags-in-
sales#:~:text=More%20than%2032%2C000%20Michigan%20workers,involved%20
%E2%80%9Cin%20this%20ecosystem.%E2%80%9D.
    \1413\ EDF. (2023). New climate laws drive boom in electric 
vehicle jobs. Retrieved November 1, 2023 from https://vitalsigns.edf.org/story/new-climate-laws-drive-boom-electric-vehicle-jobs.
    \1414\ EDF. (2023). U.S. Electric Vehicle Manufacturing 
Investments and Jobs. https://www.edf.org/sites/default/files/2023-03/State-Electric-Vehicle-Policy-Landscape.pdf.
    \1415\ https://www.energy.gov/invest.
---------------------------------------------------------------------------

    The UAW states that re-training programs will be needed to support 
auto workers in a market with an increasing share of electric vehicles 
in order to prepare workers that might be displaced by the shift to the 
new technology.\1416\ In their comments on the proposed rule, UAW 
stated that job loss or creation in the auto industry depends on 
whether EV assembly and parts production is expanded in the U.S. or 
not. In 2020, Volkswagen stated that labor requirements for ICE 
vehicles are about 70 percent higher than their electric counterpart, 
but these changes in employment intensities in the manufacturing of the 
vehicles can be offset by shifting to the production of new components, 
for example batteries or battery cells.\1417\ More recently, Volkswagen 
announced it will start construction of a new electric vehicle battery 
gigafactory supporting up to 3,000 direct jobs in Canada, as well as 
supporting a new EV manufacturing plant in South Carolina.\1418\ 
Research from the Seattle Jobs Initiative indicates that employment in 
a collection of sectors related to both PEV and ICE vehicle 
manufacturing is expected to grow slightly through 2029.\1419\ Climate 
Nexus also states that the increasing penetration of electric vehicles 
will lead to a net increase in jobs, a claim that is partially 
supported by the rising investment in batteries, vehicle manufacturing 
and charging stations.\1420\
---------------------------------------------------------------------------

    \1416\ https://uaw.org/wp-content/uploads/2019/07/190416-EV-White-Paper-REVISED-January-2020-Final.pdf.
    \1417\ https://www.volkswagenag.com/presence/stories/2020/12/frauenhofer-studie/6095_EMDI_VW_Summary_um.pdf.
    \1418\ Volkswagen-backed PowerCo SE reaches significant 
milestone in St. Thomas gigafactory project: https://www.volkswagen-group.com/en/press-releases/volkswagen-backed-powerco-se-reaches-significant-milestone-in-st-thomas-gigafactory-project-17962; South 
Carolina Offers $1.3B to new Scout Electric SUV maker: https://apnews.com/article/scout-electric-vehicle-plant-south-carolina-07c565669e13985738db503a86e323b0.
    \1419\ https://www.seattle.gov/Documents/Departments/OSE/ClimateDocs/TE/EV%20Field%20in%20OR%20and%20WA_February20.pdf.
    \1420\ https://climatenexus.org/climate-issues/energy/ev-job-impacts/.
---------------------------------------------------------------------------

    This expected private investment is also supported by recent 
Federal investment which will encourage increased investment along the 
vehicle supply chain, including domestic critical minerals, materials 
processing, battery manufacturing, charging infrastructure, and vehicle 
assembly and vehicle component manufacturing. This investment includes 
the BIL, the CHIPS Act, and the IRA. The BIL was signed in November 
2021 and provides over $24 billion in investment in electric vehicle 
chargers, critical minerals, and battery components needed by domestic 
manufacturers of EV batteries and for

[[Page 28125]]

clean transit and school buses.\1421\ The CHIPS and Science Act, signed 
in August, 2022, invests in expanding America's manufacturing capacity 
for the semiconductors used in electric vehicles and chargers.\1422\ 
The IRA provides incentives for producers to expand domestic 
manufacturing of PEVs and domestic sourcing of components and critical 
minerals needed to produce them. The Act also provides incentives for 
consumers to purchase both new and used PEVs. These laws create 
domestic employment opportunities along the full automotive sector 
supply chain, from components and equipment manufacturing and 
processing to final assembly, as well as incentivize the development of 
reliable EV battery supply chains, as indicated by the evidence we 
present in section VIII.I.1 of the preamble.\1423\
---------------------------------------------------------------------------

    \1421\ The Bipartisan Infrastructure Law is officially titled 
the Infrastructure Investment and Jobs Act. More information can be 
found at https://www.fhwa.dot.gov/bipartisan-infrastructure-law.
    \1422\ The CHIPS and Science Act was signed by President Biden 
in August, 2022 to boost investment in, and manufacturing of, 
semiconductors in the U.S. The fact sheet can be found at https://www.whitehouse.gov/briefing-room/statements-releases/2022/08/09/fact-sheet-chips-and-science-act-will-lower-costs-create-jobs-strengthen-supply-chains-and-counter-china.
    \1423\ ``Building a Clean Energy Economy: A Guidebook to the 
Inflation Reduction Act's Investments in Clean Energy and Climate 
Action.'' January 2023. Whitehouse.gov. https://www.whitehouse.gov/wp-content/uploads/2022/12/Inflation-Reduction-Act-Guidebook.pdf.
---------------------------------------------------------------------------

    In addition, the IRA is expected to lead to increased demand for 
PEVs through tax credits for purchasers of PEVs. The BlueGreen Alliance 
and the Political Economy Research Institute estimate that IRA will 
create over 9 million jobs over the next decade, with about 400,000 of 
those jobs being attributed directly to the battery and fuel cell 
vehicle provisions in the act.\1424\ Additional studies find similar 
results: the IRA and BIL have the potential to lead to significant job 
increases in transportation, electricity and manufacturing, with some 
estimates almost 700,000 new jobs through 2030. EDF reports that more 
than 46,000 jobs in EV manufacturing have already been announced since 
the passage of the IRA.
---------------------------------------------------------------------------

    \1424\ Political Economy Research Institute. (2022). Job 
Creation Estimates Through Proposed Inflation Reduction Act. 
University of Massachusetts Amherst. Retrieved from https://www.bluegreenalliance.org/site/9-million-good-jobs-from-climate-action-the-inflation-reduction-act.
---------------------------------------------------------------------------

    It is important to note that investments from the IRA have, so far, 
been focused in more economically disadvantages counties. The U.S. 
Department of Treasury states that as of November 2023, 70 percent of 
post-IRA investments in clean energy have happened in counties with a 
smaller share of the population employed than the U.S. average; almost 
80 percent have happened in counties with below-average medium 
household incomes; more than 80 percent of have happened in counties 
with below-average wages; and more than 85 percent have gone to 
counties with below-average college graduation rates.\1425\
---------------------------------------------------------------------------

    \1425\ The Inflation Reduction Act: A Place-Based Analysis: 
https://home.treasury.gov/news/featured-stories/the-inflation-reduction-act-a-place-based-analysis.
---------------------------------------------------------------------------

    It is also important to note that though the majority of this 
discussion focuses on possible direct impacts these Federal Acts may 
have on jobs along the vehicle supply chain (including domestic 
critical minerals, materials processing, battery manufacturing, 
charging infrastructure, and vehicle assembly and vehicle component 
manufacturing), there may also be indirect job creation and support, 
for example, in constructing the new manufacturing facilities.\1426\
---------------------------------------------------------------------------

    \1426\ The U.S. Department of Treasury reports that 
manufacturing spending has increased significantly since the BIL, 
IRA and CHIPS Act were passed. Unpacking the Boom in U.S. 
Construction of Manufacturing Facilities: https://home.treasury.gov/news/featured-stories/unpacking-the-boom-in-us-construction-of-manufacturing-facilities.
---------------------------------------------------------------------------

    In the proposal, we asked for comment on our employment analysis. 
Some commenters, including the UAW, BlueGreen Alliance and the United 
Steelworkers Union, provided comments on possible impacts on both job 
quality and geographic impacts of the rule making the point that not 
all jobs should be treated as equal. The commenters stated that the 
rule will lead to a reduction in job quality, citing current 
differences in job quality for those working in plants manufacturing 
ICE vehicles, and those working in plants manufacturing BEVs or vehicle 
batteries. Commenters stated that the BEV and battery plant workers 
receive lower pay, fewer benefits, and are not unionized in comparison 
to those working at ICE manufacturing plants. In addition, commenters 
state that even if the number of jobs at the national level does not 
change, there will be local community level impacts due to the location 
of those jobs changing. For example, employment at an ICE plant in one 
community might be reduced while employment at a BEV or battery plant 
in another community might increase. Though the number of jobs might 
not change, employment in the ``losing'' community will decrease, or 
workers from that community might have to relocate if they are able. 
The UAW, in comments on the proposed rule stated support for emission 
reductions, though they also indicate a slower phase in of ZEVs into 
the market than that projected in the proposal would better support 
employees in auto manufacturing and supporting industries.
    Even with expected increases in employment in component production 
and new domestic jobs related to ZEVs, these shifts in production may 
negatively affect workers currently employed in production of ICE 
vehicles. We acknowledge the possibility of geographically localized 
effects, and that there may be job quality impacts associated with this 
rule, especially in the short term. We note that there are Federal 
programs to assist workers in the transition to low or zero emitting 
vehicles, including a DOE funding package which makes $2 billion in 
grants, and up to $10 billion in loans available to support projects 
converting existing automotive manufacturing facilities to support 
electric vehicle production.\1427\ The funding package is expected to 
result in retention of high-quality, high-paying jobs in communities 
that currently host these manufacturing facilities, and along the full 
supply chain for the automotive sector, from components to assembly. 
The grants available give priority to refurbishing and retooling 
manufacturing facilities, especially for those likely to retain 
collective bargaining agreements and/or an existing higher-quality, 
high-wage hourly production workforce.\1428\ The program aims to 
support a just transition for workers and communities in the transition 
to electrified transportation, and to strengthen domestic supply chains 
and support disadvantaged communities. DOE has also announced funding 
to support clean energy supply chains, with the funding going toward 
projects to support domestic clean energy manufacturing (including 
projects supporting battery production) in, or near, nine communities 
that were formerly tied to coal mining, and are expected to create 
almost 1,500 jobs.\1429\

[[Page 28126]]

We also note that during and after the comment period, several major 
U.S. automakers were negotiating new labor contracts, with an emphasis 
on workers in facilities that support the production of electrified 
vehicles.\1430\ The negotiations resulted in many workers in EV 
production, including EV battery workers, becoming newly eligible to 
join the union, as well as in raising wages for those employed by 
unionized automakers, and those employed by non-unionized 
automakers.\1431\ Research from the Economic Policy Institute indicates 
the U.S. auto sector and its employees would benefit from increasing 
electrification if there are policies to support domestic 
manufacturing, to automotive supply chain, and workers throughout the 
sector.\1432\ As discussed in RTC section 20, there are many existing 
and planned projects focused on training new and existing employees in 
fields related to green jobs, and specifically green jobs associated 
with electric vehicle production, maintenance and repair, and the 
associated charging infrastructure. This includes work by the Joint 
Office of Energy and Transportation (JOET), created by the BIL, which 
supports efforts related to deploying infrastructure, chargers and zero 
emission vehicles. In addition, the IRA is expected to lead to 
increased demand in PEVs through tax credits for purchasers of PEVs. 
These ongoing actions supporting green jobs, including those by DOE, 
the Department of Labor (DOL), the Office of Energy Jobs, and others, 
are particularly focused on jobs with high standards and the right to 
collective bargaining. Additional programs are described in RIA Chapter 
4.5, including programs and initiatives focused on community-level 
impacts. Jobs that may be lost due to reductions in ICE vehicle 
production may transition to fields related to EV production, but may 
also transition to other sectors. As mentioned above, a 2023 study 
funded by DOE indicates that there is a wide range of ICE automotive 
production jobs with similar skill sets to those required for jobs in 
EV automotive production and other industries, including the heat pump, 
solar panel manufacturing and transformer industry.\1433\ Also, we 
point out that even though vehicle manufacturing and battery 
manufacturing may create more localized employment effects, 
infrastructure work is, and will continue to be, a nation-wide effort.
---------------------------------------------------------------------------

    \1427\ https://www.energy.gov/articles/biden-harris-administration-announces-155-billion-support-strong-and-just-transition.
    \1428\ U.S. Department of Energy Office of Manufacturing and 
Energy Supply Chains Inflation Reduction Act Domestic Manufacturing 
Conversion Grants Funding Opportunity Announcement. DE-FOA-
0003106_FOA Doc_Amendment 000006_IRA 50143. https://infrastructure-exchange.energy.gov/Default.aspx#FoaIdf9eb1c8a-9922-46b6-993e-78972d823cb2.
    \1429\ https://www.energytech.com/energy-efficiency/article/21278185/doe-announces-275m-for-7-projects-to-strengthen-clean-energy-supply-chains-and-manufacturing-in-former-coal-communities.
    \1430\ UAW: Bargaining 2023 UAW-GM, https://uaw.org/gm2023/; 
UAW: UAW National Negotiators Reach Tentative Agreement with Ford on 
Record Contract, https://uaw.org/uaw-national-negotiators-reach-
tentative-agreement-with-ford-on-record-contract/
#:~:text=Some%20of%20our%20lower-
tier%20members%20at%20Sterling%20Axle,workers%20will%20receive%20an%2
0immediate%2011%25%20wage%20increase.; UAW: UAW reaches a Tentative 
Agreement with Stellantis, https://uaw-newsroom.prgloo.com/press-release/uaw-reaches-a-tentative-agreement-with-stellantis.
    \1431\ Bloomberg: UAW Scores Victory in EV Worker Battle Even 
with Wage Compromise, https://news.bloomberglaw.com/daily-labor-report/uaw-scores-victory-in-ev-worker-battle-even-with-wage-compromise; The Washington Post: UAW members ratify record contracts 
with Big 3 automakers, https://www.washingtonpost.com/business/2023/11/20/uaw-contract-ford-general-motors-stellantis.
    \1432\ Economic Policy Institute: The stakes for workers in how 
policymakers manage the coming shift to all-electric vehicles, 
https://www.epi.org/publication/ev-policy-workers.
    \1433\ See footnote 106.
---------------------------------------------------------------------------

    We do not have data to estimate current or future job quality. Nor 
are we able to determine the future location of vehicle manufacturing 
and supporting industries beyond the public announcements made as of 
the publication of this rule. We note that, compared to the proposal, 
we are finalizing standards that extend flexibilities and provide a 
slower increase in the stringency of the standards in the early years 
of the program. The more gradual shift allows for a more moderate pace 
in the industry's scale up to the battery supply chain and 
manufacturing, which in turn should help to reduce any potential 
impacts in employment across all sectors impacted by this rule. In 
addition, as illustrated by the range of sensitivity analyses which 
demonstrate alternative technology pathways manufacturers might choose 
to comply with the standards, as shown in sections IV.E and F of the 
preamble, there are multiple ways OEMs can choose to meet the 
standards, including through a wide range of BEV and PHEV technologies. 
These pathways continue to provide ICE technologies including base ICE, 
advanced ICE and HEVs in addition to PHEVs and BEVs.
2. Factor Shift, Demand, and Cost Effect on Employment
    Consistent with the proposal, in RIA Chapter 4.5 we describe three 
ways employment at the firm level might be affected by changes in a 
firm's production costs due to environmental regulation: A factor-shift 
effect, in which post-regulation production technologies may have 
different labor intensities than their pre-regulation counterparts; a 
demand effect, caused by higher production costs increasing market 
prices and decreasing demand; and a cost effect, caused by additional 
environmental protection costs leading regulated firms to increase 
their use of inputs.1434 1435 Due to data limitations, EPA 
is not quantifying the impacts of the final regulation on firm-level 
employment for affected companies, although we acknowledge these 
potential impacts. Instead, we discuss factor-shift, demand, and cost 
employment effects for the regulated sector at the industry level.
---------------------------------------------------------------------------

    \1434\ Morgenstern, Richard D., William A. Pizer, and Jhih-
Shyang Shih (2002). ``Jobs Versus the Environment: An Industry-Level 
Perspective.'' Journal of Environmental Economics and Management 43: 
412-436.
    \1435\ Berman and Bui have a similar framework in which they 
consider output and substitution effects that are similar to 
Morgenstern et al.'s three effect (Berman, E. and L. T. M. Bui 
(2001). ``Environmental Regulation and Labor Demand: Evidence from 
the South Coast Air Basin.'' Journal of Public Economics 79(2): 265-
295).
---------------------------------------------------------------------------

    Factor-shift effects are due to changes in labor intensity of 
production due to the standards. We do not have data on how the 
regulation might affect labor intensity of production within ICE 
vehicle production. There is ongoing research on the different labor 
intensity of production between BEV and ICE vehicle production, with 
inconsistent results. Some research indicates that the labor hours 
needed to produce a BEV are fewer than those needed to produce an ICE 
vehicle, while other research indicates there are no real differences. 
EPA worked with a research group to produce a peer-reviewed tear-down 
study of a BEV (Volkswagen ID.4) to its comparable ICE vehicle 
counterpart (Volkswagen Tiguan).\1436\ Peer reviewed study results were 
delivered in May 2023. Included in this study are estimates of labor 
intensity needed to produce each vehicle under three different 
assumptions of vertical integration of manufacturing scenarios ranging 
from a scenario where most of the assemblies and components are sourced 
from outside suppliers to a scenario where most of the assemblies and 
components are assembled in house. Under the low and moderate levels of 
vertical integration, results indicate that assembly time of the BEV at 
the plant is reduced compared to assembly time of the ICE vehicle. 
Under a scenario of high vertical integration, which includes the BEV 
battery assembly, results show an increase in time needed to assemble 
the BEV. When powertrain systems are ignored (battery, drive units, 
transmission and engine assembly), the BEV requires more time to 
assemble under all three vertical integration scenarios. The results

[[Page 28127]]

indicate that the largest difference in assembly comes from the 
building of the battery pack assembly. When the battery cells are built 
in-house, the BEV will require more hours to build at the assembly 
plant. It also indicates that if the labor input to manufacture 
batteries is included in the estimated labor needs to build a BEV, 
regardless of the vertical integration decisions to build batteries in-
house, BEVs will require more labor to build.
---------------------------------------------------------------------------

    \1436\ See RIA Chapter 2.5.2.2.3 for more information.
---------------------------------------------------------------------------

    Data on the labor intensity of PHEV production compared to ICE 
vehicle production is also very sparse. PHEVs share features with both 
ICE vehicles, including engines and exhaust assemblies, and BEVs, 
including motors and batteries. If labor is a function of the number of 
components, PHEVs might have a higher labor intensity of production 
compared to both BEV and ICE vehicles, and if they are produced in the 
U.S. may provide labor demand. The labor needs of battery production 
are also a factor of the total labor needs to build a PHEV.
    Given the current lack of data and inconsistency in the existing 
literature, we are unable to estimate a quantitative factor-shift 
effect of increasing relative PEV production as a function of this 
rule. However, we can say, generally, that research indicates that if 
production of PEVs and their power supplies are done in the U.S. at the 
same rates as ICE vehicles, we do not expect employment to fall, and it 
may likely increase. Electric vehicle manufacturing plants and battery 
plants are being built and announced in the U.S., as discussed in 
section IV of this preamble. In addition, states are making efforts to 
support increasing domestic production of electric vehicles and 
batteries, including support for the workforce. An Executive Order 
issued in South Carolina prioritized implementing a strategic 
initiative to explore opportunities related to ongoing economic 
development, business support and recruitment efforts with electric 
vehicle and automotive manufacturers.\1437\ A study from Ohio estimates 
that there will be more than 25,000 new jobs in EV manufacturing and 
maintenance, battery development and charging station installation and 
operations in the state by 2030.\1438\ California has a Workforce 
Development Board that has been focused on furthering the development 
of an equitable ZEV industry, including high quality jobs and access to 
them, since at least 2021.\1439\ Illinois has invested in EV training 
programs, research and development in the EV industry, and in workforce 
development and community support in the clean energy sector.\1440\ The 
Nevada Battery Coalition is tasked with identifying gaps in, and 
developing solutions for, workforce and economic development supporting 
the lithium industry in Nevada.\1441\ Kentucky has been the location 
for at least two recent automotive sector development projects, and it 
is providing resources toward upgrading industrial sites throughout the 
state, with funding evaluated based on factors including workforce 
availability.\1442\ Tennessee is co-locating a new Tennessee College of 
Applied Technology with a new EV manufacturing facility Ford is 
building in the state to provide specialized technical training.\1443\ 
In Michigan, the Department of Labor and Economic Opportunity created 
the Electric Vehicle Jobs Academy to assist with tuition and other 
supportive services for those training to be in the advanced automotive 
mobility and electrification industry, and the University of Michigan 
contracted with the state to open the University of Michigan Electric 
Vehicle Center focusing on research and development and developing a 
highly skilled workforce.1444 1445
---------------------------------------------------------------------------

    \1437\ SCpowersEV: State support--Driving the Future, https://scpowersev.com/state-support.
    \1438\ Accelerating Ohio's Auto & Advanced Mobility Workforce, 
Auto and Advanced Mobility Workforce Strategy, 2023. https://workforce.ohio.gov/wps/wcm/connect/gov/2e9f6e52-a4bc-4ef6-9080-e6b06f067a1a/Ohio%27s+Electric+Vehicle+Workforce+Strategy.pdf?MOD=AJPERES.
    \1439\ California Workforce Development Board, 2021. https://business.ca.gov/wp-content/uploads/2021/03/CWDB_ZEV-Plan.pdf.
    \1440\ Illinois Drive Electric: Abundant Workforce, https://ev.illinois.gov/grow-your-business/abundant-workforce.html.
    \1441\ Nevada Battery Coalition: https://nevadabatterycoalition.com/about.
    \1442\ Kentucky: Leading the Charge, https://ced.ky.gov/Newsroom/Article/20230816_Leading_th.
    \1443\ Area Development: Tennessee: A growing Capital of 
Electric Vehicle Production, https://www.areadevelopment.com/ContributedContent/Q4-2021/tennessee-growing-capital-of-electric-vehicle-production.shtm.
    \1444\ MI Labor and Economic Opportunity: Electric Vehicle Jobs 
Academy, https://www.michigan.gov/leo/bureaus-agencies/wd/industry-business/mobility/electric-vehicle-jobs-academy.
    \1445\ Michigan Engineering News, $130M Electric Vehicle Center 
launches at U-Michigan, https://news.engin.umich.edu/2023/04/130m-electric-vehicle-center-launches-at-u-michigan.
---------------------------------------------------------------------------

    Factor shift effects do not account for a change in the total 
number of vehicles sold. Demand effects on employment are due to 
changes in labor due to changes in demand. In general, if the 
regulation causes total sales of new vehicles to increase, more workers 
will be needed to assemble vehicles and manufacture their components. 
However, if BEVs, PHEVs and ICE vehicles have different labor 
intensities of production, the relative change in BEV, PHEV, and ICE 
vehicles sales will impact the demand effect on employment. As a simple 
example, assume that sales of BEV, PHEV and ICE vehicles increase. This 
would mean that the change in employment due to an increase demand will 
depend on the labor intensity of BEV, PHEV and ICE vehicle production 
and the increase in their respective sales. Now assume that PEV sales 
increased while ICE vehicle sales decreased. If total sales increase, 
that would indicate that PEVs replaced ICE vehicles, but there was new 
sales demand as well. For ease of illustration, ignore PHEVs for now, 
and assume that all PEV vehicles in this scenario are BEVs. The change 
in employment under this scenario would depend on the factor shift 
effect (the relative BEV and ICE vehicle labor intensity) for the 
replaced ICE vehicles, and the demand effect (labor intensity of BEVs) 
for the new sales demand. Under this same scenario (PEV sales are 
increasing while ICE sales are decreasing, with increased total sales) 
where PEVs are both replacing ICE vehicles, and there is new sales 
demand for PEVs, there is additional complexity when those PEVs are 
broken up unto BEVs and PHEVs. The factor shift effect for the replaced 
ICE vehicles would depend on whether PHEVs or BEVs are replacing them. 
In addition, there may be situations where BEVs are being replaced by 
PHEVs, or vice versa, and that effect would depend on the relative 
labor intensities of BEV and PHEV production. The demand effect for the 
new sales will depend on the labor intensity of the new BEVs and the 
new PHEVs, as well as the share of each that are being introduced into 
the market each model year.
    For the same reason we cannot estimate a factor-shift effect, 
namely that we do not know the labor intensity of BEV or PHEV vs ICE 
vehicle production, we are not currently able to estimate a demand-
shift effect on employment.
    The cost effects on employment are due to changes in labor 
associated with increases in costs of production. BEVs, PHEVs and ICE 
vehicles require different inputs and have different costs of 
production, though there are interchangeable, common, parts as well. In 
previous LD and HD rules, we have estimated a partial employment effect 
due to the change in costs of production. We estimated the cost effect 
using the historic share of labor in the cost of production to 
extrapolate future estimates of impacts on labor due to new compliance 
activities in response to the regulations. Specifically, we multiplied 
the share of labor in

[[Page 28128]]

production costs by the production cost increase estimated as an impact 
of the rule. This provided a sense of the magnitude of potential 
impacts on employment.
    As described in Chapter 4.6 of the RIA, we used historical data on 
the number of employees per $1 million in expenditures from the 
Employment Requirements Matrix (ERM) provided by the U.S. Bureau of 
Labor Statistics (BLS) to examine labor needs of six manufacturing 
sectors related to ICE and BEV vehicle production to determine trends 
over time. Three of these sectors (Electrical equipment and 
manufacturing, Other electrical equipment and component manufacturing 
and Semiconductor and other electronic component manufacturing) are 
more closely related to battery electric production, while the other 
three (Motor vehicle manufacturing, Motor vehicle body and trailer 
manufacturing, and Motor vehicle parts manufacturing) are sectors that 
are more generally related to both battery electric and ICE vehicle 
production.
    Over time, the amount of labor needed in the motor vehicle industry 
has changed: Automation and improved methods have led to significant 
productivity increases, which is reflected in the estimates from the 
BLS ERM. For example, in 1997 about 1.2 workers in the Motor vehicle 
manufacturing sector were needed per $1 million, but only 0.7 workers 
by 2022 (in 2022$).\1446\ Though two sectors mainly associated with BEV 
manufacturing, Electrical equipment manufacturing, and Other electrical 
equipment and component manufacturing, show an increase in recent 
years.
---------------------------------------------------------------------------

    \1446\ http://www.bls.gov/emp/ep_data_emp_requirements.htm; this 
analysis used data for the sectors electrical equipment and 
manufacturing, other electrical equipment and component 
manufacturing, motor vehicle manufacturing, motor vehicle body and 
trailer manufacturing, and motor vehicle parts manufacturing from 
``Chain-weighted (2012 dollars) real domestic employment 
requirements tables;'' see the excel file ``Final Cost Effect 
Employment Impacts Calculation'' in the docket.
---------------------------------------------------------------------------

3. Partial Employment Effect
    We attempt to estimate partial employment effects of this rule by 
separating out costs mainly associated with electrified portions of 
vehicle production (for example, batteries) and the ICE vehicle portion 
of production (for example, engines), as well as the costs that are 
common between them (for example, gliders.\1447\) We apply the 
electrified portions of cost changes only to sectors primarily focused 
on electrified portions of vehicle production, the ICE vehicle portion 
of costs only to sectors primarily focused on the ICE vehicle portions 
of production, and the costs common to both the electrified portions 
and ICE portions of vehicle production to sectors that are common to 
the electrified and ICE portions of vehicle production.\1448\ For more 
information on how we estimated this partial employment effect, see RIA 
Chapter 4.5.4.
---------------------------------------------------------------------------

    \1447\ In this context, a glider is a vehicle without a 
powertrain. It includes the body, chassis, interior and non-
propulsion related electrical components.
    \1448\ A report from the Seattle Jobs Initiative examined how 
electrification in the automotive industry might advance workforce 
development in Oregon and Washington. As part of that study, the 
authors identified the sectors classified by the North American 
Industry Classification System (NAICS) codes most strongly 
associated with automotive production in general, those exclusive to 
ICE vehicles, and those primarily associated with electrified 
portions of vehicle production. The report can be found at: https://www.seattle.gov/Documents/Departments/OSE/ClimateDocs/TE/EV%20Field%20in%20OR%20and%20WA_February20.pdf.
---------------------------------------------------------------------------

    In previous rules, we have estimated the cost effect, which is done 
while keeping sales constant. However, OMEGA estimates costs and 
changes in sales concurrently. Therefore, as we did in the proposal, 
the partial employment effect we estimate here is a combined cost and 
demand effect, and is meant to give a sense of possible partial 
employment effects, including directionality and relative magnitude. 
The estimate includes effects due to both LD and MD cost changes, as 
the costs used in the analysis were the combined estimated costs for 
the light- and medium-duty sectors, as well as the change in new 
vehicle sales in the LD market.\1449\ It does not include economy-wide 
labor effects, possible factor intensity effects, or effects from 
possible changes to domestic production.
---------------------------------------------------------------------------

    \1449\ We do not estimate a change in new medium-duty vehicle 
sales. See section VIII.C of this preamble, or RIA Chapter 4.4.2 for 
more information on the change in sales estimated due to this rule.
---------------------------------------------------------------------------

    Table 228 shows our estimates of partial employment results for the 
final rule for each year for the three sector groups. See Chapter 4.5.4 
of the RIA for more information on the employment analysis.

         Table 228--Estimated Partial Employment Effects for Sectors Focused on the Electrified, ICE, and Common Portions of Vehicle Production
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                  Common portions               Electrified portion                 ICE portion
                                                         -----------------------------------------------------------------------------------------------
                          Year                               Smallest                        Smallest                        Smallest
                                                              effect      Largest effect      effect      Largest effect      effect      Largest effect
--------------------------------------------------------------------------------------------------------------------------------------------------------
2027....................................................            -370          -3,600           3,000           6,900           2,200           2,900
2028....................................................            -900          -8,600          15,700          36,600            -800          -1,100
2029....................................................          -1,300         -13,000          36,800          89,100          -7,600          -9,800
2030....................................................          -1,900         -19,800          54,800         140,200         -13,600         -17,500
2031....................................................          -2,100         -22,600          67,700         182,600         -18,800         -24,200
2032....................................................          -2,600         -27,700          75,100         213,900         -23,200         -29,900
--------------------------------------------------------------------------------------------------------------------------------------------------------

    These results show negative employment effects in the ICE focused 
sectors (except for 2027) and the sectors common to the ICE and 
electrified portions of production. There are positive employment 
effects in the sectors focused on the electrified portions of 
production.
    Table 229 shows the range from the smallest estimated employment 
gain across the combination of sector groups to the largest estimated 
potential employment gain across the combination of sector groups. This 
is not a straight sum of the smallest and largest effects as seen in 
Table 228 above, which are based on absolute value (closest to and 
furthest from zero) and are not affected by the direction of the 
effect, but a sum of the minimum and maximum estimated effects, which 
include direction of the effect. The estimated range shows an expected 
increase in employment from 2027 through 2032. In addition, these 
estimates indicate that possible job growth over time in PEV related 
sectors will be greater than possible job loss in ICE or common 
sectors, and those gains are increasing over time.

[[Page 28129]]



    Table 229--Estimated Maximum Combined Range of Estimated Partial
                  Employment Effects Across all Sectors
------------------------------------------------------------------------
 
------------------------------------------------------------------------
Year                                          Maximum combined range
------------------------------------------------------------------------
2027....................................           1,600           9,400
2028....................................           6,000          34,900
2029....................................          14,000          80,200
2030....................................          17,600         124,700
2031....................................          20,800         161,700
2032....................................          17,400         188,100
------------------------------------------------------------------------

    These results are consistent with the results of the FEV tear-down 
study, discussed in section VIII.I.2 of this preamble, and indicate 
that even if fewer labor hours are needed at the assembly plant, 
increased labor hours will be needed elsewhere in the supply chain for 
the electrified portions of production, for example in building and 
assembling battery packs.
4. Employment in Related Sectors
    With respect to possible employment effects in other sectors, 
economy-wide impacts on employment are generally driven by broad 
macroeconomic effects. However, employment impacts, both positive and 
negative, in sectors upstream and downstream from the regulated sector, 
or in sectors producing substitute or complementary products, may also 
occur as a result of this rule. For example, changes in electricity 
generation may have consequences for labor demand in those upstream 
industries. Lower per-mile fuel costs could lead to labor effects in 
ride-sharing or ride-hailing services through an increase in demand for 
those services. Increased mobility related to the lower cost per mile 
of driving, as discussed in section VIII.D.1 of this preamble may also 
benefit drivers or owner/operators in other ways, including through MD 
fleets being able to service a greater range of customers, or consumers 
having access to a larger geographic area for employment opportunities. 
Reduced demand for gasoline may lead to impacts on demand for labor in 
the gas station sector, although the fact that many gas stations 
provide other goods, such as food and car washes, will moderate 
possible losses in this sector. There may also be an increase in demand 
for labor in sectors that manufacture, build and maintain charging 
stations. To that end, the BIL is investing in the build out of EV 
chargers along America's major roads, freeways and interstates, 
focusing on domestically produced iron and steel, and domestically 
manufactured chargers.\1450\ The magnitude of all of these impacts 
depends on a variety of factors including the labor intensities of the 
related sectors, as well as the nature of the linkages (which can be 
reflected in measures of elasticity) between them and the regulated 
firms.
---------------------------------------------------------------------------

    \1450\ The White house: Full Charge: The Economics of Building a 
National EV Charging Network, https://www.whitehouse.gov/briefing-room/blog/2023/12/11/full-charge-the-economics-of-building-a-national-ev-charging-network.
---------------------------------------------------------------------------

    Electrification of the vehicle fleet is likely to affect both the 
number and the nature of employment in the auto and parts sectors and 
related sectors, such as providers of charging infrastructure and 
utilities supporting grid enhancements. ICCT estimated that charging 
infrastructure growth in the U.S. could create about 160,000 jobs by 
2032, in sectors ranging from electrical installation, maintenance and 
repair, charger assembly, general construction, software maintenance 
and repair, planning and design, and administration and legal.\1451\ As 
mentioned above, JOET has funded initiatives related to job training 
for many sectors related to charging resiliency and performance, 
including those in the electrical industry.\1452\ In addition, the type 
and number of jobs related to vehicle maintenance are expected to 
change as well, though we expect this to happen over a longer time span 
due to the nature of fleet turnover. Given the timeline, we expect 
opportunities for workers to retrain from ICE vehicle maintenance to 
other positions, for example within PEV maintenance, charging station 
infrastructure, or elsewhere in the economy.
---------------------------------------------------------------------------

    \1451\ ICCT: Charging Up America, https://theicct.org/wp-content/uploads/2024/01/ID-28-%E2%80%93-U.S.-infra-jobs-report-letter-70112-ALT-v6.pdf.
    \1452\ JOET: New Funding Enhances EV Charging Resiliency, 
Reliability, Equity and Workforce Development, https://driveelectric.gov/news/workforce-development-ev-projects.
---------------------------------------------------------------------------

    Reduced consumption of petroleum fuel represents fuel savings for 
purchasers of fuel, as well as a potential loss in value of output for 
the petroleum refining industry, fuel distributors, and gasoline 
stations, which may result in reduced employment in these sectors. 
These impacts may also pass up the supply chain to, for example, 
pipeline construction, operation and maintenance, and domestic oil 
production. However, because the fuel production sector is material-
intensive, and we estimate that only part of the reduction in liquid 
fuel consumption will be met by reduced refinery production in the U.S. 
(see RIA Chapter 10), the employment effect is not expected to be 
large. In addition, it may be difficult to distinguish these effects 
from other trends, such as increases in petroleum sector labor 
productivity that may also lower labor demand.
    As discussed in section I of this preamble, there have been several 
legislative and administrative efforts enacted since 2021 aimed at 
improving the domestic supply chain for electric vehicles, including 
electric vehicle chargers, critical minerals, and components needed by 
domestic manufacturers of EV batteries. These actions are also expected 
to provide opportunities for domestic employment in these associated 
sectors.
    The standards may affect employment for auto dealers through a 
change in vehicles sold, with increasing sales being associated with an 
increase in labor demand. However, vehicle sales are also affected by 
macroeconomic effects, and it is difficult to separate out the effects 
of the standards on sales from effects due to macroeconomic conditions. 
In addition, auto dealers may also be affected by changes in 
maintenance and service costs, as well as through changes in the 
maintenance needs of the vehicles sold. For example, reduced 
maintenance needs of BEVs would lead to reduced demand for maintenance 
labor.
    Commenters on the proposal stated concerns about a lack of 
available technicians qualified to service electric vehicles and 
charging infrastructure. We do not agree that there will be a 
significant lack of technicians in the timeframe of this rule given 
investments and programs focused on training for EV sector positions 
(including those

[[Page 28130]]

discussed in section VIII.I.1 of this preamble and section 20 of the 
RTC, as well as other programs, including those at many community 
colleges, supporting jobs related to EV technology, including 
technicians).\1453\ Additionally, the phase-in of this final rule, 
described in section III of this preamble, will allow time for 
technicians to be trained. Commenters also stated that refinery jobs 
and gas station employees are at risk if the share of BEVs in the 
market increases as projected in the proposal. However, traditional gas 
stations and liquid fuel providers are already incorporating electric 
vehicle charging into their business plans. For example, investments by 
Chevron have been made to expand reliable, profitable EV charging 
stations to existing convenience stores and gas stations across the 
county; \1454\ Shell is offering ``Shell Recharge,'' which is focused 
on providing charging solutions for electric vehicle fleets; \1455\ and 
Love's Travel Stops, a national travel stop network, is working with 
Electrify America to provide ultra-fast EV charging at seven existing 
travel stops, which also have helped Electrify America to complete a 
cross-country charging route from LA to DC \1456\ In addition, some gas 
stations have converted from providing liquid fuel to electric 
charging.\1457\ Overall, nearly three quarters of existing gas stations 
are located in census tracts eligible for the Alternative Fuel Vehicle 
Refueling Tax Credit (Internal Revenue Code 30C), encouraging the 
continuation of private sector employment in these communities.\1458\
---------------------------------------------------------------------------

    \1453\ For a list of some of the community college and other 
programs that support the electric vehicle industry, see the 
Community College and Other EV Training Programs memo to the docket.
    \1454\ Businesswire: Electric Era Announces Investment from 
Chevron Technology Ventures to Scale Adoption of it PowerNode 
Electric Vehicle Charging Stations.https://www.businesswire.com/news/home/20231003932625/en/Electric-Era-Announces-Investment-from-Chevron-Technology-Ventures-to-Scale-Adoption-of-its-PowerNode%E2%84%A2-Electric-Vehicle-Charging-Stations.
    \1455\ Shell Recharge: https://www.shell.us/business-customers/shell-fleet-solutions/shell-recharge?msclkid=b112711a7f16131508b614da1ed439cf&utm_source=bing&utm_medium=cpc&utm_campaign=US_RCG_EN_NB_PM_BNG_Fleet_Recharge_Product&utm_term=ev%20charging&utm_content=Recharge%20Solution#iframe=L0xlYWRfR2VuX0Zvcm0_SUQ9VUhKdlpIVmpkRDFUWld4bUlITmxiR1ZqZEdWa0preGxZV1JUYjNWeVkyVTlUM0puWVc1cFl3PT0.
    \1456\ Love's: Electrify America Announces Collaboration with 
Love's Travel Stops:https://www.loves.com/en/news/2020/august/electrify-america-announces-collaboration-with-loves-travel-stops.
    \1457\ NPR: Gas Station Converts to Electric Charging Station 
and Speeds Ahead of Curve.https://www.npr.org/2019/10/26/773446805/gas-station-converts-to-electric-charging-station-and-speeds-ahead-of-curve.
    \1458\ Gohlke, David, Zhou, Yan, and Wu, Xinyi. 2024. 
``Refueling Infrastructure Deployment in Low-Income and Non-Urban 
Communities''. United States. https://doi.org/10.2172/2318956. 
https://www.osti.gov/servlets/purl/2318956.
---------------------------------------------------------------------------

    Commenters discussed possible transitory effects on impacted 
industries, noting that there will not be a one-to-one job replacement, 
in part because battery processing operations are largely conducted 
overseas and workers trained in one field may not necessarily be able 
to move into another field, stating that the U.S. labor pool supporting 
the automotive industry will be redefined. As noted earlier in this 
section, and in section VIII.I.1 of this preamble, there are many 
programs and targeted investments through federal, state and private 
programs to support and enhance employment opportunities in the U.S. 
related to the automotive industry, battery manufacturing, and charging 
infrastructure and support across the supply chains.\1459\ Commenters 
stated that moving to BEVs will result in loss of jobs due to increased 
automation and fewer components in a BEV compared to an ICE vehicle, 
and that jobs in the specialty aftermarket industry will be lost. One 
commenter stated that there will be reduced demand due to higher 
upfront vehicle costs, which will lead to job losses across the 
industry.
---------------------------------------------------------------------------

    \1459\ DOE: Biden-Harris Administration announces $3.5 Billion 
to strengthen domestic battery manufacturing, https://www.energy.gov/articles/biden-harris-administration-announces-35-billion-strengthen-domestic-battery-manufacturing; White House: Fact 
Sheet: Biden-Harris Administration Driving U.S. Battery 
Manufacturing and Good-Paying Jobs,https://www.whitehouse.gov/briefing-room/statements-releases/2022/10/19/fact-sheet-biden-harris-administration-driving-u-s-battery-manufacturing-and-good-paying-jobs.
---------------------------------------------------------------------------

    Some commenters appear to ignore that the market share of new PEVs 
sold is increasing over time, while other commenters point out that the 
IRA has already led to new jobs in the automotive industry, including 
in battery manufacturing, and additional research shows job creation in 
charging infrastructure industry. We agree that a shift in the 
automotive industry is already underway and, as reflected in our No 
Action scenario modeling, this shift is occurring independent of this 
rule.\1460\ Also, the PEV share of the total on-road fleet will change 
more slowly than new vehicle shares. In 2032, over 80 percent of the 
on-road fleet will use an internal combustion engine, and even in 2055 
such vehicles will be a majority of the fleet.\1461\ In addition, we 
are finalizing standards that incorporate additional flexibilities and 
a slower increase in the stringency of the standards compared to the 
proposal. We recognize that the ongoing transition in the vehicles 
market will result in shifts of patterns of employment, with increases 
in employment in component production and new domestic jobs related to 
PEVs offset at least in part by losses in production of ICE vehicles. 
We also recognize that commenters are concerned about job quality and 
geographic location. However, for the reasons discussed above, we think 
the net effects of the rule are likely to be positive and we see no 
basis for concluding that these final standards will cause significant 
economic dislocation.
---------------------------------------------------------------------------

    \1460\ For more information on the No Action case, see section 
IV.B of the preamble.
    \1461\ See Figure 8-5: Share of ICE (including HEV), PHEV, and 
BEV in the total light- and medium-duty stock under the Final 
standards in Chapter 8.2 in the RIA.
---------------------------------------------------------------------------

J. Environmental Justice

1. Overview
    Communities with environmental justice concerns, which can include 
a range of communities and populations, face relatively greater 
cumulative impacts associated with environmental exposures of multiple 
types, as well as impacts from non-chemical stressors. Numerous studies 
have found that environmental hazards such as air pollution are more 
prevalent in areas where people of color and low-income populations 
represent a higher fraction of the population compared with the general 
population.1462 1463 1464 1465 1466 1467 
1468 1469 1470 As described in section II.C.8 of this 
preamble, there is some literature to suggest that different 
sociodemographic factors may increase susceptibility to the effects of 
traffic-associated air pollution. In addition, compared to non-Hispanic 
Whites, some other racial groups experience greater levels of health 
problems during some life stages. For example, in 2018-2020,

[[Page 28131]]

about 12 percent of non-Hispanic Black; 9 percent of non-Hispanic 
American Indian/Alaska Native; and 7 percent of Hispanic children were 
estimated to currently have asthma, compared with 6 percent of non-
Hispanic White children.\1471\ Nationally, on average, non-Hispanic 
Black and non-Hispanic American Indian or Alaska Native people also 
have lower than average life expectancy based on 2019 data.\1472\
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    \1462\ Rowangould, G.M. (2013) A census of the near-roadway 
population: public health and environmental justice considerations. 
Trans Res D 25: 59-67. http://dx.doi.org/10.1016/j.trd.2013.08.003.
    \1463\ Marshall, J.D. (2000) Environmental inequality: Air 
pollution exposures in California's South Coast Air Basin. Atmos 
Environ 21: 5499-5503. https://doi.org/10.1016/j.atmosenv.2008.02.005.
    \1464\ Marshall, J.D. (2008) Environmental inequality: air 
pollution exposures in California's South Coast Air Basin. Atmos 
Environ 21: 5499-5503. https://doi.org/10.1016/j.atmosenv.2008.02.005.
    \1465\ Mohai, P.; Pellow, D.; Roberts Timmons, J. (2009) 
Environmental justice. Annual Reviews 34: 405-430. https://doi.org/10.1146/annurev-environ82508-094348.
    \1466\ Jbaily A, Zhou X, Liu J, Lee TH, Kamareddine L, Verguet 
S, Dominici F. Air pollution exposure disparities across US 
population and income groups. Nature. 2022 Jan;601(7892):228-233.''
    \1467\ Collins TW, Grineski SE. Racial/Ethnic Disparities in 
Short-Term PM2.5 Air Pollution Exposures in the United 
States. Environ Health Perspect. 2022 Aug;130(8):87701.
    \1468\ Weaver GM, Gauderman WJ. Traffic-Related Pollutants: 
Exposure and Health Effects Among Hispanic Children. Am J Epidemiol. 
2018 Jan 1;187(1):45-52.
    \1469\ C.W. Tessum, D.A. Paolella, S.E. Chambliss, J.S. Apte, 
J.D. Hill, J.D. Marshall, PM2.5 polluters 
disproportionately and systemically affect people of color in the 
United States. Sci. Adv. 7, eabf4491 (2021)).
    \1470\ Valencia, A.; Cerre, M.; Arunachalam, S. A hyperlocal 
hybrid data fusion near-road PM2.5 and NO2 annual risk 
and environmental justice assessment across the United States, 18 
PLOS ONE 1 (2023).
    \1471\ Current Asthma Prevalence by Race and Ethnicity (2018-
2020). Online at https://www.cdc.gov/asthma/most_recent_national_asthma_data.htm.
    \1472\ Arias, E. Xu, J. (2022) United States Life Tables, 2019. 
National Vital Statistics Report, Volume 70, Number 19. Online at 
https://www.cdc.gov/nchs/data/nvsr/nvsr70/nvsr70-19.pdf.
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    EPA's 2016 ``Technical Guidance for Assessing Environmental Justice 
in Regulatory Analysis'' provides recommendations on conducting the 
highest quality analysis feasible of environmental justice (EJ) issues 
associated with a given regulatory decision, though it is not 
prescriptive, recognizing that data limitations, time and resource 
constraints, and analytic challenges will vary by media and regulatory 
context. Where applicable and practicable, the Agency endeavors to 
conduct such an EJ analysis. There is evidence that communities with EJ 
concerns are disproportionately and adversely impacted by vehicle 
emissions.\1473\
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    \1473\ Demetillo, M.A.; Harkins, C.; McDonald, B.C.; et al. 
(2021) Space-based observational constraints on NO2 air 
pollution inequality from diesel traffic in major US cities. Geophys 
Res Lett 48, e2021GL094333.
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    In section VIII.J.2 of the preamble, we discuss the EJ impacts of 
this final rule's GHG emission standards from the anticipated reduction 
of GHGs. We also discuss in section VIII.J.3 of the preamble the 
potential additional EJ impacts from the non-GHG (criteria pollutant 
and air toxic) emissions changes we estimate would result from 
compliance with the emission standards, including impacts near roadways 
and from upstream sources. EPA did not consider potential adverse 
disproportionate impacts of vehicle emissions in selecting the emission 
standards, but we provide information about adverse impacts of vehicle 
emissions for the public's understanding of this rulemaking, which 
addresses the need to protect public health consistent with CAA section 
202(a)(1)-(2). When assessing the potential for disproportionate and 
adverse health or environmental impacts of regulatory actions on 
populations with potential EJ concerns, EPA strives to answer the 
following three broad questions, for purposes of the EJ analysis. (1) 
Is there evidence of potential EJ concerns in the baseline (the state 
of the world absent the regulatory action)? Assessing the baseline will 
allow EPA to determine whether pre-existing disparities are associated 
with the pollutant(s) under consideration (e.g., if the effects of the 
pollutant(s) are more concentrated in some population groups); (2) Is 
there evidence of potential EJ concerns for the regulatory option(s) 
under consideration? Specifically, how are the pollutant(s) and its 
effects distributed for the regulatory options under consideration?; 
and (3) Do the regulatory option(s) under consideration exacerbate or 
mitigate EJ concerns relative to the baseline? It is not always 
possible to provide quantitative answers to these questions.
    EPA received several comments related to the environmental justice 
impacts of light- and medium-duty vehicles in general and the impacts 
of the proposal specifically. We summarize and respond to those 
comments in section 9 of the RTC document that accompanies this 
rulemaking. After consideration of comments, EPA updated our review of 
the literature, while maintaining our general approach to the 
environmental justice analysis. We note that the analyses in this 
section are based on data that was the most appropriate recent data at 
the time we undertook the analyses. We intend to continue analyzing 
data concerning disproportionate impacts of pollution in the future, 
using the latest available data. We also note that after consideration 
of comments, we conducted an analysis of how human exposure to future 
air quality varies with sociodemographic characteristics relevant to 
potential environmental justice concerns in scenarios with and without 
the rule in place. The results of this analysis are presented in 
section VII.D of this preamble and in RIA Chapter 7.6
2. GHG Impacts on Environmental Justice and Vulnerable or Overburdened 
Populations
    In the 2009 Endangerment Finding, the Administrator considered how 
climate change threatens the health and welfare of the U.S. population. 
As part of that consideration, she also considered risks to various 
populations and communities, finding that certain parts of the U.S. 
population may be especially vulnerable based on their characteristics 
or circumstances. These groups include economically and socially 
disadvantaged communities; individuals at vulnerable life stages, such 
as the elderly, the very young, and pregnant or nursing women; those 
already in poor health or with comorbidities; the disabled; those 
experiencing homelessness, mental illness, or substance abuse; and 
Indigenous or other populations dependent on limited resources for 
subsistence due to factors including but not limited to geography, 
access, and mobility.
    Scientific assessment reports produced over the past decade by the 
USGCRP,1474 1475 1476 the 
IPCC,1477 1478 1479 1480 the National

[[Page 28132]]

Academies of Science, Engineering, and Medicine,1481 1482 
and EPA \1483\ add more evidence that the impacts of climate change 
raise potential EJ concerns. These reports conclude that less-affluent, 
traditionally marginalized and predominantly non-White communities can 
be especially vulnerable to climate change impacts because they tend to 
have limited resources for adaptation, are more dependent on climate-
sensitive resources such as local water and food supplies or have less 
access to social and information resources. Some communities of color, 
specifically populations defined jointly by ethnic/racial 
characteristics and geographic location (e.g., African-American, Black, 
and Hispanic/Latino communities; Native Americans, particularly those 
living on tribal lands and Alaska Natives), may be uniquely vulnerable 
to climate change health impacts in the U.S., as discussed below. In 
particular, the 2016 scientific assessment on the Impacts of Climate 
Change on Human Health \1484\ found with high confidence that 
vulnerabilities are place- and time-specific, lifestages and ages are 
linked to immediate and future health impacts, and social determinants 
of health are linked to greater extent and severity of climate change-
related health impacts. The GHG emission reductions from this final 
rule would contribute to efforts to reduce the probability of severe 
impacts related to climate change.
---------------------------------------------------------------------------

    \1474\ USGCRP, 2018: Impacts, Risks, and Adaptation in the 
United States: Fourth National Climate Assessment, Volume II 
[Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. 
Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change 
Research Program, Washington, DC, USA, 1515 pp. doi:10.7930/
NCA4.2018.
    \1475\ USGCRP, Impacts in the United States: Assessment C..E. 
M.C. U.S. Global Change Research Program, Washington, DC.
    \1476\ Jay, A.K., A.R. Crimmins, C.W. Avery, T.A. Dahl, R.S. 
Dodder, B.D. Hamlington, A. Lustig, K. Marvel, P.A. M[eacute]ndez-
Lazaro, M.S. Osler, A. Terando, E.S. Weeks, and A. Zycherman, 2023: 
Ch. 1. Overview: Understanding risks, impacts, and responses. In: 
Fifth National Climate Assessment. Crimmins, A.R., C.W. Avery, D.R. 
Easterling, K.E. Kunkel, B.C. Stewart, and T.K. Maycock, Eds. U.S. 
Global Change Research Program, Washington, DC, USA. https://
doi.org/10.7930/NCA5.2023.CH1.
    \1477\ Oppenheimer, M., M. Campos, R. Warren, J. Birkmann, G. 
Luber, B. O'Neill, and K. Takahashi, 2014: Emergent risks and key 
vulnerabilities. In: Climate Change 2014: Impacts, Adaptation, and 
Vulnerability. Part A: Global and Sectoral Aspects. Contribution of 
Working Group II to the Fifth Assessment Report of the 
Intergovernmental Panel on Climate Change [Field, C.B., V.R. Barros, 
D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. Bilir, M. Chatterjee, 
K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, E.S. Kissel, A.N. 
Levy, S. MacCracken, P.R. Mastrandrea, and L.L. White (eds.)]. 
Cambridge University Press, Cambridge, United Kingdom and New York, 
NY, USA, pp. 1039-1099.
    \1478\ Porter, J.R., L. Xie, A.J. Challinor, K. Cochrane, S.M. 
Howden, M.M. Iqbal, D.B. Lobell, and M.I. Travasso, 2014: Food 
security and food production systems. In: Climate Change 2014: 
Impacts, Adaptation, and Vulnerability. Part A: Global and Sectoral 
Aspects. Contribution of Working Group II to the Fifth Assessment 
Report of the Intergovernmental Panel on Climate Change [Field, 
C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. Mastrandrea, T.E. 
Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. Genova, B. Girma, 
E.S. Kissel, A.N. Levy, S. MacCracken, P.R. Mastrandrea, and L.L. 
White (eds.)]. Cambridge University Press, Cambridge, United Kingdom 
and New York, NY, USA, pp. 485-533.
    \1479\ Smith, K.R., A. Woodward, D. Campbell-Lendrum, D.D. 
Chadee, Y. Honda, Q. Liu, J.M. Olwoch, B. Revich, and R. Sauerborn, 
2014: Human health: impacts, adaptation, and co-benefits. In: 
Climate Change 2014: Impacts, Adaptation, and Vulnerability. Part A: 
Global and Sectoral Aspects. Contribution of Working Group II to the 
Fifth Assessment Report of the Intergovernmental Panel on Climate 
Change [Field, C.B., V.R. Barros, D.J. Dokken, K.J. Mach, M.D. 
Mastrandrea, T.E. Bilir, M. Chatterjee, K.L. Ebi, Y.O. Estrada, R.C. 
Genova, B. Girma, E.S. Kissel, A.N. Levy, S. MacCracken, P.R. 
Mastrandrea, and L.L. White (eds.)]. Cambridge University Press, 
Cambridge, United Kingdom and New York, NY, USA, pp. 709-754.
    \1480\ IPCC, 2018: Global Warming of 1.5 [deg]C. An IPCC Special 
Report on the impacts of global warming of 1.5 [deg]C above pre-
industrial levels and related global greenhouse gas emission 
pathways, in the context of strengthening the global response to the 
threat of climate change, sustainable development, and efforts to 
eradicate poverty [Masson-Delmotte, V., P. Zhai, H.-O. P[ouml]rtner, 
D. Roberts, J. Skea, P.R. Shukla, A. Pirani, W. Moufouma-Okia, C. 
P[eacute]an, R. Pidcock, S. Connors, J.B.R. Matthews, Y. Chen, X. 
Zhou, M.I. Gomis, E. Lonnoy, T. Maycock, M. Tignor, and T. 
Waterfield (eds.)]. In Press.
    \1481\ National Research Council. 2011. America's Climate 
Choices. Washington, DC: The National Academies Press. https://doi.org/10.17226/12781.
    \1482\ National Academies of Sciences, Engineering, and 
Medicine. 2017. Communities in Action: Pathways to Health Equity. 
Washington, DC: The National Academies Press. https://doi.org/10.17226/24624.
    \1483\ EPA. 2021. Climate Change and Social Vulnerability in the 
United States: A Focus on Six Impacts. U.S. Environmental Protection 
Agency, EPA 430-R-21-003.
    \1484\ USGCRP, 2016: The Impacts of Climate Change on Human 
Health in the United States: A Scientific Assessment.
---------------------------------------------------------------------------

Effects on Specific Communities and Populations
    Per the Fourth National Climate Assessment (NCA4), ``Climate change 
affects human health by altering exposures to heat waves, floods, 
droughts, and other extreme events; vector-, food- and waterborne 
infectious diseases; changes in the quality and safety of air, food, 
and water; and stresses to mental health and well-being.'' \1485\ Many 
health conditions such as cardiopulmonary or respiratory illness and 
other health impacts are associated with and exacerbated by an increase 
in GHGs and climate change outcomes, which is problematic as these 
diseases occur at higher rates within vulnerable communities. 
Importantly, negative public health outcomes include those that are 
physical in nature, as well as mental, emotional, social, and economic.
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    \1485\ Ebi, K.L., J.M. Balbus, G. Luber, A. Bole, A. Crimmins, 
G. Glass, S. Saha, M.M. Shimamoto, J. Trtanj, and J.L. White-
Newsome, 2018: Human Health. In Impacts, Risks, and Adaptation in 
the United States: Fourth National Climate Assessment, Volume II 
[Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. 
Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change 
Research Program, Washington, DC, USA, pp. 539-571. doi: 10.7930/
NCA4.2018.CH14.
---------------------------------------------------------------------------

    The scientific assessment literature, including the aforementioned 
reports, demonstrates that there are myriad ways in which these 
particular communities and populations may be affected at the 
individual and community levels. Individuals face differential exposure 
to criteria pollutants, in part due to the proximities of highways, 
trains, factories, and other major sources of pollutant-emitting 
sources to less-affluent residential areas. Outdoor workers, such as 
construction or utility crews and agricultural laborers, who frequently 
are comprised of already at-risk groups, are exposed to poor air 
quality and extreme temperatures without relief. Furthermore, people in 
communities with EJ concerns face greater housing, clean water, and 
food insecurity and bear disproportionate and adverse economic impacts 
and health burdens associated with climate change effects. They have 
less or limited access to healthcare and affordable, adequate health or 
homeowner insurance.\1486\ Finally, resiliency and adaptation are more 
difficult for economically vulnerable communities; these communities 
have less liquidity, individually and collectively, to move or to make 
the types of infrastructure or policy changes to limit or reduce the 
hazards they face. They frequently are less able to self-advocate for 
resources that would otherwise aid in building resilience and hazard 
reduction and mitigation.
---------------------------------------------------------------------------

    \1486\ USGCRP, 2016: The Impacts of Climate Change on Human 
Health in the United States: A Scientific Assessment.
---------------------------------------------------------------------------

    The assessment literature cited in EPA's 2009 and 2016 Endangerment 
and Cause or Contribute Findings, as well as Impacts of Climate Change 
on Human Health, also concluded that certain populations and life 
stages, including children, are most vulnerable to climate-related 
health effects.\1487\ The assessment literature produced from 2016 to 
the present strengthens these conclusions by providing more detailed 
findings regarding related vulnerabilities and the projected impacts 
youth may experience. These assessments--including the NCA5 and The 
Impacts of Climate Change on Human Health in the United States (2016)--
describe how children's unique physiological and developmental factors 
contribute to making them particularly vulnerable to climate change. 
Impacts to children are expected from heat waves, air pollution, 
infectious and waterborne illnesses, and mental health effects 
resulting from extreme weather events. In addition, children are among 
those especially susceptible to allergens, as well as health effects 
associated with heat waves, storms, and floods. Additional health 
concerns may arise in low-income households, especially those with 
children, if climate change reduces food availability and increases 
prices, leading to food insecurity within households. More generally, 
these reports note that extreme weather and flooding can cause or 
exacerbate poor health outcomes by affecting mental health because of 
stress; contributing to or worsening existing conditions, again due to 
stress or also as a consequence of exposures to water and air 
pollutants; or by impacting hospital and emergency services 
operations.\1488\ Further, in

[[Page 28133]]

urban areas in particular, flooding can have significant economic 
consequences due to effects on infrastructure, pollutant exposures, and 
drowning dangers. The ability to withstand and recover from flooding is 
dependent in part on the social vulnerability of the affected 
population and individuals experiencing an event.\1489\ In addition, 
children are among those especially susceptible to allergens, as well 
as health effects associated with heat waves, storms, and floods. 
Additional health concerns may arise in low-income households, 
especially those with children, if climate change reduces food 
availability and increases prices, leading to food insecurity within 
households.
---------------------------------------------------------------------------

    \1487\ 74 FR 66496, December 15, 2009; 81 FR 54422, August 15, 
2016.
    \1488\ Ebi, K.L., J.M. Balbus, G. Luber, A. Bole, A. Crimmins, 
G. Glass, S. Saha, M.M. Shimamoto, J. Trtanj, and J.L. White-
Newsome, 2018: Human Health. In Impacts, Risks, and Adaptation in 
the United States: Fourth National Climate Assessment, Volume II 
[Reidmiller, D.R., C.W. Avery, D.R. Easterling, K.E. Kunkel, K.L.M. 
Lewis, T.K. Maycock, and B.C. Stewart (eds.)]. U.S. Global Change 
Research Program, Washington, DC, USA, pp. 539-571. doi:10.7930/
NCA4.2018.CH14.
    \1489\ National Academies of Sciences, Engineering, and Medicine 
2019. Framing the Challenge of Urban Flooding in the United States. 
Washington, DC: The National Academies Press. https://doi.org/10.17226/25381.
---------------------------------------------------------------------------

    The Impacts of Climate Change on Human Health \1490\ also found 
that some communities of color, low-income groups, people with limited 
English proficiency, and certain immigrant groups (especially those who 
are undocumented) are subject to many factors that contribute to 
vulnerability to the health impacts of climate change. While difficult 
to isolate from related socioeconomic factors, race appears to be an 
important factor in vulnerability to climate-related stress, with 
elevated risks for mortality from high temperatures reported for Black 
or African American individuals compared to White individuals after 
controlling for factors such as air conditioning use. Moreover, people 
of color are disproportionately more exposed to air pollution based on 
where they live, and disproportionately vulnerable due to higher 
baseline prevalence of underlying diseases such as asthma. As explained 
earlier, climate change can exacerbate local air pollution conditions 
so this increase in air pollution is expected to have disproportionate 
and adverse effects on these communities. Locations with greater health 
threats include urban areas (due to, among other factors, the ``heat 
island'' effect where built infrastructure and lack of green spaces 
increases local temperatures), areas where airborne allergens and other 
air pollutants already occur at higher levels, and communities 
experienced depleted water supplies or vulnerable energy and 
transportation infrastructure.
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    \1490\ USGCRP, 2016: The Impacts of Climate Change on Human 
Health in the United States: A Scientific Assessment. Crimmins, A., 
J. Balbus, J.L. Gamble, C.B. Beard, J.E. Bell, D. Dodgen, R.J. 
Eisen, N. Fann, M.D. Hawkins, S.C. Herring, L. Jantarasami, D.M. 
Mills, S. Saha, M.C. Sarofim, J. Trtanj, and L. Ziska, Eds. U.S. 
Global Change Research Program, Washington, DC, 312 pp. http://dx.doi.org/10.7930/J0R49NQX.
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    The recent EPA report on climate change and social vulnerability 
\1491\ examined four socially vulnerable groups (individuals who are 
low income, minority, without high school diplomas, and/or 65 years and 
older) and their exposure to several different climate impacts (air 
quality, coastal flooding, extreme temperatures, and inland flooding). 
This report found that Black and African-American individuals were 40 
percent more likely to currently live in areas with the highest 
projected increases in mortality rates due to climate-driven changes in 
extreme temperatures, and 34 percent more likely to live in areas with 
the highest projected increases in childhood asthma diagnoses due to 
climate-driven changes in particulate air pollution. The report found 
that Hispanic and Latino individuals are 43 percent more likely to live 
in areas with the highest projected labor hour losses in weather-
exposed industries due to climate-driven warming, and 50 percent more 
likely to live in coastal areas with the highest projected increases in 
traffic delays due to increases in high-tide flooding. The report found 
that American Indian and Alaska Native individuals are 48 percent more 
likely to live in areas where the highest percentage of land is 
projected to be inundated due to sea level rise, and 37 percent more 
likely to live in areas with high projected labor hour losses. Asian 
individuals were found to be 23 percent more likely to live in coastal 
areas with projected increases in traffic delays from high-tide 
flooding. Persons with low income or no high school diploma are about 
25 percent more likely to live in areas with high projected losses of 
labor hours, and 15 percent more likely to live in areas with the 
highest projected increases in asthma due to climate-driven increases 
in particulate air pollution, and in areas with high projected 
inundation due to sea level rise.
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    \1491\ EPA. 2021. Climate Change and Social Vulnerability in the 
United States: A Focus on Six Impacts. U.S. Environmental Protection 
Agency, EPA 430-R-21-003.
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    In a more recent 2023 report, Climate Change Impacts on Children's 
Health and Well-Being in the U.S., EPA considered the degree to which 
children's health and well-being may be impacted by five climate-
related environmental hazards--extreme heat, poor air quality, changes 
in seasonality, flooding, and different types of infectious 
diseases.\1492\ The report found that children's academic achievement 
is projected to be reduced by 4-7 percent per child, as a result of 
moderate and higher levels of warming, impacting future income levels. 
The report also projects increases in the numbers of annual emergency 
department visits associated with asthma, and that the number of new 
asthma diagnoses increases by 4-11 percent due to climate-driven 
increases in air pollution relative to current levels. In addition, 
more than 1 million children in coastal regions are projected to be 
temporarily displaced from their homes annually due to climate-driven 
flooding, and infectious disease rates are similarly anticipated to 
rise, with the number of new Lyme disease cases in children living in 
22 states in the eastern and midwestern U.S. increasing by 
approximately 3,000-23,000 per year compared to current levels. 
Overall, the report confirmed findings of broader climate science 
assessments that children are uniquely vulnerable to climate-related 
impacts and that in many situations, children in the U.S. who identify 
as Black, Indigenous, and People of Color, are limited English-
speaking, do not have health insurance, or live in low-income 
communities may be disproportionately more exposed to the most severe 
adverse impacts of climate change.
---------------------------------------------------------------------------

    \1492\ EPA. 2023. Climate Change Impacts on Children's Health 
and Well-Being in the U.S., EPA EPA 430-R-23-001.
---------------------------------------------------------------------------

    Tribes and Indigenous communities face disproportionate and adverse 
risks from the impacts of climate change, particularly those 
communities impacted by degradation of natural and cultural resources 
within established reservation boundaries and threats to traditional 
subsistence lifestyles. Indigenous communities whose health, economic 
well-being, and cultural traditions depend upon the natural environment 
will likely be affected by the degradation of ecosystem goods and 
services associated with climate change. The IPCC indicates that losses 
of customs and historical knowledge may cause communities to be less 
resilient or adaptable.\1493\ The NCA4 noted that while Tribes and 
Indigenous Peoples are diverse and will be impacted by the climate 
changes universal to all Americans, there are several ways in which 
climate change uniquely

[[Page 28134]]

threatens Tribes and Indigenous Peoples' livelihoods and 
economies.\1494\ In addition, as noted in the following paragraph, 
there can be institutional barriers (including policy-based limitations 
and restrictions) to their management of water, land, and other natural 
resources that could impede adaptive measures.
---------------------------------------------------------------------------

    \1493\ Porter, et al., 2014: Food security and food production 
systems.
    \1494\ Jantarasami, L.C., R. Novak, R. Delgado, E. Marino, S. 
McNeeley, C. Narducci, J. Raymond-Yakoubian, L. Singletary, and K. 
Powys Whyte, 2018: Tribes and Indigenous Peoples. In Impacts, Risks, 
and Adaptation in the United States: Fourth National Climate 
Assessment, Volume II [Reidmiller, D.R., C.W. Avery, D.R. 
Easterling, K.E. Kunkel, K.L.M. Lewis, T.K. Maycock, and B.C. 
Stewart (eds.)]. U.S. Global Change Research Program, Washington, 
DC, USA, pp. 572-603. doi:10.7930/NCA4. 2018. CH15.
---------------------------------------------------------------------------

    For example, Indigenous agriculture in the Southwest is already 
being adversely affected by changing patterns of flooding, drought, 
dust storms, and rising temperatures leading to increased soil erosion, 
irrigation water demand, and decreased crop quality and herd sizes. The 
Confederated Tribes of the Umatilla Indian Reservation in the Northwest 
have identified climate risks to salmon, elk, deer, roots, and 
huckleberry habitat. Housing and sanitary water supply infrastructure 
are vulnerable to disruption from extreme precipitation events. 
Additionally, NCA4 noted that Tribes and Indigenous Peoples generally 
experience poor infrastructure, diminished access to quality 
healthcare, and greater risk of exposure to pollutants. Consequently, 
Native Americans often have disproportionately higher rates of asthma, 
cardiovascular disease, Alzheimer's disease, diabetes, and obesity. 
These health conditions and related effects (disorientation, heightened 
exposure to PM2.5, etc.) can all contribute to increased 
vulnerability to climate-driven extreme heat and air pollution events, 
which also may be exacerbated by stressful situations, such as extreme 
weather events, wildfires, and other circumstances.
    NCA4 and IPCC's Fifth Assessment Report \1495\ also highlighted 
several impacts specific to Alaskan Indigenous Peoples. Coastal erosion 
and permafrost thaw will lead to more coastal erosion, rendering winter 
travel riskier and exacerbating damage to buildings, roads, and other 
infrastructure--impacts on archaeological sites, structures, and 
objects that will lead to a loss of cultural heritage for Alaska's 
Indigenous people. In terms of food security, the NCA4 discussed 
reductions in suitable ice conditions for hunting, warmer temperatures 
impairing the use of traditional ice cellars for food storage, and 
declining shellfish populations due to warming and acidification. While 
the NCA4 also noted that climate change provided more opportunity to 
hunt from boats later in the fall season or earlier in the spring, the 
assessment found that the net impact was an overall decrease in food 
security. In addition, the U.S. Pacific Islands and the Indigenous 
communities that live there are also uniquely vulnerable to the effects 
of climate change due to their remote location and geographic 
isolation. They rely on the land, ocean, and natural resources for 
their livelihoods, but they face challenges in obtaining energy and 
food supplies that need to be shipped in at high costs. As a result, 
they face higher energy costs than the rest of the nation and depend on 
imported fossil fuels for electricity generation and diesel. These 
challenges exacerbate the climate impacts that the Pacific Islands are 
experiencing. NCA4 notes that Tribes and Indigenous Peoples of the 
Pacific are threatened by rising sea levels, diminishing freshwater 
availability, and negative effects to ecosystem services that threaten 
these individuals' health and well-being.
---------------------------------------------------------------------------

    \1495\ Porter, et al., 2014: Food security and food production 
systems.
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3. Non-GHG Impacts
    In section VII of this preamble, in addition to GHG emissions 
impacts, we also discuss potential additional emission changes of non-
GHGs (i.e., criteria and air toxic pollutants) that we project from 
compliance with the final emission standards. This section describes 
evidence that communities with EJ concerns are disproportionately and 
adversely impacted by relevant non-GHG emissions. We discuss the 
potential impact of non-GHG emissions for two specific contexts: near-
roadway (section VIII.J.3.i of the preamble) and upstream sources 
(section VIII.J.3.ii of the preamble).
i. Near-Roadway Analysis
    As described in section II.C.8 of this preamble, concentrations of 
many air pollutants are elevated near high-traffic roadways. We 
recently conducted an analysis of the populations within the 
continental U.S. living in close proximity to truck freight routes as 
identified in USDOT's FAF4.\1496\ FAF4 is a model from the USDOT's 
Bureau of Transportation Statistics and Federal Highway Administration, 
which provides data associated with freight movement in the United 
States.\1497\ Relative to the rest of the population, people living 
near FAF4 truck routes are more likely to be people of color and have 
lower incomes than the general population. People living near FAF4 
truck routes are also more likely to live in metropolitan areas. Even 
controlling for region of the country, county characteristics, 
population density, and household structure, race, ethnicity, and 
income are significant determinants of whether someone lives near a 
FAF4 truck route.
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    \1496\ U.S. EPA (2021). Estimation of Population Size and 
Demographic Characteristics among People Living Near Truck Routes in 
the Conterminous United States. Memorandum to the Docket.
    \1497\ FAF4 includes data from the 2012 Commodity Flow Survey 
(CFS), the Census Bureau on international trade, as well as data 
associated with construction, agriculture, utilities, warehouses, 
and other industries. FAF4 estimates the modal choices for moving 
goods by trucks, trains, boats, and other types of freight modes. It 
includes traffic assignments, including truck flows on a network of 
truck routes. https://ops.fhwa.dot.gov/freight/freight_analysis/faf.
---------------------------------------------------------------------------

    We additionally analyzed other national databases that allowed us 
to evaluate whether homes and schools were located near a major road 
and whether disparities in exposure may be occurring in these 
environments. Until 2009, the U.S. Census Bureau's American Housing 
Survey (AHS) included descriptive statistics of over 70,000 housing 
units across the nation and asked about transportation infrastructure 
near respondents' homes every two years.1498 1499 We also 
analyzed the U.S. Department of Education's Common Core of Data, which 
includes enrollment and location information for schools across the 
United States.\1500\
---------------------------------------------------------------------------

    \1498\ U.S. Department of Housing and Urban Development, & U.S. 
Census Bureau. (n.d.). Age of other residential buildings within 300 
feet. In American Housing Survey for the United States: 2009 (pp. A-
1). Retrieved from https://www.census.gov/programs-surveys/ahs/data/2009/ahs-2009-summary-tables0/h150-09.html.
    \1499\ The 2013 AHS again included the ``etrans'' question about 
highways, airports, and railroads within half a block of the housing 
unit but has not maintained the question since then.
    \1500\ http://nces.ed.gov/ccd.
---------------------------------------------------------------------------

    In analyzing the 2009 AHS, we focused on whether a housing unit was 
located within 300 feet of a ``4-or-more lane highway, railroad, or 
airport'' (this distance was used in the AHS analysis).\1501\ We 
analyzed whether there were differences between households in such 
locations compared with those in locations farther from these 
transportation facilities.\1502\ We

[[Page 28135]]

included other variables, such as land use category, region of country, 
and housing type. We found that homes with a non-White householder were 
22-34 percent more likely to be located within 300 feet of these large 
transportation facilities than homes with White householders. Homes 
with a Hispanic householder were 17-33 percent more likely to be 
located within 300 feet of these large transportation facilities than 
homes with non-Hispanic householders. Households near large 
transportation facilities were, on average, lower in income and 
educational attainment and more likely to be a rental property and 
located in an urban area compared with households more distant from 
transportation facilities.
---------------------------------------------------------------------------

    \1501\ This variable primarily represents roadway proximity. 
According to the Central Intelligence Agency's World Factbook, in 
2010, the United States had 6,506,204 km of roadways, 224,792 km of 
railways, and 15,079 airports. Highways thus represent the 
overwhelming majority of transportation facilities described by this 
factor in the AHS.
    \1502\ Bailey, C. (2011) Demographic and Social Patterns in 
Housing Units Near Large Highways and other Transportation Sources. 
Memorandum to docket.
---------------------------------------------------------------------------

    In examining schools near major roadways, we used the Common Core 
of Data from the U.S. Department of Education, which includes 
information on all public elementary and secondary schools and school 
districts nationwide.\1503\ To determine school proximities to major 
roadways, we used a geographic information system to map each school 
and roadways based on the U.S. Census's TIGER roadway file.\1504\ We 
estimated that about 10 million students attend schools within 200 
meters of major roads, about 20 percent of the total number of public 
school students in the United States.\1505\ About 800,000 students 
attend public schools within 200 meters of primary roads, or about 2 
percent of the total. We found that students of color were 
overrepresented at schools within 200 meters of primary roadways, and 
schools within 200 meters of primary roadways had a disproportionately 
greater population of students eligible for free or reduced-price 
lunches.\1506\ Black students represent 22 percent of students at 
schools located within 200 meters of a primary road, compared to 17 
percent of students in all U.S. schools. Hispanic students represent 30 
percent of students at schools located within 200 meters of a primary 
road, compared to 22 percent of students in all U.S. schools.
---------------------------------------------------------------------------

    \1503\ http://nces.ed.gov/ccd.
    \1504\ Pedde, M.; Bailey, C. (2011) Identification of Schools 
within 200 Meters of U.S. Primary and Secondary Roads. Memorandum to 
the docket.
    \1505\ Here, ``major roads'' refer to those TIGER classifies as 
either ``Primary'' or ``Secondary.'' The Census Bureau describes 
primary roads as ``generally divided limited-access highways within 
the Federal interstate system or under state management.'' Secondary 
roads are ``main arteries, usually in the U.S. highway, state 
highway, or county highway system.''
    \1506\ For this analysis we analyzed a 200-meter distance based 
on the understanding that roadways generally influence air quality 
within a few hundred meters from the vicinity of heavily traveled 
roadways or along corridors with significant trucking traffic. See 
U.S. EPA, 2014. Near Roadway Air Pollution and Health: Frequently 
Asked Questions. EPA-420-F-14-044.
---------------------------------------------------------------------------

    We also reviewed existing scholarly literature examining the 
potential for disproportionately high exposure to these pollutants 
among people of color and people with low socioeconomic status (SES). 
Numerous studies evaluating the demographics and socioeconomic status 
of populations or schools near roadways have found that they include a 
greater percentage of residents of color, as well as lower SES 
populations (as indicated by variables such as median household 
income). Locations in these studies include Los Angeles, CA; Seattle, 
WA; Wayne County, MI; Orange County, FL; Tampa, FL; the State of 
California; the State of Texas; and 
nationally.1507 1508 1509 1510 1511 1512 1513  
1514 1515 1516 1517 1518 Such disparities may be due to 
multiple factors, such as historic segregation, redlining, residential 
mobility, and daily mobility.1519 1520 1521 1522 1523 1524
---------------------------------------------------------------------------

    \1507\ Marshall, J.D. (2008) Environmental inequality: air 
pollution exposures in California's South Coast Air Basin. Atmos 
Environ 42: 5499-5503. doi:10.1016/j.atmosenv.2008.02.00.
    \1508\ Su, J.G.; Larson, T.; Gould, T.; Cohen, M.; Buzzelli, M. 
(2010) Transboundary air pollution and environmental justice: 
Vancouver and Seattle compared. GeoJournal 57: 595-608. doi:10.1007/
s10708-009-9269-6.
    \1509\ Chakraborty, J.; Zandbergen, P.A. (2007) Children at 
risk: measuring racial/ethnic disparities in potential exposure to 
air pollution at school and home. J Epidemiol Community Health 61: 
1074-1079. doi:10.1136/jech.2006.054130.
    \1510\ Green, R.S.; Smorodinsky, S.; Kim, J.J.; McLaughlin, R.; 
Ostro, B. (2004) Proximity of California public schools to busy 
roads. Environ Health Perspect 112: 61-66. doi:10.1289/ehp.6566.
---------------------------------------------------------------------------

    \1511\ Wu, Y; Batterman, S.A. (2006) Proximity of schools in 
Detroit, Michigan to automobile and truck traffic. J Exposure Sci & 
Environ Epidemiol. doi:10.1038/sj.jes.7500484.
    \1512\ Su, J.G.; Jerrett, M.; de Nazelle, A.; Wolch, J. (2011) Does 
exposure to air pollution in urban parks have socioeconomic, racial, or 
ethnic gradients? Environ Res 111: 319-328.
    \1513\ Jones, M.R.; Diez-Roux, A.; Hajat, A.; et al. (2014) Race/
ethnicity, residential segregation, and exposure to ambient air 
pollution: The Multi-Ethnic Study of Atherosclerosis (MESA). Am J 
Public Health 104: 2130-2137. Online at: https://doi.org/10.2105/AJPH.2014.302135.
    \1514\ Stuart A.L., Zeager M. (2011) An inequality study of ambient 
nitrogen dioxide and traffic levels near elementary schools in the 
Tampa area. Journal of Environmental Management. 92(8): 1923-1930. 
https://doi.org/10.1016/j.jenvman.2011.03.003.
    \1515\ Stuart A.L., Mudhasakul S., Sriwatanapongse W. (2009) The 
Social Distribution of Neighborhood-Scale Air Pollution and Monitoring 
Protection. Journal of the Air & Waste Management Association. 59(5): 
591-602. https://doi.org/10.3155/1047-3289.59.5.591.
    \1516\ Willis M.D., Hill E.L., Kile M.L., Carozza S., Hystad P. 
(2020) Assessing the effectiveness of vehicle emission regulations on 
improving perinatal health: a population-based accountability study. 
International Journal of Epidemiology. 49(6): 1781-1791. https://doi.org/10.1093/ije/dyaa137.
    \1517\ Collins, T.W., Grineski, SE, Nadybal, S. (2019) Social 
disparities in exposure to noise at public schools in the contiguous 
United States. Environ. Res. 175, 257-265. https://doi.org/10.1016/j.envres.2019.05.024.
    \1518\ Kingsley S., Eliot M., Carlson L., Finn J., MacIntosh D.L., 
Suh H.H., Wellenius G.A. (2014) Proximity of US schools to major 
roadways: a nationwide assessment. J Expo Sci Environ Epidemiol. 24: 
253-259. https://doi.org/10.1038/jes.2014.5.
---------------------------------------------------------------------------

    \1519\ Depro, B.; Timmins, C. (2008) Mobility and environmental 
equity: do housing choices determine exposure to air pollution? Duke 
University Working Paper.
    \1520\ Rothstein, R. The Color of Law: A Forgotten History of 
How Our Government Segregated America. New York: Liveright, 2018.
    \1521\ Lane, H.J.; Morello-Frosch, R.; Marshall, J.D.; Apte, 
J.S. (2022) Historical redlining is associated with present-day air 
pollution disparities in US Cities. Environ Sci & Technol Letters 9: 
345-350. DOI: Online at: https://doi.org/10.1021/acs.estlett.1c01012.
    \1522\ Ware, L. (2021) Plessy's legacy: the government's role in 
the development and perpetuation of segregated neighborhoods. RSF: 
The Russel Sage Foundation Journal of the Social Sciences, 7:92-109. 
DOI: DOI: 10.7758/RSF.2021.7.1.06.
    \1523\ Archer, D.N. (2020) ``White Men's Roads through Black 
Men's Homes'': advancing racial equity through highway 
reconstruction. Vanderbilt Law Rev 73: 1259.
    \1524\ Park, Y.M.; Kwan, M.-P. (2020) Understanding Racial 
Disparities in Exposure to Traffic-Related Air Pollution: 
Considering the Spatiotemporal Dynamics of Population Distribution. 
Int. J. Environ. Res. Public Health. 17 (3): 908. https://doi.org/10.3390/ijerph17030908.
---------------------------------------------------------------------------

    Several publications report nationwide analyses that compare the 
demographic patterns of people who do or do not live near major 
roadways.1525 1526 1527 1528 1529 1530 Three

[[Page 28136]]

of these studies found that people living near major roadways are more 
likely to be people of color or of low SES.1531 1532 1533 
They also found that the outcomes of their analyses varied between 
regions within the United States. However, only one such study looked 
at whether such conclusions were confounded by living in a location 
with higher population density and looked at how demographics differ 
between locations nationwide.\1534\ That study generally found that 
higher density areas have higher proportions of low-income residents 
and people of color. In other publications assessing a city, county, or 
state, the results are similar.1535 1536 1537
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    \1525\ Rowangould, G.M. (2013) A census of the U.S. near-roadway 
population: public health and environmental justice considerations. 
Transportation Research Part D; 59-67.
    \1526\ Tian, N.; Xue, J.; Barzyk. T.M. (2013) Evaluating 
socioeconomic and racial differences in traffic-related metrics in 
the United States using a GIS approach. J Exposure Sci Environ 
Epidemiol 23: 215-222.
    \1527\ CDC (2013) Residential proximity to major highways--
United States, 2010. Morbidity and Mortality Weekly Report 62(3): 
46-50.
    \1528\ Clark, L.P.; Millet, D.B.; Marshall, J.D. (2017) Changes 
in transportation-related air pollution exposures by race-ethnicity 
and socioeconomic status: outdoor nitrogen dioxide in the United 
States in 2000 and 2010. Environ Health Perspect https://doi.org/10.1289/EHP959.
    \1529\ Mikati, I.; Benson, A.F.; Luben, T.J.; Sacks, J.D.; 
Richmond-Bryant, J. (2018) Disparities in distribution of 
particulate matter emission sources by race and poverty status. Am J 
Pub Health https://ajph.aphapublications.org/doi/abs/10.2105/AJPH.2017.304297?journalCode=ajph.
    \1530\ Alotaibi, R.; Bechle, M.; Marshall, J.D.; Ramani, T.; 
Zietsman, J.; Nieuwenhuijsen, M.J.; Khreis, H. (2019) Traffic 
related air pollution and the burden of childhood asthma in the 
continuous United States in 2000 and 2010. Environ International 
127: 858-867. https://www.sciencedirect.com/science/article/pii/S0160412018325388.
    \1531\ Tian, N.; Xue, J.; Barzyk. T.M. (2013) Evaluating 
socioeconomic and racial differences in traffic-related metrics in 
the United States using a GIS approach. J Exposure Sci Environ 
Epidemiol 23: 215-222.
    \1532\ Rowangould, G.M. (2013) A census of the U.S. near-roadway 
population: public health and environmental justice considerations. 
Transportation Research Part D; 59-67.
    \1533\ CDC (2013) Residential proximity to major highways--
United States, 2010. Morbidity and Mortality Weekly Report 62(3): 
46-50.
    \1534\ Rowangould, G.M. (2013) A census of the U.S. near-roadway 
population: public health and environmental justice considerations. 
Transportation Research Part D; 59-67.
    \1535\ Pratt, G.C.; Vadali, M.L.; Kvale, D.L.; Ellickson, K.M. 
(2015) Traffic, air pollution, minority, and socio-economic status: 
addressing inequities in exposure and risk. Int J Environ Res Public 
Health 12: 5355-5372. http://dx.doi.org/10.3390/ijerph120505355.
    \1536\ Sohrabi, S.; Zietsman, J.; Khreis, H. (2020) Burden of 
disease assessment of ambient air pollution and premature mortality 
in urban areas: the role of socioeconomic status and transportation. 
Int J Env Res Public Health doi:10.3390/ijerph17041166.
    \1537\ Aizer A., Currie J. (2019) Lead and Juvenile Delinquency: 
New Evidence from Linked Birth, School, and Juvenile Detention 
Records. The Review of Economics and Statistics. 101 (4): 575-587. 
https://doi.org/10.1162/rest_a_00814.
---------------------------------------------------------------------------

    Overall, there is substantial evidence that people who live or 
attend school near major roadways are more likely to be of a non-White 
race, Hispanic, and/or have a low SES. As described in section II.C.8 
of the preamble, traffic-related air pollution may have 
disproportionate and adverse impacts on health across racial and 
sociodemographic groups. We expect communities near roads will benefit 
from the reduced vehicle emissions of PM, NOX, 
SO2, VOC, CO, and mobile source air toxics projected to 
result from this final rule. Although we were not able to conduct air 
quality modeling of the estimated emission reductions, we believe it a 
fair inference that because vehicular emissions affect communities with 
environmental justice concerns disproportionately and adversely due to 
roadway proximity, and because we project this rule will result in 
significant reductions in vehicular emissions, these communities' 
exposures to non-GHG air pollutants will be reduced. EPA is considering 
how to better estimate the near-roadway air quality impacts of its 
regulatory actions and how those impacts are distributed across 
populations.
ii. Upstream Source Impacts
    As described in Chapter 4.5 of the RIA, we expect some non-GHG 
emissions reductions from sources related to refining petroleum fuels 
and increases in emissions from EGUs, both of which would lead to 
changes in exposure for people living in communities near these 
facilities. The EGU emissions increases become smaller over time 
because of changes in the projected power generation mix as electricity 
generation uses less fossil fuels.
    Analyses of communities in close proximity to EGUs have found that 
a higher percentage of communities of color and low-income communities 
live near these sources when compared to national averages.\1538\ EPA 
compared the percentages of people of color and low-income populations 
living within three miles of fossil fuel-fired power plants regulated 
under EPA's Acid Rain Program and/or EPA's Cross-State Air Pollution 
Rule to the national average and found that there is a greater 
percentage of people of color and low-income individuals living near 
these power plants than in the rest of the country on average.\1539\ 
According to 2020 Census data, on average, the U.S. population is 
comprised of 40 percent people of color and 30 percent low-income 
individuals. In contrast, the population living near fossil fuel-fired 
power plants is comprised of 53 percent people of color and 34 percent 
low-income individuals.\1540\ Historically redlined neighborhoods are 
more likely to be downwind of fossil fuel power plants and to 
experience higher levels of exposure to relevant emissions than non-
redlined neighborhoods.\1541\ Analysis of populations near refineries 
and oil and gas wells also indicates there may be potential disparities 
in pollution-related health risk from these 
sources.1542 1543 1544 1545 Section VII.B of the preamble 
and RIA Chapter 7.4 discuss the air quality impacts of the emissions 
changes associated with the rule. See also section VII.A of this 
preamble, discussing issues pertaining to lifecycle emissions more 
generally.
---------------------------------------------------------------------------

    \1538\ See 80 FR 64662, 64915-64916 (October 23, 2015).
    \1539\ U.S. EPA (2023) 2021 Power Sector Programs--Progress 
Report. https://www3.epa.gov/airmarkets/progress/reports.
    \1540\ U.S. EPA (2023) 2021 Power Sector Programs--Progress 
Report. https://www3.epa.gov/airmarkets/progress/reports.
    \1541\ Cushing L.J., Li S., Steiger B.B., Casey J.A. (2023) 
Historical red-lining is associated with fossil fuel power plant 
siting and present-day inequalities in air pollutant emissions. 
Nature Energy. 8: 52-61. https://doi.org/10.1038/s41560-022-01162-y.
    \1542\ U.S. EPA (2014). Risk and Technology Review--Analysis of 
Socio-Economic Factors for Populations Living Near Petroleum 
Refineries. Office of Air Quality Planning and Standards, Research 
Triangle Park, North Carolina. January.
    \1543\ Carpenter, A., and M. Wagner. Environmental justice in 
the oil refinery industry: A panel analysis across United States 
counties. J. Ecol. Econ. V. 159 (2019).
    \1544\ Gonzalez, J.X., et al. Historic redlining and the siting 
of oil and gas wells in the United States. J. Exp. Sci. & Env. Epi. 
V. 33. (2023). p. 76-83.
    \1545\ In comparison to the national population, the EPA 
publication reports higher proportions of the following population 
groups in block groups with higher cancer risk associated with 
emissions from refineries: ``minority,'' ``African American,'' 
``Other and Multiracial,'' ``Hispanic or Latino,'' ``Ages 0-17,'' 
``Ages 18-64,'' ``Below the Poverty Level,'' ``Over 25 years old 
without a HS diploma,'' and ``Linguistic isolations.''
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K. Additional Non-Monetized Considerations Associated With Benefits and 
Costs

1. Energy Efficiency Gap
    The topic of the ``energy paradox'' or ``energy efficiency gap'' 
has been extensively discussed in many previous vehicle GHG standards' 
analyses.\1546\ The idea of the energy efficiency gap is that existing 
technologies that reduce fuel consumption enough to pay for themselves 
in short periods were not widely adopted, even though conventional 
economic principles suggest that, because the benefits to vehicle 
buyers would outweigh the costs to those buyers of the new 
technologies, automakers would provide

[[Page 28137]]

them and people would buy them. However, as described in previous EPA 
GHG vehicle rules (most recently in the 2021 rulemaking) engineering 
analyses identified technologies, such as downsized-turbocharged 
engines, gasoline direct injection, and improved aerodynamics, where 
the additional cost of the technology is quickly covered by the fuel 
savings it provides, but they were not widely adopted until after the 
issuance of EPA vehicle standards. As explained in detail in previous 
rulemakings, research suggests the presence of fuel-saving technologies 
does not lead to adverse effects on other vehicle attributes, such as 
performance and noise.\1547\ Additionally, research shows that there 
are technologies that exist that provide improvements in both 
performance and fuel economy, or at least in improved fuel economy 
without hindering performance.
---------------------------------------------------------------------------

    \1546\ For two of the most recent examples, see 86 FR 74434, 
December 30, 2021, ``Revised 2023 and Later Model Year Light-Duty 
Vehicle Greenhouse Gas Emissions Standards'' and 85 FR 24174, April 
30, 2020, ``The Safer Affordable Fuel-Efficient (SAFE) Vehicles Rule 
for Model Years 2021-2026 Passenger Cars and Light Trucks,'' and the 
respective RIAs. Although there are differences between personal 
consumption and commercial purchases, we have also identified an 
energy efficiency gap for vehicles used in commercial applications. 
See 81 FR at 73859-62 (HD Phase 2 rule discussing the gap as it 
relates to HD vehicles and also discussing related findings in the 
HD Phase 1 rule).
    \1547\ For example, as seen in Figure 3.8 of the 2023 EPA 
Automotive Trends Report, average new vehicle horsepower has 
increased by 88 percent since MY 1975. https://www.epa.gov/system/files/documents/2023-12/420r23033.pdf.
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    While evidence exists to substantiate agreement upon the existence 
of the efficiency gap, there is less agreement on the reasons for its 
existence and its magnitude. There are a number of hypotheses in the 
literature that attempt to explain the existence of the energy 
efficiency gap, including both consumer and producer side 
reasons.\1548\ For example, some researchers posit that consumers take 
up-front costs into account in purchase decisions more than future fuel 
savings, consumers may not fully understand potential cost savings, or 
they may not prioritize fuel consumption in their set of important 
attributes in the vehicle purchase process. On the producer side, 
suggested explanations include shifting of priorities from a long-
standing product mix to a new product or mix, fixed costs in switching 
to new technologies and the uncertainty involved in technological 
innovation and adoption. Broadly, these explanations encompass 
constraints on access to capital for investment, imperfect or 
asymmetrical information about the new technology (for example, real-
world operational cost savings, durability, or performance), and 
uncertainty about supporting infrastructure (for example, ease of 
charging a PEV).
---------------------------------------------------------------------------

    \1548\ Note that the literature surrounding the energy 
efficiency gap in LD vehicles is based on historical data, which is 
focused on ICE vehicles.
---------------------------------------------------------------------------

    Part of the uncertainty surrounding reasons behind the energy 
efficiency gap is that most of the technologies applied to existing ICE 
vehicles were ``invisible'' to the consumer, both literally and also 
possibly in effect. For example, the technology itself was not 
something the mainstream consumer would know about, or the technology 
was applied to a vehicle at the same time as multiple other changes, 
making it unclear to the consumer what changes in vehicle attributes, 
if any, could be attributed to a specific technology. At the first 
purchase of a PEV, the energy efficiency technology is clearly apparent 
to the consumer (i.e., consumer-facing), in which case the above 
``invisibility'' rationale does not apply. However, as PEV technology 
continues to evolve and as precedent with ICE vehicle technology 
suggests, technologies that improve PEV efficiency may again become 
invisible to the consumer, making the value of those improvements less 
apparent at the time of purchase, even if operating savings are.
    Though the energy paradox is likely to persist for the reasons 
discussed above, including future fuel and electricity prices, 
uncertainty about charging infrastructure and availability, perceptions 
of comparisons of quality and durability of different powertrains, and 
other factors discussed in this section and in RIA Chapter 4.4, there 
are factors that may mitigate it. Uncertainties will be resolved over 
time (e.g., growing familiarity with PEVs and EVSE, durability), 
systems will evolve (e.g., infrastructure growth and expansion, fuel 
and electricity prices, supply chains), and the nature and balance of 
information will change Another factor that may reduce the magnitude of 
an energy efficiency gap are the incentives provided in the BIL and IRA 
which provide support for the development, production and purchase of 
PEVs and the supporting infrastructure. For more information, see RIA 
Chapter 4.4.
2. Safety Impacts
    EPA has long considered the safety implications of its emission 
standards. Section 202(a)(4) of the CAA specifically prohibits the use 
of an emission control device, system or element of design that will 
cause or contribute to an unreasonable risk to public health, welfare, 
or safety. With respect to its light-duty greenhouse gas emission 
regulations, EPA has historically considered the potential impacts of 
GHG standards on safety in its light-duty GHG rulemakings.
    The potential relationship between GHG emissions standards and 
safety is multi-faceted, and can be influenced not only by control 
technologies, but also by consumer decisions about vehicle ownership 
and use. EPA has estimated the impacts of this rule on safety by 
accounting for changes in new vehicle purchase, fleet turnover and VMT, 
and changes in vehicle weight that occur either as an emissions control 
strategy or as a result of the adoption of emissions control 
technologies such as vehicle electrification. Safety impacts related to 
changes in the use of vehicles in the fleet, relative mass changes, and 
the turnover of fleet to newer and safer vehicles have been estimated 
and analyzed as part of the standard setting process.
    The GHG emissions standards are attribute-based standards, using 
vehicle footprint as the attribute. Footprint is defined as a vehicle's 
wheelbase multiplied by its average track width--in other words, the 
area enclosed by the points at which the wheels meet the ground. The 
standards are therefore generally based on a vehicle's size: larger 
vehicles have numerically higher GHG emissions targets and smaller 
vehicles have numerically lower GHG emissions targets. Footprint-based 
standards help to distribute the burden of compliance across all 
vehicle footprints and across all manufacturers. Manufacturers are not 
compelled to build vehicles of any particular size or type, and each 
manufacturer has its own fleetwide standard for its car and truck 
fleets in each year that reflects the light-duty vehicles it chooses to 
produce. EPA has evaluated the relationship between vehicle footprint 
and GHG emissions targets and is finalizing GHG standards that are 
intended to minimize incentives to change footprint as a compliance 
strategy. EPA is not projecting any changes in vehicle safety due to 
changes in footprint as a result of this rule.
    While EPA has not conducted new studies on the safety implications 
of electrified vehicles, we have consulted with NHTSA on potential 
safety issues and they have provided a number of studies to us. NHTSA's 
Office of Crashworthiness Standards has also informed us that NHTSA is 
not aware of differences in crash outcomes between electric and non-
electric vehicles, although NHTSA is closely monitoring and conducting 
extensive research on this topic closely. EPA notes there is strong 
reason to believe that PEVs are at least as safe as ICE vehicles,\1549\ 
if not more so. For example, the PEV architecture often lends itself to 
the addition of a ``frunk'' or front trunk. The frunk can provide 
additional crush space and occupant protection in frontal or front 
offset impacts. In addition, high

[[Page 28138]]

voltage, large capacity batteries are often packaged under the vehicle 
and are integral to the vehicle construction. The increase in mass low 
in the vehicle provides additional vehicle stability and could reduce 
the propensity for vehicle rollover, especially in vehicles with a 
higher ride height, such as SUVs. In addition, the battery is typically 
an integral part of the body design and can provide additional side 
impact protection. For each of these reasons EPA believes that applying 
the historical relationship between mass and safety is appropriate for 
this rulemaking and may be conservative given the potential safety 
improvements provided by vehicle electrification.
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    \1549\ https://www.iihs.org/news/detail/with-more-electric-vehicles-comes-more-proof-of-safety.
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    Consistent with previous light-duty GHG analyses, EPA conducted a 
quantitative assessment of the potential of the standards to affect 
vehicle safety. EPA applied the same historical relationships between 
mass, size, and fatality risk that were established and documented in 
NHTSA's 2023 proposed rulemaking. These relationships are based on the 
statistical analysis of historical crash data, which included an 
analysis performed by using the most recently available crash studies 
based on data for model years 2007 to 2011. EPA used these findings to 
estimate safety impacts of the modeled adoption of mass reduction as 
technology to reduce emissions, and the adoption of PEVs that result in 
some vehicle weights that are higher than comparable ICE vehicles due 
to the addition of the battery. Based on the findings of our safety 
analysis, we concluded there are no changes to the vehicles themselves, 
nor the combined effects of fleet composition and vehicle design, that 
will have a statistically significant impact on safety.\1550\ The only 
fatality projections presented here that are statistically significant 
are due to changes in use (VMT) rather than changes to the vehicles 
themselves. When including non-significant effects, EPA estimates that 
the final standards have no impact on the annual fatalities per billion 
miles driven in the 27-year period from 2027 through 2055 (4.599 
fatalities per billion miles under both the final standards and the No 
Action case.)
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    \1550\ None of the mass-safety coefficients that were developed 
for the 2020 and 2021 Rulemakings are statistically significant at 
the 95th percentile confidence level. EPA is including the 
presentation of non-significant changes in fatality rate here for 
the purpose of comparison with previous rulemaking assessments.
---------------------------------------------------------------------------

    EPA has also estimated, over the same 27-year period, that total 
fatalities will increase by 2,602, with all of those attributed to 
increased driving. Our analysis projects that there will be an increase 
in vehicle miles traveled (VMT) under the standards of 567 billion 
miles compared to the No Action case in 2027 through 2055 (an increase 
of under 0.6 percent). As noted, the only statistically significant 
changes in the fatalities projected are the result from the projected 
increased driving--i.e., people choosing to drive more due to the lower 
operating costs of more efficient vehicles. Our cost-benefit analysis 
accounts for the value of this additional driving, which we assume is 
an important consideration in the decision to drive.
    On the whole, EPA considers safety impacts in the context of all 
projected health impacts from the rule including public health benefits 
from the projected reductions in air pollution. Considering these 
estimates in the context of public health benefits anticipated from the 
final standards, EPA notes that the estimated annualized value of 
monetized health benefits of reduced PM2.5 through 2055 is 
between $3.6 billion and $10 billion (depending on study and discount 
rate), and that the air quality modeling which, as discussed further in 
Chapter 7.5 of the RIA, assesses a regulatory scenario with lower rates 
of PEV penetration than EPA is projecting for the final rule, estimates 
that in 2055 such a scenario would prevent between 1,000 and 2,000 
premature deaths associated with exposure to PM2.5 and 
prevent between 25 and 550 premature deaths associated with exposure to 
ozone. By comparison, the safety analysis estimates 118 more highway 
fatalities in calendar year 2055, far fewer than the decrease estimated 
from exposure to PM2.5. We expect that the cumulative number 
of premature deaths avoided that would occur during the entire period 
from 2027 to 2055 would be much larger than the estimate of deaths 
avoided projected to occur in 2055.
3. Other Non-Monetized Considerations
    In addition to the energy paradox, safety, and the effects that we 
monetize, we also look more closely into, but do not monetize, the 
effects of the standards on low-income households, on consumers of low-
priced new vehicles and used vehicles, and on PEV consumers without 
access to home or work charging. These effects depend, in large part, 
on three elements of vehicle ownership, namely (a) the purchase prices 
of vehicles, (b) fueling expenditures, and (c) maintenance and repair. 
Typically, the introduction of more stringent standards leads to higher 
purchase prices and lower fuel expenditures, on average. These 
standards also yield reductions on average in vehicle maintenance and 
repair costs, especially among buyers of PEVs. The net effect varies 
across households. Regarding purchase price, the IRA provides tax 
credits for both new and used PEVs. The reduction in fuel expenditures 
may be especially beneficial for low-income households and consumers in 
the used and low-priced new vehicle markets. First, fuel expenditures 
are a larger portion of expenses for low-income households compared to 
higher income households. Second, lower-priced new vehicles have 
historically been more fuel efficient. Third, fuel economy and 
therefore fuel savings do not decline as vehicles age even though the 
price paid for vehicles typically declines as vehicles age and are 
resold. Fourth, low-income households are more likely to purchase 
lower-priced new vehicles and used vehicles, capturing their associated 
fuel savings.\1551\ In addition, savings on maintenance and repair 
costs may also be especially beneficial for consumers in the used 
vehicle market. Finally, EPA expects that automakers will continue to 
produce a wide variety of vehicles, including price points, 
technologies, and body styles, to satisfy diverse vehicle consumers.
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    \1551\ Hutchens, A., Cassidy, A., Burmeister, G., Helfand, G. 
(2021). ``Impacts of Light-Duty Greenhouse Gas Emission Standards on 
Vehicle Affordability.''
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    Furthermore, for many vehicle consumers, access to credit for 
vehicle purchases is essential and may be of particular concern for 
low-income households. The effects of the standards on access to credit 
is influenced by the potentially countervailing forces of vehicle 
purchase costs and fuel costs. However, the degree of influence and the 
net effect is not clear (see RIA Chapter 8.4.3 of the 2021 rule). 
Increased purchase prices and presumably higher loan principal may, in 
some cases, discourage lending, while reduced fuel expenditures may, in 
some cases, improve lenders' perceptions of borrowers' repayment 
reliability.
    Finally, while access to gasoline and diesel can be assumed for the 
most part, the number and density of charging stations varies 
considerably.\1552\ Public and private charging infrastructure has been 
expanding alongside PEV adoption and is generally expected to continue 
to grow, particularly in light of public and private investments and 
consistent with local level priorities.1553 1554 This

[[Page 28139]]

includes home charging events, which are likely to continue to grow 
with PEV adoption but are also expected to represent a declining 
proportion of charging events as PEV share increases and more drivers 
without easy access to home charging adopt PEVs and therefore use 
public charging.\1555\ Thus, publicly accessible charging is an 
important consideration, especially for some renters and among 
residents of multi-family housing and others who charge away from 
home.\1556\ Households without access to charging at home or the 
workplace may incur additional charging costs, though there is ongoing 
interest in and development of alternative charging solutions (e.g., 
curbside charging or use of mobile charging units) and business models 
(e.g., providing charging as an amenity or as a subscription service 
for multi-family housing).\1557\ Though the higher price of public 
charging is important, especially among consumers who rely upon public 
charging, improvements in access and availability to both public and 
private charging are expected, bolstered by private and public 
investment in charging infrastructure, including the recent Federal 
investments provided by the CHIPS Act, the BIL and the IRA, which will 
allow for increased investment along the vehicle supply chain, 
including charging infrastructure.\1558\ Please see section IV.C.4 of 
this preamble and Chapter 5 of the RIA for a more detailed discussion 
of public and private investments in charging infrastructure, and our 
assessment of infrastructure needs and costs under this rulemaking.
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    \1552\ https://afdc.energy.gov/fuels/electricity_locations.html, 
accessed 3/8/2022.
    \1553\ Bui, Anh, Peter Slowik, and Nic Lutsey. 2020. Update on 
electric vehicle adoption across U.S. cities. International Council 
on Clean Transportation. https://theicct.org/wp-content/uploads/2021/06/EV-cities-update-aug2020.pdf.
    \1554\ Greschak, Tressa, Matilda Kreider, and Nathan Legault. 
2022. ``Consumer Adoption of Electric Vehicles: An Evaluation of 
Local Programs in the United States.'' School for Environment and 
Sustainability, University of Michigan, Ann Arbor, MI. https://deepblue.lib.umich.edu/handle/2027.42/172221.
    \1555\ Ge, Yanbo, Christina Simeone, Andrew Duvall, and Andrew 
Wood. 2021. There's No Place Like Home: Residential Parking, 
Electrical Access, and Implications for the Future of Electric 
Vehicle Charging Infrastructure. NREL/TP-5400-81065, Golden, CO: 
National Renewable Energy Laboratory. https://www.nrel.gov/docs/fy22osti/81065.pdf.
    \1556\ https://advocacy.consumerreports.org/wp-content/uploads/2022/09/EV-Demographic-Survey-English-final.pdf.
    \1557\ Matt Alexander, Noel Crisostomo, Wendell Krell, Jeffrey 
Lu, Raja Ramesh, ``Assembly Bill 2127: Electric Vehicle Charging 
Infrastructure Assessment,'' July 2021, California Energy 
Commission. Accessed March 9, 2023, at https://www.energy.ca.gov/programs-and-topics/programs/electric-vehicle-charging-infrastructure-assessment-ab-2127.
    \1558\ More information on these three acts can be found in the 
January, 2023 White House publication ``Building a Clean Energy 
Economy: A Guidebook to the Inflation Reduction Act's Investments in 
Clean Energy and Climate Action.'' found online at https://www.whitehouse.gov/wp-content/uploads/2022/12/Inflation-Reduction-Act-Guidebook.pdf.
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IX. Statutory and Executive Order Reviews

A. Executive Order 12866: Regulatory Planning and Review and Executive 
Order 14094: Modernizing Regulatory Review

    This action is a ``significant regulatory action,'' as defined 
under section 3(f)(1) of Executive Order 12866, as amended by Executive 
Order 14094. Accordingly, EPA submitted this action to the Office of 
Management and Budget (OMB) for Executive Order 12866 review. 
Documentation of any changes made in response to the Executive Order 
12866 review is available in the docket. EPA prepared an analysis of 
the potential costs and benefits associated with this action. This 
analysis is in the Regulatory Impact Analysis, which can be found in 
the docket for this rule and is briefly summarized in section VIII of 
this preamble.

B. Paperwork Reduction Act (PRA)

    The information collection activities in this rule have been 
submitted for approval to the Office of Management and Budget (OMB) 
under the PRA. The Information Collection Request (ICR) document that 
EPA prepared has been assigned EPA ICR number 2750.02. You can find a 
copy of the ICR in the docket for this rule, and it is briefly 
summarized here. The information collection requirements are not 
enforceable until OMB approves them.
    The Agency is adopting requirements for manufacturers to submit 
information to ensure compliance with the provisions in this rule. This 
includes a variety of requirements for vehicle manufacturers. Section 
208(a) of the CAA requires that vehicle manufacturers provide 
information the Administrator may reasonably require to determine 
compliance with the regulations; submission of the information is 
therefore mandatory. We will consider confidential all information 
meeting the requirements of section 208(c) of the CAA for 
confidentiality.
    Many of the information activities associated with the rule are 
covered by existing emission certification and reporting requirements 
for EPA's light-duty and medium-duty vehicle emission control program. 
Therefore, this ICR only covers the incremental burden associated with 
the updated regulatory requirements as described in this rule.
    The total annual reporting burden associated with this rule is 
about 40,136 hours and $(6,213) million, based on a projection of 35 
respondents. The estimated burden for vehicle manufacturers is a total 
estimate for new reporting requirements incremental to the current 
program. Burden means the total time, effort, or financial resources 
expended by persons to generate, maintain, retain, or disclose or 
provide information to or for a Federal agency. This includes the time 
needed to review instructions; modify existing technology and systems 
for the purposes of collecting, validating, and verifying newly 
required information, processing and maintaining information, and 
disclosing and providing information; adjust the existing ways to 
comply with any previously applicable instructions and requirements; 
train personnel to be able to respond to a collection of information; 
search data sources; complete and review the collection of information; 
and transmit or otherwise disclose the information.
    Respondents/affected entities: Light- and medium-duty vehicle 
manufacturers, alternative fuel converters, and independent commercial 
importers.
    Respondent's obligation to respond: Manufacturers must respond as 
part of their annual model year vehicle certification under section 
208(a) of the CAA which is required prior to entering vehicles into 
commerce. Participation in some programs is voluntary; but once a 
manufacturer has elected to participate, it must submit the required 
information.
    Estimated number of respondents: 35.
    Frequency of response: Annually or on occasion, depending on the 
type of response.
    Total estimated burden: 40,136 hours (per year). Burden is defined 
at 5 CFR 1320.3(b).
    Total estimated cost: $(6,212,838) per year, which is a net burden 
reduction because the total new burden measures are offset by burden 
reduction measures and reduced light- and medium duty vehicle testing 
and reporting due to the switch from ICE to EVs. The total estimated 
cost includes an estimated $(6,483,593) annualized capital or operation 
& maintenance cost savings.
    An agency may not conduct or sponsor, and a person is not required 
to respond to, a collection of information unless it displays a 
currently valid OMB control number. The OMB control numbers for EPA's 
regulations are listed in 40 CFR part 9. When OMB approves this ICR, 
the Agency will announce that approval in the Federal Register and 
publish a technical amendment to 40 CFR part 9 to display the OMB 
control

[[Page 28140]]

number for the approved information collection activities contained in 
this final rule.

C. Regulatory Flexibility Act

    I certify that this action will not have a significant economic 
impact on a substantial number of small entities (SISNOSE) under the 
Regulatory Flexibility Act (RFA).
    EPA has focused its assessment of potential small business impacts 
on three key aspects of the standards, including GHG emissions 
standards, criteria pollutant standards (including NMOG+NOX 
fleet-average standards and PM emissions standards), and EV battery 
warranty and durability. Details of EPA's No SISNOSE assessment are 
included in RIA Chapter 11.
    There are three types of small entities under the RFA that could 
potentially be impacted by the GHG standards: (1) small entity vehicle 
manufacturers; (2) alternative fuel converters, which are companies 
that take a vehicle for which an OEM has already accounted for GHG 
compliance and convert it to operate on a cleaner fuel such as natural 
gas or propane; and (3) independent commercial importers (ICIs), which 
are firms that import vehicles from other countries for individual 
vehicle purchasers.
    Under the current light-duty GHG program, small entities are exempt 
from the GHG standards. EPA is continuing the current exemption for all 
three types of small entities, including small entity manufacturers, 
alternate fuel converters, and ICIs. In contrast, current regulations 
require small entities making new medium-duty vehicles to meet the same 
GHG emission standards that apply for other companies. In this rule, we 
are not adopting new or revised GHG emission standards for medium-duty 
vehicles for small entities. As a result, medium-duty vehicles produced 
by small entities will continue to be subject to the MY 2026 standards 
indefinitely, instead of being subject to the new GHG emission 
standards for MY 2027 and later vehicles that we are adopting in this 
rule. However, EPA is finalizing its proposal to add some environmental 
protections for imported vehicles, as described below in this 
paragraph. EPA is continuing the current provision allowing small 
entity manufacturers to opt into the GHG program to earn credits, which 
they can then choose to sell in the credit market. The small entity 
vehicle manufacturers in the market at this time produce only electric 
vehicles. EPA received comments that there were small entity 
manufacturers that made internal combustion engine vehicles. EPA had 
previously reviewed those entities and determined that they did not 
qualify for consideration under the RFA (for further details see the 
Response to Comments document.) EPA requested comment on the potential 
need for small entity light-duty and medium-duty manufacturers to have 
an annual production cap (e.g., 200-500 vehicles per year) on vehicles 
eligible for the exemption. EPA noted that this cap could be an 
important environmental safeguard. It balances eliminating GHG 
compliance burdens for small manufacturers with safeguards to avoid 
undermining the environmental benefits of the standards. A group of 
small OEMs opposed the imposition of such a cap, although the group did 
not provide data or explanation as to why such a cap would not be a 
reasonable means of ensuring environmental benefits without restricting 
small manufacturers from producing volumes consistent with what they 
have produced in the past. EPA is finalizing an annual limit of the 
first 500 vehicles produced by a small business being exempted from the 
light- and medium-duty GHG standards.
    Under existing EPA regulations, each ICI is currently limited to 
importing 50 vehicles per year. EPA is finalizing, as proposed, a 
reduced limit of 25 vehicles per year, which is well above historical 
sales, as a means of limiting the potential environmental impact of 
importing vehicles with potentially high GHG emissions. Importing of 
BEVs and fuel cell vehicles would not count against the 25 vehicles 
limit. EPA believes this lower vehicle limit is important for capping 
the potential for high-emitting imported vehicles, because unlike with 
criteria pollutant emissions, there are very limited add-on emissions 
control options for reducing the GHG emissions of an imported vehicle. 
To ease the burden required for ICIs to certify electric vehicles, EPA 
is finalizing its proposal to remove the requirement that the vehicle 
have a fuel economy label. Production electric vehicles do not normally 
have high voltage wiring accessible, so it is not practical for ICIs to 
measure the energy in and out of the battery, which is necessary when 
measuring energy for the fuel economy label.
    EPA also has evaluated the potential impacts on small businesses 
for criteria pollutant emissions standards, including both the 
NMOG+NOX standard and the PM standard. EPA's 
NMOG+NOX standards should have no impact on the existing RFA 
qualified small entity manufacturers, which currently produce only 
electric vehicles. The standards are expected to have minimal impact on 
both the alternate fuel converters and ICIs, as discussed in RIA 
Chapter 11. EPA estimates that the PM standard will have no significant 
financial impact on any of the three types of RFA qualified small 
entities. Existing small entity manufacturers all produce only battery 
electric vehicles, which have no tailpipe emissions and therefore would 
be able to comply with the PM standard without any additional burden. 
Alternative fuel vehicles are exempted from cold temperature testing 
requirements under existing EPA regulations, and EPA is continuing this 
exemption for the final rule; as such there is no impact on alternative 
fuel converters. To minimize the testing burden on ICIs, EPA is 
finalizing the exemption for ICIs from measuring PM during cold 
testing; ICIs would only need to comply with the new PM levels on the 
FTP75 and US06 tests. EPA also notes that it is finalizing an extended 
phase-in for ICI's in meeting the new NMOG+NOX and PM 
standards.
    The final aspect of the final rule that could have potential 
impacts on small entities is battery durability (section III.G.2 of the 
preamble). EPA finds it appropriate to exempt small entities from 
battery durability requirements at this time while we implement the 
requirement for larger manufacturers. Based on our experience with 
larger manufacturers we will be in a better position to judge whether 
the requirements are appropriate to extend to smaller manufacturers in 
a future rulemaking.

D. Unfunded Mandates Reform Act

    This action contains Federal mandates under UMRA, 2 U.S.C. 1531-
1538, that may result in expenditures of $100 million or more for 
state, local, and Tribal governments, in the aggregate, or the private 
sector in any one year. Accordingly, EPA has prepared a written 
statement of the costs and benefits associated with this action as 
required under section 202 of UMRA. This is discussed in section VIII 
of this preamble and Chapter 10 of the RIA. This action is not subject 
to the requirements of section 203 of UMRA because it contains no 
regulatory requirements that might significantly or uniquely affect 
small governments.

E. Executive Order 13132: ``Federalism''

    This action does not have federalism implications. It will not have 
substantial direct effects on the states, on the relationship between 
the national government and the states, or on the distribution of power 
and responsibilities among the various levels of government.

[[Page 28141]]

F. Executive Order 13175: ``Consultation and Coordination With Indian 
Tribal Governments''

    This action does not have tribal implications as specified in 
Executive Order 13175. Thus, Executive Order 13175 does not apply to 
this action. However, EPA has engaged with our Tribal stakeholders in 
the development of this rulemaking by offering a Tribal workshop and 
offering government-to-government consultation upon request.

G. Executive Order 13045: Protection of Children From Environmental 
Health Risks and Safety Risks

    This action is subject to Executive Order 13045 because it is a 
significant regulatory action under section 3(f)(1) of Executive Order 
12866, and EPA believes that the environmental health or safety risks 
of the pollutants addressed by this action may have a disproportionate 
effect on children. The 2021 Policy on Children's Health also applies 
to this action.\1559\ Accordingly, we have evaluated the environmental 
health or safety effects of air pollutants affected by this final rule 
on children. The results of this evaluation are described in section II 
of this preamble. The protection offered by these standards may be 
especially important for children because childhood represents a life 
stage associated with increased susceptibility to air pollutant-related 
health effects.
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    \1559\ U.S. Environmental Protection Agency (2021). 2021 Policy 
on Children's Health. Washington, DC. https://www.epa.gov/system/files/documents/2021-10/2021-policy-on-childrens-health.pdf.
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    Children make up a substantial fraction of the U.S. population, and 
often have unique factors that contribute to their increased risk of 
experiencing a health effect from exposures to ambient air pollutants 
because of their continuous growth and development. Children are more 
susceptible than adults to many air pollutants because they have (1) a 
developing respiratory system, (2) increased ventilation rates relative 
to body mass compared with adults, (3) an increased proportion of oral 
breathing, particularly in boys, relative to adults, and (4) behaviors 
that increase chances for exposure. Even before birth, the developing 
fetus may be exposed to air pollutants through the mother that affect 
development and permanently harm the individual when the mother is 
exposed.
    GHG emissions contribute to climate change and the GHG emissions 
reductions described in section VI of this preamble resulting from this 
rule will contribute to mitigation of climate change. The assessment 
literature cited in EPA's 2009 and 2016 Endangerment Findings concluded 
that certain populations and life stages, including children, the 
elderly, and the poor, are most vulnerable to climate-related health 
effects. The assessment literature since 2016 strengthens these 
conclusions by providing more detailed findings regarding these groups' 
vulnerabilities and the projected impacts they may experience. These 
assessments describe how children's unique physiological and 
developmental factors contribute to making them particularly vulnerable 
to climate change. Impacts to children are expected from heat waves, 
air pollution, infectious and waterborne illnesses, and mental health 
effects resulting from extreme weather events. In addition, children 
are among those especially susceptible to most allergic diseases, as 
well as health effects associated with heat waves, storms, and floods. 
Additional health concerns may arise in low-income households, 
especially those with children, if climate change reduces food 
availability and increases prices, leading to food insecurity within 
households. More detailed information on the impacts of climate change 
to human health and welfare is provided in section II of this preamble.
    In addition to reducing GHGs, this final rule will also reduce 
onroad emissions of criteria pollutants and air toxics. section VII of 
this preamble presents the estimated onroad emissions reductions from 
the rule. Certain motor vehicle emissions present greater risks to 
children. Early lifestages (e.g., children) are thought to be more 
susceptible to tumor development than adults when exposed to 
carcinogenic chemicals that act through a mutagenic mode of 
action.\1560\ Exposure at a young age to these carcinogens could lead 
to a higher risk of developing cancer later in life. Section II.C.8 of 
this preamble describes a systematic review and meta-analysis conducted 
by the U.S. Centers for Disease Control and Prevention that reported a 
positive association between proximity to traffic and the risk of 
leukemia in children. Also, section II.C.8 of this preamble discusses a 
number of childhood health outcomes associated with proximity to 
roadways, including evidence for exacerbation of asthma symptoms and 
suggestive evidence for new onset asthma.
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    \1560\ U.S. Environmental Protection Agency (2005). Supplemental 
guidance for assessing susceptibility from early-life exposure to 
carcinogens. Washington, DC: Risk Assessment Forum. EPA/630/R-03/
003F. https://www3.epa.gov/airtoxics/childrens_supplement_final.pdf.
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    In addition to reduced onroad emissions of criteria pollutants and 
air toxics, we expect the rule will also lead to reductions in 
petroleum-sector emissions and increases in pollutant emissions from 
EGUs (see section VII of the preamble). As described in section II of 
this preamble, the Integrated Science Assessments for a number of 
pollutants affected by this rule, including those for SO2, 
NO2, PM, ozone and CO, describe children as a group with 
greater susceptibility.
    There is substantial evidence that people who live or attend school 
near major roadways are more likely to be people of color, Hispanic 
ethnicity, and/or low socioeconomic status. Analyses of communities in 
close proximity to sources such as EGUs and refineries have also found 
that a higher percentage of communities of color and low-income 
communities live near these sources when compared to national averages. 
Within these highly exposed groups, children's exposure and 
susceptibility to health effects is greater than adults due to school-
related and seasonal activities, behavior, and physiological factors.
    Children are not expected to experience greater ambient 
concentrations of air pollutants compared to the general population. 
However, because of their greater susceptibility to air pollution, 
including the impacts of a changing climate, and their increased time 
spent outdoors, it is likely that these standards will have particular 
benefits for children's health.

H. Executive Order 13211: Energy Effects

    This action is not a ``significant energy action'' because it is 
not likely to have a significant adverse effect on the supply, 
distribution, or use of energy. EPA has outlined the energy effects in 
Table 8-8 in Chapter 8 of the RIA, which is available in the docket for 
this action and is briefly summarized here.
    This action reduces CO2 emissions for light-duty and 
medium-duty vehicles under revised GHG standards, which will result in 
significant reductions of the consumption of petroleum, increase 
electricity consumption, achieve energy security benefits, and have no 
adverse energy effects. Because the GHG emission standards result in 
significant fuel savings, this rule encourages more efficient use of 
fuels. As shown in Table 8-8 in the RIA, EPA projects that through 2055 
these standards will result in a reduction of 780 billion gallons of 
retail gasoline consumption (about 15 billion barrels of oil) and an 
increase of

[[Page 28142]]

6,100 Terawatt hours (TWh) of electricity consumption. As discussed in 
section IV.C.5 of this preamble, we do not expect the increased 
electricity consumption under this rule to have significant adverse 
impacts on the electric grid.

I. National Technology Transfer and Advancement Act (NTTAA) and 1 CFR 
Part 51

    This rulemaking involves technical standards. Except for the 
standards discussed in this section, the standards included in the 
regulatory text as incorporated by reference were all previously 
approved for incorporation by reference (IBR) and no change is included 
in this action.
    In accordance with the requirements of 1 CFR 51.5, we are 
incorporating by reference the use of standards and test methods from 
the California Air Resources Board (CARB). The referenced standards and 
test methods may be obtained through the CARB website (www.arb.ca.gov) 
or by calling (916) 322-2884. We are incorporating by reference the 
following CARB documents:

----------------------------------------------------------------------------------------------------------------
       Standard or test method                         Regulation                             Summary
----------------------------------------------------------------------------------------------------------------
CARB's 2022 OBD regulation--13 CCR     40 CFR 86.1 and 86.1806-27................  The CARB standards establish
 1968.2, Malfunction and Diagnostic                                                 updated requirements for
 System Requirements--2004 and                                                      manufacturers to design
 Subsequent Model-Year Passenger                                                    their light-duty and medium-
 Cars, Light-Duty Trucks, and Medium-                                               duty vehicles with onboard
 Duty Vehicles and Engines; operative                                               diagnostic systems that
 November 22, 2022.                                                                 detect malfunctions in
                                                                                    emission controls. This is a
                                                                                    newly referenced standard.
California 2026 and Subsequent Model   40 CFR 1066.801 and 1066.1010.............  The CARB regulation
 Year Criteria Pollutant Exhaust                                                    establishes test procedures
 Emission Standards and Test                                                        for measuring emissions from
 Procedures for Passenger Cars, Light-                                              light-duty and medium-duty
 Duty Trucks, And Medium-Duty                                                       vehicles that are not plug-
 Vehicles (``CARB's LMDV Test                                                       in hybrid electric vehicles.
 Procedures''); adopted August 25,                                                  This is a newly referenced
 2022.                                                                              standard.
California Test Procedures for 2026    40 CFR 1066.801 and 1066.1010.............  The CARB regulation
 and Subsequent Model Year Zero-                                                    establishes test procedures
 Emission Vehicles and Plug-In Hybrid                                               for measuring emissions from
 Electric Vehicles, in the Passenger                                                plug-in hybrid electric
 Car, Light-Duty Truck and Medium-                                                  vehicles. This is a newly
 Duty Vehicle Classes (``CARB's PHEV                                                referenced standard.
 Test Procedures''); adopted August
 25, 2022.
CARB's battery durability standards--  40 CFR 86.1 and 86.1815-27................  The CARB regulation describes
 13 CCR 1962.5 Data Standardization                                                 a standardized protocol for
 Requirements for 2026 and Subsequent                                               retrieving and evaluating
 Model Year Light-Duty Zero Emission                                                data related to monitor
 Vehicles and Plug-in Hybrid Electric                                               accuracy and battery
 Vehicles; operative November 30,                                                   durability for electric
 2022.                                                                              vehicles and plug-in hybrid
                                                                                    electric vehicles. This is a
                                                                                    newly referenced standard.
CARB's battery durability standards--  40 CFR 86.1 and 86.1815-27................  The CARB regulation
 13 CCR 1962.7 In-Use Compliance,                                                   establishes performance
 Corrective Action and Recall                                                       requirements and testing
 Protocols for 2026 and Subsequent                                                  procedures related to
 Model Year Zero-Emission and Plug-in                                               monitor accuracy and battery
 Hybrid Electric Passenger Cars and                                                 durability for electric
 Light-Duty Trucks; operative                                                       vehicles and plug-in hybrid
 November 30, 2022.                                                                 electric vehicles. This is a
                                                                                    newly referenced standard.
----------------------------------------------------------------------------------------------------------------

    In accordance with the requirements of 1 CFR 51.5, we are 
incorporating by reference the use of standards and test methods from 
the United Nations. The referenced standards and test methods may be 
obtained from the UN Economic Commission for Europe, Information 
Service at Palais des Nations, CH-1211 Geneva 10, Switzerland; 
[email protected]; www.unece.org. We are incorporating by reference the 
following UN Economic Commission for Europe document:

----------------------------------------------------------------------------------------------------------------
       Standard or test method                         Regulation                             Summary
----------------------------------------------------------------------------------------------------------------
Addendum 22: United Nations Global     40 CFR 86.1 and 86.1815-27................  GTR No. 22 establishes design
 Technical Regulation No. 22, United                                                protocols and procedures for
 Nations Global Technical Regulation                                                measuring durability and
 on In-vehicle Battery Durability for                                               performance for batteries
 Electrified Vehicles, April 14, 2022.                                              used with electric vehicles
                                                                                    and plug-in hybrid-electric
                                                                                    vehicles.
----------------------------------------------------------------------------------------------------------------

    In accordance with the requirements of 1 CFR 51.5, we are 
incorporating by reference the use of standards and test methods from 
SAE International. The referenced standards and test methods may be 
obtained from SAE International, 400 Commonwealth Dr., Warrendale, PA 
15096-0001, (877) 606-7323 (U.S. and Canada) or (724) 776-4970 (outside 
the U.S. and Canada), or www.sae.org. We are incorporating by reference 
the following documents from SAE International:

----------------------------------------------------------------------------------------------------------------
       Standard or test method                         Regulation                             Summary
----------------------------------------------------------------------------------------------------------------
SAE J1711 FEB2023, Recommended         40 CFR 86.1, 86.1866-12, 600.011, 600.114-  This updated document
 Practice for Measuring the Exhaust     12, 600.116-12, 600.311-12, 1066.501, and   specifies emission
 Emissions and Fuel Economy of Hybrid-  1066.1010.                                  measurement procedures for
 Electric Vehicles, Including Plug-In                                               hybrid electric vehicles.
 Hybrid Vehicles, revised February
 2023.
SAE J2727 SEP2023, Mobile Air          40 CFR 86.1, 86.1819-14, 86.1867-12, and    This updated document
 Conditioning System Refrigerant        86.1867-31.                                 describes a methodology for
 Emissions Estimate for Mobile Air                                                  calculating leakage rates
 Conditioning Refrigerants, revised                                                 from automotive air
 September 2023.                                                                    conditioning systems.
SAE J2807 FEB2020, Performance         40 CFR 86.1 and 86.1845-04................  This newly referenced
 Requirements for Determining Tow-                                                  document includes
 Vehicle Gross Combination Weight                                                   specifications for trailers
 Rating and Trailer Weight Rating,                                                  and describes how to
 revised February 2020.                                                             determine a vehicle's gross
                                                                                    combination weight rating.
----------------------------------------------------------------------------------------------------------------

    In accordance with the requirements of 1 CFR 51.5, we are 
incorporating by reference the use of standards and test methods from 
ASTM International. The referenced standards and test methods may be 
obtained from ASTM International, 100 Barr Harbor Drive, P.O. Box C700, 
West Conshohocken, PA 19428-2959, (610) 832-9585, or www.astm.org. We 
are incorporating by reference the following standards from ASTM 
International:

[[Page 28143]]



----------------------------------------------------------------------------------------------------------------
       Standard or test method                         Regulation                             Summary
----------------------------------------------------------------------------------------------------------------
ASTM D86-23, Standard Test Method for  40 CFR 600.011 and 600.113-12.............  This newly referenced
 Distillation of Petroleum Products                                                 standard describes
 and Liquid Fuels at Atmospheric                                                    procedures for measuring
 Pressure, approved March 1, 2023.                                                  fuel distillation
                                                                                    parameters.
ASTM D1319-20a, Standard Test Method   40 CFR 600.011 and 600.113-12.............  This newly referenced
 for Hydrocarbon Types in Liquid                                                    standard describes
 Petroleum Products by Fluorescent                                                  procedures for measuring
 Indicator Adsorption, approved                                                     aromatic content of
 August 1, 2020.                                                                    gasoline.
ASTM D3338/D3338M-20a, Standard Test   40 CFR 600.011 and 600.113-12.............  This updated standard
 Method for Estimation of Net Heat of                                               describes procedures for
 Combustion of Aviation Fuels,                                                      measuring the net heat of
 approved December 1, 2020.                                                         combustion for gasoline.
ASTM D3343-22, Standard Test Method    40 CFR 600.011 and 600.113-12.............  This updated standard
 for Estimation of Hydrogen Content                                                 describes procedures for
 of Aviation Fuels, approved November                                               measuring the hydrogen and
 1, 2022.                                                                           carbon mass fractions of
                                                                                    gasoline.
ASTM D4052-22, Standard Test Method    40 CFR 600.011 and 600.113-12.............  This newly referenced
 for Density, Relative Density, and                                                 standard describes
 API Gravity of Liquids by Digital                                                  procedures for measuring the
 Density Meter, approved May 1, 2022.                                               specific gravity of
                                                                                    gasoline.
ASTM D4815-22, Standard Test Method    40 CFR 600.011 and 600.113-12.............  This newly referenced
 for Determination of MTBE, ETBE,                                                   standard describes
 TAME, DIPE, tertiary-Amyl Alcohol                                                  procedures for measuring
 and C1 to C4 Alcohols in Gasoline by                                               ethanol concentrations in
 Gas Chromatography, approved April                                                 gasoline.
 1, 2022.
ASTM D5599-22, Standard Test Method    40 CFR 600.011 and 600.113-12.............  This newly referenced
 for Determination of Oxygenates in                                                 standard describes
 Gasoline by Gas Chromatography and                                                 procedures for measuring
 Oxygen Selective Flame Ionization                                                  ethanol concentrations in
 Detection, approved April 1, 2022.                                                 gasoline.
ASTM D5769-22, Standard Test Method    40 CFR 600.011 and 600.113-12.............  This newly referenced
 for Determination of Benzene,                                                      standard describes
 Toluene, and Total Aromatics in                                                    procedures for measuring
 Finished Gasolines by Gas                                                          aromatic content of
 Chromatography/Mass Spectrometry,                                                  gasoline.
 approved July 1, 2022.
----------------------------------------------------------------------------------------------------------------

J. Executive Order 12898: Federal Actions To Address Environmental 
Justice in Minority Populations and Low-Income Populations and 
Executive Order 14096: Revitalizing Our Nation's Commitment to 
Environmental Justice for All

    EPA believes that the human health or environmental conditions that 
exist prior to this action result in or have the potential to result in 
disproportionate and adverse human health or environmental effects on 
communities with environmental justice concerns.
    EPA provides a summary of the evidence for potentially 
disproportionate and adverse effects among various populations analyzed 
prior to implementation of the action in sections II.C.8, VII.D, and 
VIII.J of the preamble for this rule.
    EPA believes that this action is likely to reduce existing 
disproportionate and adverse effects on many communities with 
environmental justice concerns. The air pollutant emission reductions 
that will be achieved by this rule will improve air quality for the 
people who reside in close proximity to major roadways and who are 
disproportionately represented by people of color and people with low 
income, as described in section II.C.8 and section VIII.J of this 
preamble. We expect that localized increases in criteria and toxic 
pollutant emissions from EGUs and reductions in petroleum-sector 
emissions could lead to changes in exposure to these pollutants for 
people living in the communities near these facilities. Analyses of 
communities in close proximity to these sources (such as EGUs and 
refineries) have found that a higher percentage of communities of color 
and low-income communities live near these sources when compared to 
national averages.
    Section VIII.J.2 of this preamble discusses the environmental 
justice issues associated with climate change. People of color, low-
income populations and/or indigenous peoples may be especially 
vulnerable to the impacts of climate change. The GHG emission 
reductions from this action will contribute to efforts to reduce the 
probability of severe impacts related to climate change.
    EPA is additionally identifying and addressing environmental 
justice concerns by providing just treatment and meaningful involvement 
with Environment Justice groups in developing this action and 
soliciting input for this rulemaking.
    The information supporting this impacts review is contained in 
sections II.C.8, VII.D, and VIII.J of the preamble for this rule, and 
all supporting documents have been placed in the public docket for this 
action.

K. Congressional Review Act (CRA)

    This action is subject to the CRA, and EPA will submit a rule 
report to each House of Congress and to the Comptroller General of the 
United States. This action meets the criteria set forth in 5 U.S.C. 
804(2).

L. Judicial Review

    This final action is ``nationally applicable'' within the meaning 
of CAA section 307(b)(1) because it is expressly listed in the section 
(i.e., ``any standard under section [202] of this title''). Under 
section 307(b)(1) of the CAA, petitions for judicial review of this 
action must be filed in the U.S. Court of Appeals for the District of 
Columbia Circuit within 60 days from the date this final action is 
published in the Federal Register. Filing a petition for 
reconsideration by the Administrator of this final action does not 
affect the finality of the action for the purposes of judicial review, 
nor does it extend the time within which a petition for judicial review 
must be filed and shall not postpone the effectiveness of such rule or 
action.

M. Severability

    This final rule includes new and revised requirements for numerous 
provisions under various aspects of the highway on-road emission 
control program, including revised standards for both criteria 
pollutants and GHG, test procedures, emission-related warranty, and 
other requirements. Therefore, this final rule is a multifaceted rule 
that addresses many separate things for independent reasons, as 
detailed in each respective portion of this preamble. We intend each 
portion of this rule to be severable from each other, though we took 
the approach of including all the parts in one rulemaking rather than 
promulgating multiple rules to ensure the changes are properly 
coordinated, even though the changes are not inter-dependent. We have 
noted the independence of various pieces of this package both in the 
proposal and in earlier sections of the preamble but we reiterate it 
here for clarity.
    For example, as EPA noted in the proposal, although we are 
coordinating the GHG and criteria pollutant

[[Page 28144]]

standards we are setting in this rulemaking, and although some of the 
available control technologies for GHG also control criteria 
pollutants, we are establishing GHG standards separately (i.e., for 
separate reasons based on a separate assessment of available control 
technologies and their feasibility in light of lead time and cost), 
from the standards we are setting for criteria pollutants. Furthermore, 
although EPA believes it is appropriate to offer a small A/C credit to 
encourage low GWP refrigerants and the low leakage designs, EPA does 
not consider the small A/C credit as integral to selection of the GHG 
standards. Similarly, although EPA is establishing both light-duty and 
medium-duty standards in this rulemaking, these are based on distinct 
statutory authorities (applicable based on the vehicle and pollutant). 
The two sets of standards are set with consideration of these statutory 
authorities and the distinct purposes of these classes of vehicles. 
Even within these classes, EPA notes that our judgments regarding 
feasibility of the standards for earlier years largely reflect 
anticipated changes in the motor vehicle market (which are driven by 
other factors, such as the IRA, consumer demand and manufacturers' 
global market plans), while our judgment regarding feasibility of the 
standards in later years reflects those trends plus the additional lead 
time for further adoption of control technologies. Accordingly, EPA 
finds that the standards for each individual year are severable from 
standards for each of the other years.
    Finally, EPA notes that there are a host of issues which are 
significant for implementation of any standards. For example, EPA is 
making changes to compliance testing (including requirements for fuels) 
and other certification procedures, as well as establishing battery 
durability and battery warranty provisions. Each of these issues has 
been considered and adopted independently of the level of the 
standards, and indeed of each other.
    Thus, EPA has independently considered and adopted each of these 
portions of the final rule (including but not limited to the standards 
for LD GHG, LD NMOG+NOX, LD PM, LD CO, LD HCHO, MD GHG, MD 
NMOG+NOX, MD PM, MD CO, MD HCHO; in-use standards for high-
GCWR MDV; trading and A/C credits; compliance testing and certification 
procedures; battery durability; and battery warranty) and each is 
severable should there be judicial review. If a court were to 
invalidate any one of these elements of the final rule, we intend the 
remainder of this action to remain effective, as we have designed the 
program to function sensibly and find each portion appropriate even if 
one or more other parts of the rule has been set aside. For example, if 
a reviewing court were to invalidate any of the criteria or GHG 
standards, we intend the other regulatory amendments, including not 
only the other pollutant standards but also the changes to 
certification procedures, and battery durability and warranty, to 
remain effective. Moreover, this list is not intended to be exhaustive, 
and should not be viewed as an intention by EPA to consider other parts 
of the rule not explicitly listed here as not severable from other 
parts of the rule.

X. Statutory Provisions and Legal Authority

    Statutory authority for this final rule is found at 42 U.S.C. 7401-
7675 and 49 U.S.C. 32901-32919q.

List of Subjects

40 CFR Part 85

    Environmental protection, Confidential business information, 
Greenhouse gases, Imports, Labeling, Motor vehicle pollution, Reporting 
and recordkeeping requirements, Research, Warranties.

40 CFR Part 86

    Environmental protection, Administrative practice and procedure, 
Confidential business information, Incorporation by reference, 
Labeling, Motor vehicle pollution, Reporting and recordkeeping 
requirements.

40 CFR Part 600

    Environmental protection, Administrative practice and procedure, 
Electric power, Fuel economy, Incorporation by reference, Labeling, 
Reporting and recordkeeping requirements.

40 CFR Part 1036

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Greenhouse 
gases, Labeling, Motor vehicle pollution, Reporting and recordkeeping 
requirements, Warranties.

40 CFR Part 1037

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Labeling, 
Motor vehicle pollution, Reporting and recordkeeping requirements, 
Warranties.

40 CFR Part 1066

    Environmental protection, Air pollution control, Incorporation by 
reference, Reporting and recordkeeping requirements.

40 CFR Part 1068

    Environmental protection, Administrative practice and procedure, 
Air pollution control, Confidential business information, Imports, 
Motor vehicle pollution, Penalties, Reporting and recordkeeping 
requirements, Warranties.

Michael S. Regan,
Administrator.

    For the reasons set out in the preamble, EPA is amending title 40, 
chapter I of the Code of Federal Regulations as set forth below.

PART 85--CONTROL OF AIR POLLUTION FROM MOBILE SOURCES

0
1. The authority citation for part 85 continues to read as follows:

    Authority:  42 U.S.C. 7401-7671q.


0
2. Amend Sec.  85.505 by revising paragraph (f) to read as follows:


Sec.  85.505  Overview.

* * * * *
    (f) If you have previously used small volume conversion 
manufacturer or qualified small volume test group/engine family 
procedures and you may exceed the volume thresholds using the sum 
described in Sec.  85.535(f) to determine small volume status in 40 CFR 
86.1838-01 or 1036.150(d), as appropriate, you must satisfy the 
requirements for conversion manufacturers who do not qualify for small 
volume exemptions or your exemption from tampering is no longer valid.
* * * * *

0
3. Revise and republish Sec.  85.510 to read as follows:


Sec.  85.510  Exemption provisions for new and relatively new vehicles/
engines.

    (a) You are exempted from the tampering prohibition with respect to 
new and relatively new vehicles/engines if you certify the conversion 
system to the emission standards specified in Sec.  85.525 as described 
in paragraph (b) in this section; you meet the labeling and packaging 
requirements in Sec.  85.530 before you sell, import or otherwise 
facilitate the use of a clean alternative fuel conversion system; and 
you meet the liability, recordkeeping, and end of year reporting 
requirements in Sec.  85.535.
    (b) Certification under this section must be based on the 
certification

[[Page 28145]]

procedures such as those specified in 40 CFR part 86, subparts A, B, 
and S, and 40 CFR part 1065, as applicable, subject to the following 
exceptions and special provisions:
    (1) Test groups and evaporative/refueling families for light-duty 
and heavy-duty chassis certified vehicles.
    (i) Small volume conversion manufacturers and qualified small 
volume test groups.
    (A) If criteria for small volume manufacturer or qualified small 
volume test groups are met as defined in 40 CFR 86.1838-01, you may 
combine light-duty vehicles or heavy-duty vehicles which can be chassis 
certified under 40 CFR part 86, subpart S using good engineering 
judgment into conversion test groups if the following criteria are 
satisfied instead of those specified in 40 CFR 86.1827-01.
    (1) Same OEM and OEM model year.
    (2) Same OBD group.
    (3) Same vehicle classification (e.g., light-duty vehicle, heavy-
duty vehicle).
    (4) Engine displacement is within 15% of largest displacement or 50 
CID, whichever is larger.
    (5) Same number of cylinders or combustion chambers.
    (6) Same arrangement of cylinders or combustion chambers (e.g., in-
line, v-shaped).
    (7) Same combustion cycle (e.g., two stroke, four stroke, Otto-
cycle, diesel-cycle).
    (8) Same engine type (e.g., piston, rotary, turbine, air cooled vs. 
water cooled).
    (9) Same OEM fuel type (except otherwise similar gasoline and E85 
flexible-fuel vehicles may be combined into dedicated alternative fuel 
vehicles).
    (10) Same fuel metering system (e.g., throttle body injection vs. 
port injection).
    (11) Same catalyst construction (e.g., metal vs. ceramic 
substrate).
    (12) All converted vehicles are subject to the most stringent 
emission standards used in certifying the OEM test groups within the 
conversion test group.
    (B) EPA-established scaled assigned deterioration factors for both 
exhaust and evaporative emissions may be used for vehicles with over 
10,000 miles if the criteria for small volume manufacturer or qualified 
small volume test groups are met as defined in 40 CFR 86.1838-01. This 
deterioration factor will be adjusted according to vehicle or engine 
miles of operation. The deterioration factor is intended to predict the 
vehicle's emission levels at the end of the useful life. EPA may adjust 
these scaled assigned deterioration factors if we find the rate of 
deterioration non-constant or if the rate differs by fuel type.
    (C) As part of the conversion system description provided in the 
application for certification, conversion manufacturers using EPA 
assigned deterioration factors must present detailed information to 
confirm the durability of all relevant new and existing components and 
to explain why the conversion system will not harm the emission control 
system or degrade the emissions.
    (ii) Conversion evaporative/refueling families are identical to the 
OEM evaporative/refueling families unless the OEM evaporative emission 
system is no longer functionally necessary. You must create any new 
evaporative families according to 40 CFR 86.1821-01.
    (2) Engine families and evaporative/refueling families for heavy-
duty engines.
    (i) Small volume conversion manufacturers and qualified small 
volume heavy-duty engine families.
    (A) If criteria for small volume manufacturer or qualified small 
volume engine families are met as defined in 40 CFR 1036.150(d), you 
may combine heavy-duty engines using good engineering judgment into 
conversion engine families if the following criteria are satisfied 
instead of those specified in 40 CFR 1036.230.
    (1) Same OEM.
    (2) Same OBD group after MY 2013.
    (3) Same service class (e.g., light heavy-duty diesel engines, 
medium heavy-duty diesel engines, heavy heavy-duty diesel engines).
    (4) Engine displacement is within 15% of largest displacement or 50 
CID, whichever is larger.
    (5) Same number of cylinders.
    (6) Same arrangement of cylinders.
    (7) Same combustion cycle.
    (8) Same method of air aspiration.
    (9) Same fuel type (e.g., diesel/gasoline).
    (10) Same fuel metering system (e.g., mechanical direct or 
electronic direct injection).
    (11) Same catalyst/filter construction (e.g., metal vs. ceramic 
substrate).
    (12) All converted engines are subject to the most stringent 
emission standards. For example, 2005 and 2007 heavy-duty diesel 
engines may be in the same family if they meet the most stringent 
(2007) standards.
    (13) Same emission control technology (e.g., internal or external 
EGR).
    (B) EPA-established scaled assigned deterioration factors for both 
exhaust and evaporative emissions may be used for engines with over 
10,000 miles if the criteria for small volume manufacturer or qualified 
small volume engine families are met as defined in 40 CFR 1036.150(d). 
This deterioration factor will be adjusted according to vehicle or 
engine miles of operation. The deterioration factor is intended to 
predict the engine's emission levels at the end of the useful life. EPA 
may adjust these scaled assigned deterioration factors if we find the 
rate of deterioration non-constant or if the rate differs by fuel type.
    (C) As part of the conversion system description provided in the 
application for certification, conversion manufacturers using EPA 
assigned deterioration factors must present detailed information to 
confirm the durability of all relevant new and existing components and 
to explain why the conversion system will not harm the emission control 
system or degrade the emissions.
    (ii) Conversion evaporative/refueling families are identical to the 
OEM evaporative/refueling families unless the OEM evaporative emission 
system is no longer functionally necessary. You must create any new 
evaporative families according to 40 CFR 86.1821.
    (3) Conversion test groups/engine families for small volume 
conversion manufacturers and qualified small volume test groups/engine 
families may include vehicles/engines that are subject to different OEM 
emission standards; however, all the vehicles/engines certified under 
this subpart in a single conversion test group/engine family are 
subject to the most stringent standards that apply for vehicles/engines 
included in the conversion test group/engine family. For example, if 
OEM vehicle test groups originally certified to Tier 2, Bin 4 and Bin 5 
standards are in the same conversion test group for purposes of fuel 
conversion, all the vehicles certified in the conversion test group 
under this subpart are subject to the Tier 2, Bin 4 standards. 
Conversion manufacturers may choose to certify a conversion test group/
engine family to a more stringent standard than the OEM did. The 
optional, more stringent standard would then apply to all OEM test 
groups/engine families within the conversion test group/engine family. 
This paragraph (b)(3) does not apply to conversions to dual-fuel/mixed-
fuel vehicles/engines, as provided in paragraph (b)(7) of this section.
    (4)-(5) [Reserved]
    (6) Durability testing is required unless the criteria for small 
volume manufacturer or qualified small volume test groups/engine 
families are met as defined in 40 CFR 86.1838-01 or 1036.150(d), as 
applicable.
    (7) Conversion test groups/engine families for conversions to dual-
fuel or

[[Page 28146]]

mixed-fuel vehicles/engines cannot include vehicles/engines subject to 
different emission standards unless applicable exhaust and OBD 
demonstrations are also conducted for the original fuel(s) 
demonstrating compliance with the most stringent standard represented 
in the test group. However, for small volume conversion manufacturers 
and qualified small volume test groups/engine families the data 
generated from exhaust emission testing on the new fuel for dual-fuel 
or mixed-fuel test vehicles/engines may be carried over to vehicles/
engines which otherwise meet the test group/engine family criteria and 
for which the test vehicle/engine data demonstrate compliance with the 
application vehicle/engine standard. Clean alternative fuel conversion 
evaporative families for dual-fuel or mixed-fuel vehicles may not 
include vehicles/engines which were originally certified to different 
evaporative emissions standards unless evaporative/refueling 
demonstrations are also conducted for the original fuel(s) 
demonstrating compliance with the most stringent standard represented 
in the evaporative/refueling family.
    (8) The vehicle/engine selected for testing must qualify as a 
worst-case vehicle/engine under 40 CFR 86.1828-01 or 1036.235(a)(2), as 
applicable.
    (9) The following requirements apply for OBD systems:
    (i) The OBD system must properly detect and identify malfunctions 
in all monitored emission-related powertrain systems or components 
including any new monitoring capability necessary to identify potential 
emission problems associated with the new fuel.
    (ii) Conduct OBD testing as needed to demonstrate that the vehicle/
engine continues to comply with emission thresholds and other 
requirements that apply based on the original certification.
    (iii) Submit the applicable OBD reporting information for vehicles 
as set forth in 40 CFR 86.1806-17. Submit the applicable OBD reporting 
information for engines as set forth in 40 CFR 86.010-18 or 1036.110, 
as appropriate. Submit the following statement of compliance if the OEM 
vehicles/engines were required to be OBD-equipped:

    The test group/engine family converted to an alternative fuel 
has fully functional OBD systems and therefore meets the OBD 
requirements specified in [40 CFR part 86 or part 1036, as 
applicable] when operating on the alternative fuel.

    (10) In lieu of specific certification test data, you may submit 
the following attestations for the appropriate statements of 
compliance, if you have sufficient basis to prove the statement is 
valid.
    (i) The test group/engine family converted to an alternative fuel 
has properly exercised the optional and applicable statements of 
compliance or waivers in the certification regulations. Attest to each 
statement or waiver in your application for certification.
    (ii) The test group/engine family converted to dual-fuel or mixed-
fuel operation retains all the OEM fuel system, engine calibration, and 
emission control system functionality when operating on the fuel with 
which the vehicle/engine was originally certified.
    (iii) The test group/engine family converted to dual fuel or mixed-
fuel operation retains all the functionality of the OEM OBD system (if 
so equipped) when operating on the fuel with which the vehicle/engine 
was originally certified.
    (iv) The test group/engine family converted to dual-fuel or mixed-
fuel operation properly purges hydrocarbon vapor from the evaporative 
emission canister when the vehicle/engine is operating on the 
alternative fuel.
    (11) Certification fees apply as described in 40 CFR part 1027.
    (12) A certificate issued under this section is valid starting with 
the indicated effective date and expires on December 31 of the 
conversion model year for which it is issued. You may apply for a 
certificate of conformity for the next conversion model year using the 
applicable provisions for carryover certification. Even after the 
certificate expires, your exemption from the prohibition on tampering 
remains valid for the applicable conversion test group/engine family 
and/or evaporative/refueling family, as long as the conditions under 
which the certificate was issued remain unchanged, such as small volume 
manufacturer or qualified small volume test group/engine family status. 
Your exemption from tampering is valid only if the conversion is 
installed on the OEM test groups/engine families and/or evaporative 
emissions/refueling families listed on the certificate. For example, if 
you have received a clean alternative fuel conversion certificate of 
conformity in conversion model year 2011 for converting a 2010 model 
year OEM test group/evaporative/refueling family, your exemption from 
tampering continues to apply for the conversion of the same 2010 model 
year OEM test group/evaporative/refueling family as long as the 
conditions under which the certificate was issued remain unchanged, 
such as small volume manufacturer status.
    (13) Conversion systems must be properly installed and adjusted 
such that the vehicle/engine operates consistent with the principles of 
good engineering judgment and in accordance with all applicable 
regulations.

0
4. Revise and republish Sec.  85.515 to read as follows:


Sec.  85.515  Exemption provisions for intermediate age vehicles/
engines.

    (a) You are exempted from the tampering prohibition with respect to 
intermediate age vehicles/engines if you properly test, document and 
notify EPA that the conversion system complies with the emission 
standards specified in Sec.  85.525 as described in paragraph (b) of 
this section; you meet the labeling requirements in Sec.  85.530 before 
you sell, import or otherwise facilitate the use of a clean alternative 
fuel conversion system; and you meet the liability, recordkeeping, and 
end of year reporting requirements in Sec.  85.535. You may also meet 
the requirements under this section by complying with the requirements 
in Sec.  85.510.
    (b) Documenting and notifying EPA under this section includes 
demonstrating compliance with all the provisions in this section and 
providing all notification information to EPA. You may notify us as 
described in this section instead of certifying the clean alternative 
fuel conversion system. You must demonstrate compliance with all 
exhaust and evaporative emissions standards by conducting all exhaust 
and evaporative emissions and durability testing as required for OEM 
certification subject to the exceptions and special provisions 
permitted in Sec.  85.510. This paragraph (b) provides additional 
special provisions applicable to intermediate age vehicles/engines. 
Paragraph (b) is applicable to all conversion manufacturers unless 
otherwise specified.
    (1) Conversion test groups for light-duty and heavy-duty chassis 
certified vehicles may be grouped together into an exhaust conversion 
test group using the criteria described in Sec.  85.510(b)(1)(i)(A), 
except that the same OBD group is not a criterion. Evaporative/
refueling families may be grouped together using the criteria described 
in Sec.  85.510(b)(1)(ii).
    (2) Conversion engine families for heavy-duty engines may be 
grouped together into an exhaust conversion engine family using the 
criteria described in Sec.  85.510(b)(2)(i)(A), except that the same 
OBD group is not a criterion. Evaporative/refueling families may be 
grouped together using the criteria described in Sec.  
85.510(b)(2)(ii).

[[Page 28147]]

    (3) Conversion test groups/engine families may include vehicles/
engines that are subject to different OEM emission standards; however, 
all vehicles/engines in a single conversion test group/engine family 
are subject to the most stringent standards that apply for vehicles/
engines included in the conversion test group/engine family. For 
example, if OEM vehicle test groups originally certified to Tier 2, Bin 
4 and Bin 5 standards are in the same conversion test group for 
purposes of fuel conversion, all the vehicles in the conversion test 
group under this subpart are subject to the Tier 2, Bin 4 standards. 
This paragraph (b)(3) does not apply to conversions to dual-fuel/mixed-
fuel vehicles/engines, as provided in paragraph (b)(7).
    (4) EPA-established scaled assigned deterioration factors for both 
exhaust and evaporative emissions may be used for vehicles/engines with 
over 10,000 miles if the criteria for small volume manufacturer or 
qualified small volume test groups/engine families are met as defined 
in 40 CFR 86.1838-01 or 40 CFR 1036.150(d), as appropriate. This 
deterioration factor will be adjusted according to vehicle/engine miles 
or hours of operation. The deterioration factor is intended to predict 
the vehicle/engine's emission level at the end of the useful life. EPA 
may adjust these scaled assigned deterioration factors if we find the 
rate of deterioration non-constant or if the rate differs by fuel type.
    (5) As part of the conversion system description required by 
paragraph (b)(10)(i) of this section, small volume conversion 
manufacturers and qualified small volume test groups/engine families 
using EPA assigned deterioration factors must present detailed 
information to confirm the durability of all relevant new and existing 
components and explain why the conversion system will not harm the 
emission control system or degrade the emissions.
    (6) Durability testing is required unless the criteria for small 
volume manufacturer or qualified small volume test groups/engine 
families are met as defined in 40 CFR 86.1838-01 or 40 CFR 1036.150(d), 
as applicable. Durability procedures for large volume conversion 
manufacturers of intermediate age light-duty and heavy-duty chassis 
certified vehicles that follow provisions in 40 CFR 86.1820-01 may 
eliminate precious metal composition and catalyst grouping statistic 
when creating clean alternative fuel conversion durability groupings.
    (7) Conversion test groups/engine families for conversions to dual-
fuel or mixed-fuel vehicles/engines may not include vehicles/engines 
subject to different emissions standards unless applicable exhaust and 
OBD demonstrations are also conducted for the original fuel(s) 
demonstrating compliance with the most stringent standard represented 
in the test group/engine family. However, the data generated from 
testing on the new fuel for dual-fuel or mixed/fuel test vehicles/
engines may be carried over to vehicles/engines that otherwise meet the 
conversion test group/engine family criteria and for which the test 
vehicle/engine data demonstrate compliance with the applicable vehicle/
engine standards. Clean alternative fuel conversion evaporative 
families for dual-fuel or mixed-fuel vehicles/engines cannot include 
vehicles/engines that were originally certified to different 
evaporative emissions standards unless evaporative/refueling 
demonstrations are also conducted for the original fuel(s) 
demonstrating compliance with the most stringent standard represented 
in the evaporative/refueling family.
    (8) You must conduct all exhaust and all evaporative and refueling 
emissions testing with a worst-case vehicle/engine to show that the 
conversion test group/engine family complies with exhaust and 
evaporative/refueling emission standards, based on the certification 
procedures.
    (9)(i) The OBD system must properly detect and identify 
malfunctions in all monitored emission-related powertrain systems or 
components including any new monitoring capability necessary to 
identify potential emission problems associated with the new fuel. 
These include but are not limited to: Fuel trim lean and rich monitors, 
catalyst deterioration monitors, engine misfire monitors, oxygen sensor 
deterioration monitors, EGR system monitors, if applicable, and vapor 
leak monitors, if applicable. No original OBD system monitor that is 
still applicable to the vehicle/engine may be aliased, removed, 
bypassed, or turned-off. No MILs shall be illuminated after the 
conversion. Readiness flags must be properly set for all monitors that 
identify any malfunction for all monitored components.
    (ii) Subsequent to the vehicle/engine fuel conversion, you must 
clear all OBD codes and reset all OBD monitors to not-ready status 
using an OBD scan tool appropriate for the OBD system in the vehicle/
engine in question. You must operate the vehicle/engine with the new 
fuel on representative road operation or chassis dynamometer/engine 
dynamometer testing cycles to satisfy the monitors' enabling criteria. 
When all monitors have reset to a ready status, you must submit an OBD 
scan tool report showing that with the vehicle/engine operating in the 
key-on/engine-on mode, all supported monitors have reset to a ready 
status and no emission related ``pending'' (or potential) or 
``confirmed'' (or MIL-on) diagnostic trouble codes (DTCs) have been 
set. The MIL must not be commanded ``On'' or be illuminated. A MIL 
check must also be conducted in a key-on/engine-off mode to verify that 
the MIL is functioning properly. You must include the VIN/EIN number of 
the test vehicle/engine. If necessary, the OEM evaporative emission 
readiness monitor may remain unset for dedicated gaseous fuel 
conversion systems.
    (iii) In addition to conducting OBD testing described in this 
paragraph (b)(9), you must submit to EPA the following statement of 
compliance if the OEM vehicles/engines were required to be OBD-
equipped:

    The test group/engine family converted to an alternative fuel 
has fully functional OBD systems and therefore meets the OBD 
requirements specified in [40 CFR part 86 or part 1036, as 
applicable] when operating on the alternative fuel.

    (10) You must notify us by electronic submission in a format 
specified by the Administrator with all required documentation. The 
following must be submitted:
    (i) You must describe how your conversion system qualifies as a 
clean alternative fuel conversion. You must include emission test 
results from the required exhaust, evaporative emissions, and OBD 
testing, applicable exhaust and evaporative emissions standards and 
deterioration factors. You must also include a description of how the 
test vehicle/engine selected qualifies as a worst-case vehicle/engine 
under 40 CFR 86.1828-01 or 1036.235(a)(2), as applicable.
    (ii) You must describe the group of vehicles/engines (conversion 
test group/conversion engine family) that are covered by your 
notification based on the criteria specified in paragraph (b)(1) or 
(b)(2) of this section.
    (iii) In lieu of specific test data, you may submit the following 
attestations for the appropriate statements of compliance, if you have 
sufficient basis to prove the statement is valid.
    (A) The test group/engine family converted to an alternative fuel 
has properly exercised the optional and applicable statements of 
compliance or waivers in the certification regulations. Attest to each 
statement or waiver in your notification.
    (B) The test group/engine family converted to dual-fuel or mixed-
fuel

[[Page 28148]]

operation retains all the OEM fuel system, engine calibration, and 
emission control system functionality when operating on the fuel with 
which the vehicle/engine was originally certified.
    (C) The test group/engine family converted to dual-fuel or mixed-
fuel operation retains all the functionality of the OEM OBD system (if 
the OEM vehicles/engines were required to be OBD equipped) when 
operating on the fuel for which the vehicle/engine was originally 
certified.
    (D) The test group/engine family converted to dual-fuel or mixed-
fuel operation properly purges hydrocarbon vapor from the evaporative 
emission canister when the vehicle/engine is operating on the 
alternative fuel.
    (iv) Include any other information as the Administrator may deem 
appropriate to establish that the conversion system is for the purpose 
of conversion to a clean alternative fuel and meets applicable emission 
standards.
    (11) [Reserved]
    (12) Your exemption from the prohibition on tampering remains valid 
for the applicable conversion test group/engine family and/or 
evaporative/refueling family, as long as the conditions under which you 
previously complied remain unchanged, such as small volume manufacturer 
or qualified small volume test group/engine family status. Your 
exemption from tampering is valid only if the conversion is installed 
on the OEM test groups/engine families and/or evaporative emissions/
refueling families listed on the notification. For example, if you have 
complied properly with the provisions in this section in calendar year 
2011 for converting a model year 2006 OEM test group/evaporative/
refueling family, your exemption from tampering continues to apply for 
the conversion of the same model year 2006 OEM test group/evaporative/
refueling family as long as the conditions under which the notification 
was submitted remain unchanged.
    (13) Conversion systems must be properly installed and adjusted 
such that the vehicle/engine operates consistent with the principles of 
good engineering judgment and in accordance with all applicable 
regulations.

0
5. Amend Sec.  85.520 by revising and republishing paragraphs (b)(4) 
and (6) to read as follows:


Sec.  85.520  Exemption provisions for outside useful life vehicles/
engines.

* * * * *
    (b) * * *
    (4) The following requirements apply for OBD systems:
    (i) The OBD system must properly detect and identify malfunctions 
in all monitored emission-related powertrain systems or components, 
including any new monitoring capability necessary to identify potential 
emission problems associated with the new fuel. These include but are 
not limited to: Fuel trim lean and rich monitors, catalyst 
deterioration monitors, engine misfire monitors, oxygen sensor 
deterioration monitors, EGR system monitors, if applicable, and 
evaporative system leak monitors, if applicable. No original OBD system 
monitor that is still applicable to the vehicle/engine may be aliased, 
removed, bypassed, or turned-off. No MILs shall be illuminated after 
the conversion. Readiness flags must be properly set for all monitors 
that identify any malfunction for all monitored components.
    (ii) Subsequent to the vehicle/engine fuel conversion, you must 
clear all OBD codes and reset all OBD monitors to not-ready status 
using an OBD scan tool appropriate for the OBD system in the vehicle/
engine in question. You must operate the vehicle/engine with the new 
fuel on representative road operation or chassis dynamometer/engine 
dynamometer testing cycles to satisfy the monitors' enabling criteria. 
When all monitors have reset to a ready status, you must submit an OBD 
scan tool report showing that with the vehicle/engine operating in the 
key-on/engine-on mode, all supported monitors have reset to a ready 
status and no emission related ``pending'' (or potential) or 
``confirmed'' (or MIL-on) diagnostic trouble codes (DTCs) have been 
stored. The MIL must not be commanded ``On'' or be illuminated. A MIL 
check must also be conducted in a key-on/engine-off mode to verify that 
the MIL is functioning properly. You must include the VIN/EIN of the 
test vehicle/engine. If necessary, the OEM evaporative emission 
readiness monitor may remain unset for dedicated gaseous fuel 
conversion systems.
    (iii) In addition to conducting OBD testing described in this 
paragraph (b)(4), you must submit to EPA the following statement of 
compliance if the OEM vehicles/engines were required to be OBD-
equipped:
    The test group/engine family converted to an alternative fuel has 
fully functional OBD systems and therefore meets the OBD requirements 
specified in [40 CFR part 86 or 40 CFR part 1036, as applicable] when 
operating on the alternative fuel.
* * * * *
    (6) You must notify us by electronic submission in a format 
specified by the Administrator with all required documentation. The 
following must be submitted.
    (i) You must describe how your conversion system complies with the 
good engineering judgment criteria in paragraph (b)(3) of this section 
and/or other requirements under this subpart or other applicable 
subparts such that the conversion system qualifies as a clean 
alternative fuel conversion. The submission must provide a level of 
technical detail sufficient for EPA to confirm the conversion system's 
ability to maintain or improve on emission levels in a worst-case 
vehicle/engine. The submission of technical information must include a 
complete characterization of exhaust and evaporative emissions control 
strategies, the fuel delivery system, durability, and specifications 
related to OBD system functionality. You must present detailed 
information to confirm the durability of all relevant new and existing 
components and to explain why the conversion system will not harm the 
emission control system or degrade the emissions. EPA may ask you to 
supply additional information, including test data, to support the 
claim that the conversion system does not increase emissions and 
involves good engineering judgment that is being applied for purposes 
of conversion to a clean alternative fuel.
    (ii) You must describe the group of vehicles/engines (conversion 
test group/conversion engine family) that is covered by your 
notification based on the criteria specified in paragraph (b)(2) of 
this section.
    (iii) In lieu of specific test data, you may submit the following 
attestations for the appropriate statements of compliance, if you have 
sufficient basis to prove the statement is valid.
    (A) The test group/engine family converted to an alternative fuel 
has properly exercised the optional and applicable statements of 
compliance or waivers in the certification regulations. Attest to each 
statement or waiver in your notification.
    (B) The test group/engine family converted to dual-fuel or mixed-
fuel operation retains all the OEM fuel system, engine calibration, and 
emission control system functionality when operating on the fuel with 
which the vehicle/engine was originally certified.
    (C) The test group/engine family converted to dual-fuel or mixed-
fuel operation retains all the functionality of the OEM OBD system (if 
the OEM vehicles/engines were required to be OBD equipped) when 
operating on the fuel with which the vehicle/engine was originally 
certified.

[[Page 28149]]

    (D) The test group/engine family converted to dual-fuel or mixed-
fuel operation properly purges hydrocarbon vapor from the evaporative 
emission canister when the vehicle/engine is operating on the 
alternative fuel.
    (E) The test group/engine family converted to an alternative fuel 
uses fueling systems, evaporative emission control systems, and engine 
powertrain components that are compatible with the alternative fuel and 
designed with the principles of good engineering judgment.
    (iv) You must include any other information as the Administrator 
may deem appropriate, which may include test data, to establish the 
conversion system is for the purpose of conversion to a clean 
alternative fuel.
* * * * *


Sec.  85.524  [Removed]

0
6. Remove Sec.  85.524.

0
7. Amend Sec.  85.525 by revising paragraph (b)(3) introductory text to 
read as follows:


Sec.  85.525  Applicable standards.

* * * * *
    (b) * * *
    (3) Subject to the following exceptions and special provisions, 
compliance with greenhouse gas emission standards for medium-duty 
vehicles and heavy-duty vehicles subject to 40 CFR 86.1819-14 is 
demonstrated by complying with the N2O and CH4 
standards and provisions set forth in 40 CFR 86.1819-14 and the in-use 
CO2 exhaust emission standard set forth in 40 CFR 86.1819-
14(b) as determined by the OEM for the subconfiguration that is 
identical to the fuel conversion emission data vehicle (EDV):
* * * * *

0
8. Amend Sec.  85.535 by revising paragraph (f) to read as follows:


Sec.  85.535  Liability, recordkeeping, and end of year reporting.

* * * * *
    (f) Clean alternative fuel conversion manufacturers must submit an 
end of the year sales report to EPA describing the number of clean 
alternative fuel conversions by fuel type(s) and vehicle test group/
engine family by January 31 of the following year. The number of 
conversions is the sum of the calendar year intermediate age 
conversions, outside useful life conversions, and the same conversion 
model year certified clean alternative fuel conversions. The number of 
conversions will be added to any other vehicle and engine sales 
accounted for using 40 CFR 86.1838-01 or 1036.150(d), as appropriate to 
determine small volume manufacturer or qualified small volume test 
group/engine family status.
* * * * *

0
9. Amend Sec.  85.1503 by revising paragraphs (a) and (c) to read as 
follows:


Sec.  85.1503  General requirements for importation of nonconforming 
vehicles and engines.

    (a) A nonconforming vehicle or engine offered for importation into 
the United States must be imported by an ICI who is a current holder of 
a valid certificate of conformity unless an exemption or exclusion is 
granted by the Administrator under Sec.  85.1511 or the vehicle is 
eligible for entry under Sec.  85.1512.
* * * * *
    (c) In any one certificate year (e.g., the current model year), an 
ICI may finally admit no more than the following numbers of 
nonconforming vehicles into the United States under the provisions of 
Sec. Sec.  85.1505 and 85.1509, except as allowed by paragraph (e) of 
this section:
    (1) [Reserved]
    (2) A total of 25 light-duty vehicles, light-duty trucks, and 
medium-duty passenger vehicles. This limit applies for vehicles with 
engines, including plug-in hybrid electric vehicles. This limit does 
not apply for electric vehicles.
    (3) 50 highway motorcycles.
* * * * *

0
10. Amend Sec.  85.1509 by:
0
a. Revising paragraph (a) introductory text.
0
b. Removing and reserving paragraphs (b) through (f).
0
c. Removing the paragraph headings from paragraphs (j), (k), and (l).
    The revision reads as follows:


Sec.  85.1509  Final admission of modification and test vehicles.

    (a) A motor vehicle or motor vehicle engine may be imported under 
this section by a certificate holder possessing a currently valid 
certificate of conformity only if--
* * * * *

0
11. Amend Sec.  85.1510 by revising paragraphs (d)(1) and (f) to read 
as follows:


Sec.  85.1510  Maintenance instructions, warranties, emission labeling 
and fuel economy requirements.

* * * * *
    (d) * * *
    (1) The certificate holder shall affix a fuel economy label that 
complies with the requirements of 40 CFR part 600, subpart D. The 
requirement for fuel economy labels does not apply for electric 
vehicles.
* * * * *
    (f) Corporate Average Fuel Economy (CAFE). Certificate holders 
shall comply with any applicable CAFE requirements of the Energy Policy 
and Conservation Act, 15 U.S.C. 2001 et seq., and 40 CFR part 600, for 
all vehicles imported under Sec. Sec.  85.1505 and 85.1509.

0
12. Revise and republish Sec.  85.1515 to read as follows:


Sec.  85.1515  Emission standards and test procedures applicable to 
imported nonconforming motor vehicles and motor vehicle engines.

    (a) Notwithstanding any other requirements of this subpart, any 
motor vehicle or motor vehicle engine conditionally imported pursuant 
to Sec.  85.1505 or Sec.  85.1509 and required to be emission tested 
shall be tested using the FCT at 40 CFR part 86 applicable to current 
model year motor vehicles and motor vehicle engines at the time of 
testing or reduced testing requirements as follows:
    (1) ICIs are eligible for reduced testing under this paragraph (a) 
subject to the following conditions:
    (i) The OEM must have a valid certificate of conformity covering 
the vehicle.
    (ii) The vehicle must be in its original configuration as certified 
by the OEM. This applies for all emission-related components, including 
the electronic control module, engine calibrations, and all 
evaporative/refueling control hardware. It also applies for OBD 
software and hardware, including all sensors and actuators.
    (iii) The vehicle modified as described in paragraph (a)(1)(ii) of 
this section must fully comply with all applicable emission standards 
and requirements.
    (iv) Vehicles must have the proper OBD systems installed and 
operating. When faults are present, the ICI must test and verify the 
system's ability to find the faults (such as disconnected components), 
set codes, and illuminate the light, and set readiness codes as 
appropriate for each vehicle. When no fault is present, the ICI must 
verify that after sufficient prep driving (typically one FTP test 
cycle), all OBD readiness codes are set and the OBD system does not 
indicate a malfunction (i.e., no codes set and no light illuminated).
    (v) The ICI may not modify more than 300 vehicles in any given 
model year using reduced testing provisions in this paragraph (a).
    (vi) The ICI must state in the application for certification that 
it will

[[Page 28150]]

meet all the conditions in this paragraph (a)(1).
    (2) The following provisions allow for ICIs to certify vehicles 
with reduced testing:
    (i) In addition to the test waivers specified in 40 CFR 86.1829, 
you may provide a statement in the application for certification, 
supported by engineering analysis, that vehicles comply with any of the 
following standards that apply instead of submitting test data:
    (A) Cold temperature CO, NMHC, NMOG+NOX, and PM emission 
standards specified in 40 CFR 86.1811.
    (B) SFTP emission standards specified in 40 CFR 86.1811 and 86.1816 
for all pollutants, and separate emission standards that apply for US06 
and SC03 duty cycles.
    (C) For anything other than diesel-fueled vehicles, PM emission 
standards specified in 40 CFR 86.1811 and 86.1816.
    (D) Any running loss, refueling, spitback, bleed emissions, and 
leak standards specified in 40 CFR part 86, subparts A and S.
    (ii) You must perform testing and submit test data as follows to 
demonstrate compliance with emission standards:
    (A) Exhaust and fuel economy tests. You must measure emissions over 
the FTP driving cycle and the highway fuel economy driving cycle as 
specified in 40 CFR 1066.801 to meet the fuel economy requirements in 
40 CFR part 600 and demonstrate compliance with the exhaust emission 
standards in 40 CFR part 86 (other than PM). Measure exhaust emissions 
and fuel economy with the same test procedures used by the original 
manufacturer to test the vehicle for certification. However, you must 
use an electric dynamometer meeting the requirements of 40 CFR part 
1066, subpart B, unless we approve a different dynamometer based on 
excessive compliance costs. If you certify based on testing with a 
different dynamometer, you must state in the application for 
certification that all vehicles in the emission family will comply with 
emission standards if tested on an electric dynamometer.
    (B) Evaporative emission test. You may measure evaporative 
emissions as specified in this paragraph (a)(2)(ii)(B) to demonstrate 
compliance with the evaporative emission standards in 40 CFR part 86 
instead of the otherwise specified procedures. Use measurement 
equipment for evaporative measurements specified in 40 CFR part 86, 
subpart B, except that the evaporative emission enclosure does not need 
to accommodate varying ambient temperatures. The evaporative 
measurement procedure is integral to the procedure for measuring 
exhaust emissions over the FTP driving cycle as described in paragraph 
(a)(ii)(2)(A) of this section. Perform canister preconditioning using 
the same procedure used by the original manufacturer to certify the 
vehicle; perform this canister loading before the initial 
preconditioning drive. Perform a diurnal emission test at the end of 
the stabilization period before the exhaust emission test by heating 
the fuel from 60 to 84 [deg]F, either by exposing the vehicle to 
increasing ambient temperatures or by applying heat directly to the 
fuel tank. Measure hot soak emissions as described in 40 CFR 86.138-
96(k). We may approve alternative measurement procedures that are 
equivalent to or more stringent than the specified procedures if the 
specified procedures are impractical for particular vehicle models or 
measurement facilities. The sum of the measured diurnal and hot soak 
values must meet the appropriate emission standard as specified in this 
section.
    (b) [Reserved]
    (c) Nonconforming motor vehicles conditionally imported pursuant to 
Sec.  85.1505 or Sec.  85.1509 must meet all the emission standards 
specified in 40 CFR part 86 for the OP year of the vehicle, with the 
following exceptions and clarifications:
    (1) The useful life specified in 40 CFR part 86 for the OP year of 
the motor vehicle is applicable where useful life is not designated in 
this subpart.
    (2)(i) Nonconforming light-duty vehicles and light light-duty 
trucks (LDV/LLDTs) originally manufactured in OP years 2004, 2005 or 
2006 must meet the FTP exhaust emission standards of bin 9 in Tables 
S04-1 and S04-2 in 40 CFR 86.1811-04 and the evaporative emission 
standards for light-duty vehicles and light light-duty trucks specified 
in 40 CFR 86.1811-01(e)(5).
    (ii) Nonconforming LDT3s and LDT4s (HLDTs) and medium-duty 
passenger vehicles (MDPVs) originally manufactured in OP years 2004 
through 2006 must meet the FTP exhaust emission standards of bin 10 in 
Tables S04-1 and S04-2 in 40 CFR 86.1811-04 and the applicable 
evaporative emission standards specified in 40 CFR 86.1811-04(e)(5). 
For 2004 OP year HLDTs and MDPVs where modifications commence on the 
first vehicle of a test group before December 21, 2003, this 
requirement does not apply to the 2004 OP year. ICIs opting to bring 
all their 2004 OP year HLDTs and MDPVs into compliance with the exhaust 
emission standards of bin 10 in Tables S04-1 and S04-2 in 40 CFR 
86.1811-04, may use the optional higher NMOG values for their 2004-2006 
OP year LDT2s and 2004-2008 LDT4s.
    (iii) Nonconforming LDT3s and LDT4s (HLDTs) and medium-duty 
passenger vehicles (MDPVs) originally manufactured in OP years 2007 and 
2008 must meet the FTP exhaust emission standards of bin 8 in Tables 
S04-1 and S04-2 in 40 CFR 86.1811-04 and the applicable evaporative 
standards specified in 40 CFR 86.1811-04(e)(5).
    (iv) Nonconforming LDV/LLDTs originally manufactured in OP years 
2007 through 2021 and nonconforming HLDTs and MDPVs originally 
manufactured in OP year 2009 through 2021 must meet the FTP exhaust 
emission standards of bin 5 in Tables S04-1 and S04-2 in 40 CFR 
86.1811-04, and the evaporative standards specified in 40 CFR 86.1811-
04(e)(1) through (4).
    (v) ICIs are exempt from the Tier 2 and the interim non-Tier 2 
phase-in intermediate percentage requirements for exhaust, evaporative, 
and refueling emissions described in 40 CFR 86.1811-04.
    (vi) In cases where multiple standards exist in a given model year 
in 40 CFR part 86 due to phase-in requirements of new standards, the 
applicable standards for motor vehicle engines required to be certified 
to engine-based standards are the least stringent standards applicable 
to the engine type for the OP year.
    (vii) Nonconforming LDV/LLDTs originally manufactured in OP years 
2009 through 2021 must meet the evaporative emission standards in Table 
S09-1 in 40 CFR 86.1811-09(e). However, LDV/LLDTs originally 
manufactured in OP years 2009 and 2010 and imported by ICIs who qualify 
as small-volume manufacturers as defined in 40 CFR 86.1838-01 are 
exempt from the LDV/LLDT evaporative emission standards in Table S09-1 
in 40 CFR 86.1811-09(e), but must comply with the Tier 2 evaporative 
emission standards in Table S04-3 in 40 CFR 86.1811-04(e).
    (viii) Nonconforming HLDTs and MDPVs originally manufactured in OP 
years 2010 through 2021 must meet the evaporative emission standards in 
Table S09-1 in 40 CFR 86.1811-09(e). However, HLDTs and MDPVs 
originally manufactured in OP years 2010 and 2011 and imported by ICIs, 
who qualify as small-volume manufacturers as defined in 40 CFR 86.1838-
01, are exempt from the HLDTs and MDPVs evaporative emission standards 
in Table S09-1 in 40 CFR 86.1811-09(e), but must comply with the Tier 2

[[Page 28151]]

evaporative emission standards in Table S04-3 in 40 CFR 86.1811-04(e).
    (ix) Nonconforming LDV/LLDTs originally manufactured in OP years 
2013 through 2021 must meet the cold temperature NMHC emission 
standards in Table S10-1 in 40 CFR 86.1811-10(g). Nonconforming HLDTs 
and MDPVs originally manufactured in OP years 2015 through 2021 must 
meet the cold temperature NMHC emission standards in Table S10-1 in 40 
CFR 86.1811-10(g).
    (x) Nonconforming vehicles subject to the provisions of 40 CFR part 
86, subpart S, originally manufactured in OP years 2022 through 2031 
must meet the Tier 3 and related exhaust emission standards in 40 CFR 
86.1811-17 and 86.1816-18, the Tier 3 evaporative emission standards in 
40 CFR 86.1813-17, and the refueling emission standards in 40 CFR 
86.1813-17(b) and have an OBD system meeting the requirements of 40 CFR 
86.1806-17. In cases where the standard allows or requires 
demonstrating compliance using emission credits, each vehicle imported 
under this paragraph (c) is subject to the specified fleet average 
standard.
    (xi) Nonconforming vehicles subject to the provisions of 40 CFR 
part 86, subpart S, originally manufactured in OP years 2032 and later 
must meet the Tier 4 exhaust emission standards in 40 CFR 86.1811-27, 
the Tier 3 evaporative emission standards in 86.1813-17, and the 
refueling emission standards in 40 CFR 86.1813-17(b) and have an OBD 
system meeting the requirements of 40 CFR 86.1806-27. In cases where 
the standard allows or requires demonstrating compliance using emission 
credits, each vehicle imported under this paragraph (c) is subject to 
the specified fleet average standard.
    (3) The following provisions apply for demonstrating compliance 
with the Tier 2 fleet average NOX standard in 40 CFR 
86.1811-04:
    (i) As an option to the requirements of paragraph (c)(2)(i) through 
(viii) of this section, independent commercial importers may elect to 
meet lower bins in Tables S04-1 and S04-2 of 40 CFR 86.1811-04 than 
specified in paragraph (c)(2) of this section and bank or sell 
NOX credits as permitted in 40 CFR 86.1860-04 and 40 CFR 
86.1861-04. An ICI may not meet higher bins in Tables S04-1 and S04-2 
of 40 CFR 86.1811-04 than specified in paragraph (c)(2) of this section 
unless it demonstrates to the Administrator at the time of 
certification that it has obtained appropriate and sufficient 
NOX credits from another manufacturer, or has generated them 
in a previous model year or in the current model year and not 
transferred them to another manufacturer or used them to address other 
vehicles as permitted in 40 CFR 86.1860-04 and 40 CFR 86.1861-04.
    (ii) Where an ICI desires to obtain a certificate of conformity 
using a bin higher than specified in paragraph (c)(2) of this section, 
but does not have sufficient credits to cover vehicles produced under 
such certificate, the Administrator may issue such certificate if the 
ICI has also obtained a certificate of conformity for vehicles 
certified using a bin lower than that required under paragraph (c)(2) 
of this section. The ICI may then produce vehicles to the higher bin 
only to the extent that it has generated sufficient credits from 
vehicles certified to the lower bin during the same model year.
    (iii) Except for the situation where an ICI desires to bank, sell 
or use NOX credits as described in this paragraph (c)(3), 
the requirements of 40 CFR 86.1811-04 related to fleet average 
NOX standards and requirements to comply with such standards 
do not apply to vehicles modified under this subpart.
    (iv) ICIs using bins higher than those specified in paragraph 
(c)(2) of this section must monitor their production so that they do 
not produce more vehicles certified to the standards of such bins than 
their available credits can cover. ICIs must not have a credit deficit 
at the end of a model year and are not permitted to use the deficit 
carryforward provisions provided in 40 CFR 86.1860-04(e).
    (v) The Administrator may condition the certificates of conformity 
issued to ICIs as necessary to ensure that vehicles subject to this 
paragraph (c) comply with the appropriate average NOX 
standard for each model year.
    (4) The following provisions apply for demonstrating compliance 
with the cold temperature NMHC fleet average standards in 40 CFR 
86.1811-10 through 2021:
    (i) As an alternative to the requirements of paragraphs (c)(2)(ix) 
of this section, ICIs may elect to meet a cold temperature NMHC family 
emission level below the cold temperature NMHC fleet average standards 
specified in Table S10-1 of 40 CFR 86.1811-10 and bank or sell credits 
as permitted in 40 CFR 86.1864-10. An ICI may not meet a higher cold 
temperature NMHC family emission level than the fleet average standards 
in Table S10-1 of 40 CFR 86.1811-10, unless it demonstrates to the 
Administrator at the time of certification that it has obtained 
appropriate and sufficient NMHC credits from another manufacturer, or 
has generated them in a previous model year or in the current model 
year and not traded them to another manufacturer or used them to 
address other vehicles as permitted in 40 CFR 86.1864-10.
    (ii) Where an ICI desires to obtain a certificate of conformity 
using a higher cold temperature NMHC family emission level than 
specified in paragraph (c)(2)(ix) of this section, but does not have 
sufficient credits to cover vehicles imported under such certificate, 
the Administrator may issue such certificate if the ICI has also 
obtained a certificate of conformity for vehicles certified using a 
cold temperature NMHC family emission level lower than that required 
under paragraph (c)(2)(ix) of this section. The ICI may then import 
vehicles to the higher cold temperature NMHC family emission level only 
to the extent that it has generated sufficient credits from vehicles 
certified to a family emission level lower than the cold temperature 
NMHC fleet average standard during the same model year.
    (iii) ICIs using cold temperature NMHC family emission levels 
higher than the cold temperature NMHC fleet average standards specified 
in paragraph (c)(2)(ix) of this section must monitor their imports so 
that they do not import more vehicles certified to such family emission 
levels than their available credits can cover. ICIs must not have a 
credit deficit at the end of a model year and are not permitted to use 
the deficit carryforward provisions provided in 40 CFR 86.1864-10.
    (iv) The Administrator may condition the certificates of conformity 
issued to ICIs as necessary to ensure that vehicles subject to this 
paragraph (c)(8) comply with the applicable cold temperature NMHC fleet 
average standard for each model year.
    (5) In cases where a vehicle is subject to a Tier 3 or Tier 4 
credit-based standard as described in paragraphs (c)(2)(x) and (xi) of 
this section, an ICI may import a vehicle with emissions higher than 
the applicable standard if it first arranges to purchase appropriate 
and sufficient emission credits from a manufacturer that has generated 
the emission credits as specified in 40 CFR part 86, subpart S. A 
vehicle's emissions may not exceed the specified values for the highest 
available NMOG + NOX bin or the evaporative emissions FEL 
cap. Vehicles subject to this paragraph (c)(5) may not generate 
emission credits.
    (6) An ICI may comply with the cold temperature PM standard in 40 
CFR 86.1811-27(c) based on an engineering evaluation.
    (d) An ICI may not certify using nonconformance penalties and may 
not

[[Page 28152]]

participate in the averaging, banking, and trading program for GHG 
emissions.

0
13. Revise Sec.  85.1702 to read as follows:


Sec.  85.1702  Definitions.

    As used in this subpart, all terms not defined herein shall have 
the meaning given them in the Act:
    Certificate holder has the meaning given in 40 CFR 1068.30.
    Export exemption means an exemption granted by statute under 42 
U.S.C. 7522(b)(3) for the purpose of exporting new motor vehicles or 
new motor vehicle engines.
    National security exemption means an exemption which may be granted 
under 42 U.S.C. 7522(b)(1) of the Act for the purpose of national 
security.
    Pre-certification vehicle means an uncertified vehicle that a 
certificate holder employs in fleets from year to year in the ordinary 
course of business for product development, production method 
assessment, and market promotion, but not involving lease or sale.
    Pre-certification vehicle engine means an uncertified heavy-duty 
engine owned by a manufacturer and used in a manner not involving lease 
or sale in a vehicle employed from year to year in the ordinary course 
of business for product development, production method assessment and 
market promotion purposes.
    Testing exemption means an exemption which may be granted under 42 
U.S.C. 7522(b)(1) for the purpose of research investigations, studies, 
demonstrations or training, but not including national security.

0
14. Amend Sec.  85.1716 by revising the introductory text to read as 
follows:


Sec.  85.1716  Approval of an emergency vehicle field modification 
(EVFM).

    This section describes how you may implement design changes for an 
emergency vehicle that has already been placed into service to ensure 
that the vehicle will perform properly in emergency situations. This 
applies for any light-duty vehicle, light-duty truck, or heavy-duty 
vehicle meeting the definition of emergency vehicle in 40 CFR 86.1803-
01 or 1036.801. In this section, ``you'' refers to the certifying 
manufacturer and ``we'' refers to the EPA Administrator and any 
authorized representatives.
* * * * *

0
15. Amend Sec.  85.1803 by adding paragraph (e) to read as follows:


Sec.  85.1803  Remedial Plan.

* * * * *
    (e) A remedial plan for an alternative remedy under 40 CFR 86.1865-
12(j)(3) that does not involve vehicle repairs may omit items from this 
section that do not apply. For example, such a remedial plan will 
generally omit information related to proper maintenance, vehicle 
repairs, and vehicle labeling.

0
16. Amend Sec.  85.1805 by:
0
a. Revising paragraph (a) introductory text.
0
b. Redesignating paragraphs (b) and (c) as paragraphs (c) and (d), 
respectively.
0
c. Adding new paragraph (b).
    The revision and addition read as follows:


Sec.  85.1805  Notification to vehicle or engine owners.

    (a) Except as specified in paragraph (b) of this section, the 
notification of vehicle or engine owners shall contain the following:
* * * * *
    (b) In the case of manufacturers submitting an alternative remedy 
under 40 CFR 86.1865-12(j)(3) that does not involve vehicle repairs, 
the proposed remedy must also include a proposal for notifying owners 
of the nonconformity. The notification must contain the following:
    (1) The statement: ``The Administrator of the U.S. Environmental 
Protection Agency has determined that your vehicle or engine may be 
emitting pollutants in excess of the Federal emission standards as 
defined in 40 CFR part 86. These emission standards were established to 
protect the public health or welfare from the dangers of air 
pollution.''
    (2) A clear description of the measures to be taken to correct the 
nonconformity.
* * * * *

0
17. Revise Sec.  85.2101 to read as follows:


Sec.  85.2101  General applicability.

    (a) Sections 85.2101 through 85.2111 are applicable to all 1981 and 
later model year vehicles subject to standards under 40 CFR part 86, 
subpart S.
    (b) References in this subpart to engine families and emission 
control systems shall be deemed to apply to durability groups and test 
groups as applicable.

0
18. Amend Sec.  85.2102 by revising paragraph (a) introductory text and 
paragraphs (a)(4), (10), and (11) to read as follows:


Sec.  85.2102  Definitions.

    (a) As used in Sec. Sec.  85.2101 through 85.2111 all terms not 
defined herein shall have the meaning given them in the Act. All terms 
additionally not defined in the Act shall have the meaning given in 40 
CFR 86.1803-01, 1065.1001, or 1068.30:
* * * * *
    (4) Emission performance warranty means that warranty described in 
Sec.  85.2103(c) and 42 U.S.C. 7541(b).
* * * * *
    (10) Useful life means that period established under 40 CFR 
86.1805.
    (11) Vehicle means any vehicle subject to standards under 40 CFR 
part 86, subpart S.
* * * * *

0
19. Revise Sec.  85.2103 to read as follows:


Sec.  85.2103  Emission warranty.

    (a) The manufacturer of each vehicle to which this subpart applies 
must provide a written commitment to meet warranty requirements as 
described in this section.
    (b) The warranty periods under this section apply based on the 
vehicle's age in years and on the vehicle's odometer reading. The 
warranty period expires based on the specified age or mileage, 
whichever comes first. The warranty period for a particular vehicle 
begins on the date the vehicle is delivered to its ultimate purchaser 
or, if the vehicle is first placed in service as a ``demonstrator'' or 
``company'' car prior to delivery, on the date it is first placed in 
service.
    (c) Under the emission performance warranty, in the case of a 
vehicle failing to conform at any time during its useful life to the 
applicable emission standards or family emission limits as determined 
by an EPA-approved emission test, the manufacturer must remedy that 
nonconformity at no cost to the owner if such nonconformity results or 
will result in the vehicle owner having to bear any penalty or other 
sanction (including the denial of the right to use the vehicle) under 
local, State, or Federal law. The following warranty periods apply:
    (1) For light-duty vehicles, light-duty trucks, and medium-duty 
passenger vehicles, the warranty period for the emission performance 
warranty is 24 months or 24,000 miles, except that the warranty period 
is 8 years or 80,000 miles for any nonconformity resulting from a 
failed specified major emission control component identified in 
paragraph (d) and (e) of this section.
    (2) For medium-duty vehicles, the warranty period for the emission 
performance warranty is 5 years or 50,000 miles, except that the 
warranty period is 8 years or 80,000 miles for any

[[Page 28153]]

nonconformity resulting from a failed specified major emission control 
component identified in paragraph (d) and (e) of this section.
    (d) An emission defect warranty applies as follows:
    (1) An emission defect warranty applies for light-duty vehicles, 
light-duty trucks, and medium-duty passenger vehicles for a warranty 
period of two years or 24,000 miles, except that the following 
specified major emission control components have a warranty period of 
eight years or 80,000 miles:
    (i) Catalytic converters and SCR catalysts, and related components.
    (ii) Particulate filters and particulate traps, used with both 
spark-ignition and compression-ignition engines.
    (iii) Components related to exhaust gas recirculation with 
compression-ignition engines.
    (iv) Emission control module.
    (v) Batteries serving as a Renewable Energy Storage System for 
electric vehicles and plug-in hybrid electric vehicles, along with all 
components needed to charge the system, store energy, and transmit 
power to move the vehicle. This paragraph (d)(1)(v) is optional for 
vehicles not yet subject to battery monitoring requirements under 40 
CFR 86.1815-27.
    (2) An emission defect warranty applies for medium-duty vehicles 
for a warranty period of five years or 50,000 miles, except that the 
specific major emission control components identified in paragraph 
(d)(1) of this section have a warranty period of eight years or 80,000 
miles.
    (3) An electric vehicle or plug-in hybrid electric vehicle fails to 
meet the manufacturer-defined value for percentage usable battery 
energy for the specified period as determined by the State of Certified 
Energy monitor required under 40 CFR 86.1815-27, subject to the 
warranty claim procedures in Sec.  85.2106.


0
20. Amend Sec.  85.2104 by revising paragraphs (d) through (g) to read 
as follows:


Sec.  85.2104  Owners' compliance with instructions for proper 
maintenance and use.

* * * * *
    (d) The time/mileage interval for scheduled maintenance services 
shall be the service interval specified for the part in the written 
instructions for proper maintenance and use. However, in the case of 
certified parts having a maintenance or replacement interval different 
from that specified in the written instructions for proper maintenance 
and use, the time/mileage interval shall be the service interval for 
which the part was certified.
    (e) The owner may perform maintenance or have maintenance performed 
more frequently than required in the maintenance instructions.
    (f) Written instruction for proper use of battery electric vehicles 
and plug-in hybrid electric vehicles may identify certain behaviors or 
vehicle operating modes expected to unreasonably or artificially 
shorten battery durability. For example, exceeding a vehicle's towing 
capacity might be considered improper use. However, the manufacturer 
should not consider actions to be improper use if the vehicle can be 
designed to prevent the targeted behaviors or operating modes. Evidence 
of compliance with the requirement to properly use vehicles under this 
paragraph (f) is generally limited to onboard data logging, though 
manufacturers may also request vehicle owners to make a statement 
regarding specific behaviors or vehicle operating modes.
    (g) Except as provided in paragraph (h) of this section, a 
manufacturer may deny an emission warranty claim on the basis of 
noncompliance with the written instructions for proper maintenance and 
use if and only if:
    (1) An owner is not able to comply with a request by a manufacturer 
for evidence pursuant to paragraph (c) or (f) of this section; or
    (2) Notwithstanding the evidence presented pursuant to paragraph 
(c) of this section, the manufacturer can prove that the vehicle failed 
because of any of the following conditions:
    (i) The vehicle was abused.
    (ii) An instruction for the proper maintenance and use was 
performed in a manner resulting in a component's being improperly 
installed or a component or related parameter's being adjusted 
substantially outside of the manufacturer's specifications.
    (iii) Unscheduled maintenance was performed on a vehicle which 
resulted in the removing or rendering inoperative of any component 
affecting the vehicle's emissions.
* * * * *


0
21. Amend Sec.  85.2105 by revising paragraph (b)(3) to read as 
follows:


Sec.  85.2105  Aftermarket parts.

* * * * *
    (b) * * *
    (3) List all objective evidence as defined in Sec.  85.2102 that 
was used in the determination to deny warranty. This evidence must be 
made available to the vehicle owner or EPA upon request.
* * * * *


0
22. Amend Sec.  85.2109 by revising paragraph (a) to read as follows:


Sec.  85.2109  Inclusion of warranty provisions in owners' manuals and 
warranty booklets.

    (a) A manufacturer shall furnish with each new motor vehicle, a 
full explanation of the emission warranties required by 42 U.S.C. 
7541(a) and (b), including at a minimum the following information:
    (1) A basic statement of the coverage of the emissions performance 
warranty as set out in Sec.  85.2103. This shall be separated from any 
other warranty given by the manufacturer and shall be prefaced by the 
title ``Emissions Performance Warranty'' set in bold face type.
    (2) A list of all items which are covered by the emission 
performance warranty for the full useful life of the vehicle. This list 
shall contain all specified major emission control components. All 
items listed pursuant to this subsection shall be described in the same 
manner as they are likely to be described on a service facility work 
receipt for that vehicle.
    (3) A list or a reference to the location of the instructions for 
proper maintenance and use, together with the time and/or mileage 
interval at which such instructions are to be performed.
    (4) An explanation of the effect that the use of certified parts 
will have on the emission performance warranty. This explanation shall 
comport with the provisions of Sec.  85.2105 (b) and (c), including a 
statement in boldface type that maintenance, replacement, or repair of 
the emission control devices and systems may be performed by any 
automotive repair establishment or individual using any certified part.
    (5) Complete instructions as to when and how an owner may bring a 
claim under the emissions performance warranty, as governed by 
Sec. Sec.  85.2104 and 85.2106. These instructions shall include all 
the following:
    (i) An explanation of the point in time at which a claim may be 
raised.
    (ii) Complete procedures as to the manner in which a claim may be 
raised.
    (iii) The provisions for manufacturer liability contained in Sec.  
85.2106(f) if the manufacturer fails to respond within the time period 
set in accordance with Sec.  85.2106(d).
    (iv) For battery electric vehicles and plug-in hybrid electric 
vehicles, the manufacturer-defined value for percentage usable battery 
energy specified in Sec.  85.2103(d)(3).
    (6) An explanation that an owner may obtain further information 
concerning the emission warranties or that an owner may report 
violations of the

[[Page 28154]]

terms of the emission warranties provided under 42 U.S.C. 7541(a) and 
(b) by contacting the Director, Compliance Division, Environmental 
Protection Agency, 2000 Traverwood Dr., Ann Arbor, MI 48105 (Attention: 
Warranty) or email to: [email protected].
* * * * *


0
23. Revise Sec.  85.2110 to read as follows:


Sec.  85.2110  Submission of owners' manuals and warranty statements to 
EPA.

    (a) The manufacturer of each vehicle to which this subpart applies 
must send to EPA an owner's manual and warranty booklet (if applicable) 
in electronic format for each model vehicle that completely and 
accurately represent the warranty terms for that vehicle.
    (1) The owner's manuals and warranty booklets should be received by 
EPA 60 days prior to the introduction of the vehicle for sale.
    (2) If the manuals and warranty booklets are not in their final 
format 60 days prior to the introduction of the vehicle for sale, a 
manufacturer may submit the most recent draft at that time, provided 
that the manufacturer promptly submits final versions when they are 
complete.
    (b) All materials described in paragraph (a) of this section shall 
be sent to the Designated Compliance Officer as specified at 40 CFR 
1068.30 (Attention: Warranty Booklet).

PART 86--CONTROL OF EMISSIONS FROM NEW AND IN-USE HIGHWAY VEHICLES 
AND ENGINES

0
24. The authority citation for part 86 continues to read as follows:

    Authority: 42 U.S.C. 7401-7671q.


0
25. Revise and republish Sec.  86.1 to read as follows:


Sec.  86.1  Incorporation by reference.

    Certain material is incorporated by reference into this part with 
the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, EPA must publish a document in the Federal 
Register and the material must be available to the public. All approved 
incorporation by reference (IBR) material is available for inspection 
at EPA and at the National Archives and Records Administration (NARA). 
Contact EPA at: U.S. EPA, Air and Radiation Docket Center, WJC West 
Building, Room 3334, 1301 Constitution Ave. NW, Washington, DC 20004; 
www.epa.gov/dockets; (202) 202-1744. For information on inspecting this 
material at NARA, visit www.archives.gov/federal-register/cfr/ibr-locations.html or email [email protected]. The material may be 
obtained from the following sources:
    (a) ASTM International (ASTM). ASTM International, 100 Barr Harbor 
Drive, P.O. Box C700, West Conshohocken, PA, 19428-2959; (610) 832-
9585; www.astm.org.
    (1) ASTM C1549-09, Standard Test Method for Determination of Solar 
Reflectance Near Ambient Temperature Using a Portable Solar 
Reflectometer, approved August 1, 2009 (``ASTM C1549''); IBR approved 
for Sec.  86.1869-12(b).
    (2) ASTM D86-12, Standard Test Method for Distillation of Petroleum 
Products at Atmospheric Pressure, approved December 1, 2012 (``ASTM 
D86''); IBR approved for Sec. Sec.  86.113-04(a); 86.113-94(b); 
86.213(a); 86.513(a).
    (3) ASTM D93-13, Standard Test Methods for Flash Point by Pensky-
Martens Closed Cup Tester, approved July 15, 2013 (``ASTM D93''); IBR 
approved for Sec.  86.113-94(b).
    (4) ASTM D445-12, Standard Test Method for Kinematic Viscosity of 
Transparent and Opaque Liquids (and Calculation of Dynamic Viscosity), 
approved April 15, 2012 (``ASTM D445''); IBR approved for Sec.  86.113-
94(b).
    (5) ASTM D613-13, Standard Test Method for Cetane Number of Diesel 
Fuel Oil, approved December 1, 2013 (``ASTM D613''); IBR approved for 
Sec.  86.113-94(b).
    (6) ASTM D975-13a, Standard Specification for Diesel Fuel Oils, 
approved December 1, 2013 (``ASTM D975''); IBR approved for Sec.  
86.1910(c).
    (7) ASTM D976-06 (Reapproved 2011), Standard Test Method for 
Calculated Cetane Index of Distillate Fuels, approved October 1, 2011 
(``ASTM D976''); IBR approved for Sec.  86.113-94(b).
    (8) ASTM D1319-13, Standard Test Method for Hydrocarbon Types in 
Liquid Petroleum Products by Fluorescent Indicator Adsorption, approved 
May 1, 2013 (``ASTM D1319''); IBR approved for Sec. Sec.  86.113-04(a); 
86.213(a); 86.513(a).
    (9) ASTM D1945-03 (reapproved 2010), Standard Test Method for 
Analysis of Natural Gas by Gas Chromatography, approved January 1, 2010 
(``ASTM D1945''); IBR approved for Sec. Sec.  86.113-94(e); 86.513(d).
    (10) ASTM D2163-07, Standard Test Method for Determination of 
Hydrocarbons in Liquefied Petroleum (LP) Gases and Propane/Propene 
Mixtures by Gas Chromatography, approved December 1, 2007 (``ASTM 
D2163''); IBR approved for Sec. Sec.  86.113-94(f).
    (11) ASTM D2622-10, Standard Test Method for Sulfur in Petroleum 
Products by Wavelength Dispersive X-ray Fluorescence Spectrometry, 
approved February 15, 2010 (``ASTM D2622''); IBR approved for 
Sec. Sec.  86.113-04(a); 86.113-94(b); 86.213(a); 86.513(a).
    (12) ASTM D2699-13b, Standard Test Method for Research Octane 
Number of Spark-Ignition Engine Fuel, approved October 1, 2013 (``ASTM 
D2699''); IBR approved for Sec. Sec.  86.113-04(a); 86.213(a).
    (13) ASTM D2700-13b, Standard Test Method for Motor Octane Number 
of Spark-Ignition Engine Fuel, approved October 1, 2013 (``ASTM 
D2700''); IBR approved for Sec. Sec.  86.113-04(a); 86.213(a).
    (14) ASTM D3231-13, Standard Test Method for Phosphorus in 
Gasoline, approved June 15, 2013 (``ASTM D3231''); IBR approved for 
Sec. Sec.  86.113-04(a); 86.213(a); 86.513(a).
    (15) ASTM D3237-12, Standard Test Method for Lead in Gasoline by 
Atomic Absorption Spectroscopy, approved June 1, 2012 (``ASTM D3237''); 
IBR approved for Sec. Sec.  86.113-04(a); 86.213(a); 86.513(a).
    (16) ASTM D4052-11, Standard Test Method for Density, Relative 
Density, and API Gravity of Liquids by Digital Density Meter, approved 
October 15, 2011 (``ASTM D4052''); IBR approved for Sec.  86.113-94(b).
    (17) ASTM D5186-03 (Reapproved 2009), Standard Test Method for 
Determination of the Aromatic Content and Polynuclear Aromatic Content 
of Diesel Fuels and Aviation Turbine Fuels by Supercritical Fluid 
Chromatography, approved April 15, 2009 (``ASTM D5186''); IBR approved 
for Sec.  86.113-94(b).
    (18) ASTM D5191-13, Standard Test Method for Vapor Pressure of 
Petroleum Products (Mini Method), approved December 1, 2013 (``ASTM 
D5191''); IBR approved for Sec. Sec.  86.113-04(a); 86.213(a); 
86.513(a).
    (19) ASTM D5769-20, Standard Test Method for Determination of 
Benzene, Toluene, and Total Aromatics in Finished Gasolines by Gas 
Chromatography/Mass Spectrometry, approved June 1, 2020 (``ASTM5769''); 
IBR approved for Sec. Sec.  86.113-04(a); 86.213(a); 86.513(a).
    (20) ASTM D6550-20, Standard Test Method for Determination of 
Olefin Content of Gasolines by Supercritical-Fluid Chromatography, 
approved July 1, 2020 (``ASTM D6550''); IBR approved for Sec. Sec.  
86.113-04(a); 86.213(a); 86.513(a).
    (21) ASTM E29-93a, Standard Practice for Using Significant Digits 
in

[[Page 28155]]

Test Data to Determine Conformance with Specifications, approved March 
15, 1993 (``ASTM E29''); IBR approved for Sec. Sec.  86.004-15(c); 
86.007-11(a); 86.007-15(m); 86.1803-01; 86.1823-01(a); 86.1824-01(c); 
86.1825-01(c).
    (22) ASTM E903-96, Standard Test Method for Solar Absorptance, 
Reflectance, and Transmittance of Materials Using Integrating Spheres, 
approved April 10, 1996 (``ASTM E903''); IBR approved for Sec.  
86.1869-12(b).
    (23) ASTM E1918-06, Standard Test Method for Measuring Solar 
Reflectance of Horizontal and Low-Sloped Surfaces in the Field, 
approved August 15, 2006 (``ASTM E1918''); IBR approved for Sec.  
86.1869-12(b).
    (b) American National Standards Institute (ANSI). American National 
Standards Institute, 25 W 43rd Street, 4th Floor, New York, NY 10036; 
(212) 642-4900; www.ansi.org.
    (1) ANSI NGV1-2006, Standard for Compressed Natural Gas Vehicle 
(NGV) Fueling Connection Devices, 2nd edition, reaffirmed and 
consolidated March 2, 2006; IBR approved for Sec.  86.1813-17(f).
    (2) CSA IR-1-15, Compressed Natural Gas Vehicle (NGV) High Flow 
Fueling Connection Devices--Supplement to NGV 1-2006, ANSI approved 
August 26, 2015; IBR approved for Sec.  86.1813-17(f).
    (c) California Air Resources Board (California ARB). California Air 
Resources Board, 1001 I Street, Sacramento, CA 95812; (916) 322-2884; 
www.arb.ca.gov.
    (1) California Requirements Applicable to the LEV III Program, 
including the following documents:
    (i) LEV III exhaust emission standards are in Title 13 Motor 
Vehicles, Division 3 Air Resources Board, Chapter 1 Motor Vehicle 
Pollution Control Devices, Article 2 Approval of Motor Vehicle 
Pollution Control Devices (New Vehicles), Sec.  1961.2 Exhaust Emission 
Standards and Test Procedures--2015 and Subsequent Model Passenger 
Cars, Light-Duty Trucks, and Medium-Duty Vehicles, effective as of 
December 31, 2012; IBR approved for Sec.  86.1803-01.
    (ii) LEV III evaporative emission standards for model year 2015 and 
later vehicles are in Title 13 Motor Vehicles, Division 3 Air Resources 
Board, Chapter 1 Motor Vehicle Pollution Control Devices, Article 2 
Approval of Motor Vehicle Pollution Control Devices (New Vehicles) 
Sec.  1976 Standards and Test Procedures for Motor Vehicle Fuel 
Evaporative Emissions, effective as of December 31, 2012; IBR approved 
for Sec.  86.1803-01.
    (2) 13 CCR 1962.5, Title 13, Motor Vehicles, Division 3, Air 
Resources Board, Chapter 1, Motor Vehicle Pollution Control Devices, 
Article 2, Approval of Motor Vehicle Pollution Control Devices (New 
Vehicles), Sec.  1962.5 Data Standardization Requirements for 2026 and 
Subsequent Model Year Light-Duty Zero Emission Vehicles and Plug-in 
Hybrid Electric Vehicles; Operative November 30, 2022; IBR approved for 
Sec.  86.1815-27(h).
    (3) 13 CCR 1962.7, Title 13, Motor Vehicles, Division 3, Air 
Resources Board, Chapter 1, Motor Vehicle Pollution Control Devices, 
Article 2, Approval of Motor Vehicle Pollution Control Devices (New 
Vehicles), Sec.  1962.7 In-Use Compliance, Corrective Action and Recall 
Protocols for 2026 and Subsequent Model Year Zero-Emission and Plug-in 
Hybrid Electric Passenger Cars and Light-Duty Trucks; Operative 
November 30, 2022; IBR approved for Sec.  86.1815-27(h).
    (4) 13 CCR 1968.2 (known as Onboard Diagnostics II (OBD-II)), Title 
13, Motor Vehicles, Division 3, Air Resources Board, Chapter 1, Motor 
Vehicle Pollution Control Devices, Article 2, Approval of Motor Vehicle 
Pollution Control Devices (New Vehicles), Sec.  1968.2 Malfunction and 
Diagnostic System Requirements--2004 and Subsequent Model-Year 
Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles and 
Engines, effective as of July 31, 2013; IBR approved for Sec.  86.1806-
17(a).
    (5) 13 CCR 1968.2 (known as Onboard Diagnostics II (OBD-II)), Title 
13, Motor Vehicles, Division 3, Air Resources Board, Chapter 1, Motor 
Vehicle Pollution Control Devices, Article 2, Approval of Motor Vehicle 
Pollution Control Devices (New Vehicles), Sec.  1968.2 Malfunction and 
Diagnostic System Requirements--2004 and Subsequent Model-Year 
Passenger Cars, Light-Duty Trucks, and Medium-Duty Vehicles and 
Engines; Operative November 30, 2022; IBR approved for Sec.  86.1806-
27(a).
    (d) International Organization for Standardization (ISO). 
International Organization for Standardization, Case Postale 56, CH-
1211 Geneva 20, Switzerland; 41-22-749-01-11; www.iso.org.
    (1) ISO 13837:2008(E), Road Vehicles--Safety glazing materials--
Method for the determination of solar transmittance, First edition, 
April 15, 2008; IBR approved for Sec.  86.1869-12(b).
    (2) ISO 15765-4:2005(E), Road Vehicles--Diagnostics on Controller 
Area Networks (CAN)--Part 4: Requirements for emissions-related 
systems, January 15, 2005; IBR approved for Sec.  86.010-18(k).
    (e) National Institute of Standards and Technology (NIST). National 
Institute of Standards and Technology, 100 Bureau Drive, Gaithersburg, 
MD 20899; [email protected]; www.nist.gov.
    (1) NIST Special Publication 811, 2008 Edition, Guide for the Use 
of the International System of Units (SI), March 2008; IBR approved for 
Sec.  86.1901(d).
    (2) [Reserved]
    (f) SAE International (SAE). SAE International, 400 Commonwealth 
Dr., Warrendale, PA 15096-0001; (877) 606-7323 (U.S. and Canada) or 
(724) 776-4970 (outside the U.S. and Canada); www.sae.org.
    (1) SAE J1151, Methane Measurement Using Gas Chromatography, 
stabilized September 2011; IBR approved for Sec.  86.111-94(b).
    (2) SAE J1349, Engine Power Test Code--Spark Ignition and 
Compression Ignition--As Installed Net Power Rating, revised September 
2011; IBR approved for Sec.  86.1803-01.
    (3) SAE J1711 FEB2023, Recommended Practice for Measuring the 
Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, 
Including Plug-In Hybrid Vehicles; Revised February 2023; IBR approved 
for Sec.  86.1866-12(b).
    (4) SAE J1877, Recommended Practice for Bar-Coded Vehicle 
Identification Number Label, July 1994; IBR approved for Sec.  86.1807-
01(f).
    (5) SAE J1930, Electrical/Electronic Systems Diagnostic Terms, 
Definitions, Abbreviations, and Acronyms, Revised May 1998; IBR 
approved for Sec. Sec.  86.1808-01(f); 86.1808-07(f).
    (6) SAE J1930, Electrical/Electronic Systems Diagnostic Terms, 
Definitions, Abbreviations, and Acronyms--Equivalent to ISO/TR 15031-2, 
April 30, 2002, Revised April 2002; IBR approved for Sec.  86.010-
18(k).
    (7) SAE J1939, Recommended Practice for a Serial Control and 
Communications Vehicle Network, Revised October 2007; IBR approved for 
Sec.  86.010-18(k).
    (8) SAE J1939-13, Off-Board Diagnostic Connector, Revised March 
2004; IBR approved for Sec.  86.010-18(k).
    (9) SAE J1939-71, Vehicle Application Layer (Through February 
2007), Revised January 2008; IBR approved for Sec.  86.010-38(j).
    (10) SAE J1939-73, Application Layer--Diagnostics, Revised 
September 2006; IBR approved for Sec. Sec.  86.010-18(k); 86.010-38(j).
    (11) SAE J1939-81, Network Management, Revised May 2003; IBR 
approved for Sec.  86.010-38(j).

[[Page 28156]]

    (12) SAE J1962, Diagnostic Connector Equivalent to ISO/DIS 15031-3, 
December 14, 2001, Revised April 2002; IBR approved for Sec.  86.010-
18(k).
    (13) SAE J1978, OBD II Scan Tool--Equivalent to ISO/DIS 15031-4, 
December 14, 2001, Revised April 2002; IBR approved for Sec.  86.010-
18(k).
    (14) SAE J1979, E/E Diagnostic Test Modes, Revised September 1997; 
IBR approved for Sec. Sec.  86.1808-01(f) and 86.1808-07(f).
    (15) SAE J1979, (R) E/E Diagnostic Test Modes, Revised May 2007; 
IBR approved for Sec.  86.010-18(k).
    (16) SAE J2012, (R) Diagnostic Trouble Code Definitions Equivalent 
to ISO/DIS 15031-6, April 30, 2002, Revised April 2002; IBR approved 
for Sec.  86.010-18(k).
    (17) SAE J2064 FEB2011, R134a Refrigerant Automotive Air-
Conditioned Hose, Revised February 2011; IBR approved for Sec.  
86.1867-12(a).
    (18) SAE J2284-3, High Speed CAN (HSC) for Vehicle Applications at 
500 KBPS, May 2001; IBR approved for Sec. Sec.  86.1808-01(f); 86.1808-
07(f).
    (19) SAE J2403, Medium/Heavy-Duty E/E Systems Diagnosis 
Nomenclature--Truck and Bus; Revised August 2007; IBR approved for 
Sec. Sec.  86.010-18(k); 86.010-38(j).
    (20) SAE J2534, Recommended Practice for Pass-Thru Vehicle 
Programming, February 2002; IBR approved for Sec. Sec.  86.1808-01(f); 
86.1808-07(f).
    (21) SAE J2727 FEB2012, Mobile Air Conditioning System Refrigerant 
Emission Charts for R-134a and R-1234yf, Revised February 2012; IBR 
approved for Sec.  86.1867-12(a).
    (22) SAE J2727 SEP2023, Mobile Air Conditioning System Refrigerant 
Emissions Estimate for Mobile Air Conditioning Refrigerants, Revised 
September 2023; IBR approved for Sec. Sec.  86.1819-14(h); 86.1867-
12(a); 86.1867-31(a).
    (23) SAE J2765 OCT2008, Procedure for Measuring System COP 
[Coefficient of Performance] of a Mobile Air Conditioning System on a 
Test Bench, Issued October 2008; IBR approved for Sec.  86.1868-12(h).
    (24) SAE J2807 FEB2020, Performance Requirements for Determining 
Tow-Vehicle Gross Combination Weight Rating and Trailer Weight Rating, 
Revised February 2020; IBR approved for Sec.  86.1845-04(h).
    (g) Truck and Maintenance Council (TMC). Truck and Maintenance 
Council, 950 North Glebe Road, Suite 210, Arlington, VA 22203-4181; 
(703) 838-1754; [email protected]; tmc.trucking.org.
    (1) TMC RP 1210B, Revised June 2007, WINDOWSTMCOMMUNICATION API; 
IBR approved for Sec.  86.010-38(j).
    (2) [Reserved]
    (h) UN Economic Commission for Europe (UNECE). UN Economic 
Commission for Europe, Information Service, Palais des Nations, CH-1211 
Geneva 10, Switzerland; [email protected]; www.unece.org.
    (1) ECE/TRANS/180/Add.22, Addendum 22: United Nations Global 
Technical Regulation, No. 22, United Nations Global Technical 
Regulation on In-vehicle Battery Durability for Electrified Vehicles; 
Adopted April 14, 2022, (``GTR No. 22''); IBR approved for Sec.  
86.1815-27.
    (2) [Reserved]


Sec.  86.113-04  [Amended]


0
26. Amend Sec.  86.113-04 by removing and reserving paragraph 
(a)(2)(i).


0
27. Amend Sec.  86.113-15 by:
0
a. Removing the introductory text.
0
b. Adding paragraphs (b) and (c).
0
c. Removing paragraphs (d) through (g).
    The revisions read as follows:


Sec.  86.113-15  Fuel specifications.

* * * * *
    (b) Diesel fuel. For diesel-fueled engines, use the ultra low-
sulfur diesel fuel specified in 40 CFR 1065.703.
    (c) Other fuels. For fuels other than gasoline or diesel fuel, use 
the appropriate test fuel as specified in 40 CFR part 1065, subpart H.


0
28. Add Sec.  86.113-27 to read as follows:


Sec.  86.113-27  Fuel specifications.

    Use the fuels specified in 40 CFR part 1065 to perform valid tests, 
as follows:
    (a) For service accumulation, use the test fuel or any commercially 
available fuel that is representative of the fuel that in-use vehicles 
will use.
    (b) For diesel-fueled engines, use the ultra low-sulfur diesel fuel 
specified in 40 CFR part 1065.703 for emission testing.
    (c) The following fuel requirements apply for gasoline-fueled 
engines:
    (1) Use the appropriate E10 fuel specified in 40 CFR part 
1065.710(b) to demonstrate compliance with all exhaust, evaporative, 
and refueling emission standards under subpart S of this part.
    (2) For vehicles certified for 50-state sale, you may instead use 
California Phase 3 gasoline (E10) as adopted in California's LEV III 
program as follows:
    (i) You may use California Phase 3 gasoline (E10) as adopted in 
California's LEV III program for exhaust emission testing.
    (ii) If you certify vehicles to LEV III evaporative emission 
standards with California Phase 3 gasoline (E10), you may use that 
collection of data to certify to evaporative emission standards. For 
evaporative emission testing with California test fuels, perform tests 
based on the test temperatures specified by the California Air 
Resources Board. Note that this paragraph (c)(2)(ii) does not apply for 
refueling, spitback, high-altitude, or leak testing.
    (iii) If you certify using fuel meeting California's 
specifications, we may perform testing with E10 test fuel meeting 
either California or EPA specifications.
    (d) Interim test fuel specifications apply for model years 2027 
through 2029 as described in 40 CFR 600.117.
    (e) Additional test fuel specifications apply as specified in 
subpart S of this part.


0
29. Amend Sec.  86.132-96 by revising paragraphs (a), (b), (f), (g), 
(h) introductory text, and (j) introductory text to read as follows:


Sec.  86.132-96  Vehicle preconditioning.

    (a) Prepare the vehicle for testing as described in this section. 
Store the vehicle before testing in a way that prevents fuel 
contamination and preserves the integrity of the fuel system. The 
vehicle shall be moved into the test area and the following operations 
performed.
    (b)(1) Gasoline- and Methanol-Fueled Vehicles. Drain the fuel 
tank(s) and fill with test fuel, as specified in Sec.  86.113, to the 
``tank fuel volume'' defined in Sec.  86.082-2. Install the fuel cap(s) 
within one minute after refueling.
    (2) Gaseous-Fueled Vehicles. Fill fuel tanks with fuel that meets 
the specifications in Sec.  86.113. Fill the fuel tanks to a minimum of 
75 percent of service pressure for natural gas-fueled vehicles or a 
minimum of 75 percent of available fill volume for liquefied petroleum 
gas-fueled vehicles. However, if you omit the refueling event in 
paragraph (f) of this section, refuel the vehicles to 85 percent 
instead of 75 percent. Draining the fuel tanks at the start of the test 
is not required if the fuel in the tanks already meets the 
specifications in Sec.  86.113.
* * * * *
    (f) Drain and then fill the vehicle's fuel tank(s) with test fuel, 
as specified in Sec.  86.113, to the ``tank fuel volume'' defined in 
Sec.  86.082-2. Refuel the vehicle within 1 hour after completing the 
preconditioning drive. Install fuel cap(s) within 1 minute after 
refueling.

[[Page 28157]]

Park the vehicle within five minutes after refueling. However, for the 
following vehicles you may omit this refueling event and instead drive 
the vehicle off the dynamometer and park it within five minutes after 
the preconditioning drive:
    (1) Diesel-fueled vehicles.
    (2) Gaseous-fueled vehicles.
    (3) Fuel economy data vehicles.
    (4) In-use vehicles subject to testing under Sec.  86.1845.
    (g) The vehicle shall be soaked for not less than 12 hours nor more 
than 36 hours before the cold start exhaust emission test. The soak 
period starts at the end of the refueling event, or at the end of the 
previous drive if there is no refueling.
    (h) During the soak period for the three-diurnal test sequence 
described in Sec.  86.130-96, precondition any evaporative canisters as 
described in this paragraph (h); however, canister preconditioning is 
not required for fuel economy data vehicles. For vehicles with multiple 
canisters in a series configuration, the set of canisters must be 
preconditioned as a unit. For vehicles with multiple canisters in a 
parallel configuration, each canister must be preconditioned 
separately. If production evaporative canisters are equipped with a 
functional service port designed for vapor load or purge steps, the 
service port shall be used during testing to precondition the canister. 
In addition, for model year 1998 and later vehicles equipped with 
refueling canisters, these canisters shall be preconditioned for the 
three-diurnal test sequence according to the procedure in paragraph 
(j)(1) of this section. If a vehicle is designed to actively control 
evaporative or refueling emissions without a canister, the manufacturer 
shall devise an appropriate preconditioning procedure, subject to the 
approval of the Administrator.
* * * * *
    (j) During the soak period for the supplemental two-diurnal test 
sequence described in Sec.  86.130-96, precondition any evaporative 
canisters using one of the methods described in this paragraph (j); 
however, canister preconditioning is not required for fuel economy data 
vehicles. For vehicles with multiple canisters in a series 
configuration, the set of canisters must be preconditioned as a unit. 
For vehicles with multiple canisters in a parallel configuration, each 
canister must be preconditioned separately. In addition, for model year 
1998 and later vehicles equipped with refueling canisters, these 
canisters shall be preconditioned for the supplemental two-diurnal test 
sequence according to the procedure in paragraph (j)(1) of this 
section. Canister emissions are measured to determine breakthrough. 
Breakthrough is here defined as the point at which the cumulative 
quantity of hydrocarbons emitted is equal to 2 grams.
* * * * *

0
30. Amend Sec.  86.134-96 by revising paragraph (g)(1)(xvi) to read as 
follows:


Sec.  86.134-96  Running loss test.

* * * * *
    (g) * * *
    (1) * * *
    (xvi) Fuel tank pressure may exceed 10 inches of water during the 
running loss test only if the manufacturer demonstrates that vapor 
would not be vented to the atmosphere upon fuel cap removal. Note that 
this allows for temporary pressure exceedances for vehicles whose tank 
pressure otherwise remains below 10 inches of water.
* * * * *


Sec.  86.165-12  [Removed]

0
31. Remove Sec.  86.165-12.


Sec.  86.213  [Amended]

0
32. Amend Sec.  86.213 by removing and reserving paragraph (b).


Sec.  86.1801-01  [Removed]

0
33. Remove Sec.  86.1801-01.

0
34. Revise and republish Sec.  86.1801-12 to read as follows:


Sec.  86.1801-12  Applicability.

    (a) Applicability. The provisions of this subpart apply to certain 
types of new vehicles as described in this paragraph (a). Where the 
provisions apply for a type of vehicle, they apply for vehicles powered 
by any fuel, unless otherwise specified. In cases where a provision 
applies only to a certain vehicle group based on its model year, 
vehicle class, motor fuel, engine type, or other distinguishing 
characteristics, the limited applicability is cited in the appropriate 
section. Testing references in this subpart generally apply to Tier 2 
and older vehicles, while testing references to 40 CFR part 1066 
generally apply to Tier 3 and newer vehicles; see Sec.  86.101 for 
detailed provisions related to this transition. The provisions of this 
subpart apply to certain vehicles as follows:
    (1) The provisions of this subpart apply for light-duty vehicles 
and light-duty trucks.
    (2) The provisions of this subpart apply for medium-duty passenger 
vehicles. The provisions of this subpart also apply for medium-duty 
vehicles at or below 14,000 pounds GVWR, except as follows:
    (i) The provisions of this subpart are optional for diesel-cycle 
vehicles through model year 2017; however, if you are using the 
provisions of Sec.  86.1811-17(b)(9) or Sec.  86.1816-18(b)(8) to 
transition to the Tier 3 exhaust emission standards, the provisions of 
this subpart are optional for those diesel-cycle vehicles until the 
start of the Tier 3 phase-in for those vehicles.
    (ii) The exhaust emission standards of this part are optional for 
vehicles above 22,000 pounds GCWR and for all incomplete medium-duty 
vehicles. Certain requirements in this subpart apply for such vehicles 
even if they are not certified to the exhaust emission standards of 
this subpart as follows:
    (A) Such vehicles remain subject to the evaporative and refueling 
emission standards of this subpart.
    (B) Such vehicles may remain subject to the greenhouse gas 
standards in Sec.  86.1819-14 as specified in 40 CFR 1036.635.
    (C) Such vehicles may remain subject to onboard diagnostic 
requirements a specified in 40 CFR 1036.110.
    (iii) The provisions of this subpart are optional for diesel-fueled 
Class 3 heavy-duty vehicles in a given model year if those vehicles are 
equipped with engines certified to the appropriate standards in Sec.  
86.007-11 or 40 CFR 1036.104 for which less than half of the engine 
family's sales for the model year in the United States are for complete 
Class 3 heavy-duty vehicles. This includes engines sold to all vehicle 
manufacturers. If you are the original manufacturer of the engine and 
the vehicle, base this showing on your sales information. If you 
manufacture the vehicle but are not the original manufacturer of the 
engine, you must use your best estimate of the original manufacturer's 
sales information.
    (3) The provisions of this subpart do not apply to heavy-duty 
vehicles above 14,000 pounds GVWR (see Sec.  86.016-1 and 40 CFR parts 
1036 and 1037), except as follows:
    (i) Heavy-duty vehicles above 14,000 pounds GVWR may be optionally 
certified to the exhaust emission standards in this subpart, including 
the greenhouse gas emission standards, if they are properly included in 
a test group with similar vehicles at or below 14,000 pounds GVWR. 
Emission standards apply to these vehicles as if they were Class 3 
medium-duty vehicles. The work factor for these vehicles may not be 
greater than the largest work factor that applies for vehicles in the 
test group that are at or below 14,000 pounds GVWR (see Sec.  86.1819-
14).

[[Page 28158]]

    (ii) The greenhouse gas standards apply for certain vehicles above 
14,000 pounds GVWR as specified in Sec.  86.1819-14.
    (iii) Evaporative and refueling emission standards apply for heavy-
duty vehicles above 14,000 pounds GVWR as specified in 40 CFR 1037.103.
    (4) If you optionally certify vehicles to standards under this 
subpart, those vehicles are subject to all the regulatory requirements 
as if the standards were mandatory.
    (b) Relationship to 40 CFR parts 1036 and 1037. If any heavy-duty 
vehicle is not subject to standards and certification requirements 
under this subpart, the vehicle and its installed engine are instead 
subject to standards and certification requirements under 40 CFR parts 
1036 and 1037, as applicable. If you optionally certify engines or 
vehicles to standards under 40 CFR part 1036 or 40 CFR part 1037, 
respectively, those engines or vehicles are subject to all the 
regulatory requirements in 40 CFR parts 1036 and 1037 as if they were 
mandatory. Note that heavy-duty engines subject to greenhouse gas 
standards under 40 CFR part 1036 before model year 2027 are also 
subject to standards and certification requirements under subpart A of 
this part 86.
    (c) Clean alternative fuel conversions. The provisions of this 
subpart also apply to clean alternative fuel conversions as defined in 
40 CFR 85.502 of all vehicles described in paragraph (a) of this 
section.
    (d) Small-volume manufacturers. Special certification procedures 
are available for small-volume manufacturers as described in Sec.  
86.1838.
    (e) You. The term ``you'' in this subpart refers to manufacturers 
subject to the emission standards and other requirements of this 
subpart.
    (f) Vehicle. The term ``vehicle'', when used generically, does not 
exclude any type of vehicle for which the regulations apply (such as 
light-duty trucks).
    (g) Complete and incomplete vehicles. Several provisions in this 
subpart, including the applicability provisions described in this 
section, are different for complete and incomplete vehicles. We 
differentiate these vehicle types as described in 40 CFR 1037.801.
    (h) Applicability of provisions of this subpart to light-duty 
vehicles, light-duty trucks, medium-duty passenger vehicles, and heavy-
duty vehicles. Numerous sections in this subpart provide requirements 
or procedures applicable to a ``vehicle'' or ``vehicles.'' Unless 
otherwise specified or otherwise determined by the Administrator, the 
term ``vehicle'' or ``vehicles'' in those provisions apply equally to 
light-duty vehicles (LDVs), light-duty trucks (LDTs), medium-duty 
passenger vehicles (MDPVs), and heavy-duty vehicles (HDVs), as those 
terms are defined in Sec.  86.1803-01. Note that this subpart also 
identifies heavy-duty vehicles at or below 14,000 pounds GVWR that are 
not medium-duty passenger vehicles as medium-duty vehicles.
    (i) Types of pollutants. Emission standards and related 
requirements apply for different types of pollutants as follows:
    (1) Criteria pollutants. Criteria pollutant standards apply for 
NOX, NMOG, HC, formaldehyde, PM, and CO, including exhaust, 
evaporative, and refueling emission standards. These pollutants are 
sometimes described collectively as ``criteria pollutants'' because 
they are either criteria pollutants under the Clean Air Act or 
precursors to the criteria pollutants ozone and PM.
    (2) Greenhouse gas emissions. This subpart contains standards and 
other regulations applicable to the emission of the air pollutant 
defined as the aggregate group of six greenhouse gases: carbon dioxide, 
nitrous oxide, methane, hydrofluorocarbons, perfluorocarbons, and 
sulfur hexafluoride.
    (3) Nomenclature. Numerous sections in this subpart refer to 
requirements relating to ``exhaust emissions.'' Unless otherwise 
specified or otherwise determined by the Administrator, the term 
``exhaust emissions'' refers at a minimum to emissions of all 
pollutants described by emission standards in this subpart, including 
carbon dioxide (CO2), nitrous oxide (N2O), and 
methane (CH4).
    (j) Exemption from greenhouse gas emission standards for small 
businesses. Manufacturers that qualify as a small business under the 
Small Business Administration regulations in 13 CFR part 121 are exempt 
from certain standards and associated provisions as specified in 
Sec. Sec.  86.1815, 86.1818, and 86.1819 and in 40 CFR part 600. This 
exemption applies to both U.S.-based and non-U.S.-based businesses. The 
following categories of businesses (with their associated NAICS codes) 
may be eligible for exemption based on the Small Business 
Administration size standards in 13 CFR 121.201:
    (1) Vehicle manufacturers (NAICS code 336111).
    (2) Independent commercial importers (NAICS codes 811111, 811112, 
811198, 423110, 424990, and 441120).
    (3) Alternate fuel vehicle converters (NAICS codes 335312, 336312, 
336322, 336399, 454312, 485310, and 811198).
    (k) Conditional exemption from greenhouse gas emission standards. 
Manufacturers may request a conditional exemption from compliance with 
the emission standards described in Sec.  86.1818-12(c) through (e) and 
associated provisions in this part and in part 600 of this chapter for 
model years 2012 through 2016. For the purpose of determining 
eligibility the sales of related companies shall be aggregated 
according to the provisions of Sec.  86.1838-01(b)(3) or, if a 
manufacturer has been granted operational independence status under 
Sec.  86.1838-01(d), eligibility shall be based on that manufacturer's 
vehicle production.
    (1) [Reserved]
    (2) Maintaining eligibility for exemption from greenhouse gas 
emission standards. To remain eligible for exemption under this 
paragraph (k) the manufacturer's average sales for the three most 
recent consecutive model years must remain below 5,000. If a 
manufacturer's average sales for the three most recent consecutive 
model years exceeds 4999, the manufacturer will no longer be eligible 
for exemption and must meet applicable emission standards according to 
the provisions in this paragraph (k)(2).
    (i) If a manufacturer's average sales for three consecutive model 
years exceeds 4999, and if the increase in sales is the result of 
corporate acquisitions, mergers, or purchase by another manufacturer, 
the manufacturer shall comply with the emission standards described in 
Sec.  86.1818-12(c) through (e), as applicable, beginning with the 
first model year after the last year of the three consecutive model 
years.
    (ii) If a manufacturer's average sales for three consecutive model 
years exceeds 4999 and is less than 50,000, and if the increase in 
sales is solely the result of the manufacturer's expansion in vehicle 
production, the manufacturer shall comply with the emission standards 
described in Sec.  86.1818-12(c) through (e), as applicable, beginning 
with the second model year after the last year of the three consecutive 
model years.
    (iii) If a manufacturer's average sales for three consecutive model 
years exceeds 49,999, the manufacturer shall comply with the emission 
standards described in Sec.  86.1818-12(c) through (e), as applicable, 
beginning with the first model year after the last year of the three 
consecutive model years.

0
35. Amend Sec.  86.1803-01 by:
0
a. Revising the definitions for ``Banking'' and ``Defeat device''.
0
b. Removing the definition for ``Durability useful life''.

[[Page 28159]]

0
c. Revising the definition for ``Electric vehicle''.
0
d. Removing the definitions for ``Fleet average cold temperature NMHC 
standard'' and ``Fleet average NOX standard''.
0
e. Adding definitions for ``Incomplete vehicle'' and ``Light-duty 
program vehicle'' in alphabetical order.
0
f. Revising the definitions for ``Light-duty truck'' and ``Medium-duty 
passenger vehicle (MDPV)''.
0
g. Adding definitions for ``Medium-duty vehicle'', ``Rechargeable 
Energy Storage System (RESS)'', and ``Revoke'' in alphabetical order.
0
h. Revising the definition for ``Supplemental FTP (SFTP)''.
0
i. Adding definitions for ``Suspend'', ``Tier 4'', and ``United 
States'' in alphabetical order.
0
j. Removing the definition for ``Useful life''.
0
k. Adding a definition for ``Void'' in alphabetical order.
    The revisions and additions read as follows:


Sec.  86.1803-01  Definitions.

* * * * *
    Banking means the retention of emission credits by the manufacturer 
generating the emission credits, for use in future model year 
certification programs as permitted by regulation.
* * * * *
    Defeat device means an auxiliary emission control device (AECD) 
that reduces the effectiveness of the emission control system under 
conditions which may reasonably be expected to be encountered in normal 
vehicle operation and use, unless:
    (1) Such conditions are substantially included in driving cycles 
specified in this subpart, the fuel economy test procedures in 40 CFR 
part 600, and the air conditioning efficiency test in 40 CFR 1066.845;
    (2) The need for the AECD is justified in terms of protecting the 
vehicle against damage or accident;
    (3) The AECD does not go beyond the requirements of engine 
starting; or
    (4) The AECD applies only for emergency vehicles and the need is 
justified in terms of preventing the vehicle from losing speed, torque, 
or power due to abnormal conditions of the emission control system, or 
in terms of preventing such abnormal conditions from occurring, during 
operation related to emergency response. Examples of such abnormal 
conditions may include excessive exhaust backpressure from an 
overloaded particulate trap, and running out of diesel exhaust fluid 
for engines that rely on urea-based selective catalytic reduction.
* * * * *
    Electric vehicle means a motor vehicle that is powered solely by an 
electric motor drawing current from a rechargeable energy storage 
system, such as from storage batteries or other portable electrical 
energy storage devices, including hydrogen fuel cells, provided that:
    (1) The vehicle is capable of drawing recharge energy from a source 
off the vehicle, such as residential electric service; and
    (2) The vehicle must be certified to Bin 0 emission standards.
    (3) The vehicle does not have an onboard combustion engine/
generator system as a means of providing electrical energy.
* * * * *
    Incomplete vehicle has the meaning given in 40 CFR 1037.801.
* * * * *
    Light-duty program vehicle means any medium-duty passenger vehicle 
and any vehicle subject to standards under this subpart that is not a 
heavy-duty vehicle. This definition generally applies for model year 
2027 and later vehicles.
    Light-duty truck has one of the following meanings:
    (1) Except as specified in paragraph (2) of this definition, light-
duty truck means any motor vehicle that is not a heavy-duty vehicle, 
but is:
    (i) Designed primarily for purposes of transportation of property 
or is a derivation of such a vehicle; or
    (ii) Designed primarily for transportation of persons and has a 
capacity of more than 12 persons; or
    (iii) Available with special features enabling off-street or off-
highway operation and use.
    (2) Starting in model year 2027, light-duty truck has the meaning 
given for ``Light truck'' in 40 CFR 600.002. Vehicles that qualify as 
emergency vehicles for any reason under Sec.  86.1803-01 are light-duty 
trucks if they are derived from light-duty trucks.
* * * * *
    Medium-duty passenger vehicle (MDPV) has one of the following 
meanings:
    (1) Except as specified in paragraph (2) of this definition, 
Medium-duty passenger vehicle means any heavy-duty vehicle (as defined 
in this subpart) with a gross vehicle weight rating (GVWR) of less than 
10,000 pounds that is designed primarily for the transportation of 
persons. The MDPV definition does not include any vehicle which:
    (i) Is an ``incomplete vehicle'' as defined in this subpart; or
    (ii) Has a seating capacity of more than 12 persons; or
    (iii) Is designed for more than 9 persons in seating rearward of 
the driver's seat; or
    (iv) Is equipped with an open cargo area (for example, a pick-up 
truck box or bed) of 72.0 inches in interior length or more. A covered 
box not readily accessible from the passenger compartment will be 
considered an open cargo area for purposes of this definition.
    (2) Starting with model year 2027, or earlier at the manufacturer's 
discretion, Medium-duty passenger vehicle means any heavy-duty vehicle 
subject to standards under this subpart that is designed primarily for 
the transportation of persons, with seating rearward of the driver, 
except that the MDPV definition does not include any vehicle that has 
any of the following characteristics:
    (i) Is an ``incomplete vehicle'' as defined in this subpart.
    (ii) Has a seating capacity of more than 12 persons.
    (iii) Is designed for more than 9 persons in seating rearward of 
the driver's seat.
    (iv) Is equipped with an open cargo area (for example, a pick-up 
truck box or bed) with an interior length of 72.0 inches or more for 
vehicles above 9,500 pounds GVWR with a work factor above 4,500 pounds. 
A covered box not readily accessible from the passenger compartment 
will be considered an open cargo area for purposes of this definition. 
For purposes of this definition, measure the cargo area's interior 
length from front to back at floor level with all gates and doors 
closed.
    (v) Is equipped with an open cargo area with an interior length of 
94.0 inches or more for vehicles at or below 9,500 pounds GVWR and for 
all vehicles with a work factor at or below 4,500 pounds.
    (vi) Is a van in a configuration with greater cargo-carrying volume 
than passenger-carrying volume at the point of first retail sale. 
Determine cargo-carrying volume accounting for any installed second-row 
seating, even if the manufacturer has not described that as an 
available feature.
    Medium-duty vehicle means any heavy-duty vehicle subject to 
standards under this subpart, excluding medium-duty passenger vehicles. 
This definition generally applies for model year 2027 and later 
vehicles.
* * * * *
    Rechargeable Energy Storage System (RESS) has the meaning given in 
40 CFR 1065.1001. For electric vehicles and

[[Page 28160]]

hybrid electric vehicles, this may also be referred to as a 
Rechargeable Electrical Energy Storage System.
* * * * *
    Revoke has the meaning given in 40 CFR 1068.30.
* * * * *
    Supplemental FTP (SFTP) means the test procedures designed to 
measure emissions during aggressive and microtransient driving over the 
US06 cycle and during driving while the vehicle's air conditioning 
system is operating over the SC03 cycle as described in Sec.  86.1811-
17.
    Suspend has the meaning given in 40 CFR 1068.30.
* * * * *
    Tier 4 means relating to the Tier 4 emission standards described in 
Sec.  86.1811-27. Note that a Tier 4 vehicle continues to be subject to 
Tier 3 evaporative emission standards.
* * * * *
    United States has the meaning given in 40 CFR 1068.30.
* * * * *
    Void has the meaning given in 40 CFR 1068.30.
* * * * *

0
36. Amend Sec.  86.1805-17 by revising paragraphs (c) and (d) and 
removing paragraph (f).
    The revisions read as follows:


Sec.  86.1805-17  Useful life.

* * * * *
    (c) Cold temperature emission standards. The cold temperature NMHC 
emission standards in Sec.  86.1811-17 apply for a useful life of 10 
years or 120,000 miles for LDV and LLDT, and 11 years or 120,000 miles 
for HLDT and HDV. The cold temperature CO emission standards in Sec.  
86.1811-17 apply for a useful life of 5 years or 50,000 miles.
    (d) Criteria pollutants. The useful life provisions of this 
paragraph (d) apply for all emission standards not covered by paragraph 
(b) or (c) of this section. This paragraph (d) applies for the cold 
temperature emission standards in Sec.  86.1811-27(c). Except as 
specified in paragraph (f) of this section and in Sec. Sec.  86.1811, 
86.1813, and 86.1816, the useful life for LDT2, HLDT, MDPV, and HDV is 
15 years or 150,000 miles. The useful life for LDV and LDT1 is 10 years 
or 120,000 miles. Manufacturers may optionally certify LDV and LDT1 to 
a useful life of 15 years or 150,000 miles, in which case the longer 
useful life would apply for all the standards and requirements covered 
by this paragraph (d).
* * * * *


Sec.  86.1806-05  [Removed]

0
37. Remove Sec.  86.1806-05.

0
38. Amend Sec.  86.1806-17 by revising and republishing paragraph 
(b)(4) and revising paragraph (e) to read as follows:


Sec.  86.1806-17  Onboard diagnostics.

* * * * *
    (b) * * *
    (4) For vehicles with installed compression-ignition engines that 
are subject to standards and related requirements under 40 CFR 1036.104 
and 1036.111, you must comply with the following additional 
requirements:
    (i) Make parameters related to engine derating and other 
inducements available for reading with a generic scan tool as specified 
in 40 CFR 1036.110(b)(9)(vi).
    (ii) Design your vehicles to display information related to engine 
derating and other inducements in the cab as specified in 40 CFR 
1036.110(c)(1) and 1036.601(c).
* * * * *
    (e) Onboard diagnostic requirements apply for alternative-fuel 
conversions as described in 40 CFR part 85, subpart F.
* * * * *

0
39. Add Sec.  86.1806-27 to read as follows:


Sec.  86.1806-27  Onboard diagnostics.

    Model year 2027 and later vehicles must have onboard diagnostic 
(OBD) systems as described in this section. OBD systems must generally 
detect malfunctions in the emission control system, store trouble codes 
corresponding to detected malfunctions, and alert operators 
appropriately. Vehicles may optionally comply with the requirements of 
this section instead of the requirements of Sec.  86.1806-17 before 
model year 2027.
    (a) Vehicles must comply with the 2022 OBD requirements adopted for 
California as described in this paragraph (a). California's 2022 OBD-II 
requirements are part of Title 13, section 1968.2 of the California 
Code of Regulations, operative November 30, 2022 (incorporated by 
reference, see Sec.  86.1). We may approve your request to certify an 
OBD system meeting a later version of California's OBD requirements if 
you demonstrate that it complies with the intent of this section. The 
following clarifications and exceptions apply for vehicles certified 
under this subpart:
    (1) For vehicles not certified in California, references to 
vehicles meeting certain California Air Resources Board emission 
standards are understood to refer to the corresponding EPA emission 
standards for a given family, where applicable. Use good engineering 
judgment to correlate the specified standards with the bin standards 
that apply under this subpart.
    (2) Vehicles must comply with OBD requirements throughout the 
useful life as specified in Sec.  86.1805. If the specified useful life 
is different for evaporative and exhaust emissions, the useful life 
specified for evaporative emissions applies for monitoring related to 
fuel-system leaks and the useful life specified for exhaust emissions 
applies for all other parameters.
    (3) The purpose and applicability statements in 13 CCR 1968.2(a) 
and (b) do not apply.
    (4) The anti-tampering provisions in 13 CCR 1968.2(d)(1.4) do not 
apply.
    (5) The requirement to verify proper alignment between the camshaft 
and crankshaft described in 13 CCR 1968.2(e)(15.2.1)(C) applies only 
for vehicles equipped with variable valve timing.
    (6) The deficiency provisions described in paragraph (c) of this 
section apply instead of 13 CCR 1968.2(k).
    (7) Apply thresholds for exhaust emission malfunctions from Tier 4 
vehicles based on the thresholds calculated for the corresponding bin 
standards in the California LEV III program as prescribed for the 
latest model year in 13 CCR 1968.2(d). For example, for Tier 4 Bin 10 
standards, apply the threshold that applies for the LEV standards. For 
cases involving Tier 4 standards that have no corresponding bin 
standards from the California LEV III program, use the monitor 
threshold for the next highest LEV III bin. For example, for Tier 4 Bin 
5 and Bin 10 standards, apply a threshold of 50 mg/mile (15 mg/mile x 
3.33). You may apply thresholds that are more stringent than we require 
under this paragraph (a)(7).
    (8) Apply thresholds and testing requirements as specified in 40 
CFR 1036.110(b)(5), (6) and (11) for engines certified to emission 
standards under 40 CFR part 1036.
    (b) For vehicles with installed compression-ignition engines that 
are subject to standards and related requirements under 40 CFR 1036.104 
and 1036.111, you must comply with the following additional 
requirements:
    (1) Make parameters related to engine derating and other 
inducements available for reading with a generic scan tool as specified 
in 40 CFR 1036.110(b)(9)(vi).
    (2) Design your vehicles to display information related to engine 
derating and other inducements in the cab as

[[Page 28161]]

specified in 40 CFR 1036.110(c)(1) and 1036.601(c).
    (c) You may ask us to accept as compliant a vehicle that does not 
fully meet specific requirements under this section. Such deficiencies 
are intended to allow for minor deviations from OBD standards under 
limited conditions. We expect vehicles to have functioning OBD systems 
that meet the objectives stated in this section. The following 
provisions apply regarding OBD system deficiencies:
    (1) Except as specified in paragraph (d) of this section, we will 
not approve a deficiency that involves the complete lack of a major 
diagnostic monitor, such as monitors related to exhaust aftertreatment 
devices, oxygen sensors, air-fuel ratio sensors, NOX 
sensors, engine misfire, evaporative leaks, and diesel EGR (if 
applicable).
    (2) We will approve a deficiency only if you show us that full 
compliance is infeasible or unreasonable considering any relevant 
factors, such as the technical feasibility of a given monitor, or the 
lead time and production cycles of vehicle designs and programmed 
computing upgrades.
    (3) Our approval for a given deficiency applies only for a single 
model year, though you may continue to ask us to extend a deficiency 
approval in renewable one-year increments. We may approve an extension 
if you demonstrate an acceptable level of effort toward compliance and 
show that the necessary hardware or software modifications would pose 
an unreasonable burden.
    (d) For alternative-fuel vehicles, manufacturers may request a 
waiver from specific requirements for which monitoring may not be 
reliable for operation with the alternative fuel. However, we will not 
waive requirements that we judge to be feasible for a particular 
manufacturer or vehicle model.
    (e) OBD-related requirements for alternative-fuel conversions apply 
as described in 40 CFR part 85, subpart F.
    (f) You may ask us to waive certain requirements in this section 
for emergency vehicles. We will approve your request for an appropriate 
duration if we determine that the OBD requirement in question could 
harm system performance in a way that would impair a vehicle's ability 
to perform its emergency functions.
    (g) The following interim provisions describe an alternate 
implementation schedule for the requirements of this section in certain 
circumstances:
    (1) Manufacturers may delay complying with all the requirements of 
this section, and instead meet all the requirements that apply under 
Sec.  86.1806-17 for any vehicles above 6,000 pounds GVWR that are not 
yet subject to all the Tier 4 standards in Sec.  86.1811.
    (2) Except as specified in this paragraph (g)(2), small-volume 
manufacturers may delay complying with all the requirements of this 
section until model year 2030, and instead meet all the requirements 
that apply under Sec.  86.1806-17 during those years.

0
40. Amend Sec.  86.1807-01 by adding paragraph (a)(3)(iv) and revising 
paragraph (d) to read as follows:


Sec.  86.1807-01  Vehicle labeling.

    (a) * * *
    (3) * * *
    (iv) Monitor family and battery durability family as specified in 
Sec.  86.1815-27, if applicable;
* * * * *
    (d) The following provisions apply for incomplete vehicles 
certified under this subpart:
    (1) Incomplete light-duty trucks must have the following prominent 
statement printed on the label required by paragraph (a)(3)(v) of this 
section: ``This vehicle conforms to U.S. EPA regulations applicable to 
20xx Model year Light-Duty Trucks when it does not exceed XXX pounds in 
curb weight, XXX pounds in gross vehicle weight rating, and XXX square 
feet in frontal area.''
    (2) Incomplete heavy-duty vehicles must have the following 
prominent statement printed on the label required by paragraph 
(a)(3)(v) of this section: ``This vehicle conforms to U.S. EPA 
regulations applicable to 20xx Model year Heavy-Duty Vehicles when it 
does not exceed XXX pounds in curb weight, XXX pounds in gross vehicle 
weight rating, and XXX square feet in frontal area.''
* * * * *


Sec.  86.1808-01  [Amended]

0
41. Amend Sec.  86.1808-01 by removing and reserving paragraph (e).


Sec. Sec.  86.1809-01 and 86.1809-10  [Removed]

0
42. Remove Sec. Sec.  86.1809-01 and 86.1809-10.

0
43. Revise Sec.  86.1809-12 to read as follows:


Sec.  86.1809-12  Prohibition of defeat devices.

    (a) No new vehicle shall be equipped with a defeat device.
    (b) EPA may test or require testing on any vehicle at a designated 
location, using driving cycles and conditions that may reasonably be 
expected to be encountered in normal operation and use, for the 
purposes of investigating a potential defeat device.
    (c) For cold temperature CO, NMHC, and NMOG+NOX emission 
control, EPA will use a guideline to determine the appropriateness of 
the CO emission control and the NMHC or NMOG+NOX emission 
control at ambient temperatures between 25 [deg]F (the upper bound of 
the range for cold temperature testing) and 68 [deg]F (the lower bound 
of the FTP test temperature range). The guideline for CO and 
NMOG+NOX emission congruity across the intermediate 
temperature range is the linear interpolation between the CO or 
NMOG+NOX standard applicable at 25 [deg]F and the 
corresponding standard applicable at 68 [deg]F. The guideline for NMHC 
emission congruity across the intermediate temperature range is the 
linear interpolation between the NMHC FEL pass limit (e.g., 0.3499 g/mi 
for a 0.3 g/mi FEL) applicable at 20 [deg]F and the Tier 2 NMOG 
standard or the Tier 3 or Tier 4 NMOG+NOX bin standard to 
which the vehicle was certified at 68 [deg]F, where the intermediate 
temperature NMHC level is rounded to the nearest 0.01 g/mile for 
comparison to the interpolated line. The following provisions apply for 
vehicles that exceed the specified emission guideline during 
intermediate temperature testing:
    (1) If the CO emission level is greater than the 20 [deg]F emission 
standard, the vehicle will automatically be considered to be equipped 
with a defeat device without further investigation. If the intermediate 
temperature NMHC or NMOG+NOX emission level, rounded to the 
nearest 0.01 g/mile or the nearest 10 mg/mile, is greater than the 20 
[deg]F FEL pass limit, the vehicle will be presumed to have a defeat 
device unless the manufacturer provides evidence to EPA's satisfaction 
that the cause of the test result in question is not due to a defeat 
device.
    (2) If the conditions in paragraph (c)(1) of this section do not 
apply, EPA may investigate the vehicle design for the presence of a 
defeat device under paragraph (d) of this section.
    (d) The following provisions apply for vehicle designs EPA 
designates for investigation as possible defeat devices:
    (1) The manufacturer must show to EPA's satisfaction that the 
vehicle design does not incorporate strategies that unnecessarily 
reduce emission control effectiveness exhibited over the driving cycles 
specified in this subpart, the fuel economy test procedures in 40 CFR 
part 600, or the air conditioning efficiency test in 40 CFR 1066.845, 
when the vehicle is operated under conditions that may reasonably be

[[Page 28162]]

expected to be encountered in normal operation and use.
    (2) [Reserved]
    (3) The following information requirements apply:
    (i) Upon request by EPA, the manufacturer must provide an 
explanation containing detailed information regarding test programs, 
engineering evaluations, design specifications, calibrations, on-board 
computer algorithms, and design strategies incorporated for operation 
both during and outside of the Federal emission test procedures.
    (ii) For purposes of investigation of possible cold temperature CO, 
NMHC, or NMOG+NOX defeat devices under this paragraph (d), 
the manufacturer must provide an explanation to show to EPA's 
satisfaction that CO emissions and NMHC or NMOG+NOX 
emissions are reasonably controlled in reference to the linear 
guideline across the intermediate temperature range.
    (e) For each test group the manufacturer must submit an engineering 
evaluation with the Part II certification application demonstrating to 
EPA's satisfaction that a discontinuity in emissions of non-methane 
organic gases, particulate matter, carbon monoxide, carbon dioxide, 
oxides of nitrogen, nitrous oxide, methane, and formaldehyde measured 
on the Federal Test Procedure (40 CFR 1066.801(c)(1)) and on the 
Highway Fuel Economy Test Procedure (40 CFR 1066.801(c)(5)) does not 
occur in the temperature range of 20 to 86 [deg]F.

0
44. Amend Sec.  86.1810-17 by revising paragraph (g) and revising and 
republishing paragraph (h) to read as follows:


Sec.  86.1810-17  General requirements.

* * * * *
    (g) The cold temperature standards in this subpart refer to test 
procedures set forth in subpart C of this part and 40 CFR part 1066, 
subpart H. All other emission standards in this subpart rely on test 
procedures set forth in subpart B of this part and 40 CFR part 1066, 
subpart H. These procedures rely on the test specifications in 40 CFR 
parts 1065 and 1066 as described in subparts B and C of this part.
    (h) Multi-fueled vehicles (including dual-fueled and flexible-
fueled vehicles) must comply with all the requirements established for 
each consumed fuel (and blend of fuels for flexible-fueled vehicles). 
The following specific provisions apply for flexible-fueled vehicles 
that operate on ethanol and gasoline:
    (1) For criteria exhaust emissions, we may identify the worst-case 
fuel blend for testing in addition to what is required for gasoline-
fueled vehicles. The worst-case fuel blend may be the fuel specified in 
40 CFR 1065.725, or it may consist of a combination of the fuels 
specified in 40 CFR 1065.710(b) and 1065.725. We may waive testing with 
the worst-case blended fuel for US06 and/or SC03 duty cycles; if we 
waive only SC03 testing for Tier 3 vehicles, substitute the SC03 
emission result using the standard test fuel for gasoline-fueled 
vehicles to calculate composite SFTP emissions.
    (2) For evaporative and refueling emissions, test using the fuel 
specified in 40 CFR 1065.710(b).
    (3) No additional spitback or evaporative emission testing is 
required beyond the emission measurements with the gasoline test fuel 
specified in 40 CFR 1065.710.
* * * * *

0
45. Amend Sec.  86.1811-17 by revising paragraphs (b)(8)(iii)(B), (d) 
introductory text, and (g)(2)(ii) to read as follows:


Sec.  86.1811-17  Exhaust emission standards for light-duty vehicles, 
light-duty trucks and medium-duty passenger vehicles.

* * * * *
    (b) * * *
    (8) * * *
    (iii) * * *
    (B) You may continue to use the E0 test fuel specified in Sec.  
86.113 as described in 40 CFR 600.117.
* * * * *
    (d) Special provisions for Otto-cycle engines. The following 
special provisions apply for vehicles with Otto-cycle engines:
* * * * *
    (g) * * *
    (2) * * *
    (ii) The manufacturer must calculate its fleet average cold 
temperature NMHC emission level(s) as described in Sec.  86.1864-10(b).
* * * * *

0
46. Add Sec.  86.1811-27 to read as follows:


Sec.  86.1811-27  Criteria exhaust emission standards.

    (a) Applicability and general provisions. The criteria exhaust 
emission standards of this section apply for both light-duty program 
vehicles and medium-duty vehicles, starting with model year 2027.
    (1) A vehicle meeting all the requirements of this section is 
considered a Tier 4 vehicle meeting the Tier 4 standards. Vehicles 
meeting some but not all requirements are considered interim Tier 4 
vehicles as described in paragraph (b)(6)(iv) of this section.
    (2) The Tier 4 standards include testing over a range of driving 
schedules and ambient temperatures. The standards for 25 [deg]C or 35 
[deg]C testing in paragraph (b) of this section apply separate from the 
-7 [deg]C testing in paragraph (c) of this section. We may identify 
these standards based on nominal ambient test temperatures. Note that -
7 [deg]C testing is also identified as cold temperature testing 
elsewhere in this subpart.
    (3) See Sec.  86.1813 for evaporative and refueling emission 
standards.
    (4) See Sec.  86.1818 for greenhouse gas emission standards.
    (b) Exhaust emission standards for 25 and 35 [deg]C testing. 
Exhaust emissions may not exceed standards over several driving cycles 
as follows:
    (1) Measure emissions using the chassis dynamometer procedures of 
40 CFR part 1066, as follows:
    (i) Establish appropriate load settings based on loaded vehicle 
weight for light-duty program vehicles and adjusted loaded vehicle 
weight for medium-duty vehicles (see Sec.  86.1803).
    (ii) Emission standards under this paragraph (b) apply for all the 
following driving cycles unless otherwise specified:

------------------------------------------------------------------------
        The driving cycle . . .               is identified in . . .
------------------------------------------------------------------------
(A) FTP................................  40 CFR 1066.801(c)(1).
(B) US06...............................  40 CFR 1066.801(c)(2).
(C) SC03...............................  40 CFR 1066.801(c)(3).
(D) HFET...............................  40 CFR 1066.801(c)(5).
(E) ACC II--Mid-temperature              40 CFR 1066.801(c)(8).
 intermediate soak.
(F) ACC II--Early driveaway............  40 CFR 1066.801(c)(9).
(G) ACC II High-load PHEV engine starts  40 CFR 1066.801(c)(10).
------------------------------------------------------------------------


[[Page 28163]]

    (iii) Testing occurs at (20-30) [deg]C ambient temperatures, except 
that a nominal ambient temperature of 35.0 [deg]C applies for testing 
over the SC03 driving cycle. See paragraph (c) of this section for 
emission standards and measurement procedures that apply for cold 
temperature testing.
    (iv) Hydrocarbon emission standards are expressed as NMOG; however, 
for certain vehicles you may measure exhaust emissions based on 
nonmethane hydrocarbon instead of NMOG as described in 40 CFR 1066.635.
    (v) Measure emissions from hybrid electric vehicles (including 
plug-in hybrid electric vehicles) as described in 40 CFR part 1066, 
subpart F, except that these procedures do not apply for plug-in hybrid 
electric vehicles during charge-depleting operation.
    (2) Fully phased-in standards apply as specified in the following 
table:

          Table 1--To Paragraph (b)(2)--Fully Phased-In Tier 4 Criteria Exhaust Emission Standards \a\
----------------------------------------------------------------------------------------------------------------
                                                  NMOG+NOX  (mg/   PM  (mg/mile)   CO  (g/mile)    Formaldehyde
                                                     mile) \b\          \c\             \d\        (mg/mile) \e\
----------------------------------------------------------------------------------------------------------------
Light-duty program vehicles.....................              15             0.5             1.7               4
Medium-duty vehicles............................              75             0.5             3.2               6
----------------------------------------------------------------------------------------------------------------
\a\ Paragraphs (b)(6) and (f) of this section describe how these standards phase in for model year 2027 and
  later vehicles.
\b\ The NMOG+NOX standards apply on a fleet-average basis using discrete bin standards as described in
  paragraphs (b)(4) and (6) of this section.
\c\ PM standards do not apply for the SC03, HFET, and ACC II driving cycles specified in paragraphs
  (b)(1)(ii)(C) through (G) of this section.
\d\ Alternative CO standards of 9.6 and 25 g/mile apply for the US06 driving cycle for light-duty program
  vehicles and medium-duty vehicles, respectively. CO standards do not apply for the ACC II driving cycles
  specified in paragraph (b)(1)(ii)(E) through (G) of this section.
\e\ Formaldehyde standards apply only for the FTP driving cycle.

    (3) The FTP standards specified in this paragraph (b) apply equally 
for testing at low-altitude conditions and high-altitude conditions. 
The US06, SC03, and HFET standards apply only for testing at low-
altitude conditions.
    (4) The NMOG+NOX emission standard is based on a fleet 
average for a given model year.
    (i) You must specify a family emission limit (FEL) for each test 
group based on the FTP emission standard corresponding to each named 
bin. The FEL serves as the emission standard for the test group with 
respect to all specified driving cycles. Calculate your fleet average 
emission level as described in Sec.  86.1860 to show that you meet the 
specified fleet average standard. For multi-fueled vehicles, calculate 
fleet average emission levels based only on emission levels for testing 
with gasoline or diesel fuel. You may generate emission credits for 
banking and trading, and you may use banked or traded credits as 
described in Sec.  86.1861 for demonstrating compliance with the fleet 
average NMOG+NOX emission standard. You comply with the 
fleet average emission standard for a given model year if you have 
enough credits to show that your fleet average emission level is at or 
below the applicable standard.
    (ii) Select one of the identified values from table 2 of this 
section for demonstrating that your fleet average emission level for 
light-duty program vehicles complies with the fleet average 
NMOG+NOX emission standard. These FEL values define emission 
bins that also determine corresponding emission standards for 
NMOG+NOX emission standards for ACC II driving cycles, as 
follows:

                             Table 2 to Paragraph (b)(4)(ii)--Tier 4 NMOG+NOX Bin Standards for Light-Duty Program Vehicles
                                                                        [mg/mile]
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                         ACC II--Mid-     ACC II--Mid-     ACC II--Mid-
                                                                          temperature      temperature      temperature      ACC II--     ACC II--  High-
                       FEL name                           FTP, US06,     intermediate     intermediate     intermediate        Early        power  PHEV
                                                          SC03, HFET      soak  (3-12       soak  (40        soak  (10     driveaway \b\  engine  starts
                                                                            hours)        minutes) \a\       minutes)                         \b\ \c\
--------------------------------------------------------------------------------------------------------------------------------------------------------
Bin 70................................................              70              70                54              35              82             200
Bin 65................................................              65              65                50              33              77             188
Bin 60................................................              60              60                46              30              72             175
Bin 55................................................              55              55                42              28              67             163
Bin 50................................................              50              50                38              25              62             150
Bin 45................................................              45              45                35              23              57             138
Bin 40................................................              40              40                31              20              52             125
Bin 35................................................              35              35                27              18              47             113
Bin 30................................................              30              30                23              15              42             100
Bin 25................................................              25              25                19              13              37              84
Bin 20................................................              20              20                15              10              32              67
Bin 15................................................              15              15                12               8              27              51
Bin 10................................................              10              10                 8               5              22              34
Bin 5.................................................               5               5                 4               3              17              17
Bin 0.................................................               0  ..............  ................  ..............  ..............  ..............
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Calculate the bin standard for a soak time between 10 and 40 minutes based on a linear interpolation between the corresponding bin values for a 10-
  minute soak and a 40-minute soak. Similarly, calculate the bin standard for a soak time between 40 minutes and 3 hours based on a linear interpolation
  between the corresponding bin values for a 40-minute soak and a 3-hour soak.
\b\ Qualifying vehicles are exempt from standards for early driveaway and high-power PHEV engine starts as described in paragraph (b)(5) of this
  section.
\c\ Alternative standards apply for high-power PHEV engine starts for model years 2027 through 2029 as described in paragraph (b)(6)(v) of this section.


[[Page 28164]]

    (iii) You may select one of the identified values from table 2 to 
paragraph (b)(4)(ii) of this section for demonstrating that your fleet 
average emission level for medium-duty vehicles complies with the fleet 
average NMOG+NOX emission standard. The following additional 
NMOG+NOX bin standards are also available for medium-duty 
vehicles: 75, 85, 100, 125, 150, and 170 mg/mile. Medium-duty vehicles 
are not subject to standards based on the ACC II driving cycles 
specified in paragraphs (b)(1)(ii)(E) through (G) of this section.
    (5) Qualifying vehicles are exempt from certain ACC II bin 
standards as follows:
    (i) Vehicles are exempt from the ACC II bin standards for early 
driveaway if the vehicle prevents engine starting during the first 20 
seconds of a cold-start FTP test interval and the vehicle does not use 
an electrically heated catalyst or other technology to precondition the 
engine or emission controls such that NMOG+NOX emissions 
would be higher during the first 505 seconds of the early driveaway 
driving cycle compared to the first 505 seconds of the conventional FTP 
driving cycle.
    (ii) Vehicles are exempt from the ACC II bin standards for high-
power PHEV engine starts if their all-electric range on the cold-start 
US06 driving cycles is at or above 10 miles for model years 2027 
through 2029, and at or above 40 miles for model year 2030 and later.
    (6) The Tier 4 standards phase in over several years, as follows:
    (i) Light-duty program vehicles. Include all light-duty program 
vehicles at or below 6,000 pounds GVWR in the calculation to comply 
with the Tier 4 fleet average NMOG+NOX standard for 25 
[deg]C testing in paragraph (b)(2) of this section. You must meet all 
the other Tier 4 requirements with 20, 40, 60, and 100 percent of your 
projected nationwide production volumes in model years 2027 through 
2030, respectively. A vehicle counts toward meeting the phase-in 
percentage only if it meets all the requirements of this section. Fleet 
average NMOG+NOX standards apply as follows for model year 
2027 through 2032 light-duty program vehicles:

    Table 3 to Paragraph (b)(6)(i)--Declining Fleet Average NMOG+NOX
                Standards for Light-Duty Program Vehicles
------------------------------------------------------------------------
                                                          Fleet average
                                                             NMOG+NOX
                       Model year                         standard  (mg/
                                                              mile)
------------------------------------------------------------------------
2027...................................................               25
2028...................................................               23
2029...................................................               21
2030...................................................               19
2031...................................................               17
2032...................................................               15
------------------------------------------------------------------------

    (ii) Default phase-in for vehicles above 6,000 pounds GVWR. The 
default approach for phasing in the Tier 4 standards for vehicle above 
6,000 pounds GVWR is for all those vehicles to meet the fully phased in 
Tier 4 standards of this section starting in model year 2030 for light-
duty program vehicles and in model year 2031 for medium-duty vehicles. 
Manufacturers using this default phase-in for medium-duty vehicles may 
not use credits generated from earlier model years for demonstrating 
compliance with the Tier 4 NMOG+NOX standards under this 
paragraph (b).
    (iii) Alternative early phase-in for vehicles above 6,000 pounds 
GVWR. Manufacturers may use the following alternative early phase-in 
provisions to transition to the Tier 4 exhaust emission standards on an 
earlier schedule for vehicles above 6,000 pounds GVWR.
    (A) If you select the alternative early phase-in for light-duty 
program vehicles above 6,000 pounds GVWR, you must demonstrate that you 
meet the phase-in requirements in paragraph (b)(6)(i) of this section 
based on all your light-duty program vehicles.
    (B) If you select the alternative early phase-in for medium-duty 
vehicles, include all medium-duty vehicles in the calculation to comply 
with the Tier 4 fleet average NMOG+NOX standard starting in 
model year 2027. You must meet all the other Tier 4 requirements with 
20, 40, 60, 80, and 100 percent of a manufacturer's projected 
nationwide production volumes in model years 2027 through 2031, 
respectively. A vehicle counts toward meeting the phase-in percentage 
only if it meets all the requirements of this section. Medium-duty 
vehicles complying with the alternative early phase-in are subject to 
the following fleet average NMOG+NOX standards for model 
years 2027 through 2033:

  Table 4 to Paragraph (b)(6)(iii)(B)--Declining Fleet Average NMOG+NOX
                   Standards for Medium-Duty Vehicles
------------------------------------------------------------------------
                                                          Fleet average
                                                             NMOG+NOX
                       Model year                         standard  (mg/
                                                              mile)
------------------------------------------------------------------------
2027...................................................              175
2028...................................................              160
2029...................................................              140
2030...................................................              120
2031...................................................              100
2032...................................................               80
2033...................................................               75
------------------------------------------------------------------------

    (C) If you select the alternative early phase-in but are unable to 
meet all the requirements that apply in any model year before model 
year 2030 for light-duty program vehicles and model year 2031 for 
medium-duty vehicles, you may switch to the default phase-in. Switching 
to the default phase-in does not affect certification or compliance 
obligations for model years before you switch to the default phase-in.
    (iv) Interim Tier 4 vehicles. Vehicles not meeting all the 
requirements of this section during the phase-in are considered 
``interim Tier 4 vehicles''. Interim Tier 4 vehicles are subject to all 
the requirements of this subpart that apply for Tier 3 vehicles except 
for the fleet average NMOG+NOX standards in Sec. Sec.  
86.1811-17 and 86.1816-18. Interim Tier 4 vehicles may certify to the 
25 [deg]C fleet average NMOG+NOX standard under this section 
using all available Tier 3 bins under Sec. Sec.  86.1811-17 and 
86.1816-18. Interim Tier 4 vehicles are subject to the whole collection 
of Tier 3 bin standards, and they are not subject to any of the Tier 4 
bin standards specified in this section. Note that manufacturers 
complying with the default phase-in specified in paragraph (b)(6)(ii) 
of this section for Interim Tier 4 light-duty program vehicles above 
6,000 pounds GVWR will need to meet a Tier 3 fleet average 
NMOG+NOX standard in model years 2027 through 2029 in 
addition to the Tier 4 fleet average NMOG+NOX standard for 
vehicles at or below 6,000 pounds GVWR in those same years. Note that 
emission credits from those Tier 3 and Tier 4 light-duty program 
vehicles remain in the same averaging set.
    (v) Phase-in for high-power PHEV engine starts. The following bin 
standards apply for high-power PHEV engine starts in model years 2027 
through 2029 instead of the analogous standards specified in paragraph 
(b)(4)(ii) of this section:

[[Page 28165]]



    Table 5 to Paragraph (b)(6)(v)--Model Year 2027 Through 2029 Bin
               Standards for High-Power PHEV Engine Starts
------------------------------------------------------------------------
                                                         ACC II-- High-
                                                           power  PHEV
                       FEL name                           engine starts
                                                            (mg/mile)
------------------------------------------------------------------------
Bin 70................................................               320
Bin 65................................................               300
Bin 60................................................               280
Bin 55................................................               260
Bin 50................................................               240
Bin 45................................................               220
Bin 40................................................               200
Bin 35................................................               175
Bin 30................................................               150
Bin 25................................................               125
Bin 20................................................               100
Bin 15................................................                75
Bin 10................................................                50
Bin 5.................................................                25
------------------------------------------------------------------------

    (vi) MDPV. Any vehicle that becomes an MDPV as a result of the 
revised definition in Sec.  86.1803-01 starting in model 2027 remains 
subject to the heavy-duty Tier 3 standards in Sec.  86.1816-18 under 
the default phase-in specified in paragraph (b)(6)(ii) of this section 
for model years 2027 through 2030.
    (vii) Keep records as needed to show that you meet the requirements 
specified in this paragraph (b) for phasing in standards and for 
complying with declining fleet average average standards.
    (c) Exhaust emission standards for -7 [deg]C testing. Exhaust 
emissions may not exceed standards for -7 [deg]C testing, as follows:
    (1) Measure emissions as described in 40 CFR 1066.801(c)(1) and 
(6).
    (2) The standards apply to gasoline-fueled and diesel-fueled 
vehicles, except as specified. Multi-fuel, bi-fuel or dual-fuel 
vehicles must comply with requirements using only gasoline and diesel 
fuel, as applicable. Testing with other fuels such as electricity or a 
high-level ethanol-gasoline blend is not required.
    (3) The following standards apply equally for light-duty program 
vehicles and medium-duty vehicles:
    (i) Gasoline-fueled vehicles must meet a fleet average 
NMOG+NOX standard of 300 mg/mile. Calculate fleet average 
emission levels as described in Sec.  86.1864. There is no 
NMOG+NOX standard for diesel-fueled vehicles, but 
manufacturers must measure and report emissions as described in Sec.  
86.1829-15(g).
    (ii) The PM standard is 0.5 mg/mile.
    (iii) The CO standard is 10.0 g/mile.
    (4) The CO standard applies at both low-altitude and high-altitude 
conditions. The NMOG+NOX and PM standards apply only at low-
altitude conditions. However, manufacturers must submit an engineering 
evaluation indicating that common calibration approaches are utilized 
at high altitudes. Any deviation from low altitude emission control 
practices must be included in the auxiliary emission control device 
(AECD) descriptions submitted at certification. Any AECD specific to 
high altitude must require engineering emission data for EPA evaluation 
to quantify any emission impact and validity of the AECD.
    (5) Phase-in requirements for standards under this paragraph (c) 
apply as described in paragraphs (b)(6) and (f) of this section.
    (d) Special provisions for spark-ignition engines. The following A/
C-on specific calibration provisions apply for vehicles with spark-
ignition engines:
    (1) A/C-on specific calibrations (e.g., air-fuel ratio, spark 
timing, and exhaust gas recirculation) that differ from A/C-off 
calibrations may be used for a given set of engine operating conditions 
(e.g., engine speed, manifold pressure, coolant temperature, air charge 
temperature, and any other parameters). Such calibrations must not 
unnecessarily reduce emission control effectiveness during A/C-on 
operation when the vehicle is operated under conditions that may 
reasonably be expected during normal operation and use. If emission 
control effectiveness decreases as a result of such calibrations, the 
manufacturer must describe in the Application for Certification the 
circumstances under which this occurs and the reason for using these 
calibrations.
    (2) For AECDs involving commanded enrichment, these AECDs must not 
operate differently for A/C-on operation than for A/C-off operation. 
This includes both the sensor inputs for triggering enrichment and the 
degree of enrichment employed.
    (e) Off-cycle emission standards for high-GCWR vehicles. Model year 
2031 and later medium-duty vehicles above 22,000 pounds GCWR must meet 
off-cycle emission standards as follows:
    (1) The engine-based off-cycle emission standards in 40 CFR 
1036.104(a)(3) apply for vehicles with compression-ignition engines 
based on measurement procedures with 2-bin moving average windows. 
Manufacturers may instead meet the following alternative standards for 
measurement procedures with 3-bin moving average windows:

  Table 6 to Paragraph (e)(1)--Alternative Off-Cycle Standards for High-GCWR Vehicles With Compression-Ignition
                                                   Engines \a\
----------------------------------------------------------------------------------------------------------------
                                                                      HC mg/          PM mg/           CO g/
           Off-cycle bin                       NOX \b\             hp[middot]hr    hp[middot]hr    hp[middot]hr
----------------------------------------------------------------------------------------------------------------
Bin 1..............................  7.5 g/hr...................  ..............  ..............  ..............
Bin 2a.............................  75 mg/hp[middot]hr.........             210             7.5           23.25
Bin 2b.............................  30 mg/hp[middot]hr.........             210             7.5           23.25
----------------------------------------------------------------------------------------------------------------
\a\ Listed standards include a conformity factor of 1.5. Accuracy margins apply as described in Sec.   86.1845-
  04(h).
\b\ There is no temperature-based adjustment to the off-cycle NOX standard for testing with three-bin moving
  average windows.

    (2) The following emission standards apply for spark-ignition 
engines:

 Table 7 to Paragraph (e)(2)--Off-Cycle Emission Standards for High-GCWR
                Vehicles With Spark-Ignition Engines \a\
------------------------------------------------------------------------
               Pollutant                   Off-cycle emission standard
------------------------------------------------------------------------
NOX \b\................................  30 mg/hp[middot]hr.
HC.....................................  210 mg/hp[middot]hr.
PM.....................................  7.5 mg/hp[middot]hr.

[[Page 28166]]

 
CO.....................................  21.6 g/hp[middot]hr.
------------------------------------------------------------------------
\a\ Listed standards include a conformity factor of 1.5.
\b\ There is no temperature-based adjustment to the off-cycle NOX
  standard for vehicles with spark-ignition engines.

    (3) In-use testing requirements and measurement procedures apply as 
described in Sec.  86.1845-04(h).
    (f) Small-volume manufacturers. Small-volume manufacturers may use 
the following phase-in provisions for light-duty program vehicles:
    (1) Instead of the 25 [deg]C fleet average NMOG+NOX 
standards specified in this section, small-volume manufacturers may 
meet alternate fleet average standards of 51 mg/mile for model year 
2027 and 30 mg/mile for model years 2028 through 2031. The 15 mg/mile 
standard applies starting in model year 2032.
    (2) Instead of the phase-in specified in paragraph (b)(6)(i) of 
this section, small-volume manufacturers may comply with all the 
requirements of this section other than the NMOG+NOX 
standards starting in model year 2032.

0
47. Amend Sec.  86.1813-17 by:
0
a. Revising paragraph (a)(2)(i) introductory text;
0
b. Adding paragraphs (a)(2)(iv) and (v); and
0
c. Revising paragraphs (b)(1) and (g)(2)(ii)(B).
    The revisions and additions read as follows:


Sec.  86.1813-17  Evaporative and refueling emission standards.

* * * * *
    (a) * * *
    (2) * * *
    (i) The emission standard for the sum of diurnal and hot soak 
measurements from the two-diurnal test sequence and the three-diurnal 
test sequence is based on a fleet average in a given model year. You 
must specify a family emission limit (FEL) for each evaporative family. 
The FEL serves as the emission standard for the evaporative family with 
respect to all required diurnal and hot soak testing. Calculate your 
fleet average emission level as described in Sec.  86.1860 based on the 
FEL that applies for low-altitude testing to show that you meet the 
specified standard. For multi-fueled vehicles, calculate fleet average 
emission levels based only on emission levels for testing with 
gasoline. You may generate emission credits for banking and trading, 
and you may use banked or traded credits for demonstrating compliance 
with the diurnal plus hot soak emission standard for vehicles required 
to meet the Tier 3 standards, other than gaseous-fueled or electric 
vehicles, as described in Sec.  86.1861 starting in model year 2017. 
You comply with the emission standard for a given model year if you 
have enough credits to show that your fleet average emission level is 
at or below the applicable standard. You may exchange credits between 
or among evaporative families within an averaging set as described in 
Sec.  86.1861. Separate diurnal plus hot soak emission standards apply 
for each evaporative/refueling emission family as shown for high-
altitude conditions. The sum of diurnal and hot soak measurements may 
not exceed the following Tier 3 standards:
* * * * *
    (iv) Vehicles that become light-duty vehicles based on the change 
in the definition for ``light-duty truck'' for Tier 4 vehicles may 
continue to meet the same evaporative emission standards under this 
paragraph (a) through model year 2031 as long as they qualify for 
carryover certification as described in Sec.  86.1839.
    (v) Vehicles that are no longer medium-duty vehicles based on the 
change in the definition for ``medium-duty passenger vehicles'' for 
Tier 4 vehicles may continue to meet the same evaporative emission 
standards under this paragraph (a) through model year 2031 as long as 
they qualify for carryover certification as described in Sec.  86.1839.
* * * * *
    (b) * * *
    (1) The following implementation dates apply for incomplete heavy-
duty vehicles:
    (i) Refueling standards apply starting with model year 2027 for 
incomplete heavy-duty vehicles certified under 40 CFR part 1037 and in 
model year 2030 for incomplete heavy-duty vehicles certified under this 
subpart, unless the manufacturer complies with the alternate phase-in 
specified in paragraph (b)(1)(iii) of this section. If you do not meet 
the alternative phase-in requirement for model year 2026, you must 
certify all your incomplete heavy-duty vehicles above 14,000 pounds 
GVWR to the refueling standard in model year 2027.
    (ii) Refueling standards are optional for incomplete heavy-duty 
vehicles at or below 14,000 pounds GVWR through model year 2029, unless 
the manufacturer uses the alternate phase-in specified in paragraph 
(b)(1)(iii) of this section to meet standards together for heavy-duty 
vehicles above and below 14,000 pounds GVWR.
    (iii) Manufacturers may comply with an alternate phase-in of the 
refueling standard for incomplete heavy-duty vehicles as described in 
this paragraph (b)(1)(iii). Manufacturers must meet the refueling 
standard during the phase-in based on their projected nationwide 
production volume of all incomplete heavy-duty vehicles subject to 
standards under this subpart and under 40 CFR part 1037 as described in 
Table 4 of this section. Keep records as needed to show that you meet 
phase-in requirements.

     Table 4 of Sec.   86.1813-17--Alternative Phase-In Schedule for
     Refueling Emission Standards for Incomplete Heavy-Duty Vehicles
------------------------------------------------------------------------
                                                  Minimum percentage  of
                                                   heavy-duty  vehicles
                   Model year                        subject to  the
                                                   refueling  standard
------------------------------------------------------------------------
2026...........................................                       40
2027...........................................                       40
2028...........................................                       80
2029...........................................                       80
2030...........................................                      100
------------------------------------------------------------------------

* * * * *
    (g) * * *
    (2) * * *
    (ii) * * *
    (B) All the vehicles meeting the leak standard must also meet the 
Tier 3 evaporative emission standards. Through model year 2026, all 
vehicles meeting the leak standard must also meet the OBD requirements 
in Sec.  86.1806-17(b)(1).
* * * * *

0
48. Add Sec.  86.1815-27 to read as follows:

[[Page 28167]]

Sec.  86.1815-27  Battery-related requirements for battery electric 
vehicles and plug-in hybrid electric vehicles.

    Except as specified in paragraph (h) of this section, battery 
electric vehicles and plug-in hybrid electric vehicles must meet 
requirements related to batteries serving as a Rechargeable Energy 
Storage System from GTR No. 22 (incorporated by reference, see Sec.  
86.1). The requirements of this section apply starting in model year 
2027 for vehicles at or below 6,000 pounds GVWR. The requirements of 
this section start to apply for vehicles above 6,000 pounds GVWR when 
they are first certified to Tier 4 NMOG+NOX bin standards 
under Sec.  86.1811-27(b), not later than model year 2031. The 
following clarifications and adjustments to GTR No. 22 apply for 
vehicles subject to this section:
    (a) Manufacturers must install an operator-accessible display that 
monitors, estimates, and communicates the vehicle's State of Certified 
Energy (SOCE) and include information in the application for 
certification as described in Sec.  86.1844. Display SOCE as a 
percentage expressed at least to the nearest whole number. 
Manufacturers that qualify as small businesses under Sec.  86.1801-
12(j)(1) must meet the requirements of this paragraph (a) but are not 
subject to the requirements in paragraphs (c) through (g) of this 
section; however, small businesses may trade credits they generate from 
battery electric vehicles and plug-in hybrid electric vehicles for a 
given model year only if they meet requirements in paragraphs (c) 
through (g) of this section.
    (b) Requirements in GTR No. 22 related to State of Certified Range 
do not apply.
    (c) Evaluate SOCE based on measured Usable Battery Energy (UBE) 
values. Use the Multi-Cycle Range and Energy Consumption Test described 
in 40 CFR 600.116-12(a) for battery electric vehicles and either the 
UDDS Full Charge Test (FCT) or the HFET FCT as described in 40 CFR 
600.116-12(c)(11) for plug-in hybrid electric vehicles. For medium-duty 
vehicles, perform testing with test weight set to Adjusted Loaded 
Vehicle Weight.
    (d) In-use vehicles must display SOCE values that are accurate 
within 5 percent of measured values as calculated in GTR No. 22.
    (e) Batteries installed in light-duty program vehicles must meet a 
Minimum Performance Requirement such that measured usable battery 
energy is at least 80 percent of the vehicle's certified usable battery 
energy after 5 years or 62,000 miles, and at least 70 percent of 
certified usable battery energy at 8 years or 100,000 miles.
    (f) Manufacturers must divide test groups into families and perform 
testing and submit reports as follows:
    (1) Identify battery durability families and monitor families as 
specified in Section 6.1 of GTR No. 22. Include vehicles in the same 
battery durability family only if there are no chemistry differences 
that would be expected to influence durability, such as proportional 
metal composition of the cathode, composition of the anode, or 
differences in particle size or morphology of cathode or anode active 
materials.
    (2) Perform Part A testing to verify that SOCE monitors meet 
accuracy requirements as described in Sec.  86.1845-04. Test the number 
of vehicles and determine a pass or fail result as specified in Section 
6.3 of GTR No. 22.
    (3) For light-duty program vehicles, perform Part B verification 
for each battery durability family included in a monitor family subject 
to Part A testing to verify that batteries have SOCE meeting the 
Minimum Performance Requirement. Determine performance by reading SOCE 
monitors with a physical inspection, remote inspection using wireless 
technology, or any other appropriate means.
    (i) Randomly select test vehicles from at least 10 different U.S. 
states or territories, with no more than 50 percent of selected 
vehicles coming from any one state or territory. Select vehicles to 
represent a wide range of climate conditions and operating 
characteristics.
    (ii) Select at least 500 test vehicles per year from each from each 
battery durability family, except that we may approve your request to 
select fewer vehicles for a given battery durability family based on 
limited production volumes. If you test fewer than 500 vehicles, you 
may exclude up to 5 percent of the tested vehicles to account for the 
limited sample size. Test vehicles may be included from year to year, 
or test vehicles may change over the course of testing for the battery 
durability family.
    (iii) A battery durability family passes if 90 percent or more of 
sampled vehicles have reported values at or above the Minimum 
Performance Requirement.
    (iv) Continue testing for eight years after the end of production 
for vehicles included in the battery durability family. Note that 
testing will typically require separate testing from multiple model 
years in a given calendar year.
    (4) You may request our approval to group monitors and batteries 
differently, or to adjust testing specifications. Submit your request 
with your proposed alternative specifications, along with technical 
justification. In the case of broadening the scope of a monitor family, 
include data demonstrating that differences within the proposed monitor 
family do not cause error in estimating SOCE.
    (5) Submit electronic reports to document the results of testing as 
described in Sec.  86.1847.
    (g) If vehicles do not comply with monitor accuracy requirements 
under this section, the recall provisions in 40 CFR part 85, subpart S, 
apply for each affected monitor family. If battery electric and plug-in 
hybrid electric vehicles do not comply with battery durability 
requirements under this section, the manufacturer must account for the 
nonconformity by forfeiting GHG credits calculated for all the vehicles 
within the battery durability group (see Sec.  86.1865-12(j)(3)). 
Manufacturers must similarly adjust NMOG+NOX credits for 
battery electric vehicles (see Sec.  86.1861-17(f)).
    (h) Manufacturers may meet the requirements of this section for 
battery electric vehicles by instead complying with monitor accuracy 
and battery durability requirements based on the procedures specified 
in 13 CCR 1962.7 (incorporated by reference, see Sec.  86.1), subject 
to the following exceptions and clarifications:
    (1) References to the California ARB Executive Officer are deemed 
to mean the EPA Administrator. References to California are deemed to 
mean the United States. Test vehicles may be registered in any U.S. 
state or territory.
    (2) Model year 2027 through 2029 vehicles must be designed to 
maintain 70 percent or more of the certification range value for at 
least 70 percent of the vehicles in a test group. Model year 2030 and 
later vehicles must be designed to maintain 80 percent or more of the 
certification range value as an average value for all vehicles in a 
test group. These requirements apply for a useful life of 10 years or 
150,000 miles, whichever occurs first. If vehicles do not comply with 
these battery durability requirements, the manufacturer must adjust all 
credit balances to account for the nonconformity by forfeiting GHG 
credits calculated for all the vehicles within the test group (see 
Sec.  86.1865-12(j)(3)). Manufacturers must similarly adjust 
NMOG+NOX credits (see Sec.  86.1861-17(f)).
    (3) EPA may perform compliance and enforcement testing to support a 
finding of nonconformity as described in 13 CCR 1962.7(e).
    (4) A minimum nationwide sampling rate of 500 in-use vehicles 
applies under

[[Page 28168]]

13 CCR 1962.7(d)(1). Select vehicles as described in paragraph 
(f)(3)(i) of this section.
    (5) Manufacturers must meet the data standardization requirements 
in 13 CCR 1962.5 (incorporated by reference, see Sec.  86.1).
    (6) Vehicles continue to be subject to warranty requirements as 
specified in 40 CFR part 85, subpart V.
    (7) Meeting requirements under this paragraph (h) does not depend 
on creating battery durability families and monitor families. The Part 
A testing requirements for monitor accuracy also do not apply.
    (8) Include the following information in the application for 
certification for each test group instead of the information specified 
in Sec.  86.1844-01(d)(19):
    (i) The worst-case certified range value to represent the test 
group, instead of certified usable battery energy.
    (ii) A statement attesting that the SOCE monitor meets the accuracy 
requirement appropriate for the model year.
    (iii) A statement that each test group meets the design targets in 
paragraph (h)(2) of this section.

0
49. Amend Sec.  86.1816-18 by revising paragraph (a) introductory text 
and adding paragraph (b)(14) to read as follows:


Sec.  86.1816-18  Emission standards for heavy-duty vehicles.

    (a) Applicability and general provisions. This section describes 
Tier 3 exhaust emission standards for complete heavy-duty vehicles. 
These standards are optional for incomplete heavy-duty vehicles and for 
heavy-duty vehicles above 14,000 pounds GVWR as described in Sec.  
86.1801. Greenhouse gas emission standards are specified in Sec.  
86.1818 for MDPV and in Sec.  86.1819 for other HDV. See Sec.  86.1813 
for evaporative and refueling emission standards. This section starts 
to apply in model year 2018, except that the provisions may apply to 
vehicles before model year 2018 as specified in paragraph (b)(11) of 
this section. This section applies for model year 2027 and later 
vehicles only as specified in Sec.  86.1811-27. Separate requirements 
apply for MDPV as specified in Sec.  86.1811. See subpart A of this 
part for requirements that apply for incomplete heavy-duty vehicles and 
for heavy-duty engines certified independent of the chassis. The 
following general provisions apply:
* * * * *
    (b) * * *
    (14) Starting in model year 2027, you may certify vehicles using 
the following transitional Tier 4 bins as part of the compliance 
demonstration for meeting the Tier 4 declining fleet average 
NMOG+NOX standard in Sec.  86.1811-27(b)(6):

                    Table 8 of Sec.   86.1816-18--Transitional Tier 4 Bin Standards--Class 2b
                                                    [g/mile]
----------------------------------------------------------------------------------------------------------------
                                                             NMOG+NOX                           CO
                    FEL name                     ---------------------------------------------------------------
                                                     FTP (FEL)        HD-SFTP           FTP           HD-SFTP
----------------------------------------------------------------------------------------------------------------
Bin 125.........................................           0.125           0.125             3.2            12.0
Bin 100.........................................           0.100           0.100             3.2            12.0
Bin 85..........................................           0.085           0.085             3.2            12.0
Bin 75..........................................           0.075           0.075             3.2            12.0
----------------------------------------------------------------------------------------------------------------


                    Table 9 of Sec.   86.1816-18--Transitional Tier 4 Bin Standards--Class 3
                                                    [g/mile]
----------------------------------------------------------------------------------------------------------------
                                                             NMOG+NOX                           CO
                    FEL name                     ---------------------------------------------------------------
                                                     FTP (FEL)        HD-SFTP           FTP           HD-SFTP
----------------------------------------------------------------------------------------------------------------
Bin 170.........................................           0.170           0.170             3.7             4.0
Bin 150.........................................           0.150           0.150             3.7             4.0
Bin 125.........................................           0.125           0.125             3.7             4.0
Bin 100.........................................           0.100           0.100             3.7             4.0
Bin 85..........................................           0.085           0.085             3.7             4.0
Bin 75..........................................           0.075           0.075             3.7             4.0
----------------------------------------------------------------------------------------------------------------

* * * * *


Sec. Sec.  86.1817-05 and 86.1817-08  [Removed]

0
50. Remove Sec. Sec.  86.1817-05 and 86.1817-08.

0
51. Amend Sec.  86.1818-12 by:
0
a. Revising and republishing paragraph (a),;
0
b. Revising paragraphs (b) introductory text and (c);
0
c. Removing and reserving paragraph (e);
0
d. Revising paragraph (f) introductory text;
0
e. Revising and republishing paragraph (g); and
0
f. Revising paragraph (h).
    The revisions read as follows:


Sec.  86.1818-12  Greenhouse gas emission standards for light-duty 
vehicles, light-duty trucks, and medium-duty passenger vehicles.

    (a) Applicability. (1) The greenhouse gas standards and related 
requirements in this section apply to 2012 and later model year LDV, 
LDT, and MDPV, including multi-fuel vehicles, vehicles fueled with 
alternative fuels, hybrid electric vehicles, plug-in hybrid electric 
vehicles, electric vehicles, and fuel cell vehicles. Unless otherwise 
specified, multi-fuel vehicles must comply with all requirements 
established for each consumed fuel.
    (2) The standards specified in this section apply for testing at 
both low-altitude conditions and high-altitude conditions. However, 
manufacturers must submit an engineering evaluation indicating that 
common calibration approaches are utilized at high altitude instead of 
performing testing for certification, consistent with Sec.  86.1829. 
Any deviation from low altitude emission control practices must be 
included in the auxiliary emission control device (AECD) descriptions 
submitted at certification. Any AECD

[[Page 28169]]

specific to high altitude requires engineering emission data for EPA 
evaluation to quantify any emission impact and determine the validity 
of the AECD.
    (3) A manufacturer that qualifies as a small business according to 
Sec.  86.1801-12(j) is exempt from the emission standards in this 
section and the associated provisions in 40 CFR part 600; however, 
manufacturers may trade emission credits generated in a given model 
year only by certifying to emission standards that apply for that model 
year. Starting in model year 2027, manufacturers may produce no more 
than 500 exempt vehicles in any model year under this paragraph (a)(3). 
This limit applies for vehicles with engines, including plug-in hybrid 
electric vehicles; this limit does not apply for electric vehicles. 
Vehicles that are not exempt under this paragraph (a)(3) must meet 
emission standards as specified in this section.
    (b) Definitions. The following definitions apply for this section:
* * * * *
    (c) Fleet average CO2 standards. Fleet average 
CO2 standards apply as follows for passenger automobiles and 
light trucks:
    (1) Each manufacturer must comply with separate fleet average 
CO2 standards for passenger automobiles and light trucks. To 
calculate the fleet average CO2 standards for passenger 
automobiles for a given model year, multiply each CO2 target 
value by the production volume of passenger automobiles for the 
corresponding model type-footprint combination, then sum those products 
and divide the sum by the total production volume of passenger 
automobiles in that model year. Repeat this calculation using 
production volumes of light trucks to determine the separate fleet 
average CO2 standards for light trucks. Round the resulting 
fleet average CO2 emission standards to the nearest whole 
gram per mile. Averaging calculations and other compliance provisions 
apply as described in Sec.  86.1865.
    (2) A CO2 target value applies for each unique 
combination of model type and footprint. The CO2 target 
serves as the emission standard that applies throughout the useful life 
for each vehicle. Determine the CO2 target values from the 
following table for model year 2032 and later, or from paragraph (h) of 
this section for model year 2031 and earlier:

                                             Table 1 to Paragraph (c)(2)--Footprint-Based CO2 Target Values
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                 Footprint  cutpoints (ft\2\)                           CO2 target value (g/mile)
                                               ---------------------------------------------------------------------------------------------------------
                 Vehicle type                                                      Below low                                                Above high
                                                      Low            High          cutpoint              Between  cutpoints \a\              cutpoint
--------------------------------------------------------------------------------------------------------------------------------------------------------
Passenger automobile..........................              45              56            71.8  0.35 x f + 56.2.........................            75.6
Light truck...................................              45            70.0            75.7  1.38 x f + 13.8.........................           110.1
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Calculate the CO2 target value for vehicles between the footprint cutpoints as shown, using vehicle footprint, f, and rounding the result to the
  nearest 0.1 g/mile.

* * * * *
    (f) Nitrous oxide (N2O) and methane (CH4) 
exhaust emission standards for passenger automobiles and light trucks. 
Each manufacturer's fleet of combined passenger automobiles and light 
trucks must comply with N2O and CH4 standards 
using either the provisions of paragraph (f)(1), (2), or (3) of this 
section. Except with prior EPA approval, a manufacturer may not use the 
provisions of both paragraphs (f)(1) and (2) of this section in a model 
year. For example, a manufacturer may not use the provisions of 
paragraph (f)(1) of this section for their passenger automobile fleet 
and the provisions of paragraph (f)(2) for their light truck fleet in 
the same model year. The manufacturer may use the provisions of both 
paragraphs (f)(1) and (3) of this section in a model year. For example, 
a manufacturer may meet the N2O standard in paragraph 
(f)(1)(i) of this section and an alternative CH4 standard 
determined under paragraph (f)(3) of this section.
* * * * *
    (g) Alternative fleet average standards for manufacturers with 
limited sales. Manufacturers meeting the criteria in this paragraph (g) 
may request alternative fleet average CO2 standards for 
model year 2031 and earlier vehicles.
    (1) Eligibility for alternative standards. Eligibility as 
determined in this paragraph (g) shall be based on the total nationwide 
sales of combined passenger automobiles and light trucks. The terms 
``sales'' and ``sold'' as used in this paragraph (g) shall mean 
vehicles produced for sale in the states and territories of the United 
States. For the purpose of determining eligibility the sales of related 
companies shall be aggregated according to the provisions of Sec.  
86.1838-01(b)(3), or, if a manufacturer has been granted operational 
independence status under Sec.  86.1838-01(d), eligibility shall be 
based on that manufacturer's vehicle sales. To be eligible for 
alternative standards established under this paragraph (g), the 
manufacturer's average sales for the three most recent consecutive 
model years must remain below 5,000. If a manufacturer's average sales 
for the three most recent consecutive model years exceeds 4999, the 
manufacturer will no longer be eligible for exemption and must meet 
applicable emission standards starting with the model year according to 
the provisions in this paragraph (g)(1).
    (i) If a manufacturer's average sales for three consecutive model 
years exceeds 4999, and if the increase in sales is the result of 
corporate acquisitions, mergers, or purchase by another manufacturer, 
the manufacturer shall comply with the emission standards described in 
paragraph (c) of this section, as applicable, beginning with the first 
model year after the last year of the three consecutive model years.
    (ii) If a manufacturer's average sales for three consecutive model 
years exceeds 4999 and is less than 50,000, and if the increase in 
sales is solely the result of the manufacturer's expansion in vehicle 
production (not the result of corporate acquisitions, mergers, or 
purchase by another manufacturer), the manufacturer shall comply with 
the emission standards described in paragraph (c), of this section, as 
applicable, beginning with the second model year after the last year of 
the three consecutive model years.
    (2) Requirements for new entrants into the U.S. market. New 
entrants are those manufacturers without a prior record of automobile 
sales in the United States and without prior certification to 
greenhouse gas emission standards in this section. In addition to the 
eligibility requirements stated in paragraph (g)(1) of this section, 
new entrants must meet the following requirements:

[[Page 28170]]

    (i) In addition to the information required under paragraph (g)(4) 
of this section, new entrants must provide documentation that shows a 
clear intent by the company to actually enter the U.S. market in the 
years for which alternative standards are requested. Demonstrating such 
intent could include providing documentation that shows the 
establishment of a U.S. dealer network, documentation of work underway 
to meet other U.S. requirements (e.g., safety standards), or other 
information that reasonably establishes intent to the satisfaction of 
the Administrator.
    (ii) Sales of vehicles in the U.S. by new entrants must remain 
below 5,000 vehicles for the first three model years in the U.S. 
market, and in subsequent years the average sales for any three 
consecutive years must remain below 5,000 vehicles. Vehicles sold in 
violation of these limits within the first five model years will be 
considered not covered by the certificate of conformity and the 
manufacturer will be subject to penalties on an individual-vehicle 
basis for sale of vehicles not covered by a certificate. In addition, 
violation of these limits will result in loss of eligibility for 
alternative standards until such point as the manufacturer demonstrates 
two consecutive model years of sales below 5,000 automobiles. After the 
first five model years, the eligibility provisions in paragraph (g)(1) 
of this section apply, where violating the sales thresholds is no 
longer a violation of the condition on the certificate, but is instead 
grounds for losing eligibility for alternative standards.
    (iii) A manufacturer with sales in the most recent model year of 
less than 5,000 automobiles, but where prior model year sales were not 
less than 5,000 automobiles, is eligible to request alternative 
standards under this paragraph (g). However, such a manufacturer will 
be considered a new entrant and subject to the provisions regarding new 
entrants in this paragraph (g), except that the requirement to 
demonstrate an intent to enter the U.S. market in paragraph (g)(2)(i) 
of this section shall not apply.
    (3) How to request alternative fleet average standards. Eligible 
manufacturers may petition for alternative standards for up to five 
consecutive model years if sufficient information is available on which 
to base such standards.
    (i) To request alternative standards starting with the 2017 model 
year, eligible manufacturers must submit a completed application no 
later than July 30, 2013.
    (ii) To request alternative standards starting with a model year 
after 2017, eligible manufacturers must submit a completed request no 
later than 36 months prior to the start of the first model year to 
which the alternative standards would apply.
    (iii) The request must contain all the information required in 
paragraph (g)(4) of this section, and must be signed by a chief officer 
of the company. If the Administrator determines that the content of the 
request is incomplete or insufficient, the manufacturer will be 
notified and given an additional 30 days to amend the request.
    (4) Data and information submittal requirements. Eligible 
manufacturers requesting alternative standards under this paragraph (g) 
must submit the following information to the Environmental Protection 
Agency. The Administrator may request additional information as she 
deems appropriate. The completed request must be sent to the 
Environmental Protection Agency at the following address: Director, 
Compliance and Innovative Strategies Division, U.S. Environmental 
Protection Agency, 2000 Traverwood Drive, Ann Arbor, Michigan 48105.
    (i) Vehicle model and fleet information. (A) The model years to 
which the requested alternative standards would apply, limited to five 
consecutive model years.
    (B) Vehicle models and projections of sales volumes for each model 
year.
    (C) Detailed description of each model, including the vehicle type, 
vehicle mass, power, footprint, powertrain, and expected pricing.
    (D) The expected production cycle for each model, including new 
model introductions and redesign or refresh cycles.
    (ii) Technology evaluation information. (A) The CO2 
reduction technologies employed by the manufacturer on each vehicle 
model, or projected to be employed, including information regarding the 
cost and CO2 -reducing effectiveness. Include technologies 
that improve air conditioning efficiency and reduce air conditioning 
system leakage, and any ``off-cycle'' technologies that potentially 
provide benefits outside the operation represented by the Federal Test 
Procedure and the Highway Fuel Economy Test.
    (B) An evaluation of comparable models from other manufacturers, 
including CO2 results and air conditioning credits generated 
by the models. Comparable vehicles should be similar, but not 
necessarily identical, in the following respects: vehicle type, 
horsepower, mass, power-to-weight ratio, footprint, retail price, and 
any other relevant factors. For manufacturers requesting alternative 
standards starting with the 2017 model year, the analysis of comparable 
vehicles should include vehicles from the 2012 and 2013 model years, 
otherwise the analysis should at a minimum include vehicles from the 
most recent two model years.
    (C) A discussion of the CO2-reducing technologies 
employed on vehicles offered outside of the U.S. market but not 
available in the U.S., including a discussion as to why those vehicles 
and/or technologies are not being used to achieve CO2 
reductions for vehicles in the U.S. market.
    (D) An evaluation, at a minimum, of the technologies projected by 
the Environmental Protection Agency in a final rulemaking as those 
technologies likely to be used to meet greenhouse gas emission 
standards and the extent to which those technologies are employed or 
projected to be employed by the manufacturer. For any technology that 
is not projected to be fully employed, explain why this is the case.
    (iii) Alternative fleet average CO2 standards. (A) The 
most stringent CO2 level estimated to be feasible for each 
model, in each model year, and the technological basis for this 
estimate.
    (B) For each model year, a projection of the lowest feasible sales-
weighted fleet average CO2 value, separately for passenger 
automobiles and light trucks, and an explanation demonstrating that 
these projections are reasonable.
    (C) A copy of any application, data, and related information 
submitted to NHTSA in support of a request for alternative Corporate 
Average Fuel Economy standards filed under 49 CFR part 525.
    (iv) Information supporting eligibility. (A) U.S. sales for the 
three previous model years and projected sales for the model years for 
which the manufacturer is seeking alternative standards.
    (B) Information regarding ownership relationships with other 
manufacturers, including details regarding the application of the 
provisions of Sec.  86.1838-01(b)(3) regarding the aggregation of sales 
of related companies.
    (5) Alternative standards. Alternative standards apply as follows:
    (i) Where EPA has exercised its regulatory authority to 
administratively specify alternative standards, those alternative 
standards approved for model year 2021 continue to apply through model 
year 2026. Starting in model year 2027, manufacturers must certify to 
the standards in paragraph (h)

[[Page 28171]]

of this section on a delayed schedule, as follows:

------------------------------------------------------------------------
                                                   Manufacturers  must
                                                      certify to the
              In model year . . .                 standards that  would
                                                 otherwise  apply in . .
                                                            .
------------------------------------------------------------------------
(A) 2027.......................................                     2025
(B) 2028.......................................                     2025
(C) 2029.......................................                     2027
(D) 2030.......................................                     2028
(E) 2031.......................................                     2030
------------------------------------------------------------------------

    (ii) EPA may approve a request from other manufacturers for 
alternative fleet average CO2 standards under this paragraph 
(g). The alternative standards for those manufacturers will apply by 
model year as specified in paragraph (g)(5)(i) of this section.
    (6) Restrictions on credit trading. Manufacturers subject to 
alternative standards approved by the Administrator under this 
paragraph (g) may not trade credits to another manufacturer. Transfers 
between car and truck fleets within the manufacturer are allowed, and 
the carry-forward provisions for credits and deficits apply. 
Manufacturers may generate credits in a given model year for trading to 
another manufacturer by certifying to the standards in paragraph (h) of 
this section for the current model year across the manufacturer's full 
product line. A manufacturer certifying to the standards in paragraph 
(h) of this section will no longer be eligible to certify to the 
alternative standards under this paragraph (g) in later model years.
    (7) Starting in model year 2032, all manufacturers must certify to 
the standards in paragraph (c) of this section.
    (h) Historical and interim standards. The following CO2 
target values apply for model year 2031 and earlier vehicles:
    (1) CO2 target values apply as follows for passenger 
automobiles:

                             Table 2 to Paragraph (h)(1)--Historical and Interim CO2 Target Values for Passenger Automobiles
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Footprint cutpoints (ft\2\)                           CO2 target value (g/mile)
                                               ---------------------------------------------------------------------------------------------------------
                  Model year                                                       Below low                                                Above high
                                                      Low            High          cutpoint               Between cutpoints \a\              cutpoint
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012..........................................              41              56           244.0  4.72 x f + 50.5.........................           315.0
2013..........................................              41              56           237.0  4.72 x f + 43.3.........................           307.0
2014..........................................              41              56           228.0  4.72 x f + 34.8.........................           299.0
2015..........................................              41              56           217.0  4.72 x f + 23.4.........................           288.0
2016..........................................              41              56           206.0  4.72 x f + 12.7.........................           277.0
2017..........................................              41              56           195.0  4.53 x f + 8.9..........................           263.0
2018..........................................              41              56           185.0  4.35 x f + 6.5..........................           250.0
2019..........................................              41              56           175.0  4.17 x f + 4.2..........................           238.0
2020..........................................              41              56           166.0  4.01 x f + 1.9..........................           226.0
2021..........................................              41              56           161.8  3.94 x f + 0.2..........................           220.9
2022..........................................              41              56           159.0  3.88 x f--0.1...........................           217.3
2023..........................................              41              56           145.6  3.56 x f--0.4...........................           199.1
2024..........................................              41              56           138.6  3.39 x f--0.4...........................           189.5
2025..........................................              41              56           130.5  3.26 x f--3.2...........................           179.4
2026..........................................              41              56           114.3  3.11 x f--13.1..........................           160.9
2027..........................................              42              56           135.9  0.66 x f + 108.0........................           145.2
2028..........................................              43              56           123.8  0.60 x f + 97.9.........................           131.6
2029..........................................              44              56           110.6  0.54 x f + 87.0.........................           117.0
2030..........................................              45              56            98.2  0.47 x f + 76.9.........................           103.4
2031..........................................              45              56            85.3  0.41 x f + 66.8.........................            89.8
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Calculate the CO2 target value for vehicles between the footprint cutpoints as shown, using vehicle footprint, f, and rounding the result to the
  nearest 0.1 g/mile.

    (2) CO2 target values apply as follows for light trucks:

                                 Table 3 to paragraph (h)(2)--Historical and Interim CO2 Target Values for Light Trucks
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                  Footprint cutpoints (ft\2\)                           CO2 target value (g/mile)
                                               ---------------------------------------------------------------------------------------------------------
                  Model year                                                       Below low                                                Above high
                                                      Low            High          cutpoint               Between cutpoints \a\              cutpoint
--------------------------------------------------------------------------------------------------------------------------------------------------------
2012..........................................              41            66.0           294.0  4.04 x f + 128.6........................           395.0
2013..........................................              41            66.0           284.0  4.04 x f + 118.7........................           385.0
2014..........................................              41            66.0           275.0  4.04 x f + 109.4........................           376.0
2015..........................................              41            66.0           261.0  4.04 x f + 95.1.........................           362.0
2016..........................................              41            66.0           247.0  4.04 x f + 81.1.........................           348.0
2017..........................................              41            50.7           238.0  4.87 x f + 38.3.........................              --
2017..........................................            50.8            66.0              --  4.04 x f + 80.5.........................           347.0
2018..........................................              41            60.2           227.0  4.76 x f + 31.6.........................              --
2018..........................................            60.3            66.0  ..............  4.04 x f + 75.0.........................           342.0
2019..........................................              41            66.4           220.0  4.68 x f + 27.7.........................           339.0
2020..........................................              41            68.3           212.0  4.57 x f + 24.6.........................           337.0
2021..........................................              41            68.3           206.5  4.51 x f + 21.5.........................           329.4
2022..........................................              41            68.3           203.0  4.44 x f + 20.6.........................           324.1

[[Page 28172]]

 
2023..........................................              41            74.0           181.1  3.97 x f + 18.4.........................           312.1
2024..........................................              41            74.0           172.1  3.77 x f + 17.4.........................           296.5
2025..........................................              41            74.0           159.3  3.58 x f + 12.5.........................           277.4
2026..........................................              41            74.0           141.8  3.41 x f + 1.9..........................           254.4
2027..........................................              42            73.0           150.3  2.89 x f + 28.9.........................           239.9
2028..........................................              43            72.0           136.8  2.58 x f + 25.8.........................           211.7
2029..........................................              44            71.0           122.7  2.27 x f + 22.7.........................           184.0
2030..........................................              45            70.0           108.8  1.98 x f + 19.8.........................           158.3
2031..........................................              45            70.0            91.8  1.67 x f + 16.7.........................           133.5
--------------------------------------------------------------------------------------------------------------------------------------------------------
\a\ Calculate the CO2 target value for vehicles between the footprint cutpoints as shown, using vehicle footprint, f, and rounding the result to the
  nearest 0.1 g/mile.


0
52. Amend Sec.  86.1819-14 by:
0
a. Revising the section heading, the introductory text, and paragraphs 
(a)(2), (d)(10), (d)(13), (d)(15), (d)(17), and (h).
0
b. Revising and republishing paragraphs (j) and (k).
    The revisions and republications read as follows:


Sec.  86.1819-14  Greenhouse gas emission standards for medium-duty and 
heavy-duty vehicles.

    This section describes exhaust emission standards for 
CO2, CH4, and N2O for medium-duty 
vehicles. The standards of this section apply for model year 2014 and 
later vehicles that are chassis-certified with respect to criteria 
pollutants under this subpart S. Additional medium-duty and heavy-duty 
vehicles may be subject to the standards of this section as specified 
in paragraph (j) of this section. Any medium-duty or heavy-duty 
vehicles not subject to standards under this section are instead 
subject to greenhouse gas standards under 40 CFR part 1037, and engines 
installed in these vehicles are subject to standards under 40 CFR part 
1036. If you are not the engine manufacturer, you must notify the 
engine manufacturer that its engines are subject to 40 CFR part 1036 if 
you intend to use their engines in vehicles that are not subject to 
standards under this section. Vehicles produced by small businesses may 
be exempted from the standards of this section as described in 
paragraph (k)(5) of this section.
    (a) * * *
    (2) CO2 target values apply as described in this 
paragraph (a)(2) for model year 2032 and later. See paragraph (k)(4) of 
this section for model year 2031 and earlier:
    (i) For vehicles with work factor at or below 5,500 pounds, use the 
appropriate work factor in the following equation to calculate a target 
value for each vehicle subconfiguration (or group of subconfigurations 
as allowed under paragraph (a)(4) of this section), rounding to the 
nearest whole g/mile:

CO2 Target = 0.0221 x WF + 170

    (ii) For vehicles with work factor above 5,500 pounds, the 
CO2 target value is 292 g/mile.
* * * * *
    (d) * * *
    (10) For dual-fuel, multi-fuel, and flexible-fuel vehicles, perform 
exhaust testing on each fuel type (for example, gasoline and E85).
    (i) Use either the conventional-fueled CO2 emission rate 
or a weighted average of your emission results as specified in 40 CFR 
600.510-12(k) for light-duty trucks.
    (ii) If you certify to an alternate standard for N2O or 
CH4 emissions, you may not exceed the alternate standard 
when tested on either fuel.
* * * * *
    (13) This paragraph (d)(13) applies for CO2 reductions 
resulting from technologies that were not in common use before 2010 
that are not reflected in the specified test procedures. While you are 
not required to prove that such technologies were not in common use 
with heavy-duty vehicles before model year 2010, we will not approve 
your request if we determine they do not qualify. These may be 
described as off-cycle or innovative technologies. We may allow you to 
generate emission credits consistent with the provisions of Sec.  
86.1869-12(c) and (d), but only through model year 2026. The 5-cycle 
methodology is not presumed to be preferred over alternative 
methodologies described in Sec.  86.1869-12(d).
* * * * *
    (15) You must submit a final report within 90 days after the end of 
the model year. Unless we specify otherwise, include applicable 
information identified in Sec.  86.1865-12(l), 40 CFR 600.512, and 49 
CFR 535.8(e). The final report must include at least the following 
information:
    (i) Model year.
    (ii) Applicable fleet average CO2 standard.
    (iii) Calculated fleet average CO2 value and all the 
values required to calculate the CO2 value.
    (iv) Number of credits or debits incurred and all values required 
to calculate those values.
    (v) Resulting balance of credits or debits.
    (vi) N2O emissions.
    (vii) CH4 emissions.
    (viii) Total and percent leakage rates under paragraph (h) of this 
section (through model year 2026 only).
* * * * *
    (17) You may calculate emission rates for weight increments less 
than the 500-pound increment specified for test weight. This does not 
change the applicable test weights.
    (i) Use the ADC equation in paragraph (g) of this section to adjust 
your emission rates for vehicles in increments of 50, 100, or 250 
pounds instead of the 500 pound test-weight increments. Adjust 
emissions to the midpoint of each increment. This is the equivalent 
emission weight. For example, vehicles with a test weight basis of 
11,751 to 12,250 pounds (which have an equivalent test weight of 12,000 
pounds) could be regrouped into 100-pound increments as follows:

[[Page 28173]]



    Table 1 to paragraph (d)(17)(i)--Example of Test-Weight Groupings
------------------------------------------------------------------------
                                           Equivalent       Equivalent
          Test weight basis             emission weight     test weight
------------------------------------------------------------------------
11,751-11,850........................             11,800          12,000
11,851-11,950........................             11,900          12,000
11,951-12,050........................             12,000          12,000
12,051-12,150........................             12,100          12,000
12,151-12,250........................             12,200          12,000
------------------------------------------------------------------------

    (ii) You must use the same increment for all equivalent test weight 
classes across your whole product line in a given model year. You must 
also specify curb weight for calculating the work factor in a way that 
is consistent with your approach for determining test weight for 
calculating ADCs under this paragraph (d)(17).
* * * * *
    (h) Air conditioning leakage. Loss of refrigerant from your air 
conditioning systems may not exceed a total leakage rate of 11.0 grams 
per year or a percent leakage rate of 1.50 percent per year, whichever 
is greater. This applies for all refrigerants. Calculate the annual 
rate of refrigerant leakage according to the procedures specified in 
SAE J2727 SEP2023 (incorporated by reference, see Sec.  86.1) or as 
specified in Sec.  86.1867-12(a). Calculate the percent leakage rate 
as: [total leakage rate (g/yr)] / [total refrigerant capacity (g)] x 
100. Round your percent leakage rate to the nearest one-hundredth of a 
percent. For purpose of this requirement, ``refrigerant capacity'' is 
the total mass of refrigerant recommended by the vehicle manufacturer 
as representing a full charge. Where full charge is specified as a 
pressure, use good engineering judgment to convert the pressure and 
system volume to a mass.
* * * * *
    (j) GHG certification of additional vehicles under this subpart. 
You may certify certain complete or cab-complete vehicles to the GHG 
standards of this section. Certain high-GCWR vehicles may also be 
subject to the GHG standards of this section. All vehicles optionally 
certified under this paragraph (j) are deemed to be subject to the GHG 
standards of this section. Note that for vehicles above 14,000 pounds 
GVWR and at or below 26,000 pounds GVWR, GHG certification under this 
paragraph (j) does not affect how you may or may not certify with 
respect to criteria pollutants.
    (1) For GHG compliance, you may certify any complete or cab-
complete spark-ignition vehicles above 14,000 pounds GVWR and at or 
below 26,000 pounds GVWR to the GHG standards of this section even 
though this section otherwise specifies that you may certify vehicles 
to the GHG standards of this section only if they are chassis-certified 
for criteria pollutants. This paragraph (j)(1) also applies for 
vehicles at or below 14,000 pounds GVWR with GCWR above 22,000 pounds 
with installed engines that have been certified under 40 CFR part 1036 
as described in 40 CFR 1036.635.
    (2) You may apply the provisions of this section to cab-complete 
vehicles based on a complete sister vehicle. In unusual circumstances, 
you may ask us to apply these provisions to Class 2b or Class 3 
incomplete vehicles that do not meet the definition of cab-complete.
    (i) Except as specified in paragraph (j)(3) of this section, for 
purposes of this section, a complete sister vehicle is a complete 
vehicle of the same vehicle configuration as the cab-complete vehicle. 
You may not apply the provisions of this paragraph (j) to any vehicle 
configuration that has a four-wheel rear axle if the complete sister 
vehicle has a two-wheel rear axle.
    (ii) Calculate the target value for fleet average CO2 
emissions under paragraph (a) or (k)(4) of this section based on the 
work factor value that applies for the complete sister vehicle.
    (iii) Test these cab-complete vehicles using the same equivalent 
test weight and other dynamometer settings that apply for the complete 
vehicle from which you used the work factor value (the complete sister 
vehicle). For GHG certification, you may submit the test data from that 
complete sister vehicle instead of performing the test on the cab-
complete vehicle.
    (iv) You are not required to produce the complete sister vehicle 
for sale to use the provisions of this paragraph (j)(2). This means the 
complete sister vehicle may be a carryover vehicle from a prior model 
year or a vehicle created solely for the purpose of testing.
    (3) For GHG purposes, if a cab-complete vehicle is not of the same 
vehicle configuration as a complete sister vehicle due only to certain 
factors unrelated to coastdown performance, you may use the road-load 
coefficients from the complete sister vehicle for certification testing 
of the cab-complete vehicle, but you may not use emission data from the 
complete sister vehicle for certifying the cab-complete vehicle.
    (4) The GHG standards of this section and related provisions apply 
for vehicles above 22,000 pounds GCWR as described in 40 CFR 1036.635.
    (k) Interim provisions. The following provisions apply instead of 
other provisions in this subpart:
    (1) Incentives for early introduction. Manufacturers may 
voluntarily certify in model year 2013 (or earlier model years for 
electric vehicles) to the greenhouse gas standards that apply starting 
in model year 2014 as specified in 40 CFR 1037.150(a).
    (2) Early credits. To generate early credits under this paragraph 
(k)(2) for any vehicles other than electric vehicles, you must certify 
your entire U.S.-directed fleet to these standards. If you calculate a 
separate fleet average for advanced-technology vehicles under paragraph 
(k)(7) of this section, you must certify your entire U.S.-directed 
production volume of both advanced and conventional vehicles within the 
fleet. If some test groups are certified after the start of the model 
year, you may generate credits only for production that occurs after 
all test groups are certified. For example, if you produce three test 
groups in an averaging set and you receive your certificates for those 
test groups on January 4, 2013, March 15, 2013, and April 24, 2013, you 
may not generate credits for model year 2013 for vehicles from any of 
the test groups produced before April 24, 2013. Calculate credits 
relative to the standard that would apply in model year 2014 using the 
applicable equations in this subpart and your model year 2013 U.S.-
directed production volumes. These credits may be used to show 
compliance with the standards of this subpart for 2014 and later model 
years. We recommend that you notify us of your intent to use this 
provision before submitting your applications.
    (3) Compliance date. Compliance with the standards of this section 
was optional before January 1, 2014 as specified in 40 CFR 1037.150(g).

[[Page 28174]]

    (4) Historical and interim standards. The following CO2 
target values apply for model year 2031 and earlier vehicles:
    (i) CO2 target values apply as follows for model years 
2014 through 2027, except as specified in paragraph (k)(4)(ii) of this 
section:

 Table 2 to paragraph (k)(4)(i)--CO2 Target Values for Model years 2014
                              Through 2027
------------------------------------------------------------------------
                                          CO2 target (g/mile) \a\
                                 ---------------------------------------
           Model year                                    Compression-
                                    Spark-ignition         ignition
------------------------------------------------------------------------
2014............................  0.0482 x WF + 371.  0.0478 x WF + 368.
2015............................  0.0479 x WF + 369.  0.0474 x WF + 366.
2016............................  0.0469 x WF + 362.  0.0460 x WF + 354.
2017............................  0.0460 x WF + 354.  0.0445 x WF + 343.
2018-2020.......................  0.0440 x WF + 339.  0.0416 x WF + 320.
2021............................  0.0429 x WF + 331.  0.0406 x WF + 312.
2022............................  0.0418 x WF + 322.  0.0395 x WF + 304.
2023............................  0.0408 x WF + 314.  0.0386 x WF + 297.
2024............................  0.0398 x WF + 306.  0.0376 x WF + 289.
2025............................  0.0388 x WF + 299.  0.0367 x WF + 282.
2026............................  0.0378 x WF + 291.  0.0357 x WF + 275.
2027............................  0.0348 x WF + 268.  0.0348 x WF + 268.
------------------------------------------------------------------------
\a\ Electric vehicles are subject to the compression-ignition CO2 target
  values.

    (ii) The following optional alternative CO2 target 
values apply for model years 2014 through 2020:

Table 3 to paragraph (k)(4)(ii)--Alternative CO2 Target Values for Model
                         Years 2014 Through 2020
------------------------------------------------------------------------
                                            CO2 target (g/mile)
                                 ---------------------------------------
           Model year                                    Compression-
                                    Spark-ignition         ignition.
------------------------------------------------------------------------
2014............................  0.0482 x WF + 371.  0.0478 x WF + 368.
2015............................  0.0479 x WF + 369.  0.0474 x WF + 366.
2016-2018.......................  0.0456 x WF + 352.  0.0440 x WF + 339.
2019-2020.......................  0.0440 x WF + 339.  0.0416 x WF + 320.
------------------------------------------------------------------------

    (iii) CO2 target values apply as follows for all engine 
types for model years 2028 through 2031:

              Table 4 to paragraph (k)(4)(iii)--CO2 Target Values for Model Years 2028 Through 2031
----------------------------------------------------------------------------------------------------------------
                                           Work factor                  CO2 target value (g/mile)
               Model year                   cutpoint    --------------------------------------------------------
                                            (pounds)                 Below cutpoint              Above cutpoint
----------------------------------------------------------------------------------------------------------------
2028...................................           8,000  0.0339 x WF + 270....................               541
2029...................................           6,800  0.0310 x WF + 246....................               457
2030...................................           5,500  0.0280 x WF + 220....................               374
2031...................................           5,500  0.0251 x WF + 195....................               333
----------------------------------------------------------------------------------------------------------------

    (5) Provisions for small manufacturers. Standards apply on a 
delayed schedule for manufacturers meeting the small business criteria 
specified in 13 CFR 121.201 (NAICS code 336111); the employee and 
revenue limits apply to the total number employees and total revenue 
together for affiliated companies. Qualifying small manufacturers are 
not subject to the greenhouse gas standards of this section for 
vehicles with a date of manufacture before January 1, 2022, as 
specified in 40 CFR 1037.150(c). In addition, small manufacturers 
producing vehicles that run on any fuel other than gasoline, E85, or 
diesel fuel may delay complying with every later standard under this 
part by one model year through model year 2026. The following 
provisions apply starting with model year 2027:
    (i) Qualifying small manufacturers remain subject to the model year 
2026 greenhouse gas standards; however, small manufacturers may trade 
emission credits generated in a given model year only by certifying to 
standards that apply for that model year.
    (ii) Small manufacturers may produce no more than 500 exempt 
vehicles in any model year under paragraph (k)(5)(i) of this section. 
This limit applies for vehicles with engines, including plug-in hybrid 
electric vehicles; this limit does not apply for electric vehicles. 
Vehicles that are not exempt under this paragraph (k)(5) must meet 
emission standards as specified in this section.

[[Page 28175]]

    (6) Alternate N2O standards. Manufacturers may show compliance with 
the N2O standards using an engineering analysis. This 
allowance also applies for model year 2015 and later test groups 
carried over from model 2014 consistent with the provisions of Sec.  
86.1839. You may not certify to an N2O FEL different than 
the standard without measuring N2O emissions.
    (7) Advanced-technology credits. Provisions for advanced-technology 
credits apply as described in 40 CFR 1037.615. If you generate credits 
from Phase 1 vehicles certified with advanced technology (in model 
years 2014 through 2020), you may multiply these credits by 1.50. If 
you generate credits from model year 2021 through 2026 vehicles 
certified with advanced technology, you may multiply these credits by 
3.5 for plug-in hybrid electric vehicles, 4.5 for battery electric 
vehicles, and 5.5 for fuel cell vehicles. Advanced-technology credits 
from Phase 1 vehicles may be used to show compliance with any standards 
of this part or 40 CFR part 1036 or part 1037, subject to the 
restrictions in 40 CFR 1037.740. Similarly, you may use up to 60,000 Mg 
per year of advanced-technology credits generated under 40 CFR 1036.615 
or 1037.615 (from Phase 1 vehicles) to demonstrate compliance with the 
CO2 standards in this section. Include vehicles generating 
credits in separate fleet average calculations (and exclude them from 
your conventional fleet average calculation). You must first apply 
these advanced-technology vehicle credits to any deficits for other 
vehicles in the averaging set before applying them to other averaging 
sets. The provisions of this paragraph (k)(7) do not apply for credits 
generated from model year 2027 and later vehicles.
    (8) Loose engine sales. This paragraph (k)(8) applies for model 
year 2023 and earlier spark-ignition engines with identical hardware 
compared with engines used in vehicles certified to the standards of 
this section, where you sell such engines as loose engines or as 
engines installed in incomplete vehicles that are not cab-complete 
vehicles. You may include such engines in a test group certified to the 
standards of this section, subject to the following provisions:
    (i) Engines certified under this paragraph (k)(8) are deemed to be 
certified to the standards of 40 CFR 1036.108 as specified in 40 CFR 
1036.150(j).
    (ii) For 2020 and earlier model years, the maximum allowable U.S.-
directed production volume of engines you sell under this paragraph 
(k)(8) in any given model year is ten percent of the total U.S-directed 
production volume of engines of that design that you produce for heavy-
duty applications for that model year, including engines you produce 
for complete vehicles, cab-complete vehicles, and other incomplete 
vehicles. The total number of engines you may certify under this 
paragraph (k)(8), of all engine designs, may not exceed 15,000 in any 
model year. Engines produced in excess of either of these limits are 
not covered by your certificate. For example, if you produce 80,000 
complete model year 2017 Class 2b pickup trucks with a certain engine 
and 10,000 incomplete model year 2017 Class 3 vehicles with that same 
engine, and you do not apply the provisions of this paragraph (k)(8) to 
any other engine designs, you may produce up to 10,000 engines of that 
design for sale as loose engines under this paragraph (k)(8). If you 
produced 11,000 engines of that design for sale as loose engines, the 
last 1,000 of them that you produced in that model year 2017 would be 
considered uncertified.
    (iii) For model years 2021 through 2023, the U.S.-directed 
production volume of engines you sell under this paragraph (k)(8) in 
any given model year may not exceed 10,000 units.
    (iv) This paragraph (k)(8) does not apply for engines certified to 
the standards of 40 CFR 1036.108.
    (v) Label the engines as specified in 40 CFR 1036.135 including the 
following compliance statement: ``THIS ENGINE WAS CERTIFIED TO THE 
ALTERNATE GREENHOUSE GAS EMISSION STANDARDS OF 40 CFR 1036.150(j).'' 
List the test group name instead of an engine family name.
    (vi) Vehicles using engines certified under this paragraph (k)(8) 
are subject to the emission standards of 40 CFR 1037.105.
    (vii) For certification purposes, your engines are deemed to have a 
CO2 target value and test result equal to the CO2 
target value and test result for the complete vehicle in the applicable 
test group with the highest equivalent test weight, except as specified 
in paragraph (k)(8)(vii)(B) of this section. Use these values to 
calculate your target value, fleet average emission rate, and in-use 
emission standard. Where there are multiple complete vehicles with the 
same highest equivalent test weight, select the CO2 target 
value and test result as follows:
    (A) If one or more of the CO2 test results exceed the 
applicable target value, use the CO2 target value and test 
result of the vehicle that exceeds its target value by the greatest 
amount.
    (B) If none of the CO2 test results exceed the 
applicable target value, select the highest target value and set the 
test result equal to it. This means that you may not generate emission 
credits from vehicles certified under this paragraph (k)(8).
    (viii) Production and in-use CO2 standards apply as 
described in paragraph (b) of this section.
    (ix) N2O and CH4 standards apply as described 
in paragraph (c) of this section.
    (x) State in your applications for certification that your test 
group and engine family will include engines certified under this 
paragraph (k)(8). This applies for your greenhouse gas vehicle test 
group and your criteria pollutant engine family. List in each 
application the name of the corresponding test group/engine family.
    (9) Credit adjustment for useful life. For credits that you 
calculate based on a useful life of 120,000 miles, multiply any banked 
credits that you carry forward for use in model year 2021 and later by 
1.25.
    (10) CO2 rounding. For model year 2014 and earlier vehicles, you 
may round measured and calculated CO2 emission levels to the 
nearest 0.1 g/mile, instead of the nearest whole g/mile as specified in 
paragraphs (a), (b), and (g) of this section.

0
53. Amend Sec.  86.1820-01 by revising paragraphs (b) introductory text 
and (b)(7) and adding paragraph (b)(8) to read as follows:


Sec.  86.1820-01  Durability group determination.

* * * * *
    (b) To be included in the same durability group, vehicles must be 
identical in all the respects listed in paragraphs (b)(1) through (7) 
of this section and meet one of the criteria specified in paragraph 
(b)(8) of this section:
* * * * *
    (7) Type of particulate filter (none, catalyzed, noncatalyzed).
    (8) The manufacturer must choose one of the following two criteria:
    (i) Grouping statistic:
    (A) Vehicles are grouped based upon the value of the grouping 
statistic determined using the following equation:
[GRAPHIC] [TIFF OMITTED] TR18AP24.045

Where:

GS = Grouping Statistic used to evaluate the range of precious metal 
loading rates and relative sizing of the catalysts compared to the 
engine displacement that are

[[Page 28176]]

allowable within a durability group. The grouping statistic shall be 
rounded to a tenth of a gram/liter.
Cat Vol = Total volume of the catalyst(s) in liters. Include the 
volume of any catalyzed particulate filters.
Disp = Displacement of the engine in liters.
Loading rate = The mass of total precious metal(s) in the catalyst 
(or the total mass of all precious metal(s) of all the catalysts if 
the vehicle is equipped with multiple catalysts) in grams divided by 
the total volume of the catalyst(s) in liters. Include the mass of 
precious metals in any catalyzed particulate filters.

    (B) Engine-emission control system combinations which have a 
grouping statistic which is either less than 25 percent of the largest 
grouping statistic value, or less than 0.2 g/liter (whichever allows 
the greater coverage of the durability group) shall be grouped into the 
same durability group.
    (ii) The manufacturer may elect to use another procedure which 
results in at least as many durability groups as required using 
criteria in paragraph (b)(8)(i) of this section providing that only 
vehicles with similar emission deterioration or durability are combined 
into a single durability group.
* * * * *

0
54. Amend Sec.  86.1821-01 by revising paragraph (b)(10) to read as 
follows:


Sec.  86.1821-01  Evaporative/refueling family determination.

* * * * *
    (b) * * *
    (10) Evaporative emission standard or family emission limit (FEL) 
for testing at low-altitude conditions.
* * * * *


Sec.  86.1823-01  [Removed]

0
55. Remove Sec.  86.1823-01.

0
56. Amend Sec.  86.1823-08 by revising and republishing paragraph (f) 
and revising paragraph (n) to read as follows:


Sec.  86.1823-08  Durability demonstration procedures for exhaust 
emissions.

* * * * *
    (f) Use of deterioration program to determine compliance with the 
standard. A manufacturer may select from two methods for using the 
results of the deterioration program to determine compliance with the 
applicable emission standards. Either a deterioration factor (DF) is 
calculated and applied to the emission data vehicle (EDV) emission 
results or aged components are installed on the EDV prior to emission 
testing.
    (1) Deterioration factors. (i) Deterioration factors are calculated 
using all FTP emission test data generated during the durability 
testing program except as noted:
    (A) Multiple tests at a given mileage point are averaged together 
unless the same number of tests are conducted at each mileage point.
    (B) Before and after maintenance test results are averaged 
together.
    (C) Zero-mile test results are excluded from the calculation.
    (D) Total hydrocarbon (THC) test points beyond the 50,000-mile 
(useful life) test point are excluded from the intermediate useful life 
deterioration factor calculation.
    (E) A procedure may be employed to identify and remove from the DF 
calculation those test results determined to be statistical outliers 
providing that the outlier procedure is consistently applied to all 
vehicles and data points and is approved in advance by the 
Administrator.
    (ii) The deterioration factor must be based on a linear regression, 
or another regression technique approved in advance by the 
Administrator. The deterioration must be a multiplicative or additive 
factor. Separate factors will be calculated for each regulated emission 
constituent and for the full and intermediate useful life periods as 
applicable. Separate DF's are calculated for each durability group 
except as provided in Sec.  86.1839.
    (A) A multiplicative DF will be calculated by taking the ratio of 
the full or intermediate useful life mileage level, as appropriate 
(rounded to four decimal places), divided by the stabilized mileage 
(reference Sec.  86.1831-01(c), e.g., 4000-mile) level (rounded to four 
decimal places) from the regression analysis. The result must be 
rounded to three-decimal places of accuracy. The rounding required in 
this paragraph must be conducted in accordance with Sec.  86.1837. 
Calculated DF values of less than one must be changed to one for the 
purposes of this paragraph.
    (B) An additive DF will be calculated to be the difference between 
the full or intermediate useful life mileage level (as appropriate) 
minus the stabilized mileage (reference Sec.  86.1831-01(c), e.g., 
4000-mile) level from the regression analysis. The full useful life 
regressed emission value, the stabilized mileage regressed emission 
value, and the DF result must be rounded to the same precision and 
using the same procedures as the raw emission results according to the 
provisions of Sec.  86.1837-01. Calculated DF values of less than zero 
must be changed to zero for the purposes of this paragraph.
    (iii) For Tier 3 vehicles, the DF calculated by these procedures 
will be used for determining full and intermediate useful life 
compliance with FTP exhaust emission standards, SFTP exhaust emission 
standards, and cold CO emission standards. At the manufacturer's option 
and using procedures approved by the Administrator, a separate DF may 
be calculated exclusively using cold CO test data to determine 
compliance with cold CO emission standards. Also, at the manufacturer's 
option and using procedures approved by the Administrator, a separate 
DF may be calculated exclusively using US06 and/or air conditioning 
(SC03) test data to determine compliance with the SFTP emission 
standards.
    (iv) For Tier 4 vehicles, the DF calculated by these procedures may 
be used for determining compliance with all the standards identified in 
Sec.  86.1811-27. At the manufacturer's option and using procedures 
approved by the Administrator, manufacturers may calculate a separate 
DF for the following standards and driving schedules:
    (A) Testing to determine compliance with cold temperature emission 
standards.
    (B) US06 testing.
    (C) SC03 testing.
    (D) HFET.
    (E) Mid-temperature intermediate soak testing.
    (F) Early driveaway testing.
    (G) High-power PHEV engine starts.
    (2) Installation of aged components on emission data vehicles. For 
full and intermediate useful life compliance determination, the 
manufacturer may elect to install aged components on an EDV prior to 
emission testing rather than applying a deterioration factor. Different 
sets of components may be aged for full and intermediate useful life 
periods. Components must be aged using an approved durability procedure 
that complies with paragraph (b) of this section. The list of 
components to be aged and subsequently installed on the EDV must 
selected using good engineering judgment.
* * * * *
    (n) Emission component durability. The manufacturer shall use good 
engineering judgment to determine that all emission-related components 
are designed to operate properly for the full useful life of the 
vehicles in actual use.


Sec. Sec.  86.1824-01 and 86.1824-07  [Removed]

0
57. Remove Sec. Sec.  86.1824-01 and 86.1824-07.


0
58. Amend Sec.  86.1824-08 by revising paragraphs (c)(1) and (k) to 
read as follows:

[[Page 28177]]

Sec.  86.1824-08  Durability demonstration procedures for evaporative 
emissions.

* * * * *
    (c) * * *
    (1) Mileage accumulation must be conducted using the SRC or any 
road cycle approved under the provisions of Sec.  86.1823-08(e)(1).
* * * * *
    (k) Emission component durability. The manufacturer shall use good 
engineering judgment to determine that all emission-related components 
are designed to operate properly for the full useful life of the 
vehicles in actual use.


Sec.  86.1825-01  [Removed]

0
59. Remove Sec.  86.1825-01.


0
60. Amend Sec.  86.1825-08 by revising the introductory text and 
paragraphs (c)(1) and (h) to read as follows:


Sec.  86.1825-08  Durability demonstration procedures for refueling 
emissions.

    The durability-related requirements of this section apply for 
vehicles subject to refueling standards under this subpart. Refer to 
the provisions of Sec. Sec.  86.1801 and 86.1813 to determine 
applicability of the refueling standards to different classes of 
vehicles. Diesel-fueled vehicles may be exempt from the requirements of 
this section under Sec.  86.1829.
* * * * *
    (c) * * *
    (1) Mileage accumulation must be conducted using the SRC or a road 
cycle approved under the provisions of Sec.  86.1823-08(e)(1).
* * * * *
    (h) Emission component durability. The manufacturer shall use good 
engineering judgment to determine that all emission-related components 
are designed to operate properly for the full useful life of the 
vehicles in actual use.
* * * * *

0
61. Amend Sec.  86.1827-01 by revising paragraph (a)(5) to read as 
follows:


Sec.  86.1827-01  Test group determination.

* * * * *
    (a) * * *
    (5) Subject to the same emission standards (except for 
CO2), or FEL in the case of cold temperature NMHC or 
NMOG+NOX standards, except that a manufacturer may request 
to group vehicles into the same test group as vehicles subject to more 
stringent standards, so long as all the vehicles within the test group 
are certified to the most stringent standards applicable to any vehicle 
within that test group. For example, manufacturers may include medium-
duty vehicles at or below 22,000 pounds GCWR in the same test group 
with medium-duty vehicles above 22,000 pounds GCWR, but all vehicles 
included in the test group are then subject to the off-cycle emission 
standards and testing requirements described in Sec.  86.1811-27(e). 
Light-duty trucks and light-duty vehicles may be included in the same 
test group if all vehicles in the test group are subject to the same 
criteria exhaust emission standards.
* * * * *

0
62. Revise and republish Sec.  86.1828-01 to read as follows:


Sec.  86.1828-01  Emission data vehicle selection.

    (a) Criteria exhaust testing. Within each test group, the vehicle 
configuration shall be selected which is expected to be worst-case for 
exhaust emission compliance on candidate in-use vehicles, considering 
all criteria exhaust emission constituents, all exhaust test 
procedures, and the potential impact of air conditioning on test 
results. For vehicles meeting Tier 4 standards, include consideration 
of cold temperature testing. See paragraph (c) of this section for cold 
temperature testing with vehicles not yet subject to Tier 4 standards. 
The selected vehicle will include an air conditioning engine code 
unless the worst-case vehicle configuration selected is not available 
with air conditioning. This vehicle configuration will be used as the 
EDV calibration.
    (b) Evaporative/Refueling testing. Vehicles of each evaporative/
refueling family will be divided into evaporative/refueling emission 
control systems.
    (1) The vehicle configuration expected to exhibit the highest 
evaporative and/or refueling emission on candidate in-use vehicles 
shall be selected for each evaporative/refueling family and evaporative 
refueling emission system combination from among the corresponding 
vehicles selected for testing under paragraph (a) of this section. 
Separate vehicles may be selected to be tested for evaporative and 
refueling testing.
    (2) Each test group must be represented by both evaporative and 
refueling testing (provided that the refueling standards are 
applicable) before it may be certified. That required testing may have 
been conducted on a vehicle in another test group provided the tested 
vehicle is a member of the same evaporative/refueling family and 
evaporative/refueling emission system combination and it was selected 
for testing in accordance with the provisions of paragraph (b)(1) of 
this section.
    (3) For evaporative/refueling emission testing, the vehicle(s) 
selected shall be equipped with the worst-case evaporative/refueling 
emission hardware available on that vehicle considering such items as 
canister size and material, fuel tank size and material, purge strategy 
and flow rates, refueling characteristics, and amount of vapor 
generation.
    (c) Cold temperature testing--Tier 3. For vehicles subject to Tier 
3 standards, select test vehicles for cold temperature testing as 
follows:
    (1) For cold temperature CO exhaust emission compliance for each 
durability group, the vehicle expected to emit the highest CO emissions 
at 20 degrees F on candidate in-use vehicles shall be selected from the 
test vehicles selected in accordance with paragraph (a) of this 
section.
    (2) For cold temperature NMHC exhaust emission compliance for each 
durability group, the manufacturer must select the vehicle expected to 
emit the highest NMHC emissions at 20 [deg]F on candidate in-use 
vehicles from the test vehicles specified in paragraph (a) of this 
section. When the expected worst-case cold temperature NMHC vehicle is 
also the expected worst-case cold temperature CO vehicle as selected in 
paragraph (c)(1) of this section, then cold temperature testing is 
required only for that vehicle; otherwise, testing is required for both 
the worst-case cold temperature CO vehicle and the worst-case cold 
temperature NMHC vehicle.
    (d) [Reserved]
    (e) Alternative configurations. The manufacturer may use good 
engineering judgment to select an equivalent or worst-case 
configuration in lieu of testing the vehicle selected in paragraphs (a) 
through (c) of this section. Carryover data satisfying the provisions 
of Sec.  86.1839 may also be used in lieu of testing the configuration 
selected in paragraphs (a) through (c) of this section.
    (f) Good engineering judgment. The manufacturer shall use good 
engineering judgment in making selections of vehicles under this 
section.


Sec.  86.1829-01  [Removed]

0
63. Remove Sec.  86.1829-01.


0
64. Amend Sec.  86.1829-15 by revising paragraphs (a), (b), (d), and 
(f) and adding paragraph (g) to read as follows:


Sec.  86.1829-15  Durability and emission testing requirements; 
waivers.

* * * * *
    (a) Durability requirements apply as follows:
    (1) One durability demonstration is required for each durability 
group. The

[[Page 28178]]

configuration of the DDV is determined according to Sec.  86.1822. The 
DDV shall be tested and accumulate service mileage according to the 
provisions of Sec. Sec.  86.1823, 86.1824, 86.1825, and 86.1831. Small-
volume manufacturers and small-volume test groups may optionally use 
the alternative durability provisions of Sec.  86.1838.
    (2) Manufacturers may provide a statement in the application for 
certification that vehicles comply with the monitor accuracy and 
battery durability requirements of Sec.  86.1815-27 instead of 
submitting test data for certification. The following durability 
testing requirements apply for battery electric vehicles and plug-in 
hybrid electric vehicles after certification:
    (i) Manufacturers must perform monitor accuracy testing on in-use 
vehicles as described in Sec.  86.1845-04(g) for each monitor family. 
Carryover provisions apply as described in Sec.  86.1839-01(c).
    (ii) Manufacturers must perform battery durability testing as 
described in Sec.  86.1815-27(f)(2).
    (b) The manufacturer must test EDVs as follows to demonstrate 
compliance with emission standards:
    (1) Except as specified in this section, test one EDV in each test 
group using the test procedures specified in this subpart to 
demonstrate compliance with other exhaust emission standards.
    (2) Test one EDV in each test group using the test procedures in 40 
CFR part 1066 to demonstrate compliance with cold temperature exhaust 
emission standards.
    (3) Test one EDV in each test group to each of the three discrete 
mid-temperature intermediate soak standards identified in Sec.  
86.1811-27.
    (4) Test one EDV in each evaporative/refueling family and 
evaporative/refueling emission control system combination using the 
test procedures in subpart B of this part to demonstrate compliance 
with evaporative and refueling emission standards.
* * * * *
    (d) Manufacturers may omit exhaust testing for certification in 
certain circumstances as follows:
    (1) For vehicles subject to the Tier 3 PM standards in Sec.  
86.1811-17 (not the Tier 4 PM standards in Sec.  86.1811-27), a 
manufacturer may provide a statement in the application for 
certification that vehicles comply with applicable PM standards instead 
of submitting PM test data for a certain number of vehicles. However, 
each manufacturer must test vehicles from a minimum number of 
durability groups as follows:
    (i) Manufacturers with a single durability group subject to the 
Tier 3 PM standards in Sec.  86.1811 must submit PM test data for that 
group.
    (ii) Manufacturers with two to eight durability groups subject to 
the Tier 3 PM standards in Sec.  86.1811 must submit PM test data for 
at least two durability groups each model year. EPA will work with the 
manufacturer to select durability groups for testing, with the general 
expectation that testing will rotate to cover a manufacturer's whole 
product line over time. If a durability group has been certified in an 
earlier model year based on submitted PM data, and that durability 
group is eligible for certification using carryover test data, that 
carryover data may count toward meeting the requirements of this 
paragraph (d)(1), subject to the selection of durability groups.
    (iii) Manufacturers with nine or more durability groups subject to 
the Tier 3 PM standards in Sec.  86.1811 must submit PM test data for 
at least 25 percent of those durability groups each model year. We will 
work with the manufacturer to select durability groups for testing as 
described in paragraph (d)(1)(ii) of this section.
    (2) Small-volume manufacturers may provide a statement in the 
application for certification that vehicles comply with the applicable 
Tier 3 PM standard instead of submitting test data. Small-volume 
manufacturers must submit PM test data for vehicles that are subject to 
Tier 4 PM standards.
    (3) Manufacturers may omit PM measurements for fuel economy and GHG 
testing conducted in addition to the testing needed to demonstrate 
compliance with the PM emission standards.
    (4) Manufacturers may provide a statement in the application for 
certification that vehicles comply with the applicable formaldehyde 
standard instead of submitting test data.
    (5) When conducting Selective Enforcement Audit testing, a 
manufacturer may petition the Administrator to waive the requirement to 
measure PM emissions and formaldehyde emissions.
    (6) For model years 2012 through 2016, a manufacturer may provide a 
statement in its application for certification that vehicles comply 
with the applicable standards instead of measuring N2O 
emissions. Such a statement may also be used for model year 2017 and 
2018 vehicles only if the application for certification for those 
vehicles is based upon data carried over from a prior model year, as 
allowed under this subpart. No model year 2019 and later vehicles may 
be waived from testing for N2O emissions. Vehicles certified 
to N2O standards using a compliance statement instead of 
submitting test data are not required to collect and submit 
N2O emission data under the in-use testing requirements of 
Sec.  86.1845.
    (7) Manufacturers may provide a statement in the application for 
certification that vehicles comply with the mid-temperature 
intermediate soak standards for soak times not covered by testing.
    (8) Manufacturers may provide a statement in the application for 
certification that medium-duty vehicles above 22,000 pounds GCWR comply 
with the off-cycle emission standards in Sec.  86.1811-27(e) for all 
normal operation and use when tested as specified. Describe in the 
application for certification under Sec.  86.1844-01(d)(8) any relevant 
testing, engineering analysis, or other information in sufficient 
detail to support the statement. We may direct you to include emission 
measurements representing typical engine in-use operation at a range of 
ambient conditions. For example, we may specify certain transient and 
steady-state engine operation that is typical for your vehicles. Also 
describe the procedure you used to determine a reference CO2 
emission rate, eCO2FTPFCL, under Sec.  86.1845-04(h)(6).
    (9) For model year 2027 and 2028 vehicles subject to the Tier 4 PM 
standards in Sec.  86.1811-27, a manufacturer may provide a statement 
in the application for certification that vehicles comply with the PM 
standard for -7 [deg]C temperature testing instead of submitting PM 
test data.
* * * * *
    (f) For electric vehicles and fuel cell vehicles, manufacturers may 
provide a statement in the application for certification that vehicles 
comply with all the emission standards and related requirements of this 
subpart instead of submitting test data. Tailpipe emissions of 
regulated pollutants from vehicles powered solely by electricity are 
deemed to be zero.
    (g) Manufacturers must measure NMOG+NOX emissions from -
7 [deg]C testing with Tier 4 diesel-fueled emission data vehicles and 
report values corresponding to submitted CO and PM test results in the 
application for certification. Note that it is not necessary to repeat 
NMOG+NOX measurements for fuel economy, confirmatory, or in-
use testing.


0
65. Amend Sec.  86.1834-01 by revising paragraph (h) to read as 
follows:


Sec.  86.1834-01  Allowable maintenance.

* * * * *

[[Page 28179]]

    (h) When air conditioning exhaust emission tests are required, the 
manufacturer must document that the vehicle's air conditioning system 
is operating properly and in a representative condition. Required air 
conditioning system maintenance is performed as unscheduled maintenance 
and does not require the Administrator's approval.


0
66. Amend Sec.  86.1835-01 by revising paragraphs (a)(1)(i), (a)(4), 
(b)(1), and (d) introductory text to read as follows:


Sec.  86.1835-01  Confirmatory certification testing.

    (a) * * *
    (1) * * *
    (i) The Administrator may adjust or cause to be adjusted any 
adjustable parameter of an emission-data vehicle which the 
Administrator has determined to be subject to adjustment for 
certification testing in accordance with Sec.  86.1833-01(a)(1), to any 
setting within the physically adjustable range of that parameter, as 
determined by the Administrator in accordance with Sec.  86.1833-
01(a)(3), prior to the performance of any tests to determine whether 
such vehicle or engine conforms to applicable emission standards, 
including tests performed by the manufacturer. However, if the idle 
speed parameter is one which the Administrator has determined to be 
subject to adjustment, the Administrator shall not adjust it to a 
setting which causes a higher engine idle speed than would have been 
possible within the physically adjustable range of the idle speed 
parameter on the engine before it accumulated any dynamometer service, 
all other parameters being identically adjusted for the purpose of the 
comparison. The Administrator, in making or specifying such 
adjustments, will consider the effect of the deviation from the 
manufacturer's recommended setting on emissions performance 
characteristics as well as the likelihood that similar settings will 
occur on in-use light-duty vehicles, light-duty trucks, or complete 
heavy-duty vehicles. In determining likelihood, the Administrator will 
consider factors such as, but not limited to, the effect of the 
adjustment on vehicle performance characteristics and surveillance 
information from similar in-use vehicles.
* * * * *
    (4) Retesting for fuel economy reasons or for compliance with 
greenhouse gas exhaust emission standards in Sec.  86.1818-12 may be 
conducted under the provisions of 40 CFR 600.008-08.
    (b) * * *
    (1) If the Administrator determines not to conduct a confirmatory 
test under the provisions of paragraph (a) of this section, 
manufacturers will conduct a confirmatory test at their facility after 
submitting the original test data to the Administrator under either of 
the following circumstances:
    (i) The vehicle configuration has previously failed an emission 
standard.
    (ii) The test exhibits high emission levels determined by exceeding 
a percentage of the standards specified by the Administrator for that 
model year.
* * * * *
    (d) Conditional certification. Upon request of the manufacturer, 
the Administrator may issue a conditional certificate of conformity for 
a test group which has not completed the Administrator testing required 
under paragraph (a) of this section. Such a certificate will be issued 
based upon the conditions that the confirmatory testing be completed in 
an expedited manner and that the results of the testing are in 
compliance with all standards and procedures.
* * * * *


0
67. Amend Sec.  86.1838-01 by revising and republishing paragraph (b) 
to read as follows:


Sec.  86.1838-01  Small-volume manufacturer certification procedures.

* * * * *
    (b) Eligibility requirements--(1) Small-volume manufacturers. (i) 
Optional small-volume manufacturer certification procedures apply for 
vehicles produced by manufacturers with the following number of 
combined sales of vehicles subject to standards under this subpart in 
all states and territories of the United States in the model year for 
which certification is sought, including all vehicles and engines 
imported under the provisions of 40 CFR 85.1505 and 85.1509:
    (A) At or below 5,000 units for the Tier 3 standards described in 
Sec. Sec.  86.1811-17, 86.1813-17, and 86.1816-18 and the Tier 4 
standards described in Sec.  86.1811-27. This volume threshold applies 
for phasing in the Tier 3 and Tier 4 standards and for determining the 
corresponding deterioration factors.
    (B) No small-volume sales threshold applies for the heavy-duty 
greenhouse gas standards; alternative small-volume criteria apply as 
described in Sec.  86.1819-14(k)(5).
    (C) At or below 15,000 units for all other requirements. See Sec.  
86.1845 for separate provisions that apply for in-use testing.
    (ii) If a manufacturer's aggregated sales in the United States, as 
determined in paragraph (b)(3) of this section are fewer than the 
number of units specified in paragraph (b)(1)(i) of this section, the 
manufacturer (or each manufacturer in the case of manufacturers in an 
aggregated relationship) may certify under the provisions of paragraph 
(c) of this section.
    (iii) A manufacturer that qualifies as a small business under the 
Small Business Administration regulations in 13 CFR part 121 is 
eligible for all the provisions that apply for small-volume 
manufacturers under this subpart. See Sec.  86.1801-12(j) to determine 
whether companies qualify as small businesses.
    (iv) The sales volumes specified in this section are based on 
actual sales, unless otherwise specified.
    (v) Except for delayed implementation of new emission standards, an 
eligible manufacturer must transition out of the special provisions 
that apply for small-volume manufacturers as described in Sec.  
86.1801-12(k)(2)(i) through (iii) if sales volumes increase above the 
applicable threshold.
    (2) Small-volume test groups and small-volume monitor families. (i) 
If the aggregated sales in all states and territories of the United 
States, as determined in paragraph (b)(3) of this section are equal to 
or greater than 15,000 units, then the manufacturer (or each 
manufacturer in the case of manufacturers in an aggregated 
relationship) will be allowed to certify a number of units under the 
small-volume test group certification procedures in accordance with the 
criteria identified in paragraphs (b)(2)(ii) through (iv) of this 
section. Similarly, the manufacturer will be exempt from Part A testing 
for monitor accuracy as described in Sec.  86.1845-04(g) in accordance 
with the criteria identified in paragraphs (b)(2)(ii) through (iv) of 
this section for individual monitor families with aggregated sales up 
to 5,000 units in the current model year.
    (ii) If there are no additional manufacturers in an aggregated 
relationship meeting the provisions of paragraph (b)(3) of this 
section, then the manufacturer may certify whole test groups whose 
total aggregated sales (including heavy-duty engines) are less than 
15,000 units using the small-volume provisions of paragraph (c) of this 
section.
    (iii) If there is an aggregated relationship with another 
manufacturer which satisfies the provisions of paragraph (b)(3) of this 
section, then the following provisions shall apply:
    (A) If none of the manufacturers own 50 percent or more of another 
manufacturer in the aggregated relationship, then each manufacturer

[[Page 28180]]

may certify whole test groups whose total aggregated sales (including 
heavy-duty engines) are less than 15,000 units using the small-volume 
provisions of paragraph (c) of this section.
    (B) If any of the manufacturers own 50 percent or more of another 
manufacturer in the aggregated relationship, then the limit of 14,999 
units must be shared among the manufacturers in such a relationship. In 
total for all the manufacturers involved in such a relationship, 
aggregated sales (including heavy-duty engines) of up to 14,999 units 
may be certified using the small-volume provisions of paragraph (c) of 
this section. Only whole test groups shall be eligible for small-volume 
status under paragraph (c) of this section.
    (iv) In the case of a joint venture arrangement (50/50 ownership) 
between two manufacturers, each manufacturer retains its eligibility 
for 14,999 units under the small-volume test group certification 
procedures, but the joint venture must draw its maximum 14,999 units 
from the units allocated to its parent manufacturers. Only whole test 
groups shall be eligible for small-volume status under paragraph (c) of 
this section.
    (3) Sales aggregation for related manufacturers. The projected or 
actual sales from different firms shall be aggregated in the following 
situations:
    (i) Vehicles and/or engines produced by two or more firms, one of 
which is 10 percent or greater part owned by another.
    (ii) Vehicles and/or engines produced by any two or more firms if a 
third party has equity ownership of 10 percent or more in each of the 
firms.
    (iii) Vehicles and/or engines produced by two or more firms having 
a common corporate officer(s) who is (are) responsible for the overall 
direction of the companies.
    (iv) Vehicles and/or engines imported or distributed by all firms 
where the vehicles and/or engines are manufactured by the same entity 
and the importer or distributor is an authorized agent of the entity.
* * * * *


0
68. Revise and republish Sec.  86.1839-01 to read as follows:


Sec.  86.1839-01  Carryover of certification and battery monitoring 
data.

    (a) In lieu of testing an emission-data or durability vehicle 
selected under Sec.  86.1822, Sec.  86.1828, or Sec.  86.1829, and 
submitting data therefrom, a manufacturer may submit exhaust emission 
data, evaporative emission data and/or refueling emission data, as 
applicable, on a similar vehicle for which certification has been 
obtained or for which all applicable data required under Sec.  86.1845 
has previously been submitted. To be eligible for this provision, the 
manufacturer must use good engineering judgment and meet the following 
criteria:
    (1) In the case of durability data, the manufacturer must determine 
that the previously generated durability data represent a worst case or 
equivalent rate of deterioration for all applicable emission 
constituents compared to the configuration selected for durability 
demonstration. Prior to certification, the Administrator may require 
the manufacturer to provide data showing that the distribution of 
catalyst temperatures of the selected durability configuration is 
effectively equivalent or lower than the distribution of catalyst 
temperatures of the vehicle configuration which is the source of the 
previously generated data.
    (2) In the case of emission data, the manufacturer must determine 
that the previously generated emissions data represent a worst case or 
equivalent level of emissions for all applicable emission constituents 
compared to the configuration selected for emission compliance 
demonstration.
    (b) In lieu of using newly aged hardware on an EDV as allowed under 
the provisions of Sec.  86.1823-08(f)(2), a manufacturer may use 
similar hardware aged for an EDV previously submitted, provided that 
the manufacturer determines that the previously aged hardware 
represents a worst case or equivalent rate of deterioration for all 
applicable emission constituents for durability demonstration.
    (c) In lieu of testing battery electric vehicles or plug-in hybrid 
electric vehicles for monitor accuracy under Sec.  86.1822-01(a) and 
submitting the test data, a manufacturer may rely on previously 
conducted testing on a similar vehicle for which such test data have 
previously been submitted to demonstrate compliance with monitor 
accuracy requirements. For vehicles to be eligible for this provision, 
they must have designs for battery monitoring that are identical in all 
material respects to the vehicles tested under Sec.  86.1845-04(g). If 
a monitor family fails to meet accuracy requirements, repeat the 
testing under Sec.  86.1845-04(g) as soon as practicable.


0
69. Revise Sec.  86.1840-01 to read as follows:


Sec.  86.1840-01  Special test procedures.

    Provisions for special test procedures apply as described in 40 CFR 
1065.10 and 1066.10. For example, manufacturers must propose a 
procedure for EPA's review and advance approval for testing and 
certifying vehicles equipped with periodically regenerating 
aftertreatment devices, including sufficient documentation and data for 
EPA to fully evaluate the request.


0
70. Amend Sec.  86.1841-01 by revising and republishing paragraph (a) 
and revising paragraph (e) to read as follows:


Sec.  86.1841-01  Compliance with emission standards for the purpose of 
certification.

    (a) Certification levels of a test vehicle will be calculated for 
each emission constituent applicable to the test group for both full 
and intermediate useful life as appropriate.
    (1) If the durability demonstration procedure used by the 
manufacturer under the provisions of Sec.  86.1823, Sec.  86.1824, or 
Sec.  86.1825 requires a DF to be calculated, the DF shall be applied 
to the official test results determined in Sec.  86.1835-01(c) for each 
regulated emission constituent and for full and intermediate useful 
life, as appropriate, using the following procedures:
    (i) For additive DF's, the DF will be added to the emission result. 
The sum will be rounded to the same level of precision as the standard 
for the constituent at full and/or intermediate useful life, as 
appropriate. This rounded sum is the certification level for that 
emission constituent and for that useful life mileage.
    (ii) For multiplicative DFs, the DF will be multiplied by the 
emission result for each regulated constituent. The product will be 
rounded to the same level of precision as the standard for the 
constituent at full and intermediate useful life, as appropriate. This 
rounded product is the certification level for that emission 
constituent and for that useful life mileage.
    (iii) For a composite standard of NMHC+NOX, the measured 
results of NMHC and NOX must each be adjusted by their 
corresponding deterioration factors before the composite 
NMHC+NOX certification level is calculated. Where the 
applicable FTP exhaust hydrocarbon emission standard is an NMOG 
standard, the applicable NMOG deterioration factor must be used in 
place of the NMHC deterioration factor, unless otherwise approved by 
the Administrator.
    (2) If the durability demonstration procedure used by the 
manufacturer under the provisions of Sec.  86.1823, Sec.  86.1824, or 
Sec.  86.1825, as applicable, requires testing of the EDV with aged 
emission components, the official results of that testing determined 
under

[[Page 28181]]

the provisions of Sec.  86.1835-01(c) shall be rounded to the same 
level of precision as the standard for each regulated constituent at 
full and intermediate useful life, as appropriate. This rounded 
emission value is the certification level for that emission constituent 
at that useful life mileage.
    (3) Compliance with full useful life CO2 exhaust 
emission standards shall be demonstrated at certification by the 
certification levels on the duty cycles specified for carbon-related 
exhaust emissions according to Sec.  600.113 of this chapter.
    (4) The rounding required in paragraph (a) of this section shall be 
conducted in accordance with the provisions of Sec.  86.1837-01.
* * * * *
    (e) Unless otherwise approved by the Administrator, manufacturers 
must not use Reactivity Adjustment Factors (RAFs) in their calculation 
of the certification level of any pollutant for any vehicle.


0
71. Amend Sec.  86.1844-01 by:
0
a. Revising and republishing paragraphs (d) and (e);
0
b. Revising paragraphs (g)(11) and (h); and
0
c. Removing paragraph (i).
    The revisions and republication read as follows:


Sec.  86.1844-01  Information requirements: Application for 
certification and submittal of information upon request.

* * * * *
    (d) Part 1 Application. Part 1 must contain the following items:
    (1) Correspondence and communication information, such as names, 
mailing addresses, phone and fax numbers, and email addresses of all 
manufacturer representatives authorized to be in contact with EPA 
compliance staff. The address where official documents, such as 
certificates of conformity, are to be mailed must be clearly 
identified. At least one U.S. contact must be provided.
    (2) A description of the durability group in accordance with the 
criteria listed in Sec.  86.1820-01, or as otherwise used to group a 
product line.
    (3) A description of applicable evaporative/refueling families and 
leak families in accordance with the criteria listed in Sec.  86.1821-
01, or as otherwise used to group a product line.
    (4) Include the following durability information:
    (i) A description of the durability method used to establish useful 
life durability, including exhaust and evaporative/refueling emission 
deterioration factors as required in Sec. Sec.  86.1823, 86.1824 and 
86.1825 when applicable.
    (ii) The equivalency factor required to be calculated in Sec.  
86.1823-08(e)(1)(iii)(B), when applicable.
    (5) A description of each test group in accordance with the 
criteria listed in Sec.  86.1827-01 or as otherwise used to group a 
product line.
    (6) Identification and description of all vehicles for which 
testing is required by Sec. Sec.  86.1822-01 and 86.1828-01 to obtain a 
certificate of conformity.
    (7) A comprehensive list of all test results, including official 
certification levels, and the applicable intermediate and full useful 
life emission standards to which the test group is to be certified as 
required in Sec.  86.1829. Include the following additional information 
related to testing:
    (i) For vehicles certified to any Tier 3 or Tier 4 emission 
standards, include a comparison of drive-cycle metrics as specified in 
40 CFR 1066.425(j) for each drive cycle or test phase, as appropriate.
    (ii) For gasoline-fueled vehicles subject to Tier 3 evaporative 
emission standards, identify the method of accounting for ethanol in 
determining evaporative emissions, as described in Sec.  86.1813.
    (iii) Identify any aspects of testing for which the regulations 
obligate EPA testing to conform to your selection of test methods.
    (iv) For heavy-duty vehicles subject to air conditioning standards 
under Sec.  86.1819, include the refrigerant leakage rates (leak 
scores), describe the type of refrigerant, and identify the refrigerant 
capacity of the air conditioning systems. If another company will 
install the air conditioning system, also identify the corporate name 
of the final installer.
    (v) For vehicles with pressurized fuel tanks, attest that vehicles 
subject to EPA testing with the partial refueling test will meet the 
refueling emission standard for that testing. Include engineering 
analysis showing that canister capacity is adequate to account for the 
increased vapor load from venting the pressurized fuel tank upon fuel 
cap removal.
    (8) A statement that all applicable vehicles will conform to the 
emission standards for which emission data is not being provided, as 
allowed under Sec.  86.1806 or Sec.  86.1829. The statement shall 
clearly identify the standards for which emission testing was not 
completed and include supporting information as specified in Sec.  
86.1806 or Sec.  86.1829.
    (9) Information describing each emission control diagnostic system 
required by Sec.  86.1806, including all of the following:
    (i) A description of the functional operation characteristics of 
the diagnostic system, with additional information demonstrating that 
the system meets the requirements specified in Sec.  86.1806. Include 
all testing and demonstration data submitted to the California Air 
Resources Board for certification.
    (ii) The general method of detecting malfunctions for each 
emission-related powertrain component.
    (iii) Any deficiencies, including resolution plans and schedules.
    (iv) A statement that the diagnostic system is adequate for the 
performance warranty test described in 40 CFR part 85, subpart W.
    (v) For vehicles certified to meet the leak standard in Sec.  
86.1813, a description of the anticipated test procedure. The 
description must include, at a minimum, a method for accessing the fuel 
system for measurements and a method for pressurizing the fuel system 
to perform the procedure specified in 40 CFR 1066.985. The recommended 
test method must include at least two separate points for accessing the 
fuel system, with additional access points as appropriate for multiple 
fuel tanks and multiple evaporative or refueling canisters.
    (10) A description of all flexible or dedicated alternate fuel 
vehicles including, but not limited to, the fuel and/or percentage of 
alternate fuel for all such vehicles.
    (11) A list of all auxiliary emission control devices (AECD) 
installed on any applicable vehicles, including a justification for 
each AECD, the parameters they sense and control, a detailed 
justification of each AECD that results in a reduction in effectiveness 
of the emission control system, and rationale for why it is not a 
defeat device as defined under Sec.  86.1809. The following specific 
provisions apply for AECDs:
    (i) For any AECD uniquely used at high altitudes, EPA may request 
engineering emission data to quantify any emission impact and validity 
of the AECD.
    (ii) For any AECD uniquely used on multi-fuel vehicles when 
operated on fuels other than gasoline, EPA may request engineering 
emission data to quantify any emission impact and validity of the AECD.
    (iii) For Tier 3 vehicles with spark-ignition engines, describe how 
AECDs are designed to comply with the requirements of Sec.  86.1811-
17(d). Identify which components need protection through enrichment

[[Page 28182]]

strategies; describe the temperature limitations for those components; 
and describe how the enrichment strategy corresponds to those 
temperature limitations. We may also require manufacturers to submit 
this information for certification related to Tier 2 vehicles.
    (iv) For Tier 4 vehicles with spark-ignition engines, describe how 
AECDs comply with the requirements of Sec. Sec.  86.1809-12(d)(2) and 
86.1811-27(d).
    (12) Identification and description of all vehicles covered by each 
certificate of conformity to be produced and sold within the U.S. The 
description must be sufficient to identify whether any given in-use 
vehicle is, or is not, covered by a given certificate of conformity, 
the test group and the evaporative/refueling family to which it belongs 
and the standards that are applicable to it, by matching readily 
observable vehicle characteristics and information given in the 
emission control information label (and other permanently attached 
labels) to indicators in the Part 1 Application. In addition, the 
description must be sufficient to determine for each vehicle covered by 
the certificate, all appropriate test parameters and any special test 
procedures necessary to conduct an official certification exhaust or 
evaporative emission test as was required by this subpart to 
demonstrate compliance with applicable emission standards. The 
description shall include, but is not limited to, information such as 
model name, vehicle classification (light-duty vehicle, light-duty 
truck, or complete heavy-duty vehicle), sales area, engine 
displacement, engine code, transmission type, tire size and parameters 
necessary to conduct exhaust emission tests such as equivalent test 
weight, curb and gross vehicle weight, test horsepower (with and 
without air conditioning adjustment), coast down time, shift schedules, 
cooling fan configuration, etc. and evaporative tests such as canister 
working capacity, canister bed volume and fuel temperature profile. The 
Part 1 may include ranges for test parameters in lieu of actual values.
    (13) Projected U.S. vehicle sales volumes for each test group and 
evaporative/refueling family combination organized in such a way to 
determine projected compliance with any applicable implementation 
schedules or minimum sales requirements as specified in Sec.  86.1810 
or as otherwise required by this chapter.
    (14) A request for a certificate of conformity for each test group 
after all required testing has been completed. The request must be 
signed by an authorized manufacturer representative and include a 
statement that the test group complies with all applicable regulations 
contained within this chapter.
    (15) For vehicles with fuel-fired heaters, describe the control 
system logic of the fuel-fired heater, including an evaluation of the 
conditions under which it can be operated and an evaluation of the 
possible operational modes and conditions under which evaporative 
emissions can exist. Use good engineering judgment to establish an 
estimated exhaust emission rate from the fuel-fired heater in grams per 
mile for each pollutant subject to a fleet average standard. Adjust 
fleet average compliance calculations in Sec. Sec.  86.1861, 86.1864, 
and 86.1865 as appropriate to account for emissions from fuel-fired 
heaters. Describe the testing used to establish the exhaust emission 
rate.
    (16) A statement indicating that the manufacturer has conducted an 
engineering analysis of the complete exhaust system.
    (i) The engineering analysis must ensure that the exhaust system 
has been designed--
    (A) To facilitate leak-free assembly, installation and operation 
for the full useful life of the vehicle; and
    (B) To facilitate that such repairs as might be necessary on a 
properly maintained and used vehicle can be performed in such a manner 
as to maintain leak-free operation, using tools commonly available in a 
motor vehicle dealership or independent repair shop for the full useful 
life of the vehicle.
    (ii) The analysis must cover the exhaust system and all related and 
attached components including the air injection system, if present, 
from the engine block manifold gasket surface to a point sufficiently 
past the last catalyst and oxygen sensor in the system to assure that 
leaks beyond that point will not permit air to reach the oxygen sensor 
or catalyst under normal operating conditions.
    (iii) A ``leak-free'' system is one in which leakage is controlled 
so that it will not lead to a failure of the certification exhaust 
emission standards in-use.
    (17) The name of an agent for service located in the United States. 
Service on this agent constitutes service on you or any of your 
officers or employees for any action by EPA or otherwise by the United 
States related to the requirements of this part.
    (18) For vehicles equipped with RESS, the recharging procedures and 
methods for determining battery performance, such as state of charge 
and charging capacity.
    (19) For battery electric vehicles and plug-in hybrid electric 
vehicles, a description of each monitor family and battery durability 
family as described in Sec.  86.1815-27(f)(1). Note that a single test 
group may include multiple monitor families and battery durability 
families, and conversely that individual monitor families and battery 
durability families may be associated with multiple test groups. Note 
also that provisions related to monitor families and battery durability 
families do not apply for certain vehicles as specified in Sec.  
86.1815-27(h)(8). Include the following information for each monitor 
family:
    (i) The monitor, battery, and other specifications that are 
relevant to establishing monitor families and battery durability 
families to comply with the requirements of this section.
    (ii) The certified usable battery energy for each battery 
durability family. For plug-in hybrid electric vehicles, identify 
whether the UDDS Full Charge Test or HFET Full Charge Test was used for 
battery measurements.
    (iii) A statement attesting that the SOCE monitor meets the 5 
percent accuracy requirement.
    (iv) For light-duty program vehicles, a statement that each battery 
durability family meets the Minimum Performance Requirement.
    (20) Acknowledgement, if applicable, that you are including 
vehicles with engines certified under 40 CFR part 1036 in your 
calculation to demonstrate compliance with the fleet average 
CO2 standard in this subpart as described in Sec.  86.1819-
14(j).
    (21) Measured NMOG+NOX emission levels from -7 [deg]C 
testing with Tier 4 diesel-fueled vehicles as described in Sec.  
86.1829-15(g).
    (e) Part 2 Application. Part 2 must contain the following items:
    (1) Identify all emission-related components, including those that 
can affect GHG emissions. Also identify software, AECDs, and other 
elements of design that are used to control criteria, GHG, or 
evaporative/refueling emissions. Identify the emission-related 
components by part number. Identify software by part number or other 
convention, as appropriate. Organize part numbers by engine code or 
other similar classification scheme.
    (2) Basic calibration information, organized by engine code (or 
other similar classification scheme), for the major components of the 
fuel system, EGR system, ignition system, oxygen sensor(s) and 
thermostat. Examples of major components and associated calibration 
information include, but are not limited to; fuel pump and fuel pump

[[Page 28183]]

flow rate, fuel pressure regulator and regulated fuel pressure, EGR 
valve and EGR exhaust gas flow rate at specified vacuum levels, EGR 
vacuum regulator and regulated vacuum, EGR orifice and orifice 
diameter, basic engine timing, timing RPM, idle rpm, spark plug gap, 
oxygen sensor output (mV), and thermostat opening temperature.
    (3) Identification and description of all vehicles covered by each 
certificate of conformity to be produced and sold within the U.S. The 
description must be sufficient to identify whether any given in-use 
vehicle is, or is not, covered by a given certificate of conformity, 
the test group and the evaporative/refueling family to which it belongs 
and the standards that are applicable to it, by matching readily 
observable vehicle characteristics and information given in the 
emission control information label (and other permanently attached 
labels) to indicators in the Part 1 Application. For example, the 
description must include any components or features that contribute to 
measured or demonstrated control of emissions for meeting criteria, 
GHG, or evaporative/refueling standards under this subpart. In 
addition, the description must be sufficient to determine for each 
vehicle covered by the certificate, all appropriate test parameters and 
any special test procedures necessary to conduct an official 
certification exhaust or evaporative emission test as was required by 
this subpart to demonstrate compliance with applicable emission 
standards. The description shall include, but is not limited to, 
information such as model name, vehicle classification (light-duty 
vehicle, light-duty truck, or complete heavy-duty vehicle), sales area, 
engine displacement, engine code, transmission type, tire size and 
parameters necessary to conduct exhaust emission tests such as 
equivalent test weight, curb and gross vehicle weight, test horsepower 
(with and without air conditioning adjustment), coast down time, shift 
schedules, cooling fan configuration, etc. and evaporative tests such 
as canister working capacity, canister bed volume, and fuel temperature 
profile. Actual values must be provided for all parameters.
    (4) Final U.S. vehicle sales volumes for each test group and 
evaporative/refueling family combination organized in such a way to 
verify compliance with any applicable implementation schedules. Final 
sales are not required until the final update to the Part 2 Application 
at the end of the model year.
    (i) The manufacturer may petition the Administrator to allow actual 
volume produced for U.S. sale to be used in lieu of actual U.S. sales. 
The petition must establish that production volume is functionally 
equivalent to sales volume.
    (ii) The U.S. sales volume shall be based on the location of the 
point of sale to a dealer, distributor, fleet operator, broker, or any 
other entity which comprises the point of first sale.
    (5) Copies of all service manuals, service bulletins and 
instructions regarding the use, repair, adjustment, maintenance, or 
testing of such vehicles relevant to the control of crankcase, exhaust 
or evaporative emissions, as applicable, issued by the manufacturer for 
use by other manufacturers, assembly plants, distributors, dealers, and 
ultimate purchasers. These shall be submitted in electronic form to the 
Agency when they are made available to the public and must be updated 
as appropriate throughout the useful life of the corresponding 
vehicles.
    (6) The NMOG-to-NMHC and HCHO-to-NMHC ratios established according 
to Sec.  86.1845-04.
    (7) The results of any production vehicle evaluation testing 
required for OBD systems under Sec.  86.1806.
* * * * *
    (g) * * *
    (11) A description of all procedures, including any special 
procedures, used to comply with applicable test requirements of this 
subpart. Any special procedures used to establish durability data or 
emission deterioration factors required to be determined under 
Sec. Sec.  86.1823, 86.1824 and 86.1825 and to conduct emission tests 
required to be performed on applicable emission data vehicles under 
Sec.  86.1829 according to test procedures contained within this Title 
must also be included.
* * * * *
    (h) Manufacturers must submit the in-use testing information 
required in Sec.  86.1847.

0
72. Revise and republish Sec.  86.1845-04 to read as follows:


Sec.  86.1845-04  Manufacturer in-use verification testing 
requirements.

    (a) General requirements. (1) Manufacturers of LDV, LDT, MDPV and 
complete HDV must test, or cause to have tested, a specified number of 
vehicles. Such testing must be conducted in accordance with the 
provisions of this section.
    (2) Unless otherwise approved by the Administrator, no emission 
measurements made under the requirements of this section may be 
adjusted by Reactivity Adjustment Factors (RAFs).
    (3) The following provisions apply regarding the possibility of 
residual effects from varying fuel sulfur levels:
    (i) Vehicles certified under Sec.  86.1811 must always measure 
emissions over the FTP, then over the HFET (if applicable), then over 
the US06. If a vehicle meets all the applicable emission standards 
except the FTP or HFET emission standard for NMOG+NOX, and a 
fuel sample from the tested vehicle (representing the as-received 
condition) has a measured fuel sulfur level exceeding 15 ppm when 
measured as described in 40 CFR 1065.710, the manufacturer may repeat 
the FTP and HFET measurements and use the new emission values as the 
official results for that vehicle. For all other cases, measured 
emission levels from the first test will be considered the official 
results for the test vehicle, regardless of any test results from 
additional test runs. Where repeat testing is allowed, the vehicle may 
operate for up to two US06 cycles (with or without measurement) before 
repeating the FTP and HFET measurements. The repeat measurements must 
include both FTP and HFET, even if the vehicle failed only one of those 
tests, unless the HFET is not required for a particular vehicle. 
Vehicles may not undergo any other vehicle preconditioning to eliminate 
fuel sulfur effects on the emission control system, unless we approve 
it in advance. This paragraph (a)(3)(i) does not apply for Tier 2 
vehicles.
    (ii) Upon a manufacturer's written request, prior to in-use 
testing, that presents information to EPA regarding pre-conditioning 
procedures designed solely to remove the effects of high sulfur in 
gasoline from vehicles produced through the 2007 model year, EPA will 
consider allowing such procedures on a case-by-case basis. EPA's 
decision will apply to manufacturer in-use testing conducted under this 
section and to any in-use testing conducted by EPA. Such procedures are 
not available for complete HDV. For model year 2007 and later Tier 2 
vehicles, this provision can be used only in American Samoa, Guam, and 
the Commonwealth of the Northern Mariana Islands, and then only if low 
sulfur gasoline is determined by the Administrator to be unavailable in 
that specific location.
    (4) Battery-related in-use testing requirements apply for battery 
electric vehicles and plug-in hybrid electric vehicles as described in 
paragraph (g) of this section.
    (5) Certain medium-duty vehicles are also subject to in-use testing 
requirements to demonstrate compliance with off-cycle emission

[[Page 28184]]

standards as described in paragraph (h) of this section.
    (b) Low-mileage testing--(1) Test groups. Testing must be conducted 
for each test group and evaporative/refueling family as specified.
    (2) Vehicle mileage. All test vehicles must have a minimum odometer 
mileage of 10,000 miles.
    (3) Procuring test vehicles. For each test group, the minimum 
number of vehicles that must be tested is specified in table 1 (Table 
S04-06) and table 2 (Table S04-07) to this paragraph (b)(3). After 
testing the minimum number of vehicles of a specific test group as 
specified in Table S04-06 or S04-07, a manufacturer may test additional 
vehicles upon request and approval by the Agency prior to the 
initiation of the additional testing. Any additional testing must be 
completed within the testing completion requirements shown in Sec.  
86.1845-04(b)(4). The request and Agency approval (if any) shall apply 
to test groups on a case-by-case basis and apply only to testing under 
this paragraph (b). Separate approval will be required to test 
additional vehicles under paragraph (c) of this section. In addition to 
any testing that is required under Table S04-06 and Table S04-07, a 
manufacturer shall test one vehicle from each evaporative/refueling 
family for evaporative/refueling emissions. If a manufacturer believes 
it is unable to procure the required number of test vehicles meeting 
the specifications of this section, the manufacturer may request 
Administrator approval to either test a smaller number of vehicles or 
include vehicles that don't fully meet specifications. The request 
shall include a description of the methods the manufacturer has used to 
procure the required number of vehicles meeting specifications. The 
approval of any such request will be based on a review of the 
procurement efforts made by the manufacturer to determine if all 
reasonable steps have been taken to procure the required number of test 
vehicles meeting the specifications of this section.

  Table 1 to Paragraph (b)(3)--Table S04-06--Small Volume Manufacturers
------------------------------------------------------------------------
  49 and 50 State total sales\1\           1-5000           5001-14,999
------------------------------------------------------------------------
Low Mileage.......................  Voluntary...........               0
High Mileage......................  Voluntary...........               2
------------------------------------------------------------------------
\1\ Manufacturer's total annual sales.


                                          Table 2 to Paragraph (b)(3)--Table S04-07--Large Volume Manufacturers
--------------------------------------------------------------------------------------------------------------------------------------------------------
                                                                                                                1-50,000
        49 and 50 State annual sales \1\                         1-5000 \2\                  5001-14,999 \2\      \3\       50,001-250,000     >250,000
--------------------------------------------------------------------------------------------------------------------------------------------------------
Low Mileage....................................  Voluntary.................................                0            2                 3            4
High Mileage...................................  Voluntary.................................                2            4                 5            6
--------------------------------------------------------------------------------------------------------------------------------------------------------
\1\ Sales by test group.
\2\ Total annual production of groups eligible for testing under small volume sampling plan is capped at a maximum of 14,999 vehicle 49 or 50 state
  annual sales, or a maximum of 4,500 vehicle California only sales per model year, per large volume manufacturer.
\3\ Sampling plan applies to all of a manufacturer's remaining groups in this sales volume category when the maximum annual cap on total sales of small
  groups eligible for the small volume sampling plan is exceeded.

    (4) Completion of testing. Testing of the vehicles in a test group 
and evaporative/refueling family must be completed within 12 months of 
the end of production of that test group (or evaporative/refueling 
family) for that model year or a later date that we approve.
    (5) Testing. (i) Each test vehicle of a test group shall be tested 
in accordance with the FTP and the US06 as described in subpart B of 
this part, when such test vehicle is tested for compliance with 
applicable exhaust emission standards under this subpart. Test vehicles 
subject to applicable exhaust CO2 emission standards under 
this subpart shall also be tested in accordance with the HFET as 
described in 40 CFR 1066.840.
    (ii) For vehicles subject to Tier 3 p.m. standards, manufacturers 
must measure PM emissions over the FTP and US06 driving schedules for 
at least 50 percent of the vehicles tested under paragraph (b)(5)(i) of 
this section. For vehicles subject to Tier 4 p.m. standards, this test 
rate increases to 100 percent.
    (iii) Starting with model year 2018 vehicles, manufacturers must 
demonstrate compliance with the Tier 3 leak standard specified in Sec.  
86.1813, if applicable, as described in this paragraph (b)(5)(iii). 
Manufacturers must evaluate each vehicle tested under paragraph 
(b)(5)(i) of this section, except that leak testing is not required for 
vehicles tested under paragraph (b)(5)(iv) of this section for diurnal 
emissions. In addition, manufacturers must evaluate at least one 
vehicle from each leak family for a given model year. Manufacturers may 
rely on OBD monitoring instead of testing as follows:
    (A) A vehicle is considered to pass the leak test if the OBD system 
completed a leak check within the previous 750 miles of driving without 
showing a leak fault code.
    (B) Whether or not a vehicle's OBD system has completed a leak 
check within the previous 750 miles of driving, the manufacturer may 
operate the vehicle as needed to force the OBD system to perform a leak 
check. If the OBD leak check does not show a leak fault, the vehicle is 
considered to pass the leak test.
    (C) If the most recent OBD leak check from paragraph (b)(5)(iii)(A) 
or (B) of this section shows a leak-related fault code, the vehicle is 
presumed to have failed the leak test. Manufacturers may perform the 
leak measurement procedure described in 40 CFR 1066.985 for an official 
result to replace the finding from the OBD leak check.
    (D) Manufacturers may not perform repeat OBD checks or leak 
measurements to over-ride a failure under paragraph (b)(5)(iii)(C) of 
this section.
    (iv) For vehicles other than gaseous-fueled vehicles and electric 
vehicles, one test vehicle of each evaporative/refueling family shall 
be tested in accordance with the supplemental 2-diurnal-plus-hot-soak 
evaporative emission and refueling emission procedures described in 
subpart B of this part, when such test vehicle is tested for compliance 
with applicable evaporative emission and refueling standards under this 
subpart. For gaseous-fueled vehicles, one test vehicle of each 
evaporative/refueling family shall be tested in accordance with the 3-

[[Page 28185]]

diurnal-plus-hot-soak evaporative emission and refueling emission 
procedures described in subpart B of this part, when such test vehicle 
is tested for compliance with applicable evaporative emission and 
refueling standards under this subpart. The test vehicles tested to 
fulfill the evaporative/refueling testing requirement of this paragraph 
(b)(5)(iv) will be counted when determining compliance with the minimum 
number of vehicles as specified in Table S04-06 and Table S04-07 
(tables 1 and 2 to paragraph (b)(3) of this section) for testing under 
paragraph (b)(5)(i) of this section only if the vehicle is also tested 
for exhaust emissions under the requirements of paragraph (b)(5)(i) of 
this section.
    (6) Test condition. Each test vehicle not rejected based on the 
criteria specified in appendix II to this subpart shall be tested in 
as-received condition.
    (7) Diagnostic maintenance. A manufacturer may conduct subsequent 
diagnostic maintenance and/or testing of any vehicle. Any such 
maintenance and/or testing shall be reported to the Agency as specified 
in Sec.  86.1847.
    (c) High-mileage testing--(1) Test groups. Testing must be 
conducted for each test group and evaporative/refueling family as 
specified.
    (2) Vehicle mileage. All test vehicles must have a minimum odometer 
mileage of 50,000 miles. At least one vehicle of each test group must 
have a minimum odometer mileage of 105,000 miles or 75 percent of the 
full useful life mileage, whichever is less. See Sec.  86.1838-01(c)(2) 
for small-volume manufacturer mileage requirements.
    (3) Procuring test vehicles. For each test group, the minimum 
number of vehicles that must be tested is specified in Table S04-06 and 
Table S04-07 (tables 1 and 2 to paragraph (b)(3) of this section). 
After testing the minimum number of vehicles of a specific test group 
as specified in Table S04-06 and Table S04-07, a manufacturer may test 
additional vehicles upon request and approval by the Agency prior to 
the initiation of the additional testing. Any additional testing must 
be completed within the testing completion requirements shown in Sec.  
86.1845-04(c)(4). The request and Agency approval (if any) shall apply 
to test groups on a case-by-case basis and apply only to testing under 
this paragraph (c). In addition to any testing that is required under 
Table S04-06 and Table S04-07, a manufacturer shall test one vehicle 
from each evaporative/refueling family for evaporative/refueling 
emissions. If a manufacturer believes it is unable to procure the 
required number of test vehicles meeting the specifications of this 
section, the manufacturer may request Administrator approval to either 
test a smaller number of vehicles or include vehicles that don't fully 
meet specifications. The request shall include a description of the 
methods the manufacturer has used to procure the required number of 
vehicles meeting specifications. The approval of any such request will 
be based on a review of the procurement efforts made by the 
manufacturer to determine if all reasonable steps have been taken to 
procure the required number of test vehicles meeting the specifications 
of this section.
    (4) Initiation and completion of testing. Testing of a test group 
(or evaporative refueling family) must commence within 4 years of the 
end of production of the test group (or evaporative/refueling family) 
and be completed within 5 years of the end of production of the test 
group (or evaporative/refueling family) or a later date that we 
approve.
    (5) Testing. (i) Each test vehicle shall be tested in accordance 
with the FTP and the US06 as described in subpart B of this part when 
such test vehicle is tested for compliance with applicable exhaust 
emission standards under this subpart. Test vehicles subject to 
applicable exhaust CO2 emission standards under this subpart 
shall also be tested in accordance with the HFET as described in 40 CFR 
1066.840. One test vehicle from each test group shall be tested over 
the FTP at high altitude. The test vehicle tested at high altitude is 
not required to be one of the same test vehicles tested at low 
altitude. The test vehicle tested at high altitude is counted when 
determining the compliance with the requirements shown in Table S04-06 
and Table S04-07 (tables 1 and 2 to paragraph (b)(3) of this section) 
or the expanded sample size as provided for in this paragraph (c).
    (ii) For vehicles subject to Tier 3 p.m. standards, manufacturers 
must measure PM emissions over the FTP and US06 driving schedules for 
at least 50 percent of the vehicles tested under paragraph (c)(5)(i) of 
this section. For vehicles subject to Tier 4 p.m. standards, this test 
rate increases to 100 percent.
    (iii) Starting with model year 2018 vehicles, manufacturers must 
evaluate each vehicle tested under paragraph (c)(5)(i) of this section 
to demonstrate compliance with the Tier 3 leak standard specified in 
Sec.  86.1813, except that leak testing is not required for vehicles 
tested under paragraph (c)(5)(iv) of this section for diurnal 
emissions. In addition, manufacturers must evaluate at least one 
vehicle from each leak family for a given model year. Manufacturers may 
rely on OBD monitoring instead of testing as described in paragraph 
(b)(5)(iii) of this section.
    (iv) For vehicles other than gaseous-fueled vehicles and electric 
vehicles, one test vehicle of each evaporative/refueling family shall 
be tested in accordance with the supplemental 2-diurnal-plus-hot-soak 
evaporative emission procedures described in subpart B of this part, 
when such test vehicle is tested for compliance with applicable 
evaporative emission and refueling standards under this subpart. For 
gaseous-fueled vehicles, one test vehicle of each evaporative/refueling 
family shall be tested in accordance with the 3-diurnal-plus-hot-soak 
evaporative emission procedures described in subpart B of this part, 
when such test vehicle is tested for compliance with applicable 
evaporative emission and refueling standards under this subpart. The 
vehicles tested to fulfill the evaporative/refueling testing 
requirement of this paragraph (c)(5)(iv) will be counted when 
determining compliance with the minimum number of vehicles as specified 
in Tables S04-06 and S04-07 (tables 1 and 2 to paragraph (b)(3) of this 
section) for testing under paragraph (c)(5)(i) of this section only if 
the vehicle is also tested for exhaust emissions under the requirements 
of paragraph (c)(5)(i) of this section .
    (6) Test condition. Each test vehicle not rejected based on the 
criteria specified in appendix II to this subpart shall be tested in 
as-received condition.
    (7) Diagnostic maintenance. A manufacturer may conduct subsequent 
diagnostic maintenance and/or testing on any vehicle. Any such 
maintenance and/or testing shall be reported to the Agency as specified 
in Sec.  86.1847-01.
    (d) Test vehicle procurement. Vehicles tested under this section 
shall be procured as follows:
    (1) Vehicle ownership. Vehicles shall be procured from the group of 
persons who own or lease vehicles registered in the procurement area. 
Vehicles shall be procured from persons which own or lease the vehicle, 
excluding commercial owners/lessees owned or controlled by the vehicle 
manufacturer, using the procedures described in appendix I to this 
subpart. See Sec.  86.1838-01(c)(2)(i) for small volume manufacturer 
requirements.
    (2) Geographical limitations. (i) Test groups certified to 50-state 
standards: For low altitude testing no more than fifty percent of the 
test vehicles may be procured from California. The test vehicles 
procured from the 49-state area

[[Page 28186]]

must be procured from a location with a heating degree day 30-year 
annual average equal to or greater than 4,000.
    (ii) Test groups certified to 49-state standards: The test vehicles 
procured from the 49-state area must be procured from a location with a 
heating degree day 30-year annual average equal to or greater than 
4,000.
    (iii) Vehicles procured for high altitude testing may be procured 
from any area located above 4,000 feet.
    (3) Rejecting candidate vehicles. Vehicles may be rejected for 
procurement or testing under this section if they meet one or more of 
the rejection criteria in appendix II to this subpart. Vehicles may 
also be rejected after testing under this section if they meet one or 
more of the rejection criteria in appendix II to this subpart. Any 
vehicle rejected after testing must be replaced in order that the 
number of test vehicles in the sample comply with the sample size 
requirements of this section. Any post-test vehicle rejection and 
replacement procurement and testing must take place within the testing 
completion requirements of this section.
    (e) Testing facilities, procedures, quality assurance and quality 
control -- (1) Lab equipment and procedural requirements. The 
manufacturer shall utilize a test laboratory that is in accordance with 
the equipment and procedural requirements of subpart B of this part to 
conduct the testing required by this section.
    (2) Notification of test facility. The manufacturer shall notify 
the Agency of the name and location of the testing laboratory(s) to be 
used to conduct testing of vehicles of each model year conducted 
pursuant to this section. Such notification shall occur at least thirty 
working days prior to the initiation of testing of the vehicles of that 
model year.
    (3) Correlation. The manufacturer shall document correlation 
traceable to the Environmental Protection Agency's National Vehicle and 
Fuel Emission Laboratory for its test laboratory utilized to conduct 
the testing required by this section.
    (f) NMOG and formaldehyde. The following provisions apply for 
measuring NMOG and formaldehyde:
    (1) A manufacturer must conduct in-use testing on a test group by 
determining NMOG exhaust emissions using the same methodology used for 
certification, as described in 40 CFR 1066.635.
    (2) For flexible-fueled vehicles certified to NMOG (or 
NMOG+NOX) standards, the manufacturer may ask for EPA 
approval to demonstrate compliance using an equivalent NMOG emission 
result calculated from a ratio of ethanol NMOG exhaust emissions to 
gasoline NMHC exhaust emissions. Ethanol NMOG exhaust emissions are 
measured values from testing with the ethanol test fuel, expressed as 
NMOG. Gasoline NMHC exhaust emissions are measured values from testing 
with the gasoline test fuel, expressed as NMHC. This ratio must be 
established during certification for each emission-data vehicle for the 
applicable test group. Use good engineering judgment to establish a 
different ratio for each duty cycle or test interval as appropriate. 
Identify the ratio values you develop under this paragraph (f)(2) and 
describe the duty cycle or test interval to which they apply in the 
Part II application for certification. Calculate the equivalent NMOG 
emission result by multiplying the measured gasoline NMHC exhaust 
emissions for a given duty cycle or test interval by the appropriate 
ratio.
    (3) If the manufacturer measures NMOG as described in 40 CFR 
1066.635(a), it must also measure and report HCHO emissions. As an 
alternative to measuring the HCHO content, if the manufacturer measures 
NMOG as permitted in 40 CFR 1066.635(c), the Administrator may approve, 
upon submission of supporting data by a manufacturer, the use of HCHO 
to NMHC ratios. To request the use of HCHO to NMHC ratios, the 
manufacturer must establish during certification testing the ratio of 
measured HCHO exhaust emissions to measured NMHC exhaust emissions for 
each emission-data vehicle for the applicable test group. The results 
must be submitted to the Administrator with the Part II application for 
certification. Following approval of the application for certification, 
the manufacturer may conduct in-use testing on the test group by 
measuring NMHC exhaust emissions rather than HCHO exhaust emissions. 
The measured NMHC exhaust emissions must be multiplied by the HCHO to 
NMHC ratio submitted in the application for certification for the test 
group to determine the equivalent HCHO exhaust emission values for the 
test vehicle. The equivalent HCHO exhaust emission values must be 
compared to the HCHO exhaust emission standard applicable to the test 
group.
    (g) Battery testing. Manufacturers of battery electric vehicles and 
plug-in hybrid electric vehicles must perform in-use testing related to 
battery monitor accuracy and battery durability for those vehicles as 
described in Sec.  86.1815-27. Except as otherwise provided in Sec.  
86.1815-27(h), perform Part A testing for each monitor family as 
follows to verify that SOCE monitors meet accuracy requirements:
    (1) Determine accuracy by measuring SOCE from in-use vehicles using 
the procedures specified in Sec.  86.1815-27(c) and comparing the 
measured values to the SOCE value displayed on the monitor at the start 
of testing.
    (2) Perform low-mileage testing of the vehicles in a monitor family 
within 24 months of the end of production of that monitor family for 
that model year. All test vehicles must have a minimum odometer mileage 
of 20,000 miles.
    (3) Perform high-mileage testing of the vehicles in a monitor 
family by starting the test program within 4 years of the end of 
production of the monitor family and completing the test program within 
5 years of the end of production of the monitor family. All test 
vehicles must have a minimum odometer mileage of 40,000 miles.
    (4) Select test vehicles as described in paragraphs (b)(6), (c)(6), 
and (d)(1) and (3) of this section from the United States. Send 
notification regarding test location as described in paragraph (e)(2) 
of this section.
    (5) You may perform diagnostic maintenance as specified in 
paragraph (b)(7) and (c)(7) of this section.
    (6) See Sec.  86.1838-01(b)(2) for a testing exemption that applies 
for small-volume monitor families.
    (h) Off-cycle testing for high-GCWR medium-duty vehicles. Medium-
duty vehicles that are subject to off-cycle standards under Sec.  
86.1811-27(e) are subject to in-use testing requirements described in 
40 CFR part 1036, subpart E, and 40 CFR 1036.530, with the following 
exceptions and clarifications:
    (1) In-use testing requirements apply for both vehicles with spark-
ignition engines and vehicles with compression-ignition engines.
    (2) References to ``engine family'' should be understood to mean 
``test group''.
    (3) In our test order we may include the following requirements and 
specifications:
    (i) We may select any vehicle configuration for testing. We may 
also specify that the selected vehicle have certain optional features.
    (ii) We may allow the vehicle manufacturer to arrange for the 
driver of a test vehicle to be an employee or a hired contractor, 
rather than the vehicle owner.
    (iii) We may specify certain routes or types of driving.
    (4) Within 45 days after we direct you to perform testing under 
this paragraph (h), send us a proposed test plan that meets the 
provisions in this paragraph

[[Page 28187]]

(h)(4) in addition to what we specify in 40 CFR 1036.410. EPA must 
approve the test plan before the manufacturer may start testing. EPA 
approval will be based on a determination that the test plan meets all 
applicable requirements. The test plan must include the following 
information:
    (i) Describe how you will select vehicles, including consideration 
of available options and features, to properly represent in-use 
performance for the selected vehicle configuration.
    (ii) Describe any planned inspection or maintenance before testing 
the vehicle, along with any criteria for rejecting a candidate vehicle.
    (iii) Describe test routes planned for testing. The test route must 
target a specific total duration or distance, including at least three 
hours of driving with non-idle engine operation. The test route must 
represent normal driving, including a broad range of vehicle speeds and 
accelerations and a reasonable amount of operation at varying grades. 
If the completed test route does not include enough windows for any bin 
as specified in paragraph (h)(8) of this section, repeat the drive over 
the approved test route.
    (iv) Describe your plan for vehicle operation to include at least 
50 percent of non-idle operation with gross combined weight at least 70 
percent of GCWR. Trailers used for testing must meet certain 
specifications as follows:
    (A) Trailers must comply with requirements in Row D through Row L 
of Table 1 of SAE J2807 (incorporated by reference, see Sec.  86.1); 
however, the frontal area of the trailer may not exceed the vehicle 
manufacturer's specified maximum frontal area for towing. Trailers over 
24,000 pounds must have a frontal area between 60 and 75 ft\2\.
    (B) You may ask us to approve the use of a trailer not meeting SAE 
J2807 specifications. This may apply, for example, if the trailer has 
tires that are different than but equivalent to the specified tires. In 
your request, describe the alternative trailer's specifications, why 
you are using it, and how it is more representative of in-use operation 
than a trailer meeting the specifications in paragraph (h)(4)(iv)(A) of 
this section. Rather than demonstrating representativeness, you may 
instead describe why it is infeasible to use a trailer meeting the 
specifications in paragraph (h)(4)(iv)(A) of this section. We will 
consider whether your request is consistent with good engineering 
judgment.
    (5) The accuracy margins in 40 CFR 1036.420(a) do not apply for 
vehicles with spark-ignition engines, or for vehicles with compression-
ignition engines for demonstrating compliance with standards based on 
measurement procedures with 3-bin moving average windows.
    (6) Determine a reference CO2 emission rate, 
eCO2FTPFCL, as described in 40 CFR 1036.635(a)(1) or based 
on measured values from any chassis FTP driving cycles under 40 CFR 
part 1066, subpart I, that is used for reporting data from an emission 
data vehicle or a fuel economy data vehicle, as follows:
Equation 1 to Paragraph (h)(6)
[GRAPHIC] [TIFF OMITTED] TR18AP24.046

Where:
mCO2FTP = CO2 emission mass in grams emitted 
over the FTP driving cycle.
dFTP = measured driving distance in miles.
WFTP = work performed over the FTP.
[GRAPHIC] [TIFF OMITTED] TR18AP24.047

i = an indexing variable that represents a 1 Hz OBD time counter 
over the course of the FTP drive.
N = total number of measurements over the FTP duty cycle = 1874.
fn = engine speed for each point, i, starting from the 
start of the FTP drive at i = 1, collected from OBD PID $0C.
T = engine torque in N[middot]m for each point, i, starting from i = 
1. Calculate T by subtracting Friction Torque (PID $8E) from 
Indicated Torque (PID $62) (both PIDs are percentages) and then 
multiplying by the reference torque (PID $63). Set torque to zero if 
friction torque is greater than indicated torque.
[Delta]t = 1/frecord
frecord = the data recording frequency.

Example:

mCO2FTP = 10,961 g
N = 1874
f1 = 687.3 r/min = 71.97 rad/s
f2 = 689.7 r/min = 72.23 rad/s
T1 = 37.1 ft[middot]lbf = 50.3 N[middot]m
T2 = 37.2 ft[middot]lbf = 50.4 N[middot]m
frecord = 1 Hz
[Delta]t = 1/1 = 1 s = 0.000277 hr
WFTP = 71.97 [middot] 50.3 [middot] 1.0 + 72.23 [middot] 
50.4 [middot] 1.0 + [middot] [middot] [middot] [fnof]n1874 
[middot] T1874 [middot] [Delta]t1874
WFTP = 53,958,852 W[middot]s = 20.1 hp[middot]hr
[GRAPHIC] [TIFF OMITTED] TR18AP24.048

eCO2FTPFCL = 545.3 g/hp[middot]hr
    (7) For testing based on the 3-bin moving average windows, identify 
the appropriate bin for each of the 300 second test intervals based on 
its normalized CO2 emission mass, 
mCO2,norm,testinterval, instead of the bin definitions in 40 
CFR 1036.530(f), as follows:

Table 3 to paragraph (h)(7) of Sec.   86.1845-04--Criteria for Off-Cycle
                  Bins for 3-Bin Moving Average Windows
------------------------------------------------------------------------
                                            Normalized CO2 emission mass
                    Bin                       over the 300 second test
                                                      interval
------------------------------------------------------------------------
Bin 1.....................................  mCO2,norm,testinterval <=
                                             6.00%
Bin 2a....................................  6.00% <
                                             mCO2,norm,testinterval <=
                                             20.00%
Bin 2b....................................  mCO2,norm,testinterval >
                                             20.00%
------------------------------------------------------------------------

    (8) For testing based on 3-bin moving average windows, calculate 
the off-cycle emissions quantity for Bin 2a and Bin 2b using the method 
described in 40 CFR 1036.530 for Bin 2. Each bin is valid for 
evaluating test results only if it has at least 2,400 windows.

0
73. Amend Sec.  86.1846-01 by revising paragraphs (a), (b), (e), and 
(j) to read as follows:


Sec.  86.1846-01  Manufacturer in-use confirmatory testing 
requirements.

    (a) General requirements. (1) Manufacturers must test, or cause 
testing to be conducted, under this section when the emission levels 
shown by a test group sample from testing under Sec.  86.1845 exceeds 
the criteria specified in paragraph (b) of this section. The testing 
required under this section applies separately to each test group and 
at each test point (low and high mileage) that meets the specified 
criteria. The testing requirements apply separately for each model 
year. These provisions do not apply to emissions of CH4 or 
N2O.
    (2) The provisions of Sec.  86.1845-04(a)(3) regarding fuel sulfur 
effects apply equally to testing under this section.
    (b) Criteria for additional testing. (1) A manufacturer shall test 
a test group, or a subset of a test group, as described in paragraph 
(j) of this section when the results from testing conducted under Sec.  
86.1845 show mean exhaust emissions of any criteria pollutant for that 
test group to be at or above 1.30 times the applicable in-use standard 
for at least 50 percent of vehicles tested from the test group. 
However, under an interim alternative approach for PM emissions, 
additional testing is required if 80 percent of vehicles from the test 
group exceed 1.30 times the in-use standard through model year 2030 for 
light-duty program vehicles and through 2031 for medium-duty vehicles.
    (2) A manufacturer shall test a test group, or a subset of a test 
group, as described in paragraph (j) of this section when the results 
from testing conducted under Sec.  86.1845 show mean exhaust

[[Page 28188]]

emissions of CO2 (City-highway combined CREE) for that test 
group to be at or above the applicable in-use standard for at least 50 
percent of vehicles tested from the test group.
    (3) Additional testing is not required under this paragraph (b) 
based on evaporative/refueling testing or based on low-mileage US06 
testing conducted under Sec.  86.1845-04(b)(5)(i). Testing conducted at 
high altitude under the requirements of Sec.  86.1845-04(c) will be 
included in determining if a test group meets the criteria triggering 
the testing required under this section.
    (4) The vehicle designated for testing under the requirements of 
Sec.  86.1845-04(c)(2) with a minimum odometer reading of 105,000 miles 
or 75% of useful life, whichever is less, will not be included in 
determining if a test group meets the triggering criteria.
    (5) The SFTP composite emission levels for Tier 3 vehicles shall 
include the IUVP FTP emissions, the IUVP US06 emissions, and the values 
from the SC03 Air Conditioning EDV certification test (without DFs 
applied). The calculations shall be made using the equations prescribed 
in Sec.  86.164. If more than one set of certification SC03 data exists 
(due to running change testing or other reasons), the manufacturer 
shall choose the SC03 result to use in the calculation from among those 
data sets using good engineering judgment.
    (6) If fewer than 50 percent of the vehicles from a leak family 
pass either the leak test or the diurnal test under Sec.  86.1845, EPA 
may require further leak testing under this paragraph (b)(6). Testing 
under this section must include five vehicles from the family. If all 
five of these vehicles fail the test, the manufacturer must test five 
additional vehicles.
    EPA will determine whether to require further leak testing under 
this section after providing the manufacturer an opportunity to discuss 
the results, including consideration of any of the following 
information, or other items that may be relevant:
    (i) Detailed system design, calibration, and operating information, 
technical explanations as to why the individual vehicles tested failed 
the leak standard.
    (ii) Comparison of the subject vehicles to other similar models 
from the same manufacturer.
    (iii) Data or other information on owner complaints, technical 
service bulletins, service campaigns, special policy warranty programs, 
warranty repair data, state I/M data, and data available from other 
manufacturer-specific programs or initiatives.
    (iv) Evaporative emission test data on any individual vehicles that 
did not pass leak testing during IUVP.
* * * * *
    (e) Emission testing. Each test vehicle of a test group or Agency-
designated subset shall be tested in accordance with the driving cycles 
performed under Sec.  86.1845 corresponding to emission levels 
requiring testing under this section) as described in subpart B of this 
part, when such test vehicle is tested for compliance with applicable 
exhaust emission standards under this subpart.
* * * * *
    (j) Testing a subset. EPA may designate a subset of the test group 
for testing under this section in lieu of testing the entire test group 
when the results for the entire test group from testing conducted under 
Sec.  86.1845 show mean emissions and a failure rate which meet these 
criteria for additional testing.

0
74. Amend Sec.  86.1847-01 by adding paragraphs (g) and (h) to read as 
follows:


Sec.  86.1847-01  Manufacturer in-use verification and in-use 
confirmatory testing; submittal of information and maintenance of 
records.

* * * * *
    (g) Manufacturers of battery electric vehicles and plug-in hybrid 
electric vehicles certified under this subpart must meet the following 
reporting and recordkeeping requirements related to testing performed 
under Sec. Sec.  86.1815-27(f)(2) and (3):
    (1) Submit the following records organized by monitor family and 
battery durability family related to Part A testing to verify accuracy 
of SOCE monitors within 30 days after completing low-mileage, 
intermediate-mileage, or high-mileage testing:
    (i) A complete record of all tests performed, the dates and 
location of testing, measured SOCE values for each vehicle, along with 
the corresponding displayed SOCE values at the start of testing.
    (ii) Test vehicle information, including model year, make, model, 
and odometer reading.
    (iii) A summary of statistical information showing whether the 
testing shows a pass or fail result.
    (2) Keep the following records related to testing under paragraph 
(g)(1) of this section:
    (i) Test reports submitted under paragraph (g)(1) of this section.
    (ii) Test facility information.
    (iii) Routine testing records, such as dynamometer trace, and 
temperature and humidity during testing.
    (3) Submit an annual report related to Part B testing to verify 
compliance with the Minimum Performance Requirement for SOCE, as 
applicable. Submit the report by October 1 for testing you perform over 
the preceding year or ask us to approve a different annual reporting 
period based on your practice for starting a new model year. Include 
the following information in your annual reports, organized by monitor 
family and battery durability family:
    (i) Displayed values of SOCE for each sampled vehicle, along with a 
description of each vehicle to identify its model year, make, model, 
odometer reading, and state of registration. Also include the date for 
assessing each selected vehicle.
    (ii) A summary of results to show whether 90 percent of sampled 
vehicles from each battery durability family meet the Minimum 
Performance Requirement.
    (iii) A description of how you randomly selected vehicles for 
testing, including a demonstration that you meet the requirement to 
select test vehicles from different U.S. states or territories. Provide 
a more detailed description of your random selection if you test more 
than 500 vehicles.
    (iv) A description of any selected vehicles excluded from the test 
results and the justification for excluding them.
    (v) Information regarding warranty claims and statistics on repairs 
for batteries and for other components or systems for each battery 
durability family that might influence a vehicle's electric energy 
consumption.
    (4) Keep the following records related to testing under paragraph 
(g)(3) of this section:
    (i) Test reports submitted under paragraph (g)(3) of this section.
    (ii) Documentation related to the method of selecting vehicles.
    (5) Keep records required under this paragraph (g) for eight years 
after submitting reports to EPA.
    (h) Manufacturers of high-GCWR vehicles subject to in-use testing 
under Sec.  86.1845-04(j) must meet the reporting and recordkeeping 
requirements of 40 CFR 1036.430 and 1036.435 and include the following 
additional information:
    (1) Describe the trailer used for testing.
    (2) Identify the driving route, including total time and distance, 
and explain any departure from the planned driving route.
    (3) Demonstrate that you met the specification for loaded 
operation.


Sec.  86.1848-01  [Removed]

0
75. Remove Sec.  86.1848-01.

0
76. Revise Sec.  86.1848-10 to read as follows:

[[Page 28189]]

Sec.  86.1848-10  Compliance with emission standards for the purpose of 
certification.

    (a)(1) If, after a review of the manufacturer's submitted Part I 
application, information obtained from any inspection, such other 
information as the Administrator may require, and any other pertinent 
data or information, the Administrator determines that the application 
is complete and that all vehicles within a test group and evaporative/
refueling family as described in the application meet the requirements 
of this part and the Clean Air Act, the Administrator shall issue a 
certificate of conformity.
    (2) If, after review of the manufacturer's application, request for 
certification, information obtained from any inspection, such other 
information as the Administrator may require, and any other pertinent 
data or information, the Administrator determines that the application 
is not complete or the vehicles within a test group or evaporative/
refueling family as described in the application, do not meet 
applicable requirements or standards of the Act or of this part, the 
Administrator may deny the issuance of, suspend, or revoke a previously 
issued certificate of conformity. The Administrator will notify the 
manufacturer in writing, setting forth the basis for the determination. 
The manufacturer may request a hearing on the Administrator's 
determination.
    (b) A certificate of conformity will be issued by the Administrator 
for a period not to exceed one model year and upon such terms as deemed 
necessary or appropriate to assure that any new motor vehicle covered 
by the certificate will meet the requirements of the Act and of this 
part.
    (c) Failure to meet any of the following conditions will be 
considered a failure to satisfy a condition upon which a certificate 
was issued, and any affected vehicles are not covered by the 
certificate:
    (1) The manufacturer must supply all required information according 
to the provisions of Sec. Sec.  86.1843 and 86.1844.
    (2) The manufacturer must comply with all certification and in-use 
emission standards contained in subpart S of this part both during and 
after model year production. This includes monitor accuracy and battery 
durability requirements for battery electric vehicles and plug-in 
hybrid electric vehicles as described in Sec.  86.1815.
    (3) The manufacturer must comply with all implementation schedules 
sales percentages as required in this subpart.
    (4) New incomplete vehicles must, when completed by having the 
primary load-carrying device or container attached, conform to the 
maximum curb weight and frontal area limitations described in the 
application for certification as required in Sec.  86.1844.
    (5) The manufacturer must meet the in-use testing and reporting 
requirements contained in Sec. Sec.  86.1815, 86.1845, 86.1846, and 
86.1847, as applicable.
    (6) Vehicles must in all material respects be as described in the 
manufacturer's application for certification (Part I and Part II).
    (7) Manufacturers must meet all the provisions of Sec. Sec.  
86.1811, 86.1813, 86.1816, and 86.1860 through 86.1862 both during and 
after model year production, including compliance with the applicable 
fleet average standard and phase-in requirements. The manufacturer 
bears the burden of establishing to the satisfaction of the 
Administrator that the terms and conditions upon which each certificate 
was issued were satisfied. For recall and warranty purposes, vehicles 
not covered by a certificate of conformity will continue to be held to 
the standards stated or referenced in the certificate that otherwise 
would have applied to the vehicles. A manufacturer may not sell credits 
it has not generated.
    (8) Manufacturers must meet all provisions related to cold 
temperature standards in Sec. Sec.  86.1811 and 86.1864 both during and 
after model year production, including compliance with the applicable 
fleet average standard and phase-in requirements. The manufacturer 
bears the burden of establishing to the satisfaction of the 
Administrator that the terms and conditions upon which each certificate 
was issued were satisfied. For recall and warranty purposes, vehicles 
not covered by a certificate of conformity will continue to be held to 
the standards stated or referenced in the certificate that otherwise 
would have applied to the vehicles. A manufacturer may not sell credits 
it has not generated.
    (9) Manufacturers must meet all the provisions of Sec. Sec.  
86.1818, 86.1819, and 86.1865 both during and after model year 
production, including compliance with the applicable fleet average 
standard. The manufacturer bears the burden of establishing to the 
satisfaction of the Administrator that the terms and conditions upon 
which the certificate(s) was (were) issued were satisfied. For recall 
and warranty purposes, vehicles not covered by a certificate of 
conformity will continue to be held to the standards stated or 
referenced in the certificate that otherwise would have applied to the 
vehicles. A manufacturer may not sell credits it has not generated.
    (i) Manufacturers that are determined to be operationally 
independent under Sec.  86.1838-01(d) must report a material change in 
their status within 60 days as required by Sec.  86.1838-01(d)(2).
    (ii) Manufacturers subject to an alternative fleet average 
greenhouse gas emission standard approved under Sec.  86.1818-12(g) 
must comply with the annual sales thresholds that are required to 
maintain use of those standards, including the thresholds required for 
new entrants into the U.S. market.
    (10) Manufacturers must meet all the provisions of Sec.  86.1815 
both during and after model year production. The manufacturer bears the 
burden of establishing to the satisfaction of the Administrator that 
the terms and conditions related to issued certificates were satisfied.
    (d) One certificate will be issued for each test group and 
evaporative/refueling family combination. For diesel fueled vehicles 
and electric vehicles, one certificate will be issued for each test 
group. A certificate of conformity is deemed to cover the vehicles 
named in such certificate and produced during the model year.
    (e) A manufacturer of new light-duty vehicles, light-duty trucks, 
and complete heavy-duty vehicles must obtain a certificate of 
conformity covering such vehicles from the Administrator prior to 
selling, offering for sale, introducing into commerce, delivering for 
introduction into commerce, or importing into the United States the new 
vehicle. Vehicles produced prior to the effective date of a certificate 
of conformity may also be covered by the certificate, once it is 
effective, if the following conditions are met:
    (1) The vehicles conform in all respects to the vehicles described 
in the application for the certificate of conformity.
    (2) The vehicles are not sold, offered for sale, introduced into 
commerce, or delivered for introduction into commerce prior to the 
effective date of the certificate of conformity.
    (3) EPA is notified prior to the beginning of production when such 
production will start, and EPA is provided a full opportunity to 
inspect and/or test the vehicles during and after their production. EPA 
must have the opportunity to conduct SEA production line testing as if 
the vehicles had been produced after the effective date of the 
certificate.
    (f) Vehicles imported by an original equipment manufacturer after 
December 31 of the calendar year for which the model year is named are 
still covered by the certificate of conformity as long as

[[Page 28190]]

the production of the vehicle was completed before December 31 of that 
year.
    (g) For test groups required to have an emission control diagnostic 
system, certification will not be granted if, for any emission data 
vehicle or other test vehicle approved by the Administrator in 
consultation with the manufacturer, the malfunction indicator light 
does not illuminate as required under Sec.  86.1806.
    (h) Vehicles equipped with aftertreatment technologies such as 
catalysts, otherwise covered by a certificate, which are driven outside 
the United States, Canada, and Mexico will be presumed to have been 
operated on leaded gasoline resulting in deactivation of such 
components as catalysts and oxygen sensors. If these vehicles are 
imported or offered for importation without retrofit of the catalyst or 
other aftertreatment technology, they will be considered not to be 
within the coverage of the certificate unless included in a catalyst or 
other aftertreatment technology control program operated by a 
manufacturer or a United States Government agency and approved by the 
Administrator.


Sec.  86.1860-04  [Removed]

0
77. Remove Sec.  86.1860-04.

0
78. Amend Sec.  86.1860-17 by:
0
a. Revising the section heading and paragraphs (a) and (b); and
0
b. Removing paragraph (c)(4).
    The revisions read as follows:


Sec.  86.1860-17  How to comply with the Tier 3 and Tier 4 fleet 
average standards.

    (a) You must show that you meet the applicable Tier 3 fleet average 
NMOG+NOX standards from Sec. Sec.  86.1811-17 and 86.1816-
18, the Tier 3 fleet average evaporative emission standards from Sec.  
86.1813-17, and the Tier 4 fleet average NMOG+NOX standards 
from Sec.  86.1811-27 as described in this section. Note that separate 
fleet average calculations are required for Tier 3 FTP and SFTP exhaust 
emission standards under Sec.  86.1811-17.
    (b) Calculate your fleet average value for each model year for all 
vehicle models subject to a separate fleet average standard using the 
following equation, rounded to the nearest 0.001 g/mile for 
NMOG+NOX emissions and the nearest 0.001 g/test for 
evaporative emissions:
Equation 1 to Paragraph (b)
[GRAPHIC] [TIFF OMITTED] TR18AP24.049

Where:

i = A counter associated with each separate test group or 
evaporative family.
b = The number of separate test groups or evaporative families from 
a given averaging set to which you certify your vehicles.
Ni = The actual nationwide sales for the model year for 
test group or evaporative family i. Include allowances for 
evaporative emissions as described in Sec.  86.1813.
FELi = The FEL selected for test group or evaporative 
family i. Disregard any separate standards that apply for in-use 
testing or for testing under high-altitude conditions.
Ntotal = The actual nationwide sales for the model year 
for all vehicles from the averaging set, except as described in 
paragraph (c) of this section. The pool of vehicle models included 
in Ntotal may vary by model year, and it may be different 
for evaporative standards, FTP exhaust standards, and SFTP exhaust 
standards in a given model year.
* * * * *


Sec.  86.1861-04  [Removed]

0
79. Remove Sec.  86.1861-04.

0
80. Revise and republish Sec.  86.1861-17 to read as follows:


Sec.  86.1861-17  How do the NMOG+NOX and evaporative 
emission credit programs work?

    You may use emission credits for purposes of certification to show 
compliance with the applicable fleet average NMOG+NOX 
standards from Sec. Sec.  86.1811 and 86.1816 and the fleet average 
evaporative emission standards from Sec.  86.1813 as described in 40 
CFR part 1037, subpart H, with certain exceptions and clarifications as 
specified in this section. MDPVs are subject to the same provisions of 
this section that apply to LDT4.
    (a) Calculate emission credits as described in this paragraph (a) 
instead of using the provisions of 40 CFR 1037.705. Calculate positive 
or negative emission credits relative to the applicable fleet average 
standard. Calculate positive emission credits if your fleet average 
level is below the standard. Calculate negative emission credits if 
your fleet average value is above the standard. Calculate credits 
separately for each applicable fleet average standard and calculate 
total credits for each averaging set as specified in paragraph (b) of 
this section. Convert units from mg/mile to g/mile as needed for 
performing calculations. Calculate emission credits using the following 
equation, rounded to the nearest whole number:
Equation 1 to Paragraph (a)
Emission credit = Volume [middot] [Fleet average standard-Fleet average 
value]

Where:

Emission credit = The positive or negative credit for each discrete 
fleet average standard, in units of vehicle-grams per mile for 
NMOG+NOx and vehicle-grams per test for evaporative emissions.
Volume = Sales volume in a given model year from the collection of 
test groups or evaporative families covered by the fleet average 
value, as described in Sec.  86.1860.

    (b) The following restrictions apply instead of those specified in 
40 CFR 1037.740:
    (1) Except as specified in paragraph (b)(2) of this section, 
emission credits may be exchanged only within an averaging set, as 
follows:
    (i) HDV represent a separate averaging set with respect to all 
emission standards.
    (ii) Except as specified in paragraph (b)(1)(iii) of this section, 
light-duty program vehicles represent a single averaging set with 
respect to all emission standards. Note that FTP and SFTP credits for 
Tier 3 vehicles are not interchangeable.
    (iii) LDV and LDT1 certified to standards based on a useful life of 
120,000 miles and 10 years together represent a single averaging set 
with respect to NMOG+NOX emission standards. Note that FTP 
and SFTP credits for Tier 3 vehicles are not interchangeable.
    (iv) The following separate averaging sets apply for evaporative 
emission standards:
    (A) LDV and LDT1 together represent a single averaging set.
    (B) LDT2 represents a single averaging set.
    (C) HLDT represents a single averaging set.

[[Page 28191]]

    (D) HDV represents a single averaging set.
    (2) You may exchange evaporative emission credits across averaging 
sets as follows if you need additional credits to offset a deficit 
after the final year of maintaining deficit credits as allowed under 
paragraph (c) of this section:
    (i) You may exchange LDV/LDT1 and LDT2 emission credits.
    (ii) You may exchange HLDT and HDV emission credits.
    (3) Except as specified in paragraph (b)(4) of this section, 
credits expire after five years.
    For example, credits you generate in model year 2018 may be used 
only through model year 2023.
    (4) For the Tier 3 declining fleet average FTP and SFTP emission 
standards for NMOG+NOX described in Sec.  86.1811-17(b)(8), 
credits generated in model years 2017 through 2024 expire after eight 
years, or after model year 2030, whichever comes first; however, these 
credits may not be traded after five years. This extended credit life 
also applies for small-volume manufacturers generating credits under 
Sec.  86.1811-17(h)(1) in model years 2022 through 2024. Note that the 
longer credit life does not apply for heavy-duty vehicles, for vehicles 
certified under the alternate phase-in described in Sec.  86.1811-
17(b)(9), or for vehicles generating early Tier 3 credits under Sec.  
86.1811-17(b)(11) in model year 2017.
    (5) Tier 3 credits for NMOG+NOX may be used to 
demonstrate compliance with Tier 4 standards without adjustment, except 
as specified in Sec.  86.1811-27(b)(6)(ii).
    (6) A manufacturer may generate NMOG+NOX credits from 
model year 2027 through 2032 electric vehicles that qualify as MDPV and 
use those credits for certifying medium-duty vehicles, as follows:
    (i) Calculate generated credits separately for qualifying vehicles. 
Calculate generated credits by multiplying the applicable standard for 
light-duty program vehicles by the sales volume of qualifying vehicles 
in a given model year.
    (ii) Apply generated credits to eliminate any deficit for light-
duty program vehicles before using them to certify medium-duty 
vehicles.
    (iii) Apply the credit provisions of this section as specified, 
except that you may not buy or sell credits generated under this 
paragraph (b)(6).
    (iv) Describe in annual credit reports how you are generating 
certain credit quantities under this paragraph (b)(6). Also describe in 
your end of year credit report how you will use those credits for 
certifying light-duty program vehicles or medium-duty vehicles in a 
given model year.
    (c) The credit-deficit provisions 40 CFR 1037.745 apply to the 
NMOG+NOX and evaporative emission standards for Tier 3 and 
Tier 4 vehicles. Credit-deficit provisions are not affected by the 
transition from Tier 3 to Tier 4 standards.
    (d) The reporting and recordkeeping provisions of Sec.  86.1862 
apply instead of those specified in 40 CFR 1037.730 and 1037.735.
    (e) The provisions of 40 CFR 1037.645 do not apply.
    (f) The enforcement provisions described in Sec.  86.1865-12(j)(3) 
apply with respect to NMOG+NOX emission credits under this 
section for battery electric vehicles that do not conform to battery 
durability requirements in Sec.  86.1815-27.

0
81. Amend Sec.  86.1862-04 by revising the section heading and 
paragraphs (a), (c)(2), and (d) to read as follows:


Sec.  86.1862-04  Maintenance of records and submittal of information 
relevant to compliance with fleet average standards.

    (a) Overview. This section describes reporting and recordkeeping 
requirements for vehicles subject to the following standards:
    (1) Tier 4 criteria exhaust emission standards, including cold 
temperature NMOG+NOX standards, in Sec.  86.1811-27.
    (2) Tier 3 evaporative emission standards in Sec.  86.1813-17.
    (3) Tier 3 FTP emission standard for NMOG+NOX for LDV 
and LDT in Sec.  86.1811-17.
    (4) Tier 3 SFTP emission standard for NMOG+NOX for LDV 
and LDT (including MDPV) in Sec.  86.1811-17.
    (5) Tier 3 FTP emission standard for NMOG+NOX for HDV 
(other than MDPV) in Sec.  86.1816-18.
    (6) Cold temperature NMHC standards in Sec.  86.1811-17 for 
vehicles subject to Tier 3 NMOG+NOX standards.
* * * * *
    (c) * * *
    (2) When a manufacturer calculates compliance with the fleet 
average standard using the provisions in Sec.  86.1860-17(f), the 
annual report must state that the manufacturer has elected to use such 
provision and must contain the fleet average standard as the fleet 
average value for that model year.
* * * * *
    (d) Notice of opportunity for hearing. Any voiding of the 
certificate under this section will be made only after EPA has offered 
the manufacturer concerned an opportunity for a hearing conducted in 
accordance with 40 CFR part 1068, subpart G, and, if a manufacturer 
requests such a hearing, will be made only after an initial decision by 
the Presiding Officer.


Sec.  86.1863-07  [Removed]

0
82. Remove Sec.  86.1863-07.

0
83. Revise Sec.  86.1864-10 to read as follows:


Sec.  86.1864-10  How to comply with cold temperature fleet average 
standards.

    (a) Applicability. Cold temperature fleet average standards apply 
for NMHC or NMOG+NOX emissions as described in Sec.  
86.1811. Certification testing provisions described in this subpart 
apply equally for meeting cold temperature exhaust emission standards 
except as specified.
    (b) Calculating the cold temperature fleet average standard. 
Manufacturers must compute separate sales-weighted cold temperature 
fleet average emissions at the end of the model year using actual sales 
and certifying test groups to FELs, as defined in Sec.  86.1803-01. The 
FEL becomes the standard for each test group, and every test group can 
have a different FEL. The certification resolution for the FEL is 0.1 
grams/mile for NMHC and 0.010 grams/mile for NMOG+NOX. 
Determine fleet average emissions separately for each set of vehicles 
subject to different fleet average emission standards. Do not include 
electric vehicles or fuel cell vehicles when calculating fleet average 
emissions. Starting with Tier 4 vehicles, determine fleet average 
emissions based on separate averaging sets for light-duty program 
vehicles and medium-duty vehicles. Convert units between mg/mile and g/
mile as needed for performing calculations. Calculate the sales-
weighted cold temperature fleet averages using the following equation, 
rounded to the nearest 0.1 grams/mile for NMHC and to the nearest 0.001 
grams/mile for NMOG+NOX:
Equation 1 to Paragraph (b)
[GRAPHIC] [TIFF OMITTED] TR18AP24.050


[[Page 28192]]


Where:

N = The number of vehicles subject to a given fleet average emission 
standard based on vehicles counted at the point of first sale.
FEL = Family Emission Limit (grams/mile).
Volume = Total number of vehicles sold from the applicable cold 
temperature averaging set.

    (c) Certification compliance and enforcement requirements for cold 
temperature fleet average standards. Each manufacturer must comply on 
an annual basis with fleet average standards as follows:
    (1) Manufacturers must report in their annual reports to the Agency 
that they met the relevant fleet average standard by showing that their 
sales-weighted cold temperature fleet average emissions are at or below 
the applicable fleet average standard for each averaging set.
    (2) If the sales-weighted average is above the applicable fleet 
average standard, manufacturers must obtain and apply sufficient 
credits as permitted under paragraph (d)(8) of this section. A 
manufacturer must show via the use of credits that they have offset any 
exceedance of the cold temperature fleet average standard. 
Manufacturers must also include their credit balances or deficits.
    (3) If a manufacturer fails to meet the cold temperature fleet 
average standard for two consecutive years, the vehicles causing the 
exceedance will be considered not covered by the certificate of 
conformity (see paragraph (d)(8) of this section). A manufacturer will 
be subject to penalties on an individual-vehicle basis for sale of 
vehicles not covered by a certificate.
    (4) EPA will review each manufacturer's sales to designate the 
vehicles that caused the exceedance of the fleet average standard. EPA 
will designate as nonconforming those vehicles in test groups with the 
highest certification emission values first, continuing until reaching 
a number of vehicles equal to the calculated number of noncomplying 
vehicles as determined above. In a group where only a portion of 
vehicles would be deemed nonconforming, EPA will determine the actual 
nonconforming vehicles by counting backwards from the last vehicle 
produced in that test group. Manufacturers will be liable for penalties 
for each vehicle sold that is not covered by a certificate.
    (d) Requirements for the cold temperature averaging, banking, and 
trading (ABT) program. (1) Manufacturers must average the cold 
temperature fleet average emissions of their vehicles and comply with 
the cold temperature fleet average standard. A manufacturer whose cold 
temperature fleet average emissions exceed the applicable standard must 
complete the calculation in paragraph (d)(4) of this section to 
determine the size of its credit deficit. A manufacturer whose cold 
temperature fleet average emissions are less than the applicable 
standard must complete the calculation in paragraph (d)(4) of this 
section to generate credits.
    (2) There are no property rights associated with cold temperature 
credits generated under this subpart. Credits are a limited 
authorization to emit the designated amount of emissions. Nothing in 
this part or any other provision of law should be construed to limit 
EPA's authority to terminate or limit this authorization through 
rulemaking.
    (3) The following transition provisions apply:
    (i) Cold temperature NMHC credits may be used to demonstrate 
compliance with the cold temperature NMOG+NOX emission 
standards for Tier 4 vehicles. The value of a cold temperature NMHC 
credit is deemed to be equal to the value of a cold temperature 
NMOG+NOX credit.
    (ii) Credits earned from any light-duty vehicles, light-duty 
trucks, and medium-duty passenger vehicles may be used for any light-
duty program vehicles, even if they were originally generated for a 
narrower averaging set.
    (4) Credits are earned on the last day of the model year. 
Manufacturers must calculate, for a given model year, the number of 
credits or debits it has generated according to the following equation, 
rounded to the nearest 0.1 vehicle-grams/mile:
Equation 2 to Paragraph (d)(4)
Fleet average Credits or Debits = (Standard-Emissions) x Volume

Where:

Standard = the cold temperature NMHC or NMOG+NOX 
standard.
Emissions = the manufacturer's sales-weighted cold temperature fleet 
average emissions, calculated according to paragraph (b) of this 
section.
Volume = total number of 50-state vehicles sold, based on the point 
of first sale.

    (5) NMHC and NMOG+NOX credits are not subject to any 
discount or expiration date except as required under the deficit 
carryforward provisions of paragraph (d)(8) of this section. There is 
no discounting of unused credits. NMHC and NMOG+NOX credits 
have unlimited lives, subject to the limitations of paragraph (d)(2) of 
this section.
    (6) Credits may be used as follows:
    (i) Credits generated and calculated according to the method in 
paragraph (d)(4) of this section may be used only to offset deficits 
accrued with respect to the standard in Sec.  86.1811-10(g)(2). Credits 
may be banked and used in a future model year in which a manufacturer's 
average cold temperature fleet average level exceeds the applicable 
standard. Credits may be exchanged only within averaging sets. Credits 
may also be traded to another manufacturer according to the provisions 
in paragraph (d)(9) of this section. Before trading or carrying over 
credits to the next model year, a manufacturer must apply available 
credits to offset any credit deficit, where the deadline to offset that 
credit deficit has not yet passed.
    (ii) The use of credits shall not be permitted to address Selective 
Enforcement Auditing or in-use testing failures. The enforcement of the 
averaging standard occurs through the vehicle's certificate of 
conformity. A manufacturer's certificate of conformity is conditioned 
upon compliance with the averaging provisions. The certificate will be 
void ab initio if a manufacturer fails to meet the corporate average 
standard and does not obtain appropriate credits to cover its 
shortfalls in that model year or in the subsequent model year (see 
deficit carryforward provision in paragraph (d)(8) of this section). 
Manufacturers must track their certification levels and sales unless 
they produce only vehicles certified with FELs at or below the 
applicable to cold temperature fleet average levels below the standard 
and have chosen to forgo credit banking.
    (7) The following provisions apply if debits are accrued:
    (i) If a manufacturer calculates that it has negative credits (also 
called ``debits'' or a ``credit deficit'') for a given model year, it 
may carry that deficit forward into the next model year. Such a carry-
forward may only occur after the manufacturer exhausts any supply of 
banked credits. At the end of that next model year, the deficit must be 
covered with an appropriate number of credits that the manufacturer 
generates or purchases. Any remaining deficit is subject to an 
enforcement action, as described in this paragraph (d)(8). 
Manufacturers are not permitted to have a credit deficit for two 
consecutive years.
    (ii) If debits are not offset within the specified time period, the 
number of vehicles not meeting the cold temperature fleet average 
standards (and therefore not covered by the certificate) must be 
calculated by dividing the total amount of debits for the model year by 
the cold temperature fleet average standard applicable for the model 
year in which the debits were first incurred.

[[Page 28193]]

    (iii) EPA will determine the number of vehicles for which the 
condition on the certificate was not satisfied by designating vehicles 
in those test groups with the highest certification cold temperature 
NMHC or NMOG+NOX emission values first and continuing until 
reaching a number of vehicles equal to the calculated number of 
noncomplying vehicles as determined above. If this calculation 
determines that only a portion of vehicles in a test group contribute 
to the debit, EPA will designate actual vehicles in that test group as 
not covered by the certificate, starting with the last vehicle produced 
and counting backwards.
    (iv)(A) If a manufacturer ceases production of vehicles affected by 
a debit balance, the manufacturer continues to be responsible for 
offsetting any debits outstanding within the required time period. Any 
failure to offset the debits will be considered a violation of 
paragraph (d)(8)(i) of this section and may subject the manufacturer to 
an enforcement action for sale of vehicles not covered by a 
certificate, pursuant to paragraphs (d)(8)(ii) and (iii) of this 
section.
    (B) If a manufacturer is purchased by, merges with, or otherwise 
combines with another manufacturer, the controlling entity is 
responsible for offsetting any debits outstanding within the required 
time period. Any failure to offset the debits will be considered a 
violation of paragraph (d)(8)(i) of this section and may subject the 
manufacturer to an enforcement action for sale of vehicles not covered 
by a certificate, pursuant to paragraphs (d)(8)(ii) and (iii) of this 
section.
    (v) For purposes of calculating the statute of limitations, a 
violation of the requirements of paragraph (d)(8)(i) of this section, a 
failure to satisfy the conditions upon which a certificate(s) was 
issued and hence a sale of vehicles not covered by the certificate, all 
occur upon the expiration of the deadline for offsetting debits 
specified in paragraph (d)(8)(i) of this section.
    (8) The following provisions apply for trading cold temperature 
credits:
    (i) EPA may reject credit trades if the involved manufacturers fail 
to submit the credit trade notification in the annual report. A 
manufacturer may not sell credits that are not available for sale 
pursuant to the provisions in paragraphs (d)(7)(i) of this section.
    (ii) In the event of a negative credit balance resulting from a 
transaction that a manufacturer could not cover by the reporting 
deadline for the model year in which the trade occurred, both the buyer 
and seller are liable, except in cases involving fraud by either the 
buyer or seller. EPA may void ab initio the certificates of conformity 
of all engine families participating in such a trade.
    (iii) A manufacturer may only trade credits that it has generated 
pursuant to paragraph (d)(4) of this section or acquired from another 
party.

0
84. Amend Sec.  86.1865-12 by:
0
a. Revising paragraphs (h)(1) and (j);
0
b. Removing and reserving paragraph (k)(7)(iii); and
0
c. Adding paragraph (k)(10).
    The revisions and addition read as follows:


Sec.  86.1865-12  How to comply with the fleet average CO2 standards.

* * * * *
    (h) * * *
    (1) The test procedures for demonstrating compliance with 
CO2 exhaust emission standards are described at Sec.  86.101 
and 40 CFR part 600, subpart B. Note that these test procedures involve 
measurement of carbon-related exhaust emissions to demonstrate 
compliance with the fleet average CO2 standards in Sec.  
86.1818-12.
* * * * *
    (j) Certification compliance and enforcement requirements for 
CO2 exhaust emission standards. (1) Compliance and 
enforcement requirements are provided in this section and Sec.  
86.1848-10.
    (2) The certificate issued for each test group requires all model 
types within that test group to meet the in-use emission standards to 
which each model type is certified. The in-use standards for passenger 
automobiles and light trucks (including MDPV) are described in Sec.  
86.1818-12(d). The in-use standards for medium-duty vehicles are 
described in Sec.  86.1819-14(b).
    (3) EPA will issue a notice of nonconformity as described in 40 CFR 
part 85, subpart S, if EPA or the manufacturer determines that a 
substantial number of a class or category of vehicles produced by that 
manufacturer, although properly maintained and used, do not conform to 
in-use CO2 emission standards, or do not conform to the 
monitor accuracy and battery durability requirements in Sec.  86.1815-
27. The manufacturer must submit a remedial plan in response to a 
notice of nonconformity as described in 40 CFR 85.1803. The 
manufacturer's remedial plan would generally be a recall intended to 
remedy repairable problems to bring nonconforming vehicles into 
compliance; however, if there is no demonstrable, repairable problem 
that could be remedied to bring the vehicles into compliance, the 
manufacturer must submit an alternative plan to address the 
noncompliance and notify owners. For example, manufacturers may need to 
calculate a correction to its emission credit balance based on the GHG 
emissions of the actual number of vehicles produced. Manufacturers may 
voluntarily recall vehicles to remedy a noncompliance and submit a 
voluntary recall report as described in 40 CFR part 85, subpart T. 
Manufacturers may also voluntarily pursue a credit-based or other 
alternative approach to remedy a noncompliance where appropriate.
    (4) Any remedial plan under paragraph (j)(3) of this section, 
whether voluntary or in response to a notice of nonconformity, must 
fully correct the difference between the measured in-use CREE of the 
affected class or category of vehicles and the reported CREE used to 
calculate the manufacturer's fleet average and credit balances.
    (5) The manufacturer may request a hearing under 40 CFR part 1068, 
subpart G, regarding any voiding of credits or adjustment of debits 
under paragraph (j)(3) of this section. Manufacturers must submit such 
a request in writing describing the objection and any supporting data 
within 30 days after we make a decision.
    (6) Each manufacturer must comply with the applicable 
CO2 fleet average standard on a production-weighted average 
basis, at the end of each model year. Use the procedure described in 
paragraph (i) of this section for passenger automobiles and light 
trucks (including MDPV). Use the procedure described in Sec.  86.1819-
14(d)(9)(iv) for medium-duty vehicles.
    (7) Each manufacturer must comply on an annual basis with the fleet 
average standards as follows:
    (i) Manufacturers must report in their annual reports to the Agency 
that they met the relevant corporate average standard by showing that 
the applicable production-weighted average CO2 emission 
levels are at or below the applicable fleet average standards; or
    (ii) If the production-weighted average is above the applicable 
fleet average standard, manufacturers must obtain and apply sufficient 
CO2 credits as authorized under paragraph (k)(8) of this 
section. A manufacturer must show that they have offset any exceedance 
of the corporate average standard via the use of credits. Manufacturers 
must also include their credit balances or deficits in their annual 
report to the Agency.
    (iii) If a manufacturer fails to meet the corporate average 
CO2 standard for four consecutive years, the vehicles 
causing the corporate average exceedance will be considered not covered 
by the certificate of conformity (see paragraph

[[Page 28194]]

(k)(8) of this section). A manufacturer will be subject to penalties on 
an individual-vehicle basis for sale of vehicles not covered by a 
certificate.
    (iv) EPA will review each manufacturer's production to designate 
the vehicles that caused the exceedance of the corporate average 
standard. EPA will designate as nonconforming those vehicles in test 
groups with the highest certification emission values first, continuing 
until reaching a number of vehicles equal to the calculated number of 
noncomplying vehicles as determined in paragraph (k)(8) of this 
section. In a group where only a portion of vehicles would be deemed 
nonconforming, EPA will determine the actual nonconforming vehicles by 
counting backwards from the last vehicle produced in that test group. 
Manufacturers will be liable for penalties for each vehicle sold that 
is not covered by a certificate.
    (k) * * *
    (10) A manufacturer may generate CO2 credits from model 
year 2027 through 2032 electric vehicles that qualify as MDPV and use 
those credits for certifying medium-duty vehicles, as follows:
    (i) Determine the emission standards from Sec.  86.1818-12 for 
qualifying vehicles based on the CO2 target values for light 
trucks and the footprint for each vehicle.
    (ii) Calculate generated credits separately for qualifying vehicles 
as described in paragraph (k)(4) of this section based on the emission 
standards from paragraph (k)(10)(i) of this section, the mileage values 
for light trucks, and the total number of qualifying vehicles produced, 
with fleet average CO2 emissions set to 0.
    (iii) Apply generated credits to eliminate any deficit for light 
trucks before using them to certify medium-duty vehicles.
    (iv) Apply the credit provisions of this section as specified, 
except that you may not buy or sell credits generated under this 
paragraph (k)(10).
    (v) Describe in the annual credit reports how you are generating 
certain credit quantities under this paragraph (k)(10). Also describe 
in your end of year credit report how you will use those credits for 
certifying light trucks or medium-duty vehicles in a given model year.
* * * * *

0
85. Amend Sec.  86.1866-12 by revising paragraphs (a) and (c)(3) to 
read as follows:


Sec.  86.1866-12  CO2 credits for advanced technology vehicles.

* * * * *
    (a) Battery electric vehicles, plug-in hybrid electric vehicles, 
and fuel cell vehicles that are certified and produced for sale in the 
states and territories of the United States may use a value of zero 
grams CO2 per mile to represent the proportion of electric 
operation of a vehicle that is derived from electricity generated from 
sources that are not onboard the vehicle.
* * * * *
    (c) * * *
    (3) Multiplier-based credits for model years 2022 through 2024 may 
not exceed credit caps, as follows:
    (i) Calculate a nominal annual credit cap in Mg using the following 
equation, rounded to the nearest whole number:
[GRAPHIC] [TIFF OMITTED] TR18AP24.051

Where:

Pauto = total number of certified passenger automobiles 
the manufacturer produced in a given model year for sale in any 
state or territory of the United States.
Ptruck = total number of certified light trucks 
(including MDPV) the manufacturer produced in a given model year for 
sale in any state or territory of the United States.

    (ii) Calculate an annual g/mile equivalent value for the 
multiplier-based credits using the following equation, rounded to the 
nearest 0.1 g/mile:
[GRAPHIC] [TIFF OMITTED] TR18AP24.052

Where:

annual credits = a manufacturer's total multiplier-based credits in 
a given model year from all passenger automobiles and light trucks 
as calculated under this paragraph (c).

    (iii) Calculate a cumulative g/mile equivalent value for the 
multiplier-based credits in each year by adding the annual g/mile 
equivalent values calculated under paragraph (c)(3)(ii) of this 
section.
    (iv) The cumulative g/mile equivalent value may not exceed 10.0 in 
any year.
    (v) For every year of certifying with multiplier-based credits, the 
annual credit report must include the calculated values for the nominal 
annual credit cap in Mg and the cumulative g/mile equivalent value.

0
86. Revise and republish Sec.  86.1867-12 to read as follows:


Sec.  86.1867-12  CO2 credits for reducing leakage of air conditioning 
refrigerant.

    Manufacturers may generate credits applicable to the CO2 
fleet average program described in Sec.  86.1865-12 by implementing 
specific air conditioning system technologies designed to reduce air 
conditioning refrigerant leakage over the useful life of their 
passenger automobiles and/or light trucks (including MDPV); only the 
provisions of paragraph (a) of this section apply for non-MDPV heavy-
duty vehicles. Credits shall be calculated according to this section 
for each air conditioning system that the manufacturer is using to 
generate CO2 credits.
    (a) Calculate an annual rate of refrigerant leakage from an air 
conditioning system as follows, expressed to the nearest 0.1 grams per 
year:
    (1) Through model year 2026, calculate leakage rates according to 
the procedures specified in SAE J2727 FEB2012 (incorporated by 
reference, see Sec.  86.1). In doing so, the refrigerant permeation 
rates for hoses shall be determined using the procedures specified in 
SAE J2064 (incorporated by reference, Sec.  86.1). The procedures of 
SAE J2727 may be used to determine leakage rates for HFC-134a and HFO-
1234yf; manufacturers should contact EPA regarding procedures for other 
refrigerants.
    (2) For model years 2027 through 2030, calculate leakage rates 
according to the procedures specified in SAE J2727 SEP2023 
(incorporated by reference, Sec.  86.1).
    (b) The CO2-equivalent gram per mile leakage reduction 
used to calculate the total leakage credits generated by an air

[[Page 28195]]

conditioning system shall be determined according to this paragraph 
(b), separately for passenger automobiles and light trucks, and rounded 
to the nearest tenth of a gram per mile:
    (1) Passenger automobile leakage credit for an air conditioning 
system:
Equation 1 to Paragraph (b)(1)
[GRAPHIC] [TIFF OMITTED] TR18AP24.053

Where:

MaxCredit is 12.6 (grams CO2-equivalent/mile) for air 
conditioning systems using HFC-134a, and 13.8 (grams CO2-
equivalent/mile) for air conditioning systems using a refrigerant 
with a lower global warming potential.
LeakScore means the annual refrigerant leakage rate determined 
according to paragraph (a) of this section. If the calculated rate 
is less than 8.3 grams/year (or 4.1 grams/year for systems using 
only electric compressors), the rate for the purpose of this formula 
shall be 8.3 grams/year (or 4.1 grams/year for systems using only 
electric compressors).
GWPREF means the global warming potential of the 
refrigerant as indicated in paragraph (e) of this section or as 
otherwise determined by the Administrator.
HiLeakDis means the high leak disincentive, which is determined 
using the following equation, except that if GWPREF is 
greater than 150 or if the calculated result of the equation is less 
than zero, HiLeakDis shall be set equal to zero, or if the 
calculated result of the equation is greater than 1.8 g/mi, 
HiLeakDis shall be set to 1.8 g/mi:
Equation 2 to Paragraph (b)(1)
[GRAPHIC] [TIFF OMITTED] TR18AP24.054

Where:

LeakThreshold = 11.0 for air conditioning systems with a refrigerant 
capacity less than or equal to 733 grams; or LeakThreshold = 
[Refrigerant Capacity x 0.015] for air conditioning systems with a 
refrigerant capacity greater than 733 grams, where Refrigerant 
Capacity is the maximum refrigerant capacity specified for the air 
conditioning system, in grams.

    (2) Light truck leakage credit for an air conditioning system:
Equation 3 to Paragraph (b)(2)
[GRAPHIC] [TIFF OMITTED] TR18AP24.055

Where:

MaxCredit is 15.6 (grams CO2-equivalent/mile) for air 
conditioning systems using HFC-134a, and 17.2 (grams CO2-
equivalent/mile) for air conditioning systems using a refrigerant 
with a lower global warming potential.
LeakScore means the annual refrigerant leakage rate determined 
according to paragraph (a) of this section. If the calculated rate 
is less than 10.4 grams/year (or 5.2 grams/year for systems using 
only electric compressors), the rate for the purpose of this formula 
shall be 10.4 grams/year (or 5.2 grams/year for systems using only 
electric compressors).
GWPREF means the global warming potential of the 
refrigerant as indicated in paragraph (e) of this section or as 
otherwise determined by the Administrator.
HiLeakDis means the high leak disincentive, which is determined 
using the following equation, except that if GWPREF is 
greater than 150 or if the calculated result of the equation is less 
than zero, HiLeakDis shall be set equal to zero, or if the 
calculated result of the equation is greater than 2.1 g/mi, 
HiLeakDis shall be set to 2.1 g/mi:
Equation 4 to Paragraph (b)(2)
[GRAPHIC] [TIFF OMITTED] TR18AP24.056

Where:

LeakThreshold = 11.0 for air conditioning systems with a refrigerant 
capacity less than or equal to 733 grams; or LeakThreshold = 
[Refrigerant Capacity x 0.015] for air conditioning systems with a 
refrigerant capacity greater than 733 grams, where Refrigerant 
Capacity is the maximum refrigerant capacity specified for the air 
conditioning system, in grams.

    (c) Calculate the total leakage credits generated by the air 
conditioning system as follows:
    (1) Calculate a total leakage credit in megagrams separately for 
passenger automobiles and light trucks using the following equation:
Equation 5 to Paragraph (c)(1)
[GRAPHIC] [TIFF OMITTED] TR18AP24.057

Where:

Leakage = the CO2-equivalent leakage credit value in 
grams per mile determined in paragraph (b) of this section, subject 
to the maximum values specified in paragraph (c)(2) of this section.
Production = The total number of passenger automobiles or light 
trucks, whichever is applicable, produced with the air

[[Page 28196]]

conditioning system to which to the leakage credit value from 
paragraph (b)(1) or (2) of this section applies.
VLM = vehicle lifetime miles, which for passenger automobiles shall 
be 195,264 and for light trucks shall be 225,865.

    (2) Total leakage credits may not exceed the following maximum per-
vehicle values in model years 2027 through 2030:

       Table 1 to Paragraph (c)(2)--Maximum Leakage Credit Values
                                [g/mile]
------------------------------------------------------------------------
                                                     Passenger    Light
                    Model year                      automobiles   trucks
------------------------------------------------------------------------
2027.............................................          11.0     13.8
2028.............................................           8.3     10.3
2029.............................................           5.5      6.9
2030.............................................           2.8      3.4
------------------------------------------------------------------------

    (d) The results of paragraph (c) of this section, rounded to the 
nearest whole number, shall be included in the manufacturer's credit/
debit totals calculated in Sec.  86.1865-12(k)(5).
    (e) The following values for refrigerant global warming potential 
(GWPREF), or alternative values as determined by the 
Administrator, shall be used in the calculations of this section. The 
Administrator will determine values for refrigerants not included in 
this paragraph (e) upon request by a manufacturer.
    (1) For HFC-134a, GWPREF = 1430;
    (2) For HFC-152a, GWPREF = 124;
    (3) For HFO-1234yf, GWPREF 1; and
    (4) For CO2, GWPREF = 1.

0
87. Add Sec.  86.1867-31 to read as follows:


Sec.  86.1867-31  CO2 credits for reducing leakage of air conditioning 
refrigerant.

    Manufacturers may generate credits applicable to the CO2 
fleet average program described in Sec.  86.1865-12 by implementing 
specific air conditioning system technologies designed to reduce air 
conditioning refrigerant leakage over the useful life of their 
passenger automobiles and light trucks (including MDPV). Calculate 
credits for each air conditioning system used to generate 
CO2 credits. This section applies starting with model year 
2031.
    (a) Calculate an annual rate of refrigerant leakage from an air 
conditioning system in grams per year for refrigerants with GWP at or 
below 150 according to the procedures specified in SAE J2727 SEP2023 
(incorporated by reference, see Sec.  86.1).
    (b) Determine the CO2-equivalent gram per mile leakage 
reduction separately for passenger automobiles and light trucks, as 
follows:
    (1) Calculate the leakage credit to the nearest 0.1 g/mile using 
the following equation:
Equation 1 to Paragraph (b)(1)
[GRAPHIC] [TIFF OMITTED] TR18AP24.058

Where:

MaxCredit is the maximum per-vehicle value of the leakage credit. 
Use 1.6 g/mile for passenger automobiles and 2.0 g/mile for light 
trucks.
GWPREF means the global warming potential of the 
refrigerant as indicated in paragraph (e) of this section.
HiLeakDis is the high leak disincentive, as determined in paragraph 
(b)(2) of this section.

    (2) Calculate the high leak disincentive, HiLeakDis, using the 
following equation, except that if the calculated result is less than 
zero, set HiLeakDis equal to zero:
Equation 2 to Paragraph (b)(2)
[GRAPHIC] [TIFF OMITTED] TR18AP24.059

Where:

K = a constant. Use 1.6 for passenger automobiles and 2.0 for light 
trucks.
LeakScore means the annual refrigerant leakage rate as described in 
paragraph (a) of this section, expressed to the nearest 0.1 grams 
per year. If the calculated rate for passenger automobiles is less 
than 8.3 grams/year (or 4.1 grams/year for systems using only 
electric compressors), use 8.3 grams/year (or 4.1 grams/year for 
systems using only electric compressors). If the calculated rate for 
light trucks is less than 10.4 grams/year (or 5.2 grams/year for 
systems using only electric compressors), use 10.4 grams/year (or 
5.2 grams/year for systems using only electric compressors).
LeakThreshold = 11.0 or [Refrigerant Capacity x 0.015], whichever is 
greater, where Refrigerant Capacity is the maximum refrigerant 
capacity specified for the air conditioning system, in grams.

    (c) Calculate the total leakage reduction credits generated by the 
air conditioning system separately for passenger automobiles and light 
trucks to the nearest whole megagram using the following equation:
Equation 3 to Paragraph (c)
[GRAPHIC] [TIFF OMITTED] TR18AP24.060

Where:

Leakage = the CO2-equivalent leakage credit value in 
grams per mile determined in paragraph (b) of this section for 
passenger automobiles or light trucks.
Production = The total number of passenger automobiles or light 
trucks, produced with the air conditioning system to which to the 
leakage credit value from paragraph (b) of this section applies.
VLM = vehicle lifetime miles. Use 195,264 for passenger automobiles 
and 225,865 for light trucks.

    (d) Include the results of paragraph (c) of this section in your 
credit totals calculated in Sec.  86.1865-12(k)(5).
    (e) Calculate leakage credits using values for refrigerant global 
warming potential (GWPREF) as follows:
    (1) Use the following values for the specific refrigerants:
    (i) For HFC-152a, GWPREF = 124.
    (ii) For HFO-1234yf, GWPREF = 1.
    (iii) For CO2, GWPREF = 1.
    (2) EPA will assign values for GWPREF, up to a value of 
150, for other refrigerants upon request.

[[Page 28197]]


0
88. Revise and republish Sec.  86.1868-12 to read as follows:


Sec.  86.1868-12  CO2 credits for improving the efficiency of air 
conditioning systems.

    Manufacturers may generate credits applicable to the CO2 
fleet average program described in Sec.  86.1865-12 by implementing 
specific air conditioning system technologies designed to reduce air 
conditioning-related CO2 emissions over the useful life of 
their passenger automobiles and light trucks (including MDPV). The 
provisions of this section do not apply for medium-duty vehicles. 
Credits shall be calculated according to this section for each air 
conditioning system that the manufacturer is using to generate 
CO2 credits. Manufacturers must validate credits under this 
section based on testing as described in paragraph (g) of this section. 
Starting in model year 2027, manufacturers may generate credits under 
this section only for vehicles propelled by internal combustion 
engines.
    (a) Air conditioning efficiency credits are available for the 
following technologies in the gram per mile amounts indicated for each 
vehicle category in the following table:

     Table 1 to Paragraph (a)--Technology-Specific Air Conditioning
                           Efficiency Credits
                                [g/mile]
------------------------------------------------------------------------
                                             Passenger
       Air conditioning technology          automobiles    Light trucks
------------------------------------------------------------------------
Reduced reheat, with externally                      1.5             2.2
 controlled, variable-displacement
 compressor (e.g., a compressor that
 controls displacement based on
 temperature setpoint and/or cooling
 demand of the air conditioning system
 control settings inside the passenger
 compartment)...........................
Reduced reheat, with externally                      1.0             1.4
 controlled, fixed-displacement or
 pneumatic variable displacement
 compressor (e.g., a compressor that
 controls displacement based on
 conditions within, or internal to, the
 air conditioning system, such as head
 pressure, suction pressure, or
 evaporator outlet temperature).........
Default to recirculated air with closed-             1.5             2.2
 loop control of the air supply (sensor
 feedback to control interior air
 quality) whenever the ambient
 temperature is 75 [deg]F or higher: Air
 conditioning systems that operated with
 closed-loop control of the air supply
 at different temperatures may receive
 credits by submitting an engineering
 analysis to the Administrator for
 approval...............................
Default to recirculated air with open-               1.0             1.4
 loop control air supply (no sensor
 feedback) whenever the ambient
 temperature is 75 [deg]F or higher. Air
 conditioning systems that operate with
 open-loop control of the air supply at
 different temperatures may receive
 credits by submitting an engineering
 analysis to the Administrator for
 approval...............................
Blower motor controls which limit wasted             0.8             1.1
 electrical energy (e.g., pulse width
 modulated power controller)............
Internal heat exchanger (e.g., a device              1.0             1.4
 that transfers heat from the high-
 pressure, liquid-phase refrigerant
 entering the evaporator to the low-
 pressure, gas-phase refrigerant exiting
 the evaporator)........................
Improved condensers and/or evaporators               1.0             1.4
 with system analysis on the
 component(s) indicating a coefficient
 of performance improvement for the
 system of greater than 10% when
 compared to previous industry standard
 designs)...............................
Oil separator. The manufacturer must                 0.5             0.7
 submit an engineering analysis
 demonstrating the increased improvement
 of the system relative to the baseline
 design, where the baseline component
 for comparison is the version which a
 manufacturer most recently had in
 production on the same vehicle design
 or in a similar or related vehicle
 model. The characteristics of the
 baseline component shall be compared to
 the new component to demonstrate the
 improvement............................
Advanced technology air conditioning                 1.1             1.1
 compressor with improved efficiency
 relative to fixed-displacement
 compressors achieved through the
 addition of a variable crankcase
 suction valve..........................
------------------------------------------------------------------------

    (b) Air conditioning efficiency credits are determined on an air 
conditioning system basis. For each air conditioning system that is 
eligible for a credit based on the use of one or more of the items 
listed in paragraph (a) of this section, the total credit value is the 
sum of the gram per mile values for the appropriate model year listed 
in paragraph (a) for each item that applies to the air conditioning 
system. The total credit value for an air conditioning system may not 
be greater than 5.0 grams per mile for any passenger automobile or 7.2 
grams per mile for any light truck.
    (c) The total efficiency credits generated by an air conditioning 
system shall be calculated in megagrams separately for passenger 
automobiles and light trucks according to the following formula:
Equation 1 to Paragraph (c)
[GRAPHIC] [TIFF OMITTED] TR18AP24.061

Where:

Credit = the CO2 efficiency credit value in grams per 
mile determined in paragraph (b) of this section, whichever is 
applicable. Starting in model year 2027, multiply the credit value 
for PHEV by (1-UF), where UF = the fleet utility factor established 
under 40 CFR 600.116-12(c)(1) or (c)(10)(iii) (weighted 55 percent 
city, 45 percent highway.
Production = The total number of passenger automobiles or light 
trucks, whichever is applicable, produced with the air conditioning 
system to which to the efficiency credit value from paragraph (b) of 
this section applies.
VLM = vehicle lifetime miles, which for passenger automobiles shall 
be 195,264 and for light trucks shall be 225,865.

    (d) The results of paragraph (c) of this section, rounded to the 
nearest whole number, shall be included in the manufacturer's credit/
debit totals calculated in Sec.  86.1865-12(k)(5).
    (e)-(f) [Reserved]
    (g) For AC17 validation testing and reporting requirements, 
manufacturers must validate air conditioning credits by

[[Page 28198]]

using the AC17 Test Procedure in 40 CFR 1066.845 as follows:
    (1) For each air conditioning system (as defined in Sec.  86.1803) 
selected by the manufacturer to generate air conditioning efficiency 
credits, the manufacturer shall perform the AC17 Air Conditioning 
Efficiency Test Procedure specified in 40 CFR 1066.845, according to 
the requirements of this paragraph (g).
    (2) Complete the following testing and calculations:
    (i) Perform the AC17 test on a vehicle that incorporates the air 
conditioning system with the credit-generating technologies.
    (ii) Perform the AC17 test on a vehicle which does not incorporate 
the credit-generating technologies. The tested vehicle must be similar 
to the vehicle tested under paragraph (g)(2)(i) of this section and 
selected using good engineering judgment. The tested vehicle may be 
from an earlier design generation. If the manufacturer cannot identify 
an appropriate vehicle to test under this paragraph (g)(2)(ii), they 
may submit an engineering analysis that describes why an appropriate 
vehicle is not available or not appropriate, and includes data and 
information supporting specific credit values, using good engineering 
judgment.
    (iii) Subtract the CO2 emissions determined from testing 
under paragraph (g)(1)(i) of this section from the CO2 
emissions determined from testing under paragraph (g)(1)(ii) of this 
section and round to the nearest 0.1 grams/mile. If the result is less 
than or equal to zero, the air conditioning system is not eligible to 
generate credits. If the result is greater than or equal to the total 
of the gram per mile credits determined in paragraph (b) of this 
section, then the air conditioning system is eligible to generate the 
maximum allowable value determined in paragraph (b) of this section. If 
the result is greater than zero but less than the total of the gram per 
mile credits determined in paragraph (b) of this section, then the air 
conditioning system is eligible to generate credits in the amount 
determined by subtracting the CO2 emissions determined from 
testing under paragraph (g)(1)(i) of this section from the 
CO2 emissions determined from testing under paragraph 
(g)(1)(ii) of this section and rounding to the nearest 0.1 grams/mile.
    (3) For the first model year for which an air conditioning system 
is expected to generate credits, the manufacturer must select for 
testing the projected highest-selling configuration within each 
combination of vehicle platform and air conditioning system (as those 
terms are defined in Sec.  86.1803). The manufacturer must test at 
least one unique air conditioning system within each vehicle platform 
in a model year, unless all unique air conditioning systems within a 
vehicle platform have been previously tested. A unique air conditioning 
system design is a system with unique or substantially different 
component designs or types and/or system control strategies (e.g., 
fixed-displacement vs. variable displacement compressors, orifice tube 
vs. thermostatic expansion valve, single vs. dual evaporator, etc.). In 
the first year of such testing, the tested vehicle configuration shall 
be the highest production vehicle configuration within each platform. 
In subsequent model years the manufacturer must test other unique air 
conditioning systems within the vehicle platform, proceeding from the 
highest production untested system until all unique air conditioning 
systems within the platform have been tested, or until the vehicle 
platform experiences a major redesign. Whenever a new unique air 
conditioning system is tested, the highest production configuration 
using that system shall be the vehicle selected for testing. Credits 
may continue to be generated by the air conditioning system installed 
in a vehicle platform provided that:
    (i) The air conditioning system components and/or control 
strategies do not change in any way that could be expected to cause a 
change in its efficiency;
    (ii) The vehicle platform does not change in design such that the 
changes could be expected to cause a change in the efficiency of the 
air conditioning system; and
    (iii) The manufacturer continues to test at least one unique air 
conditioning system within each platform using the air conditioning 
system, in each model year, until all unique air conditioning systems 
within each platform have been tested.
    (4) Each air conditioning system must be tested and must meet the 
testing criteria in order to be allowed to generate credits. Credits 
may continue to be generated by an air conditioning system in 
subsequent model years if the manufacturer continues to test at least 
one unique air conditioning system within each platform on an annual 
basis, unless all systems have been previously tested, as long as the 
air conditioning system and vehicle platform do not change 
substantially.
    (5) AC17 testing requirements apply as follows for electric 
vehicles and plug-in hybrid electric vehicles:
    (i) Manufacturers may omit AC17 testing for electric vehicles. 
Electric vehicles may qualify for air conditioning efficiency credits 
based on identified technologies, without testing. The application for 
certification must include a detailed description of the vehicle's air 
conditioning system and identify any technology items eligible for air 
conditioning efficiency credits. Include additional supporting 
information to justify the air conditioning credit for each technology.
    (ii) The provisions of paragraph (g)(5)(i) of this section also 
apply for plug-in hybrid electric vehicles if they have an all electric 
range of at least 60 miles (combined city and highway) after adjustment 
to reflect actual in-use driving conditions (see 40 CFR 600.311(j)), 
and they do not rely on the engine to cool the vehicle's cabin for the 
ambient and driving conditions represented by the AC17 test.
    (iii) If AC17 testing is required for plug-in hybrid electric 
vehicles, perform this testing in charge-sustaining mode.
    (h) The following definitions apply to this section:
    (1) Reduced reheat, with externally-controlled, variable 
displacement compressor means a system in which compressor displacement 
is controlled via an electronic signal, based on input from sensors 
(e.g., position or setpoint of interior temperature control, interior 
temperature, evaporator outlet air temperature, or refrigerant 
temperature) and air temperature at the outlet of the evaporator can be 
controlled to a level at 41 [deg]F, or higher.
    (2) Reduced reheat, with externally-controlled, fixed-displacement 
or pneumatic variable displacement compressor means a system in which 
the output of either compressor is controlled by cycling the compressor 
clutch off-and-on via an electronic signal, based on input from sensors 
(e.g., position or setpoint of interior temperature control, interior 
temperature, evaporator outlet air temperature, or refrigerant 
temperature) and air temperature at the outlet of the evaporator can be 
controlled to a level at 41 [deg]F, or higher.
    (3) Default to recirculated air mode means that the default 
position of the mechanism which controls the source of air supplied to 
the air conditioning system shall change from outside air to 
recirculated air when the operator or the automatic climate control 
system has engaged the air conditioning system (i.e., evaporator is 
removing heat), except under those conditions where dehumidification is 
required for visibility (i.e., defogger mode). In vehicles equipped 
with interior air quality sensors (e.g., humidity sensor, or carbon 
dioxide sensor), the controls may

[[Page 28199]]

determine proper blend of air supply sources to maintain freshness of 
the cabin air and prevent fogging of windows while continuing to 
maximize the use of recirculated air. At any time, the vehicle operator 
may manually select the non-recirculated air setting during vehicle 
operation but the system must default to recirculated air mode on 
subsequent vehicle operations (i.e., next vehicle start). The climate 
control system may delay switching to recirculation mode until the 
interior air temperature is less than the outside air temperature, at 
which time the system must switch to recirculated air mode.
    (4) Blower motor controls which limit waste energy means a method 
of controlling fan and blower speeds which does not use resistive 
elements to decrease the voltage supplied to the motor.
    (5) Improved condensers and/or evaporators means that the 
coefficient of performance (COP) of air conditioning system using 
improved evaporator and condenser designs is 10 percent higher, as 
determined using the bench test procedures described in SAE J2765 
(incorporated by reference, see Sec.  86.1), when compared to a system 
using standard, or prior model year, component designs. The 
manufacturer must submit an engineering analysis demonstrating the 
increased improvement of the system relative to the baseline design, 
where the baseline component(s) for comparison is the version which a 
manufacturer most recently had in production on the same vehicle design 
or in a similar or related vehicle model. The dimensional 
characteristics (e.g., tube configuration/thickness/spacing, and fin 
density) of the baseline component(s) shall be compared to the new 
component(s) to demonstrate the improvement in coefficient of 
performance.
    (6) Oil separator means a mechanism which removes at least 50 
percent of the oil entrained in the oil/refrigerant mixture exiting the 
compressor and returns it to the compressor housing or compressor 
inlet, or a compressor design which does not rely on the circulation of 
an oil/refrigerant mixture for lubrication.
    (7) Advanced technology air conditioning compressor means an air 
conditioning compressor with improved efficiency relative to fixed-
displacement compressors. Efficiency gains are derived from improved 
internal valve systems that optimize the internal refrigerant flow 
across the range of compressor operator conditions through the addition 
of a variable crankcase suction valve.

0
89. Amend Sec.  86.1869-12 by revising the introductory text and 
paragraphs (b)(2) and (f) to read as follows:


Sec.  86.1869-12  CO2 credits for off-cycle CO2 reducing technologies.

    This section describes how manufacturers may generate credits for 
off-cycle CO2-reducing technologies through model year 2032. 
The provisions of this section do not apply for medium-duty vehicles, 
except that Sec.  86.1819-14(d)(13) describes how to apply paragraphs 
(c) and (d) of this section for those vehicles. Manufacturers may no 
longer generate credits under this section starting in model year 2027 
for vehicles deemed to have zero tailpipe emissions and in model year 
2033 for all other vehicles. Manufacturers may no longer generate 
credits under paragraphs (c) and (d) of this section for any type of 
vehicle starting in model year 2027.
* * * * *
    (b) * * *
    (2) The maximum allowable decrease in the manufacturer's combined 
passenger automobile and light truck fleet average CO2 
emissions attributable to use of the default credit values in paragraph 
(b)(1) of this section is specified in paragraph (b)(2)(v) of this 
section. If the total of the CO2 g/mi credit values from 
paragraph (b)(1) of this section does not exceed the specified off-
cycle credit cap for any passenger automobile or light truck in a 
manufacturer's fleet, then the total off-cycle credits may be 
calculated according to paragraph (f) of this section. If the total of 
the CO2 g/mi credit values from paragraph (b)(1) of this 
section exceeds the specified off-cycle credit cap for any passenger 
automobile or light truck in a manufacturer's fleet, then the gram per 
mile decrease for the combined passenger automobile and light truck 
fleet must be determined according to paragraph (b)(2)(ii) of this 
section to determine whether the applicable limitation has been 
exceeded.
    (i) Determine the gram per mile decrease for the combined passenger 
automobile and light truck fleet using the following formula:
[GRAPHIC] [TIFF OMITTED] TR18AP24.062

Where:

Credits = The total of passenger automobile and light truck credits, 
in Megagrams, determined according to paragraph (f) of this section 
and limited to those credits accrued by using the default gram per 
mile values in paragraph (b)(1) of this section.
ProdC = The number of passenger automobiles produced by 
the manufacturer and delivered for sale in the United States. 
Starting in model year 2027, include only vehicles with internal 
combustion engines.
ProdT = The number of light trucks produced by the 
manufacturer and delivered for sale in the United States. Starting 
in model year 2027, include only vehicles with internal combustion 
engines.

    (ii) If the value determined in paragraph (b)(2)(i) of this section 
is greater than the off-cycle credit cap specified in paragraph 
(b)(2)(v) of this section, the total credits, in Megagrams, that may be 
accrued by a manufacturer using the default gram per mile values in 
paragraph (b)(1) of this section shall be determined using the 
following formula:
[GRAPHIC] [TIFF OMITTED] TR18AP24.063

Where:

cap = the off-cycle credit cap specified in paragraph (b)(2)(v) of 
this section.

    (iii) If the value determined in paragraph (b)(2)(i) of this 
section is not greater than the off-cycle credit cap specified in 
paragraph (b)(2)(v) of this section, then the credits that may be 
accrued by a manufacturer using the

[[Page 28200]]

default gram per mile values in paragraph (b)(1) of this section do not 
exceed the allowable limit, and total credits may be determined for 
each category of vehicles according to paragraph (f) of this section.
    (iv) If the value determined in paragraph (b)(2)(i) of this section 
is greater than the off-cycle credit cap specified in paragraph 
(b)(2)(v) of this section, then the combined passenger automobile and 
light truck credits, in Megagrams, that may be accrued using the 
calculations in paragraph (f) of this section must not exceed the value 
determined in paragraph (b)(2)(ii) of this section. This limitation 
should generally be done by reducing the amount of credits attributable 
to the vehicle category that caused the limit to be exceeded such that 
the total value does not exceed the value determined in paragraph 
(b)(2)(ii) of this section.
    (v) The manufacturer's combined passenger automobile and light 
truck fleet average CO2 emissions attributable to use of the 
default credit values in paragraph (b)(1) of this section may not 
exceed the following specific values:

------------------------------------------------------------------------
                                                              Off-cycle
                         Model year                           credit cap
                                                               (g/mile)
------------------------------------------------------------------------
(A) 2023-2026..............................................           15
(B) 2027-2030..............................................           10
(C) 2031...................................................          8.0
(D) 2032...................................................          6.0
------------------------------------------------------------------------

* * * * *
    (f) Calculation of total off-cycle credits. Total off-cycle credits 
in Megagrams of CO2 (rounded to the nearest whole megagram) 
shall be calculated separately for passenger automobiles and light 
trucks according to the following formula:
[GRAPHIC] [TIFF OMITTED] TR18AP24.064

Where:

Credit = the credit value in grams per mile determined in paragraph 
(b), (c), or (d) of this section. Starting in model year 2027, 
multiply the credit value for PHEV by (1-UF), where
UF = the fleet utility factor established under 40 CFR 600.116-
12(c)(1) or (c)(10)(iii) (weighted 55 percent city, 45 percent 
highway).
Production = The total number of passenger automobiles or light 
trucks, whichever is applicable, produced with the off-cycle 
technology to which to the credit value determined in paragraph (b), 
(c), or (d) of this section applies.
VLM = vehicle lifetime miles, which for passenger automobiles shall 
be 195,264 and for light trucks shall be 225,865.


Sec.  86.1871-12  [Removed]

0
90. Remove Sec.  86.1871-12.

PART 600--FUEL ECONOMY AND GREENHOUSE GAS EXHAUST EMISSIONS OF 
MOTOR VEHICLES

0
91. The authority citation for part 600 continues to read as follows:

    Authority: 49 U.S.C. 32901-23919q, Pub. L. 109-58.


0
92. Amend Sec.  600.001 by revising paragraph (a) to read as follows:


Sec.  600.001  General applicability.

    (a) The provisions of this part apply to 2008 and later model year 
automobiles that are not medium duty passenger vehicles 
(MDPVFE), and to 2011 and later model year automobiles 
including MDPVFE. The test procedures in subpart B of this 
part also apply to 2014 and later heavy-duty vehicles subject to 
standards under 40 CFR part 86, subpart S.
* * * * *

0
93. Amend Sec.  600.002 by revising the definitions for ``Engine 
code'', ``Light truck'', ``Medium-duty passenger vehicle'', 
``Subconfiguration'', and ``Vehicle configuration'' to read as follows:


Sec.  600.002  Definitions.

* * * * *
    Engine code means one of the following:
    (1) For LDV, LDT, and MDPVFE, engine code means a unique 
combination, within a test group (as defined in Sec.  86.1803 of this 
chapter), of displacement, fuel injection (or carburetion or other fuel 
delivery system), calibration, distributor calibration, choke 
calibration, auxiliary emission control devices, and other engine and 
emission control system components specified by the Administrator. For 
electric vehicles, engine code means a unique combination of 
manufacturer, electric traction motor, motor configuration, motor 
controller, and energy storage device.
    (2) For HDV, engine code has the meaning given in Sec.  86.1819-
14(d)(12) of this chapter.
* * * * *
    Light truck means an automobile that is not a passenger automobile, 
as defined by the Secretary of Transportation at 49 CFR 523.5. This 
term is interchangeable with ``non-passenger automobile.'' The term 
``light truck'' includes medium-duty passenger vehicles 
(MDPVFE) manufactured during 2011 and later model years.
    Medium-duty passenger vehicle (MDPVFE) means a vehicle that would 
satisfy the criteria for light trucks as defined by the Secretary of 
Transportation at 49 CFR 523.5 but for its gross vehicle weight rating 
or its curb weight, is rated at more than 8,500 lbs GVWR or has a 
vehicle curb weight of more than 6,000 pounds or has a basic vehicle 
frontal area in excess of 45 square feet, and is designed primarily to 
transport passengers, but does not include a vehicle that--
    (1) Is an ``incomplete truck'' as defined in 40 CFR 86.1803-01; or
    (2) Has a seating capacity of more than 12 persons; or
    (3) Is designed for more than 9 persons in seating rearward of the 
driver's seat; or
    (4) Is equipped with an open cargo area (for example, a pick-up 
truck box or bed) of 72.0 inches in interior length or more. A covered 
box not readily accessible from the passenger compartment will be 
considered an open cargo area for purposes of this definition.
* * * * *
    Subconfiguration means one of the following:
    (1) For LDV, LDT, and MDPVFE, subconfiguration means a 
unique combination within a vehicle configuration of equivalent test 
weight, road-load horsepower, and any other operational characteristics 
or parameters which the Administrator determines may significantly 
affect fuel economy or CO2 emissions within a vehicle 
configuration.
    (2) For HDV, subconfiguration has the meaning given in Sec.  
86.1819-14(d)(12) of this chapter.
* * * * *
    Vehicle configuration means one of the following:
    (1) For LDV, LDT, and MDPVFE, vehicle configuration 
means a unique combination of basic engine, engine code, inertia weight 
class, transmission configuration, and axle ratio within a base level.

[[Page 28201]]

    (2) For HDV, vehicle configuration has the meaning given for 
``configuration'' in Sec.  86.1819-14(d)(12) of this chapter.
* * * * *

0
94. Amend Sec.  600.007 by revising paragraph (b)(4) introductory text 
to read as follows:


Sec.  600.007  Vehicle acceptability.

* * * * *
    (b) * * *
    (4) Each fuel economy data vehicle must meet the same exhaust 
emission standards as certification vehicles of the respective engine-
system combination during the test in which the fuel economy test 
results are generated. This may be demonstrated using one of the 
following methods:
* * * * *


Sec.  600.008  [Amended]

0
95. Amend Sec.  600.008 by removing paragraphs (b)(1)(iii), (iv), and 
(v).

0
96. Revise and republish Sec.  600.011 to read as follows:


Sec.  600.011  Incorporation by reference.

    Certain material is incorporated by reference into this part with 
the approval of the Director of the Federal Register under 5 U.S.C. 
552(a) and 1 CFR part 51. To enforce any edition other than that 
specified in this section, EPA must publish a document in the Federal 
Register and the material must be available to the public. All approved 
incorporation by reference (IBR) material is available for inspection 
at EPA and at the National Archives and Records Administration (NARA). 
Contact EPA at: U.S. EPA, Air and Radiation Docket Center, WJC West 
Building, Room 3334, 1301 Constitution Ave. NW, Washington, DC 20004; 
www.epa.gov/dockets; (202) 202-1744. For information on inspecting this 
material at NARA, visit www.archives.gov/federal-register/cfr/ibr-locations.html or email [email protected]. The material may be 
obtained from the following sources:
    (a) ASTM International (ASTM). ASTM International, 100 Barr Harbor 
Drive, P.O. Box C700, West Conshohocken, PA 19428-2959; (610) 832-9585; 
www.astm.org.
    (1) ASTM D86-23, Standard Test Method for Distillation of Petroleum 
Products and Liquid Fuels at Atmospheric Pressure; Approved March 1, 
2023; IBR approved for Sec.  600.113-12(f).
    (2) ASTM D975-13a, Standard Specification for Diesel Fuel Oils, 
Approved December 1, 2013; IBR approved for Sec.  600.107-08(b).
    (3) ASTM D1298-12b, Standard Test Method for Density, Relative 
Density, or API Gravity of Crude Petroleum and Liquid Petroleum 
Products by Hydrometer Method, Approved June 1, 2012; IBR approved for 
Sec. Sec.  600.113-12(f); 600.510-12(g).
    (4) ASTM D1319-20a, Standard Test Method for Hydrocarbon Types in 
Liquid Petroleum Products by Fluorescent Indicator Adsorption, Approved 
August 1, 2020; IBR approved for Sec.  600.113-12(f).
    (5) ASTM D1945-03 (Reapproved 2010), Standard Test Method for 
Analysis of Natural Gas By Gas Chromatography, Approved January 1, 
2010; IBR approved for Sec.  600.113-12(f) and (k).
    (6) ASTM D3338/D3338M-20a, Standard Test Method for Estimation of 
Net Heat of Combustion of Aviation Fuels, Approved December 1, 2020; 
IBR approved for Sec.  600.113-12(f).
    (7) ASTM D3343-22, Standard Test Method for Estimation of Hydrogen 
Content of Aviation Fuels, Approved November 1, 2022; IBR approved for 
Sec.  600.113-12(f).
    (8) ASTM D4052-22, Standard Test Method for Density, Relative 
Density, and API Gravity of Liquids by Digital Density Meter, Approved 
May 1, 2022; IBR approved for Sec.  600.113-12(f).
    (9) ASTM D4815-22, Standard Test Method for Determination of MTBE, 
ETBE, TAME, DIPE, tertiary-Amyl Alcohol and C1 to 
C4 Alcohols in Gasoline by Gas Chromatography, Approved 
April 1, 2022; IBR approved for Sec.  600.113-12(f).
    (10) ASTM D5599-22, Standard Test Method for Determination of 
Oxygenates in Gasoline by Gas Chromatography and Oxygen Selective Flame 
Ionization Detection, Approved April 1, 2022; IBR approved for Sec.  
600.113-12(f).
    (11) ASTM D5769-22, Standard Test Method for Determination of 
Benzene, Toluene, and Total Aromatics in Finished Gasolines by Gas 
Chromatography/Mass Spectrometry, Approved July 1, 2022; IBR approved 
for Sec.  600.113-12(f).
    (b) International Organization for Standardization (ISO). 
International Organization for Standardization, Case Postale 56, CH-
1211 Geneva 20, Switzerland; (41) 22749 0111; [email protected]; 
www.iso.org.
    (1) ISO/IEC 18004:2006(E), Information technology--Automatic 
identification and data capture techniques--QR Code 2005 bar code 
symbology specification, Second Edition, September 1, 2006; IBR 
approved for Sec.  600.302-12(b).
    (2) [Reserved]
    (c) SAE International (SAE). SAE International, 400 Commonwealth 
Dr., Warrendale, PA 15096-0001; (877) 606-7323 (U.S. and Canada) or 
(724) 776-4970 (outside the U.S. and Canada); www.sae.org.
    (1) Motor Vehicle Dimensions--Recommended Practice SAE 1100a 
(Report of Human Factors Engineering Committee, Society of Automotive 
Engineers, approved September 1973 as revised September 1975); IBR 
approved for Sec.  600.315-08(c).
    (2) SAE J1634 JUL2017, Battery Electric Vehicle Energy Consumption 
and Range Test Procedure, Revised July 2017; IBR approved for 
Sec. Sec.  600.116-12(a); 600.210-12(d); 600.311-12(j) and (k).
    (3) SAE J1711 FEB2023, Recommended Practice for Measuring the 
Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, 
Including Plug-In Hybrid Vehicles; Revised February 2023; IBR approved 
for Sec. Sec.  600.114-12(c) and (f); 600.116-12(b) and (c); 600.311-
12(c), (j), and (k).

0
97. Add Sec.  600.101 to subpart B to read as follows:


Sec.  600.101  Testing overview.

    Perform testing under this part as described in Sec.  600.111. This 
involves the following specific requirements:
    (a) Perform the following tests and calculations for LDV, LDT, and 
MDPVFE:
    (1) Testing to demonstrate compliance with Corporate Average Fuel 
Economy standards and greenhouse gas emission standards generally 
involves a combination of two cycles--the Federal Test Procedure and 
the Highway Fuel Economy Test (see 40 CFR 1066.801). Testing to 
determine values for fuel economy labeling under subpart D of this part 
generally involves testing with three additional test cycles; Sec.  
600.210 describes circumstances in which testing with these additional 
test cycles does not apply for labeling purposes.
    (2) Calculate fuel economy and CREE values for vehicle 
subconfigurations, configurations, base levels, and model types as 
described in Sec. Sec.  600.206 and 600.208. Calculate fleet average 
values for fuel economy and CREE as described in Sec.  600.510.
    (3) Determine fuel economy values for labeling as described in 
Sec.  600.210 using either the vehicle-specific 5-cycle method or the 
derived 5-cycle method as described in Sec.  600.115.
    (i) For vehicle-specific 5-cycle labels, the test vehicle 
(subconfiguration) data are adjusted to better represent in-use fuel 
economy and CO2 emissions based on the vehicle-specific 
equations in Sec.  600.114. Sections 600.207 and 600.209

[[Page 28202]]

describe how to use the ``adjusted'' city and highway subconfiguration 
values to calculate adjusted values for the vehicle configuration, base 
level, and the model type. These ``adjusted'' city, highway, and 
combined fuel economy estimates and the combined CO2 
emissions for the model type are shown on fuel economy labels.
    (ii) For derived 5-cycle labels, calculate ``unadjusted'' fuel 
economy and CO2 values for vehicle subconfigurations, 
configurations, base levels, and model types as described in Sec. Sec.  
600.206 and 600.208. Section 600.210 describes how to use the 
unadjusted model type values to calculate ``adjusted'' model type 
values for city, highway, and combined fuel economy and CO2 
emissions using the derived 5-cycle equations for the fuel economy 
label.
    (4) Diesel-fueled Tier 3 vehicles are not subject to cold 
temperature emission standards; however, you must test at least one 
vehicle in each test group over the cold temperature FTP to comply with 
requirements of this part. This paragraph (a)(4) does not apply for 
Tier 4 vehicles.
    (b) Perform the following tests and calculations for all chassis-
tested vehicles other than LDV, LDT, and MDPVFE that are 
subject to standards under 40 CFR part 86, subpart S:
    (1) Test vehicles as described in 40 CFR 86.1811, 86.1816, and 
86.1819. Testing to demonstrate compliance with CO2 emission 
standards generally involves a combination of two cycles for each test 
group--the Federal Test Procedure and the Highway Fuel Economy Test 
(see 40 CFR 1066.801). Fuel economy labeling requirements do not apply 
for vehicles above 8,500 pounds GVWR, except for MDPVFE.
    (2) Determine fleet average CO2 emissions as described 
in 40 CFR 86.1819-14(d)(9). These CO2 emission results are 
used to calculate corresponding fuel consumption values to demonstrate 
compliance with fleet average fuel consumption standards under 49 CFR 
part 535.
    (c) Manufacturers must use E10 gasoline test fuel as specified in 
40 CFR 1065.710(b) for new testing to demonstrate compliance with all 
emission standards and to determine fuel economy values. This 
requirement starts in model year 2027. Interim provisions related to 
test fuel apply as described in Sec.  600.117.

0
98. Amend Sec.  600.113-12 by:
0
a. Revising the introductory text and paragraphs (f)(1) and (n).
0
b. Redesignating paragraph (o) as paragraph (p).
0
c. Adding new paragraph (o).
    The revisions and addition read as follows:


Sec.  600.113-12  Fuel economy, CO2 emissions, and carbon-related 
exhaust emission calculations for FTP, HFET, US06, SC03 and cold 
temperature FTP tests.

    The Administrator will use the calculation procedure set forth in 
this section for all official EPA testing of vehicles fueled with 
gasoline, diesel, alcohol-based or natural gas fuel. The calculations 
of the weighted fuel economy and carbon-related exhaust emission values 
require input of the weighted grams/mile values for total hydrocarbons 
(HC), carbon monoxide (CO), and carbon dioxide (CO2); and, 
additionally for methanol-fueled automobiles, methanol 
(CH3OH) and formaldehyde (HCHO); and, additionally for 
ethanol-fueled automobiles, methanol (CH3OH), ethanol 
(C2H5OH), acetaldehyde 
(C2H4O), and formaldehyde (HCHO); and 
additionally for natural gas-fueled vehicles, non-methane hydrocarbons 
(NMHC) and methane (CH4). For manufacturers selecting the 
fleet averaging option for N2O and CH4 as allowed 
under Sec.  86.1818 of this chapter the calculations of the carbon-
related exhaust emissions require the input of grams/mile values for 
nitrous oxide (N2O) and methane (CH4). Emissions 
shall be determined for the FTP, HFET, US06, SC03, and cold temperature 
FTP tests. Additionally, the specific gravity, carbon weight fraction 
and net heating value of the test fuel must be determined. The FTP, 
HFET, US06, SC03, and cold temperature FTP fuel economy and carbon-
related exhaust emission values shall be calculated as specified in 
this section. An example fuel economy calculation appears in appendix 
II to this part.
* * * * *
    (f) * * *
    (1) Gasoline test fuel properties shall be determined by analysis 
of a fuel sample taken from the fuel supply. A sample shall be taken 
after each addition of fresh fuel to the fuel supply. Additionally, the 
fuel shall be resampled once a month to account for any fuel property 
changes during storage. Less frequent resampling may be permitted if 
EPA concludes, on the basis of manufacturer-supplied data, that the 
properties of test fuel in the manufacturer's storage facility will 
remain stable for a period longer than one month. The fuel samples 
shall be analyzed to determine fuel properties as follows for neat 
gasoline (E0) and for a low-level ethanol-gasoline blend (E10):
    (i) Specific gravity. Determine specific gravity using ASTM D4052 
(incorporated by reference, see Sec.  600.011). Note that ASTM D4052 
refers to specific gravity as relative density.
    (ii) Carbon mass fraction. (A) For E0, determine hydrogen mass 
percent using ASTM D3343 (incorporated by reference, see Sec.  
600.011), then determine carbon mass fraction as CMF = 1-0.01 x 
hydrogen mass percent.
    (B) For E10, determine carbon mass fraction of test fuel, 
CMFf, using the following equation, rounded to three decimal 
places:
[GRAPHIC] [TIFF OMITTED] TR18AP24.065

Where:

VFe = volume fraction of ethanol in the test fuel as 
determined from ASTM D4815 or ASTM D5599 (both incorporated by 
reference, see Sec.  600.011). Calculate the volume fraction by 
dividing the volume percent of ethanol by 100.
SGe = specific gravity of pure ethanol. Use 
SGe = 0.7939.
SGf = specific gravity of the test fuel as determined by 
ASTM D1298 or ASTM D4052 (both incorporated by reference, see Sec.  
600.011).
CMFe = carbon mass fraction of pure ethanol. Use 
CMFe = 0.5214.
CMFh = carbon mass fraction of the hydrocarbon fraction 
of the test fuel as determined using ASTM D3343 (incorporated by 
reference, see Sec.  600.011) with the following inputs, using 
VTier3 or VLEVIII as appropriate:

[[Page 28203]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.066

Where:

VParo,f = volume percent aromatics in the test fuel as 
determined by ASTM D1319 (incorporated by reference, see Sec.  
600.011). An acceptable alternative method is ASTM D5769 
(incorporated by reference, see Sec.  600.011), as long as the 
result is bias-corrected as described in ASTM D1319.
[GRAPHIC] [TIFF OMITTED] TR18AP24.067

    T10, T50, T90 = the 10, 50, and 90 
percent distillation temperatures of the test fuel, respectively, in 
degrees Fahrenheit, as determined by ASTM D86 (incorporated by 
reference, see Sec.  600.011).
    (iii) Net heat of combustion. (A) For E0, determine net heat of 
combustion in MJ/kg using ASTM D3338/D3338M (incorporated by reference, 
see Sec.  600.011).
    (B) For E10, determine net heat of combustion, NHCf, in 
MJ/kg using the following equation, rounding the result to the nearest 
whole number:
[GRAPHIC] [TIFF OMITTED] TR18AP24.068

Where:

NHCe = net heat of combustion of pure ethanol. Use 
NHCe = 11,530 Btu/lb.
NHCh = net heat of combustion of the hydrocarbon fraction 
of the test fuel as determined using ASTM D3338 (incorporated by 
reference, see Sec.  600.011) using input values as specified in 
paragraph (f)(1)(ii) of this section.
* * * * *
    (n) Manufacturers may use a value of 0 grams CO2 and 
CREE per mile to represent the emissions of electric vehicles and the 
electric operation of plug-in hybrid electric vehicles derived from 
electricity generated from sources that are not onboard the vehicle.
    (o)(1) For testing with E10, calculate fuel economy using the 
following equation, rounded to the nearest 0.1 miles per gallon:
[GRAPHIC] [TIFF OMITTED] TR18AP24.069

Where:

CMFtestfuel = carbon mass fraction of the test fuel, 
expressed to three decimal places.
SGtestfuel = the specific gravity of the test fuel as 
obtained in paragraph (f)(1) of this section, expressed to three 
decimal places.
rH2O = the density of pure water at 60 [deg]F. Use 
rH2O = 3781.69 g/gal.
SGbasefuel = the specific gravity of the 1975 base fuel. 
Use SGbasefuel = 0.7394.
NHCbasefuel = net heat of combustion of the 1975 base 
fuel. Use NHCbasefuel = 43.047 MJ/kg.
NMOG = NMOG emission rate over the test interval or duty cycle in 
grams/mile.
CH4 = CH4 emission rate over the test interval or duty 
cycle in grams/mile.
CO = CO emission rate over the test interval or duty cycle in grams/
mile.
CO2 = measured tailpipe CO2 emission rate over the test 
interval or duty cycle in grams/mile.
Ra = sensitivity factor that represents the response of a 
typical vehicle's fuel economy to changes in fuel properties, such 
as volumetric energy content. Use Ra = 0.81.
NHCtestfuel = net heat of combustion by mass of test fuel 
as obtained in paragraph (f)(1) of this section, expressed to three 
decimal places.

    (2) Use one of the following methods to calculate the carbon-
related exhaust emissions for testing model year 2027 and later 
vehicles with the E10 test fuel specified in 40 CFR 1065.710(b):
    (i) For manufacturers not complying with the fleet averaging option 
for N2O and CH4 as allowed under 40 CFR 86.1818-
12(f)(2), calculate CREE using

[[Page 28204]]

the following equation, rounded to the nearest whole gram per mile:

CREE = (CMF/0.273 [middot] NMOG) + (1.571 [middot] CO) + CO2 + (0.749 
[middot] CH4)

Where:

CREE = carbon-related exhaust emissions.
CMF = carbon mass fraction of test fuel as obtained in paragraph 
(f)(1) of this section and rounded according to paragraph (g)(3) of 
this section.
NMOG = NMOG emission rate obtained in 40 CFR 1066.635 in grams/mile.
CO = CO emission rate obtained in paragraph (g)(2) of this section 
in grams/mile.
CO2 = measured tailpipe CO2 emission rate obtained in 
paragraph (g)(2) of this section in grams/mile.
CH4 = CH4 emission rate obtained in paragraph (g)(2) of 
this section in grams/mile.
    (ii) For manufacturers complying with the fleet averaging option 
for N2O and CH4 as allowed under 40 CFR 86.1818-
12(f)(2), calculate CREE using the following equation, rounded to the 
nearest whole gram per mile:

CREE = [(CMF/0.273) [middot] NMOG] + (1.571 [middot] CO) + CO2 + (298 
[middot] N2O) + (25 [middot] CH4)

Where:

CREE = the carbon-related exhaust emissions as defined in Sec.  
600.002.
NMOG = NMOG emission rate obtained in 40 CFR 1066.635 in grams/mile.
CO = CO emission rate obtained in paragraph (g)(2) of this section 
in grams/mile.
CO2 = measured tailpipe CO2 emission rate obtained in 
paragraph (g)(2) of this section in grams/mile.
N2O = N2O emission rate obtained in paragraph (g)(2) of 
this section in grams/mile.
CH4 = CH4 emission rate obtained in paragraph (g)(2) of 
this section in grams/mile.
CMF = carbon mass fraction of test fuel as obtained in paragraph 
(f)(1) of this section and rounded according to paragraph (g)(3) of 
this section.
* * * * *

0
99. Amend Sec.  600.114-12 by revising paragraphs (d)(2), (e)(3), 
(f)(1) introductory text, (f)(2) introductory text, and (f)(4) to read 
as follows:


Sec.  600.114-12  Vehicle-specific 5-cycle fuel economy and carbon-
related exhaust emission calculations.

* * * * *
    (d) * * *
    (2) To determine City CO2 emissions, use the appropriate 
CO2 gram/mile values expressed to the nearest 0.1 gram/mile 
instead of CREE values in the equations in this paragraph (d). The 
appropriate CO2 values for fuel economy labels based on 
testing with E10 test fuel are the measured tailpipe CO2 
emissions for the test cycle multiplied by 1.0166.
* * * * *
    (e) * * *
    (3) To determine Highway CO2 emissions, use the 
appropriate CO2 gram/mile values expressed to the nearest 
0.1 gram/mile instead of CREE values in the equations in this paragraph 
(e) The appropriate CO2 values for fuel economy labeling 
based on testing with E10 test fuel are the measured tailpipe 
CO2 emissions for the test cycle multiplied by 1.0166.
* * * * *
    (f) * * *
    (1) If the 4-bag sampling method is used, manufacturers may use the 
equations in paragraphs (a) and (b) of this section to determine city 
and highway CO2 and carbon-related exhaust emissions values. 
The appropriate CO2 emission input values for fuel economy 
labeling based on testing with E10 test fuel are the measured tailpipe 
CO2 emissions for the test cycle multiplied by 1.0166. If 
this method is chosen, it must be used to determine both city and 
highway CO2 emissions and carbon-related exhaust emissions. 
Optionally, the following calculations may be used, provided that they 
are used to determine both city and highway CO2 and carbon-
related exhaust emissions values:
* * * * *
    (2) If the 2-bag sampling method is used for the 75 [deg]F FTP 
test, it must be used to determine both city and highway CO2 
emissions and carbon-related exhaust emissions. The appropriate 
CO2 emission input values for fuel economy labeling based on 
testing with E10 test fuel are the measured tailpipe CO2 
emissions for the test cycle multiplied by 1.0166. The following 
calculations must be used to determine both city and highway 
CO2 emissions and carbon-related exhaust emissions:
* * * * *
    (4) To determine City and Highway CO2 emissions, use the 
appropriate CO2 gram/mile values expressed to the nearest 
0.1 gram/mile instead of CREE values in the equations in paragraphs 
(f)(1) through (3) of this section.
* * * * *

0
100. Amend Sec.  600.115-11 by revising the introductory text to read 
as follows:


Sec.  600.115-11  Criteria for determining the fuel economy label 
calculation method.

    This section provides the criteria to determine if the derived 5-
cycle method for determining fuel economy label values, as specified in 
Sec.  600.210-08(a)(2) or (b)(2) or Sec.  600.210-12(a)(2) or (b)(2), 
as applicable, may be used to determine label values. Separate criteria 
apply to city and highway fuel economy for each test group. The 
provisions of this section are optional. If this option is not chosen, 
or if the criteria provided in this section are not met, fuel economy 
label values must be determined according to the vehicle-specific 5-
cycle method specified in Sec.  600.210-08(a)(1) or (b)(1) or Sec.  
600.210-12(a)(1) or (b)(1), as applicable. However, dedicated 
alternative-fuel vehicles (other than battery electric vehicles and 
fuel cell vehicles), dual fuel vehicles when operating on the 
alternative fuel, MDPVFE, and vehicles imported by 
Independent Commercial Importers may use the derived 5-cycle method for 
determining fuel economy label values whether or not the criteria 
provided in this section are met. Manufacturers may alternatively 
account for this effect for battery electric vehicles, fuel cell 
vehicles, and plug-in hybrid electric vehicles (when operating in the 
charge-depleting mode) by multiplying 2-cycle fuel economy values by 
0.7 and dividing 2-cycle CO2 emission values by 0.7.
* * * * *

0
101. Amend Sec.  600.116-12 by revising paragraphs (b), (c)(1), (2), 
(5), (6), (7), and (10), and adding paragraph (c)(11) to read as 
follows:


Sec.  600.116-12  Special procedures related to electric vehicles and 
hybrid electric vehicles.

* * * * *
    (b) Determine performance values for hybrid electric vehicles that 
have no plug-in capability as specified in Sec. Sec.  600.210 and 
600.311 using the procedures for charge-sustaining operation from SAE 
J1711 (incorporated by reference in Sec.  600.011). We may approve 
alternate measurement procedures with respect to these vehicles if that 
is necessary or appropriate for meeting the objectives of this part. 
For example, we may approve alternate Net Energy Change/Fuel Ratio 
tolerances for charge-sustaining operation as described in paragraph 
(c)(5) of this section.
    (c) * * *
    (1) To determine CREE values to demonstrate compliance with GHG 
standards, calculate composite values representing combined operation 
during charge-depleting and charge-sustaining operation using the 
following utility factors, except as otherwise specified in this 
paragraph (c):

[[Page 28205]]



                  Table 1 to Paragraph (c)(1)--Fleet Utility Factors for Urban ``City'' Driving
----------------------------------------------------------------------------------------------------------------
                                              Model year 2030 and earlier          Model year 2031 and later
  Schedule range for UDDS phases, miles  -----------------------------------------------------------------------
                                            Cumulative UF     Sequential UF     Cumulative UF     Sequential UF
----------------------------------------------------------------------------------------------------------------
3.59....................................             0.125             0.125             0.062             0.062
7.45....................................             0.243             0.117             0.125             0.062
11.04...................................             0.338             0.095             0.178             0.054
14.90...................................             0.426             0.088             0.232             0.053
18.49...................................             0.497             0.071             0.278             0.046
22.35...................................             0.563             0.066             0.324             0.046
25.94...................................             0.616             0.053             0.363             0.040
29.80...................................             0.666             0.049             0.403             0.040
33.39...................................             0.705             0.040             0.437             0.034
37.25...................................             0.742             0.037             0.471             0.034
40.84...................................             0.772             0.030             0.500             0.029
44.70...................................             0.800             0.028             0.530             0.029
48.29...................................             0.822             0.022             0.555             0.025
52.15...................................             0.843             0.021             0.580             0.025
55.74...................................             0.859             0.017             0.602             0.022
59.60...................................             0.875             0.016             0.624             0.022
63.19...................................             0.888             0.013             0.643             0.019
67.05...................................             0.900             0.012             0.662             0.019
70.64...................................             0.909             0.010             0.679             0.017
----------------------------------------------------------------------------------------------------------------


                     Table 2 to paragraph (c)(1)--Fleet Utility Factors for Highway Driving
----------------------------------------------------------------------------------------------------------------
                                              Model year 2030 and earlier          Model year 2031 and later
     Schedule range for HFET, miles      -----------------------------------------------------------------------
                                            Cumulative UF     Sequential UF     Cumulative UF     Sequential UF
----------------------------------------------------------------------------------------------------------------
10.3....................................             0.123             0.123             0.168             0.168
20.6....................................             0.240             0.117             0.303             0.136
30.9....................................             0.345             0.105             0.414             0.110
41.2....................................             0.437             0.092             0.503             0.090
51.5....................................             0.516             0.079             0.576             0.073
61.8....................................             0.583             0.067             0.636             0.060
72.1....................................             0.639             0.056             0.685             0.049
----------------------------------------------------------------------------------------------------------------

    (2) Determine fuel economy values to demonstrate compliance with 
CAFE standards as follows:
    (i) For vehicles that are not dual fueled automobiles, determine 
fuel economy using the utility factors specified in paragraph (c)(1) of 
this section for model year 2030 and earlier vehicles. Do not use the 
petroleum-equivalence factors described in 10 CFR 474.3.
    (ii) Except as described in paragraph (c)(2)(iii) of this section, 
determine fuel economy for dual fueled automobiles from the following 
equation, separately for city and highway driving:
Equation 2 to Paragraph (c)(2)(ii)
[GRAPHIC] [TIFF OMITTED] TR18AP24.070

Where:

MPGgas = The miles per gallon measured while operating on 
gasoline during charge-sustaining operation as determined using the 
procedures of SAE J1711.
MPGeelec = The miles per gallon equivalent measured while 
operating on electricity. Calculate this value by dividing the 
equivalent all-electric range determined from the equation in Sec.  
86.1866-12(b)(2)(ii) by the corresponding measured Watt-hours of 
energy consumed; apply the appropriate petroleum-equivalence factor 
from 10 CFR 474.3 to convert Watt-hours to gallons equivalent. Note 
that if vehicles use no gasoline during charge-depleting operation, 
MPGeelec is the same as the charge-depleting fuel economy 
specified in SAE J1711.

    (iii) For 2016 and later model year dual fueled automobiles, you 
may determine fuel economy based on the following equation, separately 
for city and highway driving:
Equation 3 to Paragraph (c)(2)(iii)
[GRAPHIC] [TIFF OMITTED] TR18AP24.071

Where:

UF = The appropriate utility factor for city or highway driving 
specified in paragraph (c)(1) of this section for model year 2030 
and earlier vehicles.
* * * * *
    (5) Instead of the utility factors specified in paragraphs (c)(1) 
through (3) of this section, calculate utility factors using the 
following equation for vehicles whose maximum speed is less than the 
maximum speed specified in the driving schedule, where the vehicle's 
maximum speed is determined, to the nearest 0.1 mph, from observing the 
highest speed over the first duty cycle (FTP, HFET, etc.):
Equation 4 to Paragraph (c)(5)

[[Page 28206]]

[GRAPHIC] [TIFF OMITTED] TR18AP24.072

Where:

UFi = the utility factor for phase i. Let UF0 
= 0.
j = a counter to identify the appropriate term in the summation 
(with terms numbered consecutively).
k = the number of terms in the equation (see Table 5 of this 
section).
di = the distance driven in phase i.
ND = the normalized distance. Use 399 for both FTP and HFET 
operation for CAFE and GHG fleet values, except that ND = 583 for 
both FTP and HFET operation for GHG fleet values starting in model 
year 2031. Use 399 for both FTP and HFET operation for multi-day 
individual values for labeling.
Cj = the coefficient for term j from the following table:

                 Table 5 to Paragraph (c)(5)--City/Highway Specific Utility Factor Coefficients
----------------------------------------------------------------------------------------------------------------
                                             Fleet values for CAFE for all   Fleet values for      Multi-day
                                               model years, and for GHG      GHG starting in   individual values
                     j                              through MY 2030              MY 2031          for labeling
                                           ---------------------------------------------------------------------
                                                 City           Highway      City or highway    City or highway
----------------------------------------------------------------------------------------------------------------
1.........................................           14.86             4.8              10.52               13.1
2.........................................           2.965              13             -7.282              -18.7
3.........................................          -84.05             -65             -26.37               5.22
4.........................................           153.7             120              79.08               8.15
5.........................................          -43.59         -100.00             -77.36               3.53
6.........................................          -96.94           31.00              26.07              -1.34
7.........................................           14.47  ..............  .................              -4.01
8.........................................           91.70  ..............  .................              -3.90
9.........................................          -46.36  ..............  .................              -1.15
10........................................  ..............  ..............  .................               3.88
----------------------------------------------------------------------------------------------------------------

    n = the number of test phases (or bag measurements) before the 
vehicle reaches the end-of-test criterion.
    (6) Determine End-of-Test as follows:
    (i) Base End-of-Test on a 2 percent State of Charge as specified in 
Section 3.5.1 of SAE J1711.
    (ii) Base End-of-Test on a 1 percent Net Energy Change/Fuel Ratio 
as specified in Section 3.5.2 of SAE J1711.
    (iii) For charge-sustaining tests, we may approve alternate Net 
Energy Change/Fuel Ratio tolerances as specified in Appendix C of SAE 
J1711 to correct final fuel economy values, CO2 emissions, 
and carbon-related exhaust emissions. For charge-sustaining tests, do 
not use alternate Net Energy Change/Fuel Ratio tolerances to correct 
emissions of criteria pollutants. Additionally, if we approve an 
alternate End-of-Test criterion or Net Energy Change/Fuel Ratio 
tolerances for a specific vehicle, we may use the alternate criterion 
or tolerances for any testing we conduct on that vehicle.
    (7) Use the vehicle's Actual Charge-Depleting Range, Rcda, as 
specified in Section 7.1.4 of SAE J1711 for evaluating the end-of-test 
criterion.
* * * * *
    (10) The utility factors described in this paragraph (c) and in 
Sec.  600.510 are derived from equations in SAE J2841. You may 
alternatively calculate utility factors from the corresponding 
equations in SAE J2841 as follows:
    (i) Calculate utility factors for labeling directly from the 
equation in SAE J2841 Section 6.2 using the Table 2 MDIUF Fit 
Coefficients (C1 through C10) and a normalized distance (norm_dist) of 
399 miles.
    (ii) Calculate utility factors for fuel economy standards from the 
equation in SAE J2841 Section 6.2 using the Table 5 Fit Coefficients 
for city/Hwy Specific FUF curves weighted 55 percent city, 45 percent 
highway and a normalized distance (norm_dist) of 399 miles.
    (iii) Starting in model year 2031, calculate utility factors for 
GHG compliance with emission standards from the equation in SAE J2841 
Section 6.2 using the Table 2 FUF Fit Coefficients (C1 through C6) and 
a normalized distance (norm_dist) of 583 miles. For model year 2026 and 
earlier, calculate utility factors for compliance with GHG emission 
standards as described in paragraph (c)(10)(ii) of this section.
    (11) The following methodology is used to determine the usable 
battery energy (UBE) for a PHEV using data obtained during either the 
UDDS Full Charge Test (FCT) or the HFET FCT as described in SAE J1711:
    (i) Perform the measurements described in SAE J1711 Section 
5.1.3.d. Record initial and final SOC of the RESS for each cycle in the 
FCT.
    (ii) Perform the measurements described in SAE J1711 Section 
5.1.3.c. Continuously measure the voltage of the RESS throughout the 
entire cycle, or record initial and final voltage measurements of the 
RESS for each test cycle.
    (iii) Determine average voltage of the RESS during each FCT cycle 
by averaging the results of the continuous voltage measurement or by 
determining the average of the initial and final voltage measurement.
    (iv) Determine the DC discharge energy for each cycle of the FCT by 
multiplying the change in SOC of each cycle by the average voltage for 
the cycle.
    (v) Instead of independently measuring current and voltage and 
calculating the resulting DC discharge energy, you may use a DC 
wideband Watt-hour meter (power analyzer) to directly measure the DC 
discharge energy of the RESS during each cycle of the FCT. The meter 
used for this measurement must meet the requirements in SAE J1711 
Section 4.4.
    (vi) After completing the FCT, determine the cycles comprising the 
Charge-Depleting Cycle Range (Rcdc) as described in SAE J1711 Section 
3.1.14. Charge-sustaining cycles are not included in the Rcdc. Rcdc 
includes any number of transitional cycles where the vehicle may have 
operated in both charge-depleting and charge-sustaining modes.

[[Page 28207]]

    (vii) Determine the UBE of the PHEV by summing the measured DC 
discharge energy for each cycle comprising Rcdc. Following the charge-
depleting cycles and during the transition to charge-sustaining 
operation, one or more of the transition cycles may result in negative 
DC discharge energy measurements that result from the vehicle charging 
and not discharging the RESS. Include these negative discharge results 
in the summation.
* * * * *

0
102. Revise Sec.  600.117 to read as follows:


Sec.  600.117  Interim provisions.

    (a) The following provisions apply instead of other provisions 
specified in this part through model year 2026:
    (1) Except as specified in paragraphs (a)(5) and (6) of this 
section, manufacturers must demonstrate compliance with greenhouse gas 
emission standards and determine fuel economy values using E0 gasoline 
test fuel as specified in 40 CFR 86.113-04(a)(1), regardless of any 
testing with E10 test fuel specified in 40 CFR 1065.710(b) under 
paragraph (a)(2) of this section.
    (2) Manufacturers may demonstrate that vehicles comply with 
emission standards for criteria pollutants as specified in 40 CFR part 
86, subpart S, during fuel economy measurements using the E0 gasoline 
test fuel specified in 40 CFR 86.113-04(a)(1), as long as this test 
fuel is used in fuel economy testing for all applicable duty cycles 
specified in 40 CFR part 86, subpart S. If a vehicle fails to meet an 
emission standard for a criteria pollutant using the E0 gasoline test 
fuel specified in 40 CFR 86.113-04(a)(1), the manufacturer must retest 
the vehicle using the E10 test fuel specified in 40 CFR 1065.710(b) (or 
the equivalent LEV III test fuel for California) to demonstrate 
compliance with all applicable emission standards over that test cycle.
    (3) If a manufacturer demonstrates compliance with emission 
standards for criteria pollutants over all five test cycles using the 
E10 test fuel specified in 40 CFR 1065.710(b) (or the equivalent LEV 
III test fuel for California), the manufacturer may use test data with 
the same test fuel to determine whether a test group meets the criteria 
described in Sec.  600.115 for derived 5-cycle testing for fuel economy 
labeling. Such vehicles may be tested over the FTP and HFET cycles with 
the E0 gasoline test fuel specified in 40 CFR 86.113-04(a)(1) under 
this paragraph (a)(3); the vehicles must meet the emission standards 
for criteria pollutants over those test cycles as described in 
paragraph (a)(2) of this section.
    (4) Manufacturers may perform testing with the appropriate gasoline 
test fuels specified in 40 CFR 86.113-04(a)(1), 40 CFR 86.213(a)(2), 
and in 40 CFR 1065.710(b) to evaluate whether their vehicles meet the 
criteria for derived 5-cycle testing under Sec.  600.115. All five 
tests must use test fuel with the same nominal ethanol concentration.
    (5) For IUVP testing under 40 CFR 86.1845, manufacturers may 
demonstrate compliance with greenhouse gas emission standards using a 
test fuel meeting specifications for demonstrating compliance with 
emission standards for criteria pollutants.
    (6) Manufacturers may alternatively demonstrate compliance with 
greenhouse gas emission standards and determine fuel economy values 
using E10 gasoline test fuel as specified in 40 CFR 1065.710(b). 
However, manufacturers must then multiply measured CO2 
results by 1.0166 and round to the nearest 0.01 g/mile and calculate 
fuel economy using the equations appropriate equation for testing with 
E10 test fuel.
    (7) If a vehicle uses an E10 test fuel for evaporative emission 
testing and E0 is the applicable test fuel for exhaust emission 
testing, exhaust measurement and reporting requirements apply over the 
course of the evaporative emission test, but the vehicle need not meet 
the exhaust emission standards during the evaporative emission test 
run.
    (b) Manufacturers may certify model year 2027 through 2029 vehicles 
to greenhouse gas emission standards using data with E0 test fuel from 
testing for earlier model years, subject to the carryover provisions of 
40 CFR 86.1839. In the case of the fleet average CO2 
standard, manufacturers must divide the measured CO2 results 
by 1.0166 and round to the nearest 0.01 g/mile.
    (c) Manufacturers may perform testing under Sec.  600.115-11 using 
E0 gasoline test fuel as specified in 40 CFR 86.113-04(a)(1) or E10 
test fuel as specified in 40 CFR 1065.710(b) until EPA publishes 
guidance under Sec.  600.210-12(a)(2)(iv) describing when and how to 
apply 5-cycle adjustment factors based on testing with the E10 test 
fuel.

0
103. Amend Sec.  600.206-12 by revising and republishing paragraph (a) 
to read as follows:


Sec.  600.206-12  Calculation and use of FTP-based and HFET-based fuel 
economy, CO2 emissions, and carbon-related exhaust emission values for 
vehicle configurations.

    (a) Fuel economy, CO2 emissions, and carbon-related 
exhaust emissions values determined for each vehicle under Sec.  
600.113-08(a) and (b) and as approved in Sec.  600.008(c), are used to 
determine FTP-based city, HFET-based highway, and combined FTP/Highway-
based fuel economy, CO2 emissions, and carbon-related 
exhaust emission values for each vehicle configuration for which data 
are available. Note that fuel economy for some alternative fuel 
vehicles may mean miles per gasoline gallon equivalent and/or miles per 
unit of fuel consumed. For example, electric vehicles will determine 
miles per kilowatt-hour in addition to miles per gasoline gallon 
equivalent, and fuel cell vehicles will determine miles per kilogram of 
hydrogen.
    (1) If only one set of FTP-based city and HFET-based highway fuel 
economy values is accepted for a subconfiguration at which a vehicle 
configuration was tested, these values, rounded to the nearest tenth of 
a mile per gallon, comprise the city and highway fuel economy values 
for that subconfiguration. If only one set of FTP-based city and HFET-
based highway CO2 emissions and carbon-related exhaust 
emission values is accepted for a subconfiguration at which a vehicle 
configuration was tested, these values, rounded to the nearest gram per 
mile, comprise the city and highway CO2 emissions and 
carbon-related exhaust emission values for that subconfiguration. The 
appropriate CO2 values for fuel economy labels based on 
testing with E10 test fuel are the measured tailpipe CO2 
emissions for the test cycle multiplied by 1.0166.
    (2) If more than one set of FTP-based city and HFET-based highway 
fuel economy and/or carbon-related exhaust emission values are accepted 
for a vehicle configuration:
    (i) All data shall be grouped according to the subconfiguration for 
which the data were generated using sales projections supplied in 
accordance with Sec.  600.208-12(a)(3).
    (ii) Within each group of data, all fuel economy values are 
harmonically averaged and rounded to the nearest 0.0001 of a mile per 
gallon and all CO2 emissions and carbon-related exhaust 
emission values are arithmetically averaged and rounded to the nearest 
tenth of a gram per mile in order to determine FTP-based city and HFET-
based highway fuel economy, CO2 emissions, and carbon-
related exhaust emission values for each subconfiguration at which the 
vehicle configuration was tested. The appropriate CO2 values 
for fuel economy labels based on testing with E10 test fuel are the 
measured tailpipe

[[Page 28208]]

CO2 emissions for the test cycle multiplied by 1.0166.
    (iii) All FTP-based city fuel economy, CO2 emissions, 
and carbon-related exhaust emission values and all HFET-based highway 
fuel economy and carbon-related exhaust emission values calculated in 
paragraph (a)(2)(ii) of this section are (separately for city and 
highway) averaged in proportion to the sales fraction (rounded to the 
nearest 0.0001) within the vehicle configuration (as provided to the 
Administrator by the manufacturer) of vehicles of each tested 
subconfiguration. Fuel economy values shall be harmonically averaged, 
and CO2 emissions and carbon-related exhaust emission values 
shall be arithmetically averaged. The resultant fuel economy values, 
rounded to the nearest 0.0001 mile per gallon, are the FTP-based city 
and HFET-based highway fuel economy values for the vehicle 
configuration. The resultant CO2 emissions and carbon-
related exhaust emission values, rounded to the nearest tenth of a gram 
per mile, are the FTP-based city and HFET-based highway CO2 
emissions and carbon-related exhaust emission values for the vehicle 
configuration. Note that the appropriate vehicle subconfiguration 
CO2 values for fuel economy labels based on testing with E10 
test fuel are adjusted as described in paragraph (a)(1) or (a)(2)(ii) 
of this section.
    (3)(i) For the purpose of determining average fuel economy under 
Sec.  600.510, the combined fuel economy value for a vehicle 
configuration is calculated by harmonically averaging the FTP-based 
city and HFET-based highway fuel economy values, as determined in 
paragraph (a)(1) or (2) of this section, weighted 0.55 and 0.45 
respectively, and rounded to the nearest 0.0001 mile per gallon. A 
sample of this calculation appears in appendix II to this part.
    (ii) For the purpose of determining average carbon-related exhaust 
emissions under Sec.  600.510, the combined carbon-related exhaust 
emission value for a vehicle configuration is calculated by 
arithmetically averaging the FTP-based city and HFET-based highway 
carbon-related exhaust emission values, as determined in paragraph 
(a)(1) or (2) of this section, weighted 0.55 and 0.45 respectively, and 
rounded to the nearest tenth of gram per mile.
    (4) For alcohol dual fuel automobiles and natural gas dual fuel 
automobiles the procedures of paragraphs (a)(1) or (2) of this section, 
as applicable, shall be used to calculate two separate sets of FTP-
based city, HFET-based highway, and combined values for fuel economy, 
CO2 emissions, and carbon-related exhaust emissions for each 
configuration.
    (i) Calculate the city, highway, and combined fuel economy, 
CO2 emissions, and carbon-related exhaust emission values 
from the tests performed using gasoline or diesel test fuel.
    (ii) Calculate the city, highway, and combined fuel economy, 
CO2 emissions, and carbon-related exhaust emission values 
from the tests performed using alcohol or natural gas test fuel.
* * * * *

0
104. Amend Sec.  600.207-12 by revising the section heading and 
revising and republishing paragraph (a) to read as follows:


Sec.  600.207-12  Calculation and use of vehicle-specific 5-cycle-based 
fuel economy and CO2 emission values for vehicle configurations.

    (a) Fuel economy and CO2 emission values determined for 
each vehicle under Sec.  600.114 and as approved in Sec.  600.008(c), 
are used to determine vehicle-specific 5-cycle city and highway fuel 
economy and CO2 emission values for each vehicle 
configuration for which data are available.
    (1) If only one set of 5-cycle city and highway fuel economy and 
CO2 emission values is accepted for a vehicle configuration, 
these values, where fuel economy is rounded to the nearest 0.0001 of a 
mile per gallon and the CO2 emission value in grams per mile 
is rounded to the nearest tenth of a gram per mile, comprise the city 
and highway fuel economy and CO2 emission values for that 
configuration. Note that the appropriate vehicle-specific 
CO2 values for fuel economy labels based on 5-cycle testing 
with E10 test fuel are adjusted as described in Sec.  600.114-12.
    (2) If more than one set of 5-cycle city and highway fuel economy 
and CO2 emission values are accepted for a vehicle 
configuration:
    (i) All data shall be grouped according to the subconfiguration for 
which the data were generated using sales projections supplied in 
accordance with Sec.  600.209-12(a)(3).
    (ii) Within each subconfiguration of data, all fuel economy values 
are harmonically averaged and rounded to the nearest 0.0001 of a mile 
per gallon in order to determine 5-cycle city and highway fuel economy 
values for each subconfiguration at which the vehicle configuration was 
tested, and all CO2 emissions values are arithmetically 
averaged and rounded to the nearest tenth of gram per mile to determine 
5-cycle city and highway CO2 emission values for each 
subconfiguration at which the vehicle configuration was tested. Note 
that the appropriate vehicle-specific CO2 values for fuel 
economy labels based on 5-cycle testing with E10 test fuel are adjusted 
as described in Sec.  600.114-12.
    (iii) All 5-cycle city fuel economy values and all 5-cycle highway 
fuel economy values calculated in paragraph (a)(2)(ii) of this section 
are (separately for city and highway) averaged in proportion to the 
sales fraction (rounded to the nearest 0.0001) within the vehicle 
configuration (as provided to the Administrator by the manufacturer) of 
vehicles of each tested subconfiguration. The resultant values, rounded 
to the nearest 0.0001 mile per gallon, are the 5-cycle city and 5-cycle 
highway fuel economy values for the vehicle configuration.
    (iv) All 5-cycle city CO2 emission values and all 5-
cycle highway CO2 emission values calculated in paragraph 
(a)(2)(ii) of this section are (separately for city and highway) 
averaged in proportion to the sales fraction (rounded to the nearest 
0.0001) within the vehicle configuration (as provided to the 
Administrator by the manufacturer) of vehicles of each tested 
subconfiguration. The resultant values, rounded to the nearest 0.1 
grams per mile, are the 5-cycle city and 5-cycle highway CO2 
emission values for the vehicle configuration.
    (3) [Reserved]
    (4) For alcohol dual fuel automobiles and natural gas dual fuel 
automobiles, the procedures of paragraphs (a)(1) and (2) of this 
section shall be used to calculate two separate sets of 5-cycle city 
and highway fuel economy and CO2 emission values for each 
configuration.
    (i) Calculate the 5-cycle city and highway fuel economy and 
CO2 emission values from the tests performed using gasoline 
or diesel test fuel.
    (ii) Calculate the 5-cycle city and highway fuel economy and 
CO2 emission values from the tests performed using alcohol 
or natural gas test fuel, if 5-cycle testing has been performed. 
Otherwise, the procedure in Sec.  600.210-12(a)(3) or (b)(3) applies.
* * * * *

0
105. Amend Sec.  600.208-12 by revising paragraph (a)(4) and adding 
paragraph (b)(3)(iii)(C) to read as follows:


Sec.  600.208-12  Calculation of FTP-based and HFET-based fuel economy, 
CO2 emissions, and carbon-related exhaust emissions for a model type.

    (a) * * *
    (4) Vehicle configuration fuel economy, CO2 emissions, 
and carbon-related exhaust emissions, as determined in Sec.  600.206-
12(a), (b) or (c),

[[Page 28209]]

as applicable, are grouped according to base level.
    (i) If only one vehicle configuration within a base level has been 
tested, the fuel economy, CO2 emissions, and carbon-related 
exhaust emissions from that vehicle configuration will constitute the 
fuel economy, CO2 emissions, and carbon-related exhaust 
emissions for that base level. Note that the appropriate vehicle 
subconfiguration CO2 values for fuel economy labels based on 
testing with E10 test fuel are adjusted as referenced in Sec.  600.206-
12(a)(2)(iii); those values are used to calculate the base level 
CO2 values in this paragraph (a)(4)(i).
    (ii) If more than one vehicle configuration within a base level has 
been tested, the vehicle configuration fuel economy values are 
harmonically averaged in proportion to the respective sales fraction 
(rounded to the nearest 0.0001) of each vehicle configuration and the 
resultant fuel economy value rounded to the nearest 0.0001 mile per 
gallon; and the vehicle configuration CO2 emissions and 
carbon-related exhaust emissions are arithmetically averaged in 
proportion to the respective sales fraction (rounded to the nearest 
0.0001) of each vehicle configuration and the resultant carbon-related 
exhaust emission value rounded to the nearest tenth of a gram per mile. 
Note that the appropriate vehicle subconfiguration CO2 
values for fuel economy labels based on testing with E10 test fuel are 
adjusted as referenced in Sec.  600.206-12(a)(2)(iii); those values are 
used to calculate the base level CO2 values in this 
paragraph (a)(4)(ii).
* * * * *
    (b) * * *
    (3) * * *
    (iii) * * *
    (C) Note that the appropriate base level CO2 values for 
fuel economy labels based on testing with E10 test fuel are adjusted as 
referenced in paragraph (a)(4)(i) and (ii) of this section; those 
values are used to calculate the model type FTP-based city 
CO2 values in this paragraph (b)(3)(iii).
* * * * *

0
106. Amend Sec.  600.209-12 by revising paragraphs (a) introductory 
text and (b) introductory text to read as follows:


Sec.  600.209-12  Calculation of vehicle-specific 5-cycle fuel economy 
and CO2 emission values for a model type.

    (a) Base level. 5-cycle fuel economy and CO2 emission 
values for a base level are calculated from vehicle configuration 5-
cycle fuel economy and CO2 emission values as determined in 
Sec.  600.207 for low-altitude tests. Note that the appropriate 
vehicle-specific CO2 values for fuel economy labels based on 
5-cycle testing with E10 test fuel are adjusted as described in Sec.  
600.114-12.
* * * * *
    (b) Model type. For each model type, as determined by the 
Administrator, city and highway fuel economy and CO2 
emissions values will be calculated by using the projected sales and 
fuel economy and CO2 emission values for each base level 
within the model type. Separate model type calculations will be done 
based on the vehicle configuration fuel economy and CO2 
emission values as determined in Sec.  600.207-12, as applicable. Note 
that the appropriate vehicle-specific CO2 values for fuel 
economy labels based on 5-cycle testing with E10 test fuel are adjusted 
as described in Sec.  600.114-12.
* * * * *

0
107. Amend Sec.  600.210-12 by revising paragraphs (a)(2)(i)(B), 
(a)(2)(ii)(B), (b)(2)(i)(B), and (b)(2)(ii)(B) to read as follows:


Sec.  600.210-12  Calculation of fuel economy and CO2 emission values 
for labeling.

    (a) * * *
    (2) * * *
    (i) * * *
    (B) For each model type, determine the derived five-cycle city 
CO2 emissions using the following equation and coefficients 
determined by the Administrator:

Derived 5-cycle City CO2 = City Intercept [middot] A + City 
Slope [middot] MT FTP CO2

Where:

City Intercept = Intercept determined by the Administrator based on 
historic vehicle-specific 5-cycle city fuel economy data.
A = 8,887 for gasoline-fueled vehicles, 10,180 for diesel-fueled 
vehicles, or an appropriate value specified by the Administrator for 
other fuels.
City Slope = Slope determined by the Administrator based on historic 
vehicle-specific 5-cycle city fuel economy data.
MT FTP CO2 = the model type FTP-based city CO2 
emissions determined under Sec.  600.208-12(b), rounded to the 
nearest 0.1 grams per mile. Note that the appropriate MT FTP 
CO2 input values for fuel economy labels based on testing 
with E10 test fuel are adjusted as referenced in Sec.  600.208-
12(b)(3)(iii).

    (ii) * * *
    (B) For each model type, determine the derived five-cycle highway 
CO2 emissions using the equation below and coefficients 
determined by the Administrator:

Derived 5-cycle Highway CO2 = Highway Intercept [middot] A + Highway 
Slope [middot] MT HFET CO2

Where:

Highway Intercept = Intercept determined by the Administrator based 
on historic vehicle-specific 5-cycle highway fuel economy data.
A = 8,887 for gasoline-fueled vehicles, 10,180 for diesel-fueled 
vehicles, or an appropriate value specified by the Administrator for 
other fuels.
Highway Slope = Slope determined by the Administrator based on 
historic vehicle-specific 5-cycle highway fuel economy data.
MT HFET CO2 = the model type highway CO2 emissions 
determined under Sec.  600.208-12(b), rounded to the nearest 0.1 
grams per mile. Note that the appropriate the MT HFET CO2 
input values for fuel economy labels based on testing with E10 test 
fuel are adjusted as referenced in Sec.  600.208-12(b)(3)(iii) and 
(b)(4).

* * * * *
    (b) * * *
    (2) * * *
    (i) * * *
    (B) Determine the derived five-cycle city CO2 emissions 
of the configuration using the equation below and coefficients 
determined by the Administrator:

Derived 5-cycle City CO2 = City Intercept + City Slope 
[middot]Config FTP CO2

Where:

City Intercept = Intercept determined by the Administrator based on 
historic vehicle-specific 5-cycle city fuel economy data.
City Slope = Slope determined by the Administrator based on historic 
vehicle-specific 5-cycle city fuel economy data.
Config FTP CO2 = the configuration FTP-based city 
CO2 emissions determined under Sec.  600.206, rounded to 
the nearest 0.1 grams per mile. Note that the appropriate Config FTP 
CO2 input values for fuel economy labels based on testing 
with E10 test fuel are adjusted as referenced in Sec.  600.206-
12(a)(2)(iii).

    (ii) * * *
    (B) Determine the derived five-cycle highway CO2 
emissions of the configuration using the equation below and 
coefficients determined by the Administrator:

Derived 5-cycle city Highway CO2 = Highway Intercept + Highway Slope 
[middot] Config HFET CO2

Where:

Highway Intercept = Intercept determined by the Administrator based 
on historic vehicle-specific 5-cycle highway fuel economy data.
Highway Slope = Slope determined by the Administrator based on 
historic vehicle-specific 5-cycle highway fuel economy data.
Config HFET CO2 = the configuration highway fuel economy determined 
under Sec.  600.206, rounded to the nearest tenth. Note that the 
appropriate Config HFET CO2 input values for fuel economy 
labels

[[Page 28210]]

based on testing with E10 test fuel are adjusted as referenced in 
Sec.  600.206-12(a)(2)(iii).

* * * * *

0
108. Amend Sec.  600.311-12 by revising paragraph (g) to read as 
follows:


Sec.  600.311-12  Determination of values for fuel economy labels.

* * * * *
    (g) Smog rating. Establish a rating for exhaust emissions other 
than CO2 based on the applicable emission standards for the 
appropriate model year as shown in tables 1 through 3 to this paragraph 
(g). Unless specified otherwise, use the California emission standards 
to select the smog rating only for vehicles not certified to any EPA 
standards. For Independent Commercial Importers that import vehicles 
not subject to the identified emission standards, the vehicle's smog 
rating is 1. Similarly, if a manufacturer certifies vehicles to 
emission standards that are less stringent than all the identified 
standards for any reason, the vehicle's smog rating is 1. If EPA or 
California emission standards change in the future, we may revise the 
emission levels corresponding to each rating for future model years as 
appropriate to reflect the changed standards. If this occurs, we would 
publish the revised ratings as described in Sec.  600.302-12(k), 
allowing sufficient lead time to make the changes; we would also expect 
to initiate a rulemaking to update the smog rating in the regulation.

   Table 1 to Paragraph (g)--Criteria for Establishing Smog Rating for
                        Model Year 2030 and Later
------------------------------------------------------------------------
                                                       California Air
           Rating               U.S. EPA emission      Resources Board
                                    standard          emission standard
------------------------------------------------------------------------
1...........................  ....................  ULEV 125.
2...........................  Bin 65 or Bin 70....  ULEV70.
3...........................  Bin 55 or Bin 60....  ULEV60.
4...........................  Bin 45 or Bin 50....  ULEV50.
5...........................  Bin 35 or Bin 40....  ULEV40.
6...........................  Bin 25 or Bin 30....  SULEV25 or SULEV30.
7...........................  Bin 15 or Bin 20....  SULEV15 or SULEV20.
8...........................  Bin 10..............
9...........................  Bin 5...............
10..........................  Bin 0...............  ZEV.
------------------------------------------------------------------------


   Table 2 to Paragraph (g)--Criteria for Establishing Smog Rating for
                      Model Years 2025 Through 2029
------------------------------------------------------------------------
                                                       California Air
                               U.S. EPA Tier 3 or    Resources Board LEV
           Rating                Tier 4 emission        III or LEV IV
                                    standard          emission standard
------------------------------------------------------------------------
1...........................  Bin 160.............  LEV 160.
2...........................  Bin 125.............  ULEV125.
4...........................  Bin 55 through Bin    ULEV70 or ULEV60.
                               70.
5...........................  Bin 35 through Bin    ULEV50 or ULEV40.
                               50.
6...........................  Bin 25 or Bin 30....  SULEV 25 or SULEV30.
7...........................  Bin 15 or Bin 20....  SULEV 15 or SULEV20.
8...........................  Bin 10..............
9...........................  Bin 5...............
10..........................  Bin 0...............  ZEV.
------------------------------------------------------------------------


        Table 3 to Paragraph (g)--Criteria for Establishing Smog Rating for Model Years 2018 Through 2024
----------------------------------------------------------------------------------------------------------------
                                                                                        California Air Resources
              Rating                U.S. EPA Tier 3 emission   U.S EPA Tier 2 emission   Board LEV III emission
                                            standard                  standard                  standard
----------------------------------------------------------------------------------------------------------------
1................................  Bin 160..................  Bin 5 through Bin 8.....  LEV 160.
3................................  Bin 125, Bin 110.........  Bin 4...................  ULEV125.
5................................  Bin 85, Bin 70...........  Bin 3...................  ULEV70.
6................................  Bin 50...................  ........................  ULEV50.
7................................  Bin 30...................  Bin 2...................  SULEV30.
8................................  Bin 20...................  ........................  SULEV20.
10...............................  Bin 0....................  Bin 1...................  ZEV.
----------------------------------------------------------------------------------------------------------------

* * * * *

PART 1036--CONTROL OF EMISSIONS FROM NEW AND IN-USE HEAVY-DUTY 
HIGHWAY ENGINES

0
109. The authority citation for part 1036 continues to read as follows:

    Authority: 42 U.S.C. 7401-7671q.


0
110. Amend Sec.  1036.110 by revising paragraph (a) to read as follows:


Sec.  1036.110  Diagnostic controls.

* * * * *
    (a) The requirements of this section apply for engines certified 
under this part, except in the following circumstances:
    (1) Heavy-duty engines intended to be installed in heavy-duty 
vehicles at or below 14,000 pounds GVWR must meet the OBD requirements 
in 40 CFR 86.1806-27. Note that 40 CFR 86.1806-27 allows for using 
later versions of specified OBD requirements from the California Air 
Resources Board, which includes meeting the 2019 heavy-duty OBD 
requirements adopted for California and updated emission thresholds as 
described in this section.
    (2) Heavy-duty spark-ignition engines intended to be installed in 
heavy-duty vehicles above 14,000 pounds GVWR may instead meet the OBD 
requirements in 40 CFR 86.1806-27 if the same engines are also 
installed in vehicles

[[Page 28211]]

certified under 40 CFR part 86, subpart S, where both sets of vehicles 
share similar emission controls.
* * * * *

0
111. Add Sec.  1036.635 to read as follows:


Sec.  1036.635  Certification requirements for high-GCWR medium-duty 
vehicles.

    Engines that will be installed in Vehicles at or below 14,000 
pounds GVWR that have GCWR above 22,000 pounds may be optionally 
certified under this part instead of vehicle certification under 40 CFR 
part 86, subpart S.
    (a) Affected engines must meet the criteria pollutant standards 
specified in Sec.  1036.104. The following specific provisions apply if 
engines are exempt from greenhouse gas standards under paragraph (b) or 
(c) of this section:
    (1) Determine brake-specific CO2 emissions over the FTP, 
eCO2FTPFCL, from the emission-data engine used for 
demonstrating compliance with criteria pollutant standards. You may 
alternatively determine eCO2FTPFCL based on chassis testing 
as described in 40 CFR 86.1845-04(h)(6). Use eCO2FTPFCL for 
calculating emission rates from in-use engines under Sec.  1036.530. 
Report the measured CO2 emission rate and the method of 
testing in your application for certification.
    (2) For plug-in hybrid electric vehicles, meet battery monitor 
requirements under 40 CFR 1037.115(f) instead of the battery-related 
requirements under 40 CFR 86.1815-27.
    (b) Affected engines that will be installed in complete vehicles 
are exempt from the greenhouse gas emission standards in Sec.  
1036.108, but engine certification under this part 1036 depends on the 
following conditions:
    (1) The vehicles in which the engines are installed must meet the 
following vehicle-based standards under 40 CFR part 86, subpart S:
    (i) Evaporative and refueling emission standards as specified in 40 
CFR 86.1813-17.
    (ii) Greenhouse gas emission standards as specified in 40 CFR 
86.1819-14.
    (2) Additional provisions related to relevant requirements from 40 
CFR part 86, subpart S, apply for certifying engines under this part, 
as illustrated in the following examples:
    (i) The engine's emission control information label must state that 
the vehicle meets evaporative and refueling emission standards under 40 
CFR 86.1813-17 and greenhouse gas emission standards under 40 CFR 
86.1819-14.
    (ii) The application for certification must include the information 
related to complying with evaporative, refueling, and greenhouse gas 
emission standards.
    (iii) We may require you to perform testing on in-use vehicles and 
report test results as specified in 40 CFR 86.1845-04, 86.1846-01, and 
86.1847-01.
    (iv) Demonstrate compliance with the fleet average CO2 
standard as described in 40 CFR 86.1865-12 by including vehicles 
certified under this section in the compliance calculations as part of 
the fleet averaging calculation for medium-duty vehicles certified 
under 40 CFR part 86, subpart S.
    (3) State in the application for certification that you are using 
the provisions of this section to meet the fleet average CO2 
standard in 40 CFR 86.1819-14 instead of meeting the standards of Sec.  
1036.108 and instead of certifying the vehicle to standards under 40 
CFR part 1037.
    (c) The provisions in paragraph (b) of this section are optional 
for affected engines that will be installed in incomplete vehicles. If 
vehicles do not meet all the requirements described in paragraph (b) of 
this section, the engines must meet the greenhouse gas emission 
standards of Sec.  1036.108 and the vehicles must be certified under 40 
CFR part 1037.

PART 1037--CONTROL OF EMISSIONS FROM NEW HEAVY-DUTY MOTOR VEHICLES

0
112. The authority citation for part 1037 continues to read as follows:

    Authority:  42 U.S.C. 7401-7671q.


0
113. Amend Sec.  1037.150 by revising paragraph (l) to read as follows:


Sec.  1037.150  Interim provisions.

* * * * *
    (l) Optional certification to GHG standards under 40 CFR part 86. 
The greenhouse gas standards in 40 CFR part 86, subpart S, may apply 
instead of the standards of Sec.  1037.105 as follows:
    (1) Complete or cab-complete vehicles may optionally meet 
alternative standards as described in 40 CFR 86.1819-14(j).
    (2) Complete high-GCWR vehicles must meet the greenhouse gas 
standards of 40 CFR part 86, subpart S, as described in 40 CFR 
1036.635.
    (3) Incomplete high-GCWR vehicles may meet the greenhouse gas 
standards of 40 CFR part 86, subpart S, as described in 40 CFR 
1036.635.
* * * * *

PART 1066--VEHICLE-TESTING PROCEDURES

0
114. The authority citation for part 1066 continues to read as follows:

    Authority:  42 U.S.C. 7401-7671q.


0
115. Amend Sec.  1066.301 by revising paragraph (b) to read as follows:


Sec.  1066.301  Overview of road-load determination procedures.

* * * * *
    (b) The general procedure for determining road-load force is 
performing coastdown tests and calculating road-load coefficients. This 
procedure is described in SAE J1263 and SAE J2263 (incorporated by 
reference, see Sec.  1066.1010). Continued testing based on the 2008 
version of SAE J2263 is optional, except that it is no longer available 
for testing starting with model year 2026. This subpart specifies 
certain deviations from those procedures for certain applications.
* * * * *

0
116. Amend Sec.  1066.305 by revising paragraph (a) to read as follows:


Sec.  1066.305  Procedures for specifying road-load forces for motor 
vehicles at or below 14,000 pounds GVWR.

    (a) For motor vehicles at or below 14,000 pounds GVWR, develop 
representative road-load coefficients to characterize each vehicle 
covered by a certificate of conformity. Calculate road-load 
coefficients by performing coastdown tests using the provisions of SAE 
J1263 and SAE J2263 (incorporated by reference, see Sec.  1066.1010). 
This protocol establishes a procedure for determination of vehicle road 
load force for speeds between 115 and 15 km/hr (71.5 and 9.3 mi/hr); 
the final result is a model of road-load force (as a function of speed) 
during operation on a dry, level road under reference conditions of 20 
[deg]C, 98.21 kPa, no wind, no precipitation, and the transmission in 
neutral. You may use other methods that are equivalent to SAE J2263, 
such as equivalent test procedures or analytical modeling, to 
characterize road load using good engineering judgment. Determine 
dynamometer settings to simulate the road-load profile represented by 
these road-load target coefficients as described in Sec.  1066.315. 
Supply representative road-load forces for each vehicle at speeds above 
15 km/hr (9.3 mi/hr), and up to 115 km/hr (71.5 mi/hr), or the highest 
speed from the range of applicable duty cycles.
* * * * *

0
117. Amend Sec.  1066.310 by revising paragraph (b) introductory text 
to read as follows:

[[Page 28212]]

Sec.  1066.310  Coastdown procedures for vehicles above 14,000 pounds 
GVWR.

* * * * *
    (b) Follow the provisions of Sections 1 through 9 of SAE J1263 and 
SAE J2263 (incorporated by reference, see Sec.  1066.1010), except as 
described in this paragraph (b). The terms and variables identified in 
this paragraph (b) have the meaning given in SAE J1263 or J2263 unless 
specified otherwise.
* * * * *

0
118. Revise Sec.  1066.315 to read as follows:


Sec.  1066.315  Dynamometer road-load setting.

    Determine dynamometer road-load settings for chassis testing by 
following SAE J2264 (incorporated by reference, see Sec.  1066.1010).

0
119. Amend Sec.  1066.425 by revising paragraph (j)(1) introductory 
text to read as follows:


Sec.  1066.425  Performing emission tests.

* * * * *
    (j) * * *
    (1) Compare the following drive-cycle metrics, based on measured 
vehicle speeds, to a reference value based on the target cycle that 
would have been generated by driving exactly to the target trace as 
described in SAE J2951 (incorporated by reference, see Sec.  
1066.1010):
* * * * *

0
120. Amend Sec.  1066.501 by revising paragraph (a) to read as follows:


Sec.  1066.501  Overview.

* * * * *
    (a) Correct the results for Net Energy Change of the RESS as 
follows:
    (1) For all sizes of EV, follow SAE J1634 (incorporated by 
reference, see Sec.  1066.1010).
    (2) For HEV at or below 14,000 pounds GVWR, follow SAE J1711 
(incorporated by reference, see Sec.  1066.1010) except as described in 
this paragraph (a). Disregard provisions of SAE J1711 that differ from 
this part or the standard-setting part if they are not specific to HEV. 
Apply the following adjustments and clarifications to SAE J1711:
    (i) If the procedure calls for charge-sustaining operation, start 
the drive with a State of Charge that is appropriate to ensure charge-
sustaining operation for the duration of the drive. Take steps other 
than emission measurements to confirm that vehicles are in charge-
sustaining mode for the duration of the drive.
    (ii) You may use Appendix C of SAE J1711 for charge-sustaining 
tests to correct final fuel economy values, CO2 emissions, 
and carbon-related exhaust emissions, but not to correct measured 
values for criteria pollutant emissions.
    (iii) You may test subject to a measurement accuracy of 0.3% of full scale in place of the measurement accuracy specified 
in Section 4.4 of SAE J1711.
    (3) For HEV above 14,000 pounds GVWR, follow SAE J2711 
(incorporated by reference, see Sec.  1066.1010) for requirements 
related to charge-sustaining operation.
* * * * *

0
121. Amend Sec.  1066.630 by revising paragraph (a)(2) to read as 
follows:


Sec.  1066.630  PDP, SSV, and CFV flow rate calculations.

* * * * *
    (a) * * *
    (2) Calculate Vrev using the following equation:
    [GRAPHIC] [TIFF OMITTED] TR18AP24.073
    
Eq. 1066.630-2
Where:

pout = static absolute pressure at the PDP outlet.

Example:

a1 = 0.8405 m\3\/s
fnPDP = 12.58 r/s
pout = 99.950 kPa
pin = 98.575 kPa
a0 = 0.056 m\3\/r
Tin = 323.5 K
[GRAPHIC] [TIFF OMITTED] TR18AP24.074

* * * * *

0
122. Amend Sec.  1066.635 by revising the introductory text to read as 
follows:


Sec.  1066.635  NMOG determination.

    For vehicles subject to an NMOG standard, determine NMOG as 
described in paragraph (a) of this section. Except as specified in the 
standard-setting part, you may alternatively calculate NMOG results 
based on measured NMHC emissions as described in paragraphs (c) through 
(f) of this section. Note that references to the FTP in this section 
apply for testing over the FTP test cycle at any ambient temperature.
* * * * *

0
123. Amend Sec.  1066.710 by revising the section heading, introductory 
text, and paragraphs (a)(6), (b)(2), and (d)(2) to read as follows:


Sec.  1066.710  Cold temperature testing procedures for measuring NMOG, 
NOX, PM, and CO emissions and determining fuel economy.

    This section describes procedures for measuring emissions of 
nonmethane organic gas (NMOG), oxides of nitrogen (NOX), 
particulate matter (PM), and carbon monoxide (CO) and determining fuel 
economy on a cold day using the FTP test cycle (see Sec.  1066.801). 
For Tier 3 and earlier motor vehicles, measurement procedures are based 
on nonmethane hydrocarbon (NMHC) emissions instead of NMOG emissions; 
NOX and PM measurement requirements do not apply.
    (a) * * *
    (6) Analyze samples for NMOG, NOX, PM, CO, and 
CO2.

[[Page 28213]]

    (b) * * *
    (2) Ambient temperature for preconditioning. Instantaneous ambient 
temperature values may be above -4.0 [deg]C or below -9.0 [deg]C but 
not for more than 3 minutes at a time during the preconditioning 
period. At no time may ambient temperatures be below -12.0 [deg]C or 
above -1.0 [deg]C. The average ambient temperature during 
preconditioning must be (-7.0 2.8) [deg]C. You may 
precondition vehicles at temperatures above -7.0 [deg]C or with a 
temperature tolerance greater than that described in this section (or 
both) if you determine that this will not cause NMOG, NOX, 
PM, CO, or CO2 emissions to decrease; if you modify the 
temperature specifications for vehicle preconditioning, adjust the 
procedures described in this section appropriately for your testing.
* * * * *
    (d) * * *
    (2) Fill the fuel tank to approximately 40% of the manufacturer's 
nominal fuel tank capacity. Use the appropriate gasoline test fuel for 
low-temperature testing as specified 40 CFR 1065.710 or use ultra low-
sulfur diesel fuel as specified in 40 CFR 1065.703. However, you may 
ask us to approve an alternative formulation of diesel fuel under 40 
CFR 1065.10(c)(1) if that better represents in-use diesel fuel in 
winter conditions. The temperature of the dispensed test fuel must be 
at or below 15.5 [deg]C. If the leftover fuel in the fuel tank before 
the refueling event does not meet these specifications, drain the fuel 
tank before refueling. You may operate the vehicle prior to the 
preconditioning drive to eliminate fuel effects on adaptive memory 
systems.
* * * * *

0
124. Revise and republish Sec.  1066.801 to read as follows:


Sec.  1066.801  Applicability and general provisions.

    This subpart I specifies how to apply the test procedures of this 
part for light-duty vehicles, light-duty trucks, and heavy-duty 
vehicles at or below 14,000 pounds GVWR that are subject to chassis 
testing for exhaust emissions under 40 CFR part 86, subpart S. For 
these vehicles, references in this part 1066 to the standard-setting 
part include subpart H of this part and this subpart I.
    (a) Use the procedures detailed in this subpart to measure vehicle 
emissions over a specified drive schedule in conjunction with subpart E 
of this part. Where the procedures of subpart E of this part differ 
from this subpart I, the provisions in this subpart I take precedence.
    (b) Collect samples of every pollutant for which an emission 
standard applies, unless specified otherwise.
    (c) This subpart covers the following test procedures:
    (1) The Federal Test Procedure (FTP), which includes the general 
driving cycle. This procedure is also used for measuring evaporative 
emissions. This may be called the conventional test since it was 
adopted with the earliest emission standards.
    (i) The FTP consists of one Urban Dynamometer Driving Schedule 
(UDDS) as specified in paragraph (a) of appendix I to 40 CFR part 86, 
followed by a 10-minute soak with the engine off and repeat driving 
through the first 505 seconds of the UDDS. Note that the UDDS 
represents about 7.5 miles of driving in an urban area. Engine startup 
(with all accessories turned off), operation over the initial UDDS, and 
engine shutdown make a complete cold-start test. The hot-start test 
consists of the first 505 seconds of the UDDS following the 10-minute 
soak and a hot-running portion of the UDDS after the first 505 seconds. 
The first 505 seconds of the UDDS is considered the transient portion; 
the remainder of the UDDS is considered the stabilized (or hot-
stabilized) portion. The hot-stabilized portion for the hot-start test 
is generally measured during the cold-start test; however, in certain 
cases, the hot-start test may involve a second full UDDS following the 
10-minute soak, rather than repeating only the first 505 seconds. See 
Sec. Sec.  1066.815 and 1066.820.
    (ii) Evaporative emission testing includes a preconditioning drive 
with the UDDS and a full FTP cycle, including exhaust measurement, 
followed by evaporative emission measurements. In the three-day diurnal 
test sequence, the exhaust test is followed by a running loss test 
consisting of a UDDS, then two New York City Cycles as specified in 
paragraph (e) of appendix I to 40 CFR part 86, followed by another 
UDDS; see 40 CFR 86.134. Note that the New York City Cycle represents 
about 1.18 miles of driving in a city center. The running loss test is 
followed by a high-temperature hot soak test as described in 40 CFR 
86.138 and a three-day diurnal emission test as described in 40 CFR 
86.133. In the two-day diurnal test sequence, the exhaust test is 
followed by a low-temperature hot soak test as described in 40 CFR 
86.138-96(k) and a two-day diurnal emission test as described in 40 CFR 
86.133-96(p).
    (iii) Refueling emission tests for vehicles that rely on integrated 
control of diurnal and refueling emissions includes vehicle operation 
over the full FTP test cycle corresponding to the three-day diurnal 
test sequence to precondition and purge the evaporative canister. For 
non-integrated systems, there is a preconditioning drive over the UDDS 
and a refueling event, followed by repeated UDDS driving to purge the 
evaporative canister. The refueling emission test procedures are 
described in 40 CFR 86.150 through 86.157.
    (2) The US06 driving cycle is specified in paragraph (g) of 
appendix I to 40 CFR part 86. Note that the US06 driving cycle 
represents about 8.0 miles of relatively aggressive driving.
    (3) The SC03 driving cycle is specified in paragraph (h) of 
appendix I to 40 CFR part 86. Note that the SC03 driving schedule 
represents about 3.6 miles of urban driving with the air conditioner 
operating.
    (4) The hot portion of the LA-92 driving cycle is specified in 
paragraph (c) of appendix I to 40 CFR part 86. Note that the hot 
portion of the LA-92 driving cycle represents about 9.8 miles of 
relatively aggressive driving for commercial trucks. This driving cycle 
applies for heavy-duty vehicles above 10,000 pounds GVWR and at or 
below 14,000 pounds GVWR only for vehicles subject to Tier 3 standards.
    (5) The Highway Fuel Economy Test (HFET) is specified in appendix I 
to 40 CFR part 600. Note that the HFET represents about 10.2 miles of 
rural and freeway driving with an average speed of 48.6 mi/hr and a 
maximum speed of 60.0 mi/hr. See Sec.  1066.840.
    (6) Cold temperature standards apply for NMOG+NOX (or 
NMHC), PM, and CO emissions when vehicles operate over the FTP at a 
nominal temperature of -7 [deg]C. See subpart H of this part.
    (7) Emission measurement to determine air conditioning credits for 
greenhouse gas standards. In this optional procedure, manufacturers 
operate vehicles over repeat runs of the AC17 test sequence to allow 
for calculating credits as part of demonstrating compliance with 
CO2 emission standards. The AC17 test sequence consists of a 
UDDS preconditioning drive, followed by emission measurements over the 
SC03 and HFET driving cycles. See Sec.  1066.845.
    (8) The mid-temperature intermediate soak FTP is specified as the 
procedure for Partial Soak Emission Testing in Section E4.4 of 
California ARB's PHEV Test Procedures for plug-in hybrid electric 
vehicles, in Part II Section I.7 of California ARB's LMDV Test 
Procedures for other hybrid electric vehicles, and in Part II, Section 
B.9.1 and B.9.3 of California ARB's LMDV Test Procedures

[[Page 28214]]

for other vehicles (both incorporated by reference, see Sec.  
1066.1010).
    (9) The early driveaway FTP is specified as the procedure for Quick 
Drive-Away Emission Testing in Section E4.5 of California ARB's PHEV 
Test Procedures for plug-in hybrid electric vehicles, in Part II 
Section I.8 of California ARB's LMDV Test Procedures for other hybrid 
electric vehicles, and in Part II, Section B.9.2 and B.9.4 of 
California ARB's LMDV Test Procedures for other vehicles (both 
incorporated by reference, see Sec.  1066.1010). Additionally, vehicle 
speed may not exceed 0.0 mi/hr until 7.0 seconds into the driving 
schedule and vehicle speed may not exceed 2.0 mi/hr from 7.1 through 
7.9 seconds.
    (10) The high-load PHEV engine starts US06 is specified in Section 
E7.2 of California ARB's PHEV Test Procedures using the cold-start US06 
Charge-Depleting Emission Test (incorporated by reference, see Sec.  
1066.1010).
    (d) The following provisions apply for all testing:
    (1) Ambient temperatures encountered by the test vehicle must be 
(20 to 30) [deg]C, unless otherwise specified. Where ambient 
temperature specifications apply before or between test measurements, 
the vehicle may be exposed to temperatures outside of the specified 
range for up to 10 minutes to account for vehicle transport or other 
actions to prepare for testing. The temperatures monitored during 
testing must be representative of those experienced by the test 
vehicle. For example, do not measure ambient temperatures near a heat 
source.
    (2) Do not operate or store the vehicle at an incline if good 
engineering judgment indicates that it would affect emissions.
    (3) If a test is void after collecting emission data from previous 
test segments, the test may be repeated to collect only those data 
points needed to complete emission measurements. You may combine 
emission measurements from different test runs to demonstrate 
compliance with emission standards.
    (4) Prepare vehicles for testing as described in Sec.  1066.810.
    (e) The following figure illustrates the FTP test sequence for 
measuring exhaust and evaporative emissions:

Figure 1 to Paragraph (e)--FTP Test Sequence
[GRAPHIC] [TIFF OMITTED] TR18AP24.075


0
125. Amend Sec.  1066.805 by revising paragraph (c) to read as follows:


Sec.  1066.805  Road-load power, test weight, and inertia weight class 
determination.

* * * * *
    (c) For FTP, US06, SC03, New York City Cycle, HFET, and LA-92 
testing, determine road-load forces for each test vehicle at speeds 
between 9.3 and 71.5 miles per hour. The road-load force must represent 
vehicle operation on a smooth, level road with no wind or calm winds, 
no precipitation, an ambient temperature of approximately 20 [deg]C, 
and atmospheric pressure of

[[Page 28215]]

98.21 kPa. You may extrapolate road-load force for speeds below 9.3 mi/
hr.

0
126. Revise Sec.  1066.830 to read as follows:


Sec.  1066.830  Supplemental Federal Test Procedures; overview.

    Sections 1066.831 and 1066.835 describe the detailed procedures for 
the Supplemental Federal Test Procedure (SFTP). This testing applies 
for Tier 3 vehicles subject to the SFTP standards in 40 CFR 86.1811-17 
or 86.1816-18. The SFTP test procedure consists of FTP testing and two 
additional test elements--a sequence of vehicle operation with more 
aggressive driving and a sequence of vehicle operation that accounts 
for the impact of the vehicle's air conditioner. Tier 4 vehicles 
subject to 40 CFR 86.1811-27 must meet standards for each individual 
driving cycle.
    (a) The SFTP standard applies as a composite representing the three 
test elements. The emission results from the aggressive driving test 
element (Sec.  1066.831), the air conditioning test element (Sec.  
1066.835), and the FTP test element (Sec.  1066.820) are analyzed 
according to the calculation methodology and compared to the applicable 
SFTP emission standards as described in 40 CFR part 86, subpart S.
    (b) The test elements of the SFTP may be run in any sequence that 
includes the specified preconditioning steps.

0
127. Amend Sec.  1066.831 by revising paragraph (e)(2) to read as 
follows:


Sec.  1066.831  Exhaust emission test procedures for aggressive 
driving.

* * * * *
    (e) * * *
    (2) Operate the vehicle over the full US06 driving schedule, with 
the following exceptions that apply only for Tier 3 vehicles:
    (i) For heavy-duty vehicles above 10,000 pounds GVWR, operate the 
vehicle over the Hot LA-92 driving schedule.
    (ii) Heavy-duty vehicles at or below 10,000 pounds GVWR with a 
power-to-weight ratio at or below 0.024 hp/pound may be certified using 
only the highway portion of the US06 driving schedule as described in 
40 CFR 86.1816.
* * * * *

0
128. Amend Sec.  1066.1001 by removing the definition for ``SFTP'' and 
adding a definition for ``Supplemental FTP (SFTP)'' in alphabetical 
order to read as follows:


Sec.  1066.1001  Definitions.

* * * * *
    Supplemental FTP (SFTP) means the collection of test cycles as 
given in Sec.  1066.830.
* * * * *

0
129. Amend Sec.  1066.1010 by:
0
a. Revising paragraph (b)(3); and
0
b. Adding paragraph (c).
    The revision and addition read as follows:


Sec.  1066.1010  Incorporation by reference.

* * * * *
    (b) * * *
    (3) SAE J1711 FEB2023, Recommended Practice for Measuring the 
Exhaust Emissions and Fuel Economy of Hybrid-Electric Vehicles, 
Including Plug-In Hybrid Vehicles; Revised February 2023, (``SAE 
J1711''); IBR approved for Sec. Sec.  1066.501(a); 1066.1001.
* * * * *
    (c) California Air Resources Board (California ARB). California Air 
Resources Board, 1001 I Street, Sacramento, CA 95812; (916) 322-2884; 
www.arb.ca.gov:
    (1) California 2026 and Subsequent Model Year Criteria Pollutant 
Exhaust Emission Standards and Test Procedures for Passenger Cars, 
Light-Duty Trucks, And Medium-Duty Vehicles (``California ARB's LMDV 
Test Procedures''); Adopted August 25, 2022; IBR approved for Sec.  
1066.801(c).
    (2) California Test Procedures for 2026 and Subsequent Model Year 
Zero-Emission Vehicles and Plug-In Hybrid Electric Vehicles, in the 
Passenger Car, Light-Duty Truck and Medium-Duty Vehicle Classes 
(``California ARB's PHEV Test Procedures''); Adopted August 25, 2022; 
IBR approved for Sec.  1066.801(c).

PART 1068--GENERAL COMPLIANCE PROVISIONS FOR HIGHWAY, STATIONARY, 
AND NONROAD PROGRAMS

0
130. The authority citation for part 1068 continues to read as follows:

    Authority:  42 U.S.C. 7401-7671q.


0
131. Amend Sec.  1068.30 by revising the definitions for ``Family'' and 
``Void'' to read as follows:


Sec.  1068.30  Definitions.

* * * * *
    Family means engine family, emission family, or test group, as 
applicable, under the standard-setting part.
* * * * *
    Void means, with respect to a certificate of conformity or an 
exemption, to invalidate the certificate or the exemption ab initio 
(``from the beginning''). If we void a certificate, all the engines/
equipment introduced into U.S. commerce under that family for that 
model year are considered uncertified (or nonconforming) and are 
therefore not covered by a certificate of conformity, and you are 
liable for all engines/equipment introduced into U.S. commerce under 
the certificate and may face civil or criminal penalties or both. This 
applies equally to all engines/equipment in the family, including 
engines/equipment introduced into U.S. commerce before we voided the 
certificate. If we void an exemption, all the engines/equipment 
introduced into U.S. commerce under that exemption are considered 
uncertified (or nonconforming), and you are liable for engines/
equipment introduced into U.S. commerce under the exemption and may 
face civil or criminal penalties or both. You may not sell, offer for 
sale, or introduce or deliver into commerce in the United States or 
import into the United States any additional engines/equipment using 
the voided exemption.
* * * * *
[FR Doc. 2024-06214 Filed 4-17-24; 8:45 am]
BILLING CODE 6560-50-P